emkr-20211231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended December 31, 2021
or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ___ to ___

Commission File Number 001-36632

EMCORE Corporation

(Exact name of registrant as specified in its charter)


New Jersey						22-2746503
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2015 W. Chestnut Street, Alhambra, California, 91803

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (626) 293-3400

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common stock, no par value	EMKR	The Nasdaq Stock Market LLC	(Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☐ Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☑ Smaller reporting company ☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the E change Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

As of February 7, 2022, the number of shares outstanding of our no par value common stock totaled 37,277,592.


			Page
		Cautionary Note Regarding Forward-Looking Statements	4
Part I:	Financial Information		6
	Item 1.	Financial Statements (Unaudited)	6
		Condensed Consolidated Statements of Operations and Comprehensive Income For the Three Months Ended December 31, 2021 and 2020	6
		Condensed Consolidated Balance Sheets as of December 31, 2021 and September 30, 2021	7
		Condensed Consolidated Statements of Shareholders’ Equity F or the T hree M onths E nded December 3 1 , 2021 and 2020	8
		Condensed Consolidated Statements of Cash Flows For the Three Months E nded December 31, 2021 and 2020	9
		Notes to Condensed Consolidated Financial Statements	10
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures about Market Risks	25
	Item 4.	Controls and Procedures	26
Part II:	Other Information		26
	Item 1.	Legal Proceedings	26
	Item 1A.	Risk Factors	26
	Item 6.	Exhibits	26
		Signatures	28


	For the Three Months Ended December 31,
	2021		2020
Revenue	$	42,236	$	33,426
Cost of revenue	26,439		20,854
Gross profit	15,797		12,572
Operating expense:
Selling, general, and administrative	7,187		5,757
Research and development	4,627		4,296
Restructuring charge	1,298		41
Loss (gain) on sale of assets	187		(29)
Total operating expense	13,299		10,065
Operating income	2,498		2,507
Other income:
Interest expense, net	(11)		(49)
Foreign exchange gain	42		237
Total other income	31		188
Income before income tax expense	2,529		2,695
Income tax expense	(115)		(126)
Net income	$	2,414	$	2,569
Foreign exchange translation adjustment	20		(10)
Comprehensive income	$	2,434	$	2,559
Per share data
Net income per basic share	$	0.07	$	0.09
Weighted-average number of basic shares outstanding	36,950		29,503
Net income per diluted share	$	0.06	$	0.08
Weighted-average number of diluted shares outstanding	39,031		30,377


	As of
	December 31, 2021		September 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	74,896	$	71,621
Restricted cash	1,062		61
Accounts receivable, net of credit loss of $425 and $260, respectively	32,382		31,849
Contract assets	238		361
Inventory	31,283		32,309
Prepaid expenses and other current assets	7,046		6,877
Assets held for sale	1,052		1,241
Total current assets	147,959		144,319
Property, plant, and equipment, net	23,219		22,544
Goodwill	69		69
Operating lease right-of-use assets	20,140		13,489
Other intangible assets, net	161		167
Other non-current assets	213		225
Total assets	$	191,761	$	180,813
LIABILITIES and SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	17,033	$	16,686
Accrued expenses and other current liabilities	10,344		9,936
Operating lease liabilities - current	941		1,198
Total current liabilities	28,318		27,820
Operating lease liabilities - non-current	19,628		12,684
Asset retirement obligations	2,058		2,049
Other long-term liabilities	794		794
Total liabilities	50,798		43,347
Commitments and contingencies (Note 10)
Shareholders’ equity:
Common stock, no par value, 50,000 shares authorized; 44,181 shares issued and 37,275 shares outstanding as of December 31, 2021; 43,890 shares issued and 36,984 shares outstanding as of September 30, 2021	783,329		782,266
Treasury stock at cost; 6,906 shares as of December 31, 2021 and September 30, 2021	(47,721)		(47,721)
Accumulated other comprehensive income	707		687
Accumulated deficit	(595,352)		(597,766)
Total shareholders’ equity	140,963		137,466
Total liabilities and shareholders’ equity	$	191,761	$	180,813


	For the Three Months Ended
	2021		2020
Shares of common stock
Balance, beginning of period	36,984		29,551
Stock-based compensation	285		230
Stock option exercises	6		2
Balance, end of period	37,275		29,783
Value of common stock
Balance, beginning of period	$	782,266	$	744,361
Stock-based compensation	1,088		903
Stock option exercises	29		7
Tax withholding paid on behalf of employees for stock-based awards	(54)		(83)
Balance, end of period	783,329		745,188
Treasury stock, beginning and ending of period	(47,721)		(47,721)
Accumulated other comprehensive income
Balance, beginning of period	687		918
Translation adjustment	20		(10)
Balance, end of period	707		908
Accumulated deficit
Balance, beginning of period	(597,766)		(623,409)
Net income	2,414		2,569
Balance, end of period	(595,352)		(620,840)
Total shareholders’ equity	$	140,963	$	77,535


	As of
(in thousands)	December 31, 2021		September 30, 2021
Cash	$	19,820	$	16,547
Cash equivalents	55,076		55,074
Restricted cash	1,062		61
Total cash, cash equivalents, and restricted cash	$	75,958	$	71,682


	For the Three Months Ended December 31,
(in thousands, except per share data)	2021		2020
Numerator
Net income	$	2,414	$	2,569
Denominator
Weighted average number of shares outstanding - basic	36,950		29,503
Effect of dilutive securities
Stock options	7		—
PSUs, RSUs, and restricted stock	2,074		874
Weighted average number of shares outstanding - diluted	39,031		30,377
Earnings per share - basic	$	0.07	$	0.09
Earnings per share - diluted	$	0.06	$	0.08
Weighted average antidilutive options, unvested restricted RSUs and RSAs, unvested PSUs and ESPP shares excluded from the computation	53		161


			Number of Common Stock Shares Available for Future Issuances
Exercise of outstanding stock options			13,884
Unvested RSUs and RSAs			1,462,942
Unvested PSUs and PRSAs (at 200% maximum payout)			1,934,000
Issuance of stock-based awards under the Equity Plans			1,748,593
Purchases under the officer and director share purchase plan			88,741
Total reserved			5,248,160


	As of
(in thousands)	December 31, 2021		September 30, 2021
Raw materials	$	15,130	$	16,146
Work in-process	10,446		11,410
Finished goods	5,707		4,753
Inventory	$	31,283	$	32,309


	As of
(in thousands)	December 31, 2021		September 30, 2021
Equipment	$	38,131	$	37,985
Furniture and fixtures	1,125		1,125
Computer hardware and software	3,576		3,575
Leasehold improvements	6,699		6,663
Construction in progress	10,563		9,247
Property, plant, and equipment, gross	$	60,094	$	58,595
Accumulated depreciation	(36,875)		(36,051)
Property, plant, and equipment, net	$	23,219	$	22,544


	For the Three Months Ended December 31,
(in thousands)	2021		% of Revenue		2020		% of Revenue
Aerospace and Defense
Navigation and Inertial Sensing	$	8,145	19	%	$	9,202	28	%
Defense Optoelectronics	1,755		4		4,434		13
Broadband
CATV Lasers and Transmitters	28,459		67		17,315		52
Chip Devices	1,068		3		743		2
Other Optical Products	2,809		7		1,732		5
Total revenue	$	42,236	100	%	$	33,426	100	%

SEC Form 10-Q filed by EMCORE Corporation