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MRV Reports Second-Quarter Results

CHATSWORTH, California, Aug. 2, 2017 /PRNewswire/ --MRV Communications (NASDAQ: MRVC), a provider of innovative network solutions for service providers, data center operators and enterprises, reported financial results for the three- and six-months ended June 30, 2017.

Financial Reporting

The Company uses certain non-GAAP financial measures and a reconciliation of the non-GAAP measures to GAAP measures is provided in the attached table.

Second Quarter 2017 Results

  • Revenue was $19.7 million, compared to $21.6 million in Q2'16 and $21.2 million in Q1'17, reflecting lower European and North American product revenue slightly offset by increased service revenue.
  • GAAP gross margin was 51.5%, compared to 46.7% in Q2'16 and 50.6% in Q1'17.  Non-GAAP gross margin was 51.6%, compared to 48.3% in Q2'16 and 50.6% in Q1'17. The increase was primarily due to greater service revenue at higher margins as well as the impact of geographic and product mix.
  • GAAP operating expenses were $12.1 million, compared to $12.1 million in Q2'16 and $11.5 million in Q1'17.  Non-GAAP operating expenses were $10.5 million, compared to $11.8 million in Q2'16 and $10.9 million in Q1'17.
  • GAAP operating loss was $1.9 million, compared to $2.1 million in Q2'16 and $0.8 million in Q1'17.  Non-GAAP operating loss was to $0.3 million, compared to $1.3 million in Q2'16 and $0.2 million in Q1'17.
  • GAAP net loss increased to $2.1 million, or $0.31 per share, compared to $2.0 million, or $0.29 per share, in Q2'16 and $1.0 million, or $0.15 per share, in Q1'17.
  • Non-GAAP net loss was $0.4 million, or $0.07 per share, compared to $1.3 million, or $0.19 per share, in Q2'16 and $0.5 million, or $0.08 per share, in Q1'17.

Six-months Ended June 30, 2017 Results as compared to Six-months Ended June 30, 2016 Results

  • Revenue was $40.9 million, compared to $40.5 million.
  • GAAP gross margin was 51.0%, compared to 49.1%.  Non-GAAP gross margin was 51.1%, compared to 50.1%.
  • GAAP net loss was $3.1 million, or $0.46 per share, compared to $5.9 million, or $0.84 per share.
  • Non-GAAP net loss improved to $1.0 million, or $0.14 per share, from $4.8 million, or $0.68 per share.

Due to the pending merger, management will not conduct a conference call.

The Offer and Merger

On July 2, 2017, MRV Communications entered into an Agreement and Plan of Merger (as it may be amended or supplemented from time to time, the "Merger Agreement"), among MRV, ADVA NA Holdings, Inc., a Delaware corporation ("Parent"), and Golden Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"). The Merger Agreement provides that Merger Sub commence a cash tender offer (the "Offer") to purchase all of the issued and outstanding shares of MRV common stock at a price per share equal to $10.00. Following completion of the Offer, Merger Sub will merge with and into the Company (the "Merger"), with MRV continuing as the surviving corporation and as a wholly owned subsidiary of Parent.

On July 17, 2017, pursuant to the Merger Agreement, the Offer was commenced and is scheduled to expire at midnight on August 11, 2017, unless extended. The completion of the Offer is conditional upon, among other things, the tender of at least a majority of the MRV's common stock then outstanding. Additional information regarding the Offer and the Merger, including the conditions to their consummation, may be found in the Schedule 14D-9 (as amended) filed on July 17, 2017 by the Company with the U.S. Securities and Exchange Commission (the "SEC") and the Schedule TO (as amended) filed on July 17, 2017 with the SEC by ADVA Optical Networking SE, Parent and Merger Sub.

About MRV Communications

MRV Communications (NASDAQ: MRVC) enables service providers, data center operators and enterprises to make their networks smarter, faster and easier to operate.  MRV's end-to-end portfolio includes innovative packet, optical and software platforms designed for flexibility and reliability. To learn more about MRV visit www.mrv.com and follow us on Twitter @MRVC.

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 loss, non-GAAP net loss and non-GAAP basic and diluted loss per share. The company's non-GAAP financial measures exclude the impact of stock-based compensation expense, litigation costs, severance and related transition costs, transaction costs and costs related to the sale of Tecnonet S.p.A., 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.

Forward Looking Statements

This press release may contain statements, including statements related to the transactions contemplated by the Merger Agreement, 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 "will likely result," "are expected to," " is anticipated," "appear," "believe," "could," "estimate," "expect," "intend," "may," "should," "outlook," "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 units 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. 

With respect to the transactions contemplated by the Merger Agreement, there is no assurance that the transactions will be consummated. Potential risks and uncertainties related to such transactions include, among others, the impact of the announcement of the pending transactions on the Company's business, its financial and operating results and its employees, suppliers and customers; factors affecting the feasibility and timing of the consummation of the transactions, including, without limitation, the ability to satisfy the conditions to closing contained in the Merger Agreement and Offer; and risks related to realization of the expected benefits of these transactions to the Company and its stockholders.

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, 2016 and its quarterly report on Form 10-Q for the quarter ended March 31, 2017, 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 August 2, 2017 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.

 

 

MRV Communications, Inc.     

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)






Three Months Ended
 June 30,


Six Months Ended
 June 30,


2017


2016


2017


2016

Revenue:








Product revenue

$

16,283



$

18,658



$

34,408



$

34,665


Service revenue

3,442



2,926



6,492



5,801


Total revenue

19,725



21,584



40,900



40,466


Cost of Revenue:








Cost of product

8,666



10,285



17,935



17,880


Cost of services

902



1,228



2,104



2,712


Total cost of revenue

9,568



11,513



20,039



20,592


Gross profit

10,157



10,071



20,861



19,874


Operating expenses:








Product development and engineering

4,610



5,125



9,338



10,469


Selling, general and administrative

7,455



7,007



14,223



15,024


Total operating expenses

12,065



12,132



23,561



25,493


Operating loss

(1,908)



(2,061)



(2,700)



(5,619)


Other income (expense), net

(155)



74



(358)



(203)


Loss before provision for income taxes

(2,063)



(1,987)



(3,058)



(5,822)


Provision for income taxes

34



36



80



97


Net loss

$

(2,097)



$

(2,023)



$

(3,138)



$

(5,919)










Net loss per share — basic

$

(0.31)



$

(0.29)



$

(0.46)



$

(0.84)


Net loss per share — diluted

$

(0.31)



$

(0.29)



$

(0.46)



$

(0.84)










Weighted average number of shares:








Basic

6,786



7,092



6,784



7,042


Diluted

6,786



7,092



6,784



7,042


 

 

MRV Communications, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except par values)

(unaudited)



June 30,
 2017


December 31,
 2016

Assets




Current assets:




Cash and cash equivalents

$

24,333



$

25,116


Restricted cash and time deposits

4,918



272


Accounts receivable, net

16,926



14,295


Inventories

9,374



9,657


Other current assets

2,177



2,378


Total current assets

57,728



51,718


Property and equipment, net

2,985



3,130


Intangible assets, net

893



1,064


Other assets

264



348


Total assets

$

61,870



$

56,260






Liabilities and stockholders' equity




Current liabilities:




Deferred consideration payable

$

233



$

233


Accounts payable

9,296



8,353


Accrued liabilities

9,974



9,195


Deferred revenue

7,223



6,146


Other current liabilities

4,778



156


Total current liabilities

31,504



24,083


Other long-term liabilities

3,968



3,478


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 — 8,435 shares in 2017 and 8,425 shares in 2016




Outstanding — 6,812 shares in 2017 and 6,802 shares in 2016

270



270


Additional paid-in capital

1,288,135



1,287,336


Accumulated deficit

(1,242,501)



(1,239,308)


Treasury stock — 1,623 shares in 2017 and 2016

(18,098)



(18,098)


Accumulated other comprehensive loss

(1,408)



(1,501)


Total stockholders' equity

26,398



28,699


Total liabilities and stockholders' equity

$

61,870



$

56,260


 

 

MRV Communications, Inc.

Consolidated Non-GAAP reconciliation

(Unaudited, in thousands except per share data)




Three Months
Ended June 30,


Six Months Ended
June 30,


Three
Months
Ended
March 31,




2017


2016


2017


2016


2017


Revenue:












  GAAP revenue


$

19,725



$

21,584



$

40,900



$

40,466



$

21,175



Cost of revenue












GAAP cost of revenue


9,568



11,513



20,039



20,592



10,471



Stock-based charges


(21)



(28)



(36)



(70)



(15)



Severance and transition costs




(325)





(325)





Non-GAAP adjusted cost of revenue


9,547



11,160



20,003



20,197



10,456















Gross profit:












GAAP gross profit


10,157



10,071



20,861



19,874



10,704



Stock-based charges


21



28



36



70



15



Severance and transition costs




325





325





Non-GAAP adjusted gross profit


10,178



10,424



20,897



20,269



10,719



Non-GAAP Gross Margin %


51.6

%


48.3

%


51.1

%


50.1

%


50.6

%














Operating expenses:












  GAAP Product development and engineering


4,610



5,125



9,338



10,469



4,728



Stock-based charges


(39)



(63)



(98)



(139)



(59)



    Non-GAAP Product development and engineering


4,571



5,062



9,240



10,330



4,669















GAAP Selling, general & administrative:


7,455



7,007



14,223



15,024



6,768



Stock-based charges


(329)



(259)



(670)



(488)



(341)



Severance and transition costs


(167)





(186)





(19)



Litigation costs


126



(56)



(8)



(91)



(134)



Divestiture costs






(5)



(68)



(5)



Merger costs


(1,174)





(1,174)







Non-GAAP Selling, general & administrative


5,911



6,692



12,180



14,377



6,269















GAAP operating expenses:


12,065



12,132



23,561



25,493



11,496



Stock-based charges


(368)



(322)



(768)



(627)



(400)



Severance and transition costs


(167)





(186)





(19)



Litigation costs


126



(56)



(8)



(91)



(134)



Divestiture costs






(5)



(68)



(5)



Merger costs


(1,174)





(1,174)







Non-GAAP operating expenses


$

10,482



$

11,754



$

21,420



$

24,707



$

10,938


























 

 

MRV Communications, Inc.

Consolidated Non-GAAP reconciliation

(continued)

(Unaudited, in thousands except per share data)




Three Months
Ended June 30,


Six Months Ended
June 30,


Three Months Ended March 31,




2017


2016


2017


2016


2017














GAAP operating loss:


$

(1,908)



$

(2,061)



$

(2,700)



$

(5,619)



$

(792)



Stock-based charges


389



350



804



697



415



Severance and transition costs


167



325



186



325



19



Litigation costs


(126)



56



8



91



134



Divestiture costs






5



68



5



Merger costs


1,174





1,174







Non-GAAP operating loss


(304)



(1,330)



(523)



(4,438)



(219)















Net loss:












GAAP net loss


(2,097)



(2,023)



(3,138)



(5,919)



(1,041)



Stock-based charges


389



350



804



697



415



Severance and transition costs


167



325



186



325



19



Litigation costs


(126)



56



8



91



134



Divestiture costs






5



68



5



Income tax impact


50



(22)



(3)



(36)



(54)



Merger costs


1,174





1,174







Non-GAAP adjusted net loss


$

(443)



$

(1,314)



$

(964)



$

(4,774)



$

(522)















Weighted average number of shares - Basic and Diluted


6,786



7,092



6,784



7,042



6,802



GAAP EPS - Basic and Diluted


$

(0.31)



$

(0.29)



$

(0.46)



$

(0.84)



$

(0.15)



Non-GAAP EPS - Basic and Diluted


$

(0.07)



$

(0.19)



$

(0.14)



$

(0.68)



$

(0.08)



 

IR Contact: 
Cathy Mattison/Kirsten Chapman
LHA Investor Relations
(415) 433-3777
ir@mrv.com

View original content:http://www.prnewswire.com/news-releases/mrv-reports-second-quarter-results-300498265.html

SOURCE MRV Communications LTD.

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