EX-99.3 7 tm2323810d4_ex99-3.htm EXHIBIT 99.3

 

Exhibit 99.3

 

With respect to our inertial navigation product line, our management estimates that (i) programs currently in production or awarded with leading prime contractors world-wide will result in approximately $605 million of lifetime contract value and (ii) we have identified an additional approximately $300 million of potential new opportunities. Based on industry reports, we believe the estimated global market size for high- end inertial sensors in 2021 was over $3 billion.

 

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Non-GAAP Financial Measures

 

We conform to U.S. Generally Accepted Accounting Principles (“GAAP”) in the preparation of our financial statements. We have presented below certain supplemental non-GAAP measures for gross profit, gross profit margin and adjusted EBITDA for our Inertial Navigation product line and our Broadband and Defense Optoelectronics product lines for the fiscal quarters ended December 31, 2021, March 31, 2022, June 30, 2022, September 30, 2022, December 31, 2022, March 31, 2023 and June 30, 2023.

 

   Q3 FY23 (6/30/2023)   Q2 FY23 (3/31/2023)   Q1 FY23 (12/31/2022) 
($ in thousands)  Inertial Nav.   Broadband/
Def. Opto.*
   Inertial Nav.   Broadband/
Def. Opto.*
   Inertial Nav.   Broadband/
Def. Opto.*
 
Revenue   26,718.3    (20.1)   24,250.4    2,569.2    19,978.6    4,974.5 
Non-GAAP Gross Profit   7,883.1    (3,542.9)   5,295.6    (985.5)   4,942.7    (1,118.9)
Non-GAAP Gross Margin    29.5%   17626.4%   21.8%   -38.4%   24.7%   -22.5%
Adjusted EBITDA   (1,332.4)   (3,005.6)   (4,408.6)   (2,109.4)          

 

   Q4 FY22 (9/30/2022)   Q3 FY22 (6/30/2022)   Q2 FY22 (3/31/2022)   Q1 FY22 (12/31/2021) 
       Broadband/       Broadband/       Broadband/       Broadband/ 
   Inertial Nav.   Def. Opto.*   Inertial Nav.   Def. Opto.*   Inertial Nav.   Def. Opto.*   Inertial Nav.   Def. Opto.* 
Revenue   19,666.8    5,897.6    9,891.3    13,784.8    7,614.7    25,034.8    8,144.8    34,090.8 
Non-GAAP Gross Profit   521.2    (83.3)   631.7    3,589.6    1,263.0    8,384.6    1,561.1    14,401.7 
Non-GAAP Gross Margin   2.7%   -1.4%   6.4%   26.0%   16.6%   33.5%   19.2%   42.2%

 

 

*The totals in this column represent the defense optoelectronics product category, previously reported in the aerospace and defense segment, on a combined basis with the broadband segment.

 

Management believes these supplemental non-GAAP measures reflect our core ongoing operating performance and facilitates comparisons across reporting periods. We use these measures when evaluating its financial results and for planning and forecasting of future periods. We believe that these supplemental non-GAAP measures are also useful to investors in assessing our operating performance. While we believe in the usefulness of these supplemental non-GAAP measures, there are limitations. Our non-GAAP measures may not be reported by other companies in our industry and/or may not be directly comparable to similarly titled measures of other companies due to potential differences in calculation. We compensate for these limitations by using these non-GAAP measures as a supplement to GAAP and by providing the reconciliations to the most comparable GAAP measure.

 

Non-GAAP measures are not in accordance with or an alternative to GAAP, nor are they meant to be considered in isolation or as a substitute for comparable GAAP measures. We have, regardless of result, applied consistent rationale, methods and adjustments when presenting supplemental non-GAAP measures and reconciling non-GAAP measures to the most directly comparable GAAP measure.

 

Our disclosures of these measures should be read only in conjunction with the section of this prospectus supplement titled “Risk Factors” as well as the risks and uncertainties set forth in “Risk Factors” in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, in the section of this prospectus supplement titled “Forward-Looking Statements”, and our consolidated financial statements and related notes incorporated by reference in this registration statement. Non-GAAP measures should not be viewed as a substitute for our GAAP results.

 

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EMCORE GAAP to Non-GAAP Reconciliations

 

    1Q22    2Q22    3Q22    4Q22   1Q23   2Q23   3Q23 
$ in thousands    GP     GP     GP     GP    GP    Op
Profit
    GP    OP
Profit
    GP    OP
Profit
 
EMKR GAAP   15,797    9,017    3,898    1,006    3,059    (11,540)   3,711    (12,044)   3,500    (9,961)
    37%   28%   16%   4%   12%        14%        13%     
Stock Based Compensation   151    178    275    348    387    1,734    331    1,535    436    1,713 
Asset Retirement Obligation   9    9    9    64    51    51    (18)   (18)   51    51 
Acquisition Related   6    12    40    58    326    2,386    287    287    353    353 
Restructuring, Separations, & Transitions       432                475        1,247        2,161 
Litigation Related                       105        884        (1,086)
Variable Compensation Adjustment               (1,040)                        
Asset Impairment                                        
Gain/Loss on Asset Sales                       (1,171)                
EMKR Non-GAAP   15,963    9,648    4,222    436    3,823    (7,960)   4,311    (8,085)   4,340    (6,769)
    38%   30%   18%   2%   15%        16%        16%     
Depreciation                            1,450         1,566         2,431 
EMKR Adjusted EBITDA                            (6,510)        (6,519)        (4,338)
EMKR Adjusted EBITDA Margin                            -26%        -24%        -16%

 

Inertial Navigation GAAP to Non-GAAP Reconciliations

 

    1Q22    2Q22    3Q22    4Q22    1Q23    2Q23   3Q23 
                             Op          OP          OP  
$ in thousands   GP     GP     GP     GP     GP     Profit     GP     Profit     GP     Profit  
Inertial Navigation GAAP   1,491    1,180    483    911    4,379    (6,916)   4,861    (8,644)   7,260    (2,904)
    18%   15%   5%   5%   22%        20%        27%     
Stock Based Compensation   63    70    108    151    199    1,354    211    1,177    264    1,248 
Asset Retirement Obligation   1    1    1    57    39    39    (30)   (30)   39    39 
Acquisition Related   6    12    40    65    326    2,386    254    1,518    320    643 
Restructuring, Separations, & Transitions                                        
Litigation Related                       105        884        (1,086)
Variable Compensation Adjustment               (662)                        
Asset Impairment                                        
Gain/Loss on Asset Sales                       (1,171)                
Inertial Navigation Non-GAAP   1,561    1,263    632    522    4943    (4,203)   5,296    (5,095)   7,883    (2,060)
    19%   17%   6%   3%   25%        22%        30%     
Depreciation                            688         687         728 
Inertial Navigation Adjusted EBITDA                            (3,515)        (4,408)        (1,332)
Inertial Nav Adjusted EBITDA Margin                            -18%        -18%        -5%

 

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Broadband and Defense Optoelectronics GAAP to Non-GAAP Reconciliations

 

    1Q22   2Q22   3Q22   4Q22   1Q23   2Q23   3Q23  
                            Op           Op           Op  
$ in thousands   GP   GP   GP   GP   GP   Opex   Profit   GP   Opex   Profit   GP   Opex   Profit  
Broadband GAAP   14,113   7,784   2,347   118   (1,049 ) 2,663   (3,712 ) (1,805 ) 1,348   (3,153 ) (3,662 ) 2,868   (6,530 )
Plus: Defense Optoelectronics   193   53   1,068   (23 ) (271 ) 641   (912 ) 655   902   (247 ) (98 ) 429   (527 )
Broadband GAAP & Def-Opto   14,306   7,837   3,415   95   (1,320 ) 3,304   (4,624 ) (1,150 ) 2,250   (3,400 ) (3,760 ) 3,297   (7,057 )
    42 % 31 % 25 % 2 % -27 %         -45 %         NM          
Stock Based Compensation   88   108   167   197   188   192   380   120   238   358   172   293   465  
Asset Retirement Obligation   8   8   8   7   12     12   12     12   12     12  
Acquisition Related         (7 )       33           33   (323 ) (290 )
Restructuring, Separations, & Transitions     432         475   475     (17 ) (17 )   2,161   2,161  
Litigation Related                            
Variable Compensation Adjustment         (378 )                  
Asset Impairment Charge                            
Gain/Loss on Asset Sales                   24   24        
Broadband & Def-Opto Non-GAAP   14,402   8,385   3,590   (86 ) (1,120 ) 2,637   (3,757 ) (985 ) 2,005   (2,990 ) (3,543 ) 1,166   (4,709 )
    42 % 33 % 26 % -1 % -23 %         -38 %         NM          
Depreciation                           762           879           1,703  
Broadband & Def-Opto Adjusted EBITDA                           (2,995 )         (2,111 )         (3,006 )
B’band & Def-O Adjusted EBITDA Margin                           -76 %         -116 %         NM  

 

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