Applied Optoelectronics, Inc. (NASDAQ: AAOI), a
leading provider of fiber-optic access network products for the
cable broadband, internet datacenter, telecom and fiber-to-the-home
(FTTH) markets, today announced financial results for its first
quarter 2023 ended March 31, 2023.
“We continued to see steady improvement in our gross margin in
the first quarter,” said Dr. Thompson Lin, Applied Optoelectronics
Inc. Founder, President and Chief Executive Officer. “Further, we
are encouraged by the improving demand we saw for our 100G products
in our datacenter business, and we generated another quarter of
good CATV results. However, recently we were notified of some
inventory build-up with certain CATV customers which we expect will
negatively impact our Q2 revenue. With respect to the transaction
that we announced in September 2022 that we have entered into an
agreement with Yuhan Optoelectronic Technology for the sale of our
manufacturing facilities located in the People’s Republic of China
and certain assets related to our transceiver business and
multi-channel optical sub-assembly products for the internet
datacenter, telecom and FTTH markets, we continue to make progress
in gathering the information necessary to obtain required
regulatory approvals and expect that the transaction will close in
2023 or early 2024.”
First Quarter 2023 Financial Summary
- GAAP revenue was $53.0
million, compared $52.2 million in the first quarter of 2022 and
$61.6 million in the fourth quarter of 2022.
- GAAP gross margin was 17.4%,
compared with 17.3% in the first quarter of 2022 and 10.1% in the
fourth quarter of 2022. Non-GAAP gross margin was 23.2%, compared
with 17.5% in the first quarter of 2022 and 21.4% in the fourth
quarter of 2022.
- GAAP net loss was $16.3 million, or
$0.56 per basic share, compared with net loss of $16.1 million, or
$0.58 per basic share in the first quarter of 2022, and a net loss
of $20.3 million, or $0.71 per basic share in the fourth quarter of
2022.
- Non-GAAP net loss was $7.1 million,
or $0.25 per basic share, compared with non-GAAP net loss of $7.9
million, or $0.29 per basic share in the first quarter of 2022, and
a non-GAAP net loss of $5.4 million, or $0.19 per basic share in
the fourth quarter of 2022.
A reconciliation between all GAAP and non-GAAP information
referenced above is contained in the tables below. Please also
refer to “Non-GAAP Financial Measures” below for a description of
these non-GAAP financial measures.
Second Quarter 2023 Business Outlook
(+)
For the second quarter of 2023, the company currently
expects:
- Revenue in the range of $40.5 million to $47.5 million.
- Non-GAAP gross margin in the range of 20.5% to 23.5%.
- Non-GAAP net loss in the range of
$6.8 million to $9.0 million, and non-GAAP loss per share in the
range of $0.23 to $0.31 using approximately 29.2 million
shares.
(+) 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.
Conference Call Information
The company will host a conference call and webcast for analysts
and investors on May 4, 2023 to discuss its first quarter 2023
results and outlook for its second quarter of 2023 at 4:30 p.m.
Eastern time / 3:30 p.m. Central time. Open to the public,
investors may access the call by dialing 844-890-1794 (domestic) or
412-717-9586 (international). A live audio webcast of the
conference call along with supplemental financial information will
also be accessible on 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 877-344-7529
(domestic) or 412-317-0088 (international) and entering passcode
3456304.
Forward-Looking Information
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. 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,” “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.
These statements include management’s beliefs and expectations
related to our outlook for the second quarter of 2023. 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: the impact of the COVID-19 pandemic on our business and
financial results; 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, cable television
(CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets;
changes in the world economy (particularly in the United States and
China); changes in the regulation and taxation of international
trade, including the imposition of tariffs; changes in currency
exchange rates; 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, including our Annual Report on Form 10-K for the year
ended December 31, 2022. 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. 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),
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 margin, we exclude
stock-based compensation expense, expenses associated with
discontinued products, and non-recurring (income) expenses, if any,
from our GAAP gross margin. To arrive at our non-GAAP net income
(loss), we exclude all amortization of intangible assets,
stock-based compensation expense, non-recurring expenses,
unrealized foreign exchange loss (gain), losses from the disposal
of idle assets, if any, non-GAAP tax benefit (expenses), and
expenses associated with discontinued products, from our GAAP net
income (loss). Included in our non-recurring expenses in Q1 2023
and Q1 2022, and FY 2023 and FY 2022, are certain non-recurring
expenses related to extreme weather and pandemic events (if any)
and non-recurring tax expenses or benefits (if any), and employee
severance expenses (if any). In computing our non-GAAP income tax
benefit (expense), we have applied an estimate of our annual
effective income tax rate and applied it to our net income before
income taxes. Our non-GAAP diluted net loss per share is calculated
by dividing our non-GAAP net loss by the fully diluted share count
(for periods in which non-GAAP net income is positive) or basic
share count (for periods in which our non-GAAP net income is
negative). 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 amortization of
intangible assets, stock-based compensation expense, non-recurring
revenue and expenses, losses from the disposal of idle assets,
unrealized foreign exchange gain or loss, and depreciation on
certain equipment undergoing reconfiguration is appropriate because
treatment of these items may vary for reasons unrelated to our
overall operating performance;
- We believe that elimination of expenses associated with
discontinued products, including depreciation and inventory
obsolescence is appropriate because these expenses are not
indicative of our ongoing operations;
- We believe that estimating non-GAAP income taxes allows
comparison with prior periods and provides additional information
regarding the generation of potential future deferred tax
assets;
- 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 as a supplement
to GAAP measures to evaluate our overall operating
performance.
A reconciliation of our GAAP net income (loss) and GAAP earnings
(loss) per share for Q1 2023 to our non-GAAP net income (loss) and
earnings (loss) per share is provided below, together with
corresponding reconciliations for Q1 2022.
Non-GAAP measures should not be considered as an alternative to
net income (loss), earnings (loss) 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.
We have not reconciled the non-GAAP measures included in our
guidance to the appropriate GAAP financial measures because the
GAAP measures are not readily determinable on a forward-looking
basis. GAAP measures that impact our non-GAAP financial measures
may include stock-based compensation expense, non-recurring
expenses, amortization of intangible assets, unrealized exchange
loss (gain), asset impairment charges, and loss (gain) from
disposal of idle assets. These GAAP measures cannot be reasonably
predicted and may directly impact our non-GAAP gross margin, our
non-GAAP net income and our non-GAAP fully-diluted earnings per
share, although changes with respect to certain of these measures
may offset other changes. In addition, certain of these measures
are out of our control. Accordingly, a reconciliation of the
non-GAAP financial measure guidance to the corresponding GAAP
measures is not available without unreasonable effort.
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 CATV broadband, internet datacenter, telecom and FTTH
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.
Investor Relations Contacts:
The Blueshirt Group, Investor RelationsLindsay
Savarese+1-212-331-8417ir@ao-inc.com
Cassidy Fuller+1-415-217-4968ir@ao-inc.com
Applied
Optoelectronics, Inc. |
Preliminary
Condensed Consolidated Balance Sheets |
(In
thousands) |
(Unaudited) |
|
March 31,
2023 |
|
December 31,
2022 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
Cash, Cash Equivalents and Restricted Cash |
$ |
26,948 |
|
|
$ |
35,587 |
|
Accounts Receivable, Net |
|
56,799 |
|
|
|
61,175 |
|
Notes receivable |
|
1,079 |
|
|
|
339 |
|
Inventories |
|
70,186 |
|
|
|
79,679 |
|
Prepaid Income Tax |
|
|
Prepaid Expenses and Other Current Assets |
|
6,517 |
|
|
|
6,384 |
|
Total Current Assets |
|
161,529 |
|
|
|
183,164 |
|
|
|
|
Property, Plant And Equipment, Net |
|
207,171 |
|
|
|
210,184 |
|
Land Use Rights, Net |
|
5,278 |
|
|
|
5,238 |
|
Operating Right of Use Asset |
|
5,381 |
|
|
|
5,566 |
|
Financing Right of Use Asset |
|
18 |
|
|
|
26 |
|
Intangible Assets, Net |
|
3,655 |
|
|
|
3,699 |
|
Deferred Income Tax Assets |
|
- |
|
|
|
- |
|
Other Assets |
|
519 |
|
|
|
386 |
|
TOTAL ASSETS |
$ |
383,551 |
|
|
$ |
408,263 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
CURRENT LIABILITIES |
|
|
Accounts Payable |
$ |
38,419 |
|
|
$ |
47,845 |
|
Bank Acceptance Payable |
|
19,196 |
|
|
|
12,337 |
|
Accrued Expenses |
|
13,505 |
|
|
|
17,222 |
|
Deferred Revenue |
|
2,763 |
|
|
|
3,000 |
|
Current Lease Liability-Operating |
|
1,035 |
|
|
|
1,041 |
|
Current Lease Liability-Financing |
|
58 |
|
|
|
63 |
|
Current Portion of Notes Payable and Long Term Debt |
|
50,921 |
|
|
|
57,074 |
|
Current Portion of Convertible Debt |
|
79,710 |
|
|
|
- |
|
Total Current Liabilities |
|
205,607 |
|
|
|
138,582 |
|
|
|
|
Notes Payable and Long Term Debt |
|
- |
|
|
|
- |
|
Convertible Senior Notes |
|
- |
|
|
|
79,506 |
|
Other Long-Term Liabilities |
|
5,307 |
|
|
|
5,505 |
|
TOTAL LIABILITIES |
|
210,914 |
|
|
|
223,593 |
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
TOTAL STOCKHOLDERS’ EQUITY |
|
172,637 |
|
|
|
184,668 |
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
383,551 |
|
|
$ |
408,261 |
|
Applied
Optoelectronics, Inc. |
Preliminary
Condensed Consolidated Statements of Operations |
(In
thousands, except per share data) |
(Unaudited) |
Q1 2023 |
Three Months Ended March 31, |
Revenue |
|
2023 |
|
|
|
2022 |
|
CATV |
|
27,779 |
|
|
|
24,980 |
|
Datacenter |
|
20,353 |
|
|
|
21,415 |
|
Telecom |
|
3,707 |
|
|
|
5,265 |
|
FTTH |
|
2 |
|
|
|
98 |
|
Other |
|
1,189 |
|
|
|
484 |
|
Total Revenue |
|
53,030 |
|
|
|
52,242 |
|
|
|
|
Total Cost of Goods Sold |
|
43,786 |
|
|
|
43,217 |
|
|
|
|
Total Gross Profit |
|
9,244 |
|
|
|
9,025 |
|
|
|
|
Operating
Expenses: |
|
|
Research and Development |
|
8,536 |
|
|
|
9,486 |
|
Sales and Marketing |
|
2,327 |
|
|
|
2,558 |
|
General and Administrative |
|
12,548 |
|
|
|
11,220 |
|
Total Operating Expenses |
|
23,411 |
|
|
|
23,264 |
|
|
|
|
Operating Loss |
|
(14,167 |
) |
|
|
(14,239 |
) |
|
|
|
Other Income
(Expense): |
|
|
Interest Income |
|
33 |
|
|
|
28 |
|
Interest Expense |
|
(2,137 |
) |
|
|
(1,401 |
) |
Other Income (Expense), net |
|
(21 |
) |
|
|
(450 |
) |
Total Other Income (Expense): |
|
(2,125 |
) |
|
|
(1,823 |
) |
|
|
|
Net loss before Income Taxes |
|
(16,292 |
) |
|
|
(16,062 |
) |
|
|
|
Income Tax Expense |
|
0 |
|
|
|
0 |
|
|
|
|
Net loss |
$ |
(16,292 |
) |
|
$ |
(16,062 |
) |
Net loss per share attributable to common
stockholders |
basic |
$ |
(0.56 |
) |
|
$ |
(0.58 |
) |
diluted |
$ |
(0.56 |
) |
|
$ |
(0.58 |
) |
|
|
|
Weighted-average shares used to compute net loss per share
attributable to common stockholders |
basic |
|
28,872 |
|
|
|
27,463 |
|
diluted |
|
28,872 |
|
|
|
27,463 |
|
Applied
Optoelectronics, Inc. |
Reconciliation of Statements of Operations under GAAP and
Non-GAAP |
(In
thousands, except per share data) |
(Unaudited) |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
GAAP revenue |
$ |
53,030 |
|
|
$ |
52,242 |
|
Non-recurring customer credit |
|
- |
|
|
|
- |
|
Non-GAAP revenue |
$ |
53,030 |
|
|
$ |
52,242 |
|
|
|
|
GAAP total gross profit(a) |
$ |
9,244 |
|
|
$ |
9,025 |
|
Share-based compensation expense |
|
114 |
|
|
|
136 |
|
Non-recurring expense |
|
0 |
|
|
|
0 |
|
Expenses associated with discontinued products |
|
2,962 |
|
|
|
0 |
|
Non-GAAP total gross profit(a) |
$ |
12,320 |
|
|
$ |
9,161 |
|
|
|
|
GAAP net loss |
$ |
(16,292 |
) |
|
$ |
(16,062 |
) |
Share-based compensation expense |
|
2,290 |
|
|
|
2,472 |
|
Expenses associated with discontinued products |
|
2,962 |
|
|
|
0 |
|
Non-cash expenses associated with discontinued products |
|
1,162 |
|
|
|
1,166 |
|
Amortization of intangible assets |
|
159 |
|
|
|
152 |
|
Non-recurring (income) expense |
|
358 |
|
|
|
25 |
|
Unrealized exchange loss (gain) |
|
(1,109 |
) |
|
|
981 |
|
Non-GAAP tax benefit |
|
3,327 |
|
|
|
3,394 |
|
Non-GAAP net loss |
$ |
(7,143 |
) |
|
$ |
(7,872 |
) |
|
|
|
GAAP diluted net loss per share |
$ |
(0.56 |
) |
|
$ |
(0.58 |
) |
Share-based compensation expense |
|
0.08 |
|
|
|
0.09 |
|
Expenses associated with discontinued products |
|
0.10 |
|
|
|
- |
|
Non-cash expenses associated with discontinued products |
|
0.04 |
|
|
|
0.04 |
|
Amortization of intangible assets |
|
0.01 |
|
|
|
0.01 |
|
Non-recurring (income) expense |
|
0.01 |
|
|
|
0.00 |
|
Unrealized exchange loss (gain) |
|
(0.04 |
) |
|
|
0.04 |
|
Non-GAAP tax benefit |
|
0.12 |
|
|
|
0.12 |
|
Non-GAAP diluted net loss per share |
$ |
(0.25 |
) |
|
$ |
(0.29 |
) |
|
|
|
Shares used
to compute diluted loss per share |
|
28,872 |
|
|
|
27,463 |
|
Shares used
to compute diluted earnings per share |
|
28,872 |
|
|
|
27,463 |
|
|
|
|
(a) Provided for the purpose of calculating gross profit as a
percentage of revenue (gross margin). |
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