Mercury Systems Inc · NASDAQ:MRCY

Mercury Systems — Mercury Computer Systems — Cowen and Company 20/20 Technology Media Telecom Conference 2008

37 slides from Mercury Systems's conference presentation, May 28, 2008

  1. Slide 1: Cowen and Company 20/20 Technology Media Telecom Conference

    Cowen and Company 20/20 Technology Media Telecom Conference May 29, 2008 Exhibit 99.1 © 2008 Mercury Computer Systems, Inc. Mark Aslett, President & Chief Executive Officer Bob Hult, SVP & Chief Financial Officer

  2. Slide 2: Forward-Looking Safe Harbor Statement

    © 2008 Mercury Computer Systems, Inc. www.mc.com 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 2008 business perfor

  3. Slide 3: Mercury at a Glance

    © 2008 Mercury Computer Systems, Inc. www.mc.com 3 Mercury at a Glance Oil and Gas Telecommunications Embedded Computing Aerospace and Defense Semi Industry Life Sciences Mercury offers more than 20 years’ experience in designing and delivering high-performance computing systems and software, for a

  4. Slide 4: Mercury spans the entire signal processing chain

    © 2008 Mercury Computer Systems, Inc. www.mc.com 4 4 Mercury spans the entire signal processing chain • Modular boards and integrated systems • Scalable multi core architectures • Robust software and tools • Open-standard COTS to custom solutions • Ruggedized systems • Comprehensive services • Visua

  5. Slide 5: Advanced Computing Solutions

    © 2008 Mercury Computer Systems, Inc. www.mc.com 5 5 Advanced Computing Solutions ACS focuses on specialized, high-performance computing solutions that leverage Mercury’s capabilities in sensor computing, computational acceleration, and delivery of complex system-level solutions. Example Segments •

  6. Slide 6: Visage Imaging, Inc.

    © 2008 Mercury Computer Systems, Inc. www.mc.com 6 6 Visage Imaging, Inc. Mercury’s wholly owned subsidiary focuses on the development and distribution of 3D visualization and PACS (picture archiving and communications system) solutions, and other 3D software solutions in the life sciences segment.

  7. Slide 7: Visualization Sciences Group

    © 2008 Mercury Computer Systems, Inc. www.mc.com 7 7 Visualization Sciences Group VSG focuses on the development and distribution of software developer toolkits and 3D application software for very-high volume-rendering applications. Example Segments • Geosciences – Oil and Gas • Engineering and man

  8. Slide 8: Why customers choose Mercury

    © 2008 Mercury Computer Systems, Inc. www.mc.com 8 8 Why customers choose Mercury • Significant and pioneering investments in specialized FPGA and multi core computing architectures and software We maintain ongoing relationships with silicon providers that are unique Significant multi computing R&D

  9. Slide 9: Partial customer and partner list

    © 2008 Mercury Computer Systems, Inc. www.mc.com 9 9 Partial customer and partner list

  10. Slide 10: Major Company Dynamics

    © 2008 Mercury Computer Systems, Inc. www.mc.com 10 Major Company Dynamics (# ’ s GAAP FY08 YTD) 10 10.7 (10.3) (6.7) Segment Revenue Q308 YTD VI $9.9M 6% ACS $139.2M 88% Emerging $1.4M 1% VSG $7.9M 5% • Revenue and profitability strength in ACS business • Other businesses eroding margin Notes: Q308

  11. Slide 11: Major ACS Business Dynamics

    © 2008 Mercury Computer Systems, Inc. www.mc.com 11 11 Major ACS Business Dynamics 11 Commercial Defense Defense Commercial ACS Revenue Walk + ~20% Growth (~35% Decline) FY07 Defense Commercial FY08* • Shift toward defense in ACS business unit • Defense represents economic core of the business * Fig

  12. Slide 12: Military Electronics Market

    © 2008 Mercury Computer Systems, Inc. www.mc.com 12 Military Electronics Market • COTS $3B of $30B total military electronics market • Increased outsourcing and overall market growth • Move toward collaborative COTS & system integration • Platform upgrades, obsolescence, and new functionality • New

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  17. Slide 17: Strategic Direction – Sell, fix or grow

    © 2008 Mercury Computer Systems, Inc. www.mc.com 13 Strategic Direction – Sell, fix or grow AUSG VI ES/PS Other Emerging Government Defense Commercial Mercury Federal Sell, Shutdown or Recap Fix Grow VI

  18. Slide 18: Strategic Sequence

    © 2008 Mercury Computer Systems, Inc. www.mc.com 14 Strategic Sequence • Short Term: Improve operations and cash flow Enhance leadership team to tackle short, medium, long-term strategy Improve supply chain, manufacturing operations and shipment linearity Increase turns Simplify operations, cross-fu

  19. Slide 19: Challenges Drive Innovation

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  20. Slide 20: Mercury Overview

    © 2008 Mercury Computer Systems, Inc. www.mc.com 16 Mercury Overview • HQ in Chelmsford, MA • Sales, support and R&D centers in U.S., Europe and Japan • 745 employees worldwide ending Q308 • Founded in 1981 • FY2007 revenues of $224 million • NASDAQ: MRCY FY07 (Ended June) Revenue Mix* ACS, $200M Vi

  21. Slide 21: Revenue Growth Follows Technology Investment Cycles

    © 2008 Mercury Computer Systems, Inc. www.mc.com 17 Revenue Growth Follows Technology Investment Cycles - $186 $250 $236 $224 $211 - $214 2004 2005 2006 2007 2008E* Commerical Defense June Fiscal Year End Cell BE Processor DSP/GPU / FPGA Processors Ensemble PowerStream 7000 RapidIO ~ 10% CAGR FY98 –

  22. Slide 22: FY07 Compared to FY08 (Non-GAAP)

    © 2008 Mercury Computer Systems, Inc. www.mc.com 18 FY07 Compared to FY08 (Non-GAAP) Revenue 211 - (6%) - (4%) Gross Margin % Revenue 55.8% 60% 4.2 pts Operating Expenses 7% Improvement Operating Profit % Revenue (14) (6.3%) (1) - (1%) – 0% $13M - $15M Improvement EPS $(0.29) $0.12 - $0.18 $0.41 - $

  23. Slide 23: Segment Operating Profit (GAAP)

    © 2008 Mercury Computer Systems, Inc. www.mc.com 19 (4.2) 4.2 (3.8) Segment Operating Profit (# ’ s GAAP) 10.7 (10.3) (6.7) Segment Operating Profit Q308 0.0 (3.8) -6 -4 -2 ACS VI VSG Emerging Total • Profitability strength in ACS; other businesses eroding margin Notes: Q308 YTD represents 9 months

  24. Slide 24: Strong Balance Sheet

    © 2008 Mercury Computer Systems, Inc. www.mc.com 20 Strong Balance Sheet Historically strong balance sheet Net cash positive: $37M Projected FY08 capex of $5 million Positive free cash flow in FY08 * 2% convertible senior notes offering due 2024 Quarter ended March 31, 2008 Cash and Equivalents $162

  25. Slide 25: Focus on Working Capital

    © 2008 Mercury Computer Systems, Inc. www.mc.com 21 Focus on Working Capital • Supply chain transformation Operational efficiencies Manufacturing lead times Cost of quality Competitive advantage for Mercury and customers • Customer satisfaction End-of-quarter shipment skew DSO target 50 days Days Sa

  26. Slide 26: Gap to Timeless Business Model (Non-GAAP)

    © 2008 Mercury Computer Systems, Inc. www.mc.com 22 Gap to Timeless Business Model (# ’ s Non - GAAP) Non-GAAP Guidance FY08* ACS FY08 Timeless Business Model Revenue 100% 100% 100% Gross Margin 60% 60% 58+% SG&A 36% 26% Mid 20% R&D 25% - 24% 23% High Teens Income from Operations (1)% - 0% 10+% 15%

  27. Slide 27: Q308 Fiscal Year 2008 Summary

    © 2008 Mercury Computer Systems, Inc. www.mc.com 23 Q308 Fiscal Year 2008 Summary • First three quarters’ revenue and non-GAAP EPS exceeded guidance • Strong book-to-bill all quarters, 1.15 for Q308 • Operating cash flow generation of $11.3 million for 9 months ending Q308 • Q308 DSO: 60 days; Q308

  28. Slide 28: Q4 Fiscal Year 2008 Guidance

    © 2008 Mercury Computer Systems, Inc. www.mc.com 24 Q4 Fiscal Year 2008 Guidance • Impact of equity-based compensation costs related to FAS 123(R) of approximately $2.8M excluded from non-GAAP • Acquisition-related amortization of approximately $1.8M excluded from non-GAAP • Restructuring and impair

  29. Slide 29: Fiscal Year 2008 Guidance

    © 2008 Mercury Computer Systems, Inc. www.mc.com 25 Fiscal Year 2008 Guidance Fiscal Year Ending June 30, 2008 Revenues ($M) $211 - $214 GAAP Non-GAAP Gross Margin 60% 60% EPS $(0.99) - $(0.91) $0.12 - $0.18 Notes: 1) Figures in millions, except percent and per share data 2) Company guidance, April

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  34. Slide 34: Strategic Direction – Sell, fix or grow

    © 2008 Mercury Computer Systems, Inc. www.mc.com 26 Strategic Direction – Sell, fix or grow AUSG VI ES/PS Other Emerging Government Defense Commercial Mercury Federal Sell, Shutdown or Recap Fix Grow VI

  35. Slide 35: www.mc.com

    © 2008 Mercury Computer Systems, Inc. www.mc.com 27 www.mc.com NASDAQ: MRCY

  36. Slide 36: Challenges Drive Innovation

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  37. Slide 37: GAAP to Non-GAAP Reconciliation

    © 2008 Mercury Computer Systems, Inc. www.mc.com 29 GAAP to Non-GAAP Reconciliation Q408 and FY08 Guidance Reconciliation* Note: figures are rounded * Per Company guidance range, April 23, 2008 earnings conference call RANGE (Loss) Income Per Share - Diluted (Loss) Income Per Share - Diluted GAAP ex

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