Post on 17-May-2015
Analyst & Investor Day
September 19, 2012 Martinsried/Munich, Germany
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 2 2
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-looking statements involve a number of unknown risks, uncertainties and other factors that could cause actual results to differ materially. Unknown risks, uncertainties and other factors are discussed in the ‘risk report’ section of ADVA Optical Networking’s annual report 2011.
CONSOLIDATED PRO FORMA FINANCIAL RESULTS
ADVA Optical Networking provides consolidated pro forma financial results in this presentation solely as supplemental financial information to help investors and the financial community make meaningful comparisons of ADVA Optical Networking’s operating results from one financial period to another. ADVA Optical Networking believes that these pro forma consolidated financial results are helpful because they exclude non-cash charges related to the stock option programs and amortization and impairment of goodwill and acquisition-related intangible assets, which are not reflective of the company’s operating results for the period presented. This pro forma information is not prepared in accordance with IFRS and should not be considered a substitute for historical information presented in accordance with IFRS.
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 3 3
Agenda
• 02:00pm – 03:30pm: Brian Protiva – CEO
• 03:30pm – 03:45pm: Coffee Break/Q&A
• 03:45pm – 04:30pm: Product Demo
• 04:30pm – 04:45pm: Coffee Break
• 04:45pm – 05:45pm: Jaswir Singh – CFO & COO
• 05:45pm – 06:00pm: Coffee Break/Q&A
• 07:30pm – 09:30pm: Dinner – Vorstand, all attendees
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 4 4
Brian Protiva, CEO
September, 2012
ADVA Optical Networking The Best of Both Worlds
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 6 6
Our Environment
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 7 7
Brian Protiva
CEO
Jaswir Singh
CFO & COO
Christoph Glingener
CTO
Christian Unterberger
CSMO
Executive Team
Technology innovation Revenue growth Operational execution Key responsibility:
Experienced and stable leadership team
Quality Management
Human Resources
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 8 8
Crisis? What Crisis?
The global boundary conditions will remain difficult for some time
$122,100,000,000,000 US unfunded liabilities
by Dec 31, 2012
Euro Crisis China's economy has grown at its slowest pace in three years
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 9 9
The Telecom Market
Profitable growth is a challenge
Regulation
Competition
Globalization New Services
Differentiation
Profitability
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 10 10
The State Of Our Industry
Partly cloudy. But: the network is the foundation for all
Components
Enterprises
Consumer Devices
Cloud Services
Content Service Providers
Systems
Carriers
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 11 11
?
What Does It Take To Win?
Speed to outperform Str
ength
to innovate
• Innovation
• Speed
• Trusted Partner
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 12 12
ADVA Optical Networking
Growth Data 2008 – 2012F
Market
0%
20%
40%
60%
80%
100%
120%
140%
2008 2009 2010 2011 2012F
LH WDM
Metro WDM
EAD
CAGR: 4.2%
CAGR: 12%
Consistent multi-year performance
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 13 13
“Our mission is to be the trusted partner for
innovative Optical+Ethernet transport solutions
that ADVANCE next-generation networks for
data, storage, voice and video services.”
ADVA Optical Networking Today
Your trusted partner for speed and innovation
Our History
• 18 years of innovation
Our Performance
• 19% revenue CAGR since 1995, 12% in the last 4 years
Our Innovation Strength • 570 engineers at year-end 2011,
up 15% per year on average over the last 4 years
Our US Focus
• 38% revenue today; target 50% by 2015
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 14 14
Global Presence
Richardson Atlanta Munich Meiningen Berlin Singapore Shenzhen
Headquarter
Office
Representative
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 15 15
Strength To Innovate For Growth Markets
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 16 16
Growth Is In Mobility
Mobility
Mobile communication has become a way of life
Mobile Mobile Broadband Fixed Broadband
Subscri
bers
(billions)
0
1
2
3
4
5
6
7
08 09 10 11 12 13 14 15
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 17 17
What Matters?
Backhaul with synchronization & timing to support LTE
Service Assurance
Service Intelligence
Timing Excellence
FSP 150
Demarcation Aggregation Service Edge
FSP 150EG-X
FSP 150CC
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 18 18
Mobile Backhaul Innovation
FSP 150
>15 MBH customers, > 900 gateway units shipped
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 19 19
Ethernet Wholesale
Our Ethernet Innovation
The industry’s leading Carrier Ethernet implementation
• Connectivity & Resiliency with accurate HW-based OAM/PM
• Out-of-Service Testing & In-Service Monitoring
• Aggregation for efficient hand off
• Plug&Play installation, Service provisioning & monitoring
The Foundation for Business Ethernet Services 1
Efficient inter-carrier handoff (E-NNI)
2
Enable a seamless transition towards Ethernet
• TDMoE (CES/PWE3) and TDMoE
The solution for wholesale and integrated approaches
• The leading clock recovery / synchronization service with assurance
• Security solutions for mobile backhaul
• Mobile backhaul optimization
• Data and Sync transparent virtual dark fiber backhaul
SONET/SDH Replacement 3
Mobile Backhaul 4
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 20 20
Growth Is In Data Centers
Datacenter traffic will grow by 5 times by 2015 to 5 zettabytes
Data Centers
Q4 06 Q4 07 Q4 08 Q4 09 Q4 10
Total number of objects stored in amazon S3, in billion
2.9 14
40
102
262 Peak requests 200k+
per second
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 21 21
Primary Data Center Backup Data Center
What Matters?
Lowest Latency
Highest Availability
Maximum Security
FSP 3000
Growth, security and resource consumption are primary pain points
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 22 22
Data Center Innovation
FSP 3000
More than 50% of our 10G connectivity sales are now encrypted; 100G metro extremely successful, winning us new business
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 23 23
Our Enterprise Innovation
Enable secure & versatile lowest latency connectivity
• Leading support of Storage / HPC and Ethernet
• Lowest latency on the market
• Unique Security Suite
• Enable Infrastructure as a Service (IaaS)
DC Connectivity (Enterprises, Government) 1
Provide the market leading high capacity DC connectivity solution
• Efficient transport for 1GbE to 100 GbE
• Cost efficient, assured Ethernet DC access
• Enable Infrastructure as a Service (IaaS)
DC Connectivity (Web2.0, Internet eXchanges) 2
Media L1 video networking Utilities Operational networks
Dedicated Solutions 3
Innovative connectivity for institutes, universities, schools
• Scalable and open optical connectivity
Research & Education 4
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 24 24
Growth Is In Cloud Infrastructure
Massive data centers have changed traffic patterns
Exabytes/month Cost of SP equipment change per year
E
xabyte
s/m
onth
(tr
illions)
0
10
20
30
40
50
60
70
2009 2010 2011 2012 2013 2014
Price p
er
port
per
Gbps (
US$k)
$0
$1
$2
$3
$4
$5 OTT Video
Cloud Services
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 25 25
Access Metro Core
What Matters?
Agile optical network with end-to-end SLA assurance is the foundation
Service Management
From Access to Core
Multi-Layer Transport
FSP 3000
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 26 26
Infrastructure Innovation
The agile optical network with end-to-end SLA assurance is the foundation
FSP 3000
“ADVA Optical Networking’s relationship with Juniper provides its entry into the core optical network market and the tier 1 operator market …”
Rick Talbot, Current Analysis, July 2011
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 27 27
Our Infrastructure Innovation
A scalable and transparent FTTx infrastructure solution
• Optimum cost/fiber/energy/rack usage
• Scalable passive and active solutions
• Optojack™ last mile supervision
• Dedicated optical & Ethernet edge gateway solutions
Optical Access and Backhaul 1
Provide the market leading flexible metro solution
• Highly scalable optical layer
• Focus on OTN and POT access and aggregation
• Integrated optical & Ethernet solutions (150/3000)
• Innovative demarcation and passive solutions
• Evolution to Software Defined Optical Networks (SDON)
Metro 2
Agile Core Select and Core Express Solutions
• Scalable, efficient optical layer with self-monitoring
• Optimized OTN solutions
• Industry leading control plane – evolution to Openflow
• Evolution to Software Defined Optical Networks (SDON)
• Packet optical networking via partnership
Core 3
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 28 28
Outlook: SDN And Openflow
• Software Defined Networking (SDN)
• SDN virtualizes the network infrastructure – the natural step beyond virtualization of servers and storage
• Virtualization has appealed to network managers for some time; consequently, SDN is a strategy of substantial global interest.
• OpenFlow
• Has emerged as one of the world’s most popular SDN protocols, particularly among data centers for Web 2.0 companies
• One solution for the control of cloud computing, storage, and networking resources with a single, unified API*
• The Vision
• With a single instruction, the controller can jointly create virtual machines, and reserve computing, networking and storage resources in a virtual slice.
OpenFlow is seen as a native interface for SDN
*Application Programming Interface
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 29 29
Optical Network Elements (NE) w. lean Network Management (NM)
and embedded Control Plane
SW content: medium/low
Network Control
NE Software
NE Hardware
Multi-Layer Operation Today
Individual, proprietary management solutions leading to a non-integrated, costly mode of operation
Packet switch/router Network Element (NE) w comprehensive management & control SW
SW content: high
Network Control
NE Software
NE Hardware
Application
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 30 30
Transport Applications
Constraint-aware agile optical network acting as a large, geographically dispersed switch
with standardized Openflow IF
SW: new opportunities at app layer
Generalized flow forwarding engine with standardized Openflow IF
SW content: medium/low
SDN Changes The Software Content
Higher layer equipment risks commoditization New opportunities for optical networks through additional software content
NE Software
NE Hardware
Network Intelligence
NE Software
NE Hardware
Network Control
Application
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 31 31
SDN Leadership
Scalability, flexibility and automation for ultimate performance
Agile Optical Networking
• Extremely scalable and flexible optical layer
• Forward looking control and management concepts
• Integration with higher network layers (e.g. Juniper)
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 32 32
CTO Organization
Christoph Glingener CTO
Engineering
Network Management
Metro Core
Metro Access
Ethernet Access
System Verification
Test
Advanced Technology
Product Line Management
New Product Introduction
Lifecycle Management
Processes
Thought leadership and innovation
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 33 33
Speed To Be The Trusted Partner For Our Customers
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 34 34
Operators R & E
Our Broad And Loyal Customer Base
Leveraging our speed and innovation to build trust with enterprises, carriers and partners around the globe
Enterprises
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 35 35
Go-To-Market Strategy
Solutions integration
NMS integration
Long relationships
Regional focus
Vertical segments
Long relationships
e.g.
CUSTOMER
Three-pronged distribution model to flexibly address customer needs
VAR
OEM
DIRECT
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 36 36
2012 FC
51%30%
19%
55%24%
21%
Revenue by Channel Partner
VAR
Direct
OEM
Good mix between direct and indirect (OEM & VAR partners) business; Strengthening VARs through new partner program
2011
NEW!
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 37 37
Regional Focus
We are leveraging our partner landscape and experience with carrier AND enterprise customers
Grow carrier business further and penetrate additional enterprise verticals
North America
Growth in carrier infrastructure and mobile backhaul; expansion to new enterprise verticals
Europe
From managed services to carrier infrastructure (mobile backhaul, metro + long-haul infrastructure)
APAC
Grow business via regional partners + direct touch sales force into new territories
Emerging Markets
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 38 38
Strategic Sales Initiatives 2.0
Top 10
Named Accts
New
Cust.
Strategic Partnership
Service Business Growth engine Software
Improve margins Ethernet Attack Increase market share
Processes & Efficiency Increase efficiency
Top 10
Glo
bal
account
pro
gra
m
Strategic Sales Initiatives (SSI) drive revenue and lower cost of sales
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 39 39
SSI: Juniper-ADVA Partnership
PTX5000
OTS1000
MX/T-series
FSP 3000
MX-series
FSP 150
Qfabric
FSP 3000
Efficient, integrated and aligned solutions
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 40 40
SSI: Attacking Ethernet Opportunities
Content distribution
Business applications – ERP, CRM
TelePresence
Online trading
Core banking applications
Broadcasting
PoS and ATM applications
As transport converges on Ethernet, so do services. Leverage Ethernet as growth opportunity and expand into networking solutions.
FSP 150 Family
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 41 41
Marketing Strategy
Awareness and demand creation via efficient multipliers and personal touch
Media
Customers
Partners
Analysts
Live Events
PR & Online
Technical Marketing
Technology
Market
Building a strong community around our brand
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 42 42
Custo
mer
facin
g
Busin
ess s
upport
CSMO Organization
Christian Unterberger CSMO
Applications & Solutions
Management
Marketing
Technical Sales
Customer Operations
Sales Operations
Tools and Processes
APAC
British Telecom
Europe
Emerging Markets
North America
Revenue growth – building a community based on trust
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 43 43
Our ADVAntage
ADVA Optical Networking has a unique combination of customer focus and innovation
• World-class engineering team
• Focused on latest technology
• Unconstrained networking
Optical+Ethernet
Innovation
• Responsive team
• Customized delivery
• 24/7 worldwide
Speed for Customers
• High quality
• Operational excellence
• Financial stability
Trusted
Partner
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 44 44
Q&A
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 45 45
3.30pm – 3.45pm Coffee Break
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 46 46
3.45pm – 4.30pm Product Demo
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 47 47
4.30pm – 4.45pm Coffee Break
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 48 48
Jaswir Singh CFO & COO
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 49 49
Global Operations
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 50 50
Operations Vision And Structured Project Initiatives
Strategic Initiatives Strategic Focus
1. Exploit ADVA Optical Networking’s growth to achieve accelerated cost reductions in the areas of direct materials, contract manufacturing, freight and distribution cost.
Provide highest quality products at market leading order fulfillment service levels (on time to commit and order lead times) to our customers, while reducing inventory and working capital needs.
1. Integrate processes successively and ways of working across all ADVA sites to increase operational effectiveness.
2. Help standardize manufacturing requirements for our products and consolidate contract manufacturing supplier base.
Motivate, educate and nurture our team to achieve high levels of performance, personal growth and job satisfaction.
Vision
All strategic initiatives driven by operations are aligned with the ADVA Efficiency Engine (AEE)
Operations will be a customer-centric organization that is agile and adaptive
in exceeding expectations and
inspiring confidence of all
stakeholders
Growth & Profitability
Optical+Ethernet Innovation
Operational Excellence
People
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 51 51
Jaswir Singh CFO & COO
Operations
Sites
Meiningen, Germany
Norcross, Georgia,
USA
York, United
Kingdom
Shenzhen, China
Functions
Operations Engineering & Projects
Supply Chain
Manage-ment
S&OP Process and Inventory
EMS Manage-
ment
COO Organization
Finance
Jaswir Singh
CFO & COO
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 52 52
Manufacturing And Distribution Sites With Functions
Headquarter
Operations/Dist
EMS/CM supplier
Europe
Atlanta (27)
York (26)
Flextronics, Timisoara, RO
Shenzhen (12)
Sanmina-SCI, Shenzhen, CN
Meiningen (175)
Munich (4)
Operations Engineering & Projects
Supply Chain Mgmt
S&OP Process and Inventory
EMS Mgmt
USA
China
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 53 53
Finance
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 54 54
Jaswir Singh CFO & COO
Finance
Commercial Management
EMEA North America
APAC
Decision Support
S&M Operations
R&D G&A
Group
Accounting Tax
Investor Relations & Treasury
Legal
Information Technology
Travel Facilities
Business Systems
CFO Organization
Operations
Jaswir Singh
CFO & COO
Internal Audit
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 55 55
CFO Organization Vision
CFO organization has grown into global team that is dynamic,
professional, efficient and scalable
The CFO team enables and influences quality decisions that are in the best interest of ADVA Optical Networking through the provision of timely and relevant business
information to all stakeholders, whilst ensuring all ethical and statutory standards are met.
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 56 56
Annual IFRS Revenues And Pro Forma Profitability
* Growth vs. previous year.
** Pro forma operating income is calculated prior to non-cash charges related to the stock option programs and amortization and impairment of goodwill and acquisition-related intangible assets.
Revenues and Pro Forma Gross Profit
(millions of EUR, % of revenues)
Pro Forma Operating Income**
(millions of EUR, % of revenues)
232.8
100.0 (42.9%)
6.1 (2.6%)
2009
2009
2010
291.7
121.2 (41.6%)
13.3 (4.6%)
2010
310.9
133.5 (42.9%)
2011
2011
17.3 (5.6%)
+7%* +25%*
+7%*
+7%* +25%*
+7%*
+9%* +21%* +10%*
+30%*
+118%*
n.a.*
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 57 57
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
Quarterly IFRS Revenues And Pro Forma Profitability Revenues and Pro Forma Gross Profit***
(millions of EUR, % of revenues)
Q2 2011
77.8
29.7** (38.1%) (43.0%)
3.5 (4.5%)
Q3 2011
79.3
30.9** (39.0%) (43.5%)
5.5 (6.9%)
Q4 2011
83.4
33.3** (40.0%) (43.9%)
7.4 (8.9%)
+11%* +2%* +5%*
+17%* +4%* +8%*
+286%*
+56%*
+36%*
32.3** (39.5%) (43.6%)
-3%*
81.7
-2%*
Q1 2012
4.5 (5.5%)
-40%*
Pro Forma Operating Income***
(millions of EUR, % of revenues)
* Growth vs. previous quarter. ** Amortization for capitalized development projects is presented as cost of goods sold from 2012. Prior period information has been adjusted accordingly, by reclassification of amortization from research and development expenses to cost of goods sold. The percentages in red represent pro forma gross margins prior to reclassification. *** Pro forma operating income is calculated prior to non-cash charges related to the stock option programs and amortization and impairment of goodwill and acquisition-related intangible assets.
Q2 2012
35.1** (40.9%) (45.4%)
+9%*
85.9
+5%*
6.8 (8.0%)
+53%*
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 58 58
-5-3-1135791113
IFRS Profitability
EUR million Q2 2011 Q3 2011 Q4 2011 Q1 2011 Q2 2012
Pro Forma Operating Income
3.5
(4.5%)
5.5
(6.9%)
7.4
(8.9%)
4.5
(5.5%)
6.8
(8.0%)
Operating Income 2.4 (3.1%)
4.4 (5.6%)
6.7 (8.0%)
3.5 (4.3%)
5.9 (6.9%)
Net Income 0.8 (1.1%)
9.7 (12.3%)
8.7 (10.4%)
4.0 (5.0%)
5.1 (5.9%)
Diluted EPS in EUR 0.02 0.20 0.18 0.08 0.10
Margins, in % of Revenues
5.9%
6.9%
8.0%
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 59 59
Cash And Net Liquidity
EUR million Cash & Cash Equivalents
Financial Liabilities and Lease Obligations
Net Liquidity
40.8
69.9
-29.1
All-time high quarter-end cash and net liquidity positions at the end of Q2 2012, demonstrating financial strength and operational flexibility
Q1 2008
-40
-25
-10
5
20
35
50
65
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 60 60
4.4
4.6
4.8
5.0
5.2
5.4
5.6
5.8
6.0
40
50
60
70
80
90
100
Working Capital Metrics
Days Sales Outstanding (DSOs)
Days Payable Outstanding (DPOs)* Inventory Turns*
Healthy working capital metrics with DPOs > DSOs
56
5.6
54
* Amortization for capitalized development projects is presented as cost of goods sold from 2012. Prior period information has been adjusted accordingly, by reclassification of amortization from research and development expenses to cost of goods sold. As prior period values for DPOs (defined as average accounts payable / cost of goods sold) and inventory turns (defined as cost of goods sold / average inventories) are affected by this reclassification as well, these values have also been adjusted.
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 61 61
Revenues Per Region
Quarterly Development of Regional Revenues
(millions of EUR, % of total)
EMEA Americas Asia-Pacific
Q2 2011
77.8
5%
32%
63%
Q3 2011
EMEA remains most significant revenue contributor, Q2 2012 revenues impacted by significant investments in carrier infrastructure and enterprise solutions in EMEA and the Americas
79.3
6%
38%
56%
Q4 2011
83.4
2%
29%
69%
Q1 2012
81.7
6%
38%
56%
Q2 2012
85.9
6%
38%
56%
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 62 62
EUR million Q1 2012 Q2 2012
Net cash provided by operating activities 13.6 12.7
Net cash used for investing activities -8.3 -8.6
Net cash provided by (used for) financing activities 1.0 -0.3
Net effect of foreign currency translation -1.4 2.1
Net change in cash and cash equivalents 4.9 5.9
Cash and cash equivalents
at beginning of period 59.1 64.0
at end of period 64.0 69.9
Free cash flow* 11.2 10.6
* Free cash flow = Net cash provided by operating activities ./. capital expenditures for property, plant and equipment, finance leases and intangible assets not related to development activities.
IFRS Consolidated Cash Flow Statement
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 63 63
Financing Financial Liabilities • Maturity structure as of Sep 30, 2012 (E)
Credit Lines • EUR 8 million, unchanged from the end of 2011, with EUR 2 million each
provided by Deutsche Bank, BayernLB, DZBank and Portigon (WestLB) • WestLB line maturing in March 2013, we will seek to replace • All lines undrawn at current
Financial liabilities by maturity (in millions of EUR)
Balance on Sep. 30,
2012E Interest terms (a) 2012
Maturity
2013 after 2013
IKB Deutsche Industriebank
# Bank loans 1.1 Fixed rate, subsidized - 0.3 0.8
2.5 Fixed rate, subsidized - 0.4 2.1
# Bonded loan 14.0 Floating rate, based on 3M EURIBOR
-
14.0
-
Portigon (WestLB) bonded loan
11.4 Floating rate, based on 3M EURIBOR - - 11.4
Total financial liabilities 29.0 - 14.7 14.3
(a) Key covenants: ADVA Optical Networking Group year-end debt/equity ratio ≤ 3 and quarter-end net liquidity ≥ EUR 8 million.
• Depending on 2012 operating cash flow, in early 2013 we will start to seek refinancing for EUR 14 million bonded loan due in Q3 2013
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 64 64
Guidance Q3 2012
• Revenues between EUR 82 million and EUR 87 million
• Pro forma operating margin between 4% and 8% of revenues*
• ADVA Optical Networking will continue to perform detailed quarterly reviews of the expected business development in respect of all intangible assets, including capitalized research and development expenses; these reviews may result in non-cash impairment charges
* Excluding any potential impairment charges.
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 65 65
18.1%
81.9%
Free float
EGORA Group
• ADVA Management
• DWS (D) • Capital (US) • DnB NOR (NOR) • Fidelity (US) • ING (NL) • Pictet (CH) • Polar (UK) • SVM Asset (UK) • Swedbank (S) • DEKA (D) • UBS (CH) • Union Inv. (D) • Baring Asset (UK) • Other inst. inv. • Retail inv.
8.4% 2.9%
Recent Investor Activities Planned Investor Activities
66.4%, below 1.5% each
As of Aug 31, 2012: 47,704,260 shares outstanding
Stockholder Structure Financial Analyst Coverage
Jul-Aug
Last change
Last update
Recommendation/ target price Institution
As of Aug 31, 2012
Arete Buy (€7.50) Mar 3, 11 (€6.70)
Berenberg Buy (€6.50) Jul 19, 12 (€6.50)
Close Brothers Seydler Buy (€6.00) Jul 19, 12 (€6.00)
Deutsche Bank Buy (€6.50) Jul 19, 12 (€6.50)
DZBank Buy (€6.30) Jul 19, 12 (€6.00)
Edison Investment Research n.a. (€6.27) Aug 28, 12 (Initiation)
Hauck & Aufhäuser Buy (€6.20) Jul 3, 12 (€6.20)
LBBW Buy (€6.40) Jul 11, 12 (€6.40)
Silvia Quandt Bank Buy (€7.30) Feb 24, 11 (€4.80)
Ø € 6.31
2.6%
Recommendations in light grey are outdated; outdated target prices have not been included in average target price calculation.
1.6%
Source: LionShare, as of Aug 31, 2012.
Investor Relations Overview (I/II)
Jul 19 • Release of Q2 2012 IFRS financials and guidance for Q3 2012
• Updates to financial analysts
• Institutional investors met in Europe and America: Frankfurt, New York, Boston Oct 23 • Release of Q3 2012 IFRS financials and
guidance for Q4 2012 • Updates to financial analysts
Sep-Oct • Investor roadshows and conferences in Europe and America: London, Munich, Brussels
Sep 19 • Annual Analyst & Investor Day, Munich, Germany
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 66 66
Excludes outdated estimates
Share Price and Trading Volume Development
Share price in €
Trading volume in thousand
Ø daily trading volume (in shares) • 1 month: 103,805 • 6 months: 251,190 • 12 months: 248,091
Sep 1, 2011 – Sep 15, 2012 FWB Xetra data
Share price in EUR • Current (Sep 14) 5.28 • 52 week high 5.59 • 52 week low 3.08
Financial Analyst IFRS Estimates
(x%) = % of revenues As of Sep 15, 2012
Ø analyst estimate
ADVA guidance
FY 2011
Revenues
Pro forma op. inc.
EUR m
82 - 87
3.3 – 7.0 (4% - 8%)
Net income
FY 2012
6.6 (7.6%)
3.9 (4.5%)
Ø analyst estimate Actual
Q3 2012
345.0 (+10.9%)
25.7 (7.4%)
17.7 (5.1%)
Investor Relations Overview (II/II)
FY 2013
Ø analyst estimate
385.4 (+11.7%)
31.0 (8.0%)
19.3 (5.0%)
310.9
17.3 (5.6%)
16.9 (5.4%)
86.6 (0.9%)
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 67 67
In Summary
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 68 68
How we ADd VAlue
ADVA Optical Networking is a thought leader in developing intelligent network infrastructure for high-growth markets
Profitable growth
FOCUS ON
GROWTH MARKETS
Expanding opportunities
THOUGHT
LEADERSHIP
Differentiated technology
OPERATIONAL EXCELLENCE
Loyal
customer
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 69 69
Q&A
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 70 70
5.45pm – 6.00pm Coffee Break
© 2012 ADVA Optical Networking. All rights reserved. Confidential. 71 71
7.30pm – 9.30pm: Dinner w/Vorstand
Spatenhaus an der Oper Residenzstrasse 12 80333 Munich spatenhaus@kuffler.de T. +49 89 290 706 0
Directions:
U 3/6 Marienplatz or Odeonsplatz U 4/5 Odeonsplatz Subway Marienplatz Strassenbahn Nr. 19 Nationaltheater (opera house)
Thank you Investor Relations
Wolfgang Guessgen t +49 89 89 06 65 940 wguessgen@advaoptical.com www.advaoptical.com