LightPath Provides Update on Operations Amid Covid-19 Breakouts in China and Russia Invasion of Ukraine
LightPath Technologies (NASDAQ: LPTH) updates on operational impacts from the recent COVID-19 outbreaks in China and the Russia-Ukraine war. The company reported 1,337 new COVID cases in China as of March 13, 2022, exceeding the year’s prior total. While LightPath continues operations, some employees are quarantined, affecting supply chains and expected revenue reductions of $1.0 to $1.25 million for the fiscal third quarter ending March 31, 2022. However, there have been no order cancellations, indicating stability. Upcoming financial results will be reported on May 12, 2022.
- No order cancellations reported amid challenges.
- Adequate supply of germanium secured for six months, mitigating potential shortages.
- Anticipated revenue decrease of $1.0 to $1.25 million due to supply chain disruptions in China.
- Employees quarantined impacting operational efficiency.
ORLANDO, FL / ACCESSWIRE / March 16, 2022 / LightPath Technologies, Inc. (NASDAQ:LPTH) ("LightPath," the "Company," or "we"), a leading vertically integrated global manufacturer and integrator of proprietary optical and infrared technologies and high-level assemblies, today provided an update on operations relating to the recent COVID-19 (or "coronavirus") outbreaks in China and the Russia invasion of Ukraine.
The Company operates in China through two wholly-owned subsidiaries, including LightPath Optical Instrumentation (Zhenjiang) Co., Ltd. ("LOIZ"), a manufacturing operation located in Zhenjiang, which is in the Jiangsu province, and LightPath Optical Instrumentation (Shanghai) Co., Ltd., an administration and sales operation located in the city of Shanghai, which is in the Shanghai province. LightPath's operations in eastern Europe include a wholly-owned subsidiary based in Riga, Latvia, a European Union country and NATO-member.
According to published reports, outbreaks of the Omicron variant of Covid-19 in China led to a record-breaking level of new local COVID-19 cases so far this year that exceeded the cases recorded in 2021. Mainland China reported 1,337 new domestically transmitted Covid infections with confirmed symptoms on March 13th, the National Health Commission (NHC) said on Monday. That brought the registered total this year to more than 9,000, compared with 8,378 in 2021, according to Reuters calculations. In the recent weeks, new Covid cases have been reported in Beijing and Shanghai, as well as in the provinces of Guangdong, Jiangsu, Shandong and Zhejiang.
Commenting on recent global developments, Sam Rubin, President and Chief Executive Officer of LightPath Technologies, said, "We are providing a business update following the war between Russia and Ukraine and a brief period of meaningful Covid-19 outbreaks in several cities in China. The viral outbreaks prompted authorities to institute immediate actions relating to travel bans and work from home restrictions. To the extent possible, LightPath is doing its part to contribute toward recovery and well-being, including efforts to ensure safety to our team members, customers and business partners, as well as moving forward for the benefit of our shareholders.
"LightPath's operations in China have remained open since the onset of the Covid-19 pandemic approximately 2 years ago. We maintain remote working procedures for non-manufacturing and non-factory floor personnel in China. This does not, however, remove our responsibilities from operating safe workplaces, protecting our team members and communities, and abiding by local regulations. As such, certain of our team members have been unable to report to work due to quarantine and travel restrictions. Furthermore, some key customers and supply chain partners are experiencing similar workplace challenges and are unable to deliver raw materials to us or accept our products that have been manufactured. The primary issue we are presently encountering in China is the quarantining and temporary closure or lockdowns of certain technology areas where our customers are located. These limitations will result in some customers being unable to accept shipments until April at the earliest. This will in turn impact our revenue recognition, inventory and other financial performance measures. We have not received any requests to cancel orders to date and expect to deliver finished goods as soon as the limitations are lifted.
"Due to the invasion of Ukraine, economic and trade restrictions have been imposed against Russia. To date, this has not directly impacted our manufacturing order flow in Riga or global customer demand for the infrared (IR) optics that are made at our facility in that city. In a precautionary move, earlier this month we began advance ordering of germanium, the principal raw material used in manufacturing many of our diamond-turned IR lenses. The largest deposits of germanium are primarily in China and Russia, with our procurement typically spanning both markets depending on price and availability, along with the use of various distributors. We took these steps to ensure the resiliency of our supply chain and because we maintain the financial ability to support our customers. Our inventory of germanium is expected to increase in value above our traditional levels and is expected to alleviate potential raw material shortages or price increases due to the war in Ukraine and disruptions in China amid the increase in Covid-19 cases. We now believe we have ample supply of germanium to last an estimated 6 months of our planned manufacturing capacity. We are in compliance with internationally imposed trade restrictions against Russia.
"For the most part, we have not seen material disruption to traditional ordering patterns, bookings or fulfillment anywhere in the world except in China during the past 7-14 days. We anticipate the impact to our revenue derived from our manufacturing operations in China in the fiscal third quarter ended March 31, 2022 will be a reduction of between
LightPath's management notes that production capabilities and actual components delivered may vary depending on workflow, product type, customer requirements and availability of raw materials. As a diversified manufacturer of infrared and visible optical lenses, LightPath maintains production facilities in three countries, each in separate continents, all manufacturing multiple product families. As a result, the Company has developed raw materials sources with multiple global partners around the world, including a portion of its proprietary BD6 lens materials being developed internally at its facilities in the US. At present, and for the foreseeable future, the Company does not anticipate any supply issues that will affect its ability to provide products required to service current demand. This situation remains fluid and is subject to change. LightPath has seen some extended delivery dates and some raw materials price increases, from some vendors, but its strategy to multi-source raw materials has, so far, allowed the Company to mitigate the impact of these issues. Shipping and delivery issues present both challenges and opportunities. Rates and availability for ocean shipping and air freight are subject to change. The aforementioned and other factors not discussed herein may alter anticipated production, deliveries and financial results.
Financial results for the fiscal third quarter ended March 31, 2022 is scheduled to be reported on May 12, 2022, with a conference call to be conducted on that day. Conference call details will be announced on or about April 28, 2022.
About LightPath Technologies
LightPath Technologies, Inc. (NASDAQ:LPTH) is a leading global, vertically integrated provider of optics, photonics and infrared solutions for the industrial, commercial, defense, telecommunications, and medical industries. LightPath designs and manufactures proprietary optical and infrared components including molded glass aspheric lenses and assemblies, custom molded glass freeform lenses, infrared lenses and thermal imaging assemblies, fused fiber collimators, and proprietary Black DiamondTM ("BD6") chalcogenide-based glass lenses. LightPath also offers custom optical assemblies, including full engineering design support. The Company is headquartered in Orlando, Florida, with manufacturing and sales offices in Latvia and China.
LightPath's wholly-owned subsidiary, ISP Optics Corporation, manufactures a full range of infrared products from high performance MWIR and LWIR lenses and lens assemblies. ISP's infrared lens assembly product line includes athermal lens systems used in cooled and un-cooled thermal imaging cameras. Manufacturing is performed in-house to provide precision optical components including spherical, aspherical and diffractive coated infrared lenses. ISP's optics processes allow it to manufacture its products from all important types of infrared materials and crystals. Manufacturing processes include CNC grinding and CNC polishing, diamond turning, continuous and conventional polishing, optical contacting and advanced coating technologies.
For more information on LightPath and its businesses, please visit www.lightpath.com.
Forward-Looking Statements
This press release includes statements that constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "forecast," "guidance," "plan," "estimate," "will," "would," "project," "maintain," "intend," "expect," "anticipate," "prospect," "strategy," "future," "likely," "may," "should," "believe," "continue," "opportunity," "potential," and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters, and include, for example, statements related to the expected effects on the Company's business from the COVID-19 pandemic. These forward-looking statements are based on information available at the time the statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or suggested by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the duration and scope of the COVID-19 pandemic and impact on the demand for the Company products; the ability of the Company to obtain needed raw materials and components from its suppliers; actions governments, businesses, and individuals take in response to the pandemic, including restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps that the Company could take to reduce operating costs; the inability of the Company to sustain profitable sales growth, convert inventory to cash, or reduce its costs to maintain competitive prices for its products; circumstances or developments that may make the Company unable to implement or realize the anticipated benefits, or that may increase the costs, of its current and planned business initiatives; and those factors detailed by LightPath Technologies, Inc. in its public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on 10-Q. Should one or more of these risks, uncertainties, or facts materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by the forward-looking statements contained herein. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
CONTACT:
Jordan Darrow
Darrow Associates
Tel. 631-766-4528
jdarrow@darrowir.com
SOURCE: LightPath Technologies, Inc.
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