Applied Optoelectronics, Inc.
(NASDAQ:AAOI)
, a leading provider of fiber-optic
access network products for the internet datacenter, cable
broadband, fiber-to-the-home (FTTH) and telecom markets, today
announced certain preliminary unaudited financial results for its
third quarter ended September 30, 2017.
“Our preliminary results for the third quarter fell short of
prior estimates and were negatively impacted by lower than expected
sales to one of our large datacenter customers. Despite this
shortfall, we maintained a strong gross margin profile in the
quarter, and continued to experience solid demand with our other
top datacenter customers,” said Dr. Thompson Lin, Applied
Optoelectronics, Inc. founder, president and CEO. “Although we are
disappointed with these preliminary results, we continue to feel
good about our leadership position in advanced optics and remain
optimistic based on the customer traction we are seeing with our
100G products, especially our 100G CWDM transceivers.”
Third Quarter 2017 Preliminary Unaudited Financial
Results+
- Revenue in the range of $88 million to $89 million, compared to
the prior outlook of $107 million to $115 million.
- GAAP and non-GAAP gross margin in the range of 43.5% to 44.5%,
within the prior non-GAAP outlook of 43.0% to 44.5%.
- GAAP net income in the range of $18.6 million to $19.6 million
and non-GAAP net income after tax in the range of $21.2 million to
$22.2 million, compared to the prior non-GAAP outlook of $26.6
million to $29.4 million.
- GAAP fully diluted earnings per share in the range of $0.91 to
$0.96 and non-GAAP fully diluted earnings per share in the range of
$1.04 to $1.09, using a weighted-average fully diluted share count
of approximately 20.4 million shares. This compares to the prior
non-GAAP outlook of $1.30 to $1.43 per share, using approximately
20.5 million shares.
These are preliminary financial results and remain subject to
the completion of the company's customary quarterly close and
review procedures. Material adjustments may arise between the date
of this press release and the dates on which Applied
Optoelectronics announces its third quarter 2017 results and files
its Form 10-Q with the SEC.
(+)Please refer to the note below on
forward-looking statements and the risks involved with such
statements as well as the note on non-GAAP financial measures. The
prior outlook referenced above was provided in the company’s press
release on August 03, 2017.
Conference Call Information
The company will host a conference call and webcast for analysts
and investors today, October 12, 2017 to discuss its preliminary
results for its third quarter 2017 at 4:30 p.m. Eastern time / 3:30
p.m. Central time. Open to the public, investors may access the
call by dialing (412) 717-9586.
A live webcast of the conference call and supplemental
financials will be accessible from the company's website at
investors.ao-inc.com. Following the webcast, an archived version
will be available on the website for one year. A telephonic replay
of the call will be available one hour after the call and will run
for five business days and may be accessed by dialing (412)
317-0088 and entering passcode 10113458.
Forward-Looking Information
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements reflect the views of
management at the time such statements are made. These
forward-looking statements involve risks and uncertainties, as well
as assumptions and current expectations, which could cause the
company's actual results to differ materially from those
anticipated in such forward-looking statements. These risks and
uncertainties include but are not limited to: reduction in the size
or quantity of customer orders; change in demand for the company's
products due to industry conditions; changes in manufacturing
operations; volatility in manufacturing costs; delays in shipments
of products; disruptions in the supply chain; change in the rate of
design wins or the rate of customer acceptance of new products; the
company's reliance on a small number of customers for a substantial
portion of its revenues; potential pricing pressure; a decline in
demand for our customers' products or their rate of deployment of
their products; general conditions in the internet datacenter,
CATV, FTTH or Telecom markets; changes in the world economy
(particularly in the United States and China); the negative effects
of seasonality; and other risks and uncertainties described more
fully in the company's documents filed with or furnished to the
Securities and Exchange Commission. More information about these
and other risks that may impact the company's business are set
forth in the "Risk Factors" section of the company's quarterly and
annual reports on file with the Securities and Exchange Commission.
In some cases, you can identify forward-looking statements by
terminology such as "believe," "may," "estimate," "continue,"
"anticipate," "intend," "should," "could," "would," "target,"
"seek," "aim," "believe," "predicts," "think," "objectives,"
"optimistic," "new," "goal," "strategy," "potential," "is likely,"
"will," "expect," "plan" "project," "permit" or by other similar
expressions that convey uncertainty of future events or outcomes.
You should not rely on forward-looking statements as predictions of
future events. All forward-looking statements in this press release
are based upon information available to us as of the date hereof,
and qualified in their entirety by this cautionary statement.
Except as required by law, we assume no obligation to update
forward-looking statements for any reason after the date of this
press release to conform these statements to actual results or to
changes in the company's expectations.
Non-GAAP Financial Measures
We provide non-GAAP gross margin, non-GAAP net income (loss)
after tax, and non-GAAP earnings per share to eliminate the impact
of items that we do not consider indicative of our overall
operating performance. To arrive at our non-GAAP gross profit, we
exclude stock-based compensation expense and non-recurring
expenses, if any, from our GAAP gross profit. To arrive at our
non-GAAP income (loss) after tax, we exclude all amortization of
intangible assets, stock-based compensation expense, tax effects of
stock-based compensation, and non-recurring expenses, if any, from
our GAAP net income (loss) after tax. Included in our non-recurring
expenses in Q3 2017 are certain consulting fees, employee severance
expenses, and certain non-recurring expenses related to hurricane
Harvey. Our non-GAAP earnings per share is calculated by dividing
our non-GAAP net income by the fully diluted share count. We
believe that our non-GAAP measures are useful to investors in
evaluating our operating performance for the following reasons:
- We believe that elimination of items such as stock-based
compensation expense and non-recurring expenses is appropriate
because treatment of these items may vary for reasons unrelated to
our overall operating performance;
- We believe that non-GAAP measures provide better comparability
with our past financial performance, period-to-period results and
with our peer companies, many of which also use similar non-GAAP
financial measures; and
- We anticipate that investors and securities analysts will
utilize non-GAAP measures to evaluate our overall operating
performance.
A reconciliation of our preliminary GAAP income (loss) after tax
and GAAP earnings per share for Q3 2017 to our preliminary non-GAAP
income (loss) after tax and earnings per share is provided
below.
Non-GAAP measures should not be considered as an alternative to
income (loss) after tax, earnings per share, or any other measure
of financial performance calculated and presented in accordance
with GAAP. Our non-GAAP measures may not be comparable to similarly
titled measures of other organizations because other organizations
may not calculate such other non-GAAP measures in the same
manner.
About Applied Optoelectronics
Applied Optoelectronics, Inc. (AOI) is a leading developer and
manufacturer of advanced optical products, including components,
modules and equipment. AOI's products are the building blocks for
broadband fiber access networks around the world, where they are
used in the internet datacenter, CATV broadband, fiber-to-the-home
and telecom markets. AOI supplies optical networking lasers,
components and equipment to tier-1 customers in all four of these
markets. In addition to its corporate headquarters, wafer fab and
advanced engineering and production facilities in Sugar Land, TX,
AOI has engineering and manufacturing facilities in Taipei, Taiwan
and Ningbo, China. For additional information, visit
www.ao-inc.com.
|
Applied Optoelectronics, Inc. |
Reconciliation of Net Income under GAAP and
Non-GAAP |
(In millions) |
(Unaudited) |
|
|
Three months ended September 30,
2017 |
|
|
|
|
|
Low end of range |
|
High end of range |
|
GAAP net
income |
$ |
18.6 |
|
|
$ |
19.6 |
|
|
GAAP earnings
per share (1) |
$ |
0.91 |
|
|
$ |
0.96 |
|
|
Adjustments: |
|
|
|
|
Amortization of intangible assets |
|
0.1 |
|
|
|
0.1 |
|
|
Share-based compensation expense |
|
2.1 |
|
|
|
2.1 |
|
|
Non-recurring Charges |
|
0.4 |
|
|
|
0.4 |
|
|
Unrealized exchange gain |
|
0.1 |
|
|
|
0.1 |
|
|
Other |
|
(0.1) |
|
|
|
(0.1) |
|
|
Non-GAAP net
income |
$ |
21.2 |
|
|
$ |
22.2 |
|
|
Non-GAAP
earnings per share (1) |
$ |
1.04 |
|
|
$ |
1.09 |
|
|
|
|
|
|
|
(1)
calculated using a weighted-average fully diluted share count of
approximately 20.4 million shares |
|
|
|
|
|
|
Investor Relations Contacts:
The Blueshirt Group, Investor Relations
Maria Riley & Chelsea Lish
+1-415-217-7722
ir@ao-inc.com
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