For its fiscal fourth-quarter 2012(to end-September),Emcore Corp of Albuquerque,NM,USA,which manufacturers compound semiconductor-based systems for fiber-optic and solar power applications,has reported revenue of$47.5m,down 8.9%on the prior year's quarter but up 15.6%on fiscal Q3/2012.
Fiscal Q4/2011 Q1/2012 Q2/2012 Q3/2012 Q4/2012 Revenue$52.1m$37.5m$37.8m$41.1m$47.5m
The increase was primarily due to Fiber Optics revenue of$30.1m,down 2.7%on Q4/2011 but 16.5%up on Q3/2012,driven by ITLA(integrable tunable laser assembly)sales.In addition,the firm's Photovoltaics division yielded revenue of$17.4m,down 17.9%on Q4/2011 but up 14.2%on Q3/2012.Photovoltaics business accounted for 37%of total revenue(level with last quarter).
Consolidated gross margin was 9.7%,down from 10.7%last quarter and 19.2%the prior year.On a segment basis,Photovoltaics'gross margin was 22.2%,up from 13%the preceding quarter and 21%the prior year.Fiber Optics'gross margin was just 2.4%,down from 9.3%the preceding quarter and 18%the prior year,primarily due to higher excess and obsolete charges,work order variances for new product lines,and yield and other variances associated with manufacturing transfer from California to China and Thailand.Excluding these items,Fiber Optics gross margin would have been over 20%."We expect our gross margins in the Fiber Optics segment to improve in future quarters as we complete the ramp-up of our product lines at our overseas locations,"commented chief financial officer Mark Weinswig.
Operating loss was$6.3m,an improvement of$2.5m on the preceding quarter and$8.1m on the prior year.The firm noted that the quarter-on-quarter boost was primarily due to the$4m of insurance recoveries relating to the flooding at Thailand-based subcontract manufacturer Fabrinet,partially offset by higher severance-related costs from corporate restructuring.
After excluding certain non-cash and other infrequent transactions,non-GAAP net loss was$6.6m,an additional loss of about$2.6m on the prior year but a lower loss of$0.9m on last quarter.
Considering its full-year fiscal 2012 performance,revenue was$163.8m,down 18.5%on the prior year's$200.9m.Fiber Optics revenue was$96.2m,down 23.5%"primarily due to the Thailand flood in October 2011".Revenue for the Photovoltaics segment was$67.6m,down 10.2%,primarily due to lower sales to an[unnnamed]international customer.
The company commented that during fiscal 2012,lower fiber-optics revenues due to the impact from the Thailand flood resulted in higher manufacturing overhead as a percentage of revenue.Manufacturing of certain fiber-optics components was moved to company-owned facilities in the USA,which involved higher labor and other related costs.Instead of completely rebuilding all flood-damaged manufacturing lines,Emcore's management decided to realign the company's fiber-optics product portfolio and focus on business areas with strong technology differentiation and growth opportunities.
During fiscal 2012,management identified$1.6m of inventory on order related to manufacturing product lines that were destroyed by the Thailand flood and will not be replaced.This expense was recorded within cost of revenues.Photovoltaics'gross margins fell year-on-year,primarily due to lower revenues with unfavorable product mix changes,as well as lower manufacturing yields on new products.
As of end-September,order backlog for Emcore's Photovoltaics segment totaled$43.3m,down 6.3%on$46.2m at the end of June.The order backlog as of end-September and end-June included$1.9m and$5.1m,respectively,of terrestrial solar cell orders from the Suncore joint venture.Emcore notes that product sales from its Fiber Optics segment are made in relation to purchase orders,often with short lead-times,and revenue from this segment is still limited by the rebuilding of production capacity.
"In the fourth quarter,Emcore sold assets relating to the terrestrial systems product lines to Suncore as part of the realignment strategy we discussed last quarter,"noted Weinswig in the subsequent analysts conference."As we have said previously,while we believe in the long-term growth prospects of the space solar power business,our revenues in any given quarter may be a bit lumpy,"he added.
"Over the past few months,we have made significant strides in recovering from the crisis caused by the flooding in Thailand,including steps to streamline and focus our business through the sale of certain product lines,"noted Weinswig."We look forward to showing the results of these actions over the next few quarters."
Considering its business outlook Emcore stated,"On a consolidated basis,we expect revenue for our first quarter 2013(ending December 31,2012)to be in the range of$49-51m[up 5%sequentially],which includes revenue from our joint venture Suncore that was previously deferred."
CEO Hong Hou added,"The fundamentals of the business remain robust,and the outlook for the space programs remains promising.We have good visibility into our customer demand for the next 12 months and expect to book several high-value contracts in our space solar segment in the near term.
"Furthermore,we have increased our focus on operational efficiency in the Photovoltaics area,and those efforts are paying off.Product yield and productivity are improving,and we expect the trend to continue throughout the next several quarters.With the divestiture of the terrestrial systems business and the improvement in the space solar business,we'd expect more consistent operating results in the future periods.
"Our forecast fiscal year 2013 revenue for solar is expected to be at or near record level,and our profit margins are currently projected to show marked improvement over the 2012 results.Finally,for solar segment,it's widely recognized by the industry that Emcore maintains its technology lead in the next-generation solar cell and solar panel technology,commonly referred to as IMM[Inverted Metamorphic].
"We currently hold the world record for space solar cell efficiency,with demonstrated results of greater than 35%efficiency as compared to 29.5%that represents the current state of the practice.We plan to reintroduce IMM products to well-known manufacturing in the year.
"During the September quarter,we achieved significant increase in revenue for our Fiber Optics business.This is due primarily to the increase in ITLA shipment for 40G and 100G coherent systems.The revenue from this product line in the September quarter exceeded the highest level pre-flood.
"As we announced in the last quarter,we are increasing manufacturing capacity by 50%by adding more processing and testing equipment,as well as shortening production cycle time.We are on track for increasing capacity and reaching that level by March 2013.
"With a completed recovery in the manufacturing capacity,we are moving to recapture the lost market share.We're very encouraged and confident by the recent order activities,which positions us for substantial ramp in the March quarter."
