Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Ciena Reports Fiscal Second Quarter 2021 Financial Results By: Ciena Corporation via Business Wire June 03, 2021 at 07:00 AM EDT Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal second quarter ended May 1, 2021. Q2 Revenue: $833.9 million Q2 Net Income per Share: $0.66 GAAP; $0.62 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 0.5 million shares of common stock for an aggregate price of $26.2 million during the quarter “We delivered strong fiscal second quarter results as we continued to see encouraging signs in the market environment, including improvements in customer spending,” said Gary Smith, president and CEO of Ciena. “These dynamics, combined with our business and financial performance in the first half of the year, give us strong visibility and confidence in our ability to achieve our financial targets as we move through the year.” For the fiscal second quarter 2021, Ciena reported revenue of $833.9 million as compared to $894.1 million for the fiscal second quarter 2020. Ciena's GAAP net income for the fiscal second quarter 2021 was $103.1 million, or $0.66 per diluted common share, which compares to a GAAP net income of $91.7 million, or $0.59 per diluted common share, for the fiscal second quarter 2020. Ciena's GAAP net income for the second quarter of 2021 benefited from recording $40.4 million in pre-tax amounts from the Canadian Emergency Wage Subsidy program. See APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures for more information and a reconciliation of our adjusted (non-GAAP) net income which excludes the effect of these amounts. Ciena's adjusted (non-GAAP) net income for the fiscal second quarter 2021 was $97.6 million, or $0.62 per diluted common share, which compares to an adjusted (non-GAAP) net income of $117.4 million, or $0.76 per diluted common share, for the fiscal second quarter 2020. Fiscal Second 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. GAAP Results Q2 Q2 FY 2021 FY 2020 Y-T-Y* Revenue $ 833.9 $ 894.1 (6.7 )% Gross margin 49.5 % 46.2 % 3.3 % Operating expense $ 278.8 $ 285.8 (2.5 )% Operating margin 16.0 % 14.3 % 1.7 % Non-GAAP Results Q2 Q2 FY 2021 FY 2020 Y-T-Y* Revenue $ 833.9 $ 894.1 (6.7 )% Adj. gross margin 49.2 % 46.9 % 2.3 % Adj. operating expense $ 278.7 $ 258.7 7.7 % Adj. operating margin 15.8 % 17.9 % (2.1 )% Adj. EBITDA $ 156.2 $ 183.0 (14.6 )% * Denotes % change, or in the case of margin, absolute change Revenue by Segment Q2 FY 2021 Q2 FY 2020 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 573.7 68.8 $ 654.3 73.2 Routing and Switching (1) 63.6 7.6 64.2 7.2 Total Networking Platforms 637.3 76.4 718.5 80.4 Platform Software and Services 56.7 6.8 45.0 5.0 Blue Planet Automation Software and Services 23.9 2.9 15.0 1.7 Global Services Maintenance Support and Training 70.4 8.4 71.5 8.0 Installation and Deployment 38.0 4.6 34.2 3.8 Consulting and Network Design 7.6 0.9 9.9 1.1 Total Global Services 116.0 13.9 115.6 12.9 Total $ 833.9 100.0 $ 894.1 100.0 ** Denotes % of total revenue (1) Ciena renamed its former “Packet Networking” product line “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 Second Quarter 2021 Revenue by Geographic Region Q2 FY 2021 Q2 FY 2020 Revenue % ** Revenue % ** Americas $ 587.5 70.4 $ 650.4 72.7 Europe, Middle East and Africa 155.0 18.6 141.4 15.8 Asia Pacific 91.4 11.0 102.3 11.5 Total $ 833.9 100.0 $ 894.1 100.0 ** Denotes % of total revenue One 10%-plus customer represented a total of 15% of revenue Cash and investments totaled $1.4 billion Cash flow from operations totaled $225.0 million Average days' sales outstanding (DSOs) were 86 Accounts receivable, net balance was $716.8 million Unbilled contract asset, net balance was $81.4 million Inventories totaled $401.2 million, including: Raw materials: $139.4 million Work in process: $10.8 million Finished goods: $234.2 million Deferred cost of sales: $57.4 million Reserve for excess and obsolescence: $(40.6) million Product inventory turns were 3.4 Headcount totaled 7,077 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Second Quarter 2021 Results Today, Thursday, June 3, 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 second 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 strong fiscal second quarter results as we continued to see encouraging signs in the market environment, including improvements in customer spending,” and “These dynamics, combined with our business and financial performance in the first half of the year, give us strong visibility and confidence in our ability to achieve our financial targets as we move through the year.” 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; 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; 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 second 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. CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Quarter Ended Six Months Ended May 1, May 2, May 1, May 2, 2021 2020 2021 2020 Revenue: Products $ 670,043 $ 739,892 $ 1,267,263 $ 1,427,107 Services 163,884 154,161 323,794 299,858 Total revenue 833,927 894,053 1,591,057 1,726,965 Cost of goods sold: Products 339,601 405,138 654,699 794,151 Services 81,907 75,589 166,048 148,953 Total cost of goods sold 421,508 480,727 820,747 943,104 Gross profit 412,419 413,326 770,310 783,861 Operating expenses: Research and development 110,246 131,530 242,987 262,430 Selling and marketing 110,387 101,214 207,665 208,280 General and administrative 43,635 42,030 83,628 84,498 Amortization of intangible assets 6,019 5,839 11,929 11,692 Significant asset impairments and restructuring costs 8,209 3,811 14,076 8,283 Acquisition and integration costs 294 1,414 601 3,233 Total operating expenses 278,790 285,838 560,886 578,416 Income from operations 133,629 127,488 209,424 205,445 Interest and other income (loss), net (1,274 ) (2,665 ) (2,395 ) 981 Interest expense (7,785 ) (7,860 ) (15,145 ) (16,675 ) Loss on extinguishment and modification of debt — — — (646 ) Income before income taxes 124,570 116,963 191,884 189,105 Provision for income taxes 21,453 25,308 33,419 35,122 Net income $ 103,117 $ 91,655 $ 158,465 $ 153,983 Net Income per Common Share Basic net income per common share $ 0.66 $ 0.60 $ 1.02 $ 1.00 Diluted net income per potential common share $ 0.66 $ 0.59 $ 1.01 $ 0.99 Weighted average basic common shares outstanding 155,331 153,858 155,257 154,099 Weighted average dilutive potential common shares outstanding 1 156,876 155,141 156,734 155,443 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the second quarter of fiscal 2021 includes 1.5 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 potential common share for the first six months of fiscal 2021 includes 1.5 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 potential common share for the second quarter of fiscal 2020 includes 1.3 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 potential common share for the first six months of fiscal 2020 includes 1.3 million shares underlying certain stock option and stock unit awards. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) May 1, 2021 October 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 1,202,974 $ 1,088,624 Short-term investments 151,816 150,667 Accounts receivable, net 716,779 719,405 Inventories 401,233 344,379 Prepaid expenses and other 321,651 308,084 Total current assets 2,794,453 2,611,159 Long-term investments 91,715 82,226 Equipment, building, furniture and fixtures, net 298,329 272,377 Operating lease right-of-use assets 50,997 57,026 Goodwill 311,734 310,847 Other intangible assets, net 82,879 96,647 Deferred tax asset, net 653,922 647,805 Other long-term assets 103,984 102,830 Total assets $ 4,388,013 $ 4,180,917 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 279,247 $ 291,904 Accrued liabilities and other short-term obligations 330,060 334,132 Deferred revenue 147,075 108,700 Operating lease liabilities 19,364 19,035 Current portion of long-term debt 6,930 6,930 Total current liabilities 782,676 760,701 Long-term deferred revenue 57,224 49,663 Other long-term obligations 127,700 123,185 Long-term operating lease liabilities 53,795 61,415 Long-term debt, net 673,355 676,356 Total liabilities $ 1,694,750 $ 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; 154,962,122 and 154,563,005 shares issued and outstanding 1,550 1,546 Additional paid-in capital 6,813,215 6,826,531 Accumulated other comprehensive gain (loss) 5,361 (35,358 ) Accumulated deficit (4,126,863 ) (4,283,122 ) Total stockholders’ equity 2,693,263 2,509,597 Total liabilities and stockholders’ equity $ 4,388,013 $ 4,180,917 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended May 1, May 2, 2021 2020 Cash flows provided by operating activities: Net income $ 158,465 $ 153,983 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 47,295 48,381 Share-based compensation costs 40,499 33,579 Amortization of intangible assets 18,517 19,361 Deferred taxes (9,606 ) 25,420 Provision for inventory excess and obsolescence 10,402 12,640 Provision for warranty 7,937 13,793 Other 5,928 16,190 Changes in assets and liabilities: Accounts receivable (180 ) 15,865 Inventories (66,934 ) 5,618 Prepaid expenses and other (8,565 ) (54,839 ) Operating lease right-of-use assets 8,253 8,642 Accounts payable, accruals and other obligations (30,108 ) (151,713 ) Deferred revenue 45,482 (5,679 ) Short and long-term operating lease liabilities (9,726 ) (10,311 ) Net cash provided by operating activities 217,659 130,930 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (51,651 ) (45,458 ) Purchase of available for sale securities (102,429 ) (40,894 ) Proceeds from maturities of available for sale securities 91,810 60,000 Settlement of foreign currency forward contracts, net 9,414 (3,836 ) Acquisition of business, net of cash acquired — (28,300 ) Proceeds from sale of equity investment 4,678 — Net cash used in investing activities (48,178 ) (58,488 ) Cash flows used in financing activities: Payment of long term debt (3,465 ) (1,733 ) Payment of debt issuance costs — (382 ) Payment of finance lease obligations (1,463 ) (1,381 ) Shares repurchased for tax withholdings on vesting of restricted stock units (27,893 ) (18,200 ) Repurchases of common stock - repurchase program (38,498 ) (74,535 ) Proceeds from issuance of common stock 13,480 12,290 Net cash used in financing activities (57,839 ) (83,941 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,696 (4,876 ) Net increase (decrease) in cash, cash equivalents and restricted cash 114,338 (16,375 ) Cash, cash equivalents and restricted cash at beginning of period 1,088,708 904,161 Cash, cash equivalents and restricted cash at end of period $ 1,203,046 $ 887,786 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 14,949 $ 17,590 Cash paid during the period for income taxes, net $ 27,666 $ 22,011 Operating lease payments $ 10,785 $ 11,409 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 4,966 $ 4,480 Repurchase of common stock in accrued liabilities from repurchase program $ 900 $ — Operating lease right-of-use assets subject to lease liability $ 1,770 $ 4,887 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (in thousands, except per share data) (unaudited) Quarter Ended May 1, May 2, 2021 2020 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 412,419 $ 413,326 Share-based compensation-products 498 827 Share-based compensation-services 1,421 1,036 Canadian Emergency Wage Subsidy-products (4,189 ) — Canadian Emergency Wage Subsidy-services (2,620 ) — Amortization of intangible assets 2,856 3,835 Total adjustments related to gross profit (2,034 ) 5,698 Adjusted (non-GAAP) gross profit $ 410,385 $ 419,024 Adjusted (non-GAAP) gross profit percentage 49.2 % 46.9 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 278,790 $ 285,838 Share-based compensation-research and development 5,844 4,822 Share-based compensation-sales and marketing 6,610 5,264 Share-based compensation-general and administrative 6,743 5,975 Canadian Emergency Wage Subsidy-research and development (28,923 ) — Canadian Emergency Wage Subsidy-sales and marketing (2,551 ) — Canadian Emergency Wage Subsidy-general and administrative (2,161 ) — Amortization of intangible assets 6,019 5,839 Significant asset impairments and restructuring costs 8,209 3,811 Acquisition and integration costs 294 1,414 Total adjustments related to operating expense 84 27,125 Adjusted (non-GAAP) operating expense $ 278,706 $ 258,713 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 133,629 $ 127,488 Total adjustments related to gross profit (2,034 ) 5,698 Total adjustments related to operating expense 84 27,125 Total adjustments related to income from operations (1,950 ) 32,823 Adjusted (non-GAAP) income from operations $ 131,679 $ 160,311 Adjusted (non-GAAP) operating margin percentage 15.8 % 17.9 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 103,117 $ 91,655 Exclude GAAP provision for income taxes 21,453 25,308 Income before income taxes 124,570 116,963 Total adjustments related to income from operations (1,950 ) 32,823 Unrealized loss on equity investment 165 — Adjusted income before income taxes 122,785 149,786 Non-GAAP tax provision on adjusted income before income taxes 25,171 32,354 Adjusted (non-GAAP) net income $ 97,614 $ 117,432 Weighted average basic common shares outstanding 155,331 153,858 Weighted average dilutive potential common shares outstanding 1 156,876 155,141 Net Income per Common Share GAAP diluted net income per common share $ 0.66 $ 0.59 Adjusted (non-GAAP) diluted net income per potential common share $ 0.62 $ 0.76 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the second quarter of fiscal 2021 includes 1.5 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 potential common share for the second quarter of fiscal 2020 includes 1.3 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended May 1, May 2, 2021 2020 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 103,117 $ 91,655 Add: Interest expense 7,785 7,860 Add: Interest and other loss, net 1,274 2,665 Add: Provision for income taxes 21,453 25,308 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 24,107 22,599 Add: Amortization of intangible assets 8,875 9,674 EBITDA $ 166,611 $ 159,761 Less: Canadian Emergency Wage Subsidy 40,444 — Add: Share-based compensation cost 21,535 17,977 Add: Significant asset impairments and restructuring costs 8,209 3,811 Add: Acquisition and integration costs 294 1,414 Adjusted EBITDA $ 156,205 $ 182,963 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. Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak. 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 - includes 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. Unrealized loss on equity investment - reflects a change in the carrying value of a certain cost method equity investment. 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 second fiscal quarter of 2021 and 21.6% for the second 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20210603005209/en/Contacts Press Contact: Jamie Moody Ciena Corporation +1 (214) 995-8035 pr@ciena.com Investor Contact: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Ciena Reports Fiscal Second Quarter 2021 Financial Results By: Ciena Corporation via Business Wire June 03, 2021 at 07:00 AM EDT Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal second quarter ended May 1, 2021. Q2 Revenue: $833.9 million Q2 Net Income per Share: $0.66 GAAP; $0.62 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 0.5 million shares of common stock for an aggregate price of $26.2 million during the quarter “We delivered strong fiscal second quarter results as we continued to see encouraging signs in the market environment, including improvements in customer spending,” said Gary Smith, president and CEO of Ciena. “These dynamics, combined with our business and financial performance in the first half of the year, give us strong visibility and confidence in our ability to achieve our financial targets as we move through the year.” For the fiscal second quarter 2021, Ciena reported revenue of $833.9 million as compared to $894.1 million for the fiscal second quarter 2020. Ciena's GAAP net income for the fiscal second quarter 2021 was $103.1 million, or $0.66 per diluted common share, which compares to a GAAP net income of $91.7 million, or $0.59 per diluted common share, for the fiscal second quarter 2020. Ciena's GAAP net income for the second quarter of 2021 benefited from recording $40.4 million in pre-tax amounts from the Canadian Emergency Wage Subsidy program. See APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures for more information and a reconciliation of our adjusted (non-GAAP) net income which excludes the effect of these amounts. Ciena's adjusted (non-GAAP) net income for the fiscal second quarter 2021 was $97.6 million, or $0.62 per diluted common share, which compares to an adjusted (non-GAAP) net income of $117.4 million, or $0.76 per diluted common share, for the fiscal second quarter 2020. Fiscal Second 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. GAAP Results Q2 Q2 FY 2021 FY 2020 Y-T-Y* Revenue $ 833.9 $ 894.1 (6.7 )% Gross margin 49.5 % 46.2 % 3.3 % Operating expense $ 278.8 $ 285.8 (2.5 )% Operating margin 16.0 % 14.3 % 1.7 % Non-GAAP Results Q2 Q2 FY 2021 FY 2020 Y-T-Y* Revenue $ 833.9 $ 894.1 (6.7 )% Adj. gross margin 49.2 % 46.9 % 2.3 % Adj. operating expense $ 278.7 $ 258.7 7.7 % Adj. operating margin 15.8 % 17.9 % (2.1 )% Adj. EBITDA $ 156.2 $ 183.0 (14.6 )% * Denotes % change, or in the case of margin, absolute change Revenue by Segment Q2 FY 2021 Q2 FY 2020 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 573.7 68.8 $ 654.3 73.2 Routing and Switching (1) 63.6 7.6 64.2 7.2 Total Networking Platforms 637.3 76.4 718.5 80.4 Platform Software and Services 56.7 6.8 45.0 5.0 Blue Planet Automation Software and Services 23.9 2.9 15.0 1.7 Global Services Maintenance Support and Training 70.4 8.4 71.5 8.0 Installation and Deployment 38.0 4.6 34.2 3.8 Consulting and Network Design 7.6 0.9 9.9 1.1 Total Global Services 116.0 13.9 115.6 12.9 Total $ 833.9 100.0 $ 894.1 100.0 ** Denotes % of total revenue (1) Ciena renamed its former “Packet Networking” product line “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 Second Quarter 2021 Revenue by Geographic Region Q2 FY 2021 Q2 FY 2020 Revenue % ** Revenue % ** Americas $ 587.5 70.4 $ 650.4 72.7 Europe, Middle East and Africa 155.0 18.6 141.4 15.8 Asia Pacific 91.4 11.0 102.3 11.5 Total $ 833.9 100.0 $ 894.1 100.0 ** Denotes % of total revenue One 10%-plus customer represented a total of 15% of revenue Cash and investments totaled $1.4 billion Cash flow from operations totaled $225.0 million Average days' sales outstanding (DSOs) were 86 Accounts receivable, net balance was $716.8 million Unbilled contract asset, net balance was $81.4 million Inventories totaled $401.2 million, including: Raw materials: $139.4 million Work in process: $10.8 million Finished goods: $234.2 million Deferred cost of sales: $57.4 million Reserve for excess and obsolescence: $(40.6) million Product inventory turns were 3.4 Headcount totaled 7,077 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Second Quarter 2021 Results Today, Thursday, June 3, 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 second 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 strong fiscal second quarter results as we continued to see encouraging signs in the market environment, including improvements in customer spending,” and “These dynamics, combined with our business and financial performance in the first half of the year, give us strong visibility and confidence in our ability to achieve our financial targets as we move through the year.” 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; 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; 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 second 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. CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Quarter Ended Six Months Ended May 1, May 2, May 1, May 2, 2021 2020 2021 2020 Revenue: Products $ 670,043 $ 739,892 $ 1,267,263 $ 1,427,107 Services 163,884 154,161 323,794 299,858 Total revenue 833,927 894,053 1,591,057 1,726,965 Cost of goods sold: Products 339,601 405,138 654,699 794,151 Services 81,907 75,589 166,048 148,953 Total cost of goods sold 421,508 480,727 820,747 943,104 Gross profit 412,419 413,326 770,310 783,861 Operating expenses: Research and development 110,246 131,530 242,987 262,430 Selling and marketing 110,387 101,214 207,665 208,280 General and administrative 43,635 42,030 83,628 84,498 Amortization of intangible assets 6,019 5,839 11,929 11,692 Significant asset impairments and restructuring costs 8,209 3,811 14,076 8,283 Acquisition and integration costs 294 1,414 601 3,233 Total operating expenses 278,790 285,838 560,886 578,416 Income from operations 133,629 127,488 209,424 205,445 Interest and other income (loss), net (1,274 ) (2,665 ) (2,395 ) 981 Interest expense (7,785 ) (7,860 ) (15,145 ) (16,675 ) Loss on extinguishment and modification of debt — — — (646 ) Income before income taxes 124,570 116,963 191,884 189,105 Provision for income taxes 21,453 25,308 33,419 35,122 Net income $ 103,117 $ 91,655 $ 158,465 $ 153,983 Net Income per Common Share Basic net income per common share $ 0.66 $ 0.60 $ 1.02 $ 1.00 Diluted net income per potential common share $ 0.66 $ 0.59 $ 1.01 $ 0.99 Weighted average basic common shares outstanding 155,331 153,858 155,257 154,099 Weighted average dilutive potential common shares outstanding 1 156,876 155,141 156,734 155,443 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the second quarter of fiscal 2021 includes 1.5 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 potential common share for the first six months of fiscal 2021 includes 1.5 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 potential common share for the second quarter of fiscal 2020 includes 1.3 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 potential common share for the first six months of fiscal 2020 includes 1.3 million shares underlying certain stock option and stock unit awards. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) May 1, 2021 October 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 1,202,974 $ 1,088,624 Short-term investments 151,816 150,667 Accounts receivable, net 716,779 719,405 Inventories 401,233 344,379 Prepaid expenses and other 321,651 308,084 Total current assets 2,794,453 2,611,159 Long-term investments 91,715 82,226 Equipment, building, furniture and fixtures, net 298,329 272,377 Operating lease right-of-use assets 50,997 57,026 Goodwill 311,734 310,847 Other intangible assets, net 82,879 96,647 Deferred tax asset, net 653,922 647,805 Other long-term assets 103,984 102,830 Total assets $ 4,388,013 $ 4,180,917 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 279,247 $ 291,904 Accrued liabilities and other short-term obligations 330,060 334,132 Deferred revenue 147,075 108,700 Operating lease liabilities 19,364 19,035 Current portion of long-term debt 6,930 6,930 Total current liabilities 782,676 760,701 Long-term deferred revenue 57,224 49,663 Other long-term obligations 127,700 123,185 Long-term operating lease liabilities 53,795 61,415 Long-term debt, net 673,355 676,356 Total liabilities $ 1,694,750 $ 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; 154,962,122 and 154,563,005 shares issued and outstanding 1,550 1,546 Additional paid-in capital 6,813,215 6,826,531 Accumulated other comprehensive gain (loss) 5,361 (35,358 ) Accumulated deficit (4,126,863 ) (4,283,122 ) Total stockholders’ equity 2,693,263 2,509,597 Total liabilities and stockholders’ equity $ 4,388,013 $ 4,180,917 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended May 1, May 2, 2021 2020 Cash flows provided by operating activities: Net income $ 158,465 $ 153,983 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 47,295 48,381 Share-based compensation costs 40,499 33,579 Amortization of intangible assets 18,517 19,361 Deferred taxes (9,606 ) 25,420 Provision for inventory excess and obsolescence 10,402 12,640 Provision for warranty 7,937 13,793 Other 5,928 16,190 Changes in assets and liabilities: Accounts receivable (180 ) 15,865 Inventories (66,934 ) 5,618 Prepaid expenses and other (8,565 ) (54,839 ) Operating lease right-of-use assets 8,253 8,642 Accounts payable, accruals and other obligations (30,108 ) (151,713 ) Deferred revenue 45,482 (5,679 ) Short and long-term operating lease liabilities (9,726 ) (10,311 ) Net cash provided by operating activities 217,659 130,930 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (51,651 ) (45,458 ) Purchase of available for sale securities (102,429 ) (40,894 ) Proceeds from maturities of available for sale securities 91,810 60,000 Settlement of foreign currency forward contracts, net 9,414 (3,836 ) Acquisition of business, net of cash acquired — (28,300 ) Proceeds from sale of equity investment 4,678 — Net cash used in investing activities (48,178 ) (58,488 ) Cash flows used in financing activities: Payment of long term debt (3,465 ) (1,733 ) Payment of debt issuance costs — (382 ) Payment of finance lease obligations (1,463 ) (1,381 ) Shares repurchased for tax withholdings on vesting of restricted stock units (27,893 ) (18,200 ) Repurchases of common stock - repurchase program (38,498 ) (74,535 ) Proceeds from issuance of common stock 13,480 12,290 Net cash used in financing activities (57,839 ) (83,941 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,696 (4,876 ) Net increase (decrease) in cash, cash equivalents and restricted cash 114,338 (16,375 ) Cash, cash equivalents and restricted cash at beginning of period 1,088,708 904,161 Cash, cash equivalents and restricted cash at end of period $ 1,203,046 $ 887,786 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 14,949 $ 17,590 Cash paid during the period for income taxes, net $ 27,666 $ 22,011 Operating lease payments $ 10,785 $ 11,409 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 4,966 $ 4,480 Repurchase of common stock in accrued liabilities from repurchase program $ 900 $ — Operating lease right-of-use assets subject to lease liability $ 1,770 $ 4,887 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (in thousands, except per share data) (unaudited) Quarter Ended May 1, May 2, 2021 2020 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 412,419 $ 413,326 Share-based compensation-products 498 827 Share-based compensation-services 1,421 1,036 Canadian Emergency Wage Subsidy-products (4,189 ) — Canadian Emergency Wage Subsidy-services (2,620 ) — Amortization of intangible assets 2,856 3,835 Total adjustments related to gross profit (2,034 ) 5,698 Adjusted (non-GAAP) gross profit $ 410,385 $ 419,024 Adjusted (non-GAAP) gross profit percentage 49.2 % 46.9 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 278,790 $ 285,838 Share-based compensation-research and development 5,844 4,822 Share-based compensation-sales and marketing 6,610 5,264 Share-based compensation-general and administrative 6,743 5,975 Canadian Emergency Wage Subsidy-research and development (28,923 ) — Canadian Emergency Wage Subsidy-sales and marketing (2,551 ) — Canadian Emergency Wage Subsidy-general and administrative (2,161 ) — Amortization of intangible assets 6,019 5,839 Significant asset impairments and restructuring costs 8,209 3,811 Acquisition and integration costs 294 1,414 Total adjustments related to operating expense 84 27,125 Adjusted (non-GAAP) operating expense $ 278,706 $ 258,713 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 133,629 $ 127,488 Total adjustments related to gross profit (2,034 ) 5,698 Total adjustments related to operating expense 84 27,125 Total adjustments related to income from operations (1,950 ) 32,823 Adjusted (non-GAAP) income from operations $ 131,679 $ 160,311 Adjusted (non-GAAP) operating margin percentage 15.8 % 17.9 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 103,117 $ 91,655 Exclude GAAP provision for income taxes 21,453 25,308 Income before income taxes 124,570 116,963 Total adjustments related to income from operations (1,950 ) 32,823 Unrealized loss on equity investment 165 — Adjusted income before income taxes 122,785 149,786 Non-GAAP tax provision on adjusted income before income taxes 25,171 32,354 Adjusted (non-GAAP) net income $ 97,614 $ 117,432 Weighted average basic common shares outstanding 155,331 153,858 Weighted average dilutive potential common shares outstanding 1 156,876 155,141 Net Income per Common Share GAAP diluted net income per common share $ 0.66 $ 0.59 Adjusted (non-GAAP) diluted net income per potential common share $ 0.62 $ 0.76 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the second quarter of fiscal 2021 includes 1.5 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 potential common share for the second quarter of fiscal 2020 includes 1.3 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended May 1, May 2, 2021 2020 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 103,117 $ 91,655 Add: Interest expense 7,785 7,860 Add: Interest and other loss, net 1,274 2,665 Add: Provision for income taxes 21,453 25,308 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 24,107 22,599 Add: Amortization of intangible assets 8,875 9,674 EBITDA $ 166,611 $ 159,761 Less: Canadian Emergency Wage Subsidy 40,444 — Add: Share-based compensation cost 21,535 17,977 Add: Significant asset impairments and restructuring costs 8,209 3,811 Add: Acquisition and integration costs 294 1,414 Adjusted EBITDA $ 156,205 $ 182,963 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. Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak. 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 - includes 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. Unrealized loss on equity investment - reflects a change in the carrying value of a certain cost method equity investment. 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 second fiscal quarter of 2021 and 21.6% for the second 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20210603005209/en/Contacts Press Contact: Jamie Moody Ciena Corporation +1 (214) 995-8035 pr@ciena.com Investor Contact: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com
Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal second quarter ended May 1, 2021. Q2 Revenue: $833.9 million Q2 Net Income per Share: $0.66 GAAP; $0.62 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 0.5 million shares of common stock for an aggregate price of $26.2 million during the quarter “We delivered strong fiscal second quarter results as we continued to see encouraging signs in the market environment, including improvements in customer spending,” said Gary Smith, president and CEO of Ciena. “These dynamics, combined with our business and financial performance in the first half of the year, give us strong visibility and confidence in our ability to achieve our financial targets as we move through the year.” For the fiscal second quarter 2021, Ciena reported revenue of $833.9 million as compared to $894.1 million for the fiscal second quarter 2020. Ciena's GAAP net income for the fiscal second quarter 2021 was $103.1 million, or $0.66 per diluted common share, which compares to a GAAP net income of $91.7 million, or $0.59 per diluted common share, for the fiscal second quarter 2020. Ciena's GAAP net income for the second quarter of 2021 benefited from recording $40.4 million in pre-tax amounts from the Canadian Emergency Wage Subsidy program. See APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures for more information and a reconciliation of our adjusted (non-GAAP) net income which excludes the effect of these amounts. Ciena's adjusted (non-GAAP) net income for the fiscal second quarter 2021 was $97.6 million, or $0.62 per diluted common share, which compares to an adjusted (non-GAAP) net income of $117.4 million, or $0.76 per diluted common share, for the fiscal second quarter 2020. Fiscal Second 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. GAAP Results Q2 Q2 FY 2021 FY 2020 Y-T-Y* Revenue $ 833.9 $ 894.1 (6.7 )% Gross margin 49.5 % 46.2 % 3.3 % Operating expense $ 278.8 $ 285.8 (2.5 )% Operating margin 16.0 % 14.3 % 1.7 % Non-GAAP Results Q2 Q2 FY 2021 FY 2020 Y-T-Y* Revenue $ 833.9 $ 894.1 (6.7 )% Adj. gross margin 49.2 % 46.9 % 2.3 % Adj. operating expense $ 278.7 $ 258.7 7.7 % Adj. operating margin 15.8 % 17.9 % (2.1 )% Adj. EBITDA $ 156.2 $ 183.0 (14.6 )% * Denotes % change, or in the case of margin, absolute change Revenue by Segment Q2 FY 2021 Q2 FY 2020 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 573.7 68.8 $ 654.3 73.2 Routing and Switching (1) 63.6 7.6 64.2 7.2 Total Networking Platforms 637.3 76.4 718.5 80.4 Platform Software and Services 56.7 6.8 45.0 5.0 Blue Planet Automation Software and Services 23.9 2.9 15.0 1.7 Global Services Maintenance Support and Training 70.4 8.4 71.5 8.0 Installation and Deployment 38.0 4.6 34.2 3.8 Consulting and Network Design 7.6 0.9 9.9 1.1 Total Global Services 116.0 13.9 115.6 12.9 Total $ 833.9 100.0 $ 894.1 100.0 ** Denotes % of total revenue (1) Ciena renamed its former “Packet Networking” product line “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 Second Quarter 2021 Revenue by Geographic Region Q2 FY 2021 Q2 FY 2020 Revenue % ** Revenue % ** Americas $ 587.5 70.4 $ 650.4 72.7 Europe, Middle East and Africa 155.0 18.6 141.4 15.8 Asia Pacific 91.4 11.0 102.3 11.5 Total $ 833.9 100.0 $ 894.1 100.0 ** Denotes % of total revenue One 10%-plus customer represented a total of 15% of revenue Cash and investments totaled $1.4 billion Cash flow from operations totaled $225.0 million Average days' sales outstanding (DSOs) were 86 Accounts receivable, net balance was $716.8 million Unbilled contract asset, net balance was $81.4 million Inventories totaled $401.2 million, including: Raw materials: $139.4 million Work in process: $10.8 million Finished goods: $234.2 million Deferred cost of sales: $57.4 million Reserve for excess and obsolescence: $(40.6) million Product inventory turns were 3.4 Headcount totaled 7,077 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Second Quarter 2021 Results Today, Thursday, June 3, 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 second 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 strong fiscal second quarter results as we continued to see encouraging signs in the market environment, including improvements in customer spending,” and “These dynamics, combined with our business and financial performance in the first half of the year, give us strong visibility and confidence in our ability to achieve our financial targets as we move through the year.” 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; 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; 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 second 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. CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Quarter Ended Six Months Ended May 1, May 2, May 1, May 2, 2021 2020 2021 2020 Revenue: Products $ 670,043 $ 739,892 $ 1,267,263 $ 1,427,107 Services 163,884 154,161 323,794 299,858 Total revenue 833,927 894,053 1,591,057 1,726,965 Cost of goods sold: Products 339,601 405,138 654,699 794,151 Services 81,907 75,589 166,048 148,953 Total cost of goods sold 421,508 480,727 820,747 943,104 Gross profit 412,419 413,326 770,310 783,861 Operating expenses: Research and development 110,246 131,530 242,987 262,430 Selling and marketing 110,387 101,214 207,665 208,280 General and administrative 43,635 42,030 83,628 84,498 Amortization of intangible assets 6,019 5,839 11,929 11,692 Significant asset impairments and restructuring costs 8,209 3,811 14,076 8,283 Acquisition and integration costs 294 1,414 601 3,233 Total operating expenses 278,790 285,838 560,886 578,416 Income from operations 133,629 127,488 209,424 205,445 Interest and other income (loss), net (1,274 ) (2,665 ) (2,395 ) 981 Interest expense (7,785 ) (7,860 ) (15,145 ) (16,675 ) Loss on extinguishment and modification of debt — — — (646 ) Income before income taxes 124,570 116,963 191,884 189,105 Provision for income taxes 21,453 25,308 33,419 35,122 Net income $ 103,117 $ 91,655 $ 158,465 $ 153,983 Net Income per Common Share Basic net income per common share $ 0.66 $ 0.60 $ 1.02 $ 1.00 Diluted net income per potential common share $ 0.66 $ 0.59 $ 1.01 $ 0.99 Weighted average basic common shares outstanding 155,331 153,858 155,257 154,099 Weighted average dilutive potential common shares outstanding 1 156,876 155,141 156,734 155,443 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the second quarter of fiscal 2021 includes 1.5 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 potential common share for the first six months of fiscal 2021 includes 1.5 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 potential common share for the second quarter of fiscal 2020 includes 1.3 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 potential common share for the first six months of fiscal 2020 includes 1.3 million shares underlying certain stock option and stock unit awards. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) May 1, 2021 October 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 1,202,974 $ 1,088,624 Short-term investments 151,816 150,667 Accounts receivable, net 716,779 719,405 Inventories 401,233 344,379 Prepaid expenses and other 321,651 308,084 Total current assets 2,794,453 2,611,159 Long-term investments 91,715 82,226 Equipment, building, furniture and fixtures, net 298,329 272,377 Operating lease right-of-use assets 50,997 57,026 Goodwill 311,734 310,847 Other intangible assets, net 82,879 96,647 Deferred tax asset, net 653,922 647,805 Other long-term assets 103,984 102,830 Total assets $ 4,388,013 $ 4,180,917 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 279,247 $ 291,904 Accrued liabilities and other short-term obligations 330,060 334,132 Deferred revenue 147,075 108,700 Operating lease liabilities 19,364 19,035 Current portion of long-term debt 6,930 6,930 Total current liabilities 782,676 760,701 Long-term deferred revenue 57,224 49,663 Other long-term obligations 127,700 123,185 Long-term operating lease liabilities 53,795 61,415 Long-term debt, net 673,355 676,356 Total liabilities $ 1,694,750 $ 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; 154,962,122 and 154,563,005 shares issued and outstanding 1,550 1,546 Additional paid-in capital 6,813,215 6,826,531 Accumulated other comprehensive gain (loss) 5,361 (35,358 ) Accumulated deficit (4,126,863 ) (4,283,122 ) Total stockholders’ equity 2,693,263 2,509,597 Total liabilities and stockholders’ equity $ 4,388,013 $ 4,180,917 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended May 1, May 2, 2021 2020 Cash flows provided by operating activities: Net income $ 158,465 $ 153,983 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 47,295 48,381 Share-based compensation costs 40,499 33,579 Amortization of intangible assets 18,517 19,361 Deferred taxes (9,606 ) 25,420 Provision for inventory excess and obsolescence 10,402 12,640 Provision for warranty 7,937 13,793 Other 5,928 16,190 Changes in assets and liabilities: Accounts receivable (180 ) 15,865 Inventories (66,934 ) 5,618 Prepaid expenses and other (8,565 ) (54,839 ) Operating lease right-of-use assets 8,253 8,642 Accounts payable, accruals and other obligations (30,108 ) (151,713 ) Deferred revenue 45,482 (5,679 ) Short and long-term operating lease liabilities (9,726 ) (10,311 ) Net cash provided by operating activities 217,659 130,930 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (51,651 ) (45,458 ) Purchase of available for sale securities (102,429 ) (40,894 ) Proceeds from maturities of available for sale securities 91,810 60,000 Settlement of foreign currency forward contracts, net 9,414 (3,836 ) Acquisition of business, net of cash acquired — (28,300 ) Proceeds from sale of equity investment 4,678 — Net cash used in investing activities (48,178 ) (58,488 ) Cash flows used in financing activities: Payment of long term debt (3,465 ) (1,733 ) Payment of debt issuance costs — (382 ) Payment of finance lease obligations (1,463 ) (1,381 ) Shares repurchased for tax withholdings on vesting of restricted stock units (27,893 ) (18,200 ) Repurchases of common stock - repurchase program (38,498 ) (74,535 ) Proceeds from issuance of common stock 13,480 12,290 Net cash used in financing activities (57,839 ) (83,941 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,696 (4,876 ) Net increase (decrease) in cash, cash equivalents and restricted cash 114,338 (16,375 ) Cash, cash equivalents and restricted cash at beginning of period 1,088,708 904,161 Cash, cash equivalents and restricted cash at end of period $ 1,203,046 $ 887,786 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 14,949 $ 17,590 Cash paid during the period for income taxes, net $ 27,666 $ 22,011 Operating lease payments $ 10,785 $ 11,409 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 4,966 $ 4,480 Repurchase of common stock in accrued liabilities from repurchase program $ 900 $ — Operating lease right-of-use assets subject to lease liability $ 1,770 $ 4,887 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (in thousands, except per share data) (unaudited) Quarter Ended May 1, May 2, 2021 2020 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 412,419 $ 413,326 Share-based compensation-products 498 827 Share-based compensation-services 1,421 1,036 Canadian Emergency Wage Subsidy-products (4,189 ) — Canadian Emergency Wage Subsidy-services (2,620 ) — Amortization of intangible assets 2,856 3,835 Total adjustments related to gross profit (2,034 ) 5,698 Adjusted (non-GAAP) gross profit $ 410,385 $ 419,024 Adjusted (non-GAAP) gross profit percentage 49.2 % 46.9 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 278,790 $ 285,838 Share-based compensation-research and development 5,844 4,822 Share-based compensation-sales and marketing 6,610 5,264 Share-based compensation-general and administrative 6,743 5,975 Canadian Emergency Wage Subsidy-research and development (28,923 ) — Canadian Emergency Wage Subsidy-sales and marketing (2,551 ) — Canadian Emergency Wage Subsidy-general and administrative (2,161 ) — Amortization of intangible assets 6,019 5,839 Significant asset impairments and restructuring costs 8,209 3,811 Acquisition and integration costs 294 1,414 Total adjustments related to operating expense 84 27,125 Adjusted (non-GAAP) operating expense $ 278,706 $ 258,713 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 133,629 $ 127,488 Total adjustments related to gross profit (2,034 ) 5,698 Total adjustments related to operating expense 84 27,125 Total adjustments related to income from operations (1,950 ) 32,823 Adjusted (non-GAAP) income from operations $ 131,679 $ 160,311 Adjusted (non-GAAP) operating margin percentage 15.8 % 17.9 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 103,117 $ 91,655 Exclude GAAP provision for income taxes 21,453 25,308 Income before income taxes 124,570 116,963 Total adjustments related to income from operations (1,950 ) 32,823 Unrealized loss on equity investment 165 — Adjusted income before income taxes 122,785 149,786 Non-GAAP tax provision on adjusted income before income taxes 25,171 32,354 Adjusted (non-GAAP) net income $ 97,614 $ 117,432 Weighted average basic common shares outstanding 155,331 153,858 Weighted average dilutive potential common shares outstanding 1 156,876 155,141 Net Income per Common Share GAAP diluted net income per common share $ 0.66 $ 0.59 Adjusted (non-GAAP) diluted net income per potential common share $ 0.62 $ 0.76 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the second quarter of fiscal 2021 includes 1.5 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 potential common share for the second quarter of fiscal 2020 includes 1.3 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended May 1, May 2, 2021 2020 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 103,117 $ 91,655 Add: Interest expense 7,785 7,860 Add: Interest and other loss, net 1,274 2,665 Add: Provision for income taxes 21,453 25,308 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 24,107 22,599 Add: Amortization of intangible assets 8,875 9,674 EBITDA $ 166,611 $ 159,761 Less: Canadian Emergency Wage Subsidy 40,444 — Add: Share-based compensation cost 21,535 17,977 Add: Significant asset impairments and restructuring costs 8,209 3,811 Add: Acquisition and integration costs 294 1,414 Adjusted EBITDA $ 156,205 $ 182,963 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. Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak. 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 - includes 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. Unrealized loss on equity investment - reflects a change in the carrying value of a certain cost method equity investment. 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 second fiscal quarter of 2021 and 21.6% for the second 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20210603005209/en/
Press Contact: Jamie Moody Ciena Corporation +1 (214) 995-8035 pr@ciena.com Investor Contact: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com