Emcore Corp of Alhambra, CA, USA – which provides indium phosphide (InP)-based optical chips, components, subsystems and systems for the broadband and specialty fiber-optics markets – has completed its strategic review and will distribute $1.50 per share via a special dividend payable on 29 July to shareholders of record as of 18 July.
Emcore's board of directors will have hence returned about $85m of cash to its shareholders since June 2015, representing about 50% of the cash received from operations sold in the prior fiscal year.
"The return of cash to shareholders will strongly improve the return on assets of the business by reducing our overall capitalization, while maintaining flexibility to invest in new market opportunities to accelerate earnings growth," says president & CEO Jeffrey Rittichier. "We are encouraged by the performance of our CATV and Fiber Optic Gyro businesses and see strong growth opportunities in these and other areas to continue improving our financial performance," he adds.
"During my first year at Emcore, we grew revenues 47% and improved gross margins 13 points from fiscal-year 2014 to fiscal-year 2015, positioning the company for profitable growth. Building on this progress, we returned $45m to shareholders in June 2015 and began executing a strategic re-alignment of the manufacturing operations to drive margins higher," continues Rittichier. "With the core operations of the business on improved footing, in December 2015 the board and management began a comprehensive strategic review to strike the right balance between returning assets to shareholders and investing in growth opportunities," he adds. "During this review period, we actively worked to eliminate risks to our balance sheet posed by the Sumitomo arbitration and other lingering liabilities. Given the recent successful outcome of the Sumitomo arbitration and the completion of our strategic review, we are pleased to announce this return of capital to our shareholders."
As part of the strategic review process, the firm evaluated its growth opportunities in existing and adjacent markets, analyzed its products, technologies and production capabilities, and concluded that it could fully leverage its core competency in mixed-signal optics in both existing and new markets. As mixed-signal devices have both analog and digital circuits on multiple chips, or even a single chip, the value of these solutions is often far greater than traditional digital applications, and as a result they require specialized expertise that is unique in the optics industry, reckons the firm.
"Given Emcore's existing leadership in mixed-signal optic products such as DOCSIS 3.1 transmission devices, and emerging position in new products such as fiber-optic gyros and 5G distributed antenna system components for wireless applications, it became clear there is an opportunity to leverage our core mixed-signal competencies to penetrate new markets," says Rittichier. "Emcore is uniquely positioned as a supplier of advanced mixed-signal solutions given our design expertise and our captive wafer fabrication facility," he adds. "Mixed-signal technology is at the heart of all of our products, and is shared between fiber-optic gyros (sensor) and our CATV (transmission) products alike… If one were to open up one of our fiber gyros, one would see a miniature communication link that requires the same technologies, chip designs and production assets as our CATV products, giving us the ability to leverage our high-volume infrastructure against lower-volume, higher-value-added product."
