ADVA Optical Networking announced Q4 and audited full-year 2010 financial results for the period ended December 31, 2010, and prepared in accordance with International Financial Reporting Standards (IFRS).
February 24, 2011
- Q4 2010 Revenues at EUR 79.4 Million, IFRS Pro Forma Operating Income of EUR 4.3 Million (5.4% of Revenues)
- FY 2010 Revenues at EUR 291.7 Million, IFRS Pro Forma Operating Income of EUR 13.3 Million (4.6% of Revenues)
- Q1 2011 Revenues Expected to Range between EUR 70 Million and EUR 75 Million with
IFRS Pro Forma Operating Income between 0% and 4% of Revenues
Q4 2010 IFRS Financial Results
Revenues in Q4 2010 totaled EUR 79.4 million after EUR 59.6 million in Q4 2009 and EUR 80.5 million in Q3 2010. This result is in line with guidance of between EUR 76 million and EUR 81 million. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, amounted to EUR 4.3 million in Q4 2010 or 5.4% of revenues, also in line with guidance of between 2% and 6% of revenues. This compares to Q4 2009 IFRS pro forma operating income of EUR 3.1 million or 5.2% of revenues, and to Q3 2010 IFRS pro forma operating income of EUR 4.4 million or 5.5% of revenues. To a large degree, the year-over-year improvement of pro forma operating income is due to revenue growth.
The IFRS operating income in Q4 2010 was EUR 3.1 million, up from EUR 2.1 million in Q4 2009. The key driver for this development is the above-mentioned increase in pro forma operating income.
The IFRS net income in Q4 2010 amounted to EUR 1.6 million after EUR 1.4 million in Q4 2009. The positive development of operating income described above was mostly compensated by higher tax expenses of EUR 1.9 million in Q4 2010 after EUR 1.2 million in Q4 2009. Basic and diluted IFRS net earnings per share at EUR 0.03 in Q4 2010 were unchanged from Q4 2009.
Full-Year 2010 IFRS Financial Results
Driven by increased enterprise, Ethernet access and carrier infrastructure business, revenues rose to a record high of EUR 291.7 million in 2010, 25.3% higher than the EUR 232.8 million reported in 2009. IFRS pro forma operating income at EUR 13.3 million in 2010 or 4.6% of revenues was significantly higher than the EUR 6.1 million or 2.6% of revenues in 2009. This improvement is largely due to higher revenues.
The IFRS operating income at EUR 9.3 million in 2010 was also significantly up vs. EUR 2.3 million in 2009. The major reason for this positive development is the above-mentioned increase in pro forma operating income.
Finally, IFRS net income amounted to EUR 7.0 million in 2010 after EUR 1.3 million in 2009. Beyond the development of the operating income mentioned above, the increase in the net result was positively affected by net foreign currency exchange gains of EUR 3.1 million in 2010 after EUR 0.5 million in the previous year. This was partially offset by higher income tax expenses of EUR 4.0 million in 2010 after EUR 0.3 million in 2009. Basic and diluted IFRS net earnings per share were EUR 0.15 in 2010, significantly up from EUR 0.03 in 2009.
"We are very pleased with our Q4 2010 revenues of EUR 79.4 million. This result is in line with guidance, representing major growth of 33.2% vs. Q4 2009 and stability vs. all-time high revenues of EUR 80.5 million in Q3 2010. Our pro forma gross margin increased from 40.0% in Q3 2010 to 42.5% in Q4 2010. In Q4 2010, we achieved pro forma operating income of 5.4% of revenues, which is in line with guidance and similar to the level of 5.5% that we reported in the previous quarter. We succeeded in this with continued tight management of operational expenses and despite significantly increased sales commissions due to higher full-year revenues than we foresaw at the beginning of the year," commented Jaswir Singh, chief financial officer & chief operating officer of ADVA Optical Networking.
In conjunction with the release of its full-year 2010 audited IFRS financial results on February 24, 2011, 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 4035 9611 or +1 866 306 3455, 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 atwww.advaoptical.com.
Q1 2011 Outlook
2011 is likely to be a year of continuing global recovery, although with significant volatility. ADVA Optical Networking therefore remains cautious about revenue development for the year. In Q1 2011, the Company expects revenues to range between EUR 70 million and EUR 75 million, and anticipates pro forma operating income of between 0% and 4% 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 2011 and beyond. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q1 2011 financial results on April 20, 2011.
"In 2010, despite the slow and volatile economic recovery, ADVA Optical Networking continued its strong upward trend and recorded record-high revenue growth coupled with positive profitability development. Our share price increased an impressive 132% in 2010, from EUR 2.53 at year-end 2009 to EUR 5.86 at the end of 2010. During the year, we made significant progress in many areas. We expanded our addressable market and we continued to invest heavily in operational excellence and innovation. These investments have been paying off. The market for optical networking and carrier Ethernet equipment continues to grow rapidly. Major new opportunities are emerging from the technology transition from SONET/SDH to WDM technologies, from enterprises increasingly using collaborative Web 2.0 technologies, and from backhauling mobile broadband traffic. As a market and technology leader in our space, we are competing strongly. In 2011, our profitability will be driven by revenue growth as well as by the opportunity to increase our gross margin, harvesting the fruits of the product portfolio consolidation we drove over the last several years," stated Brian Protiva, chief executive officer of ADVA Optical Networking.
IFRS Consolidated Income Statement