- Annual revenues up 10.9% to EUR 556.8 million
- Pro forma operating income of EUR 24.8 million(4.5% of revenues)
- 2020 outlook including potential impact of COVID-19: Revenues >EUR 580 million; Pro forma operating income >5% of revenues
ADVA (ISIN: DE0005103006), a leading provider of open networking solutions for the delivery of cloud and mobile services, reported financial results for Q4 and full year 2019 ended on December 31, 2019. The results have been prepared in accordance with International Financial Reporting Standards (IFRS).
Q4 2019 IFRS financial results
Revenues for Q4 2019 increased by 4.7% to EUR 151.1 million from EUR 144.3 million in Q3 2019 and grew significantly by 14.9% from EUR 131.5 million in the same year-ago period. Revenues for Q4 2019 were at the upper end of the guidance corridor the company provided on October 24, 2019, of between EUR 142 million and EUR 152 million.
Pro forma operating income for Q4 2019 was EUR 10.3 million (6.8% of revenues), up from EUR 7.4 million (5.1% of revenues) in Q3 2019 and above EUR 8.1 million (6.2% of revenues) in the same year-ago period. Pro forma operating income for Q4 2019 was also at the upper end of the company’s guidance range of between 5% and 7% of revenues.
Operating income for Q4 2019 of EUR 5.4 million increased from EUR 3.2 million reported for Q3 2019 but decreased compared to EUR 6.3 million in the same year-ago quarter. This is mainly due to tariffs on China-made products in the US market, the strength of the US dollar and one-off expenses of EUR 3.2 million in Q4 2019. These one-off expenses are primarily driven by selective head count reduction and site closures.
Net income for Q4 2019 was EUR 2.5 million and increased by 15.2% from EUR 2.2 million in Q3 2019; however, it declined from EUR 3.6 million in Q4 2018.
At quarter-end, the company’s cash and cash equivalents totaled EUR 54.3 million, representing a substantial increase of 41.3% compared to EUR 38.4 million at the end of Q3 2019.
The company’s net debt decreased by EUR 13.8 million to EUR 61.1 million from EUR 74.9 million at the end of Q3 2019.
Net working capital at quarter-end was EUR 128.2 million compared to EUR 137.8 million at the end of Q3 2019. Although revenues increased in Q4, ADVA managed to decrease net working capital by EUR 9.6 million, mainly due to reduction of trade account receivables.
For the full year 2019, revenues increased by 10.9% to EUR 556.8 million from EUR 502.0 million in 2018. The positive development is due to solid demand from all customer groups across all technology areas. Except for Q1 2019, quarterly revenues increased sequentially in 2019.
Pro forma gross profit increased by 5.2% from EUR 185.6 million in 2018 to EUR 195.4 million in 2019. Pro forma gross margin, however, decreased from 37.0% in 2018 to 35.1% in 2019. The margin was impacted by the US tariffs on Chinese-made goods in the US market and the strong US dollar.
Pro forma operating income for 2019 was EUR 24.8 million (4.5% of revenues), compared to EUR 23.3 million (4.6% of revenues) in 2018. Operating income for 2019 was EUR 12.0 million compared to EUR 15.0 million in 2018 and decreased by EUR 3.0 million. Operating income 2019 includes one-off expenses of EUR 5.7 million. These one-off expenses are primarily driven by selective head count reduction and site closures.
In 2019, ADVA generated a net income of EUR 7.0 million, down by EUR 2.7 million after EUR 9.7 million in the prior year.
Basic and diluted earnings per share in 2019 amounted to positive EUR 0.14, both compared to basic and diluted earnings per share of EUR 0.19 in 2018.
Today, we report one of the best results in our 25-year company history