ADVA increases its revenues for the second quarter of 2022

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MUNICH–(BUSINESS WIRE)–ADVA (ISIN: DE0005103006, FSE: ADV), a leading provider of open networking solutions for cloud and mobile service delivery, has released its final financial results for the second quarter 2022 ended 30 June 2022. The results have been prepared in accordance with International Financial Reporting Standards (IFRS).

Q2 2022 Financial Summary 1

(in thousands of euros)

Q2 2022

Q2 2021

To change

Q1 2022

To change

Revenue

166,320

149,354

11.4%

170 498

(2.5)%

Pro forma gross margin

54,336

57,274

(5.1)%

53,405

1.7%

as a % of turnover

32.7%

38.3%

(5.6)pp

31.3%

1.4pp

Pro forma EBIT

6,435

14,415

(55.4)%

7,812

(17.6)%

as a % of turnover

3.9%

9.7%

(5.8)pp

4.6%

(0.7)pp

Operating result 2

4,655

13,036

(64.3)%

5,976

(22.1)%

Net revenue

7,291

12,001

(39.2)%

6,179

18.0%

(in thousands of euros)

June 30, 2022

June 30, 2021

To change

March 31, 2022

To change

Cash and cash equivalents

63,187

85,023

(25.7)%

73,002

(13.4)%

Net cash (+)/net debt (-)

(946)

3,876

(124.4)%

763

(224.0)%

Net working capital

183,030

132,767

37.9%

164,402

11.3%

1 Potential inconsistencies in table values ​​are based on rounding differences.

2 Q2 2022 including 0.4 million euros and Q1 2022 including 0.5 million euros of exceptional charges.

IFRS Q2 2022 financial results

Revenues in Q2 2022 reached €166.3 million, down 2.5% from €170.5 million in Q1 2022 and up 11.4% from €149.4 million euros in Q2 2021. The increase in revenues in Q2 2022 is mainly due to a growth in demand from network operators and Internet content providers (ICPs). In addition, the strengthening of the US dollar led to higher revenues in North America.

Q2 2022 pro forma gross margin increased by 1.7% to €54.3m (32.7% of revenue) from €53.4m (31.3% of revenue) in Q1 2022 and decreased by 5.1% against 57.3 million euros (38.3% of revenues). revenues) reported in Q2 2021. Gross profit was impacted by higher purchasing costs caused by the semiconductor crisis and a stronger US dollar.

Pro forma EBIT for Q2 2022 was €6.4 million (3.9% of revenue) and decreased by 17.6% compared to €7.8 million (4.6% of revenues) published in Q1 2022 and decreased sharply by 55.4% compared to €14.4 million (9.7% of revenues) in Q2 2021.

Q2 2022 operating income of €4.7 million decreased by 22.1% compared to the €6.0 million reported for Q1 2022 and significantly decreased by 64.3% compared to 13.0 million euros from Q2 2021. The operating result for Q2 2022 was impacted by extraordinary expenses related to the announcement of the merger with Adtran for an amount of 0.4 million EUR (Q1 2022 0.5 million EUR and Q2 2021 EUR 0).

Net income reached €7.3 million in Q2 2022, increased by 18.0% compared to €6.2 million in Q1 2022 and significantly decreased by 39.2% compared to 12, 0 million euros in Q2 2021.

The company’s cash and cash equivalents totaled €63.2 million, a decrease of €9.8 million compared to €73.0 million at the end of the first quarter of 2022. cash and cash equivalents year-over-year decreased by €21.8 million, compared to €85.0 million at the end of the second quarter of 2021. The company invested non-operating cash in measures to secure delivery.

Net debt at the end of the second quarter of 2022 amounted to €0.9 million compared to net cash of €0.8 million at the end of the first quarter of 2022 and net cash of €3.9 million. euros at the end of the second quarter of 2021.

At the end of the quarter, net working capital amounted to €183.0 million and increased by €18.6 million compared to €164.4 million at the end of the first quarter of 2022 and increased significantly by €50.3 million compared to €132.8 million at the end of the second quarter of 2021. The increase Net working capital compared to the prior year quarter is mainly attributable to increased inventory levels to secure the supply chain.

Management commentary

“The last few months have been very exciting for us as a company,” said Brian Protiva, CEO of ADVA. “We have reached several important milestones in our journey of joining forces with Adtran and advancing our operational activities. Our revenues in the first half of 2022 reached a record level and our order books are well filled. We continue to see strong customer demand coupled with a high level of complexity and cost in sourcing, production and logistics. This environment will continue for the foreseeable future. Our teams work tirelessly on solutions to meet market demand, and we work closely with our customers every day to provide them with the best possible support in the development of their network. So far, we have mastered the challenges very well and look forward to the rest of the year positively.

“During the last quarter, we made further progress compared to the quarter of the previous year. This underlines the positive market environment and the tailwind we are experiencing on the demand side,” said Uli Dopfer, CFO of ADVA. “However, in the second half of the year, we will also face challenges resulting from increased procurement costs and tight supply chains. Despite the increase in inventory, our liquidity stands at a satisfactory level of 63 In the context of a still high order volume and a rising dollar combined with ever higher costs in the supply chains, we have decided to adjust the outlook for the financial year in accordingly, which we announced in an ad hoc notification on July 15. We are raising our revenue guidance to between 680 and 730 million euros and reducing our pro forma EBIT margin guidance by one percentage point to between 5% and 9%.

Financial outlook 2022

For fiscal 2022, ADVA expects revenue of between €680 million and €730 million and pro forma EBIT of between 5.0% and 9.0% of revenue.

The company will release its third quarter 2022 financial results on October 27, 2022.

Conference call details

ADVA will host a conference call for analysts and investors today, July 28, 2022, to discuss second quarter 2022 results. Company CEO Brian Protiva, CTO Christoph Glingener 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 full 2022 half-year report (January – June) is available in PDF format here:

https://www.adva.com/en/about-us/investors/financial-results/financial-reports

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 events. These forward-looking projections and statements are subject to risks that cannot be predicted and are beyond ADVA’s control. ADVA is therefore unable to make any representation as to the accuracy of any economic projections and forward-looking statements or their impact on ADVA’s financial condition or the market for ADVA’s shares.

Use of pro forma financial information

ADVA provides consolidated pro forma financial results in this press release solely as supplemental financial information to assist investors and the financial community in making meaningful comparisons of ADVA’s operating results from one financial period to another. . ADVA believes that these pro forma consolidated financial results are helpful as they exclude non-cash charges related to stock option programs and amortization and impairment of acquisition-related goodwill and intangibles, which do not reflect the results of the company’s operations for the period presented. . In addition, non-recurring 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 continually develop breakthrough 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 essential to today’s society and to imagine new tomorrows. Together, we are building a truly connected and sustainable future. For more information on how we can help you, visit us at www.adva.com.

Published by:

ADVA Optical Networking SE, Munich, Germany

www.adva.com

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