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AFOP Reports Annual Sales and Operating Profits for 2015 With Sequential Growth Guidance

SUNNYVALE, Calif., Feb. 18, 2016 (GLOBE NEWSWIRE) -- Alliance Fiber Optic Products, Inc. (Nasdaq:AFOP), an innovative supplier of fiber optic components, subsystems and integrated modules for the optical network equipment market, today reported its financial results for the fourth quarter and year ended December 31, 2015.

Revenues for the fourth quarter of 2015 totaled $16,421,000, a 9% decrease from revenues of $18,060,000 reported in the previous quarter and a 13% decrease from revenues of $18,809,000 reported in the fourth quarter of 2014. The Company recorded net income for the fourth quarter of 2015 of $787,000, or $0.05 per share, compared to $3,653,000, or $0.20 per share for the previous quarter, and compared to net income for the fourth quarter of 2014 of $1,409,000, or $0.08 per share.

Revenues for the year ended December 31, 2015 were $81,189,000, a 6% decrease over revenues of $85,987,000 reported in the previous year. Operating income for the year ended December 31, 2015 was $19,194,000, compared with $21,603,000 for the previous year. The Company recorded a net profit for the year ended December 31, 2015 of $13,038,000, or $0.74 per basic share. This compares with a net profit of $14,508,000, or $0.78 per basic share, for the year ended December 31, 2014.

“Fiscal year 2015 represented a year of continued profitability and investment for AFOP,” commented Peter Chang, President and Chief Executive Officer. “With the softer second half of 2015, overall annual revenues were off 6% from 2014’s record performance. With our operational efficiency, we achieved annual and quarterly gross margins above the average of our peers throughout the year, which resulted in improved annual Non-GAAP based gross margins, from 40% in 2014 to 41% in 2015. In addition, AFOP increased shareholder value during the year through a stock buyback program to reduce the number of outstanding shares by over 2.5 million, while still maintaining a strong balance sheet.”

“While we are pleased with the continued profitable financial performance for 2015, we are encouraged with the business prospects in this coming year with the progress we have made with customers, new products, and the continued strong demand in the global fiber optics markets. In the first quarter of 2016, we expect revenues to be in the range of $17M to $19M. Earnings per share in the first quarter of 2016 will improve with fewer outstanding shares from the stock buyback program in 2015 and no foreign subsidiary annual tax adjustment. In addition, we are encouraged by the prospects of continuous sequential quarterly growth, which would result in a year of record revenue and profits in the full year 2016,” concluded Mr. Chang.

Conference Call
Management will host a conference call at 1:30 p.m. PT on February 18, 2016 to discuss AFOP’s Fourth Quarter and Fiscal Year 2015 financial results as well as the outlook for the First Quarter of 2016. Please call 877-675-3572 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 22256438. AFOP will also provide a live webcast of its Fourth Quarter and Fiscal Year 2015 Earnings Conference call at AFOP’s website: www.afop.com. The webcast replay will be available on AFOP’s website 90 minutes after the live conference call.

About AFOP
Founded in 1995, Alliance Fiber Optic Products, Inc. designs, manufactures and markets a broad range of high performance fiber optic components and integrated modules. AFOP's products are used by leading and emerging communications equipment manufacturers to deliver optical networking systems to the long-haul, enterprise, metropolitan and last mile access segments of the communications network. AFOP offers a broad product line of passive optical components including interconnect systems, couplers and splitters, thin film CWDM and DWDM components and modules, optical attenuators, and micro-optics devices. AFOP is headquartered in Sunnyvale, California, with manufacturing and product development capabilities in the United States, Taiwan and China. AFOP's website is located at http://www.afop.com.

Except for the historical information contained herein, the matters set forth in this press release, including statements as to our expectations regarding future revenue levels, profits, business prospects and the time periods thereof, our beliefs regarding demand in the global market, growth in the fiber optics industry, and our expectation regarding future demand for our products are forward looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to general economic conditions and trends, trends in demand for bandwidth, the rate of conversion from copper to fiber technology, the impact of competitive products and pricing, timely introduction of new technologies, timely design acceptance by our customers, the acceptance of new products and technologies by our customers, customer demand for our products, the timing of customer orders, loss of key customers, our ability to ramp new products into volume production, the mix of products sold and product pricing, the costs associated with running our operations, industry-wide shifts in supply and demand for optical components and modules, industry overcapacity and demand for bandwidth, the success of cost control initiatives, our ability to obtain and maintain operational efficiencies, financial stability in foreign markets, and other risks detailed from time to time in our SEC reports, including AFOP's quarterly report on Form 10-Q for the quarter ended September 30, 2015. These forward-looking statements speak only as of the date hereof. AFOP disclaims any intention or obligation to update or revise any forward-looking statements.


ALLIANCE FIBER OPTIC PRODUCTS, INC.
Consolidated Balance Sheets
(in thousands)
(Unaudited)
Dec. 31, Dec. 31,
2015 2014
ASSETS
Current assets:
Cash and short-term investments$ 23,988 $ 54,580
Accounts receivable, net 12,547 10,806
Inventories, net 10,919 9,305
Deferred tax assets 3,848 3,690
Other current assets 2,121 2,077
Total current assets 53,423 80,458
Long-term investments 10,821 10,635
Property and equipment, net 16,183 13,868
Other assets 206 212
Total assets$ 80,633 $ 105,173
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$ 6,059 $ 9,236
Accrued expenses and other current liabilities 9,510 8,699
Total current liabilities 15,569 17,935
Long-term liabilities 2,194 978
Total liabilities 17,763 18,913
Stockholders' equity 62,870 86,260
Total liabilities and stockholders' equity$ 80,633 $ 105,173






ALLIANCE FIBER OPTIC PRODUCTS, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2015 2015 2014 2015 2014
Revenues$ 16,421 $ 18,060 $ 18,809 $ 81,189 $ 85,987
Cost of revenues 9,770 10,963 11,339 48,154 51,770
Gross profit 6,651 7,097 7,470 33,035 34,217
Operating expenses:
Research and development 1,090 1,009 1,096 4,411 4,340
Selling, marketing and administrative 2,259 2,373 1,954 9,430 8,274
Total operating expenses 3,349 3,382 3,050 13,841 12,614
Income from operations 3,302 3,715 4,420 19,194 21,603
Interest and other income, net 87 148 209 623 769
Net income before tax$ 3,389 $ 3,863 $ 4,629 $ 19,817 $ 22,372
Provision for income taxes (2,602) (210) (3,220) (6,779) (7,864)
Net income$ 787 $ 3,653 $ 1,409 $ 13,038 $ 14,508
Net income per share:
Basic$ 0.05 $ 0.20 $ 0.08 $ 0.74 $ 0.78
Diluted$ 0.05 $ 0.20 $ 0.08 $ 0.73 $ 0.77
Shares used in per share calculation:
Basic 17,055 17,850 18,366 17,648 18,488
Diluted 17,315 18,227 18,727 17,945 18,935
Included in costs and expenses above:
Stock based compensation charges
Cost of revenues$ 118 $ 137 $ 113 $ 513 $ 492
Research and development 41 51 44 196 234
Selling, marketing and administrative 657 666 321 2,227 1,435
Total$ 816 $ 854 $ 478 $ 2,936 $ 2,161






ALLIANCE FIBER OPTIC PRODUCTS, INC.
Reconciliations from GAAP to Non-GAAP
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
Dec. 31, Sep. 30, Dec. 31, Dec. 31, Dec. 31,
2015 2015 2014 2015 2014
Gross Profit Reconciliation
GAAP gross profit$ 6,651 $ 7,097 $ 7,470 $ 33,035 $ 34,217
Stock-based compensation expense 118 137 113 513 492
Adjusted (non-GAAP) gross profit$ 6,769 $ 7,234 $ 7,583 $ 33,548 $ 34,709
Adjusted (non-GAAP) gross margin 41.2 % 40.1 % 40.3 % 41.3 % 40.4 %
Operating Expense Reconciliation
GAAP operating expenses$ 3,349 $ 3,382 $ 3,050 $ 13,841 $ 12,614
Stock-based compensation expense 698 717 365 2,423 1,669
Adjusted (non-GAAP) operating expenses$ 2,651 $ 2,665 $ 2,685 $ 11,418 $ 10,945
Income from Operations Reconciliation
GAAP income from operations$ 3,302 $ 3,715 $ 4,420 $ 19,194 $ 21,603
Adjustments related to gross profit 118 137 113 513 492
Adjustments related to operating expense 698 717 365 2,423 1,669
Adjusted (non-GAAP) income from operations$ 4,118 $ 4,569 $ 4,898 $ 22,130 $ 23,764
Adjusted (non-GAAP) operating margin 25.1 % 25.3 % 26.0 % 27.3 % 27.6 %
Net Income Reconciliation
GAAP net income$ 787 $ 3,653 $ 1,409 $ 13,038 $ 14,508
Adjustments related to gross profit 118 137 113 513 492
Adjustments related to operating expense 698 717 365 2,423 1,669
Income tax provision adjustments (760) (310) 2,768 994 5,394
Adjusted (non-GAAP) net income $ 843 $ 4,197 $ 4,655 $ 16,968 $ 22,063
Weighted average shares outstanding
Basic 17,055 17,850 18,366 17,648 18,488
Diluted 17,315 18,227 18,727 17,945 18,935
Net Income per Common Share - Basic:
GAAP as reported $ 0.05 $ 0.20 $ 0.08 $ 0.74 $ 0.78
Non-GAAP as adjusted $ 0.05 $ 0.24 $ 0.25 $ 0.96 $ 1.19
Net Income per Common Share - Diluted:
GAAP as reported $ 0.05 $ 0.20 $ 0.08 $ 0.73 $ 0.77
Non-GAAP as adjusted $ 0.05 $ 0.23 $ 0.25 $ 0.95 $ 1.17
Non-GAAP EBITDA
Non-GAAP net income$ 843 $ 4,197 $ 4,655 $ 16,968 $ 22,063
Depreciation expense 814 685 658 2,837 2,798
Interest income (143) (182) (197) (717) (755)
Income tax expense 3,362 520 452 5,785 2,470
Non-GAAP EBITDA$ 4,876 $ 5,220 $ 5,568 $ 24,873 $ 26,576



Use of Non-GAAP Financial Information

The company provides Non-GAAP gross margin, Non-GAAP net income, Non-GAAP basic and diluted net income per share and EBITDA as supplemental information. In computing these non-GAAP financial measures, the company excludes certain items included under GAAP, including stock-based compensation expense and income tax provision adjustments. In computing EBITDA, the company also excludes interest income, provision for (benefit from) income taxes and depreciation expense.

Management uses these Non-GAAP financial measures to evaluate the operating performance of the business and aid in period-to-period comparability. Management also uses the Non-GAAP financial measures for planning and forecasting and measuring results against its forecast. Using several measures to evaluate the business allows the company and investors to assess the company’s relative performance. The Non-GAAP financial measures provided herein may not provide information that is directly comparable to that provided by other companies in our industry, as other companies may calculate such financial results differently. The company’s Non-GAAP financial measures are not measurements of financial performance under GAAP, and should not be considered as alternatives to the financial measures derived in accordance with GAAP. The company does not consider these Non-GAAP financial measures to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of the Non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion of this press release.

Contact: Keting Lin, IR Associate Alliance Fiber Optic Products, Inc. Phone: 408-736-6900 x188

Source:Alliance Fiber Optic Products, Inc.