Alliance Fiber Optic Products, Inc. (Nasdaq:AFOP), an innovative
supplier of fiber optic components, subsystems and integrated
modules for the fiber optic communication market, today reported
its financial results for the first quarter ended March 31, 2014.
Revenues for the first quarter of 2014 were $24,882,000, a 105%
increase from revenues of $12,153,000 reported in the first quarter
of 2013, and a 14% increase from revenues of $21,804,000 reported
in the fourth quarter of 2013.
Net income for the quarter ended March 31, 2014 rose to
$5,015,000, or $0.27 per share, compared to net income of
$1,850,000, or $0.11 per share, for the first quarter of 2013, and
net income of $7,055,000, or $0.38 per share, for the fourth
quarter of 2013. Included in net income for the fourth quarter of
2013 was a one-time tax benefit of approximately $2.3 million.
Excluding this tax benefit, net income was $4,720,000, or $0.26 per
share, in the fourth quarter of 2013.
Gross margin for the quarter ended March 31, 2014 increased to
40%, compared to 36% in the year ago quarter and 39% in the fourth
quarter of 2013. Operating margin for the quarter ended March 31,
2014 increased to 26%, compared to 14.5% in the year ago quarter
and 24% in the fourth quarter of 2013.
Non-GAAP net income for the quarter ended March 31, 2014 was
$6,391,000, or $0.35 per share, compared to non-GAAP net income of
$2,130,000, or $0.12 per share, for the first quarter of 2013, and
non-GAAP net income of $5,383,000, or $0.29 per share, for the
fourth quarter of 2013.
Non-GAAP gross margin for the quarter ended March 31, 2014 was
41%, compared to 37% in the year ago quarter and 40% in the fourth
quarter of 2013. Non-GAAP operating margin for the quarter ended
March 31, 2014 was 29%, compared to 17% in the year ago quarter and
27% in the fourth quarter of 2013.
Peter Chang, President and Chief Executive Officer, commented,
"Thanks to the support of our customers and the effort by our Asia
operations, we were able to deliver record quarterly revenue, which
exceeded our previous guidance, during a normally slower season
which includes the Chinese New Year holiday. In addition to the
record quarterly revenue, we continued to improve our quarterly
financial performance with record gross margin, operating margin
and profits."
"While data bandwidth demands continue to increase and the next
growth cycle in the fiber optics industry is emerging, we are
encouraged by the prospect of business growth in the coming years,
and with the progress we made serving our customers and extending
our product technology in recent quarters. Based on input from our
customers and current orders, we expect revenues in the coming
quarter to be above $25 million, which will be a new record for
quarterly sales and will represent a 31% increase from the year ago
quarter." concluded Mr. Chang.
Conference Call
Management will host a conference call at 1:30 p.m. PT on April
24, 2014 to discuss AFOP's first quarter 2014 financial results as
well as the outlook for the second quarter of 2014. Please call
877-675-3572 at least ten minutes prior to the call in order for
the operator to connect you. The confirmation number for the call
is 19751761. AFOP will also provide a live webcast of its first
quarter 2014 conference call at AFOP's website: www.afop.com. The
webcast replay will be available on AFOP's website 90 minutes after
the live conference call.
About AFOP
Founded in 1995, Alliance Fiber Optic Products, Inc. designs,
manufactures and markets a broad range of high performance fiber
optic components and integrated modules. AFOP's products are used
by leading and emerging communications equipment manufacturers to
deliver optical networking systems to the long-haul, enterprise,
data center, metropolitan and last mile access segments of the
communications network. AFOP offers a broad product line of passive
optical components including interconnect systems, splitters, thin
film CWDM and DWDM components and modules, and optical attenuators.
AFOP is headquartered in Sunnyvale, California, with manufacturing
and product development capabilities in the United States, Taiwan
and China. AFOP's website is located at http://www.afop.com.
Except for the historical information contained herein, the
matters set forth in this press release, including statements as to
our expectations regarding future revenue levels and the time
periods thereof, our business prospects, demand for our products
and sources of demand, and our expectations for growth in the fiber
optic industry, are forward looking statements within the meaning
of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to
differ materially, including, but not limited to general economic
conditions and trends, trends in demand for bandwidth, the impact
of competitive products and pricing, timely introduction of new
technologies, timely design acceptance by our customers, the
acceptance of new products and technologies by our customers,
customer demand for our products, the timing of customer orders,
loss of key customers or customer orders, our ability to ramp new
products into volume production, the mix of products sold and
product pricing, the costs associated with running our operations,
industry-wide shifts in supply and demand for optical components
and modules, industry overcapacity and demand for bandwidth, the
success of cost control initiatives, our ability to obtain and
maintain operational efficiencies, financial stability in foreign
markets, and other risks detailed from time to time in our SEC
reports, including AFOP's Annual Report on Form 10-K for the year
ended December 31, 2013. These forward-looking statements speak
only as of the date hereof. AFOP disclaims any intention or
obligation to update or revise any forward-looking statements.
ALLIANCE FIBER OPTIC
PRODUCTS, INC. |
Condensed Consolidated
Statements of Operations |
(In thousands, except per share
amounts) |
(Unaudited) |
|
|
Three Months Ended |
|
Mar. 31, |
Dec. 31, |
Mar. 31, |
|
2014 |
2013 |
2013 |
|
|
|
|
Revenues |
$ 24,882 |
$ 21,804 |
$ 12,153 |
|
|
|
|
Cost of revenues |
14,968 |
13,230 |
7,745 |
Gross profit |
9,914 |
8,574 |
4,408 |
|
|
|
|
Operating expenses: |
|
|
|
Research and development |
1,108 |
1,006 |
813 |
Selling, marketing and
administrative |
2,336 |
2,337 |
1,828 |
Total operating expenses |
3,444 |
3,343 |
2,641 |
|
|
|
|
Income from operations |
6,470 |
5,231 |
1,767 |
Interest and other income, net |
147 |
239 |
133 |
Income before benefit (provision) for income
taxes |
$ 6,617 |
$ 5,470 |
$ 1,900 |
Benefit (provision) for income taxes |
(1,602) |
1,585 |
(50) |
Net income |
$ 5,015 |
$ 7,055 |
$ 1,850 |
|
|
|
|
Net income per share |
|
|
|
Basic |
$ 0.27 |
$ 0.38 |
$ 0.11 |
Diluted |
$ 0.26 |
$ 0.37 |
$ 0.10 |
|
|
|
|
Weighted average shares outstanding |
|
|
|
Basic |
18,422 |
18,382 |
17,190 |
Diluted |
19,070 |
19,198 |
17,812 |
|
|
|
|
Included in costs and expenses above: |
|
|
|
Stock-based compensation expense |
|
|
|
Cost of revenue |
$ 176 |
$ 158 |
$ 35 |
Research and development |
83 |
83 |
33 |
Selling, marketing and
administrative |
458 |
422 |
212 |
Total |
$ 717 |
$ 663 |
$ 280 |
|
ALLIANCE FIBER OPTIC
PRODUCTS, INC. |
Condensed Consolidated
Balance Sheets |
(in thousands) |
(Unaudited) |
|
|
Mar. 31, |
Dec. 31, |
|
2014 |
2013 |
ASSETS |
|
|
Current assets: |
|
|
Cash and short-term
investments |
$ 51,350 |
$ 46,679 |
Accounts receivable, net |
13,961 |
11,566 |
Inventories |
10,330 |
10,630 |
Deferred tax asset |
5,378 |
6,036 |
Other current assets |
1,815 |
1,745 |
Total current assets |
82,834 |
76,656 |
|
|
|
Long-term investments |
10,498 |
10,453 |
Property and equipment, net |
13,069 |
13,258 |
Other assets |
178 |
198 |
Total assets |
$ 106,579 |
$ 100,565 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 11,761 |
$ 11,657 |
Accrued expenses and other
current liabilities |
7,649 |
7,134 |
Total current liabilities |
19,410 |
18,791 |
|
|
|
Long-term liabilities |
601 |
600 |
Total liabilities |
20,011 |
19,391 |
|
|
|
Stockholders' equity |
86,568 |
81,174 |
Total liabilities and
stockholders' equity |
$ 106,579 |
$ 100,565 |
|
ALLIANCE FIBER OPTIC
PRODUCTS, INC. |
Reconciliations from
GAAP to Non-GAAP |
(In thousands, except
per share amounts) |
(Unaudited) |
|
|
Three Months
Ended |
|
Mar. 31, |
Dec. 31, |
Mar. 31, |
|
2014 |
2013 |
2013 |
Gross Profit
Reconciliation |
|
|
|
GAAP gross profit |
$ 9,914 |
$ 8,574 |
$4,408 |
Stock-based compensation expense |
176 |
158 |
35 |
Adjusted (non-GAAP) gross profit |
$ 10,090 |
$ 8,732 |
$ 4,443 |
Adjusted (non-GAAP) gross margin |
40.6% |
40.0% |
36.6% |
|
|
|
|
Operating Expense
Reconciliation |
|
|
|
GAAP operating expenses |
$ 3,444 |
$ 3,343 |
$ 2,641 |
Stock-based compensation expense |
541 |
505 |
245 |
Adjusted (non-GAAP) operating expenses |
$ 2,903 |
$ 2,838 |
$ 2,396 |
|
|
|
|
Income from Operations
Reconciliation |
|
|
|
GAAP income from operations |
$ 6,470 |
$ 5,231 |
$ 1,767 |
Adjustments related to gross profit |
176 |
158 |
35 |
Adjustments related to operating expense |
541 |
505 |
245 |
Adjusted (non-GAAP) income from
operations |
$ 7,187 |
$ 5,894 |
$ 2,047 |
Adjusted (non-GAAP) operating margin |
28.9% |
27.0% |
16.8% |
|
|
|
|
Net
Income Reconciliation |
|
|
|
GAAP net income |
$ 5,015 |
$ 7,055 |
$ 1,850 |
Adjustments related to gross profit |
176 |
158 |
35 |
Adjustments related to operating expense |
541 |
505 |
245 |
Income tax provision adjustments |
659 |
(2,335) |
-- |
Adjusted (non-GAAP) net income |
$ 6,391 |
$ 5,383 |
$ 2,130 |
|
|
|
|
Weighted average shares outstanding |
|
|
|
Basic |
18,422 |
18,382 |
17,190 |
Diluted |
19,070 |
19,198 |
17,812 |
|
|
|
|
Net Income per Common Share -
Basic: |
|
|
|
GAAP as
reported |
$ 0.27 |
$ 0.38 |
$ 0.11 |
Non-GAAP as
adjusted |
$ 0.35 |
$ 0.29 |
$ 0.12 |
|
|
|
|
Net Income per Common Share -
Diluted: |
|
|
|
GAAP as
reported |
$ 0.26 |
$ 0.37 |
$ 0.10 |
Non-GAAP as
adjusted |
$ 0.34 |
$ 0.28 |
$ 0.12 |
|
|
|
|
Non-GAAP EBITDA |
|
|
|
Non-GAAP net income |
$ 6,391 |
$ 5,383 |
$ 2,130 |
Depreciation expense |
684 |
662 |
452 |
Interest income |
(178) |
(178) |
(159) |
Income tax expense |
944 |
750 |
50 |
Non-GAAP EBITDA |
$ 7,841 |
$ 6,617 |
$ 2,473 |
Use of Non-GAAP Financial Information
The company provides Non-GAAP gross margin, Non-GAAP net income,
Non-GAAP basic and diluted net income per share and EBITDA, as
supplemental information. In computing these non-GAAP financial
measures, the company excludes certain items included under GAAP,
including stock-based compensation expense and income tax provision
adjustments. In computing EBITDA, the company also excludes
interest income, provision for (benefit from) income taxes and
depreciation expense.
Management uses these Non-GAAP financial measures to evaluate
the operating performance of the business and aid in the
period-to-period comparability. Management also uses the Non-GAAP
financial measures for planning and forecasting and measuring
results against its forecast. Using several measures to evaluate
the business allows the company and investors to assess the
company's relative performance. The Non-GAAP financial measures
provided herein may not provide information that is directly
comparable to that provided by other companies in the company's
industry, as other companies may calculate such financial results
differently. The company's Non-GAAP financial measures are not
measurements of financial performance under GAAP, and should not be
considered as alternatives to the financial measures derived in
accordance with GAAP. The company does not consider these Non-GAAP
financial measures to be a substitute for, or superior to, the
information provided by GAAP financial results. A reconciliation of
the Non-GAAP financial measures to the most directly comparable
GAAP financial measures is provided in the financial schedules
portion of this press release.
CONTACT: Keting Lin, IR Associate
Alliance Fiber Optic Products, Inc.
408-736-6900 x188
Email: klin@afop.com
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