Ciena Corporation · NYSE:CIEN

Ciena — Q4 2017 Earnings Presentation

44 slides from Ciena's earnings presentation, Dec 7, 2017

Slide 1: Ciena Investor Presentation, Period ended October 31, 2017
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. Ciena Corporation Period ended October 31, 2017 December 7, 2017 Investor presentation
Slide 2: Forward-looking statements and non-GAAP measures
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 2 Forward-looking statements and non-GAAP measures Information in this presentation and related comments of presenters contain a number of forward-looking statements. These statements are based on current expectatio
Slide 5: Continued execution of our strategy to diversify and scale the business
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 5 Continued execution of our strategy to diversify and scale the business Ciena has reached an important inflection point in our recent transformation ~8% total revenue | India: $38M ~15% total revenue Upgrade marke
Slide 6: Ciena has delivered differentiated growth & profit expansion
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 6 *Industry Average: ADTN, ADVA, CSCO, ERIC, INFN, JNPR and NOKIA 2017 = Represents Ciena fiscal 2017 actuals and midpoint of Q1’18 guidance, and peer consensus estimates as of 28 November 2017 0.8 1.0 1.2 1.4 1.6 1
Slide 7: Strengthening balance sheet
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 7 Strengthening balance sheet Ciena has improved its leverage and reduced its debt position 13.2 10.9 6.0 4.4 2.8 - 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 2013 2014 2015 2016 2017 Gross debt-to-EBITDA leverage ratio
Slide 8: Ciena is a market share leader in all target segments
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 8 Ciena is a market share leader in all target segments Optical Networks Report, 3Q17 #1 GLOBALLY • DATA CENTER INTERCONNECT • DATA CENTER INTERCONNECT for ICPs #1 N. AMERICA • TOTAL OPTICAL NETWORKING • PACKET OPTI
Slide 10: Overall industry growth outlook
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 10 Overall industry growth outlook Strongest growth in APAC 0.8% (6.1%) 2.6% '14-'16 '17 '18-'20 North America (1.6%) (6.0%) 2.6% '14-'16 '17 '18-'20 EMEA 11.5% 9.1% 3.9% '14-'16 '17 '18-'20 China (0.2%) (20.3%) 5.2
Slide 11: Our industry structure is evolving
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 11 Our industry structure is evolving Ciena uniquely positioned to address evolving customer demands Service Provider Service Provider Webscale CLOUD Services & Application Innovation End User Data Center Data Cente
Slide 12: Ciena is well positioned to take market share and expand addressable market
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 12 Grow our Packet & Optical Infrastructure Business Build our Network Automation Capabilities with Blue Planet Attack the Merchant Coherent Modem Market Explore Adjacencies for Growth “Best-of-breed at scale” Ciena
Slide 14: Taking market share and outperforming the competition
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 14 We are taking market share and outperforming the competition Our balance sheet is strengthening We are forcing the pace of innovation in the industry  Annual revenue growth faster than market at more than 7.5% 
Slide 15: FY'17 financial highlights
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 15 FY’17 financial highlights * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation. Adjusted Gross Margin Adjusted Operating Expense Adjusted Operating M
Slide 16: FY'17 operating metrics
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 16 FY’17 operating metrics Cash Flow from Operations DSO Inventory Turns $1.0B* $1.1BCash and Investments $235M** $290M 80 Days 80 Days 4.9** 5.6 FY’17 FY’16 *Reduced debt by ~$330M **Working Capital increased to me
Slide 18: Long-term financial targets
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 18 Long-term financial targets Ciena’s strategic drivers play a key role in our performance Optical Systems Attached Services Packet Networking Software and Related Services Components *Projections or outlook with r
Slide 19: Long-term financial targets
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 19 Long-term financial targets Execution of our strategy will drive top-line growth, profitability and cash generation *Projections or outlook with respect to future operating results are only as of December 7, 2017
Slide 21: Strengthening balance sheet
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 21 Strengthening balance sheet Ciena has made significant improvements since 2014 Convertible Debt Net Cash / (Debt) Gross Debt-to-EBITDA leverage ratio Ratings Agency Upgrades
Slide 22: Capital allocation priorities
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 22 Capital allocation priorities Ciena is proactively managing dilution and taking steps to return capital to shareholders Debt Exchange Offer Stock Buyback Business Expansion
Slide 24: Q4 Fiscal 2017 Financial Highlights
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 24 Q4 Fiscal 2017 Financial Highlights * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation.
Slide 25: Q4 Fiscal 2017 Comparisons (Year-over-Year)
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 25 Q4 Fiscal 2017 Comparisons (Year-over-Year) 45.2% 44.2% Adj. Gross Margin* Q4'16 Q4'17 $716.2 $744.4 Revenue Q4'16 Q4'17 12.8% 11.9% Adj. Operating Margin* Q4'16 Q4'17 * A reconciliation of these non-GAAP measure
Slide 26: Q4 Fiscal 2017 Comparisons Adjusted EPS
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 26 Q4 Fiscal 2017 Comparisons Adjusted EPS (Year-over-Year) $0.30 $0.32 Adj. EPS* Q4'16 Q4'17 New Method $0.44 $0.46 Adj. EPS* Q4'16 Q4'17 Prior Method • Beginning this quarter, Ciena is changing how it calculates i
Slide 27: Q4 Fiscal 2017 Balance Sheet and Operating Metrics
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 27 Q4 Fiscal 2017 Balance Sheet and Operating Metrics DSO
Slide 28: Q4 Fiscal 2017 Comparisons (Revenue by Segment)
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 28 Q4 Fiscal 2017 Comparisons (Revenue by Segment) (in millions) $598.9 $592.3 $566.2 $41.8 $42.3 $37.6 $103.7 $94.1 $112.4 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 Q4'17 Q3'17 Q4'16 Networking P
Slide 29: Q4 Fiscal 2017 Revenue by Segment
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 29 Q4 Fiscal 2017 Revenue by Segment (Amounts in millions) Q4 FY 2017 Q3 FY 2017 Q4 FY 2016 Revenue %* Revenue %* Revenue %* Networking Platforms Converged Packet Optical $504.7 67.8 $506.5 69.5 $488.0 68.1 Packet N
Slide 30: U.S. and International Revenue
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 30 U.S. and International Revenue (Amounts in millions) Revenue Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 Q1 FY 2017 Q4 FY 2016 United States $418.2 $438.1 $392.0 $379.7 $436.9 International $326.2 $290.6 $315.0 $241.8 $279.
Slide 31: Q4 Fiscal 2017 Revenue by Geographic Region
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 31 Q4 Fiscal 2017 Revenue by Geographic Region 59.2% 14.9% 5.8% 20.1% North America Europe, Middle East and Africa Caribbean and Latin America Asia Pacific
Slide 32: Revenue by Geographic Region
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 32 Revenue by Geographic Region (Amounts in millions) Revenue Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 Q1 FY 2017 Q4 FY 2016 North America $440.5 $465.2 $424.4 $405.9 $463.1 Europe, Middle East and Africa 110.7 96.1 105.8 9
Slide 34: Convertible notes exchange and diluted EPS methodologies
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 34 (1) On August 2, 2017, a portion of our 3.75% Senior Convertible Notes due October 15, 2018 (Issued 10/18/2010) (the “Original 2018 Notes”) were exchanged by the holders thereof for 3.75% Senior Convertible Notes
Slide 35: Illustrative Treasury Stock Method dilution by average stock price
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 35 Average Stock Price Per Share A Below $20.17 21 22 23 24 25 26 27 28 29 30 31 32 33 34 $ 35 Underlying Shares B Additional Shares in Diluted EPS Calculation (Additional EPS Shares) E÷A Conversion Value C = (A * B
Slide 37: Adjusted gross profit reconciliation
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 37 Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 Q1 FY 2017 Q4 FY 2016 GAAP gross profit $325,685 $328,076 $318,240 $273,785 $318,548 Share-based compensation-products 694 709 708 561 612 Share-based compensation-services 561 61
Slide 38: Adjusted income from operations reconciliation
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 38 Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 Q1 FY 2017 Q4 FY 2016 GAAP income from operations $55,799 $81,999 $57,820 $19,104 $59,673 Total adjustments related to gross profit 3,587 3,745 5,010 5,502 5,489 Total adjustments
Slide 43: EBITDA, net debt and leverage ratio reconciliation
Copyright © Ciena Corporation 2017. All rights reserved. Confidential & Proprietary. 43 2013 2014 2015 2016 2017 Net income (loss) (85,431)$ (40,637)$ 11,667$ 72,584$ 1,386,819$ Provision for income taxes 5,240 13,964 12,097 14,134 (1,230,699) Interest expense 44,042 47,115 51,179 56,656 55,852 Depr

Ciena — Q4 2017 Earnings Presentation on 6ix

Ciena — Q4 2017 Earnings Presentation

Slide 1: Ciena Investor Presentation, Period ended October 31, 2017

Slide 2: Forward-looking statements and non-GAAP measures

Slide 3: Table of Contents

Slide 4: Our Pedigree

Slide 5: Continued execution of our strategy to diversify and scale the business

Slide 6: Ciena has delivered differentiated growth & profit expansion

Slide 7: Strengthening balance sheet

Slide 8: Ciena is a market share leader in all target segments

Slide 9: Market Context

Slide 10: Overall industry growth outlook

Slide 11: Our industry structure is evolving

Slide 12: Ciena is well positioned to take market share and expand addressable market

Slide 13: FY'17 Highlights

Slide 14: Taking market share and outperforming the competition

Slide 15: FY'17 financial highlights

Slide 16: FY'17 operating metrics

Slide 17: Long-Term Targets

Slide 18: Long-term financial targets

Slide 19: Long-term financial targets

Slide 20: Balance Sheet & Capital Allocation

Slide 21: Strengthening balance sheet

Slide 22: Capital allocation priorities

Slide 23: Q4'17 Financials

Slide 24: Q4 Fiscal 2017 Financial Highlights

Slide 25: Q4 Fiscal 2017 Comparisons (Year-over-Year)

Slide 26: Q4 Fiscal 2017 Comparisons Adjusted EPS

Slide 27: Q4 Fiscal 2017 Balance Sheet and Operating Metrics

Slide 28: Q4 Fiscal 2017 Comparisons (Revenue by Segment)

Slide 29: Q4 Fiscal 2017 Revenue by Segment

Slide 30: U.S. and International Revenue

Slide 31: Q4 Fiscal 2017 Revenue by Geographic Region

Slide 32: Revenue by Geographic Region

Slide 33: Convertible Debt Overview

Slide 34: Convertible notes exchange and diluted EPS methodologies

Slide 35: Illustrative Treasury Stock Method dilution by average stock price

Slide 36: Q4 Fiscal 2017 Appendix

Slide 37: Adjusted gross profit reconciliation

Slide 38: Adjusted income from operations reconciliation

Slide 39: & Proprietary.

Slide 40: & Proprietary.

Slide 41: & Proprietary. • • • • • • • •

Slide 42: & Proprietary. • • • • • • •

Slide 43: EBITDA, net debt and leverage ratio reconciliation

Slide 44: 44Copyright