For Immediate Release
LightPath Technologies Reports Financial Results for
Fiscal Year and Fourth Quarter 2021
CEO Sam Rubin Unveils Mission for Leadership in Global Photonics
Value Chain
ORLANDO,
FL – September 9, 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 financial results for the fourth
quarter and full fiscal year ended June 30, 2021.
Fiscal 2021 Full Year and Fourth Quarter Highlights:
●
Revenue for the
full fiscal year of $38.5 million, an increase of 10% from the
prior year period.
●
Total backlog at
June 30, 2021 of $21.3 million, compared to $21.9 million at June
30, 2020.
●
Cash and cash
equivalents of $6.8 million as of June 30, 2021 increased over 26%
as compared to $5.4 million as of June 30, 2020.
●
Total debt,
including finance leases, was reduced by 17% or approximately $1.0
million in fiscal 2021.
●
Capital
expenditures were approximately $3.2 million for fiscal 2021,
compared to $2.4 million for fiscal 2020.
●
Net loss for fiscal
2021 was $3.2 million, compared to net income of approximately
$867,000 in the prior fiscal year, largely due to higher operating
expenses associated with the China management changes, including
related non-recurring costs.
●
EBITDA* for fiscal
2021 was $1.5 million, compared to $5.4 million in fiscal
2020.
●
Revenue for the
fourth quarter of fiscal 2021 of $8.3 million, a decrease of 9%
from the prior year period.
●
Net loss for the
fourth quarter of fiscal 2021 was $2.9 million, compared to net
income of approximately $657,000 in the fourth quarter of fiscal
2020, largely due to higher operating expenses associated with the
China management changes, including related non-recurring
costs.
●
EBITDA* for the
fourth quarter of fiscal 2021 was a loss of $2.0 million, compared
to $1.7 million of earnings in the fourth quarter of fiscal
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,
“Reporting on fiscal 2021 marks the completion of my first
full fiscal year of leadership at LightPath and has provided the
necessary time to uncover our strengths and weaknesses, as well as
develop a plan for our future. Significant progress and milestones
were achieved in the past year amid one of the most challenging
business climates in our lifetime, as well as the uncovering and
clean-up of malfeasance practices at our subsidiaries in China. I
am grateful for the dedication of our global team that has enabled
us to get to this point and I am highly appreciative of their work
at such a challenging time, full of uncertainties due to the global
pandemic.
“Upon
reporting financial results for the past year, I am even more
excited to address our plans for the future. Our mission is now
clear and we have made great strides to forge our place as an
emerging leader in the global photonics value chain, a large and
fast-growing market that is estimated to be an enabling technology
in as much as 11% of the world’s economy.
“Capitalizing
on optics as an enabling technology that is increasingly pervasive
among various industries and markets, LightPath is leveraging its
legacy of more than 30 years in the industry to address the largest
and fastest growing trends for visible and infrared
(“IR”) optical solutions. The
Company’s global reach, investments in manufacturing
facilities, core competencies in material sciences and substantial
engineering capabilities position it to embrace the changes in the
photonics value chain, to advance from simply providing components
and materials commonly used today to addressing the
photonic-enabled services of tomorrow.
“During
fiscal 2021, we developed and began implementing our ambitious
strategic plan. A key element for this was the buildout of our
global executive leadership team and the bolstering of our Board of
Directors. Although our cash balance at the end of the year
increased as we reduced debt, our overhead expenses increased,
including one-time recruiting costs, as we put our team in place.
At the same time, as part of the diligence while reviewing all of
our global operations, we uncovered malfeasance within our
subsidiaries in China that also required significant one-time
expenses and an overhaul of our management team for those
operations. It has been and continues to be a disruptive and
costly, yet necessary ordeal – made more complicated by
COVID-19 travel restrictions – which played a large part in
the temporary reduced revenue and net loss incurred in the second
half of the year.
“Our
top line growth plans, however, are beginning to deliver their
intended results. For the year, we reached double digit annual
organic revenue growth, which is something we not experienced in 5
years, and follows the two preceding years, which had revenue
growth of 4% in each year. Revenues in the fiscal 2021 third
quarter reached the highest level for any quarter in our history.
We have benefited from momentum achieved in the majority of our
product lines and geographic regions, particularly in our IR
product group. A temporary deferment in telecommunications orders
for our precision molded optics (“PMO”) product group
negatively impacted revenue in China during the second half of the
year, although a trough may have been reached in the fourth
quarter.
“We
believe that LightPath is uniquely positioned to leverage the
change happening in our industry to uniquely position itself, by
changing from a components manufacturer to a solutions provider,
and subsequently growing our business and generating long-term
value to our stockholders. In fiscal 2021, we rolled out a number
of new volume production programs. As is the case with any new
product moving from design to high volume production with
increasing commercial acceptance, we experienced yield issues
associated with coating and finishing. This materially impacted our
gross margins and required specialized engineering resources to
rectify the problem. Now, with our processes back on track, we
expect more normalized production that should be accretive to
margins.
“Further,
our product development has been focused on some very large and
high growth applications. These development efforts include
freeform molding technology that we believe will allow us to target
the AR\VR market and miniaturization opportunities. IR imaging and
sensory capabilities, including LIDAR, is another key area we are
pursuing. Our renowned capabilities and investments in engineering
are enabling us to work more closely with government agencies and
their respective military and aerospace programs.
“Our
sights are also set on inorganic growth. During fiscal 2022, we
intend to actively pursue acquisitions as part of our strategy, to
help augment our capabilities and market reach. While we work
through certain growing pains, these are exciting times for
LightPath and we look forward to setting new records and delivering
on our global mission in fiscal 2022.”
Financial Results
Revenue
Revenue
for the fourth quarter of fiscal 2021 was approximately $8.3
million, a decrease of approximately $775,000, or 9%, as compared
to $9.1 million in the same period of the prior fiscal year. Sales
of IR products comprised 60% of the Company’s consolidated
revenue in the fourth quarter of fiscal 2021, as compared to 53% of
consolidated revenue in the same period of the prior fiscal year.
Visible PMO product sales represented 35% of consolidated revenues
in the fourth quarter of fiscal 2021, as compared to 43% in the
same period of the prior fiscal year. Specialty products continue
to be a small component of the Company’s business,
representing 5% of consolidated revenue in both the fourth quarters
of fiscal 2021 and fiscal 2020.
Revenue
generated by IR products was approximately $5.0 million in the
fourth quarter of fiscal 2021, an increase of 4%, as compared to
$4.8 million in the same period of the prior fiscal
year. The increase in
revenue is primarily driven by sales of diamond-turned IR products,
while sales of BD6-based molded IR products decreased. The increase
in sales of diamond-turned IR products was primarily due to the
timing of order shipments against a large-volume annual contract,
for which shipments were lower in the fourth quarter of the prior
fiscal year. Demand for certain BD6-based IR products has leveled
off, particularly for temperature sensing applications, demand for
which was previously accelerated by COVID-19; however, demand for
industrial applications, firefighting and other public safety
applications continues to be strong.
Revenue
generated by PMO products was approximately $2.9 million for the
fourth quarter of fiscal 2021, a decrease of 24%, as compared to
fiscal 2020. The decline
in revenue is primarily attributed to decreases in sales to
customers in the telecommunications market, partially offset by an
increase in sales through catalog and distribution channels. The
increase in catalog and distribution sales reflects a recovery from
the initial impact of COVID-19 on colleges and universities. The
Company believes the slowdown in orders from telecommunications
customers experienced in the second half of fiscal 2021 to be
temporary with headwinds subsiding by January 2022 as customers
align their inventory levels to the next phase of their 5G
rollout.
Revenue
generated by specialty products was approximately $415,000 in the
fourth quarter of fiscal 2021, a decrease of approximately 1%,
compared to $421,000 in the same period of the prior fiscal
year.
Revenue
for fiscal 2021 was approximately $38.5 million, an increase of
approximately $3.5 million, or 10%, as compared to $35.0 million in
the prior fiscal year. Sales of IR products comprised 55% of the
Company’s consolidated revenue in fiscal 2021, as compared to
52% of consolidated revenue in the prior fiscal year. Visible PMO
product sales represented 41% of consolidated revenues in fiscal
2021, as compared to 42% in the prior fiscal year. Specialty
products continue to be a small component of the Company’s
business, representing 4% of consolidated revenue in fiscal 2021,
as compared to 7% in the prior fiscal year.
Revenue
generated by IR products was approximately $21.0 million in fiscal
2021, an increase of approximately $2.9 million, or 16%, as
compared to approximately $18.1 million in the prior fiscal year.
Revenue growth for IR is driven by increases in sales of both
molded and diamond-turned IR products to customers in the
industrial market, including a key customer with an annual supply
agreement which was renewed for a higher amount during fiscal 2021.
Fever detection products was key driver of the increased demand for
molded IR products, including lenses made with the Company’s
new BD6 material, in fiscal 2021. Demand for temperature sensing
applications was accelerated by COVID-19, and although the demand
has leveled off since the initial spike, it remains elevated.
Demand for industrial applications, firefighting and other public
safety applications also continues to be strong.
Revenue
generated by PMO products was approximately $15.9 million in fiscal
2021, an increase of approximately $1.2 million, or 8%, as compared
to the prior fiscal year. The increase in revenue is primarily
attributed to a significant increase in sales through catalog and
distribution channels, which were down during the second half of
fiscal 2020 due to the impact of COVID-19 on colleges and
universities. This increase was partially offset by a decrease in
sales to customers in the telecommunications market, for which
orders began to slow down in the second half of fiscal 2021, and
lower sales in connection with the personnel transition and related
organizational disruption in China.
Revenue
generated by specialty products was approximately $1.6 million in
fiscal 2021, a decrease of approximately $664,000, or 29%, compared
to $2.3 million in the prior fiscal year. This decrease is
primarily due to non-recurring engineering (“NRE”)
project revenue as well as sales of certain legacy specialty
products in fiscal 2020 not recurring in fiscal 2021. NRE revenue
is project-based and the timing of any such projects is wholly
dependent on these customers and their project
activity.
Cost of Sales and Gross Margin
Gross
margin in the fourth quarter of fiscal 2021 was approximately $2.1
million, a decrease of 41%, as compared to approximately $3.5
million in the same period of the prior fiscal year. Total cost of
sales was approximately $6.3 million for the fourth quarter of
fiscal 2021, compared to $5.6 million for the same period of the
prior fiscal year. Gross margin as a percentage of revenue was 25%
for the fourth quarter of fiscal 2021, compared to 39% for the same
period of the prior fiscal year. The decrease in gross margin as a
percentage of revenue is primarily due to the mix of products sold
in each respective period and yields and efficiencies pertaining to
newly launched products entering into volume
production.
IR
products, which typically have lower margins than PMO products,
comprised 60% of revenue for the fourth quarter of fiscal 2021, as
compared to 53% of revenue for the same period of fiscal 2020.
Gross margin as a percentage of revenue also continues to be
impacted by 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, resulted in traditional
start-up inefficiencies, which negatively impacted margins but
which issues are expected to be reduced as the respective programs
mature. The mix of IR product sales for the fourth quarter of
fiscal 2021 was heavily weighted toward volume production orders,
some of which consisted of products that the Company only recently
started producing in mass, including yield issues the Company
experienced in connection with BD6 coatings, which increased costs.
The Company believes all critical technical issues were resolved by
the end of July 2021, which the Company expects will result in
improved manufacturing efficiencies at a level similar to existing
products.
Gross
margin for fiscal 2021 was approximately $13.4 million, a decrease
of 3%, as compared to approximately $13.8 million in the prior
fiscal year. Total cost of sales was approximately $25.0 million
for fiscal 2021, compared to $21.1 million for the prior fiscal
year. Gross margin as a percentage of revenue was 35% for fiscal
2021, compared to 40% for the prior fiscal year. Margins for PMO
products have generally been strong,
although the decrease in sales for the fourth quarter of fiscal
2021, as compared to the fourth quarter of fiscal 2020,
resulted in some inefficiencies due to under-utilized capacity.
Margins for IR products have been below target levels due to the
many new items going into production and the yield issues
experienced in fiscal 2021, which the Company believes have now
been resolved.
Operating Expenses
During the fourth quarter of fiscal 2021, total operating expenses
were approximately $4.8 million, an increase of $1.9 million, or
67%, 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 $1.8
million, or 84%, as compared to the same period of the prior fiscal
year. The increase is primarily
due to approximately $524,000 of legal fees and consulting expenses
associated with the hiring of new employees and termination of
several employees of the Company’s Chinese
subsidiaries after
determining that they had engaged in malfeasance and conduct
adverse to the interests of the Company, including efforts to
misappropriate certain of the Company’s proprietary
technology, diverting sales to entities owned or controlled by
these former employees and other suspected acts of fraud, theft and
embezzlement. In connection with such terminations, the
Company’s Chinese subsidiaries have engaged in certain legal
proceedings with the terminated employees.
Knowing that such transitions in international subsidiaries can
lead to lengthy legal proceedings that can interrupt the
subsidiary’s ability to operate, compounded by the fact that
the Company’s officers could not travel to China to oversee
the transitions because of the travel restrictions imposed by
COVID-19, the Company chose to enter into severance agreements with
certain of the employees at the time of transaction, pursuant to
which the Company’s subsidiaries agreed to pay such employees
severance of approximately $485,000 in the aggregate, to be paid
out over a six-month period. After the execution of the severance
agreements, the Company discovered additional wrongdoing by the
terminated employees and, as a result, the Company’s
subsidiaries have not yet paid the severance payments and have
disputed the employees’ rights to such payments. Currently,
there are ongoing civil actions in China in connection with the
subsidiaries’ refusal to pay these severance amounts due to
the employees’ non-compliance. However, based on the
likelihood that the courts in China will determine that the
subsidiaries will ultimately be obligated to pay these amounts, we
have accrued for these payments as of June 30, 2021. In addition,
the Company recorded additional stock compensation expenses of
approximately $65,000 as certain restricted stock units
(“RSUs”) vested upon the retirement of a director. The
director had also deferred receipt of the shares of Class A common
stock underlying previously vested RSUs until his retirement. The
remaining increase in SG&A costs, as compared to the same
period of the prior fiscal year, is due to higher personnel-related
costs associated with filling key positions as the Company
implements its global growth and corporate development initiatives.
New product development costs increased by approximately $140,000,
or 35%, as compared to the same period of the prior fiscal year.
This increase was primarily due to the addition of engineering
employees and outside services in order to support the demand for
optical design, to resolve yield issues and to develop new
processes and advanced material applications.
During fiscal 2021, total operating expenses were approximately
$15.3 million, an increase of $3.6 million, or 31%, as compared to
$11.7 million in the prior fiscal year. SG&A
costs were approximately $12.0 million during fiscal
2021, an increase of approximately $3.0 million, or 34%, as
compared to the prior fiscal year. SG&A for fiscal 2021 included the following
non-recurring expenses: (i) $1.2 million of expenses associated
with the termination of several employees within the
Company’s subsidiaries in China and related matters,
including severance, legal and consulting fees, (ii) approximately
$400,000 of previously disclosed additional compensation to the
former Chief Executive Officer, and (iii) approximately $150,000 of
additional stock compensation recorded as certain RSUs vested upon
the retirement of two directors. The remaining increase of $1.3
million is due to increases in recruiting costs associated with the
changes to executive leadership, outside consulting services for
projects related to operational improvements, and personnel-related
costs associated with filling key positions. New product
development costs increased by approximately $452,000, or 26%, as
compared to the prior fiscal year. This increase was primarily due
to the addition of engineering employees and outside services in
order to support the demand for optical design.
Other Income (Expense)
Interest
expense was approximately $49,000 and $215,000 for the three months
and full fiscal year ended June 30, 2021, respectively, as compared
to approximately $66,000 and $339,000 for the three months and full
fiscal year ended June 30, 2020, respectively. The decrease in
interest expense is due to lower interest rates and a 17% reduction
in the Company’s total debt, including finance lease
obligations, from June 30, 2020 to June 30, 2021.
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 $37,000 in the fourth quarter of
fiscal 2021, compared to $149,000 for the fourth quarter of fiscal
2020. These foreign currency transaction amounts had no impact on
basic and diluted loss per share for the fourth quarter of fiscal
2021 and a $0.01 favorable impact on basic and diluted earnings per
share for the fourth quarter of fiscal 2020. For fiscal 2021,
LightPath recognized foreign currency transaction losses of $1,000,
compared to $214,000 for fiscal 2020. These foreign currency
transaction losses had no impact on basic and diluted loss per
share for fiscal 2021, and a $0.01 unfavorable impact on basic and
diluted earnings per share for fiscal 2020.
Other
expense, net, for the fourth quarter and full fiscal year of 2021
also includes expenses of $210,000, which represents a further
potential liability that we may incur in the future due to the
actions of the terminated employees of our subsidiaries in China as
previously discussed. This amount has been accrued as of June 30,
2021, pending further investigation.
Income Taxes
During
the fourth quarter of fiscal 2021, the Company recorded a net
income tax benefit of approximately $50,000, compared to income tax
expense of approximately $90,000 for the same period of the prior
fiscal year. The net income tax benefit for the fourth quarter is
primarily driven by the net losses incurred by subsidiaries in
China as a result of the aforementioned additional operating
expenses. This tax benefit was partially offset by an increase in
the Company’s valuation allowance against its U.S. net
deferred tax assets.
During
fiscal 2021, income tax expense was approximately $934,000, as
compared to approximately $764,000 for the prior fiscal year,
primarily related to income taxes on the income generated in China.
Income tax expense for fiscal 2021 also reflects an increase in the
Company’s valuation allowance against its U.S. net deferred
tax assets. Income taxes for fiscal 2021 and fiscal 2020 also
included Chinese withholding taxes of $500,000 and $200,000,
respectively, associated with intercompany dividends declared
during the respective periods. While these repatriation
transactions resulted in some additional Chinese withholding taxes,
one of Company’s subsidiaries in China 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 net operating loss (“NOL”) carry-forward benefits
of approximately $61 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 fourth quarter of fiscal 2021 was approximately $2.9
million, or $0.11 basic and diluted loss per share, compared to net
income of $657,000, or $0.03 and $0.02 basic and diluted earnings
per share, respectively, for the fourth quarter of fiscal 2020. The
decrease in net income for the fourth quarter of fiscal 2021 as
compared to the same period of the prior fiscal year was primarily
attributable to the lower gross margin, coupled with the
approximately $1.3 million of non-recurring SG&A and Other
expenses incurred in connection with the previously described
events that occurred at our Chinese subsidiaries, and the
recognition of stock compensation expense related to the retirement
of a director, as well as increased new product development costs.
These differences reduced operating income by approximately $3.4
million for the fourth quarter of fiscal 2021 as compared to the
same period of the prior fiscal year.
Net
loss for fiscal 2021 was approximately $3.2 million, or $0.12 basic
and diluted loss per share, compared to net income of $867,000, or
$0.03 basic and diluted earnings per share, for fiscal 2020. The
decrease in net income for fiscal 2021 as compared to the prior
fiscal year is primarily attributable to a $4.0 million decrease in
operating income resulting from lower gross margin, and higher
operating expenses, including the aforementioned $2.0 million of
SG&A and Other expenses related to expenses incurred in
connection with the previously described events that occurred at
our Chinese subsidiaries, the payment of additional compensation to
our former Chief Executive Officer, and additional stock
compensation as a result of the retirement of two of our directors.
In addition, there was an unfavorable difference of approximately
$170,000 in the provision for income taxes. These increased costs
were partially offset by a favorable difference of approximately
$213,000 in net foreign exchange gains and losses.
Weighted-average
common shares outstanding were 26,796,326, basic and diluted, in
the fourth quarter of fiscal 2021, compared to 25,875,127 and
28,182,614, basic and diluted, respectively, in the fourth quarter
of fiscal 2020. Weighted-average common shares outstanding were
26,314,025, basic and diluted, for fiscal 2021, compared to
25,853,419 and 27,469,845, basic and diluted, respectively, for
fiscal 2020. The increase in the weighted-average basic common
shares was due to the issuance of shares of Class A common stock
(i) under the Employee Stock Purchase Plan, (ii) upon the exercises
of stock options, and (iii) underlying vested RSUs.
EBITDA
EBITDA
for the fourth quarter of fiscal 2021 was a loss of approximately
$2.0 million, compared to earnings of $1.7 million for the same
period of the prior fiscal year. The decrease in EBITDA in the fourth
quarter of fiscal 2021 was primarily attributable to lower
consolidated gross margin and increased SG&A and Other
expenses, including approximately $1.3 million of expenses incurred
related to the previously described events that occurred in our
China subsidiaries, and certain director and personnel matters that
occurred during the period as discussed above, as well as increased
new product development costs. In addition, there was an
unfavorable difference of approximately $112,000 in net foreign
exchange gains and losses.
EBITDA
for fiscal 2021 was approximately $1.5 million, compared to $5.4
million for the prior fiscal year. The decrease in EBITDA for
fiscal 2021 is primarily attributable to increased SG&A and
Other expenses, including approximately $2.0 million of expenses
incurred related to the previously described events that occurred
in our China subsidiaries, and certain officer, director, and
personnel matters that occurred during the period as discussed
above, as well as increased new product development costs. These
increased costs were partially offset by a favorable difference of
approximately $213,000 in net foreign exchange gains and
losses.
EBITDA
is a non-GAAP financial measure. A disclaimer and reconciliation
are provided below.
Liquidity and Capital Resources
Cash
and cash equivalents totaled approximately $6.8 million as of June
30, 2021, compared to approximately $5.4 million at June 30, 2020.
Cash provided by operations was approximately $4.7 million for
fiscal 2021, as compared to approximately $3.7 million in fiscal
2020. The improvement in cash flows during fiscal 2021 is due to
improved receivables and inventory management, which was achieved
amid the increase in sales for the same period as compared to the
prior fiscal year. In addition, accounts payable and accrued
liabilities increased in fiscal 2021 as compared to fiscal 2020,
primarily due to the previously described activities in China, for
which certain expenses have been incurred but not yet paid. The
Company expended approximately $3.2 million for investments in
capital equipment during fiscal 2021, compared to approximately
$2.4 million for the prior fiscal year. The majority of capital
expenditures during fiscal 2021 were related to the continued
global expansion of IR coating capacity as well as increasing lens
pressing and dicing capacity to meet current and forecasted
demand.
The
current ratio as of June 30, 2021 was 2.5 to 1, compared to 2.9 to
1 as of June 30, 2020. Total stockholders’ equity as of June
30, 2021 was approximately $33.6 million, compared to $34.6 million
as of June 30, 2020. The net decrease in stockholders’ equity
during 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 net 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 June 30, 2021,
LightPath’s total backlog was $21.3 million, a decrease of 3%
as compared to $21.9 million as of June 30, 2020. The decrease in
total backlog during fiscal 2021 is the result of fewer new orders
during the last two quarters from a large telecommunications
customer, which orders are typically renewed each quarter. The
Company believes this to be a temporary slowdown, as inventory
levels are aligned to the next phase of the 5G
rollout.
Historically,
the Company has received the renewal of a large annual contract for
IR products during the second quarter of each fiscal year, which is
typically shipped against beginning in the fiscal third quarter.
The timing of other contract renewals may not be as 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 Thursday,
September 9, 2021 at 5:00 p.m. ET to discuss its financial and
operational performance for its fiscal 2021 fourth quarter ended
June 30, 2021.
Date:
Thursday, September 9, 2021
Time:
5:00 PM (ET)
Dial-in
Number: 1-877-317-2514
International
Dial-in Number: 1-412-317-2514
Webcast: https://services.choruscall.com/links/lpth210909.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 September 23, 2021.
To listen to the replay, dial 1-877-344-7529 (domestic) or
1-412-317-0088 (international), and enter conference ID
#10159443.
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
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 and Quarterly
Reports on 10-Q. 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:
Jordan Darrow
Darrow Associates, Inc.
Tel:
512-551-9296
(tables
follow)
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$6,774,694
|
$5,387,388
|
|
Trade accounts
receivable, net of allowance of $45,643 and $9,917
|
4,656,354
|
6,188,726
|
|
Inventories,
net
|
8,659,587
|
8,984,482
|
|
Other
receivables
|
137,103
|
132,051
|
|
Prepaid expenses
and other assets
|
475,364
|
565,181
|
|
Total current
assets
|
20,703,102
|
21,257,828
|
|
|
|
|
|
Property and
equipment, net
|
13,279,867
|
11,799,061
|
|
Operating lease
right-of-use assets
|
9,015,498
|
1,220,430
|
|
Intangible assets,
net
|
5,582,881
|
6,707,964
|
|
Goodwill
|
5,854,905
|
5,854,905
|
|
Deferred tax
assets, net
|
147,000
|
659,000
|
|
Other
assets
|
27,737
|
75,730
|
|
Total
assets
|
$54,610,990
|
$47,574,918
|
|
Liabilities
and Stockholders’ Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$2,924,333
|
$2,558,638
|
|
Accrued
liabilities
|
1,067,265
|
992,221
|
|
Accrued payroll and
benefits
|
2,810,043
|
1,827,740
|
|
Operating lease
liabilities, current
|
799,507
|
765,422
|
|
Loans payable,
current portion
|
634,846
|
981,350
|
|
Finance lease
obligation, current portion
|
212,212
|
278,040
|
|
Total current
liabilities
|
8,448,206
|
7,403,411
|
|
|
|
|
|
Finance lease
obligation, less current portion
|
66,801
|
279,435
|
|
Operating lease
liabilities, noncurrent
|
8,461,133
|
887,766
|
Loans payable, less
current portion
|
4,057,365
|
4,437,365
|
|
Total
liabilities
|
21,033,505
|
13,007,977
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
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; 26,985,913 and 25,891,885
|
|
|
|
shares issued and
outstanding
|
269,859
|
258,919
|
|
Additional paid-in
capital
|
231,438,651
|
230,634,056
|
|
Accumulated other
comprehensive income
|
2,116,152
|
735,892
|
|
Accumulated
deficit
|
(200,247,177)
|
(197,061,926)
|
|
Total
stockholders’ equity
|
33,577,485
|
34,566,941
|
|
Total liabilities
and stockholders’ equity
|
$54,610,990
|
$47,574,918
|
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Comprehensive Income
(Loss)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue,
net
|
$8,332,316
|
$9,107,140
|
$38,464,821
|
$34,967,963
|
|
Cost of
sales
|
6,268,831
|
5,596,915
|
25,017,051
|
21,125,464
|
|
Gross
margin
|
2,063,485
|
3,510,225
|
13,447,770
|
13,842,499
|
|
Operating
expenses:
|
|
|
|
|
|
Selling, general
and administrative
|
3,980,113
|
2,164,614
|
11,989,597
|
8,961,150
|
|
New product
development
|
545,024
|
404,694
|
2,165,951
|
1,714,077
|
|
Amortization of
intangibles
|
281,271
|
281,270
|
1,125,083
|
1,129,341
|
|
Loss (gain) on
disposal of property and equipment
|
—
|
21,802
|
8,951
|
(107,280)
|
|
Total operating
expenses
|
4,806,408
|
2,872,380
|
15,289,582
|
11,697,288
|
|
Operating
income
|
(2,742,923)
|
637,845
|
(1,841,812)
|
2,145,211
|
|
Other income
(expense):
|
|
|
|
|
|
Interest expense,
net
|
(48,863)
|
(66,184)
|
(215,354)
|
(339,446)
|
|
Other income
(expense), net
|
(171,095)
|
175,733
|
(194,170)
|
(174,838)
|
|
Total other income
(expense), net
|
(219,958)
|
109,549
|
(409,524)
|
(514,284)
|
|
Income before
income taxes
|
(2,962,881)
|
747,394
|
(2,251,336)
|
1,630,927
|
|
|
(49,671)
|
90,442
|
933,915
|
763,998
|
|
Net income
(loss)
|
$(2,913,210)
|
$656,952
|
$(3,185,251)
|
$866,929
|
|
Foreign currency
translation adjustment
|
300,670
|
(24,928)
|
1,380,260
|
(72,626)
|
|
Comprehensive
income (loss)
|
$(2,612,540)
|
$632,024
|
$(1,804,991)
|
$794,303
|
|
Earnings (loss) per
common share (basic)
|
$(0.11)
|
$0.03
|
$(0.12)
|
$0.03
|
|
Number of shares
used in per share calculation (basic)
|
26,796,326
|
25,858,155
|
26,314,025
|
25,853,419
|
|
Earnings (loss) per
common share (diluted)
|
$(0.11)
|
$0.02
|
$(0.12)
|
$0.03
|
|
Number of shares
used in per share calculation (diluted)
|
26,796,326
|
27,569,844
|
26,314,025
|
27,469,845
|
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Changes in Stockholders'
Equity
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
30,537
|
305
|
24,307
|
—
|
—
|
24,612
|
|
Exercise of Stock Options &
RSUs, net
|
42,453
|
425
|
21,838
|
—
|
—
|
22,263
|
|
Shares issued as
compensation
|
5,000
|
50
|
6,100
|
—
|
—
|
6,150
|
|
Stock-based compensation on stock
options & RSUs
|
—
|
—
|
260,487
|
—
|
—
|
260,487
|
|
Foreign currency translation
adjustment
|
—
|
—
|
—
|
(72,626)
|
—
|
(72,626)
|
|
Net income
|
—
|
—
|
—
|
—
|
866,929
|
866,929
|
|
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
|
8,145
|
81
|
29,897
|
—
|
—
|
29,978
|
|
Exercise of Stock Options &
RSUs, net
|
1,085,883
|
10,859
|
131,833
|
—
|
—
|
142,692
|
|
Stock-based compensation on stock
options & RSUs
|
—
|
—
|
642,865
|
—
|
—
|
642,865
|
|
Foreign currency translation
adjustment
|
—
|
—
|
—
|
1,380,260
|
—
|
1,380,260
|
|
Net loss
|
—
|
—
|
—
|
—
|
(3,185,251)
|
(3,185,251)
|
|
Balances at June
30, 2021
|
26,985,913
|
$269,859
|
$231,438,651
|
$2,116,152
|
$(200,247,177)
|
$33,577,485
|
LIGHTPATH TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
Net (loss)
income
|
$(3,185,251)
|
$866,929
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
3,509,436
|
3,424,438
|
|
Interest from
amortization of debt costs
|
18,572
|
18,572
|
|
Gain on disposal of
property and equipment
|
8,951
|
(107,280)
|
|
Stock-based
compensation on stock options & RSUs, net
|
642,865
|
250,737
|
|
Provision for
doubtful accounts receivable
|
(35,799)
|
18,826
|
|
Change in operating
lease liabilities
|
(187,616)
|
(157,757)
|
|
Inventory
write-offs to allowance
|
157,399
|
127,872
|
|
Deferred tax
expense (benefit)
|
512,000
|
(7,000)
|
|
Changes in
operating assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
1,568,171
|
3,279
|
|
Other
receivables
|
(5,052)
|
221,644
|
|
Inventories
|
167,496
|
(1,427,827)
|
|
Prepaid expenses
and other assets
|
137,810
|
403,220
|
|
Accounts payable
and accrued liabilities
|
1,423,042
|
97,160
|
|
Net cash provided
by operating activities
|
4,732,024
|
3,732,813
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
Purchase of
property and equipment
|
(3,158,784)
|
(2,442,779)
|
|
Proceeds from sale
of equipment
|
—
|
186,986
|
|
Net cash used in
investing activities
|
(3,158,784)
|
(2,255,793)
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
Proceeds from
exercise of stock options
|
142,692
|
22,263
|
|
Proceeds from sale
of common stock from Employee Stock Purchase Plan
|
29,978
|
24,612
|
|
Borrowings on loans
payable
|
275,377
|
400,000
|
|
Payments on loans
payable
|
(1,013,014)
|
(581,350)
|
|
Repayment of
finance lease obligations
|
(278,462)
|
(487,233)
|
|
Net cash used in
financing activities
|
(843,429)
|
(621,708)
|
|
Effect of exchange
rate on cash and cash equivalents
|
657,495
|
(72,625)
|
|
Change in cash and
cash equivalents
|
1,387,306
|
782,687
|
|
Cash and cash
equivalents, beginning of period
|
5,387,388
|
4,604,701
|
|
Cash and cash
equivalents, end of period
|
$6,774,694
|
$5,387,388
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Interest paid
in cash
|
$199,524
|
$330,910
|
|
Income taxes
paid
|
$1,054,232
|
$526,225
|
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
Disclosure
|
|
|
|
|
Three Months
Ended June 30,
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$(2,913,210)
|
$656,952
|
$(3,185,251)
|
$866,929
|
|
Depreciation and
amortization
|
900,964
|
837,123
|
3,509,436
|
3,424,438
|
|
Income tax
provision
|
(49,671)
|
90,442
|
933,915
|
763,998
|
|
Interest
expense
|
48,863
|
66,184
|
215,354
|
339,446
|
|
EBITDA
|
$(2,013,054)
|
$1,650,701
|
$1,473,454
|
$5,394,811
|
|
% of
revenue
|
-24%
|
18%
|
4%
|
15%
|