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| 8-K - CURRENT REPORT - LIGHTPATH TECHNOLOGIES INC | lpth_8k.htm |
Exhibit
99.1
For Immediate Release
LightPath Technologies Reports Financial Results for
Fiscal 2021 Second Quarter
Revenues and Backlog Reach Record Levels;
Increased Manufacturing Capacity, Product Additions and European
Expansion Position Company for Continued Growth
ORLANDO,
FL – February 3, 2021 – LightPath
Technologies, Inc. (NASDAQ: LPTH) (“LightPath,”
the “Company,” or “we”), a leading
vertically integrated global
manufacturer and integrator of
proprietary optical
and infrared components and high-level
assemblies, today announced its financial results for its
fiscal 2021 second quarter ended December 31, 2020.
Fiscal 2021 Financial Results Highlights:
●
Revenue for the
second quarter of fiscal 2021 of $9.9 million, the highest level
for any quarter.
●
First half of
fiscal 2021 revenue of $19.4 million, an increase of 13% from the
comparable prior year period.
●
Total backlog at
end of the second quarter of fiscal 2021 increased to $23.8
million, the highest level at the end of any quarter.
●
Gross margin as a
percentage of revenue was 37% in the second quarter of fiscal 2021,
compared to 41% in the second quarter of fiscal 2020, reflecting
traditionally lower margins at onset of new production orders as
well as technical issues in production of molded infrared lenses
which are being addressed.
●
First half of
fiscal 2021 gross margin of 38%, an improvement from 37% in the
prior year period.
●
Net loss for the
second quarter of fiscal 2021 was $147,000, compared to net income
of $769,000 in the second quarter of fiscal 2020. The second
quarter of fiscal 2021 includes a non-recurring charge of
approximately $400,000 of additional compensation for the
Company’s former Chief Executive Officer (“CEO”),
as previously disclosed in the Current Report on Form 8-K filed
with the Securities and Exchange Commission (the “SEC”)
on November 18, 2020.
●
Net loss for first
half of fiscal 2021, including the non-recurring charge of
$400,000, was $49,000, an improvement from net loss of $606,000 in
prior year period.
●
EBITDA* for the
second quarter of fiscal 2021 was $1.0 million, compared to $2.0
million in the second quarter of fiscal 2020.
●
EBITDA for first
half of fiscal 2021 was $2.4 million, compared to $1.8 million in
the prior year period.
●
Capital
expenditures were approximately $2.2 million for the first half of
fiscal 2021, compared to $1.2 million for the first half of fiscal
2020.
●
Total debt,
including finance leases, was reduced by 4% or approximately
$246,000 in the first half of fiscal 2021.
●
Cash and cash
equivalents of $5.3 million as of December 31, 2020, compared to
$5.4 million as of June 30, 2020.
* This
press release includes references to non-GAAP financial measures.
Please see the heading “Use of Non-GAAP Financial
Measures” below for a more complete explanation.
Management Comments
Sam
Rubin, President and Chief Executive Officer of LightPath, stated,
“We made good progress on our long-term strategic growth
initiatives in the first half of fiscal 2021, which was underscored
by achieving record levels for consolidated quarterly revenues and
total backlog at the end of the fiscal second quarter. The growth
drivers of our business remain intact and relatively insulated from
the coronavirus (“COVID-19”) pandemic. However,
temporary yield issues in production have impacted our gross margin
for this quarter. Those issues have been identified and are being
addressed through both improvement to processes, as well as changes
to designs. Advancements have been made to our business operations
to ensure the safety of our staff and all stakeholders during these
challenging times, while positioning LightPath to emerge as a
larger, more profitable and increasingly dominant force in the
global market for optical and infrared solutions.
“Revenue
for the first half of fiscal 2021 of $19.4 million represents an
increase of 13% as compared to the prior year period. Our revenue
growth during the first half of fiscal 2021 was driven by the
initial deliveries for new contracts, demand from the
telecommunications market in connection with the 5G buildout, and
demand from the industrial and healthcare sectors. Second quarter
revenue of $9.9 million marked our highest level of any quarter in
the Company’s history. We also achieved a record level for
total backlog, which increased to $23.8 million at the end of the
second quarter, as compared to $20.9 million at the end of the
fiscal first quarter and $21.9 million at the start of the fiscal
year. Part of this growth has resulted from the capacity we have
added over the last 12 months. Further, more than half of total
backlog represents contracts that extend multiple quarters with
annual renewal opportunities. Also notable is the commencement of
high-volume deliveries on two key accounts, both of which are
contracts for products with our proprietary BD6 material, which
replaces products previously using Germanium material. As we have
indicated in the past, we believe our BD6 material is a significant
element of differentiation for LightPath.
“As
is sometimes the case with new programs and product lines, many of
which are supported by long-term contracts, the initial phase-in
period typically has lower yield and efficiencies. In this case the
main challenges have been around the production of BD6 glass, and
the coating of lenses. Both issues are being addressed, one through
rigorous process review and improvement, and the second by hiring
of a new senior global coating manager, who has specific experience
in this area. In turn, this impacted the bills of materials, labor,
and gross profits. Such challenges are not uncommon for a new
technology and we are working through these earlier periods of our
newer products’ life cycles with the intent of elevating
gross margins as a percentage of revenue for these order
fulfilments so that they are more in line with our consolidated
annual target rate.
“During
the second quarter, we were awarded the renewal of an annual supply
agreement valued at over $5.8 million, which is a 16% increase over
the prior year contract. This renewal has since been supplemented
with additional orders from the customer, bringing the annual
growth of contracts with this customer to above 20%, as compared to
the prior year contracts. The renewed contract is for the purchase
of a variety of infrared ("IR") optical lens elements by a major
commercial infrared vision products customer. The large volume of
work needed to fulfill this supply agreement along with several
other orders from the same customer will be a shared effort among
LightPath’s facilities in Riga, Latvia, Orlando, Florida, and
Zhenjiang, China.
“Our
success with this customer is representative of the strategy we are
deploying globally – we have been leveraging initial entry
points in order to provide a more comprehensive solutions approach
for all of a customer’s optical and photonics needs. We have
been actively adapting our sales and marketing culture and
structuring and training our team to deploy these new initiatives.
Recent progress was made with the bolstering of our international
presence in January upon the opening of our newest sales office in
Germany for coverage of the entire continent of Europe, the Middle
East and other contiguous regions.
“As
a result of our revenue and broader growth initiatives, as
previously disclosed, we had been experiencing certain
manufacturing capacity constraints. The need for additional
capacity output and for building out vertically integrated
facilities for redundancies and growth, called for an increase in
capital expenditures. Spending in first half of fiscal 2021 was
$2.2 million, compared to $1.2 million for the prior year period.
After the end of the second quarter of fiscal 2021, we announced
the completion of the initial phase of our facility expansion in
Riga, Latvia for new infrared coating capabilities as part of our
operational improvement plans, as well as our global production
capacity expansion. This expansion will enable our facility in
Riga, Latvia to coat all infrared components produced at this
location. For reference, in the world of optics, each optical
component needs to be coated from both sides, with different
coatings, depending on the customer’s application. Being able
to do this last step of the component’s production in the
same site will lead to an increase in margins, shorter lead times,
and improved customer service overall, which we believe will result
be value additive for our customers and provide a runway for
incremental top line growth. We believe that our facility expansion
will also free up some of our coating capacity at our facilities in
Orlando, Florida and Zhenjiang, China to develop new products and
capabilities.
“At
a time when we have been expanding our product platforms and global
team in pursuit of a solutions-oriented approach for our customers,
which we believe will deliver greater sales and improved
consolidated margins and profitability, we have been steadfast in
maintaining a strong balance sheet. Cash remained intact as we
ended the second quarter of fiscal 2021 with $5.3 million even as
we have been heavily investing in capital expenditures and reduced
our total debt, including finance leases, by 4% in the first half
of fiscal 2021, as compared to June 30, 2020. Our long-term
strategies are being implemented with success and we look forward
to continued progress during the balance of fiscal
2021.”
Financial Results
Revenue
Three months ended December 31, 2020, compared to three months
ended December 31, 2019
Revenue
for the second quarter of fiscal 2021 was approximately $9.9
million, an increase of $322,000, or 3%, as compared to $9.6
million in the same period of the prior fiscal year. Sales of IR
products comprised 48% of the Company’s consolidated revenue
in the second quarter of fiscal 2021, as compared to 52% of
consolidated revenue in the same period of the prior fiscal year.
Visible precision molded optics (“PMO”) product sales
represented 48% of consolidated revenues in the second quarter of
fiscal 2021, as compared to 39% in the same period of the prior
fiscal year. Specialty products continue to be a small component of
the Company’s business, representing 4% of consolidated
revenue in the second quarter of fiscal 2021, as compared to 9% in
the same period of the prior fiscal year.
Revenue
generated by IR products was approximately $4.8 million in the
second quarter of fiscal 2021, a decrease of 4% as compared to $5.0
million in the same period of the prior fiscal year. The decrease
in revenue is attributed to decreases in sales to customers in the
commercial and defense markets, largely due to timing of orders,
partially offset by an increase in sales to customers in the
industrial market. In the prior fiscal year, the second quarter was
the highest sales level for IR products of any quarter in fiscal
2020 due to the timing of several customer orders. Demand for IR
products, including proprietary BD6 material, has been
increasing.
Revenue
generated by PMO products was approximately $4.7 million for the
second quarter of fiscal 2021, an increase of $1.0 million, or 28%,
as compared to $3.7 million in the same period of the prior fiscal
year. The increase in revenue is attributed to an increase in sales
to customers in the telecommunications market, as well as the
defense and industrial markets and sales through catalog and
distribution channels. Demand for PMO lenses for the 5G
infrastructure buildout remains steady.
Revenue
generated by specialty products was approximately $372,000 in the
second quarter of fiscal 2021, a decrease of $514,000, or 58%, as
compared to $885,000 in the same period of the prior fiscal
year. This decrease is
primarily related to non-recurring engineering (“NRE”)
project revenue in the second quarter of fiscal 2020 that did not
repeat in the second quarter of fiscal 2021.
Six months ended December 31, 2020, compared to six months ended
December 31, 2019
Revenue
for the first half of fiscal 2021 was approximately $19.4 million,
an increase of $2.3 million, or 13%, as compared to $17.2 million
in the same period of the prior fiscal year. Sales of infrared IR
products comprised 49% of the Company’s consolidated revenue
in the first half of fiscal 2021, as compared to 52% of
consolidated revenue in the same period of the prior fiscal year.
Visible PMO product sales represented 47% of consolidated revenues
in the first half of fiscal 2021, as compared to 40% in the same
period of the prior fiscal year. Specialty products continue to be
a small component of the Company’s business, representing 4%
of consolidated revenue in the first half of fiscal 2021, as
compared to 8% in the same period of the prior fiscal
year.
Revenue
generated by IR products was approximately $9.5 million in the
first half of fiscal 2021, an increase of 13%, as compared to $9.0
million in the same period of the prior fiscal year. Revenue growth
is attributed to an increase in sales to customers in the
industrial market, while other markets remained fairly consistent
compared to the same period of the prior fiscal year. Leading the
growth within the Company’s IR product group is demand for
molded IR products, including lenses made with LightPath’s
new BD6 material.
The increased demand for molded IR products
continues to be driven in large part by fever detection products as
a result of the ongoing COVID-19 pandemic. Demand for industrial
applications, firefighting and other public safety applications
also continues to be strong.
Revenue
generated by PMO products was approximately $9.0 million for the
first half of fiscal 2021, an increase of $2.1 million, or 31%, as
compared to $6.9 million in the same period of the prior fiscal
year. The increase in revenue is primarily attributed to an
increase in sales to customers in the telecommunications market, as
well as the commercial and defense markets.
Revenue
generated by specialty products was approximately $862,000 in the
first half of fiscal 2021, a decrease of $431,000, or 33%, as
compared to $1.3 million in the same period of the prior fiscal
year. This decrease is
primarily related to NRE project revenue in the first half of
fiscal 2020 that did not repeat in the first half of fiscal
2021.
Cost of Sales and Gross Margin
Three months ended December 31, 2020, compared to three months
ended December 31, 2019
Gross
margin in the second quarter of fiscal 2021 was approximately $3.6
million, a decrease of 8%, as compared to approximately $3.9
million in the same period of the prior fiscal year. Total cost of
sales was approximately $6.3 million for the second quarter of
fiscal 2021, compared to $5.7 million for the same period of the
prior fiscal year. Gross margin as a percentage of revenue was 37%
for the second quarter of fiscal 2021, compared to 41% for the same
period of the prior fiscal year. The decrease in gross margin as a
percentage of revenue is due to both the mix of products sold in
each respective period, as well as due to the initial volume
deliveries of new products and sales contracts. The acceleration of
new lenses moving into the volume production stage and alignments
required for orders from the increasing number of new customers
incurred traditional start-up inefficiencies, which negatively
impacted margins but which we believe will be reduced as the
respective programs mature. The mix of IR product sales for the
second quarter of fiscal 2021 was more heavily weighted toward
volume production orders, some of which are products the Company
only recently started producing in mass and for which some yield
issues have been experienced in connection with BD6 coatings, which
increased costs. The Company is in the process of resolving these
technical issues, which is expected to bring manufacturing
efficiencies to a level similar to existing products. Additionally,
in comparison, the second quarter of fiscal 2020 included a larger
mix of NRE project revenue, which naturally has a higher margin
contribution than other products. Most of those NRE projects did
not repeat in the second quarter of fiscal 2021.
Six months ended December 31, 2020, compared to six months ended
December 31, 2019
Gross
margin in the first half of fiscal 2021 was approximately $7.5
million, an increase of 18% as compared to approximately $6.3
million in the same period of the prior fiscal year. Total cost of
sales was approximately $12.0 million for the first half of fiscal
2021, compared to $10.8 million for the same period of the prior
fiscal year. The increases in gross margin and cost of sales are
primarily driven by the increase in sales. Gross margin as a
percentage of revenue was 38% for the first half of fiscal 2021,
compared to 37% for the same period of the prior fiscal year. The
increase in gross margin as a percentage of revenue is primarily
due to the increase in revenue and volumes for both the PMO and IR
product groups. In addition, there were several factors that
negatively impacted the first quarter of fiscal 2020, such as
increased tariffs, the impacts of which have since been mitigated.
During the first half of fiscal 2021, LightPath began high-volume
delivery of several key OEM projects, which orders consisted of
products with both molded and diamond turned BD6 material. As is
typical of scaling new products into volume production, the Company
has experienced a number of technical challenges, both related to
the fabrication of the components, as well as some of the
value-added activities such as coating and assembly. While such
early-stage problems are common, the Company expects to resolve the
issues, improve production yields and elevate the products to their
target margin levels.
Operating Expenses
Three months ended December 31, 2020, compared to three months
ended December 31, 2019
During the second quarter of fiscal 2021, total operating expenses
were approximately $3.6 million, an increase of $702,000, or 24%,
as compared to $2.9 million in the same period of the prior fiscal
year. Selling, general and administrative (“SG&A”)
costs increased by approximately $564,000, or 26%, as compared to
the same period of the prior fiscal year. The increase is primarily due to additional
non-recurring compensation to the Company’s former CEO), as
previously disclosed in the Current Report on Form 8-K filed with
the SEC on November 18, 2020. The remaining increase in SG&A
costs as compared to the same period of the prior fiscal year is
due to increases in personnel-related costs associated with a
moderate increase in headcount, as well as an increase in outside
consulting services for projects related to operational
improvements. New product development costs increased by
approximately $61,000, or 13%, primarily due to additional
engineering employees in order to support the demand for optical
design. In addition, total operating expenses for the second
quarter of fiscal 2020 were reduced by a net gain on disposals of
property and equipment of $79,000, which did not repeat in the
second quarter of fiscal 2021.
Six months ended December 31, 2020, compared to six months ended
December 31, 2019
During the first half of fiscal 2021, total operating expenses were
approximately $6.7 million, an increase of $871,000 million, or
15%, as compared to $5.9 million in the same period of the prior
fiscal year. SG&A costs increased by approximately $663,000, or
15%, as compared to the same period of the prior fiscal
year. The increase is primarily
due to additional non-recurring compensation to the Company’s
former Chief Executive Officer, as previously disclosed in the
Current Report on Form 8-K filed with the SEC on November 18, 2020.
The remaining increase in SG&A costs as compared to the same
period of the prior fiscal year is due to increases in
personnel-related costs associated with a moderate increase in
headcount, as well as an increase in outside consulting services
for projects related to operational improvements. New product
development costs increased by approximately $83,000, or 9%,
primarily due to additional engineering employees in order to
support the demand for optical design. In addition, total operating
expenses for the first half of fiscal 2020 were reduced by a net
gain on disposals of property and equipment of $129,000, which did
not repeat in the first half of fiscal 2021.
Other Income (Expense)
Interest
expense, net, was approximately $55,000 and $114,000 for the three
and six months ended December 31, 2020, respectively, as compared
to $89,000 and $188,000 for the three and six months ended December
31, 2019, respectively. The decrease in interest expense is due to
lower interest rates and a 7% reduction in total debt from December
31, 2019 to December 31, 2020.
LightPath
recognized net foreign currency transaction gains due to changes in
the value of the Chinese Yuan and Euro against the U.S. Dollar
in the amount of approximately $77,000 in the second quarter of
fiscal 2021, compared to $119,000 for the second quarter of fiscal
2020. These foreign currency transaction gains had no impact on
basic and diluted earnings per share for the second quarter of
fiscal 2021 or the second quarter of fiscal 2020. For the first
half of fiscal 2021, LightPath recognized foreign currency
transaction losses of $21,000, compared to $376,000 for the first
half of fiscal 2020. These foreign currency transaction losses had
no impact on basic and diluted earnings per share for the first
half of fiscal 2021, and a $0.01 unfavorable impact on basic and
diluted loss per share for the first half of fiscal
2020.
Income Taxes
During
the second quarter of fiscal 2021, income tax expense was
approximately $241,000, compared to approximately $322,000 for the
same period of the prior fiscal year, primarily related to income
taxes from the Company’s operations in China. Income taxes
for the second quarter of fiscal 2020 also included Chinese
withholding taxes of $200,000 associated with intercompany dividend
declared by the Company’s Chinese subsidiary LightPath
Optical Instrumentation (Zhenjiang) Co., Ltd. (“LPOIZ”)
in December 2019.
During
the first half of fiscal 2021, income tax expense was approximately
$676,000, as compared to approximately $470,000 for the same period
of the prior fiscal year, primarily related to income taxes on the
income generated by LPOIZ. Income taxes for the first half of
fiscal 2021 and the first half of fiscal 2020 also included Chinese
withholding taxes of $300,000 and $200,000, respectively,
associated with intercompany dividends declared by LPOIZ during the
first quarter of fiscal 2021 and the second quarter of fiscal 2020.
While these repatriation transactions resulted in some additional
Chinese withholding taxes, LPOIZ currently qualifies for a reduced
Chinese income tax rate; therefore, the total income tax on those
earnings was still lower than it would have been using the normal
income tax rate.
LightPath
has NOL carry-forward benefits of approximately $74 million
available to apply against taxable income as reported on a
consolidated basis in the U.S. Outside of the U.S., income taxes
are attributable to the Company’s wholly-owned subsidiaries
in China. Income generated by the Company’s wholly-owned
subsidiary in Latvia is subject to distribution tax, however, the
Company currently does not intend to distribute earnings subject to
this tax and, therefore, no taxes have been accrued on these
earnings. Instead, profits are allocated to investments in future
IR business activity growth.
Net Income (Loss)
Net
loss for the second quarter of fiscal 2021 was approximately
$146,000, or $0.01 basic and diluted loss per share, compared to
net income of $769,000, or $0.03 basic and diluted earnings per
share, for the second quarter of fiscal 2020. The decrease in net
income for the second quarter of fiscal 2021 as compared to the
same period of the prior fiscal year is primarily attributable to
lower operating income, which was partially due to lower gross
margin as well as an increase in SG&A and new product
development expenses. The increase in SG&A was largely due to
approximately $400,000 of non-recurring additional compensation for
the former CEO, as previously disclosed in the Current Report on
Form 8-K filed with the SEC on November 18, 2020. These differences
decreased operating income by approximately $1.0 million for the
second quarter of fiscal 2021, as compared to the same period of
the prior fiscal year. This decrease was partially offset by a
favorable difference of approximately $81,000 in the provision for
income taxes.
Net
loss for the first half of fiscal 2021 was approximately $49,000,
or $0.00 basic and diluted loss per share, compared to a net loss
of $606,000, or $0.02 basic and diluted loss per share, for the
first half of fiscal 2020. The decrease in net loss for the first
half of fiscal 2021 is primarily attributable to the increase in
sales, resulting in higher gross margin, partially offset by
increases in SG&A and new product development costs, of which
approximately $400,000 relates to non-recurring additional
compensation to the Company’s former CEO, as previously
disclosed in the Current Report on Form 8-K filed with the SEC on
November 18, 2020. These differences increased operating income by
approximately $290,000 for the first half of fiscal 2021, as
compared to the same period of the prior fiscal year. In addition,
there was a favorable difference in foreign exchange gains and
losses of $355,000. These increases were partially offset by an
unfavorable difference of approximately $206,000 in the provision
for income taxes.
Weighted-average
common shares outstanding were 26,117,239, basic and diluted, in
the second quarter of fiscal 2021, compared to 25,837,903 and
27,361,273, basic and diluted, respectively in the second quarter
of fiscal 2020. Weighted-average common shares outstanding were
26,049,750, basic and diluted, in the first half of fiscal 2021,
compared to 25,832,337, basic and diluted, in the first half of
fiscal 2020. The increase in the weighted-average basic common
shares was due to the issuance of shares of Class A common stock
under the Employee Stock Purchase Plan and upon the exercises of
stock options and vesting of restricted stock units.
EBITDA
EBITDA
for the second quarter of fiscal 2021 was approximately $1.0
million, as compared to $2.0 million for the second quarter of
fiscal 2020. The decrease in EBITDA in the second quarter of fiscal
2021 was primarily due to lower operating income as compared to the
same period of the prior fiscal year. The decrease in operating
income for the second quarter of fiscal 2021 as compared to the
same period of the prior fiscal year was partially due to lower
gross margin, as well as an increase in SG&A and new product
development expenses, of which approximately $400,000 was related
to non-recurring additional compensation for the former CEO, as
previously disclosed in the Current Report on Form 8-K filed with
the SEC on November 18, 2020.
EBITDA
for the first half of fiscal 2021 was approximately $2.4 million,
as compared to $1.8 million for the first half of fiscal 2020. The
increase in EBITDA in the first half of fiscal 2021 was primarily
due higher operating income as compared to the same period of the
prior fiscal year. The increase in operating income for the second
quarter of fiscal 2021 as compared to the same period of the prior
fiscal year was largely due to higher revenues and gross margin,
partially offset by an increase in SG&A and new product
development expenses, of which approximately was $400,000 related
to non-recurring additional compensation for the former CEO, as
previously disclosed in the Current Report on Form 8-K filed with
the SEC on November 18, 2020.
EBITDA
is a non-GAAP financial measure. A disclaimer and reconciliation
are provided below.
Liquidity and Capital Resources
Cash
and cash equivalents totaled approximately $5.3 million as of
December 31, 2020, compared to approximately $5.4 million at June
30, 2020. Cash provided by operations was approximately $1.5
million for the first half of fiscal 2021, as compared to
approximately $938,000 in the first half of fiscal 2020. The
increase in cash flow from operations for the first half of fiscal
2021 is primarily due to the decrease in the net loss. The Company
expended approximately $2.2 million for investments in capital
equipment during the first half of fiscal 2021, compared to
approximately $1.2 million in the same period of the prior fiscal
year. The majority of capital expenditures during the first half of
fiscal 2021 were related to the continued expansion of infrared
coating capacity as well as increasing lens pressing and dicing
capacity to meet current and forecasted demand.
The
current ratio as of December 31, 2020 was 2.7 to 1, compared to 2.9
to 1 as of June 30, 2020. Total stockholders’ equity as of
December 31, 2020 was approximately $36.4 million, compared to
$34.6 million as of June 30, 2020. The net increase in
stockholders’ equity during the first half of fiscal 2021 is
made up of the net loss, plus adjustments for stock-based
compensation, for which the expense is offset in additional paid-in
capital, as well as proceeds from the exercise of stock options and
foreign currency translation adjustment gains, which are included
in other comprehensive income.
Sales Backlog
Historically,
LightPath has disclosed sales backlog on a 12-month basis, which
examined orders required by customers for delivery within a
one-year period. To better align with the Company’s strategic
focus on longer-term customer orders and relationships, beginning
in fiscal 2021 disclosure is being provided for total backlog and
includes all firm orders that are reasonably believed to remain in
the backlog and convert into revenues. As of December 31, 2020,
LightPath’s total backlog was $23.8 million, an increase of
6% from $22.6 million as of December 31, 2019, and an increase of
9% from $21.9 million as of June 30, 2020. The majority of the
increase in backlog from the end of fiscal 2020 to the end of the
second quarter of fiscal 2021 was due to the renewal of a large
annual contract for diamond-turned infrared products during the
second quarter, which LightPath will begin shipping against in the
third quarter of fiscal 2021, after the shipments against the
previous contract are completed. The timing of this contract
renewal is similar to the renewal timing in the prior fiscal year.
The timing of other contract renewals may not be consistent, and
may substantially increase backlog levels at the time the orders
are received, and backlog will subsequently be drawn down as
shipments are made against these orders.
*Use of Non-GAAP Financial Measures
To
provide investors with additional information regarding financial
results, this press release includes references to EBITDA and gross
margin, both 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.
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 Wednesday,
February 3, 2021 at 4:30 p.m. ET to discuss its financial and
operational performance for its fiscal 2021 second quarter ended
December 31, 2020.
Date:
Wednesday, February 3, 2021
Time:
4:30 PM (ET)
Dial-in
Number: 1-877-317-2514
International
Dial-in Number: 1-412-317-2514
Webcast: https://services.choruscall.com/links/lpth210203.html
Participants
are recommended to 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 February 17, 2021.
To listen to the replay, dial 1-877-344-7529 (domestic) or
1-412-317-0088 (international), and enter conference ID
#10151782.
About LightPath Technologies
LightPath
Technologies, Inc. (NASDAQ: LPTH) is a leading global, vertically
integrated provider of optics, photonics and infrared solutions for
the industrial, commercial, defense, telecommunications, and
medical industries. LightPath designs and manufactures proprietary
optical and infrared components including molded glass aspheric
lenses and assemblies, infrared lenses and thermal imaging
assemblies, fused fiber collimators, and proprietary Black
DiamondTM (“BD6”)
chalcogenide-based glass 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 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 press release includes statements that constitute
forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by the use of words
such as “forecast,” “guidance,”
“plan,” “estimate,” “will,”
“would,” “project,” “maintain,”
“intend,” “expect,”
“anticipate,” “prospect,”
“strategy,” “future,” “likely,”
“may,” “should,” “believe,”
“continue,” “opportunity,”
“potential,” and other similar expressions that predict
or indicate future events or trends or that are not statements of
historical matters, and include, for example, statements related to
the expected effects on the Company’s business from the
COVID-19 pandemic. These forward-looking statements are based on
information available at the time the statements are made and/or
management’s good faith belief as of that time with respect
to future events, and are subject to risks and uncertainties that
could cause actual results to differ materially from those
expressed in or suggested by the forward-looking statements.
Factors that could cause or contribute to such differences include,
but are not limited to, the duration and scope of the COVID-19
pandemic and impact on the demand for the Company products; the
ability of the Company to obtain needed raw materials and
components from its suppliers; actions governments, businesses, and
individuals take in response to the pandemic, including mandatory
business closures and restrictions on onsite commercial
interactions; the impact of the pandemic and actions taken in
response to the pandemic on global and regional economies and
economic activity; the pace of recovery when the COVID-19 pandemic
subsides; general economic uncertainty in key global markets and a
worsening of global economic conditions or low levels of economic
growth; the effects of steps that the Company could take to reduce
operating costs; the inability of the Company to sustain profitable
sales growth, convert inventory to cash, or reduce its costs to
maintain competitive prices for its products; circumstances or
developments that may make the Company unable to implement or
realize the anticipated benefits, or that may increase the costs,
of its current and planned business initiatives; and those factors
detailed by LightPath Technologies, Inc. in its public filings with
the Securities and Exchange Commission, including its Annual Report
on Form 10-K for the year ended June 30, 2020. Should one or more
of these risks, uncertainties, or facts materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those indicated or anticipated by the
forward-looking statements contained herein. Accordingly, you are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date they are made.
Forward-looking statements should not be read as a guarantee of
future performance or results and will not necessarily be accurate
indications of the times at, or by, which such performance or
results will be achieved. 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:
|
Sam Rubin, President &
CEO
|
Don
Retreage, Jr. CFO
|
Jordan
Darrow
|
|
LightPath Technologies, Inc.
|
LightPath Technologies, Inc. |
Darrow
Associates, Inc.
|
|
Tel: 407-382-4003
|
Tel: 407-382-4003 |
Tel: 512-551-9296
|
|
srubin@lightpath.com
|
dretreage@lightpath.com |
jdarrow@darrowir.com
|
(tables
follow)
|
LIGHTPATH
TECHNOLOGIES, INC.
|
||
|
Condensed
Consolidated Balance Sheets
|
||
|
(unaudited)
|
||
|
|
|
|
|
|
December
31,
|
June
30,
|
|
Assets
|
2020
|
2020
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$5,306,243
|
$5,387,388
|
|
Trade accounts
receivable, net of allowance of $10,352 and $9,917
|
6,842,818
|
6,188,726
|
|
Inventories,
net
|
9,693,277
|
8,984,482
|
|
Other
receivables
|
—
|
132,051
|
|
Prepaid expenses
and other assets
|
346,377
|
565,181
|
|
Total current
assets
|
22,188,715
|
21,257,828
|
|
|
|
|
|
Property and
equipment, net
|
13,631,399
|
11,799,061
|
|
Operating lease
right-of-use assets
|
1,389,428
|
1,220,430
|
|
Intangible assets,
net
|
6,145,423
|
6,707,964
|
|
Goodwill
|
5,854,905
|
5,854,905
|
|
Deferred tax
assets, net
|
659,000
|
659,000
|
|
Other
assets
|
27,737
|
75,730
|
|
Total
assets
|
$49,896,607
|
$47,574,918
|
|
Liabilities
and Stockholders’ Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$2,737,740
|
$2,558,638
|
|
Accrued
liabilities
|
1,175,444
|
992,221
|
|
Accrued payroll and
benefits
|
2,164,827
|
1,827,740
|
|
Operating lease
liabilities, current
|
843,533
|
765,422
|
|
Loans payable,
current portion
|
936,615
|
981,350
|
|
Finance lease
obligation, current portion
|
274,112
|
278,040
|
|
Total current
liabilities
|
8,132,271
|
7,403,411
|
|
|
|
|
|
Finance lease
obligation, less current portion
|
147,031
|
279,435
|
|
Operating lease
liabilities, noncurrent
|
891,849
|
887,766
|
|
Loans payable, less
current portion
|
4,372,429
|
4,437,365
|
|
Total
liabilities
|
13,543,580
|
13,007,977
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
Preferred stock:
Series D, $.01 par value, voting;
|
|
|
|
500,000 shares
authorized; none issued and outstanding
|
—
|
—
|
|
Common stock:
Class A, $.01 par value, voting;
|
|
|
|
44,500,000 shares
authorized; 26,127,361 and 25,891,885
|
|
|
|
shares issued and
outstanding
|
261,274
|
258,919
|
|
Additional paid-in
capital
|
231,014,560
|
230,634,056
|
|
Accumulated other
comprehensive income
|
2,188,596
|
735,892
|
|
Accumulated
deficit
|
(197,111,403)
|
(197,061,926)
|
|
Total
stockholders’ equity
|
36,353,027
|
34,566,941
|
|
Total liabilities
and stockholders’ equity
|
$49,896,607
|
$47,574,918
|
|
LIGHTPATH TECHNOLOGIES, INC.
|
|||||||||||
|
Condensed Consolidated Statements of Comprehensive Income
(Loss)
|
|||||||||||
|
(unaudited)
|
|
|
Three Months
Ended December
31,
|
Six Months
Ended December
31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Revenue,
net
|
$9,922,171
|
$9,599,912
|
$19,431,143
|
$17,151,842
|
|
Cost of
sales
|
6,291,835
|
5,670,632
|
11,950,615
|
10,831,744
|
|
Gross
margin
|
3,630,336
|
3,929,280
|
7,480,528
|
6,320,098
|
|
Operating
expenses:
|
|
|
|
|
|
Selling, general
and administrative
|
2,763,178
|
2,199,133
|
5,203,655
|
4,540,911
|
|
New product
development
|
529,902
|
468,646
|
980,399
|
897,057
|
|
Amortization of
intangibles
|
281,271
|
283,279
|
562,542
|
566,800
|
|
Gain on disposal of
property and equipment
|
(477)
|
(79,224)
|
(522)
|
(129,224)
|
|
Total operating
expenses
|
3,573,874
|
2,871,834
|
6,746,074
|
5,875,544
|
|
Operating
income
|
56,462
|
1,057,446
|
734,454
|
444,554
|
|
Other income
(expense):
|
|
|
|
|
|
Interest expense,
net
|
(55,147)
|
(89,257)
|
(113,696)
|
(187,798)
|
|
Other income
(expense), net
|
93,252
|
122,797
|
5,517
|
(392,609)
|
|
Total other income
(expense), net
|
38,105
|
33,540
|
(108,179)
|
(580,407)
|
|
Income (loss)
before income taxes
|
94,567
|
1,090,986
|
626,275
|
(135,853)
|
|
Income tax
provision
|
241,112
|
321,869
|
675,752
|
470,187
|
|
Net income
(loss)
|
$(146,545)
|
$769,117
|
$(49,477)
|
$(606,040)
|
|
Foreign currency
translation adjustment
|
723,396
|
143,056
|
1,452,704
|
196,822
|
|
Comprehensive
income (loss)
|
$576,851
|
$912,173
|
$1,403,227
|
$(409,218)
|
|
Earnings (loss) per
common share (basic)
|
$(0.01)
|
$0.03
|
$(0.00)
|
$(0.02)
|
|
Number of shares
used in per share calculation (basic)
|
26,117,239
|
25,837,903
|
26,049,750
|
25,832,337
|
|
Earnings (loss) per
common share (diluted)
|
$(0.01)
|
$0.03
|
$(0.00)
|
$(0.02)
|
|
Number of shares
used in per share calculation (diluted)
|
26,117,239
|
27,361,273
|
26,049,750
|
25,832,337
|
|
LIGHTPATH
TECHNOLOGIES, INC.
|
||||||
|
Condensed
Consolidated Statements of Changes in Stockholders'
Equity
|
||||||
|
(unaudited)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
Additional
|
Accumulated Other
|
|
Total
|
|
|
Common Stock
Shares
|
Amount
|
Paid-in
Capital
|
Comphrehensive
Income
|
Accumulated
Deficit
|
Stockholders’
Equity
|
|
Balances at June
30, 2020
|
25,891,885
|
$258,919
|
$230,634,056
|
$735,892
|
$(197,061,926)
|
$34,566,941
|
|
Issuance of common stock
for:
|
|
|
|
|
|
|
|
Employee Stock Purchase
Plan
|
3,306
|
33
|
10,976
|
|
—
|
11,009
|
|
Exercise of stock options,
net
|
207,640
|
2,076
|
124,024
|
|
—
|
126,100
|
|
Stock-based compensation on stock
options & RSUs
|
—
|
—
|
136,849
|
—
|
—
|
136,849
|
|
Foreign currency translation
adjustment
|
—
|
—
|
—
|
729,308
|
—
|
729,308
|
|
Net income
|
—
|
—
|
—
|
—
|
97,068
|
97,068
|
|
Balances at
September 30, 2020
|
26,102,831
|
$261,028
|
$230,905,905
|
$1,465,200
|
$(196,964,858)
|
$35,667,275
|
|
Issuance of common stock
for:
|
|
|
|
|
|
|
|
Exercise of stock options &
RSUs, net
|
24,530
|
246
|
2,488
|
—
|
—
|
2,734
|
|
Stock-based compensation on stock
options & RSUs
|
—
|
—
|
106,167
|
—
|
—
|
106,167
|
|
Foreign currency translation
adjustment
|
—
|
—
|
—
|
723,396
|
—
|
723,396
|
|
Net loss
|
—
|
—
|
—
|
—
|
(146,545)
|
(146,545)
|
|
Balances at
December 31, 2020
|
26,127,361
|
$261,274
|
$231,014,560
|
$2,188,596
|
$(197,111,403)
|
$36,353,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at June
30, 2019
|
25,813,895
|
$258,139
|
$230,321,324
|
$808,518
|
$(197,928,855)
|
$33,459,126
|
|
Issuance of common stock
for:
|
|
|
|
|
|
|
|
Employee Stock Purchase
Plan
|
13,370
|
134
|
12,033
|
—
|
—
|
12,167
|
|
Exercise of RSUs,
net
|
4,394
|
44
|
(44)
|
—
|
—
|
—
|
|
Stock-based compensation on stock
options & RSUs
|
—
|
—
|
98,459
|
—
|
—
|
98,459
|
|
Foreign currency translation
adjustment
|
—
|
—
|
—
|
53,766
|
—
|
53,766
|
|
Net loss
|
—
|
—
|
—
|
—
|
(1,375,157)
|
(1,375,157)
|
|
Balances at
September 30, 2019
|
25,831,659
|
$258,317
|
$230,431,772
|
$862,284
|
$(199,304,012)
|
$32,248,361
|
|
Issuance of common stock
for:
|
|
|
|
|
|
|
|
Exercise of RSUs,
net
|
8,703
|
87
|
(87)
|
—
|
—
|
—
|
|
Stock-based compensation on stock
options & RSUs
|
—
|
—
|
95,441
|
—
|
—
|
95,441
|
|
Foreign currency translation
adjustment
|
—
|
—
|
—
|
143,056
|
—
|
143,056
|
|
Net income
|
—
|
—
|
—
|
—
|
769,117
|
769,117
|
|
Balances at
December 31, 2019
|
25,840,362
|
$258,404
|
$230,527,126
|
$1,005,340
|
$(198,534,895)
|
$33,255,975
|
|
LIGHTPATH
TECHNOLOGIES, INC.
|
||
|
Condensed
Consolidated Statements of Cash Flows
|
||
|
(unaudited)
|
||
|
|
|
|
|
|
Six Months Ended
December 31,
|
|
|
|
2020
|
2019
|
|
Cash flows from
operating activities
|
|
|
|
Net
loss
|
$(49,477)
|
$(606,040)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
1,691,163
|
1,760,220
|
|
Interest from
amortization of debt costs
|
9,286
|
9,286
|
|
Gain on disposal of
property and equipment
|
(522)
|
(129,224)
|
|
Stock-based
compensation on stock options & RSUs, net
|
243,016
|
178,389
|
|
Provision for
doubtful accounts receivable
|
—
|
9,147
|
|
Change in operating
lease liabilities
|
(86,804)
|
(64,090)
|
|
Inventory
write-offs to allowance
|
133,204
|
—
|
|
Changes in
operating assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
(654,092)
|
(1,199,691)
|
|
Other
receivables
|
132,051
|
353,695
|
|
Inventories
|
(841,999)
|
142,198
|
|
Prepaid expenses
and other assets
|
266,797
|
338,034
|
|
Accounts payable
and accrued liabilities
|
699,412
|
146,547
|
|
Net cash provided
by operating activities
|
1,542,035
|
938,471
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
Purchase of
property and equipment
|
(2,160,710)
|
(1,153,227)
|
|
Proceeds from sale
of equipment
|
—
|
179,573
|
|
Net cash used in
investing activities
|
(2,160,710)
|
(973,654)
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from
exercise of stock options
|
128,834
|
—
|
|
Proceeds from sale
of common stock from Employee Stock Purchase Plan
|
11,009
|
12,167
|
|
Borrowings on loan
payable
|
275,377
|
—
|
|
Payments on loan
payable
|
(395,257)
|
(290,675)
|
|
Repayment of
finance lease obligations
|
(136,332)
|
(210,225)
|
|
Net cash used in
financing activities
|
(116,369)
|
(488,733)
|
|
Effect of exchange
rate on cash and cash equivalents and restricted cash
|
653,899
|
196,822
|
|
Change in cash and
cash equivalents and restricted cash
|
(81,145)
|
(327,094)
|
|
Cash and cash
equivalents, beginning of period
|
5,387,388
|
4,604,701
|
|
Cash and cash
equivalents, end of period
|
$5,306,243
|
$4,277,607
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Interest paid
in cash
|
$105,029
|
$182,241
|
|
Income taxes
paid
|
$512,499
|
$249,777
|
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.
|
LIGHTPATH TECHNOLOGIES, INC.
|
||||
|
Reconciliation of Non-GAAP Financial Measures and Regulation G
Disclsuure
|
||||
|
(unaudited)
|
||||
|
|
||||
|
|
Three Months Ended
December 31,
|
Six Months Ended
December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Net income
(loss)
|
$(146,545)
|
$769,117
|
$(49,477)
|
$(606,040)
|
|
Depreciation and
amortization
|
864,855
|
868,148
|
1,691,163
|
1,760,220
|
|
Income tax
provision
|
241,112
|
321,869
|
675,752
|
470,187
|
|
Interest
expense
|
55,147
|
89,257
|
113,696
|
187,798
|
|
EBITDA
|
$1,014,569
|
$2,048,391
|
$2,431,134
|
$1,812,165
|
|
% of
revenue
|
10%
|
21%
|
13%
|
11%
|