Avaya Reports First Fiscal Quarter 2014 Financial Results

18 Feb 2014
  • Business model advances year-on-year
  • Cash growth from operations and asset sales
First Quarter 2014 Highlights:
  • Revenue of $1,158 million
  • Operating income of $91 million, non-GAAP operating income(1) of $196 million
  • Adjusted EBITDA(1) of $240 million, 20.7% of revenue
Santa Clara, Calif. — Avaya Inc., a global provider of business communications and collaboration systems, software and services, reported results for the first fiscal quarter ended December 31, 2013.
 
Total revenue for the first quarter was $1,158 million, seasonally down 3.5% when compared to the prior quarter.  On a year over year basis revenue was down 6.6% compared to the first quarter of fiscal 2013.  For the first fiscal quarter, adjusted EBITDA was $240 million which compares to adjusted EBITDA of $295 million for the prior quarter and $251 million for the first quarter of fiscal 2013.  Non-GAAP operating income was $196 million compared to non-GAAP operating income of $244 million for the prior quarter and $193 million for the first quarter of fiscal 2013.   First quarter cash flow from operations was $64 million.  Cash and cash equivalents totaled $300 million as of December 31, 2013.  Subsequent to the end of the first fiscal quarter, the company also completed the sale of its facility in Westminster, Colorado for approximately $58 million, net of applicable fees and related expenses.
 
"Avaya's first quarter results demonstrated progress in the execution of our strategy and improved operational efficiency," said Kevin Kennedy, president and CEO.  "We delivered year-over-year profitability improvements and increased cash while advancing our business model.  Avaya remains focused on execution and aligning our organization to optimize our innovative product portfolio while pursuing new and attractive market opportunities."
 
First Fiscal Quarter Highlights
  • Revenue of $1,158 million decreased 3.5% compared to the prior quarter and decreased 6.6% compared to the first quarter of fiscal 2013
  • Gross margin was 55.7% compared to 56.8% for the prior quarter and 53.7% for the first quarter of fiscal 2013.  Operating income was $91 million compared to operating income of $113 million for the prior quarter and up nearly 4 times compared to $23 million for the first quarter of fiscal 2013  
  • Non-GAAP gross margin(1) was 57.2% compared to 58.1% for the prior quarter and 55.6% for the first quarter of fiscal 2013.  Non-GAAP operating income was $196 million compared to non-GAAP operating income of $244 million for the prior quarter and $193 million for the first quarter of fiscal 2013
  • Adjusted EBITDA was $240 million or 20.7% of revenue compared to $295 million or 24.6% of revenue for the prior quarter and $251 million or 20.2% of revenue for the first quarter of fiscal 2013
  • First quarter 2014 non-GAAP gross margin and adjusted EBITDA were record levels in the first quarter of any fiscal year for the company.
  • Product revenue of $574 million decreased by 7.0% compared to the prior quarter and decreased by 9.0% compared to the first quarter of fiscal 2013.  
  • Avaya Global Services revenue of $584 million increased 0.2% compared to the prior quarter and decreased 4.1% compared to the first quarter of fiscal  2013
  • First quarter 2014 capital expenditures and capitalized software totaled $33 million compared to $34 million for the prior quarter and $30 million for the first quarter of fiscal 2013
  • The provision for income taxes includes charges related to valuation allowances and to the transfer of intellectual property
  • For the first fiscal quarter, percentage of revenue by geography was:
    -  
    U.S. – 54%
    -  
    EMEA – 26%
    -  
    Asia-Pacific – 10%
    -  
    Americas International – 10%.
Conference Call and Webcast
Avaya will discuss these results at 5:00 a.m. PST on Tuesday, February 18, 2014 in a live webcast and conference call.  To join the webcast, listeners should access the investor page of our website (www.avaya.com/investors).  Supplementary materials will be available at the same location.  Following the live webcast, a replay will be available at the same web address in our event archives.  
 
To access the webcast by phone, dial 800-882-9327 in the U.S. or Canada and 706-645-9730 for international callers using the conference passcode number of 31446838.  To ensure you are connected prior to the start, we suggest you access the website or the call 10-15 minutes before the start time.  
 
For those unable to participate during the live event, a replay of the conference call will be available beginning at 8:00 a.m. PST on February 18, 2014 through March 18, 2014 by dialing 855-859-2056 or 800-585-8367 within the United States and 404-537-3406 outside the United States. The replay access code is 31446838.
 
The following financial tables are presented in accordance with GAAP, unless otherwise specified: here.
 
About Avaya
Avaya is a global provider of business collaboration and communications solutions, providing unified communications, contact centers, networking and related services to companies of all sizes around the world. For more information please visit www.avaya.com.
 
Certain statements contained in this press release may be forward-looking statements. 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 are reasonable, such forward looking statements involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results to differ materially from any future results expressed or implied by these forward-looking statements. For a list and description of such risks and uncertainties, please refer to Avaya's filings with the SEC that are available at www.sec.gov. Avaya disclaims any intention or obligation to update or revise any forward-looking statements.
 
1Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers and for reconciliation of adjusted EBITDA for the fourth quarter of fiscal 2013 see our Form 8-K filed with the SEC on November 20, 2013 at www.sec.gov.
 

Deb Kline

908-953-6179

klined@avaya.com

Matthew Booher

Investor Inquiries

908-953-7500

mbooher@avaya.com

John Nunziati

Avaya Investor Relations

+1 408-562-3780

jfnunziati@avaya.com