February 27, 2014

Applied Optoelectronics Reports Fourth Quarter and Year 2013 Results

Key Highlights

  • Record quarterly revenue of $23.7 million grew 26 percent year-over-year and 14 percent sequentially
  • Data center revenue of $5.9 million grew 97 percent year-over-year and 84 percent sequentially
  • Fiber-To-The-Home (FTTH) revenue of $1.6 million, grew 6 percent year-over-year and 63 percent sequentially
  • First volume shipments of WDM-PON OLT transceiver products for FTTH market
  • Deployed $4.9 million in capital investment in Q4 to increase data center and FTTH production capacity
  • Full year revenue grew 24 percent to reach a record $78.4 million

SUGAR LAND, Texas, Feb. 27, 2014 (GLOBE NEWSWIRE) -- Applied Optoelectronics, Inc. (Nasdaq:AAOI), a leading provider of fiber-optic access network products for the cable broadband, internet data center, and fiber-to-the-home markets, today announced its financial results for the fourth quarter and year ended December 31, 2013.

"We are very pleased to report our third consecutive quarter of record revenue," said Dr. Thompson Lin, Applied Optoelectronics, Inc. (AOI) Founder and CEO. "Our revenue growth in the quarter was driven by the continued success of our data center 10G and 40G transceivers among our marquee Web 2.0 customers."

Lin continued, "Our fourth quarter was a strong finish to a very exciting year for AOI. We grew our revenue to record levels, completed our initial public offering raising $31.5 million in net proceeds and successfully entered two new rapidly growing markets. On the foundation of our number one position in the CATV market, now we are a leader in the rapidly growing data center market and emerging fiber-to-the-home WDM-PON market.

"Looking forward, we expect our data center and fiber-to-the-home products to continue to fuel our growth in 2014. To capitalize on the increasing market demand in the data center market, we are accelerating our investment to expand manufacturing capacity. We are entering the first quarter with record bookings driven by the adoption of our new data center and fiber-to-the-home products. As a result, we believe we will achieve record revenue in the first quarter that will mitigate historical seasonality in the CATV market," concluded Dr. Lin.

Fourth Quarter Financial Summary

  • Total revenue grew $4.9 million or 26 percent year-over-year to $23.7 million, compared with $18.9 million in the fourth quarter of 2012
     
  • Gross margin was 28.1 percent, compared with 30.4 percent in the third quarter of 2013. Non-GAAP gross margin was 28.2 percent, compared with 30.5 percent in the third quarter of 2013. Gross margin was impacted by CATV product mix and the initial production of fiber-to-the-home WDM-PON transceivers. Gross margin for fiber-to-the-home products is expected to improve as volumes increase and manufacturing increases in Taiwan in the first quarter of 2014
     
  • GAAP net loss was $0.5 million, compared with net income of $0.4 million in the third quarter of 2013 and net income of $0.1 million in the fourth quarter of 2012
     
  • Non-GAAP net income was $0.3 million, compared with non-GAAP net income of $0.6 million in the third quarter of 2013 and non-GAAP net income of $0.3 million in the fourth quarter of 2012
     
  • On December 31, 2013, cash, cash equivalents and short-term investments totaled $30.8 million. On October 1, 2013, the company received $31.5 million in net proceeds from its initial public offering

Full Year 2013 Financial Summary

  • Total revenue grew $15.0 million or 24 percent year-over-year to $78.4 million, compared with $63.4 million in 2012
     
  • Gross margin was 29.4 percent, compared with 29.8 percent in 2012. Non-GAAP gross margin was 29.4 percent, compared with 29.9 percent in 2012
     
  • GAAP net loss was $1.4 million, compared with net loss of $0.9 million in 2012
     
  • Non-GAAP net income was $0.1 million, compared with a net loss of $0.5 million in 2012

A reconciliation between all GAAP and non-GAAP information referenced above is contained in the tables below. Please also refer to "Non-GAAP Financial Measures" below for a description of these Non-GAAP financial measures.

First Quarter 2014 Business Outlook(+)

AOI's outlook for the first quarter of 2014 primarily reflects continued robust growth in the internet data center market and increased revenue from the FTTH market. The company currently expects:

  • Revenue in the range of $23.5 million to $24.5 million
  • On a non-GAAP basis gross margin in the range of 31.0 percent to 32.0 percent
  • On a non-GAAP basis net income in the range of $0.5 million to $1.0 million, and fully diluted earnings per share in the range of $0.04 to $0.07, using approximately 13.5 million shares

(+)Please refer to the note below on forward-looking statements and the risks involved with such statements as well as the note on Non-GAAP financial measures.  

Conference Call Information

Applied Optoelectronics will host a conference call for analysts and investors to discuss its fourth quarter and year 2013 results and outlook for its first quarter of 2014 today, February 27, 2014 at 4:30 p.m. Eastern time / 1:30 p.m. Pacific time. Open to the public, investors may access the call by dialing (480) 629-9712. A live audio webcast of the conference call along with supplemental financial information will also be accessible on the company's website at investors.ao-inc.com. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available two hours after the call and will run for five business days and may be accessed by dialing (303) 590-3030 and entering passcode 4664747.

Forward-Looking Information

This press release contains forward-looking statements. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations, which could cause the company's actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include but are not limited to: reduction in the size or quantity of customer orders; change in demand for the company's products due to industry conditions; changes in manufacturing operations; volatility in manufacturing costs; delays in shipments of products; disruptions in the supply chain; change in the rate of design wins or the rate of customer acceptance of new products; the company's reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure; a decline in demand for our customers products or their rate of deployment of their products; general conditions in the CATV, internet data center or FTTH markets; changes in the world economy (particularly in the United States, and China); the negative effects of seasonality; and other risks and uncertainties described more fully in the company's documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact the company's business are set forth in the "Risk Factors" section of the company's Prospectus and quarterly report on file with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as ''may,'' ''will,'' ''should,'' ''expects,'' ''plans,'' ''anticipates,'' ''believes,'' or ''estimates" or by other similar expressions that convey uncertainty of future events or outcomes. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in the company's expectations.

Non-GAAP Financial Measures

We provide Non-GAAP gross margin, Non-GAAP operating income (loss), Non-GAAP net income (loss), Non-GAAP earnings per share, and other non-GAAP measures like Adjusted EBITDA to eliminate the impact of items that we do not consider indicative of our overall operating performance. To arrive at our non-GAAP gross profit, we exclude stock-based compensation expense from our GAAP gross profit. To arrive at our non-GAAP income (loss) from operations, we exclude all amortization of intangible assets, stock-based compensation expense and non-recurring consulting fees, if any, from our GAAP net income (loss) from operations. To arrive at Adjusted EBITDA, we exclude these same items and, additionally, exclude asset impairment charges, loss (gain) from disposal of idle assets, unrealized exchange loss (gain), interest (income) expense, on a net basis, provision for (benefit from) income taxes and depreciation expense, from our GAAP net income (loss). We believe that our non-GAAP measures are useful to investors in evaluating our operating performance for the following reasons:

  • We believe that elimination of items such as stock-based compensation expense, amortization and tax is appropriate because treatment of these items may vary for reasons unrelated to our overall operating performance;
  • We believe that non-GAAP measures provide better comparability with our past financial performance, period-to-period results and with our peer companies, many of which also use similar non-GAAP financial measures; and
  • We anticipate that investors and securities analysts will utilize non-GAAP measures to evaluate our overall operating performance.

Adjusted EBITDA and other Non-GAAP measures should not be considered as an alternative to gross profit, income (loss) from operations, net income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP. Our Adjusted EBITDA and other non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate Adjusted EBITDA or such other non-GAAP measures in the same manner.

About Applied Optoelectronics

Applied Optoelectronics Inc. (AOI) is a leading developer and manufacturer of advanced optical products, including components, modules, and equipment. AOI's products are the building blocks for broadband fiber access networks around the world, where they are used in the CATV broadband, internet datacenter, and fiber-to-the-home markets. AOI supplies optical networking lasers, components and equipment to tier-1 customers in all three of these markets. In addition to its corporate headquarters, wafer fab and advanced engineering and production facilities in Sugar Land, TX, AOI has engineering and manufacturing facilities in Taipei, Taiwan and Ningbo, China. For additional information, visit www.ao-inc.com.

Applied Optoelectronics Inc. and the related AOI logo are trademarks of Applied Optoelectronics Inc.

 
 
 
Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 December 31,December 31,
 20132012
ASSETS  
CURRENT ASSETS    
Cash and Cash Equivalents  $ 22,006  $ 10,723
Restricted Cash    775    503
Short term Investments  7,970    -- 
Accounts Receivable, net    22,089    13,525
Inventories  19,608    12,493
Notes Receivable    --     1,034
Prepaid Expenses and Other Current Assets  5,488    968
Total Current Assets 77,936    39,246
     
Property, Plant And Equipment, Net  31,134    24,838
Land Use Rights    959    674
Intangible Assets, net    851    795
Other Assets    177    195
TOTAL ASSETS $ 111,057  $ 65,748
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
CURRENT LIABILITIES    
Accounts Payable  $ 15,010  $ 6,913
Accrued Expenses  4,515  3,243
Bank Acceptance Payable  2,347  1,521
Bank Loan-Short Term  13,260  13,657
Current Portion of Long Term Debt  3,925    243
Total Current Liabilities 39,057  25,577
     
Long Term Debt, Net of Current Portion  8,923  9,163
TOTAL LIABILITIES 47,980  34,740
     
TOTAL STOCKHOLDERS' EQUITY 63,077  31,008
     
Total Liabilities, redeemable preferred stock and stockholders' equity $ 111,057  $ 65,748
 
 
 
Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
   
 Three Months Ended
December 31,
Twelve Months Ended
December 31,
 2013201220132012
Revenue        
CATV  $ 14,041  $ 13,277  $  47,373  $ 49,842
Datacenter 5,910 2,998 19,386 5,293
FTTH 1,603 1,512 4,377 3,690
Other 2,190 1,074 7,288 4,596
Total Revenue 23,744 18,861 78,424 63,421
         
Total Cost of Revenue 17,068 13,418 55,396 44,492
         
Total Gross Profit 6,676 5,443 23,028 18,929
         
Operating Expenses:        
Research & Development 2,400 2,143 8,512 7,603
Sales and Marketing 1,198 755 4,191 3,135
General and administrative 3,375 2,214 10,632 8,012
Total Operating Expenses 6,973 5,112 23,335 18,750
         
Operating Income (Loss)(297)331(307)179
         
Other Income (Expense):        
Interest Income 55 14 104 26
Interest Expense (200) (314) (1,125) (1,381)
Other Income 69 31 334 94
Other Expense (147) (11) (412) 137
Total Other Income (Expenses): (223) (280) (1,099) (1,124)
         
Net Income (loss) before Income Taxes $ (520) $ 51 $ (1,406) $ (945)
         
Net income (loss) per share attributable to common stockholders        
basic $  (0.04)  $  0.20  $ (0.14)  $ (3.56)
diluted  $ (0.04)  $ 0.07  $ (0.14)  $ (3.56)
         
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders        
basic  12,631  266  9,965  266
diluted  12,631  695  9,965  266
 
 
 
Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated NON GAAP Statements of Operations
(In thousands, except per share data)
(Unaudited)
   
 Three Months Ended
December 31,
Twelve Months Ended
December 31,
 2013201220132012
Revenue        
CATV  $ 14,041  $ 13,277  $ 47,373  $ 49,842
Datacenter 5,910 2,998 19,386 5,293
FTTH 1,603 1,512 4,377 3,690
Other 2,190 1,074 7,288 4,596
Total Revenue 23,744 18,861 78,424 63,421
         
Total Cost of Revenue 17,052 13,416 55,340 44,484
         
Total Gross Profit 6,692 5,445 23,084 18,937
         
Operating Expenses:        
Research & Development 2,383 2,141 8,459 7,596
Sales and Marketing 1,178 753 4,139 3,126
General and administrative 2,718 2,076 9,622 7,775
Total Operating Expenses 6,279 4,970 22,220 18,497
         
Operating Income (Loss)413475864440
         
Other Income (Expense):        
Interest Income 55 14 104 26
Interest Expense (200) (314) (1,125) (1,381)
Other Income 69 31 334 56
Other Expense (62) 57 (70) 355
Total Other Income (Expenses): (138) (212) (757) (944)
         
Net Income (loss) before Income Taxes $ 275  $ 263  $ 107 $ (504)
         
Net income (loss) per share attributable to common stockholders        
basic  $ 0.02  $ 0.99  $ 0.01  $ (1.89)
diluted  $ 0.02  $  0.38  $ 0.01  $ (1.89)
         
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders        
basic  12,631  266 9,965 266
diluted  13,291  695 10,626 266
 
 
 
Applied Optoelectronics, Inc.
Preliminary Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
   
 Three Months Ended
December 31,
Twelve Months Ended
December 31,
 2013201220132012
GAAP total gross profit 6,676 5,443 23,028 18,929
Share-based compensation expense 16 2 56 8
Non-GAAP income (loss) from gross profit 6,692 5,445 23,084 18,937
Non-GAAP gross margin28.2%28.9%29.4%29.9%
GAAP research and development expense 2,400 2,143 8,512 7,603
Share-based compensation expense 17 2 53 7
Non-GAAP research and development expense 2,383 2,141 8,459 7,596
GAAP sales and marketing expense 1,198 755 4,191 3,135
Share-based compensation expense 20 2 52 9
Non-GAAP sales and marketing expense 1,178 753 4,139 3,126
GAAP general and administrative expense 3,375 2,214 10,632 8,012
Share-based compensation expense 640 105 907 136
Amortization expense 17 16 68 60
Non Recurring expense 0 17 35 41
Non-GAAP general and administrative expense 2,718 2,076 9,622 7,775
GAAP total operating expense 6,973 5,112 23,335 18,750
Share-based compensation expense 677 109 1,012 152
Amortization expense 17 16 68 60
Non Recurring expense 0 17 35 41
Non-GAAP total operating expense 6,279 4,970 22,220 18,497
GAAP operating income (loss) (297) 331 (307) 179
Share-based compensation expense 693 111 1,068 160
Amortization expense 17 16 68 60
Non Recurring expense 0 17 35 41
Non-GAAP operating income (loss) 413 475 864 440
GAAP other income (loss) (223) (280) (1,099) (1,124)
Loss (gain) from disposal of idle assets 0 0 0 (38)
Unrealized exchange loss (gain) 85 68 342 218
Non-GAAP other income (loss) (138) (212) (757) (944)
GAAP net income (loss) (520) 51 (1,406) (945)
Amortization of intangible assets 17 16 68 60
Share-based compensation expense 693 111 1,068 160
Non Recurring charges 0 17 35 41
Loss (gain) from disposal of idle assets 0 0 0 (38)
Unrealized exchange loss (gain) 85 68 342 218
Non-GAAP net income (loss) 275 263 107 (504)
GAAP net income (loss) (520) 51 (1,406) (945)
Amortization of intangible assets 17 16 68 60
Share-based compensation expense 693 111 1,068 160
Depreciation expense 954 712 3,339 2,882
Non Recurring charges 0 17 35 41
Loss (gain) from disposal of idle assets 0 0 0 (38)
Unrealized exchange loss (gain) 85 68 342 218
Interest (income) expense, net 145 301 1,021 1,356
Adjusted EBITDA 1,374 1,276 4,467 3,734
CONTACT: Investor Relations Contacts:

         

         Applied Optoelectronics, Inc.

         James L. Dunn, Jr.

         Chief Financial Officer

         ir@ao-inc.com

         

         The Blueshirt Group, Investor Relations

         Maria Riley

         +1-415-217-7722

         ir@ao-inc.com


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