Lumentum Holdings Inc. Q3 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Q3 FY2020 revenue: $402.8 million, down 12% sequentially and down 7% year-over-year.
  • COVID-19 disruptions intensified late in the quarter, causing supply-chain constraints and reduced demand in certain segments.
  • Q4 FY2020 is expected to be impacted by more than $90 million in lost revenue relative to pre-COVID expectations, driven by supply limitations (over half) and reduced consumer/industrial demand (balance).

Key Financial and Operational Highlights

  • Non-GAAP gross margin: 45.5%, down 190 bps sequentially but up 650 bps year-over-year due to product mix and synergies.
  • Non-GAAP operating margin: 25%, down 380 bps sequentially but up 720 bps year-over-year.
  • Non-GAAP net income: $98 million; EPS of $1.26 vs. $1.22 in Q3 FY2019.
  • Strong financial position: $1.45 billion in cash and short-term investments, no term debt, and $1.5 billion in convertible notes.
  • Acquisition synergy progress: $100 million in annual run-rate synergies achieved; targeting $110 million total.

Business Segment Performance

Telecom & Datacom
  • Demand remained very strong throughout the quarter, driven by cloud expansion, 5G deployments, and increased network traffic.
  • Book-to-bill exceeded 1.3 vs. 1.1 in prior quarter.

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Operator: Good day, everyone, and welcome to the Lumentum Third Quarter Fiscal Year 2020 Financial Results Conference Call. As a reminder, today’s call is being recorded for replay purposes through May 12, 2020. I would now like to turn the conference over to Mr. Jim Fanucchi of Darrow Associates. Mr. Fanucchi, please go ahead. Jim Fanucchi: Thank you, Operator. Welcome everyone to Lumentum’s third quarter fiscal 2020 earnings call. This is Jim Fanucchi from Darrow Associates, assisting Lumentum with its Investor Relations, and joining the call today from the company’s management team we have Alan Lowe, President and Chief Executive Officer; Wajid Ali, Chief Financial Officer; and Chris Coldren, Senior Vice President of Strategy and Corporate Development. Today’s call will include forward-looking statements, including statements regarding the markets in which we operate, including potential market sizes, market trends and our position in such markets, the impact of COVID-19 and responsive actions there too on our business, our partners, and the global economy, trends and expectations for our products and technology, including product development and projected new product releases, purchasing trends and demands for our products, our expected financial performance, including our guidance, expenses, risks and uncertainties associated with potential disruption, caused by the COVID-19 as well as statements regarding our business initiatives and the achievement of synergies followi

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