Q1 2014 revenues at EUR 78.1 million
Q1 2014 IFRS pro forma operating income of EUR 0.4 million (0.5% of revenues)
Q2 2014 revenues expected to range between EUR 84 million and EUR 89 million with IFRS pro forma operating income between -2% and +2% of revenues
MARTINSRIED/MUNICH, Germany, April 23, 2014 (GLOBE NEWSWIRE) -- ADVA Optical Networking (FSE: ADV) announced Q1 2014 financial results for the quarter ended on March 31, 2014, and prepared in accordance with International Financial Reporting Standards (IFRS).
Q1 2014 IFRS FINANCIAL RESULTS
Revenues totaled EUR 78.1 million in Q1 2014 and were at the upper end of guidance of between EUR 74 million and EUR 79 million. This is up 1.4% vs. Q1 2013 at EUR 77.0 million and up 2.5% vs. EUR 76.2 million in Q4 2013. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, amounted to EUR 0.4 million or 0.5% of revenues, and was in line with guidance of between -2% and +2% of revenues. This compares to EUR 0.8 million or 1.0% of revenues in Q1 2013 and EUR 2.3 million or 3.0% of revenues in Q4 2013. These developments are largely due to lower gross margins adversely impacted by product and customer mix, higher amortization charges for capitalized development projects and reduced income from capitalization of development expenses.
IFRS operating income amounted to EUR 0.1 million in Q1 2014, after EUR 0.4 million in Q1 2013. The key driver for this unfavorable development is the above-mentioned decrease of pro forma operating income. The decline in part is offset by lower stock compensation expenses, which amounted to EUR 0.1 million in Q1 2014 after EUR 0.3 million in Q1 2013.
Q1 2014 IFRS net loss amounted to EUR 0.4 million, after a net income of EUR 0.8 million in Q1 2013. The reduction was largely driven by the development of the operating result described above, as well as higher interest expenses of EUR 0.4 million after EUR 0.2 million in Q1 2013. Basic and diluted IFRS net earnings per share were EUR -0.01 each in Q1 2014 after EUR 0.02 each in Q1 2013.
"Q1 2014 revenue at EUR 78.1 million was at the upper end of guidance. This is an increase of 1.4% vs. Q1 2013 and an increase of 2.5% vs. Q4 2013. The increase in revenue mainly relates to stronger enterprise business in the Americas and EMEA regions. Our pro forma gross margin decreased from 39.3% in Q4 2013 to 35.4% in Q1 2014, due to variations in product and customer mix and higher quarter-on-quarter amortization of capitalized development projects. Prior to amortization of capitalized development projects, pro forma gross margin decreased from 45.9% in Q4 2013 to 42.7% in Q1 2014. Our pro forma operating margin came in at 0.5%, also in line with guidance, and demonstrates our focus on managing operational costs. Also, operating cash flow at EUR 4.8 million in Q1 2014 remained positive, and our high quarter-end cash & cash equivalents and net liquidity of EUR 77.1 million and EUR 38.5 million, respectively, demonstrate ongoing financial strength," commented Jaswir Singh, chief financial officer & chief operating officer of ADVA Optical Networking.
In conjunction with the release of its Q1 2014 financial results on April 24, 2014, ADVA Optical Networking will host a conference call for analysts and investors at 3:00 p.m. CEST / 9:00 a.m. EDT. Participating in the call will be ADVA Optical Networking's chief executive officer, Brian Protiva, and chief financial officer & chief operating officer, Jaswir Singh. Interested parties may dial in at +49 69 201744 210 or +1 877 423 0830, pin code 566 623#, and download the corresponding presentation from ADVA Optical Networking's website, www.advaoptical.com, located in the "About Us / Investor Relations" section on the "Financial Results" page under "Conference Calls".
Q2 2014 OUTLOOK
In Q2 2014, ADVA Optical Networking expects revenues to range between EUR 84 million and EUR 89 million, and anticipates pro forma operating income of between -2% and +2% of revenues. As a matter of caution, ADVA Optical Networking notes that it will continue to perform quarterly reviews of the expected business development with respect to all intangible assets, including capitalized development expenses. In case of highly adverse business prospects, these reviews may result in non-cash impairment charges in Q2 2014 and beyond. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will hold its annual shareholders' meeting on June 5, 2014, in Meiningen, Germany, and will publish its Q2 2014 financial results on July 24, 2014.
"Although, we are seeing signs of the telecommunications industry slowly returning to growth in Europe, the broader sentiment remains cautious as the shift to software-centric networks and architectural changes is deferring service provider investment decisions in the short-term. In order to support the exponential increase of high-capacity data and video applications, the drive toward Long Term Evolution-Advanced (LTE-A) networks and small cells is creating pressure on both mobile network operators and backhaul service providers, and thus both are continuing to evolve their networks to packet-based solutions. Precise timing and synchronization is critical for this development. The acquisition of Oscilloquartz is a strategic milestone for us and provides ADVA Optical Networking with a complete end-to-end solution for the delivery and, most importantly, assurance of highly accurate timing - a first within the industry; thereby allowing our rapid expansion into the synchronization business for next-generation networks. The next few years will clearly highlight the strategic vision of this acquisition, heightening our revenue growth potential, margin opportunity, and increasing shareholder value," stated Brian Protiva, chief executive officer of ADVA Optical Networking.
THREE-MONTH IFRS CONSOLIDATED INCOME STATEMENT
|(in thousands of EUR, except earnings per share)||Q1 2014||Q1 2013|
|Pro forma cost of goods sold||-50,503||-47,265|
|Pro forma gross profit||27,616||29,769|
|Pro forma selling and marketing expenses||-11,389||-11,685|
|Pro forma general and administrative expenses||-6,313||-6,673|
|Pro forma research and development expenses||-16,695||-16,842|
|Income from capitalization of development expenses||5,063||5,580|
|Other operating income and expenses, net||2,109||656|
|Pro forma operating income||391||805|
|Amortization of intangible assets from acquisitions||-171||-171|
|Stock compensation expenses||-135||-252|
|Interest income and expenses, net||-336||-152|
|Other financial gains and losses, net||40||-756|
|Income (loss) before tax||-211||-526|
|Income tax benefit (expense), net||-186||1,286|
|Net income (loss)||-397||760|
|Earnings per share in EUR|
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About ADVA Optical Networking
At ADVA Optical Networking we're creating new opportunities for tomorrow's networks, a new vision for a connected world. Our intelligent telecommunications hardware, software and services have been deployed by several hundred service providers and thousands of enterprises. Over the past twenty years, our innovative connectivity solutions have helped to drive our customers' networks forward, helped to drive their businesses to new levels of success. We forge close working relationships with all our customers. As your trusted partner we ensure that we're always ready to exceed your networking expectations. For more information on our products and our team, please visit us at: www.advaoptical.com.
The economic projections and forward-looking statements contained in this document relate to future facts. Such projections and forward-looking statements are subject to risks which cannot be foreseen and which are beyond the control of ADVA Optical Networking. ADVA Optical Networking is therefore not in a position to make any representation as to the accuracy of economic projections and forward-looking statements or their impact on the financial situation of ADVA Optical Networking or the market in the shares of ADVA Optical Networking.
ADVA Optical Networking provides consolidated pro forma financial results in this press release solely as supplemental financial information to help investors and the financial community make meaningful comparisons of ADVA Optical Networking's operating results from one financial period to another. ADVA Optical Networking believes that these pro forma consolidated financial results are helpful because they exclude non-cash charges related to the stock option programs and amortization and impairment of goodwill and acquisition-related intangible assets, which are not reflective of the Company's operating results for the period presented. This pro forma information is not prepared in accordance with IFRS and should not be considered a substitute for historical information presented in accordance with IFRS.
ADVA Optical Networking SE, Martinsried/Munich and Meiningen, Germany
t +44 1904 699 358
t +1 201 940 7212
Source:ADVA Optical Networking SE