Oclaro Announces Third Quarter Fiscal Year 2013 Results, Secures Additional $25 Million Credit
SAN JOSE, Calif., May 7, 2013 /PRNewswire/ — Oclaro, Inc. (NASDAQ: OCLR), a provider of optical components, modules and subsystems, today announced the financial results for its third quarter of fiscal year 2013, which ended March 30, 2013. Oclaro also announced it has secured $25 million in short-term bridge loans from Providence Equity Capital Markets, who joins Wells Fargo Bank and Silicon Valley Bank as a lender under Oclaro’s existing credit agreement.
“Our financial results were at the lower end of guidance for the third quarter, in the face of continued softness in the telecommunications market. Our sales declined further than expected, which drove a higher loss compared with the prior quarter,” said Alain Couder, president and CEO, Oclaro, Inc. “The financing we announced today is an initial step in our plan to simplify the company and develop and implement a profitable operating model. Meanwhile our new product innovations continue. At the recent OFC trade show Oclaro reinforced its position as a leader in the high growth 100G market, both on the telecom line side and the datacom client side.”
Results for the Third Quarter of Fiscal 2013:
- Revenues were $141.6 million for the third quarter of fiscal 2013, compared with revenues of $159.5 million in the second quarter of fiscal 2013.
- GAAP gross margin was 9% for the third quarter of fiscal 2013, compared with a GAAP gross margin of 14% in the second quarter of fiscal 2013.
- Second quarter gross margin, operating expenses and net income were impacted by measurement period adjustments to the fair value of assets acquired and liabilities assumed in the merger with Opnext, Inc. as described more fully in the bullet points below.
- Non-GAAP gross margin was 10% for the third quarter of fiscal 2013, compared with a non-GAAP gross margin of 16% in the second quarter of fiscal 2013.
- GAAP operating loss was $28.9 million for the third quarter of fiscal 2013, which included $11.5 million of flood-related income, net of expenses, due to the flooding in Thailand. This compares with a GAAP operating loss of $5.7 million in the second quarter of fiscal 2013, which included a $25.0 million gain on the sale of assets related to our interleaver product line and our thin film filter business.
- Non-GAAP operating loss was $32.3 million for the third quarter of fiscal 2013, compared with a non-GAAP operating loss of $22.1 million in the second quarter of fiscal 2013.
- GAAP net loss for the third quarter of fiscal 2013 was $41.5 million, which included $11.5 million of flood-related income, net of expenses, due to the flooding in Thailand, and $3.6 million for the impairment of an investment. This compares with a GAAP net loss of $11.2 million in the second quarter of fiscal 2013, which included a $25.0 million gain on the sale of assets related to our interleaver product line and our thin film filter business.
- Non-GAAP net loss for the third quarter of fiscal 2013 was $33.8 million. This compares with a non-GAAP net loss of $24.2 million in the second quarter of fiscal 2013.
- Adjusted EBITDA was negative $24.0 million for the third quarter of fiscal 2013, compared with negative $13.2 million in the second quarter of fiscal 2013.
- Cash, cash equivalents, restricted cash, and short-term investments were $80.5 million at March 30, 2013.
- Oclaro closed its merger with Opnext, Inc. on July 23, 2012. During the third quarter of fiscal 2013, as part of the fair value assessment of assets acquired and liabilities assumed in the merger, the Company made the following measurement period adjustments impacting the first and second quarters of fiscal 2013:
- In the first quarter of fiscal 2013, a decrease of $0.6 million in cost of revenues, a decrease of $0.1 million in operating expenses, a decrease in gain on bargain purchase of $11.6 million and an increase in net loss of $10.8 million.
- In the second quarter of fiscal 2013, a decrease of $0.8 million in cost of revenues, a decrease of $0.2 million in operating expenses and a decrease in net loss of $1.0 million.
- We expect to finalize our fair value assessment in the fourth quarter of fiscal 2013.
In connection with the bridge financing from Providence, we amended our credit agreement with our existing lenders. Under the amended credit agreement we agreed to complete the sale of certain assets, product lines or operating segments of our business expeditiously, and we are actively engaged in a corresponding process. The revised credit agreement requires us to apply the proceeds of any such sales to repaying the loans under the credit agreement, although subject to certain conditions a portion of the credit line may become available to us for re-borrowing after we repay it. We believe that a successful completion of such disposition of assets, product lines or operating segments, is a necessary step to fund our continued operations and to complete our plans to restructure the company.
Fourth Quarter Fiscal Year 2013 Outlook
The results of Oclaro for the fourth quarter of fiscal 2013, which ends June 29, 2013, are expected to be:
- Revenues in the range of $132 million to $144 million.
- Non-GAAP gross margin in the range of 9% to 13%.
- Adjusted EBITDA in the range of negative $30 million to negative $17 million.
The foregoing guidance is based on current expectations. These statements are forward looking, and actual results may differ materially. Please see the Safe Harbor Statement in this earnings release for a description of certain important risk factors that could cause actual results to differ, and refer to Oclaro’s most recent annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of these risks. Furthermore, our outlook excludes items that may be required by GAAP, including, but not limited to, restructuring and related costs, acquisition or disposal related costs, any additional flood-related expenses, expenses or income from certain legal actions, settlements and related costs outside our normal course of business, impairments of other long-lived assets, depreciation and amortization, extraordinary items, as well as the expensing of stock options and restricted stock grants. We do not intend to update this guidance as a result of developments occurring after the date of this release.
Oclaro will hold a conference call to discuss financial results for the third quarter of fiscal 2013 today at 1:30 p.m. PT/4:30 p.m. ET. To listen to the live conference call, please dial (480) 629-9808. A replay of the conference call will be available through May 14, 2013. To access the replay, dial (858) 384-5517. The passcode for the replay is 4615441. A webcast of this call and a supplemental presentation will be available in the investor section of Oclaro’s website at www.oclaro.com.
Oclaro, Inc. (NASDAQ: OCLR) is one of the largest providers of lasers and optical components, modules and subsystems for the optical communications, industrial and consumer laser markets. The company is a global leader dedicated to photonics innovation, with cutting-edge research and development (R&D) and chip fabrication facilities in the U.S., U.K., Italy, Switzerland, Israel, Korea and Japan. It has in-house and contract manufacturing sites in China, Malaysia and Thailand, with design, sales and service organizations in most of the major regions around the world. For more information, visit http://www.oclaro.com.
Copyright 2013. All rights reserved. Oclaro, the Oclaro logo, and certain other Oclaro trademarks and logos are trademarks and/or registered trademarks of Oclaro, Inc. or its subsidiaries in the U.S. and other countries. Information in this release is subject to change without notice.
Safe Harbor Statement
This press release contains statements about management’s future expectations, plans or prospects of Oclaro and its business, and together with the assumptions underlying these statements, constitute forward-looking statements for the purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements concerning (i) financial targets and expectations, and progress toward our target business model, including financial guidance for the fiscal quarter ending June 29, 2013 regarding revenue, non-GAAP gross margin and Adjusted EBITDA, (ii) expectations related to the integration of Opnext into Oclaro following the closing of the merger on July 23, 2012, and (iii) our market position, economic conditions, product development, and future operating prospects. Such statements can be identified by the fact that they do not relate strictly to historical or current facts and may contain words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will,” “should,” “outlook,” “could,” “target,” “model,” and other words and terms of similar meaning in connection with any discussion of future operations or financial performance. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including (i) the future performance of Oclaro and its ability to effectively integrate the operations of acquired companies following the closing of acquisitions and mergers, including its merger with Opnext, (ii) the potential inability to realize the expected and ongoing benefits and synergies of acquisitions and mergers, (iii) the impact to our operations, revenues and financial condition attributable to the flooding in Thailand, (iv) the impact of continued uncertainty in world financial markets and any resulting reduction in demand for our products, (v) our ability to meet or exceed our gross margin expectations, (vi) the effects of fluctuating product mix on our results, (vii) our ability to timely develop and commercialize new products, (viii) our ability to reduce costs and operating expenses, (ix) our ability to respond to evolving technologies and customer requirements and demands, (x) our dependence on a limited number of customers for a significant percentage of our revenues, (xi) our ability to maintain strong relationships with certain customers, (xii) our ability to effectively compete with companies that have greater name recognition, broader customer relationships and substantially greater financial, technical and marketing resources than we do, (xiii) our ability to effectively and efficiently transition to an outsourced back-end assembly and test model, (xiv) our ability to timely capitalize on any increases in market demand, (xv) increased costs related to downsizing and compliance with regulatory requirements in connection with such downsizing, (xvi) competition and pricing pressure, (xvii) the potential lack of availability of credit or opportunity for equity based financing, (xviii) the risks associated with our international operations, (xix) the outcome of tax audits or similar proceedings, (xx) the outcome of pending litigation against the company, (xxi) our ability to maintain or increase our cash reserves and obtain financing on terms acceptable to us or at all, and (xxii) other factors described in Oclaro’s most recent annual report on Form 10-K, quarterly report on Form 10-Q and other documents we periodically file with the SEC. The forward-looking statements included in this announcement represent Oclaro’s view as of the date of this announcement. Oclaro anticipates that subsequent events and developments may cause Oclaro’s views and expectations to change. Oclaro specifically disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this announcement.