10-QPeriod: Q3 FY2020

Lumentum Holdings Inc. Quarterly Report for Q3 Ended Mar 28, 2020

Filed May 5, 2020For Securities:LITE

Summary

Lumentum Holdings Inc. reported a third quarter for fiscal year 2020 (ended March 28, 2020) with net revenue of $402.8 million, a decrease of 7.0% compared to the prior year's quarter. This decline was primarily attributed to reduced sales in the Telecom and Datacom (OpComms) segment, partially offset by increased sales in the Consumer and Industrial (OpComms) market. The company experienced a significant improvement in gross margin, rising to 39.2% from 20.4% year-over-year, driven by a favorable product mix and lower amortization costs associated with acquisitions. Despite the revenue decline, the company generated positive net income of $43.4 million, a substantial improvement from a net loss of $74.3 million in the same period last year. The company also highlighted the impact of COVID-19, noting potential disruptions to operations and supply chains, but expressed confidence in continued investment in R&D and new products for long-term growth.

Financial Highlights

50 data points
Beta

Revenue

$402.80M

39.2% Gross Margin

Net Income

$43.40M

10.8% Net Margin

EPS (Diluted)

$0.56

Total Assets

$3.27B

Cash & Equivalents

$688.80M

Free Cash Flow

$134.30M

Financial Statements
Beta
Revenue$402.80M
Gross Profit$157.70M
R&D Expenses$48.70M
SG&A Expenses$61.30M
Operating Expenses$115.20M
Operating Income$42.50M
Interest Expense$15.60M
Net Income$43.40M
EPS (Basic)$0.58
EPS (Diluted)$0.56
Shares Outstanding (Basic)74.80M
Shares Outstanding (Diluted)77.50M

Key Highlights

  • 1Net revenue for the quarter was $402.8 million, a decrease of 7.0% compared to the prior year's quarter.
  • 2Gross profit significantly improved to $157.7 million, leading to a gross margin of 39.2%, up from 20.4% in the prior year's quarter.
  • 3Net income attributable to common stockholders was $43.4 million, a substantial improvement from a net loss of $74.3 million in the prior year's quarter.
  • 4Operating expenses decreased by 30% year-over-year due to lower restructuring and impairment charges.
  • 5The company ended the quarter with $688.3 million in cash and cash equivalents, an increase from $432.6 million at the end of the prior fiscal year.
  • 6The report mentions the ongoing impact and uncertainty related to the COVID-19 pandemic on business operations, supply chains, and future demand.

Frequently Asked Questions

Lumentum reported net revenue of $402.8 million for the third quarter ended March 28, 2020. This represents a decrease of 7.0% compared to the $432.9 million in net revenue reported for the same period in the prior fiscal year. The decrease was primarily due to lower sales in the Telecom and Datacom (OpComms) segment and the Lasers segment, partially offset by increased sales in the Consumer and Industrial (OpComms) market.

The company showed a significant improvement in profitability. Net income for the quarter was $43.4 million, or $0.56 per diluted share, a substantial turnaround from a net loss of $74.3 million, or $0.98 per diluted share, in the prior year's comparable quarter. This improvement was driven by a higher gross margin and reduced operating expenses, particularly lower restructuring and impairment charges.

Lumentum ended the quarter with a strong cash and cash equivalents balance of $688.3 million, up from $432.6 million at the end of the prior fiscal year. This robust liquidity, combined with cash generated from operations, provides the company with confidence in its ability to meet its liquidity and capital spending requirements for at least the next 12 months. The company also noted that it may seek additional financing if market conditions are favorable.

The company acknowledged that the COVID-19 pandemic has caused and is expected to continue to cause significant uncertainty and disruption. Potential impacts include disruptions to operations, supply chains, manufacturing, and demand for products. While the full extent of the impact is difficult to predict, Lumentum stated that its strategic focus on technology and product leadership remains valid and believes long-term opportunities exist as the world becomes more digital. The company plans to continue investing in R&D and new products.