EMCORE Corporation (NASDAQ:EMKR) Q4 2018 Earnings Conference Call Transcript

Dec 04, 2018 • 08:00 am ET


EMCORE Corporation (NASDAQ:EMKR) Q4 2018 Earnings Conference Call Transcript


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Ladies and gentlemen, thank you for standing by. And welcome to the EMCORE Corporation Fiscal Fourth Quarter and Full-year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode, later, we will conduct a question-and-answer sessions and instructions will be given at that time. As a reminder, today's call is being recorded.

At this time, I'd like to turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead.

Erica Mannion

Good morning. (Forward-Looking Cautionary Statements)

In addition, references will be made during this call to non-GAAP financial measures. Investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable GAAP financial measures included at the end of our press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC today. These materials can also be accessed in the Investors section of our website at www.emcore.com.

With me today from EMCORE are Jeff Rittichier, President and Chief Executive Officer, and Jikun Kim, Chief Financial Officer. Jikun will review the financial results, and Jeff will discuss business highlights and fiscal first quarter guidance before we open the call up for questions.

Now, I will turn the call over to Jikun.

Jikun Kim

Thank you, Erica, and good morning, everyone. Today, I will focus my discussion on EMCORE's FY '18 Q4 and full-year financial results ending September 30, 2018.

Consolidated revenue for the quarter came in at $25.2 million, more than $3.2 million above the mid-point of our initial guidance range of $21 million to $23 million provided on our third quarter earnings call and at the upper end of our revised guidance range of $24.2 million to $25.2 million provided in October. Driving the revenue upside in the quarter was larger than expected cable TV order related to our LEML product line, which we received late in the fourth quarter.

Coupled with the expected return to normalize customer inventory levels of our legacy cable TV products and the completion of the long-term navigation supply agreement, revenues grew 42% sequentially. In Q4, our cable TV revenues were 71% of revenues, and our non-cable TV revenues were 29% of revenues. Chips were 10%, Satcom video and wireless revenues approximately 9%, and navigation was at 10% of revenues.

All of our end markets grew sequentially in the quarter, with cable TV driving the largest upside, within the broadband market, and chips and navigation products growing in line with expectations.

GAAP gross profits in Q4 were approximately $4.4 million or 17.5% of revenue, up from 6.8% in the prior quarter. The sequential increase in gross margin was largely driven by a number of unique events in the third quarter, which we did not repeat themselves in the fourth quarter, offset by additional E&O charges due to accelerating adoption of our LEML products, incremental long-term inventory impairments, as well as expedite charges related to sourcing of raw materials for the LEML order, which I referenced earlier.

Taken together, these