GlobeNewswire Inc | May 5, 2021 04:01PM EDT

May 05, 2021

ALHAMBRA, CA, May 05, 2021 (GLOBE NEWSWIRE) -- EMCORE Corporation (Nasdaq: EMKR), a leading provider of advanced mixed-signal products that serve the aerospace & defense and broadband communications markets, today announced results for the fiscal 2021 second quarter ended March 31, 2021 (2Q21). Management will host a conference call to discuss financial and business results tomorrow, Thursday, May 6, 2021, at 8:00 AM Eastern Time.

Consolidated revenue for 2Q21 was $38.4 million, comprised of $13.1 million from the Aerospace & Defense segment and $25.3 million from the Broadband segment. Net income was $4.4 million and $5.9 million on a GAAP and non-GAAP basis, respectively. Adjusted EBITDA was $6.9 million. Please refer to the schedules at the end of this press release for complete GAAP to non-GAAP reconciliations and other information related to non-GAAP financial measures.

Sequential-quarter revenue growth of 15% was driven by the strong performance of our Broadband segment, led by double-digit percent increases in sales of our CATV and Sensing product lines. The higher revenue combined with gross margin strength and expense discipline resulted in operating profit margins of 12% and 15% on a GAAP and non-GAAP basis, respectively, and GAAP net income was positive for the third consecutive quarter, rising to 11% of revenue in 2Q21, said Jeff Rittichier, Chief Executive Officer of EMCORE. Our Aerospace & Defense growth initiatives remain on track, as our navigation business made important progress during the quarter, including securing a key follow-on contract for one of our new FOG IMU programs.

Rittichier concluded his comments by saying, We continue to see a strong order book for Broadband, extending well into the March 2022 quarter.

Consolidated Results

Three Months Ended Mar 31, 2021 Dec 31, 2020 +increase/ 2Q21 1Q21 -decreaseRevenue $38.4M $33.4M +$5.0MGross Margin 38% 38% ?%Operating Expenses $10.1M $10.1M $?MOperating Margin 12% 8% +4%Net Income $4.4M $2.6M +$1.8MEarnings Per Share Diluted $0.13 $0.08 +$0.05Non-GAAP Gross Margin (1) 39% 38% +1%Non-GAAP Operating Expenses (1) $8.9M $9.3M -0.4MNon-GAAP Operating Margin (1) 15% 10% +5%Non-GAAP Net Income (1) $5.9M $3.4M +$2.5MNon-GAAP Earnings Per Share Diluted (1) $0.17 $0.11 +$0.06Adjusted EBITDA $6.9M $4.4M +$2.5MEnding Cash and Cash Equivalents $65.3M $31.2M +$34.1MLoan Payable $6.5M $6.5M $?M(1) Please refer to the schedules at the end of this press release for completeGAAP to non-GAAP reconciliations and other information related to non-GAAPfinancial measures.

Aerospace and Defense (A&D) Segment

A&Ds sequential-quarter revenue decrease was primarily due to lower sales of QMEMS Navigation and Defense Optoelectronics products. Gross margin decreased slightly due to volume and mix changes. A&D segment R&D expense was lower as a result of (a) a higher amount of engineering labor related to NRE contract revenue recorded as Cost of Revenue and (b) decreased material costs related to several Navigation product development projects.

Three Months Ended Mar 31, 2021 Dec 31, 2020 +increase/ 2Q21 1Q21 -decreaseA&D Segment Revenue $13.1M $13.6M -$0.5MA&D Segment Gross Margin 29% 30% -1%A&D Segment R&D Expense $3.2M $3.7M -$0.5MA&D Segment Profit (2) $0.6M $0.4M +$0.2MNon-GAAP A&D Segment Gross Margin (1) 30% 31% -1%Non-GAAP A&D Segment R&D Expense (1) $3.0M $3.6M -$0.6MNon-GAAP A&D Segment Profit $0.9M $0.6M +$0.3M(1) Please refer to the schedules at the end of this press release for completeGAAP to non-GAAP reconciliations and other information related to non-GAAPfinancial measures.(2) Individual components may not sum to the total of reported consolidatedamounts due to rounding.

Broadband Segment

Broadbands sequential-quarter revenue increase was primarily driven by higher sales of Cable TV and Sensing products, while gross margin and R&D expense were consistent.

Three Months Ended Mar 31, 2021 Dec 31, 2020 +increase / 2Q21 1Q21 -decreaseBroadband Segment Revenue $25.3M $19.8M +$5.5MBroadband Segment Gross Margin 43% 43% ?%Broadband Segment R&D Expense $0.6M $0.6M $?MBroadband Segment Profit (2) $10.2M $7.9M +$2.3MNon-GAAP Broadband Segment Gross Margin (1) 43% 43% ?%Non-GAAP Broadband Segment R&D Expense (1) $0.5M $0.5M $?MNon-GAAP Broadband Segment Profit $10.4M $8.0M +$2.4M(1) Please refer to the schedules at the end of this press. release forcomplete GAAP to non-GAAP reconciliations and other information related tonon-GAAP financial measures.(2) Individual components may not sum to the total of reported consolidatedamounts due to rounding.

Business Outlook

The Company expects revenue for the fiscal 2021 third quarter ending June 30, 2021 to be in the range of $40 million to $42 million.

Conference Call

The Company will discuss its financial results on May 6, 2021 at 8:00 a.m. ET (5:00 a.m. PT). The call will be available, live, to interested parties by dialing 800-367-2403. For international callers, please dial +1 334-777-6978. The conference passcode number is 6389635. The call will be webcast live via the Company's website at http://www.emcore.com. A webcast will be available for replay beginning Thursday, May 6, 2021 following the conclusion of the call.

About EMCORE

EMCORE Corporation is a leading provider of advanced mixed-signal products that serve the aerospace & defense and broadband communications markets. Our best-in-class components and systems support a broad array of applications including navigation and inertial sensing, defense optoelectronics, broadband transport, 5G wireless infrastructure, optical sensing, and cloud data centers. We leverage industry-leading Quartz MEMS, Lithium Niobate and Indium Phosphide chip-level technology to deliver state-of-the-art component and system-level products across our end-market applications. EMCORE has vertically-integrated manufacturing capability at its wafer fabrication facility in Alhambra, CA, and Quartz MEMS manufacturing facility in Concord, CA. Our manufacturing facilities maintain ISO 9001 quality management certification, and we are AS9100 aerospace quality certified at our facility in Concord. For further information about EMCORE, please visit http://www.emcore.com.

Use of Non-GAAP Financial Measures

The Company conforms to U.S. Generally Accepted Accounting Principles (GAAP) in the preparation of its financial statements. We disclose supplemental non-GAAP earnings measures for gross profit margin, operating expenses, operating profit margin, net income, and earnings per share, as well as adjusted EBITDA.

Management believes these supplemental non-GAAP measures reflect the Companys core ongoing operating performance and facilitates comparisons across reporting periods. The Company uses these measures when evaluating its financial results and for planning and forecasting of future periods. We believe that these supplemental non-GAAP measures are also useful to investors in assessing our operating performance. While we believe in the usefulness of these supplemental non-GAAP measures, there are limitations. Our non-GAAP measures may not be reported by other companies in our industry and/or may not be directly comparable to similarly titled measures of other companies due to potential differences in calculation. We compensate for these limitations by using these non-GAAP measures as a supplement to GAAP and by providing the reconciliations to the most comparable GAAP measure.

The schedules at the end of this press release reconcile the Companys non-GAAP measures to the most directly comparable GAAP measure. The adjustments share one or more of the following characteristics: they are unusual and the Company does not expect them to recur in the ordinary course of its business, they do not involve the expenditure of cash, they are unrelated to the ongoing operation of the business in the ordinary course, or their magnitude and timing is largely outside of the Companys control. For all reporting periods disclosed, the Company has applied consistent rationale, method, and adjustments in reconciling non-GAAP measures to the most directly comparable GAAP measure.

Non-GAAP measures are not in accordance with or an alternative to GAAP, nor are they meant to be considered in isolation or as a substitute for comparable GAAP measures. Our disclosures of these measures should be read only in conjunction with our financial statements prepared in accordance with GAAP. Non-GAAP measures should not be viewed as a substitute for the Companys GAAP results.

Forward-Looking Statements

The information provided herein may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (Exchange Act). These forward-looking statements are largely based on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Such forward-looking statements include, in particular, projections about our future results, statements about our plans, strategies, business prospects, changes and trends in our business and the markets in which we operate.

These forward-looking statements may be identified by the use of terms and phrases such asanticipates,believes,can,could,estimates,expects,forecasts,intends,may,plans,projects,targets,will, and similar expressions or variations of these terms and similar phrases. Additionally, statements concerning future matters such as projected financial results, the development of new products, enhancements or technologies, sales levels, expense levels and other statements regarding matters that are not historical are forward-looking statements. We caution that these forward-looking statements relate to future events or our future financial performance and are subject to business, economic, and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance or achievements of our business or our industry to be materially different from those expressed or implied by any forward-looking statements.

These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, including without limitation, the following: (a) the rapidly evolving markets for the Company's products and uncertainty regarding the development of these markets; (b) the Company's historical dependence on sales to a limited number of customers and fluctuations in the mix of products and customers in any period; (c) delays and other difficulties in commercializing new products; (d) the failure of new products: (i) to perform as expected without material defects, (ii) to be manufactured at acceptable volumes, yields, and cost, (iii) to be qualified and accepted by our customers, and (iv) to successfully compete with products offered by our competitors; (e) uncertainties concerning the availability and cost of commodity materials and specialized product components that we do not make internally; (f) actions by competitors; (g) risks and uncertainties related to applicable laws and regulations, including the impact of changes to applicable tax laws and tariff regulations; (h) acquisition-related risks, including that (i) the revenues and net operating results obtained from our acquisition of the Systron Donner Inertial ("SDI") business may not meet our expectations, (ii) there could be losses and liabilities arising from the acquisition of SDI that we will not be able to recover from any source, and (iii) we may not realize sufficient scale in our navigation systems product line from the SDI acquisition and will need to take additional steps, including making additional acquisitions, to achieve our growth objectives for this product line; (i) risks related to our ability to obtain capital; (j) risks related to the transition of certain of our manufacturing operations from our Beijing facility to a contract manufacturers facility; (k) the outbreak of COVID-19 and the impact on our business and operations, which is evolving and beyond our control; (l) risks and uncertainties related to manufacturing and production capacity and expansion plans related thereto; (m) risks related to the conversion of order backlog into product revenue; and (n) other risks and uncertainties discussed under Item 1A - Risk Factors in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, as updated by our subsequent periodic reports.

Forward-looking statements are based on certain assumptions and analysis made in light of our experience and perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate under the circumstances. While these statements represent our judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results. All forward-looking statements in this press release are made as of the date hereof, based on information available to us as of the date hereof, and subsequent facts or circumstances may contradict, obviate, undermine, or otherwise fail to support or substantiate such statements. We caution you not to rely on these statements without also considering the risks and uncertainties associated with these statements and our business that are addressed in our filings with the Securities and Exchange Commission (SEC) that are available on the SECs web site located at www.sec.gov, including the sections entitledRisk Factorsin our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. Certain information included in this press release may supersede or supplement forward-looking statements in our other Exchange Act reports filed with the SEC. We do not intend to update any forward-looking statement to conform such statements to actual results or to changes in our expectations, except as required by applicable law or regulation.

EMCORE CORPORATIONCondensed Consolidated Statement of Operations and Comprehensive Income (Loss)(in thousands, except for per share data)(unaudited)

Forthethreemonthsended Forthesixmonthsended March 31, March 31, 2021 2020 2021 2020Revenue $ 38,406 $ 23,850 $ 71,832 $ 49,332 Cost of revenue 23,772 17,423 44,626 35,431 Gross profit 14,634 6,427 27,206 13,901 Operating expense:Selling,general, and 6,062 7,139 11,860 13,026 administrativeResearch and 3,771 4,584 8,067 9,226 developmentLoss (gain) on 218 (315 ) 189 (1,917 )sale of assetsTotal operating 10,051 11,408 20,116 20,335 expenseOperating income 4,583 (4,981 ) 7,090 (6,434 )(loss)Other (expense) income:Interest(expense) (49 ) 1 (98 ) (14 )income, netForeign exchange (68 ) (156 ) 169 (9 )(loss) gainTotal other (117 ) (155 ) 71 (23 )(expense) incomeIncome (loss)before income 4,466 (5,136 ) 7,161 (6,457 )tax (expense)benefitIncome tax(expense) (82 ) 55 (208 ) 41 benefitNet income $ 4,384 $ (5,081 ) $ 6,953 $ (6,416 )(loss)Foreign exchangetranslation (11 ) 29 (21 ) (7 )adjustmentComprehensive $ 4,373 $ (5,052 ) $ 6,932 $ (6,423 )income (loss)Per share data: Net income(loss) per basic $ 0.13 $ (0.18 ) $ 0.22 $ (0.22 )shareWeighted-averagenumber of basic 32,968 29,033 31,219 28,931 sharesoutstandingNet income(loss) per $ 0.13 $ (0.18 ) $ 0.21 $ (0.22 )diluted shareWeighted-averagenumber of 34,451 29,033 32,492 28,931 diluted sharesoutstanding

EMCORE CORPORATIONCondensed Consolidated Balance Sheets(in thousands)(unaudited)

As of As of March 31, September 2021 30, 2020ASSETS Current assets: Cash and cash equivalents $ 63,728 $ 30,390 Restricted cash 1,553 148 Accounts receivable, net of credit loss of $175 and 29,836 25,324 $227, respectivelyContract assets 685 1,566 Inventory 29,747 25,525 Prepaid expenses and other current assets 4,598 5,589 Assets held for sale 1,983 1,568 Total current assets 132,130 90,110 Property, plant, and equipment, net 19,180 21,052 Goodwill 69 69 Operating lease right-of-use assets 14,171 14,566 Other intangible assets, net 184 202 Other non-current assets 217 242 Total assets $ 165,951 $ 126,241 LIABILITIES and SHAREHOLDERS? EQUITY Current liabilities: PPP liability - current $ 1,912 $ ? Accounts payable 15,746 16,484 Accrued expenses and other current liabilities 10,068 11,577 Operating lease liabilities - current 1,183 992 Total current liabilities 28,909 29,053 PPP liability - non-current 4,576 6,488 Operating lease liabilities - non-current 13,222 13,735 Asset retirement obligations 2,049 2,022 Other long-term liabilities 794 794 Total liabilities 49,550 52,092 Commitments and contingencies Shareholders? equity: Common stock, no par value, 50,000 sharesauthorized; 43,681 shares issued and 36,775 sharesoutstanding as of March31,2021; 36,461 shares 779,681 744,361 issued and 29,551 shares outstanding as ofSeptember30,2020Treasury stock at cost; 6,906 shares (47,721 ) (47,721 )Accumulated other comprehensive income 897 918 Accumulated deficit (616,456 ) (623,409 )Total shareholders? equity 116,401 74,149 Total liabilities and shareholders? equity $ 165,951 $ 126,241

EMCORE CORPORATION

Reconciliations of GAAP to Non-GAAP Financial Measures

ThreeMonthsEnded Mar 31, 2021 Dec 31, 2020 2Q21 1Q21Gross Profit $ 14,634 $ 12,572 Gross Margin 38 % 38 % Adjustments: Stock-based compensation 203 141 Asset retirement obligation (ARO) accretion 8 19 Amortization of acquired intangibles 9 9 Total adjustments 220 169 Non-GAAP Gross Profit $ 14,854 $ 12,741 Non-GAAP Gross Margin 39 % 38 %

Three Months Ended Mar 31, 2021 Dec 31, 2020 2Q21 1Q21Operating Expenses $ 10,051 $ 10,065 Stock-based compensation (719 ) (762 )Severance and restructuring charges (14 ) (41 )CATV transition - gain on sale of assets 164 29 Loss on sale of assets (382 ) ? Litigation-related expenses (169 ) ? Non-GAAP Operating Expenses $ 8,931 $ 9,291

ThreeMonthsEnded Mar 31, 2021 Dec 31, 2020 2Q21 1Q21Operating Profit $ 4,583 $ 2,507 Operating Margin 12 % 8 % Adjustments: Stock-based compensation 922 903 Asset retirement obligation (ARO) accretion 8 19 Amortization of acquired intangibles 9 9 Severance and restructuring charges 14 41 CATV transition - gain on sale of assets (164 ) (29 )Loss on sale of assets 382 ? Litigation-related expenses 169 ? Total adjustments 1,340 943 Non-GAAP Operating Profit 5,923 3,450 Non-GAAP Operating Margin 15 % 10 % Depreciation 976 996 Adjusted EBITDA $ 6,899 $ 4,446 Adjusted EBITDA % 18 % 13 %

ThreeMonthsEnded Mar 31, 2021 Dec 31, 2020 2Q21 1Q21Net Income $ 4,384 $ 2,569 Earnings Per Share Basic 0.13 0.09 Earnings Per Share Diluted 0.13 0.08 Adjustments: Stock-based compensation 922 903 Asset retirement obligation (ARO) accretion 8 19 Amortization of acquired intangibles 9 9 Severance and restructuring charges 14 41 CATV transition - gain on sale of assets (164 ) (29 )Loss on sale of assets 382 ? Litigation-related expenses 169 ? Foreign currency loss (gain) 68 (237 )Income tax expense 82 126 Total adjustments 1,490 832 Non-GAAP Net Income 5,874 3,401 Non-GAAP Earnings Per Share Basic 0.18 0.12 Non-GAAP Earnings Per Share Diluted 0.17 0.11 Interest expense, net 49 49 Depreciation 976 996 Adjusted EBITDA $ 6,899 $ 4,446 Adjusted EBITDA % 18 % 13 %

Three Months Ended Three Months Ended Mar 31, Dec 31, Mar 31, Dec 31, 2021 2020 2021 2020 2Q21 1Q21 2Q21 1Q21Aerospace and Broadband DefenseGross Profit $ 3,775 $ 4,100 Gross Profit $ 10,859 $ 8,472 Gross Margin 29 % 30 % Gross Margin 43 % 43 % Adjustments: Adjustments: Stock-based 120 91 Stock-based 83 50 compensation compensationAsset retirement Asset retirementobligation (ARO) ? ? obligation (ARO) 8 19 accretion accretionAmortization of Amortization ofacquired 9 9 acquired ? ? intangibles intangiblesTotal 129 100 Total 91 69 adjustments adjustments Non-GAAP Gross $ 3,904 $ 4,200 Non-GAAP Gross $ 10,950 $ 8,541 Profit ProfitNon-GAAP Gross 30 % 31 % Non-GAAP Gross 43 % 43 %Margin Margin Aerospace and Broadband DefenseR&D Expenses $ 3,157 $ 3,686 R&D Expenses $ 614 $ 610 Stock-based (136 ) (123 ) Stock-based (73 ) (80 )compensation compensationNon-GAAP R&D $ 3,021 $ 3,563 Non-GAAP R&D $ 541 $ 530 Expenses Expenses

Contact:EMCORE CorporationTom Minichiello(626) 293-3400investor@emcore.com