Rubicon Technology, Inc. NASDAQ:RBCN a leading provider of sapphire substrates and products to the LED, RFIC, Semiconductor, and Optical industries, today reported financial results for its second quarter ended June 30, 2010 and announced the signing of an agreement with a key LED customer for the supply of six inch polished substrates.
Second Quarter Results and Third Quarter Outlook
Second Quarter 2010 Financial Highlights:
?Revenue rose to $15.8 million, up 37 percent sequentially
?Gross margin increased to 46 percent, up from 36 percent in the previous quarter
?Diluted earnings per share of $0.18 as compared to $0.07 in the first quarter 2010
?Capacity expansion plans on schedule and on budget
Commenting on the results, Raja Parvez, President and CEO said, We had a very strong quarter reaching historical highs in revenue and earnings. We continued to dramatically increase gross margin and earnings per share in the quarter through increased pricing, improved product mix, and operational efficiency.
The Company's revenue increased 37 percent sequentially to $15.8 million in the current quarter driven by strong demand from the LED market. The strong demand enabled the Company to increase pricing on its sapphire substrates by 16 percent on average over prices in the prior quarter.
The Company noted that sales of its six inch polished substrates accounted for a significant portion of the sequential increase in revenue. Mr. Parvez continued, Revenue from the sale of six inch polished substrates more than doubled sequentially as our customers continue to make progress on their development efforts using six inch substrates.
Third Quarter 2010 Guidance
Commenting on the outlook for the third quarter, William Weissman, Rubicon's Chief Financial Officer said We see an even stronger pricing environment in the third quarter and expect our substrate prices to increase by at least 20 percent on average sequentially. We estimate revenue for the third quarter will increase to approximately $19.5 million. Gross margin should be in the low 50 percent range and we expect diluted earnings per share of approximately $0.28, based on a projected diluted share count of 24.3 million shares.
Rubicon's share count increased in June with the successful completion of a follow-on offering which raised approximately $61.5 million in cash for the Company. Mr. Weissman continued, The proceeds from the offering strengthens our balance sheet and will enable us to continue our rapid expansion.
Six Inch Supply Agreement
The Company also reported that it entered into an agreement with a major LED chip manufacturer which calls for Rubicon to provide six inch polished substrates from November 2010 through December 2011. The total value of the contract is approximately $71 million.
Mr. Parvez commented, This contract is very exciting for Rubicon. While we have been supporting several LED customers in their development efforts on six inch substrates, this is the first LED chip manufacturer to move into volume production on this size material. We are proud that our capabilities in large diameter sapphire are helping the LED industry continue to evolve.
