Rubicon Technology, Inc. (NASDAQ:RBCN), a leading provider of sapphire
substrates and products to the LED, semiconductor, and optical
industries, today reported financial results for its third quarter ended
September 30, 2015.
The Company reported third quarter revenue of $5.3 million, lower than
the prior quarter revenue of $7.1 million due to weaker sapphire demand,
particularly for two-inch core sold into the mobile device market, which
declined $2.1 million sequentially. The Company cited higher inventory
of finished two-inch double side polished wafers at its customers as
contributing to the weaker demand in the quarter. PSS wafer sales
increased again sequentially, to $1.4 million in the third quarter from
$0.9 million in the prior quarter. While PSS revenue increased, the LED
market in general was weaker in the quarter, resulting from weakness in
the backlighting segment of the market.
Bill Weissman, Rubicon’s CEO, said, “The sapphire market remained very
challenging in the third quarter as excess capacity in the market and
fluctuations in inventory levels in the supply chain added additional
downward pressure on pricing and volumes for the industry. The current
excess capacity in the sapphire market has been driven by the prospect
of sapphire cover glass in mobile devices, and if that application
becomes a reality, it has the potential to quickly change the market
supply situation. While we are also taking steps to assure that Rubicon
is positioned to participate in the sapphire cover glass market if that
application is adopted, we are taking the actions necessary to diversify
the business to reduce volatility and drive stronger margins over the
long-term while putting intense focus on cost reduction to reduce cash
usage in the near-term.”
The Company’s operating loss for the third quarter, excluding a non-cash
charge for impairment of long-lived assets and an accrual for the
pending settlement of securities litigation, was reduced sequentially by
$1.4 million to $6.9 million. Cash used in the period was $1.9 million
as compared with $5 million in the prior quarter. Please refer to the
reconciliation of non-GAAP measures to the nearest GAAP measures near
the end of this release.
The Company recorded a non-cash charge for impairment of long-lived
assets such as machinery, equipment and facilities in the quarter
totaling $39.6 million. Mardel Graffy, Rubicon’s CFO commented, “Due to
the protracted weakness in sapphire pricing, it was determined in the
period that our long-lived assets should be written down to current fair
market value in accordance with generally accepted accounting
principles.”
Fourth Quarter 2015 Guidance
The Company expects the market to be particularly challenging in the
fourth quarter. Given the current pricing for two and four inch core,
the Company expects to limit sales of those products in the quarter to
allow time for inventory in the supply chain to clear. The Company also
reported some delay in the start of its purchase order with its key PSS
customer based on revised end customer demand.
Mr. Weissman said, “There is weakness in all markets right now. We
expect improvement in the first quarter of next year based on our
visibility of wafers sales and we also believe the LED and mobile device
supply chain inventories should come down and anticipate some
improvement in demand for two and four inch core in the first quarter as
well. However, fourth quarter revenue will likely be limited to $2 to $3
million with GAAP loss per share of around $0.30.”
Conference Call Details
Rubicon will host a conference call at 5:00 p.m. Eastern time on
November 9, 2015 to review the third quarter 2015 results and the fourth
quarter 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 11:59 p.m. Eastern time on November 16, 2015, and can be accessed
by dialing (877) 344-7529 or (412) 317-0088 (international). Callers
should reference conference ID 10075492. 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
for applications in light-emitting diodes (LEDs), optical systems and
specialty electronic devices. Rubicon has a proprietary 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 2015, 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 changes in the average selling prices of sapphire
products, our successful development and market acceptance of new
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,
|
|
|
|
2015
|
|
|
2014
|
Assets
|
|
|
(unaudited)
|
|
|
(unaudited)
|
Cash and cash equivalents
|
|
|
$
|
21,428
|
|
|
$
|
25,144
|
Restricted cash
|
|
|
|
167
|
|
|
|
195
|
Short-term investments
|
|
|
|
12,676
|
|
|
|
27,828
|
Accounts receivable, net
|
|
|
|
3,276
|
|
|
|
5,822
|
Inventories
|
|
|
|
23,112
|
|
|
|
23,060
|
Other current assets
|
|
|
|
7,723
|
|
|
|
9,736
|
Total current assets
|
|
|
|
68,382
|
|
|
|
91,785
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
59,079
|
|
|
|
110,347
|
Other assets
|
|
|
|
1,492
|
|
|
|
1,973
|
Total assets
|
|
|
$
|
128,953
|
|
|
$
|
204,105
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
2,563
|
|
|
$
|
4,058
|
Accrued and other current liabilities
|
|
|
|
1,993
|
|
|
|
1,970
|
Total current liabilities
|
|
|
|
4,556
|
|
|
|
6,028
|
|
|
|
|
|
|
|
Deferred tax liability
|
|
|
|
9
|
|
|
|
267
|
Total liabilities
|
|
|
|
4,565
|
|
|
|
6,295
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
124,388
|
|
|
|
197,810
|
Total liabilities and stockholders’ equity
|
|
|
$
|
128,953
|
|
|
$
|
204,105
|
|
|
|
|
|
|
|
|
|
Rubicon Technology, Inc.
|
Condensed Consolidated Statements of Operations (unaudited)
|
(in thousands except share and per share amounts)
|
|
|
|
|
Three months ended September 30,
|
|
|
Nine months ended September 30,
|
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
5,346
|
|
$
|
8,036
|
|
|
$
|
21,362
|
|
$
|
36,773
|
Cost of goods sold
|
|
|
|
9,237
|
|
|
17,496
|
|
|
|
35,517
|
|
|
61,001
|
Gross loss
|
|
|
|
(3,891)
|
|
|
(9,460)
|
|
|
|
(14,155)
|
|
|
(24,228)
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
3,037
|
|
|
2,949
|
|
|
|
7,293
|
|
|
7,534
|
Sales and marketing expenses
|
|
|
|
287
|
|
|
337
|
|
|
|
979
|
|
|
1,136
|
Research and development expenses
|
|
|
|
558
|
|
|
446
|
|
|
|
1,594
|
|
|
1,413
|
Long-lived asset impairment charges
|
|
|
|
39,597
|
|
|
-
|
|
|
|
39,597
|
|
|
-
|
Loss on disposal of assets
|
|
|
|
-
|
|
|
680
|
|
|
|
22
|
|
|
665
|
Total operating expenses
|
|
|
|
43,479
|
|
|
4,412
|
|
|
|
49,485
|
|
|
10,748
|
Loss from operations
|
|
|
|
(47,370)
|
|
|
(13,872)
|
|
|
|
(63,640)
|
|
|
(34,976)
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
Interest (expense) income and other, net
|
|
|
|
(1,489)
|
|
|
(139)
|
|
|
|
(2,060)
|
|
|
93
|
Loss before income taxes
|
|
|
|
(48,859)
|
|
|
(14,011)
|
|
|
|
(65,700)
|
|
|
(34,883)
|
Income tax benefit
|
|
|
|
663
|
|
|
298
|
|
|
|
576
|
|
|
292
|
Net loss
|
|
|
$
|
(48,196)
|
|
$
|
(13,713)
|
|
|
$
|
(65,124)
|
|
$
|
(34,591)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(1.84)
|
|
$
|
(0.53)
|
|
|
$
|
(2.49)
|
|
$
|
(1.35)
|
Diluted
|
|
|
$
|
(1.84)
|
|
$
|
(0.53)
|
|
|
$
|
(2.49)
|
|
$
|
(1.35)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding used in computing net
loss per common share:
|
|
|
|
26,160,308
|
|
|
26,110,651
|
|
|
|
26,143,948
|
|
|
25,711,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rubicon Technology, Inc.
|
Condensed Consolidated Statements of Cash Flows (unaudited)
|
(in thousands)
|
|
|
|
|
Three months ended September 30,
|
|
|
Nine months ended September 30,
|
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(48,196
|
)
|
|
$
|
(13,713
|
)
|
|
|
$
|
(65,124
|
)
|
|
$
|
(34,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
3,178
|
|
|
|
3,337
|
|
|
|
|
9,780
|
|
|
|
10,321
|
|
Long-lived asset impairment charges
|
|
|
|
39,597
|
|
|
|
-
|
|
|
|
|
39,597
|
|
|
|
-
|
|
Other
|
|
|
|
292
|
|
|
|
950
|
|
|
|
|
961
|
|
|
|
1,746
|
|
Deferred taxes
|
|
|
|
(663
|
)
|
|
|
(363
|
)
|
|
|
|
(584
|
)
|
|
|
(363
|
)
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
4,668
|
|
|
|
2,712
|
|
|
|
|
5,047
|
|
|
|
(2,251
|
)
|
Inventories
|
|
|
|
(2,301
|
)
|
|
|
235
|
|
|
|
|
(2,177
|
)
|
|
|
11,330
|
|
Other assets
|
|
|
|
206
|
|
|
|
2,430
|
|
|
|
|
1,450
|
|
|
|
2,921
|
|
Accounts payable
|
|
|
|
259
|
|
|
|
(274
|
)
|
|
|
|
(910
|
)
|
|
|
(401
|
)
|
Accrued expenses and other current liabilities
|
|
|
|
143
|
|
|
|
139
|
|
|
|
|
55
|
|
|
|
(202
|
)
|
Net cash used in operating activities
|
|
|
|
(2,817
|
)
|
|
|
(4,547
|
)
|
|
|
|
(11,905
|
)
|
|
|
(11,490
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment, net of proceeds from disposal
of assets
|
|
|
|
(459
|
)
|
|
|
(1,503
|
)
|
|
|
|
(801
|
)
|
|
|
(6,112
|
)
|
Purchases of investments, net proceeds from sales of investments
|
|
|
|
537
|
|
|
|
6,439
|
|
|
|
|
7,901
|
|
|
|
(13,359
|
)
|
Net cash provided by (used in) investing activities
|
|
|
|
78
|
|
|
|
4,936
|
|
|
|
|
7,100
|
|
|
|
(19,471
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock, net of issuance costs
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
34,957
|
|
Other financing activities
|
|
|
|
28
|
|
|
|
(42
|
)
|
|
|
|
12
|
|
|
|
182
|
|
Net cash provided by (used in) financing activities
|
|
|
|
28
|
|
|
|
(42
|
)
|
|
|
|
12
|
|
|
|
35,139
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of currency translation
|
|
|
|
1,395
|
|
|
|
67
|
|
|
|
|
1,868
|
|
|
|
(105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
|
(1,316
|
)
|
|
|
414
|
|
|
|
|
(2,925
|
)
|
|
|
4,073
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
22,744
|
|
|
|
24,730
|
|
|
|
|
24,353
|
|
|
|
21,071
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
21,428
|
|
|
$
|
25,144
|
|
|
|
$
|
21,428
|
|
|
$
|
25,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Disclosures
In addition to the GAAP results provided in this release, the Company
has provided non-GAAP operating loss and non-GAAP loss per share for the
third quarter of 2015. The Company’s management believes that providing
these non-GAAP financial measures better enables investors to understand
and evaluate the Company’s historical and prospective operating
performance. The non-GAAP measures exclude the impact of certain
non-cash charges which are described in the footnotes to the table
below. Management excludes these items because they believe the impacts
do not reflect expected future results and that their exclusion aids in
the comparison of the Company’s current results with past and future
operating results. These non-GAAP financial measures may have
limitations as analytical tools, and these measures should not be
considered in isolation or as a substitute for analysis of the Company’s
results as reported under GAAP. Other Companies may calculate these
non-GAAP financial measures differently than the Company does limiting
the usefulness of those measures for comparative purposes.
|
Rubicon Technology, Inc.
|
Q3'15 Reconciling Items to Financial Statements - GAAP to
Non-GAAP (Unaudited)
|
(in thousands except share and per share amounts)
|
|
|
|
|
Three months ended September 30, 2015
|
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
5,346
|
|
|
$
|
-
|
|
|
$
|
5,346
|
|
Cost of goods sold
|
|
|
|
9,237
|
|
|
|
-
|
|
|
|
9,237
|
|
Gross loss
|
|
|
|
(3,891
|
)
|
|
|
-
|
|
|
|
(3,891
|
)
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
3,037
|
|
|
|
(900
|
)
|
(a)
|
|
2,137
|
|
Sales and marketing expenses
|
|
|
|
287
|
|
|
|
-
|
|
|
|
287
|
|
Research and development expenses
|
|
|
|
558
|
|
|
|
-
|
|
|
|
558
|
|
Long-lived asset impairment charges
|
|
|
|
39,597
|
|
|
|
(39,597
|
)
|
(b)
|
|
-
|
|
Loss on disposal of assets
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total operating expenses
|
|
|
|
43,479
|
|
|
|
(40,497
|
)
|
|
|
2,982
|
|
Loss from operations
|
|
|
|
(47,370
|
)
|
|
|
40,497
|
|
|
|
(6,873
|
)
|
|
|
|
|
|
|
|
|
Other (expense) income:
|
|
|
|
|
|
|
|
Interest (expense) income and other, net
|
|
|
|
(1,489
|
)
|
|
|
-
|
|
|
|
(1,489
|
)
|
Loss before income taxes
|
|
|
|
(48,859
|
)
|
|
|
40,497
|
|
|
|
(8,362
|
)
|
Income tax benefit
|
|
|
|
663
|
|
|
|
|
|
663
|
|
Net loss
|
|
|
$
|
(48,196
|
)
|
|
$
|
40,497
|
|
|
$
|
(7,699
|
)
|
|
|
|
|
|
|
|
|
Net loss per common share:
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(1.84
|
)
|
|
$
|
1.55
|
|
|
$
|
(0.29
|
)
|
Diluted
|
|
|
$
|
(1.84
|
)
|
|
$
|
1.55
|
|
|
$
|
(0.29
|
)
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding used in computing net
loss per common share:
|
|
|
|
26,160,308
|
|
|
|
26,160,308
|
|
|
|
26,160,308
|
|
(a) The amount the Company accrued for its expected contribution towards
the negotiated settlement of securities litigation
(The proposed
settlement has not been finalized and remains subject to approval by the
United States District Court for the Northern District of Illinois.)
(b)
Asset impairment charges.
|
Rubicon Technology, Inc.
|
Revenue by Product Group
|
(in thousands)
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Three months ended
|
|
|
Three months ended
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
|
2015
|
|
|
2015
|
|
|
2014
|
Core
|
|
|
|
|
|
|
|
|
|
2 Inch
|
|
|
$
|
551
|
|
|
$
|
2,615
|
|
|
$
|
856
|
4 Inch
|
|
|
|
1,233
|
|
|
|
1,243
|
|
|
|
3,327
|
6 Inch
|
|
|
|
40
|
|
|
|
171
|
|
|
|
-
|
Total Core
|
|
|
|
1,824
|
|
|
|
4,029
|
|
|
|
4,183
|
Polished
|
|
|
|
763
|
|
|
|
840
|
|
|
|
1,828
|
PSS
|
|
|
|
1,373
|
|
|
|
902
|
|
|
|
257
|
R&D
|
|
|
|
270
|
|
|
|
144
|
|
|
|
156
|
Optical and other
|
|
|
|
1,116
|
|
|
|
1,191
|
|
|
|
1,612
|
|
|
|
$
|
5,346
|
|
|
$
|
7,106
|
|
|
$
|
8,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151109006632/en/
Copyright Business Wire 2015