SUNNYVALE, Calif., Sept. 04, 2019 (GLOBE NEWSWIRE) -- Finisar Corporation (NASDAQ: FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for its first quarter of fiscal 2020, ended July 28, 2019. Finisar will not hold an earnings call nor provide forward guidance for the second quarter of fiscal 2020 due to the previously announced proposed acquisition by II-VI Incorporated (NASDAQ: IIVI).
| FINANCIAL HIGHLIGHTS – First Quarter Ended July 28, 2019 | |||||||
| Summary GAAP Results | First | Fourth | |||||
| Quarter | Quarter | ||||||
| Ended | Ended | ||||||
| July 28, 2019 | April 28, 2019 | ||||||
| (in thousands, except per share amounts) | |||||||
| Revenues | $ | 285,028 | $ | 310,085 | |||
| Gross margin | 29.9 | % | 28.2 | % | |||
| Operating expenses | $ | 94,798 | $ | 98,579 | |||
| Operating income (loss) | $ | (9,533 | ) | $ | (11,278 | ) | |
| Operating margin | (3.3 | )% | (3.6 | )% | |||
| Net loss | $ | (8,717 | ) | $ | (14,151 | ) | |
| Loss per share-basic | $ | (0.07 | ) | $ | (0.12 | ) | |
| Loss per share-diluted | $ | (0.07 | ) | $ | (0.12 | ) | |
| Basic shares | 119,216 | 117,953 | |||||
| Diluted shares | 119,216 | 117,953 | |||||
| Summary Non-GAAP Results (a) | First | Fourth | |||||
| Quarter | Quarter | ||||||
| Ended | Ended | ||||||
| July 28, 2019 | April 28, 2019 | ||||||
| (in thousands, except per share amounts) | |||||||
| Revenues | $ | 285,028 | $ | 310,085 | |||
| Non-GAAP Gross margin | 31.1 | % | 30.8 | % | |||
| Non-GAAP Operating expenses | $ | 63,557 | $ | 64,642 | |||
| Non-GAAP Operating income | $ | 25,083 | $ | 30,895 | |||
| Non-GAAP Operating margin | 8.8 | % | 10.0 | % | |||
| Non-GAAP Net income | $ | 27,631 | $ | 32,960 | |||
| Non-GAAP Income per share-basic | $ | 0.23 | $ | 0.28 | |||
| Non-GAAP Income per share-diluted | $ | 0.23 | $ | 0.27 | |||
| Basic shares | 119,216 | 117,953 | |||||
| Diluted shares | 121,797 | 120,795 | |||||
_____________
(a) In evaluating the operating performance of Finisar’s business, Finisar management utilizes financial measures that exclude certain charges and credits required by U.S. generally accepted accounting principles, or GAAP, that are considered by management to be outside of Finisar’s core ongoing operating results. A reconciliation of Finisar’s non-GAAP financial measures to the most directly comparable GAAP measures, as well as additional related information, can be found under the heading “Finisar Non-GAAP Financial Measures” below.
Revenue Details for the First Quarter of Fiscal 2020:
- Revenues for datacom applications decreased by $19.4 million, or (8.9)%, compared to the fourth quarter of fiscal 2019, primarily as the result of a decline in VCSELs arrays for 3D applications due to lower demand resulting from the timing of the new product cycle of a key customer, as well as lower sales of fibre channel transceivers.
- Revenues for telecom applications decreased by $5.6 million, or (6.2)%, compared to the fourth quarter of fiscal 2019, primarily as a result of a decline in sales of wavelength selective switches.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statement concerning Finisar’s expected financial performance. These statements are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on our current expectations, estimates, assumptions and projections about our business and industry, and the markets and customers we serve, and they are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Finisar assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those projected. Examples of such risks include those associated with: the uncertainty of customer demand for Finisar’s products; the rapidly evolving markets for Finisar’s products and uncertainty regarding the development of these markets; Finisar’s historical dependence on sales to a limited number of customers and fluctuations in the mix of products and customers in any period; ongoing new product development and introduction of new and enhanced products; the challenges of rapid growth followed by periods of contraction; intensive competition; the risk that our pending merger with II-VI does not close, due to the failure of one or more conditions to closing; uncertainty as to the market value of the II-VI merger consideration to be paid in the merger; 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; the risk of litigation in respect of either Finisar or II-VI or the merger; disruption from the merger making it more difficult to maintain our customer, supplier, key personnel and other strategic relationships. Further information regarding these and other risks relating to Finisar’s business is set forth in Finisar’s annual report on Form 10-K (filed June 14, 2019) and quarterly SEC filings.
ABOUT FINISAR
Finisar Corporation (NASDAQ: FNSR) is a global technology leader in optical communications, providing components and subsystems to networking equipment manufacturers, data center operators, telecom service providers, consumer electronics and automotive companies. Founded in 1988, Finisar designs products that meet the increasing demands for network bandwidth, data storage and 3D sensing subsystems. The company is headquartered in Sunnyvale, California, USA with R&D, manufacturing sites, and sales offices worldwide. Visit our website at www.finisar.com.
FINISAR FINANCIAL STATEMENTS The following financial tables are presented in accordance with GAAP.
| Finisar Corporation | |||||||||||
| Consolidated Statements of Operations | |||||||||||
| (Unaudited, in thousands, except per share data) | |||||||||||
| Three Months Ended | Three Months Ended | ||||||||||
| July 28, 2019 | July 29, 2018 | Apr 28, 2019 | |||||||||
| Revenues | $ | 285,028 | $ | 317,336 | $ | 310,085 | |||||
| Cost of revenues | 197,627 | 236,155 | 218,513 | ||||||||
| Amortization of acquired developed technology | 471 | 496 | 471 | ||||||||
| Impairment of long-lived assets | 1,665 | - | 3,800 | ||||||||
| Gross profit | 85,265 | 80,685 | 87,301 | ||||||||
| Gross margin | 29.9 | % | 25.4 | % | 28.2 | % | |||||
| Operating expenses: | |||||||||||
| Research and development | 52,151 | 62,874 | 51,133 | ||||||||
| Sales and marketing | 12,107 | 12,480 | 12,000 | ||||||||
| General and administrative | 13,234 | 12,643 | 14,396 | ||||||||
| Amortization of purchased intangibles | 230 | 640 | 324 | ||||||||
| Impairment of long-lived assets | - | 186 | 317 | ||||||||
| Startup costs | 17,076 | 7,553 | 20,409 | ||||||||
| Total operating expenses | 94,798 | 96,376 | 98,579 | ||||||||
| Income (loss) from operations | (9,533 | ) | (15,691 | ) | (11,278 | ) | |||||
| Interest income | 4,424 | 5,155 | 4,731 | ||||||||
| Interest expense | (6,423 | ) | (9,386 | ) | (6,447 | ) | |||||
| Other income (expenses), net | (2,132 | ) | (1,789 | ) | 325 | ||||||
| Loss before income taxes | (13,664 | ) | (21,711 | ) | (12,669 | ) | |||||
| Provision (benefit) for income taxes | (4,947 | ) | (3,222 | ) | 1,482 | ||||||
| Net loss | $ | (8,717 | ) | $ | (18,489 | ) | $ | (14,151 | ) | ||
| Net loss per share attributable to Finisar Corporation common stockholders: | |||||||||||
| Basic | $ | (0.07 | ) | $ | (0.16 | ) | $ | (0.12 | ) | ||
| Diluted | $ | (0.07 | ) | $ | (0.16 | ) | $ | (0.12 | ) | ||
| Shares used in computing net loss per share - basic | 119,216 | 115,867 | 117,953 | ||||||||
| Shares used in computing net loss per share - diluted | 119,216 | 115,867 | 117,953 | ||||||||
| Finisar Corporation Consolidated Balance Sheets (in thousands) | ||||||||
| 7/28/2019 | 4/28/2019 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 882,269 | $ | 814,185 | ||||
| Short-term held-to-maturity investments | - | 100,000 | ||||||
| Accounts receivable, net | 256,605 | 263,394 | ||||||
| Inventories | 320,555 | 299,028 | ||||||
| Other current assets | 40,179 | 44,224 | ||||||
| Total current assets | 1,499,608 | 1,520,831 | ||||||
| Property, equipment and improvements, net | 633,323 | 622,979 | ||||||
| Purchased intangible assets, net | 3,631 | 4,182 | ||||||
| Goodwill | 106,736 | 106,736 | ||||||
| Other assets | 62,413 | 15,462 | ||||||
| Deferred tax assets | 89,218 | 81,977 | ||||||
| Total assets | $ | 2,394,929 | $ | 2,352,167 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 119,628 | $ | 132,440 | ||||
| Accrued compensation | 33,343 | 31,804 | ||||||
| Other accrued liabilities | 66,163 | 49,495 | ||||||
| Total current liabilities | 219,134 | 213,739 | ||||||
| Long-term liabilities: | ||||||||
| Convertible notes | 516,746 | 512,105 | ||||||
| Other non-current liabilities | 44,906 | 12,162 | ||||||
| Total liabilities | 780,786 | 738,006 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 120 | 118 | ||||||
| Additional paid-in capital | 2,933,917 | 2,919,305 | ||||||
| Accumulated other comprehensive income (loss) | (54,480 | ) | (48,565 | ) | ||||
| Accumulated deficit | (1,265,414 | ) | (1,256,697 | ) | ||||
| Total stockholders' equity | 1,614,143 | 1,614,161 | ||||||
| Total liabilities and stockholders' equity | $ | 2,394,929 | $ | 2,352,167 | ||||
| Note - Balance sheet amounts as of April 28, 2019 are derived from the audited consolidated financial statements as of that date. | ||||||||
FINISAR NON-GAAP FINANCIAL MEASURES
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP, Finisar provides the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: non-GAAP gross profit, non-GAAP operating income, non-GAAP income and non-GAAP net income per share. These non-GAAP financial measures are supplemental information regarding Finisar’s operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be outside of our ongoing core operating results. Management believes that tracking non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share provides management and the investment community with valuable insight into our ongoing core current operations, our ability to generate cash and the underlying business trends that are affecting our performance. These non-GAAP measures are used by both management and our Board of Directors, along with the comparable GAAP information, in evaluating our current performance and planning our future business activities. In particular, management finds it useful to exclude non-cash charges in order to better correlate our operating activities with our ability to generate cash from operations and to exclude certain cash charges as a means of more accurately predicting our liquidity requirements. We believe that these non-GAAP measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry.
In calculating non-GAAP gross profit in this release, we have excluded the following items from cost of revenues in applicable periods in this release:
- Amortization of acquired technology (non-cash charges related to technology obtained in acquisitions);
- Stock-based compensation expense (non-cash charges);
- Impairment of long-lived/intangible assets (non-cash charges);
- Reduction in force costs and other restructuring charges (non-core cash charges);
- Acquisition related retention payments (non-core cash charges); and
- Inventory write-off related to discontinued products (non-cash charges).
In calculating non-GAAP operating income in this release, we have excluded the same items to the extent they are classified as operating expenses, and have also excluded the following items in applicable periods in this release:
- Discontinued product services fees (non-core cash charges);
- Acquisition related costs (non-core cash charges);
- Litigation settlements and resolutions and related costs (non-core cash charges);
- Amortization of purchased intangibles (non-cash charges);
- Start-up cash costs related to our Sherman VCSEL fab until we begin commercial production; and
- Impairment of long-lived assets/intangible assets (non-cash charges).
In calculating non-GAAP income and non-GAAP income per share in this release, we have also excluded the following items in applicable periods in this release:
- Imputed interest expenses on convertible debt (non-cash charges);
- Imputed interest related to restructuring (non-cash charges);
- Other interest income (non-core benefits);
- Gains and losses on sales of assets and other miscellaneous (non-cash losses and cash gains related to the periodic disposal of assets no longer required for current activities);
- Dollar denominated foreign exchange transaction losses (gains) (non-cash charges or benefits); and
- Amortization of debt issuance costs (non-cash charges).
In addition, in this release we have adjusted non-GAAP income and non-GAAP income per share for the difference between GAAP income taxes and non-GAAP income taxes.
A reconciliation of this non-GAAP financial information to the corresponding GAAP information is set forth below:
| Finisar Corporation | |||||||||||
| Reconciliation of Results of Operations under GAAP and non-GAAP | |||||||||||
| (Unaudited, in thousands, except per share data) | |||||||||||
| Three Months Ended | Three Months Ended | ||||||||||
| July 28, 2019 | July 29, 2018 | Apr 28, 2019 | |||||||||
| GAAP to non-GAAP reconciliation of gross profit: | |||||||||||
| Gross profit - GAAP | $ | 85,265 | $ | 80,685 | $ | 87,301 | |||||
| Gross margin - GAAP | 29.9 | % | 25.4 | % | 28.2 | % | |||||
| Adjustments: | |||||||||||
| Cost of revenues | |||||||||||
| Amortization of acquired technology | 471 | 496 | 471 | ||||||||
| Stock compensation | 2,926 | 3,806 | 4,527 | ||||||||
| Impairment of long-lived/intangible assets | 1,665 | - | 3,800 | ||||||||
| Reduction in force costs | 24 | 482 | 27 | ||||||||
| Acquisition related retention payment | - | 12 | - | ||||||||
| Write off of discontinued product inventory | (1,711 | ) | 1,671 | (589 | ) | ||||||
| Total cost of revenues adjustments | 3,375 | 6,467 | 8,236 | ||||||||
| Gross profit - non-GAAP | 88,640 | 87,152 | 95,537 | ||||||||
| Gross margin - non-GAAP | 31.1 | % | 27.5 | % | 30.8 | % | |||||
| GAAP to non-GAAP reconciliation of operating income (loss): | |||||||||||
| Operating income (loss) - GAAP | (9,533 | ) | (15,691 | ) | (11,278 | ) | |||||
| Operating margin - GAAP | -3.3 | % | -4.9 | % | -3.6 | % | |||||
| Adjustments: | |||||||||||
| Total cost of revenues adjustments | 3,375 | 6,467 | 8,236 | ||||||||
| Total operating expense adjustments | |||||||||||
| Operating expenses - GAAP | 94,798 | 96,376 | 98,579 | ||||||||
| Research and development | |||||||||||
| Reduction in force costs and other restructuring | 61 | 7,024 | 558 | ||||||||
| Acquisition related retention payment | - | 29 | (2 | ) | |||||||
| Stock compensation | 6,317 | 6,175 | 5,230 | ||||||||
| Discontinued product service fees | - | 313 | - | ||||||||
| Sales and marketing | |||||||||||
| Reduction in force costs and other restructuring | - | 402 | (18 | ) | |||||||
| Acquisition related retention payment | - | - | - | ||||||||
| Stock compensation | 2,335 | 2,146 | 2,034 | ||||||||
| General and administrative | |||||||||||
| Reduction in force costs and other restructuring | - | 519 | 15 | ||||||||
| Stock compensation | 4,143 | 3,017 | 4,194 | ||||||||
| Acquisition related costs | 1,054 | (2 | ) | 876 | |||||||
| Litigation settlements and resolutions and related costs | 25 | 63 | - | ||||||||
| Amortization of purchased intangibles | 230 | 640 | 324 | ||||||||
| Startup costs | 17,076 | 7,553 | 20,409 | ||||||||
| Impairment of long-lived assets/intangible assets | - | 186 | 317 | ||||||||
| Total operating expense adjustments | 31,241 | 28,065 | 33,937 | ||||||||
| Operating expenses - non-GAAP | 63,557 | 68,311 | 64,642 | ||||||||
| Operating income - non-GAAP | 25,083 | 18,841 | 30,895 | ||||||||
| Operating margin - non-GAAP | 8.8 | % | 5.9 | % | 10.0 | % | |||||
| GAAP to non-GAAP reconciliation of income (loss) before income taxes: | |||||||||||
| Loss before income taxes - GAAP | (13,664 | ) | (21,711 | ) | (12,669 | ) | |||||
| Adjustments: | |||||||||||
| Total cost of revenues adjustments | 3,375 | 6,467 | 8,236 | ||||||||
| Total operating expense adjustments | 31,241 | 28,065 | 33,937 | ||||||||
| Other interest income | - | - | - | ||||||||
| Non-cash imputed interest expenses on convertible debt | 5,464 | 7,927 | 5,420 | ||||||||
| Imputed interest related to restructuring | 10 | 20 | 12 | ||||||||
| Other (income) expense, net | |||||||||||
| Loss (gain) on sale of assets | 1 | (77 | ) | (75 | ) | ||||||
| Foreign exchange transaction (gain) or loss | 2,433 | 1,921 | (332 | ) | |||||||
| Amortization of debt issuance cost | 231 | 385 | 231 | ||||||||
| Total interest and other adjustments | 8,139 | 10,176 | 5,256 | ||||||||
| Income before income taxes - non-GAAP | 29,091 | 22,997 | 34,760 | ||||||||
| GAAP to non-GAAP reconciliation of net income (loss): | |||||||||||
| Net loss - GAAP | (8,717 | ) | (18,489 | ) | (14,151 | ) | |||||
| Total cost of revenues adjustments | 3,375 | 6,467 | 8,236 | ||||||||
| Total operating expense adjustments | 31,241 | 28,065 | 33,937 | ||||||||
| Total interest and other adjustments | 8,139 | 10,176 | 5,256 | ||||||||
| Income tax provision adjustments | (6,407 | ) | (4,922 | ) | (318 | ) | |||||
| Total adjustments | 36,348 | 39,786 | 47,111 | ||||||||
| Net income - non-GAAP | $ | 27,631 | $ | 21,297 | $ | 32,960 | |||||
| Basic non-GAAP income per share | |||||||||||
| GAAP earnings per share | $ | (0.07 | ) | $ | (0.16 | ) | $ | (0.12 | ) | ||
| Impact of all non-GAAP adjustments | $ | 0.30 | $ | 0.34 | $ | 0.40 | |||||
| Non-GAAP earnings per share | $ | 0.23 | $ | 0.18 | $ | 0.28 | |||||
| Diluted non-GAAP income per share | |||||||||||
| GAAP earnings per share | $ | (0.07 | ) | $ | (0.16 | ) | $ | (0.12 | ) | ||
| Impact of all non-GAAP adjustments | $ | 0.30 | $ | 0.34 | $ | 0.39 | |||||
| Non-GAAP earnings per share | $ | 0.23 | $ | 0.18 | $ | 0.27 | |||||
| Shares used in computing non-GAAP income per share | |||||||||||
| Basic | 119,216 | 115,867 | 117,953 | ||||||||
| Diluted | 121,797 | 117,191 | 120,795 | ||||||||
Finisar-F
Investor Contact:
Kurt Adzema
Chief Financial Officer
408-542-5050 or Investor.relations@finisar.com
Press contact:
Victoria McDonald
Director, Corporate Communications
408-542-4261