SAN JOSE, Calif., May 5, 2020 /PRNewswire/ -- Lumentum
Holdings Inc. ("Lumentum" or the "Company") today reported results
for its fiscal third quarter of 2020 ended March 28, 2020.
Net revenue for the fiscal third quarter of 2020 was
$402.8 million, with GAAP net income
of $43.4 million, or $0.56 per diluted share. Net revenue for the
fiscal second quarter of 2020 was $457.8
million, with GAAP net income of $49.1 million, or $0.63 per diluted share. Net revenue for the
fiscal third quarter of 2019 was $432.9
million, with GAAP net loss of $(74.3) million, or $(0.98) per diluted share.
Non-GAAP net income for the fiscal third quarter of 2020 was
$98.0 million, or $1.26 per diluted share. Non-GAAP net income for
the fiscal second quarter of 2020 was $119.4
million, or $1.53 per diluted
share. Non-GAAP net income for the fiscal third quarter of 2019 was
$70.9 million, or $0.92 per diluted share.
The Company held $1,451.4 million
in total cash and short-term investments at the end of the fiscal
third quarter of 2020, up $135.8
million compared to the fiscal second quarter of 2020.
"While the COVID-19 pandemic is currently impacting our ability
to satisfy strong customer demand for our communications products,
we believe the world's experience with COVID-19 will accelerate the
shift to increasingly digital and virtual approaches to work,
education, health care, entertainment, social interaction, and
commerce, creating even more opportunity for Lumentum over the
long-term", said Alan Lowe,
President and CEO. "Our strategy of technology and product
leadership in close alignment with market leading customers is even
more apt in these times. The market and technology leadership
positions and financial strength we have attained to date, with
this strategy, position us well for the future."
Financial Overview
– Fiscal Third Quarter Ended March 28, 2020
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Results ($ in
millions)
|
|
Q3
|
|
Q2
|
|
Q3
|
|
Change
|
|
FY
2020
|
|
FY
2020
|
|
FY
2019
|
|
Q/Q
|
|
Y/Y
|
Net
revenue
|
$402.8
|
|
$457.8
|
|
$432.9
|
|
(12.0)%
|
|
(7.0)%
|
Gross
margin
|
39.2%
|
|
41.3%
|
|
20.4%
|
|
(210)bps
|
|
1,880bps
|
Operating margin
(loss)
|
10.6%
|
|
16.3%
|
|
(17.6)%
|
|
(570)bps
|
|
2,820bps
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Results
($ in millions)
|
|
Q3
|
|
Q2
|
|
Q3
|
|
Change
|
|
FY
2020
|
|
FY
2020
|
|
FY
2019
|
|
Q/Q
|
|
Y/Y
|
Net
revenue
|
$402.8
|
|
$457.8
|
|
$432.9
|
|
(12.0)%
|
|
(7.0)%
|
Gross
margin
|
45.5%
|
|
47.4%
|
|
39.0%
|
|
(190)bps
|
|
650bps
|
Operating
margin
|
25.0%
|
|
28.8%
|
|
17.8%
|
|
(380)bps
|
|
720bps
|
|
Net Revenue by
Segment ($ in millions)
|
|
Q3
|
%
of
|
Q2
|
Q3
|
Change
|
|
FY
2020
|
Net
Revenue
|
FY
2020
|
FY
2019
|
Q/Q
|
Y/Y
|
Optical
Communications
|
$
|
359.3
|
89.2
|
%
|
$
|
409.4
|
$
|
377.9
|
(12.2)
|
%
|
(4.9)
|
%
|
Lasers
|
43.5
|
10.8
|
%
|
48.4
|
55.0
|
(10.1)
|
%
|
(20.9)
|
%
|
Total
|
$
|
402.8
|
100.0
|
%
|
$
|
457.8
|
$
|
432.9
|
(12.0)
|
%
|
(7.0)
|
%
|
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
Financial Measures."
Effective June 30, 2019, we
adopted Topic 842, using the modified retrospective transition
approach. We applied the new guidance to all leases existing as of
the date of adoption. Our reported results for the nine months
ended March 28, 2020 reflect the application of Topic 842,
while fiscal 2019 amounts have not been adjusted and continue to be
reported in accordance with our historical accounting under Topic
840.
Third quarter results were impacted by the COVID-19 pandemic due
to limitations on our ability to supply products to our customers.
As the outbreak spread outside of China late in the quarter, we experienced
supply disruptions in excess of our prior assumptions. The supply
of certain products produced in Malaysia was significantly disrupted as the
Malaysian government issued a movement control order on
March 16, 2020. As we provide an
essential service under the order, we have been able to slowly
increase production in Malaysia
from zero when the movement control order was issued and expect to
reach near 100% production levels in the coming weeks. The third
quarter was also impacted by limitations in component supply from
third parties. We have implemented measures to protect the health
and well-being of our employees at our sites in other regions,
including work from home programs for nearly all of our
non-manufacturing employees around the world, social distancing
protocols, and enhanced use of personal protective equipment for
manufacturing and other employees performing essential operations
for our essential business functions.
Business Outlook
The projections we are providing
today incorporate our expectations considering the significant
impact of the COVID-19 pandemic on our ability to supply our
products and market demand in the fiscal fourth quarter. This
includes on-going component supply challenges and limited
production in Malaysia in the
first half of the quarter. We are providing a wider than normal
revenue range to incorporate uncertainty around our assumptions on
the impact of COVID-19.
Lumentum expects the following for the fiscal fourth
quarter 2020:
- Net revenue in the range of $325
million to $365 million
- Non-GAAP operating margin of 18% to 21%
- Non-GAAP diluted earnings per share of $0.70 to $0.90
- Estimated fourth quarter impact from COVID-19 is a reduction in
revenue of more than $90 million and
a reduction in non-GAAP diluted earnings per share of more than
$0.50
We have not provided reconciliations from GAAP to non-GAAP
measures for our outlook. A large portion of non-GAAP adjustments,
such as restructuring charges, stock-based compensation,
acquisition-related costs, non-cash income tax expense and credits,
amortization of fair value adjustments, integration related costs,
impairment charges, inventory write down due to plans to exit
certain product lines and other costs and contingencies unrelated
to current and future operations are by their nature highly
volatile and we have low visibility as to the range that may be
incurred in the future.
Conference Call
Lumentum will host a conference call
on May 5, 2020, at 5:30 am
PT/8:30 am ET. A live webcast
of the call and the replay will be available on the Lumentum
website at http://investor.lumentum.com through May 12, 2020, at 11:59 pm
ET. To listen to the live conference call, dial (833)
287-7900 or (647) 689-4464 and reference the passcode 6697949. A
replay of the conference call will be available through
May 12, 2020. To access the replay,
dial (800) 585-8367 or (416) 621-4642. The passcode for the replay
is 6697949. Supporting materials outlining the Company's latest
financial results will be posted on http://investor.lumentum.com
under the "Events and Presentations" section concurrently with this
earnings press release. Lumentum has used, and intends to continue
to use, its Investor Relations website as means of disclosing
material nonpublic information and for complying with its
disclosure obligations under Regulation FD. This press release is
being furnished as an exhibit to a Current Report on Form 8-K filed
with the Securities and Exchange Commission and will be available
at http://www.sec.gov/.
About Lumentum
Lumentum (NASDAQ: LITE) is a
market-leading designer and manufacturer of innovative optical and
photonic products enabling optical networking and laser
applications worldwide. Lumentum's optical components and
subsystems are part of virtually every type of telecom, enterprise,
and data center network. Lumentum's lasers enable advanced
manufacturing techniques and diverse applications including
next-generation 3D sensing capabilities. Lumentum is
headquartered in San Jose,
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 strategies and our
expectations with regard to such strategies, our expectations for
our markets, any anticipation or guidance as to demand for our
products, future financial performance, including the general
trends in our business and the industries in which we operate, and
our guidance with respect to future net revenue, earnings per
share, and operating margins, anticipated trends in our markets and
the impact of the COVID-19 pandemic and related responses of
businesses and governments to the pandemic on our markets,
operations, and future financial performance. These forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those projected. Among the
factors that could cause actual results to differ from those
contemplated are: (a) the COVID-19 pandemic and related impacts,
which may continue to adversely impact our business, financial
performance and results of operations; (b) quarter-over-quarter
product mix fluctuations which can materially impact profitability
measures due to the broad gross margin ranges across our portfolio;
(c) continued decline of average selling prices across our
businesses; (d) effects of seasonality; (e) the ability
of our suppliers and contract manufacturers to meet production and
delivery requirements for our forecasted demand; (f) inherent
uncertainty related to global markets, including the impact of the
COVID-19 pandemic, changes in the political or economic environment
and the imposition of tariffs or other duties, and the effect of
such markets on demand for our products; (g) changes in customer
demand; (h) our ability to attract and retain new customers,
particularly in the 3D sensing market; (i) the risk that synergies
and non-GAAP earnings accretion related to the acquisition of
Oclaro will not be realized or realized to the extent anticipated
or that we will incur significant costs and charges to achieve such
synergies; (j) the risk that Lumentum's financing or operating
strategies will not be successful; and (k) disruption related to
the acquisition and integration of Oclaro making it more difficult
to maintain customer, supplier, key personnel and other strategic
relationships. For more information on these and other risks,
please refer to the "Risk Factors" section included in the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 28, 2020 to be filed with the Securities and
Exchange Commission, and in the Company's other filings with the
Securities and Exchange Commission, including the Company's Annual
Report on Form 10-K for the fiscal year ended June 29, 2019, filed
by Lumentum with the Securities and Exchange Commission on August
27, 2019 and the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 28, 2019, filed by Lumentum with the
Securities and Exchange Commission on February 4, 2020. 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.
Contact Information
Investors: Jim Fanucchi, 408-404-5400;
investor.relations@lumentum.com
Media: Sean Ogarrio, 408-546-5405;
media@lumentum.com
The following financial tables are presented in accordance with
GAAP, unless otherwise specified.
LUMENTUM HOLDINGS
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in millions,
except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
March 28,
2020
|
|
March 30,
2019
|
|
March 28,
2020
|
|
March 30,
2019
|
Net
revenue
|
$
|
402.8
|
|
|
$
|
432.9
|
|
|
$
|
1,310.5
|
|
|
$
|
1,160.7
|
|
Cost of
sales
|
231.2
|
|
|
316.5
|
|
|
757.2
|
|
|
788.3
|
|
Amortization of
acquired developed intangibles
|
13.9
|
|
|
28.1
|
|
|
38.8
|
|
|
33.3
|
|
Gross
profit
|
157.7
|
|
|
88.3
|
|
|
514.5
|
|
|
339.1
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
48.7
|
|
|
57.7
|
|
|
149.6
|
|
|
135.1
|
|
Selling,
general and administrative
|
61.3
|
|
|
55.2
|
|
|
180.4
|
|
|
150.9
|
|
Restructuring
and related charges
|
2.7
|
|
|
21.1
|
|
|
4.9
|
|
|
30.2
|
|
Impairment
charges
|
2.5
|
|
|
30.7
|
|
|
2.5
|
|
|
30.7
|
|
Total operating
expenses
|
115.2
|
|
|
164.7
|
|
|
337.4
|
|
|
346.9
|
|
Income (loss) from
operations
|
42.5
|
|
|
(76.4)
|
|
|
177.1
|
|
|
(7.8)
|
|
Unrealized gain on
derivative liability
|
—
|
|
|
—
|
|
|
—
|
|
|
8.8
|
|
Interest
expense
|
(15.6)
|
|
|
(11.3)
|
|
|
(45.3)
|
|
|
(24.9)
|
|
Other income
(expense), net
|
21.7
|
|
|
5.2
|
|
|
27.9
|
|
|
11.7
|
|
Income (loss) before
income taxes
|
48.6
|
|
|
(82.5)
|
|
|
159.7
|
|
|
(12.2)
|
|
Provision for
(benefit from) income taxes
|
5.2
|
|
|
(8.2)
|
|
|
19.6
|
|
|
(1.6)
|
|
Net income
(loss)
|
$
|
43.4
|
|
|
$
|
(74.3)
|
|
|
$
|
140.1
|
|
|
$
|
(10.6)
|
|
|
|
|
|
|
|
|
|
Items reconciling net
income to net income attributable to common
stockholders:
|
|
|
|
|
|
|
|
Less: Cumulative
dividends on Series A Preferred Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
Less: Earnings
allocated to Series A Preferred Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.2)
|
|
Net income (loss)
attributable to common stockholders - Basic
|
$
|
43.4
|
|
|
$
|
(74.3)
|
|
|
$
|
140.1
|
|
|
$
|
(12.1)
|
|
Net income (loss)
attributable to common stockholders - Diluted
|
$
|
43.4
|
|
|
$
|
(74.3)
|
|
|
$
|
140.1
|
|
|
$
|
(12.1)
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to common stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.58
|
|
|
$
|
(0.98)
|
|
|
$
|
1.84
|
|
|
$
|
(0.18)
|
|
Diluted
|
$
|
0.56
|
|
|
$
|
(0.98)
|
|
|
$
|
1.80
|
|
|
$
|
(0.18)
|
|
|
|
|
|
|
|
|
|
Shares used to
compute net income (loss) per share attributable to common
stockholders:
|
|
|
|
|
|
|
|
Basic
|
74.8
|
|
|
76.2
|
|
|
76.2
|
|
|
68.7
|
|
Diluted
|
77.5
|
|
|
76.2
|
|
|
77.7
|
|
|
68.7
|
|
LUMENTUM HOLDINGS
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in millions,
except share and per share data)
|
|
|
|
|
|
|
|
|
|
March 28,
2020
|
|
June 29,
2019
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
688.3
|
|
|
$
|
432.6
|
|
Short-term
investments
|
763.1
|
|
|
335.9
|
|
Accounts receivable,
net
|
261.8
|
|
|
238.0
|
|
Inventories
|
172.7
|
|
|
228.8
|
|
Prepayments and other
current assets
|
77.1
|
|
|
97.5
|
|
Total current
assets
|
1,963.0
|
|
|
1,332.8
|
|
Property, plant and
equipment, net
|
410.1
|
|
|
433.3
|
|
Operating lease
right-of-use assets, net
|
81.7
|
|
|
—
|
|
Goodwill
|
368.9
|
|
|
368.9
|
|
Other intangible
assets, net
|
338.0
|
|
|
395.4
|
|
Deferred income
taxes
|
102.7
|
|
|
169.6
|
|
Other non-current
assets
|
4.3
|
|
|
16.6
|
|
Total
assets
|
$
|
3,268.7
|
|
|
$
|
2,716.6
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
144.6
|
|
|
$
|
160.8
|
|
Accrued payroll and
related expenses
|
50.9
|
|
|
42.3
|
|
Accrued
expenses
|
32.9
|
|
|
46.7
|
|
Term loan,
current
|
—
|
|
|
5.0
|
|
Operating lease
liabilities, current
|
11.5
|
|
|
—
|
|
Other current
liabilities
|
46.8
|
|
|
39.2
|
|
Total current
liabilities
|
286.7
|
|
|
294.0
|
|
Convertible
notes
|
1,106.0
|
|
|
351.9
|
|
Term loan,
non-current
|
—
|
|
|
484.0
|
|
Operating lease
liabilities, non-current
|
59.1
|
|
|
—
|
|
Deferred tax
liability
|
49.0
|
|
|
55.9
|
|
Other non-current
liabilities
|
33.7
|
|
|
33.7
|
|
Total
liabilities
|
1,534.5
|
|
|
1,219.5
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.001
par value, 990,000,000 authorized shares, 74,874,176 and 76,653,478
shares issued and outstanding as of March 28, 2020 and June 29,
2019, respectively
|
0.1
|
|
|
0.1
|
|
Additional paid-in
capital
|
1,659.1
|
|
|
1,360.8
|
|
Retained
earnings
|
69.2
|
|
|
129.1
|
|
Accumulated other
comprehensive income
|
5.8
|
|
|
7.1
|
|
Total stockholders'
equity
|
1,734.2
|
|
|
1,497.1
|
|
Total liabilities and
stockholders' equity
|
$
|
3,268.7
|
|
|
$
|
2,716.6
|
|
Use of Non-GAAP Financial Measures
In this press release, Lumentum provides investors with gross
margin, gross profit, research and development expense, selling,
general and administrative expense, operating margin, operating
income, interest and other income (expense), net, income before
income taxes and certain expenses, provision for taxes, net income,
and net income per share on a non-GAAP basis as well as the
non-GAAP measure of Adjusted EBITDA. Lumentum believes this
non-GAAP financial information provides additional insight into the
Company's on-going business operations and results, as well as cash
generation, 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 cash flows and,
importantly, to evaluate the efficacy of the methodology and
information used by management to evaluate and measure such cash
flows. 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. Further, these non-GAAP financial measures may
not be comparable to similarly titled measurements reported by
other companies.
Non-GAAP gross margin, non-GAAP gross profit, non-GAAP expenses,
non-GAAP operating margin, non-GAAP operating income, non-GAAP
income before income taxes, non-GAAP net income, and non-GAAP net
income per share exclude (i) stock-based compensation, (ii)
inventory write-downs and fixed asset impairment due to cancelled
programs, plans to exit certain lines of business and other costs
and contingencies unrelated to current and future operations, (iii)
acquisition related costs, (iv) integration related costs, (v)
amortization of acquired intangibles, (vi) amortization of fair
value adjustments, (vii) restructuring and related charges, (viii)
non-cash interest expense, (ix) foreign exchange (gains) losses,
net, (x) impairment charges, (xi) transferring product lines to
Thailand, (xii) excess and
obsolete inventory charges driven by the decline in demand from
Huawei, (xiii) expenses related to COVID-19 outbreak, and (xiv)
non-cash income tax provision impacts. 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.
LUMENTUM HOLDINGS
INC.
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(in millions,
except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
March 28,
2020
|
|
December 28,
2019
|
|
March 30,
2019
|
|
March 28,
2020
|
|
March 30,
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit on
GAAP basis
|
$
|
157.7
|
|
|
$
|
189.1
|
|
|
$
|
88.3
|
|
|
$
|
514.5
|
|
|
$
|
339.1
|
|
|
Stock-based
compensation
|
4.3
|
|
|
4.1
|
|
|
3.2
|
|
|
12.6
|
|
|
11.7
|
|
|
Inventory and fixed
asset write down due to product lines exit
(1)
|
2.3
|
|
|
2.6
|
|
|
19.4
|
|
|
6.0
|
|
|
19.4
|
|
|
Integration related
costs
|
(0.3)
|
|
|
—
|
|
|
2.8
|
|
|
3.1
|
|
|
2.8
|
|
|
Amortization of
acquired intangibles
|
13.9
|
|
|
12.4
|
|
|
28.1
|
|
|
38.8
|
|
|
33.3
|
|
|
Amortization of fair
value adjustments (2)
|
1.5
|
|
|
2.1
|
|
|
14.5
|
|
|
5.8
|
|
|
15.8
|
|
|
Other charges
(3)
|
4.0
|
|
|
6.5
|
|
|
12.5
|
|
|
25.5
|
|
|
39.0
|
|
|
Gross profit on
non-GAAP basis
|
$
|
183.4
|
|
|
$
|
216.8
|
|
|
$
|
168.8
|
|
|
$
|
606.3
|
|
|
$
|
461.1
|
|
|
Gross margin on
non-GAAP basis
|
45.5
|
%
|
|
47.4
|
%
|
|
39.0
|
%
|
|
46.3
|
%
|
|
39.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development on GAAP basis
|
$
|
48.7
|
|
|
$
|
51.0
|
|
|
$
|
57.7
|
|
|
$
|
149.6
|
|
|
$
|
135.1
|
|
|
Stock-based
compensation
|
(4.2)
|
|
|
(4.1)
|
|
|
(4.5)
|
|
|
(12.1)
|
|
|
(10.7)
|
|
|
Other
charges
|
(0.2)
|
|
|
(0.1)
|
|
|
(0.4)
|
|
|
(0.1)
|
|
|
(0.7)
|
|
|
Research and
development on non-GAAP basis
|
$
|
44.3
|
|
|
$
|
46.8
|
|
|
$
|
52.8
|
|
|
$
|
137.4
|
|
|
$
|
123.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general
and administrative on GAAP basis
|
$
|
61.3
|
|
|
$
|
62.4
|
|
|
$
|
55.2
|
|
|
$
|
180.4
|
|
|
$
|
150.9
|
|
|
Stock-based
compensation
|
(10.7)
|
|
|
(12.0)
|
|
|
(8.3)
|
|
|
(31.4)
|
|
|
(34.1)
|
|
|
Acquisition related
costs
|
—
|
|
|
—
|
|
|
(2.2)
|
|
|
—
|
|
|
(15.3)
|
|
|
Integration related
costs
|
(5.0)
|
|
|
(2.9)
|
|
|
(1.3)
|
|
|
(11.1)
|
|
|
(1.3)
|
|
|
Amortization of
acquired intangibles
|
(6.1)
|
|
|
(6.2)
|
|
|
(3.6)
|
|
|
(18.6)
|
|
|
(4.4)
|
|
|
Other
charges
|
(1.1)
|
|
|
(3.3)
|
|
|
(0.8)
|
|
|
(5.8)
|
|
|
(2.3)
|
|
|
Selling, general
and administrative on non-GAAP basis
|
$
|
38.4
|
|
|
$
|
38.0
|
|
|
$
|
39.0
|
|
|
$
|
113.5
|
|
|
$
|
93.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations on GAAP basis
|
$
|
42.5
|
|
|
$
|
74.8
|
|
|
$
|
(76.4)
|
|
|
$
|
177.1
|
|
|
$
|
(7.8)
|
|
|
Stock-based
compensation
|
19.2
|
|
|
20.2
|
|
|
16.0
|
|
|
56.1
|
|
|
56.5
|
|
|
Inventory and fixed
asset write down due to product lines exit
(1)
|
2.3
|
|
|
2.6
|
|
|
19.4
|
|
|
6.0
|
|
|
19.4
|
|
|
Acquisition related
costs
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
15.3
|
|
|
Integration related
costs
|
4.7
|
|
|
2.9
|
|
|
4.1
|
|
|
14.2
|
|
|
4.1
|
|
|
Amortization of
acquired intangibles
|
20.0
|
|
|
18.6
|
|
|
31.7
|
|
|
57.4
|
|
|
37.7
|
|
|
Amortization of fair
value adjustments (2)
|
1.5
|
|
|
2.1
|
|
|
14.5
|
|
|
5.8
|
|
|
15.8
|
|
|
Restructuring and
related charges
|
2.7
|
|
|
0.9
|
|
|
21.1
|
|
|
4.9
|
|
|
30.2
|
|
|
Impairment charges
(4)
|
2.5
|
|
|
—
|
|
|
30.7
|
|
|
2.5
|
|
|
30.7
|
|
|
Other
charges
|
5.3
|
|
|
9.9
|
|
|
13.7
|
|
|
31.4
|
|
|
42.0
|
|
|
Income from
operations on non-GAAP basis
|
$
|
100.7
|
|
|
$
|
132.0
|
|
|
$
|
77.0
|
|
|
$
|
355.4
|
|
|
$
|
243.9
|
|
|
Operating margin on
non-GAAP basis
|
25.0
|
%
|
|
28.8
|
%
|
|
17.8
|
%
|
|
27.1
|
%
|
|
21.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income (expense), net on GAAP basis
|
$
|
6.1
|
|
|
$
|
(17.1)
|
|
|
$
|
(6.1)
|
|
|
$
|
(17.4)
|
|
|
$
|
(13.2)
|
|
|
Other interest and
(income) expense adjustments
|
(2.0)
|
|
|
—
|
|
|
(2.5)
|
|
|
(2.0)
|
|
|
(0.5)
|
|
|
Gain on sale of
product lines
|
(13.8)
|
|
|
—
|
|
|
—
|
|
|
(13.8)
|
|
|
—
|
|
|
Foreign exchange
(gains) losses, net (5)
|
(0.7)
|
|
|
2.1
|
|
|
1.0
|
|
|
0.3
|
|
|
1.0
|
|
|
Non-cash interest
expense on convertible notes and term loan
|
14.0
|
|
|
14.4
|
|
|
4.8
|
|
|
33.3
|
|
|
13.6
|
|
|
Interest and other
income (expense), net on non-GAAP basis
|
$
|
3.6
|
|
|
$
|
(0.6)
|
|
|
$
|
(2.8)
|
|
|
$
|
0.4
|
|
|
$
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes on GAAP basis
|
$
|
48.6
|
|
|
$
|
57.7
|
|
|
$
|
(82.5)
|
|
|
$
|
159.7
|
|
|
$
|
(12.2)
|
|
|
Stock-based
compensation
|
19.2
|
|
|
20.2
|
|
|
16.0
|
|
|
56.1
|
|
|
56.5
|
|
|
Inventory and fixed
asset write down due to product lines exit
(1)
|
2.3
|
|
|
2.6
|
|
|
19.4
|
|
|
6.0
|
|
|
19.4
|
|
|
Acquisition related
costs
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
15.3
|
|
|
Integration related
costs
|
4.7
|
|
|
2.9
|
|
|
4.1
|
|
|
14.2
|
|
|
4.1
|
|
|
Amortization of
acquired intangibles
|
20.0
|
|
|
18.6
|
|
|
31.7
|
|
|
57.4
|
|
|
37.7
|
|
|
Amortization of fair
value adjustments (2)
|
1.5
|
|
|
2.1
|
|
|
14.5
|
|
|
5.8
|
|
|
15.8
|
|
|
Restructuring and
related charges
|
2.7
|
|
|
0.9
|
|
|
21.1
|
|
|
4.9
|
|
|
30.2
|
|
|
Impairment charges
(4)
|
2.5
|
|
|
—
|
|
|
30.7
|
|
|
2.5
|
|
|
30.7
|
|
|
Other interest and
(income) expense adjustments
|
(2.0)
|
|
|
—
|
|
|
(2.5)
|
|
|
(2.0)
|
|
|
(0.5)
|
|
|
Gain on sale of
product lines
|
(13.8)
|
|
|
—
|
|
|
—
|
|
|
(13.8)
|
|
|
—
|
|
|
Foreign exchange
(gains) losses, net (5)
|
(0.7)
|
|
|
2.1
|
|
|
1.0
|
|
|
0.3
|
|
|
1.0
|
|
|
Non-cash interest
expense on convertible notes and term loan
|
14.0
|
|
|
14.4
|
|
|
4.8
|
|
|
33.3
|
|
|
13.6
|
|
|
Unrealized gain on
derivative liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.8)
|
|
|
Other
charges
|
5.3
|
|
|
9.9
|
|
|
13.7
|
|
|
31.4
|
|
|
42.0
|
|
|
Income before
income taxes on non-GAAP basis
|
$
|
104.3
|
|
|
$
|
131.4
|
|
|
$
|
74.2
|
|
|
$
|
355.8
|
|
|
$
|
244.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
(benefit from) income taxes on GAAP basis
|
$
|
5.2
|
|
|
$
|
8.6
|
|
|
$
|
(8.2)
|
|
|
$
|
19.6
|
|
|
$
|
(1.6)
|
|
|
Income tax
adjustments
|
1.1
|
|
|
3.4
|
|
|
11.5
|
|
|
7.4
|
|
|
11.4
|
|
|
Provision for
income taxes on non-GAAP basis
|
$
|
6.3
|
|
|
$
|
12.0
|
|
|
$
|
3.3
|
|
|
$
|
27.0
|
|
|
$
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income on GAAP
basis
|
$
|
43.4
|
|
|
$
|
49.1
|
|
|
$
|
(74.3)
|
|
|
$
|
140.1
|
|
|
$
|
(10.6)
|
|
|
Stock-based
compensation
|
19.2
|
|
|
20.2
|
|
|
16.0
|
|
|
56.1
|
|
|
56.5
|
|
|
Inventory and fixed
asset write down due to product lines exit
(1)
|
2.3
|
|
|
2.6
|
|
|
19.4
|
|
|
6.0
|
|
|
19.4
|
|
|
Acquisition related
costs
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
15.3
|
|
|
Integration related
costs
|
4.7
|
|
|
2.9
|
|
|
4.1
|
|
|
14.2
|
|
|
4.1
|
|
|
Amortization of
acquired intangibles
|
20.0
|
|
|
18.6
|
|
|
31.7
|
|
|
57.4
|
|
|
37.7
|
|
|
Amortization of fair
value adjustments (2)
|
1.5
|
|
|
2.1
|
|
|
14.5
|
|
|
5.8
|
|
|
15.8
|
|
|
Restructuring and
related charges
|
2.7
|
|
|
0.9
|
|
|
21.1
|
|
|
4.9
|
|
|
30.2
|
|
|
Impairment charges
(4)
|
2.5
|
|
|
—
|
|
|
30.7
|
|
|
2.5
|
|
|
30.7
|
|
|
Other interest and
(income) expense adjustments
|
(2.0)
|
|
|
—
|
|
|
(2.5)
|
|
|
(2.0)
|
|
|
(0.5)
|
|
|
Gain on sale of
product lines
|
(13.8)
|
|
|
—
|
|
|
—
|
|
|
(13.8)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
(gains) losses, net (5)
|
(0.7)
|
|
|
2.1
|
|
|
1.0
|
|
|
0.3
|
|
|
1.0
|
|
|
Non-cash interest
expense on convertible notes and term loan
|
14.0
|
|
|
14.4
|
|
|
4.8
|
|
|
33.3
|
|
|
13.6
|
|
|
Unrealized gain on
derivative liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.8)
|
|
|
Other
charges
|
5.3
|
|
|
9.9
|
|
|
13.7
|
|
|
31.4
|
|
|
42.0
|
|
|
Income tax
adjustments
|
(1.1)
|
|
|
(3.4)
|
|
|
(11.5)
|
|
|
(7.4)
|
|
|
(11.4)
|
|
|
Net income on
non-GAAP basis
|
$
|
98.0
|
|
|
$
|
119.4
|
|
|
$
|
70.9
|
|
(5)
|
$
|
328.8
|
|
|
$
|
235.0
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share on non-GAAP basis
|
$
|
1.26
|
|
|
$
|
1.53
|
|
|
$
|
0.92
|
|
(5)
|
$
|
4.23
|
|
|
$
|
3.36
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation - diluted on GAAP basis
|
77.5
|
|
|
78.0
|
|
|
76.2
|
|
|
77.7
|
|
|
68.7
|
|
|
Non-GAAP adjustment
(6)
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.6
|
|
|
Effect of diluted
securities from Series A Preferred Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
Shares used in per
share calculation - diluted on non-GAAP basis
|
77.5
|
|
|
78.0
|
|
|
76.7
|
|
|
77.7
|
|
|
70.0
|
|
|
|
(1) For the three and
nine months ended March 28, 2020, we recorded an inventory and
fixed assets write down charges of $2.3 million and $6.0 million,
respectively, related to the decision to exit the Datacom module
and Lithium Niobate product lines.
|
|
(2) In connection
with the acquisition of Oclaro in fiscal 2019, we recorded a fair
value adjustment of $60.3 million to inventory, resulting in $1.5
million and $5.8 million of amortization expense of the fair value
adjustment during the three and nine months ended March 28, 2020,
respectively.
|
|
(3) Other charges of
the gross profit on non-GAAP basis for the three and nine months
ended March 28, 2020, primarily include costs of transferring
product lines to new production facilities, including Thailand of
$0.4 million and $8.5 million, respectively. We also incurred
excess and obsolete inventory charges driven by the decline in
demand from Huawei of $0.1 million and $12.8 million during the
three and nine months ended March 28, 2020. In addition, there were
expenses of $1.6 million related to COVID-19 outbreak during the
three and nine months ended March 28, 2020, which include
incremental costs for payroll expense such as overtime pay,
facilities costs such as gloves, masks and temperature gauges, and
under-utilized capacity at certain facilities, in which
manufacturing output was impacted. These COVID-19 related costs are
offset by benefits realized from government credits for employers'
payroll tax. Other charges of the gross profit on non-GAAP basis
for the three and nine months ended March 30, 2019, included costs
of transferring product lines to Thailand of $12.0
million and $38.7 million, respectively.
|
|
(4) For each of the
three and nine months ended March 28, 2020 and the three and nine
months ended March 30, 2019, we recorded an impairment charges of
$2.5 million and $30.7 million, respectively, of Property Plant and
Equipment related to the decision to exit the Datacom module
product line.
|
|
(5) The non-GAAP
financial measures for the three and nine months ended March 30,
2019 have been adjusted to conform to the current period
presentation, by removing foreign exchange (gains) losses,
net.
|
|
(6) This adjustment
represents weighted-average potentially dilutive securities from
our stock-based benefit plans excluded from the computation of
diluted net loss per share attributable to common stockholders on a
GAAP basis because the effect would have been anti-dilutive. This
adjustment amount is added for the computation of diluted net
income per share on a non-GAAP basis as we had a net income on a
non-GAAP basis.
|
LUMENTUM HOLDINGS
INC.
|
RECONCILIATION OF
GAAP NET INCOME TO ADJUSTED EBITDA
|
(in millions,
except per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
March 28,
2020
|
|
December 28,
2019
|
|
March 30,
2019
|
|
March 28,
2020
|
|
March 30,
2019
|
GAAP Net
income
|
$
|
43.4
|
|
|
$
|
49.1
|
|
|
$
|
(74.3)
|
|
|
$
|
140.1
|
|
|
$
|
(10.6)
|
|
Interest and other
expense (income), net
|
(6.1)
|
|
|
17.1
|
|
|
6.1
|
|
|
17.4
|
|
|
13.2
|
|
Provision for
(benefit from) income taxes
|
5.2
|
|
|
8.6
|
|
|
(8.2)
|
|
|
19.6
|
|
|
(1.6)
|
|
Depreciation
|
27.5
|
|
|
28.7
|
|
|
29.0
|
|
|
87.8
|
|
|
74.7
|
|
Amortization of
acquired intangibles
|
20.0
|
|
|
18.6
|
|
|
31.7
|
|
|
57.4
|
|
|
37.7
|
|
EBITDA
|
90.0
|
|
|
122.1
|
|
|
(15.7)
|
|
|
322.3
|
|
|
113.4
|
|
Amortization of fair
value adjustments
|
1.5
|
|
|
2.1
|
|
|
14.5
|
|
|
5.8
|
|
|
15.8
|
|
Restructuring and
related charges
|
2.7
|
|
|
0.9
|
|
|
21.1
|
|
|
4.9
|
|
|
30.2
|
|
Stock-based
compensation
|
19.2
|
|
|
20.2
|
|
|
16.0
|
|
|
56.1
|
|
|
56.5
|
|
Acquisition related
costs
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
15.3
|
|
Unrealized gain on
derivative liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.8)
|
|
Inventory and fixed
asset write down due to product lines exit
|
2.3
|
|
|
2.6
|
|
|
19.4
|
|
|
6.0
|
|
|
19.4
|
|
Integration related
costs
|
4.7
|
|
|
2.9
|
|
|
4.1
|
|
|
14.2
|
|
|
4.1
|
|
Impairment
charges
|
2.5
|
|
|
—
|
|
|
30.7
|
|
|
2.5
|
|
|
30.7
|
|
Other
charges
|
5.3
|
|
|
9.9
|
|
|
13.7
|
|
|
31.4
|
|
|
42.0
|
|
Adjusted
EBITDA
|
$
|
128.2
|
|
|
$
|
160.7
|
|
|
$
|
106.0
|
|
|
$
|
443.2
|
|
|
$
|
318.6
|
|
View original
content:http://www.prnewswire.com/news-releases/lumentum-announces-fiscal-third-quarter-2020-financial-results-301052566.html
SOURCE Lumentum