ADVA Optical Networking Reports Q2 2013 Financial Results with Revenues Above Guidance

Wed Jul 17, 2013 6:30pm EDT

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ADVA Optical Networking SE / ADVA Optical Networking Reports Q2 2013 Financial Results with Revenues Above Guidance . Ad hoc announcement according to § 15 WpHG. Processed and transmitted by Thomson Reuters ONE. The issuer is solely responsible for the content of this announcement.

Q2 2013 revenues at EUR 78.4 million

Q2 2013 IFRS pro forma operating income of
EUR 1.5 million (2.0% of revenues)

Q3 2013 revenues expected to range between EUR 76 million and EUR 81 million
with IFRS pro forma operating income between 1% and 5% of revenues

Martinsried/Munich, Germany. July 18, 2013. ADVA Optical Networking announced Q2 2013 financial results for the quarter ended on June 30, 2013, and prepared in accordance with International Financial Reporting Standards (IFRS).

Q2 2013 IFRS FINANCIAL RESULTS
Revenues totaled EUR 78.4 million in Q2 2013 and were slightly above guidance of between EUR 73 million and EUR 78 million.  This is down 8.7% vs. Q2 2012 at EUR 85.9 million and up 1.7% vs. EUR 77.0 million in Q1 2013. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, amounted to EUR 1.5 million or 2.0% of revenues in Q2 2013, at the upper end of guidance of between -2% and +2% of revenues. This compares to EUR 6.8 million or 8.0% of revenues in Q2 2012 and EUR 0.8 million or 1.0% of revenues in Q1 2013. The quarter-on-quarter increase of pro forma operating income is largely due to higher revenues and improved gross margins, while the year-on-year development is largely due to lower revenues from one of our largest customers due to local regulatory challenges.

The IFRS operating income amounted to EUR 1.2 million in Q2 2013 after EUR 5.9 million in Q2 2012, and after EUR 0.4 million in Q1 2013. The key driver for the unfavorable year-on-year development is the above-mentioned decrease of pro forma operating income. The decline in part is offset by lower scheduled amortization of intangible assets from acquisitions, which amounted to EUR 0.2 million in Q2 2013 after EUR 0.7 million in Q2 2012. The favorable quarter-on-quarter development is largely due to the increase in pro forma operating income explained above.

The IFRS net income amounted to EUR 0.1 million in Q2 2013, down significantly from EUR 5.1 million in Q2 2012. This reduction was largely driven by the development of the operating result described above. Beyond the development of the operating income, net foreign currency exchange losses of EUR 0.2 million, after a gain of EUR 1.9 million in Q2 2012, drove the decrease in net income. In part, this effect was offset by lower tax expenses of EUR 0.6 million in Q2 2013 after EUR 2.4 million in Q2 2012. Basic and diluted IFRS net earnings per share in Q2 2013 were nil after EUR 0.11 and 0.10 respectively in Q2 2012.

"We are pleased with our Q2 2013 results which were achieved in a volatile macro-economic environment. At EUR 78.4 million, our Q2 2013 revenues are above guidance and are up 1.7% vs. the previous quarter. Our pro forma gross margin strengthened from 38.6% in Q1 2013 to 39.9% in Q2 2013. This improvement is due to changes in product and customer mix and also demonstrates our focus on managing operational costs. Pro forma operating income at 2.0% of revenues came in at the upper end of guidance, driven mostly by the stronger revenue and gross margin development. In addition, cash and cash equivalents were at a record high of EUR 80.3 million at the end of Q2 2013, up from EUR 65.3 million at the end of the previous quarter. This is in part due to incremental refinancing of a bonded loan. Net liquidity increased to EUR 40.6 million, up EUR 4.3 million or 12% vs. the end of the previous quarter, demonstrating our commitment to manage our working capital and strengthen our balance sheet," commented Jaswir Singh, chief financial officer & chief operating officer of ADVA Optical Networking

CONFERENCE CALL
In conjunction with the release of its Q2 2013 financial results on July 18, 2013, 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 867 604#, and download the corresponding presentation from ADVA Optical Networking's website, located on the "financial results" page under "conference calls" in the investor relations section of ADVA Optical Networking's website at www.advaoptical.com.

Q3 2013 OUTLOOK
With its sound business model, ADVA Optical Networking remains flexible and is able to respond quickly to continuous change in the global market. Although the global economic sentiment continues to be very challenging, the Company expects Q3 2013 revenues of between EUR 76 million and EUR 81 million. Further, ADVA Optical Networking anticipates Q3 2013 pro forma operating income to range between 1% and 5% of revenues. The Company will continue driving innovation and cost efficiencies in order to strengthen its business model. 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 research and development expenses. In case of highly adverse business prospects, these reviews may result in non-cash impairment charges in Q3 2013 and beyond. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q3 2013 financial results on October 24, 2013.

"With the general market weakness in Europe and other regions, capital expenditures continue to be limited by the management of network operators; nevertheless, we continue to invest in innovative technology helping operators and enterprises to address important network needs.   The development of the grandmaster clock functionality is the latest in a series of updates to the ADVA FSP 150 Syncjack(TM) timing distribution and assurance technology developed to simplify the migration to LTE and LTE-Advanced radio access networks. Another example of innovation is our ultra-compact 16Gbit/s Fibre Channel (FC) card which expands the capabilities of our FSP 3000 platform and is a key component for enterprises seeking to evolve their high-density server virtualization, cloud architectures and storage applications. In addition to the opportunities created through technology, all indications suggest that 2013 will be a "huge year" for 100G.[1] With our acclaimed 100G Metro in place since mid-2012 and our 100G Agile Core solution gaining rapid traction in the marketplace, ADVA Optical Networking is best positioned to benefit from the coming surge of investment. Differentiating ourselves with innovation will create further value for shareholders," stated Brian Protiva, chief executive officer of ADVA Optical Networking.

SIX-MONTH IFRS CONSOLIDATED INCOME STATEMENT

(in thousands of EUR,
except earnings per share)
Q2
2013
Q2
2012
6M
2013
6M
2012
Revenues 78,367 85,879 155,401 167,534
Pro forma cost of goods sold -47,072 -50,779 -94,337 -100,167
Pro forma gross profit 31,295 35,100 61,064 67,367
Pro forma selling and marketing expenses -12,607 -11,761 -24,292 -22,552
Pro forma
general and administrative expenses
-6,874 -6,707 -13,547 -13,488
Pro forma
research and development expenses
-16,762 -16,613 -33,604 -33,389
Income from capitalization
of development expenses
6,001 6,446 11,581 12,499
Other operating income and expenses, net 483 382 1,139 895
Pro forma operating income 1,536 6,847 2,341 11,332
Amortization of intangible assets
from acquisitions
-170 -662 -341 -1,315
Stock compensation expenses -213 -287 -465 -605
Operating income 1,153 5,898 1,535 9,412
Interest income and expenses, net -262 -213 -414 -631
Other financial gains and losses, net -179 1,850 -935 1,008
Income  before tax 712 7,535 186 9,789
Income tax benefit (expense), net -588 -2,436 698 -646
Net income 124 5,099 884 9,143
Earnings per share in EUR
   Basic 0.00 0.11 0.02 0.19
   Diluted 0.00 0.10 0.02 0.19

# # #

About ADVA Optical Networking
ADVA Optical Networking is a global provider of intelligent telecommunications infrastructure solutions. With software-automated Optical+Ethernet transmission technology, the Company builds the foundation for high-speed, next-generation networks. The Company's FSP product family adds scalability and intelligence to customers' networks while removing complexity and cost. With a flexible and fast-moving organization, ADVA Optical Networking forges close partnerships with its customers to meet the growing demand for data, storage, voice and video services. Thanks to reliable performance for two decades, the Company has become a trusted partner for more than 250 carriers and 10,000 enterprises across the globe. For more information, 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.

Published By:
ADVA Optical Networking SE, Martinsried/Munich and Meiningen, Germany
www.advaoptical.com

For Press:            
Gareth Spence          
t +44 1904 699 358                                       
public-relations(at)advaoptical.com       

For Investors:
Karin Tovar
t +1 201 940 7212
investor-relations(at)advaoptical.com
[1] Infonetics Research Optical Network Hardware, Quarterly Market Share, Size, and Forecasts 1Q13, May 24,2013





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ADVA Optical Networking SE
Campus Martinsried, Fraunhoferstr. 9a Martinsried/Munich Germany

WKN: 510300;ISIN: DE0005103006;
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