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Press Release -- February 25th, 2016
Source: Adva Optical Networking
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ADVA Optical Networking Reports Audited 2015 IFRS Financial Results in Line With Guidance

ADVA Optical Networking (FSE: ADV) announced Q4 and audited full-year 2015 financial results for the period ended December 31, 2015, and prepared in accordance with International Financial Reporting Standards (IFRS)

February 25, 2016

  • Revenues of EUR 441.9 million drive 30.3% year-on-year growth
  • Pro forma operating income rises to EUR 30.0 million (6.8% of revenues)
  • Operating income increases 217% on 2014 figures
  • Q1 2016 revenues expected to range between EUR 117 million and EUR 127 million with IFRS pro forma operating income between 1% and 4% of revenues

Q4 2015 IFRS Financial Results

Quarterly revenues climbed to EUR 111.8 million (Q4 2014: EUR 86.7 million). The Q4 2015 figure marks a year-on-year (YoY) growth leap by 28.8%. Today’s figures are in the middle of guidance between EUR 107 million and EUR 117 million. The significant increase in revenues was due to several factors: the demand for data center interconnect (DCI) technology, the continued push for 100G in metro and regional networks and the rebound in European carrier and enterprise spend.

Pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, in Q4 2015 rose substantially to EUR 9.0 million or 8.1% of revenues, which marks a 75% YoY increase (Q4 2014: EUR 5.1 million) and is at the upper end of the previously announced guidance between 6% und 9% of revenues. The year-on-year rise is largely due to higher revenues, improved gross margins and a disproportional increase in operating expenses.

The operating income climbed significantly to EUR 7.5 million which is a 46% increase YoY (Q4 2014: EUR 5.1 million). Although operating income in Q4 2015 was impacted by higher stock-based compensation expenses, the key drivers for this positive development are the above-mentioned reasons for higher pro forma operating income.

Net profit more than doubled to EUR 8.9 million YoY (Q4 2014: EUR 4.3 million). This was supported by a positive effect from foreign currency exchange rates of EUR 1.5 million and the recognition of tax assets. Basic and diluted IFRS net earnings per share in Q4 2015 increased to EUR 0.18 each from EUR 0.09 each reported in Q4 2014.

The Q4 results place ADVA Optical Networking in a financially strong position with cash and cash equivalents at EUR 93.9 million at the end of December 2015 (2014: EUR 83.9 million) and net liquidity with a record high of EUR 51.2 million. This positive development provides considerable operational flexibility for the company.

Full-Year 2015 IFRS Financial Results

Driven by increased enterprise network and carrier infrastructure business particularly in the Americas and Asia Pacific, revenues rose to a record high of EUR 441.9 million in 2015, up by 30.3% from EUR 339.2 million in 2014.

Pro forma operating income amounted to EUR 30.0 million in 2015 or 6.8% of revenues, after EUR 9.5 million in 2014 or 2.8% of revenues. This development is largely due to higher revenues, a stable gross margin and disproportional increased operating expenses. Operating income at EUR 26.8 million also improved from EUR 8.4 million in 2014.

Net income amounted to EUR 26.9 million in 2015, after EUR 8.4 million in 2014. Beyond the favorable development of operating income, net foreign currency exchange gains of EUR 2.2 million 2015 (2014: net foreign currency exchange gains of EUR 1.1 million) as well as income tax expense of EUR 1.2 million (2014: income tax benefit of EUR 0.1 million) contributed to this development. The income tax expense in 2015 as well as the income tax benefit in 2014 are impacted by the recognition of deferred tax assets on tax loss carry-forwards. Basic and diluted earnings per share were EUR 0.55 each in 2015, after EUR 0.17 each in 2014.

“The global megatrends cloud and mobility are still the growth engine for our addressable market,” comments Brian Protiva, Chief Executive Officer, ADVA Optical Networking. “The demand for cloud and mobile services drives the demand for more bandwidth and ultimately for more transmission technology. Data centers are the new cornerstones of communication networks. We provide network operators with the right technology to build powerful cloud infrastructures and deliver fast and cost-efficient services. With ADVA Ensemble, a new division of ADVA Optical Networking, network operators have unprecedented choice of hardware and software and can extend and assure the cloud beyond the data center closer to the their customers. The cloud will continue to lift us to new heights in 2016.”

IFRS Consolidated Income Statement

Q4 2015 Financial Results Table

Q1 2016 Outlook

In Q1 2016, ADVA Optical Networking expects revenues to range between EUR 117 million and EUR 127 million, and anticipates pro forma operating income of between 1% and 4% of revenues. 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 development expenses. In case of highly adverse business prospects, these reviews may result in non-cash impairment charges in Q1 2016 and beyond. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q1 2016 financial results on April 21, 2016.

Conference Call

In conjunction with the release of its full-year 2015 audited IFRS financial results on February 25, 2016, 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, Ulrich Dopfer. Interested parties may dial in at +49 69 22 22 29 043 or +1 855 402 7766, pin code 8648 9048#, 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”.

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