Exhibit 99.1 Q1 2015
Exhibit 99.1
MRV Reports First-Quarter 2015 Results
- GAAP Net loss of $1.1 million improves $3.1 million compared to a year ago driven by higher gross margins and lower operating expenses -
CHATSWORTH, Calif.- May 7, 2015 -MRV Communications (NASDAQ: MRVC), a global supplier of packet and optical solutions that power the world’s largest networks and a provider of network integration services for communication service providers, reported financial results for the three months ended March 31, 2015.
Mark Bonney, president and chief executive officer of MRV, stated, “In the first quarter, we achieved significantly improved financial results, both sequentially and compared to the first quarter of 2014, with expanded gross margins and reduced operating expenses in each business. Our revenue declined due to the recent foreign exchange impact on the Euro on our Network Integration business, which is based in Italy. In constant currency, first quarter 2015 revenues would have been approximately the same as the first quarter of 2014.”
Mr. Bonney added, “Our Network Integration business continues to perform well, and we are exploring strategic alternatives for this business to help unlock and realize the value of our two independent and distinct lines of business.
“We are pleased with the positive trends in our Network Equipment business, and see significant growth opportunities in this segment as the products we have developed address the increasing bandwidth demand for cloud, mobility and video services. During the quarter, we achieved several significant milestones. OptiDriver® is gaining traction among service providers and data center operators, most notably in the Americas and EMEA, and the OptiDriver customer count rose to 59. Additionally, we achieved all of our OptiPacket® product development milestones and completed a successful trial in a Tier One account. We also secured our first OptiPacket order, which was a combined sale with OptiDriver and Pro-Vision®, our service orchestration software platform, to a North American service provider. This demonstrates our ability to provide an end-to-end solution for metro service edge networks,” concluded Mr. Bonney.
First Quarter 2015 Results as compared to First Quarter 2014
| |
• | Total revenue amounted to $38.8 million, compared to $42.3 million. Network Equipment revenue was $22.3 million in both periods. Network Integration revenue was $16.6 million and when calculated on a constant currency basis would have been $20.2 million, compared to $20.1 million. |
| |
• | Consolidated gross margin was 35.8%, compared to 31.3%, reflecting increases in both segments and the impact of the greater contribution percentage from the higher gross margin Network Equipment business, which had gross margins of 52.0% in the first quarter of 2015. |
| |
• | Total GAAP operating expenses were $14.7 million, or 37.9% of total revenue, compared to $17.1 million, or 40.4% of total revenue. Network Equipment operating expenses were $1.9 million lower than 2014 as a result of the impact of cost reduction efforts implemented last year. Also, Corporate general and administrative expenses were $0.7 million lower than the 2014 corresponding period. The company’s current operating expense structure reflects improved efficiencies while maintaining the ongoing commitment to develop, market and support a product road map that is designed to expand existing customer relationships while increasing the total addressable market. |
| |
• | GAAP operating loss was $0.8 million, compared to $3.8 million. |
| |
• | GAAP net loss was $1.1 million, or $0.15 per share, compared to $4.2 million, or $0.58 per share. |
| |
• | Non-GAAP operating loss was $0.1 million, compared to $3.0 million. |
| |
• | Non-GAAP net loss was $0.5 million, or $0.07 per share, compared to $3.4 million, or $0.47 per share. |
A reconciliation of the non-GAAP measures to GAAP measures is provided in the attached table.
Cash Flow Highlights
At March 31, 2015, the company had $14.2 million in cash and equivalents, compared to $22.4 million at December 31, 2014. The reduction in cash was planned as the company implemented its previously announced share repurchase program using $3.6 million to purchase 357,085 shares. Also, the reduction in the company’s short term debt was $3.3 million. Additionally, while operating results on a non-GAAP basis were close to break-even, the company used $1.1 million to fund operations, including its working capital changes that were affected by the timing of certain large accounts receivable that were collected following the conclusion of the quarter and the reduction of accounts payable. Further, the balance sheet value of cash in Euros was reduced by $0.6 million due to the change in the value of the Euro relative to the US Dollar.
Conference Call Information:
MRV Communication's first quarter 2015 financial results conference call is scheduled to take place on May 7, 2015 at 5:00 p.m. ET. The live audio webcast will be accessible at www.mrv-corporate.com in the Investor Relations section. To access the call in the U.S. please dial 888-503-8175, and for international calls dial 719-325-2362 approximately 10 minutes prior to the start of the conference. The conference ID is 3859231. The conference call will also be broadcast live at www.mrv.com 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 877-870-5176, and internationally dial 858-384-5517. The access code is 3859231.
About MRV Communications
MRV Communications is a global supplier of packet and optical solutions that empower the world’s largest networks and network integration services for leading communications service providers. For more than two decades, the most demanding service providers, Fortune 1000 companies and governments worldwide have trusted MRV to provide best-in-class solutions and services for their mission-critical networks. We help our customers overcome the challenge of orchestrating the ever-increasing need for capacity while improving service delivery and lowering network costs for critical applications such as cloud connectivity, high-capacity business services, mobile backhaul and data center connectivity. For more information please visit www.mrv.com.
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 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, fair value adjustments, litigation costs, severance and related restructuring costs, 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.
Certain revenue information is presented on a constant currency basis. The company supplementally presents this revenue information, because it believes doing so facilitates a comparison of its operating results from period to period without regard to changes resulting solely from fluctuations in currency rates. The company calculates constant currency revenue growth by comparing current-period revenues to prior-period revenues with both periods converted at the U.S. Dollar/local currency average foreign exchange rate for each month of the prior period for the currencies in which it does business.
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," "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, 2014, 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 May 7, 2015 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.
IR Contact:
Cathy Mattison/Kirsten Chapman, LHA, (415) 433-3777, ir@mrv.com
MRV Communications, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
| | | |
Revenue: | | | |
Product revenue | $ | 28,331 |
| | $ | 31,544 |
|
Service revenue | 10,442 |
| | 10,774 |
|
Total revenue | 38,773 |
| | 42,318 |
|
Cost of Revenue: | | | |
cost of product | 17,764 |
| | 20,901 |
|
cost of services | 7,133 |
| | 8,166 |
|
Total cost of revenue | 24,897 |
| | 29,067 |
|
Gross profit | 13,876 |
| | 13,251 |
|
Operating expenses: | | | |
Product development and engineering | 5,125 |
| | 5,578 |
|
Selling, general and administrative | 9,562 |
| | 11,522 |
|
Total operating expenses | 14,687 |
| | 17,100 |
|
Operating loss | (811 | ) | | (3,849 | ) |
Interest expense | (49 | ) | | (150 | ) |
Other expense, net | (20 | ) | | 33 |
|
Loss before provision for income taxes | (880 | ) | | (3,966 | ) |
Provision for income taxes | 188 |
| | 251 |
|
Net Loss | $ | (1,068 | ) | | $ | (4,217 | ) |
| | | |
Net loss per share — basic | $ | (0.15 | ) | | $ | (0.58 | ) |
Net loss per share — diluted | $ | (0.15 | ) | | $ | (0.58 | ) |
| | | |
Weighted average number of shares: | | | |
Basic | 7,131 |
| | 7,283 |
|
Diluted | 7,131 |
| | 7,283 |
|
MRV Communications, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(unaudited)
|
| | | | | | | |
| March 31, 2015 | | December 31, 2014 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 14,215 |
| | $ | 22,422 |
|
Restricted time deposits | 224 |
| | 235 |
|
Accounts receivable, net | 41,384 |
| | 43,513 |
|
Other receivables | 10,521 |
| | 11,012 |
|
Inventories, net | 17,497 |
| | 21,683 |
|
Income taxes receivable | 49 |
| | 558 |
|
Deferred income taxes | 705 |
| | 535 |
|
Other current assets | 6,975 |
| | 5,454 |
|
Total current assets | 91,570 |
| | 105,412 |
|
Property and equipment, net | 4,608 |
| | 4,890 |
|
Deferred income taxes, net of current portion | 1,973 |
| | 2,105 |
|
Intangibles, net | 1,336 |
| | 1,364 |
|
Other assets | 694 |
| | 801 |
|
Total assets | $ | 100,181 |
| | $ | 114,572 |
|
| | | |
Liabilities and stockholders' equity | | | |
Current liabilities: | | | |
Short-term debt | $ | 2,116 |
| | $ | 5,402 |
|
Deferred consideration payable | 233 |
| | 233 |
|
Accounts payable | 21,301 |
| | 24,327 |
|
Accrued liabilities | 14,217 |
| | 14,545 |
|
Deferred revenue | 13,058 |
| | 13,527 |
|
Other current liabilities | 325 |
| | 297 |
|
Total current liabilities | 51,250 |
| | 58,331 |
|
Other long-term liabilities | 4,956 |
| | 5,271 |
|
Commitments and contingencies | | | |
| | | |
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 — 8,250 shares in 2015 and 8,242 shares in 2014 | | | |
Outstanding — 7,036 shares in 2015 and 7,386 in 2014 | 270 |
| | 270 |
|
Additional paid-in capital | 1,284,811 |
| | 1,284,483 |
|
Accumulated deficit | (1,221,560 | ) | | (1,220,492 | ) |
Treasury stock — 1,214 shares in 2015 and 856 shares in 2014 | (14,009 | ) | | (10,412 | ) |
Accumulated other comprehensive income | (5,537 | ) | | (2,879 | ) |
Total stockholders' equity | 43,975 |
| | 50,970 |
|
Total liabilities and stockholders' equity | $ | 100,181 |
| | $ | 114,572 |
|
MRV Communications, Inc.
Segmented Operating Data
(In thousands)
(unaudited)
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Revenue | | | |
Network Equipment | $ | 22,276 |
| | $ | 22,319 |
|
Network Integration | 16,588 |
| | 20,053 |
|
Before intersegment adjustments | 38,864 |
| | 42,372 |
|
Intersegment adjustments | (91 | ) | | (54 | ) |
Total | $ | 38,773 |
| | $ | 42,318 |
|
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Gross profit | | | |
Network Equipment | $ | 11,544 |
| | $ | 10,759 |
|
Network Integration | 2,331 |
| | 2,490 |
|
Before intersegment adjustments | 13,875 |
| | 13,249 |
|
Intersegment adjustments | 1 |
| | 2 |
|
Total | $ | 13,876 |
| | $ | 13,251 |
|
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Operating Expenses | |
| | |
|
Network Equipment | $ | 11,743 |
| | $ | 13,598 |
|
Network Integration | 1,826 |
| | 1,645 |
|
Before intersegment adjustments | 13,569 |
| | 15,243 |
|
Corporate unallocated operating expenses and adjustments | 1,118 |
| | 1,857 |
|
Total | $ | 14,687 |
| | $ | 17,100 |
|
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Operating Income | | | |
Network Equipment | $ | (198 | ) | | $ | (2,839 | ) |
Network Integration | 505 |
| | 845 |
|
Before intersegment adjustments | 307 |
| | (1,994 | ) |
Corporate unallocated and adjustments | (1,118 | ) | | (1,855 | ) |
Total | $ | (811 | ) | | $ | (3,849 | ) |
Non-GAAP reconciliation
Three Months Ended March 31, 2015 and 2014
(Unaudited, in thousands except per share data) |
| | | | | | | | | | | | | | | | | | | | |
| Consolidated amounts | Network Equipment | | Network Integration |
| 2015 | 2014 | | 2015 | 2014 | | 2015 | 2014 |
Revenue: | | | | | | | | |
GAAP revenue | $ | 38,773 |
| $ | 42,318 |
| | $ | 22,185 |
| $ | 22,265 |
| | $ | 16,588 |
| $ | 20,053 |
|
Cost of revenue | | | | | | | | |
GAAP cost of revenue | 24,897 |
| 29,067 |
| | 10,640 |
| 11,504 |
| | 14,257 |
| 17,563 |
|
Stock-based charges | (30 | ) | (20 | ) | | (30 | ) | (19 | ) | | — |
| (1 | ) |
Non-GAAP adjusted cost of revenue | $ | 24,867 |
| $ | 29,047 |
| | $ | 10,610 |
| $ | 11,485 |
| | $ | 14,257 |
| $ | 17,562 |
|
| | | | | | | | |
Gross profit: | | | | | | | | |
GAAP gross profit | $ | 13,876 |
| $ | 13,251 |
| | $ | 11,545 |
| $ | 10,761 |
| | $ | 2,331 |
| $ | 2,490 |
|
Stock-based charges | 30 |
| 20 |
| | 30 |
| 19 |
| | — |
| 1 |
|
Non-GAAP adjusted gross profit | $ | 13,906 |
| $ | 13,271 |
| | $ | 11,575 |
| $ | 10,780 |
| | $ | 2,331 |
| $ | 2,491 |
|
| | | | | | | | |
Operating expenses: | | | | | | | | |
GAAP Product development and engineering | $ | 5,125 |
| $ | 5,578 |
| | $ | 5,125 |
| $ | 5,578 |
| | $ | — |
| $ | — |
|
Stock-based charges | (49 | ) | (23 | ) | | (49 | ) | (23 | ) | | — |
| — |
|
Non-GAAP Product development and engineering | $ | 5,076 |
| $ | 5,555 |
| | $ | 5,076 |
| $ | 5,555 |
| | $ | — |
| $ | — |
|
GAAP Selling, general & administrative | 8,445 |
| 9,663 |
| | 6,619 |
| 8,018 |
| | 1,826 |
| 1,645 |
|
Stock-based charges | (50 | ) | (27 | ) | | (44 | ) | (35 | ) | | (6 | ) | 8 |
|
Severance | (90 | ) | (261 | ) | | (90 | ) | (261 | ) | | — |
| — |
|
Non-GAAP Selling, general & administrative | $ | 8,305 |
| $ | 9,375 |
| | $ | 6,485 |
| $ | 7,722 |
| | $ | 1,820 |
| $ | 1,653 |
|
GAAP Corporate charges | 1,117 |
| 1,858 |
| | 1,117 |
| 1,858 |
| | — |
| — |
|
Stock-based charges | (83 | ) | (77 | ) | | (83 | ) | (77 | ) | | — |
| — |
|
Litigation costs | (434 | ) | — |
| | — |
| — |
| | (434 | ) | — |
|
Warrant revaluation charges | — |
| (406 | ) | | — |
| (406 | ) | | — |
| — |
|
Non-GAAP Corporate charges | $ | 600 |
| $ | 1,375 |
| | $ | 1,034 |
| $ | 1,375 |
| | $ | (434 | ) | $ | — |
|
GAAP operating expenses | $ | 14,687 |
| $ | 17,099 |
| | $ | 12,861 |
| $ | 15,454 |
| | $ | 1,826 |
| $ | 1,645 |
|
Non-GAAP operating expenses | $ | 13,981 |
| $ | 16,305 |
| | $ | 12,595 |
| $ | 14,652 |
| | $ | 1,386 |
| $ | 1,653 |
|
| | | | | | | | |
GAAP operating income | $ | (811 | ) | $ | (3,848 | ) | | (1,316 | ) | (4,693 | ) | | $ | 505 |
| $ | 845 |
|
Stock-based charges | 212 |
| 147 |
| | 206 |
| 154 |
| | 6 |
| (7 | ) |
Severance | 90 |
| 261 |
| | 90 |
| 261 |
| | — |
| — |
|
Litigation costs | 434 |
| — |
| | — |
| — |
| | 434 |
| — |
|
Warrant revaluation charges | — |
| 406 |
| | — |
| 406 |
| | — |
| — |
|
Non-GAAP adjusted operating income | $ | (75 | ) | $ | (3,034 | ) | | $ | (1,020 | ) | $ | (3,872 | ) | | $ | 945 |
| $ | 838 |
|
| | | | | | | | |
Non-GAAP reconciliation
(continued)
Three Months Ended March 31, 2015 and 2014
(Unaudited, in thousands except per share data)
|
| | | | | | | | | | | | | | | | | | | | |
| Consolidated amounts | Network Equipment | | Network Integration |
| 2015 | 2014 | | 2015 | 2014 | | 2015 | 2014 |
Net Income | | | | | | | | |
GAAP net income | $ | (1,068 | ) | $ | (4,217 | ) | | $ | (1,265 | ) | $ | (4,537 | ) | | $ | 197 |
| $ | 320 |
|
Stock-based charges | 212 |
| 147 |
| | 206 |
| 154 |
| | 6 |
| (7 | ) |
Severance | 90 |
| 261 |
| | 90 |
| 261 |
| | — |
| — |
|
Litigation costs | 434 |
| — |
| | — |
| — |
| | 434 |
| — |
|
Warrant revaluation charges | — |
| 406 |
| | — |
| 406 |
| | — |
| — |
|
Income tax impact | (174 | ) | — |
| | — |
| — |
| | (174 | ) | — |
|
Non-GAAP adjusted net income | $ | (506 | ) | $ | (3,403 | ) | | $ | (969 | ) | $ | (3,716 | ) | | $ | 463 |
| $ | 313 |
|
| | | | | | | | |
Weighted average number of shares | 7,131 |
| 7,283 |
| | | | | | |
GAAP EPS - Basic and Diluted | $ | (0.15 | ) | $ | (0.58 | ) | | | | | | |
Non-GAAP EPS - Basic and Diluted | $ | (0.07 | ) | $ | (0.47 | ) | | | | | | |