Rubicon Technology, Inc. Reports Third Quarter 2013 Results of Operations

  Rubicon Technology, Inc. Reports Third Quarter 2013 Results of Operations

Business Wire

BENSENVILLE, Ill. -- October 29, 2013

Rubicon Technology, Inc. (NASDAQ:RBCN), a leading provider of sapphire
substrates and products to the LED, RFIC, semiconductor, and optical
industries, today reported financial results for its third quarter ended
September30, 2013.

The Company reported third quarter revenue of $11.1 million as compared with
$10.6 million in the prior quarter. Overall demand for sapphire was stronger
in the third quarter driven by the growing momentum of the general lighting
segment of the LED market and demand from non-LED applications for mobile
devices, such as the sapphire home button on the iPhone 5S, as well as the
camera lens cover and dual flash now being adopted by more smartphone
manufacturers. As a result, pricing increased for the third consecutive
quarter on the Company’s two and four-inch sapphire cores. Capacity
constraints for the fabrication of two and four-inch cores along with reduced
orders for six-inch wafers limited further sequential growth in the quarter.

Raja Parvez, President and CEO of Rubicon Technology, commented, “With the
rising demand for sapphire, pricing has been steadily rising and current
market pricing, which will be reflected in our fourth quarter numbers, is now
back to approximately break-even for our two and four inch core products.
Given the momentum of the LED general lighting market and introduction of new
applications for sapphire, we expect pricing to continue to strengthen going
into next year.”

The Company announced the launch of its four and six-inch patterned wafer
product (“PSS”) and reported that seven tier-one LED chip manufacturers have
already requested samples. “We are very pleased with the customer response
thus far and believe that PSS will be a strong growth driver for our wafer
business,” Mr. Parvez said. “While we are a few quarters away from volume
production orders, we believe that PSS wafer sales should generate at least
$15 million in revenue for us in 2014.”

The Company also reported that orders from their major SoS customer are very
limited due to excess wafer inventory at the customer. That customer is also
introducing new RF chips that will be produced on SoI rather than SoS starting
early next year. Therefore future sapphire purchases from that customer will
likely be lower than they have been historically.

The Company reported a net loss of $0.26 per share in the third quarter as
compared with a per share net loss of $0.26 in the prior quarter. Product mix,
lower utilization and a slightly lower effective tax benefit rate offset the
impact of higher pricing on two and four-inch cores. While plant utilization
remains low, the Company reported that they are now beginning the process of
re-starting all of their crystal growth furnaces now that boule inventory
levels have been greatly reduced. They expect all furnaces to be operational
by the end of the first quarter of 2014.

William Weissman, CFO of Rubicon Technology, said, “Idle plant costs in the
second quarter totaled $3.9 million, which continued to be a significant
portion of our gross loss. However, our crystal growth operations will be
ramping back up which will begin to reduce that number. Utilization of our
polishing operations will improve with the strengthening of six-inch wafer
orders and the start of patterned substrate production.”

Fourth Quarter 2013 Guidance

Commenting on the outlook for the fourth quarter of 2013, Mr. Weissman said,
“We believe sapphire demand will continue to strengthen and we expect pricing
for two and four-inch cores to be higher in the fourth quarter and have added
some additional core fabrication capacity. With lower than expected wafer
orders from the SoS market, our wafer revenue will be lower in the fourth
quarter, offsetting most of the sequential price and volume increases for two
and four-inch core. Therefore, we are expecting fourth quarter revenue to be
similar to the third quarter. We are very optimistic about wafer demand next
year but it could take another couple of quarters to see a meaningful
improvement in wafer orders. Idle plant costs will remain high in the fourth
quarter but we will begin to see some reduction in idle plant costs as we have
now started the process of re-starting idle crystal growth furnaces. As a
result, we expect a loss per share between $(0.20) and $(0.24) based on 22.5
million shares outstanding and a 45 percent tax benefit.”

Conference Call Details

Rubicon will host a conference call at 5:00 p.m. Eastern time on October 29,
2013 to review the third quarter 2013 results and the fourth quarter 2013
outlook. The conference call will be available to the public through a live
audio web broadcast via the Internet. Log on through the Investor Relations
section of Rubicon's website at http://ir.rubicontechnology.com. An audio
replay of the call will be available approximately two hours after the
conclusion of the call. The audio replay will remain available until 9:00 a.m.
Eastern time on November 6, 2013, and can be accessed by dialing (877)
344-7529 or (412) 317-0088 (international). Callers should reference
conference ID 10035759. The webcast will be archived on the Company's website.

About Rubicon Technology, Inc.

Rubicon Technology, Inc. is a vertically integrated advanced electronic
materials provider specializing in monocrystalline sapphire forapplications
in light-emitting diodes (LEDs), optical systems and specialty electronic
devices. Rubicon has an unmatched technology platform and expertise extending
from the preparation of raw aluminum oxide through sapphire crystal growth and
fabrication to large-diameter polished sapphire wafers and patterned sapphire
substrates (PSS), enabling Rubicon to supply custom sapphire products with
superior quality and precision. Rubicon is ISO 9001 certified and ITAR
registered.

Further information is available at http://www.rubicontechnology.com.

Forward-Looking Statements

Certain of the statements in this release, particularly those preceded by,
followed by or including the words “believes,” “expects,” “anticipates,”
“intends,” “should,” “estimates,” or similar expressions, or those relating to
or anticipating financial results for periods beyond the end of the third
quarter of 2013, constitute “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. For those statements, the company
claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on our current expectations, estimates
and projections about our industry, management's beliefs and certain
assumptions made by us. These statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in, or implied by, the statements. These risks and uncertainties
include market acceptance of LED lighting, our ability to adapt to future
changes in the LED industry, our successful development and market acceptance
of new products, changes in the average selling prices of sapphire products,
dependence on key customers, potential disruptions in our supply of
electricity, changes in our product mix, our ability to protect our
intellectual property rights, the competitive environment, the availability
and cost of raw materials, the cost of compliance with environmental
standards, the ability to make effective acquisitions and successfully
integrate newly acquired businesses into existing operations and other risks
and uncertainties described in the company's most recent Form 10-K and other
filings with the Securities and Exchange Commission. For these reasons,
readers are cautioned not to place undue reliance on the company's
forward-looking statements. Any forward-looking statement that the company
makes speaks only as of the date of such statement, and the company undertakes
no obligation to update any forward-looking statements, whether as a result of
new information, future events or otherwise. Comparisons of results for
current and any prior periods are not intended to express any future trends or
indications of future performance, unless expressed as such, and should only
be viewed as historical data.

                                                          
Rubicon Technology, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
                                                         
                                             September 30,   September 30,
                                             2013            2012
Assets                                       (unaudited)     (unaudited)
Cash and cash equivalents                    $   21,578      $   7,601
Restricted cash                                  165             171
Short-term investments                           14,896          36,570
Accounts receivable, net                         4,443           12,445
Inventories                                      39,000          45,811
Other current assets                             13,448          18,315
Deferred tax assets                             4,892          2,619
Total current assets                             98,422          123,532
                                                             
Property and equipment, net                      117,116         121,358
Deferred tax assets                              975             -
Other assets                                    860            1,583
Total assets                                 $   217,373     $   246,473
                                                             
Liabilities and Stockholders' Equity
Accounts payable                             $   4,733       $   7,781
Accrued and other current liabilities           1,688          3,151
Total current liabilities                        6,421           10,932
                                                             
Deferred tax liability                          -              9,547
Total liabilities                                6,421           20,479
                                                             
Stockholders' equity                            210,952        225,994
Total liabilities and stockholders’ equity   $   217,373     $   246,473
                                                             


Rubicon Technology, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(in thousands except share and per share amounts)
                                                            
                Three months ended September     Nine months ended September 30,
                 30,
                 2013            2012             2013            2012
                                                                    
Revenue          $ 11,115         $ 19,942         $ 29,977         $ 47,152
Cost of goods     17,433         17,497         46,087         48,104     
sold
Gross (loss)       (6,318     )     2,445            (16,110    )     (952       )
profit
                                                                    
General and
administrative     2,137            2,530            6,542            6,880
expenses
Sales and
marketing          370              417              1,133            1,346
expenses
Research and
development        641              639              1,518            1,712
expenses
Loss (gain) on
disposal of       129            -              556            (5         )
assets
Total
operating         3,277          3,586          9,749          9,933      
expenses
Loss from          (9,595     )     (1,141     )     (25,859    )     (10,885    )
operations
                                                                    
Other
(expense)
income:
Interest
(expense)         (219       )    297            (546       )    384        
income and
other, net
Loss before        (9,814     )     (844       )     (26,405    )     (10,501    )
income taxes
Income tax        3,974          1,116          11,295         6,094      
benefit
Net (loss)       $ (5,840     )   $ 272           $ (15,110    )   $ (4,407     )
income
                                                                    
Net (loss)
income per
common share:
Basic            $ (0.26      )   $ 0.01           $ (0.67      )   $ (0.20      )
Diluted          $ (0.26      )   $ 0.01           $ (0.67      )   $ (0.20      )
                                                                    
Weighted
average common
shares
outstanding
used in
computing net
income per
common share:
Basic              22,578,608       22,524,611       22,563,196       22,519,171
Diluted            22,578,608       23,050,618       22,563,196       22,519,171
                                                                                 

                                                              
Rubicon Technology, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
                                                           
                 Three months ended September      Nine months ended September
                 30,                               30,
                 2013            2012             2013           2012
Cash flows
from operating
activities
Net (loss)       $  (5,840  )     $  272           $  (15,110  )   $ (4,407  )
income
Adjustments to
reconcile net
(loss) income
to net cash
(used in)
provided by
operating
activities
Depreciation
and                 3,133            3,065            9,355          8,958
amortization
Other               611              496              1,786          1,479
Deferred taxes      (3,974  )        (671     )       (11,302  )     (5,574  )
Changes in
operating
assets and
liabilities
Accounts            (1,340  )        (3,129   )       8,226          20,199
receivable
Inventories         4,450            (6,748   )       7,806          (22,726 )
Other assets        613              (657     )       5,124          3,700
Accounts            2,021            685              (4,064   )     (5,150  )
payable
Accrued
expenses and       64             (621     )      (1,714   )    (636    )
other current
liabilities
Net cash (used
in) provided       (262    )       (7,308   )      107          (4,157  )
by operating
activities
                                                                   
Cash flows
from investing
activities
Purchases of
property and
equipment, net      (4,038  )        (3,019   )       (7,177   )    (9,380  )
of proceeds
from disposal
of assets
Proceeds from
sales of
investments,       2,694          (3,544   )      8,307       17,098  
net of
purchases of
investments
Net cash (used
in) provided       (1,344  )       (6,563   )      1,130        7,718   
by investing
activities
                                                                   
Cash flows
from financing
activities
Other
financing          114            3              146          30      
activities
Net cash
provided by        114            3              146          30      
financing
activities
                                                                   
Net effect of
currency            291              (305     )       622            (280    )
translation
                                                                   
Net increase
(decrease) in       (1,201  )        (14,173  )       2,005          3,311
cash and cash
equivalents
Cash and cash
equivalents,       22,779         21,774         19,573       4,290   
beginning of
period
Cash and cash
equivalents,     $  21,578       $  7,601        $  21,578      $ 7,601   
end of period
                                                                   

Contact:

Rubicon Technology, Inc.
Dee Johnson
Vice President, Investor Relations
847-457-3426
 
Press spacebar to pause and continue. Press esc to stop.