Shareholders' Equity and Share-based Compensation

3 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Shareholders' Equity and Share-based Compensation

Share Repurchase

In September 2017, the Board of Directors approved a repurchase program (the “Repurchase Program”) that allowed the Company to repurchase its common shares from the open market pursuant to a pre-established Rule 10b5-1 trading plan or through privately negotiated transactions up to an aggregate of $30.0 million. The amount and timing of any repurchases under the Repurchase Program depend on a number of factors, including but not limited to, the trading price, volume and availability of the Company’s common shares. Shares repurchased under this program are accounted for as treasury shares and the total cost of shares repurchased is recorded as a reduction of shareholders' equity. From time to time, treasury shares may be reissued as part of the Company’s share-based compensation programs. Gains on re-issuance of treasury stock are credited to additional paid-in capital; losses are charged to additional paid-in capital to offset the net gains, if any, from previous sales or re-issuance of treasury stock. Any remaining balance of the losses is charged to retained earnings.

As of September 30, 2023, the Company had repurchased an aggregate of 7,332,780 shares for a total cost of $81.1 million, at an average price of $11.01 per share, excluding fees and related expenses. No repurchased shares have been retired. Of the 7,332,780 repurchased shares, 175,599 shares with a weighted average repurchase price of $9.97 per share, were reissued at an average price of $4.76 per share pursuant to option exercises and vested restricted share units (“RSU”). As of September 30, 2023, no remaining amount was available under the share repurchase program, which has been terminated.

Time-based Restricted Stock Units (“TRSU”)

The following table summarizes the Company's TRSU activities for the three months ended September 30, 2023:


	Number of Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested at June 30, 2023	1,385,065	$	32.48	1.73	$	45,430,132
Granted	76,800	$	32.79
Vested	(44,655)	$	31.18
Forfeited	(14,501)	$	33.55
Nonvested at September 30, 2023	1,402,709	$	32.53	1.57	$	41,856,837

Market-based Restricted Stock Units (“MSU”)

In December 2021, the Company granted 1.0 million market-based restricted stock units ("MSUs") to certain personnel. The number of shares to be earned at the end of performance period was determined based on the Company’s achievement of specified stock prices and revenue thresholds during the performance period from January 1, 2022 to December 31, 2024 as well as the recipients remaining in continuous service with the Company through such period. The MSU vests in four equal annual installments after the end of performance period. The Company estimated the grant date fair values of its MSUs using a Monte-Carlo simulation model. On September 19, 2023, the Compensation Committee of the Board approved a modification of the terms of MSUs to extend the performance period through December 31, 2025, changed the commencement date for the four-year time-based service period January 1, 2025, and reduced the achievement of specified stock prices and revenue thresholds. The fair value of these MSUs was revalued to reflect the change using a Monte-Carlo simulation model with the following assumptions: risk-free interest rate of 4.94%, expected term of 2.28 years, expected volatility of 61.38% and dividend yield of 0%. The Company recognizes the total compensation cost of the modified MSUs beginning on the modification date over the remaining requisite service periods. During the three months ended September 30, 2023 and 2022, the Company recorded approximately negative $6.3 million due to a $6.4 million of reversal of the prior recognized expenses, and $2.0 million of expenses for MSUs, respectively.

During the quarter ended September 30, 2018, the Company granted 1.3 million MSUs to certain personnel. The number of shares to be earned at the end of performance period is determined based on the Company’s achievement of specified stock prices and revenue thresholds during the performance period from January 1, 2019 to December 31, 2021 as well as the recipients remaining in continuous service with the Company through such period. The MSUs vest in four equal annual installments after the end of the performance period. The Company estimated the grant date fair values of its MSUs using a Monte-Carlo simulation model. On August 31, 2020, the Compensation Committee of the Board approved a modification of the terms of MSU to (i) extend the performance period through December 31, 2022 and (ii) change the commencement date for the four-year time-based service period to

January 1, 2023. The fair value of these MSUs was recalculated to reflect the change as of August 31, 2020 and the unrecognized compensation amount was adjusted to reflect the increase in fair value. The Company recorded $0.3 million and $0.6 million of expenses for MSUs during the three months ended September 30, 2023 and 2022, respectively.

The following table summarizes the Company's MSUs activities for the three months ended September 30, 2023:


	Number of Performance-based Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested at June 30, 2023	2,108,000	$	25.86	2.96	$	69,142,400
Granted	—	$	—
Vested	—	$	—
Forfeited	—	$	—
Nonvested at September 30, 2023	2,108,000	$	25.86	3.18	$	62,902,720

Performance-based Restricted Stock Units (“PRSUs”)

In March each year since year 2017, the Company granted PRSUs to certain personnel. The number of shares to be earned under the PRSUs is determined based on the level of attainment of predetermined financial goals. The PRSUs vest in four equal annual installments from the first anniversary date after the grant date if certain predetermined financial goals were met. The Company recorded approximately $0.4 million and $1.6 million of expense for these PRSUs during the three months ended September 30, 2023, and 2022 respectively.

The following table summarizes the Company’s PRSUs activities for the three months ended September 30, 2023:


	Number of Performance-based Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested at June 30, 2023	526,714	$	32.19	1.78	$	17,276,219
Granted	—	$	—
Vested	—	$	—
Forfeited	—	$	—
Nonvested at September 30, 2023	526,714	$	32.19	1.52	$	15,717,146

Stock Options

The Company did not grant any stock options during the three months ended September 30, 2023 and 2022. The following table summarizes the Company's stock option activities for the three months ended September 30, 2023:


				Weighted
		Weighted		Average
		Average		Remaining
	Number of	Exercise Price		Contractual	Aggregate
	Shares	Per Share		Term (in years)	Intrinsic Value
Outstanding at June 30, 2023	319,375	$	7.53	0.72	$	8,071,631

Exercised	(60,000)	$	7.44		$	1,342,961

Outstanding at September 30, 2023	259,375	$	7.55	0.47	$	5,782,281
Options vested and expected to vest	259,375	$	7.55	0.47	$	5,782,281
Exercisable at September 30, 2023	259,375	$	7.55	0.47	$	5,782,281

Employee Share Purchase Plan (“ESPP”)

The assumptions used to estimate the fair values of common shares issued under the ESPP were as follows:



			Three Months Ended September 30,
			2023
Volatility rate			64.0%
Risk-free interest rate			4.6%
Expected term			1.3 years
Dividend yield			0%

Share-based Compensation Expense

The total share-based compensation expense recognized in the Condensed Consolidated Statements of Income for the periods presented was as follows:


	Three Months Ended September 30,
	2023		2022
	(in thousands)
Cost of goods sold	$	212	$	1,788
Research and development	6		2,494
Selling, general and administrative	700		6,314
	$	918	$	10,596

As of September 30, 2023, total unrecognized compensation cost under the Company's equity plans was $53.2 million, which is expected to be recognized over a weighted-average period of 2.7 years.