LightPath Technologies Announces Profitable Second Quarter Q2 FY 2013 Revenues Increased 9% over Q2 FY2012 Cost Reductions Drive Increases in EBITDA and Gross Margin PR Newswire ORLANDO, Fla., Jan. 30, 2013 ORLANDO, Fla., Jan. 30, 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 second quarter ended December 31, 2012. (Logo: http://photos.prnewswire.com/prnh/20130122/FL45558LOGO ) Second Quarter Highlights: oRevenue for the second quarter of fiscal 2013 increased 9% to $2.92 million compared to $2.67 million for the second quarter of fiscal 2012. o12-month backlog increased 21% to $4.64 million as of December 31, 2012 compared to $3.82 as of December 31, 2011. oGross margin for the quarter was 43%, the highest level since the fourth quarter of fiscal 2010, compared to 32% in the second quarter of fiscal 2012. oEBITDA increased to $356,000, or 12% of revenues, compared to $6,000, in the second quarter of fiscal 2012. oNet income was $141,000, or $0.01 per share for the quarter compared to a net loss of $343,000, or $0.04 loss per share in the second quarter of fiscal 2012. Jim Gaynor, President and Chief Executive Officer of LightPath, commented, "LightPath continued to make financial progress in the quarter. Revenue continues to grow, and gross margin improved significantly over the prior year, driving increased EBITDA and resulting in another profitable quarter. Gross margin, in fact, reached the highest level since the fourth quarter of fiscal 2010. Improvement in gross margin resulted from productivity gains, lower tooling costs and continued benefit from our ongoing cost reduction programs. Our revenue growth was led by the telecommunications sector, specifically the need for expanded infrastructure to support mobile internet demand, our industrial tool business which benefited from improving Chinese market, and our entry into the digital projection market, which is highlighted by the initial $1.1 million order we received from a new customer in November." Mr. Gaynor added, "Our goal is to accelerate our top line growth and we are rigorously pursuing opportunities to further proliferate with our current accounts and penetrate 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, though overall markets are still weak and somewhat choppy as was indicated by our lower booking rate in the second quarter. To take advantage of these emerging opportunities in the marketplace, we have implemented some changes to our sales organization. Specifically we are changing our sales approach to a product centered focus. We expect these changes will enable us to move more rapidly towards our growth objectives. In addition, we continue to develop new products in order to keep our product offerings current and in line with the latest technology relevant to our customers, as is demonstrated by our recent announcement for the new products to be released at the upcoming Photonics West Trade Show. Our product offerings, which serve a diverse group of end-markets, have found growth opportunities for our core business in precision molded optics and are 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 December 31, 2012 Revenue for the second quarter of fiscal 2013 totaled approximately $2.92 million compared to approximately $2.67 million for the second quarter of fiscal 2012, an increase of 9%. This increase was primarily attributable to increases in sales of custom optics and an increase in our industrial tool products offset by slightly lower sales volumes in our collimator, isolator and GRADIUM® product lines. Growth in sales for the next several quarters is expected to be derived primarily from the precision molded lens product line, with an increase in low cost lenses being sold in Asia and from new business with penetration into imaging applications. Infrared products, now being designed and introduced 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 second quarter of fiscal 2013 was 43%, compared to 32% for the second quarter of fiscal 2012. Total manufacturing costs of $1.65 million decreased by approximately $178,000 in the second quarter of fiscal 2013 compared to the same period of the prior fiscal year due to an decrease of $123,000 in wages $116,000 in tooling costs and $40,000 in freight costs offset by a $100,000 increase in direct costs associated with the infrared project. Direct costs, which include material, labor and services, were 23% of revenue in the second quarter of fiscal 2013, as compared to 26% of revenue in the second quarter of fiscal 2012. During the second quarter of fiscal 2013, total costs and expenses increased by approximately $128,000 compared to the same period of the prior year. Selling, general and administrative expenses were $1.02 million for the second quarter of fiscal 2013. Total operating loss for the second quarter of fiscal 2013 improved to approximately $25,000 compared to $320,000 for the same period in fiscal 2012. In the second quarter of fiscal 2013, we recognized a gain of approximately $170,000 related to the change in the fair value of derivative warrants issued in connection with our June 2012 private placement. This fair value will be re-measured each reporting period throughout the five year life of the warrants or until exercised. Other income increased by approximately $13,000 to $12,000 in the second quarter of fiscal 2013 from approximately ($1,000) in the second quarter of fiscal 2012. Net income for the second quarter of fiscal 2013 was $141,000 or $0.01 per basic and diluted common share, compared with a net loss of $343,000 or $0.04 per basic and diluted common share for the same period in fiscal 2012. Weighted-average basic shares outstanding increased to 11,801,684 in the second quarter of fiscal 2013 compared to 9,761,129 in the second quarter of fiscal 2012 which is 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 and the shares issued for our employee stock purchase plan. Financial Results for Six Months Ended December 31, 2012 Revenue for the first half of fiscal 2013 totaled approximately $5.81 million compared to approximately $5.41 million for the first half of fiscal 2012, an increase of 7%. This increase was primarily attributable to increases in sales of custom optics, an increase in our industrial tool products and our entry in the digital projection market offset by slightly lower sales volumes in our collimator, isolator and GRADIUM® product lines. Growth in sales for the next several quarters is expected to be derived primarily from the precision molded lens product line, with an increase in low cost lenses being sold in Asia and from new business with penetration into imaging applications. The gross margin percentage in the first half of fiscal 2013 was 42%, compared to 36% for the first half of fiscal 2012. Total manufacturing costs of $3.36 million decreased by approximately $115,000 in the first half of fiscal 2013 compared to the same period of the prior fiscal year due to a decrease of $244,000 in wages offset by and increase of $130,000 in direct costs associated with higher revenues. Direct costs, which include material, labor and services, were 24% of revenue in the first half of fiscal 2013, as compared to 26% of revenue in the first half of fiscal 2012. During the first half of fiscal 2013, total costs and expenses increased by approximately $40,000 compared to the same period of the prior year. Selling, general and administrative expenses were $2.00 million for the first half of fiscal 2013. Total operating loss for the first half of fiscal 2013 improved to approximately $52,000 compared to $529,000 for the same period in fiscal 2012. In the first half of fiscal 2013 we recognized a gain of approximately $265,000 related to the change in the fair value of derivative warrants issued in connection with our June 2012 private placement. This fair value will be re-measured each reporting period throughout the five year life of the warrants or until exercised. Other income increased by approximately $41,000 to $75,000 in the first half of fiscal 2013 from approximately $34,000 in the first half of fiscal 2012. In the first half of fiscal 2013 we sold a technology license for our GRADIUM® product line in Asia and recognized $50,000 in income associated with the license agreement. Net income for the first half of fiscal 2013 was $242,000 or $0.02 per basic and diluted common share, compared with a net loss of $542,000 or ($0.06) per basic and diluted common share for the same period in fiscal 2012. Weighted-average basic shares outstanding increased to 11,786,793 in the first half of fiscal 2013 compared to 9,753,618 in the first half of fiscal 2012 which is 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 and the shares issued for our employee stock purchase plan. Cash and cash equivalents totaled approximately $1.78 million as of December 31, 2012. The current ratio as of December 30, 2012 was 2.18 to 1 compared to 3.59 to 1 as of June 30, 2012. The change was primarily due to our convertible debt moving from a long term to a current liability. Total stockholders' equity as of December 31, 2012 was approximately $4.48 million compared to $4.00 million as of June 30, 2012. As of December 31, 2012, our 12-month backlog was $4.64 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 Wednesday, January 30th at 4:30 p.m. (ET) to discuss the Company's financial and operational performance for the second quarter of fiscal 2013. Conference Call Details Date: Wednesday, January 30, 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: email@example.com Email: firstname.lastname@example.org Web: www.lightpath.com Web: www.lightpath.com Brett Maas, Managing Partner Hayden IR Tel: 646-536-7331 Email: Brett@haydenir.com Web: www.haydenir.com LIGHTPATH TECHNOLOGIES, INC. Consolidated Balance Sheets (Unaudited) December 31, June 30, Assets 2012 2012 Current assets: Cash and cash equivalents $ 1,777,530 $ 2,354,087 Trade accounts receivable, net of allowance of $3,003 and $18,214 2,409,606 2,133,079 Inventories, net 1,729,227 1,513,384 Other receivables 287,057 41,000 Prepaid interest expense 50,750 7,250 Current debt costs, net 2,132 — Prepaid expenses and other assets 229,083 201,459 Total current assets 6,485,385 6,250,259 Property and equipment, net 2,016,565 1,920,950 Intangible assets, net 51,831 68,265 Debt costs, net — 3,882 Other assets 27,737 27,737 Total assets $ 8,581,518 $ 8,271,093 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,339,508 $ 1,129,708 Accrued liabilities 77,904 183,910 Accrued payroll and benefits 469,807 386,234 Deferred revenue 1,966 37,750 8% convertible debentures to related parties 1,012,500 — 8% convertible debentures, net of debt discount 75,000 — Capital lease obligation, current portion 3,602 3,602 Total current liabilities 2,980,287 1,741,204 Capital lease obligation, less current portion 5,102 6,903 Deferred rent 297,138 345,726 Derivative liability, warrant 821,960 1,087,296 8% convertible debentures to related parties — 1,012,500 8% convertible debentures — 75,000 Total liabilities 4,104,487 4,268,629 Stockholders' equity: Preferred stock: Series D, $.01 par value, voting; 5,000,000 shares authorized; none issued and outstanding — — Common stock: ClassA, $.01 par value, voting; 40,000,000 shares authorized; 11,801,684 and 11,711,952 shares issued and outstanding, respectively 118,017 117,120 Additional paid-in capital 208,641,399 208,410,216 Accumulated other comprehensive income 88,752 88,258 Accumulated deficit (204,371,137) (204,613,130) Total stockholders' equity 4,477,031 4,002,464 Total liabilities and stockholders' $ 8,581,518 $ 8,271,093 equity LIGHTPATH TECHNOLOGIES, INC. Consolidated Statements of Operations and Comprehensive Income (Unaudited) Three months ended Six months ended December 31, December 31, 2012 2011 2012 2011 Product sales, net $ $ 2,672,138 $ 5,807,835 $ 5,405,263 2,916,781 Cost of sales 1,650,461 1,828,368 3,364,203 3,478,869 Gross margin 1,266,320 843,770 2,443,632 1,926,394 Operating expenses: Selling, general and 1,018,367 883,882 2,000,822 1,879,503 administrative New product development 264,311 271,532 476,768 559,251 Amortization of 8,217 8,217 16,434 16,434 intangibles Loss on disposal of 545 — 1,247 — property and equipment Total costs 1,291,440 1,163,631 2,495,271 2,455,188 and expenses Operating (25,120) (319,861) (51,639) (528,794) loss Other income (expense): Interest expense (14,616) (21,750) (45,056) (45,170) Interest expense - debt (884) (816) (1,750) (1,616) costs Change in fair value of 169,552 — 265,336 — derivative warrant Other income (expense), 11,840 (872) 75,102 33,834 net Total other income 165,892 (23,438) 293,632 (12,952) (expense), net Net income $ $ (343,299) $ 241,993 $ (541,746) (loss) 140,772 Income (loss) per common $ $ (0.04) $ 0.02 (0.06) share (basic) 0.01 Number of shares used in per 11,801,684 9,761,129 11,786,793 9,753,618 share calculation (basic) Income (Loss) per common $ $ (0.04) $ 0.02 $ (0.06) share (diluted) 0.01 Number of shares used in per 12,728,486 9,761,129 12,738,595 9,753,618 share calculation (diluted) Foreign currency translation 3,651 9,278 494 21,134 adjustment Comprehensive $ $ (334,021) $ 242,487 $ (520,612) income (loss) 144,423 LIGHTPATH TECHNOLOGIES, INC. Consolidated Statements of Cash Flows (Unaudited) Six months ended December 31, 2012 2011 Cash flows from operating activities Net income (loss) $ 241,993 $ (541,746) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 408,295 571,707 Interest from amortization of debt 1,750 1,616 costs Loss on disposal of property and 1,247 — equipment Stock based compensation 128,286 137,976 Change in provision for doubtful (4,216) 8,557 accounts receivable Change in fair value of warrant (265,336) — liability Deferred rent (48,588) (59,859) Changes in operating assets and liabilities: Trade accounts receivables (272,311) (8,871) Other receivables (246,057) 30,943 Inventories (215,843) (170,059) Prepaid expenses and other assets 28,876 (30,764) Accounts payable and accrued 187,367 317,107 liabilities Deferred revenue (35,784) — Net cash provided by (90,321) 256,607 (used in) operating activities Cash flows from investing activities Purchase of property and equipment (488,723) (542,597) Cash flows from financing activities Proceeds from sale of common stock from 3,794 7,871 employee stock purchase plan Deferred costs associated with equity — (76,527) financing Payments on capital lease obligation (1,801) — Net cash provided by (used 1,993 (68,656) in) financing activities Effect of exchange rate on cash and cash 494 21,134 equivalents Decrease in cash and cash equivalents (576,557) (333,512) Cash and cash equivalents, beginning of 2,354,087 928,900 period Cash and cash equivalents, end of period $ 1,777,530 $ 595,388 - Supplemental disclosure of cash flow information: Interest paid in cash $ 1,555 $ — Income taxes paid $ 1,736 $ 3,694 Supplemental disclosure of non-cash investing & financing activities: Accrued deferred costs associated $ — $ 144,070 with equity financing Prepaid interest on convertible debentures through the issuance of common $ 87,000 $ 87,000 stock LIGHTPATH TECHNOLOGIES, INC. Consolidated Statement of Stockholders' Equity Six months ended December 31, 2012 (Unaudited) Accumulated Class A Additional Other Total Common Stock Paid-in Comprehensive Accumulated Stockholders' Shares Amount Capital Income Deficit Equity Balance at $ $ $ $ $ June 30, 11,711,952 117,120 88,258 (204,613,130) 4,002,464 2012 208,410,216 Issuance of common stock for: Employee stock 5,261 53 3,741 — — 3,794 purchase plan Interest payment on 84,471 844 86,156 — — 87,000 convertible debentures Warrant issued for — — 13,000 — — 13,000 consulting services Stock based compensation on stock options and restricted — — 128,286 — — 128,286 stock units Net income — — — — 241,993 241,993 Foreign currency — — — 494 — 494 translation adjustment Balance at $ $ $ $ $ December 31, 11,801,684 118,017 88,752 (204,371,137) 4,477,031 2012 208,641,399 LIGHTPATH TECHNOLOGIES, INC. EBITDA (Unaudited) (Unaudited) Three months ended Six months ended December 31, December 31, 2012 2011 2012 2011 Net income (loss) $ 140,772 $ (343,299) $ 241,993 $ (541,746) Depreciation and 199,658 326,269 408,295 571,707 amortization Interest expense 15,500 22,566 46,806 46,786 EBITDA $ 355,930 $ 5,536 $ 697,094 $ 76,747 SOURCE LightPath Technologies, Inc. Website: http://www.lightpath.com
LightPath Technologies Announces Profitable Second Quarter
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