ADVA Optical Networking Investor Presentation

Transcription

ADVA Optical Networking
Investor Presentation
February/March 2015
Disclaimer
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements with words such as “believes”, “anticipates” and
“expects” to describe expected revenues and earnings, anticipated demand for optical networking solutions,
internal estimates and liquidity. These forward-looking statements involve a number of unknown risks,
uncertainties and other factors that could cause actual results to differ materially. Unknown risks, uncertainties
and other factors are discussed in the ‘risk report’ section of ADVA Optical Networking’s annual report 2014.
CONSOLIDATED PRO FORMA FINANCIAL RESULTS
ADVA Optical Networking provides consolidated pro forma financial results in this presentation solely as
supplemental financial information to help investors and the financial community make meaningful comparisons
of ADVA Optical Networking’s operating results from one financial period to another. ADVA Optical Networking
believes that these pro forma consolidated financial results are helpful because they exclude non-cash charges
related to stock compensation programs and amortization and impairment of goodwill and acquisition-related
intangible assets, which are not reflective of the Group’s operating results for the period presented. This pro
forma information is not prepared in accordance with IFRS and should not be considered a substitute for
historical information presented in accordance with IFRS.
2
© 2015 ADVA Optical Networking. All rights reserved. Confidential.
ADVA Optical Networking Today
Key Facts
Mission
Our NUMBERS
>1400 employees
EUR 339m revenue
20 years of innovation
Our MISSION
is to be
the trusted partner
for innovative
connectivity solutions
that ADVANCE
next-generation
networks for cloud
and mobile services.
Our CUSTOMERS
Hundreds of carriers
Thousands of enterprises
Our QUALITY
TL 9000, ISO 14001
Award-winning
supply chain
We bring differentiation, quality and ease-of-use to next-generation networks
3
What We Do
Social
Community
Chat
Mobility
Cloud
Innovative
Connectivity
Phone
Partners
Search
Email
Scalable, programmable and secure optical networking solutions for the digital age
4
Capitalizing on Cloud and Mobility
Approx. $200 billion
Global annual infrastructure investment
$11 billion*
in optical transport
Social
Chat
Cloud &
Mobility
IP
Voice
Community
Next-Generation
Cloud Services
Partners
Email
Data
Video
Search
Phone
Interactive Multimedia
* 2014 market size; Industry analyst estimates for metro WDM equipment (“Optical”) and
Ethernet access devices (“Ethernet”) relevant for ADVA Optical Networking.
Sources: Infonetics Research Optical Network Hardware, Quarterly Market Share, Size, and Forecasts 2Q14, August 2014,
and Infonetics Research Ethernet Access Devices Biannual Market Share, Size and Forecasts, 2 nd Edition, September 2014.
Local Experience
Internet of Things
As an industry, we have built a great network – creative use has only started …
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Business Segment Overview
Carrier Ethernet Access
Ethernet Wholesale
Business Ethernet
Mobile Backhaul
Addressable Market 2014*
EUR 8.3 billion
Industry analyst estimates for metro WDM
equipment (“Optical”) and Ethernet access devices
(“Ethernet”) relevant for ADVA Optical Networking.
Revenue Contribution 2014**
EUR 339.2 million
+9.2% vs. 2013
*
Segmental distribution of ADVA Optical
Networking revenues, rounded to full 5 per cent.
**
7%
25%
Carrier Infrastructure
Broadband Backhaul
Metro Networks
Long Haul
Private Enterprise Networks
Data Center Connectivity
Low-latency Networks
79%
14%
35%
40%
Innovative connectivity solutions for service providers and enterprises
Sources: Infonetics Research Optical Network Hardware, Quarterly Market Share, Size, and Forecasts 2Q14, August 2014, and Infonetics Research Ethernet Access Devices Biannual Market Share, Size
and Forecasts, 2nd Edition, September 2014. The split of the WDM equipment into carrier infrastructure and enterprise solutions is based on ADVA Optical Networking internal estimates.
2014 addressable market translated into EUR at average 2014 FX rate of 1 EUR = 1.3290 USD.
*
6
Our Solutions Overview
Access
FSP Service Manager
Metro
Core
Ethernet Wholesale
Business Ethernet
Mobile Backhaul
FSP 150
FSP 3000
Broadband Backhaul
Metro Networks
Long Haul
Low-Latency Networks
Automated service delivery and assurance from access to core
7
Infrastructure Transformation
The optical networking renaissance has begun
Cloud & Mobility: the Age of Data Centers
Network Operators
Enterprises
Data centers are the new cornerstones of our networked societies
9
Enabling the Cloud I
Coupling Mega Data Centers
Data Center Interconnect
Low-Latency Networks
Data center
Backup center
High-speed connectivity to increase data center performance
10
Enabling the Cloud II
Load-Balancing Mega Data Centers
FSP Service Manager
Broadband Backhaul
Metro Networks
Long Haul
Open, programmable, optical network
Flexible Terabit/s infrastructure for better cloud efficiency
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Enabling the Cloud III
Secure & Scalable Cloud Access
Ethernet Wholesale
Business Ethernet
Mobile Backhaul
Business Ethernet
Mobility
Carrier
Ethernet
Next-Generation Access
Secure cloud access solutions for fixed and mobile users
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Where is the Networking Focus?
Profitable, mass-consumed, video
Virtual functions*
Popular web content
Advertising
*NFV (Network Function Virtualization) is going to host virtual functions proximate to the service edge in the metro
Enthusiasm for additional (networking) investment is in the metro
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What Technologies Will Win?
5%
IT Elements*
55%
Non-Optical
Networking
17%
*Caching/Content Delivery Networks (CDN),
Instant Messaging Services (IMS), etc.
23%
60%
40%
Today
Optical
Networking
2020
Source: CIMI corp Jan 2015;
http://blog.cimicorp.com/?p=2036
Metro spend on optical networking will grow from 40% to 60% by 2020
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Capitalizing on Cloud and Mobility
Fundamental shift to open, programmable
optical platforms creating dynamics
in the existing supply landscape
Shift from IPsec to lower layer encryption,
integrated into our network elements
Market leader with
100G inflight encryption
20 years of experience in DCI*
with best-in-breed functionality
CLOUD
Phase synchronization and
timing go mainstream (LTE+)
Backhauling and front-hauling
experience with all technology ingredients
Strategic shift
from IP access to Carrier Ethernet
… coupled with centrally managed
or locally hosted virtualized functions
Proven leadership and differentiation in all critical aspects
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Competitive Overview
Mobile Backhaul
Business Ethernet
Ethernet Wholesale
Broadband Backhaul
Metro Networks
Long Haul
Key Competitors
Our ADVAntages
Timing excellence
Intelligent service definition and backhaul
Proven leadership in Ethernet Access Devices
Central and distributed NFV implementations
Best scalability with ease-of-use
Intelligent control plane and service manager
Multi-layer interworking with Juniper
First to market with innovation
(e.g. 16G FC, InfiniBand, 100G Metro)
Leader w integrated security options
ADVA Optical Networking is a thought leader in developing
intelligent connectivity solutions for high-growth markets
16
Customer-Optimized Sales Model
Solutions integration
NMS integration
Long relationships
OEM
DIRECT
e.g.
VAR
CUSTOMER
Regional focus
Vertical segments
Long relationships
Three-pronged distribution model to flexibly address customer needs
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Our Broad Customer Base
Service Providers
Enterprises
Internet & Cloud
Government & Education
Global success with innovative connectivity solutions
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Our Global Presence
Munich
Meiningen
Gdynia
York
Shenzhen
Atlanta
Singapore
Headquarter
Neuchâtel
Office
Representative
Application and technology expertise close to our customers
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Financial Performance
20
Annual IFRS Revenues and Pro Forma Profitability
Revenues and Pro Forma Gross Profit*
+25%
291.7
+7%
310.9
37.7%
38.4%
2010
2011
+6%
330.1
-6%
310.7
+9%
339.2
40.4%
39.3%
35.0%
2012
2013
2014
8.6
9.5
2.8%
2014
Pro Forma Operating Income**
13.3
+118%
17.3
+30%
21.8
+26%
4.6%
5.6%
6.6%
-61%
2.8%
2010
2011
2012
2013
(in millions of EUR, in % of revenues)
Growth Y-o-Y
* From 2012, amortization for capitalized development projects is presented as cost of goods sold. Prior period information has been adjusted accordingly.
** Pro forma operating income is calculated prior to non-cash charges related to the stock option programs and amortization
and impairment of goodwill and acquisition-related intangible assets.
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+10%
Quarterly IFRS Revenues and Pro Forma Profitability
Revenues and Pro Forma Gross Profit*
-5%
+1%
+11%
+10%
+14%
87.2
87.1
86.7
76.2
78.1
39.3%
35.4%
32.8%
35.3%
36.6%
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Pro Forma Operating Income**
2.3
0.4
0.4
3.5
3.0%
0.5%
0.5%
4.0%
Q4 2013
Q1 2014
Q2 2014
Q3 2014
(in millions of EUR, in % of revenues)
Growth Y-o-Y
* From 2012, amortization for capitalized development projects is presented as cost of goods sold. Prior period information has been adjusted accordingly.
** Pro forma operating income is calculated prior to non-cash charges related to the stock option programs and amortization
and impairment of goodwill and acquisition-related intangible assets.
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5.1
5.9%
Q4 2014
IFRS Profitability
2013
EUR Million
Q4
Pro Forma Operating Income
2.3
(3.0%)
Operating Income
1.9
(2.5%)
Net Income*
8.5
Diluted EPS in EUR*
2014
Q1
0.4
(0.5%)
0.1
(0.1%)
-0.4
Q2
0.4
(0.5%)
0.0
(0.0%)
0.0
Q3
Q4
3.5
5.1
(4.0%)
(5.9%)
3.1
5.1
(3.5%)
(5.9%)
4.4
4.3
(11.1%)
(-0.5%)
(0.0%)
(5.1%)
(5.0%)
0.17
-0.01
0.00
0.09
0.09
Margins, in % of Revenues
13
11
9
5.9%
5.9%
5.0%
7
5
3
1
-1
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
*As a result from a retrospective adjustment in accordance with IAS 8 as per December 31, 2013, deferred tax assets at prior year-end increased by EUR 6,128 thousand.
The line items „Income tax (expense) benefit, net“ and „net income“ in the consolidated income statement as well as „net income and accumulated deficit” in the
consolidated statement of changes in stockholders’ equity increased accordingly. The adjusted earnings per share (diluted) in Q4 2013 amount to EUR 0.17
23
Cash and Net Liquidity
90
75
83.9
Cash & Cash Equivalents
60
45
48.9
Net Liquidity
30
15
0
Q4
2011
Q4
2014
(in millions of EUR)
Record high quarter-end cash and net liquidity positions at the end of Q4 2014,
demonstrating financial strength and operational flexibility
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IFRS Balance Sheet
Dec. 31
2013
Sep. 30
2014
Dec. 31
2014
Equity & liabilities
Dec. 31
2013
Sep. 30
2014
Dec. 31
2014
Cash & cash equivalents
80.9
82.6
83.9
Accounts payable
26.5
39.8
33.0
Accounts receivable
52.7
57.1
54.0
Financial liabilities
39.2
36.5
35.0
Inventories
40.1
46.1
47.0
Other liabilities
69.6
72.7
79.7
Other assets*
125.5
137.1
139.9
Equity*
163.9
173.9
177.1
Total*
299.2
322.9
324.8
Total*
299.2
322.9
324.8
Assets
Working Capital
60
10
-40
Q4
2012
Q4
2014
25
*Deferred tax assets as of December 31, 2013 and income tax benefit for the year then ended were increased by EUR 6.1 million respectively.
Non-current assets and total assets, net income and equity have been restated accordingly.
Quarterly Revenues Per Region
87.2
87.1
86.7
11%
9%
6%
76.2
6%
78.1
25%
32%
34%
33%
69%
64%
55%
58%
63%
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
EMEA
Americas
4%
Asia-Pacific
26
31%
IFRS Consolidated Cash Flow Statement
EUR million
Q3 2014
Q4 2014
16.4
12.4
-10.6
-10.1
-2.9
-1.8
Net effect of foreign currency translation
0.6
0.8
Net change in cash and cash equivalents
3.5
1.3
at beginning of period
79.1
82.6
at end of period
82.6
83.9
13.8
10.2
Net cash provided by operating activities
Net cash used for investing activities
Net cash provided by (used for) financing activities
Cash and cash equivalents
Free cash flow*
* Free cash flow = Net cash provided by operating activities
./. capital expenditures for property, plant and equipment, finance leases and intangible assets not related to development activities.
27
Guidance Q1 2015
•
Revenues between EUR 90 million and EUR 95 million
•
Pro forma operating margin between 0% and 4% of revenues*
•
ADVA Optical Networking will continue to perform detailed quarterly
reviews of the expected business development in respect of all intangible
assets, including capitalized research
and development expenses; in case of highly adverse business prospects,
these reviews may result in non-cash impairment charges
*
28
Excluding any potential impairment charges.
Investor Relations Overview
Recent Investor Activities
Financial Analyst Coverage
As of Feb 25, 2014
Nov-Feb  Investor roadshows and conferences in Europe
and America
Feb 26
 Release of FY 2014 IFRS financials and
guidance for Q1 2015
 Updates to financial analysts
Institution
Recommendation/
target price
Last
update
Last
change
Oddo Seydler Bank
Buy (€4.00)
Feb 23, 15
 (€4.00)
Deutsche Bank
Hold (€3.80)
Feb 22, 14
 (€3.80)
Hauck & Aufhäuser
Sell (€2.50)
Feb 20, 15
 (€2.50)
LBBW
Hold (€3.50)
Nov 6, 14
 (€3.50)
Ø
€ 3.45
Close Brothers Seydler was acquired by Oddo & Cie and operates under ‘ODDO
SEYDLER BANK AG’ as of January 7, 2015.
Stockholder Structure
Peer Group Valuation
As of Jan 31, 2014: 48,096,431 shares outstanding
2015 estimates and multiples
18.0%
82.0%
Free float
EGORA Group
Source: Aggregate as of Jan 31, 2015.
29







ADVA Management
DNB Asset (NOR)
Deutsche Asset (D)
Norges (NOR)
Dimensional (US)
BlackRock (US)
LBBW (D)








Fidelity (HK)
ING Inv. Adv. (NL)
Acadian (US)
Raiffeisen (CH)
Fidelity (US)
Sydinvest (DK)
Other inst. inv.
Retail inv.
1.3%
9.8%
7.8%
3.9%
1.6%
1.0%
1.0%
55.6%,
below
1.0% each
Source: UBS, JPMorgan, Thomson Reuters
databases and ADVA Optical Networking
analysts, Jan 31, 2015.
* ADVA Optical Networking data
based on IFRS and adjusted back to
U.S. GAAP.
In Summary, How We ADd VAlue
Profitable
growth
Focus on
growth
markets
Expanding
opportunities
Thought
leadership
Differentiated
technology
Operational
excellence
Loyal
customers
ADVA Optical Networking is a thought leader in developing
innovative connectivity solutions for cloud and mobile services
30
Thank You
Karin Tovar
Director
Investor Relations
t +1 201 940 7212
t +49 89 89 06 65 940
[email protected]
www.advaoptical.com
IMPORTANT NOTICE
The content of this presentation is strictly confidential. ADVA Optical Networking is the exclusive owner or licensee of the content, material, and information in this
presentation. Any reproduction, publication or reprint, in whole or in part, is strictly prohibited.
The information in this presentation may not be accurate, complete or up to date, and is provided without warranties or representations of any kind, either express or
implied. ADVA Optical Networking shall not be responsible for and disclaims any liability for any loss or damages, including without limitation, direct, indirect, incidental,
consequential and special damages,
alleged to have been caused by or in connection with using and/or relying on the information contained in this presentation.
Copyright © for the entire content of this presentation: ADVA Optical Networking.

ADVA Optical Networking Investor Presentation

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