- Separately, NeoPhotonics and Lumentum Holdings Inc jointly
announced a definitive agreement under which Lumentum would acquire
NeoPhotonics for $16.00 per share in cash
- NeoPhotonics cancels today’s regular conference call to discuss
third quarter results
NeoPhotonics Corporation (NYSE: NPTN), a leading developer of
silicon photonics and advanced hybrid photonic integrated
circuit-based lasers, modules and subsystems for
bandwidth-intensive, high speed communications networks, today
announced financial results for its third quarter of 2021.
“With our very strong performance in the third quarter, we have
returned to operating profit on a non-GAAP basis, as we forecasted
one year ago. Operating income on a GAAP basis was a loss of $1.3
million, a substantial improvement over our second quarter. Our
accelerated growth has been driven by products for 400G and above
applications, including the initial ramp of 400ZR and related
products, adding to our 400G and above suite,” said Tim Jenks,
Chairman and CEO of NeoPhotonics.
Third Quarter 2021 Summary
- Revenue at $83.7 million at the high end of range, up 29%
quarter-over-quarter and down 18% year-over-year
- Gross margin was 28.4%, up from 15.2% in the prior quarter
- Non-GAAP gross margin was 29.4%, up from 21.7% in the prior
quarter
- Operating income was a loss of $1.3 million, up from a loss of
$16.3 million in the prior quarter.
- Non-GAAP operating income was positive $1.3 million, up from a
loss of $10.3 million in the prior quarter
- Net loss per share was $0.04, compared to net loss of $0.34 per
share in the prior quarter
- Non-GAAP net earnings per share was $0.01, compared to Non-GAAP
net loss of $0.22 per share in the prior quarter
- Adjusted EBITDA was $6.7 million, up from a negative $5.4
million in the prior quarter
Product Milestones
- Products capable of use for 400G and above applications were
50% of revenue
- We announced that we have shipped more than two million tunable
lasers cumulatively, used in the majority of the total coherent
ports delivered since their inception a decade ago.
- We announced a new frequency modulated continuous wave laser
(FMCW). This laser, together with a high power semiconductor
optical amplifier, or SOA, is used in coherent LIDAR applications
for autonomous vehicles and for precision industrial
instruments.
As of September 30, 2021, cash and cash equivalents, short-term
investments and restricted cash totaled $105 million. Free Cash
Flow was ($3.6) million. Cash from operations was $0.1 million,
including a $4.4 million increase in inventory to buffer the supply
chain. Capital purchases were $3.7 million. We drew down $15
million of debt from one of our China credit facilities.
Non-GAAP results in the third quarter of 2021 exclude $2.2
million of stock-based compensation and $0.4 million of accelerated
depreciation, amortization and other charges. A reconciliation of
the non-GAAP and Adjusted EBITDA financial measures to the most
directly comparable GAAP financial measures is provided in the
financial schedules portion at the end of this press release.
Related Announcement and Conference Calls
In a separate press release issued today, Lumentum Holdings Inc.
and NeoPhotonics (NYSE: NPTN) jointly announced that they have
entered into a definitive agreement under which Lumentum will
acquire all outstanding shares of NeoPhotonics in an all-cash
transaction of $16.00 per share, giving a fully diluted equity
value of approximately $918 million. A copy of the press release
can be found on the Company’s investor relations website
https://ir.neophotonics.com/.
Because of the announced transaction, NeoPhotonics’ earnings
call scheduled for November 4, 2021 at 4:30 pm EDT will no longer
take place.
Lumentum will host a conference call today, November 4, 2021, at
5:30 am PT/8:30 am ET to discuss the announced transaction.
Information about today's call and the related transaction
announcement is available on the Lumentum website at
http://investor.lumentum.com.
Non-GAAP and Adjusted EBITDA Measures vs. GAAP Financial
Measures
The Company’s non-GAAP and Adjusted EBITDA measures exclude
certain GAAP financial measures. A reconciliation of the non-GAAP
and Adjusted EBITDA financial measures to the most directly
comparable GAAP financial measures is provided in the financial
schedules portion at the end of this press release. These non-GAAP
financial measures differ from GAAP measures with the same captions
and may differ from non-GAAP financial measures with the same or
similar captions that are used by other companies. As such, these
non-GAAP measures should be considered as a supplement to, and not
as a substitute for, or superior to, financial measures calculated
in accordance with GAAP.
The Company uses these non-GAAP financial measures to analyze
its operating performance and future prospects, develop internal
budgets and financial goals, and to facilitate period-to-period
comparisons. NeoPhotonics believes that these non-GAAP financial
measures reflect an additional way of viewing aspects of its
operations that, when viewed with its GAAP results, provide a more
complete understanding of factors and trends affecting its
business.
Conference Call
The Company will not be hosting a conference call today.
About NeoPhotonics
NeoPhotonics is a leading developer and manufacturer of lasers
and optoelectronic solutions that transmit, receive and switch
high-speed digital optical signals for Cloud and hyper-scale data
center internet content provider and telecom networks. The
Company’s products enable cost-effective, high-speed over distance
data transmission and efficient allocation of bandwidth in optical
networks. NeoPhotonics maintains headquarters in San Jose,
California and ISO 9001:2015 certified engineering and
manufacturing facilities in Silicon Valley (USA), Japan and China.
For additional information visit www.neophotonics.com.
Forward-Looking Statements
This communication contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements generally relate to future
events, including the timing of the proposed transaction and other
information related to the proposed transaction. In some cases, you
can identify forward-looking statements because they contain words
such as "may," "will," "should," "expects," "plans," "anticipates,"
"could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential" or "continue" or
the negative of these words or other similar terms or expressions
that concern the proposed transaction and our expectations,
strategy, plans or intentions regarding it. Forward-looking
statements in this communication include, but are not limited to,
(i) expectations regarding the timing, completion and expected
benefits of the proposed transaction, (ii) plans, objectives and
intentions with respect to future operations, customers and the
market, and (iii) the expected impact of the proposed transaction
on the business of the parties. Expectations and beliefs regarding
these matters may not materialize, and actual results in future
periods are subject to risks and uncertainties that could cause
actual results to differ materially from those projected. These
risks include the risk that the transaction may not be completed in
a timely manner or at all; the ability to secure regulatory
approvals on the terms expected in a timely manner or at all; the
effect of the announcement or pendency of the transaction on our
business relationships, results of operations and business
generally; risks that the proposed transaction disrupts current
plans and operations; the risk of litigation and/or regulatory
actions related to the proposed transaction; potential impacts of
the Covid-19 pandemic; changing supply and demand conditions in the
industry; and general market, political, economic and business
conditions. The forward-looking statements contained in this
communication are also subject to other risks and uncertainties,
including those more fully described in filings with the Securities
and Exchange Commission, including reports filed on Form 10-K, 10-Q
and 8-K and in other filings made by NeoPhotonics and Lumentum with
the SEC from time to time and available at www.sec.gov. These
forward looking statements are based on current expectations, and
with regard to the proposed transaction, are based on Lumentum’s
and NeoPhotonics’ current expectations, estimates and projections
about the expected date of closing of the proposed transaction and
the potential benefits thereof, its business and industry,
management’s beliefs and certain assumptions made by NeoPhotonics
and Lumentum, all of which are subject to change.
The parties undertake no obligation to update the information
contained in this communication or any other forward-looking
statement.
Additional Information and Where to Find It
This communication is being made in respect of a proposed
business combination involving Lumentum and NeoPhotonics.
NeoPhotonics will file relevant materials with the Securities and
Exchange Commission (the “SEC”) in connection with the proposed
transaction, including a proxy statement on Schedule 14A. Under the
proposed terms, promptly after filing its proxy statement with the
SEC, NeoPhotonics will mail or otherwise make available the proxy
statement and a proxy card to each stockholder entitled to vote at
the annual meeting relating to the proposed transaction.
NEOPHOTONICS STOCKHOLDERS AND OTHER INVESTORS ARE ADVISED TO
CAREFULLY READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC IN RESPECT OF THE PROPOSED TRANSACTION WHEN THEY BECOME
AVAILABLE, AS THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED
TRANSACTION.
LUMENTUM AND NEOPHOTONICS URGE INVESTORS AND SECURITY HOLDERS TO
READ THE PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION.
Investors and security holders will be able to obtain these
materials (when they are available and filed) free of charge at the
SEC’s website, www.sec.gov. Copies of documents filed with the SEC
by Lumentum (when they become available) may be obtained free of
charge on Lumentum’s website at www.lumentum.com or by contacting
Lumentum’s Investor Relations Department at
investor.relations@lumentum.com. Copies of documents filed with the
SEC by NeoPhotonics (when they become available) may be obtained
free of charge on NeoPhotonics’ website at
https://ir.NeoPhotonics.com/ by contacting NeoPhotonics’ Investor
Relations at ir@NeoPhotonics.com.
Participants in the Solicitation
The directors and executive officers of NeoPhotonics may be
deemed to be participants in the solicitation of proxies from the
stockholders of NeoPhotonics in connection with the proposed
transaction. Information regarding the interests of these directors
and executive officers in the transaction described herein will be
included in the proxy statement described above. Additional
information regarding NeoPhotonics’ directors and executive
officers is also included in NeoPhotonics’ proxy statement for its
2021 Annual Meeting of Stockholders, which was filed with the SEC
on April 16, 2021. These documents are available free of charge as
described in the preceding paragraph.
©2021 NeoPhotonics Corporation. All rights reserved.
NeoPhotonics and the red dot logo are trademarks of NeoPhotonics
Corporation. All other marks are the property of their respective
owners.
NeoPhotonics
Corporation
Condensed Consolidated Balance
Sheets (Unaudited)
(In thousands)
As of
Sep. 30, 2021
Dec. 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
76,578
$
95,117
Short-term investments
27,674
27,669
Restricted cash
495
489
Accounts receivable, net
57,901
45,232
Inventories
48,663
46,901
Prepaid expenses and other current
assets
18,673
20,173
Total current assets
229,984
235,581
Property, plant and equipment, net
57,134
66,765
Operating lease right-of-use assets
13,922
13,823
Purchased intangible assets, net
985
1,468
Goodwill
1,115
1,115
Other long-term assets
5,159
4,912
Total assets
$
308,299
$
323,664
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
59,303
$
43,539
Short-term borrowing, net
14,822
—
Current portion of long-term debt
3,015
3,232
Accrued and other current liabilities
24,983
42,053
Total current liabilities
102,123
88,824
Long-term debt, net of current portion
26,570
30,327
Operating lease liabilities,
noncurrent
14,150
14,522
Other noncurrent liabilities
8,315
9,584
Total liabilities
151,158
143,257
Stockholders’ equity:
Common stock
132
126
Additional paid-in capital
604,727
597,460
Accumulated other comprehensive income
1,180
1,735
Accumulated deficit
(448,898
)
(418,914
)
Total stockholders’ equity
157,141
180,407
Total liabilities and stockholders’
equity
$
308,299
$
323,664
NeoPhotonics
Corporation
Condensed Consolidated
Statements of Operations (Unaudited)
(In thousands, except percentages
and per share data)
Three Months Ended
Nine Months Ended
Sep. 30, 2021
Jun. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Revenue
$
83,742
$
65,010
$
102,398
$
209,677
$
302,970
Cost of goods sold (1)
59,968
55,135
77,994
162,689
215,338
Gross profit
23,774
9,875
24,404
46,988
87,632
Gross margin
28.4
%
15.2
%
23.8
%
22.4
%
28.9
%
Operating expenses:
Research and development (1)
13,875
15,410
15,276
42,383
40,849
Sales and marketing (1)
3,498
3,362
3,692
10,725
11,630
General and administrative (1)
7,719
7,398
7,758
22,411
23,350
Acquisition and asset sale related costs
(recoveries)
28
(36
)
87
155
219
Restructuring charges (recoveries)
(12
)
22
141
10
141
Total operating expenses
25,108
26,156
26,954
75,684
76,189
Income (loss) from operations
(1,334
)
(16,281
)
(2,550
)
(28,696
)
11,443
Interest income
94
140
21
339
141
Interest expense
(207
)
(220
)
(263
)
(654
)
(942
)
Other income (expense), net
43
(880
)
(3,317
)
306
(2,314
)
Total interest and other expense, net
(70
)
(960
)
(3,559
)
(9
)
(3,115
)
Income (loss) before income taxes
(1,404
)
(17,241
)
(6,109
)
(28,705
)
8,328
Income tax provision (benefit)
(456
)
(192
)
1,206
(1,279
)
(1,199
)
Net income (loss)
$
(1,860
)
$
(17,433
)
$
(4,903
)
$
(29,984
)
$
7,129
Basic net income (loss) per share
$
(0.04
)
$
(0.34
)
$
(0.10
)
$
(0.58
)
$
0.14
Diluted net income (loss) per share
$
(0.04
)
$
(0.34
)
$
(0.10
)
$
(0.58
)
$
0.14
Weighted average shares used to compute
basic net income (loss) per share
52,427
51,634
49,936
51,599
49,212
Weighted average shares used to compute
diluted net income (loss) per share
52,427
51,634
49,936
51,599
51,411
(1) Includes stock-based compensation
expense as follows for the periods presented:
Cost of goods sold
$
403
$
572
$
607
$
1,523
$
1,765
Research and development
565
744
748
2,171
2,505
Sales and marketing
353
261
565
1,168
1,833
General and administrative
873
763
853
2,949
2,975
Total stock-based compensation expense
$
2,194
$
2,340
$
2,773
$
7,811
$
9,078
NeoPhotonics
Corporation
Reconciliation of Condensed
Consolidated GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited)
(In thousands, except percentages
and per share data)
Three Months Ended
Nine Months Ended
Sep. 30, 2021
Jun. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
NON-GAAP GROSS PROFIT:
GAAP gross profit
$
23,774
$
9,875
$
24,404
$
46,988
$
87,632
Stock-based compensation expense
403
572
607
1,523
1,765
Amortization of purchased intangible
assets
154
153
184
492
552
Depreciation of acquisition-related fixed
asset step-up
2
3
(8
)
(1
)
(28
)
End-of-life related inventory
write-down
—
3,257
4,435
2,680
4,435
Accelerated depreciation
173
157
4,120
504
4,120
Restructuring charges
78
113
706
191
706
Non-GAAP gross profit
$
24,584
$
14,130
$
34,448
$
52,377
$
99,182
Non-GAAP gross margin as a % of
revenue
29.4
%
21.7
%
33.6
%
25.0
%
32.7
%
NON-GAAP TOTAL OPERATING
EXPENSES:
GAAP total operating expenses
$
25,108
$
26,156
$
26,954
$
75,684
$
76,189
Stock-based compensation expense
(1,791
)
(1,768
)
(2,166
)
(6,288
)
(7,313
)
Depreciation of acquisition-related fixed
asset step-up
(19
)
(21
)
(28
)
(65
)
(85
)
Acquisition and asset sale related costs
(recoveries)
(28
)
36
(87
)
(155
)
(219
)
Restructuring charges (recoveries)
12
(22
)
(141
)
(10
)
(141
)
Non-GAAP total operating expenses
$
23,282
$
24,381
$
24,532
$
69,166
$
68,431
Non-GAAP total operating expenses as a %
of revenue
27.8
%
37.5
%
24.0
%
33.0
%
22.6
%
NON-GAAP OPERATING INCOME
(LOSS):
GAAP income (loss) from operations
$
(1,334
)
$
(16,281
)
$
(2,550
)
$
(28,696
)
$
11,443
Stock-based compensation expense
2,194
2,340
2,773
7,811
9,078
Amortization of purchased intangible
assets
154
153
184
492
552
Depreciation of acquisition-related fixed
asset step-up
21
24
20
64
57
Acquisition and asset sale related costs
(recoveries)
28
(36
)
87
155
219
End-of-life related inventory
write-down
—
3,257
4,435
2,680
4,435
Accelerated depreciation
173
157
4,120
504
4,120
Restructuring charges
66
135
847
201
847
Non-GAAP income (loss) from operations
$
1,302
$
(10,251
)
$
9,916
$
(16,789
)
$
30,751
Non-GAAP operating margin as a % of
revenue
1.6
%
(15.8
)%
9.7
%
(8.0
)%
10.1
%
NeoPhotonics
Corporation
Reconciliation of Condensed
Consolidated GAAP Financial Measures to Non-GAAP Financial Measures
(Unaudited) (Continued)
(In thousands, except percentages
and per share data)
Three Months Ended
Nine Months Ended
Sep. 30, 2021
Jun. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
NON-GAAP NET INCOME (LOSS):
GAAP net income (loss)
$
(1,860
)
$
(17,433
)
$
(4,903
)
$
(29,984
)
$
7,129
Stock-based compensation expense
2,194
2,340
2,773
7,811
9,078
Amortization of purchased intangible
assets
154
153
184
492
552
Depreciation of acquisition-related fixed
asset step-up
21
24
20
64
57
Acquisition and asset sale related costs
(recoveries)
28
(36
)
87
155
219
End-of-life related inventory
write-down
—
3,257
4,435
2,680
4,435
Accelerated depreciation
173
157
4,120
504
4,120
Restructuring charges
66
135
847
201
847
Income tax effect of Non-GAAP
adjustments
—
(17
)
(1,327
)
(19
)
(2,461
)
Non-GAAP net income (loss)
$
776
$
(11,420
)
$
6,236
$
(18,096
)
$
23,976
Non-GAAP net income (loss) as a % of
revenue
0.9
%
(17.6
)%
6.1
%
(8.6
)%
7.9
%
ADJUSTED EBITDA:
GAAP net income (loss)
$
(1,860
)
$
(17,433
)
$
(4,903
)
$
(29,984
)
$
7,129
Stock-based compensation expense
2,194
2,340
2,773
7,811
9,078
Amortization of purchased intangible
assets
154
153
184
492
552
Depreciation of acquisition-related fixed
asset step-up
21
24
20
64
57
Acquisition and asset sale related costs
(recoveries)
28
(36
)
87
155
219
End-of-life related inventory
write-down
—
3,257
4,435
2,680
4,435
Accelerated depreciation
173
157
4,120
504
4,120
Restructuring charges
66
135
847
201
847
Interest expense, net
113
80
242
315
801
Income tax provision (benefit)
456
191
(1,206
)
1,279
1,199
Depreciation expense
5,380
5,771
6,479
17,154
19,366
Adjusted EBITDA
$
6,725
$
(5,361
)
$
13,078
$
671
$
47,803
Adjusted EBITDA as a % of revenue
8.0
%
(8.2
)%
12.8
%
0.3
%
15.8
%
BASIC AND DILUTED NET INCOME (LOSS) PER
SHARE:
GAAP basic net income (loss) per share
$
(0.04
)
$
(0.34
)
$
(0.10
)
$
(0.58
)
$
0.14
GAAP diluted net income (loss) per
share
$
(0.04
)
$
(0.34
)
$
(0.10
)
$
(0.58
)
$
0.14
Non-GAAP basic net income (loss) per
share
$
0.01
$
(0.22
)
$
0.12
$
(0.35
)
$
0.49
Non-GAAP diluted net income (loss) per
share
$
0.01
$
(0.22
)
$
0.11
$
(0.35
)
$
0.45
SHARES USED TO COMPUTE GAAP AND
NON-GAAP BASIC NET INCOME (LOSS) PER SHARE
52,427
51,634
49,936
51,599
49,212
SHARES USED TO COMPUTE GAAP DILUTED NET
INCOME (LOSS) PER SHARE
52,427
51,634
49,936
51,599
51,411
SHARES USED TO COMPUTE NON-GAAP DILUTED
NET INCOME (LOSS) PER SHARE
55,971
51,634
54,385
51,599
53,730
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211104005570/en/
NeoPhotonics Corporation Beth Eby, Chief Financial Officer
+1-408-895-6086 ir@neophotonics.com
Sapphire Investor Relations, LLC Erica Mannion, Investor
Relations +1-617-542-6180 ir@neophotonics.com
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