Revenues from Fiber Optics segment in Q2 increased 20% sequentially----- Rebuilding of flood-damaged production infrastructure on schedule----- Expects to close the sale of VCSEL-related product lines to Sumitomo next week----- Anticipates Q3 revenue of $38 to $41 million, representing 10-20% sequential growth when taking into account the sale of the VCSEL-related product lines

ALBUQUERQUE, N.M., May 3, 2012 -- EMCORE Corporation (Nasdaq:EMKR), a leading provider of compound semiconductor-based components, subsystems, and systems for the fiber optics and solar power markets, today announced its financial results for its fiscal second quarter ended March 31, 2012.

Financial Results

Revenue:

Consolidated revenue for the second quarter ended March 31, 2012 was $37.8 million, which represents a 20% decrease compared to the prior year and approximately 1% increase from the immediate preceding quarter.

On a segment basis, revenue for our Fiber Optics segment was $21.9 million, which represents a 27% decrease compared to the prior year and approximately 20% increase compared to the immediate preceding quarter. As previously reported, in October 2011 our primary contract manufacturer announced that as a result of flooding in Thailand, it had suspended operations at its facility that was used to manufacture certain of our fiber optics products. Rising water penetrated the facility and submerged most of our process and test equipment as well as our inventory materials. The impact from this flooding has had a significant adverse impact on our operations and our ability to meet customer demand for certain of our fiber optics products. As discussed below, we are currently on schedule and focused on rebuilding the manufacturing infrastructure for our impacted product lines.

Our Photovoltaics segment was not affected by the Thailand floods. Revenue for our Photovoltaics segment was $15.8 million, which represents approximately an 8% decrease compared to the prior year and a 17% decrease compared to the immediate preceding quarter. Historically, revenue has fluctuated significantly in our Photovoltaics segment due to timing of program completions and product shipments of major orders. During the second quarter, our Photovoltaics segment experienced a delay in shipping a large satellite solar cell order to an international customer. This resulted in a push out of product revenue from this quarter.

Gross Profit:

Consolidated gross profit was $5.4 million, which represents a 49% decrease compared to the prior year and a 55% increase compared to the immediate preceding quarter. Consolidated gross margin was 14.2%, which represents a decrease from the 22.4% gross margin reported in the prior year and an increase from the 9.3% gross margin reported in the immediate preceding quarter. On a segment basis, Fiber Optics gross margin was 9.4%, which represents a decrease from the 18.0% gross margin reported in the prior year and an increase from the (4.8)% gross margin reported in the immediate preceding quarter. Photovoltaics gross margin was 20.9%, which represents a decrease from the 30.2% gross margin reported in the prior year and a decrease from the 22.7% gross margin reported in the immediate preceding quarter.

During fiscal 2012, lower fiber optics-related revenues due to the impact from the Thailand flood resulted in higher manufacturing overhead as a percentage of revenue. Manufacturing of certain fiber optics-related components was moved to Company-owned facilities in the U.S., which involved higher labor and other related costs. Instead of completely rebuilding all flood damaged manufacturing lines, management has decided to realign the Company's fiber optics product portfolio and focus on business areas with strong technology differentiation and growth opportunities. During the three and six months ended March 31, 2012, management identified $0.4 million and $1.3 million, respectively, of inventory on order related to manufacturing product lines that were destroyed by the Thailand flood and will not be replaced. This expense was recorded within cost of revenues on our statement of operations.

Operating Loss:

The consolidated operating loss was $8.9 million, which represents approximately a $4.7 million increase in operating loss when compared to the prior year and a $2.8 million decrease in operating loss when compared to the immediate preceding quarter. The quarter-over-quarter variance in operating loss was primarily related to improved gross margins as well as a decrease in net flood-related losses and insurance proceeds. During the three and six months ended March 31, 2012, we recorded estimated flood-related losses associated with damaged inventory and equipment of approximately $0.1 million and $5.8 million, respectively. Additionally, last quarter we claimed damages and received proceeds of $5.0 million under our own comprehensive insurance policy relating to business interruption and recorded this amount as flood-related insurance proceeds.

Adjusted Operating Income (Loss):

After excluding certain non-cash and other infrequent transactions as set forth in the attached non-GAAP table, adjusted operating loss for the second quarter ended March 31, 2012 was approximately $3.4 million, which represents an additional operating loss of approximately $1.4 million when compared to the prior year and a reduction of operating loss of $1.7 million from the loss reported for the immediate preceding quarter. On a segment basis, Fiber Optics adjusted operating loss was $3.8 million which represents no change in operating loss when compared to the prior year and a reduction of approximately $2.7 million from the loss reported for the immediate preceding quarter. Photovoltaics adjusted operating income was $0.4 million which represents a reduction in operating income of approximately $1.4 million when compared to the prior year and a reduction of approximately $1.0 million from the income reported for the immediate preceding quarter.

Suncore:

For the three months ended March 31, 2012, we recorded approximately a $0.2 million loss related to our Suncore joint venture. As of March 31, 2012, our cumulative proportionate loss in Suncore has exceeded our net investment in Suncore. Since we have no obligation or intent to fund the deficit, we will resume applying the equity method only after our share of net income in Suncore equals the share of net losses not recognized during the period we suspended using the equity method.

Net loss:

The consolidated net loss was $9.3 million, which represents approximately a $4.1 million increase in net loss when compared to the prior year and a decrease in net loss of $4.9 million when compared to the immediate preceding quarter. The consolidated net loss per share was $0.40, which represents a $0.16 increase in net loss per share when compared to the prior year and a reduction of $0.21 in net loss per share when compared to the immediate preceding quarter.

Order Backlog

As of March 31, 2012, order backlog for our Photovoltaics segment totaled $55.7 million, approximately an 8% increase from $51.7 million reported as of December 31, 2011, in part driven by an increase in satellite solar cell orders. The backlog as of March 31, 2012 includes $10.1 million of terrestrial solar cell orders from our Suncore joint venture. Order backlog is defined as purchase orders or supply agreements accepted by us with expected product delivery and/or services to be performed within the next twelve months.

Product sales from our Fiber Optics segment are made pursuant to purchase orders, often with short lead times, and our revenues in this segment are still limited by the rebuilding of our production capacity.

Liquidity Update

As of March 31, 2012, cash, cash equivalents, and restricted cash totaled $25.4 million and working capital totaled $13.5 million. For the six months ended March 31, 2012, net cash provided by operating activities totaled $11.0 million which was primarily due to an increase in customer deposits and a decrease in accounts receivable.

Reverse Stock Split

On January 27, 2012, we announced that our Board of Directors approved a four-to-one reverse stock split of our common stock. Our stockholders had previously authorized our Board of Directors to approve a reverse stock split at the 2011 Annual Meeting held on June 14, 2011. Our common stock began trading on the NASDAQ Global Market on a split adjusted basis on February 16, 2012. The reverse stock split reduced the number of issued and outstanding shares of our common stock from approximately 94.2 million to approximately 23.5 million. No fractional shares were issued in connection with the reverse stock split; all share amounts were rounded up. The change in the number of shares has been applied retroactively to all share and per share amounts presented in our consolidated financial statements.

Pending Sale of Fiber Optics-related Assets

On March 27, 2012, we entered into a Master Purchase Agreement with Sumitomo Electric Industries, Ltd. pursuant to which we have agreed to sell certain assets and transfer certain obligations associated with VCSEL-related product lines in our Fiber Optics segment for $17 million, subject to certain customary purchase adjustments. The assets to be sold include inventory, fixed assets, and intellectual property which enabled approximately $4.3 million and $7.4 million of revenue during the three and six months ended March 31, 2012, respectively. The carrying value of these assets totaled $6.2 million as of March 31, 2012 which is classified as "assets held for sale" on our balance sheet. We expect to record a gain of approximately $7.0 to $9.0 million, subject to certain closing adjustments, before tax, upon completion of this asset sale. We expect to consummate the transaction next week.

Business Outlook and Commentary

As previously discussed, the October 2011 flood in Thailand destroyed the manufacturing infrastructure that supports approximately 50% of our Fiber Optics segment revenue. This has had a significant impact on our operations and our ability to meet customer demand for certain fiber optics products. We have developed and implemented a solid plan to rebuild the impacted production lines at another location associated with our contractor manufacturer in Thailand as well as at our own manufacturing facility in China. We are making significant progress and the rebuild plan is on schedule. Our new CATV production line in China is online and manufacturing products to meet our customers' needs. The production line at our contract manufacturer in Thailand for our narrow-linewidth lasers for coherent 40 and 100 gigabit transmission applications has been up and running since early March, ahead of the original schedule. The products manufactured by the new line have passed Telcordia qualification requirements. Customers are completing their qualification and starting to take shipments.

On a consolidated basis, we expect revenue for our third quarter ended June 30, 2012 to be in the range of $38 to $41 million, which excludes revenues associated with the product lines being sold to Sumitomo.

Conference Call

We will discuss our financial results today at 4:30 p.m. ET. The call will be webcast via our website at http://www.emcore.com. Please go to this site beforehand to download any necessary software. To participate in the conference call, U.S. and international callers should dial (224) 357-2194. The conference call ID is 72981103.

Conferences

Management will present at the 13th Annual B. Riley & Co. Investor Conference at the Loews Santa Monica Beach Hotel in Santa Monica, CA on Tuesday, May 22, 2012 at 11:00am P.T.

About EMCORE

EMCORE Corporation offers a broad portfolio of compound semiconductor-based products for the fiber optics and solar power markets. EMCORE's Fiber Optics business segment provides optical components, subsystems and systems for high-speed telecommunications, Cable Television (CATV) and Fiber-To-The-Premise (FTTP) networks, as well as products for satellite communications, video transport and specialty photonics technologies for defense and homeland security applications. EMCORE's Solar Photovoltaics business segment provides products for both space and terrestrial solar power applications. For space applications, EMCORE offers high-efficiency multi-junction solar cells, Covered Interconnect Cells (CICs) and complete satellite solar panels. For terrestrial applications, EMCORE offers a broad portfolio of Concentrator Photovoltaic (CPV) multi-junction solar cells and components, as well as commercial rooftop solar concentrator systems. For further information about EMCORE, visit http://www.emcore.com.

Use of Non-GAAP Financial Measure

We provide a non-GAAP adjusted operating loss disclosure as a supplemental measure to U.S. GAAP regarding our operational performance. This financial measure excludes the impact of certain items; therefore, it has not been calculated in accordance with U.S. GAAP.

We believe that the additional non-GAAP financial measure is useful to investors in assessing our operating performance. We also use this measure internally to evaluate our operating performance and this measure is used for planning and forecasting of future periods. In addition, financial analysts that follow us may focus on and publish both historical results and future projections based on our non-GAAP financial measure. We also believe that it is in the best interest of our investors to provide this non-GAAP information.

While we believe that this non-GAAP financial measure provides useful supplemental information to investors, there are limitations associated with the use of this non-GAAP financial measure. Our non-GAAP financial measure may not be reported by all of our competitors and it may not be directly comparable to similarly titled measures of other companies due to potential differences in calculation. We compensate for these limitations by using this non-GAAP financial measure as a supplement to U.S. GAAP and by providing a reconciliation of the non-GAAP financial measure to its most comparable U.S. GAAP financial measure.

Non-GAAP financial measures are not in accordance with or an alternative for U.S. GAAP. Our non-GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable U.S. GAAP financial measures and it should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.