VIAVI ANNOUNCES FIRST QUARTER FISCAL 2021 RESULTS First .
VIAVI ANNOUNCES FIRST QUARTER FISCAL 2021 RESULTSFirst Quarter Net revenue of 284.7 million, down 15.1 million or 5.0% year-over-yearGAAP operating margin of 11.0%, up 410 bps year-over-yearNon-GAAP operating margin of 21.3%, up 370 bps year-over-yearGAAP EPS of 0.06, up 0.03 or 100.0% year-over-yearNon-GAAP EPS of 0.21, up 0.03 or 16.7% year-over-yearSan Jose, California, November 5, 2020 — VIAVI (NASDAQ: VIAV) today reported results for its first fiscal quarterended October 3, 2020.First quarter of fiscal 2021 net revenue was 284.7 million. GAAP net income was 14.3 million, or 0.06 per share. NonGAAP net income was 48.3 million, or 0.21 per share.Fourth quarter of fiscal 2020 net revenue was 266.6 million. GAAP net income was 26.7 million or 0.12 per share. NonGAAP net income was 40.8 million, or 0.18 per share.First quarter of fiscal 2020 net revenue was 299.8 million. GAAP net income was 6.8 million, or 0.03 per share. NonGAAP net income was 42.9 million, or 0.18 per share.“Our OSP business segment delivered an all-time record quarterly revenue driven by strong demand in 3D Sensing andAnti-Counterfeiting products. Together with a stabilizing demand environment in NSE and operating expense control, weachieved a non-GAAP EPS at 0.21 which exceeded both the guidance range and a year ago levels,” said Oleg Khaykin,VIAVI’s President and Chief Executive Officer. “We expect NSE revenue to continue recovering and strengthen sequentiallydriven by Field Instruments. OSP strength is expected to continue with modest pullback in 3D Sensing and Anti-Counterfeitingproducts, inline with fiscal Q2 seasonality.”Khaykin added, “The near-term macroeconomic uncertainty notwithstanding, we expect calendar 2021 to be a growthyear driven by the secular demand for 5G Wireless, Fiber and 3D Sensing.”Financial Overview:The tables below (in millions, except percentage, and per share data) provide comparisons of quarterly results to priorperiods, including sequential quarterly and year-over-year changes. A full reconciliation between the GAAP and non-GAAPmeasures included in the tables is contained in this release under the section titled “Use of Non-GAAP (Adjusted) FinancialMeasures.”First Quarter Ended October 3, 2020GAAP ResultsNet revenueGross marginOperating marginIncome from operationsNet income per share Q1Q4Q1FY 2021FY 2020FY 2020284.7 59.5 %11.0 %31.30.061266.6 58.0 %16.2 %43.30.12299.858.2 %6.9 %20.70.03ChangeQ/Q6.8 %150 bps(520) bps(27.7)%(50.0)%Y/Y(5.0)%130 bps410 bps51.2 %100.0%
Non-GAAP ResultsQ1Q4Q1FY 2021FY 2020FY 2020Non-GAAP gross marginNon-GAAP operating marginNon-GAAP income from operationsNon-GAAP net earnings per share62.8 %21.3 %60.60.2161.7 %19.6 %52.30.18ChangeQ/Q61.3 %17.6 %52.70.18Y/Y110 bps170 bps15.9 %16.7 %150 bps370 bps15.0 %16.7 %Net Revenue by SegmentNetwork Enablement Service EnablementOptical Security and Performance ProductsTotal Q1% of NetQ4Q1FY 2021revenueFY 2020FY 2020ChangeQ/QY/Y162.121.4101.256.9% 7.5%35.6%180.9 27.558.2198.920.980.0(10.4)%(22.2)%73.9 %(18.5)%2.4 %26.5 %284.7100.0% 266.6 299.86.8 %(5.0)% Americas, Asia-Pacific and EMEA customers represented 33.5%, 38.0% and 28.5%, respectively, of total net revenuefor the quarter ended October 3, 2020. As of October 3, 2020, the Company held 595.5 million in total cash, short-term restricted cash and investments. As of October 3, 2020, the Company had 460.0 million aggregate principal amount of 1.00% Senior Convertible Notesand 225.0 million aggregate principal amount of 1.75% Senior Convertible Notes with a total net carrying value of 606.6 million classified as long-term debt. During the fiscal quarter ended October 3, 2020, the Company generated 63.9 million of cash from operations.Business Outlook for the Second Quarter of Fiscal 2021For the second quarter of fiscal 2021 ending January 2, 2021, the Company expects net revenue to be between 280 millionto 300 million and non-GAAP earnings per share to be between 0.18 and 0.20.With respect to our expectations above, the Company has not reconciled non-GAAP net income per share to GAAP netincome (loss) per share in this press release because it is unable to provide a meaningful or accurate estimate of certain reconcilingitems described in the “Use of Non-GAAP (Adjusted) Financial Measures” section below and the information is not availablewithout unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of certain items,including certain charges related to restructuring, acquisition, integration and related charges. In addition, the Company believessuch reconciliations would imply a degree of precision that may be confusing or misleading to investors.Conference CallThe Company will discuss these results and other related matters at 1:30 p.m. Pacific Time on November 5, 2020 in a livewebcast, which will also be archived for replay on the Company’s website at https://investor.viavisolutions.com. The Companywill post supplementary slides outlining the Company’s latest financial results on https://investor.viavisolutions.com under the“Quarterly Results” section concurrently with this earnings press release. This press release is being furnished as a Current Reporton Form 8-K with the Securities and Exchange Commission, and will be available at www.sec.gov.2
About VIAVI SolutionsVIAVI (NASDAQ: VIAV) is a global provider of network test, monitoring and assurance solutions for communicationsservice providers, enterprises, network equipment manufacturers, government and avionics. We help these customers harness thepower of instruments, automation, intelligence and virtualization to Command the network. VIAVI is also a leader in lightmanagement solutions for 3D sensing, anti-counterfeiting, consumer electronics, industrial, automotive and defense applications.Learn more about VIAVI at www.viavisolutions.com. Follow us on VIAVI Perspectives, LinkedIn, Twitter, YouTube andFacebook.Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933and Section 21E of the Securities Exchange Act of 1934. These statements include any expectation, anticipation or guidance asto future financial performance, including future revenue, gross margin, operating expense, operating margin, profitability targets,cash flow and other financial metrics, as well as the impact and duration of certain trends and market position and conditions.These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from thoseprojected. In particular, the Company’s ability to predict future financial performance continues to be difficult due to, amongother things: (a) continuing general limited visibility across many of our product lines; (b) quarter-over-quarter product mixfluctuations, which can materially impact profitability measures due to the broad gross margin ranges across our portfolio;(c) consolidations in our customer base; (d) unforeseen changes in the demand for current and new products, technologies,services, delays or unforeseen events in the roll-out of new industry platforms such as 5G or evolving technology such as 3Dsensing and customer purchasing delays as they assess or transition to such new technologies and/or architectures, all of whichlimit near-term demand visibility, and could negatively impact potential revenue; (e) continued decline of average selling pricesacross our businesses; (f) notable seasonality and a significant level of in-quarter book-and-ship business; (g) various productand manufacturing transfers, site consolidations, product discontinuances and the restructuring and workforce reduction plans,including the plan announced during the first quarter of fiscal 2019 that may cause short-term disruptions; (h) challengesintegrating the businesses the Company has acquired and realizing all of the expected benefits and savings; (i) the ability of oursuppliers and contract manufacturers to meet production and delivery requirements to our forecasted demand; (j) potentialdisruptions or delays to our manufacturing and operations due to natural disasters such as the recent wildfires in NorthernCalifornia; (k) the uncertain and ongoing impact to our supply chain of tariffs, sanctions and other trade measures imposed bydomestic and foreign governments and the possibility of escalation of “trade wars” and retaliatory measures between nations; (l)the impact of infectious disease outbreaks, epidemics, and pandemics including the effects of the COVID-19 global pandemic onour financial results, revenues, customer demand, business operations and manufacturing and on the business operations of ourcustomers, contract manufacturers and suppliers; and (m) inherent uncertainty related to global markets, including recessions andtightening liquidity and the effect of such markets on demand for our products. These forward-looking statements involve risksand uncertainties that could cause actual results to differ materially from those projected. For more information on these risks,please refer to the “Risk Factors” section included in the Company’s Annual Report on Form 10-K for the fiscal year endedJune 27, 2020 filed with the Securities and Exchange Commission. The forward-looking statements contained in this press releaseare made as of the date thereof and the Company assumes no obligation to update such statements.3
Contact InformationInvestors:Bill it omThe following financial tables are presented in accordance with GAAP, unless otherwise specified.-SELECTED PRELIMINARY FINANCIAL DATA -4
VIAVI SOLUTIONS INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in millions, except per share data)(unaudited)PRELIMINARYThree Months EndedOctober 3, 2020Net revenueCost of revenues Amortization of acquired technologiesGross profitOperating expenses:Research and developmentSeptember 28, 2019284.7 107.1299.8117.08.28.4169.4174.448.851.5Selling, general and administrativeAmortization of other intangibles81.48.593.28.7Restructuring and related (benefits) charges(0.6)0.3Total operating expensesIncome from operationsInterest income and other income, netInterest expenseIncome before taxesProvision for income 8.3Net income 14.3 6.8Net income per share:BasicDiluted 0.06 0.06 0.030.03Shares used in per share calculations:Basic228.8231.8DilutedThe preliminary financial statements are estimated based on our current information.5229.4236.4
VIAVI SOLUTIONS INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in millions, unaudited)PRELIMINARYOctober 3, 2020ASSETSCurrent assets:Cash and cash equivalentsShort-term investmentsRestricted cashAccounts receivable, netInventories, netPrepayments and other current assets Total current assetsProperty, plant and equipment, netGoodwill, netIntangibles, netDeferred income taxesOther non-current assetsTotal assetsJune 27, 2020590.8 3 1,824.4 1,776.3 45.2 51.260.121.4—53.051.454.622.62.849.648.4Total current liabilitiesLong-term debtOther non-current liabilities227.5606.6236.5232.8600.9231.2Total stockholders’ equity753.8711.4LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities:Accounts payableAccrued payroll and related expensesDeferred revenueAccrued expensesCurrent portion of long-term debtOther current liabilitiesTotal liabilities and stockholders’ equity 1,824.4 The preliminary financial statements are estimated based on our current information.61,776.3
VIAVI SOLUTIONS INC.REPORTABLE SEGMENT INFORMATION(in millions, unaudited)PRELIMINARYThree Months Ended October 3, 2020Network and Service EnablementNetworkEnablementNet revenue Gross profit162.1 103.5Gross marginNetwork andServiceEnablementServiceEnablement21.4 14.363.8 %183.5Optical Securityand PerformanceProducts 117.866.8 %Operating incomeOperating margin101.2 — 61.064.2 %60.3 %13.347.37.2 %ConsolidatedGAAP MeasuresOther Items (1)(9.4)284.7169.459.5 %(29.3)31.346.7 %11.0 %Three Months Ended September 28, 2019Network and Service EnablementNetworkEnablementNet revenueGross profitGross margin 198.9128.064.4 %Network andServiceEnablementServiceEnablement 20.9 12.6219.8140.660.3 %Optical Securityand PerformanceProducts 80.0 —43.364.0 %54.1 %Operating income22.330.4Operating margin10.1 %38.0 %ConsolidatedGAAP MeasuresOther Items (1)(9.5) 299.8174.458.2 %(32.0)20.76.9 %(1) Other items include charges unrelated to core operating performance primarily consisting of stock-based compensation, amortization of acquisition-relatedintangibles, restructuring and related charges, changes in fair value of contingent consideration liabilities and other charges unrelated to core operatingperformance.The preliminary financial schedules are estimated based on our current information.7
Use of Non-GAAP (Adjusted) Financial MeasuresThe Company provides non-GAAP gross margin, non-GAAP operating margin, non-GAAP net income (loss), non-GAAPnet income (loss) per share, EBITDA and adjusted EBITDA financial measures as supplemental information regarding theCompany’s operational performance. The Company uses the measures disclosed in this release to evaluate the Company’shistorical and prospective financial performance, as well as its performance relative to its competitors. Specifically,management uses these items to further its own understanding of the Company’s core operating performance, which theCompany believes represent its performance in the ordinary, ongoing and customary course of its operations. Accordingly,management excludes from core operating performance items such as those relating to certain purchase price accountingadjustments, amortization of acquisition-related intangibles and inventory step-up, stock-based compensation, restructuring,separation costs, changes in fair value of contingent consideration liabilities and certain investing expenses and non-cashactivities that management believes are not reflective of such ordinary, ongoing and customary course activities. Additionally,the Company excludes the results of discontinued operations in calculating non-GAAP net income (loss), non-GAAP netincome (loss) per share, EBITDA and adjusted EBITDA for all periods reported. The Company believes excluding these itemsenables investors to evaluate more clearly and consistently the Company’s core operational performance.The Company believes providing this additional information allows investors to see Company results through the eyesof management. The Company further believes that providing this information allows investors to better understand theCompany’s financial performance and, importantly, to evaluate the efficacy of the methodology and information used bymanagement to evaluate and measure such performance.The non-GAAP adjustments described in this release are excluded by the Company from its non-GAAP financialmeasures. The non-GAAP adjustments, and the basis for excluding them, are outlined below.Cost of revenues, costs of research and development and costs of selling, general and administrative: The Company’sGAAP presentation of gross margin and operating expenses may include (i) additional depreciation and amortization fromchanges in estimated useful life and the write-down of certain property, equipment and intangibles that have been identified fordisposal but remained in use until the date of disposal, (ii) workforce related charges such as severance, retention bonuses andemployee relocation costs related to formal restructuring plans, (iii) costs for facilities not required for ongoing operations, andcosts related to the relocation of certain equipment from these facilities and/or contract manufacturer facilities, (iv) stock-basedcompensation, (v) changes in fair value of contingent consideration liabilities and (vi) other charges unrelated to our coreoperating performance comprising mainly of acquisition related transaction costs, amortization of acquisition related inventorystep-up, integration costs related to acquired entities, litigation and other costs and contingencies unrelated to current and futureoperations, including transformational initiatives such as the implementation of simplified automated processes, siteconsolidations, and reorganizations. The Company excludes these items in calculating non-GAAP gross margin, non-GAAPoperating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDA and adjusted EBITDA. TheCompany believes excluding these items enables investors to evaluate more clearly and consistently the Company’s coreoperational performance.Amortization of intangibles: The Company includes amortization expense related to intangibles in its GAAP presentationof cost of revenues and operating expense. The Company excludes these significant non-cash items in calculating non-GAAPgross margin, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, EBITDAand adjusted EBITDA, because it believes doing so provides investors a clearer and more consistent view of the Company’score operating performance in terms of cost of revenues and operating expenses.Non-cash interest expense and other expense: The Company incurred non-cash interest expense accretion of the debtdiscount on its convertible debt instruments. The Company eliminates this in calculating non-GAAP net income (loss), andnon-GAAP net income (loss) per share, EBITDA and adjusted EBITDA, because it believes that in so doing, it can provideinvestors a clearer and more consistent view of the Company’s core operating performance.8
Income tax expense or benefit: The Company excludes certain non-cash tax expense or benefit items, such as theutilization of net operating losses where valuation allowances were released, intra-period tax allocation benefit, the impact ofUS tax reform enacted in December 2017 and the tax effect for amortization of non-tax deductible intangible assets, incalculating non-GAAP net income (loss) and non-GAAP net income (loss) per share. As the Company excludes amortizationof certain intangibles assets in calculating non-GAAP gross margin, non-GAAP operating profit or (loss) and non-GAAPincome or (loss), the tax benefit resulting from non-tax deductible amortization expense of such intangible assets is alsoexcluded from non-GAAP metrics. The Company believes excluding these items enables investors to evaluate more clearlyand consistently the Company’s core operational performance.Interest, taxes, depreciation, amortization and other adjustments: The Company’s EBITDA calculation primarily excludesinterest income and other income (expense), interest expense, taxes, depreciation and amortization, and other items that are notpart of its core operating performance described above. The Company’s adjusted EBITDA excludes items in addition to theitems excluded from the EBITDA calculation such as stock-based compensation, restructuring and related charges (benefits),gain or loss on sale of available for-sale investments, changes in fair value of contingent consideration liabilities arising fromprior acquisitions and other charges related to activities that are not part of its core operating performance described above.Management believes adjusted EBITDA is a helpful indicator of the Company’s core operational cash flow.Non-GAAP financial measures are not in accordance with, preferable to, or an alternative for, generally acceptedaccounting principles in the United States. The GAAP measure most directly comparable to non-GAAP net income (loss) isnet income (loss). The GAAP measure most directly comparable to non-GAAP net income (loss) per share is net income (loss)per share. The Company believes these GAAP measures alone are not
About VIAVI Solutions VIAVI (NASDAQ: VIAV) is a global provider of network test, monitoring and assurance solutions for communications service providers, enterprises, network equipment manufacturers, government and avionics. We help these customers harness the power of instruments, automation, intelligence and virtualization to Command the network.
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VIAVI Solutions Inc. Subject: The VIAVI OLS-3x series consists of small and rugged optical light sources for quick, easy, and convenient field insertion loss measurement and continuity checks. Created Date: 4/2/2020 3:17:10 PM
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Oracle Investor Relations Oracle Corporate Communications 1.650.607.0349 1.212.508.7935 ken.bond@oracle.com deborah.hellinger@oracle.com Oracle Announces Fiscal 2021 Fourth Quarter and Fiscal Full Year Financial Results Q4 FY21 Earnings Per Share: GAAP EPS up 39% to 1.37, Non-GAAP EPS up 29% to 1.54 .
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