The Power of We ™ Aug 8, 2013 Avaya Q3 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 May 10, 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 Aug 8, 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. |
3 © 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. Fiscal Q3 2013 Financial Highlights (Amounts other than Revenue and Cash Balance are non-GAAP unless specified) Revenue of $1.15 billion increased 2.9% over the prior quarter – Revenue increase comprised of: – Product revenue a 5.9% increase; Service revenue a 0.2% increase – Product Book-to-Bill was greater than 1.0 Gross margin increased over the prior quarter to a record of 56.0% Operating income of $171 million – Operating margin of 14.9% Adjusted EBITDA of $225 million or 19.5% of revenue Cash and cash equivalents balance of $271 million as of 6/30/13 |
© 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) FQ3 2013 FQ2 2013 FQ3 2012 Revenue $1,150 $1,118 $1,250 Gross Margin 56.0% 53.7% 53.9% Operating Margin 14.9% 10.1% 12.7% Adjusted EBITDA $225 $172 $225 * For reconciliation of adjusted EBITDA for the second quarter of 2013 see our Form 10-Q filed with the SEC on May 10, 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) FQ3 2013 FQ2 2013 FQ3 2012 Revenue U.S. $639 $592 $666 EMEA $297 $298 $330 APAC $105 $116 $128 AI $109 $112 $126 Total $1,150 $1,118 $1,250 % of Total Revenue U.S. 55.6% 53.0% 53.3% EMEA 25.8% 26.7% 26.4% APAC 9.1% 10.3% 10.2% AI 9.5% 10.0% 10.1% 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) FQ3 2013 FQ2 2013 FQ3 2012 Total Cash and Cash Equivalents $271 $302 $271 Cash from Operations $11 $82 ($91) Capital Expenditures and Capitalized Software $33 $27 $33 Days Sales Outstanding 52 55 52 Inventory Turns 8 8 9 Headcount 15,431 15,953 17,773 |
© 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 7 Adjusted EBITDA Reconciliation 2013 2012 2013 2012 Net loss (110) $ (166) $ (387) $ (354) $ Interest expense 122 107 346 324 Interest income (1) (1) (2) (3) (Benefit from) provision for income taxes (3) 88 (9) 62 Depreciation and amortization 110 140 331 426 118 168 279 455 Impact of purchase accounting adjustments 1 1 1 2 Restructuring charges, net 63 17 165 128 Sponsors' fees 1 1 5 5 Acquisition-related costs 1 1 1 4 Integration-related costs 3 6 12 14 Loss on extinguishment of debt - - 6 - Third-party fees expensed in connection with the debt modification - - 18 - Non-cash share-based compensation 4 2 7 7 Write-down of assets held for sale to net realizable value - 4 - 4 (Gain) loss on investments and sale of long-lived assets, net (1) - (1) 3 Goodwill impairment - - 89 - Impairment of long-lived assets 1 2 1 2 Venezuela hyperinflationary and devaluation charges - - 1 - Resolution of legal matters 10 - 10 - Loss (gain) on foreign currency transactions 5 (5) (10) 7 Pension/OPEB/nonretirement postemployment benefits and long-term disability costs 19 28 64 73 Adjusted EBITDA 225 $ 225 $ 648 $ 704 $ Avaya Inc. Supplemental Schedule of Non-GAAP Adjusted EBITDA (Unaudited; in millions) EBITDA For the three months ended June 30, For the nine months ended June 30, |
© 2013 Avaya – Proprietary. Use pursuant to your signed agreement or Avaya policy. 8 Non-GAAP Reconciliation June 30, Sept. 30, Dec. 31, Mar. 31, June 30, 2012 2012 2012 2013 2013 GAAP Gross Profit $ $ $ $ $ GAAP Gross Margin Items excluded: Amortization of technology intangible assets Impairment of capitalized software development costs - - Share-based compensation - Purchase accounting adjustments - - Non-GAAP Gross Profit $ $ $ $ $ Non-GAAP Gross Margin Reconciliation of Non-GAAP Operating Income GAAP Operating Income (Loss) $ $ $ $ $ Percentage of Revenue Items excluded: Amortization of acquired assets Restructuring and impairment charges, net Acquisition/integration-related costs Share-based compensation Impairment of capitalized software development costs - - Incremental accelerated depreciation - - - - Goodwill impairment - - - - Resolution of legal matters - - - - Purchase accounting adjustments - - Non-GAAP Operating Income $ $ $ $ $ Percentage of Revenue Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin For the Three Months Ended 49.8% 47 2 1 674 53.9% 2% 104 21 6 2 2 1 159 12.7% 623 1 23 646 50.6% 46 4 1 698 76 1 54.7% 6% 103 15 6 1 4 1 206 16.1% 666 53.7% 689 55.6% 23 2% 79 84 193 15.6% 22 1 5 2 586 52.4% 600 53.7% (72) -6% 18 6 1 113 10.1% 14 71 89 56.0% 627 54.5% 13 644 14 1% 70 63 5 4 1 3 10 1 171 14.9% 1 2 1 Avaya Inc. Supplemental Schedules of Non-GAAP Reconciliations (Unaudited; in millions) |