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| 8-K - CURRENT REPORT - LIGHTPATH TECHNOLOGIES INC | lpth_8k.htm |
Exhibit 99.1
For Immediate Release
LightPath Technologies Reports 117% Increase in Operating Income
for Fiscal 2017 Fourth Quarter Financial Results
Revenue Increases 90% While Continuing to Focus on Global Market
Penetration
ORLANDO,
FL – September 14, 2017 – 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 2017 fourth quarter and
twelve months ended June 30, 2017. The results are in line with the
preliminary results issued on August 10, 2017.
Fiscal 2017 Fourth Quarter and Full Year Highlights:
●
Revenue for the
fourth quarter of fiscal 2017 increased 90% to $9.0 million, as
compared to $4.7 million for the fourth quarter of fiscal 2016.
Revenue increased to $28.4 million in fiscal 2017 compared to $17.3
million in fiscal 2016, an increase of 64%.
●
Total costs and
expenses as a percentage of revenue continues to decline, improving
to 36% in the fourth quarter of fiscal 2017, as compared to 41% in
the fourth quarter last year.
●
Operating income
for the fourth quarter of fiscal 2017 was $1.1 million, an increase
of 117% as compared to $522,000 for the fourth quarter of fiscal
2016. Fiscal 2017 operating income was $4.2 million, compared to
$2.0 million in fiscal 2016.
●
The fourth quarter
and year of fiscal 2017 includes a benefit of $5.4 million for an
adjustment to the valuation allowance on our deferred tax assets.
Previously, our net operating losses (“NOLs”) had a
full valuation allowance. Deferred tax impacts from the acquisition
of ISP Optics Corporation (“ISP”) resulted in an
adjustment to the valuation allowance on our deferred tax
assets.
●
Net income for the
fourth quarter of fiscal 2017 was $6.4 million, as compared to
$331,000 for the fourth quarter of fiscal 2016. Net income for
fiscal 2017 was $7.7 million, as compared to $1.4 million in fiscal
2016.
●
Adjusted net
income* for the fourth quarter of fiscal 2017, which excludes the
non-cash income or expense related to the change in fair value of
the Company’s warrant liability, was $6.4 million, as
compared to $359,000 for the fourth quarter of fiscal 2016. For
fiscal 2017, adjusted net income* was $8.2 million, compared to
$1.5 million in the prior fiscal year.
●
EBITDA* for the
fourth quarter of fiscal 2017 was approximately $2.3 million, as
compared to approximately $646,000 in the fourth quarter of fiscal
2016. EBITDA* for fiscal 2017 was approximately $5.9 million,
compared to approximately $2.5 million in fiscal 2016.
●
Adjusted EBITDA*,
which excludes the non-cash income or expense related to the change
in fair value of the Company’s warrant liability, was $2.3
million in the fourth quarter of fiscal 2017, an increase of 243%,
as compared with $673,000 in the fourth quarter of fiscal 2016. For
fiscal 2017, adjusted EBITDA* was approximately $6.3 million,
compared to approximately $2.6 million for fiscal
2016.
●
12-month backlog
was approximately $9.3 million at June 30, 2017, as compared to
$6.6 million at June 30, 2016.
*This
press release includes references to earnings before interest,
taxes, depreciation, and amortization (“EBITDA”),
adjusted EBITDA, adjusted net income, and gross margin, all of
which are non-GAAP financial measures. A “non-GAAP financial
measure” is generally defined as a numerical measure of a
company’s historical or future performance that excludes or
includes amounts, or is subject to adjustments, so as to be
different from the most directly comparable measure calculated and
presented in accordance with GAAP. Our management believes that
certain non-GAAP financial measures, when considered together with
the GAAP financial measures, provide information that is useful to
investors in understanding period-over-period operating results
separate and apart from items that may, or could, have a
disproportionately positive or negative impact on results in any
particular period. A reconciliation of GAAP to non-GAAP results is
provided in this press release in the accompanying tables. A more
complete explanation of these measures is also included below under
the heading “Use of Non-GAAP Financial
Measures.”
Management Comments
Jim
Gaynor, President and Chief Executive Officer of LightPath,
commented, “LightPath completed fiscal 2017 with very strong
fourth quarter financial results. We delivered significant growth
in key performance metrics, including revenue, earnings per share,
adjusted EBITDA, and cash flow.”
“Management’s
imperatives to improve profitability and cash flow through top line
growth and operating leverage resulted in meaningful increases in
adjusted EBITDA margin. This margin, which excludes the non-cash
warrant liability impact, improved to 26% in the fourth quarter of
fiscal 2017, compared to 14% in the fourth quarter of fiscal 2016.
For the year, our adjusted EBITDA margin was 22%, a 51% improvement
over fiscal 2016. At the end of fiscal 2017, our cash balance was
$8.1 million, an increase of 178% from the end of the prior fiscal
year. Our goal is to grow responsibly through the diversification
of our business lines – whether through organic growth or
acquisitions – and effectively manage our costs to drive
long-term value for our stockholders. As we reflect on the past
year, we are encouraged by the outlook for fiscal
2018.”
Mr.
Gaynor continued, “We experienced strong demand for our
industrial tool, telecommunications/data communications and defense
products in the fourth quarter of fiscal 2017. Total bookings were
21% higher in the fourth quarter of fiscal 2017 compared to the
third quarter of fiscal 2017, and 66% higher than the fourth
quarter of last year. Amid this growth, our overall backlog
decreased from the end of the third quarter, as we continued to
ship products against some large annual contracts and improved
manufacturing efficiencies and yields. As these annual contracts
renew, we expect our backlog will increase commensurately, which
will be further bolstered by new orders generated from our
accelerated sales and marketing initiatives.”
“Our
underlying business remains robust for fiscal 2018 despite some
short-term weakness with specific customers in the
telecommunications industry due to inventory builds in China and
the United States. Based on our sales pipeline, the drivers of the
secular growth for telecommunications products, which represented
13% of our consolidated revenues in fiscal 2017, remain intact as
we look out through the end of the fiscal year. We are pursuing an
increasing number of projects from current and new customers
pertaining to data center expansion, Internet-of-Things
applications, emerging world growth, metro core upgrades, and
video/data transmission. We continue to work with OEMs, including
many of our largest customers, on next generation products. In
other areas of our operations, the integration of the ISP business
continues to proceed as planned. With the completion of the second
full quarter following the acquisition of ISP, we are seeing the
benefit of larger scale and improved operating leverage. We have
also increased our product development efforts, both independently
and jointly with our customers, in the areas of sensing technology,
spectrographic instruments and advanced driver assistance systems.
While we will have more to say in the
months ahead on these very interesting initiatives, we are working
in these high growth areas both independently and jointly with our
customers. To this end, during fiscal 2017, we generated
$1.6 million in free cash flow, which is operating cash flow less
cash payments for interest, income taxes, debt payments and capital
expenditures, while also investing in our facilities and equipment
to ensure we are well positioned to take full advantage of these
growth opportunities.”
Financial Results for Three Months Ended June 30, 2017 Compared to
the Three Months Ended June 30, 2016
Revenue
for the fourth quarter of fiscal 2017 was approximately $9.0
million, an increase of approximately $4.3 million, or 90%, as
compared to the same period of the prior fiscal year. The increase from the fourth quarter of the
prior fiscal year is attributable to an approximately $3.5 million
increase, or 544%, in revenues generated by infrared products,
primarily attributable to (i) ISP, (ii) an approximately $550,000
increase, or 40%, in sales of high volume precision molded optics
(“HVPMO”) lenses primarily attributed to the
telecommunications and data communications industry, including next
generation products and industrial tools, and (iii) an
approximately $318,000 increase, or 17%, in sales of low volume
precision molded optics (“LVPMO”) lenses primarily
attributed to applications for position sensors, which increases
were partially offset by an approximately $84,000 decrease, or 12%,
in revenues from specialty products. The decrease in revenues
generated by the specialty products group was primarily due to a
slow-down in orders from one of our defense customers who
experienced reduced demand for its products.
Gross
margin in the fourth quarter of fiscal 2017 was $4.4 million, an
increase of 77% as compared to $2.5 million in the prior year
period. Gross margin as a percentage of revenue was 48% for the
fourth quarter of fiscal 2017, compared to 52% for the fourth
quarter of fiscal 2016. The change in gross margin as a percentage
of revenue is primarily attributable to the inclusion of revenues
generated by ISP, and the associated cost of sales. Total cost of
sales was approximately $4.6 million for the fourth quarter of
fiscal 2017, an increase of approximately $2.4 million as compared
to the same period of the prior fiscal year. This increase in total
cost of sales is entirely due to the increase in volume of sales,
primarily as a result of the acquisition of ISP.
During the fourth quarter of fiscal 2017, total costs and expenses
were approximately $3.2 million, an increase of approximately $1.3
million compared to the same period of the prior fiscal year. The
increase was primarily due to: (i) a $1.2 million increase in
expenses related to the acquisition and integration of ISP,
including the amortization of intangibles, wages, professional
fees, and travel expenses, and (ii) an approximately $88,000
increase in research and development expenses.
In the
fourth quarter of fiscal 2017, the Company recognized non-cash
expense of approximately $10,000 related to the change in the fair
value of warrants issued in connection with the June 2012 private
placement. In the fourth quarter of fiscal 2016, the Company
recognized non-cash expense of approximately $27,000 related to the
change in the fair value of these warrants. 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 the
Company’s Class A common stock for the period being reported
and the assumptions on when the warrants will be exercised. The
likelihood of exercise increases as the expiration date of the
warrant approaches. 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.
Income
tax expense was a benefit of approximately $5.2 million in the
fourth quarter of fiscal 2017, a decrease of $5.2 million compared
to the fourth quarter of fiscal 2016. The Company has NOL carry
forward benefits of $86 million against net income as reported on a
consolidated basis in the United States. The NOL does not apply to
taxable income from foreign subsidiaries. Previously these NOLs
have had a full valuation allowance which is now being adjusted due
to the deferred tax impacts related to deferred tax liabilities
recognized in conjunction with the ISP acquisition. The decrease in
income tax expense in the fourth quarter of fiscal 2017 was
primarily attributable to an adjustment in the valuation allowance
to the Company’s deferred taxes offset by the income taxes
associated with the Company’s Chinese subsidiaries and to a
lesser extent income taxes attributable to ISP’s wholly-owned
subsidiary, ISP Optics Latvia, SIA (“ISP Latvia”), a
limited liability company founded under the Laws of the Republic of
Latvia. The Company extinguished all NOL carryforwards in China
relating to its Chinese operations during fiscal 2016. Accordingly,
the Company now accrues income taxes in China. Chinese subsidiaries
are governed by the Income Tax Law of the People’s Republic
of China, which is applicable to privately run and foreign invested
enterprises, and which generally subjects such enterprises to a
statutory rate of 25% on income reported in the statutory financial
statements after appropriate tax adjustments. ISP Latvian is
governed by the Law of Corporate Income Tax of Latvia, which is
applicable to privately run and foreign invested enterprises, and
which generally subjects such enterprises to a statutory rate of
15% on income reported in the statutory financial statements after
appropriate tax adjustments. Excluding the impact of the change in
the fair value of the warrant liability, the impact of foreign
translation, and the benefit for the adjustment of the valuation
allowance of deferred taxes, all of which are excluded when
computing taxable income, the effective tax rate was
24%.
Net
income for the fourth quarter of fiscal 2017 was $6.4 million, or
$0.27 per basic and $0.24 per diluted common share, which includes
non-cash expense of approximately $10,000, or $0.00 per basic and
diluted common share, related to the change in the fair value of
the warrant liability, compared with net income of approximately
$331,000, or $0.02 per basic and diluted common share, which
includes non-cash income of approximately $27,000, or $0.00 per
basic and diluted common share, related to the change in the fair
value of the warrant liability for the same period in fiscal
2016.
Net
income for the fourth quarter of fiscal 2017 was affected by
increases in the following: (i) the change in the fair value of the
warrant liability, (ii) amortization of intangibles, (iii) selling
general and administrative (“SG&A”) expenses, (iv)
interest expense, (v) income taxes and (vi) new product development
costs as compared to the prior year period. Approximately 66% of
the increase in SG&A expenses during the fourth quarter of
fiscal 2017 was related to the acquisition of ISP.
Adjusted
net income, which is adjusted for the effect of the non-cash change
in the fair value of the warrant liability, increased to
approximately $6.2 million in the fourth quarter of fiscal 2017, as
compared to $359,000 in the same period of fiscal 2016. A benefit
of $5.4 million in income taxes was due to a decrease in the
valuation allowance recorded against our deferred tax assets,
driven by the deferred tax liabilities recognized in conjunction
with the acquisition of ISP.
The
Company had foreign currency exchange income in the fourth quarter
of fiscal 2017 due to changes in the value of the Chinese
Yuan and Euro in the
amount of approximately $333,000, which had a $0.01 impact on basic
and diluted earnings per share, compared to foreign currency
exchange expense of $149,000, which had a $0.01 impact on basic and
diluted earnings per share, in the same period of the prior fiscal
year.
Weighted-average
basic and diluted common shares outstanding increased to 24,156,139
and 26,222,382, respectively, in the fourth quarter of fiscal 2017
from 15,590,945 and 17,097,076, respectively, in the fourth quarter
of fiscal 2016. The increase was primarily due to 8 million shares
of Class A common stock issued in connection with the acquisition
of ISP, shares of Class A common stock issued under the 2014
Employee Stock Purchase Plan, and shares of Class A common stock
issued as a result of the exercises of stock options and
warrants.
EBITDA
for the fourth quarter of fiscal 2017 was approximately $2.3
million compared to approximately $646,000 in the fourth quarter of
fiscal 2016. The difference in EBITDA between periods was
principally caused by increased revenues and operating income,
partially offset by increased SG&A expenses, of which
approximately $208,000 were associated with the acquisition of ISP
in the prior year period. Adjusted EBITDA, which eliminates the
non-cash income or expense related to the change in fair value of
the June 2012 warrant liability, was approximately $2.3 million in
the fourth quarter of fiscal 2017, an increase of 243%, as compared
with approximately $673,000 for the same period of the prior fiscal
year.
Financial Results for Year Ended June 30, 2017 Compared to the Year
Ended June 30, 2016
Revenue
for fiscal 2017 was approximately $28.4 million, an increase of
approximately $11.1 million, or 64%, as compared to the same period
of the prior fiscal year. The
increase from the prior fiscal year is attributable to an
approximately $7.6 million increase, or 437%, in revenues generated
primarily by sales of ISP’s infrared lenses, an approximately
$3.7 million increase, or 93%, in revenues generated by sales of
HVPMO lenses, and an approximately $1.2 million increase, or 17%,
in revenues generated by sales of LVPMO lenses, partially offset by
an approximately $1.3 million decrease, or 35%, in revenues from
specialty products and an approximately $162,000 decrease or 29%
decrease in revenues from NRE projects. The decrease in revenues
generated by the specialty products group was due to the absence of
approximately $1.0 million of revenues generated in fiscal 2016 due
to completion of the project for custom fiber collimator
assemblies. This specific product technology was transferred to the
customer pursuant to a license agreement entered into in fiscal
2015.
Gross
margin as a percentage of revenue in fiscal 2017 was 52%, compared
to 54% in fiscal 2016. Gross profit in fiscal 2017 was $14.7
million, compared to $9.3 million in the prior year period, an
increase of 58%. Total cost of sales was approximately $13.6
million for fiscal 2017, an increase of approximately $5.7 million
compared to the same period of the prior fiscal year. The 71%
increase in cost of sales was entirely due to the increased volume
largely due to the acquisition of ISP.
During fiscal 2017, total costs and expenses were approximately
$10.6 million, an increase of approximately $3.3 million compared
to the same period of the prior fiscal year. The
increase was primarily due to: (i) a $2.9 million increase in
expenses related to the acquisition and integration of ISP,
including the amortization of intangibles, wages, professional
fees, and travel expenses, (ii) $104,000 increase in expenses for
trade shows, and (iii) a $253,000 increase for other
expenses.
In
fiscal 2017, the Company recognized non-cash expense of
approximately $468,000 related to the change in the fair value of
warrants issued in connection with the June 2012 private placement.
In fiscal 2016, the Company recognized non-cash expense of
approximately $52,000 related to the change in the fair value of
these warrants. 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 Class A common stock for the period
being reported and the assumptions on when the warrants will be
exercised. The likelihood of exercise increases as the expiration
date of the warrant approaches. 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.
Income
tax benefit was approximately $4.4 million in fiscal 2017, a
decrease of $4.6 million from fiscal 2016. Although the Company has
NOL carry forward benefits of $86 million against net income as
reported on a consolidated basis in the United States, the NOL does
not apply to taxable income from foreign subsidiaries. Previously
these NOLs have had a full valuation allowance which is now being
adjusted due to the deferred tax impacts related to deferred tax
liabilities recognized in conjunction with the ISP acquisition. The
decrease in income tax expense in fiscal 2017 was primarily
attributable to a benefit for the adjustment to the valuation
allowance of our deferred tax assets offset by income taxes
associated with the Company’s Chinese subsidiaries and to a
lesser extent income taxes attributable to ISP Latvia. The Company
extinguished all NOL carryforwards in China relating to its Chinese
operations during fiscal 2016. Accordingly, the Company now accrues
income taxes in China. Chinese subsidiaries are governed by the
Income Tax Law of the People’s Republic of China, which is
applicable to privately run and foreign invested enterprises, and
which generally subjects such enterprises to a statutory rate of
25% on income reported in the statutory financial statements after
appropriate tax adjustments. ISP Latvian is governed by the Law of
Corporate Income Tax of Latvia, which is applicable to privately
run and foreign invested enterprises, and which generally subjects
such enterprises to a statutory rate of 15% on income reported in
the statutory financial statements after appropriate tax
adjustments. Excluding the impact of the change in the fair value
of the warrant liability, the impact of foreign translation, prior
period adjustments and the benefit for the adjustment of the
valuation allowance of our deferred tax assets, which are all
excluded when computing taxable income, the effective tax rate was
30%.
Net
income for fiscal 2017 was $7.7 million, or $0.39 per basic and
$0.36 per diluted common share, which includes non-cash expense of
approximately $468,000, or $0.02 per basic and diluted common
share, for the change in the fair value of the warrant liability,
compared with net income of approximately $1.4 million, or $0.09
per basic and $0.08 diluted common share, which includes non-cash
expense of approximately $52,000, or $0.00 per basic and diluted
common share, for the change in the fair value of the warrant
liability for the same period in fiscal 2016.
Net
income was affected by the increase in operating expenses in fiscal
2017 as compared to the prior year period, including higher
SG&A expenses, new product development costs, and an
approximately $445,000 increase in expenses related to the
acquisition of ISP.
Adjusted
net income, which is adjusted for the effect of the non-cash change
in the fair value of the warrant liability, was approximately $8.2
million in fiscal 2017, as compared to $1.5 million in the same
period of fiscal 2016.
The
Company had foreign currency exchange expense in fiscal 2017 due to
changes in the value of the Chinese Yuan and Euro in the amount of
approximately $78,000, or$0.00 impact on basic and diluted earnings
per share. This compares to foreign currency exchange income of
$370,000, which had a $0.02 impact on earnings per share in the
prior fiscal year.
Weighted-average
basic and diluted common shares outstanding increased to 20,001,868
and 21,666,392, respectively, in fiscal 2017 from 15,401,893 and
16,875,383, respectively, in fiscal 2016. The increase was
primarily due to 8 million shares of Class A common stock issued in
connection with the acquisition of ISP, shares of Class A common
stock issued under the 2014 Employee Stock Purchase Plan and shares
of Class A common stock issued as a result of exercises of stock
options and warrants.
EBITDA
for fiscal 2017 was approximately $5.9 million, compared to
approximately $2.5 million in fiscal 2016. The difference in EBITDA
between periods was principally caused by increased revenues and
operating income, partially offset by the increased SG&A costs
of which approximately $445,000 were associated with the
acquisition of ISP, and changes relating to non-cash income in the
fair value of the June 2012 warrant liability. Adjusted EBITDA,
which eliminates the non-cash income or expense related to the
change in fair value of the June 2012 warrant liability, was
approximately $6.3 million in fiscal 2017 as compared with
approximately $2.6 million for the same period of the prior fiscal
year.
Cash
and cash equivalents totaled approximately $8.1 million as of June
30, 2017, a 178% increase from June 30, 2016. Cash flow provided by
operations was approximately $5.0 million for fiscal 2017, compared
with $1.5 million in the prior year period. During fiscal 2017, the
Company expended approximately $2.2 million for capital equipment,
as compared to $1.1 million in the same period last
year.
The
current ratio as of June 30, 2017 and June 30, 2016 was 3.5 to 1.
Total stockholders’ equity as of June 30, 2017 was
approximately $29.8 million, a 172% increase compared to
approximately $10.9 million as of June 30, 2016. The increase is
largely due to our Class A common stock public offering in December
2016, in which we received net proceeds of approximately $8.7
million, and accumulated net income.
As of
June 30, 2017, the Company’s 12-month backlog was $9.3
million, compared to $6.6 million as of June 30, 2016, an increase
of approximately 41%, partially attributable to ISP.
*Use of Non-GAAP Financial Measures
To
provide investors with additional information regarding our
financial results, this press release includes references to
EBITDA, adjusted EBITDA, adjusted net income, and gross margin, all
of which are non-GAAP financial measures. For a reconciliation of
these non-GAAP financial measures to the most directly comparable
financial measures calculated in accordance with GAAP, see the
tables provided in this press release.
A
“non-GAAP financial measure” is generally defined as a
numerical measure of a company’s historical or future
performance that excludes or includes amounts, or is subject to
adjustments, so as to be different from the most directly
comparable measure calculated and presented in accordance with
GAAP. The Company’s management believes that these non-GAAP
financial measures, when considered together with the GAAP
financial measures, provide information that is useful to investors
in understanding period-over-period operating results separate and
apart from items that may, or could, have a disproportionately
positive or negative impact on results in any particular period.
Management also believes that these non-GAAP financial measures
enhance the ability of investors to analyze underlying business
operations and understand performance. In addition, management may
utilize these non-GAAP financial measures as guides in forecasting,
budgeting, and planning. Non-GAAP financial measures should be
considered in addition to, and not as a substitute for, or superior
to, financial measures presented in accordance with
GAAP.
The
Company calculates EBITDA by adjusting net income to exclude net
interest expense, income tax expense or benefit, depreciation, and
amortization. Similarly, the Company calculates adjusted EBITDA by
adjusting net income to exclude net interest expense, income tax
expense or benefit, depreciation, amortization, and the change in
the fair value of the warrants issued in connection with the
private placement in June 2012, which expire at the end of
2017.
The
fair value of the warrants issued in connection with the private
placement in 2012 is re-measured each reporting period until the
warrants are exercised or expire. Each reporting period, the change
in the fair value of these warrants is either recognized as
non-cash expense or non-cash income. The change in the fair value
of the warrants has a significant correlation to the change in the
market value of the Company’s Class A common stock for the
period being reported and is not impacted by actual operations
during such period. Management believes that by excluding the
change in the fair value of these warrants enhances the ability of
investors to analyze and better understand the underlying business
operations and performance.
The
Company calculates adjusted net income by adjusting net income to
exclude the change in the fair value of the warrants issued in
connection with the private placement in June 2012.
The
Company calculates gross margin by deducting the cost of sales from
operating revenue. Cost of sales includes manufacturing direct and
indirect labor, materials, services, fixed costs for rent,
utilities and depreciation, and variable overhead. Gross margin
should not be considered an alternative to operating income or net
income, which is determined in accordance with GAAP. The Company
believes that gross margin, although a non-GAAP financial measure,
is useful and meaningful to investors as a basis for making
investment decisions. It provides investors with information that
demonstrates cost structure and provides funds for total costs and
expenses. The Company uses gross margin in measuring the
performance of its business and has historically analyzed and
reported gross margin information publicly. Other companies may
calculate gross margin in a different manner.
Investor Conference Call and Webcast Details
LightPath will host
an audio conference call and webcast on Thursday, September 14 at
4:30 p.m. ET to discuss its financial and operational performance
for the fourth quarter and year ended June 30, 2017.
Date:
Thursday, September 14, 2017
Time:
4:30 PM (ET)
Dial-in
Number: 1-877-317-2514
International
Dial-in Number: 1-412-317-2514
Webcast:
http://services.choruscall.com/links/lpth170914.html
Participants should
dial-in or log-on approximately 10 minutes prior to the start of
the event. A replay of the call will be available approximately one
hour after completion through October 14, 2017. To listen to the
replay, dial 1-877-344-7529 (domestic) or 1-412-317-0088
(international), and enter conference ID # 10111266.
About LightPath Technologies
LightPath
Technologies, Inc. (NASDAQ: LPTH) is a leading global, vertically
integrated provider of optics, photonics and infrared solutions for
the industrial, defense, telecommunications, testing and
measurement, and medical industries. LightPath designs,
manufactures, and distributes proprietary optical and infrared
components including molded glass aspheric lenses and assemblies,
infrared lenses and thermal imaging assemblies, fused fiber
collimators, and gradient index GRADIUM® lenses. LightPath
also offers custom optical assemblies, including full engineering
design support. The Company is headquartered in Orlando, Florida,
with manufacturing and sales offices in New York, Latvia and
China.
LightPath’s
wholly-owned subsidiary, ISP Optics
Corporation, manufactures
a full range of infrared products from high performance MWIR and
LWIR lenses and lens assemblies. ISP’s infrared lens assembly
product line includes athermal lens systems used in cooled and
un-cooled thermal imaging cameras. Manufacturing is performed
in-house to provide precision optical components including
spherical, aspherical and diffractive coated infrared lenses.
ISP’s optics processes allow it to manufacture its products
from all important types of infrared materials and crystals.
Manufacturing processes include CNC grinding and CNC polishing,
diamond turning, continuous and conventional polishing, optical
contacting and advanced coating technologies.
For
more information on LightPath and its businesses, please visit
www.lightpath.com.
Forward-Looking Statements
This news release includes statements that constitute
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995,
including statements regarding our ability to expand our presence
in certain markets, future sales growth, continued improvements in
our financial results,and implementation of new distribution
channels. This information may involve risks and uncertainties that
could cause actual results to differ materially from such
forward-looking statements. Factors that could cause or contribute
to such differences include, but are not limited to, factors
detailed by LightPath Technologies, Inc. in its public filings with
the Securities and Exchange Commission. Except as required under
the federal securities laws and the rules and regulations of the
Securities and Exchange Commission, we do not have any intention or
obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Contacts:
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Jim Gaynor, President & CEO
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Dorothy Cipolla, CFO
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Jordan Darrow
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LightPath Technologies, Inc.
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LightPath Technologies, Inc.
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Darrow Associates, Inc.
|
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Tel: 407-382-4003
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Tel: 407-382-4003 x305
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Tel:
512-551-9296
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jgaynor@lightpath.com
|
|
dcipolla@lightpath.com
|
|
jdarrow@darrowir.com
|
|
Web: www.lightpath.com
|
|
Web: www.lightpath.com
|
|
Web:www.darrowir.com
|
(tables
follow)
|
LIGHTPATH TECHNOLOGIES, INC.
|
|||||||
|
Consolidated Balance Sheets
|
|||||||
|
(unaudited)
|
|
|
June 30,
|
June 30,
|
|
Assets
|
2017
|
2016
|
|
Current
assets:
|
|
|
|
Cash
and cash equivalents
|
$8,085,015
|
$2,908,024
|
|
Trade
accounts receivable, net of allowance of $7,356 and
$4,598
|
5,890,113
|
3,545,871
|
|
Inventories,
net
|
5,074,576
|
3,836,809
|
|
Other
receivables
|
29,202
|
209,172
|
|
Prepaid
expenses and other assets
|
641,469
|
652,308
|
|
Total
current assets
|
19,720,375
|
11,152,184
|
|
|
|
|
|
Property
and equipment, net
|
10,324,558
|
4,370,045
|
|
Intangible
assets, net
|
10,375,053
|
—
|
|
Goodwill
|
5,854,905
|
—
|
|
Deferred
tax assets
|
285,000
|
—
|
|
Other
assets
|
112,323
|
66,964
|
|
Total
assets
|
$46,672,214
|
$15,589,193
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$1,536,121
|
$1,361,914
|
|
Accrued
liabilities
|
966,929
|
328,144
|
|
Accrued
payroll and benefits
|
1,896,530
|
1,356,255
|
|
Loans
payable, current portion
|
1,111,500
|
—
|
|
Capital
lease obligation, current portion
|
239,332
|
166,454
|
|
Total
current liabilities
|
5,750,412
|
3,212,767
|
|
|
|
|
|
Capital
lease obligation, less current portion
|
142,101
|
178,919
|
|
Deferred
rent
|
458,839
|
548,202
|
|
Deferred
tax liabilities
|
182,349
|
|
|
Warrant
liability
|
490,500
|
717,393
|
|
Loans
payable, less current portion
|
9,926,844
|
—
|
|
Total
liabilities
|
16,951,045
|
4,657,281
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
Preferred
stock: Series D, $.01 par value, voting;
|
|
|
|
100,000
shares authorized; none issued and outstanding
|
—
|
—
|
|
Common
stock: Class A, $.01 par value, voting;
|
|
|
|
34,500,000
shares authorized; 24,215,733 and 15,590,945
|
|
|
|
shares
issued and outstanding
|
242,157
|
155,909
|
|
Additional
paid-in capital
|
225,492,252
|
214,661,617
|
|
Accumulated
other comprehensive income
|
295,396
|
126,108
|
|
Accumulated
deficit
|
(196,308,636)
|
(204,011,722)
|
|
Total
stockholders’ equity
|
29,721,169
|
10,931,912
|
|
Total
liabilities and stockholders’ equity
|
$46,672,214
|
$15,589,193
|
|
LIGHTPATH TECHNOLOGIES, INC.
|
||||
|
Consolidated
Statements of Comprehensive Income
|
||||
|
(unaudited)
|
||||
|
|
|
|
|
|
|
|
Three months ended
|
Year ended
|
||
|
|
June 30,
|
June 30,
|
||
|
|
2017
|
2016
|
2017
|
2016
|
|
Revenue,
net
|
$9,007,380
|
$4,733,604
|
$28,367,489
|
$17,272,238
|
|
Cost
of sales
|
4,640,850
|
2,265,489
|
13,648,030
|
7,967,728
|
|
Gross
margin
|
4,366,530
|
2,468,115
|
14,719,459
|
9,304,510
|
|
Operating
expenses:
|
|
|
|
|
|
Selling,
general and administrative
|
2,460,318
|
1,759,100
|
8,651,023
|
6,581,218
|
|
New
product development
|
381,995
|
187,437
|
1,235,934
|
668,840
|
|
Amortization
of intangibles
|
389,138
|
—
|
693,947
|
—
|
|
Loss
on disposal of property and equipment
|
1,444
|
(1,028)
|
1,444
|
45,037
|
|
Total
costs and expenses
|
3,232,895
|
1,945,509
|
10,582,348
|
7,295,095
|
|
Operating
income
|
1,133,635
|
522,606
|
4,137,111
|
2,009,415
|
|
Other
income (expense):
|
|
|
|
|
|
Interest
expense
|
(168,918)
|
(7,527)
|
(336,750)
|
(37,627)
|
|
Interest
expense -debt costs
|
(38,339)
|
—
|
(76,677)
|
—
|
|
Change
in fair value of warrant liability
|
(9,759)
|
(27,243)
|
(467,543)
|
(52,454)
|
|
Other
income (expense), net
|
334,580
|
(88,148)
|
105,645
|
(305,444)
|
|
Total
other income (expense), net
|
117,564
|
(122,918)
|
(775,325)
|
(395,525)
|
|
Net
income before income taxes (benefit)
|
1,251,199
|
399,688
|
3,361,786
|
1,613,890
|
|
Income
taxes (benefit)
|
(5,112,900)
|
68,221
|
(4,341,300)
|
199,275
|
|
Net
income
|
$6,364,099
|
$331,467
|
$7,703,086
|
$1,414,615
|
|
Foreign
currency translation adjustment
|
55,470
|
28,247
|
169,288
|
75,428
|
|
Comprehensive
income
|
$6,419,569
|
$802,016
|
$7,872,374
|
$1,490,043
|
|
|
|
|
|
|
|
Earnngs
per common share (basic)
|
$0.26
|
$0.02
|
$0.39
|
$0.09
|
|
Number
of shares used in per share calculation (basic)
|
24,156,139
|
15,590,945
|
20,001,868
|
15,401,893
|
|
Earnings
per common share (diluted)
|
$0.24
|
$0.02
|
$0.36
|
$0.08
|
|
Number
of shares used in per share calculation (diluted)
|
26,222,382
|
17,097,076
|
21,666,392
|
16,875,383
|
|
LIGHTPATH TECHNOLOGIES, INC.
|
||
|
Consolidated
Statements of Cash Flows
|
||
|
(unaudited)
|
||
|
|
June 30,
|
|
|
|
2017
|
2016
|
|
Cash
flows from operating activities
|
|
|
|
Net
income
|
$7,703,086
|
$1,414,615
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
Depreciation
and amortization
|
2,080,439
|
847,990
|
|
Interest
from amortization of debt costs
|
7,721
|
—
|
|
Loss
on disposal of property and equipment
|
1,444
|
45,037
|
|
Stock
based compensation
|
394,875
|
348,735
|
|
Bad
debt expense
|
(29,551)
|
(289)
|
|
Change
in fair value of warrant liability
|
467,543
|
52,454
|
|
Change
in fair value of seller's note
|
68,955
|
—
|
|
Deferred
rent
|
(89,363)
|
35,523
|
|
Inventory
write-offs
|
90,268
|
—
|
|
Deferred
tax benefit
|
(5,493,704)
|
—
|
|
Changes
in operating assets and liabilities:
|
|
|
|
Trade
accounts receivables
|
(1,042,426)
|
(650,753)
|
|
Other
receivables
|
160,070
|
40,597
|
|
Inventories
|
(318,645)
|
(916,899)
|
|
Prepaid
expenses and other assets
|
151,821
|
(415,444)
|
|
Accounts
payable and accrued liabilities
|
846,511
|
724,147
|
|
Net
cash provided by operating activities
|
4,999,044
|
1,525,713
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
Purchase
of property and equipment
|
(2,223,126)
|
(1,131,098)
|
|
Proceeds
from sale of equipment
|
—
|
5,916
|
|
Acquisiton
of ISP Optics, net of cash acquired
|
(11,777,336)
|
—
|
|
Net
cash used in investing activities
|
(14,000,462)
|
(1,125,182)
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
Proceeds
from exercise of stock options
|
—
|
6,430
|
|
Proceeds
from sale of common stock from employee stock purchase
plan
|
19,632
|
22,903
|
|
Settlement
for Class E Shares
|
—
|
(582)
|
|
Loan
costs
|
(72,224)
|
—
|
|
Borrowings
on loan payable
|
5,000,000
|
—
|
|
Proceeds
from issuance of common stock under public equity
placement
|
8,749,496
|
—
|
|
Proceeds
from exercise of warrants, net of costs
|
705,679
|
391,083
|
|
Net
payments on loan payable
|
—
|
(51,585)
|
|
Payments
on capital lease obligations
|
(193,940)
|
(131,341)
|
|
Net
cash provided by financing activities
|
14,208,643
|
236,908
|
|
Effect
of exchange rate on cash and cash equivalents
|
(30,234)
|
626,665
|
|
Change
in cash and cash equivalents
|
5,176,991
|
1,264,104
|
|
Cash
and cash equivalents, beginning of period
|
2,908,024
|
1,643,920
|
|
Cash
and cash equivalents, end of period
|
$8,085,015
|
$2,908,024
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Interest
paid in cash
|
$334,589
|
$37,627
|
|
Income
taxes paid
|
$680,055
|
$4,296
|
|
Supplemental
disclosure of non-cash investing & financing
activities:
|
|
|
|
Purchase
of equipment through capital lease arrangements
|
$230,000
|
—
|
|
Reclassification
of warrant liability upon exercise
|
$694,436
|
$530,531
|
|
Derecognition
of liability associated with stock option grants
|
$352,765
|
$143,125
|
|
Seller
note issued to acquire ISP Optics, at fair value
|
$6,327,208
|
—
|
|
LIGHTPATH TECHNOLOGIES, INC.
|
||||||
|
Consolidated Statement of Stockholders'
Equity
|
||||||
|
Years ended June 30, 2017 and
2016
|
||||||
|
(unaudited)
|
||||||
|
|
|
|
|
Accumulated
|
|
|
|
|
Class A
|
|
Additional
|
Other
|
|
Total
|
|
|
Common Stock
|
|
Paid-in
|
Comphrehensive
|
Accumulated
|
Stockholders’
|
|
|
Shares
|
Amount
|
Capital
|
Income
|
Deficit
|
Equity
|
|
Balances
at June 30, 2015
|
15,235,073
|
$152,351
|
$213,222,950
|
$50,680
|
$(205,426,337)
|
7,999,644
|
|
Issuance
of common stock for:
|
|
|
|
|
|
|
|
Exercise
of warrants
|
313,081
|
3,130
|
388,221
|
—
|
—
|
391,351
|
|
Employee
Stock Purchase Plan
|
9,906
|
99
|
22,804
|
—
|
—
|
22,903
|
|
Exercise
of options
|
6,077
|
61
|
6,369
|
—
|
—
|
6,430
|
|
Cashless
exercise of warrants
|
26,808
|
268
|
(536)
|
—
|
—
|
(268)
|
|
Settlement
for Class E shares
|
—
|
—
|
(582)
|
—
|
—
|
(582)
|
|
Reclassification
of warrant liability upon exercise
|
—
|
—
|
530,531
|
—
|
—
|
530,531
|
|
Stock
based compensation on stock options & RSU
|
—
|
—
|
491,860
|
—
|
—
|
491,860
|
|
Foreign
currency translation adjustment
|
—
|
—
|
—
|
75,428
|
—
|
75,428
|
|
Net
income
|
—
|
—
|
—
|
—
|
1,414,615
|
1,414,615
|
|
Balances
at June 30, 2016
|
15,590,945
|
$155,909
|
$214,661,617
|
$126,108
|
$(204,011,722)
|
$10,931,912
|
|
Issuance
of common stock for:
|
|
|
|
|
|
|
|
Exercise
of warrants
|
578,897
|
5,789
|
699,890
|
—
|
—
|
705,679
|
|
Employee
Stock Purchase Plan
|
12,106
|
121
|
19,511
|
—
|
—
|
19,632
|
|
Exercise
of RSU
|
33,785
|
338
|
(338)
|
—
|
—
|
—
|
|
Cashless
exercise of warrants
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Private
placement of common stock
|
—
|
—
|
—
|
—
|
—
|
—
|
|
ProceedsPublic
equity placement, net of costs
|
8,000,000
|
80,000
|
8,669,496
|
—
|
—
|
8,749,496
|
|
Reclassification
of warrant liability upon exercise
|
—
|
—
|
694,436
|
—
|
—
|
694,436
|
|
Stock
based compensation on stock options & RSU
|
—
|
—
|
747,640
|
—
|
—
|
747,640
|
|
Foreign
currency translation adjustment
|
—
|
—
|
—
|
169,288
|
—
|
169,288
|
|
Net
income
|
—
|
—
|
—
|
—
|
7,703,086
|
7,703,086
|
|
Balances
at June 30, 2017
|
24,215,733
|
$242,157
|
$225,492,252
|
$295,396
|
$(196,308,636)
|
$29,721,169
|
To
supplement our consolidated financial statements presented in
accordance with U.S. GAAP, we provide additional non-GAAP financial
measures. Our management believes these non-GAAP financial
measures, when considered together with the GAAP financial
measures, provide information that is useful to investors in
understanding period-over-period operating results separate and
apart from items that may or could, have a disproportionally
positive or negative impact on results in any particular period.
Our management also believes that these non-GAAP financial measures
enhance the ability of investors to analyze our underlying business
operations and understand our performance. In addition, our
management may utilize these non-GAAP financial measures as guides
in forecasting, budgeting, and planning. Any analysis on non-GAAP
financial measures should be used in conjunction with results
presented in accordance with GAAP. A reconciliation of these
non-GAAP financial measures with the most directly comparable
financial measures calculated in accordance with GAAP is presented
in the tables below.
|
|
(Unaudited)
|
|||
|
|
Three
months ended:
|
Year
ended:
|
||
|
|
June 30,
2017
|
June 30,
2016
|
June 30,
2017
|
June 30,
2016
|
|
Net
income
|
$6,364,099
|
$331,467
|
$7,703,086
|
$1,414,615
|
|
Change
in fair value of warrant liability
|
9,759
|
27,243
|
467,543
|
52,454
|
|
Adjusted
net income
|
$6,373,858
|
$358,710
|
$8,170,629
|
$1,467,069
|
|
%
of revenue
|
71%
|
8%
|
29%
|
8%
|
|
|
(Unaudited)
|
|||
|
|
Three
months ended:
|
Year
ended:
|
||
|
|
June 30,
2017
|
June 30,
2016
|
June 30,
2017
|
June 30,
2016
|
|
Net
income
|
$6,364,099
|
$331,467
|
$7,703,086
|
$1,414,615
|
|
Depreciation
and amortization
|
840,207
|
238,961
|
2,080,439
|
847,990
|
|
Income
tax expense (benefit)
|
(5,112,900)
|
68,221
|
(4,341,300)
|
199,274
|
|
Interest
expense
|
207,256
|
7,527
|
413,426
|
37,626
|
|
EBITDA
|
$2,298,662
|
$646,176
|
$5,855,651
|
$2,499,505
|
|
Change
in fair value of warrant liability
|
9,759
|
27,243
|
467,543
|
52,454
|
|
Adjusted
EBITDA
|
$2,308,421
|
$673,419
|
$6,323,194
|
$2,551,959
|
|
%
of revenue
|
26%
|
14%
|
22%
|
15%
|