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CST: 05/12/2019 20:56:01   

Finisar Announces First Quarter of Fiscal 2020 Financial Results

92 Days ago

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 resultsA 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

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