EMCORE Corporation

Fiscal 2Q revenue was $19.6 million versus $24.1 million in the prior quarter. Non-GAAP gross margin was 15% compared with 29% sequentially. Operating loss was $6.9 million, negative adjusted EBITDA was $5.8 million, and net loss was $7 million, or $0.08 per share. On a GAAP basis, the quarter included a $1 million restructuring charge tied to severance. Cash was $12 million at March 31 versus $20 million net of third-party funds at December 31, and debt was $8.3 million versus $8.6 million. For the June quarter, revenue is expected to be $19 million to $21 million. Management said revenue should be flat to slightly up between the back half of fiscal 2024 and early fiscal 2025, with a return to topline growth beginning in the first half of fiscal 2025.

The CEO transition was a major strategic theme: CEO Jeff Rittichier stepped down, and Matt Vargas was named interim CEO while the board searches for a permanent replacement. Cletus Glasener said the board has formed an office of the CEO and a restructuring committee to drive cost reductions, improve performance, and move toward adjusted cash flow breakeven by the quarter ending September 2024. His tone was urgent but constructive, emphasizing that the company has 'much left to do' and that the board is committed to restoring financial health.

Tom Minichiello emphasized that the quarter was hurt by specific timing and production issues: Mark 54 and Mark 48 shipments slipped, a navigation-grade FOG IMU program was delayed by material timing and early-stage production transition, and Budd Lake revenue continued to decline after TAIMU was canceled. He highlighted the margin decline to 15%, the $9.8 million of operating expenses versus $9.5 million last quarter, and the $1 million restructuring charge that is expected to drive about $2 million of annualized savings, with roughly 80% benefiting gross profit. On liquidity, he said the company ended with $12 million of cash, used cash in the quarter for discontinued ops, financing, severance, CapEx, and litigation-related costs, and now has more flexibility under the new lender structure with Hale Capital and no longer faces the prior $12.5 million liquidity requirement.

Analysts pressed management on whether the weaker outlook reflected one-time delays or a more durable backlog problem. Management said the Torpedo business is a large part of the manufacturing footprint, but framed the weakness as tied to that segment and other specific program timing issues rather than a broader endemic problem. They also clarified that the goal is adjusted cash flow breakeven by the end of the September quarter, not profit, and confirmed that revenue should remain around current levels before growth resumes in the first half of fiscal 2025. On cash, management said restructuring will require cash upfront and that additional capital raises are being explored to support the transition.