ADVA Optical Networking: Manages Supply Constraints and Increases Revenue and Profitability in Q3 2021

ADVA manages supply constraints and increases revenue and profitability in the third quarter of 2021

* Quarterly revenue up 3.5% year-on-year to € 151.8 million
* Pro forma operating profit up sharply by 17.7% to EUR 13.0 million (8.6% of sales)
* Outlook for the 2021 financial year unchanged: Turnover 580 – 610 million euros; Pro forma operating profit 7.0% – 10.0% of sales

Munich, Germany. October 21, 2021. ADVA (ISIN: DE0005103006, FSE: ADV), a leading provider of open network solutions for the delivery of cloud and mobile services, announced its financial results for the third quarter of 2021 ended September 30, 2021. The results were been prepared in accordance with International Financial Reporting Standards (IFRS).

Financial summary for Q3 2021¹

¹ Potential difference due to rounding
² Q3 2021 including € 2.1 million of exceptional charges

IFRS financial results for Q3 2021
Revenue in Q3 2021 reached 151.8 million euros, up 1.6% from 149.4 million euros in Q2 2021, also up 3.5% from 146.7 million euros in Q3 2020. The increase in revenue is mainly driven by growth in demand for supplier communication services (CSP).

The pro forma gross margin in Q3 2021 decreased by 8.9%, reaching 52.2 million euros (34.4% of sales) against 57.3 million euros (38.3% of sales sales) in Q2 2021 and increased by 0.4% compared to 51.9 million euros (35.4% of sales) published in the third quarter of 2020. The decrease in gross margin compared to in the previous quarter is mainly attributable to the semiconductor crisis, which led to an increase in purchasing costs.

The pro forma operating profit for the third quarter of 2021 amounted to 13.0 million euros (8.6% of sales), down 9.7% compared to 14.4 million euros (9 , 7% of sales) published in the second quarter of 2021. Compared to the third quarter of 2020, pro forma operating profit improved significantly by 17.7% compared to 11.1 million euros (7.5% of turnover).

The operating result for the third quarter of 2021 of 9.5 million euros decreased substantially by 27.2% compared to the 13.0 million euros published in the second quarter of 2021 and slightly decreased by 2.8 % compared to 9.8 million euros for the third quarter of 2020. The operating income for the third quarter of 2021 was impacted by exceptional charges related to the announced merger with ADTRAN for an amount of 2.1 million euros .

Net income reached 18.5 million euros in the third quarter of 2021, up sharply by 54.0% compared to 12.0 million euros in the second quarter of 2021, and up sharply by 177.0% compared to to 6.7 million euros in the third quarter of 2020. The significant increase in net income is mainly due to a tax benefit of 8.8 million euros resulting from the increase in deferred tax assets.

The company’s cash and cash equivalents were € 100.5 million, an increase of € 15.5 million from € 85.0 million at the end of the second quarter of 2021 . the end of the third quarter of 2020.

Net cash at the end of the third quarter 2021 amounts to 20.6 million euros compared to net cash of 3.9 million euros at the end of the second quarter 2021 or net debt of 35.0 million d euros at the end of the third quarter of 2020.

Net working capital at the end of the quarter was 130.8 million euros and decreased by 2.0 million euros compared to 132.8 million euros at the end of the second quarter 2021 and increased of 6.8 million euros compared to 124.0 million euros at the end of the third quarter of 2020.

Management commentary
“Customer demand for our solutions remains strong and we are fighting hard to overcome today’s supply chain challenges,” said Brian Protiva, CEO of ADVA. “We also look forward to the planned business combination with ADTRAN. Our industry is in the early stages of an unprecedented investment cycle in fiber expansion, propelled by the goal of delivering high-speed connectivity to all homes, businesses and future 5G infrastructure. This expansion of digital infrastructure requires new innovative solutions and promotes convergence at the edge of the network. With ADTRAN, we are creating a market and innovation leader in this space that offers the industry’s most comprehensive and unique portfolio of solutions based on openness, scalability, security and automation controlled by software.”

“Given the global semiconductor crisis, the third quarter was really tough. Nonetheless, we have managed to grow and generate strong margins. In addition, we were able to generate cash, and with more than 100 million euros in cash and net cash of around 21 million euros, we further improved our level of financial flexibility ”, said Uli Dopfer, CFO, ADVA. “The semiconductor crisis will last longer than expected, and the weeks and months ahead will certainly be demanding again. Nonetheless, we are confident that with these strong numbers and record high order books, we will be able to overcome these supply challenges and close the year with good results in our outlook. “

Financial outlook 2021
For the 2021 financial year, ADVA still expects sales of between 580 and 610 million euros and a pro forma operating profit of between 7.0% and 10.0% of sales.

The company will release its financial results for the fourth quarter and full year 2021 on February 24, 2022.

Conference call details
ADVA will hold a conference call for analysts and investors today, October 21, 2021, to discuss third quarter 2021 results. Company CEO Brian Protiva and CFO Uli Dopfer will host the call at 3:00 p.m. CEST (9:00 a.m. EDT). A question-and-answer session will follow the management presentations.

A corresponding presentation is available on the ADVA website:
https://www.adva.com/en/about-us/investors/financial-results/conference-calls

The complete 9M 2021 quarterly statement (January – September) is available in PDF format:
https://www.adva.com/en/about-us/investors/financial-results/financial-statements

A replay of the call will be available here:
https://www.adva.com/en/about-us/investors/financial-results/conference-calls

Forward-looking statements
The economic projections and forward-looking statements contained in this document relate to future facts. These projections and forward-looking statements are subject to risks which cannot be foreseen and which are beyond the control of ADVA. ADVA is therefore not in a position to make any representation as to the accuracy of economic projections and forward-looking statements or their impact on the financial position of ADVA or the market for ADVA’s shares.

Use of pro forma financial information
ADVA provides consolidated pro forma financial results in this press release only as supplemental financial information to assist investors and the financial community in making meaningful comparisons of ADVA’s results of operations from financial period to period. other. ADVA believes that these pro forma consolidated financial results are useful because they exclude the non-cash charges related to stock option programs and the amortization and impairment of goodwill and intangible assets related to acquisitions, which do not reflect not the results of operations of the company for the period presented. . In addition, expenses related to mergers and acquisitions and restructuring measures are not included. This pro forma information is not prepared in accordance with IFRS and should not be considered a substitute for historical information presented in accordance with IFRS.

About ADVA
ADVA is a company founded on innovation and focused on the success of our customers. Our technology is the building blocks of a shared digital future and strengthens networks around the world. We are continually developing revolutionary hardware and software that dominates the networking industry and creates new business opportunities. It is these open connectivity solutions that enable our customers to deliver the cloud and mobile services that are vital for today’s society and for imagining new tomorrows. Together, we are building a truly connected and sustainable future. For more information on how we can help you, please visit us at www.adva.com.

Published by:
ADVA Optical Networking SE, Munich, Germany
www.adva.com

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