Attached files
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| 8-K - FORM 8-K - MITEL NETWORKS CORP | d8k.htm |
 Profitable Growth
& Shareholder Value Creation
Steve Spooner
CFO
Exhibit 99.1 |
 slide 2
Mitel | Confidential
Analyst Day (July 6/11) FLS/Safe Harbor
Forward Looking Statements
Some of the statements in this presentation, including the information regarding
financial performance targets, are forward-looking statements within the
meaning of applicable U.S. and Canadian securities laws. Statements that include the words "target," "outlook," "may,"
"will," "should," "could," "estimate,"
"continue," "expect," "intend," "plan," "predict," "potential," "believe," "project," "anticipate" and similar
statements of a forward-looking nature, or the negatives of those statements,
identify forward-looking statements. In particular, this presentation
may contain forward-looking statements pertaining to, among other matters: our future economic performance, profitability and
financial condition; general global economic conditions; our business strategy;
plans and objectives for future operations; our industry and the growth in
the markets in which we compete; the costs of operating as a public company; and our research and development
expenditures. These forward-looking statements reflect currently available
information or our current views with respect to future events and are
based
on
assumptions
and
subject
to
risks
and
uncertainties.
In
making
these
statements,
we
have
made
assumptions
regarding,
among other things:
No unforeseen changes occurring in the competitive landscape that would affect our
industry generally or Mitel in particular: A stable or recovering economic
environment; No significant event occurring outside the ordinary course of
our business; Stable foreign exchange and interest rates;
No asset impairments;
No material changes in effective tax rates; and
No negative impact from the implementation and execution of our new business
strategies. Actual
events
or
Mitel's
results,
performance,
financial
position
or
achievements
could
differ
materially
from
those
contemplated,
expressed
or implied by such forward-looking statements as a result of various risks and
uncertainties, including, without limitation: Our ability to achieve or
sustain profitability in the future; Fluctuations in our quarterly and
annual revenues and operating results; Fluctuations in foreign exchange
rates; Current and ongoing global economic instability;
Intense competition;
Our reliance on channel partners for a significant component of our sales;
Our dependence upon a small number of outside contract manufacturers to manufacture
our products; |
 slide 3
Mitel | Confidential
Analyst Day (July 6/11) FLS/Safe Harbor continued…
Our ability to successfully implement and achieve our business strategies; and
Our ability to realize our deferred tax assets
Additional
risks
are
discussed
under
the
heading
"Risk
Factors"
in
Mitel's
Annual
Report
on
Form
10-K,
which
has
been
filed
with
the
U.S.
Securities and Exchange Commission on July 1, 2011, and filed with Canadian
securities authorities on July 4, 2011. Except as required by law,
Mitel is under no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measurements
To supplement our consolidated financial statements which have been prepared in
accordance with United States generally accepted accounting principles
("U.S. GAAP"), Mitel uses non-GAAP measures of operating results, net income and income per share, which are
adjusted
to
exclude
certain
costs,
expenses,
gains
and
losses
we
believe
appropriate
to
enhance
an
overall
understanding
of
our
past
financial performance and also our prospects for the future. These adjustments to
our current period and comparative prior period U.S. GAAP
results
are
made
with
the
intent
of
providing
both
management
and
investors
a
more
complete
understanding
of
Mitel's
underlying
operational results and trends and our marketplace performance. For example, the
non-U.S. GAAP results are an indication of our baseline
performance
before
gains,
losses
or
other
charges
that
are
considered
by
management
to
be
outside
of
our
core
operating
results.
In
addition, these adjusted non-U.S. GAAP results are among the primary indicators
management uses as a basis for our planning and forecasting of future
periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for
net income or diluted net income per share prepared in accordance with U.S.
GAAP. Adjusted EBITDA
Adjusted EBITDA is defined as consolidated net income (loss) before (1) interest
expense, (2) income tax recovery, (3) amortization and depreciation, (4)
foreign exchange gain (loss), (5) fair value adjustment on derivative instruments, (6) special charges and restructuring
costs, (7) stock-based compensation, (8) gain (loss) on litigation settlement,
and (9) debt retirement costs. For a reconciliation of Adjusted EBITDA to
net income, the most directly comparable U.S. GAAP measure, see attached "Reconciliation of Net Income to Adjusted EBITDA."
Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. Adjusted
EBITDA should not be considered as an alternative to net income, income from
operations or any other measure of financial performance calculated and presented in accordance with U.S.
GAAP. We prepare Adjusted EBITDA to eliminate the impact of items that we do not
consider indicative of our core operating performance. We
encourage
you
to
evaluate
these
adjustments
and
the
reasons
we
consider
them
appropriate,
as
well
as
the
material
limitations
of
non-
GAAP
measures
and
the
manner
in
which
we
compensate
for
those
limitations.
See
"Selected
Financial
Data"
in
Mitel's
Annual
Report
on
Form
10-K,
which
has
been
filed
with
the
U.S.
Securities
and
Exchange
Commission
July
1,
2011,
and
Canadian
securities
authorities
on
July 4, 2011. |
 slide 4
Mitel | Confidential
Pillars of Mitel Shareholder Value Creation
Driving top line growth
Commitment to innovation
Expanding gross margins
Leverage in the operating model
Business simplification |
 slide 5
Mitel | Confidential
Driving Top Line Growth
Leveraging market share leadership in core markets
Deploying a proven go-to-market model in US region
Upgrading sales leadership
Recruiting/on-boarding mid-market channel
Focused strategies in emerging markets
Capitalizing on portfolio strengths
Enhancing our brand |
 slide 6
Mitel | Confidential
Commitment to Innovation
Freedom Architecture
Leadership in Virtualization
Single software stream
Common desktop portfolio
Portfolio focus
Leveraging best-of-breed partners |
 slide 7
Mitel | Confidential
Expanding Gross Margins
Mitel Strategy Should Drive Margin Accretion
Legacy platforms
Legacy sets
Legacy services
Historical
Emerging/Future
Software platforms
IP sets
Software applications
Software assurance
FY 06
FY08
Target
FY11
42%
47%
48%
51-53% |
 Leverage in the Operating Model
Continued Focus on Operational Excellence
Design cost reductions
Supply chain/back office
Outsourcing (IT, Finance, Sustaining R&D)
Facilities
Scale
Opex cost base track record
$
% revenue
$291M
$249M
42%
38%
35-37%
*Opex defined as R&D and SG&A, excluding amortization of acquired
intangibles, restructuring charges, stock-based charges and
one-time items FY08
Target
FY11
slide 8
Mitel | Confidential |
 Long-Term Target
Model – Mitel Communications Solutions
Key Metrics
Market Share
% virtualized
Software Mix
Growth Drivers
TDM to IP
Virtualization
Portfolio strength
GM% Drivers
Product/service
mix
Service Assurance
Software mix
Product cost
reduction
Op Margin Drivers
GM% expansion
Growth/scale
Improved
execution
FY11*
Long-Term Target Model
Revenue/Growth Rate
$485M
8-10%
Gross Margin
54%
56% - 58%
R&D
11%
9% - 10%
SG&A
23%
20% - 21%
Segment Margin**
20%
27% - 29%
*FY11 preliminary, unaudited
**excluding corporate overheads
slide 9
Mitel | Confidential |
 FY11*
Long-Term Target Model
Revenue/Growth Rate
$80M
5-7%
Gross Margin
47%
48% - 49%
R&D
nil
nil
SG&A
22%
20% - 21%
Segment Margin**
25%
27% - 29%
*FY11 preliminary, unaudited
**excluding corporate overheads
Key Metrics
#
of
customers
Monthly
Recurring
Revenue (MRR)
Growth Drivers
SIP
Trunking
Hosted
Mobility
GM% Drivers
Migration to
bundled services
New service
offerings
Improved cost
management
Op Margin Drivers
GM% expansion
Growth/scale
Improved
execution
Long-Term Target Model –
Mitel Network Solutions
slide 10
Mitel | Confidential |
 FY11*
Long-Term Target Model
Revenue/Growth Rate
$85M
3-5%
Gross Margin
15%
13% - 14%
R&D
nil
nil
SG&A
8%
8%
Segment Margin**
7%
5% - 6%
*FY11 preliminary, unaudited
**excluding corporate overheads
Key Metrics
Revenue growth
GM%
Segment Margin
Growth Drivers
Core business
growth
New product
offerings
Op Margin Drivers
GM% expansion
Growth/scale
Improved
execution
Long-Term Target Model –
Mitel DataNet/CommSource
slide 11
Mitel | Confidential
GM% Drivers
Product/service
mix
Supplier
cost
negotiations |
 slide 12
Mitel | Confidential
FY11*
Long-Term Target Model
Spend $
$58M
% revenue
9%
7-8%
*FY11 preliminary, unaudited
Scale/Critical Mass
Finance/Legal/IT
Facilities
Centers of
Excellence
Tools/Automation
1 ERP
Hosted Apps
Outsourcing
Simplification
Online Store
Licensing
Portfolio
Back-office
Long-Term Target Model –
Corporate SG&A
Key Metrics
Spend % Revenue
Revenue/Head
Corporate % Total
Spend |
 slide 13
Mitel | Confidential
Long-Term Target Model –
Mitel
FY09
FY10
FY11
Long-Term Target Model
Gross Margin
46.9%
48.4%
47.9%
51% - 53%
Operating
Expenses
39%
37%
38%
35% - 37%
R&D
8%
8%
8%
8% - 9%
SG&A
31%
29%
30%
27% - 28%
Operating Margin
8%
11%
10%
15% - 18%
Adjusted EBITDA
Margin
10%
14%
12%
17% - 19%
Tax Rate
-
~12%
Non-GAAP Net
Margin
4%
8%
6%
13% - 15%
Notes:
-
Where relevant, metrics exclude one-time items, stock-based compensation and
amortization of intangibles. -
Items may not sum due to rounding.
-
Tax rate for FY09, FY10 , FY11 omitted as non-meaningful.
|
 slide 14
Mitel | Confidential
Recap
Exciting Market Opportunity
–
We have not executed well of late
–
We are fixing our go-to-market model
Product
Portfolio
2
nd
to None
Mitel’s
Technology
Vision…
what
customers
are
asking
for
Simple Focused Structure
Clear Investment Priorities
Strengthened Leadership
Attractive, Achievable Target Operating Model |
 |
 Thank you
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