EMCORE Corporation

Thank you for standing by and welcome to the MCOR Corporation fiscal 2024 third quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome MCOR's Chief Financial Officer, Tom Minichiello. Please go ahead.

Thank you. Good morning, everyone, and welcome to our conference call to discuss MCOR's fiscal 2024 third quarter results. The news release we issued yesterday afternoon is posted on our website, MCOR.com. On this call, Matt Vargas, MCOR's interim chief executive officer, will begin with a discussion of our business highlights. I will then update you on our financial results, and we'll conclude by taking questions. Before we begin, we'd like to remind you that the information provided herein may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. These forward-looking statements are largely based on our current expectations and projections about future events and trends affecting the business. Such forward-looking statements include projections about future results, statements about plans, strategies, business prospects, and changes and trends in the business and the markets in which we operate. Management cautions that these forward-looking statements relate to future events or future financial performance and are subject to business, economic, and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance, or achievements of the business or in the industry to be materially different from those expressed or implied by any forward-looking statements. We caution you not to rely on these statements and to also consider the risks and uncertainties associated with these statements and the business, which are included in the company's filings available on the SEC's website located at sec.gov, including the sections entitled Risk Factors in the company's annual report on Form 10-K. The company assumes no obligation to update any forward-looking statements to conform such statements to actual results or to changes in our expectations, except as required by applicable law or regulation. In addition, references will be made during this call to non-GAAP financial measures, which we believe provide meaningful supplemental information to both management and investors. The non-GAAP measures reflect the company's core ongoing operating performance and facilitates comparisons across reporting periods. Investors are encouraged to review these non-GAAP measures, as well as the explanation and reconciliation of these measures to the most comparable GAAP measures included in our news release. I'll now turn the call over to Matt.

Thank you, Tom, and good morning, everyone. The Board of Directors and the Office of the CEO have been working lockstep executing the restructuring plan. While there is much more work to be done, the team is confident that the undertakings so far demonstrate progress towards our goal stated in last quarter's earnings call of adjusted operating cash flow break-even exclusive of restructuring costs by September 30th. I wanted to call out a couple of key actions that demonstrate tangible progress by the Restructuring Committee and the Office of the CEO and associated cost savings. As previously announced, headcount reductions enacted beginning in May are estimated to result in approximately $17 million of annualized payroll savings, and we are on track to complete the full Alhambra site closure by the end of August. Also, the team has identified additional expense savings in several categories that are currently in process. Additionally, the Board's Restructuring Committee retained FTI Consultants to serve as the company's Chief Restructuring Officer, CRO, to augment cash management and modeling in support of the restructuring effort. The FTI team has provided immediate impact and will continue to support our efforts in the upcoming quarter. From a top line revenue perspective, the revenue figure and billings were securely within the projected range. The book to bill was also well over one at 1.24 with two armored vehicle orders above $2 million and continued growth in our European portfolio. Current backlog has increased over $60 million and the sales funnel continues to be strong with diverse domestic and international opportunities and an improved product mix in the manufacturing build plan. For guidance, we're expecting revenue in the September quarter to be in the range of 20 to $22 million. The team is committed to pursuing operational efficiencies and the office of the CEO is working to overlay common operating systems across the three remaining production sites. Sustained improvement in gross margin in Concord is a key pillar of the company's strategy and will be a continued area of focus in the current quarter. While some progress was made in the June quarter, more work remains to be done. The entire MCOR team will continue to work in a coordinated fashion in the current quarter to meet our stated goals. Before turning the call back over to Tom, I'd like to mention a recent and positive development that has a significant go-forward impact for MCOR. Earlier this week, we paid off all outstanding obligations under our credit agreement with Hale Capital. This was made possible by successfully renegotiating customer payment terms on one of our existing programs of record, along with reaching a settlement on a former program with the same customer. This change eliminates the senior security interest on our assets and frees us up to explore an expanded range of alternatives to shore up the company's liquidity, including the possibility of a new, more favorable credit facility. With that, I'll turn the call back over to Tom.