10-KPeriod: FY2021

Lumentum Holdings Inc. Annual Report, Year Ended Jul 3, 2021

Filed August 31, 2021For Securities:LITE

Summary

Lumentum Holdings Inc. (LITE) reported its fiscal year 2021 results, showcasing resilience and growth in its Optical Communications (OpComms) segment, which benefited from increased demand for 3D sensing lasers and robust performance in Telecom and Datacom products. Despite a decline in the Commercial Lasers segment due to COVID-19 impacts, the company's overall net revenue saw a modest increase, driven by a strong performance in OpComms, particularly from its largest customer, Apple. The company also highlighted the net gain from the termination of its merger agreement with Coherent, which provided a significant boost to its financial results. Lumentum continues to invest in research and development to maintain its technology leadership, with a strategic focus on innovation and strong customer relationships. Key risks identified include reliance on a limited number of customers, supply chain disruptions exacerbated by the pandemic, and intense market competition. However, the company's financial position remains solid, supported by substantial cash and cash equivalents, and a recently approved share buyback program. Investors should note Lumentum's significant revenue concentration with its top customers, particularly Apple, which represented over 30% of net revenue in fiscal 2021. The company's ability to navigate supply chain challenges and capitalize on growth trends in 5G, cloud computing, and emerging technologies like 3D sensing will be crucial for future performance. The termination fee from Coherent provided a one-time financial benefit, but the underlying operational performance in the core segments remains the primary driver of long-term value.

Financial Highlights

49 data points
Beta

Revenue

$1.74B

44.9% Gross Margin

Net Income

$397.30M

22.8% Net Margin

EPS (Diluted)

$5.07

Total Assets

$3.55B

Cash & Equivalents

$774.30M

Free Cash Flow

$653.90M

Financial Statements
Beta
Revenue$1.74B
Gross Profit$783.10M
R&D Expenses$214.50M
SG&A Expenses$241.40M
Operating Expenses$256.10M
Operating Income$527.00M
Interest Expense$66.70M
Net Income$397.30M
EPS (Basic)$5.27
EPS (Diluted)$5.07
Shares Outstanding (Basic)75.40M
Shares Outstanding (Diluted)78.40M

Key Highlights

  • 1Lumentum reported a net revenue increase of 3.8% in fiscal year 2021, primarily driven by a 7.0% growth in its Optical Communications (OpComms) segment.
  • 2The OpComms segment benefited from strong performance in 3D sensing lasers for consumer electronics and increased demand for Telecom and Datacom products.
  • 3The Commercial Lasers segment experienced a decline of 25.3% in net revenue due to reduced customer demand for kilowatt-class fiber lasers, impacted by COVID-19.
  • 4The company received a $217.6 million termination fee from Coherent, Inc. in March 2021 following the termination of their merger agreement, which positively impacted financial results.
  • 5Apple was the largest customer, contributing 30.2% of net revenue in fiscal 2021, highlighting a significant customer concentration.
  • 6Lumentum maintained a strong liquidity position with $774.3 million in cash and cash equivalents and $1,171.7 million in short-term investments as of July 3, 2021.
  • 7A new share buyback program was approved, authorizing the repurchase of up to $700 million of common stock.

Frequently Asked Questions

Lumentum's financial performance in fiscal year 2021 was primarily driven by strong growth in its Optical Communications (OpComms) segment, which saw increased demand for 3D sensing lasers and robust sales in Telecom and Datacom products. This growth offset a decline in the Commercial Lasers segment. Additionally, a significant one-time gain was realized from the termination of the Coherent merger agreement.

Lumentum acknowledges its reliance on a few key customers, with Apple being the largest, representing over 30% of net revenue in fiscal 2021. While the company strives to diversify its customer base, it also focuses on building strong, long-term relationships with its major clients. The risks associated with this concentration are highlighted in the 'Risk Factors' section of the filing.

The COVID-19 pandemic caused disruptions in global supply chains and manufacturing operations, as well as volatility in financial markets. Specifically, it led to reduced customer demand for kilowatt-class fiber lasers in the Commercial Lasers segment. The company also noted that semiconductor component shortages, exacerbated by the pandemic, could impact its ability to supply products. However, Lumentum believes the long-term trends driven by the pandemic, such as increased digital and virtual interactions, will ultimately benefit its business by driving demand for optical solutions.

Lumentum's primary strategic focus is on technology and product leadership, combined with close customer relationships. The company continues to invest substantially in R&D to develop new and differentiated products and technologies to address both near-term and long-term growth opportunities. Despite the uncertainties, they plan to increase R&D investments in absolute dollars.