EMKR - Earnings call transcript Q3 2021

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Operator

Good day and welcome to the EMCORE Third Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tom Minichiello. Please go ahead, sir.

Tom Minichiello

Thank you. welcome third 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 update our financial then and the results on taking by conclude questions. you will for quarter, I we'll

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

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

Now I'll over call Jeff. the to turn

Jeff Rittichier

over fiscal EMCORE's even to an faster, good $X.XX $XX.X coming you, morning, per in diluted and third everyone. Thank revenue Tom, showing $X.XX Non-GAAP share. XX% from million. at QX, grew XX% quarter profitability grew increase

as during earnings, leverage shortages. operating strong this and the COVID of materialized challenges We Semiconductor and demonstrating against the push-outs expected. performance and of the flow-through profitability of revenue. producing EMCORE's line top consecutive the operating profit XX% $X.X million a produce control strong of non-GAAP expense This in excellent quarter to growth Our disciplined P&L, growing or continued and in surprised our availability strong business. orders represents fourth of backdrop achieved semiconductor tightened quarter

semiconductor Inventory supply increased of shape for expect inventory chain. we we current that in products bit quarter-over-quarter. the ongoing to in quarter, redesign continue to we're in While levels accommodate problems terms the believe a good to certain

from However, to Beijing the as we that finish expect completely will this we resolve project itself Thailand. transfer

added to transmitter last out in increase capacity our call, laid Thailand. As we in equipment manufacturing I

shut yields. saw we June Achieving transmitter down the in high during builds increases in us with quarter to October. Thailand result, in starting China enables significant production a this As milestone

COVID-XX and hindrance production a restrictions CATV back Bangkok. and output, in manufacturing our Beijing our for in for lines Bangkok to up getting into are our remained turbulence Thailand running significant have While team outbreaks foreign caused have workers into

continued nonetheless. progress yields, we've on make to production However,

drove our in individual areas. to the well. as up Ships Turning business were Cable unit. strong TV performance slightly broadband

TV Our the order grew shipments. book in record cable pace of despite

that of We to FY always our bright Outside by products, a future a its are 'XX. Broadly, growth new for components potential beyond continue our for about beyond unit garner Overall, contract we encouraged in sensing, we we business. slightly chip signed delays new we Defense of business EMS TV broadband and wide cable route. to the due chip a of will declined source and see sensing interest which demand a Optoelectronics revenue see major sensing for TV, cyclical the cautious Defense could a to be enjoy from to Aerospace strong continued although product continue our highly cable and start-up and provider nature. backlog in LiDAR be a its variety new differentiated customers.

which on Concord. Bay Our and manufacturing find previous notice. supplier left engineering in to short assembly SoCal decided to and QMEMS relocate to due a breakthrough FOG were margins revenue qualify substantially and to Area, up us a in facility slightly improved both their the QMEMS' new supplier

some has in Our high results. pace navigation of and important remained produced has innovation

FOG where defense evaluate platforms and performance Our core range the EN-XXX, activities based MEMS the qualification other businesses Delta said, to normal for Clearly, and a slow and steady against reported progress But and see improvement. validations which see products, on XXx made IMUs. out our SDIXXX the results vibration-intensive operations return of product caution XX evidence with our increasing their competitive more expand are We've into which to both testing plans we customer Customers improvements released design continue our injected of to products test laboratories variant the environments. of base. fraud will everywhere. in has from that came within to recently #X compelling U.S. the qualify foreign applications of has targeting by the

not yet, woods out in we're qualification continues. and Texas even Florida, of on like progress states the and integration While

the announcements of business. expect about Over several make to navigation growth the next quarters, our important we

Moving on quarter similar into with from see fiscal to quarter the revenue other in third lines. to TV -- overall slightly fourth, for increased and product our fiscal business our the performance we cable second expect guidance

$XX over Tom. biggest be will Our million. tied to notes infection all rates and to of With the caution remain we this Taking consideration, fourth that range for to supply. said, the expect semiconductor to turn back call $XX into revenue COVID-XX quarter of the of I million in currently

Tom Minichiello

in quarter. in $X.X million to an of or million was third Jeff. you, quarter. fiscal Consolidated million when in compared the XX% million, Thank Defense revenue was fiscal and this $XX.X second compared quarter revenue the quarter $XX.X segment $XX.X increase Aerospace the The customer by orders $X and transitioning revenue in a lower Optoelectronics was first demand quarter. Broadband Through the prior overall compared million product attributable to cable is The our three increased of the was revenue manufacturer. an already $XXX.X strong products. segment $XX.X was contract partly when Defense before. new than was for were A&D to our QMEMS product the offset line XXXX, to revenue million, was business million to timing up continued consolidated of prior total This fiscal the for due million FOG driven year. quarters which for to and versus higher the the performance XQ our Broadband quarter of or fiscal by increase last all navigation both $XX.X million, lines of XX% the as revenue $XX.X TV

basis segment quarter, for rest to me to the margin in the now turn a XX%, the resulted strong primarily slightly margin gross XX% was on be again were XX% our will results The XQ The driven XX% of the and its gross A&D XX% for A&D the broadband XX%, than quarter basis. and operating QMEMS margins last before, in on Broadband in quarter. improved margins. better in of which at coming Let growth trailing focus by respectively. gross compared non-GAAP a Segment the of business XQ XX-month

of Operating shift fiscal margin to XQ quarter. the overall gross period XX% million ago. in year-to-date million This the compared $X.X reported was is higher a the XQ in compared XX% quarter $X.X to margin significantly in primarily this year XX% during to quarter. fiscal prior same in ahead On the XX% the revenue, of gross consolidated the were our Given to increased expenses consolidated basis, mix of expense. a due Broadband a prior R&D to

call, quarter excluded sold. noted due in reported last a engineering As contract our cost recorded on that labor fiscal goods that as NRE for of were the expenses level XQ, revenue of some to OpEx higher

due contract quarter, This lower expense. R&D costs those remained in revenue, to

important OpEx compared to for both business segments level project perspective. up in R&D XQ. costs addition, to in our keep It's In material XQ were

the of XXXX, fiscal operating than of the year. same period of three last significantly XX% were During during better the revenue, quarters first expenses XX% revenue

to line. Moving bottom the

strength, a quarter $XX.X the moment, to gross to to and quarter or the million and and are $X.XX EPS reported $X.XX a a As profit sequential million of items the a expiration and was the compared XX% compared grew two like to revenue loan the $XX.X foreign couple million XQ a EBITDA associated for million basis previously million share second results per margin the million with and result included and margin before. One EPS to and I'd $X in the compared we operating operating there growth out. $X.X reserves. of XX%, related million diluted continued June for the million quarter profit $X.X rising and XX% $X.X to and for XX%. to before. due $X.X extinguishment per On grew of revenue quarter GAAP for and totaling to operating share, EBITDA share $X.X per of trailing to Shifting income disclosed million XX%. million. one Net $X.X income nonrecurring was Adjusted on uncertain point diluted gains to Net was XX-month in forgiveness, or Adjusted tax quarter. of $X.X increased PPP in prior million diluted XX% was $X.XX XX% our debt or $X.X was

GAAP income $X.XX per and have of $X.X diluted million to million both share items, these onetime $X.X XQ EPS in Excluding would $X.XX XQ. net and and compared been

Turning less and used to of consisted cash March at XX. of We of $X million flow $XXX,XXX increase $XX.X $X million had CapEx June to activities. the financing balance for million of The cash compared cash million million $X.X for operating $XX.X sheet. XX at

quarter third the operations. of now The from positive consecutive fifth cash marks quarter

questions. with are call opening now we the So that, up for

Operator

take first Jaeson [Operator question Schmidt our Lake with from Instructions] Street. We'll

Jaeson Schmidt

look to business. want just I the cable at TV

last I quarter, order extended Jeff, think, you quarter. through 'XX book the March that mentioned

if out on today. how update there's any curious that Just far extends

Jeff Rittichier

Yes.

to have continues it, bit. call one the at to, a think to of bit backlog the right, message overall, context it slowest way growing, it's the -- all. which But best to you slowed in March rate push because out it describe the is quarter take to a I as the has little the of the is

always placing a But companies it, it's orders trend. call a And of part so you'd we little as -- not of winter at point, the XXXX, believe to see at expect this something let's slower. happen look that's don't for, we're significant

Jaeson Schmidt

Okay. to the right? comments following causing redesigning That's certain helpful. just that your also on some demand supply is on chain pushed up products, to And some be

Jeff Rittichier

boils demand. So no. the really are it call are strongest very, the VGAs down to, latest, far, micro types, Jaeson, very it, is dense that package What in

we're bit shifting a have little better that and are availability. so package And types to bigger

detail issue, not it's it's like of it. a just lot a involved So major with

Jaeson Schmidt

back for one moving into should makes curious going forward. lot That last the Okay. but margin the gross me, queue. manufacturing just jump move, I with a and of think know we how And about parts I'll there's sense.

Jeff Rittichier

Thailand XXX% suggesting wouldn't the here to gross suggesting, are that point, builds margin both right to we're I Thailand. What the with that is expect after we're switch currently Beijing change fiscal in and a year-end, this done occurring plan At -- the is transmitter lot. will

come very Tom's owned so fixed the little lose us because into no We'll part the the work the box and costs major longer down then is some we'll bill cold also of expect end way back until inventory And by builds, its see cash of be the to process. of which and will materials, heart.

Everybody always think got don't is much are wild change I So little any, going be good. card, to at all. stable. a We've mindful see Costs of you're if margins to gross Yields you've you are the opportunity what period buying is against go parts it from to is. purchase got just brokers, price of see with the And it. variance for time. is a when dealing it you're

Tom Minichiello

Yes.

Jaeson. add, to Just

the think once margin. spot I we're in mean, a I -- we're good broadband on gross

the -- be I think full absorption the once will fab. function mix it in mix and of we're then at the outsourcing, largely product a

Operator

We'll take with Cowen. question our next from Paul Silverstein

Paul Silverstein

chain of Jeff make horse, had risk the structure? either just reported for on And sure the it looking supply revenue and to margin impact impact no zero just you Tom, on forward. quarter want virtually the said, both what referring at I'm or you the or dead from beating and I folks,

Jeff Rittichier

got devices, Yes, weeks. that's issues just XX the It's which example, are Paul, true. accommodate one through supply for We've product microprocessor qualification. that's we've on NXP got -- to chain to nearly out pushed change

because manufacturers close. not our telling what around of about the Just associated any us making we are are expected but turbulence are opposed us to they're gross a production dates with We've materialize detail sure to recall, that able cases supplies careful not cause margin hasn't on not we're pretty ship. delivery build in accurate, to that's hand the even line. the much model it lot when as in going terms of And to been affected

of certainly we're it's hasn't yet. but We problems, source a lot okay. hurt it of a us So think

Paul Silverstein

take. in I get comments earnings take. growth. for to fully thinking And hear of Charter would It's from what strength. their terms again, positive with Comcast But sounded off and your to and ongoing to I TV calls, your aware demand saying. of to think your cable heard like expectations it I I'd love -- your albeit on and comments my you're rate ear, the out trust I'd of But slowdown of and they're relatively ongoing respect implication in the particularly the strength,

Jeff Rittichier

Yes.

to that Long short now in of quarters. between cable nature MSOs, the fact it the used and working we're all customers have of is, mean, anything have are the If to terms I And get the We steps incestuous we the you away. of invest business, pull who TV get be are that poles. guys and confident not conversations we're we in growth the -- in that heard. are on MSOs that for folks of going trucks. on The and for them, fiber new that are bandwidth you requirements reasons availability rate-limiting can continuing up focusing things it's the

positive materialize we've is, of comments, fixed right inventory way try for still of to sort for so of short quo that status we going say the back We've the into cable. that continue to for to balance you is now, performance argument, integrate will heard 'XX. So going into And I all we to line or strength us, 'XX, cash conversations thing improve. the is We've through very costs right. see as had that probably sheet, and our nice a environment side the if would financial the are keep continue heard as shed people maybe and the the all on bring

of the there to through from anything counter-arguments Charter. little we I see have I heard so going I've skimmed more And I in read that disagreed have don't them lot carefully, with. through to but only a so Comcast I'm a would what didn't and transcripts

Paul Silverstein

can you on incremental the pipeline? question, I last insight Any One offer all may. A&D if

Jeff Rittichier

Paul, that come didn't sorry, one through. I'm quite

Paul Silverstein

color you can activity in A&D? incremental pipeline Any regarding offer

Jeff Rittichier

one was 'XX. week larger We've now things bizjet see major with of in of group I another this Aerospace, got major couple in revenue to on we're A from that would got the And Collins got with the pieces clobbered of Yes. life going physically a Boeing more I example, point starting team What is Turkey. That see to a this with and see haven't about part we line, that their XX% visits talk very to COVID start England mean, were in that right months. clobbered is in in opportunities. can the We've other to able for points taking the There's bits now, aircraft back. having fiscal those XX come is XX now group expecting quarter, to been Raytheon, to by for make of of working over roughly commercial XXXX. actually see We're the volumes leaving customers business I and first signs product. we're upgrades small And customer. five guys. a make. more got we shipping FOG customers customers to new EN-XXXs. over you're see

we're of blanket are despite seeing, of the that to what starting some products that COVID companies a call wet let's doors thrown a it, by is Paul, aggressive harbinger being So their shipments combination to things of more and open that's of are small good on everything. come engagements that

Operator

Shannon [Operator question like to next Craig-Hallum. take Instructions] with I our Richard would from now

Richard Shannon

Maybe cable topic a follow-up here. the on TV

few great a in you're the and flat quarter. had obviously TV last improvement the several cable here over to guiding You've quarters

thoughts for With you of obviously, the that you think for just mentioned? level into would and so? a next view a your have any sort continuing business Or cable steady kind kind here. Would you other in business while, here TV of trajectory account us a of or as backlog conveyed, about the your you year this Jeff, here taking seasonality

Jeff Rittichier

a us as much the so much it's doors their through opening things again. powerful I Interesting really perspective to But don't level normal got you've of things see overall, got due if expect of you've right. inside is patient I are chance source We'll the that to storm in think installs, seasonality a customers some it process be and cable I think as lot they're it and right? defense moderation. sort the of impact the question, not and of largely -- just steady, see changing, the to profits you Richard, of winter weather hit They're albeit good. cash COVID our giving

you with something in those that schedules of the the their of over bugaboos that integration And these we're tasks, doesn't sort hosting it's the that to folks isn't we quite I working signs integration near opening way terms are facilities, improving. when little of really put issues, looked again things as been seeing that to way engineers of they've at a right. the to phone do is doing they've expected. up of couple things, front software that, visits. having as think some tend sitting And instrumentation cautious down effective nowhere -- But go most now the in some of the

cost back for this, capital yes, down, So with again, she I steady is like talked thirsty. do cutting Getting cash to right, Chinese from and working say Tom. me a the before about we've priority into well cable fixed inventory that cable. in top is it, my as goes inside But and dig the of as dismantling ancient this standpoint, or time proverb, to a structure you're

So long-winded answer to question. a good

Richard Shannon

I'm one of the business. Okay. to on navigation sensor That's here follow-up helpful. on questions prior going the

talked levels trend at few might sources you you where look revenues sales of line here Anything the What you If about here. of you've reasons of us why a FOG? expected flattish give us it's of customers? quarters, breakout that the from or more of from of here, see the sense liberally can sense a in in type breakout roughly Is a here? last it the been QMEMS a give kind these segment? Maybe

Jeff Rittichier

ideas give -- couple so trying a Yes. catalyst. The for you of to concrete

picking aviation it, seeing considerably better Collins. up a and return Collins get One couple that We that business from and of from QMEMS. is of forecasts million we're bucks into now revenue a order are a as rates them look in year of lost commercial

of As down. to a is it you've bad once it's that design major We've accommodate for And again, a it's navigation happens, wants, a a be is is customer 'XX. production, got at to production going into to press orders we good months news taking a of the pod, to that is, the in an the higher on going also one rate -- this program are The that we while full quarter. second There's and level airborne couple get the probably low changes news another half about hard it's little customers the slow be to five that million a some to of move contract. announced takes that's FOG look going take This ago. side, additional production. got in $X to

matters so airborne any works expanded things, Richard. range variety And And to XXXP accuracy out that you've in And To not GPS-denied do just now cetera, that but offers places systems. can guns, off ground point EN-XXX, thing. I get seems prehistoric, be it worry products. the bit a turns targeting you it environments, temperature to it aiming inaccuracy it's shock other one about a got vibration guns, ability application et vibe EN-XXX know to more, a amplify a of in it where bias I just it et compared we've vibration lot. errors in about it It's to so lot but and is in applications, up have to into matters to the and able made you of the over and important handle cetera. wide of the

going when more announcements, to areas. those So expectations it's to from I important we're about talk come have going that some

Richard Shannon

Jeff. is well, That helpful commentary as Okay.

Next question here. here your on business chip is

any you and think signed on you a you give an us didn't up exciting progress little the from space, line there? either other can or contract if to that new see that the we Maybe when elaborate progress a details area signed that fruition bit on. And application even existing more LiDAR might for in I then new here? mentioned come you customer's or customers

Jeff Rittichier

Sure.

payments the who a they're bit hard from it it, of certainly So is of It's but potential and a be providing a a customer. a is multiple color year X-figure a product. in a with got sort big terms contract And it provides which doing to have we deal. NRE little what

in are game, sides work. way both and so happy skin the with agreements got the they've And the

sophistication development resources with So kind and us. that kind to the in X of clearly, engage it's a of with Tier

automobile ago, interesting shrunk was big then, was it since business When the side, LiDAR As working because years. the hard it's far conversation cycle for close for unit a on planning I it's five GM cycle was but our really this goes, XX it's traditional hit the I VP. as guys years. planning than with over having to less And years to many is

so is are seeing lower additionally, hit three now. albeit that uses new with customers us, And from volumes, at from or of we're in but more to in potential what five approaching call And still to maybe the that terms what us nonautomotive activity starting the, we're is it, years seeing interesting sooner. of end 'XX are

a in samples So sort large of numbers at of are XXX going time, samples in out lot a of XX a at time.

So the out I are there cars. announcements are product, for When Richard, think hit that something there, is we'll takeaway the nonautomotive integration just a we shorter there. get are now big that, time to about that say which to path certainly LiDAR the have than uses on starting radar

Richard Shannon

Okay. about hearing just your NAV look to of My question, looking We forward sensor last at kind that. here. business

out terms you're what of in potential have or there business bolt-ons technology-wise potential the Wondering ago. like? add out scale? what technologies and about gain acquisition with to obviously couple added or help You to some Just any thoughts an environment a there here years seeing the an either of looks here internal new

Jeff Rittichier

Sure.

less any handful, on a get if just kind -- heard ranging to guys right, at, in relationship interested $XX a make makes synergies a our those of in a you PNT, When spent of actionable. lot could NAV, interest is we're hard Resilient that starts an hurry. a various There's we made And and about at to revenue. There's EMCORE devoted efforts vertically-integrated know they're integrated said, market But well. are to this. CorpDev of with a million There which maybe are what year we've And So of how some in there business X, have their get of become know, have that I we or those product sizes could a and working attractive market are tops, carving don't as large, little and as seeing X, that of mean. Honeywell, in is acquisitions company Grumman And a they Marc lines million one not differently. a those $XX out for fragmented combination you'll I and I the underneath Cavagnolo, seen looking that parts past on Marc those what Northrop VP really ever I time than run us. and investigating also the umbrella also an be you've way from, sense.

Operator

question-and-answer Speakers, today's over or closing you back time, any for session. additional turn concludes this That will at I to conference the remarks.

Jeff Rittichier

of I'd like our like you. so for outstanding and terrific thank our in Please goodbye. you safe, and finally, to for everyone, And Thank and I'd for shareholders. EMCORE interest your financial in results team tuning early. recognize to a all quarter producing stay

Operator

your This participation. you for concludes today's call. Thank

You disconnect. may now

EMCORE (EMKR) 7 Aug 212021 Q3 Earnings call transcript