LightPath Technologies Announces Fourth Quarter and Fiscal 2010 Financial Results
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Reports Positive Net Income on Increased Revenues
and Gross Margin Improvements in the Fourth Quarter
ORLANDO, FL-September 16, 2010 -- LightPath Technologies, Inc. (NASDAQ:LPTH) (the "Company", "LightPath", or "we"), a global manufacturer, distributor and integrator of patented optical components and high-level assemblies, announced today its financial results for the fourth quarter and fiscal year ended June 30, 2010. Actual results were in line with the Company's preliminary results issued on August 25, 2010. Full details are available in the Company's Annual Report on Form 10-K filed today with the SEC at www.sec.gov.
Highlights:
Net income for the fourth quarter of fiscal 2010 was approximately $92,000 compared to a loss of approximately $318,000 for the fourth quarter of fiscal 2009.
Revenue for the fourth quarter of fiscal 2010 was $2.8 million compared to $1.6 million for the fourth quarter of fiscal 2009.
Backlog scheduled to ship within the next 12 months was $2.9 million as of June 30, 2010, an increase of $600,000 from June 30, 2009.
Gross margin was 51% for the fourth quarter of fiscal 2010 as compared to 33% for the fourth quarter of fiscal 2009.
EBITDA for the fourth quarter of fiscal 2010 improved to income of $488,000 compared to a loss of $21,000 in the fourth quarter of fiscal 2009.
Cash on hand as of June 30, 2010 was $1.5 million as compared to $580,000 on June 30, 2009.
Unit shipment volume in precision molded optics was up 292% in the fourth quarter of fiscal 2010 compared to the same period last year.
Jim Gaynor, President and Chief Executive Officer of LightPath, commented, "I am pleased to report LightPath has continued its trend of positive net income in the fourth quarter of fiscal 2010. During the fourth quarter, our revenues rose 75% over the same quarter in the prior year, gross margin increased both from the third quarter to the fourth quarter and year-over-year to 51% and expenses remained relatively flat. Unit shipment volume in precision molded optics increased substantially by 292% in the fourth quarter of fiscal 2010 compared to the same period last year."
Gaynor continued, "One measure the Company uses to measure performance is EBITDA. EBITDA has improved from a loss of $21,000in the fourth quarter of fiscal 2009 to income of $488,000 in the fourth quarter of fiscal 2010, a gain of $509,000. As we continue to grow our top-line and increase our unit volume, we anticipate better fixed cost utilization. A greater percentage of our revenues will drop to the bottom-line, delivering gross margin, EBITDA and net income improvements going forward."
"While the U.S. optics market showed signs of an economic rebound in fiscal 2010, Asia represents a significant new market for future growth. Our Shanghai-based facility has taken over 95% of our total production and has enabled us to make the transition into low-cost, high-volume production. While we continue to implement this new business strategy, we anticipate production levels to ramp up significantly at our Shanghai facility. Minimal capital expenditure would be required for future expansion, providing us the ability to meet growing demand for high-volume, low-cost lenses used in laser systems, laser tools, biomedical instrumentation, and telecommunications equipment, primarily produced by Original Equipment Manufacturers based in Asia," Gaynor added.
He concluded, "Overall, given the uncertain market conditions, our outlook for the future is positive but cautious over the short-term. Given the opportunities we see for LightPath in the low cost commercial markets and infrared markets, especially in Asia, we are very optimistic for our long-term business. Our efforts to penetrate high-volume, lower cost commercial markets in Asia show tremendous promise for the upcoming fiscal year. We are excited by the acceptance of the new products, such as our blue laser collimating lenses, which have shown quick market uptake and helped contribute to increased quote activity in recent weeks. We expect our upward growth trend to continue in fiscal 2011."
Financial Results for Three Months Ended June 30, 2010
Revenue for the fourth quarter of fiscal 2010 totaled $2.8 million compared to $1.6 million for the fourth quarter of fiscal 2009, an increase of 75%. The increase from the fourth quarter of fiscal 2009 was primarily attributable to higher sales volumes of precision molded optics, GRADIUM lenses and isolators. Our precision molded optics sales units were significantly higher as a result of our increased production capability and our pursuit of high volume low cost lens business. Our current cost structure has allowed us to sell product at lower prices while improving gross margins. Growth in sales going forward is expected to be derived primarily from the precision molded optics product line, particularly our low cost lenses being sold in Asia.
Our gross margin percentage in the fourth quarter of fiscal 2010 compared to the fourth quarter of fiscal 2009 increased to 51% from 33%. Total manufacturing cost of $1.4 million was approximately $310,000 higher in the fourth quarter of fiscal 2010 compared to the same period of the prior fiscal year. The manufacturing cost increase was a reflection of an increase in costs in order to support higher production and sales volumes. Unit shipment volume in precision molded optics was up 292% in the fourth fiscal quarter of 2010 compared to the same period last year. This resulted in better absorption of overhead costs which in turn resulted in improved fixed cost utilization and lowers our unit cost. Direct costs, which include material, labor and services increased to 26% of revenue in the fourth quarter of fiscal 2010, as compared to 23% of revenue in the fourth quarter of fiscal 2009 due to a product mix change. Gross margins improved as a result of the cost reduction programs we have implemented, better production yields and efficiencies and improved overhead absorption with the increased volume.
During the fourth quarter of fiscal 2010, total costs and expenses increased $465,000 to $1.2 million compared to $690,000 for the same period in fiscal 2009. Expenses in the fourth quarter of last year were $370,000 lower due to non recurring events resulting in reductions to general and administrative expenses; receipt of $183,000 from our D&O insurance carrier as a refund of legal expenses and receipt of $186,000 in excess cost reimbursement from the Chinese government related to the move of our manufacturing facility in Shanghai. Included in total costs and expenses for the fourth quarter of fiscal 2010 were $937,000 in selling, general and administrative expenses. As a result, total operating income for the fourth quarter of fiscal 2010 improved to $282,000 compared to a loss of ($159,000) for the same period in fiscal 2009.
Interest expense was approximately $193,000 in the fourth quarter of fiscal 2010 as compared to $163,000 in the fourth quarter of fiscal 2009. The convertible debentures issued in August 1, 2008 accounted for approximately $193,000 of interest during the quarter ended June 30, 2010. This includes periodic interest at 8% and amortization of the related debt issuance costs and debt discount, and write off of debt issue costs, prepaid interest and debt discount for debentures converted into shares of common stock during the fourth quarter of fiscal 2010.
Net income for the fourth quarter of fiscal 2010 was $92,000 or $0.01 per basic and diluted common share, compared with a net loss of ($318,000) or ($0.05) per basic and diluted per common share for the same period in fiscal 2009. This represents a $410,000 increase in net income compared to the fourth quarter of fiscal 2009. Weighted-average basic shares outstanding increased to 8,858,563 in the fourth quarter of fiscal 2010 compared to 6,691,966 in the fourth quarter in fiscal 2009 primarily due to the issuance of shares of common stock related to the private placements in the first and fourth quarter of fiscal 2010.
Financial Results for Year Ended June 30, 2010
Revenue for the fiscal year 2010 totaled $9.3 million compared to $7.5 million for fiscal year 2009, an increase of 24%. The increase from the prior fiscal year was primarily attributable to higher sales volumes for precision molded optics and GRADIUM lenses offset by lower sales for isolators and collimators. Our precision molded optics sales units were significantly higher but our average selling price was lower. This is the result of our pursuit of producing high volume low cost lenses. Our current cost structure has allowed us to sell product at lower prices while improving gross margins. Growth in sales going forward is expected to be derived primarily from the precision molded optics product line, particularly our low cost lenses being sold in Asia.
Our gross margin percentage in fiscal 2010 compared to fiscal 2009 increased to 47% from 27%. Total manufacturing cost of $4.9 million was $511,000 lower in fiscal 2010 compared to the prior fiscal year. This was due to lower production costs for labor and materials. Unit shipment volume in precision molded optics is up 176% in fiscal 2010 compared to last year. This resulted in better absorption of overhead costs which in turn resulted in improved fixed cost utilization and lower our unit cost. Direct costs, which include material, labor and services were 24% of revenue in fiscal 2010, as compared to 23% in the prior year. Gross margins improved as a result of the cost reduction programs we implemented and better production yields and efficiencies.
During fiscal 2010, total costs and expenses decreased $398,000 to $4.2 million compared to $4.6 million for fiscal 2009. Included in total costs and expenses for fiscal 2010 were $3.3 million in selling, general and administrative expenses, which decreased $377,000 or 10% from $3.6 million in the prior fiscal year. We had a reduction of $255,000 due to lower salaries and benefits, a $29,000 reduction of Director compensation, and decrease in legal costs of $262,000. We had higher investor relations expenses of $267,000 for our new radio and television campaign during fiscal 2010. During fiscal 2009 there were two non recurring events resulting in reductions to general and administrative expenses; receipt of $183,000 from our D&O insurance carrier as a refund of legal expenses and receipt of $186,000 in excess cost reimbursement fro m the Chinese government related to the move of our manufacturing facility in Shanghai. During fiscal 2010 there were some one-time events resulting in a net reduction of approximately $331,000 in general and administrative expenses; receipts of $556,000 on our D&O insurance as a refund for legal expenses, a litigation settlement, $76,000 reduction of legal expenses related to the reversal of accruals for litigation and reduction for reversal of royalty accrual of approximately $68,000.
Interest expense was approximately $728,000 for fiscal 2010 as compared to approximately $1,315,000 for fiscal 2009. Approximately $5,600 of the interest expense for fiscal 2010 is attributable to our equipment term loan and our capital equipment lease. The convertible debentures issued on August 1, 2008 accounted for approximately $722,000 and $1.3 million of interest during fiscal 2010 and 2009, respectively. This represents periodic interest of 8%, amortization and write-off of the related debt issuance costs and debt discount, for fiscal 2009 and value of common shares and warrants issued as incentive to participate in the December 2008 convertible debenture placement and to induce the conversion of the debentures to shares of common stock. On December 31, 2008, 25% of the debentures were converted into shares of common stock and $3 04,382 of debt discount and $121,255 of debt issue costs were written-off to interest expense in the second quarter of fiscal 2009. Included in these totals are related debt discount, debt issue costs and prepaid interest for $262,500 of debentures which were converted into common stock during fiscal 2010.
Net loss for fiscal 2010 was $561,000 or $0.07 per basic and diluted common share, compared with a net loss of $3.8 million or $0.62 per basic and diluted per common share for fiscal 2009. This represents a $3.3 million decrease in net loss compared to fiscal 2009. Weighted-average shares outstanding increased to 8,139,852 in fiscal 2010 compared to 6,167,827 in fiscal 2009 primarily due to the issuance of shares of common stock related to the private placement in the first and fourth quarters of fiscal 2010.
Cash and cash equivalents totaled $1.5 million at June 30, 2010. Total current assets and total assets at June 30, 2010 were $4.8 million and $7.5 million compared to $3.3 million and $5.8 million, respectively, at June 30, 2009. Total current liabilities and total liabilities at June 30, 2010 were $1.1 million and $3.2 million compared to $2.0 million and $4.1 million, respectively, for June 30, 2009. As a result, the current ratio as of June 30, 2010 improved to 4.41 to 1 compared to 1.59 to 1 as of June 30, 2009. Total stockholders' equity at June 30, 2010 totaled $4.2 million compared to $1.7 million at June 30, 2009.
As of June 30, 2010 our backlog of orders scheduled to ship in the next 12 months, was $2.9 million compared to $2.3 million as of June 30, 2009.
