MRV Achieves Strong Revenue Growth and Profitability in Third Quarter Of 2006
Wednesday October 25, 4:05 pm ET
Revenue Increases 36% Year-Over-Year - Strong Demand for Network Equipment and Optical Components
CHATSWORTH, Calif., Oct. 25 /PRNewswire-FirstCall/ -- MRV COMMUNICATIONS, INC. (Nasdaq: MRVC - News), a leading provider of products and services for out-of-band networking, WDM and optical transport, optical Ethernet and optical components, today reported its results for the third quarter ended September 30, 2006. The Company's GAAP results reflect the adoption of SFAS 123® regarding the expensing of non-cash share-based compensation in 2006.
Revenue for the third quarter of 2006 was above guidance at $89.6 million, an increase of 36% over revenue of $65.9 million in the third quarter of 2005. Revenue for the nine months ended September 30, 2006, was $253.8 million, an increase of 32% over revenue of $192.5 million for the nine months ended September 30, 2005. GAAP net income for the third quarter of 2006 was $0.2 million, or $0.00 per share, an improvement of $3.4 million when compared to a GAAP net loss of $3.1 million, or $(0.03) per share, for the third quarter of 2005. Non-GAAP net income for the third quarter of 2006, which excludes non- cash share-based compensation, was $1.1 million, or $0.01 per share, as compared with a non-GAAP net loss of $3.1 million, or $(0.03) per share, for the third quarter of 2005.
"We are very pleased with our third quarter performance as we reported revenue above guidance and were able to reach profitability one quarter earlier than expected," commented Noam Lotan, President & CEO of MRV. "We are clearly executing on the goals we set out last year to grow our business by expanding our optical systems and Metro Ethernet business and fully capitalizing on FTTP deployments and these factors were instrumental in our ability to reach profitability earlier than originally expected."
"Our optical component business had another solid quarter with sales up 86% year-over-year, posting improved gross margin of 21% and profitability," continued Mr. Lotan. "We saw continued demand for our Integrated Triplexer being used in Verizon's FTTH roll out and our DWDM transceivers being used by major OEMs. In addition, our backlog for GPON transceivers continued to grow and we feel we are in a great position to capitalize on future GPON deployments that are expected to increase significantly in 2007. Another key factor in our third quarter performance was 23% sequential growth in our internally developed network equipment sales which were strengthened by a large order from a tier one carrier in Japan and also continued solid demand in North America. In Europe our network integration businesses posted another solid quarter driven by strength from our operations in Italy."
Kevin Rubin, Chief Financial Officer of MRV, commented, "We were pleased with our ability to keep our third quarter operating expenses flat sequentially as we continued to work hard to control costs, which helped lead to profitability from both of our business units. Looking ahead, we believe our business trends remain positive and we are on track to remain profitable in the fourth quarter."
Operational Highlights
* The Company's network equipment (internally developed) grew over 23%
sequentially and benefited from a large optical transport equipment
sale to a tier one carrier in Japan.
* The Company's optical components business, LuminentOIC, posted 86%
year-over-year revenue growth and a 250 bps sequential improvement in
gross margin to 21%. Demand was primarily driven by sales of
fiber-optic components such as the DWDM transceiver product line being
used by major OEMs and its ONT Triplexer Transceiver. LuminentOIC also
saw good demand for its next generation GPON ONT Triplexer solution.
* The Company's network integration business in Europe enjoyed another
strong quarter with a 23% year-over-year increase in revenue.
Product Highlights
* Today, the Company announced the industry's first multi-rate 120km DWDM
XFP optical transceiver for metro and long haul applications. The
transceiver addresses the growing need for 10G DWDM interfaces to go
further in a cost effective manner. The XFP is currently sampling, and
will have general availability in Q1 of 2007.
* In October, the Company announced a new compact carrier-class Metro
Ethernet demarcation series. The OptiSwitch® OS 900 series is
designed to deliver managed Fast Ethernet and Gigabit Ethernet services
in carriers' access networks.
* Also in October, the Company announced the 5250 Power Control Series
family of power control devices, which provides power management for
intelligent power distribution in data centers, including 3 phase
power.
* In September, the Company announced that its LambdaDriver® LD1600 and
LD800 wave division multiplexers ("WDM") had achieved Network Equipment
Building Standard ("NEBS") Level 3 certification, the leading product
safety and reliability standard for telecommunications equipment.
* Also in September, the Company announced a partnership with Spirent
Communications to incorporate MRV's Media Cross Connect and LX 4000T
console server into the Spirent Test Automation Lab.
Fourth Quarter 2006 Outlook
MRV currently estimates that revenues for the fourth quarter of 2006 will be in the range of $95 million to $99 million. Net income per share is currently forecasted to be approximately $0.01 per share on a non-GAAP basis, which excludes the effect of SFAS No. 123® share-based compensation expense (which is forecasted to be approximately $0.01 per share). On a GAAP basis, net income per share is currently forecasted to be approximately break-even per share.
Other Information
MRV will host a conference call to discuss its third quarter of 2006 financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). For parties in the United States and Canada, call 800-257-3401 to access the conference call. International parties can access the call at 303-262-2125. A financial presentation designed to guide participants through the call will also be available. MRV will offer its live audio broadcast of the conference call, along with the financial presentation, on the MRV Investor website at ir.mrv.com. For replay information, please visit the MRV Investor website at ir.mrv.com.
Non-GAAP Financial Measures
MRV provides all financial information required in accordance with accounting principles generally accepted in the United States ("GAAP"). In the first quarter of 2006, MRV adopted Financial Accounting Standards Board Statement No. 123®, which requires companies to recognize the compensation cost associated with share-based payments in their financial statements. As a result, the financial statements for the three and nine months ended September 30, 2006 include the new share-based compensation expense of $862,000 and $2.5 million, respectively; however, comparable prior year periods are not required to be restated. Therefore, to supplement MRV's financial statements presented in accordance with GAAP, MRV has provided non-GAAP financial information, which is adjusted to exclude all share-based compensation expense. In addition to excluding all share-based compensation expense, impairments of purchased intangible assets have also been excluded. MRV believes that the presentation of non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. MRV management uses the non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of its business. |
