10-QPeriod: Q1 FY2021

Lumentum Holdings Inc. Quarterly Report for Q1 Ended Sep 26, 2020

Filed November 2, 2020For Securities:LITE

Summary

Lumentum Holdings Inc. reported a modest increase in net revenue for the three months ended September 26, 2020, reaching $452.4 million, a slight rise from $449.9 million in the prior year's comparable period. This growth was primarily driven by the Optical Communications (OpComms) segment, which saw a 3.0% increase in net revenue, largely due to higher Datacom chip sales, partially offsetting a decline in Datacom transceiver modules. The Commercial Lasers segment experienced a significant revenue decrease of 29.3%, impacted by lower demand for kilowatt-class fiber lasers. The company demonstrated strong operational efficiency, with gross profit increasing by 22.7% to $205.7 million, leading to a substantial improvement in gross margin from 37.3% to 45.5%, attributed to a favorable product mix and the divestiture of lower-margin businesses. Net income for the quarter grew to $67.1 million, or $0.86 per diluted share, compared to $47.6 million, or $0.61 per diluted share, in the prior year. This robust earnings growth reflects the improved gross profit and well-managed operating expenses. The company maintained a healthy cash position with $269.5 million in cash and cash equivalents and $1,341.2 million in short-term investments as of September 26, 2020. Despite the ongoing uncertainties of the COVID-19 pandemic, Lumentum's financial performance in this quarter shows resilience and operational strength.

Financial Highlights

48 data points
Beta

Revenue

$452.40M

45.5% Gross Margin

Net Income

$67.10M

14.8% Net Margin

EPS (Diluted)

$0.86

Total Assets

$3.39B

Cash & Equivalents

$269.50M

Free Cash Flow

$78.40M

Financial Statements
Beta
Revenue$452.40M
Gross Profit$205.70M
R&D Expenses$50.40M
SG&A Expenses$56.30M
Operating Expenses$106.70M
Operating Income$99.00M
Interest Expense$16.00M
Net Income$67.10M
EPS (Basic)$0.89
EPS (Diluted)$0.86
Shares Outstanding (Basic)75.30M
Shares Outstanding (Diluted)78.20M

Key Highlights

  • 1Net revenue increased slightly by 0.6% to $452.4 million for the three months ended September 26, 2020, compared to $449.9 million in the prior year.
  • 2Optical Communications (OpComms) segment revenue grew by 3.0% to $428.5 million, driven by Datacom chip sales.
  • 3Commercial Lasers segment revenue declined by 29.3% to $23.9 million.
  • 4Gross profit surged by 22.7% to $205.7 million, with gross margin expanding significantly from 37.3% to 45.5%.
  • 5Net income increased by 40.9% to $67.1 million, and diluted EPS grew from $0.61 to $0.86.
  • 6The company reported strong cash generation with $104.7 million in cash provided by operating activities.
  • 7As of September 26, 2020, Lumentum held $269.5 million in cash and cash equivalents and $1,341.2 million in short-term investments.

Frequently Asked Questions

Lumentum Holdings Inc. reported a net revenue of $452.4 million for the three months ended September 26, 2020, representing a slight increase of 0.6% from $449.9 million in the same period last year. This growth was primarily driven by the OpComms segment, while the Commercial Lasers segment saw a decline.

The gross margin improved substantially from 37.3% to 45.5%. This was largely due to an improved product mix, with higher revenue from higher-margin Datacom chip products and the prior divestiture of the lower-margin Datacom transceiver module business. Streamlining manufacturing supply chains in the Lasers segment also contributed.

The company acknowledges that the COVID-19 pandemic has created significant uncertainty and has disrupted global supply chains and economic activity. While the pandemic did not have a material adverse effect on the reported results for this quarter, Lumentum continues to monitor its impact. The company believes long-term trends like increased digitization could drive future demand for its products and plans to continue investing in R&D.

Lumentum maintained a strong liquidity position, with $269.5 million in cash and cash equivalents and $1,341.2 million in short-term investments as of September 26, 2020. The company believes its current cash and cash generated from operations are sufficient to meet its liquidity and capital spending requirements for at least the next 12 months.