emkr-20210331

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 March 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 May 6, 2021, the number of shares outstanding of our no par value common stock totaled 36,838,079.

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CAUTIONARY NOTE

REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are 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 included in our Exchange Act reports and statements about our plans, strategies, business prospects, changes and trends in our business and the markets in which we operate, including the expected impact of the COVID-19 pandemic on our business and operations. These forward-looking statements may be identified by the use of terms and phrases such as “anticipates,” “believes,” “can,” “could,” “estimates,” “expects,” “forecasts,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will,” “would,” and similar expressions or variations of these terms and similar phrases. Additionally, statements concerning future matters such as our expected liquidity, development of new products, enhancements or technologies, sales levels, expense levels, expectations regarding the outcome of legal proceedings and other statements regarding matters that are not historical are forward-looking statements. Management cautions 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 the industries in which we operate to be materially different from those expressed or implied by any forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation the following: (a) uncertainties regarding the effects of the COVID-19 pandemic, the length of time it will take for the COVID 19 pandemic to subside, and the impact of measures intended to reduce its spread on our business and operations, which is evolving and beyond our control; (b) the rapidly evolving markets for our products and uncertainty regarding the development of these markets; (c) our historical dependence on sales to a limited number of customers and fluctuations in the mix of products and customers in any period; (d) delays and other difficulties in commercializing new products; (e) 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; (f) uncertainties concerning the availability and cost of commodity materials and specialized product components that we do not make internally; (g) actions by competitors; (h) risks and uncertainties related to applicable laws and regulations, including the impact of changes to applicable tax laws and tariff regulations; (i) acquisition-related risks, including that (1) the revenues and net operating results obtained from the Systron Donner Inertial, Inc. ("SDI") business may not meet our expectations, (2) there could be losses and liabilities arising from the acquisition of SDI that we will not be able to recover from any source, and (3) we may not realize sufficient scale in our Navigation and Inertial Sensing 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; (j) risks related to our ability to obtain capital; (k) risks related to the transition of certain of our manufacturing operations from our Beijing facility to a contract manufacturer’s facility; (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 in Part II, Item 1A, Risk Factors in this Quarterly Report on Form 10-Q and in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, as such risk factors may be amended, supplemented or superseded from time to time by our subsequent periodic reports we file with the Securities and Exchange Commission (“SEC”). These cautionary statements apply to all forward-looking statements wherever they appear in this Quarterly Report.

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 Quarterly Report 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 this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended September 30, 2020. Certain information included in this Quarterly Report may supersede or supplement forward-looking statements in our other 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.

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EMCORE Corporation

FORM 10-Q

For the Quarterly Period Ended March 31, 2021

TABLE OF CONTENTS

Page

Part I:

Financial Information

Item 1.

Financial Statements (Unaudited)

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended March 31, 202 1 and 20 20

Condensed Consolidated Balance Sheets as of March 31, 202 1 and September 30, 2020

Condensed Consolidated Statements of Shareholders’ Equity for the three and si x months ended March 31, 202 1 and 20 20

Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 202 1

Notes to our Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART I. Financial Information.

ITEM 1. Financial Statements

EMCORE CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three and six months ended March 31, 2021 and 2020

(in thousands, except per share data)

(unaudited)


	For the three months ended March 31,				For the six months ended March 31,
	2021		2020		2021		2020
Revenue	$	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 administrative	6,062		7,139		11,860		13,026
Research and development	3,771		4,584		8,067		9,226
Loss (gain) on sale of assets	218		(315)		189		(1,917)
Total operating expense	10,051		11,408		20,116		20,335
Operating income (loss)	4,583		(4,981)		7,090		(6,434)
Other (expense) income:
Interest (expense) income, net	(49)		1		(98)		(14)
Foreign exchange (loss) gain	(68)		(156)		169		(9)
Total other (expense) income	(117)		(155)		71		(23)
Income (loss) before income tax (expense) benefit	4,466		(5,136)		7,161		(6,457)
Income tax (expense) benefit	(82)		55		(208)		41
Net income (loss)	$	4,384	$	(5,081)	$	6,953	$	(6,416)
Foreign exchange translation adjustment	(11)		29		(21)		(7)
Comprehensive income (loss)	$	4,373	$	(5,052)	$	6,932	$	(6,423)
Per share data:
Net income (loss) per basic share	$	0.13	$	(0.18)	$	0.22	$	(0.22)
Weighted-average number of basic shares outstanding	32,968		29,033		31,219		28,931
Net income (loss) per diluted share	$	0.13	$	(0.18)	$	0.21	$	(0.22)
Weighted-average number of diluted shares outstanding	34,451		29,033		32,492		28,931

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EMCORE CORPORATION

Condensed Consolidated Balance Sheets

As of March 31, 2021 and September 30, 2020

(in thousands)

(unaudited)


	As of March 31, 2021		As of September 30, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	63,728	$	30,390
Restricted cash	1,553		148
Accounts receivable, net of credit loss of $175 and $227, respectively	29,836		25,324
Contract 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 (Note 11)
Shareholders’ equity:
Common stock, no par value, 50,000 shares authorized; 43,681 shares issued and 36,775 shares outstanding as of March 31, 2021; 36,461 shares issued and 29,551 shares outstanding as of September 30, 2020	779,681		744,361
Treasury 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

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EMCORE CORPORATION

Condensed Consolidated Statements of Shareholders’ Equity

For the three and six months ended March 31, 2021 and 2020

(in thousands)

(unaudited)


	For the three months ended March 31,		For the six months ended March 31,
	2021	2020	2021	2020
Shares of Common Stock
Balance, beginning of period	29,783	28,948	29,551	28,893
Stock-based compensation	203	111	433	166
Stock option exercises	8	1	10	1
Issuance of restricted stock units	—	116	—	116
Issuance of common stock - ESPP	126	115	126	115
Sale of common stock	6,655	—	6,655

SEC Form 10-Q filed by EMCORE Corporation