DELAWARE | 001-11174 | 06-1340090 | ||
(State or other jurisdiction of | (Commission file number) | (I.R.S. employer | ||
incorporation or organization) | identification number) |
Date: August 10, 2015 | ||
MRV COMMUNICATIONS, INC. | ||
By: | /s/ Stephen G. Krulik | |
Stephen G. Krulik | ||
Chief Financial Officer |
• | Growth of New Products in Network Equipment and Increased Operating Efficiencies Deliver Operating Income of $803,000 - |
• | Executing Strategy to Focus on Packet and Optical Networking Solutions with Sale of Network Integration Business- |
• | Total revenue was $42.7 million, compared to $43.1 million. |
◦ | Network Equipment revenue of $24.5 million grew 12.4%, compared to $21.8 million. |
◦ | Network Integration revenue was $18.2 million and when calculated on a constant currency basis would have been $22.6 million, compared to $21.4 million. |
• | Total gross margin increased to 35.3% from 34.3%, reflecting the larger contribution of revenue from Network Equipment, which had gross margins of 48.7%, compared to Network Integration which had gross margins of 17.2%. Total gross profit would have been $0.7 million, or 5%, higher for the three months ended June 30, 2015 had foreign exchange rates remained the same as they were in the three months ended June 30, 2014. |
• | Total GAAP operating expenses decreased to $14.3 million, or 33.5% of total revenue, from $15.9 million, or 36.9% of total revenue, reflecting improved efficiencies while maintaining the ongoing commitment to develop, market and support a differentiated product road map for the Network Equipment business. |
• | GAAP operating income improved $1.9 million to $0.8 million. Both Network Equipment and Network Integration had positive GAAP operating income at $0.5 million and $1.5 million respectively, which were partially offset by corporate operating expenses of $1.3 million. |
• | Non-GAAP operating income improved $1.7 million to $1.3 million, from a non-GAAP operating loss of $0.4 million. |
• | GAAP net loss improved $2.0 million to $0.3 million, or $0.04 per share, from $2.3 million, or $0.31 per share. |
• | Non-GAAP net income improved $1.8 million to $0.2 million, or $0.03 per share, from a non-GAAP net loss of $1.6 million, or $0.22 per share. |
• | Total revenue amounted to $81.5 million, compared to $85.4 million. Network Equipment revenue was $46.8 million, up 6%. Network Integration revenue was $34.8 million, down 16%, primarily due to unfavorable currency exchange. Total revenue would have been $8.0 million, or 10% higher for the six months ended June 30, 2015 had foreign currency exchange rates remained the same as they were for the six months ended June 30, 2014. |
• | Year-to-date, total gross margin increased to 35.5%, from 32.8%, reflecting the larger contribution of revenue from Network Equipment, which had gross margins of 50.2%, compared to Network Integration which had gross margins of 15.7%. Total gross profit would have been $1.2 million, or 4%, higher for the six months ended June 30, 2015 had foreign exchange rates remained the same as they were in the six months ended June 30, 2014. |
• | GAAP operating results improved to breakeven from a $5.0 million loss in 2014. Both Network Equipment and Network Integration had positive GAAP operating income at $0.3 million and $2.0 million respectively, which were offset by a corporate operating expense of $2.4 million. |
• | Non-GAAP operating income improved $4.7 million to $1.2 million, from a non-GAAP operating loss of $3.4 million. |
• | GAAP net loss was $1.3 million, or $0.19 per share, a $5.1 million, or $0.70 per share improvement versus 2014. |
• | Non-GAAP net loss improved $4.7 million to $0.3 million, or $0.05 per share, from a non-GAAP net loss of $5.0 million, or $0.69 per share. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue: | |||||||||||||||
Product revenue | $ | 31,156 | $ | 30,671 | $ | 59,487 | $ | 62,215 | |||||||
Service revenue | 11,558 | 12,453 | 22,000 | 23,227 | |||||||||||
Total revenue | 42,714 | 43,124 | 81,487 | 85,442 | |||||||||||
Cost of Revenue: | |||||||||||||||
Cost of product | 20,072 | 19,210 | 37,835 | 40,112 | |||||||||||
Cost of services | 7,550 | 9,132 | 14,684 | 17,297 | |||||||||||
Total cost of revenue | 27,622 | 28,342 | 52,519 | 57,409 | |||||||||||
Gross profit | 15,092 | 14,782 | 28,968 | 28,033 | |||||||||||
Operating expenses: | |||||||||||||||
Product development and engineering | 5,310 | 5,392 | 10,435 | 10,970 | |||||||||||
Selling, general and administrative | 8,979 | 10,516 | 18,541 | 22,038 | |||||||||||
Total operating expenses | 14,289 | 15,908 | 28,976 | 33,008 | |||||||||||
Operating Income (loss) | 803 | (1,126 | ) | (8 | ) | (4,975 | ) | ||||||||
Interest expense | (50 | ) | (40 | ) | (99 | ) | (190 | ) | |||||||
Other expense, net | (281 | ) | (420 | ) | (301 | ) | (387 | ) | |||||||
Income (loss) before provision for income taxes | 472 | (1,586 | ) | (408 | ) | (5,552 | ) | ||||||||
Provision for income taxes | 752 | 681 | 940 | 932 | |||||||||||
Net Loss | $ | (280 | ) | $ | (2,267 | ) | $ | (1,348 | ) | $ | (6,484 | ) | |||
Net loss per share — basic | $ | (0.04 | ) | $ | (0.31 | ) | $ | (0.19 | ) | $ | (0.89 | ) | |||
Net loss per share — diluted | $ | (0.04 | ) | $ | (0.31 | ) | $ | (0.19 | ) | $ | (0.89 | ) | |||
Weighted average number of shares: | |||||||||||||||
Basic | 6,988 | 7,360 | 7,059 | 7,322 | |||||||||||
Diluted | 6,988 | 7,360 | 7,059 | 7,322 |
June 30, 2015 | December 31, 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 13,516 | $ | 22,422 | |||
Restricted time deposits | 194 | 235 | |||||
Accounts receivable, net | 43,118 | 43,513 | |||||
Other receivables | 10,924 | 11,012 | |||||
Inventories, net | 17,316 | 21,683 | |||||
Income taxes receivable | — | 558 | |||||
Deferred income taxes | 670 | 535 | |||||
Other current assets | 6,004 | 5,454 | |||||
Total current assets | 91,742 | 105,412 | |||||
Property and equipment, net | 4,605 | 4,890 | |||||
Deferred income taxes | 1,777 | 2,105 | |||||
Intangible assets, net | 1,275 | 1,364 | |||||
Other assets | 653 | 801 | |||||
Total assets | $ | 100,052 | $ | 114,572 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Short-term debt | $ | — | $ | 5,402 | |||
Deferred consideration payable | 233 | 233 | |||||
Accounts payable | 23,242 | 24,327 | |||||
Accrued liabilities | 14,732 | 14,545 | |||||
Deferred revenue | 13,394 | 13,527 | |||||
Other current liabilities | 408 | 297 | |||||
Total current liabilities | 52,009 | 58,331 | |||||
Other long-term liabilities | 4,623 | 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 — 8,318 shares in 2015 and 8,242 shares in 2014 | |||||||
Outstanding — 6,993 shares in 2015 and 7,386 in 2014 | 270 | 270 | |||||
Additional paid-in capital | 1,285,015 | 1,284,483 | |||||
Accumulated deficit | (1,221,840 | ) | (1,220,492 | ) | |||
Treasury stock — 1,325 shares in 2015 and 856 shares in 2014 | (14,962 | ) | (10,412 | ) | |||
Accumulated other comprehensive income | (5,063 | ) | (2,879 | ) | |||
Total stockholders' equity | 43,420 | 50,970 | |||||
Total liabilities and stockholders' equity | $ | 100,052 | $ | 114,572 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | |||||||||||||||
Network Equipment | $ | 24,536 | $ | 21,833 | $ | 46,813 | $ | 44,152 | |||||||
Network Integration | 18,195 | 21,355 | 34,783 | 41,408 | |||||||||||
Total before intersegment adjustments | 42,731 | 43,188 | 81,596 | 85,560 | |||||||||||
Intersegment adjustments | (17 | ) | (64 | ) | (109 | ) | (118 | ) | |||||||
Total | $ | 42,714 | $ | 43,124 | $ | 81,487 | $ | 85,442 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Gross profit | |||||||||||||||
Network Equipment | $ | 11,959 | $ | 11,185 | $ | 23,503 | $ | 21,944 | |||||||
Network Integration | 3,133 | 3,598 | 5,464 | 6,088 | |||||||||||
Total before intersegment adjustments | 15,092 | 14,783 | 28,967 | 28,032 | |||||||||||
Intersegment adjustments | — | (1 | ) | 1 | 1 | ||||||||||
Total | $ | 15,092 | $ | 14,782 | $ | 28,968 | $ | 28,033 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Operating Expenses | |||||||||||||||
Network Equipment | $ | 11,439 | $ | 12,688 | $ | 23,181 | $ | 26,287 | |||||||
Network Integration | 1,600 | 1,894 | 3,426 | 3,538 | |||||||||||
Total before intersegment adjustments | 13,039 | 14,582 | 26,607 | 29,825 | |||||||||||
Corporate unallocated operating expenses and adjustments | 1,250 | 1,326 | 2,369 | 3,183 | |||||||||||
Total | $ | 14,289 | $ | 15,908 | $ | 28,976 | $ | 33,008 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Operating Income (loss) | |||||||||||||||
Network Equipment | $ | 520 | $ | (1,503 | ) | $ | 322 | $ | (4,343 | ) | |||||
Network Integration | 1,533 | 1,704 | 2,038 | 2,550 | |||||||||||
Total before intersegment adjustments | 2,053 | 201 | 2,360 | (1,793 | ) | ||||||||||
Corporate unallocated operating loss and adjustments | (1,250 | ) | (1,327 | ) | (2,368 | ) | (3,182 | ) | |||||||
Total | $ | 803 | $ | (1,126 | ) | $ | (8 | ) | $ | (4,975 | ) |
Consolidated amounts | Network Equipment | Network Integration | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Revenue: | ||||||||||||||||||||
GAAP revenue | $ | 42,714 | $ | 43,124 | $ | 24,519 | $ | 21,769 | $ | 18,195 | $ | 21,355 | ||||||||
Cost of revenue | ||||||||||||||||||||
GAAP cost of revenue | 27,622 | 28,342 | 12,560 | 10,585 | 15,062 | 17,757 | ||||||||||||||
Stock-based charges | (25 | ) | (33 | ) | (25 | ) | (33 | ) | — | — | ||||||||||
Non-GAAP adjusted cost of revenue | $ | 27,597 | $ | 28,309 | $ | 12,535 | $ | 10,552 | $ | 15,062 | $ | 17,757 | ||||||||
Gross profit: | ||||||||||||||||||||
GAAP gross profit | $ | 15,092 | $ | 14,782 | $ | 11,959 | $ | 11,184 | $ | 3,133 | $ | 3,598 | ||||||||
Stock-based charges | 25 | 33 | 25 | 33 | — | — | ||||||||||||||
Non-GAAP adjusted gross profit | $ | 15,117 | $ | 14,815 | $ | 11,984 | $ | 11,217 | $ | 3,133 | $ | 3,598 | ||||||||
Operating expenses: | ||||||||||||||||||||
GAAP Product development and engineering | $ | 5,310 | $ | 5,392 | $ | 5,310 | $ | 5,391 | $ | — | $ | — | ||||||||
Stock-based charges | (44 | ) | (50 | ) | (44 | ) | (50 | ) | — | — | ||||||||||
Non-GAAP Product development and engineering | $ | 5,266 | $ | 5,342 | $ | 5,266 | $ | 5,341 | $ | — | $ | — | ||||||||
GAAP Selling, general & administrative | 7,729 | 9,192 | 6,129 | 7,297 | 1,600 | 1,894 | ||||||||||||||
Stock-based charges | (76 | ) | (103 | ) | (67 | ) | (87 | ) | (9 | ) | (16 | ) | ||||||||
Severance | (159 | ) | (211 | ) | (159 | ) | (211 | ) | — | — | ||||||||||
Litigation costs | (41 | ) | (82 | ) | — | (82 | ) | (41 | ) | — | ||||||||||
Non-GAAP Selling, general & administrative | $ | 7,453 | $ | 8,796 | $ | 5,903 | $ | 6,917 | $ | 1,550 | $ | 1,878 | ||||||||
GAAP Corporate charges (1) | 1,250 | 1,324 | — | — | — | — | ||||||||||||||
Stock-based charges | (100 | ) | (142 | ) | — | — | — | — | ||||||||||||
Severance | (37 | ) | — | — | — | — | — | |||||||||||||
Litigation costs | (4 | ) | (96 | ) | — | — | — | — | ||||||||||||
Non-GAAP Corporate charges | $ | 1,109 | $ | 1,086 | $ | — | $ | — | $ | — | $ | — | ||||||||
GAAP operating expenses | $ | 14,289 | $ | 15,908 | $ | 11,439 | $ | 12,688 | $ | 1,600 | $ | 1,894 | ||||||||
Non-GAAP operating expenses | $ | 13,828 | $ | 15,224 | $ | 11,169 | $ | 12,258 | $ | 1,550 | $ | 1,878 | ||||||||
GAAP operating income (loss) (1) | $ | 803 | $ | (1,126 | ) | $ | 520 | $ | (1,504 | ) | $ | 1,533 | $ | 1,704 | ||||||
Stock-based charges | 245 | 328 | 136 | 170 | 9 | 16 | ||||||||||||||
Severance | 196 | 211 | 159 | 211 | — | — | ||||||||||||||
Litigation costs | 45 | 178 | — | 82 | 41 | — | ||||||||||||||
Non-GAAP adjusted operating income (loss) | $ | 1,289 | $ | (409 | ) | $ | 815 | $ | (1,041 | ) | $ | 1,583 | $ | 1,720 | ||||||
Consolidated amounts | Network Equipment | Network Integration | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Net Income (loss) (1) | ||||||||||||||||||||
GAAP net income (loss) | $ | (280 | ) | $ | (2,267 | ) | $ | 200 | $ | (1,577 | ) | $ | 1,011 | $ | 575 | |||||
Stock-based charges | 245 | 328 | 136 | 170 | 9 | 16 | ||||||||||||||
Severance | 196 | 211 | 159 | 211 | — | — | ||||||||||||||
Litigation costs | 45 | 178 | — | 82 | 41 | — | ||||||||||||||
Income tax impact | (18 | ) | (71 | ) | — | (33 | ) | (16 | ) | — | ||||||||||
Non-GAAP adjusted net income (loss) | $ | 188 | $ | (1,621 | ) | $ | 495 | $ | (1,147 | ) | $ | 1,045 | $ | 591 | ||||||
Weighted average number of shares | 6,988 | 7,360 | ||||||||||||||||||
GAAP EPS - Basic and Diluted | $ | (0.04 | ) | $ | (0.31 | ) | ||||||||||||||
Non-GAAP EPS - Basic and Diluted | $ | 0.03 | $ | (0.22 | ) |
(1) | Consolidated amounts presented in the above tables include corporate unallocated operating expenses and intersegment adjustments which are not reflected in Network Equipment or Network Integration, therefore amounts may not total. |
Consolidated amounts | Network Equipment | Network Integration | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Revenue: | ||||||||||||||||||||
GAAP revenue | $ | 81,487 | $ | 85,442 | $ | 46,704 | $ | 44,034 | $ | 34,783 | $ | 41,408 | ||||||||
Cost of revenue | ||||||||||||||||||||
GAAP cost of revenue | 52,519 | 57,409 | 23,200 | 22,089 | 29,319 | 35,320 | ||||||||||||||
Stock-based charges | (55 | ) | (53 | ) | (55 | ) | (53 | ) | — | — | ||||||||||
Non-GAAP adjusted cost of revenue | $ | 52,464 | $ | 57,356 | $ | 23,145 | $ | 22,036 | $ | 29,319 | $ | 35,320 | ||||||||
Gross profit: | ||||||||||||||||||||
GAAP gross profit | $ | 28,968 | $ | 28,033 | $ | 23,504 | $ | 21,945 | $ | 5,464 | $ | 6,088 | ||||||||
Stock-based charges | 55 | 53 | 55 | 53 | — | — | ||||||||||||||
Non-GAAP adjusted gross profit | $ | 29,023 | $ | 28,086 | $ | 23,559 | $ | 21,998 | $ | 5,464 | $ | 6,088 | ||||||||
Operating expenses: | ||||||||||||||||||||
GAAP Product development and engineering | $ | 10,435 | $ | 10,970 | $ | 10,435 | $ | 10,970 | $ | — | $ | — | ||||||||
Stock-based charges | (93 | ) | (73 | ) | (93 | ) | (73 | ) | — | — | ||||||||||
Non-GAAP Product development and engineering | $ | 10,342 | $ | 10,897 | $ | 10,342 | $ | 10,897 | $ | — | $ | — | ||||||||
GAAP Selling, general & administrative | 16,174 | 18,855 | 12,748 | 15,317 | 3,426 | 3,538 | ||||||||||||||
Stock-based charges | (126 | ) | (130 | ) | (111 | ) | (122 | ) | (15 | ) | (8 | ) | ||||||||
Severance | (249 | ) | (472 | ) | (249 | ) | (472 | ) | — | — | ||||||||||
Litigation costs | (475 | ) | (82 | ) | — | (82 | ) | (475 | ) | — | ||||||||||
Non-GAAP Selling, general & administrative | $ | 15,324 | $ | 18,171 | $ | 12,388 | $ | 14,641 | $ | 2,936 | $ | 3,530 | ||||||||
GAAP Corporate charges (1) | 2,367 | 3,183 | — | — | — | — | ||||||||||||||
Stock-based charges | (183 | ) | (219 | ) | — | — | — | — | ||||||||||||
Severance | (37 | ) | — | — | — | — | — | |||||||||||||
Litigation costs | (4 | ) | (96 | ) | — | — | — | — | ||||||||||||
Warrant revaluation charges | — | (406 | ) | — | — | — | — | |||||||||||||
Non-GAAP Corporate charges | $ | 2,143 | $ | 2,462 | $ | — | $ | — | $ | — | $ | — | ||||||||
GAAP operating expenses | $ | 28,976 | $ | 33,008 | $ | 23,183 | $ | 26,287 | $ | 3,426 | $ | 3,538 | ||||||||
Non-GAAP operating expenses | $ | 27,809 | $ | 31,530 | $ | 22,730 | $ | 25,538 | $ | 2,936 | $ | 3,530 | ||||||||
GAAP operating income (loss) (1) | $ | (8 | ) | $ | (4,975 | ) | $ | 321 | $ | (4,342 | ) | $ | 2,038 | $ | 2,550 | |||||
Stock-based charges | 457 | 475 | 259 | 248 | 15 | 8 | ||||||||||||||
Severance | 286 | 472 | 249 | 472 | — | — | ||||||||||||||
Litigation costs | 479 | 178 | — | 82 | 475 | — | ||||||||||||||
Warrant revaluation charges | — | 406 | — | — | — | — | ||||||||||||||
Non-GAAP adjusted operating income (loss) | $ | 1,214 | $ | (3,444 | ) | $ | 829 | $ | (3,540 | ) | $ | 2,528 | $ | 2,558 | ||||||
Consolidated amounts | Network Equipment | Network Integration | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Net Income (loss) (1) | ||||||||||||||||||||
GAAP net income (loss) | $ | (1,348 | ) | $ | (6,484 | ) | $ | (129 | ) | $ | (4,429 | ) | $ | 1,209 | $ | 895 | ||||
Stock-based charges | 457 | 475 | 259 | 248 | 15 | 8 | ||||||||||||||
Severance | 286 | 472 | 249 | 472 | — | — | ||||||||||||||
Litigation costs | 479 | 178 | — | 82 | 475 | — | ||||||||||||||
Warrant revaluation charges | — | 406 | — | — | — | — | ||||||||||||||
Income tax impact | (192 | ) | (71 | ) | — | (33 | ) | (190 | ) | — | ||||||||||
Non-GAAP adjusted net income (loss) | $ | (318 | ) | $ | (5,024 | ) | $ | 379 | $ | (3,660 | ) | $ | 1,509 | $ | 903 | |||||
Weighted average number of shares | 7,059 | 7,322 | ||||||||||||||||||
GAAP EPS - Basic and Diluted | $ | (0.19 | ) | $ | (0.89 | ) | ||||||||||||||
Non-GAAP EPS - Basic and Diluted | $ | (0.05 | ) | $ | (0.69 | ) |
(1) | Consolidated amounts presented in the above tables include corporate unallocated operating expenses and intersegment adjustments which are not reflected in Network Equipment or Network Integration, therefore amounts may not total. |