MRV Communications, Inc. (NASDAQ: MRVC), a global provider of
innovative packet and optical solutions for service providers, data
center operators and enterprises, reported financial results for
the three- and nine-months ended Sept. 30, 2016.
“During the quarter we continued to prudently invest in our
product roadmap, particularly in our OptiSwitch® V-Series of
products for metro access and in our 100G solutions for data center
interconnect, as we believe that we are well positioned to take
advantage of the growth opportunities in these markets,” stated MRV
President and CEO Mark Bonney. “In the quarter, amongst other
factors, revenues from our Tier-1 service provider customers were
not reflective of normal buying patterns as they were impacted by
inventory adjustments and other short-term issues.
“We have continued to execute on our strategic plan to develop
and deliver packet and optical solutions focused on our target
market segments. Notably, our OptiPacket® OP-X1 has continued to be
recognized with significant industry awards for being one of the
first 100G access device in the market, an application use case
aligned with our focus on regional service providers as well as our
current global service provider customers. To that end, we are
excited that we have made significant progress with a major Tier-1
service provider, having completed the first of two rounds of
testing in the customer’s lab. Additionally, we are encouraged by
early bookings and revenues of our OptiSwitch® V-Series as well as
good progress on a customer-specific program utilizing the V-Series
platform to deliver unique capabilities. This work along with
advancements in our OptiDriver® family and in our ProVision®
software solution provides a foundation for significant growth in
2017.”
Third Quarter 2016 Financial Results as compared to Third
Quarter 2015
This release contains certain non-GAAP financial measures and a
reconciliation of the non-GAAP measures to GAAP measures is
provided in the attached table.
- Revenue was $18.9 million, compared to
$22.9 million. This reflects fewer orders from global Tier-1
service provider customers, reduced sales to the data center
interconnect market, particularly in Europe, and fewer large scale
network projects in North America as well as lower contribution
from legacy infrastructure management products.
- Gross profit including $0.3 million of
non-recurring costs related to the aforementioned consolidation of
contract manufacturing relationships was $9.0 million, a gross
margin of 47.3%, compared to $12.1 million, or 52.8%. The declines
in both gross profit and gross margin reflect the impact of the mix
of products and of the geographic regions to which they were
sold.
- Non-GAAP gross margin (non-GAAP gross
profit as a percentage of revenue) was 49.3%, compared to
53.0%.
- Operating expenses were $11.9 million,
compared to $12.2 million, reflecting lower labor costs and
professional fees, partially offset by non-recurring charges of
$0.2 million related to the idle facility due to the consolidation
of facilities in California.
- GAAP net loss from continuing
operations was $3.1 million, or $0.45 per share, compared to GAAP
net income from continuing operations of $0.1 million, or $0.02 per
share.
- Non-GAAP net loss from continuing
operations was $2.2 million, or $0.31 per share, compared to
non-GAAP net income of $0.9 million, or $0.13 per share.
- Total GAAP net loss, including
discontinued operations, was $3.1 million, or $0.45 per share,
compared to total GAAP net income of $0.9 million, or $0.13 per
share.
Year-to-date September 30, 2016 Financial Results as compared
to Year-to-date 2015
- Total revenue amounted to $59.4
million, compared to $69.6 million. More than 40% of the decline
was related to reduced sales of legacy infrastructure management
products and the remainder was as a result of lower orders from
global Tier-1 service provider accounts and fewer network expansion
projects.
- Year-to-date gross profit including
$0.7 million of non-recurring costs related to the aforementioned
consolidation of contract manufacturing relationships was $28.8
million, a gross margin of 48.5%, compared to $35.6 million, or
51.1%, principally as a result of the lower sales of infrastructure
management products.
- Non-GAAP year-to-date total gross
margin was 49.8%, compared to 51.3%.
- Year-to-date operating expenses were
$37.4 million, compared to $37.7 million as lower SG&A was
partially offset by increased product development and engineering
expenses.
- GAAP net loss from continuing
operations was $9.0 million, or $1.31 per share, compared to $2.3
million, or $0.33 per share.
- Non-GAAP net loss from continuing
operations was $6.9 million, or $1.00 per share, compared $0.8
million, or $0.11 per share.
- Total GAAP net loss, including
discontinued operations, was $9.0 million, or $1.31 per share,
compared to $0.5 million, or $0.07 per share.
Balance Sheet Highlights
At September 30, 2016, the company remained debt free with cash
and investments totaling $26.2 million.
Conference Call Information:
MRV Communication's third quarter 2016 financial results
conference call is scheduled to take place on November 3, 2016 at
5:00 p.m. ET. To access the call in the U.S. please dial
888-417-2254, and for international calls dial 719-457-2657
approximately 10 minutes prior to the start of the conference. The
conference ID is 8623795. The conference call will also be
broadcast live at the MRV Communications investor website, where it
will be available for replay for 90 days. In addition, a replay
will be available via telephone for one business day, beginning two
hours after the call. To listen to the replay, in the U.S. please
dial 844-512-2921, and internationally dial 412-317-6671. The
access code is 8623795.
About MRV Communications
MRV Communications (NASDAQ: MRVC) enables service providers,
data center operators and enterprises to make their networks
smarter, faster and easier to operate. MRV’s end-to-end portfolio
includes innovative packet, optical and software platforms designed
for flexibility and reliability. To learn more about MRV visit
www.mrv.com and follow us on Twitter
@MRVC.
Non-GAAP Measures
The company uses certain non-GAAP financial measures in this
press release to supplement its consolidated financial statements,
which are presented in accordance with GAAP. These non-GAAP
measures include non-GAAP cost of revenue, non-GAAP gross profit,
non-GAAP gross margin, non-GAAP product development and
engineering, non-GAAP selling, general and administrative, non-GAAP
operating expenses, non-GAAP operating income (loss), non-GAAP net
income (loss) and non-GAAP basic and diluted income (loss) per
share. The company's non-GAAP financial measures exclude the impact
of stock-based compensation expense, severance and related
transition costs, costs related to the sale of Tecnonet S.p.A. and
other non-recurring expenses, which the company believes are not
indicative of its core operating results. The company used these
non-GAAP measures when evaluating its financial results as well as
for internal resource management, planning and forecasting
purposes. These non-GAAP measures should not be viewed in isolation
from or as a substitute for the company's financial results in
accordance with GAAP. A reconciliation of GAAP to non-GAAP measures
is attached to this press release.
Forward Looking Statements
This press release may contain statements regarding future
financial and operating results of MRV, management's assessment of
business trends, and other statements about management's future
expectations, beliefs, goals, plans or prospects and those of the
market segments in which MRV is engaged that are based on
management's current expectations, estimates, forecasts and
projections about MRV and its consolidated businesses and the
respective market segments in which MRV's businesses operate, in
addition to management's assumptions. Statements in this press
release regarding MRV's future financial and operating results,
which are not statements of historical facts, constitute
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Words such as
"anticipate," "appear," "believe," “could,” "estimate," "expect,"
"intend," "may," "should," "plan," "project," "contemplate,"
"target," "foresee," "goal," "likely," "will," and "would" or
variations of such words and similar expressions, are intended to
identify such forward-looking statements which are not statements
of historical facts. These forward-looking statements are not
guarantees of future performance nor guarantees that the events
anticipated will occur or expected conditions will remain the same
or improve. These statements involve certain risks, uncertainties
and assumptions, the likelihood of which are difficult to assess
and may not occur, including risks that each of its business
segments may not make the expected progress in its respective
market, or that management's long-term strategy may not achieve the
expected results. Therefore, actual outcomes, performance and
results may differ from what is expressed or forecast in such
forward-looking statements, and such differences may vary
materially from current expectations. For further information
regarding risks and uncertainties associated with MRV's businesses,
please refer to the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors"
sections of MRV's SEC filings, including, but not limited to its
annual report on Form 10-K for the year ended December 31, 2015,
copies of which may be obtained by contacting MRV's investor
relations department or by visiting MRV's website at
http://www.mrv-corporate.com or the SEC's EDGAR website at
http://www.sec.gov. All information in this release is as of
November 3, 2016 unless otherwise stated. MRV undertakes no duty to
update any forward-looking statement to conform the statement to
actual results or changes in MRV's expectations.
MRV Communications, Inc. Condensed Consolidated
Statements of Operations (In thousands, except per share
data) (unaudited) Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Revenue: Product revenue
$
16,063 $ 20,847
$ 50,728 $ 61,809 Service
revenue
2,884 2,086
8,685 7,828
Total revenue
18,947 22,933
59,413 69,637
Cost of Revenue: Cost of
product
8,868 9,758
26,748 31,007 Cost of services
1,113 1,061
3,825 3,013
Total cost of revenue
9,981 10,819
30,573 34,020
Gross profit 8,966
12,114
28,840 35,617
Operating expenses: Product development and engineering
4,937 4,901
15,406 15,336 Selling, general and
administrative
6,931 7,281
21,955
22,396 Total operating expenses
11,868
12,182
37,361 37,732
Operating
loss (2,902 ) (68 )
(8,521 ) (2,115
) Interest expense
(7 ) (11 )
(35 ) (48
) Other income (expense), net
(173 ) 188
(348 ) (26 )
Income (loss) from continuing
operations before provision for income taxes (3,082
) 109
(8,904 ) (2,189 ) Provision (benefit)
for income taxes
31 (39 )
128 88
Income (loss) from continuing operations (3,113
) 148
(9,032 ) (2,277 ) Income from
discontinued operations, net of income taxes of $490 and $1,303 in
2015
— 738
— 1,814
Net
income (loss) $ (3,113 ) $ 886
$ (9,032 ) $ (463 )
Net income
(loss) per share — basic From continuing operations
$
(0.45 ) $ 0.02
$ (1.31 ) $ (0.33
) From discontinued operations
— 0.11
—
0.26
Net income (loss) per share — basic
$ (0.45 ) $ 0.13
$ (1.31
) $ (0.07 )
Net income (loss) per share —
diluted From continuing operations
$ (0.45
) $ 0.02
$ (1.31 ) $ (0.33 ) From
discontinued operations
— 0.11
—
0.26
Net income (loss) per share — diluted $
(0.45 ) $ 0.13
$ (1.31 )
$ (0.07 )
Weighted average number of shares: Basic
6,868 6,978
6,912 7,032 Diluted
6,868 7,014
6,912 7,032
MRV Communications, Inc.
Condensed Consolidated Balance Sheets (In thousands,
except par values) (unaudited)
September 30, December 31, 2016
2015 Assets Current assets: Cash and cash
equivalents
$ 20,922 $ 26,169 Restricted time
deposits
5,277 5,190 Accounts receivable, net
15,373
14,837 Inventories, net
10,185 10,226 Other current assets
3,461 6,851
Total current assets
55,218 63,273 Property and equipment, net
3,295 4,050
Intangible assets, net
1,067 1,153 Other assets
423
608
Total assets $ 60,003
$ 69,084
Liabilities and stockholders' equity
Current liabilities: Deferred consideration payable
$
233 $ 233 Accounts payable
8,473 5,749 Accrued
liabilities
9,252 9,972 Deferred revenue
6,783 7,642
Other current liabilities
135 196
Total current liabilities
24,876 23,792 Other long-term liabilities
3,819 3,846
Commitments and contingencies (Note 12)
Stockholders' equity: Preferred Stock, $0.01 par value:
Authorized — 1,000 shares; no shares issued or outstanding
—
— Common Stock, $0.0017 par value: Authorized — 16,000 shares
Issued — 8,429 shares in 2016 and 8,341 shares in 2015 Outstanding
— 6,839 shares in 2016 and 6,982 in 2015
270 270 Additional
paid-in capital
1,286,953 1,285,787 Accumulated deficit
(1,236,703 ) (1,227,671 ) Treasury stock — 1,591
shares in 2016 and 1,359 shares in 2015
(17,730 )
(15,355 ) Accumulated other comprehensive loss
(1,482
) (1,585 )
Total stockholders' equity 31,308
41,446
Total liabilities and stockholders'
equity $ 60,003 $ 69,084
MRV Communications, Inc. Consolidated Non-GAAP
reconciliation (Unaudited, in thousands except per share
data) Three Months Ended Nine
Months Ended September 30, September 30,
2016 2015 2016 2015
Revenue: GAAP revenue
$
18,947 $ 22,933
$ 59,413
$ 69,637
Cost of revenue GAAP cost of revenue
9,981 10,819
30,573 34,020 Stock-based charges
(39 ) (35 )
(109 ) (90 ) Severance
& transition costs
(327 ) —
(652
) —
Non-GAAP adjusted cost of revenue
9,615 10,784
29,812 33,930
Gross profit: GAAP gross profit
8,966
12,114
28,840 35,617 Stock-based charges
39 35
109 90 Severance & transition costs
327
— 652 — Non-GAAP
adjusted gross profit 9,332 12,149
29,601 35,707
Non-GAAP Gross Margin %
49.3 % 53.0 %
49.8 % 51.3 %
Operating expenses: GAAP Product development and
engineering 4,937 4,901
15,406 15,336 Stock-based
charges
(24 ) (68 )
(163 ) (161 )
Non-GAAP Product development and engineering 4,913
4,833
15,243 15,175
GAAP Selling, general & administrative: 6,931
7,281
21,955 22,396 Stock-based charges
(346 )
(213 )
(834 ) (507 ) Severance & transition costs
(206 ) (63 )
(206 ) (349 ) Litigation
costs
(14 ) —
(105 ) — Divestiture
costs
— (385 )
(68 ) (385 )
Non-GAAP
Selling, general & administrative 6,365 6,620
20,742 21,155
GAAP operating
expenses: 11,868 12,182
37,361 37,732 Stock-based
charges
(370 ) (281 )
(997 ) (668 )
Severance & transition costs
(206 ) (63 )
(206 ) (349 ) Litigation costs
(14 ) —
(105 ) — Divestiture costs
— (385 )
(68 ) (385 )
Non-GAAP operating expenses
$ 11,278 $ 11,453
$
35,985 $ 36,330
MRV Communications,
Inc. Consolidated Non-GAAP reconciliation
(continued) (Unaudited, in thousands except per share
data) Three Months Ended Nine
Months Ended September 30, September 30,
2016 2015 2016 2015
GAAP operating loss: $
(2,902 ) $ (68 )
$ (8,521 ) $
(2,115 ) Stock-based charges
409 316
1,106 758
Severance & transition costs
533 63
858 349
Litigation costs
14 —
105 — Divestiture costs
— 385
68 385
Non-GAAP
operating income (loss) (1,946 ) 696
(6,384 ) (623 )
Net income (loss): GAAP
net income (loss)
(3,113 ) 148
(9,032 )
(2,277 ) Stock-based charges
409 316
1,106 758
Severance & transition costs
533 63
858 349
Litigation costs
14 —
105 — Divestiture costs
— 385
68 385 Income tax impact
(6 ) —
(42 ) —
Non-GAAP adjusted net income
(loss) (2,163 ) 912
(6,937 )
(785 )
Income from Tecnonet discontinued operations
— 738
— 1,814
Non-GAAP
adjusted net income (loss) including income from Tecnonet
discontinued operations $ (2,163 ) $ 1,650
$ (6,937 ) $ 1,029
Weighted average number of shares - Basic 6,868 6,978
6,912 7,032 GAAP EPS - Continuing operations
$
(0.45 ) $ 0.02
$ (1.31 ) $ (0.33
) Non-GAAP EPS - Continuing operations
(0.31 ) 0.13
(1.00 ) (0.11 ) GAAP EPS - Discontinued operations
— 0.11
— 0.26 Non-GAAP EPS - Discontinued operations
— 0.11
— 0.26
Weighted average number of
shares - Diluted 6,868 7,014
6,912 7,032 GAAP EPS
- Continuing operations
$ (0.45 ) $ 0.02
$ (1.31 ) $ (0.33 ) Non-GAAP EPS - Continuing
operations
(0.31 ) 0.13
(1.00 ) (0.11 )
GAAP EPS - Discontinued operations
— 0.11
— 0.26
Non-GAAP EPS - Discontinued operations
— 0.11
— 0.26
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version on businesswire.com: http://www.businesswire.com/news/home/20161103006560/en/
IR Contact:LHA Investor RelationsKirsten Chapman/Cathy
Mattison, 415-433-3777ir@mrv.com
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