Alliance Fiber Optic Products, Inc. (Nasdaq:AFOP), an innovative
supplier of fiber optic components, subsystems and integrated
modules for the optical network equipment market, today reported
its financial results for the fourth quarter and year ended
December 31, 2015.
Revenues for the fourth quarter of 2015 totaled
$16,421,000, a 9% decrease from revenues of $18,060,000 reported in
the previous quarter and a 13% decrease from revenues of
$18,809,000 reported in the fourth quarter of 2014. The Company
recorded net income for the fourth quarter of 2015 of $787,000, or
$0.05 per share, compared to $3,653,000, or $0.20 per share for the
previous quarter, and compared to net income for the fourth quarter
of 2014 of $1,409,000, or $0.08 per share.
Revenues for the year ended December 31, 2015
were $81,189,000, a 6% decrease over revenues of $85,987,000
reported in the previous year. Operating income for the year
ended December 31, 2015 was $19,194,000, compared with $21,603,000
for the previous year. The Company recorded a net profit for the
year ended December 31, 2015 of $13,038,000, or $0.74 per basic
share. This compares with a net profit of $14,508,000, or
$0.78 per basic share, for the year ended December 31,
2014.
“Fiscal year 2015 represented a year of
continued profitability and investment for AFOP,” commented Peter
Chang, President and Chief Executive Officer. “With the
softer second half of 2015, overall annual revenues were off 6%
from 2014’s record performance. With our operational efficiency, we
achieved annual and quarterly gross margins above the average of
our peers throughout the year, which resulted in improved annual
Non-GAAP based gross margins, from 40% in 2014 to 41% in 2015. In
addition, AFOP increased shareholder value during the year through
a stock buyback program to reduce the number of outstanding shares
by over 2.5 million, while still maintaining a strong balance
sheet.”
“While we are pleased with the continued
profitable financial performance for 2015, we are encouraged with
the business prospects in this coming year with the progress we
have made with customers, new products, and the continued strong
demand in the global fiber optics markets. In the first quarter of
2016, we expect revenues to be in the range of $17M to $19M.
Earnings per share in the first quarter of 2016 will improve with
fewer outstanding shares from the stock buyback program in 2015 and
no foreign subsidiary annual tax adjustment. In addition, we are
encouraged by the prospects of continuous sequential quarterly
growth, which would result in a year of record revenue and profits
in the full year 2016,” concluded Mr. Chang.
Conference Call Management will
host a conference call at 1:30 p.m. PT on February 18, 2016 to
discuss AFOP’s Fourth Quarter and Fiscal Year 2015 financial
results as well as the outlook for the First Quarter of 2016.
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 22256438. AFOP will also provide a
live webcast of its Fourth Quarter and Fiscal Year 2015 Earnings
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 AFOPFounded 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, metropolitan and last mile access
segments of the communications network. AFOP offers a broad product
line of passive optical components including interconnect systems,
couplers and splitters, thin film CWDM and DWDM components and
modules, optical attenuators, and micro-optics devices. 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, profits, business
prospects and the time periods thereof, our beliefs regarding
demand in the global market, growth in the fiber optics industry,
and our expectation regarding future demand for our products 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 rate of conversion from
copper to fiber technology, 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, 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 quarterly report on Form 10-Q for
the quarter ended September 30, 2015. 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. |
Consolidated Balance Sheets |
(in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
Dec. 31, |
|
Dec. 31, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and short-term
investments |
$ |
23,988 |
|
|
$ |
54,580 |
|
|
|
Accounts receivable,
net |
|
12,547 |
|
|
|
10,806 |
|
|
|
Inventories, net |
|
10,919 |
|
|
|
9,305 |
|
|
|
Deferred tax
assets |
|
3,848 |
|
|
|
3,690 |
|
|
|
Other current
assets |
|
2,121 |
|
|
|
2,077 |
|
|
|
Total current assets |
|
53,423 |
|
|
|
80,458 |
|
|
|
|
|
|
|
|
Long-term
investments |
|
10,821 |
|
|
|
10,635 |
|
|
Property
and equipment, net |
|
16,183 |
|
|
|
13,868 |
|
|
Other
assets |
|
206 |
|
|
|
212 |
|
|
|
Total assets |
$ |
80,633 |
|
|
$ |
105,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
$ |
6,059 |
|
|
$ |
9,236 |
|
|
|
Accrued expenses and
other current liabilities |
|
9,510 |
|
|
|
8,699 |
|
|
|
Total current liabilities |
|
15,569 |
|
|
|
17,935 |
|
|
|
|
|
|
|
|
Long-term
liabilities |
|
2,194 |
|
|
|
978 |
|
|
|
Total liabilities |
|
17,763 |
|
|
|
18,913 |
|
|
|
|
|
|
|
|
Stockholders' equity |
|
62,870 |
|
|
|
86,260 |
|
|
|
Total liabilities and stockholders'
equity |
$ |
80,633 |
|
|
$ |
105,173 |
|
|
ALLIANCE FIBER OPTIC PRODUCTS,
INC. |
Consolidated Statements of
Operations |
(In thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
Dec. 31, |
|
Sep. 30, |
|
Dec. 31, |
|
Dec. 31, |
|
Dec. 31, |
|
|
|
2015 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
16,421 |
|
|
$ |
18,060 |
|
|
$ |
18,809 |
|
|
$ |
81,189 |
|
|
$ |
85,987 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues |
|
9,770 |
|
|
|
10,963 |
|
|
|
11,339 |
|
|
|
48,154 |
|
|
|
51,770 |
|
|
Gross profit |
|
6,651 |
|
|
|
7,097 |
|
|
|
7,470 |
|
|
|
33,035 |
|
|
|
34,217 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
1,090 |
|
|
|
1,009 |
|
|
|
1,096 |
|
|
|
4,411 |
|
|
|
4,340 |
|
|
Selling, marketing and
administrative |
|
2,259 |
|
|
|
2,373 |
|
|
|
1,954 |
|
|
|
9,430 |
|
|
|
8,274 |
|
|
Total operating expenses |
|
3,349 |
|
|
|
3,382 |
|
|
|
3,050 |
|
|
|
13,841 |
|
|
|
12,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
3,302 |
|
|
|
3,715 |
|
|
|
4,420 |
|
|
|
19,194 |
|
|
|
21,603 |
|
Interest
and other income, net |
|
87 |
|
|
|
148 |
|
|
|
209 |
|
|
|
623 |
|
|
|
769 |
|
Net income
before tax |
$ |
3,389 |
|
|
$ |
3,863 |
|
|
$ |
4,629 |
|
|
$ |
19,817 |
|
|
$ |
22,372 |
|
Provision
for income taxes |
|
(2,602 |
) |
|
|
(210 |
) |
|
|
(3,220 |
) |
|
|
(6,779 |
) |
|
|
(7,864 |
) |
Net
income |
$ |
787 |
|
|
$ |
3,653 |
|
|
$ |
1,409 |
|
|
$ |
13,038 |
|
|
$ |
14,508 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
per share: |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.05 |
|
|
$ |
0.20 |
|
|
$ |
0.08 |
|
|
$ |
0.74 |
|
|
$ |
0.78 |
|
|
Diluted |
$ |
0.05 |
|
|
$ |
0.20 |
|
|
$ |
0.08 |
|
|
$ |
0.73 |
|
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
|
|
Shares used
in per share calculation: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
17,055 |
|
|
|
17,850 |
|
|
|
18,366 |
|
|
|
17,648 |
|
|
|
18,488 |
|
|
Diluted |
|
17,315 |
|
|
|
18,227 |
|
|
|
18,727 |
|
|
|
17,945 |
|
|
|
18,935 |
|
|
|
|
|
|
|
|
|
|
|
|
Included in
costs and expenses above: |
|
|
|
|
|
|
|
|
|
Stock based
compensation charges |
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
$ |
118 |
|
|
$ |
137 |
|
|
$ |
113 |
|
|
$ |
513 |
|
|
$ |
492 |
|
|
Research and
development |
|
41 |
|
|
|
51 |
|
|
|
44 |
|
|
|
196 |
|
|
|
234 |
|
|
Selling, marketing and
administrative |
|
657 |
|
|
|
666 |
|
|
|
321 |
|
|
|
2,227 |
|
|
|
1,435 |
|
|
Total |
$ |
816 |
|
|
$ |
854 |
|
|
$ |
478 |
|
|
$ |
2,936 |
|
|
$ |
2,161 |
|
ALLIANCE FIBER OPTIC PRODUCTS,
INC. |
|
Reconciliations from GAAP to
Non-GAAP |
|
(In thousands, except per share amounts) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
Dec. 31, |
|
Sep. 30, |
|
Dec. 31, |
|
Dec. 31, |
|
Dec. 31, |
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
|
|
2014 |
|
|
|
Gross Profit
Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit |
$ |
|
6,651 |
|
|
|
$ |
|
7,097 |
|
|
|
$ |
|
7,470 |
|
|
|
$ |
|
33,035 |
|
|
|
$ |
|
34,217 |
|
|
|
Stock-based
compensation expense |
|
|
118 |
|
|
|
|
|
137 |
|
|
|
|
|
113 |
|
|
|
|
|
513 |
|
|
|
|
|
492 |
|
|
|
Adjusted (non-GAAP)
gross profit |
$ |
|
6,769 |
|
|
|
$ |
|
7,234 |
|
|
|
$ |
|
7,583 |
|
|
|
$ |
|
33,548 |
|
|
|
$ |
|
34,709 |
|
|
|
Adjusted (non-GAAP)
gross margin |
|
|
41.2 |
|
% |
|
|
|
40.1 |
|
% |
|
|
|
40.3 |
|
% |
|
|
|
41.3 |
|
% |
|
|
|
40.4 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expense Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses |
$ |
|
3,349 |
|
|
|
$ |
|
3,382 |
|
|
|
$ |
|
3,050 |
|
|
|
$ |
|
13,841 |
|
|
|
$ |
|
12,614 |
|
|
|
Stock-based
compensation expense |
|
|
698 |
|
|
|
|
|
717 |
|
|
|
|
|
365 |
|
|
|
|
|
2,423 |
|
|
|
|
|
1,669 |
|
|
|
Adjusted (non-GAAP)
operating expenses |
$ |
|
2,651 |
|
|
|
$ |
|
2,665 |
|
|
|
$ |
|
2,685 |
|
|
|
$ |
|
11,418 |
|
|
|
$ |
|
10,945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income from
operations |
$ |
|
3,302 |
|
|
|
$ |
|
3,715 |
|
|
|
$ |
|
4,420 |
|
|
|
$ |
|
19,194 |
|
|
|
$ |
|
21,603 |
|
|
|
Adjustments related to
gross profit |
|
|
118 |
|
|
|
|
|
137 |
|
|
|
|
|
113 |
|
|
|
|
|
513 |
|
|
|
|
|
492 |
|
|
|
Adjustments related to
operating expense |
|
|
698 |
|
|
|
|
|
717 |
|
|
|
|
|
365 |
|
|
|
|
|
2,423 |
|
|
|
|
|
1,669 |
|
|
|
Adjusted (non-GAAP)
income from operations |
$ |
|
4,118 |
|
|
|
$ |
|
4,569 |
|
|
|
$ |
|
4,898 |
|
|
|
$ |
|
22,130 |
|
|
|
$ |
|
23,764 |
|
|
|
Adjusted (non-GAAP)
operating margin |
|
|
25.1 |
|
% |
|
|
|
25.3 |
|
% |
|
|
|
26.0 |
|
% |
|
|
|
27.3 |
|
% |
|
|
|
27.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income |
$ |
|
787 |
|
|
|
$ |
|
3,653 |
|
|
|
$ |
|
1,409 |
|
|
|
$ |
|
13,038 |
|
|
|
$ |
|
14,508 |
|
|
|
Adjustments related to
gross profit |
|
|
118 |
|
|
|
|
|
137 |
|
|
|
|
|
113 |
|
|
|
|
|
513 |
|
|
|
|
|
492 |
|
|
|
Adjustments related to
operating expense |
|
|
698 |
|
|
|
|
|
717 |
|
|
|
|
|
365 |
|
|
|
|
|
2,423 |
|
|
|
|
|
1,669 |
|
|
|
Income tax provision
adjustments |
|
|
(760 |
) |
|
|
|
|
(310 |
) |
|
|
|
|
2,768 |
|
|
|
|
|
994 |
|
|
|
|
|
5,394 |
|
|
|
Adjusted (non-GAAP) net
income |
$ |
|
843 |
|
|
|
$ |
|
4,197 |
|
|
|
$ |
|
4,655 |
|
|
|
$ |
|
16,968 |
|
|
|
$ |
|
22,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
17,055 |
|
|
|
|
|
17,850 |
|
|
|
|
|
18,366 |
|
|
|
|
|
17,648 |
|
|
|
|
|
18,488 |
|
|
|
Diluted |
|
|
17,315 |
|
|
|
|
|
18,227 |
|
|
|
|
|
18,727 |
|
|
|
|
|
17,945 |
|
|
|
|
|
18,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per
Common Share - Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP as
reported |
$ |
|
0.05 |
|
|
|
$ |
|
0.20 |
|
|
|
$ |
|
0.08 |
|
|
|
$ |
|
0.74 |
|
|
|
$ |
|
0.78 |
|
|
|
Non-GAAP as
adjusted |
$ |
|
0.05 |
|
|
|
$ |
|
0.24 |
|
|
|
$ |
|
0.25 |
|
|
|
$ |
|
0.96 |
|
|
|
$ |
|
1.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per
Common Share - Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP as
reported |
$ |
|
0.05 |
|
|
|
$ |
|
0.20 |
|
|
|
$ |
|
0.08 |
|
|
|
$ |
|
0.73 |
|
|
|
$ |
|
0.77 |
|
|
|
Non-GAAP as
adjusted |
$ |
|
0.05 |
|
|
|
$ |
|
0.23 |
|
|
|
$ |
|
0.25 |
|
|
|
$ |
|
0.95 |
|
|
|
$ |
|
1.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income |
$ |
|
843 |
|
|
|
$ |
|
4,197 |
|
|
|
$ |
|
4,655 |
|
|
|
$ |
|
16,968 |
|
|
|
$ |
|
22,063 |
|
|
|
Depreciation
expense |
|
|
814 |
|
|
|
|
|
685 |
|
|
|
|
|
658 |
|
|
|
|
|
2,837 |
|
|
|
|
|
2,798 |
|
|
|
Interest income |
|
|
(143 |
) |
|
|
|
|
(182 |
) |
|
|
|
|
(197 |
) |
|
|
|
|
(717 |
) |
|
|
|
|
(755 |
) |
|
|
Income tax expense |
|
|
3,362 |
|
|
|
|
|
520 |
|
|
|
|
|
452 |
|
|
|
|
|
5,785 |
|
|
|
|
|
2,470 |
|
|
|
Non-GAAP EBITDA |
$ |
|
4,876 |
|
|
|
$ |
|
5,220 |
|
|
|
$ |
|
5,568 |
|
|
|
$ |
|
24,873 |
|
|
|
$ |
|
26,576 |
|
|
|
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
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 our 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.
Phone: 408-736-6900 x188
Alliance Fiber Optic (NASDAQ:AFOP)
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