Harmonic Inc. · NASDAQ:HLIT
Harmonic — Q2 2010 Earnings Presentation
22 slides from Harmonic's earnings presentation, Jul 29, 2010
Slide 1: Harmonic Q2 2010 Results – July 29, 2010
July 29, 2010 Patrick Harshman—President Harshman President & CEO Carolyn Aver—CFO Harmonic — Confidential Harmonic Confidential
Slide 2: Forward-looking statements and non-GAAP notice
Harmonic Confidential Harmonic — Confidential 2 During the course of this presentation, we may make projections or other forward looking statements regarding future events or the future financial performance f off Harmonic, H i our competitive titi position iti and d momentum,t trends in the markets
Slide 3: Business performing very well
Harmonic Confidential Harmonic — Confidential 3 Business performing very well −Revenue $95.5M, up 18% year-over-year −Gross margins 51% (non-GAAP) −EPS $0.09 vs. $0.03 year-over-year (non-GAAP) −Bookings g $104M, $ , up p 28% yyear-over-year y High definition continues to drive growth −Expanding opp
Slide 4: High definition continues to drive growth
Harmonic Confidential Harmonic — Confidential 4 Global expansion of new HD channels −Broadcast, Cable, Satellite and Telco Growing HD video-on-demand choices −Driving edgeQAM processing capacity Investment in bandwidth optimization −New upgrade cycle of existing HD and SD encoders −Accelerating SDV
Slide 5: Strengthening technology leadership position
Harmonic Confidential Harmonic — Confidential 5 Strengthening technology leadership position −Electra 8000 has become industry gold standard −One million NSG edgeQAMs shipped −Powerful pipeline of new products and solutions Gaining market share −International satellite operators −Emerging market tel
Slide 6: Multi-screen, video distribution and emerging markets
Harmonic Confidential Harmonic — Confidential 6 Internet and converged multi-screen solutions −Progress Spanning content owners, broadcast, cable, satellite, telco −Cable IP video delivery via MPEG-4 AVC Video contribution and distribution −High-quality High-quality feeds from content owners to serv
Slide 7: Business performing very well; 2010 stand-alone forecast
Harmonic Confidential Harmonic — Confidential 7 Business performing very well − First-half bookings $57.8M, up 19% year-over-year − Leadership position bolstered by new products − Continued rapid growth in production applications Strong growth drivers − Continuing market shift to HD − International
Slide 8: Video Infrastructure Leader Spanning Content Production & Delivery
Harmonic Confidential Harmonic — Confidential 8 Video Infrastructure Leader Spanning p g Content Production & Delivery y Over 50 customer meetings held in Q2 Overwhelming validation of technology convergence vision − Integrated content creation and delivery workflows − Integrated solutions for on-de
Slide 9: Carolyn Aver—Chief Financial Officer
July 29 29, 2010 Carolyn Aver—Chief Financial Officer Harmonic — Confidential Harmonic Confidential
Slide 10: Q2 2010 financial summary
Harmonic Confidential Harmonic — Confidential 10 $Millions Q2 Q2 (except gross margin, EPS, DSOs, turns) 2010 2009 Change Revenue 95.5 81.3 +14.2 Gross Margin - Non GAAP 48.3 36.9 +11.4 Gross Margin % 51% 45% 5% OPEX - non GAAP 35.6 35 6 32.7 32 7 +2.9 +2 9 EPS - GAAP $0.05 ($0.08) +$0.13 EPS - Non-
Slide 11: Revenue and backlog
Harmonic Confidential Harmonic — Confidential 11 $Millions Revenue Backlog 120 100 80 60 40 20 0 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10
Slide 12: Revenue by segment, geography and customer
Harmonic Confidential Harmonic — Confidential 12 Edge & Access Video Processing International U.S. Services 12% 36% 48% 52% 52% C bl Cable S t llit Satellite T l & Oth Telco Other 17% 56% 27%
Slide 13: Gross margin, operating expenses and operating margin
Harmonic Confidential Harmonic — Confidential 13 Q2 Q1 Q2 $Millions 2010 2010 2009 Gross Margin 51% 51% 45% Operating Expenses $35.6 $35.0 $32.7 Operating O i Margin M i 13% 10% 5% Net Income $9.1 $5.8 $3.1 EPS $0.09 $0.06 $0.03 See GAAP to Non-GAAP Reconciliation slides below. 2009 and d 2010 are t
Slide 14: Cash, inventory and receivables
Harmonic Confidential Harmonic — Confidential 14 $Millions 7/2/10 4/2/10 Cash $277.9 $267.8 Inventory $42.8 $39.6 Receivables $71.4 $70.0 DSOs 68 75 Cap-Ex $2.9 $1.2 Pro forma Cash at closing g >$100 $ million
Slide 15: Move into second half of 2010 with strong backlog
Harmonic Confidential Harmonic — Confidential 15 Move into second half of 2010 with strong backlog Target Q3 revenues: $95M to $98M Target 2010 revenues: $370M to $375M Target Q3 non-GAAP gross margin: 48% to 50% − Impacted by new product roll outs Target Q3 non-GAAP op-ex: $36M to $37M Forecast exc
Slide 16: Omneon integration planning
Harmonic Confidential Harmonic — Confidential 16 Integration planning well under way − Supply chain, facilities, G&A Expected to be accretive in 2011 −Identified cost synergies of ~$8M to $10M in 2011 −Additional acquisition-related charges of approximately $5M to $6M i Q3 in Q3-Q4 Q4 2010 Detailed
Slide 17: Combined operating performance targets
Harmonic Confidential Harmonic — Confidential 17 Harmonic’s core business has momentum −Target low double-digit revenue growth −Target 15%+ operating margin (non-GAAP) Omneon accelerates Harmonic’s growth −Omneon Omneon 2010 revenue targeted to be $120M to $125M −Omneon historical growth 18% Strong
Slide 18: Patrick Harshman—President & CEO
July 29, 2010 Patrick Harshman—President Harshman President & CEO Carolyn Aver—CFO Harmonic — Confidential Harmonic Confidential
Slide 19: Use of non-GAAP financial measures
Harmonic Confidential Harmonic — Confidential 19 In establishing operating budgets, managing its business performance, and setting internal measurement targets, the Company excludes a number of items required by GAAP. Management g believes that these accounting g charges g and credits,, most of whic
Slide 20: GAAP to non-GAAP reconciliation, Q2 2010
Harmonic Confidential Harmonic — Confidential 20 Three Months Ended July 2, 2010 Three Months Ended July 3, 2009 Operating Net Income Operating Net Income Gross Margin Gross Margin Expense (loss) Expense (loss) (In thousands) GAAP $ 45,682 $ 41,585 $ 4,445 $ 33,547 $ 37,719 $ (7,919) Cost of revenue
Slide 21: GAAP to non-GAAP reconciliation, Q1 2010
Harmonic Confidential Harmonic — Confidential 21 Three Months Ended April 2, 2010 Three Months Ended April 3, 2009 Operating Net Income Operating Net Income (In thousands) Gross Margin Expense (loss) Gross Margin Expense (loss) GAAP $ 40,806 $ 38,345 $ 5,319 $ 25,385 $ 36,175 $ (18,843) Cost of reve
Slide 22: Patrick Harshman—President & CEO, Carolyn Aver—CFO
July 29, 2010 Patrick Harshman—President Harshman President & CEO Carolyn Aver—CFO Harmonic — Confidential Harmonic Confidential