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Neophotonics Corp – ‘8-K’ for 8/5/19 – ‘EX-99.1’

On:  Monday, 8/5/19, at 4:14pm ET   ·   For:  8/5/19   ·   Accession #:  1227025-19-73   ·   File #:  1-35061

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 8/05/19  Neophotonics Corp                 8-K:2,9     8/05/19    2:527K

Current Report   —   Form 8-K   —   Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     17K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML    173K

‘EX-99.1’   —   Miscellaneous Exhibit

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nptnq22019logo.jpg
NeoPhotonics Reports Second Quarter 2019 Financial Results
•
Revenue of $81.7 million for the quarter, up 1% year-over-year
•
High Speed Products represented 89% of total revenue for the quarter
SAN JOSE, Calif. - August 5, 2019 - NeoPhotonics Corporation (NYSE: NPTN), a leading designer and manufacturer of optoelectronic solutions for the highest speed communications networks in telecom and data center applications, today announced financial results for its second quarter ended June 30, 2019.
“Q2 was a volatile quarter for NeoPhotonics and I am proud of our team and their continued focus and execution to extend our leadership position in high-speed digital optoelectronics while making changes needed to adjust for the Huawei ban,” said Tim Jenks, NeoPhotonics Chairman and CEO. “Market drivers are well aligned with our advanced technologies and high-speed capabilities. These trends transcend the current Huawei ban and, coupled with the continued demand with hyperscale data centers, we are optimistic about NeoPhotonics’ new product prospects,” concluded Mr. Jenks.
Second Quarter Summary
•
Revenue was $81.7 million, up 3% quarter-over-quarter and up 1% year-over-year
•
Gross margin was 19.2%, down from 19.8% in the prior quarter
•
Non-GAAP Gross margin was 25.6%, up from 22.4% in the prior quarter
•
Diluted net loss per share was $0.16, up from a net loss of $0.30 per share in the prior quarter
•
Non-GAAP diluted net loss per share was $0.03, up from net loss per share of $0.19 in the prior quarter
•
Cash generated from operations was $0.7 million, down from $8.7 million in the prior quarter
•
Adjusted EBITDA was $6.8 million, up from a loss of $0.8 million in the prior quarter
Non-GAAP results in the second quarter of 2019 exclude $3.0 million of stock-based compensation expense, $3.6 million of inventory write down, $0.9 million of accelerated depreciation, $0.8 million of gain on sale of Russia assets, $0.3 million of amortization of acquisition-related intangibles and restructuring 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.
As of June 30, 2019, cash and cash equivalents, short-term investments and restricted cash, together totaled $74 million, down $5 million compared to March 31, 2019.
Outlook for the Quarter Ending September 30, 2019
 
GAAP
Non-GAAP
Revenue
$87 to $93 million
Gross Margin
24% to 28%
25% to 29%
Operating Expenses
$25 to $26 million
$22 to $23 million
Earnings per share
$(0.09) net loss to $0.01 net profit
$(0.03) net loss to $0.07 net profit
The non-GAAP outlook for the third quarter of 2019 excludes the expected impact of stock-based compensation expense of approximately $3.5 million, of which $0.6 million is estimated for cost of goods sold and the impact of expected amortization of intangibles of approximately $0.3 million.

1



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 host a conference call today, Monday, August 05, 2019 at 4:30 P.M. Eastern Time (1:30 P.M. Pacific Time). The call will be available, live, to interested parties by dialing +1-800-263-0877. For international callers, please dial +1-323-794-2094. The Conference ID number is 6807671. Please dial into the conference call 5-10 minutes prior to the scheduled start time.
A live webcast will be available in the Investor Relations section of NeoPhotonics’ website at:
http://ir.neophotonics.com/phoenix.zhtml?c=236218&p=irol-calendar.
A replay of the webcast will be available in the Investor Relations section of the Company’s website approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days.
About NeoPhotonics
NeoPhotonics is a leading designer and manufacturer of optoelectronic solutions for the highest speed communications networks in telecom and datacenter applications. The Company’s products enable cost-effective, high-speed data transmission and efficient allocation of bandwidth over communications 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.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This press release includes statements that qualify as forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about the following topics: future financial results, demand for the Company’s high-speed products, and the Company’s market position. Forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially. Those risks and uncertainties include, but are not limited to, such factors as: the Company’s reliance on a small number of customers for a substantial portion of its revenues; market growth in China and other key countries; potential governmental trade actions; possible disruptions in demand for the Company’s products due to industry developments; changes in demand for the Company's products; the impact of competitive products and pricing and alternative technological advances; the timely and successful development and market acceptance of new

2



products and upgrades to existing products; changes in economic and industry projections; and a decline in general conditions in the telecommunications equipment industry or the world economy generally. For further discussion of these risks and uncertainties, please refer to the documents the Company files with the SEC from time to time, including the Company's Annual Report on Form 10-K for the year ended December 31, 2018. All forward-looking statements are made as of the date of this press release, and the Company disclaims any duty to update such statements.
©2019 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.

3



NeoPhotonics Corporation
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)

 
 
As of
 
 
Jun. 30, 2019
 
Dec. 31, 2018
 
 
 
 
 
ASSETS
 
 

 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
55,107

 
$
58,185

Short-term investments
 
7,567

 
7,481

Restricted cash
 
11,533

 
11,053

Accounts receivable, net
 
59,623

 
74,751

Inventories
 
48,795

 
52,159

Assets held for sale
 
—

 
2,971

Prepaid expenses and other current assets
 
23,397

 
26,605

Total current assets
 
206,022

 
233,205

Property, plant and equipment, net
 
89,283

 
100,090

Operating lease right-of-use assets
 
16,520

 
—

Purchased intangible assets, net
 
2,532

 
3,018

Goodwill
 
1,115

 
1,115

Other long-term assets
 
3,144

 
3,148

Total assets
 
$
318,616

 
$
340,576

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Accounts payable
 
$
51,857

 
$
58,403

Notes payable and short-term borrowing
 
—

 
4,795

Current portion of long-term debt
 
3,048

 
2,897

Accrued and other current liabilities
 
43,020

 
50,288

Total current liabilities
 
97,925

 
116,383

Long-term debt, net of current portion
 
45,181

 
50,454

Operating lease liabilities, non-current
 
17,577

 
—

Other noncurrent liabilities
 
9,949

 
13,499

Total liabilities
 
170,632

 
180,336

 
 
 
 
 
Stockholders’ equity:
 
 

 
 

Common stock
 
118

 
116

Additional paid-in capital
 
572,734

 
564,722

Accumulated other comprehensive loss
 
(5,979
)
 
(7,126
)
Accumulated deficit
 
(418,889
)
 
(397,472
)
Total stockholders’ equity
 
147,984

 
160,240

Total liabilities and stockholders’ equity
 
$
318,616

 
$
340,576



4



NeoPhotonics Corporation
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except percentages and per share data)

 
 
Three Months Ended
 
Six Months Ended
 
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Jun. 30, 2018
 
Jun. 30, 2019
 
Jun. 30, 2018
Revenue
 
$
81,690

 
$
79,366

 
$
81,102

 
$
161,056

 
$
149,688

Cost of goods sold (1)
 
66,015

 
63,629

 
65,630

 
129,644

 
125,034

Gross profit
 
15,675

 
15,737

 
15,472

 
31,412

 
24,654

Gross margin
 
19.2
%
 
19.8
%
 
19.1
%
 
19.5
%
 
16.5
%
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Research and development (1)
 
13,793

 
14,683

 
13,243

 
28,476

 
27,131

Sales and marketing (1)
 
3,623

 
4,603

 
3,891

 
8,226

 
8,015

General and administrative (1)
 
7,174

 
7,753

 
7,267

 
14,927

 
14,917

Amortization of purchased intangible assets
 
—

 
119

 
120

 
119

 
239

Asset sale related costs
 
47

 
329

 
79

 
376

 
93

Restructuring charges
 
79

 
179

 
622

 
258

 
653

Gain on asset sale
 
(817
)
 
—

 
—

 
(817
)
 
—

Total operating expenses
 
23,899

 
27,666

 
25,222

 
51,565

 
51,048

Loss from operations
 
(8,224
)
 
(11,929
)
 
(9,750
)
 
(20,153
)
 
(26,394
)
Interest income
 
99

 
99

 
122

 
198

 
215

Interest expense
 
(496
)
 
(493
)
 
(759
)
 
(989
)
 
(1,467
)
Other income (expense), net
 
1,090

 
(1,598
)
 
930

 
(508
)
 
581

Total interest and other income (expense), net
 
693

 
(1,992
)
 
293

 
(1,299
)
 
(671
)
Loss before income taxes
 
(7,531
)
 
(13,921
)
 
(9,457
)
 
(21,452
)
 
(27,065
)
Income tax benefit (provision)
 
205

 
(170
)
 
(1,080
)
 
35

 
(1,718
)
Net loss
 
$
(7,326
)
 
$
(14,091
)
 
$
(10,537
)
 
$
(21,417
)
 
$
(28,783
)
Basic net loss per share
 
$
(0.16
)
 
$
(0.30
)
 
$
(0.24
)
 
$
(0.46
)
 
$
(0.65
)
Diluted net loss per share
 
$
(0.16
)
 
$
(0.30
)
 
$
(0.24
)
 
$
(0.46
)
 
$
(0.65
)
Weighted average shares used to compute basic net loss per share
 
46,754

 
46,414

 
44,665

 
46,585

 
44,463

Weighted average shares used to compute diluted net loss per share
 
46,754

 
46,414

 
44,665

 
46,585

 
44,463

 
 
 
 
 
 
 
 
 
 
 
(1) Includes stock-based compensation expense as follows for the periods presented:
 
 
 
 
 
 
 
 
 
 
Cost of goods sold
 
$
609

 
$
601

 
$
629

 
$
1,210

 
$
1,279

Research and development
 
787

 
881

 
829

 
1,668

 
1,602

Sales and marketing
 
599

 
678

 
642

 
1,277

 
1,580

General and administrative
 
1,010

 
1,178

 
1,039

 
2,188

 
2,025

Total stock-based compensation expense
 
$
3,005

 
$
3,338

 
$
3,139

 
$
6,343

 
$
6,486



5



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
 
Six Months Ended
 
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Jun. 30, 2018
 
Jun. 30, 2019
 
Jun. 30, 2018
NON-GAAP GROSS PROFIT:
 
 
 
 
 
 
 
 
 
 
GAAP gross profit
 
$
15,675

 
$
15,737

 
$
15,472

 
$
31,412

 
$
24,654

Stock-based compensation expense
 
609

 
601

 
629

 
1,210

 
1,279

Amortization of purchased intangible assets
 
184

 
184

 
184

 
368

 
387

Depreciation of acquisition-related fixed asset step-up
 
(66
)
 
(66
)
 
(73
)
 
(132
)
 
(142
)
End-of-life related inventory write-down
 
3,553

 
—

 
—

 
3,553

 
—

Accelerated Depreciation
 
950

 
1,315

 
—

 
2,265

 
—

Restructuring charges
 
—

 
—

 
54

 
—

 
146

Non-GAAP gross profit
 
$
20,905

 
$
17,771

 
$
16,266

 
$
38,676

 
$
26,324

Non-GAAP gross margin as a % of revenue
 
25.6
 %
 
22.4
 %
 
20.1
 %
 
24.0
 %
 
17.6
 %
 
 
 
 
 
 
 
 
 
 
 
NON-GAAP TOTAL OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
GAAP total operating expenses
 
$
23,899

 
$
27,666

 
$
25,222

 
$
51,565

 
$
51,048

Stock-based compensation expense
 
(2,396
)
 
(2,737
)
 
(2,510
)
 
(5,133
)
 
(5,207
)
Amortization of purchased intangible assets
 
—

 
(119
)
 
(120
)
 
(119
)
 
(239
)
Depreciation of acquisition-related fixed asset step-up
 
(67
)
 
(66
)
 
(68
)
 
(133
)
 
(135
)
Asset sale related costs
 
(47
)
 
(329
)
 
(79
)
 
(376
)
 
(93
)
Restructuring charges
 
(79
)
 
(179
)
 
(622
)
 
(258
)
 
(653
)
Gain on asset sale
 
817

 
—

 
—

 
817

 
—

Non-GAAP total operating expenses
 
$
22,127

 
$
24,236

 
$
21,823

 
$
46,363

 
$
44,721

Non-GAAP total operating expenses as a % of revenue
 
27.1
 %
 
30.5
 %
 
26.9
 %
 
28.8
 %
 
29.9
 %
 
 
 
 
 
 
 
 
 
 
 
NON-GAAP OPERATING LOSS:
 
 
 
 
 
 
 
 
 
 
GAAP loss from operations
 
$
(8,224
)
 
$
(11,929
)
 
$
(9,750
)
 
$
(20,153
)
 
$
(26,394
)
Stock-based compensation expense
 
3,005

 
3,338

 
3,139

 
6,343

 
6,486

Amortization of purchased intangible assets
 
184

 
303

 
304

 
487

 
626

Depreciation of acquisition-related fixed asset step-up
 
1

 
—

 
(5
)
 
1

 
(7
)
Asset sale related costs
 
47

 
329

 
79

 
376

 
93

End-of-life related inventory write-down
 
3,553

 
—

 
—

 
3,553

 
—

Accelerated Depreciation
 
950

 
1,315

 
—

 
2,265

 
—

Restructuring charges
 
79

 
179

 
676

 
258

 
799

Gain on asset sale
 
(817
)
 
—

 
—

 
(817
)
 
—

Non-GAAP loss from operations
 
$
(1,222
)
 
$
(6,465
)
 
$
(5,557
)
 
$
(7,687
)
 
$
(18,397
)
Non-GAAP operating margin as a % of revenue
 
(1.5
)%
 
(8.1
)%
 
(6.9
)%
 
(4.8
)%
 
(12.3
)%


6



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
 
Six Months Ended
 
 
Jun. 30, 2019
 
Mar. 31, 2019
 
Jun. 30, 2018
 
Jun. 30, 2019
 
Jun. 30, 2018
NON-GAAP NET LOSS:
 
 
 
 
 
 
 
 
 
 
GAAP net loss
 
$
(7,326
)
 
$
(14,091
)
 
$
(10,537
)
 
$
(21,417
)
 
$
(28,783
)
Stock-based compensation expense
 
3,005

 
3,338

 
3,139

 
6,343

 
6,486

Amortization of purchased intangible assets
 
184

 
303

 
304

 
487

 
626

Depreciation of acquisition-related fixed asset step-up
 
1

 
—

 
(5
)
 
1

 
(7
)
Asset sale related costs
 
47

 
329

 
79

 
376

 
93

End-of-life related inventory write-down
 
3,553

 
—

 
—

 
3,553

 
—

Accelerated Depreciation
 
950

 
1,315

 
—

 
2,265

 
—

Restructuring charges
 
79

 
179

 
676

 
258

 
799

Gain on asset sale
 
(817
)
 
—

 
—

 
(817
)
 
—

Income tax effect of Non-GAAP adjustments
 
(895
)
 
(377
)
 
42

 
(1,272
)
 
(84
)
Non-GAAP net loss
 
$
(1,219
)
 
$
(9,004
)
 
$
(6,302
)
 
$
(10,223
)
 
$
(20,870
)
Non-GAAP net loss as a % of revenue
 
(1.5
)%
 
(11.3
)%
 
(7.8
)%
 
(6.3
)%
 
(13.9
)%
 
 
 
 
 
 
 
 
 
 
 
ADJUSTED EBITDA:
 
 
 
 
 
 
 
 
 
 
GAAP net loss
 
$
(7,326
)
 
$
(14,091
)
 
$
(10,537
)
 
$
(21,417
)
 
$
(28,783
)
Stock-based compensation expense
 
3,005

 
3,338

 
3,139

 
6,343

 
6,486

Amortization of purchased intangible assets
 
184

 
303

 
304

 
487

 
626

Depreciation of acquisition-related fixed asset step-up
 
1

 
—

 
(5
)
 
1

 
(7
)
Asset sale related costs
 
47

 
329

 
79

 
376

 
93

End-of-life related inventory write-down
 
3,553

 
—

 
—

 
3,553

 
—

Accelerated Depreciation
 
950

 
1,315

 
—

 
2,265

 
—

Restructuring charges
 
79

 
179

 
676

 
258

 
799

Gain on asset sale
 
(817
)
 
—

 
—

 
(817
)
 
—

Interest expense, net
 
397

 
394

 
637

 
791

 
1,252

Income tax benefit (provision)
 
(205
)
 
170

 
1,080

 
(35
)
 
1,718

Depreciation expense
 
6,956

 
7,233

 
7,607

 
14,189

 
15,293

Adjusted EBITDA
 
$
6,824

 
$
(830
)
 
$
2,980

 
$
5,994

 
$
(2,523
)
Adjusted EBITDA as a % of revenue
 
8.4
 %
 
(1.0
)%
 
3.7
 %
 
3.7
 %
 
(1.7
)%
 
 
 
 
 
 
 
 
 
 
 
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE:
 
 
 
 
 
 
 
 
 
 
GAAP basic net loss per share
 
$
(0.16
)
 
$
(0.30
)
 
$
(0.24
)
 
$
(0.46
)
 
$
(0.65
)
GAAP diluted net loss per share
 
$
(0.16
)
 
$
(0.30
)
 
$
(0.24
)
 
$
(0.46
)
 
$
(0.65
)
Non-GAAP basic net loss per share
 
$
(0.03
)
 
$
(0.19
)
 
$
(0.14
)
 
$
(0.22
)
 
$
(0.47
)
Non-GAAP diluted net loss per share
 
$
(0.03
)
 
$
(0.19
)
 
$
(0.14
)
 
$
(0.22
)
 
$
(0.47
)
 
 
 
 
 
 
 
 
 
 
 
SHARES USED TO COMPUTE GAAP AND NON-GAAP BASIC NET LOSS PER SHARE
 
46,754

 
46,414

 
44,665

 
46,585

 
44,463

SHARES USED TO COMPUTE GAAP DILUTED NET LOSS PER SHARE
 
46,754

 
46,414

 
44,665

 
46,585

 
44,463

SHARES USED TO COMPUTE NON-GAAP DILUTED NET LOSS PER SHARE
 
46,754

 
46,414

 
44,665

 
46,585

 
44,463


7



Contacts
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


8

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing    Date    Other Filings
9/30/19
Filed on / For Period end:8/5/19
6/30/19
3/31/1910-Q
12/31/1810-K,  SD
6/30/1810-Q
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