Optex Systems Holdings, Inc. · NASDAQ:OPXS
Optex Systems — IPO Roadshow (October 2015)
25 slides from Optex Systems's IPO roadshow presentation, Oct 16, 2015
Slide 1: Optex Systems Holdings Investment Overview
OPTEX SYSTEMS HOLDINGS INVESTMENT OVERVIEW Free Writing Prospectus dated October 16, 2015 Filed Pursuant to Rule 433 under the Securities Act of 1933 Registration Statement No. 333 - 204955
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT 2 This presentation includes forward - looking statements that are subject to many risks and uncertainties . These forward - looking statements, such as statements about Optex’s short - term and long - term growth strategies, can sometimes be identified by use of terms such
Slide 3: Free Writing Prospectus Statement
FREE WRITING PROSPECTUS STATEMENT 3 This presentation highlights basic information about us and the offering. Because it is a summary, it does not contain all of the information that you should consider before investing in our company . This free writing prospectus relates only to, and should be rea
Slide 4: Transaction Summary
TRANSACTION SUMMARY 4 Issuer Optex Systems Holdings, Inc. Listing OTCQB: OPXSD Applied to list common stock and warrants on the NASDAQ Capital Market under the symbols “OPXS” and “OPXSW”, respectively Securities Offered 2,400,000 shares of common stock and warrants to purchase 2,400,000 shares of co
Slide 5: Optex Overview
OPTEX OVERVIEW □ A 28 - year old, Texas - based company provides the most reliable optical sighting systems to the US Department of Defense, foreign governments, and commercial consumers of optical products □ 77 employees; 93,000 square foot facility □ Patents – 2 Issued, 3 Under Review by USPTO □ D
Slide 6: Business Divisions Overview
BUSINESS DIVISIONS OVERVIEW ▪ Military Optical Sighting Systems ▪ Weapon Systems, Optical Subassemblies ▪ High Definition Imaging Systems ▪ Thermal and Night Vision Systems ▪ Video Display Systems ▪ Premier Thin Film Coatings ▪ Precision Optical Assembly Processes ▪ Stabilized Monoculars and Binocul
Slide 7: Company Products
COMPANY PRODUCTS 7 Business Lines Product Description 2015YTD Rev %* Periscopes - M Series - ICWS Laser & Non - Laser Protected Acrylic & Glass Periscopes 35% Sighting Systems - CSS - MRS - Big Eye, etc. - Digital Day and Night (DDAN) - Muzzle Reference Systems (MRS) - Ships Binoculars - Collimators
Slide 8: Sample Products
SAMPLE PRODUCTS 8 DDAN / M36 Sights M17 Day/Thermal Periscope Red Tail – Digital Spotting Scope Back Up Sight Laser Protected Periscopes Howitzer Products Commercial Optical Assembly Naval Binoculars
Slide 9: Optex Business Strategy
OPTEX BUSINESS STRATEGY 9 Optex has established core competencies by proving its product reliability and product quality and by maintaining deep product and sector knowledge in an overall supply chain control environment ▪ Optical engineering ▪ Mechanical sighting systems ▪ Assembly Processes ▪ Comm
Slide 10: Select Major Customers
SELECT MAJOR CUSTOMERS 10 DEFENSE CUSTOMERS COMMERCIAL CUSTOMERS
Slide 11: Backlog & Historical Quarterly Revenue
BACKLOG & HISTORICAL QUARTERLY REVENUE 11 $5.0 MM $11.9 MM* 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 2015FY Backlog Total Backlog ($ MM ) Backlog (as of 6/28/15) * $1.3M ACOGS Award Received in July not included in this number. This award comes with a 100% (another $1.3 MM) Option. 3.4 2.1 2.2 3.4 1.
Slide 12: Sales Mix Shifts – Growing Commercial & Foreign Military Sales
Foreign 23.9% Commercial 2.0% Foreign 30.6% Commercial 0.5% SALES MIX SHIFTS – GROWING COMMERCIAL & FOREIGN MILITARY SALES ▪ Company has been able to diversify its sales channels over the past few years . Commercial and foreign military sales have been quickly catching up ▪ Commercial product’s bid
Slide 13: Market Share & Major Players
MARKET SHARE & MAJOR PLAYERS - 75% (U.S.) - 20 - 30% (worldwide ) (German) U.S.: $8 - $10 MM Sighting Systems Markets - 5% ( U.S.) ; - 0.5 - 1% (worldwide) (UK) (Israel) (South Korea) (UK) (UK) U.S.: $100 MM Worldwide $40 - 50 MM Worldwide $500 MM - $1 B Periscopes & Vision Blocks Markets 13 (Belgiu
Slide 14: Major Competition
MAJOR COMPETITION Many of the largest competitors in the past are either bankrupt or behind their delivery schedule 14 Company Business Description Competition Latest Status Miller - Holzwarth Inc. Once larger acrylic periscopes producer Went in a bidding war and drove the price down from 2007 to 20
Slide 15: Acquisition Strategy – Applied Optics Center (AOC) Case Study
ACQUISITION STRATEGY – APPLIED OPTICS CENTER (AOC) CASE STUDY $6 MM of proceeds expected to be used for acquisitions ▪ Time: 11/3/2014 ▪ Consideration: $1.01 MM ▪ Offer: 100% cash ▪ Valuation: - 0.19x LTM Revenue - 0.36x Net Assets ▪ Business Lines : precision optical assemblies; military thin film
Slide 16: Optex Margin Drivers
OPTEX MARGIN DRIVERS □ Acquisition Synergies ▪ Gross margin increases as Optex and AOC manufacturing capacity is currently under utilized ▪ Economy of scale - material costs from suppliers also trend lower □ Preferred Supplier Status ▪ Optex and AOC have multiple products where they are the only sup
Slide 17: Pro Forma Capital Structure - Pre-Offering
PRO FORMA CAPITAL STRUCTURE - PRE - OFFERING 17 1. After giving effect to 893 preferred shares that convert to common shares at the offering 2. Upon the offering, 1,102 preferred shares will remain outstanding, convertible into 2,655,878 shares. Preferred shareholders shall vote along with the commo
Slide 18: Leadership Team
LEADERSHIP TEAM Bill Bates – General Manager – AOC Division 33 years in Optics and Military and Commercial Contracting. Previously with L - 3 Communications (LLL). Ron Stinedurf – Manufacturing Manager 36 years in Optical Fabrication and Manufacturing Kirk Benson – Quality Manager 35 years in Inspec
Slide 19: US Government Markets & M&A Outlook
US GOVERNMENT MARKETS & M&A OUTLOOK U.S. Government Markets Improving □ U.S. Department of Defense budget is expected to grow in FY2016 - first increase since 2010 □ Procurement Drivers: - Geopolitics - Better buying power initiatives - Afghanistan drawdown - Sequestration constraints - Vehicle plat
Slide 20: Foreign Defense Markets Outlook
FOREIGN DEFENSE MARKETS OUTLOOK Foreign Military Sales funding for products built in the United States for select foreign militaries has held steady and strong due to the escalating geopolitical threats Growing International Markets 0 1 2 3 4 5 6 7 8 9 10 2009 2010 2011 2012 2013 2014 2015 Est. 2016
Slide 21: Market Development - Foreign Military Order Expansion
Australia Israel South America Saudi Arabia $4.0 MM Award Expected in 2016 • Supplier of periscopes and commander’s sighting system to Australian Land 400 Program through GDLS - CA $8.3 MM Award Expected • $2.5 MM from General Dynamics Land Systems Canada (DGLS - CA) • $4.8 MM from CMI Defence $3.0
Slide 22: Keys to Product Development
OPTICAL DESIGN TOOLS THIN FILM DESIGN TOOLS MECHANICAL DESIGN TOOLS VERTICAL INTEGRATION OF KEY EQUIPMENT & PROCESSES ▪ 2D/3D Capability ▪ Thermal / Strength Analysis ▪ Glass Properties ▪ Glass Shape ▪ Color / Distortion Control ▪ Wavelength notching ▪ Transmissivity Analysis ▪ Absorption Analysis ▪
Slide 23: Market Development - New Commercial Opportunities
On 5/26/2015, Optex entered into an exclusive supply agreement with Nightforce Optics for supply of critical optical assemblies ▪ $3.0 MM in 2015 ▪ $3.9 MM in 2016 ▪ Extendable for an additional year MARKET DEVELOPMENT - NEW COMMERCIAL OPPORTUNITIES ▪ 4 assemblies in production now ▪ 18 new assembli
Slide 24: Diversification - New Commercial Opportunities
▪ Released to Cabelas for the consumer market ▪ Released to the general service administration (GSA) schedule ▪ $800 - $1,000/unit final sales price DIVERSIFICATION - NEW COMMERCIAL OPPORTUNITIES Nighthawk (in Development) Commercial Digital Solution Optex offers a high - grade digital products for
Slide 25: Investment Highlights
INVESTMENT HIGHLIGHTS □ Operating Performance Potential - High asset utilization - New capacity creation □ Market Share Expansion - Create internal linkages through vertical integration and technology advancement - Capitalize on overseas market expansion □ Attractive Acquisition Outlook - Identify t