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First Quarter 2015
Highlights:
·
12 month backlog increased approximately 25% to $5.3 million
at September 30, 2014 as compared to June 30, 2014.
·
Bookings for optical lenses in the first quarter of fiscal
2015 were $3.45 million, the highest level in ten quarters. Bookings in
Asia increased by 73% in the first quarter of 2015 as compared to the
first quarter of fiscal 2014.
·
Revenue for the
first quarter of fiscal 2015 decreased 7% to approximately $2.60 million
compared to approximately $2.81 million for the first quarter of fiscal
2014 reflecting the more moderate economic growth in the Chinese market
and a large delayed order from a major US defense contractor.
·
Gross margin as
a percent of revenue for first quarter fiscal 2015 was 38% as compared to
47% in the first quarter of fiscal 2014. Lower gross margin was a result
of duplicative manufacturing operations as we transition between our two
facilities in China and a coating vendor yield issue
·
For the first
quarter of fiscal 2015, net loss was approximately $(579,000), or $(0.04)
per share, compared to net loss of $(80,000), or $(0.01) per share for
the first quarter of fiscal 2014.
·
Adjusted EBITDA for
the first quarter of fiscal 2015 was approximately ($380,000) compared to
approximately $168,000 in the first quarter of fiscal 2014.
Jim
Gaynor, President and Chief Executive Officer of LightPath, commented,
“The first quarter of fiscal year 2015 is best summarized as one of mixed
results. Our bookings for the quarter were $3.45 million, the highest
level in the last ten quarters.
This led to our 12 month backlog increasing by 25% from the
beginning of our current fiscal year. This growth outlook confirms the
necessity for the investment that has been made to build and staff our
recently completed manufacturing facility in China.”
“Our
revenue in the first quarter of fiscal 2015 was less than our
projections; however, our focused segments of precision molded optics in
the Asian market and infrared, experienced growth. In the first quarter
of 2015, revenue for precision molded optics business sold in Asia grew
by 9% compared to the same period in the prior year and we achieved
better than expected growth in our infrared revenue as that business was
up in the quarter by more than 47% year-over-year. Revenues from sales in
the U.S. during the first quarter of 2015 decreased by 14% from the same
period last year, impacted by the delay of a $230,000 order from a U.S.
defense contractor. This order is now planned for the second quarter.”
“We
planned for lower gross margins in the first quarter compared to the
fourth quarter due to expected impacts from the continued transition of
manufacturing processes from our Shanghai factory to our new Zhenjiang
factory, and the ramp-up of producing higher infrared volumes. We also
experienced an unexpected vendor related yield issue during the quarter
for infrared products that has been resolved. The cost of these issues is
estimated at approximately $100,000.
We also incurred $50,000 of additional expense due to overlapping
staff in both of our China locations during this transition period, while
our Zhenjiang facility staff continues training. Together, these items
impacted our gross margin by approximately 5 percentage points. In the
long term, we expect our margins to surpass prior levels as production at
the Zhenjiang facility reaches an optimal rate.”
“We actively managed our working capital
in the first quarter, continuing to make important capital investments
while taking a balanced approach managing our receivables, inventory and
payables. While Adjusted EBITDA
was negative ($380,000) in the quarter, our cash usage from operations
was only ($100,000).”
“Addressing
the previously disclosed securities purchase agreement with Pudong
Science & Technology Investment (Cayman), Co. Ltd.,” Mr. Gaynor
added, “we have continued to work with the U.S. government concerning the
proposed investment. We remain
optimistic that we will receive the necessary governmental approvals to
close the proposed transaction. As
we have previously stated, the proceeds from the sale of common stock are
intended to provide working capital to support our continued growth
through global expansion.”
Financial Results for Three Months Ended September
30, 2014
Revenue for the
first quarter of fiscal 2015 totaled approximately $2.60 million, which
was a decrease of $206,000, or 7%, as compared to the same period of the
prior fiscal year. The decrease from the first quarter of
the prior fiscal year was attributable to a decrease in sales of our
precision molded lenses primarily due to the laser tool market in China
and a delayed order from a major U.S. defense contractor, offset by an
increase in sales of infrared and Gradium products. Despite the slowdown
in the Asian laser tool market in the first quarter of fiscal 2015, the
Company still expects further growth in sales of industrial tool products
based on recent order activity.
Orders for infrared products are also expected to continue to
grow.
The gross margin
percentage in the first quarter of fiscal 2015 was 38%, compared to 47%
in the first quarter of fiscal 2014. Total manufacturing costs of $1.63
million increased by approximately $135,000 in the first quarter of
fiscal 2015 compared to the same period of the prior fiscal year. The
increase was primarily due to higher wages associated with the ramp up in
infrared production and the overlapping manufacturing workforces during
the transition of production between our two China facilities. During the
first quarter of fiscal 2015, the Company also experienced an isolated
yield issue with one of its coating vendors that resulted in additional
expense. This yield issue is now resolved.
During the first
quarter of fiscal 2015, total costs and expenses increased by
approximately $107,000 compared to the same period of the prior year. The
increase was primarily due to an increase of approximately $70,000 in
wages in support of the infrared business and approximately $30,000 in
higher travel expenses associated with business development
initiatives. Total operating loss
for the first quarter of fiscal 2015 was approximately $511,000 compared
to an operating loss of approximately $62,000 for the same period in
fiscal 2014.
In
the first quarter of fiscal 2015, the Company recognized a non-cash
expense of approximately $54,000 related to the change in the fair value
of derivative warrants issued in connection with the June 2012 private
placement. In the first quarter of fiscal 2014, the Company recognized a
non-cash expense of approximately $19,000 related to the change in the
fair value of these warrants. The warrants have a five year life and this
fair value will be re-measured each reporting period until the warrants
are exercised or expire.
Net loss
for the first quarter of fiscal 2015 was approximately $(579,000)
(including the $54,000 non-cash expense for the change in value of the
warrant liability) or $(0.04) per basic and diluted common share,
compared with a net loss of $(80,000) (including the $19,000 non-cash
expense for the change in value of the warrant liability) or $(0.01) per
basic and diluted common share for the same period in fiscal 2014.
Weighted-average basic shares outstanding increased to 14,312,061 in the
first quarter of fiscal 2015 compared to 13,567,712 in the first quarter
of fiscal 2014 primarily due to the issuance of shares of common stock
for the employee stock purchase plan, shares issued due to warrant
exercises and shares issued upon the exercise of restricted stock units.
Cash and
cash equivalents totaled approximately $787,000 as of September 30, 2014.
The current ratio as of September 30, 2014 was 2.7 to 1 compared to 3.0
to 1 as of June 30, 2014. Total stockholders’ equity as of September 30,
2014 totaled approximately $6.8 million compared to $7.3 million as of
June 30, 2014.
As of
September 30, 2014, the Company’s 12-month backlog was $5.3 million
compared to $4.3 million as of June 30, 2014, a 25% increase.
Investor
Conference Call and Webcast Details:
LightPath will host an audio conference call and
webcast on Thursday, November 6, at 4:30 p.m. ET to discuss the Company’s
financial and operational performance for the first quarter of fiscal
2015.
Conference Call Details
Date: Thursday, November 6, 2014
Time: 4:30p.m. (ET)
Dial-in Number: 1-800-860-2442
International Dial-in Number: 1-412-858-4600
It is recommended that participants dial-in
approximately 5 to 10 minutes prior to the start of the 4:30 p.m. call. A
transcript archive and webcast of the event will be available for viewing
or download on the Company web site shortly after the call is concluded.
About LightPath Technologies
LightPath manufactures optical products including
precision molded aspheric optics, GRADIUM® glass products, proprietary
collimator assemblies, laser components utilizing proprietary automation
technology, higher-level assemblies and packing solutions. The Company's
products are used in various markets, including industrial, medical,
defense, test and measurement and telecommunications. LightPath has a
patent portfolio that has been granted or licensed to it in these fields.
For more information visit www.lightpath.com.
The discussions of our results as presented in this
release include use of non-GAAP terms “EBITDA” and “gross margin.” Gross margin is determined by deducting
the cost of sales from operating revenue. Cost of sales includes
manufacturing direct and indirect labor, materials, services, fixed costs
for rent, utilities and depreciation, and variable overhead. Gross margin
should not be considered an alternative to operating income or net
income, which is determined in accordance with Generally Accepted
Accounting Principles (“GAAP”). We believe that gross margin, although a
non-GAAP financial measure is useful and meaningful to investors as a
basis for making investment decisions. It provides investors with
information that demonstrates our
cost structure and provides funds for our total costs and expenses. We
use gross margin in measuring the performance of our business and have
historically analyzed and reported gross margin information publicly.
Other companies may calculate gross margin in a different manner.
EBITDA is a non-GAAP financial measure used by
management, lenders and certain investors as a supplemental measure in
the evaluation of some aspects of a corporation's financial position and
core operating performance. Investors sometimes use EBITDA as it allows
for some level of comparability of profitability trends between those
businesses differing as to capital structure and capital intensity by
removing the impacts of depreciation, amortization, and interest expense.
EBITDA also does not include changes in major working capital items such
as receivables, inventory and payables, which can also indicate a
significant need for, or source of, cash. Since decisions regarding
capital investment and financing and changes in working capital
components can have a significant impact on cash flow, EBITDA is not a
good indicator of a business's cash flows. We use EBITDA for evaluating
the relative underlying performance of the Company's core operations and
for planning purposes. We calculate EBITDA by adjusting net loss to
exclude net interest expense, income tax expense or benefit, depreciation
and amortization, thus the term "Earnings Before Interest, Taxes,
Depreciation and Amortization" and the acronym "EBITDA."
This news release includes statements that constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our ability to expand our presence in certain markets, future sales growth, continuing reductions in cash usage and implementation of new distribution channels. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, factors detailed by LightPath Technologies, Inc. in its public filings with the Securities and Exchange Commission. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Contacts:
Jim Gaynor, President
& CEO
LightPath Technologies, Inc.
Tel: 407-382-4003
Dorothy Cipolla,
CFO
LightPath Technologies, Inc.
Tel: 407-382-4003
x305
Jordan Darrow
Darrow Associates, Inc.
Tel: 631-367-1866
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