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Second Quarter Fiscal
2015 Highlights:
·
12-month
backlog increased approximately 5% to $5.59 million at December 31, 2014
from September 30, 2014 and up approximately 8% from December 31, 2013.
·
Revenue
for the second quarter of fiscal 2015 increased 15% to approximately $3.4
million compared to approximately $2.9 million for the second quarter of
fiscal 2014.
·
Infrared
revenues increase by more than 180% in the second quarter of fiscal 2015
compared to the second quarter of fiscal 2014.
·
Non-cash
income of approximately $535,000, in the fiscal 2015 second quarter,
related to the change in the fair value of warrant liability, up from
non-cash expense of approximately $35,000 in same period of fiscal 2014.
·
For
the second quarter of fiscal 2015, net income was approximately $141,000,
or $0.01 per share, compared to net loss of $(202,000), or $(0.01) per
share for the second quarter of fiscal 2014.
·
Gross
margin was 38% in the second quarter of fiscal 2015 compared to 43% in
the second quarter last year.
·
EBITDA
was $294,000 in the second quarter of fiscal 2015 compared to $4,000 in
the second quarter last year.
Jim Gaynor, President and Chief Executive Officer of
LightPath, commented, “Order bookings continued to improve broadly across
our business, up 8% in the second quarter of fiscal 2015 compared to the
second quarter of last year, and up 5% from the first quarter of fiscal
2015. Infrared bookings also increased significantly, up 563% in the
second quarter of fiscal 2015 compared to the second quarter last year
and up 31% from the first quarter of fiscal 2015. Total revenue grew to
$3.4 million in the second quarter, up 29% from the first quarter of
fiscal 2015 and approximately 15% as compared to the second quarter of
fiscal 2014.”
“We remain vigilant in our efforts to improve our
profitability and ultimately benefit from the leverage in our business,
which is the primary reason we opened a second facility in China with a
lower cost basis than our other manufacturing locations. However, while we are transitioning
work to the new Zhenjiang facility, margins have been temporarily
pressured. Gross margin for the
second quarter of fiscal 2015 was 38%, impacted by severance costs
incurred as we accelerated the transition from our Shanghai facility to
our new facility in Zhenjiang, China. We are ahead of schedule in terms
of transferring our manufacturing operations. Essentially all
manufacturing operations are now moved to Zhenjiang. Over the course of
the last two quarters, we have reduced our headcount in Shanghai from 121
to 29. Our sales, development engineering, and some administrative
functions, including purchasing and customs support, will remain at our
Shanghai facility. SG&A costs included $277,000 of non-recurring
costs for fees incurred for outside professional services for certain
strategic growth initiatives and possible acquisition opportunities, and
$23,000 of severance costs for terminated employees. If we exclude the non-recurring
costs incurred for transitioning
between China locations and severance costs from the calculation, our
gross margin in the second quarter, as adjusted, would have been 41%.”
Mr. Gaynor continued,
“With the momentum through the first half of the year, the strategic
initiatives we announced earlier this week for our aspheric lens and
infrared lens businesses, the higher growth contributions from our
infrared business, and our anticipated margin improvements, we are well
positioned for substantial improvements in our profitability and cash
flow generation going forward.”
Financial Results for
Three Months Ended December 31, 2014
Revenue for the second quarter of fiscal 2015 totaled
approximately $3.4 million, which was an increase of $445,000, or 15%, as
compared to the same period of the prior fiscal year. The increase from the second quarter
of the prior fiscal year is attributable to an increase in sales of
precision molded lenses and an increase in sales of infrared products.
The gross margin as a percentage of revenue in the second
quarter of fiscal 2015 was 38%, compared to 43% in the second quarter of
fiscal 2014. Total manufacturing costs of $2.1 million increased by
approximately $415,000 in the second quarter of fiscal 2015 compared to
the same period of the prior fiscal year given the higher revenue levels.
We also incurred additional costs due to higher wages associated with the
overlapping manufacturing workforces during the transition of production
between the Company’s two facilities in China and severance for
terminated Shanghai staff as production was moved to the Zhenjiang
facility.
During the second quarter of fiscal 2015, total costs and
expenses increased by approximately $249,000 compared to the same period
of the prior year. The increase was due to the addition of approximately
$277,000 in professional services fees in support of strategic growth
initiatives, $23,000 of severance to terminated employees, offset by
ongoing management of expenses.
Total operating loss for the second quarter of fiscal 2015 was
approximately $(405,000), compared to an operating loss of approximately
$(186,000) for the same period in fiscal 2014.
In the second quarter
of fiscal 2015, the Company recognized non-cash income of approximately
$535,000 related to the change in the fair value of warrant liability
issued in connection with the June 2012 private placement. In the second
quarter of fiscal 2014, the Company recognized non-cash expense of
approximately $35,000 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 income for the second quarter of fiscal 2015 was
approximately $141,000 (including the $535,000 non-cash income for the
change in value of the warrant liability) or $0.01 per basic and diluted
common share, compared with a net loss of $(202,000) (including the
$35,000 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 14,305,985 in the second quarter of fiscal 2015 compared to
13,863,865 in the second quarter of fiscal 2014 primarily due to the
issuance of shares of common stock for the employee stock purchase plan.
Adjusted earnings
before interest, taxes, depreciation, amortization and change in fair value
of warrant liability (“Adjusted EBITDA”) for the second quarter of fiscal
2015 was approximately ($240,000) compared to approximately $39,000 in
the second quarter of fiscal 2014.
The difference in Adjusted EBITDA between periods was principally
caused by a higher net loss recognized in the six months ended December
31, 2014, as well as lower depreciation, offset by higher income related
to the change in the fair value of our warrant liability with respect to
the June 2012 Warrants during the six months ended December 31, 2014.
Financial Results for
Six Months Ended December 31, 2014
Revenue for the first half of fiscal 2015 totaled
approximately $6.0 million, an increase of $239,000, or 4%, as compared
to the same period of the prior fiscal year. The increase from the first half of
the prior fiscal year was attributable to an increase in sales of
precision molded lenses and a 158% increase in sales of infrared
products.
The gross margin percentage in the first half of fiscal 2015
was 38%, compared to 45% in the first half of fiscal 2014. Total
manufacturing costs of $3.7 million increased by approximately $550,000
in the first half of fiscal 2015 compared to the same period of the prior
fiscal year given the higher revenue levels. We also incurred additional
costs due to higher wages
associated with the ramp-up in infrared production, the overlapping
manufacturing workforces during the transition of production between the
two China facilities, severance for terminated Shanghai staff as
production was moved to the Zhenjiang facility.
During the first half of fiscal 2015, total costs and
expenses increased by approximately $356,000 compared to the same period
of the prior year. The increase was primarily due to an increase of
approximately $268,000 in professional services fees in support of
strategic growth initiatives and $173,000 in wages, partially offset by
$88,000 in lower stock compensation expense. Total operating loss for the first half
of fiscal 2015 was approximately $(915,000) compared to an operating loss
of approximately $(248,000) for the same period in fiscal 2014.
In the first half of
fiscal 2015, the Company recognized non-cash income of approximately
$481,000 related to the change in the fair value of warrant liability
issued in connection with the June 2012 private placement. In the first
half of fiscal 2014, the Company recognized non-cash expense of
approximately $54,000 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 half of fiscal 2015 was approximately
$(438,000) (including the $481,000 non-cash income for the change in
value of the warrant liability) or $(0.03) per basic and diluted common
share, compared with a net loss of $(282,000) (including the $54,000
non-cash expense for the change in value of the warrant liability) or
$(0.02) per basic and diluted common share for the same period in fiscal
2014. Weighted-average basic shares outstanding increased to 14,297,807
in the first half of fiscal 2015 compared to 13,715,789 in the first half
2014 primarily due to the issuance of shares of common stock for the
employee stock purchase plan.
Cash and cash equivalents totaled approximately $795,000 as
of December 31, 2014. Subsequent to the end of the second quarter of
fiscal 2015, we received gross proceeds of approximately $1.3 million
from the sale of common stock to Pudong Science & Technology
Investment (Cayman) Co. Ltd. The
current ratio as of December 31, 2014 was 2.3 to 1 compared to 3.0 to 1
as of June 30, 2014. Total stockholders’ equity as of December 31, 2014
totaled approximately $7.0 million compared to $7.3 million as of June
30, 2014.
As of December 31, 2014, the Company’s 12-month backlog was
$5.6 million, compared to $4.3 million as of June 30, 2014, an increase
of approximately 31%, and $5.3 million at September 30, 2014, an increase
of approximately 5%.
Investor Conference
Call and Webcast Details:
LightPath will host an
audio conference call and webcast on Thursday, February 5, at 4:30 p.m.
ET to discuss the Company’s financial and operational performance for the
second quarter of fiscal 2015.
Date:
Thursday, February 5,
2015
Time:
4:30 p.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 Technologies,
Inc. (NASDAQ: LPTH) provides optics and photonics solutions for the
industrial, defense, telecommunications, testing and measurement, and
medical industries. LightPath designs, manufactures, and distributes
optical and infrared components including molded glass aspheric lenses
and assemblies, infrared lenses and thermal imaging assemblies, fused
fiber collimators, and gradient index GRADIUM® lenses. LightPath also
offers custom optical assemblies, including full engineering design
support. 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 income or
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."
We calculate Adjusted EBITDA by adjusting net income or loss
to exclude net interest expense, income tax expense or benefit,
depreciation and amortization, and the change in fair value of warrant
liability, thus the term “Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization” and the acronym “Adjusted 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, CEO
LightPath Technologies, Inc.
407-382-4003
Dorothy Cipolla, CFO
LightPath Technologies, Inc.
407-382-4003 x 305
Jordan Darrow
Darrow Associates, Inc.
631-637-1866
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