MRV Communications, Inc. (OTCQB: MRVC) (“MRV” or the “Company”),
a leading provider of optical communications network infrastructure
equipment and integration and managed services, today announced
financial results for the first quarter ended March 31, 2012.
Commenting on the Company’s financial results, Barry Gorsun, MRV’s chief
executive officer, stated, “We continue to focus on enhancing
stockholder value and strengthening our business units. This is most
recently evidenced by the sale of CES and the declaration of a special
dividend to stockholders. Additionally, we continue to invest in our
technology and product development and improve our operating efficiency
and sales and marketing efforts to ensure that our subsidiaries are well
positioned in the market. MRV remains focused on providing best-in-class
products and services to the global markets we serve and in maximizing
returns to stockholders.”
Gorsun continued, “Market conditions continue to remain challenging for
network equipment providers as carriers and enterprises, particularly in
Europe, continue to defer capital spending. MRV was not immune to this
trend, and our financial results were negatively affected as a result,
primarily due to softness across the Eurozone. We are working closely
with our customers to ensure that we can quickly respond to their needs.
Additionally, we continued to add new customers to our business in the
first quarter, especially in our OCS division. We believe there is
opportunity for improvement starting in the second quarter of 2012.”
MRV reported first quarter 2012 revenue of $48.4 million, compared with
revenue of $65.5 million in the fourth quarter of 2011 and $53.2 million
in the first quarter of 2011. The year-over-year decline was driven by a
9% decline in the Network Equipment group attributable to lower service
and product revenues in the Company’s Optical Communications Systems
(“OCS”) division and a 14% decline in the Network Integration group
attributable to a continued weak European telecom marketplace. The
consolidated revenue decline was partially offset by a decrease in
intersegment sales between each of these two business units, which are
eliminated in the Company’s consolidated reporting.
Gross margin for the first quarter of 2012 was 35.5%, compared with
36.6% in the fourth quarter of 2011 and 37.0% in the first quarter of
2011. The year-over-year decrease in gross profit is attributable to the
decline in revenue at the Company’s Network Integration and Network
Equipment groups, offset by the decline in intersegment sales between
business units. In the Network Equipment group, margins were negatively
impacted by a more competitive operating environment which increased
pricing pressure, specifically at OCS. In the Network Integration group,
margins were down due to a change in revenue mix at the Company’s
Operating expenses in the first quarter of 2012 were $20.8 million, or
43% of revenue, compared with $22.5 million, or 35% of revenue in the
fourth quarter of 2011 and $19.9 million, or 37% of revenue in the first
quarter of 2011. The comparison to the fourth quarter of 2011 excludes
the previously disclosed $7.1 million goodwill impairment charge related
to MRV’s Scandinavian subsidiary. The modest year-over-year consolidated
increase is attributable to an increase in severance costs, offset by a
decrease in stock-based compensation expense. The increase in operating
expenses at the Network Equipment group can be attributed to sales force
expansion and increased sales and marketing activities, offset by lower
General and Administrative expenses. At the Company’s Network
Integration group, operating expenses increased primarily due to an
increase in severance expenses.
Operating loss for the first quarter of 2012 was $3.6 million, compared
with an operating loss of $0.3 million in the first quarter of 2011.
This was the result of the decrease in gross profit and an increase in
operating expenses. Operating losses included share-based compensation
expense of $0.2 million and $0.8 million in 2012 and 2011, respectively.
As previously disclosed, the Company closed the sale of CES Creative
Electronic Systems SA on March 29, 2012 through a definitive agreement
with a consortium of European private equity firms led by Vinci Capital
SA. The purchase price payable on closing was $28.3 million, with $2.8
million of the proceeds going into an indemnification escrow account to
be released on March 31, 2013 if no claims are brought by the purchaser.
Subsequent to the quarter close, and as publicly announced by the
Company on May 2, 2012, MRV’s Board of Directors declared a special
dividend of $0.30 per share payable on May 25, 2012 to stockholders of
record as of May 16, 2012. This dividend is part of the Company's
ongoing effort to maximize the return to stockholders. Additional
information about this dividend can be found on the Company’s IR section
of its website under the Investor FAQ section.
A more detailed discussion of MRV’s 2012 first quarter financial
results, including an analysis by business segment, is included in the
Management Discussion and Analysis section of the Company’s Form 10-Q
About MRV Communications, Inc.
MRV Communications, Inc. is a leading global provider of carrier
Ethernet, wavelength division multiplexing optical transport,
infrastructure management equipment and solutions, as well as network
integration and managed services. MRV’s solutions enable the delivery
and provisioning of next-generation optical transport and carrier
Ethernet services over any fiber infrastructure. MRV provides equipment
and services worldwide to telecommunications service providers,
enterprises, and governments, enabling network evolution and increasing
efficiency, while reducing complexity and costs. Through its
subsidiaries, MRV operates development centers in North America and
Europe, along with support centers and sales offices around the world.
For more information about MRV, visit http://www.mrv.com.
Forward Looking Statements
This press release may contain 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 "expects," "anticipates," "envisions,"
"estimates," "targets," "intends," "plans," "believes," "seeks,"
"should," "could," "forecasts," "projects," 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
segments 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.
For further information regarding risks and uncertainties associated
with MRV's businesses, please refer to the "Management's Discussion and
Analysis of Results of Operations and Financial Condition" 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, 2011, and
its quarterly report on Form 10-Q for the quarter ended March 31, 2012,
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 March 31, 2012 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
(Financial tables follow)
MRV Communications, Inc.
Statement of Operations
(In thousands, except per share data)
Net income (loss) from continuing operations attributable to MRV
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Wednesday, September 21, 2011
Marriott Marquis, New York
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