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Finisar Announces Record First Fiscal Quarter Revenues

SUNNYVALE, CA -- (Marketwired) -- 09/08/16 --

Finisar Corporation (FNSR) (NASDAQ: FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for its first quarter of fiscal year 2017, ended July 31, 2016.

COMMENTARY

"I am pleased to announce that Finisar achieved record revenues for our first quarter of $341.3 million, an increase of $22.5 million, or 7.1% compared to the prior quarter. This growth was primarily driven by strong demand for 100Gb/s transceivers in CFP, CFP2, CFP4, and QSFP28 form factors. In addition, demand for wavelength selective switches was strong. Our gross margins improved significantly due to favorable product mix and leverage of our vertically integrated manufacturing infrastructure over the larger volume. The combination of revenues being at the higher end of our guidance range and better than expected gross margins resulted in earnings per fully diluted share exceeding the upper end of our guidance range," said Jerry Rawls, Finisar's Chief Executive Officer.

 FINANCIAL HIGHLIGHTS - First Quarter Ended July 31, 2016 Summary GAAP Results First Fourth Quarter Quarter Ended Ended July 31, 2016 May 1, 2016 --------------- --------------- (in thousands, except per share amounts) Revenues $341,325 $318,794 Gross margin 31.7% 28.4% Operating expenses $79,854 $76,306 Operating income $28,311 $14,135 Operating margin 8.3% 4.4% Net income $23,949 $13,072 Income per share-basic $0.22 $0.12 Income per share-diluted $0.22 $0.12 Basic shares 108,820 107,612 Diluted shares 110,821 109,386 Summary Non-GAAP Results (a) First Fourth Quarter Quarter Ended Ended July 31, 2016 May 1, 2016 --------------- --------------- (in thousands, except per share amounts) Revenues $341,325 $318,794 Non-GAAP Gross margin 33.1% 30.6% Non-GAAP Operating expenses $69,344 $66,186 Non-GAAP Operating income $43,520 $31,239 Non-GAAP Operating margin 12.8% 9.8% Non-GAAP Net income $41,825 $31,824 Non-GAAP Income per share-basic $0.38 $0.30 Non-GAAP Income per share-diluted $0.38 $0.29 Basic shares 108,820 107,612 Diluted shares 110,821 109,386 

(a) In evaluating the operating performance of Finisar's business, Finisar management utilizes financial measures that exclude certain charges and credits required by U.S. generally accepted accounting principles, or GAAP, that are considered by management to be outside of Finisar's core ongoing operating results. A reconciliation of Finisar's non-GAAP financial measures to the most directly comparable GAAP measures, as well as additional related information, can be found under the heading "Finisar Non-GAAP Financial Measures" below.

Financial Statement Highlights for the First Quarter of Fiscal 2017:

  • Revenues were $341.3 million, an increase of $22.5 million, or 7.1%, from $318.8 million in the preceding quarter.
  • Sales of telecom products increased by $22.0 million, or 29.0%, compared to the preceding quarter. This increase was due to higher sales of wavelength selective switches, coherent receivers, and 100G transceivers, as well as a rebound in demand for other telecom products including amplifiers and 10G transceivers, both tunable and fixed wavelength.
  • Sales of datacom products increased by $0.5 million, or 0.2%, compared to the preceding quarter, primarily driven by growth in demand for 100G transceivers including CFP, CFP2, CFP4, and QSFP28 form factors, partially offset by a decline in sales of transceivers for wireless applications and 40G transceivers. Datacom revenue, excluding transceivers for wireless applications, increased 3.1% over the preceding quarter. Sales of 100G transceivers for datacom applications increased 21.8% over the preceeding quarter, and 115.8% over the first quarter of the prior fiscal year.
  • GAAP gross margin improved to 31.7%, compared to 28.4% in the preceding quarter, primarily due to favorable product mix and the benefit of vertical integration over the larger volume.
  • Non-GAAP gross margin improved to 33.1% compared to 30.6% in the preceding quarter.
  • GAAP operating expenses were $79.9 million compared to $76.3 million in the preceding quarter. The increase was due to higher payroll taxes from the annual vesting of employee restricted stock unit grants, higher legal expenses from two patent trials completed in the quarter, and higher employee compensation levels. GAAP operating expenses as a percentage of revenue decreased to approximately 23.4% of revenue compared to 23.9% in the preceding quarter.
  • Non-GAAP operating expenses increased to $69.3 million compared to $66.2 million in the preceding quarter. Non-GAAP operating expenses as a percentage of revenue decreased to approximately 20.3% of revenue compared to 20.8% in the preceding quarter.
  • GAAP operating margin improved to 8.3% from 4.4% in the preceding quarter.
  • Non-GAAP operating margin improved to 12.8% from 9.8% in the preceding quarter.
  • GAAP earnings per fully diluted share was $0.22 compared to $0.12 in the preceding quarter, primarily due to higher revenues levels and improved gross margins.
  • Non-GAAP earnings per fully diluted share was $0.38 compared to $0.29 in the preceding quarter.
  • Cash, cash equivalents and short term investments increased $31.3 million to $593.8 million at the end of the first quarter, compared to $562.5 million at the end of the preceding quarter.

OUTLOOK

Finisar indicated that for the second quarter of fiscal 2017 it currently expects revenues in the range of $355 to $375 million, non-GAAP gross margin of approximately 34%, non-GAAP operating margin of approximately 14.3% to 15.3%, and non-GAAP earnings per fully diluted share in the range of approximately $0.44 to $0.50.

Finisar has not provided a reconciliation of its second quarter outlook for non-GAAP gross margin, non-GAAP operating margin and non-GAAP earnings per fully diluted share because estimates of all of the reconciling items cannot be provided without unreasonable efforts. It is difficult to reasonably provide a forward-looking estimate of certain reconciling items between such non-GAAP forward-looking measures and the comparable forward-looking GAAP measures. Certain factors that are materially significant to Finisar's ability to estimate these items are out of its control and/or cannot be reasonably predicted, including with respect to restructuring charges, litigation settlements and resolutions and related costs, and the timing of tax related adjustments. Accordingly, a reconciliation of such non-GAAP forward-looking measures to the comparable forward-looking GAAP measures are not available within a reasonable range of predictability.

CONFERENCE CALL

Finisar will discuss its financial results for the first quarter and...


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