EMCORE (US:EMKR)2019-12-05 18:51Financial Data and Key Metrics Changes - Revenue for Q4 2019 was $24.3 million, an increase of $7.1 million or 41% compared to $17.2 million in Q3 2019 [35] - GAAP net loss was $15 million or $0.52 per share, compared to a loss of $10.5 million or $0.37 per share in Q3 2019 [38] - Non-GAAP operating loss was $7.7 million in Q4 compared to $5.1 million in Q3 [42] Business Line Data and Key Metrics Changes - Aerospace and Defense products accounted for nearly 60% of revenue, while Cable Television represented approximately 34% and Chips and Wireless about 6% combined [11] - The SDI acquisition contributed significantly to revenue, with a $5.8 million increase reported in Q4 [35] - Cable TV revenue showed a rebound from historically low levels in the previous quarter [35] Market Data and Key Metrics Changes - Demand for cable TV products is expected to improve modestly, with major MSOs indicating increased capital expenditures [23] - The chip market remains muted due to ongoing trade disputes and tariffs, leading to a strategic exit from lower-margin products [12] Company Strategy and Development Direction - The company plans to report two segments starting in fiscal 2020: Aerospace and Defense, and Broadband [36] - A shift to an EMS model for manufacturing is expected to improve margins and reduce costs [17] - The company is focusing on higher-margin products aimed at 25G applications and reducing the size of the cable TV organization [18] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the timing and slope of the rebound in cable TV demand, expecting only modest improvements in the near term [23] - The company anticipates that Aerospace and Defense will become a larger part of the business, providing better predictability [30] - Management is optimistic about the growth potential in the Aerospace and Defense sector, with strong demand for navigation products and Defense Optoelectronics [25][30] Other Important Information - The company expects to realize savings from the EMS transition in Q3 2020, targeting breakeven on an adjusted EBITDA basis [31] - A non-cash write-down of $4.7 million was recognized for cable TV inventory due to lower expected demand [38] - Cash totaled $22 million at the end of Q4, with $4.2 million used in operating activities [43] Q&A Session Summary Question: Can the cable TV business actually grow in December? - Management believes there can be an uptick in the current quarter, but remains cautious about projecting a significant rebound [47] Question: Have there been significant changes in pricing for cable TV products? - Management noted no significant pricing erosion, with a movement towards more premium products [48] Question: What factors are driving success in the Aerospace and Defense business? - Success is attributed to the company's unique capabilities in handling high-frequency links and the ability to manufacture specialized products [49][50] Question: How did the defense products contribute to total revenue? - The defense products, including SDI, were classified under Aerospace and Defense due to their commonality with defense-related applications [56] Question: What is the expected gross margin for the first quarter? - Management indicated that gross margins could return to the mid-20s range, with improvements expected from operational changes [62]