FNSR
$15.42
Finisar
$.03
.19%
Earnings Details
3rd Quarter January 2018
Thursday, March 8, 2018 4:01:00 PM
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Summary

Finisar Misses

Finisar (FNSR) reported 3rd Quarter January 2018 earnings of $0.12 per share on revenue of $332.4 million. The consensus earnings estimate was $0.23 per share on revenue of $334.6 million. The Earnings Whisper number was $0.22 per share. Revenue fell 12.7% compared to the same quarter a year ago.

The company said it expects fourth quarter non-GAAP earnings of $0.09 to $0.15 per share on revenue of $300.0 million to $320.0 million. The current consensus earnings estimate is $0.22 per share on revenue of $338.1 million for the quarter ending April 30, 2018.

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

Results
Reported Earnings
$0.12
Earnings Whisper
$0.22
Consensus Estimate
$0.23
Reported Revenue
$332.4 Mil
Revenue Estimate
$334.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Finisar Announces Third Quarter Fiscal 2018 Financial Results

SUNNYVALE, Calif., March 08, 2018 (GLOBE NEWSWIRE) -- Finisar Corporation (NASDAQ:FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for its third fiscal quarter, ended January 28, 2018

COMMENTARY

“We experienced strong demand and record revenues in our third fiscal quarter for our 100G QSFP28 transceivers for datacenters as well as higher revenue for our VCSEL arrays for 3D sensing,” said Michael Hurlston, Finisar’s Chief Executive Officer.  “However, our overall revenues for the third fiscal quarter only grew modestly to $332.4 million, as the growth from 100G QSFP28 and VCSEL arrays was offset by decline in revenue from telecom products, as well as lower revenues from our 40G QSFP and 100G CFP and CFP2 ethernet datacom transceivers.”

                
FINANCIAL HIGHLIGHTS – Third Quarter Ended January 28, 2018        
      
Summary GAAP ResultsThird 
 Second
 
 Quarter
 Quarter
 
 Ended
 Ended
 
 January 28, 2018
 October 29, 2017
 
 (in thousands, except per share amounts)
 
      
Revenues$332,403           $332,205        
Gross margin26.5%     29.0%    
Operating expenses$94,197     $86,738    
Operating income (loss)$(6,129)     $9,467    
Operating margin (1.8)%     2.8%    
Net income (loss)$(55,659)     $5,857    
Income  (loss) per share-basic$(0.49)     $0.05    
Income (loss) per share-diluted$(0.49)     $0.05    
      
Basic shares114,209     113,960    
Diluted shares114,209     115,443    
      
      
      
Summary Non-GAAP Results (a)Third  Second 
 Quarter
  Quarter
 
 Ended
  Ended
 
 January 28, 2018
  October 29, 2017
 
 (in thousands, except per share amounts)
 
      
Revenues$332,403     $332,205    
Non-GAAP Gross margin28.6%     30.3%    
Non-GAAP Operating expenses$72,376     $74,643    
Non-GAAP Operating income  $22,702     $25,914    
Non-GAAP Operating margin 6.8%     7.8%    
Non-GAAP Net income    22,801     26,089    
Non-GAAP Income per share-basic$0.20     $0.23    
Non-GAAP Income per share-diluted$0.20     $0.23    
      
Basic shares 114,209     113,960    
Diluted shares 115,661     115,443    

_____________

  1. 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.

Revenue Details for the Third Quarter of Fiscal 2018: 

  • Sales of datacom products increased from $256.6 million to $266.1 million, or by $9.5 million, or 3.7%, compared to the second quarter of fiscal 2018.
     
  • Sales of telecom products decreased from $75.6 million to $66.3 million, or by $9.3 million, or (12.3)%, compared to the second quarter of fiscal 2018.

OUTLOOK

Finisar indicated that for the fourth quarter of fiscal 2018 it currently expects revenues in the range of $300 to $320 million, non-GAAP gross margin of approximately 27%-28%, non-GAAP operating margin of approximately 4%, and non-GAAP earnings per fully diluted share in the range of approximately $0.09 to $0.15.

Finisar has not provided a reconciliation of its fourth quarter outlook for non-GAAP gross margin, non-GAAP operating margin and non-GAAP earnings per fully diluted share because estimates of all of the reconciling items cannot be provided without unreasonable efforts.  It is difficult to reasonably provide a forward-looking estimate of certain reconciling items between such non-GAAP forward-looking measures and the comparable forward-looking GAAP measures. Certain factors that are materially significant to Finisar’s ability to estimate these items are out of its control and/or cannot be reasonably predicted, including with respect to restructuring charges, litigation settlements and resolutions and related costs, and the timing of tax related adjustments. Accordingly, a reconciliation of such non-GAAP forward-looking measures to the comparable forward-looking GAAP measures are not available within a reasonable range of predictability. 

CONFERENCE CALL

Finisar will discuss its financial results for the third quarter and current business outlook during its regular quarterly conference call scheduled for Thursday, March 8, 2018, at 2:00 pm PT (5:00 pm ET).  To listen to the call you may connect through the Finisar investor relations page at http://investor.finisar.com/ or dial 1-(855) 473-9088 (domestic) or 1- (720) 405-0995 (international) and enter conference ID 5898449.

An audio replay will be available for two weeks following the call by dialing 1- (855) 859-2056 (domestic) or 1-404-537-3406 (international) and then following the prompts: enter conference ID 5898449 and provide your name, affiliation, and contact number.  A replay of the webcast will be available shortly after the conclusion of the call on Finisar’s website until the next regularly scheduled earnings conference call.

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; and intensive competition.  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 16, 2017) and quarterly SEC filings.

ABOUT FINISAR

Finisar Corporation (NASDAQ:FNSR) is a global technology leader for fiber optic subsystems and components  that enable high-speed voice, video and data communications for telecommunications, networking, storage, wireless, and cable TV applications. For 30 years, Finisar has provided critical optics technologies to system manufacturers to meet the increasing demands for network bandwidth and storage.  Finisar is headquartered in Sunnyvale, California, USA with R&D, manufacturing sites, and sales offices worldwide. For additional information, visit www.finisar.com.

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

 
Finisar Corporation
Consolidated Balance Sheets 
 (in thousands)
     
 Jan 28, 2018Oct 29, 2017Jul 30, 2017Apr 30, 2017
 (Unaudited)(Unaudited)(Unaudited) 
ASSETS    
Current assets:    
Cash and cash equivalents$259,023 $274,547 $278,826 $260,228 
Short-term held-to-maturity investments 957,267  958,216  954,026  976,595 
Accounts receivable, net 243,963  260,870  273,180  272,377 
Inventories 382,179  369,078  356,845  331,388 
Other current assets 53,023  61,517  63,629  68,269 
Total current assets 1,895,455  1,924,228  1,926,506  1,908,857 
Property, equipment and improvements, net 495,364  443,733  420,298  383,919 
Purchased intangible assets, net 9,148  10,424  11,700  13,019 
Goodwill 106,735  106,735  106,735  106,735 
Other assets 21,883  21,424  22,256  20,125 
Deferred tax assets 78,593  116,055  108,567  107,225 
Total assets$2,607,178 $2,622,599 $2,596,062 $2,539,880 
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable$127,248 $152,047 $148,605 $140,568 
Accrued compensation 39,660  36,614  42,030  54,520 
Other accrued liabilities 36,947  40,130  46,648  43,697 
Deferred revenue 14,539  17,716  14,348  13,015 
Current portion of convertible notes 248,426  -  -  - 
Total current liabilities 466,820  246,507  251,631  251,800 
Long-term liabilities:    
Convertible notes 483,481  723,784  715,722  707,782 
Other non-current liabilities 16,464  17,176  17,546  17,594 
Total liabilities 966,765  987,467  984,899  977,176 
Stockholders' equity:    
Common stock 114  114  114  112 
Additional paid-in capital 2,839,701  2,814,713  2,799,118  2,784,204 
Accumulated other comprehensive income (loss) (5,712) (41,664) (44,181) (57,865)
Accumulated deficit (1,193,690) (1,138,031) (1,143,888) (1,163,747)
Total stockholders' equity 1,640,413  1,635,132  1,611,163  1,562,704 
Total liabilities and stockholders' equity$2,607,178 $2,622,599 $2,596,062 $2,539,880 
     
Note - Balance sheet amounts as of April 30, 2017 are derived from the audited consolidated financial statements as of the date.
 


Finisar Corporation
Consolidated Statements of Operations
 (Unaudited, in thousands, except per share data) 
      
 Three Months EndedNine Months EndedThree Months Ended
 Jan 28, 2018Jan 29, 2017Jan 28, 2018Jan 29, 2017Oct 29, 2017
Revenues$332,403 $380,588 $1,006,414 $1,091,776 $332,205 
Cost of revenues 243,724  242,961  705,009  709,790  235,389 
Amortization of acquired developed technology 611  990  1,833  3,503  611 
Gross profit 88,068  136,637  299,572  378,483  96,205 
Gross margin 26.5% 35.9% 29.8% 34.7% 29.0%
Operating expenses:     
Research and development 59,888  54,691  178,488  158,941  60,560 
Sales and marketing 11,913  13,092  36,494  38,322  12,230 
General and administrative 19,739  13,235  47,310  43,126  13,282 
Startup costs 638  -  638  -  - 
Amortization of purchased intangibles 666  713  2,039  2,049  666 
Impairment of long-lived assets 1,353  -  1,353  -  - 
Total operating expenses 94,197  81,731  266,322  242,438  86,738 
Income (loss) from operations (6,129) 54,906  33,250  136,045  9,467 
Interest income 3,995  1,717  11,181  3,464  3,746 
Interest expense (9,192) (5,399) (27,336) (11,410) (9,131)
Other income (expenses), net (459) (338) (2,042) 398  1,111 
Income (loss) before income taxes (11,785) 50,886  15,053  128,497  5,193 
Provision (benefit) for income taxes 43,874  4,499  44,996  9,396  (664)
Net income (loss)$(55,659)$46,387 $(29,943)$119,101 $5,857 
      
Net income (loss) per share attributable to Finisar Corporation common stockholders:  
      
Basic$(0.49)$0.42 $(0.26)$1.08 $0.05 
Diluted$(0.49)$0.40 $(0.26)$1.05 $0.05 
      
Shares used in computing net income per share - basic 114,209  110,956  113,571  110,061  113,960 
Shares used in computing net income per share - diluted 114,209  114,873  113,571  113,506  115,443 
                

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);
  • Duplicate facility costs during facility move (non-core cash charges);
  • Stock-based compensation expense (non-cash charges);
  • Reduction in force costs (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:

  • Litigation settlements and resolutions and related costs (non-core cash charges);
  • Acquisition related costs (non-core cash charges);
  • Amortization of purchased intangibles (non-cash charges);
  • Unclaimed property tax audit accrual (non-core benefits);
  • Impairment of long-lived assets (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 (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.

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 EndedNine Months EndedThree Months Ended
 Jan 28, 2018Jan 29, 2017Jan 28, 2018Jan 29, 2017Oct 29, 2017
GAAP to non-GAAP reconciliation of gross profit:    
Gross profit - GAAP$88,068 $136,637 $299,572 $378,483 $96,205 
Gross margin - GAAP 26.5% 35.9% 29.8% 34.7% 29.0%
Adjustments:     
Cost of revenues     
Amortization of acquired technology 611  990  1,833  3,503  611 
Duplicate facility costs during facility move -  10  -  26  - 
Stock compensation 2,918  3,182  9,212  9,178  3,724 
Reduction in force costs 7  68  632  184  (9)
Acquisition related retention payment 26  26  93  71  26 
Write off of discontinued product inventory 3,448  -  3,448  -  - 
Total cost of revenue adjustments 7,010  4,276  15,218  12,962  4,352 
Gross profit - non-GAAP 95,078  140,913  314,790  391,445  100,557 
Gross margin - non-GAAP 28.6% 37.0% 31.3% 35.9% 30.3%
      
GAAP to non-GAAP reconciliation of operating income:    
Operating income (loss) - GAAP (6,129) 54,906  33,250  136,045  9,467 
Operating margin - GAAP -1.8% 14.4% 3.3% 12.5% 2.8%
Adjustments:     
Total cost of revenue adjustments 7,010  4,276  15,218  12,962  4,352 
Total operating expense adjustments     
Operating expenses - GAAP 94,197  81,731  266,322  242,438  86,738 
Research and development     
Reduction in force costs 792  30  907  292  22 
Duplicate facility costs during facility move -  10  -  24  - 
Acquisition related retention payment 44  32  108  96  32 
Stock compensation 6,073  5,461  18,302  16,124  6,147 
Sales and marketing     
Reduction in force costs -  -  (12) 29  - 
Acquisition related retention payment -  -  (2) -  - 
Stock compensation 1,892  1,921  5,975  5,549  2,039 
General and administrative     
Reduction in force costs 341  20  391  53  13 
Duplicate facility costs during facility move 119  168  439  465  137 
Acquisition related retention payment -  -  -  (2) - 
Stock compensation 9,888  2,807  15,956  8,349  2,999 
Acquisition related costs (25) 21  19  54  40 
Litigation settlements and resolutions and related costs -  47  -  93  - 
Unclaimed property tax audit accrual -  (37) -  (37) - 
Amortization of purchased intangibles 666  713  2,039  2,049  666 
Startup costs 638  -  638  -  - 
Impairment of long-lived assets 1,394  -  1,394  -  - 
Total operating expense adjustments 21,822  11,193  46,154  33,138  12,095 
Operating expenses - non-GAAP 72,375  70,538  220,168  209,300  74,643 
Operating income - non-GAAP 22,703  70,375  94,622  182,145  25,914 
Operating margin - non-GAAP 6.8% 18.5% 9.4% 16.7% 7.8%
      
GAAP to non-GAAP reconciliation of income before income taxes:     
Income (loss) before income taxes - GAAP (11,785) 50,886  15,053  128,497  5,193 
Adjustments:     
Total cost of revenue adjustments 7,010  4,276  15,218  12,962  4,352 
Total operating expense adjustments 21,822  11,193  46,154  33,138  12,095 
Other interest income (14) -  (14) -  - 
Non-cash imputed interest expenses on convertible debt 7,739  4,464  22,970  9,442  7,676 
Imputed interest related to restructuring 25  34  83  109  28 
Other (income) expense, net     
Loss (gain) on sale of assets (79) (245) (158) (270) 38 
Loss related to impairment of minority investments -  643  2,347  643  - 
Foreign exchange transaction (gain) or loss 698  (204) (318) (1,203) (1,478)
Amortization of  debt issuance cost 385  257  1,155  565  385 
Total Interest and other adjustments 8,754  4,949  26,065  9,286  6,649 
Income before income taxes - non-GAAP 25,801  71,304  102,490  183,883  28,289 
      
GAAP to non-GAAP reconciliation of net income:     
Net income (loss) - GAAP (55,659) 46,387  (29,943) 119,101  5,857 
Total cost of revenue adjustments 7,010  4,276  15,218  12,962  4,352 
Total operating expense adjustments 21,822  11,193  46,154  33,138  12,095 
Total Interest and other adjustments 8,754  4,949  26,065  9,286  6,649 
Income tax provision adjustments 40,874  399  37,146  (304) (2,864)
Total adjustments 78,460  20,817  124,583  55,082  20,232 
Net income - non-GAAP$22,801 $67,204 $94,640 $174,183 $26,089 
      
Basic non-GAAP income per share      
GAAP earnings per share$(0.49)$0.42 $(0.26)$1.08 $0.05 
Impact of all non-GAAP adjustments$0.69 $0.19 $1.09 $0.50 $0.18 
Non-GAAP earnings per share$0.20 $0.61 $0.83 $1.58 $0.23 
      
Diluted non-GAAP income per share      
GAAP earnings per share$(0.49)$0.40 $(0.26)$1.05 $0.05 
Impact of all non-GAAP adjustments$0.69 $0.19 $1.07 $0.48 $0.18 
Non-GAAP earnings per share$0.20 $0.59 $0.81 $1.53 $0.23 
      
Shares used in computing non-GAAP income per share     
Basic 114,209  110,956  113,571  110,061  113,960 
Diluted 115,661  114,873  116,138  113,506  115,443 
                

Finisar-F

Investor Contact:
Kurt Adzema
Chief Financial Officer
408-542-5050 or Investor.relations@finisar.com

Press contact:
Victoria McDonald
Director, Corporate Communications
408-542-4261

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Source: Finisar Corporation