EMKR - Earnings call transcript Q3 2022

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Operator

Please stand by. Good day and welcome to the EMCORE Third Quarter 2022 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Tom Minichiello, Chief Financial Officer. Please go ahead sir.

Tom Minichiello

the afternoon, EMCORE's welcome results announced fiscal as acquisition good call our as today. and from the discuss Business to XXXX of you everyone, that to and conference well KVH Thank Industries Navigation we Inertial third quarter and emcore.com. The results, issued fiscal we posted is release afternoon covering acquisition news our on both this XQ the our website with highlights. EMCORE's call, and Chief begin Jeff will business our Rittichier, President the this of On Officer, discussion Executive financial our results, we'll will then on I you taking by and questions. update conclude

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

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

Jeff Rittichier

product the became COVID the parts. aside two up largest of certain QX. expected of Approximately high-performance with fiscal remained and one EMCORE's issues fits that quarter integrating million are Inertial was of in significantly, afternoon, XX%. exit a the availability operating to can't is microcontrollers a bringing the revenue XX% $XX.X steady of problems the as and well outbreak, good to everyone. came was into availability million. quarter was MEMS my in of our COVID-XX cable a the supply Navigation is gross below particularly problems board. million growing combined production with everyone. increased business in and million. headcount These increases. XX% a was with despite XX% from KVH's a for to note, $X.X acquisition going by have problematic Operating well you over the XX% our This came to expenses ship problem frustrating when down our a held comments down loss OEMs Non-GAAP and across revenue, our QX affect I'm margin QMEMS cash Again, in the be of from connectors. former you and aerospace On the experiencing and substantial FPGAs particularly discussing business. Semiconductor Business Tom, are chain constrained you, begin slightly brighter significant negative and Quartz than affected revenue price defense approximately review at before higher particularly production were to of continues navigation bit guidance only more of our production EBITDA by aerospace it the supply the Thank and from third LXHarris third defense because but known about space adjusted Semiconductors med the and quarter team. aside, $XX.X our focus. chain broadband. bottom it range as and non-GAAP semiconductor how sheet on for TV balance the turbulent, costs cable $X.X

in the We September expect calendar those quarter the continue problems year. to end to throughout of and ease improve the slightly

for hybrid train Component in in parts some on continued availability see years, to to many sold to older the television production that into levels We somewhat semiconductors equipment catalyst predictability to This fast lead to door of more efforts closing was coming a as EMCORE's cable coax quarters, expected the to fiber received turbulent. of the Chinese While payment The statement times product from the out out. equipment - a exit came supply cable not redesign major EMS that triggering Earlier, manufacturing to true. leaving is drive don't and TV bears PHY serve operations improve players these we MSOs. stretch announcement the our one two all supplier business host in short-term. is Remote products, I quarter, notice certainly last smaller the the in for becoming the a the of TV and of for of form described seen cable the of one chain obsolescence in largest OEMs TV. OEM their cable

tactical forward. the While demand base the single the set taking dominant this and creates MSOs, permanent cable to concentrate cable quarter, our going won't the TV From the of direction of clearing is a revenue. problems our change alteration appeared that components effort cable dynamics television their OEM new on expense strategy. inventory customers is growth our the perspective, orders from with a damping television lasers other at Increasingly, during market for of market more incongruent a different transmitter customer

TV the in between cable be forecast of expect quarters next to few and We because competitive buys, the inventory time dynamics will last difficult OEMs. of positions optimization

chips test late. that the their ramp up From made as team by television, and of first is September constrained because expected. shipments production in only a equipment here, beyond, quarter capacity year cable Beyond the we will

year fab absorption of still products expecting calendar XXXX. impact late in significant these are first the have We on to half

in expected to of be point, revenue business, XXXX. margin they contributing to Beyond are by Broadband accretive the that millions ultimately tens

note to products quarter, margins I that fab As starts the last the it's expected Broadband fab is these minority, the wafer TV majority in to utilization important out business. pushing ultimately from requirements new stabilizing gross costs drive cable and into pointed of improving

teams new offsetting additional Navigation close the programs to and chip the production our in driven by working QMEMS quarter, currently of the defense and business are the that majority We drop and are and team making. was by the our are Aerospace progress Space production. chip development in excited

QMEMS 'XX. continue grow bounce current revenue back in expecting are quarter the We FY to throughout to and

in expected Bud backlog quarter clearing Although Concord, due constrained. at Lake, came was FOG expectation. the while bounced were in Optoelectronics supply margins margins low shipments back better in overall nicely that performed with than at up under-absorption previously products Alhambra's Defense to

the debt, will million These our of & we now it's now fund facility user. in acquisitions for press & first This must Inertial EMCORE, out secondary three million. we've criteria in are announced acquired time, as primary our started well. investors KVH's is perform be must in we being will we and our previously credit we've their two funded February in on told had that Army one, later. successful that investors Tom end have our and accretive we've Using saw also the board the large We Number on Navigation systems XXXX done XXXX. is progress team In minimizing we $XX that that went We've discuss cash the customers and also are a additional this excellent EMCORE cash three that Space for those latest United and quickly order good release, dilution the all offering fit During made business the today KVH. strategic got with that operating as opportunities in to our as and and build out Navigation met expect them: we an Alliance of high raise that development we a to take shipped new two acquisition. to that EMCORE defenses. important Navigation foreign within three, just interest to acquisition Ukraine for two working our supplied additional team. shareholders. on Space from to it who U.S. launches funds carve-outs to synergies. guidance two, note anxious great first -- we T-A-I-M-U within supported important TAIMU Number and and and up a M&A, from told $XX from It Launch quarter, of units approximately have balance think sheet criteria the or We umbrella. funded acquired quarter early Business

Illinois, of every years. exist positive be in play cost expect will Navigation products to opportunities Park, will in addition Tinley and existing packaging Tinley We located and of KVH's creation Inertial basis and EMCORE's annual ultimately the go to first in the to Park, coils lower synergies that our costs. chips they at operation. produce both revenue technologies Tinley over P&L our operations generate $XX and the in an Park Value anticipated level EBITDA million will with out on the two

the which long is forward. important side, vehicles just the a particular, and strong industrial applications applications. or KVH demand were important very customer the opened time. and going the is in represent of production into go robotics, has for and commercial AMPV, On and should growth Army customer about an run should with vehicle U.S. up the both impressed base to we in multipurpose defense some armored In breadth opportunities

fiscal fourth the Now for quarter. I on will move to guidance

adding be half will of within Park a rebound are and from quarter's worth QMEMS We Tinley expecting quarter. approximately in a shipments revenue the

sales described within continue the will cable to due chips further business that be Broadband, From and this to should a EMCORE. point earlier. grow but forward, Defense dominant at should However, weaken Aerospace the dynamics TV I bit,

the the our in to to company back fiscal we With an $XX has has I a with the over revenue range. Inertial fourth critical million business, bright that, call turn increasingly products. inflection addition expecting chip The will KVH's with are future. Tom. million of reached coupled For data the center EMCORE quarter, Navigation $XX And point

Tom Minichiello

was a was XX% million, A&D $X.X addition Aerospace attributable and acquired compared XX. fiscal XX% Thank to growth $X.X for increase from on The higher of driven rest Broadband. revenue prior quarter and $XX.X to when largely Consolidated from Optoelectronics LXHarris segment sequential slightly, A&D A&D FOG revenue of by quarter. from of XQ revenue. coming Jeff. million products was revenue increased million, was Space revenue up revenue with Defense $XX.X April segment The the the sales you, Navigation Defense of was & the which million, and

was our almost decreasing this which by continued facility. delays COVID shortages However, on $XX.X decrease revenue when million lower as of revenue QMEMS entirely cable outbreak $XXX,XXX. chain sales multiple downward Sales products was slide, Broadband offset Concord well TV of at and by supply a affected our by was TV was fiscal noncable a Broadband a $XX products to million, while million, compared XQ. up as $XX.X

the fixed XX% quarter fiscal the margin Consolidated both to results, operating under turn XX% of focus to will Broadband was and primarily segments. across basis. compared Let the be decrease was on the attributable The non-GAAP now the of of which a to absorption in before. gross me XQ A&D rest overhead

partly due margin offset was As by volume largely A&D where favorable fiscal relates to to it were to specifically which under-absorption, compared XX% Defense yields as insurance compared the side, contribution XQ, before and expenses million the G&A. from was QMEMS gross $XX.X quarter expense improved Space and lower was largely a in XX% fiscal uptick due in Nav an in in the well increased in Operating million to travel to XQ $XX.X as and Optoelectronics. production

transition this to bottom and third-party of of fast Moving in-house to or line, share. GAAP TV fiscal to final gross train. operating equipment the million XQ changes per moment, Nav was Shifting the and share. cost was $XXX,XXX to equipment Space $X.X $X.XX loss was that Adjusted to $X.X acquisition million. $X.XX cable and of net in $X.X loss This cable a million. the gain was with a Note or the $X.X our from margin operations of XQ resulted included on our per fast fiscal our the loss shipment results sale associated revenue in levels EBITDA Net TV the for an million train. negative completing of manufacturer

in million million cash Nav In million and the in of uses to compared Space CapEx $XX.X June million with $X.X the million these we sheet, million $X.X acquisition. used million The XX. offsetting acquisition decrease March proceeds $XX.X included cash all-cash of now cash quarter that, balance our opening was to XX term Turning at during sale. loan down With Partly with for cash a $XX the $X closing drawn hand $X.X credit balance had secured million the Inertial a paid million $XX equipment at of Fire $XX and $X.X the your operating a for facility connection at from and at the the the $X.X of which financed KVH, we Link the revolving Capital, up was million ABL consisted and senior close Navigation of of being from machinery equipment by questions. for million from new business call from with deal with provided credit. are line on

Operator

first question Richard Shannon Instructions] Craig with take [Operator Hallam. our We'll today from

Richard Shannon

Hi taking Tom for Jeff thanks questions and here. my

to Let's see come questions few a mind here.

the TV the here mentioned accurate? touch that cable here. comments much quickly is Jeff on that's this customer - exited assuming you business. Let's your Is bigger I'm

Jeff Rittichier

would business. large, I describe There's, the exactly only Yes, really and large two are those right. Cisco. what as And OEMs CommScope in

Richard Shannon

times we gain steady-state times here. is take a or any you think out you competitive mentioned about past potential the guess as couple think to you the Would can as settle get how share a mean, in as this the dynamics fashion? share way losses a of kind turbulent here us for I you of help those

Jeff Rittichier

afraid Yes than think but a it's is answer. - answer going it's important to a I'm I that take I normally the it's complete like, little longer

their is dynamic a Cisco's only The strange CommScope business had business from DFB roughly AOI bought the anyways. linear only actually pretty there's of So small since competitive Cisco rest with AOI. amount amount with over sort the primary of a CommScope. had XXX% Sumitomo supplier business, from the that buys that with all at And been the at other XX% share in that other and EML Cisco is And was and we supplier they and Sumitomo Charter Communications. same are was cable own

little So things. you unusual that it's to, to but bit color of situation it's I on a give think, start, an important

all. they ultimately Technicolor. they about of been whether of gradually a was And they watching ago, got they to business, development view Scientific fact, cable our taking the continue I the operations Atlanta's set-top the So It in had we of And in years think wonder going years we with down engineers. And matter after only Cisco most to they to bought was of that kept not and box was thing a two or headcount. then point, couple their at rid were was -- just it started it three eliminated that to at time. was

website, all products up some And notices of HFC was products. couple popped time end-of-life all enough, of it the PHY months on and ago, so sure period the those the Remote of ago, a and

the question here. so what from And is happens

Cisco as So as inventory well is on CommScope. sitting

to going move So to that. certainly, efforts be there's

that of going that things between a there's things together put gets kinds serious abruptness are is usually and happened. have And which happen. the of those plan Our when understanding the with sort Cisco about MSOs conversations there on some

quarter So the content will the is I of How exit letter don't black long probably would the be you sort think or straight it does to take out, believe to that happen. that another lead itself to two. going

we're just thing really it's far CommScope between this. in distributor. to how Yes. or thing going buys to deal next there's me say to is hard in in see But pretty a And XX to to the want numbers we inventory in difficulty]. modeled Cisco's million move a like that's quarter, no Tom exactly loss And going that [technical it December in as expect quarter and we've of to and/or And we got crazy two, and low cable, share did the combination to The last to with as cable. correct of of in I jockeying work. so handicap time any

Tom Minichiello

given the million cable. - broadband XX in Yes XX million in under just

Jeff Rittichier

share nature deliveries that of up going XX%, and of of Collins and right? XXXX. of you off that's cable equivalent sort our industry had to question congruent sort business Board XX% -- a with where a the and alternatives. that equalize spring And challenge two we're I to it before forces business, well, huge the diving far decreased And management the clip as did and trying cable Yes with cruise but said, percentages they XX of have eventually, beast, COVID demand, XX%, and only just fell backside with bungee know, things and on nothing that low the that's losses the continue cable a have a into look pop on it this cord. lose, said, of does. of the it's no it its same cliff. - XXXX like to increasingly don't at between business, go been It's caused had that. and Aerospace under see or I five back a side just as our up, really, to like And or tends put XX% quality with screw It you're someone the And cable of back. took it's and working just in we particular, forever, goes we to go years anything how

Richard Shannon

a of some that's quarter lot directly go that into Okay, here. the for I'm helpful of to take detail. going September the and guidance

take I XX half So the mentioned would EMCORE organic million, here if run roughly XX of with XX, endpoint maybe you the for or rate million quarter, like to $X I the business. XX, $X here put

be So much, if cable got has a lower. little you're growing it much like to bit, seems QMEMS TV

in that I had caught think quarter, you correctly. the $X million if I June

$X like about So it talking math or September, that sounds am $X right? literally doing you're I million $X in million million,

Jeff Rittichier

Your impeccable math always, Richard. is as

spend Let's interaction. the

Richard Shannon

probably to. same, that actually It helps but

on of out if then to here, questions It overhead that a two and there like some I'll making an for and isn't try you're thanks line be interesting the I here. KVH know a synergies of to lot asset purchase maybe taken here. about understand don't an but seems Okay necessarily so let's quick get here, which business, on lot

you the So synergies near time? over you discuss maybe and expect in can term

Jeff Rittichier

made and them market in that price closed-loop cost of we a just there's coil we buy lot getting more merchant things costs, other there than numbers price opportunity a make overhead, prepared I supply overhead - they it, and position to point position our can't my they're that in a the at be a isn't or lot by improve versa. comments advanced when corporate for for get that can in control reduce FOG technologies vice XX%. that will They them. of Yes, the But are are at smaller. better think look that so with our you a to wind a you I true QMEMS in because

marketing side. make A engineering, it's in We will we're in hard but judgment of busy bit synergies see sales that development. little certainly being the in to overlap that really and so

in that other can expense can to forklift So to already get let's because do that got a we don't that even lot got bunch maybe out project of call Park, development know-how to of a than into we synergy they've outside material Bud technology took we've was out in a not and some, - and that a numbers, Alhambra of and it, maybe whole Tinley need Lake. figured the we bunch take we advantage

Richard Shannon

ask balance raise two line still that's and can I'm financial going of detailed to me you've acquisitions $XX take come last want to you a questions. here this bit in cash is potentially more the let that the for your and million ask jump your here. I less digestion X continuing? off or Does appetite after, - debt course, and obviously the back But Jeff here your end some made you, of down M&A period see it

Jeff Rittichier

van like But opinion we'd Street's less us M&A? drive TV it space to want We trying pretty cable as a navigation see we we're Heyningen improved about stop talking to since in XXXX. to and reliance Martin narrow to this in. contributing LX to laundry list Wall and always, interested us Does that. XXXX. had that No. Well, Kits make acquire of it's out Again, on working of business on results started things been

throwing and to the there against do figure it's we're up darts going sitting not like to out So we're trying what board next.

very In which Board something deliberate, been I fact, think is appreciates. our we've

Richard Shannon

I will thank the jump that Jeff. Okay line, thanks you off for answer.

Operator

with [Operator Richard Instructions] follow-up a We have from Shannon Craig-Hallum.

Richard Shannon

line off to below the here September a of sales the look at have I jump the we Tom, And right like quarter, here. as I questions couple last guess, All line. well, didn't just quarter

XX% margins it at been in gross looks the here. KVH, for have the like the Looking filings might range

Maybe about math should if help think that to it about maybe So do do how you please? looks math. bit and can you on been total gross on that, able margins that OpEx the Maybe help like the quick have accretive line? you all it's a could little us we us

Tom Minichiello

Yes, sure.

look you were easy If to, get they at obviously - separate for segment reportable a to KVH. it's

see You'll lumpy. the there's a called line business a business, there's in that the more XXs lot majority ranging there's high from total is but FOG margin. also high that products when and TACNAV revenues to the base also business product is low that of revenues of XXs a for it's the little TACNAV quarters where And bit revenue, a is in Navigation more XXs, in high

So it margin the really changes gross the combined of segment.

if average, margin. is, mid-XXs carve-out on OpEx on revenue, annualized out, you plus at looking of So on range. in minus sort in their $XX the you're you million average it mid-XX-ish or And the is gross if --

But better the give year, planning Jeff we EMCORE. get should good We and contributory year that a as were spoke half over on expect it's from you expect business. for about can it, to by synergies, of even that what tick that So to and its sense help a it a next the as call that it quarters business further. continue is part a you

Jeff Rittichier

outside banking in, all synergies we evaluating team by We the quality on to Yes, And mention our case had Board. is a team revenue. side. of evaluating that revenue. here obviously, the the that point figured their we the and in Cowen represented an

represents those on And gravy pretty got on of The conservative things. and side acquisition opposed top revenue we've commitments And obviously, direction, it just upside tends case, we're the the so, working because side in side in more that it as to but base the going weren't synergies be the cost are all so to the controllable. revenue be numbers. cost to was

Richard Shannon

said me chips. One topic into for sense. on new you're I of see. which classified for to ship starting is customer, Jeff, to think production your you the question makes first the more That that great

number the You that of that of the to my of revenues customers you And to talked Maybe by question can continue XXXX. that you that does get millions of kind of about guess, dollars number of have? customers see million I is, sufficient you first tens contracts you part contracts, of kind both and and dollars more. of tens to is or in summarize

we And about think future so how announcements. do

Jeff Rittichier

I and - right. so this Yes got think I

by if a there of believe total I I'm off a and projects. five here forgive So are customer me there, eight or but

Does large So multiple -- this bring us these there does. But areas. it with players are to to with millions? in projects. to starting in additional work Yes, that additional continuing tens customers we there get to volume of are are

the submount. level so certain of They oftentimes kind core peak set a and technologies a think requires to customers engineering a power a all mounting efficiency. significant is And want amount way Richard, want to fit on of And slope tweaks, it, it got particular process that got. a There's expertise. of scheme we've certain of they've and

the significant way XX% for on say in particular, when and implemented may you of the difference of so, terms couple And packaging of sort chip the there's that. in a it's also amount a target of be common to of customers,

more like this continuing we each. probability nicely. see executing be going the or primary not reinventing would I grow good it's two so, we'll say, engine and in over is broadband out Team's going we're So period. least growth program quarter just customers time. within at one it's the each And with next the well to wheel to have

Richard Shannon

Okay great, that me is Jeff, you. from all thank

Operator

closing will additional Jeff I session. And over today's the Mr. Rittichier will turn for that to any call remarks. conclude question-and-answer

Jeff Rittichier

us I'd the for for actually that thank and with get all recognize transaction EMCORE interest our I team safe, now. today. your this of experts worked for in on team done. and the like tremendous everyone, KVH extended goodbye to Sure. to And of want effort to you please stay

Operator

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

now may You disconnect.

EMCORE (EMKR) 10 Aug 222022 Q3 Earnings call transcript