EX-99.1 2 ex991-2021q1earningspressr.htm EX-99.1 Document

FOR IMMEDIATE RELEASE

Ciena Reports Fiscal First Quarter 2021 Financial Results

HANOVER, Md. - March 4, 2021 - Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal first quarter ended January 30, 2021.

Q1 Revenue: $757.1 million

Q1 Net Income per Share: $0.35 GAAP; $0.52 adjusted (non-GAAP)

Share Repurchases: Repurchased approximately 0.3 million shares of common stock for an aggregate price of $13.2 million during the quarter


"We delivered solid revenue and profitability in the first fiscal quarter in the face of continued challenging market conditions and a dynamic industry environment," said Gary Smith, president and CEO of Ciena. "Our strong market position has enabled us to start the year largely as expected, and we are leveraging our innovation leadership and competitive advantage to deliver on our long-term growth opportunities."

For the fiscal first quarter 2021, Ciena reported revenue of $757.1 million as compared to $832.9 million for the fiscal first quarter 2020.

Ciena's GAAP net income for the fiscal first quarter 2021 was $55.3 million, or $0.35 per diluted common share, which compares to a GAAP net income of $62.3 million, or $0.40 per diluted common share, for the fiscal first quarter 2020.

Ciena's adjusted (non-GAAP) net income for the fiscal first quarter 2021 was $81.3 million, or $0.52 per diluted common share, which compares to an adjusted (non-GAAP) net income of $81.7 million, or $0.52 per diluted common share, for the fiscal first quarter 2020.

Fiscal First Quarter 2021 Performance Summary
The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release.
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GAAP Results
Q1Q1
FY 2021FY 2020Y-T-Y*
Revenue$757.1 $832.9 (9.1)%
Gross margin47.3 %44.5 %2.8 %
Operating expense$282.1 $292.6 (3.6)%
Operating margin10.0 %9.4 %0.6 %
Non-GAAP Results
Q1Q1
FY 2021FY 2020Y-T-Y*
Revenue$757.1 $832.9 (9.1)%
Adj. gross margin48.0 %45.1 %2.9 %
Adj. operating expense$253.0 $266.4 (5.0)%
Adj. operating margin14.6 %13.1 %1.5 %
Adj. EBITDA$133.8 $135.3 (1.1)%
* Denotes % change, or in the case of margin, absolute change
Revenue by Segment
Q1 FY 2021Q1 FY 2020
Revenue%**Revenue%**
Networking Platforms
Converged Packet Optical$512.3 67.7 $591.5 71.0 
Routing and Switching (1)
64.3 8.5 67.5 8.1 
Total Networking Platforms576.6 76.2 659.0 79.1 
Platform Software and Services49.9 6.6 51.9 6.2 
Blue Planet Automation Software and Services16.9 2.2 15.5 1.9 
Global Services
Maintenance Support and Training67.6 8.9 61.8 7.4 
Installation and Deployment39.6 5.2 34.9 4.2 
Consulting and Network Design6.5 0.9 9.8 1.2 
Total Global Services113.7 15.0 106.5 12.8 
Total$757.1 100.0 $832.9 100.0 
** Denotes % of total revenue
(1) Ciena renamed its former “Packet Networking” product line as “Routing and Switching” effective as of the beginning of fiscal 2021. This change, affecting only the presentation of such information, was made on a prospective basis and does not impact comparability of previous financial results or the composition of this product category.
Additional Performance Metrics for Fiscal First Quarter 2021
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Revenue by Geographic Region
Q1 FY 2021Q1 FY 2020
Revenue% **Revenue% **
Americas$496.6 65.6 $574.0 68.9 
Europe, Middle East and Africa155.4 20.5 130.0 15.6 
Asia Pacific105.1 13.9 128.9 15.5 
Total$757.1 100.0 $832.9 100.0 
** Denotes % of total revenue
No customer represented more than 10% of revenue for the fiscal quarter
Cash and investments totaled $1.3 billion
Cash flow used in operations totaled $7.3 million
Average days' sales outstanding (DSOs) were 93
Accounts receivable, net balance was $700.0 million
Unbilled contract asset, net balance was $85.5 million
Inventories totaled $389.7 million, including:
Raw materials: $123.4 million
Work in process: $11.4 million
Finished goods: $257.0 million
Deferred cost of sales: $38.9 million
Reserve for excess and obsolescence: $(41.0) million
Product inventory turns were 3.2
Headcount totaled 7,042

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal First Quarter 2021 Results
Today, Thursday, March 4, 2021, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website an accompanying investor presentation for its unaudited fiscal first quarter 2021 results.

Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena's website.

Notes to Investors

Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, Securities and Exchange Commission ("SEC") filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: "We delivered solid revenue and profitability in the first fiscal quarter in the face of continued challenging market conditions and a dynamic industry environment," and "Our strong market position has enabled us to start the year
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largely as expected, and we are leveraging our innovation leadership and competitive advantage to deliver on our long-term growth opportunities."

Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our customers and their business; our ability to execute successfully our business and growth strategies; the duration and severity of the COVID-19 pandemic and its impact on macroeconomic conditions, economic activity, demand for our technology solutions, short- and long-term changes in customer or end user needs, continuity of supply chain, our business operations, liquidity, and financial results; changes in network spending or network strategy by customers; seasonality and the timing and size of customer orders, including our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; supply chain disruptions and the level of success relating to efforts to optimize Ciena's operations; changes in foreign currency exchange rates affecting revenue and operating expense; factors beyond our control such as natural disasters, acts of war or terrorism, and public health emergencies, including the COVID-19 pandemic; the impact of the Tax Cuts and Jobs Act; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; changes in estimates of prospective income tax rates and any adjustments to Ciena's provisional estimates whether related to further guidance, analysis or otherwise; and the other risk factors disclosed in its Annual Report on Form 10-K filed with the SEC on December 18, 2020 and included in its Quarterly Report on Form 10-Q for the first quarter of fiscal 2021 to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release.

Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendices A and B to this press release set forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release.

About Ciena. Ciena (NYSE: CIEN) is a networking systems, services and software company. We provide solutions that help our customers create the Adaptive Network™ in response to the constantly changing demands of their users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most agile networks with automation, openness and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.
 

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CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended
 January 30,February 1,
 20212020
Revenue: 
Products$597,220 $687,215 
Services159,910 145,697 
Total revenue757,130 832,912 
Cost of goods sold: 
Products315,098 389,013 
Services84,141 73,364 
Total cost of goods sold399,239 462,377 
Gross profit357,891 370,535 
Operating expenses: 
Research and development132,741 130,900 
Selling and marketing97,278 107,066 
General and administrative39,993 42,468 
Amortization of intangible assets5,910 5,853 
Significant asset impairments and restructuring costs5,867 4,472 
Acquisition and integration costs307 1,819 
Total operating expenses282,096 292,578 
Income from operations75,795 77,957 
Interest and other income (loss), net(1,121)3,646 
Interest expense(7,360)(8,815)
Loss on extinguishment and modification of debt— (646)
Income before income taxes67,314 72,142 
Provision for income taxes11,966 9,814 
Net income$55,348 $62,328 
Net Income per Common Share
Basic net income per common share$0.36 $0.40 
Diluted net income per potential common share $0.35 $0.40 
Weighted average basic common shares outstanding155,174 154,334 
Weighted average dilutive potential common shares outstanding 1
156,583 155,738 

1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per common share for the first quarter of fiscal 2021 includes 1.4 million shares underlying certain stock option and stock unit awards.
Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per common share for the first quarter of fiscal 2020 includes 1.4 million shares underlying certain stock option and stock unit awards.
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CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
January 30,
2021
October 31,
2020
ASSETS 
Current assets: 
Cash and cash equivalents$1,029,237 $1,088,624 
Short-term investments151,434 150,667 
Accounts receivable, net700,025 719,405 
Inventories389,733 344,379 
Prepaid expenses and other326,110 308,084 
Total current assets2,596,539 2,611,159 
Long-term investments102,364 82,226 
Equipment, building, furniture and fixtures, net281,228 272,377 
Operating lease right-of-use assets54,244 57,026 
Goodwill311,294 310,847 
Other intangible assets, net91,516 96,647 
Deferred tax asset, net647,232 647,805 
Other long-term assets102,480 102,830 
Total assets$4,186,897 $4,180,917 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable$247,241 $291,904 
Accrued liabilities and other short-term obligations275,003 334,132 
Deferred revenue136,229 108,700 
Operating lease liabilities19,364 19,035 
Current portion of long-term debt6,930 6,930 
Total current liabilities684,767 760,701 
Long-term deferred revenue54,371 49,663 
Other long-term obligations128,764 123,185 
Long-term operating lease liabilities57,626 61,415 
Long-term debt, net674,856 676,356 
Total liabilities$1,600,384 $1,671,320 
Stockholders’ equity:
Preferred stock – par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding
— — 
Common stock – par value $0.01; 290,000,000 shares authorized; 155,187,945
and 154,563,005 shares issued and outstanding
1,552 1,546 
Additional paid-in capital6,826,488 6,826,531 
Accumulated other comprehensive loss(11,547)(35,358)
Accumulated deficit(4,229,980)(4,283,122)
Total stockholders’ equity2,586,513 2,509,597 
Total liabilities and stockholders’ equity$4,186,897 $4,180,917 
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CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Three Months Ended
 January 30,February 1,
 20212020
Cash flows provided by (used in) operating activities: 
Net income$55,348 $62,328 
Adjustments to reconcile net income to net cash provided by (used in) operating activities: 
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements23,188 25,782 
Share-based compensation costs18,964 15,602 
Amortization of intangible assets9,642 9,687 
Deferred taxes(905)10,788 
Provision for inventory excess and obsolescence5,905 6,699 
Provision for warranty3,239 7,898 
Other4,277 4,540 
Changes in assets and liabilities: 
Accounts receivable18,862 64,938 
Inventories(51,020)(4,481)
Prepaid expenses and other(13,835)(29,792)
Operating lease right-of-use assets4,103 4,176 
Accounts payable, accruals and other obligations(112,170)(142,229)
Deferred revenue31,917 8,926 
Short and long-term operating lease liabilities(4,834)(5,098)
Net cash provided by (used in) operating activities(7,319)39,764 
Cash flows used in investing activities: 
Payments for equipment, furniture, fixtures and intellectual property(20,868)(26,820)
Purchase of available for sale securities(71,756)(29,733)
Proceeds from maturities of available for sale securities51,266 30,000 
Settlement of foreign currency forward contracts, net2,357 (73)
Acquisition of business, net of cash acquired— (28,300)
Proceeds from sale of equity investment4,678 — 
Net cash used in investing activities(34,323)(54,926)
Cash flows used in financing activities: 
Payment of long term debt(1,732)— 
Payment of debt issuance costs— (382)
Payment of finance lease obligations(702)(722)
Shares repurchased for tax withholdings on vesting of restricted stock units(19,242)(12,572)
Repurchases of common stock - repurchase program(12,406)(49,203)
Proceeds from issuance of common stock13,447 11,862 
Net cash used in financing activities(20,635)(51,017)
Effect of exchange rate changes on cash, cash equivalents and restricted cash2,879 (643)
Net decrease in cash, cash equivalents and restricted cash(59,398)(66,822)
Cash, cash equivalents and restricted cash at beginning of period1,088,708 904,161 
Cash, cash equivalents and restricted cash at end of period$1,029,310 $837,339 
Supplemental disclosure of cash flow information 
Cash paid during the period for interest$7,566 $9,325 
Cash paid during the period for income taxes, net$8,798 $8,325 
Operating lease payments$5,387 $5,642 
Non-cash investing and financing activities
Purchase of equipment in accounts payable$5,935 $5,905 
Repurchase of common stock in accrued liabilities from repurchase program$800 $1,501 
Operating lease right-of-use assets subject to lease liability $555 $1,157 
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APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures
(in thousands, except per share data) (unaudited)
Quarter Ended
January 30,February 1,
20212020
Gross Profit Reconciliation (GAAP/non-GAAP)
GAAP gross profit$357,891 $370,535 
Share-based compensation-products953 671 
Share-based compensation-services1,205 842 
Amortization of intangible assets3,732 3,834 
Total adjustments related to gross profit5,890 5,347 
Adjusted (non-GAAP) gross profit$363,781 $375,882 
Adjusted (non-GAAP) gross profit percentage48.0 %45.1 %
Operating Expense Reconciliation (GAAP/non-GAAP)
GAAP operating expense$282,096 $292,578 
Share-based compensation-research and development4,794 3,849 
Share-based compensation-sales and marketing5,816 4,613 
Share-based compensation-general and administrative6,358 5,527 
Amortization of intangible assets5,910 5,853 
Significant asset impairments and restructuring costs5,867 4,472 
Acquisition and integration costs307 1,819 
Total adjustments related to operating expense29,052 26,133 
Adjusted (non-GAAP) operating expense$253,044 $266,445 
Income from Operations Reconciliation (GAAP/non-GAAP)
GAAP income from operations$75,795 $77,957 
Total adjustments related to gross profit5,890 5,347 
Total adjustments related to operating expense29,052 26,133 
Total adjustments related to income from operations34,942 31,480 
Adjusted (non-GAAP) income from operations$110,737 $109,437 
Adjusted (non-GAAP) operating margin percentage14.6 %13.1 %
Net Income Reconciliation (GAAP/non-GAAP)
GAAP net income$55,348 $62,328 
Exclude GAAP provision for income taxes11,966 9,814 
Income before income taxes67,314 72,142 
Total adjustments related to income from operations34,942 31,480 
Loss on extinguishment of debt— 646 
Adjusted income before income taxes102,256 104,268 
Non-GAAP tax provision on adjusted income before income taxes20,962 22,522 
Adjusted (non-GAAP) net income$81,294 $81,746 
Weighted average basic common shares outstanding155,174154,334
Weighted average dilutive potential common shares outstanding 1
156,583155,738
Net Income per Common Share
GAAP diluted net income per common share$0.35 $0.40 
Adjusted (non-GAAP) diluted net income per common share$0.52 $0.52 
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1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per common share for the first quarter of fiscal 2021 includes 1.4 million shares underlying certain stock option and stock unit awards.
Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per common share for the first quarter of fiscal 2020 includes 1.4 million shares underlying certain stock option and restricted stock unit awards.
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APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited)
(in thousands) (unaudited)
Quarter Ended
January 30,February 1,
20212020
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
Net income (GAAP)$55,348 $62,328 
Add: Interest expense7,360 8,815 
Less: Interest and other income (loss), net(1,121)3,646 
Add: Loss on extinguishment and modification of debt— 646 
Add: Provision for income taxes11,966 9,814 
Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements23,188 25,782 
Add: Amortization of intangible assets9,642 9,687 
EBITDA$108,625 $113,426 
Add: Share-based compensation cost 18,964 15,602 
Add: Significant asset impairments and restructuring costs5,867 4,472 
Add: Acquisition and integration costs307 1,819 
Adjusted EBITDA$133,763 $135,319 

* * *
The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items:
Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance.
Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over its expected useful life.
Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities and the redesign of business processes.
Acquisition and integration costs - consist of expenses for financial, legal and accounting advisors, severance and other employee-related costs associated with our acquisitions of DonRiver and Centina, including costs of acquisition compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities.
Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 20.5% for the first fiscal quarter of 2021 and 21.6% for the first fiscal quarter of 2020. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy.

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