Lumentum Overview. Alan Lowe President and CEO. November 18, 2015

Transcription

1 Lumentum Overview Alan Lowe President and CEO November 18, 2015

2 Forward Looking Statement and Financial Presentation This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of These statements include any anticipation or guidance as to future financial performance, including future revenue, operating margin, and earnings per share, anticipated sales trends and growth opportunities for our products, trends in and size of the markets in which we operate, as well as our strategies and financial performance. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. All forward-looking statements involve risks and uncertainties that could cause actual events and terms to differ materially from those set forth herein, including those related to the market, our business and growth opportunities. For more information on these and other risks, please refer to the "Risk Factors" section included in the Company s Amended Annual Report on Form 10-K filed on September 29, 2015 and Form 10-Q filed on November 17, The forward-looking statements and financial results contained in this document are made as of the date hereof and the Company assumes no obligation to update such statements, except as required by applicable law. Unless otherwise stated, all financial results and projections are on a non-gaap basis. Our GAAP results, details about our non-gaap financial measures, and a reconciliation between GAAP and non-gaap results can be found in our first quarter fiscal 2016 earnings press release which is available on our web site, under the investors section. Financial guidance for fiscal second quarter 2016 is provided per our earnings call on November 10, 2015 and is not being updated or confirmed as of any other date Lumentum Operations LLC 2

3 By the Numbers 8/1/2015 $837M spin-off from JDSU in FY15 revenue (June 2015) 8.3% ~2,000 >1,000 Q1 standalone operating margin* employees patents * Reported operating margin of 7.3% includes corporate allocations for pre-spinoff time period

4 Market Focus TELECOM DATACOM COMMERCIAL LASERS 3D SENSING Broad portfolio Leading the 100G transition High-growth applications Emerging volume applications MARKET SIZE $4B $2B $3B $0.1B REVENUE MIX 60% 17% 21%* 1% KEY STRENGTHS #1 market position, 100G and ROADMs Customer intimacy 100G technology Scale from telecom Materials processing Scale from telecom Quality and reliability Scale from telecom Source: Ovum, Strategies Unlimited, Lumentum FY15 results * Includes industrial diodes which are not part of Lasers segment reporting. Segments results can be found in Lumentum s SEC filings Lumentum Operations LLC 4

5 Common Operation for All Product Lines Vertical and functional integration using in-house core technology with assembly and test at low cost CMs Modules and Subsystems Optical Transceivers ROADM Module Super Transport Blade Solid State Laser Fiber Laser Engine Sub-Assemblies and Components Optical Communications Components Industrial Diode Lasers Internal Wafer Fabrication Indium Phosphide (InP) Lithium Niobate (LiNbO 3 ) Silica/Silicon (SiO2/Si) Gallium Arsenide (GaAs) 2015 Lumentum Operations LLC 5

6 Broad Optical Communications Product Portfolio Long Haul Circuit Packs and Line Cards Tunable XFP/SFP+ 40G Coherent Modulators ITLAs Telecom Central Office Pump Lasers Metro and Regional TrueFlex ROADMs and Amplifiers 100G Coherent CFP2 Receivers SFP, SFP+ and XFP Portfolio 1/10G Ethernet, 2/4/8/16G/32G Fibre Channel Datacom Cloud/ Hyperscale Data Center Wireless 40G QSFP+ 100G Portfolio Enterprise CFP2 CFP4 QSFP Lumentum Operations LLC 6

7 EB of data EB of data 100G Ports Optical Communications Market Trends Internet and cloud datacenters driving enormous traffic Mobile + Internet Traffic Fixed Internet Managed IP Mobile data Hyperscale datacenters poised for 100G transition Cloud data center Datacenter Traffic Traditional data center Source: Cisco VNI and Cloud Index 700, , , , , , ,000 - Rapid emergence of 100G in long haul and metro CAGR 30% Source: Ovum Next generation network architectures have high ROADM content Long Haul Metro WEB 2.0 Web 2.0 providers build their own data centers Sourcing direct from optical component vendors CDC NG Metro FLEX SPECTRUM 2015 Lumentum Operations LLC 7

8 Telecom Growth Catalysts 100G upgrade cycle driving components and eventually modules Next gen ROADM upgrade cycle poised to start Modulator + Receiver Laser CFP2-ACO Integration In Volume Production Emerging 100G Telecom Components and Modules Market ($M) Super Transport Blades In Volume Production $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 CAGR 15% Source: Ovum >10,000 N.A. metro nodes to upgrade over coming years Multiple Super Transport Blades per node for next gen architectures 2015 Lumentum Operations LLC 8

9 Datacom Growth Catalyst Datacom 100G upgrade cycle drives growth, and in particular longer reach 500m -10km in QSFP28 form factor transceivers 40G QSFP+ Datacenter long reach transceiver market ($M) In Volume Production $1,500 $1,250 $1,000 40G QSFP+ 100G QSFP28 100G QSFP28 Entering Production Now $750 $500 $250 $ Source: LightCounting 2015 Lumentum Operations LLC 9

10 Commercial Lasers Trends $2.5B SAM opportunity Lumentum served market Macro (kw) Materials Processing (CO 2 Replacement) Micro-Materials Processing (Mechanical Tool Replacement) Biomedical and Analytics Instrumentation (Long Lifecycle) $1,500M $600M $400M ~75 % 25 % kw Fiber Laser Engines High Power ns UV Lasers CW Solid State Lasers High Power ps UV Lasers Gas Lasers Source: Strategies Unlimited, Lumentum estimates 2015 Lumentum Operations LLC 10

11 Commercial Lasers Growth Catalysts Macro-machining conversion of CO 2 to fiber lasers Fiber Laser Market Applications: Cutting ~78% Welding ~14% Other ~8% Source: Strategies Unlimited Micro-machining new applications >1B Smartphones and Tablets in % CAGR 13% CAGR (Gartner) Source: Strategies Unlimited 2015 Lumentum Operations LLC 11

12 3D Sensing Growth Catalysts Gaming Mobile Computing Mobile Devices Virtual reality, Automotive Gaming was the early adopter of 3D sensing Applications include facial recognition, 3D scanning, 3D printing, depth measurement and eye tracking Embedding 3D sensing in mobile computing products has begun with all major manufacturers New applications emerging for hand and body tracking 2015 Lumentum Operations LLC 12

13 Summary Telecom opportunity 100G in the core 100G metro expansion 100G component leadership cost-effective 100G modules (CFP2- ACO) TrueFlex ROADMs winning in next generation networks Datacom opportunity Hyperscale data centers - leadership in 100G transition Lasers opportunity Fiber laser strength driven by continued conversion from CO 2 Ultrafast emerging opportunity driven by new applications Spin-off complete Profitable business model with operating leverage Growth catalysts across major product lines Next-generation 3D sensing Moving to PC and mobile applications 2015 Lumentum Operations LLC 13

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15 Appendix Q1 Supplementary Earnings Slides

16 Q1 FY16 Results (GAAP) $ millions except for EPS, % of revenue Part of Viavi carveout financials Viavi 5 weeks / Lumentum 8 weeks Q1 FY15 Q4 FY15 Q1 FY16 Revenue $219.0 $208.9 $212.6 Gross Margin % % % Operating Expenses % % % Operating income % (14.6) (7.0)% (2.5) (1.2)% EPS (diluted) $0.07 $(0.27) $(0.01) All time periods assume 58.8 million fully diluted shares outstanding Lumentum Operations LLC 16

17 Q1 FY16 Highlights (Non-GAAP) Spin-off from Viavi completed August 1, weeks into Q1 FY16 Revenue of $212.6M up approximately 2% sequentially Telecom up 5% with notable strength on ROADMs and pump lasers Datacom down 14% - per prior conference call Commercial lasers up 19% as fiber laser strength returned Operating margin of 7.4% includes ~$2M of Viavi allocated SG&A costs in excess of Lumentum s standalone run-rate Standalone operating margin would have been 8.3% Prior guidance of 5% to 8% on a standalone basis EPS of $0.26 includes ~$2M of Viavi allocated SG&A costs in excess of Lumentum s standalone run-rate Standalone EPS would have been $0.29 Solid balance sheet $142.1M of cash Debt-free 2015 Lumentum Operations LLC 17

18 Q1 FY16 Results (Non-GAAP) $ millions except for EPS, % of revenue Part of Viavi carveout financials Viavi 5 weeks / Lumentum 8 weeks Q1 FY15 Q4 FY15 Q1 FY16 Revenue $219.0 $208.9 $212.6 Gross Margin % % % Operating Expenses % % % Operating income % % % EPS (diluted) $0.28 $0.15 $0.26 Q1FY16 Effective Tax Rate of <2%, immaterial other income and expense, 59.7 million fully diluted shares outstanding. Q1 FY15 and Q4 FY15 EPS assume 58.8 million fully diluted shares outstanding. Operating margin of 7.4% includes ~$2M of Viavi allocated SG&A costs in excess of Lumentum s standalone run-rate. Based on Lumentum s cost structure, had we been standalone for the entire quarter operating margin would have been 8.3% and EPS would have been $ Lumentum Operations LLC 18

19 Q1 FY16 Segment Results (Non-GAAP) $ millions, % of revenue Part of Viavi Viavi 5 weeks / Lumentum 8 weeks Q1 FY15 Q4 FY15 Q1 FY16 Revenue $219.0 $208.9 $212.6 Optical Communications Telecom Datacom Industrial & Consumer Commercial Lasers Gross Margin 33.8% 32.0% 32.8% Optical Communications 29.9% 30.4% 31.5% Commercial Lasers 50.5% 41.4% 39.9% 1. Telecom includes WaveReady which has averaged $4-5M/Q over the last 2 years. In Q1FY15 WaveReady revenue was unusually high at ~$9M. 2. Industrial & Consumer contains 3D sensing revenues as well as diode lasers sold into industrial applications Lumentum Operations LLC 19

20 Q2 FY16 Guidance (Non-GAAP) Financial guidance for fiscal second quarter 2016 is provided per our earnings call on November 10, 2015 and is not being updated or confirmed as of any other date Q1 FY16 Actual Q2 FY16 Projection Revenue $212.6M $212M - $222M Operating Margin 7.4%* % EPS (diluted) $0.26* $0.26 $0.30 * Includes approximately $2M, or 3 cents per share, of Viavi allocated SG&A expenses that are in excess of Lumentum s standalone expenses for the 5-week pre-spinoff time period Lumentum Operations LLC 20