FNSR
$17.98
Finisar
($.02)
(.11%)
Earnings Details
4th Quarter April 2018
Thursday, June 14, 2018 4:01:00 PM
Tweet Share Watch
Summary

Finisar Misses

Finisar (FNSR) reported 4th Quarter April 2018 earnings of $0.10 per share on revenue of $310.1 million. The consensus earnings estimate was $0.12 per share on revenue of $310.2 million. The Earnings Whisper number was $0.14 per share. Revenue fell 13.3% compared to the same quarter a year ago.

The company said it expects first quarter non-GAAP earnings of $0.10 to $0.16 per share on revenue of $305.0 million to $325.0 million. The current consensus earnings estimate is $0.15 per share on revenue of $320.2 million for the quarter ending July 31, 2018.

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

Results
Reported Earnings
$0.10
Earnings Whisper
$0.14
Consensus Estimate
$0.12
Reported Revenue
$310.1 Mil
Revenue Estimate
$310.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Finisar Announces Fiscal 2018 Financial Results

SUNNYVALE, Calif., June 14, 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 fourth fiscal quarter and full fiscal year, ended April 29, 2018

COMMENTARY

“While fiscal fourth quarter revenues were in line with the mid-point of our guidance range, gross margin was lower than expected driven by under absorption of fixed manufacturing expenses in our Allen Texas VCSEL laser fab and an increase in non-cash inventory reserves,” said Michael Hurlston, Finisar’s Chief Executive Officer.  “While we are disappointed in last quarter’s results, we do expect both revenues and gross margins will increase in our fiscal first quarter. In addition, we have begun to make changes at Finisar that I believe will not only bring more focus to our product development efforts, but will lead to better execution and efficiency, allowing the company to reduce relative expense levels.”

 
FINANCIAL HIGHLIGHTS – Fourth Quarter Ended April 29, 2018
     
Summary GAAP ResultsFourth  Third 
 Quarter
 Quarter 
 Ended  Ended 
 April 29, 2018  January 28, 2018 
 (in thousands, except per share amounts)
     
Revenues$310,069  $332,403 
Gross margin20.2% 26.5%
Operating expenses$89,330  $94,197 
Operating loss$(26,737) $(6,129)
Operating margin(8.6)% (1.8)%
Net loss$(18,344) $(55,659)
Loss per share-basic$(0.16) $(0.49)
Loss per share-diluted$(0.16) $(0.49)
     
Basic shares114,742  114,209 
Diluted shares114,742  114,209 
     
Summary Non-GAAP Results (a)Fourth 
 Third
 Quarter 
 Quarter
 Ended 
 Ended
 April 29, 2018 January 28, 2018
 (in thousands, except per share amounts)
   
Revenues$310,069  $332,403 
Non-GAAP Gross margin24.7% 28.6%
Non-GAAP Operating expenses$72,029  $72,375 
Non-GAAP Operating income$4,573  $22,703 
Non-GAAP Operating margin1.5% 6.8%
Non-GAAP Net income5,780  22,801 
Non-GAAP Income per share-basic$0.05  $0.20 
Non-GAAP Income per share-diluted$0.05  $0.20 
    
Basic shares114,742  114,209 
Diluted shares115,991  115,661 
      

_____________

(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.

Revenue Details for the Fourth Quarter of Fiscal 2018: 

  • Sales of datacom products decreased from $266.1 million to $248.0 million, or by $18.1 million, or (6.8)%, compared to the third quarter of fiscal 2018, primarily due to a decline in revenues for our VCSEL laser arrays for 3D sensing applications.
     
  • Sales of telecom products decreased from $66.3 million to $62.1 million, or by $4.2 million, or (6.4)%, compared to the third quarter of fiscal 2018, primarily due to the full three-month impact of the annual telecom price reductions.
 
FINANCIAL HIGHLIGHTS – Fiscal Year Ended April 29, 2018
     
Summary GAAP Results    
 Fiscal Year
 Fiscal Year
 Ended
 Ended
 April 29, 2018 April 30, 2017
 (in thousands, except per share amounts)
     
Revenues$1,316,483  $1,449,303 
Gross margin27.5% 34.8%
Operating expenses$355,652  $326,762 
Operating income$6,513  $176,884 
Operating margin0.5% 12.2%
Net income (loss)$(48,287) $249,346 
Income (loss) per share-basic$(0.42) $2.26 
Income (loss) per share-diluted$(0.42) $2.19 
     
Basic shares113,864  110,405 
Diluted shares113,864  114,097 
     
Summary Non-GAAP Results (b)    
 Fiscal Year
 Fiscal Year
 Ended
 Ended
 April 29, 2018
 April 30, 2017
 (in thousands, except per share amounts)
   
Revenues$1,316,483  $1,449,303 
Non-GAAP Gross margin29.7% 35.9%
Non-GAAP Operating expenses$292,197  $280,252 
Non-GAAP Operating income$99,195  $240,556 
Non-GAAP Operating margin7.5% 16.6%
Non-GAAP Net income$100,420  $231,698 
Non-GAAP Income per share-basic$0.88  $2.10 
Non-GAAP Income per share-diluted$0.86  $2.03 
    
Basic shares113,864  110,405 
Diluted shares116,274  114,097 
      

_____________

(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.

Revenue Details for Fiscal 2018: 

  • Sales of products for datacom applications decreased by $12.8 million, or (1.2)%, compared to the preceding year, primarily due to lower demand from our Chinese OEM customers.

  • Sales of products for telecom applications decreased by $120.0 million, or (29.5)%, compared to the preceding year primarily due to lower demand from our Chinese OEM customers.

OUTLOOK

Finisar indicated that for the first quarter of fiscal 2019 it currently expects revenues in the range of $305 to $325 million, non-GAAP gross margin of approximately 26%-27%, non-GAAP operating margin of approximately 4-5%, and non-GAAP earnings per fully diluted share in the range of approximately $0.10 to $0.16.

Finisar has not provided a reconciliation of its first 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 fourth quarter and full fiscal 2018 and current business outlook during its regular quarterly conference call scheduled for June 14, 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 3799557.

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 3799557 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)
           
  Apr 29, 2018 Jan 28, 2018 Oct 29, 2017 Jul 30, 2017 Apr 30, 2017
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)  
ASSETS          
Current assets:          
Cash and cash equivalents $312,257  $259,023  $274,547  $278,826  $260,228 
Short-term held-to-maturity investments  884,838   957,267   958,216   954,026   976,595 
Accounts receivable, net  233,529   243,963   260,870   273,180   272,377 
Inventories  348,527   382,179   369,078   356,845   331,388 
Other current assets  56,001   53,023   61,517   63,629   68,269 
Total current assets  1,835,152   1,895,455   1,924,228   1,926,506   1,908,857 
Property, equipment and improvements, net  520,849   495,364   443,733   420,298   383,919 
Purchased intangible assets, net  7,878   9,148   10,424   11,700   13,019 
Goodwill  106,735   106,735   106,735   106,735   106,735 
Other assets  31,721   21,883   21,424   22,256   20,125 
Deferred tax assets  80,850   78,593   116,055   108,567   107,225 
Total assets $2,583,185  $2,607,178  $2,622,599  $2,596,062  $2,539,880 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Accounts payable $132,161  $127,248  $152,047  $148,605  $140,568 
Accrued compensation  32,525   39,660   36,614   42,030   54,520 
Other accrued liabilities  32,824   36,947   40,130   46,648   43,697 
Deferred revenue  9,535   14,539   17,716   14,348   13,015 
Current portion of convertible notes  251,278   248,426   -   -   - 
Total current liabilities  458,323   466,820   246,507   251,631   251,800 
Long-term liabilities:          
Convertible notes  488,877   483,481   723,784   715,722   707,782 
Other non-current liabilities  12,368   16,464   17,176   17,546   17,594 
Total liabilities  959,568   966,765   987,467   984,899   977,176 
Stockholders' equity:          
Common stock  115   114   114   114   112 
Additional paid-in capital  2,850,195   2,839,701   2,814,713   2,799,118   2,784,204 
Accumulated other comprehensive income (loss)  (14,659)  (5,712)  (41,664)  (44,181)  (57,865)
Accumulated deficit  (1,212,034)  (1,193,690)  (1,138,031)  (1,143,888)  (1,163,747)
Total stockholders' equity  1,623,617   1,640,413   1,635,132   1,611,163   1,562,704 
Total liabilities and stockholders' equity $2,583,185  $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 that date.
           


          
Finisar Corporation
Consolidated Statements of Operations
 (Unaudited, in thousands, except per share data) 
          
 Three Months Ended
 Twelve Months Ended
 Three Months Ended
 Apr 29, 2018 Apr 30, 2017 Apr 29, 2018 Apr 30, 2017 Jan 28, 2018
Revenues$310,069  $357,527  $1,316,483  $1,449,303  $332,403 
Cost of revenues 246,501   231,374   951,510   941,164   243,724 
Amortization of acquired developed technology 604   990   2,437   4,493   611 
Impairment of long-lived assets 371   -   371   -   - 
Gross profit 62,593   125,163   362,165   503,646   88,068 
Gross margin 20.2%  35.0%  27.5%  34.8%  26.5%
Operating expenses:         
Research and development 60,520   58,973   239,008   217,914   59,888 
Sales and marketing 12,530   12,322   49,024   50,644   11,913 
General and administrative 12,207   12,316   59,517   55,442   19,739 
Startup costs 2,897   -   3,535   -   638 
Amortization of purchased intangibles 666   713   2,705   2,762   666 
Impairment of long-lived assets 510   -   1,863   -   1,353 
Total operating expenses 89,330   84,324   355,652   326,762   94,197 
Income (loss) from operations (26,737)  40,839   6,513   176,884   (6,129)
Interest income 4,904   3,299   16,085   6,763   3,995 
Interest expense (9,322)  (8,953)  (36,658)  (20,363)  (9,192)
Other income (expenses), net 1,097   (488)  (945)  (90)  (459)
Income (loss) before income taxes (30,058)  34,697   (15,005)  163,194   (11,785)
Provision (benefit) for income taxes (11,714)  (95,548)  33,282   (86,152)  43,874 
Net income (loss)$(18,344) $130,245  $(48,287) $249,346  $(55,659)
          
Net income (loss) per share attributable to Finisar Corporation common stockholders:         
          
Basic$(0.16) $1.17  $(0.42) $2.26  $(0.49)
Diluted$(0.16) $1.13  $(0.42) $2.19  $(0.49)
          
Shares used in computing net income per share - basic 114,742   111,438   113,864   110,405   114,209 
Shares used in computing net income per share - diluted 114,742   115,242   113,864   114,097   114,209 
          

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);
  • Impairment of long-lived/intangible assets (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:

  • 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);
  • Unclaimed property tax audit accrual (non-core benefits);
  • 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 (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 Ended
 Twelve Months Ended
 Three Months Ended
 Apr 29, 2018 Apr 30, 2017 Apr 29, 2018 Apr 30, 2017 Jan 28, 2018
GAAP to non-GAAP reconciliation of gross profit:         
Gross profit - GAAP$62,593  $125,163  $362,165  $503,646  $88,068 
Gross margin - GAAP 20.2%  35.0%  27.5%  34.8%  26.5%
Adjustments:         
Cost of revenues         
Amortization of acquired technology 604   990   2,437   4,493   611 
Duplicate facility costs during facility move -   10   -   36   - 
Stock compensation 3,453   3,071   12,665   12,249   2,918 
Impairment of long-lived/intangible assets 371   -   371   -   - 
Reduction in force costs 556   103   1,188   287   7 
Acquisition related retention payment 30   26   123   97   26 
Write off of discontinued product inventory 8,995   -   12,443   -   3,448 
Total cost of revenues adjustments 14,009   4,200   29,227   17,162   7,010 
Gross profit - non-GAAP 76,602   129,363   391,392   520,808   95,078 
Gross margin - non-GAAP 24.7%  36.2%  29.7%  35.9%  28.6%
          
GAAP to non-GAAP reconciliation of operating income (loss):         
Operating income (loss) - GAAP (26,737)  40,839   6,513   176,884   (6,129)
Operating margin - GAAP -8.6%  11.4%  0.5%  12.2%  -1.8%
Adjustments:         
Total cost of revenues adjustments 14,009   4,200   29,227   17,162   7,010 
Total operating expense adjustments         
Operating expenses - GAAP 89,330   84,324   355,652   326,762   94,197 
Research and development         
Reduction in force costs 1,505   46   2,412   338   792 
Duplicate facility costs during facility move -   10   -   34   - 
Acquisition related retention payment 32   32   140   128   44 
Stock compensation 6,034   5,613   24,336   21,737   6,073 
Impairment of long-lived assets -   2,387   -   2,387   - 
Discontinued product service fees 185   -   185   -   - 
Sales and marketing         
Reduction in force costs 335   19   323   48   - 
Acquisition related retention payment -   2   (2)  2   - 
Stock compensation 1,956   1,889   7,931   7,438   1,892 
General and administrative         
Reduction in force costs 145   5   536   58   341 
Duplicate facility costs during facility move 129   176   568   641   119 
Acquisition related retention payment -   -   -   (2)  - 
Stock compensation 2,233   2,823   18,189   11,172   9,888 
Acquisition related costs 127   (343)  146   (289)  (25)
Litigation settlements and resolutions and related costs 551   -   551   93   - 
Unclaimed property tax audit accrual -   -   -   (37)  - 
Amortization of purchased intangibles 666   713   2,705   2,762   666 
Startup costs 2,897   -   3,535   -   638 
Impairment of long-lived assets/intangible assets 506   -   1,900   -   1,394 
Total operating expense adjustments 17,301   13,372   63,455   46,510   21,822 
Operating expenses - non-GAAP 72,029   70,952   292,197   280,252   72,375 
Operating income - non-GAAP 4,573   58,411   99,195   240,556   22,703 
Operating margin - non-GAAP 1.5%  16.3%  7.5%  16.6%  6.8%
          
GAAP to non-GAAP reconciliation of income (loss) before income taxes:         
Income (loss) before income taxes - GAAP (30,058)  34,697   (15,005)  163,194   (11,785)
Adjustments:         
Total cost of revenues adjustments 14,009   4,200   29,227   17,162   7,010 
Total operating expense adjustments 17,301   13,372   63,455   46,510   21,822 
Other interest income -   -   (14)  -   (14)
Non-cash imputed interest expenses on convertible debt 7,863   7,494   30,833   16,936   7,739 
Imputed interest related to restructuring 23   32   106   141   25 
Other (income) expense, net         
Loss (gain) on sale of assets (157)  9   (315)  (261)  (79)
Loss related to impairment of minority investments -   -   2,347   643   - 
Foreign exchange transaction (gain) or loss (936)  326   (1,254)  (877)  698 
Amortization of  debt issuance cost 385   385   1,540   950   385 
Total interest and other adjustments 7,178   8,246   33,243   17,532   8,754 
Income before income taxes - non-GAAP 8,430   60,515   110,920   244,398   25,801 
          
GAAP to non-GAAP reconciliation of net income (loss):         
Net income (loss) - GAAP (18,344)  130,245   (48,287)  249,346   (55,659)
Total cost of revenues adjustments 14,009   4,200   29,227   17,162   7,010 
Total operating expense adjustments 17,301   13,372   63,455   46,510   21,822 
Total interest and other adjustments 7,178   8,246   33,243   17,532   8,754 
Income tax provision adjustments (14,364)  (98,548)  22,782   (98,852)  40,874 
Total adjustments 24,124   (72,730)  148,707   (17,648)  78,460 
Net income - non-GAAP$5,780  $57,515  $100,420  $231,698  $22,801 
          
Basic non-GAAP income per share          
GAAP earnings per share$(0.16) $1.17  $(0.42) $2.26  $(0.49)
Impact of all non-GAAP adjustments$0.21  $(0.65) $1.30  $(0.16) $0.69 
Non-GAAP earnings per share$0.05  $0.52  $0.88  $2.10  $0.20 
          
Diluted non-GAAP income per share          
GAAP earnings per share$(0.16) $1.13  $(0.42) $2.19  $(0.49)
Impact of all non-GAAP adjustments$0.21  $(0.63) $1.28  $(0.16) $0.69 
Non-GAAP earnings per share$0.05  $0.50  $0.86  $2.03  $0.20 
          
Shares used in computing non-GAAP income per share         
Basic 114,742   111,438   113,864   110,405   114,209 
Diluted 115,991   115,242   116,274   114,097   115,661 
          

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

Primary Logo

Source: Finisar Corporation