Lumentum Holdings Inc. ("Lumentum") today reported results for its
fiscal first quarter ended September 26, 2015. For the first
five weeks of the first quarter, Lumentum was part of JDS Uniphase
Corporation (JDSU), now Viavi Solutions Inc, and began operations
as an independent public company on August 1, 2015.
Fiscal first quarter 2016 net revenue was $212.6 million, with
GAAP net loss of $(0.4) million, or $(0.01) per share. Prior
quarter net revenue was $208.9 million, with GAAP net loss of
$(15.8) million, or $(0.27) per share. Net revenue for fiscal first
quarter 2015 was $219.0 million, with GAAP net income of $4.3
million, or $0.07 per share.
Non-GAAP net income for the fiscal first quarter 2016 was $15.3
million or $0.26 per share. Prior quarter non-GAAP net income was
$8.9 million, or $0.15 per share. Fiscal first quarter 2015
non-GAAP net income was $16.7 million, or $0.28 per share. Included
in first quarter 2016 non-GAAP results is approximately $2.0
million of non-recurring allocated cost from JDSU during the period
from June 27, 2015 to July 31, 2015, prior to separation from JDSU.
Based on Lumentum's cost structure, had we been a stand-alone
company for the entire first quarter, the non-GAAP operating margin
would have been approximately 8.3%, and non-GAAP earnings per share
would have been $0.29 per share.
“We delivered solid first quarter results with revenue and
earnings above the mid-point of our guidance,” said Alan Lowe,
president and CEO. “Our TrueFlex™ ROADM revenue increased
approximately 27% sequentially, and we expect continued growth of
both our TrueFlex™ and 100G products into calendar 2016. I am very
proud of what our employees have accomplished and excited about the
opportunities in front of Lumentum as we embark upon a journey to
grow our business and generate shareholder value.”
Financial Overview – Fiscal First Quarter Ended
September 26, 2015
|
|
|
GAAP Results ($ in millions) |
|
Q1 |
|
Q4 |
|
Q1 |
|
Change |
|
FY 2016 |
|
FY 2015 |
|
FY 2015 |
|
Q/Q |
|
Y/Y |
Net revenue |
$ |
212.6 |
|
|
$ |
208.9 |
|
|
$ |
219.0 |
|
|
1.8 |
% |
|
(2.9 |
)% |
Gross margin |
31.5 |
% |
|
30.4 |
% |
|
32.1 |
% |
|
110 |
bps |
|
(60 |
)bps |
Operating margin |
(1.2 |
)% |
|
(7.0 |
)% |
|
2.4 |
% |
|
580 |
bps |
|
(360 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Results ($ in millions) |
|
Q1 |
|
Q4 |
|
Q1 |
|
Change |
|
FY 2016 |
|
FY 2015 |
|
FY 2014 |
|
Q/Q |
|
Y/Y |
Net revenue |
$ |
212.6 |
|
|
$ |
208.9 |
|
|
$ |
219.0 |
|
|
1.8 |
% |
|
(2.9 |
)% |
Adjusted Gross
margin |
32.8 |
% |
|
32.0 |
% |
|
33.8 |
% |
|
80 |
bps |
|
(100 |
)bps |
Adjusted Operating
margin |
7.4 |
% |
|
4.3 |
% |
|
7.7 |
% |
|
310 |
bps |
|
(30 |
)bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 GAAP Net loss available to common shareholders, which includes
dividends on Series A Preferred Stock and an adjustment for Series
A Preferred Stock redemption value, was $(10.2) million or $(0.17)
per share.
|
|
|
Non-GAAP Net Revenue by Segment |
|
Q1 |
|
% of |
|
Q4 |
|
Q1 |
|
Change |
|
FY 2016 |
|
Net Revenue |
|
FY 2015 |
|
FY 2015 |
|
Q/Q |
|
Y/Y |
Optical Communications
|
$ |
177.0 |
|
|
83.3 |
% |
|
$ |
178.9 |
|
|
$ |
176.9 |
|
|
(1.1 |
)% |
|
0.1 |
% |
Lasers |
35.6 |
|
|
16.7 |
% |
|
30.0 |
|
|
42.1 |
|
|
18.7 |
% |
|
(15.4 |
)% |
Total |
$ |
212.6 |
|
|
100.0 |
% |
|
$ |
208.9 |
|
|
$ |
219.0 |
|
|
1.8 |
% |
|
(2.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- The Company held $142.1 million in total cash at the end of the
quarter and remains debt-free.
The tables above provide comparisons of quarterly results to
prior periods, including sequential quarterly and year-over-year
changes. A reconciliation between GAAP and non-GAAP measures is
contained in this release under the section titled “Use of Non-GAAP
(Adjusted) Financial Measures.”
Business Outlook
For the second quarter of fiscal 2016 ending December 26, 2015,
the Company expects net revenue to be in the range of $212 million
to $222 million and non-GAAP earnings per share to be $0.26 to
$0.30 per share.
Conference Call
Lumentum will host a management presentation on November 10,
2015 at 1:30pm PT/4:30pm ET. A live webcast of the call and the
replay will be available on the Lumentum website at
http://investor.lumentum.com. The Company will post supporting
slides outlining the Company’s latest financial results on
http://investor.lumentum.com under the “Events and
Presentations” section concurrently with this earnings press
release. This press release is being furnished as a Current Report
on Form 8-K with the Securities and Exchange Commission, and will
be available at www.sec.gov.
About Lumentum
Lumentum (NASDAQ:LITE) is a market-leading manufacturer of
innovative optical and photonic products enabling optical
networking and commercial laser customers worldwide. Lumentum’s
optical components and subsystems are part of virtually every type
of telecom, enterprise, and data center network. Lumentum’s
commercial lasers enable advanced manufacturing techniques and
diverse applications including next-generation 3D sensing
capabilities. Lumentum is headquartered in Milpitas, California
with R&D, manufacturing, and sales offices worldwide. For
more information, visit www.lumentum.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These
statements include any anticipation or guidance as to future
financial performance, including future revenue, earnings per
share, gross margin, operating expense, operating margin,
profitability, cash flow and other financial metrics, anticipated
sales trends for our products as well as our strategies and
performance as a standalone company. These forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those projected. In particular,
the Company’s ability to predict future financial performance
continues to be difficult due to, among other things:
(a) quarter-over-quarter product mix fluctuations, which can
materially impact profitability measures due to the broad gross
margin ranges across our portfolio; (b) continued decline of
average selling prices across our businesses; (c) effects of
seasonality; (d) the ability of our suppliers and contract
manufacturers to meet production and delivery requirements to our
forecasted demand; and (e) inherent uncertainty related to
global markets and the effect of such markets on demand for our
products. Additionally, risks related to the recent separation
include the ability to recognize anticipated cost savings, and
Lumentum’s ability to function successfully as a stand-alone
entity, potential business disruption caused by the separation. All
forward-looking statements involve risks and uncertainties that
could cause actual events and terms to differ materially from those
set forth herein, including those related to our business and
growth opportunities. For more information on these risks, please
refer to the "Risk Factors" section included in the Company’s
Amended 10-K filed on September 29, 2015. In addition, the results
contained in this press release are subject to the completion of
Lumentum’s normal quarter-end closing and review processes, and
actual results could differ materially from these preliminary
amounts. Factors that could cause Lumentum’s actual results to
differ materially from those contemplated by these forward-looking
statements include inaccurate data or assumptions, in particular
with respect to the period of time that Lumentum was a part of
Viavi. The forward-looking statements and preliminary
financial results contained in this press release are made as of
the date hereof and the Company assumes no obligation to update
such statements, except as required by applicable law.
The following financial tables are presented in accordance with
GAAP, unless otherwise specified.
|
|
LUMENTUM HOLDINGS INC. |
COMBINED AND CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in millions, except per share data) |
(unaudited) |
PRELIMINARY |
|
|
|
Three Months Ended |
|
September 26, 2015 |
|
June 27, 2015 |
|
September 27, 2014 |
Net revenue |
$ |
212.6 |
|
|
$ |
208.9 |
|
|
$ |
219.0 |
|
Cost of sales |
144.0 |
|
|
143.4 |
|
|
146.8 |
|
Amortization of
acquired technologies |
1.7 |
|
|
1.9 |
|
|
1.9 |
|
Gross profit |
66.9 |
|
|
63.6 |
|
|
70.3 |
|
Operating
expenses: |
|
|
|
|
|
Research and development |
34.4 |
|
|
35.7 |
|
|
35.0 |
|
Selling, general and administrative |
33.6 |
|
|
37.6 |
|
|
28.3 |
|
Restructuring and related charges |
1.4 |
|
|
4.9 |
|
|
1.8 |
|
Total operating
expenses |
69.4 |
|
|
78.2 |
|
|
65.1 |
|
(Loss) income from
operations |
(2.5 |
) |
|
(14.6 |
) |
|
5.2 |
|
Interest and other
income (expense), net |
2.0 |
|
|
(0.3 |
) |
|
(0.3 |
) |
(Loss) income before
income taxes |
(0.5 |
) |
|
(14.9 |
) |
|
4.9 |
|
(Benefit) provision for
income taxes |
(0.1 |
) |
|
0.9 |
|
|
0.6 |
|
Net (loss) income |
(0.4 |
) |
|
(15.8 |
) |
|
4.3 |
|
|
|
|
|
|
|
Net (loss) income per
share:(a) |
|
|
|
|
|
Basic |
$ |
(0.01 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.07 |
|
Diluted |
$ |
(0.01 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.07 |
|
|
|
|
|
|
|
Items reconciling net
(loss) income to net (loss) income available to common
shareholders: |
|
|
|
|
|
Dividends
on Series A preferred stock |
(0.1 |
) |
|
— |
|
|
— |
|
Adjustment for Series A preferred stock redemption value |
(9.7 |
) |
|
— |
|
|
— |
|
Net (loss) income
available to common shareholders |
$ |
(10.2 |
) |
|
$ |
(15.8 |
) |
|
$ |
4.3 |
|
|
|
|
|
|
|
Net (loss) income
available to common shareholders per share:(a) |
|
|
|
|
|
Basic |
$ |
(0.17 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.07 |
|
Diluted |
$ |
(0.17 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.07 |
|
|
|
|
|
|
|
Shares used in per
share calculation:(a) |
|
|
|
|
|
Basic |
58.8 |
|
|
58.8 |
|
|
58.8 |
|
Diluted |
58.8 |
|
|
58.8 |
|
|
58.8 |
|
|
|
|
|
|
|
|
|
|
(a) On August 1, 2015, JDSU distributed 47.1 million shares, or
80.1% of the outstanding shares of common stock of Lumentum to
existing holders of JDSU common stock. JDSU was renamed Viavi
Solutions Inc. and at the time of the distribution, retained 11.7
million shares, or 19.9% of Lumentum’s outstanding shares. Basic
and diluted net (loss) income per share for the three months ended
June 27, 2015 and September 27, 2014 are calculated using
the shares of Lumentum common stock outstanding on August 1,
2015.
The financial statements are preliminary.
Use of Non-GAAP (Adjusted) Financial
Measures
In this press release, Lumentum provides investors with gross
margin, operating income, operating margin, net income, and other
results, on a non-GAAP basis. Lumentum believes this non-GAAP
financial information provides additional insight into the
Company's on-going performance and has therefore chosen to provide
this information to investors for a more consistent basis of
comparison and to help them evaluate the results of the Company's
on-going operations and enable more meaningful period to period
comparisons. Specifically, the Company believes that providing this
information allows investors to better understand the Company’s
financial performance and, importantly, to evaluate the efficacy of
the methodology and information used by management to evaluate and
measure such operating performance. However, these measures
may be different from non-GAAP measures used by other companies,
limiting their usefulness for comparison purposes. The non-GAAP
financial measures used in this press release should not be
considered in isolation from measures of financial performance
prepared in accordance with GAAP. Investors are cautioned that
there are material limitations associated with the use of non-GAAP
financial measures as an analytical tool. In particular, many of
the adjustments to our GAAP financial measures reflect the
exclusion of items that are recurring and will be reflected in our
financial results for the foreseeable future.
Non-GAAP gross margin, non-GAAP operating income, non-GAAP net
income (loss), non-GAAP net income (loss) per share, EBITDA and
adjusted EBITDA exclude (i) workforce related charges such as
severance, retention bonuses and employee relocation costs related
to formal restructuring plans, (ii) costs for facilities not
required for ongoing operations, and costs related to the
relocation of certain equipment from these facilities and/or
contract manufacturer facilities, (iii) stock-based compensation,
and (iv) other non-recurring charges comprising mainly one-time
acquisition, integration, litigation and other costs and
contingencies unrelated to current and future operations including
post-separation activities such as small site consolidations,
reorganizations, insourcing or outsourcing of activities, severance
related costs and transition related costs for the separation from
Viavi. Management does not believe that these items are reflective
of the Company's underlying operating performance. The presentation
of these and other similar items in Lumentum's non-GAAP financial
results should not be interpreted as implying that these items are
non-recurring, infrequent or unusual.
A quantitative reconciliation between GAAP and non-GAAP
financial data with respect to historical periods is included in
the supplemental financial table attached to this press release.
The Company has not reconciled its projections of non-GAAP earnings
per share. As items that impact net loss are out of the
company's control and/or cannot be reasonably predicted, Lumentum
has determined that a quantitative reconciliation of
forward-looking non-GAAP financial measures to their most directly
comparable GAAP financial measures cannot be provided without
unreasonable efforts.
|
|
LUMENTUM HOLDINGS INC. |
RECONCILIATION OF GAAP MEASURES TO NON-GAAP
MEASURES |
(in millions, except per share data) |
(unaudited) |
PRELIMINARY |
|
|
|
Three Months Ended |
|
September 26, 2015 |
|
June 27, 2015 |
|
September 27, 2014 |
|
|
|
|
|
|
Gross profit on
GAAP basis |
$ |
66.9 |
|
|
$ |
63.6 |
|
|
$ |
70.3 |
|
Stock-based compensation |
1.2 |
|
|
1.2 |
|
|
1.4 |
|
Other
charges related to non-recurring activities |
— |
|
|
0.2 |
|
|
0.5 |
|
Amortization of acquired developed technologies |
1.7 |
|
|
1.9 |
|
|
1.9 |
|
Gross profit on
non-GAAP basis |
$ |
69.8 |
|
|
$ |
66.9 |
|
|
$ |
74.1 |
|
|
|
|
|
|
|
Research and
development on GAAP basis |
$ |
34.4 |
|
|
$ |
35.7 |
|
|
$ |
35.0 |
|
Stock-based compensation |
1.8 |
|
|
1.8 |
|
|
1.9 |
|
Other
charges related to non-recurring activities |
0.6 |
|
|
— |
|
|
— |
|
Research and
development on non-GAAP basis |
$ |
32.0 |
|
|
$ |
33.9 |
|
|
$ |
33.1 |
|
|
|
|
|
|
|
Selling,
general and administrative on GAAP basis |
$ |
33.6 |
|
|
$ |
37.6 |
|
|
$ |
28.3 |
|
Stock-based compensation |
3.5 |
|
|
3.1 |
|
|
3.6 |
|
Other
charges related to non-recurring activities |
7.9 |
|
|
10.3 |
|
|
0.4 |
|
Amortization of intangibles |
0.1 |
|
|
0.1 |
|
|
0.1 |
|
Selling,
general and administrative on non-GAAP basis |
$ |
22.1 |
|
|
$ |
24.1 |
|
|
$ |
24.2 |
|
|
|
|
|
|
|
Restructuring
and related charges on GAAP basis |
$ |
1.4 |
|
|
$ |
4.9 |
|
|
$ |
1.8 |
|
Restructuring and related charges |
1.4 |
|
|
4.9 |
|
|
1.8 |
|
Restructuring
and related charges on non-GAAP basis |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
(Loss) income
from operations on GAAP basis |
$ |
(2.5 |
) |
|
$ |
(14.6 |
) |
|
$ |
5.2 |
|
Stock-based compensation |
6.5 |
|
|
6.1 |
|
|
6.9 |
|
Other
charges related to non-recurring activities |
8.5 |
|
|
10.5 |
|
|
0.9 |
|
Amortization of intangibles |
1.8 |
|
|
2.0 |
|
|
2.0 |
|
Restructuring and related charges |
1.4 |
|
|
4.9 |
|
|
1.8 |
|
(Loss) income
from operations on non-GAAP basis |
$ |
15.7 |
|
|
$ |
8.9 |
|
|
$ |
16.8 |
|
|
|
|
|
|
|
Interest and
other income (expense), net on GAAP basis |
$ |
2.0 |
|
|
$ |
(0.3 |
) |
|
$ |
(0.3 |
) |
Non-cash
interest expense |
(2.2 |
) |
|
— |
|
|
— |
|
Interest and
other income (expense), net on non-GAAP basis |
$ |
(0.2 |
) |
|
$ |
(0.3 |
) |
|
$ |
(0.3 |
) |
|
|
|
|
|
|
(Loss) income
before income taxes on GAAP basis |
$ |
(0.5 |
) |
|
$ |
(14.9 |
) |
|
$ |
4.9 |
|
Stock-based compensation |
6.5 |
|
|
6.1 |
|
|
6.9 |
|
Other
charges related to non-recurring activities |
8.5 |
|
|
10.5 |
|
|
0.9 |
|
Amortization of intangibles |
1.8 |
|
|
2.0 |
|
|
2.0 |
|
Restructuring and related charges |
1.4 |
|
|
4.9 |
|
|
1.8 |
|
Non-cash
interest expense |
(2.2 |
) |
|
— |
|
|
— |
|
(Loss) income
before income taxes on non-GAAP basis |
$ |
15.5 |
|
|
$ |
8.6 |
|
|
$ |
16.5 |
|
|
|
|
|
|
|
(Benefit)
provision for income taxes on GAAP basis |
$ |
(0.1 |
) |
|
$ |
0.9 |
|
|
$ |
0.6 |
|
Non-cash
income tax (benefit) expense |
0.3 |
|
|
(1.2 |
) |
|
(0.8 |
) |
(Benefit)
provision for income taxes on non-GAAP basis |
$ |
0.2 |
|
|
$ |
(0.3 |
) |
|
$ |
(0.2 |
) |
|
|
|
|
|
|
Net (loss)
income on GAAP basis |
$ |
(0.4 |
) |
|
$ |
(15.8 |
) |
|
$ |
4.3 |
|
Stock-based compensation |
6.5 |
|
|
6.1 |
|
|
6.9 |
|
Other
charges related to non-recurring activities |
8.5 |
|
|
10.5 |
|
|
0.9 |
|
Amortization of intangibles |
1.8 |
|
|
2.0 |
|
|
2.0 |
|
Restructuring and related charges |
1.4 |
|
|
4.9 |
|
|
1.8 |
|
Non-cash
interest expense |
(2.2 |
) |
|
— |
|
|
— |
|
Non-cash
income tax (benefit) expense |
(0.3 |
) |
|
1.2 |
|
|
0.8 |
|
Net (loss)
income on non-GAAP basis |
$ |
15.3 |
|
|
$ |
8.9 |
|
|
$ |
16.7 |
|
|
|
|
|
|
|
Net income per
share on non-GAAP basis |
$ |
0.26 |
|
|
$ |
0.15 |
|
|
$ |
0.28 |
|
|
|
|
|
|
|
Shares used in
per share calculation - diluted on GAAP basis |
58.8 |
|
|
58.8 |
|
|
58.8 |
|
Non-GAAP
adjustment |
0.9 |
|
|
— |
|
|
— |
|
Shares used in
per share calculation - diluted on non-GAAP basis
|
59.7 |
|
|
58.8 |
|
|
58.8 |
|
|
|
|
|
|
|
|
|
|
The financial statements are preliminary. |
|
|
|
|
|
|
|
|
|
|
|
LUMENTUM HOLDINGS INC. |
RECONCILIATION OF GAAP NET (LOSS) INCOME TO ADJUSTED
EBITDA |
(in millions) |
(unaudited) |
PRELIMINARY |
|
|
|
Three Months Ended |
|
September 26, 2015 |
|
June 27, 2015 |
|
September 27, 2014 |
GAAP net (loss)
income |
$ |
(0.4 |
) |
|
$ |
(15.8 |
) |
|
$ |
4.3 |
|
Interest
and other income (expense), net |
(2.0 |
) |
|
0.3 |
|
|
0.3 |
|
(Benefit)
provision for income taxes |
(0.1 |
) |
|
0.9 |
|
|
0.6 |
|
Depreciation |
11.6 |
|
|
10.9 |
|
|
10.4 |
|
Amortization |
1.8 |
|
|
2.0 |
|
|
2.0 |
|
EBITDA |
10.9 |
|
|
(1.7 |
) |
|
17.6 |
|
Costs
related to restructuring and related charges |
1.4 |
|
|
4.9 |
|
|
1.8 |
|
Costs
related to stock-based compensation |
6.5 |
|
|
6.1 |
|
|
6.9 |
|
Costs
related to other non-recurring activities |
8.5 |
|
|
10.5 |
|
|
0.9 |
|
Adjusted EBITDA |
$ |
27.3 |
|
|
$ |
19.8 |
|
|
$ |
27.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements are preliminary. |
|
|
|
|
|
|
|
|
|
|
|
|
Contact Information
Investors: Chris Coldren, 408-404-0606; investor.relations@lumentum.com
Press: Greg Kaufman, 408-546-4235; media@lumentum.com
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