Adtran Networks SE · XETR:ADV
Adtran Networks — ADVA Optical Networking — Investor Presentation (May 2013)
64 slides from Adtran Networks's investor presentation, May 2013
Slide 1: ADVA Optical Networking Investor Presentation
ADVA Optical Networking Investor Presentation April/May 2013
Slide 2: Disclaimer
Disclaimer FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements with words such as “believes”, “anticipates” and “expects” to describe expected revenues and earnings, anticipated demand for optical networking solutions, internal estimates and liquidity. These forward-look
Slide 3: Contents
Contents 1. Who We Are • Vision • Historical development 2. Addressable Market • Market size and environment • Market growth drivers • Recent project wins • Go-to-market strategy and customer base 3. Product and Solutions • Product and solutions overview • Expanding our reach • Optical, Ethernet and
Slide 4: 1. Who We Are
1. Who We Are 4 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 5: ADVA Optical Networking
ADVA Optical Networking Key Facts • Founded 1994, public company (FSE: ADV, TecDAX) • EUR 330 million revenue (2012) • 1,378 employees (on Dec 31, 2012) Target Markets • Carriers (Ethernet access, infrastructure) • Enterprises (corporates, government, research & education) Quality Commitment • TL 90
Slide 6: How We Continue to ADVAnce
How We Continue to ADVAnce Revenues (EUR million) LEAD 300 150 BUILD 50 START 0 Customers 30% carriers 70% carriers 100% enterprises 70% enterprises 30% enterprises Solutions FSP-I FSP 500 FSP OCM 4 Manage- FSP 150 FSP 3000 ment OCM 8 & 16 FSP-II FSP 2000 Suite 1994 2001 2013 Enterprises and carrier
Slide 7: Proven Thought Leadership
Proven Thought Leadership Data Center 1994 Connectivity Scalable 2000 Metro Networks Intelligent 2006 Service Delivery R&D facility, Meiningen, Germany Converged Transport from Access to Core 2013 Software-Automated Infrastructure Two decades of history delivering value-added solutions that support
Slide 8: ADVA Optical Networking Today
ADVA Optical Networking Today Successful Acquisition Strategy 2000 – Cellware 2000 – First Fibre Ltd. 2000 – Siemens Norway Telecom R&D 2004 – Metro Packet Systems 2006 – Covaro Networks 2006 – Movaz Networks +6% +7% +25% +7% +8% +6% +9% EUR 311 million EUR 292 million EUR 233 million EUR 330 millio
Slide 9: Our Global Presence
Our Global Presence Headquarter Office Representative Richardson Atlanta Munich Meiningen Berlin Singapore Shenzhen 9 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 10: 2. Addressable Market
2. Addressable Market 10 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 11: What Are We Trying To Solve?
What Are We Trying To Solve? Billions Trillions Millions of users of things of applications • Consumers Industry solutions • Content • Enterprises • Services • Service • Gaming providers • Commerce • … • … Mobility Cloud services Social media Big data analytics The New Network Mobile devices and app
Slide 12: Capitalizing on Next-Generation Networks
Capitalizing on Next-Generation Networks Interactive multi-media Single application Apple iPad Intelligent Approx. $200 billion infrastructure Legacy networks Global annual (dynamic, (static, narrowband, infrastructure investment purpose-built) application-driven, $5.4 billion* high-bandwidth, in op
Slide 13: What Macro Environment Do We Face?
What Macro Environment Do We Face? Financial sector and Fiscal consolidation Reduced growth rates governmental debt in high-income in the developing restructuring countries countries “Telecommunications is a facilitator of socio- economic advancement and is a critical utility for economic developmen
Slide 14: Business Segment Overview
Business Segment Overview Revenues 2012:* EUR 330.1 million 30% 30% 40% +6.2% vs. 2011 Addressable 18% 12% 70% market 2012:** EUR 4.2 billion ENTERPRISE ETHERNET CARRIER NETWORKS ACCESS INFRASTRUCTURE Well-balanced and diversified mix of market segments with low overall dependency on macro-economic
Slide 15: What's Up In The Telecom Market?
What’s Up In The Telecom Market? Challenges Opportunities Competition Growth Globalization New Services Regulation Differentiation Despite our demonstrated global leadership - profitable growth is a challenge 15 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 16: Where Do Carriers Invest?
Where Do Carriers Invest? Legacy Global carrier CAPEX 2012-16: New CAGR = 1% • SONET/SDH Source: The Insight Research Corp.: “The 2013 • Mobility (LTE) Telecommunications Industry Review: An Anthology • ADSL of Market Facts and Forecasts”, December 2012. • Application awareness • ATM • Scalability •
Slide 17: Drivers in Data Center Connectivity
Enterprise Networks: Drivers in Data Center Connectivity 566 • Dramatically growing capacity demand in data centers Peak requests 370,000k+ 262 of enterprises and per second communication providers 102 Q4 ‘11 • Increased adoption of cloud Q4 ‘10 40 services creates security 2.9 14 ‘09 ‘08 challenge
Slide 18: Efficient Data Center Connectivity
Enterprise Networks: Efficient Data Center Connectivity Amsterdam Internet Exchange: 100G metro for data center connectivity 100G Data center A Data center B FSP 3000 • First to market with 100G Metro • Highest density DWDM system on the market with innovative power management and minimum heat dissi
Slide 19: Ethernet Access: Drivers in Mobile Backhaul
Ethernet Access: Drivers in Mobile Backhaul • Internet Protocol-based 7 Radio Access Networks 6 5 make Ethernet primary choice Subscribers (billions) 4 for mobile backhaul 3 • Real-time applications and 2 increased mobility demand 1 0 low-latency architecture 08 09 10 11 12 13 14 15 Mobile Mobile Br
Slide 20: Unconstrained Mobile Backhaul
Ethernet Access: Unconstrained Mobile Backhaul FSP 150CC FSP 150EG-X Demarcation Aggregation Service Edge • Integrated, best-in-class synchronization architecture FSP 150 • Long-term supplier to BT into the world’s largest network for wholesale Ethernet access • Multi-million USD deployment for inte
Slide 21: Carrier Infrastructure: Drivers in Optical Infrastructure
Carrier Infrastructure: Drivers in Optical Infrastructure 70 $5 • Massive data centers 60 Price per port per Gbps (US$k) have changed 50 $4 Exabytes/month (trillions) traffic patterns 40 $3 30 $2 • Content now originates 20 $1 10 from many sources and 0 $0 challenges network dynamics 2009 2010 2011
Slide 22: Software-Defined Networking
Carrier Infrastructure: Software-Defined Networking Agile Optical Networking FSP 3000 • Extremely scalable and flexible optical layer • Forward looking control and management concepts • Integration with higher network layers (e.g. Juniper) Scalability, flexibility and automation for ultimate perform
Slide 23: Recent Project Wins (1/3): AMX-IX and DE-CIX
Recent Project Wins (1/3): AMX-IX and DE-CIX Scalable data center core connectivity “We are experiencing exponential growth in data transported over the exchange platform. We expect that this growth will continue in the next three years. To accommodate this development we are expanding and upgrading
Slide 24: Recent Project Wins (2/3): Kabel Deutschland
Recent Project Wins (2/3): Kabel Deutschland – Nationwide Core Agile Core Transport Cable Operator Hamburg • Applications Bremen • Digital TV Berlin • High-speed Internet Hannover • Telephony Düssel- • Services Leipzig Dresden dorf • 10GE Frankfurt • 100G • Infrastructure Kaiserslautern • Meshed net
Slide 25: Recent Project Wins (3/3): Hrvatska Elektroprivreda
Recent Project Wins (3/3): Hrvatska Elektroprivreda (HEP) Application Optimized Network / Power Utility • Applications • LAN connectivity • SAN connectivity • SDH connectivity • Services • STM-1…64, GE/10GE, FC • 100G ready FSP 3000 • Infrastructure • Ring / ROADM • Volume “This 100G introduction is
Slide 26: Customer-Optimized Sales Model
Customer-Optimized Sales Model OEM Solutions integration NMS integration CUSTOMER Long relationships DIRECT Regional focus Vertical segments Long relationships VAR e.g. Three-pronged distribution model to flexibly address customer needs 26 © 2013 ADVA Optical Networking. All rights reserved. Confide
Slide 27: Broad Base of Loyal Customers
Broad Base of Loyal Customers Operators Corporates Research and Education Global success with Optical+Ethernet solutions 27 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 28: 3. Products and Solutions
3. Products and Solutions 28 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 29: Our Solutions
Our Solutions Ethernet access Metro Core Optical access Enterprise 29 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 30: Private Enterprise Networks
Private Enterprise Networks Highest availability FSP 3000 Lowest latency Maximum security Primary data center Backup data center Market-leading enterprise connectivity solutions 30 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 31: Ethernet Access and Backhaul
Ethernet Access and Backhaul Service intelligence FSP 150 Service assurance Timing excellence Demarcation Aggregation Service edge FSP 150EG-X provides an entry to the aggregation market, a subset of the application space served by switches and routers 31 © 2013 ADVA Optical Networking. All rights r
Slide 32: Optical Network Infrastructure
Optical Network Infrastructure From access to core FSP 3000 Service management Multi-layer transport Access Metro Core The FSP 3000 agile core feature set combined with the Juniper relationship opens the door to the long-haul and tier 1 operator market 32 © 2013 ADVA Optical Networking. All rights r
Slide 33: Efficient 100G Metro
Efficient 100G Metro For Enterprise Networks & Metro Infrastructure Cost-Effective 100G Metro Compatible Short Reach Efficient Long Haul IEEE 100G Metro OIF • Works with existing installations Efficient Cabling Access Metro LH • Less than 1 Watt per Gbit/s • Ultra-compact design 0 10 100 1000 10000
Slide 34: Agile Core Express
Agile Core Express 100G Coherent and More Agile Optical Networking (long haul) Short Reach Efficient Long Haul IEEE 100G Metro OIF Scalable Cabling Access Metro LH • 96 wavelengths architecture • Optimized for 100G+ 0 10 100 1000 10000 Automated Distance (km) • GMPLS control plane • Service-based ma
Slide 35: Integrated Packet Optical Networking
Integrated Packet Optical Networking Best in class Best in class optical switching and transport packet LSP and TDM processing • Contentionless, colorless, directionless • Best in class routing and control plane multi-degree optical switching solution • Densest 96 lambda / 100G solutions • Massive s
Slide 36: The Future of Optical Transport
The Future of Optical Transport Value added features converge into the optical transport layer, delivering better end-user experience at lower cost, space and power Agile consumption.” Core Optical Network Router Encryption IP/MPLS Data aggregation TDM (SONET/SDH) Static pipe Agile feature-rich foun
Slide 37: Why Software-Defined Networking (SDN)?
Why Software-Defined Networking (SDN)? Programmable application- • Dynamic services aware networking • Customer apps • Full plug & play • Virtualized network resources Network Open source agents and controller • Extendible control & virtualization framework Open northbound FSP SW Suite application p
Slide 38: Why SDN and Optical Networking?
Why SDN and Optical Networking? ADVA Optical Networking‘s SDN innovation Monetize New network services Bandwidth Database Resource management analytics virtualization Network-based applications Network Applications Big data Policy Optimize management Operations Network utilization Service performanc
Slide 39: Where Do We Go from Here?
Where Do We Go from Here? Scalable, efficient capacity 1 Centralized intelligence towards network apps 7 2 Service assurance Network functions virtualization 6 3 High energy efficiency Network optimization 5 4 Application-aware networks The future is wide open! 39 © 2013 ADVA Optical Networking. All
Slide 40: 4. Operations Strategy
4. Operations Strategy 40 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 41: Operations Vision and Structured Project Initiatives
Operations Vision and Structured Project Initiatives Vision Strategic Focus Strategic Initiatives 1. Exploit ADVA Optical Networking’s growth to achieve Growth & accelerated cost reductions in the areas of direct Profitability materials, contract manufacturing, freight and distribution cost. Operati
Slide 42: Manufacturing and Distribution Sites
Manufacturing and Distribution Sites Europe China USA York (26) Meiningen (175) BMK, Augsburg, DE Munich (4) Sanmina-SCI, Shenzhen, CN Sanmina, Allen (TX), US Atlanta (26) Flextronics, Richardson (1) Timisoara, RO Shenzhen (12) Operations Headquarter EMS/CM supplier 42 © 2013 ADVA Optical Networking
Slide 43: Manufacturing Model WDM
Manufacturing Model WDM Meiningen Distribution Staging SUPPLIER BASE Manufacturing Atlanta Distribution Launch Jan 2013 Staging Shenzhen Distribution Staging 43 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 44: Manufacturing Model Ethernet
Manufacturing Model Ethernet York Distribution Staging SUPPLIER BASE Meiningen Shenzhen 3 PL Distribution Staging Atlanta Distribution Staging 44 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 45: 5. Competitive Landscape
5. Competitive Landscape 45 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 46: Competitive Overview
Competitive Overview Our • First to market with • Multi-year • Best scalability with ADVAntages innovation (e.g. market leader – ease-of-use 8G FC, InfiniBand, #1 in Ethernet (lowest first-in cost 100G Metro) Access Devices* but future proof) • Faster with partner • Intelligent service • Market-lead
Slide 47: Competitive Landscape Evolution
Competitive Landscape Evolution „Giants“ „Niche“ Profitability „Mainstream“ Relative technological differentiation Very few players have the critical R&D power to innovate (scale) with a lean enough overhead to be fast and profitable 47 © 2013 ADVA Optical Networking. All rights reserved. Confidenti
Slide 48: Our ADVAntage
Our ADVAntage Trusted Partner Speed for Customers Optical+Ethernet • High quality Innovation • Operational excellence • Responsive team • Financial stability • Customized delivery • World-class engineering team • 24/7 worldwide • Focused on latest technology • Unconstrained networking ADVA Optical N
Slide 49: Differentiation by Innovation
Differentiation by Innovation Fast addressing customer needs Research and prototyping of new concepts Ongoing dialogue with strategic customers Fast decision making and IPR creations implementation Standardization Close co-operation with suppliers We add value through differentiated, customer-focuse
Slide 50: Development Approach
Development Approach • >500 engineers • Global IT landscape • Present in all regions • >30 publications per year • Integrated tools • Proximity to customers • >20 patents per year • Centers of competence • Trusted technology (Optical+Ethernet+Control) partner Platform concept (Optical+Ethernet+Contr
Slide 51: 6. Financial Performance
6. Financial Performance 51 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 52: Annual IFRS Revenues and Pro Forma Profitability
Annual IFRS Revenues and Pro Forma Profitability Revenues and Pro Forma Gross Profit** (millions of EUR, % of revenues) +6% +7% Growth Y-o-Y +25% 330.1 310.9 291.7 +18%* +9%* +12%* 109.9* 119.4* (37.7%) (38.4%) 133.2* (41.6%) (42.9%) (40.4%) (45.0%) Pro Forma Operating Income** (millions of EUR, % o
Slide 53: Quarterly IFRS Revenues and Pro Forma Profitability
Quarterly IFRS Revenues and Pro Forma Profitability Revenues and Pro Forma Gross Profit** (millions of EUR, % of revenues) 81.7 85.9 82.3 80.3 77.0 32.3* 35.1* (39.5%) (40.9%) 32.3* 33.6* (43.6%) (39.3%) (45.4%) (44.5%) (41.8%) 29.8* (46.7%) (38.6%) Pro Forma Operating Income ** (43.4%) (millions of
Slide 54: IFRS Profitability
IFRS Profitability EUR million Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Pro Forma Operating Income 4.5 6.8 5.6 4.8 0.8 (5.5%) (8.0%) (6.8%) (6.0%) (1.0%) Operating Income 3.5 5.9 5.1 4.3 0.4 (4.3%) (6.9%) (6.2%) (5.3%) (0.5%) Net Income 4.0 5.1 3.5 4.1 0.8 (5.0%) (5.9%) (4.2%) (5.1%) (1.0%) Diluted E
Slide 55: Cash and Net Liquidity
Cash and Net Liquidity EUR million Cash & Cash Equivalents Financial Liabilities and Lease Obligations Net Liquidity 80 65 65.3 50 35 36.3 20 5 -10 -25 -29.0 -40 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2
Slide 56: IFRS Balance Sheet
IFRS Balance Sheet EUR million Dec. Mar. EUR million Dec. Mar. Assets 31, 31, Equity & liabilities 31, 31, 2012 2013 2012 2013 Cash & cash equivalents 70.6 65.3 Accounts payable 38.1 37.6 Accounts receivable 55.5 60.2 Financial liabilities 29.0 29.0 Inventories 41.3 39.3 Other liabilities 63.1 64.1
Slide 57: Revenues Per Region
Revenues Per Region Quarterly Development of Regional Revenues (millions of EUR, % of total) EMEA Americas Asia-Pacific 85.9 81.7 82.3 80.3 77.0 6% 6% 4% 6% 5% 38% 31% 30% 38% 33% 65% 64% 56% 56% 62% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 EMEA remains most significant revenue contributor 57 © 2013
Slide 58: IFRS Consolidated Cash Flow Statement
IFRS Consolidated Cash Flow Statement EUR million Q4 2012 Q1 2013 Net cash provided by operating activities 9.7 1.7 Net cash used for investing activities -9.0 -6.8 Net cash provided by (used for) financing activities -0.3 -0.3 Net effect of foreign currency translation -0.1 +0.1 Net change in cash
Slide 59: Guidance Q2 2013
Guidance Q2 2013 • Revenues between EUR 73 million and EUR 78 million • Pro forma operating margin between -2% and +2% of revenues* • ADVA Optical Networking will continue to perform detailed quarterly reviews of the expected business development in respect of all intangible assets, including capita
Slide 60: Investor Relations Overview (I/II)
Investor Relations Overview (I/II) Recent Investor Activities Planned Investor Activities Mar Institutional investors met in Frankfurt, May-Jun Investor roadshows and conferences in Barcelona, Hanover Europe and America: London, New York, Boston, Paris Apr 25 Release of Q1 2013 IFRS financials
Slide 61: Investor Relations Overview (II/II)
Investor Relations Overview (II/II) Share Price and Trading Volume Development Trading volume Apr 1, 2012 – Apr 19, 2013 Share price in thousand FWB Xetra data in € 6.00 2,000 1,750 Ø daily trading volume (in shares) 5.00 1,500 1 month: 211,074 1,250 6 months: 208,697 1,000 4.00 12 months: 186
Slide 62: 7. In Summary
7. In Summary 62 © 2013 ADVA Optical Networking. All rights reserved. Confidential.
Slide 63: How We ADd VAlue
How We ADd VAlue Sustainable growth Focus on Thought Operational growth leadership excellence markets Expanding Differentiated Loyal opportunities technology customers ADVA Optical Networking is a thought leader in developing intelligent network solutions for growth markets 63 © 2013 ADVA Optical Ne
Slide 64: Thank you
Thank you Investor Relations Wolfgang Guessgen t +49 89 89 06 65 940 wguessgen@advaoptical.com www.advaoptical.com
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