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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

______________

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 6, 2020

______________

 

Applied Optoelectronics, Inc.

(Exact name of Registrant as specified in its charter)

 

Delaware 001-36083 76-0533927
(State of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.)

 

13139 Jess Pirtle Blvd.

Sugar Land, TX 77478

(address of principal executive offices and zip code)

 

(281) 295-1800

(Registrant’s telephone number, including area code)

______________

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common Stock, Par value $0.001

AAOI NASDAQ Global Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

   
 

 

ITEM 2.02.RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

On August 6, 2020 Applied Optoelectronics, Inc. (the “Company”) issued a press release regarding the Company’s financial results for the second quarter ended June 30, 2020. A copy of the Company’s press release is attached as Exhibit 99.1 to this Form 8-K.

 

The information furnished in this Current Report under this Item 2.02 and the exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

ITEM 9.01.FINANCIAL STATEMENTS AND EXHIBITS.

 

(d) Exhibits

 

Exhibit Number Description

 

99.1 Press release dated August 6, 2020, issued by Applied Optoelectronics, Inc., filed herewith.

 

104 Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document).

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

  Applied Optoelectronics, Inc.
   
  By:  /s/ STEFAN J. MURRY
    Stephan J. Murry
Chief Financial Officer

Date: August 6, 2020

 

 

 

 

 

 

 

 

 

 

 

 

   

 

Exhibit 99.1

 

 

Applied Optoelectronics Reports Second Quarter 2020 Results

 

SUGAR LAND, Texas, August 6, 2020 – Applied Optoelectronics, Inc. (NASDAQ: AAOI), a leading provider of fiber-optic access network products for the internet datacenter, cable broadband, telecom and fiber-to-the-home (FTTH) markets, today announced financial results for its second quarter 2020 ended June 30, 2020.

 

“Overall, we are pleased with the progress of our second quarter financial performance, with revenue ahead of our guidance driven by strong demand from our datacenter customers and record revenue in our telecom segment led by deployments of 5G mobile technology,” said Dr. Thompson Lin, Applied Optoelectronics Inc. Founder, President and Chief Executive Officer. “We are also encouraged by the increased contributions from our newer customers, which has led to a meaningful improvement in customer and end market diversification. Looking ahead, we expect this momentum to continue into the third quarter driven by similar trends in increased demand from both our data center and telecom end markets.”

 

Second Quarter 2020 Financial Summary

 

·Total revenue was $65.2 million, compared with $43.4 million in the second quarter of 2019 and $40.5 million in the first quarter of 2020.

 

·GAAP gross margin was 21.1%, compared with 24.3% in the second quarter of 2019 and 15.7% in the first quarter of 2020. Non- GAAP gross margin was 23.1%, compared with 27.2% in the second quarter of 2019 and 19.5% in the first quarter of 2020.

 

·GAAP net loss was $18.6 million, or $0.89 per basic share, compared with net loss of $11.4 million, or $0.57 per basic share in the second quarter of 2019, and a net loss of $16.8 million, or $0.83 per basic share in the first quarter of 2020.

 

·Non-GAAP net loss was $5.0 million, or $0.24 per basic share, compared with non-GAAP net loss of $5.2 million, or $0.26 per basic share in the second quarter of 2019, and a non-GAAP net loss of $8.8 million, or $0.44 per basic share in the first quarter of 2020.

 

A reconciliation between all GAAP and non-GAAP information referenced above for the second quarters of 2020 and 2019 is contained in the tables below. Please also refer to “Non-GAAP Financial Measures” below for a description of these non-GAAP financial measures.

 

Third Quarter 2020 Business Outlook (+)

 

For the third quarter of 2020, the company currently expects:

 

·Revenue in the range of $76 million to $83 million.
·Non-GAAP gross margin in the range of 25% to 26.5%.
·Non-GAAP net loss in the range of $4.6 million to $0.6 million, and non-GAAP loss per share in the range of $0.20 to $0.03 using approximately 23.4 million shares.

 

(+) Please refer to the note below on forward-looking statements and the risks involved with such statements as well as the note on non- GAAP financial measures.

 

Conference Call Information

 

The company will host a conference call and webcast for analysts and investors on August 6, 2020 to discuss its second quarter 2020 results and outlook for its third quarter 2020 at 4:30 p.m. Eastern time / 3:30 p.m. Central time. Open to the public, investors may access the call by dialing 844-890-1794 (domestic) or 412-717-9586 (international). A live audio webcast of the conference call along with supplemental financial information will also be accessible on the company's website at investors.ao-inc.com. Following the webcast, an archived version will be available on the website for one year. A telephonic replay of the call will be available one hour after the call and will run for five business days and may be accessed by dialing 877-344-7529 (domestic) or 412-317-0088 (international) and entering passcode 10146520.

 

 

   
 

 

Forward-Looking Information

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "believe," "may," "estimate," "continue," "anticipate," "intend," "should," "could," "would," "target," "seek," "aim," "predicts," "think," "objectives," "optimistic," "new," "goal," "strategy," "potential," "is likely," "will," "expect," "plan" "project," "permit" or by other similar expressions that convey uncertainty of future events or outcomes. These statements include management’s beliefs and expectations related to our outlook for the third quarter of 2020. Such forward-looking statements reflect the views of management at the time such statements are made. These forward-looking statements involve risks and uncertainties, as well as assumptions and current expectations, which could cause the company's actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include but are not limited to: the impact of the COVID- 19 pandemic on our business and financial results; reduction in the size or quantity of customer orders; change in demand for the company's products due to industry conditions; changes in manufacturing operations; volatility in manufacturing costs; delays in shipments of products; disruptions in the supply chain; change in the rate of design wins or the rate of customer acceptance of new products; the company's reliance on a small number of customers for a substantial portion of its revenues; potential pricing pressure; a decline in demand for our customers' products or their rate of deployment of their products; general conditions in the internet datacenter, cable television (CATV) broadband, telecom, or fiber-to-the-home (FTTH) markets; changes in the world economy (particularly in the United States and China); changes in the regulation and taxation of international trade, including the imposition of tariffs; changes in currency exchange rates; the negative effects of seasonality; and other risks and uncertainties described more fully in the company's documents filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. More information about these and other risks that may impact the company's business are set forth in the "Risk Factors" section of the company's quarterly and annual reports on file with the Securities and Exchange Commission. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements in this press release are based upon information available to us as of the date hereof, and qualified in their entirety by this cautionary statement. Except as required by law, we assume no obligation to update forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in the company's expectations.

 

Non-GAAP Financial Measures

 

We provide non-GAAP gross margin, non-GAAP net income (loss), and non-GAAP earnings per share to eliminate the impact of items that we do not consider indicative of our overall operating performance. To arrive at our non-GAAP gross margin, we exclude stock-based compensation expense, expenses associated with discontinued products, and non-recurring expenses, if any, from our GAAP gross margin. To arrive at our non-GAAP net income (loss), we exclude all amortization of intangible assets, stock-based compensation expense, non-recurring expenses, unrealized foreign exchange gain (loss), losses from the disposal of idle assets, if any, non-GAAP tax expenses (benefits), and expenses associated with discontinued products, if any, from our GAAP net income (loss). Included in our non-recurring expenses in Q2 2020 and Q2 2019 are certain one-time legal (if any) and consulting fees (if any) and employee severance expenses (if any). In computing our non-GAAP income tax expense (benefit), we have applied an estimate of our annual effective income tax rate and applied it to our net income before income taxes. Our non-GAAP earnings per share is calculated by dividing our non-GAAP net income by the fully diluted share count (for periods in which non-GAAP net income is positive) or basic share count (for periods in which our non- GAAP net income is negative). We believe that our non-GAAP measures are useful to investors in evaluating our operating performance for the following reasons:

 

·We believe that elimination of items such as amortization of intangible assets, stock-based compensation expense, non-recurring revenue and expenses, losses from the disposal of idle assets, unrealized foreign exchange gain or loss, unamortized debt issuance costs associated with the extinguishment of debt, and depreciation on certain equipment undergoing reconfiguration is appropriate because treatment of these items may vary for reasons unrelated to our overall operating performance;
·We believe that elimination of expenses associated with discontinued products, including depreciation and inventory obsolescence is appropriate because these expenses are not indicative of our ongoing operations;
·We believe that estimating non-GAAP income taxes allows comparison with prior periods and provides additional information regarding the generation of potential future deferred tax assets;
·We believe that non-GAAP measures provide better comparability with our past financial performance, period-to-period results and with our peer companies, many of which also use similar non-GAAP financial measures; and
·We anticipate that investors and securities analysts will utilize non-GAAP measures as a supplement to GAAP measures to evaluate our overall operating performance.

 

A reconciliation of our GAAP net income (loss) and GAAP earnings (loss) per share for the quarter ended June 30, 2020 to our non-GAAP net income (loss) and earnings (loss) per share is provided below, together with corresponding reconciliations for the quarter period ended June 30, 2019. A reconciliation of our GAAP net income (loss) and GAAP earnings (loss) per share for the quarter ended June 30, 2020 to our non-GAAP net income (loss) and earnings (loss) per share is provided in our earnings release dated August 6, 2020, which was filed with the Securities and Exchange Commission with a Current Report on Form 8-K filed on August 6, 2020.

 

 

 

   
 

 

Non-GAAP measures should not be considered as an alternative to net income (loss), earnings (loss) per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such other non-GAAP measures in the same manner. We have not reconciled the non-GAAP measures included in our guidance to the appropriate GAAP financial measures because the GAAP measures are not readily determinable on a forward-looking basis. GAAP measures that impact our non-GAAP financial measures may include stock-based compensation expense, non-recurring expenses, amortization of intangible assets, unrealized exchange loss (gain), asset impairment charges, and loss (gain) from disposal of idle assets. These GAAP measures cannot be reasonably predicted and may directly impact our non-GAAP gross margin, our non-GAAP net income and our non-GAAP fully-diluted earnings per share, although changes with respect to certain of these measures may offset other changes. In addition, certain of these measures are out of our control. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

  

About Applied Optoelectronics

 

Applied Optoelectronics Inc. (AOI) is a leading developer and manufacturer of advanced optical products, including components, modules and equipment. AOI's products are the building blocks for broadband fiber access networks around the world, where they are used in the internet datacenter, CATV broadband, telecom and FTTH markets. AOI supplies optical networking lasers, components and equipment to tier-1 customers in all four of these markets. In addition to its corporate headquarters, wafer fab and advanced engineering and production facilities in Sugar Land, TX, AOI has engineering and manufacturing facilities in Taipei, Taiwan and Ningbo, China. For additional information, visit www.ao-inc.com.

 

Investor Relations Contacts:

 

The Blueshirt Group, Investor Relations

Monica Gould

+1-212-871-3927

ir@ao-inc.com

 

####

 

   
 

 

Applied Optoelectronics, Inc.

Preliminary Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

   June 30, 2020   December 31, 2019 
         
ASSETS          
CURRENT ASSETS          
Cash, Cash Equivalents and Restricted Cash  $58,909   $67,028 
Accounts Receivable, Net   50,029    34,655 
Inventories   97,251    85,028 
Prepaid Income Tax   210    224 
Prepaid Expenses and Other Current Assets   6,610    5,869 
Total Current Assets   213,009    192,804 
           
Property, Plant And Equipment, Net   244,126    248,444 
Land Use Rights, Net   5,455    5,598 
Right of Use Asset   7,656    7,887 
Intangible Assets, Net   4,006    4,081 
Deferred Income Tax Assets   2,136    7,287 
Other Assets   1,703    724 
TOTAL ASSETS  $478,091   $466,825 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
CURRENT LIABILITIES          
Accounts Payable  $51,154   $32,828 
Accrued Expenses   15,557    17,864 
Current Lease Liability   958    982 
Bank Acceptance Payable   9,866    6,310 
Current Portion of Notes Payable and Long Term Debt   42,234    33,371 
Total Current Liabilities   119,769    91,355 
           
Notes Payable and Long Term Debt   15,542    16,552 
Convertible Senior Notes   77,439    77,041 
Other Long-Term Liabilities   7,886    8,083 
TOTAL LIABILITIES   220,636    193,031 
           
STOCKHOLDERS' EQUITY          
TOTAL STOCKHOLDERS' EQUITY   257,455    273,794 
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $478,091   $466,825 

 

 

 

 

   
 

 

Applied Optoelectronics, Inc.

Preliminary Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

   Three Months Ended
June 30,
   Six Months Ended
June 30,
 
Revenue  2020   2019   2020   2019 
Datacenter  $52,533   $31,806   $85,797   $70,305 
CATV   6,141    9,818    10,364    21,780 
Telecom   6,170    1,630    8,730    3,368 
FTTH   1    16    1    110 
Other   377    141    797    567 
Total Revenue   65,222    43,411    105,689    96,130 
                     
Total Cost of Goods Sold   51,486    32,873    85,615    73,241 
                     
Total Gross Profit   13,736    10,538    20,074    22,889 
                     
Operating Expenses:                    
Research and Development   10,803    11,151    21,361    22,336 
Sales and Marketing   3,430    2,331    6,366    4,926 
General and Administrative   10,611    10,884    21,249    21,324 
Total Operating Expenses   24,844    24,366    48,976    48,586 
                     
Operating Loss   (11,108)   (13,828)   (28,902)   (25,697)
                     
Other Income (Expense):                    
Interest Income   47    310    194    382 
Interest Expense   (1,489)   (1,490)   (2,944)   (2,486)
Other Income   861    235    979    313 
Foreign Exchange Gain   113    216    252    (17)
Total Other Income (Expense):   (468)   (729)   (1,519)   (1,808)
                     
Net loss before Income Taxes   (11,576)   (14,557)   (30,421)   (27,505)
                     
Income Tax Benefit (Expense)   (7,024)   3,191    (4,976)   5,665 
                     
Net loss   (18,600)   (11,366)   (35,397)   (21,840)
Net loss per share attributable to common stockholders                    
basic  $(0.89)  $(0.57)  $(1.72)  $(1.10)
diluted  $(0.89)  $(0.57)  $(1.72)  $(1.10)
                     
Weighted-average shares used to compute
  net loss per share attributable to
  common stockholders
                    
 basic   20,858    19,932    20,533    19,898 
 diluted   20,858    19,932    20,533    19,898 

 

 

 

 

   
 

 

Applied Optoelectronics, Inc.

Reconciliation of Statements of Operations under GAAP and Non-GAAP

(In thousands, except per share data)

(Unaudited)

 

   Three Months Ended
June 30,
   Six Months Ended
June 30,
 
   2020   2019   2020   2019 
GAAP total gross profit (a)  $13,736   $10,538   $20,074   $22,889 
Share-based compensation expense   237    199    483    388 
Non-recurring expense   1        972     
Expenses associated with discontinued products   1,077    1,067    1,431    1,992 
Non-GAAP total gross profit (a)   15,051    11,804    22,960    25,269 
                     
GAAP net income (loss)   (18,600)   (11,366)   (35,397)   (21,840)
Amortization of intangible assets   143    133    285    263 
Share-based compensation expense   3,302    3,020    6,540    5,963 
Non-recurring charges   (463)   812    806    1,054 
Expenses associated with discontinued products   1,077    1,067    1,431    1,992 
Non-cash expenses associated with discontinued products   953    1,116    2,210    2,133 
Unrealized exchange loss (gain)   43    56    (127)   (171)
Non-GAAP tax benefit   8,562        10,477     
Non-GAAP net income (loss)  $(4,983)  $(5,162)  $(13,775)  $(10,606)
                     
GAAP diluted net income (loss) per share  $(0.89)  $(0.57)  $(1.72)  $(1.10)
Amortization of intangible assets   0.01    0.01    0.01    0.01 
Share-based compensation expense   0.16    0.15    0.32    0.30 
Non-recurring charges   (0.02)   0.04    0.04    0.05 
Expenses associated with discontinued products   0.05    0.05    0.07    0.10 
Non-cash expenses associated with discontinued products   0.04    0.06    0.10    0.11 
Loss from disposal of idle assets                
Unrealized exchange loss (gain)   0.00    0.00    (0.01)   (0.01)
Non-GAAP tax benefit   0.41        0.51     
Non-GAAP diluted net income (loss) per share  $(0.24)  $(0.26)  $(0.68)  $(0.53)
                     
Shares used to compute diluted loss per share   20,858    19,932    20,533    19,898 
Shares used to compute diluted earnings per share   20,858    19,932    20,533    19,898 

 

(a) Provided for the purpose of calculating gross profit as a percentage of revenue (gross margin).

 

 

 

   

 

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