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, 2014.
Revenues for the fourth quarter of 2014 totaled $18,809,000, a
4% increase from revenues of $18,096,000 reported in the previous
quarter and a 14% decrease from revenues of $21,804,000 reported in
the fourth quarter of 2013. The Company recorded net income for the
fourth quarter of 2014 of $3,961,000, or $0.22 per share, compared
to $4,303,000, or $0.23 per share for the previous quarter, and
compared to net income for the fourth quarter of 2013 of
$7,055,000, or $0.38 per share. Included in net income for the
fourth quarter of 2014, the third quarter of 2014 and the fourth
quarter of 2013 are an income tax provision adjustment of $216,000,
and income tax benefit adjustments of $168,000 and $2,335,000
respectively, as a result of deferred income tax benefits and
expenses based on utilization of previous net operating loss.
Excluding these adjustments, net income in the fourth quarter of
2014 was $4,177,000, or $0.23 per share, compared to net income in
the previous quarter of $4,135,000, or $0.22 per share and net
income in the fourth quarter of 2013 of $4,720,000, or $0.26 per
share.
Revenues for the year ended December 31, 2014 were $85,987,000,
a 13% increase over revenues of $76,070,000 reported in the
previous year. Operating income for the year ended December
31, 2014 was $21,603,000, compared with $17,101,000 for the
previous year. The Company recorded a net profit for the year ended
December 31, 2014 of $17,061,000, or $0.92 per share. This
compares with a net profit of $18,808,000, or $1.06 per share, for
the year ended December 31, 2013. Included in net income for
the year ended December 31, 2014 and the year ended December 31,
2013 are an income tax provision adjustment of $2,841,000 and an
income tax benefit adjustment of $2,335,000, respectively, as a
result of deferred income tax benefit and expenses based on
utilization of net operating loss. Excluding these
adjustments, net income in the year ended December 31, 2014 was
$19,902,000, or $1.08 per share, compared to net income in the year
ended December 31, 2013 of $16,473,000, or $0.93 per share.
"Fiscal year 2014 represented a year of continued record setting
growth for AFOP," commented Peter Chang, President and Chief
Executive Officer. "Despite the softer second half of 2014,
overall annual revenues grew 13% to a new record level. With our
operational efficiency, we achieved quarterly gross margins above
the average of our peers throughout the year, which resulted in
improved annual gross margins, from 38% in 2013 to 40% in 2014.
More importantly, our operating profits increased to record levels
again in 2014. In addition, AFOP increased shareholder value during
the year with the declaration of an annual dividend and the launch
of a stock buyback program in the last quarter. At the same
time, our cash and short-term and long-term investments grew from
$57.1 million at the year-end of 2013 to $65.2 million at
the year-end of 2014.
"While we are pleased with the continued record financial
performance for 2014, we are encouraged by the business prospects
in this coming year with the progress we have made with customers
and new products, and the continued strong demand in the global
Datacom markets. Based on our current bookings, we expect revenues
in the first quarter of 2015 to be in the range of $20 million to
$22 million. We expect continued sequential quarterly growth in the
beginning of 2015, and we believe the prospects remain good for
another year of record revenue and profits in 2015," concluded Mr.
Chang.
Conference Call
Management will host a conference call at 1:30 p.m. PT on
February, 4, 2015 to discuss AFOP's Fourth Quarter and Fiscal Year
2014 financial results as well as the outlook for the First Quarter
of 2015. 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 61558324. AFOP will also
provide a live webcast of its Fourth Quarter and Fiscal Year 2014
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 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,
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 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, margins,
business prospects and the time periods thereof, our beliefs
regarding demand in data communications markets, 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, 2014. 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
Balance Sheets |
(in thousands) |
(Unaudited) |
|
|
Dec. 31, |
Dec. 31, |
|
2014 |
2013 |
ASSETS |
|
|
Current assets: |
|
|
Cash and short-term investments |
$ 54,580 |
$ 46,679 |
Accounts receivable, net |
10,806 |
11,566 |
Inventories |
9,305 |
10,630 |
Deferred tax asset |
3,195 |
6,036 |
Other current assets |
2,058 |
1,745 |
Total current assets |
79,944 |
76,656 |
|
|
|
Long-term investments |
10,635 |
10,453 |
Property and equipment, net |
13,868 |
13,258 |
Other assets |
212 |
198 |
Total assets |
$ 104,659 |
$ 100,565 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
Current liabilities: |
|
|
Accounts payable |
$ 9,236 |
$ 11,657 |
Accrued expenses and other current
liabilities |
8,721 |
7,134 |
Total current liabilities |
17,957 |
18,791 |
|
|
|
Long-term liabilities |
602 |
600 |
Total liabilities |
18,559 |
19,391 |
|
|
|
Stockholders' equity |
86,100 |
81,174 |
Total liabilities and stockholders'
equity |
$ 104,659 |
$ 100,565 |
|
|
|
|
ALLIANCE FIBER OPTIC
PRODUCTS, INC. |
Condensed 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, |
|
2014 |
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
Revenues |
$ 18,809 |
$ 18,096 |
$ 21,804 |
$ 85,987 |
$ 76,070 |
|
|
|
|
|
|
Cost of revenues |
11,339 |
10,957 |
13,230 |
51,770 |
46,952 |
Gross profit |
7,470 |
7,139 |
8,574 |
34,217 |
29,118 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
Research and development |
1,096 |
1,068 |
1,006 |
4,340 |
3,702 |
Selling, marketing and
administrative |
1,954 |
1,924 |
2,337 |
8,274 |
8,315 |
Total operating expenses |
3,050 |
2,992 |
3,343 |
12,614 |
12,017 |
Income from operations |
4,420 |
4,147 |
5,231 |
21,603 |
17,101 |
Interest and other income, net |
209 |
226 |
239 |
769 |
708 |
Net income before tax |
4,629 |
4,373 |
$ 5,470 |
$ 22,372 |
$ 17,809 |
Benefit (provision) for income
taxes |
(668) |
(70) |
1,585 |
(5,311) |
999 |
Net income |
$ 3,961 |
$ 4,303 |
7,055 |
$ 17,061 |
$ 18,808 |
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
Basic |
$ 0.22 |
$ 0.23 |
$ 0.38 |
$ 0.92 |
$ 1.06 |
Diluted |
$ 0.21 |
$ 0.23 |
$ 0.37 |
$ 0.90 |
$ 1.02 |
|
|
|
|
|
|
Shares used in per share
calculation: |
|
|
|
|
Basic |
18,366 |
18,629 |
18,382 |
18,488 |
17,785 |
Diluted |
18,727 |
19,103 |
19,198 |
18,935 |
18,481 |
|
|
|
|
|
|
Included in costs and expenses
above: |
|
|
|
|
Stock based compensation
charges |
|
|
|
|
Cost of revenue |
$ 113 |
$ 87 |
$ 158 |
$ 492 |
$ 373 |
Research and development |
44 |
44 |
83 |
234 |
232 |
Selling, marketing and
administrative |
321 |
305 |
422 |
1,435 |
1,312 |
Total |
$ 478 |
$ 436 |
$ 663 |
$ 2,161 |
$ 1,917 |
|
|
ALLIANCE FIBER OPTIC
PRODUCTS, INC. |
Reconciliations from
GAAP to Non-GAAP |
(In thousands, except per share
amounts) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months
Ended |
Year Ended |
|
Dec. 31, |
Sep. 30, |
Dec. 31, |
Dec. 31, |
Dec. 31, |
|
2014 |
2014 |
2013 |
2014 |
2013 |
Gross Profit
Reconciliation |
|
|
|
|
|
GAAP gross profit |
$ 7,470 |
$ 7,139 |
$ 8,574 |
$ 34,217 |
$ 29,118 |
Stock-based compensation expense |
113 |
87 |
158 |
492 |
373 |
Adjusted (non-GAAP) gross profit |
$ 7,583 |
$ 7,226 |
$ 8,732 |
$ 34,709 |
$ 29,491 |
Adjusted (non-GAAP) gross margin |
40.3% |
39.9% |
40.0% |
40.4% |
38.8% |
|
|
|
|
|
|
Operating Expense
Reconciliation |
|
|
|
|
|
GAAP operating expenses |
$ 3,050 |
$ 2,992 |
$ 3,343 |
$ 12,614 |
$ 12,017 |
Stock-based compensation expense |
365 |
349 |
505 |
1,669 |
1,544 |
Adjusted (non-GAAP) operating expenses |
$ 2,685 |
$ 2,643 |
$ 2,838 |
$ 10,945 |
$ 10,473 |
|
|
|
|
|
|
Income from Operations
Reconciliation |
|
|
|
|
|
GAAP income from operations |
$ 4,420 |
$ 4,147 |
$ 5,231 |
$ 21,603 |
$ 17,101 |
Adjustments related to gross profit |
113 |
87 |
158 |
492 |
373 |
Adjustments related to operating expense |
365 |
349 |
505 |
1,669 |
1,544 |
Adjusted (non-GAAP) income from
operations |
$ 4,898 |
$ 4,583 |
$ 5,894 |
$ 23,764 |
$ 19,018 |
Adjusted (non-GAAP) operating margin |
26.0% |
25.3% |
27.0% |
27.6% |
25.0% |
|
|
|
|
|
|
Net
Income Reconciliation |
|
|
|
|
|
GAAP net income |
$ 3,961 |
$ 4,303 |
$ 7,055 |
$ 17,061 |
$ 18,808 |
Adjustments related to gross profit |
113 |
87 |
158 |
492 |
373 |
Adjustments related to operating expense |
365 |
349 |
505 |
1,669 |
1,544 |
Income tax (benefit) provision
adjustments |
216 |
(168) |
(2,335) |
2,841 |
(2,335) |
Adjusted (non-GAAP) net income |
$ 4,655 |
$ 4,571 |
$ 5,383 |
$ 22,063 |
$ 18,390 |
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
Basic |
18,366 |
18,629 |
18,382 |
18,488 |
17,785 |
Diluted |
18,727 |
19,103 |
19,198 |
18,935 |
18,481 |
|
|
|
|
|
|
Net Income per Common Share -
Basic: |
|
|
|
|
|
GAAP as reported |
$ 0.22 |
$ 0.23 |
$ 0.38 |
$ 0.92 |
$ 1.06 |
Non-GAAP as adjusted |
$ 0.25 |
$ 0.25 |
$ 0.29 |
$ 1.19 |
$ 1.03 |
|
|
|
|
|
|
Net Income per Common Share -
Diluted: |
|
|
|
|
|
GAAP as reported |
$ 0.21 |
$ 0.23 |
$ 0.37 |
$ 0.90 |
$ 1.02 |
Non-GAAP as adjusted |
$ 0.25 |
$ 0.24 |
$ 0.28 |
$ 1.17 |
$ 1.00 |
|
|
|
|
|
|
Non-GAAP EBITDA |
|
|
|
|
|
Non-GAAP net income |
$ 4,655 |
$ 4,571 |
$ 5,383 |
$ 22,063 |
$ 18,390 |
Depreciation expense |
658 |
748 |
662 |
2,798 |
2,175 |
Interest income |
(197) |
(198) |
(178) |
(755) |
(686) |
Income tax expense |
452 |
238 |
750 |
2,470 |
1,336 |
Non-GAAP EBITDA |
$ 5,568 |
$ 5,359 |
$ 6,617 |
$ 26,576 |
$ 21,215 |
|
|
|
|
|
|
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
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