On April 22, ADVA reported Q1 2020 revenue of EUR 132.7 million, a decrease of 12.2% from EUR 151.1 million in Q4 2019 and an increase of 3.5% from EUR 128.2 million in the same year-ago period.
Pro forma operating income for Q1 2020 was negative EUR 1.7 million (-1.3% of revenues), substantially down from EUR 10.3 million (6.8% of revenues) in Q4 2019 and also down from EUR 2.7 million (2.1% of revenues) in the same year-ago period. Operating income for Q1 2020 of negative EUR 4.0 million significantly decreased from EUR 5.4 million reported for Q4 2019 and decreased from EUR 0.9 million in the same year-ago quarter. ADVA reported a net loss of EUR 7.2 million in Q1 2020 that decreased significantly from a net income of EUR 2.5 million in Q4 2019 and declined from a net income of EUR 1.0 million in Q1 2019.
The company attributed its decline in profitability mainly to the lockdown in Wuhan at the beginning of the first quarter and to significant project-related shifts in the product and customer mix in Q1 2020.
“We are currently experiencing a crisis that is unprecedented in the history of the modern, industrialized world. Covid-19 knows no national borders, affects all continents and creates severe challenges for all of us,” said Brian Protiva, CEO, ADVA. “As a network equipment supplier, we serve some of the world’s most critical communications infrastructures. As such, we’re doing everything humanly possible to remain fully operational, while protecting the safety and health of our employees, partners and customers. Order entry from a few large customers was strong in the first quarter, and our main focus is on maintaining our ability to deliver. We have developed a very agile and flexible supply chain, and our development and distribution centers have so far largely avoided the crisis. Apart from a few minor exceptions, our production and supply chains are intact. Clearly, this can worsen suddenly, and that’s why we have developed a strategy that enables us to compensate for production and delivery bottlenecks due to possible location closures.”
“Despite elevated levels of uncertainty on the demand and supply side, we operate in a framework of financial resilience,” commented Uli Dopfer, CFO, ADVA. “We were able to improve our operating cash flow compared to the year-ago quarter while our cash balance of EUR 52.8 million remained on a comfortable level. We have a strong order backlog and are confident that we will grow sequentially in Q2 2020. So far, we haven’t utilized any of the Covid-19-related government loans. However, we are reviewing all meaningful opportunities and actively manage our working capital to ensure balance sheet stability and financial flexibility.”
