ADVA Optical Networking Reports Audited 2011 IFRS Financial Results In Line with Expectations
ADVA Optical Networking announced Q4 and audited full-year 2011 financial results for the period ended December 31, 2011, and prepared in accordance with International Financial Reporting Standards (IFRS).
February 23, 2012
- Q4 2011 Revenues at EUR 83.4 Million, IFRS Pro Forma Operating Income of EUR 7.4 Million (8.9% of Revenues)
- FY 2011 Revenues at EUR 310.9 Million, IFRS Pro Forma Operating Income of EUR 17.3 Million (5.6% of Revenues)
- Q1 2012 Revenues Expected to Range between EUR 79 Million and EUR 83 Million with IFRS Pro Forma Operating Income between 2% and 5% of Revenues
Q4 2011 IFRS Financial Results
Revenues in Q4 2011 rose to a record high of EUR 83.4 million after EUR 79.4 million in Q4 2010 and EUR 79.3 million in Q3 2011. This result is at the upper end of guidance of between EUR 79 million and EUR 84 million. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, amounted to EUR 7.4 million in Q4 2011 or 8.9% of revenues, also at the upper end of guidance of between 6% and 9% of revenues. This compares to Q4 2010 IFRS pro forma operating income of EUR 4.3 million or 5.4% of revenues, and to Q3 2011 IFRS pro forma operating income of EUR 5.5 million or 6.9% of revenues. To a large degree, the year-over-year improvement of pro forma operating income is due to revenue and gross margin growth as well as increased net capitalization of development expenses.
The IFRS operating income in Q4 2011 was EUR 6.7 million, up significantly from EUR 3.1 million in Q4 2010. The key drivers for this development are the above-mentioned reasons for the increase in pro forma operating income.
The IFRS net income in Q4 2011 amounted to EUR 8.7 million after EUR 1.6 million in Q4 2010. Beyond the improvement of the operating income, net foreign currency exchange gains of EUR 1.9 million in Q4 2011 after EUR 0.8 million in Q4 2010 drove this major improvement. Further, ADVA Optical Networking reported income tax benefits of EUR 0.5 million in Q4 2011 after income tax expenses of EUR 1.9 million in Q4 2010. The Q4 2011 income tax benefit is due to recognition of deferred taxes in ADVA Optical Networking's U.S. entity. Basic and diluted IFRS net earnings per share were EUR 0.18 each, significantly up from EUR 0.03 each in Q4 2010.
Full-Year 2011 IFRS Financial Results
Driven by increased Ethernet access and carrier infrastructure business, revenues rose to a record high of EUR 310.9 million in 2011, 6.6% higher than the EUR 291.7 million reported in 2010. IFRS pro forma operating income at EUR 17.3 million in 2011 or 5.6% of revenues was up from EUR 13.3 million or 4.6% of revenues in 2010. This improvement is largely due to revenue and gross margin growth as well as increased net capitalization of development expenses.
The IFRS operating income at EUR 13.2 million in 2011 also increased significantly from EUR 9.3 million in 2010. The major reason for this positive development is the above-mentioned increase in pro forma operating income.
Finally, IFRS net income amounted to EUR 16.9 million in 2011, significantly up vs. EUR 7.0 million in 2010. Beyond the development of the operating income mentioned above, the increase in the net result was positively affected by income tax benefits of EUR 2.9 million in 2011 after income tax expenses of EUR 4.0 million in 2010. The 2011 income tax benefit is due to recognition of deferred taxes in ADVA Optical Networking's U.S. entity in H2 2011. Basic and diluted IFRS net earnings per share were EUR 0.36 and EUR 0.35 in 2011, significantly up from EUR 0.15 each in 2010.
"We are extremely pleased with our Q4 2011 revenues which are at a record high of EUR 83.4 million. This result is at the upper end of guidance, representing 5.2% growth vs. Q3 2011. Our pro forma gross margin strengthened as well, from 43.5% in Q3 2011 to 43.9% in Q4 2011. We achieved pro forma operating income of 8.9% of revenues in Q4 2011, which is also at the upper end of guidance and up from 6.9% of revenues reported for Q3 2011. In addition, cash and cash equivalents were at EUR 59.1 million at the end of Q4 2011, up from EUR 56.0 million at the end of the previous quarter. Net liquidity increased from EUR 28.0 million at the end of Q3 2011 to a quarter-end all-time high of EUR 31.2 million. Our focus on operational excellence and continuous improvements has further fueled our profitability," commented Jaswir Singh, chief financial officer & chief operating officer of ADVA Optical Networking.
In conjunction with the release of its full-year 2011 audited IFRS financial results on February 23, 2012, ADVA Optical Networking will host a conference call for analysts and investors at 3:00 p.m. CET / 9:00 a.m. EST. 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 235 135#, 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".
Q1 2012 Outlook
In Q1 2012, ADVA Optical Networking expects revenues to range between EUR 79 million and EUR 83 million, and anticipates pro forma operating income of between 2% and 5% of revenues. Further, ADVA Optical Networking notes that it will continue to perform detailed quarterly reviews of the expected business development in respect of all intangible assets, including capitalized research and development expenses. These reviews may result in non-cash impairment charges in Q1 2012 and beyond. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q1 2012 financial results on April 24, 2012.
"Even in challenging times, ADVA Optical Networking was able to show profitable growth in 2011, driven by our relentless focus on innovation, operational excellence and our target markets which continue to show long-term growth potential. During the year, we continued to develop the most advanced network technology that provides our customers with compelling opportunities to shape and enhance their networks and businesses. We managed to control operational costs despite major incremental investments in our development activities and to improve our operational capabilities significantly in 2011. Our target markets continued to grow last year, with momentum coming from the strong trend towards mobile communication and cloud computing solutions. For 2012, all indications suggest that our target markets will continue to prosper. With further enhancements to our product and service offerings, we are also beginning to address opportunities in the WDM long-haul and Ethernet switching markets, which will enable us to address a nearly 40% bigger market in 2014 than we would be able to address without this expansion. Thus we are confident that we can continue to grow profitably even in a very challenging macro-economic environment," stated Brian Protiva, chief executive officer of ADVA Optical Networking.
IFRS Consolidated Income Statement