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Lightpath Technologies Reports 61% Revenue Increase With Fiscal 2016 First Quarter Financial Results

The following excerpt is from the company's SEC filing.

Continued Momentum for Global Sales of Specialty and Infrared Products

ORLANDO, FL -- (Marketwired - November 05, 2015) - LightPath Technologies, Inc. (NASDAQ: LPTH) ("LightPath," the "Company" or "we"), a leading vertically integrated global manufacturer, distributor and integrator of proprietary optical and infrared components and high-level assemblies, today announced financial results for the fiscal 2016 first quarter ended September 30, 2015.

First Quarter Fiscal 2016 Highlights:

Revenue for the first quarter of fiscal 2016 increased 61% to approximately $4.2 million compared to approxi mately $2.6 million for the first quarter of fiscal 2015.

Revenues from sales of infrared products increased by more than 146% in the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015.

Gross margin was 54% in the first quarter of fiscal 2016 compared to 38% in the first quarter of fiscal 2015.

Operating income for the first quarter of fiscal 2016 was approximately $663,000, compared to an operating loss of approximately ($511,000) for the first quarter of fiscal 2015.

EBITDA was approximately $1.04 million for the first quarter of fiscal 2016 compared to a negative EBITDA of approximately ($434,000) in the first quarter of the previous fiscal year. Adjusted EBITDA, which excludes the change in the fair value of our warrant liability, was approximately $669,000 for the first quarter of fiscal 2016 compared to a negative EBITDA of approximately ($380,000) for the first quarter of fiscal 2015.

12-month backlog decreased to approximately $5.1 million at September 30, 2015, compared to approximately $6.5 million as of June 30, 2015.

A reconciliation of GAAP to non-GAAP results is provided in this press release in the accompanying tables. An explanation of these measures is also included below under the heading "Use of Non-GAAP Financial Measures."

Jim Gaynor, President and Chief Executive Officer of LightPath, commented, "I am pleased to report excellent results for the first quarter of fiscal 2016, which is the fourth consecutive quarter of strong financial performance and improvement in our financial fundamentals. We continued to see impressive revenue growth of our infrared products and specialty products. After a prolonged period of a continuing sluggish economy in China, we began to see the demand for our traditional precision molded optics (PMO) increase during the first quarter of fiscal 2016. Our high volume precision molded optics, or HVPMO product group, benefited from the recovery in the industrial tools market in China and the strength of the telecommunications sector, which is continuing to have strong design, quote, and order activity. Our low volume precision molded lenses, or LVPMO product group, also showed strength with applications in medical instruments and fiber delivery systems."

"The decline in our backlog resulted from a softer order intake during the first quarter of fiscal 2016 due to a delay in certain requirement changes for some larger projects we quoted within our specialty products group. However, quote activity remained strong during the first quarter of fiscal 2016. During the quarter, we provided product quotes totaling approximately $3.4 million that remain open and that we expect to close by the end of December 2015. As of November 4, 2015, our 12-month backlog was approximately $6.5 million, which is a result of customers placing orders for several of these larger projects and an indication of our belief that strong quote activity will result in our back-log growing during the remainder of fiscal 2016."

"Along with strong revenue, quoting and booking trends, gross margins improved as a result of solid operational performance in our Zhenjiang factory, a favorable product mix, and improved overhead leverage as the infrared production volume continues to grow. We have diversified our business by developing new applications for our products in markets, such as digital imaging and laser tools, which are bolstered by our more traditional applications in telecommunications, digital projectors, industrial equipment, weapon sights, and medical instruments. We expect to show increases in revenue in our HVPMO, LVPMO and infrared product groups during fiscal 2016 as a result of this diversification."

Financial Results for Three Months Ended September 30, 2015

Revenue for the first quarter of fiscal 2016 totaled approximately $4.2 million, which was an increase of approximately $1.6 million, or 61%, as compared to the same period of the prior fiscal year. The increase from the first quarter of the prior fiscal year is attributable to a 103% increase in sales of specialty products, a 146% increase in sales of infrared products, and a 39% increase in sales of precision molded optics.

Our gross margin as a percentage of revenue in the first quarter of fiscal 2016 was 54%, compared to 38% in the first quarter of fiscal 2015. Gross margin improvement is attributed to a favorable product mix resulting in higher prices, leverage of the increase in production volume against manufacturing overhead costs, and the full benefit of our consolidated manufacturing operations in our wholly-owned subsidiary's Zhenjiang, China facility. Total cost of sales of approximately $1.9 million increased by approximately $313,000 in the first quarter of fiscal 2016 compared to the same period of the prior fiscal year. The increase was primarily due to direct costs attributable to the increased revenues.

During the first quarter of fiscal 2016, total costs and expenses increased by approximately $101,000 compared to the same period of the prior fiscal year. The increase was due to an approximately $180,000 increase in wages to accrue for fiscal 2016 management bonuses given the strong financial performance during the first quarter of fiscal 2016, offset by an approximately $14,000 decrease in legal expenses, an approximately $25,000 decrease in costs for materials and an approximately $31,000 decrease in travel expenses. Total operating income for the first quarter of fiscal 2016 was approximately $663,000, compared to an operating loss of approximately ($511,000) for the same period in fiscal 2015.

In the first quarter of fiscal 2016, we recognized non-cash income of approximately $368,000 related to the change in the fair value of warrants issued in connection with our June 2012 private placement. The applicable accounting rules for the warrant liability requires the recognition of either non-cash expense or non-cash income, which has a significant correlation to the change in the market value of our common stock for the period being reported. The market value per share of our common stock decreased by 15% during the first quarter of fiscal 2016, which aided in the recognition of non-cash income as compared to non-cash expense recorded for the same period in fiscal 2015 when the market value per share of our common stock increased by 8%. In the first quarter of fiscal 2015, we recognized a 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 will expire in December 2017. The fair value will be re-measured each reporting period until the warrants are exercised or expire.

Net income for the first quarter of fiscal 2016 was approximately $843,000, which includes non-cash income of approximately $368,000 for the change in the fair value of the warrant liability, or $0.06 per basic and diluted common share, compared with net loss of approximately ($579,000), which includes non-cash expense of approximately $54,000 for the change in the fair value of the warrant liability, or ($0.04) per basic and diluted common share, for the same period in fiscal 2015. The impact of foreign exchange losses in the fiscal first quarter of 2016 due to the recent de-valuing of the Chinese yuan, was an expense of approximately $176,000, which had a ($0.01) impact on basic and diluted earnings per share. There was no...


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