Applied Optoelectronics Reports Fourth Quarter and Full Year 2020 Results
“Despite the challenges presented by the pandemic and a slow end to the year, we are encouraged by the double-digit revenue growth we delivered in 2020, which was driven by growth in each of our three major business segments,” said Dr.
Fourth Quarter 2020 Financial Summary
- GAAP revenue was
$52.3 million , compared with$48.7 million in the fourth quarter of 2019 and$76.6 million in the third quarter of 2020. Non-GAAP revenue was$52.8 million . - GAAP gross margin was 21.6%, compared with 23.3% in the fourth quarter of 2019 and 25.0% in the third quarter of 2020. Non-GAAP gross margin was 27.5%, compared with 27.6% in the fourth quarter of 2019 and 27.4% in the third quarter of 2020.
- GAAP net loss was
$13.4 million , or$0.57 per basic share, compared with net loss of$35.4 million , or$1.76 per basic share in the fourth quarter of 2019, and a net loss of$9.6 million , or$0.42 per basic share in the third quarter of 2020. - Non-GAAP net loss was
$4.8 million , or$0.20 per basic share, compared with non-GAAP net loss of$3.6 million , or$0.18 per diluted share in the fourth quarter of 2019, and a non-GAAP net loss of$1.4 million , or$0.06 per basic share in the third quarter of 2020. Please refer to the section below on non-GAAP measures, especially regarding the treatment of deferred tax expense, for additional details.
Full Year 2020 Financial Summary
- GAAP revenue was
$234.6 million , compared with$190.9 million in 2019, and non-GAAP revenue was$235.1 million . - GAAP gross margin was 21.5%, compared with 24.2% in 2019. Non-GAAP gross margin was 24.9% compared to 27.2% in 2019.
- GAAP net loss was
$58.5 million , or$2.67 per basic share, compared with net loss of$66.0 million , or$3.31 per basic share in 2019. - Non-GAAP net loss was
$20.0 million , or$0.92 per basic share, compared with non-GAAP net loss of$17.1 million , or$0.86 per basic share in 2019.
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 2021 Business Outlook (+)
For the first quarter of 2021, the company currently expects:
- Revenue in the range of
$47 million to$51 million . - Non-GAAP gross margin in the range of 23.5% to 25%.
- Non-GAAP net loss in the range of
$5.9 million to$7.3 million , and non-GAAP loss per share in the range of$0.23 to$0.28 using approximately 26.0 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
The company will host a conference call and webcast for analysts and investors on
Forward-Looking Information
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "could," "would," "target," "seek," "aim," "predicts," "think," "objectives," "optimistic," "new," "goal," "strategy," "potential," "is likely," "will," "expect," "plan" "project," "permit" or by other similar expressions that convey uncertainty of future events or outcomes. These statements include management’s beliefs and expectations related to our outlook for the first quarter of 2021. Such forward-looking statements reflect the views of management at the time such statements are made. 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: the impact of the COVID-19 pandemic on our business and financial results; 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 internet datacenter, cable television (CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets; changes in the world economy (particularly in
Non-GAAP Financial Measures
We provide non-GAAP revenue, non-GAAP gross margin, non-GAAP net income (loss), and non-GAAP earnings per share to eliminate the impact of items that we do not consider indicative of our overall operating performance. To arrive at our non-GAAP revenue, we exclude non-recurring adjustments to revenue, if any. To arrive at our non-GAAP gross margin, we exclude stock-based compensation expense, expenses associated with discontinued products, and non-recurring expenses, if any, from our GAAP gross margin. To arrive at our non-GAAP net income (loss), we exclude all amortization of intangible assets, stock-based compensation expense, non-recurring expenses, unrealized foreign exchange gain (loss), losses from the disposal of idle assets, if any, non-recurring tax expenses (benefits), and expenses associated with discontinued products, if any, from our GAAP net income (loss). Included in our non-recurring adjustments to revenue in Q4 2020 and CY2020, but not in 2019, is a non-recurring customer credit. Included in our non-recurring expenses in Q4 2020 and Q4 2019 are certain one-time legal (if any) and consulting fees (if any) and employee severance expenses (if any). Also included in our non-recurring (income) expenses in the year ended
Our non-GAAP earnings per share is calculated by dividing our non-GAAP net income by the fully diluted share count (for periods in which non-GAAP net income is positive) or basic share count (for periods in which our non-GAAP net income is negative). 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 amortization of intangible assets, stock-based compensation expense, non-recurring revenue and expenses, losses from the disposal of idle assets, unrealized foreign exchange gain or loss, unamortized debt issuance costs associated with the extinguishment of debt, and depreciation on certain equipment undergoing reconfiguration is appropriate because treatment of these items may vary for reasons unrelated to our overall operating performance;
- We believe that elimination of expenses associated with discontinued products, including depreciation and inventory obsolescence is appropriate because these expenses are not indicative of our ongoing operations;
- 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 as a supplement to GAAP measures to evaluate our overall operating performance.
A reconciliation of our GAAP net income (loss) and GAAP earnings (loss) per share for Q4 2020 to our non-GAAP net income (loss) and earnings (loss) per share is provided below, together with corresponding reconciliations for the annual period ended
Non-GAAP measures should not be considered as an alternative to net income (loss), earnings (loss) per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such other non-GAAP measures in the same manner. We have not reconciled the non-GAAP measures included in our guidance to the appropriate GAAP financial measures because the GAAP measures are not readily determinable on a forward-looking basis. GAAP measures that impact our non-GAAP financial measures may include stock-based compensation expense, non-recurring expenses, amortization of intangible assets, unrealized exchange loss (gain), asset impairment charges, and loss (gain) from disposal of idle assets. These GAAP measures cannot be reasonably predicted and may directly impact our non-GAAP gross margin, our non-GAAP net income and our non-GAAP fully-diluted earnings per share, although changes with respect to certain of these measures may offset other changes. In addition, certain of these measures are out of our control. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.
About
Investor Relations Contacts:
+1-212-871-3927
ir@ao-inc.com
+1-212-331-8417
ir@ao-inc.com
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| Preliminary Condensed Consolidated Balance Sheets | |||||
| (In thousands) | |||||
| (Unaudited) | |||||
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash, Cash Equivalents and Restricted Cash | $ | 50,114 | $ | 67,028 | |
| Accounts Receivable, Net | 43,042 | 34,654 | |||
| Notes receivable | 401 | 1 | |||
| Inventories | 110,397 | 85,028 | |||
| Prepaid Income Tax | 2 | 224 | |||
| Prepaid Expenses and Other Current Assets | 5,213 | 5,869 | |||
| Total Current Assets | 209,169 | 192,804 | |||
| Property, Plant And Equipment, Net | 252,984 | 248,444 | |||
| Land Use Rights, Net | 5,854 | 5,598 | |||
| Right of Use Asset | 7,817 | 7,887 | |||
| Intangible Assets, Net | 3,999 | 4,081 | |||
| Deferred Income Tax Assets | - | 7,287 | |||
| Other Assets | 982 | 724 | |||
| TOTAL ASSETS | $ | 480,805 | $ | 466,825 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Accounts Payable | $ | 29,482 | $ | 32,828 | |
| Accrued Expenses | 18,511 | 17,864 | |||
| Current Lease Liability | 1,030 | 982 | |||
| Bank Acceptance Payable | 15,860 | 6,310 | |||
| Current Portion of Notes Payable and Long Term Debt | 38,265 | 33,371 | |||
| Total Current Liabilities | 103,148 | 91,355 | |||
| Notes Payable and Long Term Debt | 13,904 | 16,552 | |||
| Convertible Senior Notes | 77,854 | 77,041 | |||
| Other Long-Term Liabilities | 8,008 | 8,083 | |||
| TOTAL LIABILITIES | 202,914 | 193,031 | |||
| STOCKHOLDERS' EQUITY | |||||
| TOTAL STOCKHOLDERS' EQUITY | 277,891 | 273,794 | |||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 480,805 | $ | 466,825 | |
| Preliminary Condensed Consolidated Statements of Operations | |||||||||||||
| (In thousands, except per share data) | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended |
Twelve Months Ended |
||||||||||||
| Revenue | 2020 | 2019 | 2020 | 2019 | |||||||||
| Datacenter | $ | 32,305 | $ | 39,252 | $ | 173,437 | $ | 143,562 | |||||
| CATV | 15,937 | 6,753 | 37,944 | 37,328 | |||||||||
| Telecom | 3,492 | 2,193 | 21,092 | 8,429 | |||||||||
| FTTH | 42 | 41 | 110 | 190 | |||||||||
| Other | 550 | 419 | 2,040 | 1,363 | |||||||||
| Total Revenue | 52,326 | 48,658 | 234,623 | 190,872 | |||||||||
| Total Cost of Goods Sold | 41,049 | 37,322 | 184,082 | 144,671 | |||||||||
| Total Gross Profit | 11,277 | 11,336 | 50,541 | 46,201 | |||||||||
| Operating Expenses: | |||||||||||||
| Research and Development | 10,826 | 10,597 | 43,393 | 43,399 | |||||||||
| Sales and Marketing | 3,230 | 2,615 | 14,087 | 10,060 | |||||||||
| General and Administrative | 10,382 | 10,178 | 41,903 | 41,489 | |||||||||
| Total Operating Expenses | 24,438 | 23,390 | 99,383 | 94,948 | |||||||||
| Operating Loss | (13,161 | ) | (12,054 | ) | (48,842 | ) | (48,747 | ) | |||||
| Other Income (Expense): | |||||||||||||
| Interest Income | 35 | 196 | 255 | 925 | |||||||||
| Interest Expense | (1,211 | ) | (1,402 | ) | (5,635 | ) | (5,405 | ) | |||||
| Other Income | 883 | 383 | 2,997 | 1,820 | |||||||||
| Foreign Exchange Gain (Loss) | 19 | (286 | ) | 1 | 20 | ||||||||
| Total Other Expense: | (274 | ) | (1,109 | ) | (2,382 | ) | (2,640 | ) | |||||
| Net loss before Income Taxes | (13,435 | ) | (13,163 | ) | (51,224 | ) | (51,387 | ) | |||||
| Income Tax Expense | (4 | ) | (22,267 | ) | (7,228 | ) | (14,662 | ) | |||||
| Net loss | (13,439 | ) | (35,430 | ) | (58,452 | ) | (66,049 | ) | |||||
| Net loss per share attributable to common stockholders | |||||||||||||
| basic | $ | (0.57 | ) | $ | (1.76 | ) | $ | (2.67 | ) | $ | (3.31 | ) | |
| diluted | $ | (0.57 | ) | $ | (1.76 | ) | $ | (2.67 | ) | $ | (3.31 | ) | |
| Weighted-average shares used to compute net loss per share attributable to common stockholders |
|||||||||||||
| basic | 23,626 | 20,109 | 21,867 | 19,982 | |||||||||
| diluted | 23,626 | 20,109 | 21,867 | 19,982 | |||||||||
| Reconciliation of Statements of Operations under GAAP and Non-GAAP | |||||||||||||
| (In thousands, except per share data) | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended |
Twelve Months Ended |
||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| GAAP revenue | $ | 52,326 | $ | 48,658 | $ | 234,623 | $ | 190,872 | |||||
| Non-recurring customer credit | 449 | - | 449 | - | |||||||||
| Non-GAAP revenue | 52,775 | 48,658 | 235,072 | 190,872 | |||||||||
| GAAP total gross profit (a) | $ | 11,277 | $ | 11,336 | $ | 50,541 | $ | 46,201 | |||||
| Non-recurring customer credit | 449 | - | 449 | - | |||||||||
| Share-based compensation expense | 225 | 189 | 937 | 774 | |||||||||
| Non-recurring expense | - | - | 971 | - | |||||||||
| Expenses associated with discontinued products | 2,585 | 1,891 | 5,582 | 5,000 | |||||||||
| Non-GAAP total gross profit (a) | 14,536 | 13,416 | 58,480 | 51,975 | |||||||||
| GAAP net loss | (13,439 | ) | (35,430 | ) | (58,452 | ) | (66,049 | ) | |||||
| Non-recurring customer credit | 449 | - | 449 | - | |||||||||
| Amortization of intangible assets | 149 | 140 | 579 | 540 | |||||||||
| Share-based compensation expense | 3,242 | 2,864 | 13,046 | 11,804 | |||||||||
| Non-recurring (income) expense | (95 | ) | 94 | (90 | ) | 1,716 | |||||||
| Expenses associated with discontinued products | 2,585 | 1,891 | 5,583 | 5,000 | |||||||||
| Non-cash expenses associated with discontinued products | 661 | 1,067 | 3,133 | 4,314 | |||||||||
| Unrealized exchange loss (gain) | (669 | ) | 79 | (856 | ) | (157 | ) | ||||||
| Non-GAAP tax benefit | 2,276 | 25,736 | 16,572 | 25,736 | |||||||||
| Non-GAAP net loss | (4,841 | ) | (3,559 | ) | (20,036 | ) | (17,096 | ) | |||||
| GAAP diluted net loss per share | $ | (0.57 | ) | $ | (1.76 | ) | $ | (2.67 | ) | $ | (3.31 | ) | |
| Non-recurring customer credit | 0.02 | - | 0.02 | - | |||||||||
| Amortization of intangible assets | 0.01 | 0.01 | 0.03 | 0.03 | |||||||||
| Share-based compensation expense | 0.14 | 0.14 | 0.60 | 0.59 | |||||||||
| Non-recurring (income) expense | (0.01 | ) | 0.00 | (0.01 | ) | 0.09 | |||||||
| Expenses associated with discontinued products | 0.11 | 0.09 | 0.26 | 0.25 | |||||||||
| Non-cash expenses associated with discontinued products | 0.03 | 0.05 | 0.13 | 0.21 | |||||||||
| Unrealized exchange loss (gain) | (0.03 | ) | 0.00 | (0.04 | ) | (0.01 | ) | ||||||
| Non-GAAP tax benefit | 0.10 | 1.29 | 0.76 | 1.29 | |||||||||
| Non-GAAP diluted net loss per share | $ | (0.20 | ) | $ | (0.18 | ) | $ | (0.92 | ) | $ | (0.86 | ) | |
| Shares used to compute diluted loss per share | 23,626 | 20,109 | 21,867 | 19,982 | |||||||||
| Shares used to compute diluted earnings per share | 23,626 | 20,109 | 21,867 | 19,982 | |||||||||
| (a) Provided for the purpose of calculating gross profit as a percentage of revenue (gross margin). | |||||||||||||
Source: Applied Optoelectronics, Inc.