August, 2013files.shareholder.com/downloads/ANEN/1950908085x0x438896/ab03cb… · > proprietary...
Transcript of August, 2013files.shareholder.com/downloads/ANEN/1950908085x0x438896/ab03cb… · > proprietary...
August, 2013
Safe harbor statement
• Statements contained in this presentation, other than historical facts, are forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements necessarily involve risks and uncertainties that could cause actual results to differ materially from those stated by management.
• These risks and uncertainties are described in more detail in Anaren’s Annual Report and in Anaren’s Form 10-K and 10-Q Reports and exhibits to those reports filed with the Securities and Exchange Commission.
• Non-GAAP Financial Measures: In addition to presenting financial results calculated in accordance with GAAP, Anaren's earnings release contains non-GAAP financial measures including: non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share. These non-GAAP measures are each adjusted from GAAP results to exclude certain non-cash items including equity based compensation and acquisition related inventory step-up and intangible amortization.
The Company believes these non-GAAP financial measures provide useful information to both management and investors to help understand and compare business trends among reporting periods on a consistent basis. Additionally, these non-GAAP financial measurements are one of the primary indicators management uses for planning and forecasting in future periods. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.
Anaren, Inc.
Anaren, MSKSyracuse, NY43,000 sq. ft. (owned)
• Founded in 1967
• Provider of integrated microwave technology to wireless, space & defense
• $158.4 million annual net sales
• 68% S&D -- 32% Wireless
• Approx 880 employees
• 5 global mfg locations
• 5 global sales offices
Anaren CommunicationsSuzhou, China76,000 sq. ft. (leased)
Anaren Ceramics, Inc.Salem, NH65,000 sq. ft. (leased)
Anaren, Unicircuit Littleton, Col.45,000 sq. ft. (owned)
Anaren Microwave/Anaren, Inc. (HQ)Syracuse, NY 160,000 sq. ft. (owned)
Our threefold technology edge
Engineering strength (153)• 59 microwave/RF• 99 system level (process,
mech., chem., system, etc.) • Robust design, model, test
Advanced microwave mfg• Industry-leading performance
- size, power, cost• Supports all air interfaces• DC to >20GHz
Broad market applicability• Space & defense electronics • Wireless infrastructure• Wireless subscriber• Medical, other
Multi-layer stripline> high-frequency> high-power> high-density
Thick-film & LTCC> miniature> high-precision circuits> highly integrated> proprietary plating & etching
High density electronic assembly> ball-grid array> analog/RF hybrids> precision RF interconnects
Microwave manufacturing technologies
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1996 2013
Investment highlights
• Serving the wireless, space & defense markets
• World-class customer base
• Innovative products and manufacturing technologies
• Excellent growth potential
• Strong revenue & earnings track record
Net sales (millions)
Compound annual growth rate: 14.0%
17.1
158.4
Wireless(32%)
S&D(68%)
S&D Group: Where our technology applies
> Design-to-spec complex components & subsystems> ASPs are $100K> Annuity programs -- sole source supplier
S&D Group: Diversity
Lockheed Martin
21%
Raytheon
22% ITT
3%
Northrup Grumman
13%
Hamilton
4%
Thales
4%
Rockwell
3%
Boeing
2%
Wellking
4%Other
24%
Space/satellite, 16
EW, 34
Missiles, 9Avionics/Aviation, 7
Radar, 22
Other, 25
Sales, by application ($/mil) Sales, by customer
Anaren S&DSyracuse, NY
S&DUnit
S&D Group: Structure & technology portfolio
• Team of approx 588 -- engineers, mgrs, biz. dev., mfg.
• Diverse customer base –numerous platforms & programs
• Diverse product portfolio
• Receiver/jammer subsystems
• RF networks
• RF components
• hi-rel & RADhard custom hybrids
• power mgt devices
• control components
MS KennedySyracuse, NY
UnicircuitLittleton, CO
• Complex RFcircuit boards &manifolds
S&D Group: New synergistic opportunities
Before acquisitions After acquisitions
Control / signal
processing
RFmanifold
Active array
T/Rmodule
Control / signal
processing
RFmanifold
Active array
T/Rmodule
Anaren Ceramics content
MSK content
Unicircuit content
Anaren Microwave content
S&D Group: Revenue
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10
20
30
40
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60
70
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110
120
'09 '10 '11 '12 '13
Net Sales (millions)
98.3 113.2 94.8
IED-related sales
Backlog (millions)
113.1 107.6
Net sales ($ mil’s) & operating margins (%)
Defense
Space
Space growth (%) & backlog ($ mil’s)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
'10 '11 '12 '13
15
10
5
0
20
89.6 90.6
105.4
96.3
13.7
15.6
11.8
9.7
13.3
Non-GAAP operating margin
75
50
25
0
100
S&D Group: Program participation
Program revenues($, millions)
FY’13 rev FY’14 rev(projected)
AN / ALQ - 210 12.5 13.6
TPQ - 53 8.8 9.9
TPY – 2 9.6 6.0
Iridium Next 3.4 2.9
Phalanx (CIWS) 2.4 5.4
Classified (non-sat) 3.4 2.4
SONATA 1.9 1.4
Classified (sat) 2.5 4.0
AEHF 3.9 3.4
ALQ-187 0.3 4.8
Rain Pac (supportsE-2D Advance Hawkeye)
1.5 1.5
Total 50.2 55.3
AN/ALQ - 210
TPQ - 53TPY - 2
Phalanx
Advanced EHF Iridium
F-16 AMDR
Opportunities
S&D Group: Customers
Wireless Group: Where our technology applies
> Standard components targeted to consumer & infrastructure applications> ASPs are $.05-10
Wireless Group: Revenue
0
15
30
45
60
75
Growth of net sales (millions)
52.655.668.6 66
Custom
12.614 15
10
5
0
20
25
21
’09 ’10 ’11 ’12 ‘13
12.6
� Increasing content per base station:- each base station = 1-24 transceivers (12 / typical)- 4G = 2-3x $ content over previous generations
� Strong pipeline of new products
16.4
50.8
Standard
Non-GAAP operating margin
� Strategic exit from custom has boosted profitability
Wireless Group: Customers
Infrastructure customerConsumer wireless customer
Wireless Group: AIR / Anaren Integrated Radio
Vertical mkts & apps• Sensors• Remote control• HVAC/R• Lighting• M2M• Home automation• Medical • Many others
Technology overview• Short-range radios for
“Internet of Things”• Developed with Texas
Instruments low-power RF• Choice of protocols
(proprietary, ZigBee, Bluetooth SMART, etc.)
• Large/diverse market ($1B)
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100
200
300
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500
600
700
FY'13 - Q1 FY'13 - Q2 FY'13 - Q3 FY'13 - Q4 FY'14 - Q1projected
AIR modules have yielded Anaren Controls Solutions• Customers demand for RF firmware & software assist• LED arena lighting is first vertical (Ephesus Lighting)• Other verticals to follow
Quarterly module revenue ($/thousands)
• Innovation: high-frequency technology leadership- aggressive R&D- new addressable markets & applications
• Strategic acquisitions
• Operational excellence- cost & service leader
• Global diversity
Strategy: Grow & diversify
Geographic sales ($millions)
R&D (% of net sales)
66%
24%10%
U.S.
Asia/Pacific
Europe
7.1
7.9 7.8
8.89.4
98.6
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2
3
4
5
6
7
8
9
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2007 2008 2009 2010 2011 2012 2013
Revenue($ In millions)
Operating Income (non-GAAP)*
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10
20
30
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60
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’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13
Wireless
$94.5
$105.5
’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ‘13
8.6%
14.5%
Financial performance
Space & defense
$12915.9%
$131.3
9.8%
$167
12.8%
* From continuing operations excluding non-cash, equity-based compensation, acquisition related inventory step up, and intangible amortization.
$168.9
14.1%
$179.2
14.8%
$147.3
10.4%
$158.4
14.4%
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6
12
18
Financial model
* Percentages stated exclude stock-based compensation, acquisition inventorystep-up, and intangible asset amortization expense.
(% of Net Sales2009*(actual)
2010*(actual)
2011*(actual)
2012*(actual)
2013* (actual)
2013*(model)
Gross Profit 34.6% 37.4% 38.4% 35.6% 37.8% 37-39%
Operating Expense(Includes Restructuring)
14.5 14.8 14.6 16.4 15.1 14–15
R&D 7.4 8.4 9.0 8.7 8.3 7.5-8.5
Operating Margin 12.8 14.1 14.8 10.4 14.4 14-17
Net Income 8.8 10.0 11.0 8.0 11.4 10-12
Stock-based Compensation, Acquisition Inventory Set-up & Intangible Asset Amortization Expense
4.3 3.0 2.9 3.4 3.0 3.0
Strong Balance Sheet
Positive Operating Cash Flow & Stock Repurchase Program (Repurchased >40% of Basic Shares Outstanding)
Operating Cash Flow (millions)
Basic Shares Outstanding
Balance sheet data & cash flow
June 30, 2013(in thousands)
Actual(unaudited)
Cash and Short-termInvestments
$50,996
Non-currentInvestments
2,582
Total $53,578
Long-term Debt 0
Days SalesOutstanding
70 days
Inventory turns 3.0x17.1 12.2 15.2 8.4 16.7 21.8 12.0 28.4 28.1 24.9 20.6 26.3
22.5 21.920.6
15.5
17.516.4
14.2 13.9 13.8 1413.2 12.6
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
'02 '03 '04 '05 0'6 '07 '08 '09 '10 '11 '12 '13
Investment highlights
• Serving the wireless, space & defense markets
• World-class customer base
• Innovative products and manufacturing technologies
• Excellent growth potential
• Strong revenue & earnings track record
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Net sales (millions)
Compound annual growth rate: 14.0%
17.1
158.4
Wireless(32%)
S&D(68%)
Thank you for your time!