stifel technology conferences22.q4cdn.com/718573125/files/doc_presentations/... · * fixed...
Post on 01-Apr-2020
7 Views
Preview:
TRANSCRIPT
STIFEL TECHNOLOGY CONFERENCE Roger Shannon – SVP of Finance &
CFO
Jay Wilson – SVP of Technology & Strategy
2016 © ADTRAN, Inc.
Safe Harbor Statement During the course of this meeting, ADTRAN representatives expect to make forward-looking statements, which reflect management’s best judgment, based on factors currently known. However, these statements involve risks and uncertainties, including the successful development and market acceptance of core products, the degree of competition in the market for such products, the product and channel mix, component cost, manufacturing efficiencies, foreign exchange rate variations and other risks detailed in our Annual Report on Form 10-K for the year ended December 31, 2015. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements, which may be made during this meeting.
2
© 2015 ADTRAN, Inc. All rights reserved.
COMPANY HISTORY
FOR THE PAST THREE DECADES, ADTRAN HAS BEEN ENABLING A FULLY CONNECTED WORLD.
2016 © ADTRAN, Inc.
TOP 3 GLOBAL SUPPLIER
BROADBAND ACCESS
68 COUNTRIES Approx 30% OF SALES INTERNATIONAL in
FY2015
2000 EMPLOYEES Huntsville HQ, Munich, Berlin, Greifswald, Sydney, Melbourne,
London, Hyderabad
$600M 2015 REVENUE
250 GIGABIT COMMUNITIES ENABLED BY YE2015
AND GROWING
SDN/NFV NETWORK AUTOMATION
USER-ENABLED SERVICES
R&D – 21% OF REVENUE
60% MORE PATENTS PER $ THAN
INDUSTRY AVERAGE
$317M CASH & INVESTMENTS
INDUSTY’S 1ST CLOUD WI-FI
SOLUTION
#1 IP BUSINESS GATEWAYS
NORTH AMERICA
TOP 2 BRANCH OFFICE
ROUTERS NORTH AMERICA
#1 SIP TRUNKING & VOIP
ACCESS NORTH AMERICA
AT A GLANCE
© 2015 ADTRAN, Inc. All rights reserved. © 2016 ADTRAN, Inc. All rights reserved.
FROM THE WORLDS LARGEST SERVICE PROVIDERS TO THE SMALL BUSINESS DOWN THE STREET.
WHO WE SERVE
2016 © ADTRAN, Inc.
All names and logos on this slide are properties of the respective owners
Enterprise Distribution BROAD CUSTOMER BASE
Communications Service Providers
2016 © ADTRAN, Inc.
Top 4 Top 2
7
* Fixed Broadband includes GPON, Ethernet FTTH & DSL Aggregation ** All markets (EMEA, North America and CALA regions, excluding APAC)
Source: IHS
BROADBAND MARKET LEADERSHIP
Source: IHS
Nokia52%
Huawei15%
ZTE11%
Calix3%
ADTRAN19%
DSLAgg
Nokia49%
Huawei22%
ZTE11%
Calix7%
ADTRAN11%
FixedBB
2016 © ADTRAN, Inc.
PRODUCT PORTFOLIO STRATEGY
Fiber Access & Aggregation First vOLT with open/DC arch 10G optics innovation
Integrated optical transport
8
FTTN & DPUs Super-vectoring G.Fast portfolio breadth
SDN control, multi-PHY arch
Residential & Business CPE Universal ONTs & vRG options Leading VNFs & SD-WAN
Modern API’s for SDN control
WiFi APs & Infrastructure Lead with Wave 2 APs WLAN continuous improvement
10G aggregation switch
Value-added software & services across all product segments
2016 © ADTRAN, Inc.
INNOVATION TIMELINE
DIVESTITURE ERA
INTERNET ERA
IP TRANSITION ERA
GIGABIT ERA
SDN ERA
Created T1 Access Market
Broke $1000 Economic Barrier with HDSL, 95%
market share
Disrupted Western Electric Monopoly Redefined Economics for D4 channel cards
Drove Innovation in DSL and Converged Services
Repeaterless breakthru
Total Reach ISDN
Redefined economics for SONET Fiber Access (OPTI-3, OPTI-6100)
1st Converged Voice & Data
Business Gateways
1st All Ethernet MSAN
1st VDSL Deployment Based on IP DSLAM
1st demo of VDSL2 825Mbps
w/ phantom, bonding, vectoring
Global Leader in OSP
broadband solutions
Market Leader in DSL and
Converged Services
200 Gig Communities by YE2015
Frequency Division
Vectoring (FDV)
1st Edged Optimized Packet-Optical
Networking Platform
Market Leadership
In G.fast innovation
Breakthrough In NGPON2 Tunable Optics
1st Deployment of System Level Vectoring (SLV) (US)
1st converged, multi-service
Gigabit enterprise and MTU gateways
1st Cloud-based WLAN
ProCloud Wi-Fi services
Leading SDN/NFV Access in
Broadband Forum
CPE Automation for Service Activation
1st Open Platform for G.fast DPU
1st system level CORD
demo
NIA Industry
SDN/NFV Interop
2016 © ADTRAN, Inc.
SDN Access § Complete cloud-edge to subscriber-edge solution set § 1st to integrate and deploy complete FTTx portfolio with
an open source SDN controller § Only vendor with a complete Software Defined Access
solution set built around a CORD architecture § 1st (and only) 10G PON vOLT CORD demo in a Tier 1 § 1st industry interop - vCPE portfolio
§ Modular software architecture with Agile/DevOps model § Leadership in Broadband Forum, ITU, ETSI, Celtic-Plus,
and UK NICC standards activities
10
INNOVATION LEADERSHIP
2016 © ADTRAN, Inc.
Broadband Access § Market leader in 10 Gigabit optical access innovation
§ XGS PON – commercial deployments § NGPON2 – industry breakthrough in tunable optics
§ Over 60 G.fast trials announced on 6 continents § Europe’s (and World’s) largest deployment of
Vectoring and SuperVectoring § Over 300 Gigabit Communities § Leader in CAF2 solutions
11
INNOVATION LEADERSHIP
2016 © ADTRAN, Inc.
NEED FOR SPEED
GLOBAL COMPETITIVENESS
SOFTWARE DEFINED
NETWORK TRENDS DRIVING GROWTH
2016 © ADTRAN, Inc.
NEED FOR SPEED
GLOBAL COMPETITIVENESS
SOFTWARE DEFINED
NETWORK TRENDS DRIVING GROWTH
2016 © ADTRAN, Inc.
INTERNET TRAFFIC – N. AMERICA
Global Internet traffic is projected to grow
82 times from 2005 to 2019
Cisco VNI 2015
Source: Sandvine
0
10000
20000
30000
40000
50000
60000
70000
2008 2009 2010 2011 2012 2013 2014 2015
Exab
ytes
per
Yea
r Other
Gaming
Market Places
Communications
Tunneling
Filesharing
Web browsing
Real-Time Entertainment
Video 70.4%
Video 14%
2016 © ADTRAN, Inc.
TRANSFORMATIVE EFFECTS OF GIGABIT
ADTRAN has enabled over 300 Gigabit
Communities
2016 © ADTRAN, Inc.
ACCELERATING PACE OF FTTH & 1 GIG ANNOUNCEMENTS (2010–2015)
2016 © ADTRAN, Inc.
NEED FOR SPEED
GLOBAL COMPETITIVENESS
SOFTWARE DEFINED
NETWORK TRENDS DRIVING GROWTH
2016 © ADTRAN, Inc.
SHIFT TO DATA CENTER ARCHITECTURES
18
2016 © ADTRAN, Inc.
FUTURE NETWORK STATE
§ Fiber connectivity everywhere
§ Multi-service points
§ Open and Cloud controlled
§ Virtualized network functions
§ Highly automated, programmable
20
Applying Data Center Architectures to Access § Utilize SDN to create
highly automated and programmable networks
§ Apply NFV to create agile, software-centric networks
§ Disaggregate monolithic, proprietary systems
§ Implemement open networking architectures
2016 © ADTRAN, Inc.
ADTRAN IS A SOFTWARE COMPANY
§ 82% of R&D are working software-based designs § R&D presence across each major global region § 24 hour development & testing
§ Agile Development Process § Pilots in 2011 § Implemented companywide in January 2012
§ Modular Software Architecture § Shortens integration § Minimizes disruption § Packaging & unit level testing for 5+ years
2016 © ADTRAN, Inc.
NEED FOR SPEED
GLOBAL COMPETITIVENESS
SOFTWARE DEFINED
NETWORK TRENDS DRIVING GROWTH
23
Connecting Rural America § 34M Americans do not have access to
fixed broadband (25/3 Mbps) § 19.9M don’t have 10/1 Mbps § 16.1M don’t have 4/1 Mbps
§ ADTRAN is the top turnkey access supplier for CAF projects § Sole or primary supplier for the majority of
Price Cap Carriers with CAF projects § Complete turnkey services and solutions
designed for Rate-of-Return Carrier CAF projects
Source: FCC
2016 © ADTRAN, Inc.
$9B - 3.6M homes - 6 Years
$3B
$2.6B
$1B
$224M
$2B
CAF2 Construction Schedule • Funds accepted 8/27/15, retroactive to 1/1/15 • 40% complete by 2017 • 60% complete by 2018 • 80% complete by 2019 • 100% complete by 2020
Other Price Cap Carriers (annual funding) • Consolidated - $13,9M (24,698) • Hawaiian Tel - $4.4M (11,181 homes) • Micronesian Tel - $2.6M (11,143 homes) • Cincinnati Bell - $2.2M (7084 homes)
CONNECT AMERICA FUND – PRICE CAP
2016 © ADTRAN, Inc.
CONNECT AMERICA FUND – RATE-OF-RETURN
$2B per year for 10 years • Two Path Approach • Existing Mechanisms
- Legacy Investments – 11.25% Return (capped at defined date) - New Investments – 9.75% Return
• Model Based Alternative - Similar to Price Cap CAF2 model - 10 year support cycle
• Elections – RoR or Model
$20B over 10 years CONNECT AMERICA FUND – RATE-OF-RETURN
2016 © ADTRAN, Inc.
Digital Agenda for Europe § Pillar IV: Fast and ultra-fast Internet access § By 2013: basic broadband (2 Mbps) to all ü (claimed) § By 2020:
• All Europeans (100%) have access to > 30 Mbps (Next Generation Access) • 50% or more European have access to > 100 Mbps (ultra-fast)
Target 2: 50% subs with 100 Mbps Target 1: 100% with 30 Mpbs
Source: HIS and VVA in EC connectivity report 2015
60 Bn€ to achieve
100% 270 Bn€
to achieve 50%
EUROPEAN BROADBAND INITIATIVES
2016 © ADTRAN, Inc. 27
Company Financial Performance
28
Financial Stability § Nearly 3 Decades of
Continuous Profitability § Ongoing Strong Balance
Sheet and Cash Flow § Publicly Traded for 21 Years
with Full Transparency (NASDAQ-ADTN)
2016 © ADTRAN, Inc.
FY 2015 FY 2016 FY 2017 Q116 Q216Consensus Consensus Consensus
mn Actual Estimates* Estimates* Actual Estimates*
Revenues $600 $624 $656 $142 $162
Gross margin (%) 44.5% 46.4% 46.4% 46.3% 46.3%
Operating Income $13.5 $40.6 $50.8 $5.5 $14.4
% of Revenues 2.2% 6.5% 7.7% 3.9% 8.9%
EPS $0.36 $0.65 $0.78 $0.10 $0.20
ADTRAN - Financial Summary
*Source: First Call, Thomson, Company Reports
Based on US GAAP Financial Statements
2016 © ADTRAN, Inc.
Strong domestic revenues and services growth…
$130$144 $138
$116 $124
$13$16 $20
$23 $18
$143$160 $158
$139 $142
$162
-10%
8%
21% 20%
39%
-20%
-10%
0%
10%
20%
30%
40%
50%
$0
$20
$40
$60
$80
$100
$120
$140
$160
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16E*
Network SolutionsServices & SupportDomestic Revenues YoY growth (%)
*Consensus Estimate for 2Q16 Source: Company Reports (numbers in $mn)
2016 © ADTRAN, Inc.
Strong Cash Position ($mn)…
Cash Returned to Shareholders – 2012-2015 ($mn)
Source: Company Reports
$393
$83
$310
$0
$50
$100
$150
$200
$250
$300
$350
$400
2012-2015
Repurchases Dividends Total Cash Returned to Shareholders $317
$621
$0
$100
$200
$300
$400
$500
$600
$700
Cash & Investments as of 3/31/16 Total Assets as of 3/31/2016
2016 © ADTRAN, Inc.
Current Ratio – ADTRAN: highly liquid balance sheet Total Liabilities to Net Worth - ADTRAN: limited amount of debt on BS
Gross Margin – ADTRAN enjoys higher than peer group average gross margins
3.04
2.67 2.81
3.57 3.62
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
1Q15 2Q15 3Q15 4Q15 1Q16
ADTRAN IndustryAverage
37.1% 43.1% 40.7% 31.8% 31.6%
242.2%
423.3%
353.8%
246.5%
180.1%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
350.0%
400.0%
450.0%
1Q15 2Q15 3Q15 4Q15 1Q16
ADTRAN IndustryAverage
45.9%42.6%
44.7% 44.9% 46.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
1Q15 2Q15 3Q15 4Q15 1Q16
ADTRAN IndustryAverage
Source: Companies’ Reports
Industry Average: ADVA, ALU (now Nokia), Calix, Ciena, Zhone, ZTE
2016 © ADTRAN, Inc.
CHANGES TO FINANCIAL REPORTING
Operating Segments: § Network Solutions § Services & Support Revenue Categories: § Access & Aggregation § Customer Devices § Traditional & Other Products
33
Network Solutions
Services & Support
Acc
ess
& A
ggre
gatio
n
Cus
tom
er D
evic
es
The two Segments have the three Categories within.
Categories
Segm
ents
Trad
ition
al &
Oth
er
2016 © ADTRAN, Inc.
2nd Quarter 2016 Guidance
Corporate Financial Performance
• REVENUE: up on a percentage basis in the low-to-mid teens
• GROSS MARGIN: flattish with our Quarter 1 results (46.3%)
• OpEx: consistent with Q1 adjusted for sales commissions based on increases in revenue
• TAX RATE: mid to high 30% range

SUMMARY • Strong history and well positioned
• Leader in SDN Access ü Open, scalable and standards-based
• Ramping broadband investment cycle ü Emerging technologies in fiber & copper
ü Imperative for service agility & automation
ü Global operator proof points
• Leader in fixed broadband access
2016 © ADTRAN, Inc.
ADTRAN IS BRINGING THE WORLD TOGETHER

Thank you
37
top related