EMCORE (US:EMKR)2020-02-06 16:26Financial Data and Key Metrics Changes - Revenue for Q1 2020 was $25.5 million, an increase of $1.2 million or 5% compared to $24.3 million in Q4 2019 [31] - Non-GAAP gross margin rose to 30%, up from 19% in the previous quarter, driven by cost improvements and a favorable product mix [11][33] - Non-GAAP operating loss improved to $1.8 million from $7.7 million in the prior quarter, with adjusted EBITDA turning positive at $200,000 compared to negative $5.7 million [37] Business Line Data and Key Metrics Changes - Aerospace and Defense (A&D) accounted for 54% of revenue, while Broadband accounted for 46% [10] - Within A&D, Defense Optoelectronics revenue increased by double digits, and Quartz MEMS revenue also grew sequentially, although FOG revenue decreased [32] - Broadband revenue increased due to higher sales across all product lines, including cable TV, chips, and wireless [32] Market Data and Key Metrics Changes - Demand for Cable Television products improved sequentially but remained lower due to ongoing softness in MSO spending [18] - The company expects a typical seasonal decline of 15% to 20% in Cable Television revenue in the March quarter [42] - Demand for other broadband products, notably chips and wireless, grew quarter-over-quarter, albeit from low volumes [19] Company Strategy and Development Direction - The company is focused on cost-cutting initiatives and improving operational efficiency, with a new restructuring plan expected to save $4 million annually [38] - Transition to EMS manufacturing with Hytera is on schedule, with the first laser module manufacturing line installed [21] - The company aims to achieve sustained positive EBITDA starting in Q3 2020, followed by profitable top-line growth as new programs in Aerospace and Defense begin production [25] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding production in Asia but acknowledged the fluid and unpredictable situation due to the coronavirus outbreak [28] - Revenue guidance for Q2 is expected to be in the range of $23 million to $25 million, slightly down from Q1 [28] - The company is taking a conservative view on revenue due to potential impacts from travel restrictions and supply chain disruptions related to the coronavirus [26][27] Other Important Information - Cash totaled $15.4 million at December 31, 2019, down from $22 million at September 30, 2019, with cash used during Q1 primarily for litigation and business operations [39] - A sale leaseback transaction for the Concord facility is expected to close on February 10, netting approximately $12.8 million in cash proceeds [40] Q&A Session Summary Question: Clarification on cable business decline - Management confirmed that historically, Q1 sees a decline in cable business due to seasonal trends, typically between 10% to 20% [42] Question: Impact of coronavirus on business - Management indicated that travel restrictions from China could affect operations and timelines, but all personnel are currently healthy [43][44] Question: Future operating expenses outlook - Management expects to maintain current operating expenses around $9.4 million in the short term, with potential reductions in the back half of the fiscal year [46][47] Question: Drivers of top-line guidance - Management clarified that the defense business is not impacted by the coronavirus, with cable TV being the primary concern for revenue softness [50][51] Question: Gross margin expectations for the future - Management anticipates maintaining or improving gross margins in the back half of the fiscal year, with expectations of reaching 30% or higher [63][64]