SemiLEDs Reports Second Quarter Fiscal Year 2024 Financial Results

Rhea-AI Summary

SemiLEDs (LEDS) reported a decrease in revenue and net loss for the second quarter of fiscal year 2024, with revenue dropping to $886 thousand and a net loss of $559 thousand. The company's gross margin decreased to 13%, and operating margin was negative 94%. Cash and cash equivalents stood at $1.6 million. SemiLEDs expects third-quarter revenue to be around $1.0 million. Despite facing a potential delisting threat from Nasdaq due to stockholders' equity issues, the company believes it is currently compliant.

Positive

• None.

Negative

• Decrease in revenue and net loss for the second quarter
• Decrease in gross margin and negative operating margin
• Cash and cash equivalents decreased to $1.6 million
• Potential delisting threat from Nasdaq due to stockholders' equity issues

Insights

Financial Analyst

The reported financial results by SemiLEDs Corporation reflect a significant sequential revenue decline from $1.6 million to $886 thousand, which is indicative of a potential downward trend in the company's sales performance. This contraction could be attributed to operational halts such as the shutdown during the Chinese New Year holiday, which may have impacted production and sales. Moreover, the decrease in gross margin from 15% to 13% and the substantial drop in operating margin to negative 94% suggest escalating cost pressures or inefficiencies that could be concerning to investors. The reduction in cash reserves from $2.3 million to $1.6 million further underscores a tight liquidity position, potentially limiting the company's ability to invest in growth or weather financial setbacks.

While the net loss has marginally improved, the persistent losses are a red flag for the company's financial health and could impact investor sentiment. The projection of third-quarter revenue at approximately $1.0 million indicates a possible stabilization; however, the broad range of +/- 10% introduces uncertainty. The compliance with Nasdaq's minimum stockholders’ equity requirement is a positive note, alleviating immediate concerns of delisting. Yet, the caveat of maintaining compliance in subsequent reports hints at ongoing risks associated with the company's market listing status.

Market Research Analyst

From a market perspective, SemiLEDs' performance must be contextualized within the broader LED industry trends, which are influenced by factors such as technological advancements, competition and global demand. The decline in revenue and profitability metrics might reflect not only company-specific issues but also macroeconomic conditions affecting the sector, such as pricing pressures from competitors or shifts in consumer demand. The company's ability to regain and sustain compliance with Nasdaq's Listing Rule is a critical factor that could influence investor confidence and the stock's attractiveness to institutional investors.

Furthermore, the strategic implications of the production shutdown, while culturally understandable due to the Chinese New Year, raise questions about the company's planning and inventory management practices. Investors might seek reassurance that SemiLEDs has contingency plans to mitigate such disruptions in the future. The guidance for the third quarter suggests cautious optimism, but it will be essential for the company to demonstrate a clear path to profitability and operational efficiency to regain market trust.

Legal Expert

Regarding the Nasdaq Listing Rule compliance, SemiLEDs' ability to meet the minimum stockholders’ equity requirement is a legal and regulatory matter that has direct implications for its continued listing and public trading. The notice from Nasdaq and the subsequent acceptance of SemiLEDs' compliance plan are procedural steps that provide a temporary reprieve from delisting. However, the conditional nature of this compliance underscores the importance of monitoring the company's adherence to regulatory standards.

The potential for delisting upon failure to demonstrate continued compliance in future periodic reports is a legal risk that shareholders must be aware of. The company's disclosure of this information is a legal obligation and it provides transparency to the market. Investors should be cognizant of the legal processes and criteria for Nasdaq listing to fully understand the ramifications of SemiLEDs' financial position and regulatory standing.

HSINCHU, Taiwan--(BUSINESS WIRE)-- SemiLEDs Corporation (NASDAQ: LEDS), “SemiLEDs” or the “Company,” a developer and manufacturer of LED chips and LED components, today announced its financial results for the second quarter of fiscal year 2024, ended February 29, 2024.

Revenue for the second quarter of fiscal 2024 decreased to $886 thousand, compared to $1.6 million in the first quarter of fiscal 2024. GAAP net loss attributable to SemiLEDs stockholders for the second quarter of fiscal 2024 decreased to $559 thousand, or $(0.11) per diluted share, compared to a net loss of $598 thousand, or $(0.12) per diluted share, in the first quarter of fiscal 2024. We shut down our manufacturing production from February 3 to February 18 due to the Chinese New Year holiday.

GAAP gross margin for the second quarter of fiscal 2024 decreased to 13%, compared to 15% for the first quarter of fiscal 2024. Operating margin for the second quarter of fiscal 2024 was negative 94%, compared with negative 50% for the first quarter of fiscal 2024. The Company’s cash and cash equivalents were $1.6 million at February 29, 2024, compared to $2.3 million at the end of the first quarter of fiscal 2024.

We expect revenue for the third quarter ending May 31, 2024 to be approximately $1.0 million +/- 10%.

On July 11, 2023, we received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that we did not meet the minimum of $2,500,000 in stockholders’ equity required by Nasdaq Listing Rule 5550(b)(1) (the “Listing Rule”) for continued listing, or the alternatives of market value of listed securities or net income from continuing operations. Pursuant to the Listing Rule, we submitted a plan to regain compliance with the Listing Rule. Nasdaq accepted our plan and granted us an extension through January 8, 2024. Based on our Form 8-K, dated January 9, 2024, Nasdaq determined that we comply with the Listing Rule 5550(b)(1). However, if we fail to evidence compliance upon filing our next periodic report, we may be subject to delisting. Based on our second quarter stockholders’ equity, we believe we are in compliance with the minimum stockholders’ equity requirement.

About SemiLEDs

SemiLEDs develops and manufactures LED chips and LED components for general lighting applications, including street lights and commercial, industrial, system and residential lighting, along with specialty industrial applications such as ultraviolet (UV) curing, medical/cosmetic, counterfeit detection, horticulture, architectural lighting and entertainment lighting. SemiLEDs sells blue, white, green and UV LED chips.

Forward Looking Statements

This press release contains statements that may 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, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, revenue expectations for the third quarter ending May 31, 2024, any statements about historical results that may suggest trends for SemiLEDs’ business; any statements of the plans, strategies and objectives of management for future operations; any statements of expectation or belief regarding recovery of the LED industry, market opportunities and other future events or technology developments; any statements regarding SemiLEDs’ position to capitalize on any market opportunities; and any statements of assumptions underlying any of the foregoing. These forward-looking statements are based on current expectations, estimates, forecasts and projections of future SemiLEDs’ or industry performance based on management’s judgment, beliefs, current trends and market conditions and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. SemiLEDs’ Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) and other SemiLEDs filings with the SEC (which you may obtain for free at the SEC’s website at http://www.sec.gov) discuss some of the important risks and other factors that may affect SemiLEDs’ business, results of operations and financial condition. SemiLEDs undertakes no intent or obligation to publicly update or revise any of these forward looking statements, whether as a result of new information, future events or otherwise, except as required by law.

SEMILEDS CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars)
		February 29,				November 30,
		2024				2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	1,613			$	2,322
Restricted cash and cash equivalents			79				80
Accounts receivable (including related parties), net			748				897
Inventories			3,751				3,895
Prepaid expenses and other current assets			245				145
Total current assets			6,436				7,339
Property, plant and equipment, net			2,996				3,172
Operating lease right of use assets			1,313				1,362
Intangible assets, net			96				100
Investments in unconsolidated entities			986				1,001
Other assets			192				186
TOTAL ASSETS		$	12,019			$	13,160
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt		$	2,859			$	5,055
Accounts payable			179				409
Accrued expenses and other current liabilities			2,562				2,895
Other payable to related parties			904				1,452
Operating lease liabilities, current			132				88
Total current liabilities			6,636				9,899
Long-term debt, excluding current installments			1,110				1,237
Operating lease liabilities, less current portion			1,181				1,274
Total liabilities			8,927				12,410
EQUITY:
SemiLEDs stockholders’ equity
Common stock			—				—
Additional paid-in capital			187,275				184,359
Accumulated other comprehensive income			3,571				3,588
Accumulated deficit			(187,802	)			(187,243	)
Total SemiLEDs stockholders' equity			3,044				704
Noncontrolling interests			48				46
Total equity			3,092				750
TOTAL LIABILITIES AND EQUITY		$	12,019			$	13,160

SEMILEDS CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands of U.S. dollars and shares, except per share data)
		Three Months Ended
		February 29,				November 30,
		2024				2023
Revenues, net		$	886			$	1,650
Cost of revenues			774				1,405
Gross profit			112				245
Operating expenses:
Research and development			251				372
Selling, general and administrative			693				742
Gain on disposals of long-lived assets			—				(50	)
Total operating expenses			944				1,064
Loss from operations			(832	)			(819	)
Other income (expenses):
Investment income (loss)			(5	)			8
Interest expenses, net			(65	)			(88	)
Other income, net			377				259
Foreign currency transaction loss, net			(32	)			44
Total other income, net			275				223
Loss before income taxes			(557	)			(596	)
Income tax expense			—				—
Net loss			(557	)			(596	)
Less: Net income attributable to noncontrolling interests			2				2
Net loss attributable to SemiLEDs stockholders		$	(559	)		$	(598	)
Net loss per share attributable to SemiLEDs stockholders:
Basic and diluted		$	(0.11	)		$	(0.12	)
Shares used in computing net loss per share attributable to SemiLEDs stockholders:
Basic and diluted			4,905				4,885

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240403766370/en/

Christopher Lee

Chief Financial Officer

SemiLEDs Corporation

+886-37-586788

investor@semileds.com

Source: SemiLEDs Corporation

FAQ

What was SemiLEDs' revenue for the second quarter of fiscal year 2024?

SemiLEDs reported revenue of $886 thousand for the second quarter of fiscal year 2024.

What was SemiLEDs' net loss for the second quarter of fiscal year 2024?

SemiLEDs had a net loss of $559 thousand for the second quarter of fiscal year 2024.

What is the gross margin for SemiLEDs in the second quarter of fiscal year 2024?

SemiLEDs' gross margin decreased to 13% in the second quarter of fiscal year 2024.

What is the operating margin for SemiLEDs in the second quarter of fiscal year 2024?

SemiLEDs' operating margin was negative 94% in the second quarter of fiscal year 2024.

What are SemiLEDs' cash and cash equivalents at the end of the second quarter of fiscal year 2024?

SemiLEDs' cash and cash equivalents were $1.6 million at the end of the second quarter of fiscal year 2024.

What is SemiLEDs' revenue expectation for the third quarter ending May 31, 2024?

SemiLEDs expects revenue for the third quarter to be approximately $1.0 million +/- 10%.

Why did SemiLEDs face a potential delisting threat from Nasdaq?

SemiLEDs faced a potential delisting threat from Nasdaq due to not meeting the minimum stockholders' equity required by Nasdaq Listing Rule 5550(b)(1).