SAN JOSE, Calif., Nov. 8, 2018 /PRNewswire/ -- Oclaro, Inc.
(Nasdaq: OCLR), a leading provider and innovator of optical
communications solutions, today announced its financial results for
the first quarter of fiscal year 2019, which ended September 29, 2018. Oclaro will not hold an
earnings call, nor provide forward guidance for the second quarter
of fiscal year 2019, due to the previously announced proposed
acquisition of Oclaro by Lumentum Holdings Inc.
"I am once again pleased with the results that the Oclaro team
delivered for our first quarter of fiscal year 2019. Revenue
grew nine percent sequentially over the prior quarter to
$132 million, primarily driven by the
recovery of shipments to ZTE. Despite this revenue growth,
our gross margin declined in the quarter, primarily due to a weaker
product mix driven by increased sales of certain 100G Datacom
modules that we are winding down. Even so, we delivered
strong operating results and generated $19
million in cash," said Greg
Dougherty, CEO of Oclaro. "While we wait for the
Lumentum merger to close, which we believe remains on track to
occur in calendar year 2018, we remain a leading innovator of new
products. We recently announced several new products for next
generation deployments, including 600G components, DCO modules at
100G and 200G, and 400G PAM4 data center transceivers," said Mr.
Dougherty.
Results for the First Quarter of Fiscal 2019
- Revenues were $131.7 million for
the first quarter of fiscal 2019. This compares with revenues of
$120.9 million in the fourth quarter
of fiscal 2018, and revenues of $155.6
million in the first quarter of fiscal 2018.
- GAAP gross margin was 34.6% for the first quarter of fiscal
2019. This compares with GAAP gross margin of 37.0% in the fourth
quarter of fiscal 2018, and GAAP gross margin of 40.3% in the first
quarter of fiscal 2018.
- Non-GAAP gross margin was 34.9% for the first quarter of fiscal
2019. This compares with non-GAAP gross margin of 37.7% in the
fourth quarter of fiscal 2018, and non-GAAP gross margin of 40.6%
in the first quarter of fiscal 2018.
- GAAP operating income was $11.4
million for the first quarter of fiscal 2019. This compares
with GAAP operating income of $8.9
million in the fourth quarter of fiscal 2018, and GAAP
operating income of $31.2 million in
the first quarter of fiscal 2018.
- Non-GAAP operating income was $16.8
million for the first quarter of fiscal 2019. This compares
with non-GAAP operating income of $15.7
million in the fourth quarter of fiscal 2018, and non-GAAP
operating income of $34.6 million in
the first quarter of fiscal 2018.
- GAAP net income for the first quarter of fiscal 2019 was
$10.2 million. This compares with
GAAP net income of $6.4 million in
the fourth quarter of fiscal 2018, and GAAP net income of
$26.5 million in the first quarter of
fiscal 2018.
- Non-GAAP net income for the first quarter of fiscal 2019 was
$14.4 million. This compares with
non-GAAP net income of $14.6 million
in the fourth quarter of fiscal 2018, and non-GAAP net income of
$34.5 million in the first quarter of
fiscal 2018.
- GAAP earnings per diluted share for the first quarter of fiscal
2019 were $0.06. This compares with
GAAP earnings per diluted share of $0.04 in the fourth quarter of fiscal 2018, and
GAAP earnings per diluted share of $0.16 in the first quarter of fiscal 2018.
- Non-GAAP earnings per diluted share for the first quarter of
fiscal 2019 were $0.08. This compares
with non-GAAP earnings per diluted share of $0.08 in the fourth quarter of fiscal 2018, and
non-GAAP earnings per diluted share of $0.20 in the first quarter of fiscal 2018.
- Cash, cash equivalents, and short-term investments were
$341.9 million at September 29, 2018.
About Oclaro
Oclaro, Inc. (NASDAQ: OCLR), is a leader
in optical components and modules for the long-haul, metro and data
center markets. Leveraging more than three decades of laser
technology innovation and photonics integration, Oclaro provides
differentiated solutions for optical networks and high-speed
interconnects driving the next wave of streaming video, cloud
computing, application virtualization and other bandwidth-intensive
and high-speed applications. For more information, visit
www.oclaro.com or follow on Twitter at @OclaroInc.
Copyright 2018. All rights reserved. Oclaro, the Oclaro logo,
and certain other Oclaro trademarks and logos are trademarks and/or
registered trademarks of Oclaro, Inc. or its subsidiaries in the
U.S. and other countries. All other trademarks are the property of
their respective owners. Information in this release is subject to
change without notice.
Safe Harbor Statement
This press release contains
statements about management's future expectations regarding the
plans or prospects of Oclaro and its business, and together with
the assumptions underlying these statements, constitute
forward-looking statements for the purposes of the safe harbor
provisions of The Private Securities Litigation Reform Act of 1995.
Investors should not unduly rely on such forward-looking
statements. These forward-looking statements include statements
concerning (i) the timing of the closing of our pending merger with
Lumentum, (ii) Oclaro's future financial performance and operating
prospects and (iii) the statements in our CEO's quote. Such
statements can be identified by the fact that they do not relate
strictly to historical or current facts and may contain words such
as "anticipate," "estimate," "expect," "forecast," "project,"
"intend," "plan," "believe," "will," "should," "outlook," "could,"
"target," "model," "objective," and other words and terms of
similar meaning in connection with any discussion of future
operations or financial performance. There are a number of
important factors that could cause our actual results or events to
differ materially from those indicated by such forward-looking
statements, including (i) the risk that our pending merger with
Lumentum Holdings Inc. does not close, due to the failure of one or
more conditions to closing, (ii) disruption from the merger making
it more difficult to maintain our customer, supplier, key personnel
and other strategic relationships, (iii) uncertainty as to the
market value of the Lumentum merger consideration to be paid in the
merger, (iv) the risk that required governmental approvals of the
merger (including China antitrust
approval) will not be obtained or that such approvals will be
delayed beyond current expectations, (v) the risk of litigation in
respect of either Oclaro or Lumentum or the merger, (vi) our
dependence on a limited number of customers for a significant
percentage of our revenues, (vii) competition and pricing pressure,
(viii) our ability to effectively manage our inventory, (ix) the
absence of long-term purchase commitments from many of our
long-term customers, (x) our ability to meet or exceed our gross
margin expectations, (xi) our ability to grow our revenues in the
future by increasing the percentage of sales associated with new
products, (xii) the effects of fluctuations in foreign currency
exchange rates, (xiii) our ability to obtain governmental licenses
and approvals for international trading activities or technology
transfers, including export licenses, (xiv) our ability to timely
develop, commercialize and ramp the production of new products to
customer required volumes, (xv) the effect of tariffs or other
restrictions on trade between the U.S. and China, (xvi) our ability to respond to
evolving technologies, customer requirements and demands, and
product design challenges, (xvii) our dependence on a limited
number of suppliers and key contract manufacturers, (xviii) the
impact of additional restructuring charges we may take in the
future, (xix) the risks associated with delays, disruptions or
quality control problems in manufacturing, (xx) our manufacturing
yields, (xxi) our ability to conclude agreements with our customers
on favorable terms, (xxii) our ability to maintain effective
internal controls over financial reporting, (xxiii) fluctuations in
our revenues, growth rates and operating results, (xxiv) changes in
our effective tax rates or outcomes of tax audits or similar
proceedings, (xxv) the impact of financial market and general
economic conditions in the industries in which we operate and any
resulting reduction in demand for our products, (xxvi) potential
operating or reporting disruptions that could result from the
implementation of our new enterprise resource planning system, and
(xxvii) other factors described under the caption "Risk Factors"
and elsewhere in the documents we periodically file with the
SEC.
Non-GAAP Financial Measures
Oclaro provides certain
supplemental non-GAAP financial measures to its investors as a
complement to the most comparable GAAP measures. The GAAP measure
most directly comparable to non-GAAP gross margin rate is gross
margin rate. The GAAP measure most directly comparable to non-GAAP
operating income/loss is operating income/loss. The GAAP measure
most directly comparable to Adjusted EBITDA is net income/loss. The
GAAP measure most directly comparable to non-GAAP net income/loss
is net income/loss. An explanation and reconciliation of each of
these non-GAAP financial measures to GAAP information is set forth
below.
Oclaro believes that providing these non-GAAP measures to its
investors, in addition to corresponding income statement measures,
provides investors the benefit of viewing Oclaro's performance
using the same financial metrics that the management team uses in
making many key decisions and evaluating how Oclaro's core
operating performance and its results of operations may look in the
future. Oclaro defines "core operating performance" as its ongoing
performance in the ordinary course of its operations.
Management excludes certain items from its view of Oclaro's core
operating performance, such as impairment charges, deferred income
taxes, restructuring and severance programs, costs relating to
specific major projects (such as acquisitions), non-cash
compensation related to stock and options, impairment of fixed
assets and inventory and related expenses, certain other income and
expense items, and the tax effects thereof. Management does not
believe these items are reflective of Oclaro's ongoing core
operating performance and accordingly excludes those items from
non-GAAP gross margin rate, non-GAAP operating income/loss,
non-GAAP net income/loss and Adjusted EBITDA. Additionally, each
non-GAAP measure has historically been presented by Oclaro as a
complement to its most comparable GAAP measure, and Oclaro believes
that the continuation of this practice increases the consistency
and comparability of Oclaro's earnings releases.
Non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles in
the United States of America.
Non-GAAP measures should not be considered in isolation from or as
a substitute for financial information presented in accordance with
generally accepted accounting principles, and may be different from
non-GAAP measures used by other companies.
Adjusted EBITDA
Adjusted EBITDA is calculated
as net income/loss excluding the impact of income taxes, net
interest income/expense, depreciation and amortization, net
gains/losses on foreign currency transactions, as well as
restructuring, acquisition and related costs, non-cash compensation
related to stock and options, and other unusual one-time charges,
specifically identified in the non-GAAP reconciliation schedules
set forth below. Oclaro uses Adjusted EBITDA in evaluating Oclaro's
historical and prospective cash usage, as well as its cash usage
relative to its competitors. Specifically, management uses this
non-GAAP measure to further understand and analyze the cash used
in/generated from Oclaro's core operations. Oclaro believes that by
excluding these non-cash and non-recurring charges, more accurate
expectations of its future cash needs can be assessed in addition
to providing a better understanding of the actual cash used in or
generated from core operations for the periods presented. Oclaro
further believes that providing this information allows Oclaro's
investors greater transparency and a better understanding of
Oclaro's core cash position.
Oclaro, Inc.
Contact
|
|
Investor
Contact
|
Pete
Mangan
|
|
Jim
Fanucchi
|
Chief Financial
Officer
|
|
Darrow Associates,
Inc.
|
(408)
383-1400
|
|
(408)
404-5400
|
ir@oclaro.com
|
|
ir@oclaro.com
|
OCLARO,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
September 29,
2018
|
|
June 30,
2018
|
|
(Thousands)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
337,920
|
|
|
$
|
245,688
|
|
Short-term
investments
|
3,997
|
|
|
77,440
|
|
Accounts receivable,
net
|
108,720
|
|
|
100,482
|
|
Inventories
|
89,779
|
|
|
106,678
|
|
Prepaid expenses and
other current assets
|
36,178
|
|
|
35,175
|
|
Total current
assets
|
576,594
|
|
|
565,463
|
|
Property and
equipment, net
|
131,721
|
|
|
137,438
|
|
Other intangible
assets, net
|
19
|
|
|
61
|
|
Deferred tax assets,
non-current
|
17,192
|
|
|
16,625
|
|
Other non-current
assets
|
1,514
|
|
|
1,212
|
|
Total
assets
|
$
|
727,040
|
|
|
$
|
720,799
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
69,281
|
|
|
$
|
68,221
|
|
Accrued expenses and
other liabilities
|
36,321
|
|
|
41,686
|
|
Capital lease
obligations, current
|
530
|
|
|
2,386
|
|
Total current
liabilities
|
106,132
|
|
|
112,293
|
|
Deferred gain on
sale-leaseback
|
4,962
|
|
|
5,193
|
|
Capital lease
obligations, non-current
|
702
|
|
|
857
|
|
Other non-current
liabilities
|
10,373
|
|
|
10,440
|
|
Total
liabilities
|
122,169
|
|
|
128,783
|
|
Stockholders'
equity:
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
Common
stock
|
1,715
|
|
|
1,706
|
|
Additional paid-in
capital
|
1,705,945
|
|
|
1,703,331
|
|
Accumulated other
comprehensive income
|
42,550
|
|
|
42,547
|
|
Accumulated
deficit
|
(1,145,339)
|
|
|
(1,155,568)
|
|
Total stockholders'
equity
|
604,871
|
|
|
592,016
|
|
Total liabilities and
stockholders' equity
|
$
|
727,040
|
|
|
$
|
720,799
|
|
OCLARO,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 29,
2018
|
|
June 30,
2018
|
|
September 30,
2017
|
|
(Thousands, except
per share amounts)
|
Revenues
|
$
|
131,658
|
|
|
$
|
120,944
|
|
|
$
|
155,598
|
|
Cost of
revenues
|
86,064
|
|
|
76,136
|
|
|
92,894
|
|
Gross
profit
|
45,594
|
|
|
44,808
|
|
|
62,704
|
|
Operating
expenses:
|
|
|
|
|
|
Research and
development
|
16,162
|
|
|
16,293
|
|
|
16,435
|
|
Selling, general and
administrative
|
16,389
|
|
|
16,729
|
|
|
14,866
|
|
Amortization of other
intangible assets
|
42
|
|
|
193
|
|
|
152
|
|
Restructuring and
acquisition-related expenses
|
800
|
|
|
1,274
|
|
|
—
|
|
Loss on disposal of
property and equipment
|
777
|
|
|
1,409
|
|
|
22
|
|
Total operating
expenses
|
34,170
|
|
|
35,898
|
|
|
31,475
|
|
Operating
income
|
11,424
|
|
|
8,910
|
|
|
31,229
|
|
Other income
(expense):
|
|
|
|
|
|
Interest income
(expense), net
|
200
|
|
|
102
|
|
|
434
|
|
(Loss) gain on
foreign currency transactions, net
|
(193)
|
|
|
(928)
|
|
|
489
|
|
Other income
(expense), net
|
1,357
|
|
|
923
|
|
|
574
|
|
Total other income
(expense)
|
1,364
|
|
|
97
|
|
|
1,497
|
|
Income before income
taxes
|
12,788
|
|
|
9,007
|
|
|
32,726
|
|
Income tax provision
(1)
|
2,559
|
|
|
2,587
|
|
|
6,237
|
|
Net income
|
$
|
10,229
|
|
|
$
|
6,420
|
|
|
$
|
26,489
|
|
Net income per
share:
|
|
|
|
|
Basic
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
$
|
0.16
|
|
Diluted
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
$
|
0.16
|
|
Shares used in
computing net income per share:
|
|
|
|
|
|
|
|
|
Basic
|
171,046
|
|
|
170,325
|
|
|
168,137
|
|
Diluted
|
173,127
|
|
|
172,316
|
|
|
170,849
|
|
|
(1) The Company has
not completed its estimate of the impact of Public Law 115-97
(formerly known as the Tax Cuts and Jobs Act) on the realizability
of its U.S. deferred tax assets and has, therefore, elected to
utilize the reporting provisions of Staff Accounting Bulletin No.
118 issued by the U.S. Securities and Exchange
Commission.
|
OCLARO,
INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
September 29,
2018
|
|
June 30,
2018
|
|
September 30,
2017
|
|
(Thousands, except
per share amounts)
|
Reconciliation of
GAAP gross margin rate to non-GAAP gross margin
rate:
|
GAAP gross
profit
|
$
|
45,594
|
|
|
$
|
44,808
|
|
|
$
|
62,704
|
|
Stock-based
compensation in cost of revenues
|
562
|
|
|
783
|
|
|
438
|
|
Restructuring and
acquisition-related expenses in cost of revenues
|
229
|
|
|
—
|
|
|
—
|
|
Net excess and
obsolete recoveries in cost of revenues (2)
|
(480)
|
|
|
—
|
|
|
—
|
|
Non-GAAP gross
profit
|
$
|
45,905
|
|
|
$
|
45,591
|
|
|
$
|
63,142
|
|
|
|
|
|
|
|
GAAP gross margin
rate
|
34.6
|
%
|
|
37.0
|
%
|
|
40.3
|
%
|
Non-GAAP gross margin
rate
|
34.9
|
%
|
|
37.7
|
%
|
|
40.6
|
%
|
Reconciliation of
GAAP operating income to non-GAAP operating income:
|
GAAP operating
income
|
$
|
11,424
|
|
|
$
|
8,910
|
|
|
$
|
31,229
|
|
Stock-based
compensation
|
4,004
|
|
|
3,909
|
|
|
3,199
|
|
Amortization of other
intangible assets
|
42
|
|
|
193
|
|
|
152
|
|
Restructuring and
acquisition-related expenses
|
1,029
|
|
|
1,274
|
|
|
—
|
|
Net excess and
obsolete recoveries (2)
|
(480)
|
|
|
—
|
|
|
—
|
|
Loss on disposal of
property and equipment
|
777
|
|
|
1,409
|
|
|
22
|
|
Non-GAAP operating
income
|
$
|
16,796
|
|
|
$
|
15,695
|
|
|
$
|
34,602
|
|
|
|
|
|
|
|
GAAP operating income
rate
|
8.7
|
%
|
|
7.4
|
%
|
|
20.1
|
%
|
Non-GAAP operating
income rate
|
12.8
|
%
|
|
13.0
|
%
|
|
22.2
|
%
|
|
|
|
|
|
|
Reconciliation of
GAAP net income to non-GAAP net income and adjusted
EBITDA:
|
GAAP net
income
|
$
|
10,229
|
|
|
$
|
6,420
|
|
|
$
|
26,489
|
|
Stock-based
compensation
|
4,004
|
|
|
3,909
|
|
|
3,199
|
|
Amortization of other
intangible assets
|
42
|
|
|
193
|
|
|
152
|
|
Restructuring and
acquisition-related expenses
|
1,029
|
|
|
1,274
|
|
|
—
|
|
Other (income)
expense items, net
|
(1,357)
|
|
|
(923)
|
|
|
(574)
|
|
Loss on disposal of
property and equipment
|
777
|
|
|
1,409
|
|
|
22
|
|
Net excess and
obsolete recoveries (2)
|
(480)
|
|
|
—
|
|
|
—
|
|
Loss (gain) on
foreign currency translation
|
193
|
|
|
928
|
|
|
(489)
|
|
Income tax
effect
|
4
|
|
|
1,341
|
|
|
5,664
|
|
Non-GAAP net
income
|
$
|
14,441
|
|
|
$
|
14,551
|
|
|
$
|
34,463
|
|
Income tax
provision
|
2,555
|
|
|
1,246
|
|
|
573
|
|
Interest (income)
expense, net
|
(200)
|
|
|
(102)
|
|
|
(434)
|
|
Depreciation
expense
|
8,421
|
|
|
8,241
|
|
|
6,195
|
|
Adjusted
EBITDA
|
$
|
25,217
|
|
|
$
|
23,936
|
|
|
$
|
40,797
|
|
|
|
|
|
|
|
Non-GAAP net
income per share:
|
|
|
Basic
|
$
|
0.08
|
|
|
$
|
0.09
|
|
|
$
|
0.20
|
|
Diluted
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.20
|
|
Shares used in
computing Non-GAAP net income per share:
|
|
|
Basic
|
171,046
|
|
|
170,325
|
|
|
168,137
|
|
Diluted
|
173,127
|
|
|
172,316
|
|
|
170,849
|
|
|
Three Months
Ended
|
|
September 29,
2018
|
|
June 30,
2018
|
|
September 30,
2017
|
|
(Thousands, except
per share amounts)
|
Stock-based
compensation for the above included the following:
|
|
|
Cost of
revenues
|
$
|
562
|
|
|
$
|
783
|
|
|
$
|
438
|
|
Research and
development
|
1,067
|
|
|
875
|
|
|
867
|
|
Selling, general and
administrative
|
2,375
|
|
|
2,251
|
|
|
1,894
|
|
Total
|
$
|
4,004
|
|
|
$
|
3,909
|
|
|
$
|
3,199
|
|
|
|
|
|
|
|
|
(2) Recoveries
related to inventory exposure resulting from the U.S. Government's
removal of export sanctions that had been imposed on ZTE in April
2018.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/oclaro-announces-first-quarter-fiscal-year-2019-financial-results-300747013.html
SOURCE Oclaro, Inc.