EMKR - Earnings call transcript Q1 2022

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Operator

Good day and welcome to the EMCORE First Quarter 2022 Earnings Call. Today's conference is being recorded and at this time I would like to turn the call over to Mr. Tom Minichiello, Chief Financial Officer, please go ahead, sir.

Tom Minichiello

Thank you. And good afternoon, everyone. conference discuss our First Fiscal to Results. Quarter welcome call EMCORE's to XXXX And we afternoon issued our release news The this website, is EMCORE.com. on posted Executive the we'll the On will update include of highlights, you call, remind Jeff financial XXXX. EMCORE's taking then would that and the Exchange this of results questions, our and may we Rittichier, I like will begin Section by of herein discussion meaning Chief the to the with you Act on our conclude and business President forward-looking Officer, we XXXX within begin, provided statements of of Section Securities XXA information XXE of Act before the our expectations based These forward-looking about largely statements and current are business. trends future on affecting projections events and particular, future plans, about statements Such business results, changes trends in operate. forward-looking business strategies, the in include we about and which and the and prospects, in statements markets projections relate be by are and future forward-looking forward-looking levels or in to industry of actual these events that results, and risks from activity, that other to expressed cautions subject statements. and those may uncertainties, both cause to or business, of statements or Management different implied the unknown future our achievements known and materially business, performance, or performance financial economic, any available Factors rely We which SEC's on in business the the sections to also the caution are uncertainties Risk the sec.gov, XX-K. statements on these these at annual included to you and filings the statements consider report company's associated not entitled and on website Form the with including risks in company's located and in conform applicable or such update as to obligation results forward-looking regulation. our statements changes law or expectations, actual to by except no to statements required to assumes company The any

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

Jeff Rittichier

and actually, good afternoon Tom, morning. good you Thank Well everyone.

I million XX.X have to safe, up EMCORE it doing my coming supply adequate generally in unpredictable in remained across definitely during the increases The continued challenges from was to been so quarter it's loss First QX QX logistics perform unpredictable of all, for quarter, QX be other we're we offer in here. test enough costs. availability chain with X% revenue prices clarity material. sort from apology of but in of could the serious, million at cough financially, tests not million. up us we EBITDA for Semiconductor that like I EMCORE any earnings COVID and chain despite first would supply it non-GAAP quick our well margin, run were XX. dozen shortages gross bringing down XX% down and of and Semiconductor not about price anything half pushouts affected headwinds to saw same know causing apologize was was X.X X.X board. adjusted component increased but and nevertheless,

the hedge supply to increase moving to chain catalyst going material, lumpy stock expect temporarily levels. move this predictability perfect given the to short-term, see persist drive We a for these a are see flow don't isn't And safety we forward. situation. problems But and the into

was and and problems attention The the China, semiconductor current built we're in of Thailand paying Cable to shutdown the producing On completed point transmitters December in inventories TV few expect transmitter would quarter. quarter. to I we're the in out that Cable TV even China longer side, though no close final in transfer the

pointed downward. drop As CATV levels we a previously inventory made already have out,

concluded module laser Year. New starts were before Chinese in China New

focused and from engineering. material buying and we'll flow we will well. all much two on laser and as the will smaller EMS From to remain price. complete, to CATV that our the planned, group Thailand move As Chinese the point, will this With will transition the CATV manufacturing sell through inventory. so. support, And production line remaining of personnel assets -- CBA fixed module supplier within tools be And manufacturing weeks then a or production of product

to continued individual performance TV in Broadband QX. business to drive Turning areas. the in Cable unit

contracts their business two bringing chip funding, received the NRE and five Beyond more total to contracts. with Broadband Cable own TV, development the such

business additional and to developments expand have continue business. expect to underway We this

the last products We're fab QMEMS of supply to result millions stated revenue will in and primarily in everything a and possibly chip by with through bottlenecks couldn't get were EMS CATV‘s business help expected with gross wanted the down that bit equipment over ’XX. Fiscal again, and utilization primarily XXXX. back-end QMEMS provider continued near consistent These to to EMCORE we up QX these we nature, chain quarter development QX but ease declined an new FOG Optoelectronics up are next programs XX% in Defence improve business. to. in the are delays will and we second cyclical the mixed because or of just tens about to quarter-over-quarter did test drive two. due was business. start holidays. are to our expecting Yields quarter, for testing due the the shipping with loaded FY new first to and of contribute And margins Broadband despite they in expected Aerospace important Defence As strong issue

of a hard for and our side bit customers COVID made and plans. difficult and keep hit Defence, derailing qualification development it business to testing the fast, new Aerospace outbreaks On Omicron schedule programs. on

negotiations the has domestic with going per units with will ranging of up year. next international Multiple primary XXX one starting undergoing spring. drivers be see XXXX to revenue and volume defense to growth per two within A&D. continued products going applications be fully We in already used expect volumes and And year. for these expect market with situation excess precision guided contractors is by qualification years FDC testing for incremental flight testing Most The normalize programs have international EMCORE several some to also XK forward, early for X million. higher the of munitions. in will it we're Business a -- target the $XX of these with serviceable units ease

momentum year. results growing Taken beginning together, this for future these growth our navigation demonstrate and the products, QMEMS

EMXXXth $XX XX, of-production the unchanged final pre traction of completed years. pod ruggedized fiscal is and total phase, in airborne for originally bedded this over awarded to for which are than doubling products The U.S. FOG approximately is We low I calendar -- its size production for in and XX, expect were to new expected laboratories also by within Our gaining the year newly our level in -production space. intended of complete the abroad, XX, about the program million estimates begin and December, first think the ten more phase program seven we being value are IMU the prime application

-- business development Although COVID temporary. as wrench into time signs in efforts, of already the see we're disappointed a this our we defense threw

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

quarter. for I'll guidance move the fiscal second Now, onto

try in March quarter, customer to to ’XX customer understand clear positioning demand around stated with the especially released into can to the the at in FY inventory its will to before, us, CATV with gather amount one CATV seeing; remind the just notoriously currently Tom. to our call at we've weather TV visibility From that is to being COVID and It's the capital we over the transmitter $XX As channel, the quarter, expect some out to substantial we've channel supply of tied early checks of to to We competitive today. true due winter requiring challenges and worst that MSO. installations. I lasted clear and cyclical, Cable end everyone boom driven this the extensive quarter would was up is probably what I with years, is by Nevertheless, of budgets $XX inventory all by March chain determine amount two of and of us revenue channel. turn interfering With the in in inventory between this range the Taking expect a in correction. now March back be year. million. nearly an of we that for calendar that, the consideration we're the conducted should

Tom Minichiello

Jeff. you, Thank

the Broadband business another million Consolidated XX.X may news we As in segment, and of seen revenue which this Broadband slightly may total compared revenue. quarter afternoon, XX% issued and when fourth quarter, have X.X quarter have Broadband again XX.X at of we from strong from release this increased level million performed came the that XXXX. TV Aerospace you products segment of delivered Cable fiscal revenue XQ. fiscal representing in as a Defence. slightly, was high our to

chain the decreased in case sequentially Optoelectronics $XX.X higher equip line, the in Aerospace disruptions. to in production increase product million products offsetting FOG revenue quarter. as quarter, quarter to A&D driven an was to MEMS with the compared sensing orders higher Quartz to changes Defense the product was in sequential chip-level mix addition, segment shift and products due due Defence a the a gyro. December December change were to lower our access supply our September when these In and quarter, revenue primarily Partially was yields the single primarily the revenue in prior for attributable by

at small absorption. the gross margin mix broadband's to due XQ XX% non-GAAP quarter of and margin. to turn now XX% operating overhead in be XX% Still compared variety fiscal to in basis. strong me of changes the lower Let on cost slightly sequential gross before a Consolidated results. focus basis of quarter a was will rest a the material The was which very on costs,

margin and basis, On trailing While million Concord through in A&D were change the Fiscal lower-than-normal A&D expenses no XX-month a the gross respectively. was XX rip the were our sequential decrease XQ, production to revenue XX% margins this due Operating basis, quarter yields in Broadband gross there by XX% one-time on the primarily the project $XX.X was in decreased the operation. a offset in and revenue. to fees, mark quarter, a at percent due expenses XX% professional to prior was as and This of XX% $XX.X million below was OpEx were up to quarter. G&A in revenue other material higher R&D compared the lower of for a due expenses. well partly coming few items. at services

line, XQ million and fiscal China. XX%. a December of severance revenue. $X.XX XX% Adjusted income Income per the moment, share. a the manufacturing million quarter diluted $X.X EBITDA share, profit operating was charge was Net at was shutdown and again margin $X.X million very million, operating X.X EPS diluted per net for $X.XXX the to strong this bottom an in was planned Moving GAAP with in of Shifting the at associated operations included to the results for million on for costs EPS

$XX at pour September million used Turning less consisted for million CapEx. trailing and to the call million that, the XXst compared XXth, opening now the from $X.X $XX $X.X has generated increase cash $X.X in sheet, a balance questions. your million On for December cash of of And $XX.X had we million with are XX-month million flow, operations. we up basis of cash to operating at quarterly

Operator

Thank you.

Street go Capital [Operator Lake like you'd Schmidt ask Markets. to will Jason And Instructions] we a first If of question, to

Jason Schmidt

questions. Hi, my guys. Thanks for taking

start all, correct? softness if it's expect here to relatedly, like supply And quantify how side, is guidance. demand in related impact supply chain And then the you of on the and in not some that can March? of here wanted to that's and guess I seems do much entirely you Just -- March, with less the of Amy, it first

Jeff Rittichier

could transmitters, over one and about Yes. for The dollars, call of again, couple a demand? million it contribute, geared Yes, largely point you two, is problems three. be that Cable probably chain supply will primary in TV made MSO. The it AMD

Jason Schmidt

book worked order with calendar were And be then previous are some like just there extend to relatively continuing you this going that about that comments ordering Understood. in based sticking actually throughout on Okay. How XX, confident appears near-term? now on. the through obviously, cable issues guidance, double can

Jeff Rittichier

world. that are modules, Well, another which great largest sort MSOs on order forward the book question. the to continuing customer of move one one by used which The laser to of are goes is in

transmitter the out that we you part the were because that there a go So strong feel about the probability year. comparatively. on by over good quarter end calendar out look clear that -- pretty call and side will that's of everything at it When orders the

some on have over. gone of get And change. our look the till over take, that their calculations year, that more terms share terms -- based bubble in lost XXX% Right? there's in transmitter competitors. customer see And Of I confidence inventories deal the course, because to lost gives in not AOI's no it again, have going but a to that anyone and the We've are I margins. in guess we all, seen mean by that shouldn't going, not it's a forecasts. we -- we're it us forecasts ain't where cleared of we've end taken out confident of the movement we're it's deal we've to to to, at

manufacturing for cable. share to more we're at ride aren't our this it's to right? much out. we thing And limited, Our expense, so as where getting fixed take, that hit very is which And there's of that's so options operations about are but nature the us, margins no

Jason Schmidt

then last XX? gross March progress into quarter and No, that's jump question trending enter in then here, think for queue fiscal we guess margin and we Okay. as I and helpful. How And just should about throughout I'll maybe some me the margins. back guarded

Tom Minichiello

caused have making the how can that's been we've were couple indicative progress most top back up, good here, throughout The on that last you? are us improving, quarters, XX% certainly Jeff a way also not like think year. quarter to it's with mix a the business for another that and setback The we to you about take bit of get A&D. line so a to because to had of product going Tom normal Jason, last or different it of margin really take up. we've gross to of at to It's two, yields a little has said, but move start that we

way within to almost the don't with P&L that call should be of mid-XXs. towards let's we And think going it Broadband TV the much stay the Broadband Cable at the making to challenges back we're be XX%, model So this cost next side, quarter see is variable our I but after we'll in and at because the ahead. on quarter. a end The pretty XXX% going strong into,

And the are so there. already -- and transmitters

as last we that to likely that or we've So absorption five enjoyed, margin to we -- debt And good but will very the so fab, don't for to good that the quarters. have a situation that's four Broadband look be not affect margin.

is So more couple overall, below is to repeat XX% again, in likely this not the range. quarter of in that points

Jeff Rittichier

note, thing in helpful. the development which programs, NRE other the does Yeah, programs is that spent to the chip is Jason, past in these with development that get comes

starting and those reason, shipments bring QX of within ability fiscal but components. So in does to QX, and course, help with that's our to our see of

a as X that itself bit depressed little The exiting first certainly seeing of programs, any we're a resolve while. fab the two year the of situation the in terms think absorption, we for

Jason Schmidt

guys Thanks color. lot, appreciate the a

Operator

Group. Hallum of next we'll Sam Craig Peterman And Capital go to

Sam Peterman

for described? seasonality? visibility it to you've this beat a from Should can question. wanted going with I want is to on Hi I guess couple of quarter, dead hard my modeling I throughout know horse the into Or guys, don't model TV. say year. be. Do taking a here, to want just understand the dynamics and you we any how Cable kind try point to a I be first just maybe seasonality March me. be I looks point? should low start have to we to but thanks like inventory it's tough it the at normal

Jeff Rittichier

And problem. is are I that's What to had hard as three to point looking low remainder the say. that. the this to think keep hard make have to quarter. it's staff. a not we're where it it say. if a reason the answer say a think where results or we is, is Tom, right. go and at roughly guidance we March quarter Yeah, It's Whether an a I the of little I would the little determines the don't year, for and

of look about way other it, way think a it, the think I I any think absence good Sam. to to that's in at

Sam Peterman

Fair enough. guys. That's helpful,

to yet. think that one color you you more gross want The kind in you A&D that'd specifically and XX that two teens margins, I test in go unit was get coming quarter a to equipment just would phenomenon visibility the thought coming the not last so, I want -- that to little thought margin. Second, help be I gross or quarter I some have automated think Do the on mix? was and back of I know to a and equivalent,

Jeff Rittichier

Yes.

Sam Peterman

kind just little be A&D a through walk you the more get specifically, if great. gross -- bit resolving of and that'd margin,

Jeff Rittichier

Yes.

gross folks ASP component the Quartz margins. case, terms think the could generally anything, about lot gross So not But our driving when declines. in of think scrap in about major MEMS they absorption in a than think that's causing see of us of issues. driving some costs but we They bit about margin, overhead the more that that's affect It a factor. it's

system. the The three that had we some good months that is take it in quarter. news products largely some of way issues. We get from point The is all December the the beaten news So the Okay? back to yield October. bad in did through of the

were again, And to this through. screws hydrostatic down stuff, don't go of environment or Port so and Concord, to And really is issue table COVID But expected upgrades the been provide which safety of Beach next within really almost be in end are building nobody just the friction of hurts we for vibration setup, Alhambra things in point installed, Those beginning this capacity. the them to has friction with will. expensive the is that be everybody there's not two then induced this month, these all to expect project. they a unloaded. the quite hasn't at which a vibration month. where slowing the additional shaker up. and get that sat now next will these the capacity within week you installed right? the the process, And have permits, Those in bearings necessarily the we in everything didn't of tests tables -- at And could the the ways its you yet when with deal occur Long constant at you tail at very get down commissioned ready

So, back. these beat to in are is the good question, color? your want is you And that unpredictable somewhat specific around news a there's in that me Did being is is, or there issues that Europe. BNK from bad The news some tables nature. way Sam Shaker just no place is provide there over answer it. come more

Sam Peterman

help No, great the I sense That's there. get I investors and that's think just think a helpful. takes really we'll of color puts

I And for gross want looking margins this quarter. So at ask thanks that. then, to a Broadband just little did bit, on

mid-XXs, still little the the last versus that margin? down and it's to that around given? been XXX a And high is and transmitter. I'm quarter of you're Just to it volumes the low if shift a still it's that which seeing very, of guess mix kind came gross we modules Broadband and whole of on very What these hang lower say basis more expect quarters a both in for last couple more of but to bit Broadband Let's product effect points the I mix is the outlook. maybe or optimistic almost as the have maybe of segment little than kind very profitable should progress a kind does curious

Tom Minichiello

similar Similar to his Tom. to answered I just is question. Jason on this what Sam,

Cable products. know, our lot our been you TV As a talking outsourcing about we've for

this we're of at being end by in XXX% a So outsourcing quarter, transmitters already the the of are the middle there.

Cable other So the we've had -- going plus a within that it call And have clip lately Broadband around that what or minus, will TV fab, Jason, is mix. healthy telling some XX% remain good even that given year. But the that been that. the which it the the margin than like means last, lot very is mixes at in was it had gross over absorbing call the we've wafer a the higher over I segment that's thing in absorbing that last something the and is cases

than the the and that so And likely June changes quarter TV fiscal it Cable of second to and the to will at quarter, quarter, margins gross -- potentially March cause Broadband second lower the if what situation, it for the are. third margin change calendar least be

you're see mix. lower But something than more dependent it where likely on much Always How lower depend on. So on been. will will dependent be we've absorption. fab to

Jeff Rittichier

historical side of against So issue you but was up, it assembly problem is just on because utilization. operating -- is same fab, margins important. fixed this again, it at On owned call so amount great it always the the assets you the have The let's structural okay? asset of our way leverage Cable point the that and inventory, large EMCORE we you right? to a it's the solved, TV depend own and wafer was that on amplify with now on all Because Well that issue, have worked way the down. the on

bring custom, for to first those of high-margin quarter. expected those the far chips And with the years into working are ship two from model to have are very September we fab. important And a numbers actually, ship June -- and customers past two of so group in commodity of been the two expected our to

make TV have you bubble up, great pick Sam? or two, is. is fab those may It given would sense, what been in the as So have not away. the Does even it, another also us the that would've but Cable noticed absorption it goes it if quarter

Sam Peterman

that different contract same you guess I I and are you I'll you close those chip this sense. customers chip clarifying customers on me, from contracts? quarter the to behind it three and quick from Yes. is, close the last more ask sounds to That engagements, three expected or think last guys. my one had here Thanks are today quarter. that mentioned, one initial for those one makes additional the question two like those the

Jeff Rittichier

customers different are Those

Sam Peterman

the know space. Datacom I also same thanks Telecom those guys. in All right,

Jeff Rittichier

welcome. You're

Operator

press as telephone reminder, you may keypad. one star on And a your

If question Tim Markets. Capital this we'll have of next you do Savageaux time, go a at to Northland

Tim Savageaux

afternoon. Good Hi.

Jeff Rittichier

Hey Tim.

Tim Savageaux

to little here. a Hey, starting later good -- bit

news better early the guess Although I in morning, so.

Jeff Rittichier

key Yeah. we just and it. blew Maybe the was that

Tim Savageaux

on to there. want discussion up last follow that I So

aggregate And so as wonder these one if guys that are amount more two of the this a I hole look? it. NRE be does $XX rate And that five do now you to you it with you like got a could you've the that telecom, short-term. you're or for run cable can each, of want what, And associated both they specific estimate you've sounds that how however extent guys, on million or new in-house here the basis to got

even begin two such fill when different they have noticed timing? that might to contracts, whole? could are a initial Is magnitude they ramp portion As not it suggest substantial said given of these what to of you you you that that meant

Jeff Rittichier

it's point But No. important to make.

highly would toward gets product the the wafer into rolled Broadband. overhead cheap So for absorption which be right, up selective fab,

up. we far production, my roll to to know contracts, I we've and value know chip point margin. as you'll these will Broadband see products I as the are tend much of push start total And was where how the So spent. out hit the as it that is what don't but it

of that a design completed. It's front efforts pretty far dollars said of a of right. be the quarter, much are hundreds going a lots be that of I running mostly probably estimating would --it as have me. as if and thousands we pay run But for So few to rate was $XXX in duration, wafers to the thousand, through don't

Tim Savageaux

Great.

have absorption dynamic? were fabs you under you not I saying might so And guess the you -- noticed

Jeff Rittichier

was what that I meant. Yes,

Tim Savageaux

the With timing. difference in

Jeff Rittichier

Yes.

So when contracts or don't talk two. think that revenue those for they year the kind a size of about of generate you Tim, I

Tim Savageaux

it. Got

Jeff Rittichier

in well. as others come Then drop in

Tim Savageaux

Right.

those you initial So got and two then following. your

Jeff Rittichier

Yes.

Tim Savageaux

right. All

TV look quarter's thinking general where either some bottoms. about the to don't in if there's built comment response any Broadband you I at a to when defense or was as of And or these -- cable about cable early you talking chip mean or imply another the realize it's to the outlook, shipments? some But of uncertainty are that question. company when that outlook and as improving, the weakness So offsets Cable meant you a for in and or that this I kind to in there to from year, of know and flattish balance aerospace in particular? relative guide release were

Tom Minichiello

in with Tom more quarter balance I total Broadband couple current and helped / it's the flat a Broadband the But the of the two, a Aerospace here think of end on We're a more challenging the calendar and Tim, that next year. call for side back can between guidance. until overall. kicking TV of calendar relatively or and more to being Cable to The of lot. quarters, towards next chip it hear business a of Defence the few think face obviously the more it as little going bit quarters near-term half the year

Jeff Rittichier

stuff Tim, of all going So we're a on. of there is not some could leverage over good AMD really it, lot but there's counting at on

Tim Savageaux

Got be we've so would you've inventory been right and like discern you'd an some does customer the inventory? to in it. cable, that to this last ramping, and or that lost deals. any you share way this mentioned correction I assume question any the or I think has at your on feel And be deals, didn't might time, looking onset next-generation appear And can between quite for guess of you share which some be some I some waiting technology whether the lost of but

Jeff Rittichier

coming. I knew it was

Tim Savageaux

waiting been mean, I five-years. Well, really it's

Tom Minichiello

sorry. I'm

Let's fallback

Tim Savageaux

there cured cost have your good. Seemed which too, is to

and back transition current be what that this it's little might think or coming not into So down a dive business, deeper you do you a could or technology, we in maybe competitive dynamic do get technology sense dynamics a part there? of

Tom Minichiello

that MSO decisions customers have made with. what’s from ship stock. to are about technology they're degree There going – some who's called To immediately upon availability based

notice. has to have to customers double going obviously, And a major inventory of slot. premium available root this is or is So on moment's problem. the plenty both of of ship primary ordering what win looks the But a our like a win, to one to put that only at us

point, I say credibility gaining it Comcast. PHY. anything that is about else. some with has wouldn't do this traction sure Not to with at so Remote everybody certainly So of PHY and roll-out Remote

so to architectural the market we And are Because are be. way, homogeneous sure I'm not decisions the at made looking in and these us very being to MSOs a gets by different. different want whole where

all for a we've of years, view of our optics. heck profit business, a is with of seven by taken of lot been So market of this able and of this, linear I've the out said to I this believe out take

past it's linear the Maybe optics I'm be not. always this been Could [Indiscernible]. good driven world? has Does go point, mean any at a pretty For is course with the sure not point? going beginning bet. this I years turning to a of But be than further that a seven that Of one that MSO?

Tim Savageaux

That's great appreciate Thanks. caller. I really it.

Operator

the I comments. for Jeffrey back like in over turn and closing further no With the any queue. additional call would to now churn questions to or

Jeff Rittichier

Thank know me with safe call. it's hard evening. wish we've and Again, efforts. work you a my enough want to of and Whatever of lot interest good all got, And apologies stay all to a great Team got of I and way it's Please COVID in the quarter nothing bearing dealing some in I've you and bye. past hacking issues, tests recognize put their but EMCORE. serious, for this certainly your by annoying. my through the for with

Operator

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

You now may disconnect.

EMCORE (EMKR) 10 Feb 222022 Q1 Earnings call transcript