EMKR - Earnings call 2 2023 | EMCORE Corporation

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Operator

Good day, and thank you for standing by. Welcome to the EMCORE Corporation Fiscal 2023 Second Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tom Minichiello, Chief Financial Officer. Please go ahead.

Thomas Minichiello

you. Thank and second conference quarter everyone, EMCORE's to to XXXX fiscal results. welcome afternoon, call our discuss Good The news release on our we issued this 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 by we'll results, on questions. you will and conclude I taking

Section herein Section begin, statements and affecting within forward-looking expectations the we business. remind of XXA events Before of future include the XXE like we Act you and that our projections and Act These meaning of Exchange may to would the of Securities trends about largely current information of provided statements forward-looking the the based XXXX XXXX. on are

known and business in the financial our changes subject business to are statements prospects performance by expressed or implied of in the Such business business, these in cautions be events markets both trends or and of the levels actual future or performance results, forward-looking statements include statements. economic that strategies, about risks any in and projections we to future forward-looking or achievements future activity, industry and that and uncertainties, operate. which cause relate results, Management plans, forward-looking may different statements and those from materially other to unknown, about

the company and required in you law to the sections our caution to included any including actual assumes with the expectations, such results in company's annual associated uncertainties or these obligation or forward-looking website risks entitled except filings statements to on not which update located conform report statements the XX-K. in the are as SEC's applicable We Risk The to the sec.gov, to Form regulation. consider rely by and Factors statements changes to on available statements also at and business, on these company's no

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

Jeffrey Rittichier

our Defense from grew Budd generated Inertial QX you, Tom, in Defense driven Navigation X%. through in significant line. EMCORE of encouraging $XX.X and quarter its Consolidated of represented million, QX, GAAP Lake Aerospace of improvements 'XX. and up afternoon, less Park, loss was into CATV the top of $XX.X performances $XX.X previous than was XX%. aerospace the X.X% and were it Broadband operating X% transformation, a There million. business generating good operating In the Opto Alhambra an Navigation which work as Tinley revenue. to everyone. progress FOG totaled and a was Thank X% significant XX% XX% and overall to continued challenges transformation our defense business. made was from operations. over strong by Inertial million, revenue

that erosion adjusted aerospace the Essentially, Broadband revenue conclusion we represents EBITDA flat improvements and $X ago erased weeks operating continued era to in the $X.X margin both non-GAAP X Broadband. and EMCORE. of roughly million of billion, defense The and Our logical announced a loss at in end negative respectively. at the by were the gross negative the remained and restructuring

determined we September. effort announcement, pointed the made and Opto a out in to our Defense Broadband sell last businesses, which we As started

M&A beginning could to and transaction. not different XXXX, way companies. Navigation a distinctly close definitive both points period, all business EMCORE sheet, Board attempts Historically, became employing and multiple different to Broadband point continued The made X letter we through signed the which where term intent Although reaching years. past the significant grow has the banks EMCORE's business organically Inertial agreement interest, time numerous over we in had the a manifested in during reach itself in X of finally sell at or the the

of the businesses Phosphide the is In Inertial X Broadband Navigation personnel the we this part independent and being developed tale actions fab, loan of these businesses as and intersection which down was X assets. The announced. shut companies, Indium with of wafer

actions Indium lithium building chip by niobate a our chips and assets However, for EMCORE from Inertial Quartz we've Navigation. FOG costs MEMS we in operations in Concord. a the play EMCORE prepared Navigation. pure of in Inertial the and the our for summary, carve taken Phosphide significant this now consolidating and decision stockpile without making affecting products for business other out effectively In Broadband is

resulted improved just assets, of transformation This cable beginning of profitability Many will Inertial in in improvements reduction is the changes now made to really next operations. in set of manufacturing productivity that in be the automated the fixed assembly a for we our applied and television Navigation. that

reduction Over in floor see expect and should in profitability. the a few space in years, we improvements manufacturing next inventory require, the to you a reduction

for customers ensure final objective requirements serve buy is broadband employees our business Our and an and orderly last-time from for exit to the customers' alike.

should believe over so. be or will next orders processing last the but $XX the total ship time approximately quarters X million, which We still amount are that buy

to inside contracting by our little was due Alhambra low DoD. book-to-bill Aerospace orders Defense. Tinley now in strong QX's and X.XX, the Navigation, Turning stating Park at had Space pushed begin but significant performance and priorities of a out operation. I'll to that and comments several we were my

Demand X.X solid book-to-bill with upswing. the aviation was approximately the board civil quarter. the seen a expect surprising will June across for be We

UAV funding orders is few received million new $X.X for to full next total the We in which are also platforms, months parts. released as expected over

pick into for X production. turret-based is bookings stemming momentum follow-on significant fiber tourists rate vehicle AMPV, for to strong up programs. were customers. booked position Escribano's it gyros multipurpose optic from control strong continuing targeting heads important platforms, from also the armored International that and We business our X in as BAE's program CROs full Guardian

next-generation received IMUs and we orders business, Mark ship our for our torpedo the of side against strong new backlog. lightweight naval the torpedo continue to XX XX Mark On

New environments expertise programs the and emerging being undersea in weapons. our of vibration we demanding are in leverage called are to torpedo

the restrictive On of less precision were getting slowed down guided requirements. munitions side working licenses bit are products to things, little qualify our a but customers we with export licensing with

of signs important Beyond acceleration we production the seeing rate into which indicator in capture, growth. of phase, program are low key programs key long-term a is initial of

and and the benefit. infrared become in wins application our In has key and a this design track of particular, multiple search area focus

the built continues as an the inertial Our Boeing, units Hornet. achieved critical to X and we up These IRST support the has and Launch milestone production multiple to launch shipment important for has to now measurement it with targets are board. these ramping per product team systems integration navigation and readiness schedule space deployments in of NAVAIR, meet qualification on important Lockheed for design, are The F/A-XX production Alliance. United and

forward. we had lumpy. but million products to certain uptick this charges, production, Our in and timing expectation year shipments late launches expected, gross produce is going full are of because a can these QMEMs enable volume margins. to be $XX in and to to complete of scale expected the hit significant the quarter, $XX didn't help year largely million qualification significantly which per builds When revenue margin they well quite nice improve of as as calendar

company expect fluctuations that entire will pronounced. new the the these As coming moves to be system less ERP in its months, we

are as businesses I'd clearly KVH guidance, are to to programs, like and which well well business on on and Navigation move the and focus former Harris I year. acquisitions Both Before performing of some provide Inertial key this as the LX a area recent the are accretive. our integration Space comments

the EMCORE system cutover Navigation systems acquisitions, side in these On LX ERP TSA Harris resulting and the IT made common rest a Space with from costs. running integration has of with reduction the of is &

expecting the Chicago out Middletown Chicago engineering to the are and moved IT complete Rhode EMCORE over already and building have KVH's June now offices We we've quarter, the but transition the both switched domain. Island to team of the for

we make Ultimately, transition We to us and in and will cost help complete Camstar ERP Concord and expect will efficient processes, Chicago services. inventory. after more exit our the integrate EMCORE this improve into upgrades

in Turning the guidance current quarter. now to

growth that expect semiconductor slow bit for quarter. We down Nav shortages a will Inertial in for the June tamping some down products, production

a production Additionally, are yet from we moving forward our time standing last builds not start have dates. on and scheduled

million revenue over Excluding is $XX buy to $XX the we of builds, to Navigation these for $XX I $XX call will million range million turn June which that, business. With the to the the million in Inertial quarter, back Tom. last-time expect

Thomas Minichiello

$XX.X business million contributing quarter A&D million the half already grew sequentially revenue X% Consolidated Jeff. of to on sequential shutdown a quarter to about grew the Broadband fiscal only Thank revenue XQ you, level million. basis segment XX% low soon-to-be $XX.X for $X.X for this or the before. segment despite

revenue. Inertial million importantly, XX% $XX.X without and XX% total the was million grew segment Navigation, is More Defense Optoelectronic or to the A&D which by $X.X of products EMCORE

within bottom to were turned of business quarter, March for X the accounted hamburg-based All both and Nav excellent be revenue. Moreover, Tinley Inertial Lake XX% results. when and performed Park Budd quarter Nav Tinley and line. most accretive acquisitions in product continue the Inertial FOG in well for December acquisitions recent the Lake the and Budd lines Park Combined, both in QMEMS nicely compared up the to

quarter Let in XX%. which basis. by low the margin Broadband of the March on December me now overall extremely of the operating down up the turn the from revenue. consolidated level to improved quarter, dragged a Conversely, focus XX% results, revenue margin will of A&D driven increased the XX%, primarily gross be to rest the the non-GAAP in to

work programs. Operating the in quarter. expenses Net $X the $X.X a results material was million to I expenses flat million million. largely was FOG in in compared $XX.X the prior to million $XXX,XXX $X.X in XQ. million fiscal before. per million due in the Shifting for quarter was negative quarter basis, $XX.X operating on $X.X per million increase compared share loss at XQ development to March $X.X Adjusted a GAAP $X.XX The share were fiscal consolidated to $X.XX On moment. for to or was the loss or EBITDA compared

in or acquisitions $XXX,XXX expenses loss included million This $XX.X per $XXX,XXX expenses litigation payable settlement the net last that of from a transitional stemming of year's as and $X.X $X.XX XQ share. million agreement. was Fiscal part included

The million March the XX the to $XX.X million by to of balance sheet. cash from cash following We at XX. included in cash the received offset quarter. completed Turning financing $XX.X net at in February, had $XX.X uses of proceeds the increase during December $XXX,XXX net compared million

and activities normal working litigation-related to financing $X.X expenses, acquisition operations, adjusted $XXX,XXX $X.X $XXX,XXX million CapEx. costs, capital million million for for business EBITDA, million for related used $X $X.X for transaction for

sensing to get chips, linear your which our approximately XX% review in and restructuring indium consists like we the Before second, of product as Defense operations, cable Alhambra as force of to includes: TV, a This items to Optoelectronic the wireless our shutdown primarily in recently related of about workforce well the wafer reduction announced XXX of -- China. fab. one, related closure employees, program. several EMCORE's lines questions, of I'd plan and Phosphide of all or optics and total

already action This end completion the July. with by has of expected begun around

of completed footprint currently as approximately in remaining by in actions our in China. Third, and a These end space are vacating exiting by facility be facility of XX% Concord as Alhambra the reducing our by the small anticipated portion well September. to use

severance over quarter costs, time, million. charge and be stock we a anticipate combination vesting For a GAAP around to accelerated cash in June record expect of $X.X we of which the will

finalized From should fully is annually quarter. of attributable at a perspective, of reduce which the cost by and expenses yet with coincide Broadband. happen restructuring least to program anticipate P&L likely which is vacate various and once September also to to actually -- will We the dates $XX during GAAP million timing predominantly a bulk of total the charges of spaces. the facility consolidation, the be elimination the we is for completed, the

Defense production reported the operations. of completed Broadband be -- on as the eventually Optoelectronics It's and customer the to to extent will depend will largely last discontinued the have buys. of activities expected for segment this related shutdown product last for that Timing time which line the we

that, of that Navigation products. and consist chips our quartz Our results now will solely opening with and for from questions. we forward Inertial call the our going FOG Quartz in lithium your used including operations of niobate are business, And MEMS point up

Operator

At this Craig-Hallum. Richard [Operator will time, the question session. we first Instructions] conduct comes question-and-answer Shannon Our from from

Richard Shannon

go sequence just out first have rush kind of I'm question not sure of you. good these, a maybe I for I'll over if these. Jeff,

last-time for have As any into I quarter? catch correctly revenue that the baked this guidance buys you not

Jeffrey Rittichier

essentially standing That here. start a in is correct. We're

semiconductors time at is that to going number we Some chips And are wafer the of where this going up. and can't qual squared to looking are lead things time have the for away. we completely got require that fab go just substantial through speed you don't of a and other you've

So really that's it why haven't in. we baked

Richard Shannon

then. Okay. Fair enough

referred MEMS QMEMS. your that Q some to coming Was in hurt think you I it of shortages products. components

that is So right the one, Jeff?

Jeffrey Rittichier

Actually, quarter. where push to isn't. you've of finished beginning September revenue April, to quarter. we're and of dates if to this it getting assemblies going we that supposed that into May. a circuit now late And thing it's out No. July it boards the not us hit for finish It's And end the we got going the sort happens, expect June, bit of were some arrive will and

Richard Shannon

for of risk products, these continued wouldn't in you a Are And suspect these kind this? your something do the that's thing? is onetime from we you to have probably boards describe and be most of I there this some Or Okay. can commodities. way? specialized consider constraints

Jeffrey Rittichier

exceedingly had that's can high There's read because just, some rel an there, FPGAs into would been it it, components it. probably ] to nothing call If be in but guess, and educated I [ there's certainly guess. they've you difficult,

Richard Shannon

in can't today you this X.X. X-part a remember I Maybe last expecting that I was question. A&D kind of repeated just you if this of on referring about call the earnings a do before And book-to-bill to know kind they these said here about in times a line? the of you give can the just from? But total those of coming hit where business. sense And what or are INS of us revenue bookings come lead kind

Jeffrey Rittichier

lead say I -- times okay. oh, you When probably,

build. So time to

And because for you'll of a it that soon there's immediately products the normally actually the lines. orders it's Some as less rolling wide through variety of are virtually as see are assembly things.

an give you I'll So example.

of got the we only expecting. of about drones a got a there couple big that were One we we were that order on win -- X/X and the

So the just chain that a And seeing our as released service supply we common. they to that's "Hey, of said, And from particular had the these funding buys just customer, haven't all in talk to are the because branch And sort we of expecting things. you're of for just the what way jocking reshuffling that a thing. of we're normal, of it long-term bit around partially caused has is degree dollars than more the up this a dollars but expenditures set Ukraine, right? not to be

Richard Shannon

enough. a of questions bit. a me, Fair of for more jump I'll out for here Maybe couple line

that kind interim few at talked hopefully, the level. comments rate, about after point, in some a the think the about at maybe next hopefully progress they qualifying to run of this about we quarters? healthy over last here how of you amount very But a do the your here, nice repeat Team a end program, and quarter year the fair from So and getting by

breakeven you I December range the get in and the drivers when kind do about be bit here your the do and at little which hoping the a kind think -- that mentioned to if the or $XX point? you're do kind it I we to Or see point, by How somewhere that of in million linearity the you of breakeven can think a looking guidance getting of not, source believe you've think happen? quarter? from to And past, to more. of

Jeffrey Rittichier

to you're it. answer see part Well, part, the starting already Tom. in about I'll second essentially, get But Yes. breakeven this I'll to

money. run additional worth for and contract for, don't buy materials production. materials. million, to that, of lead So, that's is there significant on being I year's roughly long program an pretty first then time that. And million, something of $X $X call a know, us is the top the on it, Team currently And of like It's, amount

to be sort price see become coming "Hey, because with a don't for it to though the with normal units assemblies the And the And number won't in, set of orders there's so order x done these, that material associated we're fixed of is qualification. return of purchase what until it you're will year even and price final you'll a next then some have we're seeing now we going them."

what the this engineering material increased time see activity, engineering, the ramp mentioned a X So had and is couple I manufacturing purchases, is you're and a ultimately, before, materials, quarters, quarters. and from, going over it, call the assembler technicians I first, that to of next to going and nice let's over come next amounts didn't ramp. provide of gradual explanation of but And lot

so function not a step this. going And you're to see in

those and you're materials contract think space 'XX, for. the looking already the pretty okay, I it, with all say, though, out Again, is. long-lead indicator that is this ultimately, and under already think are is the sensors where ULA, well, buying EMCORE's that out things strong when so go the that's of and about you And you program way buying, a through and

Richard Shannon

good. Fair the questions jump for enough. out line here. there. Tom, of couple I'll explanation and Good quick of That's A

INS of see And margin kind all, fall-through should get increased referred either kind this First of quarter? business, you what for or as there? shares sales within we A&D June to, what of which expecting are outstanding everyone you

Thomas Minichiello

first Richard was outstanding June. one the shares by Yes.

XX.X can we when issued you an shares quarter, million should in see shares. because of you the this done, all around so But -- February. that it's So it's average that be

Richard Shannon

through? Great. on Okay. [indiscernible] incremental the fall

Thomas Minichiello

Yes.

for been his Jeff margin in revenue to it $X A&D. prepared jump to from than had moved some other script. have a million in would in 'XX been And bit over little better we alluded that that on 'XX that So not items in in probably increase

not quarter, quarter, this as in still but as much growth with growing. last So

the But by consolidated equal. and being That's XX% range, that company. for key XX% all the at looking that's for the in high Inertial Nav/A&D. things the way, You're XX%, not --

Jeffrey Rittichier

Yes.

were The to Richard? point was all change plays other the relating piece, asking breakeven restructuring you the then, out. Richard, I about how I get that right, that think and

Richard Shannon

for it yes. question a interest of me, Certainly, was

Jeffrey Rittichier

Okay.

lower. So it's

are after and we So the is an restructuring all strictly changes. Navigation the completed, program Inertial profile business, OpEx

be, X.X%, used net that depreciation. gross so about $XX And now million call profit to it, to, what That's overcome range. it, to needed in OpEx, roughly call somewhere in lower of

margin, just point revenue gross over if $XX you you So I million, to million breakeven think get just $XX a it, over in math for adjusted EBITDA. call and XX% would did in that

Operator

next to comes Brian [Operator Kinstlinger question AGP. Instructions] from us Our of

Brian Kinstlinger

On that what level your the semiconductor December a the shortage at Lake, September or confidence in Budd way? is won't this quarters impact negative

Jeffrey Rittichier

a Well, first "Well, of is it's it's It's like that said, think common We the It's you told thing. was -- same pushed It's what been all. same is have that an incident. X weeks XX weeks." cards now XX thing. come months. with all, This back isolated by parts couple we not the and of well, X not at manufacturers not

when about of and in an to -- say million something we're I So order this issue, revenue. $X.X of the talking is -- it's worth $X million now

when I the quarter, about this. exactly mean, would needs is, because right? ship, June in that guy not at be to we're ship, in what growth looking looking occurred that. and got knowing have if much circuit only we'd going But or boards, XX% something that the It's quite into at I'm and needs visibility not just what roughly it you've that's exactly be it to talking is just quarter-over-quarter to like material it

Brian Kinstlinger

Sure.

munition. on moving to So Precision Guided

December both be opening on with other you shipped order that You maybe to and and that and I had progress at contracts? a about Or you're point, there the you you qualifying orders, piece. SDIXXX defense domestically that internationally you making provide talked in some were touched would larger know that had in doors can if large you on great. international there

Jeffrey Rittichier

was world. ROKETSAN, military Turkish different sell Progress Again, of a are domestic for said is allowed the requirements outside i.e., talked domestic ASELSAN, what of their have Turkey, in terms fine. the we set they and TUBITAK, feeding where internal and programs, about we they what in to

gotten some large do though even carry we're Department we opportunities which state. And Commerce the for now, form and most And pushback export right license, The for so of from has us. actually qualified there's some restricted been is not ITAR.

a nail is a so We to require And were they of a ours, on working them, out does EAR that potential product some couple the we problem. the not keep the a through. just to get dates business the solution expecting license. is but don't of come haven't pushing that to licenses and have hard The go

have We not right the spec is is licensing underneath that which required. at one

And been working on that replace working units the to one the so with. that's that we're we've

friends I have changes, the idea a licensing are So -- certain world, just happens change in we and it's friends of with that were -- our parts to It their it's and countries live it. administrations of thing. before who just

Brian Kinstlinger

Great. One me and on for Camu last one [ ]. follow-up

great that You product have you gave it's or through XXXX. some for see us great details to and are ordering

were hit about those to you on expect be were to? milestones or that you in them milestones achieve talked to March. details going update share any an You and that able Can on

Jeffrey Rittichier

only would is we're in to our I reach or that The thing design review hit that critical August. expecting roughly say

have that's And integration to so excellent look to expecting for. complete by been then. we're And

Operator

from Richard Hallum. comes question the Shannon of with Craig next Our line

Richard Shannon

questions big picture you, Jeff. of A couple for

that your United see DoD your impacts geopolitical budget? And especially that's situation, love get you also if of the the kind with sense to impact, one, positive the you I'd today? First as portfolio or kind evolving and negative relevant internationally, of think of States it

Jeffrey Rittichier

great Well, question.

right you out So stockpiles then have And the DoD replenish they military. U.S. the figure foreign the of later to they're on, see going usually when of just tends to plans because how is, budgeting out the situation of reorient there's current I way to that a countries, the talk it. scrambling support lot inside given about to to come of

book. U.S. somebody writing not government like So case $XX is where, Ukraine say, and out it's the aid million let's check to a a offers there in

sent to on for later Ukraine that pay counting out essentially are how they're figuring and of the No, replacements. value to then things

of around, It read it's it and it problems of into noise. is lot There's there's just -- quarter next short-term orders sure would is. not a some more that -- from So it I'm creates into one but a push what lot I just anything but to shuffling than the it that.

But heightened I when of who go is aggressive. customers. call interested sense beyond to to in, that, The of let's sorts the interested things I that that Taiwan, major it, backdrop the but in preparedness them overall, you be countries see as and our I When are that take the things more of going look at what out up. non-NATO that at is look -- a talk for think going international the I not NATO only example, just like, allies number they're spending,

so to the be larger able critical systems, part for the us the find these that chain organized of to a are of of challenge we get weapons is in some supply path to sitting because are supply of And several way to the is things that that. chain, supply whole

general on environment in denial resulted to, very where one look example, Inertial and It's is a that in if budget the strong more space, I Ukraine you on extrapolated be amount Taiwan. well, look at a interesting Pentagon for take you solutions going you at give the more So -- think have have that what in over GPS of if to GPS jamming Navigation China the at that guys think the is ours. look emphasis in is smart when like And take in a not the lot a decides happen hard that's the aggressive finding I a problem. might this taken towards products

Nav, all -- at that is in area lifts think, the but certainly more So so. even in play Inertial tide rising overall, this there's boats I

Richard Shannon

the thoughts, here sir, whether with our any other or your if wasn't football Are close happening that Great released. in I term? there shutdown sort get what as some you it? Jeff. are all And issues get see deficits, experience we -- from mentioned the we program funding? potential some on and think of here do see funding some get we happening Do you even impacts political thoughts any this you Okay. to in Like to have budget near

Jeffrey Rittichier

constantly I that chicken goes can't government light long. it's wants imagine a aisle did. of certainly creditworthiness something for them, branches of on of it to banking going putting if that in it now, side at of happen. X a either usually in reached, go on solution that with game the this. world line especially and concern. But on see I would Well, A time it between doubt certainly budgeting like of very U.S. the would be would right concerning like what's on the be X the

I can't imagine wanting this mind someone with to politics. do but that, is a rational

I Richard, So would don't have us. how thoughts, well-formed it any about affect

about concern the more overall countries going think other I certain is becoming that though. analysis, most belligerent to outweigh factors in

Richard Shannon

right. All

those appreciate thoughts, I always, As Jeff.

again. line for that's all me. I'll on jump Thanks. I the think

Operator

that, turn closing Jeff Rittichier, back Executive for like to Officer now remarks. Chief it you. would I Thank With to

Jeffrey Rittichier

to networks. the from technologies bit close grow And simple normally Fiber I'd comments facto in cable in systems to Broadband Broadband do Thank want led really radio-based for allow team. you. backbone little CATV interest with became Coax standard that like team way networks you of Hybrid EMCORE. my advanced our I relates the points The that EML around the And longer of your to of I EMCORE's into than to for world's would. the linear Internet set thank world. all the de services a

transmission EMCORE Aerospace generate upgrade cash flow from to that pandemic. profits the reality really that this during transition providers allowed everybody, turned COVID EMCORE significant and our work from Linear company down network and started to when capture made the the business the future. make to to bright allowed to home a a competitors, And to Defense, networks company giving shut EML technology

through you for team, all to creativity and in all hard want your future I So the wish our your to And years. simply I and luck Tom Broadband say thank would work of endeavors. you best the

Operator

for conference. you in participation your Thank today's

EMCORE (EMKR) 4 May 232023 Q2 Earnings call transcript