FNSR
$22.86
Finisar
($.61)
(2.60%)
Earnings Details
3rd Quarter January 2019
Thursday, February 28, 2019 4:01:00 PM
Tweet Share Watch
Summary

Finisar (FNSR) Recent Earnings

Finisar (FNSR) reported 3rd Quarter January 2019 earnings of $0.16 per share on revenue of $327.6 million. The consensus earnings estimate was $0.16 per share on revenue of $343.3 million. Revenue fell 1.4% compared to the same quarter a year ago.

Finisar Corp is a provider of optical subsystems and components that are used in data communication and telecommunication applications.

Results
Reported Earnings
$0.16
Earnings Whisper
-
Consensus Estimate
$0.16
Reported Revenue
$327.6 Mil
Revenue Estimate
$343.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Finisar Announces Third Quarter of Fiscal 2019 Financial Results

SUNNYVALE, Calif., Feb. 28, 2019 (GLOBE NEWSWIRE) -- Finisar Corporation (NASDAQ: FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for third quarter of fiscal 2019, ended January 27, 2019. Finisar will not hold an earnings call, nor provide forward guidance for the fourth quarter of fiscal 2019 due to the previously announced proposed acquisition by II-VI Incorporated (NASDAQ: IIVI).

COMMENTARY

“I am pleased to report that revenues again grew over the prior quarter and gross margins also improved over the prior quarter, primarily due to favorable product mix and continued focus on reducing manufacturing overhead,” said Michael Hurlston, Finisar’s Chief Executive Officer.  “The combination of the above resulted in significant improvement in operating margins and profitability.”

FINANCIAL HIGHLIGHTS – Third Quarter Ended January 27,2019

Summary GAAP ResultsThird
 Second
 Quarter
 Quarter
 Ended
 Ended
 January 27, 2019
 October 28, 2018
 (in thousands, except per share amounts)
        
Revenues$327,636  $325,423 
Gross margin 28.8%  26.3%
Operating expenses$93,890  $89,788 
Operating income (loss)$533  $(4,105)
Operating margin 0.2%  (1.3)%
Net loss$(15,301) $(5,275)
Loss per share-basic$(0.13) $(0.04)
Loss per share-diluted$(0.13) $(0.04)
        
Basic shares 117,608   117,284 
Diluted shares 117,608   117,284 
        



Summary Non-GAAP Results (a)Third
 Second
 Quarter
 Quarter
 Ended
 Ended
 January 27, 2019
 October 28, 2018
 (in thousands, except per share amounts)
        
Revenues$327,636  $325,423 
Non-GAAP Gross margin 30.2%  28.3%
Non-GAAP Operating expenses$63,645  $63,559 
Non-GAAP Operating income $35,229  $28,626 
Non-GAAP Operating margin 10.8%  8.8%
Non-GAAP Net income$34,192  $30,600 
Non-GAAP Income per share-basic$0.29  $0.26 
Non-GAAP Income per share-diluted$0.29  $0.26 
        
Basic shares 117,608   117,284 
Diluted shares 119,570   118,290 

_____________

(a)  In evaluating the operating performance of Finisar’s business, Finisar management utilizes financial measures that exclude certain charges and credits required by U.S. generally accepted accounting principles, or GAAP, that are considered by management to be outside of Finisar’s core ongoing operating resultsA reconciliation of Finisar’s non-GAAP financial measures to the most directly comparable GAAP measures, as well as additional related information, can be found under the heading “Finisar Non-GAAP Financial Measures” below.

Financial Statement Highlights for the Third Quarter of Fiscal 2019: 

  • Revenues increased by $2.2 million, or 0.7%, compared to the second quarter of fiscal 2019 as the result of increased sales of wavelength selective switches and VCSEL arrays for 3D applications, partially offset by a decline in sales of 10G and lower transceivers.
     
  • GAAP gross margin improved from 26.3% in the second quarter to 28.8% primarily due to favorable product mix and continued focus on reducing manufacturing overhead.

  • Non-GAAP gross margin improved from 28.3% in the second quarter to 30.2%.

  • GAAP operating margin improved from (1.3)% of revenue in the second quarter to 0.2% due to the combination of higher revenues and improved gross margins.

  • Non-GAAP operating margin improved from 8.8% in the second quarter to 10.8%.

  • During the quarter, the Company redeemed approximately $257.7 million of convertible notes.

SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains forward-looking statement concerning Finisar’s expected financial performance. These statements are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements are based on our current expectations, estimates, assumptions and projections about our business and industry, and the markets and customers we serve, and they are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Finisar assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those projected. Examples of such risks include those associated with:  the uncertainty of customer demand for Finisar’s products; the rapidly evolving markets for Finisar’s products and uncertainty regarding the development of these markets; Finisar’s historical dependence on sales to a limited number of customers and fluctuations in the mix of products and customers in any period; ongoing new product development and introduction of new and enhanced products; the challenges of rapid growth followed by periods of contraction; intensive competition; the risk that our pending merger with II-VI does not close, due to the failure of one or more conditions to closing; uncertainty as to the market value of the II-VI merger consideration to be paid in the merger; the risk that required governmental or stockholder approvals of the merger (including China antitrust approval) will not be obtained or that such approvals will be delayed beyond current expectations; the risk of litigation in respect of either Finisar or II-VI or the merger; disruption from the merger making it more difficult to maintain our customer, supplier, key personnel and other strategic relationships.  Further information regarding these and other risks relating to Finisar’s business is set forth in Finisar’s annual report on Form 10-K (filed June 15, 2018) and quarterly SEC filings.

ABOUT FINISAR

Finisar Corporation (NASDAQ: FNSR) is a global technology leader in optical communications, providing components and subsystems to networking equipment manufacturers, data center operators, telecom service providers, consumer electronics and automotive companies.  Founded in 1988, Finisar designs products that meet the increasing demands for network bandwidth, data storage and 3D sensing subsystems. The company is headquartered in Sunnyvale, California, USA with R&D, manufacturing sites, and sales offices worldwide. Visit our website at www.finisar.com.

FINISAR FINANCIAL STATEMENTS The following financial tables are presented in accordance with GAAP.

Finisar Corporation
Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
          
 Three Months Ended Nine Months Ended Three Months Ended
 Jan 27, 2019 Jan 28, 2018 Jan 27, 2019 Jan 28, 2018 Oct 28, 2018
Revenues$ 327,636  $ 332,403  $ 970,395  $ 1,006,414  $ 325,423 
Cost of revenues  232,717    243,724    708,116    705,009    239,244 
Amortization of acquired developed technology  496    611    1,488    1,833    496 
Gross profit  94,423    88,068    260,791    299,572    85,683 
Gross margin 28.8%  26.5%  26.9%  29.8%  26.3%
Operating expenses:         
Research and development  51,274    59,888    167,008    178,488    52,674 
Sales and marketing  12,170    11,913    37,077    36,494    12,427 
General and administrative  14,973    19,739    40,448    47,310    12,832 
Start-up costs  15,136    638    34,108    638    11,419 
Amortization of purchased intangibles  337    666    1,413    2,039    436 
Impairment of long-lived assets  -     1,353    -     1,353    -  
Total operating expenses  93,890    94,197    280,054    266,322    89,788 
Income (loss) from operations  533    (6,129)   (19,263)   33,250    (4,105)
Interest income  5,333    3,995    16,469    11,181    5,981 
Interest expense  (8,167)   (9,192)   (27,043)   (27,336)   (9,490)
Other income (expenses), net  (38)   (459)   (1,043)   (2,042)   784 
Income (loss) before income taxes  (2,339)   (11,785)   (30,880)   15,053    (6,830)
Provision (benefit) for income taxes  12,962    43,874    8,185    44,996    (1,555)
Net loss$ (15,301) $ (55,659) $ (39,065) $ (29,943) $ (5,275)
          
Net income (loss) per share:         
          
Basic$ (0.13) $ (0.49) $ (0.33) $ (0.26) $ (0.04)
Diluted$ (0.13) $ (0.49) $ (0.33) $ (0.26) $ (0.04)
          
Shares used in computing net income (loss) per share - basic 117,608   114,209   116,919   113,571   117,284 
Shares used in computing net income (loss) per share - diluted 117,608   114,209   116,919   113,571   117,284 
          


Finisar Corporation
Consolidated Balance Sheets
 (in thousands)
         
  Jan 27, 2019 Oct 28, 2018 Jul 29, 2018 Apr 29, 2018
  (Unaudited) (Unaudited) (Unaudited)  
ASSETS        
Current assets:        
Cash and cash equivalents $ 906,854  $ 332,138  $ 326,189  $ 312,257 
Short-term investments   3,754    837,658    832,681    884,838 
Accounts receivable, net   263,737    247,688    248,138    233,529 
Inventories   306,864    309,500    325,846    348,527 
Other current assets   44,713    51,232    54,863    56,001 
Total current assets   1,525,922    1,778,216    1,787,717    1,835,152 
Property, equipment and improvements, net   622,770    600,972    587,203    520,849 
Purchased intangible assets, net   4,977    5,810    6,742    7,878 
Goodwill   106,735    106,735    106,735    106,735 
Other assets   12,185    12,250    25,179    31,721 
Deferred tax assets   85,372    89,202    85,873    80,850 
Total assets $ 2,357,961  $ 2,593,185  $ 2,599,449  $ 2,583,185 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable $ 128,594  $ 133,539  $ 149,876  $ 132,161 
Accrued compensation   41,216    36,152    35,349    32,525 
Other accrued liabilities   54,890    54,746    50,944    32,824 
Deferred revenue   -     -     -     9,535 
Current portion of convertible debt   -     257,067    254,150    251,278 
Total current liabilities   224,700    481,504    490,319    458,323 
Long-term liabilities:        
Convertible debt, net of current portion   506,454    499,838    494,316    488,877 
Other non-current liabilities   11,864    11,558    11,366    12,368 
Total liabilities   743,018    992,900    996,001    959,568 
Stockholders' equity:        
Common stock   118    117    117    115 
Additional paid-in capital   2,904,016    2,885,319    2,869,657    2,850,195 
Accumulated other comprehensive loss   (46,645)   (57,906)   (44,356)   (14,659)
Accumulated deficit   (1,242,546)   (1,227,245)   (1,221,970)   (1,212,034)
Total stockholders' equity   1,614,943    1,600,285    1,603,448    1,623,617 
Total liabilities and stockholders' equity $ 2,357,961  $ 2,593,185  $ 2,599,449  $ 2,583,185 
         
Note - Balance sheet amounts as of April 29, 2018 are derived from the audited consolidated financial statements as of that date. 
         

FINISAR NON-GAAP FINANCIAL MEASURES

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP, Finisar provides the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: non-GAAP gross profit, non-GAAP operating income, non-GAAP income and non-GAAP net income per share. These non-GAAP financial measures are supplemental information regarding Finisar’s operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be outside of our ongoing core operating results.   Management believes that tracking non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share provides management and the investment community with valuable insight into our ongoing core current operations, our ability to generate cash and the underlying business trends that are affecting our performance.  These non-GAAP measures are used by both management and our Board of Directors, along with the comparable GAAP information, in evaluating our current performance and planning our future business activities.  In particular, management finds it useful to exclude non-cash charges in order to better correlate our operating activities with our ability to generate cash from operations and to exclude certain cash charges as a means of more accurately predicting our liquidity requirements.  We believe that these non-GAAP measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry.

In calculating non-GAAP gross profit in this release, we have excluded the following items from cost of revenues in applicable periods in this release:

  • Amortization of acquired technology (non-cash charges related to technology obtained in acquisitions);
  • Stock-based compensation expense (non-cash charges);
  • Impairment of long-lived/intangible assets (non-cash charges);
  • Reduction in force costs and other restructuring charges (non-core cash charges);
  • Acquisition related retention payments (non-core cash charges); and
  • Inventory write-off related to discontinued products (non-cash charges). 

In calculating non-GAAP operating income in this release, we have excluded the same items to the extent they are classified as operating expenses, and have also excluded the following items in applicable periods in this release:

  • Discontinued product services fee (non-core cash charges);
  • Acquisition related costs (non-core cash charges);
  • Litigation settlements and resolutions and related costs (non-core cash charges);
  • Amortization of purchased intangibles (non-cash charges); and
  • Start-up cash costs related to our Sherman VCSEL fab until we begin commercial production.

In calculating non-GAAP income and non-GAAP income per share in this release, we have also excluded the following items in applicable periods in this release:

  • Imputed interest expenses on convertible debt (non-cash charges);
  • Imputed interest related to restructuring (non-cash charges);
  • Other interest income (non-core benefits);
  • Gains and losses on sales of assets and other miscellaneous (non-cash losses and cash gains related to the periodic disposal of assets no longer required for current activities);
  • Loss (gain) related to minority investment (non-core charges or benefits);
  • Dollar denominated foreign exchange transaction losses (gains) (non-cash charges or benefits); and
  • Amortization of debt issuance costs (non-cash charges).

In addition, in this release we have adjusted non-GAAP income and non-GAAP income per share for the difference between GAAP income taxes and non-GAAP income taxes.

A reconciliation of this non-GAAP financial information to the corresponding GAAP information is set forth below:

Finisar Corporation
Reconciliation of Results of Operations under GAAP and non-GAAP
(Unaudited, in thousands, except per share data)
          
 Three Months Ended Nine Months Ended Three Months Ended
 Jan 27, 2019 Jan 28, 2018 Jan 27, 2019 Jan 28, 2018 Oct 28, 2018
GAAP to non-GAAP reconciliation of gross profit:         
Gross profit - GAAP$ 94,423  $ 88,068  $ 260,791  $ 299,572  $ 85,683 
Gross margin - GAAP 28.8%  26.5%  26.9%  29.8%  26.3%
Adjustments:         
Cost of revenues         
Amortization of acquired technology  496    611    1,488    1,833    496 
Stock compensation  4,248    2,918    11,547    9,212    3,493 
Impairment of long-lived/intangible assets  62    -     79    -     17 
Reduction in force costs  544    7    2,685    632    1,659 
Acquisition related retention payment  (5)   26    28    93    21 
Write off of discontinued product inventory  (894)   3,448    1,593    3,448    816 
Total cost of revenues adjustments  4,451    7,010    17,420    15,218    6,502 
Gross profit - non-GAAP  98,874    95,078    278,211    314,790    92,185 
Gross margin - non-GAAP 30.2%  28.6%  28.7%  31.3%  28.3%
          
GAAP to non-GAAP reconciliation of operating income (loss):         
Operating income (loss) - GAAP  533    (6,129)   (19,263)   33,250    (4,105)
Operating margin - GAAP 0.2%  -1.8%  -2.0%  3.3%  -1.3%
Adjustments:         
Total cost of revenues adjustments  4,451      7,010    17,420      15,218    6,502 
Total operating expense adjustments         
Operating expenses - GAAP  93,890    94,197    280,054    266,322    89,788 
Research and development         
Reduction in force costs and other restructuring  186    792    8,182    907    972 
Acquisition related retention payment  (5)   44    41    108    17 
Stock compensation  5,683    6,073    17,820    18,302    5,962 
Discontinued product service fees  -     -     921    -     608 
Sales and marketing         
Reduction in force costs  32    -     716    (12)   282 
Acquisition related retention payment  -     -     -     (2)   -  
Stock compensation  2,012    1,892    6,179    5,975    2,021 
General and administrative         
Reduction in force costs and other restructuring  190    460    966    830    257 
Stock compensation  3,542    9,888    9,761    15,956    3,202 
Acquisition related costs  3,086    (25)   4,081    19    997 
Litigation settlements and resolutions and related costs  -     -     88    -     25 
Amortization of purchased intangibles  337    666    1,413    2,039    436 
Startup costs  15,136    638    34,108    638    11,419 
Impairment of long-lived assets/intangible assets  46    1,394    263    1,394    31 
Total operating expense adjustments 30,245   21,822   84,539   46,154   26,229 
Operating expenses - non-GAAP 63,645   72,375   195,515   220,168   63,559 
Operating income - non-GAAP 35,229   22,703   82,696   94,622   28,626 
Operating margin - non-GAAP 10.8%  6.8%  8.5%  9.4%  8.8%
          
GAAP to non-GAAP reconciliation of income (loss) before income taxes:         
Income (loss) before income taxes - GAAP  (2,339)   (11,785)   (30,880)   15,053    (6,830)
Adjustments:         
Total cost of revenues adjustments  4,451    7,010    17,420    15,218    6,502 
Total operating expense adjustments  30,245    21,822    84,539    46,154    26,229 
Other interest income  (13)   (14)   (13)   (14)   -  
Non-cash imputed interest expenses on convertible debt  6,940    7,739    22,921    22,970    8,054 
Imputed interest related to restructuring  15    25    53    83    18 
Other (income) expense, net         
(Gain) / loss on sale of assets and other miscellaneous  85    (79)   (42)   (158)   (50)
Loss related to impairment of minority investments  -     -     399    2,347    399 
Foreign exchange transaction (gain) or loss  200    698    814    (318)   (1,307)
Amortization of debt issuance cost  308    385    1,078    1,155    385 
Total interest and other adjustments  7,535    8,754    25,210    26,065    7,499 
Income before income taxes - non-GAAP 39,892   25,801   96,289   102,490   33,400 
          
GAAP to non-GAAP reconciliation of net income (loss):         
Net loss - GAAP  (15,301)   (55,659)   (39,065)   (29,943)   (5,275)
Total cost of revenues adjustments  4,451    7,010    17,420    15,218    6,502 
Total operating expense adjustments  30,245    21,822    84,539    46,154    26,229 
Total interest and other adjustments 7,535    8,754   25,210    26,065   7,499 
Income tax provision adjustments  7,262    40,874    (2,015)   37,146    (4,355)
Total adjustments  49,493    78,460    125,154    124,583    35,875 
Net income - non-GAAP$ 34,192  $ 22,801  $ 86,089  $ 94,640  $ 30,600 
          
Non-GAAP net income for diluted earnings per share calculation         
Net income - non-GAAP$ 34,192  $ 22,801  $ 86,089  $ 94,640  $ 30,600 
Add: interest expense for dilutive convertible notes  -     -     -     -     -  
Adjusted net income - non-GAAP$ 34,192  $ 22,801  $ 86,089  $ 94,640  $ 30,600 
          
Basic non-GAAP income per share          
GAAP earnings per share$ (0.13) $ (0.49) $ (0.33) $ (0.26) $ (0.04)
Impact of all non-GAAP adjustments$ 0.42  $ 0.69  $ 1.07  $ 1.09  $ 0.30 
Non-GAAP earnings per share$ 0.29  $ 0.20  $ 0.74  $ 0.83  $ 0.26 
          
Diluted non-GAAP income per share          
GAAP earnings per share$ (0.13) $ (0.49) $ (0.33) $ (0.26) $ (0.04)
Impact of all non-GAAP adjustments$ 0.42  $ 0.69  $ 1.06  $ 1.07  $ 0.30 
Non-GAAP earnings per share$ 0.29  $ 0.20  $ 0.73  $ 0.81  $ 0.26 
          
Shares used in computing non-GAAP income per share         
Basic 117,608   114,209   116,919   113,571   117,284 
Diluted 119,570   115,661   118,617   116,138   118,290 
          


Finisar-F

Investor Contact: Press contact:
Kurt AdzemaVictoria McDonald
Chief Financial OfficerDirector, Corporate Communications
408-542-5050 or Investor.relations@finisar.com408-542-4261
  

Additional Information and Where to Find It

In connection with the proposed acquisition of Finisar Corporation (the “Company”) by II-VI Incorporation (“Parent”) pursuant to the terms of an Agreement and Plan of Merger by and among the Company, Parent and Mutation Merger Sub Inc. (“Merger Subsidiary”), Parent has filed with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 (the “Form S-4”) that contains a proxy statement of the Company and a proxy statement and prospectus of Parent, which joint proxy statement/prospectus has been mailed or otherwise disseminated to the Company’s stockholders.  Investors are urged to read the joint proxy statement/prospectus (including all amendments and supplements) because they contain important information.  Investors may obtain free copies of the joint proxy statement/prospectus, as well as other filings containing information about the Company and Parent, without charge, at the SEC’s Internet site (http://www.sec.gov). Copies of these documents may also be obtained for free from the companies’ web sites at www.finisar.com and www.ii-vi.com.

Participants in Solicitation

The Company, Parent and their respective officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of the Company in connection with the proposed transaction.  Information about the Company’s executive officers and directors is set forth in its Annual Report on Form 10-K, which was filed with the SEC on June 15, 2018, and the proxy statement for its 2018 annual meeting of stockholders, which was filed with the SEC on July 26, 2018. Investors may obtain more detailed information regarding the direct and indirect interests of Parent, the Company and their respective executive officers and directors in the acquisition by reading the definitive joint proxy statement/prospectus regarding the transaction, which was filed with the SEC on February 8, 2019.

Forward Looking Statements

This written communication contains forward-looking statements that involve risks and uncertainties concerning Parent’s proposed acquisition of the Company, the Company’s expected financial performance, as well as the Company’s strategic and operational plans. Actual events or results may differ materially from those described in this written communication due to a number of risks and uncertainties. The potential risks and uncertainties include, among others, the possibility that the Company may be unable to obtain required stockholder approval or that other conditions to closing the transaction may not be satisfied, such that the transaction will not close or that the closing may be delayed; the reaction of customers to the transaction; general economic conditions; the transaction may involve unexpected costs, liabilities or delays; risks that the transaction disrupts current plans and operations of the parties to the transaction; the ability to recognize the benefits of the transaction; the amount of the costs, fees, expenses and charges related to the transaction and the actual terms of any financings that will be obtained for the transaction; the outcome of any legal proceedings related to the transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the transaction agreement.  In addition, please refer to the documents that the Company files with the SEC on Forms 10-K, 10-Q and 8-K. The filings by the Company identify and address other important factors that could cause its financial and operational results to differ materially from those contained in the forward-looking statements set forth in this written communication. All forward-looking statements speak only as of the date of this written communication or, in the case of any document incorporated by reference, the date of that document. The Company is under no duty to update any of the forward-looking statements after the date of this written communication to conform to actual results.

finisar_logo_color.jpg

Source: Finisar Corporation