• Quarterly revenues up 14.4% year-over-year to EUR 144.3
million
• Pro forma operating income of EUR 7.4 million (5.1% of
revenues)
• Q4 2019 outlook: revenues EUR 142 – 152 million; Pro forma
operating income 5% - 7% of revenues
ADVA (ISIN: DE0005103006), a leading provider of open networking
solutions for the delivery of cloud and mobile services, reported
financial results for Q3 2019 ended on September 30, 2019. The
results have been prepared in accordance with International
Financial Reporting Standards (IFRS).
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Uli Dopfer, CFO, ADVA (Photo: Business
Wire)
Q3 2019 financial summary1
(in thousands of EUR)
Q3
Q3
Change
Q2
Change
2019
2018
2019
Revenues
144,310
126,178
14.4%
133,216
8.3%
Pro forma gross profit
49,086
47,304
3.8%
46,513
5.5%
in % of revenues
34.0%
37.5%
-3.5pp
34.9%
-0.9pp
Pro forma operating income
7,393
6,776
9.1%
4,337
70.5%
in % of revenues
5.1%
5.4%
-0.3pp
3.3%
1.8pp
Operating income (loss)
3,2002
4,994
-35.9%
2,497
28.2%
Net income
2,190
3,908
-44.0%
1,297
68.9%
(in thousands of EUR)
Sep. 30
2019
Sep. 30
2018
Change
Jun. 30
2019
Change
Cash and cash equivalents
38,396
53,949
-28.8%
48,275
-20.5%
Net debt3
74,873
38,656
93.7%
68,117
9.9%
1 Potential differences due to rounding 2 Including EUR 2.5
million one-off expenses 3 Q3 and Q2 2019 include lease liabilities
of EUR 36.2 million due to first-time adoption of IFRS 16
Q3 2019 IFRS financial results
Revenues for Q3 2019 increased by 8.3% to EUR 144.3 million from
EUR 133.2 million in Q2 2019 and grew by 14.4% from EUR 126.2
million in the same year-ago period. Revenues for Q3 2019 were in
the upper range of the guidance corridor the company provided on
July 25, 2019, of between EUR 135 million and EUR 145 million.
Pro forma operating income for Q3 2019 was EUR 7.4 million (5.1%
of revenues), compared to EUR 4.3 million (3.3% of revenues) in Q2
2019 and compared to a pro forma operating income of EUR 6.8
million (5.4% of revenues) in the same year-ago period. Pro forma
operating income for Q3 2019 was also at the upper end of the
company’s guidance range of between 3% and 6% of revenues.
Operating income for Q3 2019 of EUR 3.2 million increased from
EUR 2.5 million reported for Q2 2019 and decreased compared to EUR
5.0 million in the same year-ago quarter. This is mainly due to
tariffs on China-made products in the US market and the strength of
the US dollar.
Net income for Q3 2019 increased substantially by 68.9% to EUR
2.2 million from EUR 1.3 million in Q2 2019; however, it declined
significantly from EUR 3.9 million in Q3 2018.
At quarter-end, the company’s cash and cash equivalents totaled
EUR 38.4 million, representing a decrease of 20.5% compared to EUR
48.3 million at the end of Q2 2019. The company built up
inventories and thus working capital in the past quarter to reduce
the negative impact of import duties, which led to a reduction in
cash and cash equivalents.
The company’s net debt increased by EUR 6.8 million to EUR 74.9
million from EUR 68.1 million at the end of Q2 2019.
Net working capital at quarter-end was EUR 137.8 million
compared to EUR 127.6 million at the end of Q2 2019.
“In the third quarter of the fiscal year, our revenues continued
to develop very positively, and we are satisfied with the overall
order entry,” commented Uli Dopfer, CFO, ADVA. “Both of our two key
metrics were at the upper end of our guidance range, and
year-over-year we increased revenues significantly by 14.4%.
Somewhat challenging, on the other hand, are the negative effects
of US trade policy on our business. As such, we’ve taken several
measures to counteract the impact of this trade conflict. These
include the relocation of production from China, proactive material
purchasing and rapid transfer of pre-engineered subsystems, as well
as tightening the control of operational costs. These measures are
partly associated with one-time costs but will sustainably support
us in terms of the positive development of our profitability.”
“We’ve made significant progress across all of our strategic
product groups in Q3. As a result, customer demand for our
technology continues to accelerate,” said Brian Protiva, CEO, ADVA.
“Our new FSP 3000 TeraFlex™ terminal is truly industry-leading. It
provides open, scalable and programmable optical transmission
technology that delivers the lowest cost per bit. With these
features, it's no surprise that this product is testing so strongly
with our customers. Our FSP 150 packet edge solutions combined with
our Ensemble software suite is also drawing strong customer
reaction and is playing a pivotal role in the development of new
open networking concepts such as edge computing. What’s more, our
NFV software continues to grow in strength and customer wins are
rapidly accelerating. And last but not least, the positive revenue
development of our Oscilloquartz synchronization solutions
continues to gather momentum. So much so, we expect to exceed our
good 2018 results in this area in the current financial year.”
Q4 2019 financial outlook
For Q4 2019, ADVA expects revenues to be in the range of EUR 142
million and EUR 152 million and a pro forma operating income of
between 5% and 7% of revenues.
The company will publish its financial results for Q4 and the
full fiscal year 2019 on February 20, 2020.
Conference call details
ADVA will hold a conference call for analysts and investors
today, October 24, 2019, to discuss these results and management’s
outlook. The company’s CEO, Brian Protiva, and CFO, Uli Dopfer,
will host the call at 3:00 p.m. CET (9:00 a.m. EDT). A question and
answer session will follow management presentations.
To participate, please dial the appropriate number at least five
minutes before the start time and ask for the ADVA conference
call.
International number: +49 69 201 744 210 US number: +1 877 423
08 30 Pin code: 417 32 288#
A corresponding presentation is available on ADVA’s website:
https://www.adva.com/en/about-us/investors/financial-results/conference-calls
The complete quarterly statement 9M 2019 (January – September)
is available as a PDF here:
https://www.adva.com/en/about-us/investors/financial-results/financial-statements
A replay of the call will be available here:
https://www.adva.com/en/about-us/investors/financial-results/conference-calls
Forward-looking statements
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 that cannot be
foreseen and that are beyond the control of ADVA. ADVA 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 or the market in the shares of
ADVA.
Use of pro forma financial information
ADVA 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’s operating results from one financial period to another.
ADVA 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.
Additionally, expenses related to restructuring measures are not
included. This pro forma information is not prepared in accordance
with IFRS and should not be considered a substitute for the
historical information presented in accordance with IFRS.
About ADVA
ADVA is a company founded on innovation and focused on helping
our customers succeed. Our technology forms the building blocks of
a shared digital future and empowers networks across the globe.
We’re continually developing breakthrough hardware and software
that leads the networking industry and creates new business
opportunities. It’s these open connectivity solutions that enable
our customers to deliver the cloud and mobile services that are
vital to today’s society and for imagining new tomorrows. Together,
we’re building a truly connected and sustainable future. For more
information on how we can help you, please visit us at
www.adva.com.
Published by: ADVA Optical Networking SE, Munich, Germany
www.adva.com
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version on businesswire.com: https://www.businesswire.com/news/home/20191023005917/en/
For ADVA press: Gareth Spence t +44 1904 699 358
public-relations@adva.com For ADVA investors: Stephan
Rettenberger t +49 89 890 665 854 investor-relations@adva.com