Q4 2023 EMCORE Corporation Earnings Call
[music].
Thank you for standing by and welcome to M-Core Corporation's fiscal 2023 fourth quarter results conference call. At this time, all participants on our listen only mode. After the speakers presentations, there'll be a question and answer session. To ask the question at that time, please press star 111 on your telephone. As a reminder, today's call is being recorded. I would now turn the conference over to you, host, Mr. Tom Mintetelo, chief financial officer. Please go ahead.
Thank you for standing by and welcome to EMCORE corporations fiscal 'twenty two 'twenty three fourth quarter results conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
Speaker Change: Ask a question at that time, Please press star one wondering your telephone.
Speaker Change: Today's call is being recorded.
Speaker Change: Now I'll turn the conference over your host Mr. Tom in a cello Chief Financial Officer. Please go ahead.
Thank you. And good afternoon, everyone, and welcome to our conference call to discuss M. Courses' fiscal 2023 fourth quarter result.
Speaker Change: Thank you.
Speaker Change: And good afternoon, everyone and welcome to our conference call to discuss M of course fiscal 2023 fourth quarter results.
The news release we issued this afternoon is posted on our website mcore.com. On this call, Jeff Ritichier, M.Core's president and chief executive officer will begin with the discussion of our business highlights, and then I'll be updating you on our financial and we'll conclude by taking questions.
Speaker Change: The release, we issued this afternoon is posted on our website M cord Dot com on this call, Jeff richer <unk>, President and Chief Executive Officer will begin with the discussion of our business highlights and then I'll be updating you on our financial results and we'll conclude by taking questions.
Before we begin, we would like to remind you that the information provided herein may include forward looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Exchange Act of 1934. These forward looking statements are largely based on our current expectations and projections about future events and trends affecting the business.
Speaker Change: Before we begin we would like to remind you that the information provided herein may include forward looking statements within the meaning of section 27, a of the Securities Act of 1933 and section 21 E of the Exchange Act of 1934.
Speaker Change: These forward looking statements are largely based on our current expectations and projections about future events and trends affecting the business.
Fetch forward looking statements include projections about future results, statements about plans, strategies, business prospects, and changes and trends in the business and in the markets in which we operate.
Speaker Change: Such forward looking statements include projections about future results statements about plans strategies business prospects and changes and trends in the business and in the markets in which we operate.
management cautions that these forward-looking statements relate to future events or future financial performance in our subject to business, economic and other risks and uncertainties both known and unknown that may cause actual results, levels of activity, performance or achievements of the business or in our industry to be materially different from those expressed or implied by any forward-looking statement.
Speaker Change: Management cautions that these forward looking statements relate to future events or future financial performance and are subject to business economic and other risks and uncertainties, both known and unknown that may cause actual results levels of activity performance or achievements of the business or in our industry to be materially different from those expressed or <unk>.
Speaker Change: Implied by any forward looking statements. We caution you not to rely on these statements and to also consider the risks and uncertainties associated with these statements and the business, which are included in the company's filings available on the Sec's website at web site located at FCC Dot Gov.
We caution you not to rely on these statements and to also consider the risks and uncertainties associated with these statements and the business, which are included in the company's filings available on the SEC's website, located at sec.gov.
including the sections entitled Rift Factors in the company's annual report on Form 10K.
Speaker Change: <unk> in the sections entitled Risk factors in the company's annual report on Form 10-K.
company assumes no obligation to update any forward looking statements to conform such statements to actual results or to changes in our expectations except as required by applicable law or regulation.
Speaker Change: The company assumes no obligation to update any forward looking statements to conform such statements to actual results or to changes in our expectations, except as required by applicable law or regulation.
In addition, references will be made during this call to non- GAAP financial measures, which we believe provide meaningful supplemental information to both management and investors. The non- GAAP measures reflect the company's core ongoing operating performance and facilitates comparisons across reporting periods.
Speaker Change: In addition references will be made during this call to non-GAAP financial measures, which we believe provide meaningful supplemental information to both management and investors, but non-GAAP measures reflect the company's core ongoing operating performance and facilitates comparisons across reporting periods.
investors are encouraged to review these non- GAAP measures , as well as the explanation and reconciliation of these measures to the most comparable GAAP measures included in our news release. With that, I'll now...
Speaker Change: Investors are encouraged to review these non-GAAP measures as well as the explanation and reconciliation of these measures to the most comparable GAAP measures included in our news release.
Speaker Change: With that I'll now turn the call over to Jeff.
Thank you, Tom, and good afternoon, everyone. In the fourth quarter, our inertial navigation business continued to show progress, with another strong top line performance at 26.8 million, and gross margin at 31% non-gap. Tom will provide additional financial details in his remarks.
Jeff Richer: Thank you Tom and good afternoon, everyone.
Jeff Richer: In the fourth quarter, our inertial navigation business continued to show progress with another strong top line performance at $26 8 million.
Jeff Richer: And gross margin at 31% non-GAAP Tom.
Jeff Richer: Tom will provide additional financial details in his remarks.
Look to bill came in under 1.0 due to concerns about the government shutdown. However, the majority of those expected orders were received in October . Therefore, the backlog and the business remained steady at approximately 67 million.
Tom Inacello: Book to Bill came in under 1.0 due to concerns about the government shutdown. However, the majority of those expected orders were received in October therefore, the backlog in the business remains steady at approximately $67 million.
with the closing of the sale of the linear business to photonic foundries in early October and the shutdown of the Indian Fossified Wafer Fab, the operational components of the restructuring plan that we announced in April are complete. M.Core is now a pure play, aerospace and defense business.
Tom Inacello: With the closing of the sale of the linear business to photonic foundries in early October and the shutdown of the indium phosphide wafer fab the operational components of the restructuring plan that we announced in April our complete <unk>.
Tom Inacello: Core is now a pure play aerospace and defense business.
In our press release, we announced that we have entered into a non-binding letter of intent to sell the Indian Fossified Waiver Facts.
Tom Inacello: In our press release, we announced that we have entered into a nonbinding letter of intent to sell the indium phosphide wafer fab.
This agreement is secured with a deposit and also includes an obligation for the buyer to assume the lease obligations of two buildings on the Elhamber campus, resulting in a reduction in long term liabilities and cash outflow for M Corps.
Tom Inacello: This agreement is secured with a deposit and also includes an obligation for the buyer to assume the lease obligations of two buildings on the Alhambra campus, resulting in a reduction in long term liabilities and cash out for outflow for EMCORE we.
We expect to complete this sale by the end of the December quarter.
Tom Inacello: We expect to complete this sale by the end of the December quarter.
Moving on to the business, I'll begin my comments by stating that we had strong performance from space and navigation in Timley Park.
Moving onto the business I'll begin my comments by stating that we had strong performance from space to navigation and Tinley Park.
Concert and Alhambra operations came in low, but largely due to mixed changes and timing of order.
Concord, and Alhambra operations came in low, but largely due to mix changes in timing of orders.
In the current quarter, we expect that the book to bill will recover and believe the Q2 will be stronger yet.
Tom Inacello: In the current quarter, we expect that the book to Bill will recover and believe that Q2 will be stronger yet.
Operating expenses came in below budget for R&D and sales and marketing.
Tom Inacello: Operating expenses came in below budget for R&D and sales and marketing.
We are mindful of our high internally funded research and development spending, otherwise known as IRAD, and are working to drive this down substantially. This turning??? um,
Tom Inacello: We are mindful of our high internally funded research and development spending otherwise known as Iran.
Tom Inacello: And are working to drive this down substantially.
Tom Inacello: Use me.
Tom Inacello: Expenses came in below budget.
And I'm working to drive this down substantially in the coming quarters through non-recurring engineering contracts from our customers. I will address this in more detail later on in the discussion.
Tom Inacello: Okay.
Tom Inacello: We're working to drive this down substantially in the coming quarters through nonrecurring engineering contracts from our customers I will address this in more detail later on in the discussion Yanacocha.
In October , we announced an agreement with Kratos to provide inertial navigation systems for four of their high performance drones. In particular, the XQ58 Valkyrie contains multiple M-core systems.
Tom Inacello: In October we announced an agreement with Kratos to provide inertial navigation systems for four of their high performance drones in particular, the ex SKU 58 Valkyrie contains multiple EMCORE systems.
Developed under the LCAT program between Kratos and the Air Force Research Labs, this extraordinary, stealthy AI-driven platform can serve as a loyal wingman to advance pilot-operated aircraft.
Tom Inacello: Developed under the L Cat program between Kratos and the Air Force Research Labs. This extraordinary stealthy AI driven platform conserve as a loyal wingman to advanced pilot operated aircraft.
The Air Force has stated that it wants to acquire a fleet of at least a thousand of these systems.
Tom Inacello: The Air Force has stated that it wants to acquire a fleet of at least a thousand of these systems.
The Navy also directly awarded us additional business for the Mark 48 torpedo. And we have been notified that we will need to nearly double production in FY 24.
Tom Inacello: The Navy also directly awarded US additional business for the Mark 48 torpedo and we have been notified that we will need to nearly double production in FY 'twenty four.
We are expecting significant upside business for our EM 300 products, the return of orders for MTSBs and expect to make our first low rate of initial production shipments of an advanced targeting system this quarter, depending on the receipt of circuit boards that are laid by a month.
Tom Inacello: We are expecting significant upside business for our E. M 300 products. The return of orders for M. T. S B's and expect to make our first low rate of initial production shipments of an advanced targeting system. This quarter, depending on the receipt of circuit boards that are late by a month.
During the quarter, we received additional production orders for precision guided munitions program and expect this to transition into a growing yearly order pattern. Business from the Ukraine is also expected to expand.
Tom Inacello: During the quarter, we received additional production orders for precision guided munitions program and expect this to transition into a growing yearly order pattern business from the Ukraine is also expected to expand.
Beyond program capture, we are nearing completion of pre-production units for Raytheon's advanced EOLIR pods. We expect to complete the current phase of our MMS program in June along with several smaller programs over the next six to 12 months.
Tom Inacello: Beyond program capture we are nearing completion of preproduction units for Raytheon's advanced E O I our pods.
Tom Inacello: We expect to complete the current phase of our M. M. S program in June along with several small smaller programs over the next six to 12 months.
This year we are expecting non-recurring, engineering funding from our customers to be at least $7 million of which 70% is already booked.
Tom Inacello: This year, we are expecting nonrecurring engineering funding from our customers to be at least $7 million of which 70% is already booked.
Unfortunately, L3 Harris informed us that they received a demand letter from the United Launch Alliance for breach of contract.
Tom Inacello: Unfortunately L. Three Harris informed us that they received a demand letter from the United launch Alliance for breach of contract.
and that L3Harris was terminating our development contract for TAMU for convenience.
Tom Inacello: And that L. Three Harris was terminating our development contract for Teemu for convenience.
I don't have any additional details to share at this time and must refrain from making additional comments until we fully evaluate our options.
Tom Inacello: I don't have any additional details to share at this time and must refrain from making additional comments until we fully evaluate our options are.
Obviously, we are disappointed by this development and are considering all remedies available to us.
Tom Inacello: Obviously, we are disappointed by this development.
In our considering all remedies available to us but.
But we believe that upside from our other unrelated programs from other product families can substantially offset the loss of TAMU in FY 24. We have three high confidence programs alone, which could offset at least 10 million out of the approximately 14 million in TAMU revenue that was expected in FY 24.
But we believe that upside from our other unrelated programs from other product families can substantially offset the loss of T. Mo in FY 'twenty four.
Tom Inacello: We have three high confidence programs alone, which could offset at least $10 million out of the approximately $14 million in <unk> revenue that was expected in FY 'twenty four.
I'd like to provide additional insight into our integration programs and our continued work on optimization, all of which are a key areas of focus this year. With Chicago and Bud Lake now on Sightline 10, we will now transition our Hambra in March and Concord in June , unifying the company's ERP system.
Tom Inacello: I'd like to provide additional insight.
Tom Inacello: Into our integration programs and our continued work on optimization all of which are our key areas of focus this year with Chicago and Budd Lake now on sight line 10, we will now transition Alhambra in March and Concord in June unifying the company's ERP systems.
Beyond ERP, we should complete the product line and product data management in Blood Lake in the March quarter, which will complete the unification of our product data system.
Tom Inacello: Beyond ERP wishing complete the product line and product data management in blood Lake in the March quarter.
Tom Inacello: Which will complete the unification of our product data systems Cam star manufacturing execution systems will be integrated into Concord, and Chicago facility, starting in the new year.
CAMSTAR manufacturing execution systems will be integrated into Concord and Chicago facilities starting in the new year.
Beyond the integration programs that I mentioned, and CORE has begun its initiative to leverage its state of the art, a Nursal Measurement Unit, and INS architecture from Bud Lake across the entire company.
Tom Inacello: Beyond the integration programs that I mentioned and core has begun its initiative to leverage its state of the art inertial measurement unit and I N S architecture from Budd Lake across the entire company.
A singular focus on this common architecture will streamline our operations, reduce development expense, and improve our ability to create new component technology.
Tom Inacello: Our singular focus on this common architecture will streamline our operations reduce development expense and improve our ability to create new component technologies.
Component technology differentiation is the key to gross margin in this business.
Tom Inacello: Component technology differentiation is the key to gross margin in this business.
Beyond these actions, we are working to reduce the amount of floor space that we require. With the wafer fab sale, Alhambra will be down to just one building from five.
Beyond these actions we are working to reduce the amount of floor space that we require.
Tom Inacello: With the wafer fab sale Alhambra, we'll be down to just one building from five.
Concord will have its footprint cut in half, and we are working on a plan to right size the blood lake facility.
Concord will have its footprint cut in half and we are working on a plan to rightsize the Budd Lake facility.
It is tempting to think that reducing floor space is as simple as relocating processes and equipment. However, there are expensive structural, power, gas, and environmental systems required to support any move, and not all of these exist in some of our facilities.
Tom Inacello: It is tempting to think that reducing floor space is as simple as relocating processes and equipment. However, there are expensive structural power gas and environmental systems required to support any move and not all of these exist in some of our facilities.
Customers also require significant re-qualification efforts to certify new equipment in new facilities.
Tom Inacello: Customers also require significant re qualification efforts to certify new equipment in new facilities.
Requalification is typically done during block changes and the timing is driven by their schedules and the needs of end users, not ours.
Re qualification is typically done during block changes and the timing is driven by their schedules and the needs of end users not ours.
Nevertheless, we are working to drive down the amount of floor space we require within the capital and qualification limits in the business.
Tom Inacello: Nevertheless, we are working to drive down the amount of floor space, we require within the capital and qualification limits in the business.
Turning now to guidance, I'd like to remind everyone that any chip sales which will occur in the quarter will be logged as part of discontinued operations and are not a part of guidance.
Tom Inacello: Turning now to guidance I'd like to remind everyone that any chip sales, which will occur in the quarter will be logged as part of discontinued operations and are not a part of guidance.
Given that Q4 came in above expectations, and we do expect to see some short-term impact of the TAMU shutdown, we expect that revenue for the December quarter will be within the range of $26 to $28 million, which represents 35% year-over-year growth at the midpoint of the range.
Given that Q4 came in above expectations, and we do expect to see some short term impact of the team who shut down we expect that revenue for the December quarter will be within the range of 26 to 28 million, which represents 35% year over year growth at the midpoint of the range.
As we look to the full year, we see a solid order book and a funnel that should support revenue in the range of 115 to 125 million, which would be a 23% year over year growth at the midpoint of the range. And with that, I will turn the call back over to.
<unk>.
Tom Inacello: As we look to the full year, we see a solid order book and our funnel. It should support revenue in the range of $115 million to $125 million, which would be a 23% year over year growth at the midpoint of the range and with that I will turn the call back over to tore.
Thank you, Jeff. Let me start with making mention of the fact that starting in the fiscal fourth quarter, the results from our legacy business, namely the former broadband segment, and the defense optoelectronic products, are now reported in the income statement under discontinued operations. And as of September 30th, on the balance sheet, as assets and liabilities held for sale.
Tom Inacello: Thank you Jeff.
Tom Inacello: Let me start with making mention of the fact that starting in the fiscal fourth quarter. The results from our legacy business, namely the form a broadband segment and the defense Opto electronic products are now reported in the income statement under discontinued operations and as.
Tom Inacello: September 30th on the balance sheet as assets and liabilities held for sale.
So with that, I'll move to a discussion of the results from continuing operations, which is now exclusively the inertial navigation business. And to facilitate apples to apples comparisons, any references to previous period earnings are solely on inertial navigation.
Tom Inacello: So with that I'll move to a discussion of the results from continuing operations, which is now exclusively the inertial navigation business.
Tom Inacello: And to facilitate apples to apples comparisons any references to previous period earnings are solely also solely on inertial navigation only.
Revenue in fiscal 4Q was 26.8 million near the high end of the guidance range provided during our last quarterly call. And the sixth consecutive quarter of
Tom Inacello: Revenue in fiscal <unk> was 26.8 million near the high end of the guidance range provided during our last quarterly call.
Tom Inacello: And the sixth consecutive quarter of sequential growth.
Revenue from the two most recently acquired operations in Tinley Park and Bud Lake led the way. Both achieving their best revenue quarters since their acquisition.
Tom Inacello: Revenue from the two most recently acquired operations in Tinley Park, and Budd Lake led the way both achieving their best revenue quarters since their acquisitions.
And while conquered and Elhamber were sequentially lower in 4Q, both of these operations are expected to pick up significantly in fiscal 20.
Tom Inacello: And while Concord in Alhambra were sequentially lower in <unk>. Both of these operations are expected to pick up significantly in fiscal 'twenty four.
To the full 2023 fiscal year, a commercial navigation revenue was 97.7 million.
Tom Inacello: For the fall 2023 fiscal year inertial navigation revenue was $97.7 million.
Let me now turn to the rest of the operating results, which will be on a non-GAP basis.
Tom Inacello: Let me now turn to the rest of the operating results, which will be on a non-GAAP basis gross margin was 31% in four Q compared to 30% and three Q.
Gross margin was 31% in 4Q compared to 30% in 3Q.
slight improvement was largely driven by the Bud Lake revenue increase, including a significantly more favorable mix that was due to a large percentage of revenue coming from a repair and support
Tom Inacello: The slight improvement was largely driven by the Budd Lake revenue increase including a significantly more favorable mix that was due to a large percentage of revenue coming from a repair and support contract.
continued steady tinley park growth also contributed favorably to the overall 4Q margin performance while Concord and Elhamber were below average due to the lower volumes already meant.
Tom Inacello: The continued steady Tinley Park growth also contributed favorably to the overall <unk> margin performance, while Concord and all hammer, we're below average due to the lower volumes already mentioned.
Operating expenses were 10.1 million in fiscal 4Q operating loss in the September quarter was 1.9 million Adjusted EBITDA improved to negative 900,000 net loss was 2 million or 3
Tom Inacello: Operating expenses were 10.1 million in fiscal <unk> operating loss in the September quarter was 1.9 million adjusted EBITDA improved to negative 900000 net.
Tom Inacello: Net loss was 2 million or three cents per share.
Shifting for a moment to the gap results, fiscal 4Q from continuing operations was...
Tom Inacello: Shifting for a moment to the GAAP results fiscal for Q from continuing operations was two.
was 28.8 million or 42 cents per share.
Tom Inacello: Was $28 8 million or 42 cents per share.
GAP results from continuing operations included asset impairment charges, totaling 22.6 million, which included Goodwill, Taymu IPR&D, and ROU, or Right of Use leases, associated with vacating space in Elham.
Tom Inacello: GAAP results from continuing operations included asset impairment charges totaling 22.6 million, which included goodwill Tamar I P. R&D and Aro, you or right of use leases associated with vacating space in Alhambra.
Turning to the balance sheet, we had cash of 26.7 million at September 30th compared to 20.2 million at June 30th.
Tom Inacello: Turning to the balance sheet, we had cash of $26 7 million at September 30th compared to $20 2 million at June 30th.
The $6.5 million net increase consisted of 15.6 million and net cash proceeds received from the financing completed in August , offset by 9.1 million news during the quarter as follows. 900,000 negative...
Tom Inacello: The $6.5 million net increase consisted of $15 6 million in net cash proceeds received from the financing completed in August offset by $9 1 million used during the quarter as follows.
Tom Inacello: 900000 negative adjusted EBITDA.
3.2 million associated with the lost on discontinued operations. 3.5 million for
Tom Inacello: 2.2 million associated with the loss on discontinued operations.
$3 5 million for working capital.
$700,000 for severance, $500,000 for M&A related costs, $800,000 for financing activities, and $500,000 for CAPAC.
Tom Inacello: 700000 for severance 500000 for M&A related costs 800000 for financing activities and 500000 for Capex.
Outstanding debt on our credit facility was $10.6 million at September 30th, compared to $11.7 million at June 30th. The $10.6 million as of September 30th consisted of $6.4 million on a revolving line of credit and a $4.2 million balance on the term loan component.
Tom Inacello: Outstanding debt on our credit facility was $10 6 million at September 30th compared to 11.7 million at June 30th the 10.6 million ads as of September 30th consisted of $6 4 million on our revolving line of credit and a $4.2 million balance on the term loan component.
The overall 1.1 million reduction during the quarter included 860,000 in proceeds from equipment sales that went directly to paying down the term loan. With that,
Tom Inacello: Overall 1.1 million reduction during the quarter included 860000 and proceeds from equipment sales that went directly to paying down the term loan.
Tom Inacello: With that we're now ready to open up the call for your questions.
Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star 11 on your telephone. Again, to ask a question, please press star 11. One moment please.
Speaker Change: Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone again to ask a question. Please press star 111 moment. Please.
Tom Inacello: Okay.
Tom Inacello: Okay.
Thank you. Our first question comes from the line of Shoddy Midwally of Craig Hallam, United States.
Thank you. Our first question comes from the line of Saudi Meanwhile, <unk> of Craig Hallum. Your line is open.
Hey guys, thanks for taking my questions. This is Shadi, Spillian for Richard Shannon. I've got two questions here. May you start off on your guide's gross margins. It was solid for the September quarter. And do you guys expect that positive trend continuing into the December quarter? And if so, what do you think we'll contribute to that?
Hey, guys. Thanks for taking my question Shati filling in for Richard Shannon.
Tom Inacello: A few questions here, maybe starting off on your guys is gross margins. It was solid for the September quarter.
Tom Inacello: Do you guys expect that positive trend continuing into the December quarter, and if so what do you think will contribute to that.
Let me tackle that one first. Short answer is yes we do. The biggest thing is that we still have facilities which have a lot of locked up operating leverage. So as volumes go up.
Speaker Change: Let me tackle that one first.
Speaker Change: Short answer is yes, we do the biggest thing is that are you know, we still have facilities, which are.
Speaker Change: <unk> had a lot of locked up operating leverage so as volumes go up.
You know, there's a significant component of contribution margin, well and excess of the gross margin line. So all you gotta do is crank the volume and margin start to improve. Current quarter we're expecting that the product mix.
Speaker Change: You know theres, a significant component of contribution margin well in excess of the gross margin line.
Speaker Change: So all you Gotta do is crank, the volume and margin start to improve.
Speaker Change: Current quarter, we're expecting that the product mix is a equivalent to favorable.
is equivalent to favorable. So yeah, we will expect to see the trend continue.
Speaker Change: So yes, we will expect to see the trend continue.
All right, thanks. Fair enough. And then some other questions on the December quarter. But what do you expect the cash for in the B for December and how much of that do you expect to be from non-corporations? Yeah, I got it, Jeff. So it's going to look similar to the...
Speaker Change: Alright, Thanks Fair enough and then just another question on <unk>.
Speaker Change: The December quarter, but what do you expect the cash burn to be for December and how much of that do you expect to be from our noncore operations.
Speaker Change: Okay.
Yeah, I got it Jeff So it's gonna look.
Speaker Change: Similar to the fourth quarter, we are still digging out from you know all the restructuring the severance payments alone are you know we're not a.
you know, all the restructuring, the severance payments alone, you know, we're not paid out all at one time. They're paid out over time.
Paid out all at one time they are paid out over time.
So that'll continue. We still carried the legacy business into the month of October .
Speaker Change: So that'll continue we still carried the legacy business into the month of October.
And while the fab was shut down, you know, there's still some cost associated with that, that lingered through. And you'll notice in our gap results, we also had an accrual for a legal settlement.
Speaker Change: And while the Fad was shut down you know theres still some costs associated with that that that lingered through and you'll notice in our GAAP results. We also had an accrual for a legal settlement.
in the P&L in September that got paid out in early October . That was around 1.3 million.
In the P&L in September that got paid out in early October that was around 1.3 million and there'll be some additional working capital needs. So overall, it's gonna look similar in cash use to what I just.
and there'll be some additional working capital needs. So overall, it's gonna look
similar in cash use to what I just ran through for the fourth quarter.
Speaker Change: Ran through for the fourth quarter.
Then maybe one last question on a book to bill. It came under one for the September quarter and you guys expected to improve for the December quarter. Are you able to give any more color on if you expect the book to bill to be over one for the next quarter?
Speaker Change: Fair enough.
Speaker Change: And then maybe one last question on a book to Bill.
Speaker Change: It came under one for the September quarter, and you guys expect that to improve.
Speaker Change: For the December quarter.
Speaker Change: To give any more color on if you expect the book to bill to be over one for the next quarter.
Yeah, when we say recover, it would mean over one. It's just, there's a lot of unusual dynamics right now with
Speaker Change: Yeah, when we say recover it would mean over one.
Speaker Change: It's just you know theres a lot of unusual dynamics right now with the.
the way that Pentagon is allocating funds. Again, you know, it's easy to look at.
Speaker Change: The way that the Pentagon is allocating funds again, you know it's easy to look at.
Okay, you know, Congress authorizes X amount of aid to the Ukraine.
Speaker Change: Hey, you know Congress authorizes X amount of aid to the Ukraine.
And really what that means is we're sending stuff from our inventory, platforms, weapon platforms, munitions, et cetera.
Speaker Change: And really what that means is we're sending our stuff from our inventory platforms weapon platforms munitions et cetera.
And then the service branches need the cash to go recover that. And there's a lot of...
Speaker Change: And then the service branches need the cash to go a recover that and Theres a lot of.
give and take and
Speaker Change: Given take and.
Occasionally, you know, that pushes out some of the The actual contracting timelines. I'll give you an example We were told by the Navy by the the contracting authority that the Mark 54 contract was going to be let in March of 22
Speaker Change: Occasionally you know that pushes out some of the the actual contracting timelines I'll give you. An example, we were told by the Navy by the the.
Contracting authority that the Mark 54 contract was going to be let in March of 'twenty two.
and the most recent thoughts we have, well, from them are, yeah, it is going to get done here in December . So we expect to recover. There's a lot of good things that can happen even better than that in the March quarter. You know, you get hampered a little bit by the holidays, but yeah, we think we'll be up back over one. And, you know, we look at a strong March quarter after that.
Speaker Change: And you know the most recent thoughts we have from them are yeah. It is going to get done here in December. So you know we expected a recover there's a lot of good things that can happen.
Speaker Change: Even better than that in the in the March quarter.
Yet hampered a little bit by the holidays, but yeah, we think we'll be up back over one and we look at a strong march quarter after that.
Speaker Change: On the bookings side.
Awesome. Thanks guys for taking my questions, and I'll hop back in the queue.
Speaker Change: Awesome. Thanks, guys for taking my questions and I'll hop back in the queue.
Speaker Change: Yeah.
Speaker Change: Thank you one moment please.
Our next question comes from the line of Tom Savage.
Speaker Change: Northland Capital markets. Your line is open.
Our next question comes from Tim Favagel of Northland Capital Market.
Speaker Change: Our next question comes from Tim <unk> Northland capital markets.
Speaker Change: Hi, sorry about that.
And you've got it revenues for the year. And I imagine that's reflective of some offsets from the K-MU.
Okay.
Speaker Change: And you've.
Speaker Change: Guided revenues for the year and I.
Speaker Change: Imagine that's reflective of some offsets from them.
cancellation, it's not really not too far off what we might have originally expected. That's correct. Yeah, yeah. I don't know if you've explicitly stated in the past. I think the expectation was to achieve positive EBITDA exiting the year. Yeah. Yeah. Yeah. There you go. Is there. Yeah, yeah.
Speaker Change: <unk>.
Speaker Change: Cancellation, you're currently not too far off what we might have originally expected.
That's correct yeah, Yeah, I don't know if you.
Speaker Change: Explicitly stated in the past I think the expectation was to achieve positive EBITDA exiting the year.
Given the positives on gross margin, and when I correct me if I'm wrong, when you say expect this trend to continue, that would be the trend of sequential improvement in gross margin.
Speaker Change: Given the positive on gross margin.
Speaker Change: Correct me if I'm wrong. When you say you expect this trend to continue that would be the trend of sequential improvement in gross margins.
for the December quarter and you did have a nice little bounce up and
Speaker Change: For the December quarter, and you did have a nice little bounce up in.
Speaker Change:
Speaker Change: In December we started in September.
probably not the same order of magnitude. But how should we be thinking about that positive EBITDA target in light of maybe a stronger, gross margin environment and a likely a change in mix? When do you think you can get the positive EBITDA and maybe positive cash flow?
Speaker Change: I'm, probably not the same order of magnitude.
Speaker Change: But how should we be thinking about that.
Speaker Change: Positive EBITDA target in.
Speaker Change: Maybe a stronger gross margin environment.
Speaker Change: Likely a change in mix.
Speaker Change: When do you think you can get to positive EBITDA.
Speaker Change: And may be positive cash flow.
Speaker Change: Thanks.
I'll go ahead with that one Tom. So this quarter is going to be close as we said. You know, it's a little more favorable, you know, on the gross margin line.
Speaker Change: I'll go ahead with that one Tom so this.
Speaker Change: This quarter is going to be close as we as we said.
Speaker Change: <unk> is a little more favorable.
On the gross margin line.
Tiny bit less on the revenue line. The only thing we gotta be mindful of is, these call once in a year, op-ex things like additional costs from auditing, right? Because we're trying to get the K filed here as quickly as we can.
Speaker Change: Tiny bit less on the revenue line.
Speaker Change: The thing we got to be mindful of as you know the these called once in a year opex things like additional costs from auditing right because we're trying to get the K filed here as quickly as we can.
So, you know, on the adjusted EVA dot basis, if you're not there this quarter, certainly next, but it's, you know, we're gonna be close. As far as getting to cash flow break even, what we've said is, you know, one to two quarters after that.
Speaker Change:
So you know on the adjusted EBITDA basis, if youre not there this quarter. It certainly next but it's we're going to be close as far as getting to.
Speaker Change: Cash flow breakeven, what we've said is you know one to two quarters after that.
It's really just a function of moving the top white a little bit.
Speaker Change: It's really just a function of moving the top line a little bit.
Speaker Change: Okay. Thanks very much.
Thank you one moment please.
Okay, our next question comes from a lot of Shady Mewali of Craig Hall and MewLine is open.
Speaker Change: Okay. Our next question comes from the line of Saudi Murali <unk> of Craig Hallum. Your line is open.
Speaker Change: Please make sure your phone is in EMEA.
Speaker Change: One moment please.
Our next question comes from a line of Brian Kinsler, of Alliance Global Mouf Partners, your line is...
Speaker Change: Our next question comes from a line of Brian Kesseler.
Alliance Global partners. Your line is open.
Great, thanks for taking my question. If I heard you correctly, I think you said three contracts.
Speaker Change: Great. Thanks for taking my question I heard you correctly I think you said three contracts.
you have that kind of offset 10 million of the 14 million of revenue that was expected for the So
Speaker Change: You have that kind of offset 10 million of the $14 million of revenue that was expected for the attainment cancellation.
And do you help tell us which three contracts that those are if you're able to? And then the second part of that question, whether you are or not, with those contracts...
Speaker Change: Could you help.
Speaker Change: Tell us which three contracts those.
Speaker Change: And those are if you are able to and then the second part of that question and whether you are or not where those contracts previously in the backlog or are there.
Previous scene the backlog or they're expected to get into the backlog in the short.
Speaker Change: <unk> to get into the backlog in the short term.
So I already did tell you what, when we talked about Mark 48 production doubling in the year. So that's one of them.
Speaker Change: So I already did tell you why.
Speaker Change: Well.
And we talked about Mark 48 production doubling in the year right. So that's one of them.
Speaker Change: The other two we did not name, but when I say high confidence programs. They are things that we have made and shipped before.
Speaker Change: For specific programs.
and orders are being worked up inside of the system.
And you know orders are being worked up inside of the system.
or are being, you know, we just got additional volume that's gonna come with that.
Speaker Change: Or are being you know, we just got additional volume that's going to come with that so I'd rather not name. The other two I'm you know, it's a competitive world out there, but when we say high confidence orders. That's that's what we mean things we're already doing right. So one essentially is booked in the backlog and the other two.
So I'd rather not name the other two. You know, it's a competitive world out there, but when we say high confidence orders, that's what we mean. Things we're already doing. Right. So one essentially is booked, and in the backlog and the other.
Some sort of negotiation or in business development, you think are highly likely. Is that accurate?
Speaker Change: Some some sort of negotiation and business development do you think are highly likely is that accurate.
Not quite. So what I said was that we've been notified by the Navy that we are going to be ramping doubling production for the Mark 48 program in fiscal calendar 24. And so we expect to get an order from them early in the year.
Speaker Change: Not quite.
Speaker Change: So what I said was that we've been notified by the Navy that.
Speaker Change: We are going to.
Speaker Change: Be ramping doubling production for the Mark 48 program in our fiscal calendar 'twenty four.
Speaker Change: And so we expect to get an order from them early in the year.
With that said, you know, we've got a bunch of other open orders with them. So it's not like
Speaker Change: With that said, we've got a bunch of other open orders with them. So it's not like.
You know, it's really going to slow us down at all, but we haven't actually booked the order. So that's the only point of clarification. Bye.
Speaker Change: It's really going to slow us down at all.
Speaker Change: Habit actually book the order so that's the only point of clarification great understood. Thank you.
Thank you. I'm sure no further questions at this time I'd like to turn the call back over to Jeff Whitichard for any closing remarks.
Speaker Change: Thank you I'm showing no further questions at this time I'd like to turn the call back over to Jeff <unk> for any closing remarks.
Jeff <unk>: Thank you all for your interest in EMCORE also want to recognize the team for completing the restructuring plan, we announced in April a positioning.
Positioning EMCORE as a pure play aerospace and defense business.
Jeff <unk>: Thanks, again and happy holidays.
Speaker Change: Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.
Speaker Change: [music].
Speaker Change: Okay.