Q IFRS Financial Results. October 20, 2011 Martinsried/Munich, Germany

Transcription

1 Q IFRS Financial Results October 20, 2011 Martinsried/Munich, Germany

2 Disclaimer FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements with words such as believes, anticipates and expects about 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 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 the stock option programs and amortization and impairment of goodwill and acquisition-related intangible assets, which are not reflective of the company 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

3 Business Update and Outlook Brian Protiva Chief Executive Officer 3

4 Q in Review Revenue growth to EUR 79.3 million, +2% vs. Q2 2011, largely due to increased Ethernet access business related to initial significant carrier investments for mobile backhauling solutions Pro forma gross margin at 43.5%, up from 43.0% in Q and up from 40.0% in Q3 2010, driven by focus on execution and cost management Pro forma operating income at 6.9% of revenues, up from 4.5% in Q and up from 5.5% in Q3 2010, with significant investment in development activities and tight management of operational expenses Net income at 12.3% of revenues, up from 1.1% in Q and up from 3.0% in Q3 2011, related to strong operating income, FX gains and initial recognition of deferred tax benefits in the U.S. Launch of industry s first 100G metro transport solution, based on non-coherent technology and complementing our coherent 100G long-haul solution Established footprint with several mobile backhaul operators and joint project wins via our cooperation with Juniper Networks 4

5 Prospects for Q Market growth drivers remain intact with three-year average annual market growth of 14% to 18%; 2011 growth is likely to be below this average Good opportunity for further revenue and profitability growth, with mobile backhauling projects ramping up and end-of-year spending Win of WDM managed services solution at BT Openreach they are offering managed services to their enterprise customers via our FSP 3000 WDM platform Development activities remain a major driver for profitable growth and make us more competitive than ever Ongoing strict cost control and profitability management 5

6 Business Segment Overview Revenues 2010: * EUR million % vs % 30% 40% Market Growth : ** 14-18% CAGR + 14% + 23% +14% Addressable Market 2010: ** EUR 2.5 billion 14% 29% 57% ENTERPRISE NETWORKS ETHERNET ACCESS CARRIER INFRASTRUCTURE Well-balanced and diversified mix of market segments * Segmental distribution of ADVA Optical Networking revenues, rounded to full 5 per cent. ** Source: Infonetics Research and ADVA Optical Networking internal estimates, December USD 3.3 billion translated into EUR at 1 EUR = 1.30 USD. 6

7 Future Mobile Traffic Growth Growth in mobile data is supported by the mix shift globally from 2G to 3G and 4G devices Jefferies Investment Banking Research estimates that 2020 mobile data traffic could increase 100x from 2011 levels * Number of subscribers by network technology Source: CDMA Development Group. * Jefferies estimates for the installed base of subscribers by technology on a global basis; Jefferies, Mobility 2020, How An Increasingly Mobile World Will Transform TMT Business Models Over the Coming Decade, September

8 Video Traffic Trends & Drivers More and more video is getting posted to sites like Youtube.com as increasingly high resolution content Formats more data-heavy than 1080p (Ultra- HD, 3D, Holographic, etc.) are emerging By 2020, subscribers will commonly have video projection capabilities embedded into their wireless devices The migration of Web-based video content from low resolution to high resolution will also drive a big portion of this bandwidth growth. * * Jefferies, Mobility 2020, How An Increasingly Mobile World Will Transform TMT Business Models Over the Coming Decade, September

9 ADVA Optical Networking Services Comprehensive service portfolio: PLAN Design & Consult BUILD CARE MANAGE Deploy & Integrate Train & Maintain Projects & Programs Efficient & flexible service delivery: ADVA ServiceEco system Global Network of own top experts and > 70 ADVACert partners Next step: growing service revenues to 15% over the next 3 years 9

10 Software Opportunities Our software platforms allows you to lower costs and to automate networks Software revenues have already ramped significantly - Q2 2011: 85% year-on-year increase Next major steps introduction of a licensing model to differentiate and charge for individual applications and features adding a new layer to the FSP Service Manager, supporting supervision and service creation for electrical switching for Ethernet and optical transport network services 10

11 Managed Enterprise Services ADVA Optical Networking s FSP 3000 WDM platform is foundation for BT Openreach s new Optical Spectrum Access service, designed to offer retail service providers an efficient option to serve their respective multisite business customers to transport enormous amounts of data with lowest latency possible Applications include data center connectivity for cloud and virtualized services, business continuity and disaster recovery, financial trading, video conferencing, and data backhaul Relationship with BT builds on ADVA Optical Networking s standing as trusted partner for Ethernet access devices and for managed enterprise services 11

12 Innovation Drives Higher Margins Striving for the Lowest Cost per GbE Mile Telecom service providers and enterprises have made it clear they need 100G transport technology in their networks in order to handle increased data traffic and bandwidth use. While the industry moves quickly with developing 100G DWDM for optical transport networks, speed isn t the only issue to be addressed. Spectral efficiency, price, space and power dissipation per bit also have to be improved over 10G and 40G DWDM transport solutions. The 100G modulation format defined by the Optical Internetworking Forum is optimized for WAN and backbone regional networks and does not meet these requirements when it comes to common metro and enterprise applications. ADVA Optical Networking recently launched the industry s first 100G transport solution for the metro market, based on non-coherent technology and complementing our coherent 100G long-haul solution The metro system can span up to 500km in distance, and it increases the capacity of WDM networks while lowering cost and reducing space and power consumption Potential to generate significant revenues due to first-in-market advantage 12

13 How we ADd VAlue OPERATIONAL EXCELLENCE Profitable Growth FOCUS ON GROWTH MARKETS THOUGHT LEADERSHIP Differentiated Technology Loyal Customers Expanding Opportunities ADVA Optical Networking is a thought leader in developing intelligent network infrastructure for high-growth markets 13

14 Financial Results Jaswir Singh Chief Financial Officer & Chief Operating Officer 14

15 Quarterly IFRS Revenues and Pro Forma Profitability Revenues and Pro Forma Gross Profit * (millions of EUR, % of revenues) (40.0%) 33.7 (42.5%) 29.0 (41.2%) 33.4 (43.0%) 34.5 (43.5%) Q Q Q Q Q Pro Forma Operating Income * (millions of EUR, % of revenues) 4.4 (5.5%) 4.3 (5.4%) 3.5 (4.5%) 5.5 (6.9%) 0.9 (1.3%) Q Q Q Q Q * Pro forma gross profit and pro forma operating income exclude non-cash charges related to the stock option programs and amortization and impairment of goodwill and acquisition-related intangible assets. 15

16 IFRS Profitability EUR million Q Q Q Q Q Pro Forma Operating Income 4.4 (5.5%) 4.3 (5.4%) 0.9 (1.3%) 3.5 (4.5%) 5.5 (6.9%) Operating Income 3.3 (4.1%) 3.1 (3.9%) -0.3 (-0.4%) 2.4 (3.1%) 4.4 (5.6%) Net Income 2.4 (3.0%) 1.6 (2.0%) -2.3 (-3.3%) 0.8 (1.1%) 9.7 (12.3%) Diluted EPS in EUR Margins, in % of Revenues Q Q Q Q % 6.9% 5.6% Q Q Q Q Q

17 Cash and Net Liquidity EUR million Cash & Cash Equivalents Financial Liabilities and Lease Obligations Net Liquidity Q Q Q Q Q Q Q Q Q High cash and record net liquidity position, demonstrating financial strength and operational flexibility 17

18 Working Capital Metrics Days Sales Outstanding (DSOs) Days Payable Outstanding (DPOs) Inventory Turns Q Q Q Q Q Q Q Q Q Healthy working capital metrics with DPOs > DSOs 18

19 Revenues Per Region Quarterly Development of Regional Revenues (millions of EUR, % of total) EMEA Americas Asia-Pacific % 8% % 6% % 41% 28% 21% 32% 38% 55% 64% 73% 63% 56% Q Q Q Q Q EMEA remains most significant revenue contributor, Q revenue increase driven by carrier investments for mobile backhauling solutions based on Ethernet access technology in the Americas 19

20 IFRS Consolidated Cash Flow Statement EUR million Q Q Net cash provided by operating activities Net cash used for investing activities Net cash provided by financing Net effect of foreign currency translation Net change in cash and cash equivalents Cash and cash equivalents at beginning of period at end of period 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. 20

21 Guidance Q Revenues between EUR 79 million and EUR 84 million Pro forma operating margin between 6% and 9% of revenues * ADVA Optical Networking will continue to perform quarterly reviews of the expected business development in respect of all intangible assets, including capitalized research and development expenses; these reviews may result in non-cash impairment charges * Excluding any potential impairment charges. 21

22 Thank you IMPORTANT NOTICE INVESTOR RELATIONS Wolfgang Guessgen t wguessgen@advaoptical.com 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.