Viavi Solutions Inc. · NASDAQ:VIAV
Viavi Solutions — JDS Uniphase — Investor Day (September 2014)
58 slides from Viavi Solutions's investor day presentation, Sep 11, 2014
Slide 1: JDSU Analyst Day
JDSU Analyst Day September 11, 2014
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements under Section 27A of the Securities Act of 1934. Forward-looking statements are all statements we make other than those dealing specifically with historical matters. These forward- looking statements include, among other things, infor
Slide 3: Agenda
Agenda TIME EVENT PRESENTER 9:00 – 9:05 am Welcome/Overview Bill Ong 9:05 – 9:15 am Creating Two Market-Leading Companies Tom Waechter 9:15 – 9:25 am Why Now? Rex Jackson 9:25 – 9:50 am Q&A – Part 1 Bill Ong Communications and Commercial Optical Products 9:50 – 10:10 am Alan Lowe (CCOP) 10:10 – 10:3
Slide 4: Creating Two Market-Leading Companies
Creating Two Market-Leading Companies JDSU Analyst Day September 11, 2014 Tom Waechter President and CEO
Slide 5: Powerful End Market Forces at Work
Powerful End Market Forces at Work Cloud-Based Big Data Internet of Everything Applications © 2014 JDS Uniphase Corporation | JDSU CONFIDENTIAL AND PROPRIETARY INFORMATION 5
Slide 6: Rapid Change is Our Opportunity – Now
Rapid Change is Our Opportunity – Now Customers moving to higher speeds and software-defined and virtualized networks … FAST 5 years of strong innovation and operational improvements Invested for growth NSE: Business value from application visibility CCOP: Capacity demand drives network expansion Op
Slide 7: Creating Two Leading Companies: Poised for Growth
Creating Two Leading Companies: Poised for Growth CCOP NSE/OSP #1 in telecom optical NE: #1 in field test components SE: Strong investments in Gaining share in datacom high growth market Growth in commercial lasers OSP: Leader in anti- counterfeiting SAM: $10B SAM: $7B CAGR: 10%
Slide 8: Driving Shareholder Value
Driving Shareholder Value Agile and Focused Improved Financial Profiles Clearer Investment Profiles Poised for Growth © 2014 JDS Uniphase Corporation | JDSU CONFIDENTIAL AND PROPRIETARY INFORMATION 8
Slide 9: Why Now?
Why Now? JDSU Analyst Day September 11, 2014 Rex S. Jackson Executive Vice President and CFO
Slide 10: Transforming Our Businesses – NSE
Transforming Our Businesses – NSE Operationally Invested to Poised to FIT WIN GROW Network Enablement (2011- Service Enablement 2014) Since 2010: Managing down Operational Improvements— legacy service assurance metrics at record highs business acquired from GM from 56% to a record 66.2% Agilen
Slide 11: Transforming Our Businesses – OSP
Transforming Our Businesses – OSP Operationally Invested to Poised to FIT WIN GROW 2010-2014 Exited low margin hologram and commodity coatings businesses Doubled anti-counterfeiting capacity at Beijing plant Significant investments in coating capacity in Suzhou Early successes in investments
Slide 12: Transforming Our Businesses – CCOP
Transforming Our Businesses – CCOP Operationally Invested to Poised to FIT WIN GROW 2010-2014 Completed outsourcing back end to low cost locations Substantial operational improvements—operating margins from 6.7% to 11.8% Strong innovation (>50% revenue from products < 2 years old) Significan
Slide 13: Operationally Fit and Invested to Win
Operationally Fit and Invested to Win R&D, Strong Innovation and $2.5B Invested in New Products Operational Improvements 540 for Growth Markets bps GM Expansion 55% Gross Margin 20% $700 R&D % of Revenue R&D CAPEX M&A $600 50% SG&A % of Revenue 15% $500 45% $400 10% $300 40% $200 5% 35% $100 30% 0
Slide 14: Creating Two Leading Companies
Creating Two Leading Companies CCOP NSE/OSP FY14 Revenues: $794.1M FY14 Revenues: $949.5M FY14 GM: 32.5% FY14 GM: 61.2% FY14 OM: 11.8% FY14 OM: 16.0% FY14 OpInc: $93.5M FY14 OpInc: $152.3M Non-GAAP; operating income excludes unallocated corporate expense of ~5-6% of revenue © 2014 JD
Slide 15: Expected Cost Reductions
Expected Cost Reductions POISED TO GROW Two focused companies to deliver ~$50M in additional annual cost reductions, net of new public company costs for CCOP Streamlined teams Portfolio infrastructure elimination Site consolidations Establishing a new, lean CCOP infrastructure Coupling SE growth pot
Slide 16: Roadmap to Completion
Roadmap to Completion Separation expected to occur through tax-free pro rata spinoff of CCOP to JDSU shareholders Corporate brand identities to be announced at a later date Separation subject to the satisfaction of closing conditions, including, among others: • Obtaining final approval from JD
Slide 17: Fiscal 1Q 2015 Guidance – Reaffirmed
Fiscal 1Q 2015 Guidance – Reaffirmed (Amounts non-GAAP and $millions) Total Revenue Y/Y Increase/(Decline) (5.6%) (0.9%) Total Revenue Q/Q Increase/(Decline) (9.7%) (5.3%) $480 $460 $440 $448.6 $420 $429.0 $425.0 $400 $405.0 $380 $360 $340 $320 $300 F1Q 2014 F4Q 2014 F1Q 2015 Revenue Revenue Managem
Slide 18: Segment Guidance and Business Models
Segment Guidance and Business Models F1Q15 Current Pre-Separation ($M, non-GAAP) F4Q14 Guidance* Models Targets CCOP Revenue $196.9 $205 +/- $5 >$210 >$210 Gross Margin% 33.3% ----- 33-36% 33-35% Operating Margin% 10.2% 13% +/- 1% 16-20% 12-14% NE Revenue $165.5 $125 +/- $5 NSE > $215 NE: $165 Gross
Slide 19: Driving Shareholder Value
Driving Shareholder Value Agile and Focused Improved Financial Profiles Clearer Investment Profiles Poised for Growth © 2014 JDS Uniphase Corporation | JDSU CONFIDENTIAL AND PROPRIETARY INFORMATION 19
Slide 20: Alan Lowe – CCOP
JDSU Analyst Day September 11, 2014 Alan Lowe Executive Vice President and President, Communication and Commercial Optical Products (CCOP)
Slide 21: Optical Communications Business – At a Glance
Optical Communications Business – At a Glance INDUSTRY/TECHNOLOGY MARKET TRENDS TRENDS Fixed Grid TrueFlex® 100Gb: in the Core in the Metro 40Gb 100Gb Hyperscale Data Center Copper Fiber in the enterprise driving 10Gb/40Gb growth FINANCIAL PERFORMANCE FY12 FY13 FY14 REV $586.8M $625.
Slide 22: Customer Challenges – JDSU Solutions
Customer Challenges – JDSU Solutions Increased Density Functionally Integrated Blades Smaller Modules 1.5W 10Gb T-SFP+ 3.5W 100Gb QSFP28 Reduced Power Dissipation Lower Power Modules Increased Flexibility TrueFlex® Solutions © 2014 JDS Uniphase Corporation | JDSU CONFIDENTIAL AND PROPRIETARY INFORMA
Slide 23: Competitive Advantage: Vertical & Functional Integration
Competitive Advantage: Vertical & Functional Integration Internal Wafer Fabrication Indium Lithium Niobate Silicon Gallium Phosphide (InP) (LiNbO3) Arsenide (GaAs) Sub-Assemblies and Components Modules and Circuit Packs Core Technology Developed in House with Assembly & Test at Low Cost CMs © 2014 J
Slide 24: JDSU Optical Communications in the Network
JDSU Optical Communications in the Network Circuit Packs and Tunable XFP/SFP+ Modulators Line Cards ITLAs Long Haul 40Gb Coherent Central Office Pump Lasers TrueFlex® ROADMs and 100Gb Coherent Amplifiers CFP2 Metro and Regional Receivers SFP, SFP+ and XFP Portfolio 1/10Gb Ethernet, 2/4/8/16Gb Fibre
Slide 25: Leveraging Core Technology & Infrastructure for 3-D Sensing
Leveraging Core Technology & Infrastructure for 3-D Sensing Long history of leadership in gaming New uses and applications coming: computing, home entertainment, mobile Moving from pre-production to full production for first personal computer application JDSU’s reliability track record key t
Slide 26: Commercial Lasers
Commercial Lasers
Slide 27: Commercial Lasers Business – At a Glance
Commercial Lasers Business – At a Glance INDUSTRIAL APPLICATION MARKET TRENDS Macro Material Processing Disruptive Technology: CO2 to Fiber Micro Material Processing Miniaturization of consumer Biomedical and Analytics electronics Instrumentation FINANCIAL PERFORMANCE FY12 FY13 FY14 REV $1
Slide 28: Commercial Lasers Market
Commercial Lasers Market INDUSTRIAL LASERS MARKET-2014 Macro (kW) Micro- Biomedical & analytics Materials Processing Materials Processing instrumentation (fiber) (solid-state) (gas/solid-state) WELDING CUTTING / OTHER ~75% ~25% $1,500M $600M $400M (>5% CAGR) (10-15% CAGR) (0-5% CAGR) $2.5B SAM Oppor
Slide 29: Market Impact of kW Fiber Lasers
Market Impact of kW Fiber Lasers Industrial kW+ Laser Revenue Trend $2,000 $800 $1,600 $600 17.5% $1,200 CAGR $400 $800 $200 $400 $0 $0 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 CO2 Fiber Solid State Direct Diode / Other Fiber CO2 Laser Fiber Laser provides has
Slide 30: Fiber vs. CO2 Lasers in Macro Materials Processing
Fiber vs. CO2 Lasers in Macro Materials Processing CHARACTERISTICS BEAM INITIAL COST OF QUALITY EFFICIENCY FOOTPRINT COST OWNERSHIP Fiber Laser ✔✔ ✔ ✔ ✔✔ CO2 ✖ ✖ ✔✔ ✖ © 2014 JDS Uniphase Corporation | JDSU CONFIDENTIAL AND PROPRIETARY INFORMATION 30
Slide 31: Vertical & Functional Integration: Optimizing Cost & Performance
Vertical & Functional Integration: Optimizing Cost & Performance Internal Wafer Fabrication Gallium Arsenide (GaAs) GaAs Wafer Pump Sources (industrial diodes) Commercial Lasers and Modules Core Technology Developed in House with Assembly & Test at Low Cost CMs © 2014 JDS Uniphase Corporation | JDSU
Slide 32: CCOP Positioned for Success
CCOP Positioned for Success Operationally Invested to Poised to FIT WIN GROW A Stand-Alone Business Focused on Execution, Growth, and Improved Margins Maintain #1 Position in Telecom TrueFlex® 100G in the Core Metro Leadership in Tunable XFP and SFP+ Win BIG in Datacom Hyperscale Data Cent
Slide 33: Agenda
Agenda TIME EVENT PRESENTER 9:00 – 9:05 am Welcome/Overview Bill Ong 9:05 – 9:15 am Creating Two Market-Leading Companies Tom Waechter 9:15 – 9:25 am Why Now? Rex Jackson 9:25 – 9:50 am Q&A – Part 1 Bill Ong Communications and Commercial Optical Products 9:50 – 10:10 am Alan Lowe (CCOP) 10:10 – 10:3
Slide 34: David Heard – NE/SE
JDSU Analyst Day September 11, 2014 David Heard Executive Vice President and President, Network Enablement and Service Enablement (NE/SE)
Slide 35: Network Enablement and Service Enablement – At A Glance
Network Enablement and Service Enablement – At A Glance HIGHLIGHTS MARKET OPPORTUNITIES Market leader in Network Network virtualization Enablement at business model Mobility (LTE/4G) New Service Enablement business Fiber build-outs building scale Faster Access, Transport New entry into
Slide 36: Market Drivers Stronger Than Ever
Market Drivers Stronger Than Ever Cloud-Based Big Data Internet of Everything Applications © 2014 JDS Uniphase Corporation | JDSU CONFIDENTIAL AND PROPRIETARY INFORMATION 36
Slide 37: End-to-End Visibility and Intelligence
End-to-End Visibility and Intelligence Enabling Our Customers to Navigate Change NETWORK AND SERVICE ENABLEMENT Network Enablement Service Enablement Build and Maintain the Network Ensure Customer Experience Design | Build | Turn-Up Monitor | Collect Data Certify | Troubleshoot | Optimize Analyze |
Slide 38: NE: Market Leading Business with a Long Runway
NE: Market Leading Business with a Long Runway Market Leader #1 in the field instruments market and taking share Product portfolio refreshed and focused on highest growth segments Only company with a path to virtualization across the end-to-end portfolio Advantage: core competence, culture, StrataSy
Slide 39: NE Product Line Aligned with Customer Challenges
NE Product Line Aligned with Customer Challenges CUSTOMER CHALLENGES MARKET GROWTH RATES FOCUSED GROWTH Workforce Efficiency PORTFOLIO 2014-18 M&A, cost pressure MAC Aging workforce - Access (5-6%) Reduce Capital Intensity - Cable 2-4% Constant Connectivity Mobility Test 4-5% New SLAs Fiber Te
Slide 40: Network Enablement Fact Sheet
Network Enablement Fact Sheet SAM: $2.7B, CAGR 4% PROFILE 7% 2015 SAM Sales Cycle: 1-6 months Deal Value: $1K-$1M 14% 28% Seasonal, 70-75% Book/Ship 16% 16% Strong Cash Flow 24% GLOBAL CUSTOMERS 19% 27% 23% 26% Access Cable COMPETITORS Fiber Mobility Ethernet © 2014 JDS Uniphase Corporation | JDSU C
Slide 41: SE: Leveraging Industry Dislocation
SE: Leveraging Industry Dislocation Strong position with carriers and Seat at the table new entry position in Enterprise Solid solutions portfolio, aligned with big data, mobility, SDN and NFV • Disruptive new mobile assurance driving displacement • Growing Location Intelligence pipeline • Netwo
Slide 42: SE Solutions Aligned to Growth Opportunities
SE Solutions Aligned to Growth Opportunities CUSTOMER CHALLENGES MARKET GROWTH RATES Market Competitiveness FOCUSED GROWTH Internet fast lanes (SLA) PORTFOLIO 2014-18 New revenue generation Location Intelligence 20%+ App performance Network Performance 10%+ Big Data Scale Management Mobile Ana
Slide 43: PacketPortal – Smart Network Application Platform
PacketPortal – Smart Network Application Platform Strong pull from our Clients Three (3) Tier 1 revenue customers Over 80 trials complete Commercial applications across the portfolio Three (3) high demand applications Direct alignment with SDN and NFV Three (3) of top five (5) global c
Slide 44: Service Enablement Fact Sheet
Service Enablement Fact Sheet SAM: $3.1B, CAGR 12% PROFILE 3% 7% 2015 SAM Sales Cycle: 12-24 months 13% Deal Value: $100K-$15M+ 14% 15% 3% Strong Backlog and 13% Deferred Revenue Growth GLOBAL CUSTOMERS 38% 15% 31% Network Performance Management Mobile Analytics & Assurance COMPETITORS Legacy Packet
Slide 45: NE/SE Positioned for Success
NE/SE Positioned for Success Operationally Invested to Poised to FIT WIN GROW Focused on the High Growth Markets Establishing a focused brand to take advantage of industry dislocation Attractive high growth markets High operating leverage with additional cost savings #1 market position and gaini
Slide 46: Luke Scrivanich – OSP
JDSU Analyst Day September 11, 2014 Luke Scrivanich Senior Vice President Optical Security and Performance (OSP) Products
Slide 47: Optical Security & Performance Products – At a Glance
Optical Security & Performance Products – At a Glance HIGHLIGHTS MARKET TRENDS Extend market leadership in overt Anti- Global growth of cash in Counterfeiting technology circulation Leverage core capability in optical Growing sophistication of coating with emerging opportunities counterfeiti
Slide 48: Strategic Vision: Priority Markets
Strategic Vision: Priority Markets Leveraging competency in Precision Optics for Collaborative Innovation Anti-Counterfeiting Other Markets ANTI- COUNTERFEITING CONSUMER ELECTRONICS GOVERNMENT HEALTHCARE Leadership and core business in anti-counterfeiting Emerging opportunities for growth in 3 marke
Slide 49: OSP – SAM Opportunity
OSP – SAM Opportunity END-MARKET 2014 CAGR Targeted end- Anti-counterfeiting $ 450M 5% markets driving Optical coating $ 400M 9% long- term Handheld spectrometer $ 300M 11% growth for OSP Total SAM $ 1,100M+ 6-8% Source: Industry reports, JDSU estimates © 2014 JDS Uniphase Corporation | JDSU CONFIDE
Slide 50: Anti-Counterfeiting: Competing in Attractive Markets
Anti-Counterfeiting JDSU Competing in Attractive Markets- Solving Customer Problems MARKET DRIVERS JDSU VALUE ADD Ubiquity, trust, convenience Easy to authenticate security that and privacy of cash transcends language and culture 375 billion notes in circulation; World-class operations in US and 150
Slide 51: Anti-Counterfeiting: JDSU Well Positioned in Market
Anti-Counterfeiting JDSU Well Positioned in Market Strong technical, commercial and operational barriers to entry Long-term contracts with JDSU RESULTS key customers in place 110 Trusted to protect the currencies Collaborative innovation of more than countries with market leaders OVMP gaining
Slide 52: Anti-Counterfeiting: Pigment Technology
Anti-Counterfeiting: Pigment Technology Unique Vacuum Key Attributes Coating Technology State-of-the-art vacuum roll coating technology Proprietary intellectual property Engineered material: color through physics Sophisticated process controls and tight supply chain security © 2014 JDS Uniphase Corp
Slide 53: Anti-Counterfeiting Leadership
Anti-Counterfeiting Leadership JDSU OVPTM Incorporated into SICPA OVI® JDSU OVMPTM Incorporated into SICPA SPARK® © 2014 JDS Uniphase Corporation | JDSU CONFIDENTIAL AND PROPRIETARY INFORMATION 53
Slide 54: Anti-Counterfeiting: SPARK Live
Anti-Counterfeiting: SPARK® Live (Utilizes JDSU OVMPTM) Smaller Particle Size Nickel Free New Designs LAUNCHED APRIL 2014 © 2014 JDS Uniphase Corporation | JDSU CONFIDENTIAL AND PROPRIETARY INFORMATION 54
Slide 55: Consumer Electronics: JDSU Enabling Innovation
Consumer Electronics: JDSU Enabling Innovation BACK CAMERA Proximity, 3-D Sensing, ambient light Autofocus lens and (in the future) UV sensor FRONT CAMERA Enabling 3-D Sensing, RGB NIR (low light imaging), consumer Autofocus lens electronic customers with our © 2014 JDS Uniphase Corporation | JDSU C
Slide 56: Government: Defense Applications
Government: Defense Applications NIGHT VISION Block specified wavelengths while maintaining high in-band transmittance LASER EYE PROTECTION Very high optical density (OD) and high-layer count dielectric coatings Longstanding legacy of enabling key government programs and ongoing collaboration to sup
Slide 57: Emerging Instrumentation Opportunity: Handheld Spectrometer
Emerging Instrumentation Opportunity: Handheld Spectrometer Robust, low power and ultra-compact spectrometer leveraging unique optical filter technology Applications in pharmaceuticals, security and food/agriculture © 2014 JDS Uniphase Corporation | JDSU CONFIDENTIAL AND PROPRIETARY INFORMATION 57
Slide 58: OSP Positioned for Success
OSP Positioned for Success Operationally Invested to Poised to FIT WIN GROW Extend Leadership in Currency & Leverage Thin Film Coatings Strong Market Drivers Continued growth of cash Increasing sophistication of counterfeiter’s demands robust overt security Higher performance sensors & display