Avaya — Q2 2014 Earnings Presentation
14 slides from Avaya's earnings presentation, May 7, 2014
Slide 1: Avaya Q2 2014 Earnings Call
The Power of We™ Avaya Q2 2014 Earnings Call May 7, 2014
Slide 2: Forward-Looking Statements
Forward - Looking Statements Certain statements contained in this presentation are forward-looking statements, including statements regarding our future financial and operating performance, as well as statements regarding our future growth plans and drivers. These statements may be identified by the
Slide 3: Fiscal Q2 2014 Key Messages
Fiscal Q2 2014 Key Messages Avaya remains committed to enhancing its innovative product portfolio Avaya is focused on aligning its Go-To-Market approach for products and services to meet the needs of the enterprise and mid-market segments Avaya’s Q2 financial performance reflects ongoing impro
Slide 4: Fiscal Q2 2014 Financial Highlights
Fiscal Q2 2014 Financial Highlights (Amounts other than Revenue are non-GAAP) Revenue of $1,060 million down ~6 percent from the prior quarter Compares to guidance range of $1,070 - $1,120, adjusted for sale of ITPS – Sequential decrease better than recent historical revenue seasonality – Product
Slide 5: Fiscal Q2 2014 Financial Highlights - Continued
Fiscal Q2 2014 Financial Highlights - Continued (Amounts other than Cash Flow and Cash are non-GAAP) Cash and cash equivalents balance of $384 million as of 3/31/14 includes cash related to asset sales and refinancing: – $58 million from sale of Westminster facility – $100 million from sale of ITP
Slide 6: Income Statement
Income Statement (All amounts non-GAAP, other than Revenue, and dollars in millions) FQ2 2014 FQ1 2014 FQ2 2013 Revenue: Product $532 $574 $529 Services $528 $557 $557 Total Revenue $1,060 $1,131 $1,086 Gross Margin: Product 61.8% 60.3% 55.4% Services 55.3% 55.8% 53.9% Total Gross Margin 58.6% 58.1%
Slide 7: Revenue by Geographic Region
Revenue by Geographic Region (Amounts GAAP and dollars in millions) FQ2 2014 FQ1 2014 FQ2 2013 Revenue U.S. $532 $604 $560 EMEA $313 $303 $298 APAC $112 $114 $116 AI $103 $110 $112 Total $1,060 $1,131 $1,086 % of Total Revenue U.S. 50% 53% 52% EMEA 29% 27% 27% APAC 11% 10% 11% AI 10% 10% 10% Total 1
Slide 8: Balance Sheet and Operating Metrics
Balance Sheet and Operating Metrics (Dollars in millions, Balance sheet items as of the end of the period indicated) FQ2 2014 FQ1 2014 FQ2 2013 Total Cash and Cash $384 $300 $302 Equivalents Cash from Operations ($28) $64 $82 Capital Expenditures and $27 $33 $27 Capitalized Software Days Sales Outst
Slide 9: Financial Summary
Financial Summary ($M) 1Q14 2Q14 Business Q2 Revenue - down Non-GAAP Actual Actual Model ~6% sequentially Revenue $1,131 $1,060 $1,100 – $1,150 – Better than recent historical Gross Margin % 58.1% 58.6% 58.5% – 59.5% seasonality – Weakness in US services Oper Expense % 41.0% 45.2% 38.5% – 39.5% and
Slide 10: Avaya Debt Maturity Profile
Avaya Debt Maturity Profile ($ in Billions, by calendar year) Cash Pay Notes (9.75%) TLB – 3 (4.8%) Senior Secured Bonds (7%) $4.0 PIK Toggle Notes (10.125%) TLB – 4 (7.5%) Senior Secured Bonds (9%) TLB – 6 (6.5%) 2nd Lien Bonds (10.5%) $3.5 $3.0 Overall Average Portfolio Interest Rate 7.1% $2.5 2.0
Slide 11: Upcoming Investor Events
Upcoming Investor Events (See www.avaya.com/investors for additional details) Tuesday, May 13, 2014 – Barclays High Yield Bond Finance Conference – Presenter: Dave Vellequette, CFO – Presentation Time: 8:10 AM Pacific / 11:10 AM Eastern Thursday, June 12, 2014 – Morgan Stanley Leveraged Finance
Slide 12: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted EBITDA Avaya Inc. S upplemental S chedule of Non-GAAP Adjusted EBITDA (Unaudited; in millions) For the three months ended For the six months ended March 31, March 31, 2014 2013 2014 2013 Loss from continuing operations $ (123) $ (112) $ (180) $ (201) Interest expense
Slide 13: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gross Margin and Operating Income Avaya Inc. S upplemental S chedules of Non-GAAP Reconciliations (Unaudited; in millions) For the Three Months Ended Mar. 31, June 30, S ept. 30, Dec. 31, Mar. 31, 2013 2013 2013 2013 2014 Reconciliation of Non-GAAP Gross Profit and Non-GAAP G
Slide 14: Non-GAAP Reconciliation
Non-GAAP Reconciliation Product and Services Gross Margins Avaya Inc. S upplemental S chedules of Non-GAAP Reconciliation of Gross Profit and Gross Margin by Portfolio (Unaudited; in millions) For the Three Months Ended Mar. 31, June 30, S ept. 30, Dec. 31, Mar. 31, 2013 2013 2013 2013 2014 Reconcil