LightPath Technologies Announces Profitable Third Quarter

Backlog Grows to Greater Than $5 Million

Cost Reductions Drive Increases in EBITDA and Gross Margin

May 02, 2013, 16:00 ET from LightPath Technologies, Inc.

ORLANDO, Fla., May 2, 2013 /PRNewswire/ -- LightPath Technologies, Inc. (NASDAQ: LPTH) ("LightPath", the "Company" or "we"), a global manufacturer, distributor and integrator of proprietary optical components and high-level assemblies, announced today its financial results for the third quarter ended March 31, 2013.

(Logo:  http://photos.prnewswire.com/prnh/20130122/FL45558LOGO)

Third Quarter Highlights:

  • Revenue for the third quarter of fiscal 2013 increased 3% to $2.85 million compared to $2.78 million for the third quarter of fiscal 2012.
  • 12-month backlog increased 14% to $5.01 million as of March 31, 2013 compared to $4.39 million as of March 31, 2012.
  • Gross margin for the quarter was 47%, compared to 32% for the same quarter of fiscal 2012.
  • EBITDA increased to $463,000, or 16% of revenues, compared to a loss of $211,000, in the same quarter of fiscal 2012.
  • Net income was $217,000, or $0.02 per share for the quarter compared to a net loss of $519,000 or $0.05 loss per share in the same quarter of fiscal 2012.

Jim Gaynor, President and Chief Executive Officer of LightPath, commented, "We are very pleased with the results we achieved this quarter with bookings over $3 million, shipments of $2.85 million and gross margin of 47%. The 15 percentage point improvement in gross margin as compared to the third quarter of fiscal 2012, was a result of cost reductions from our glass conversion program, lower tooling costs, yield improvement and direct labor productivity improvement. We also benefited from improved overhead absorption as we continued to increase our manufacturing volume. Our revenue growth continues to be driven by the telecommunications sector, specifically the need for expanded infrastructure to support mobile internet demand; our industrial tool business which benefited from an improving Chinese market; demand for fiber laser delivery systems; and our entry into the digital projection market."

Mr. Gaynor added, "Our goal is to accelerate our top line growth and we are rigorously pursuing opportunities to further expand our current accounts and develop new ones. We believe the themes of mobile internet growth, recovery of the Chinese industrial tool market and new product applications bode well for our long term growth. Even though overall markets are still weak and somewhat choppy, we have been able to grow our business 51% from 2009 to 2012.   Our product offerings, which serve a diverse group of end-markets, have found growth opportunities for our core business in precision molded optics.  We are also building a presence in the infrared market. We will continue to work hard to ensure that we are positioned to capitalize on the many opportunities we see ahead for our products and technology."

Financial Results for Three Months Ended March 31, 2013

Revenue for the third quarter of fiscal 2013 totaled approximately $2.85 million compared to approximately $2.78 million for the third quarter of fiscal 2012, an increase of 3%. This increase was primarily attributable to increases in sales of our custom optics, our industrial tool and our GRADIUM® product lines. Growth in sales for the next several quarters is expected to be derived primarily from the precision molded lens product line, driven by the telecommunications sector's need for expanded infrastructure to support mobile internet demand; our industrial tool business, which benefited from an improving Chinese market demand; fiber laser delivery systems; and our entry into the digital projection market.  Infrared products, now being designed and introduced to the market are expected to accelerate the Company's growth more meaningfully beginning in the fourth quarter of fiscal 2013 and continuing in fiscal 2014.

The gross margin percentage in the third quarter of fiscal 2013 was 47%, compared to 32% for the third quarter of fiscal 2012. Total manufacturing costs of $1.52 million decreased by approximately $373,000 in the third quarter of fiscal 2013 compared to the same period of the prior fiscal year. The decrease in manufacturing costs, as compared to the same period of the prior fiscal year, is a result of an increase in precision molded optics products utilizing lower cost glass, lower tooling costs and better utilization of fixed costs due to higher unit volumes. Direct costs, which include material, labor and services, were 23% of revenue in the third quarter of fiscal 2013, as compared to 24% of revenue in the third quarter of fiscal 2012.

During the third quarter of fiscal 2013, total costs and expenses decreased by approximately $118,000 compared to the same period of the prior year. Selling, general and administrative expenses were $1.04 million for the third quarter of fiscal 2013 compared to $1.14 million for the third quarter of fiscal 2012. Total operating income for the third quarter of fiscal 2013 improved to approximately $56,000 compared to a loss of $506,000 for the same period in fiscal 2012.

In the third quarter of fiscal 2013, we recognized a gain of approximately $223,000 related to the change in the fair value of derivative warrants issued in connection with our June 2012 private placement. The warrants have a five year life and this fair value will be re-measured each reporting period until the warrants are exercised or expire.

Other income was a loss of $8,500 in the third quarter of fiscal 2013 compared to a gain of approximately $10,000 in the third quarter of fiscal 2012 due to the effect of foreign currency rate adjustments. Net income for the third quarter of fiscal 2013 was $217,000 or $0.02 per basic and diluted common share, compared with a net loss of $519,000 or $0.05 per basic and diluted common share for the same period in fiscal 2012. Weighted-average basic shares outstanding increased to 11,883,042 in the third quarter of fiscal 2013 compared to 9,767,640 in the third quarter of fiscal 2012 which was primarily due to the issuance of shares of common stock in the June 2012 private placement, shares issued for the payment of interest on our convertible debentures, shares issued in connection with the conversion of our debentures and the shares issued under our employee stock purchase plan.

Financial Results for Nine Months Ended March 31, 2013

Revenue for the first nine months of fiscal 2013 totaled approximately $8.65 million compared to approximately $8.18 million for the first nine months of fiscal 2012, an increase of 6%. This increase was primarily attributable to an increase in the sales of custom optics, an increase in the sales of our industrial tool products and our entry in the digital projection market offset by slightly lower sales volumes in our collimator and isolator product lines. Growth in sales for the next several quarters is expected to be derived primarily from the precision molded lens product line, driven by the telecommunications sector's need for expanded infrastructure to support mobile internet demand; our industrial tool business which benefited from an improving Chinese market; demand for fiber laser delivery systems; and our entry into the digital projection market.

The gross margin percentage in the first nine months of fiscal 2013 was 44%, compared to 34% for the first nine months of fiscal 2012. Total manufacturing costs of $4.89 million decreased by approximately $487,000 in the first nine months of fiscal 2013 compared to the same period of the prior fiscal year. This decrease in manufacturing costs, as compared to the same period of the prior fiscal year, is a result of a decrease of $271,000 in wages and a decrease of $268,000 in material and tooling costs offset by an increase of $38,000 in repairs and an increase of $33,000 in depreciation. Direct costs, which include material, labor and services, were 23% of revenue in the first nine months of fiscal 2013, as compared to 26% of revenue in the first nine months of fiscal 2012.

During the first nine months of fiscal 2013, total costs and expenses decreased by approximately $78,000 compared to the same period of the prior year. Selling, general and administrative expenses were $3.04 million for the first nine months of fiscal 2013 compared to $3.02 million for the same period in fiscal 2012. Total operating income for the first nine months of fiscal 2013 improved to approximately $4,000 compared to a loss of $1.04 million for the same period in fiscal 2012.

In the first nine months of fiscal 2013 we recognized a gain of approximately $488,000 related to the change in the fair value of derivative warrants issued in connection with our June 2012 private placement. The warrants have a five year life and this fair value will be re-measured each reporting period until the warrants are exercised or expire.

Other income increased by approximately $23,000 to $67,000 in the first nine months of fiscal 2013 from approximately $44,000 in the first nine months of fiscal 2012.  In the first nine months of fiscal 2013 we entered into license agreement in which we granted a license for our GRADIUM® product line to NHG for a $150,000 fee. We recognized $50,000 in income, in accordance with ASC 605-10.

Net income for the first nine months of fiscal 2013 was $459,000 or $0.04 per basic and diluted common share, compared with a net loss of $1.06 million or ($0.11) per basic and diluted common share for the same period in fiscal 2012. Weighted-average basic shares outstanding increased to 11,818,408 in the first nine months of fiscal 2013 compared to 9,758,233 in the first nine months of fiscal 2012 which was primarily due to the issuance of shares of common stock in the June 2012 private placement, shares issued for the payment of interest on our 8% convertible debentures, shares issued in connection with the conversion of our debentures and the shares issued under our employee stock purchase plan.

Cash and cash equivalents totaled approximately $1.40 million as of March 31, 2013. The current ratio as of March 31, 2013 was 3.57 to 1.00 compared to 3.59 to 1.00 as of June 30, 2012. Total stockholders' equity as of March 31, 2013 was approximately $5.64 million compared to $4.00 million as of June 30, 2012.

As of March 31, 2013, our 12-month backlog was $5.01 million compared to $4.89 million as of June 30, 2012. 

Investor Conference Call and Webcast Details:

LightPath will host an audio conference call and webcast on Thursday, May 2nd at 4:30 p.m. (ET) to discuss the Company's financial and operational performance for the third quarter of fiscal 2013.

Conference Call Details Date: Thursday, May 2, 2013 Time: 4:30 p.m. (ET) Dial-in Number: 1-800-860-2442 International Dial-in Number: 1-412-858-4600

It is recommended that participants dial-in approximately 5 to 10 minutes prior to the start of the 4:30 p.m. call. A transcript archive of the webcast will be available for viewing or download on the company web site shortly after the call is concluded.

About LightPath Technologies

LightPath manufactures optical products including precision molded aspheric optics, GRADIUM® glass products, proprietary collimator assemblies, laser components utilizing proprietary automation technology, higher-level assemblies and packing solutions. The Company's products are used in various markets, including industrial, medical, defense, test and measurement and telecommunications. LightPath has a strong patent portfolio that has been granted or licensed to it in these fields. For more information visit www.lightpath.com.

The discussions of our results as presented in this release include use of non-GAAP terms "EBITDA" and "gross margin."  Gross margin is determined 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 Generally Accepted Accounting Principles ("GAAP"). We believe 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   our cost structure and provides funds for our total costs and expenses. We use gross margin in measuring the performance of our business and have historically analyzed and reported gross margin information publicly. Other companies may calculate gross margin in a different manner.

EBITDA is a non-GAAP financial measure used by management, lenders and certain investors as a supplemental measure in the evaluation of some aspects of a corporation's financial position and core operating performance. Investors sometimes use EBITDA as it allows for some level of comparability of profitability trends between those businesses differing as to capital structure and capital intensity by removing the impacts of depreciation, amortization, and loss on extinguishment of debt and interest expense. EBITDA also does not include changes in major working capital items such as receivables, inventory and payables, which can also indicate a significant need for, or source of, cash. Since decisions regarding capital investment and financing and changes in working capital components can have a significant impact on cash flow, EBITDA is not a good indicator of a business's cash flows. We use EBITDA for evaluating the relative underlying performance of the Company's core operations and for planning purposes. We calculate EBITDA by adjusting net loss to exclude net interest expense, income tax expense or benefit, depreciation and amortization, thus the term "Earnings Before Interest, Taxes, Depreciation and Amortization" and the acronym "EBITDA."

This news release includes statements that constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our ability to expand our presence in certain markets, future sales growth, continuing reductions in cash usage and implementation of new distribution channels. This information may involve risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, factors detailed by LightPath Technologies, Inc. in its public filings with the Securities and Exchange Commission. 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:

 

Jim Gaynor, President & CEO                                          

Dorothy Cipolla, CFO

LightPath Technologies, Inc.                                            

LightPath Technologies, Inc.

Tel: 407-382-4003                                                             

Tel: 407-382-4003 x305

Email: jgaynor@lightpath.com                                         

Email: dcipolla@lightpath.com           

Web: www.lightpath.com                                                 

Web: www.lightpath.com

 

 

LIGHTPATH TECHNOLOGIES, INC.

Consolidated Balance Sheets

(Unaudited)

March 31,

June 30,

Assets

2013

2012

Current assets:

Cash and cash equivalents

$

1,403,490

$

2,354,087

Trade accounts receivable, net of allowance of $27,600 and $18,214

2,234,361

2,133,079

Inventories, net

1,828,368

1,513,384

Other receivables

323,500

41,000

Prepaid interest expense

7,250

Prepaid expenses and other assets

341,786

201,459

Total current assets

6,131,505

6,250,259

Property and equipment, net 

2,013,214

1,920,950

Intangible assets, net 

43,614

68,265

Debt costs, net

3,882

Other assets

27,737

27,737

Total assets

$

8,216,070

$

8,271,093

             Liabilities and Stockholders' Equity

Current liabilities: 

Accounts payable 

$

1,048,555

$

1,129,708

Accrued liabilities 

167,942

183,910

Accrued payroll and benefits

496,793

386,234

Deferred revenue

1,966

37,750

Capital lease obligation, current portion

3,602

3,602

Total current liabilities

1,718,858

1,741,204

Capital lease obligation, less current portion

4,202

6,903

Deferred rent

258,280

345,726

Warrant liability

599,194

1,087,296

8% convertible debentures to related parties

1,012,500

8% convertible debentures

75,000

       Total liabilities

2,580,534

4,268,629

Stockholders' equity:

Preferred stock: Series D, $.01 par value, voting; 

5,000,000 shares authorized; none issued and outstanding

Common stock: Class A, $.01 par value, voting; 

40,000,000 shares authorized; 12,955,728 and 11,711,952

shares issued and outstanding, respectively

129,557

117,120

Additional paid-in capital

209,571,539

208,410,216

Accumulated other comprehensive income

88,483

88,258

Accumulated deficit

(204,154,043)

(204,613,130)

Total stockholders' equity

5,635,536

4,002,464

Total liabilities and stockholders' equity

$

8,216,070

$

8,271,093

LIGHTPATH TECHNOLOGIES, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

Three months ended

Nine months ended

March 31,

March 31,

2013

2012

2013

2012

Product sales, net

$        2,846,718

$

2,775,486

8,654,553

$

8,180,749

Cost of sales 

1,522,901

1,895,724

4,887,104

5,374,593

Gross margin

1,323,817

879,762

3,767,449

2,806,156

Operating expenses:

Selling, general and administrative 

1,042,067

1,141,366

3,042,889

3,020,869

New product development

216,626

236,643

693,394

795,894

Amortization of intangibles

8,217

8,217

24,651

24,651

Loss on disposal of property and equipment

1,026

2,273

Total costs and expenses

1,267,936

1,386,226

3,763,207

3,841,414

Operating income (loss)

55,881

(506,464)

4,242

(1,035,258)

Other income (expense):

Interest expense

(50,951)

(21,750)

(96,007)

(66,920)

Interest expense - debt costs

(2,132)

(832)

(3,882)

(2,448)

Change in fair value of warrant liability

222,766

488,102

Other income (expense), net

(8,470)

10,061

66,632

43,895

Total other income (expense), net

161,213

(12,521)

454,845

(25,473)

Net income (loss)

$           217,094

$ (518,985)

$    459,087

$ (1,060,731)

Income (loss) per common share (basic)

$                 0.02

$       (0.05)

$          0.04

$          (0.11)

Number of shares used in per share calculation (basic)

11,883,042

9,767,640

11,818,408

9,758,233

Income (loss) per common share (diluted) 

$                 0.02

$       (0.05)

$          0.04

$          (0.11)

Number of shares used in per share calculation (diluted)

12,717,742

9,767,640

12,671,472

9,758,233

Foreign currency translation adjustment

(269)

9,883

225

31,017

                Comprehensive income (loss)

$           216,825

$ (509,102)

$    459,312

$ (1,029,714)

LIGHTPATH TECHNOLOGIES, INC.

Consolidated Statements of Cash Flows

 (Unaudited)

Nine months ended

March 31,

2013

2012

Cash flows from operating activities

Net income (loss)

$    459,087

$    (1,060,731)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

       Depreciation and amortization

601,334

857,721

       Interest from amortization of debt costs

3,882

2,448

       Loss on disposal of property and equipment

2,273

       Stock based compensation

197,198

202,802

       Change in provision for doubtful accounts receivable

9,386

7,946

       Change in fair value of warrant liability

(488,102)

       Deferred rent

(87,446)

(92,753)

Changes in operating assets and liabilities:

Trade accounts receivables

(110,668)

(571,541)

Other receivables

(282,500)

10,289

Inventories

(314,984)

59,196

    Prepaid expenses and other assets

(33,077)

45,022

    Accounts payable and accrued liabilities

13,438

354,169

    Deferred revenue

(35,784)

282,000

                  Net cash provided by (used in) operating activities

(65,963)

96,568

Cash flows from investing activities

   Purchase of property and equipment 

(671,220)

(580,575)

                  Net cash used in investing activities

(671,220)

(580,575)

Cash flows from financing activities

   Proceeds from sale of common stock from employee stock purchase plan

8,981

14,145

   Costs associated with conversion of debentures

(39,919)

   Repayments of debentures

(180,000)

    Payments on capital lease obligation

(2,701)

                 Net cash provided by (used in) financing activities

(213,639)

14,145

Effect of exchange rate on cash and cash equivalents

225

31,017

Decrease in cash and cash equivalents

(950,597)

(438,845)

Cash and cash equivalents, beginning of period

2,354,087

928,900

Cash and cash equivalents, end of period

$ 1,403,490

$         490,055

Supplemental disclosure of cash flow information:

    Interest paid in cash 

$        1,757

$             1,670

    Income taxes paid 

$        2,350

$             3,694

 Supplemental disclosure of non-cash investing & financing activities: 

      Prepaid interest on convertible debentures through the issuance of common stock 

$      87,000

$           87,000

      Issuance of common stock through the conversion of 8% debentures 

$    907,500

LIGHTPATH TECHNOLOGIES, INC.

Consolidated Statement of Stockholders' Equity

Nine months ended March 31, 2013 

(Unaudited)

Accumulated

Class A

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders'

Shares

Amount

Capital

Income

Deficit

Equity

Balance at June 30, 2012

11,711,952

$  117,120

$    208,410,216

$    88,258

$(204,613,130)

$      4,002,464

Issuance of common stock for:

Employee stock purchase plan

10,567

106

8,875

8,981

Conversion of debentures, net of costs

1,148,738

11,487

856,094

867,581

Cashless exercise of warrants

-

-

-

Interest payment on convertible debentures

84,471

844

86,156

87,000

Warrant issued for consulting services

13,000

13,000

Stock based compensation on stock 

options and restricted stock units

197,198

197,198

Net income

459,087

459,087

Foreign currency translation adjustment

225

225

Balance at March 31, 2013

12,955,728

$  129,557

$    209,571,539

$    88,483

$(204,154,043)

$      5,635,536

 

LIGHTPATH TECHNOLOGIES, INC.

EBITDA

(Unaudited)

 

(Unaudited)

Three months ended

Nine months ended

March 31,

March 31,

2013

2012

2013

2012

Net income (loss)

$  217,094

$ (518,985)

$    459,087

$ (1,060,731)

Depreciation and amortization

193,039

286,014

601,334

857,721

Interest expense

53,083

22,582

99,889

69,368

EBITDA

$  463,216

$ (210,389)

$ 1,160,310

$    (133,642)

 

SOURCE LightPath Technologies, Inc.



RELATED LINKS

http://www.lightpath.com