Mercury Systems Inc · NASDAQ:MRCY
Mercury Systems — Mercury Computer Systems — The AeA Classic Financial Conference 2006
34 slides from Mercury Systems's conference presentation, Nov 6, 2006
Slide 1: The AeA Classic Financial Conference November 6-7, 2006
The AeA Classic Financial Conference November 6-7, 2006 Exhibit 99.1 © 2005 Mercury Computer Systems, Inc. Jay Bertelli, President, Chief Executive Officer & Chairman Bob Hult, SVP, Chief Financial Officer Mark Skalabrin, VP & GM, Advanced Solutions Business
Slide 2: Forward-Looking Safe Harbor Statement
© 2005 Mercury Computer Systems, Inc. 2 Forward-Looking Safe Harbor Statement This presentation contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to anticipated fiscal 2007 business performance and b
Slide 3: Mercury at a Glance
© 2005 Mercury Computer Systems, Inc. 3 Mercury at a Glance HQ in Chelmsford, MA Sales, support, and R&D centers in U.S., Europe, and Japan 823 employees worldwide Founded in 1983 Seven acquisitions since 2004 FY06 revenues: $236M 56/44% defense/commercial Four segments: Defense Business Unit (DBU)
Slide 4: What We Do
© 2005 Mercury Computer Systems, Inc. 4 What We Do For diverse customers in: Aerospace & Defense Communications Geosciences Life Sciences Semiconductor Leading provider of: Computing solutions for specialized, compute- and data- intensive applications
Slide 5: Mercury's Strategy
© 2005 Mercury Computer Systems, Inc. 5 Mercury’s Strategy Focus on relatively small ($200-400M) niche markets that are not well served by mainstream suppliers Leverage technology investments across multiple markets Focus on solving problems that are challenging and can command high margins Focus on
Slide 6: Diverse Base of Customers and Targets
© 2005 Mercury Computer Systems, Inc. 6 Diverse Base of Customers and Targets Commercial Defense
Slide 7: What is Driving Growth?
What is Driving Growth? © 2005 Mercury Computer Systems, Inc.
Slide 8: Revenue Follows Technology Cycles
© 2005 Mercury Computer Systems, Inc. 8 Revenue Follows Technology Cycles Echotek – A/D-D/A Revenue ($M) $186 $250 $150 $181 $141 $107 $86 $180 $235-245* $236 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E June Fiscal Year End *Per Company guidance, October 26, 2006 earnings conference call Powe
Slide 9: Identifying New Markets to Drive Growth
© 2005 Mercury Computer Systems, Inc. 9 Identifying New Markets to Drive Growth Recently expanded market opportunities Aerospace & Defense - Synthetic vision Communications - Wideband data links satellite communications Geosciences – Data-intensive computation (oil & gas) Life Sciences - 3D medical
Slide 10: Leverage as a Competitive Advantage
© 2005 Mercury Computer Systems, Inc. 10 Leverage as a Competitive Advantage Market-specific Innovation Leveraged Innovation Multi-market leverage of technology and core competencies results in strong competitive advantage and significant barriers to entry Defense, National Labs, Life Sciences, Semi
Slide 11: Leverage Example: Cell BE Processor
© 2005 Mercury Computer Systems, Inc. 11 Leverage Example: Cell BE Processor 5-100x faster than conventional microprocessors Designed to solve the same types of problems Mercury has been solving for many years Medical/ Biotech Radar Video Gaming Semi Creation Oil & Gas Intelligence National Labs Est
Slide 12: Unique Strengths in Life Sciences
© 2005 Mercury Computer Systems, Inc. 12 Unique Strengths in Life Sciences Medical Imaging 19 years of experience Unique skill set for emerging 3D market Successful introduction of software applications and full systems for end users Expanding product portfolio PACS 3D visualization server MRI data
Slide 13: Growth Opportunity: 3D Medical Imaging
© 2005 Mercury Computer Systems, Inc. 13 Growth Opportunity: 3D Medical Imaging Multi-slice CT scanners, PET/CT, multi-channel MRI and new clinical applications are flooding the diagnostic workflow with data The market requires a more productive means of visualization Revolutionary 3D transformation
Slide 14: Growth Opportunity: Oil & Gas
© 2005 Mercury Computer Systems, Inc. 14 Growth Opportunity: Oil & Gas Competitive advantages in computing and visualization Performance/watt/cubic Inch Extremely large data sets Computing platforms Seismic acquisition and processing Visualization Seismic QC and interpretation Horizons, faults, well
Slide 15: Unique Strengths in Defense
© 2005 Mercury Computer Systems, Inc. 15 Unique Strengths in Defense Leader in airborne surveillance 14 years of experience Investing and innovating to maintain leadership position Strong business partnership relationship with defense primes Representative
Slide 16: Defense Embedded Computing Market Potential
© 2005 Mercury Computer Systems, Inc. 16 Defense Embedded Computing Market Potential A $14.2 Billion Available Market 95% Primes 5-10% COTS Opportunity for Collaborative COTS ® Source: The Embedded Computing Market 2006, Electronic Trend Publications Inc & Internal Estimates. Defense Weapons & C3 Bo
Slide 17: Growth Opportunity: Radar
© 2005 Mercury Computer Systems, Inc. 17 Growth Opportunity: Radar Airborne surveillance: MP-RTIP Global Hawk (15 platforms) JSTARS and AWACS upgrade potential Tactical fighters: F-35, F-22, F-16 Shipboard missile defense: Aegis UAV: Predator LYNX SAR Land-based/mobile radar Aegis (BMD) JSF (F-35)
Slide 18: Growth Opportunity: Battlefield Communication
© 2005 Mercury Computer Systems, Inc. 18 Growth Opportunity: Battlefield Communication Projected widespread deployment of battlefield visualization and decision aids Multi-sensor visualization for warfighters on the move Comprehensive battlefield pictures for warfighters Super-smart compression for
Slide 19: Growth Opportunity: Wide-Band Data Links
© 2005 Mercury Computer Systems, Inc. 19 Growth Opportunity: Wide-Band Data Links Ground, shipboard, and airborne communications via satellite Deployment of broadband closer to the war fighter driving need for new compute solutions Mercury well positioned with COTS software- defined radio (SDR) and
Slide 20: Growth Opportunity: Unmanned Systems & Avionics
© 2005 Mercury Computer Systems, Inc. 20 Growth Opportunity: Unmanned Systems & Avionics Forest fire detection and monitoring Precision agriculture Border surveillance Oil and gas pipeline monitoring Power line monitoring Surveillance and reconnaissance Commercial and military avionics Synthetic Vis
Slide 21: Mercury's Combined Capabilities
© 2005 Mercury Computer Systems, Inc. 21 Mercury’s Combined Capabilities Aeronautical Applications & Systems Knowledge 3D Visualization Embedded Design Sensor Processing Ruggedization RF Airborne Devices Display Sub-systems
Slide 22: Nav-Sim Potential
© 2005 Mercury Computer Systems, Inc. 22 Nav-Sim Potential FY07 FY08 FY09 FY10 FY11 FY12 Commercial & Military avionics 1,750 4,000 9,500 24,500 42,000 Consumer Avionics 1,300 2,500 4,000 6,500 8,000 10,000 Unmanned Systems 1,750 7,850 19,000 39,000 72,500 TOTAL AVIONICS 2,300 6,000 15,850 35,000 71
Slide 23: Communication
© 2005 Mercury Computer Systems, Inc. 23 Communication Communications market potential System development platforms for wireless infrastructure applications Growth Opportunity AdvancedTCA DSP and FPGA compute solutions Example: Satellite ground stations for Ancillary Terrestrial Component (ATC)
Slide 24: Semiconductor Equipment Market
© 2005 Mercury Computer Systems, Inc. 24 Semiconductor Equipment Market Semiconductor market applications Wafer and reticle inspection systems Process streaming data to find defects Mask writing systems Generate patterns to write to semiconductor and flat-panel masks Mercury Cell BE-based solutions
Slide 25: Growth Opportunity: EDA Mask Synthesis
© 2005 Mercury Computer Systems, Inc. 25 Growth Opportunity: EDA Mask Synthesis Compute-intensive processing required to prepare designs for mask creation Resolution Enhancement Technology (RET) Design For Manufacturing (DFM) Mercury Cell-based solutions to provide over 10 Teraflops to speed applica
Slide 26: Financial Overview
Financial Overview © 2005 Mercury Computer Systems, Inc.
Slide 27: Advancing Towards Our Goals
© 2005 Mercury Computer Systems, Inc. 27 Advancing Towards Our Goals Non-GAAP FY04 FY05 FY06 Guidance FY07* Timeless Business Model Revenue 100% 100% 100% 100% 100% Gross Margin 67% 66% 62% 57% 60+% SG&A 30% 29% 34% R&D 21% 20% 25% Income from Operations 17% 17% 3% 3% 16-18% *Per Company guidance, O
Slide 28: Focus on Working Capital
© 2005 Mercury Computer Systems, Inc. 28 Focus on Working Capital Inventory Turns 8.0 4.9 6.9 5.4 4.6 5.5 2003 2004 2005 2006 2007E Model Supply chain transformation Competitive advantage for Mercury and customers Customer satisfaction DSO target 45 days Days Sales Outstanding 2003 2004 2005 2006 20
Slide 29: EBITDA
© 2005 Mercury Computer Systems, Inc. 29 EBITDA $M $42 $41 $57 $5 $10 2003 2004 2005 2006 2007E *Per Company guidance, October 26, 2006 earnings conference call
Slide 30: Strong Balance Sheet
© 2005 Mercury Computer Systems, Inc. 30 Strong Balance Sheet Historically strong balance sheet Net cash positive * Adjusted for October 19 mortgage payoff ** Convertible senior notes offering * Quarter ended September 30, 2006 Cash and Equivalents $142 Total Current Assets $172 Total Assets $368 To
Slide 31: Q2 Fiscal Year 2007 Guidance
© 2005 Mercury Computer Systems, Inc. 31 Q2 Fiscal Year 2007 Guidance Impact of equity-based compensation costs related to FAS 123(R) of approximately $2.6M excluded from non- GAAP Acquisition-related amortization of approximately $1.7 M excluded from Non-GAAP Notes: 1) Figures in millions, except p
Slide 32: Fiscal Year 2007 Guidance
© 2005 Mercury Computer Systems, Inc. 32 Fiscal Year 2007 Guidance Fiscal Year Ending June 30, 2007 Revenues ($M) $235-245 GAAP Non-GAAP Gross Margin ~57% EPS ~$(0.50) ~$0.29 Notes: 1) Figures in millions, except percent and per share data which includes adjustment for contingent convertibles, in ac
Slide 33: Why Invest in Mercury?
© 2005 Mercury Computer Systems, Inc. 33 Why Invest in Mercury? Strong competitive position in attractive and growing markets Large growth opportunities in 3D medical imaging, semiconductor applications, defense communications, and synthetic vision Leverage technology investments across multiple app
Slide 34: www.mc.com
© 2005 Mercury Computer Systems, Inc. 34 www.mc.com NASDAQ: MRCY
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