Opnext Reports Q1

Friday, 06 August 2010 20:11

Opnext, Inc., a global leader in the design and manufacturing of optical modules and components, today announced unaudited financial results for its first fiscal quarter ended June 30, 2010. Financial Highlights for the First Fiscal Quarter Ended June 30, 2010: # Revenue increased $2.1 million, or 2.7%, to $78.9 million compared to $76.8 million in the quarter ended March 31, 2010. Revenue from sales of 10Gbps and below products increased $6.9 million, or 14.2%, to $55.8 million, compared to the quarter ended March 31, 2010, primarily as a result of increased sales of 300 pin tunables, XFP, and SFP+ modules, partially offset by decreased sales of Xenpak modules. Revenue from sales of 40Gbps and above products decreased $5.5 million, or 25.2%, to $16.3 million compared to the quarter ended March 31, 2010, primarily as a result of a decline in 40Gbps subsystems sales and lower research and development contract revenue, partially offset by an increase in 40Gbps module sales. Revenue from sales of industrial and commercial products increased $0.6 million, or 9.8%, to $6.7 million compared to the quarter ended March 31, 2010. # Revenue decreased $6.4 million, or 7.5%, from $85.3 million in the quarter ended June 30, 2009. Revenue from sales of 10Gbps and below products increased $7.8 million, or 16.3%, compared to the quarter ended June 30, 2009. This increase was driven by higher sales of XFP and SFP+ modules, partially offset by decreased sales of Xenpak and SFP modules. Revenue from sales of 40Gbps and above products decreased $18.6 million compared to the quarter ended June 30, 2009, or 53.3%, primarily as a result of a decline in 40Gbps subsystem sales, partially offset by increased revenue from sales of 40Gbps and 100Gbps modules. Revenue from sales of industrial and commercial products increased $4.4 million, or 191.3%, compared to the quarter ended June 30, 2009. # Cisco Systems, Inc., Alcatel-Lucent, and Huawei Technologies Co., Ltd. (“Huawei”) each represented 10% or more of total revenues in the quarter ended June 30, 2010. Combined, sales to these three customers represented 51% of total revenues compared to 44% in the quarter ended March 31, 2010. This was the first quarter for which sales to Huawei represented 10% or more of total revenues. # Gross margin was 18.8% and non-GAAP gross margin was 20.9% for each of the quarters ended June 30 and March 31, 2010. As compared to the quarter ended March 31, 2010, gross margins were favorably impacted by lower average per unit material and outsourcing costs, lower excess and obsolete inventory charges, and a 30 basis point positive impact from foreign currency exchange rate fluctuations and hedging programs, and were unfavorably impacted by a lower mix of 40Gbps and above revenues and lower average per unit selling prices. # Operating loss was $16.2 million for the quarter ended June 30, 2010, compared to an operating loss of $18.5 million for the quarter ended March 31, 2010. Non-GAAP operating loss was $12.0 million for the quarter ended June 30, 2010, compared to $14.7 million for the quarter ended March 31, 2010. The decrease in non-GAAP operating loss resulted from higher gross margin dollars and lower research and development expenses, partially offset by higher selling, general and administrative expenses. Research and development expenses decreased by $2.5 million primarily as a result of lower material and outsourcing costs related to various advanced product development programs. # Net loss was $16.3 million for the quarter ended June 30, 2010, or $0.18 per fully diluted share, compared to a net loss of $18.3 million, or $0.20 per fully diluted share, for the quarter ended March 31, 2010. Non-GAAP net loss for the quarter ended June 30, 2010 was $12.1 million, or $0.13 per fully diluted share, compared to a non-GAAP net loss of $14.5 million, or $0.16 per fully diluted share, for the quarter ended March 31, 2010. # Cash and cash equivalents decreased by $25.8 million to $106.9 million at June 30, 2010, compared to $132.6 million at March 31, 2010, reflecting $19.7 million of cash used in operations, $3.1 million of capital expenditures, $2.6 million of capital lease payments, and an unfavorable impact of $0.4 million from foreign currency exchange rate fluctuations. Net working capital other than cash and cash equivalents increased by $13.0 million, including an $8.8 million increase in accounts receivable, a $5.4 million increase in inventory and a $2.9 million increase in prepaid expenses and other current assets, partially offset by a $2.7 million increase in accrued expenses and other assets and liabilities and a $1.4 million increase in accounts payable. # EBITDA was negative $8.5 million for the quarter ended June 30, 2010, compared to negative $11.0 million for the quarter ended March 31, 2010. Adjusted EBITDA was negative $6.1 million for the quarter ended June 30, 2010, compared to negative $9.0 million for the quarter ended March 31, 2010. Reconciliations between gross margin, operating loss and net loss on a GAAP basis and a non-GAAP basis and net loss to EBITDA and Adjusted EBITDA are provided in the tables appearing at the end of this release. Market Observations and Guidance: “During the quarter, we continued to see improving demand across most of our product lines, one notable exception being 40Gbps subsystems,” said Gilles Bouchard, Opnext President and CEO. “Sales of 10Gbps and below products and 40Gbps modules grew 14% and 31%, respectively, in spite of continuing supply constraints. However, demand for 40Gbps subsystems was weaker than expected and was the primary reason total revenue came in under plan.” “Looking ahead to our second fiscal quarter ending in September 2010, we expect sales of 10Gbps and below products to show solid growth,” continued Mr. Bouchard, “while sales of 40Gbps and above products are expected to remain essentially flat and sales of industrial and commercial products are expected to grow modestly compared to the June quarter.” “Based on these factors, we expect revenues to be between $80 million and $85 million for the second fiscal quarter ending September 30, 2010,” concluded Mr. Bouchard. Opnext Inc.