Yahoo Finance EMCORE Corp (EMKR) Q2 2024 Earnings Call Transcript Highlights: Navigating Challenges and ...
Revenue: $19.6 million in fiscal Q2, down from $24.1 million in the previous quarter.
Gross Margin: 15% in fiscal Q2, a decrease from 29% in the prior quarter.
Operating Expenses: $9.8 million in fiscal Q2, up from $9.5 million in fiscal Q1.
Operating Loss: $6.9 million in fiscal Q2, compared to $2.6 million in the December quarter.
Net Loss: $7 million, or $0.08 per share in fiscal Q2.
Adjusted EBITDA: Negative $5.8 million in fiscal Q2, compared to negative $1.7 million last quarter.
Cash Balance: $12 million at the end of March, down from $20 million at the end of December.
Total Debt: $8.3 million at the end of March, slightly down from $8.6 million at the end of December.
Revenue Guidance: Expected to be flat to slightly up between the back half of fiscal '24 and early fiscal '25, with Q3 revenue projected between $19 million to $21 million.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
EMCORE Corp (NASDAQ:EMKR) successfully completed the sale of its discontinued chips business line and Alhambra indium phosphide wafer fab, generating $2.92 million in cash proceeds.
The company has established a restructuring committee to direct necessary cost reductions and restructuring, aiming for adjusted cash flow breakeven by the end of September 2024.
EMCORE Corp (NASDAQ:EMKR) has entered into a new lending agreement with Hale Capital, providing additional financial flexibility for necessary changes.
The company anticipates flat to slightly up quarterly revenues between the back half of fiscal '24 and early fiscal '25, with a return to top line growth expected in the first half of fiscal '25.
EMCORE Corp (NASDAQ:EMKR) has a current book of business backlog and opportunity pipeline that supports the expected return to top line growth.
Negative Points
Revenue for fiscal 2Q was $19.6 million, a decrease from the prior quarter's $24.1 million, primarily due to delayed orders and material arrival issues.
Gross margin significantly decreased to 15% in fiscal 2Q from 29% the previous quarter, impacted by lower revenue and production yield issues.
Operating loss widened to $6.9 million in the March quarter from $2.6 million in the December quarter, with negative adjusted EBITDA of $5.8 million.
EMCORE Corp (NASDAQ:EMKR) experienced a cash balance decrease, ending the quarter with $12 million compared to $20 million at the end of the previous quarter.
The company faces ongoing challenges with revenue decline from its Bud Lake site following the cancellation of the Team We project and needs to implement significant cost structure adjustments.
Q & A Highlights
Q: Richard Shannon asked about the extent to which EMCORE's current issues are one-time or unusual versus indicative of a decrease in backlog, and how these issues are affecting the revenue outlook. A: Thomas Minichiello, EMCORE Corp - Chief Financial Officer, deferred to Matt Vargas for a detailed response. Matt Vargas, Vice President of Sales, Marketing and Business Development, explained that the issues are not indicative of larger problems but are specific to certain business segments, particularly affecting the company's manufacturing footprint and demand signals.
Q: Richard Shannon inquired about the company's restructuring plans and whether they are a response to ongoing or transitional challenges. A: Cletus Glasener, EMCORE Corp - Independent Chairman of the Board, responded that the restructuring is necessary to align the company's cost structure with its current revenue and will require cash, indicating that the company is exploring various options to raise the necessary funds.
Q: Richard Shannon asked for clarification on EMCORE's cash burn rate and its plans to maintain liquidity given the current cash balance is below the previously stated comfort level. A: Thomas Minichiello elaborated that the company started the quarter with $12 million, boosted by an additional $2 million from a recent sale, totaling $14 million. He highlighted the new lending terms that provide more flexibility, helping the company manage its cash flow amidst restructuring.
Q: Brian Kinstlinger questioned the feasibility of EMCORE achieving profitability by the end of the September quarter given the current financials. A: Cletus Glasener clarified that the goal is to reach cash flow breakeven on an adjusted basis by the end of the September quarter, excluding restructuring expenses, rather than achieving profitability.
Q: Brian Kinstlinger sought confirmation on whether EMCORE's revenue outlook for the second half of the fiscal year remains flat and how this aligns with the company's profitability goals. A: Thomas Minichiello confirmed the revenue expectations and clarified the timeline, indicating that the company is planning for fiscal year adjustments rather than calendar year, with a focus on managing costs to align with projected revenues.
Q: Brian Kinstlinger asked for details on the impact of specific programs like Mark 54 and Mark 48 on the revenue and whether issues with these programs are affecting the financial outlook. A: Matt Vargas explained that the demand signals for Mark 54 and Mark 48 are independent, and the issues are not interrelated. He noted that budget implications in Washington are being closely monitored to better align production and demand forecasts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
