Deswell Industries, Inc. · NASDAQ:DSWL
Deswell Industries — Investor Presentation (September 2004)
20 slides from Deswell Industries's investor presentation, September 2004
Slide 1: Deswell Industries, Inc.
D E S W E L L DESWELL INDUSTRIES, INC. I N D NASDAQ NM: DSWL U September 2004 S T R I E S
Slide 2: Overview
D E Overview S W E • Founded: 1987 L L • Location: Macau (Corporate) Dongguan & Shekou (Operations) I N • Business: Plastic Injection Molding D Electronics Assembly U S Metallic Parts Manufacturing T R • Customers I Include: Digidesign, Inter-Tel, Kyocera E Mita, Epson, VTECH, Peavey, etc. S
Slide 3: Financials At-A-Glance
D E Financials At-A-Glance S W E • IPO 1995 L • Market Cap: 182.52 million as of 9/14/04 L • Share Out: 9.20 million • Float: 5.65 million I N Year Ended March 2004 D U • Revenues: 97.2 million S • Gross Margins: 32.0 % T • Net Profit Margins: 15.1% R • Dividend: $0.96 (per share) I E • Cash: $30.2
Slide 4: Deswell Industries, Inc. corporate structure
D E Deswell Industries, Inc. S W E L Deswell Deswell L Industries Industries Inc. Inc. I N D Kwanasia Kwanasia U Jetcrown Jetcrown Electronics Electronics S Plastics Plastics &&Metals Metals (100%) (100%) T (71%) (71%) R I E S
Slide 5: Plastic Injection Molding Overview
D E Plastic Injection Molding Overview S W E • Leading injection molding company in China L L Approx. 1 million square feet of manufacturing space I N 3,800 employees D U • Focus on high-end injection molding products S T High precision R High cosmetic requirements I E Large scale injection, less co
Slide 6: Plastic Injection Molding Expansion
D E Plastic Injection Molding Expansion S W E • New manufacturing campus in Dongguan L L 40% additional capacity added I 25% additional capacity by end of 2005 N D • Benefits of new facility include: U S Lower rental rates Custom designed facility T R I Centralized management E S
Slide 7: Technology Leader
D Plastic Injection Molding E Technology Leader S W Advancements Over Past Year E L • Latest mold making technology L 4 sets new LCL machines (Seki Mori high speed CNC) 1 set new high speed and high precision CNC I (Yoshida) N 5 sets new medium size high precision EDM D machines U 1 set new large sc
Slide 8: Technology Leader (continued)
D Plastic Injection Molding E Technology Leader S W Advancements Over Past Year E L (continued) L • Fully automated production lines in 3 clean I rooms N D Expect to complete in October 2004 U Increases efficiency for select items (70,000 per day) S • Added laser etching division T R Latest technolo
Slide 9: Sample Key Customers
D Plastic Injection Molding E Sample Key Customers S W E L Established Emerging L • Epson • Italia Telecom I N • Kyocera Mita • Emerson D U • Inter-Tel • General Motors S • VTECH • Combi T R I E S
Slide 10: Electronics Assembly Overview
D E Electronics Assembly Overview S W E L • Full-service assembly for primarily L high-end products I • Competitive advantages include: N Expertise in professional audio equipment D U In-house metal manufacturing S T Injection molding through Jetcrown R I • Growth resurgence in 2004 E S
Slide 11: Electronics Assembly Key Customers
D Electronics Assembly E Key Customers S W E L • Peavey (audio) L • Digidesign (audio) I N • Line 6 (audio) D U • Inter-Tel (telecom) S • Kyocera Mita (printers) T R I E S
Slide 12: Electronics Assembly Metals Division
D Electronics Assembly E S Metals Division W E • Metal parts, primarily casings, for such L products as: Digital mixing boards L I Guitar amplifiers N ATM machines D Pay phones U S • Audio companies prefer metal casing to better T shield frequency R I • Division broke even last year and should E rep
Slide 13: Increased Sales & Marketing Focus
D E Increased Sales & Marketing Focus S W E • Plastic Injection Molding L L Significantly expanded sales & marketing division in 2002 I • Electronics Assembly N D 15 person international sales & marketing U department launched in 2003 S Focused on expanding marketshare in T audio sector R I E S
Slide 14: Revenues
D E Revenues S W E $ In Millions $97.2 L $90.9 $83.3 L $80.8 $66.2 $61.0 I $53.4 N $44.5 D U S T R I E S Year Ended March 31
Slide 15: Revenue Growth Drivers
D E Revenue Growth Drivers S W E • Continued penetration of audio L L manufacturing sector • New large scale injection molding capabilities position Deswell to penetrate automotive I N D business U S • Significantly expanded sales & marketing T • Cutting-edge manufacturing technologies R I initiated
Slide 16: Net Income
D E Net Income S W E $ In Millions L L $14.7 $13.0 $13.3 $12.8 $10.3 $10.2 I $9.5 $8.7 N D U S T R I E S Year Ended March 31
Slide 17: Profitability Drivers
D E Profitability Drivers S W E • Closing original Shenzhen plastics facility saves L estimated $1 million per year ($0.10 per share) L • Focus on higher margin manufacturing I IMD N laser etching D U • Lower SG&A at new facility because S less rent T labor R I • Raw material prices currently high a
Slide 18: Healthy Balance Sheet
D E Healthy Balance Sheet S W (In thousands, except per share data) E Fiscal Year: 2002 2003 2004 L Cash & Cash Equivalents $ 31,534 $ 34,400 $ 30,193 L Cash/Share* $ 3.77 $ 3.81 $ 3.30 I Working Capital $ 54,922 $ 58,223 $ 52,876 N Short-Term Debt $ 482 None None D Long-Term Debt None None None U T
Slide 19: Cash Dividend History
D E Cash Dividend History S W E $0.96 L $1.00 $0.90 $0.80 L $0.70 $0.80 $0.67 $0.70 $0.59 $0.59 $0.60 $0.60 I $0.50 $0.43 N $0.40 D $0.30 $0.20 U $0.10 S $0.00 1997 1998* 1999 2000 2001 2002 2003 2004 T R I E *Includes a special cash dividend of $0.25 per share S
Slide 20: Conclusion
D E Conclusion S W E L • Benefiting from manufacturing outsourcing L to China I • New injection molding facility adds growth N capacity and reduces SG&A D U • Resurgence in growth at electronics S manufacturing division driven by audio T niche R I • High yield and strong cash position E S
Deswell Industries — Investor Presentation (September 2004) on 6ix