May 9, 2013 Avaya Q2 2013 Earnings Call Exhibit 99.2 |
© 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 2 Forward - Looking Statements Certain statements contained in this presentation are forward-looking statements, including statements regarding our future financial and operating performance, as well as statements regarding our future growth plans and drivers. These statements may be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should" or "will" or other similar terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. For a list and description of such risks and uncertainties, please refer to our filings with the SEC that are available at www.sec.gov and in particular, our 2012 Form 10-K and our Form 10-Q filed with the SEC on February 8, 2013. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This presentation should be read in conjunction with our Form 8-K filed with the SEC on May 9, 2013. Within this presentation, we refer to certain non-GAAP financial measures that involve adjustments to GAAP measures. A reconciliation between our non-GAAP financial measures and GAAP financial measures is included on the last two slides of this presentation, which will be available on our web site at www.avaya.com/investors. |
© 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 3 Fiscal Q2 2013 Financial Highlights (Amounts other than Revenue and Cash Balance are non-GAAP unless specified) Revenue of $1.12 billion declined 9.8% over the prior quarter – Revenue decrease comprised of: – Product revenue a 16.2% decline; Service revenue a 3.3% decline Gross margin declined over the prior quarter to 53.7% Operating income of $113 million – Operating margin of 10.1% Adjusted EBITDA of $172 million or 15.4% of revenue Cash and cash equivalents balance of $302 million as of 3/31/13 |
© 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 4 Income Statement (Amounts non-GAAP (other than Revenue) and dollars in millions) FQ2 2013 FQ1 2013 FQ2 2012 Revenue $1,118 $1,240 $1,257 Gross Margin 53.7% 55.6% 52.8% Operating Margin 10.1% 15.6% 11.0% Adjusted EBITDA $172 $251 $200 * For reconciliation of adjusted EBITDA for the first quarter of 2013 see our Form 8-K filed with the SEC on February 5,2013 at www.sec.gov. . |
© 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 5 Revenue by Geographic Region (Amounts GAAP and dollars in millions) FQ2 2013 FQ1 2013 FQ2 2012 Revenue U.S. $592 $670 $678 EMEA $298 $331 $327 APAC $116 $123 $117 AI $112 $116 $135 Total $1,118 $1,240 $1,257 % of Total Revenue U.S. 53.0% 54.0% 53.9% EMEA 26.7% 26.7% 26.0% APAC 10.3% 9.9% 9.3% AI 10.0% 9.4% 10.7% Total 100.0% 100.0% 100.0% |
© 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 6 Balance Sheet and Operating Metrics (Dollars in millions, Balance sheet items as of the end of the period indicated) FQ2 2013 FQ1 2013 FQ2 2012 Total Cash and Cash Equivalents $302 $285 $355 Cash from Operations $82 $6 $41 Capital Expenditures and Capitalized Software $27 $30 $31 Days Sales Outstanding 55 55 53 Inventory Turns 8 9 9 Headcount 15,953 16,393 18,025 |
© 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 7 Adjusted EBITDA Reconciliation 2013 2012 2013 2012 Net loss (192) $ (162) $ (277) $ (188) $ Interest expense 116 108 224 217 Interest income - (1) (1) (2) Provision for (benefit from) income taxes 3 (24) (6) (26) Depreciation and amortization 107 143 221 286 34 64 161 287 Impact of purchase accounting adjustments - 1 - 1 Restructuring charges, net 18 90 102 111 Sponsors' fees 2 2 4 4 Acquisition-related costs - 2 - 3 Integration-related costs 5 3 9 8 Loss on extinguishment of debt 3 - 6 - Third-party fees expensed in connection with the debt modification 14 - 18 - Non-cash share-based compensation 1 2 3 5 Loss on investments and sale of long-lived assets, net - 2 - 3 Goodwill impairment 89 - 89 - Venezuela hyperinflationary and devaluation charges 1 - 1 - (Gain) loss on foreign currency transactions (17) 11 (15) 12 Pension/OPEB/nonretirement postemployment benefits and long-term disability costs 22 23 45 45 Adjusted EBITDA 172 $ 200 $ 423 $ 479 $ Avaya Inc. Supplemental Schedule of Non-GAAP Adjusted EBITDA (Unaudited; in millions) EBITDA For the three months ended March 31, For the six months ended March 31, |
© 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 8 Non-GAAP Reconciliation Mar. 31, June 30 Sept. 30, Dec. 31 Mar. 31 2012 2012 2012 2012 2013 GAAP Gross Profit 613 $ 623 $ 646 $ 666 $ 586 $ GAAP Gross Margin 48.8% 49.8% 50.6% 53.7% 52.4% Items excluded: Amortization of technology intangible assets 49 47 46 22 14 Impairment of capitalized software development costs - 2 4 - - Share-based compensation 1 1 1 1 - Purchase accounting adjustments 1 1 1 - - Non-GAAP Gross Profit 664 $ 674 $ 698 $ 689 $ 600 $ Non-GAAP Gross Margin 52.8% 53.9% 54.7% 55.6% 53.7% Reconciliation of Non-GAAP Operating Income GAAP Operating (Loss) Income (66) $ 23 $ 76 $ 23 $ (72) $ Percentage of Revenue -5% 2% 6% 2% -6% Items excluded: Amortization of acquired assets 105 104 103 79 71 Restructuring and impairment charges, net 90 21 15 84 18 Acquisition/integration-related costs 6 6 6 5 6 Share-based compensation 2 2 1 2 1 Impairment of capitalized software development costs - 2 4 - - Goodwill impairment - - - - 89 Purchase accounting adjustments 1 1 1 - - Non-GAAP Operating Income 138 $ 159 $ 206 $ 193 $ 113 $ Percentage of Revenue 11.0% 12.7% 16.1% 15.6% 10.1% Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin Avaya Inc. Supplemental Schedules of Non-GAAP Reconciliations (Unaudited; in millions) For the Three Months Ended |