FNSR
$21.86
Finisar
($.17)
(.77%)
Earnings Details
1st Quarter July 2018
Thursday, September 06, 2018 4:01:00 PM
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Summary

Finisar Beats

Finisar (FNSR) reported 1st Quarter July 2018 earnings of $0.17 per share on revenue of $317.3 million. The consensus earnings estimate was $0.12 per share on revenue of $315.3 million. The Earnings Whisper number was $0.12 per share. Revenue fell 7.2% compared to the same quarter a year ago.

The company said it expects second quarter non-GAAP earnings of $0.19 to $0.25 per share on revenue of $315.0 million to $335.0 million. The current consensus earnings estimate is $0.18 per share on revenue of $332.2 million for the quarter ending October 31, 2018.

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

Results
Reported Earnings
$0.17
Earnings Whisper
$0.12
Consensus Estimate
$0.12
Reported Revenue
$317.3 Mil
Revenue Estimate
$315.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Finisar Announces First Quarter of Fiscal 2019 Financial Results

SUNNYVALE, Calif., Sept. 06, 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 first quarter of fiscal 2019, ended July 29, 2018

COMMENTARY

“Revenues grew over the prior quarter and exceeded the mid-point of our guidance range, primarily driven by strength in demand for our wavelength selective switches. Gross margin also improved over the prior quarter and exceeded our guidance range due to favorable product mix,” said Michael Hurlston, Finisar’s Chief Executive Officer. “In addition, we were able to accelerate the process of bringing more focus to our product development efforts, which allowed the company to reduce relative expense levels faster than expected. In combination, this led to better earnings per share, exceeding the high end of our guidance range.”

 
FINANCIAL HIGHLIGHTS – First Quarter Ended July 29, 2018
    
Summary GAAP ResultsFirst 
 Fourth
 Quarter 
 Quarter
 Ended 
 Ended
 July 29, 2018 April 29, 2018
 (in thousands, except per share amounts)
    
Revenues (a)$317,336 $310,069
Gross margin25.4% 20.2%
Operating expenses$96,376 $89,330
Operating loss$(15,691) $(26,737)
Operating margin(4.9)% (8.6)%
Net loss$(18,489) $(18,344)
Loss per share-basic$(0.16) $(0.16)
Loss per share-diluted$(0.16) $(0.16)
    
Basic shares115,867 114,742
Diluted shares115,867 114,742
    
    
Summary Non-GAAP Results (b)First
 Fourth
 Quarter
 Quarter
 Ended
 Ended
 July 29, 2018
 April 29, 2018
 (in thousands, except per share amounts)
  
  
Revenues (a)$317,336  $310,069 
Non-GAAP Gross margin 27.5%  24.7%
Non-GAAP Operating expenses$68,311  $72,029 
Non-GAAP Operating income$18,841  $4,573 
Non-GAAP Operating margin 5.9%  1.5%
Non-GAAP Net income 21,297   5,780 
Non-GAAP Income per share-basic$0.18  $0.05 
Non-GAAP Income per share-diluted$0.18  $0.05 
    
Basic shares 115,867   114,742 
Diluted shares 117,191   115,991 
 

_____________

(a) During the first quarter of fiscal 2019, Finisar recognized revenue based on the ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” but revenue for the three months ended April 29, 2018 was recognized based on Topic 605. Therefore, the periods are not directly comparable. For additional information on the impact of the new revenue recognition accounting standard, see refer to Note 2 in the notes to condensed consolidated financial statements in Finisar’s Form 10-Q for the first quarter of fiscal 2019.

(b) 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.

OUTLOOK

Finisar indicated that for the second quarter of fiscal 2019 it currently expects revenues in the range of $315 to $335 million, non-GAAP gross margin of approximately 28%, non-GAAP operating margin of approximately 7-8%, and non-GAAP earnings per fully diluted share in the range of approximately $0.19 to $0.25.

Finisar has not provided a reconciliation of its second 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 first fiscal quarter of 2019 and current business outlook during its regular quarterly conference call scheduled for September 6, 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 9594409.

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 9594409 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 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 Balance Sheets 
 (in thousands)
    
 Jul 29, 2018 Apr 29, 2018
 (Unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$326,189  $312,257 
Short-term held-to-maturity investments 832,681   884,838 
Accounts receivable, net 248,138   233,529 
Inventories 325,846   348,527 
Other current assets 54,863   56,001 
Total current assets 1,787,717   1,835,152 
Property, equipment and improvements, net 587,203   520,849 
Purchased intangible assets, net 6,742   7,878 
Goodwill 106,735   106,735 
Other assets 25,179   31,721 
Deferred tax assets 85,873   80,850 
Total assets$2,599,449  $2,583,185 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$149,876  $132,161 
Accrued compensation 35,349   32,525 
Other accrued liabilities 50,944   32,824 
Deferred revenue -   9,535 
Current portion of convertible notes 254,150   251,278 
Total current liabilities 490,319   458,323 
Long-term liabilities:   
Convertible notes 494,316   488,877 
Other non-current liabilities 11,366   12,368 
Total liabilities 996,001   959,568 
Stockholders' equity:   
Common stock 117   115 
Additional paid-in capital 2,869,657   2,850,195 
Accumulated other comprehensive income (loss) (44,356)  (14,659)
Accumulated deficit (1,221,970)  (1,212,034)
Total stockholders' equity 1,603,448   1,623,617 
Total liabilities and stockholders' equity$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 Corporation
Consolidated Statements of Operations
 (Unaudited, in thousands, except per share data) 
      
 Three Months Ended Three Months Ended
 Jul 29, 2018 Jul 30, 2017 Apr 29, 2018
Revenues$317,336  $341,806  $310,069 
Cost of revenues 236,155   225,896   246,501 
Amortization of acquired developed technology 496   611   604 
Impairment of long-lived assets -   -   371 
Gross profit 80,685   115,299   62,593 
Gross margin 25.4%  33.7%  20.2%
Operating expenses:    
Research and development 62,874   58,040   60,520 
Sales and marketing 12,480   12,351   12,530 
General and administrative 12,643   14,289   12,207 
Startup costs 7,553   -   2,897 
Amortization of purchased intangibles 640   707   666 
Impairment of long-lived assets 186   -   510 
Total operating expenses 96,376   85,387   89,330 
Income (loss) from operations (15,691)  29,912   (26,737)
Interest income 5,155   3,440   4,904 
Interest expense (9,386)  (9,013)  (9,322)
Other income (expenses), net (1,789)  (2,694)  1,097 
Income (loss) before income taxes (21,711)  21,645   (30,058)
Provision (benefit) for income taxes (3,222)  1,786   (11,714)
Net income (loss)$(18,489) $19,859  $(18,344)
      
Net income (loss) per share:   
      
Basic$(0.16) $0.18  $(0.16)
Diluted$(0.16) $0.17  $(0.16)
      
Shares used in computing net income (loss) per share - basic 115,867   112,544   114,742 
Shares used in computing net income (loss) per share - diluted 115,867   115,698   114,742 
      

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);
  • Duplicate facilities cost during facility move (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 miscellaneous 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 related to impairment of minority investment (non-core charges);
  • 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 Ended Three Months Ended
 Jul 29, 2018 Jul 30, 2017 Apr 29, 2018
GAAP to non-GAAP reconciliation of gross profit:           
Gross profit - GAAP$80,685  $115,299  $62,593 
Gross margin - GAAP 25.4%  33.7%  20.2%
Adjustments:    
Cost of revenues    
Amortization of acquired technology 496   611   604 
Stock compensation 3,806   2,570   3,453 
Impairment of long-lived/intangible assets -   -   371 
Reduction in force costs 482   634   556 
Acquisition related retention payment 12   41   30 
Write off of discontinued product inventory 1,671   -   8,995 
Total cost of revenues adjustments 6,467   3,856   14,009 
Gross profit - non-GAAP 87,152   119,155   76,602 
Gross margin - non-GAAP 27.5%  34.9%  24.7%
  -     
GAAP to non-GAAP reconciliation of operating income (loss):
Operating income (loss) - GAAP (15,691)  29,912   (26,737)
Operating margin - GAAP -4.9%  8.8%  -8.6%
Adjustments:    
Total cost of revenues adjustments 6,467   3,856   14,009 
Total operating expense adjustments  
Operating expenses - GAAP 96,376   85,387   89,330 
Research and development   
Reduction in force costs and other restructuring 7,024   93   1,505 
Acquisition related retention payment 29   32   32 
Stock compensation 6,175   6,082   6,034 
Discontinued product service fees 313   -   185 
Sales and marketing    
Reduction in force costs 402   (12)  335 
Acquisition related retention payment -   (2)  - 
Stock compensation 2,146   2,044   1,956 
General and administrative   
Reduction in force costs 493   37   145 
Duplicate facility costs during facility move 26   183   129 
Stock compensation 3,017   3,069   2,233 
Acquisition related costs (2)  4   127 
Litigation settlements and resolutions and related costs 63   -   551 
Amortization of purchased intangibles 640   707   666 
Startup costs 7,553   -   2,897 
Impairment of long-lived assets/intangible assets 186   -   506 
Total operating expense adjustments 28,065   12,237   17,301 
Operating expenses - non-GAAP 68,311   73,150   72,029 
Operating income - non-GAAP 18,841   46,005   4,573 
Operating margin - non-GAAP 5.9%  13.5%  1.5%
      
GAAP to non-GAAP reconciliation of income (loss) before income taxes:     
Income (loss) before income taxes - GAAP (21,711)  21,645   (30,058)
Adjustments:    
Total cost of revenues adjustments 6,467   3,856   14,009 
Total operating expense adjustments 28,065   12,237   17,301 
Non-cash imputed interest expenses on convertible debt 7,927   7,555   7,863 
Imputed interest related to restructuring 20   30   23 
Other (income) expense, net   
Gain on sale of assets (57)  (113)  (157)
Loss related to impairment of minority investments -   2,347   - 
Other miscellaneous income (20)  (4)  - 
Foreign exchange transaction (gain) or loss 1,921   463   (936)
Amortization of debt issuance cost 385   385   385 
Total interest and other adjustments 10,176   10,663   7,178 
Income before income taxes - non-GAAP 22,997   48,401   8,430 
      
GAAP to non-GAAP reconciliation of net income (loss):     
Net income (loss) - GAAP (18,489)  19,859   (18,344)
Total cost of revenues adjustments 6,467   3,856   14,009 
Total operating expense adjustments 28,065   12,237   17,301 
Total interest and other adjustments 10,176   10,663   7,178 
Income tax provision adjustments (4,922)  (865)  (14,364)
Total adjustments 39,786   25,891   24,124 
Net income - non-GAAP$21,297  $45,750  $5,780 
      
Non-GAAP net income for diluted earnings per share calculation
Non-GAAP net income$21,297  $45,750  $5,780 
Add: interest expense for dilutive convertible notes -   -   - 
Adjusted non-GAAP income$21,297  $45,750  $5,780 
      
Basic non-GAAP income per share      
GAAP earnings per share$(0.16) $0.18  $(0.16)
Impact of all non-GAAP adjustments$0.34  $0.23  $0.21 
Non-GAAP earnings per share$0.18  $0.41  $0.05 
      
Diluted non-GAAP income per share      
GAAP earnings per share$(0.16) $0.17  $(0.16)
Impact of all non-GAAP adjustments$0.34  $0.23  $0.21 
Non-GAAP earnings per share$0.18  $0.40  $0.05 
      
Shares used in computing non-GAAP income per share     
Basic 115,867   112,544   114,742 
Diluted 117,191   115,698   115,991 
            

Finisar-F

Investor Contact:
Kurt Adzema
Chief Financial Officer
408-542-5050 or Investor.relations@finisar.com
  Press contact:
Victoria McDonald
Director, Corporate Communications408-542-4261

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Source: Finisar Corporation