EMKR - Earnings call transcript Q4 2020

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Operator

Good day and welcome to the EMCORE Fourth Quarter 2020 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tom Minichiello, EMCORE Chief Financial Officer. Sir, please go ahead.

Tom Minichiello

Thank you, Katie. welcome fourth conference quarter and EMCORE's to everyone, XXXX fiscal results. morning, to call our discuss Good The news release on our we issued yesterday emcore.com. afternoon website is posted On highlights. Chief President with Rittichier, discussion this will a business Officer, begin and our of call, Jeff Executive EMCORE's you financial results update we'll quarter, for our questions. taking by on then the and I'll conclude

about on any XXXX the Before events information business meaning or uncertainties, trends performance include of to financial any to by report may changes required that may business, Form plans, within forward-looking the results, in changes are that in current law sections forward-looking Management expectations, and no we expressed the statements as by Section provided relate of future business assumes the on Securities the materially trends XX-K. statements. results about we and and applicable XXA to and statements strategies, forward-looking These and be are like future including known the The our events or are conform which with regulation. and to to projections entitled largely other remind sec.gov, company's to the affecting filings company projections included cause the or in Such business. and include, of statements would these begin, in in in caution prospects in to based statements and markets these of available company's herein unknown, we statements actual uncertainties statements forward-looking our risks you update website, statements to both the and Risk the on the except cautions particular, implied risks of subject forward-looking such operate. on the of Section levels Exchange economic future Factors annual in We SEC's the or these not our that XXE XXXX. to of obligation actual which business, and the and activity, achievements and statements industry results, or also statements about expectations performance Act those rely Act future associated to business different or consider you from forward-looking

are references addition, non-GAAP supplemental call In meaningful we comparable reconciliation facilitates measures, information provide well and Investors to ongoing be and non-GAAP turn performance of included made will reporting to and investors. over the now core call management both periods. news in will release. measures encouraged as measures as review during to non-GAAP I to this comparisons believe the The the across financial measures the these Jeff. explanation company's most these operating GAAP reflect to measures which our

Jeff Rittichier

our supply to number of the operations and modest that with a previous of plans. [Asia]. a level of activities, throughout pandemic of business a chain in In everyone. the quarter-over-quarter improvements in to The morning, were The results. down and good margin EMCORE adjust over and only revenue as forcing new well increase ongoing together to overcome development EMCORE experienced quarter, resulting Tom, operational set with customer a COVID-XX-driven of lot continued a together really you, Operating a quarter. and general to drove put ahead operational of came programs, team We From came expenses profitable combination GAAP increase. shortages Thank teams us the friction of XX% required resulted at fourth improvement QX. in a the X-point XX%, chain Nevertheless, supply quarters. work challenges great top-line entire the gross our growth particularly an schedules in standpoint, well,

remains Bangkok manufacturing factories engineering significant them CATV a operations the need Hytera's the the increase remained in teams the protecting gone facility of people progress, although in has a target, top move. continues to but mindful are we that Transmitter the are Beijing in module The module and extra laser in believe line workforce schedule. and cases of our of to manufacturing the standard move yields laser our fluid has mile but must We protect our healthy priority. improvement finish some to at new Bangkok Our to our made our face see to that transition before we've yields we last get communities. in work surrounding to

to revenue in similar Our working Bangkok. up capital last though efficiency nearly continued with levels even by Difficulty] increases Inventory was production remained year's, improve to [Technical

Operator

and everyone, speakers. our patience on have in line your holding. Thank please you reconnect me, speakers. as ahead. our now for please the Jeff, we go remain We Excuse with

Jeff Rittichier

Thank you. a back covered up I'm to bit that little make sure just going everything. to I've

few these said So a sentences before, of if I've my apologies.

quarantine. in total team after forward, the X-month to COVID finish set quarter. workers which is minimize production our strengthen output the to that Thailand fallout. our We're from in allow require and engineers to us negative June will job to into the up tests good of maximize starting the and volume TV assignments, back that getting to potential Thai Looking The news EA early for the to is Thai sometime at Cable beginning foreign strong allow process losses travel the to country a yield X-week is to us demand government continuing

is to that EA demand effectiveness, team experienced improve but It's engineering to us to a switchover the facilities, at mix Thai the parallel sufficient a to adding manufacturing ready. operation both stronger enabling we're before will Our highly and hedge product impact. into of their the risk have positive justify engineers note get there continues important

certainty customers in operation facility expect a X Our dates ship their that. and provides

from operations see on upward to TV. more Cable pressure in As margins move expect to gross we Thailand, Beijing

to for stay-at-home break our the bottlenecks networks demands and individual their TV Broadband created demand drove unit. performance by invest Turning areas, Cable to bandwidth continue entertainment. strong in to MSOs business in work-at-home

spending the know 'XX strong a June well entirety year don't plans TV January, had we until in into their calendar quarter. MSOs’ Cable book EMCORE's products the order While

duration ultimate confident the the upgrade move of to of while we're cautious we'll cycle, remain orders manufacturing cost we our complete Although variable strong. are that

remained which side, On the needs. architectural continue imminent as in continued our rely shipments Remote proven at to are the weapons TV are our well as are Any platforms products DAA as the smart where to for In on with first made QMEMs product were QMEMs and schedules Optic we Optoelectronic no Shelf Defense did on across about work that by such right. important COVID productivity Fiber the JDAM continues for MSOs some orders key products in The Production built Demand up Remote in PHY completion there proven out upgrades meantime, steady, strong, portfolio. are PHY linear EMCORE was similarly which X%, qualification, Cable delays for is Gyro bomb to although migration as new major Opto's their development on products In margins and our see product remained band on was a applications. new changes up networks testing or team keeps to while market slowdowns. the driven FAA and military next development the the demand Tower backbone. for I commercial technology breakthroughs, manufacturing fraction within month X further expect products meet QMEMs earlier pushing gaining and across products, the the year. revenue. optics We're the wave traction coming optics of a a mix a -- their making significant been and products bit, do the millimeter drove Defense Q weaker in -- new which contract our and several has Aerospace Defense, Defense important linear especially quarter milestones our and down pre-production overall help one Opto but will good. month to project led revenue performance margins of the Control V and staying excited have for so. a on described we reached, for get

yields milestone, significantly announced evaluated the weeks which and the our Tier it excitement and new The is X as few engineering growing we assembly teams prime by now five EN-XXX a improved EM-XXX manufacturing our have reaching is process availability Additionally, over contractors. general IMU, resulting ago. for being

in you remains in our COVID-driven new testing our confidence products slowdowns strong and would despite the validation. expect, As

guidance the fiscal first fourth the to fiscal we're QMEMs to sorry, and quarter, product expecting I'm -- on performance quarter, a Moving in strong strong we're Optoelectronic our see lines. to Cable expecting TV, see Defense from performance

over With various will this the to into to However, that see range customs $XX consideration, authorities, past. be the about annual we back that, revenue of to we and Taking we call over delayed with in currently turn the which million. have quarters expect shipments in I million Tom. be continue to $XX cautious slowdowns

Tom Minichiello

and Aerospace this is driven in in up XXXX. components quarter, when their up compared Thank X% to quarter Optoelectronics. robust million, in when you, our since revenue networks December as to revenue continued driven XX% Cable segments. $XX.X demand the This million preliminary basis, $XX.X meet compared annualized revenue compared by the fiscal consolidated results before, $XX consolidated $XX.X $XX.X increasing the XX% third by XXXX was the increase largest million, with Jeff. million million increase for to quarter expand a the quarterly fiscal to the revenue XXXX was for to and was and in fourth or annual an revenue Defense $XX a transmitters with Consistent October, a XX% revenue was increased prior Defense Broadband and both in fiscal quarter, is to announced million. for Broadband XXXX EMCORE $XX.X TV when demands. our for and bandwidth when fiscal the for million increases quarter On for $XXX.X million compared A&D $X.X in million revenue MSOs QMEMs

gross to for driven the margin. quarter. increase was to higher the higher quarter to margin credits overhead A&D's in and Cable and TV Broadband to XQ costs revenues, fiscal due gross The A&D's favorable less X% in gross Consolidated change gross change product was in when prior were mix. a in a non-recurring margin margin to XX% sequential a margin quarter, offset of in XX% gross a Broadband, compared margin product before. XX% on XQ production compared up gross last over to by Moving in XQ the quarter favorable XQ, by performance to mix, absorption XX% Contributing grew XX% non-GAAP partly from XX% while a

two consolidated gross to margin For expanded the XXXX, XX% for compared to fiscal significantly XX% year non-GAAP we previous fiscal years. our

reductions, revenue a management. yields the cost While increase was also was driven by production improved and full higher XX% better factor, inventory the

was R&D XX% in revenue all management the and of on Turning XQ sequential prior OpEx to The compared to SG&A expense $X.X XX% activities. SG&A The largely expenses attributable to to as million lower a OpEx revenue of was in and quarter. ongoing Non-GAAP result flat was improved operating million expenses. reduced a basis. quarter $XX.X of

During million XX% as by revenue compared fiscal when improving XX% XXXX, the to or XQ our percent of from OpEx $X.X fiscal we in quarterly lowered our to OpEx XXXX, million $XX.X while of XX%. non-GAAP a

share XQ, and operating generated and non-GAAP XQ. bottom-line. $X.XX or basis and also last X%. of in we quarter XX% share loss a million Not net a and or per the XQ on was basis $X a a EPS it share a also $X.X million before. $XXX,XXX XX% share margin of operating $X.XX result Moving improved In the $X.XX swing the back XQ. $XXX,XXX Fourth on to quarter. from was our non-GAAP quarter of compared quarter, $XXX,XXX first to per loss positive adds was X% $X.X in which compared income just an million significantly and Adjusted of first and per per GAAP a XXXX compared to net $X.XX this or to a in depreciation, million was to $X.X EBITDA, $X.X profit Net income net EPS million and since fiscal only

$XXX,XXX cash, to balance the The to sheet. activities, $XX.X are had we and million September $X.X of compared now questions. payable XXth. less of With result of at the generated Turning June at was that, during loan from We XXth CapEx calls for cash your million operations the up of million. in net the cash quarter $XXX,XXX in $X.X financing million $XX opening from a

Operator

Instructions]. [Operator

Jaeson Our Street. comes first Lake question from with Schmidt

Jaeson Schmidt

chain some of challenges. Jeff, remarks, kind supply mentioned you in your prepared continued

do your you what on Just sort the quarter? that impact of is quantify relatedly, December in revenue impact could the on I September curious And quarter? had if what guess, that think of sort you having

Jeff Rittichier

completely in had previous XQ. virtually Well, prepared with what was, beaten my a comments, we that few had quarters, said supply chain in in I back challenges we've

and shortages component Phoenix things in of operations And right? because in I'm in in Malaysia, -- are we had it production are and get Taiwan so custom So little breakouts was components supply -- and a with we of with of Taiwan. well But We've just these in sorry, no short trouble suppliers over itself components linear resolved that needed. packaging total were getting a nothing pretty COVID problems, past. those the subcomponent had in couldn't we availability couple few things

So in terms a we've established problems. of rhythm with I -- think there's dealing the

got mean, we've back right? think good where the not a at we going I can component in situation us I a on chain. going something that changes, And concerns all are forward, handle everywhere. supply see the pretty fluid unless to it's it's hold

Jaeson Schmidt

obviously, I helpful. that's And cable No, mean, remains demand business the in Okay. robust.

Or this actually tide? if as well? you do position, curious is rising share more taking guys from Just of a you're you your think if think

Jeff Rittichier

get have call, the a taken we share. is round without more would it's the it, and that EMLs, trying Well, the in There can probably more make. as to linear people I majority MSOs rising up, of tide, our world which only we're are some demanding certainly, competitors

EMLs get going a And Cable our of that. business now our largest we're to part course, the of from business. are Of TV benefit linear

Jaeson Schmidt

continue assume from on, you fair just then the jump margin higher? uplift gross And is trend would I I should your queue. gross September mean, and on for back Okay. see as the new last comments in me, to one continues, based facility to margin. mean, transition the I'll an to it that in

Jeff Rittichier

You XQ? mean into

Jaeson Schmidt

Correct.

Jeff Rittichier

product not available Thailand. in it's similar, always of movement I'd say issues that's scalpel but mix be are we'd cut have going wholesale sorts change that similar, similar. that in finally, the there be I a numbers to There's With right? built to expect QX to being similar things are quarter-to-quarter, guidance results. don't of going range but a the

it So becomes itself. Bangkok, that manufacturing that's happens really which facility effect, for when as really the primary manifests

laser it's And March there be will the all in transmitters early the over in modules so then some and virtually -- point quarter. in June quarter

Operator

question comes with Kang Dave next Our Riley. from B.

Dave Kang

going tell my the Can about all, first OpEx. on is question OpEx forward? should how think of we us First you

Operator

Please your I conference. We do apologize, reconnect holding, operator. hold This Dave. for have back our in while Please we is continue Dave. speakers the you Thank do conference with question. speakers. with our

Dave Kang

question should was about But guess, there to on think engineers OpEx much travel, how disruption. is going start How I OpEx a first my the will we forward? OpEx. as increase

Tom Minichiello

Dave, Hey, this is Tom.

would to quarterly So a million we're pretty much run $X.X in a -- of million on in non-GAAP say, $XX I OpEx. rate

and continue So reasons usually it look reasons our than calendar costs way. a it past XQ year. the I fiscal history, the variety quarters that other think if The quarter, you you payroll trend fourth to look way there's it, does at is, for lower for and around cycle at of

range basis on going forward. under million million $XX $X.X that But to be of run we'll a XQ. think we So $XX in we're million kind in rate

Jeff Rittichier

not travel, Yes. as I'd as far costs EA the with. concern And something it's yourself with involved Dave,

Dave Kang

Got it. margin. back gross just then to And going

you margin. So upward complete, there could transition be is pressure gross said on once Broadband

it than So could once transition XX% you're higher the is saying complete? be

Jeff Rittichier

little over could not Yes, danger have absorption, on the be in The mix pressure make you But or don't got is we'll to that yes, a and it you transition just statement careful final know is that. there's be making whether that it. going still fundamentally, what to when be. we the upward so with

Tom Minichiello

assets been for I sheet. held the because account this we benefit in put in add balance of would now have on sale some EA that the Dave, have a

in quarter, the get able model be We a fourth now, go when largely regardless So depreciation in full key we there call the China, is, there's especially still have fiscal fiscal in-house expense. were 'XX, will into and we of deep internally, And the a is operation. variable model. EA in away. those the top-line we'll EA higher-margin we're we we hold -- where or that fixed into still other an costs variable to Right have still no force in

Dave Kang

Defense. gross went XX% Aerospace on Got and A&D driven. margin it. it saw from like to XX%, And mix you sounds then

gross margin to forward controls A&D have is mix basically you on improve driven? any going the gross So do margin? Or

Jeff Rittichier

We do.

issue mix that little around the there's in of but a gets pretty So U.S. and up just in bit way also the spread a make facilities, numbers FOG impact. decent-sized absorption the getting will

couple to that And the of get these will testing so to qualification flight improve we're and on working a start really move which needle, margins. also will hard programs through

Dave Kang

out quarter projects about two an you during, quarters. aerospace us My it. commercial actually, by being one Got you give that? talked call, update earnings pushed on question fiscal third to Can possibly is last

Jeff Rittichier

think Yes. I changed. much has don't

One that settle up was products, we'll Aerospace line, quarter. of commercial of push start one-time those we what is of shipments thing. sort Collins agreement outs an the that's March in things back old in of aerospace of expect showed in with did of to and negotiated some was coming problems that GAAP the R&D that note the set a Part

So it's to any forward. worse, getting just continuing Dave, it it's like and doesn't move look it

Operator

Our next Savageaux from Northland question Capital. comes with Tim

Tim Savageaux

first guess about optics quarter, question last cable And focused commented is order into March visibility you the had quarter. my on demand. extending I

us visibility the that deployments the if more -- June. and way, is moved don't I sort is what's I Are question into backlog? order appear capacity you've that into from on guess you And comment my give you March wonder 'XX? driving of can timing quarters? in some overall Or of this stretching constrained Now June to cable the stretching that? color to you be visibility Where building about any

Jeff Rittichier

CCAP Bangkok is, we're the We're no breaking Beijing. it's managing the always moved would It's than later. loan It's that constraints into say But capacity them work have like think aware There's driving and with sure current with material use purely rather production I both would additional bar we looking into networks. just virtualized operator yields. on principal do high on And is top of, build them. this have running schedules, continuing split side we products to driven. at that It's it no customers these the just a high the spending. things of fancy making sooner pushing quarter meaning step from over can shortages. June. The the bottlenecks. March quality and And Sure. through we've the to that we're across some about operations, again, I and cable not

factor, complicating is I other pretty rigorous customers processes The change product talk didn't that very much, really about notices. for have approving

Bangkok time that and to long off again, it an this is with friction those in findings example all audit of where our I put And had in capacity any so major general say set Bangkok. And it again, and to which need completely substance, we comments to with in flexibility of virtual customer particular through took about showing for customers, get there where we're an a Originally PCNs with want and for audit particular business. expecting completed we one that went the was just was our it -- of it my it. from And a last three week. involved audit, just improve will being the whole to is product. walking are a a signed get processes few cameras we're very [friction-light] to documentation. going got around expecting it And line it through. literally team scheduled people We're the the up and that

Tim, of the the lot of sort at it's into the EMLs So breaking in still a out of complex going heart, linear bottlenecks but a its case market. it's thing, about a EMSs,

Tim Savageaux

you kind to I I suppose, the caution? -- I in support Got it. of increasing this you're wanted do or accelerated revenue to do that timing reasonable bit further mean healthy I activity general. of to sustainable it's context, commentary could express, a seeing. I level, at activity, you Or order did caution visibility? if that follow-up. -- guess, upgrade mean that wonder of of despite that some like, or hey, feel substance kind of sustainability has that Or this have you upgrade think forever, And cable into that's in you to the optics around go I elevated is any But not real outside length the I and sustainability which,

Jeff Rittichier

Yes.

very run plugged well the So see into up of with to inventory in anywhere. building just It's very we're We staying channel. cable. don't very, backlog this unusual level

quickly And any a suggest to just by so major a if things perhaps bit we was that's what's customer XXXX But over evidence of you'll going XXXX, a has was paranoia how is remember, that that from little that us have now. part driven to cautious. just seeing order. And don't turned on

from major we is, had year thing the early The informal every to other a which we so always updates our to spend in conversations those a OEMs. planned what guys, MSOs point conversations haven't note is, that's have. get we do January and normal their picture with our And good our CATV with have about outside of than other

with So it actually just TV heavy it. I wouldn't guy very from is. of the We're anything my been taken in read comments lessons volatility Cable of has very, the happy try into that's as I situation as to read -- caution describe words would -- heart. to a just

Tim Savageaux

that That running perspective are to in makes any there of that this to backlog metrics can level? used I where kind relative with being you sense. are mentioned, give mean, level maybe now backlog normal as you describe operating your from would you us of cable, not

Jeff Rittichier

it at you going would what lost essentially, over And running if running worldwide, $X Yes. for whole the about U.S. a was EMCORE was $XX that million say in in cable, quarter. certainly the has million we're effort XXXX RF was $XX of Of that I glass. peak about into think million, scheme maybe --

total back was more selling links, if XX look selling then it -- off we So top were months, we million. lot And the that year, okay, number $XX a transmitters. say, were you take roughly than a lasers you you for the of we were at and at take a running

would were enabling somewhere and XX% links spitballing bit, of number or we're now. higher I probably that out the -- I'm we than So that running what say, XX% little a going between was to were at this

looking it; it, a of still Tim? XXXX. stop because that stop this just in it is number going we're were lower bit what Does build that at little we build comfort out stop it, a So than gives links it, make substantially sense, the that scenario build us of it, links are is not the enabling actual

Tim Savageaux

does. And It I'll pass it on.

Operator

Thank you. closing That concludes today's turn back over for Q&A. I the remarks. will call now to Jeff

Jeff Rittichier

your results. Thank to And like set and thank of and certainly for Goodbye. I'd in Please such thank entire the you all stay team you. for safe, you a of putting great again. interest EMCORE EMCORE together

Operator

Thank and concludes you. gentlemen, teleconference. today's Ladies this

You may disconnect. now

EMCORE (EMKR) 1 Dec 202020 Q4 Earnings call transcript