Viavi Solutions(US:VIAV)2021-11-08 05:25Financial Data and Key Metrics Changes - Fiscal Q1 2022 revenue reached $326.8 million, a 14.8% year-over-year increase, exceeding guidance of $303 million to $317 million [5] - Operating profit margin was 22.7%, expanding 140 basis points year-over-year and exceeding guidance of 21.5% to 22.5% [6] - EPS was a record $0.24 per share, surpassing the guidance range of $0.20 to $0.22 and increasing 14.3% from the previous year [6] Business Segment Data and Key Metrics Changes - NSE revenue was $227.9 million, up 24.2% year-over-year, exceeding guidance of $210 million to $220 million [7] - Within NSE, NE revenues increased 26.4% to $204.9 million, driven by fiber, wireless, and cable products [8] - OSP revenue was $98.9 million, down 2.3% year-over-year, but exceeded guidance of $93 million to $97 million [9] Market Data and Key Metrics Changes - Demand for fiber, wireless, and cable products remained strong, with 5G deployment accelerating [18] - Cable demand was robust, supporting MSO's bandwidth expansion and 5G deployment [19] - The company expects supply constraints to alleviate by mid-calendar 2022 [20] Company Strategy and Development Direction - The company is focusing on investments in fiber and wireless, with new product lines expected to materialize [49] - M&A opportunities are being explored, particularly in private company acquisitions [52] - The company aims to optimize its capital structure and create financial flexibility for growth objectives [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges but expressed confidence in meeting demand [19] - The company anticipates a strong demand for 5G and fiber products, with expectations for continued growth in these areas [22] - Management expects the demand for anti-counterfeiting products to moderate but remain above pre-COVID levels [21] Other Important Information - The company completed a $400 million high-yield bond offering to enhance financial flexibility [14] - A share repurchase program of up to $190 million was authorized, with $95.5 million repurchased as of the end of Q1 [13] Q&A Session Summary Question: Outlook on 5G and supply constraints impact - Management indicated that 5G is facing some supply constraints, particularly in advanced chips, but has managed to secure enough materials for initial shipments [29][31] Question: Impact of supply constraints on revenues - Management estimated a $5 million to $10 million gap in outstanding shipments due to supply constraints in the current quarter [35] Question: M&A pipeline and organic investments - Management is optimistic about organic investments in R&D and is exploring M&A opportunities, particularly in private companies [49][52] Question: Customer demand amid supply constraints - Management noted that less than 10% of demand is lost due to supply constraints, with most customers pushing orders to future quarters [54] Question: Key end market segments driving upside - Management highlighted strong demand in fiber and wireless as key drivers, with expectations for a rebound in demand in the upcoming quarters [60] Question: 3D sensing revenue expectations - Management expects 3D sensing revenue to be about 10% down year-over-year due to component shortages affecting unit consumption [78] Question: Cable TV contributions and sustainability - Management indicated that cable companies are increasingly becoming fiber operators, driving demand for fiber monitoring equipment [106]