microsemi analyst day presentation - pt...
TRANSCRIPT
Power Matters
Microsemi Corporation September 2013
© 2013 Microsemi Corporation.
TM
Power Matters
This presentation contains projections or other forward-looking statements regarding future events or the future financial performance of Microsemi Corporation.
We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We refer you to all of the documents that the company filed with the Securities and Exchange Commission. Please pay special attention to the Company’s most recent Form 10-K and subsequent Form 10-Qs.
These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.
Disclaimer
2
Power Matters
About Microsemi Corporation (Nasdaq: MSCC)
Global provider of semiconductor solutions for applications focused on delivering power, reliability, security and performance.
High-value, high barrier-entry markets:
– Communications
– Defense & Security
– Aerospace
– Industrial
FY 2012 Revenue: $1 billion
3
Corporate headquarters in Aliso Viejo, CA
Power Matters
Strengthening Financial Results
(Non-GAAP, $MM)
Operating Income EBITDA
Net Sales Gross Profit
4
$-
$200
$400
$600
$800
$1,000
FY07 FY08 FY 09 FY 10 FY11 FY12
$-
$100
$200
$300
$400
$500
$600
FY07 FY08 FY 09 FY 10 FY11 FY12
$-
$50
$100
$150
$200
$250
FY07 FY08 FY 09 FY 10 FY11 FY12
$-
$50
$100
$150
$200
$250
FY07 FY08 FY 09 FY 10 FY11 FY12
Power Matters
Macro Growth Drivers
Ban
dw
idth
4G Deployment
Bi-directional Data
High Definition Media
The Cloud
5
Information Assurance
Counterfeiting
Anti-tamper
Transportation
Power Generation
Energy Management
Se
cu
rity
Ele
ctr
ific
ati
on
Power Matters 6
2013 2006 2001
Revenue Opportunity Up 10X
SAM Expansion Drives Growth
Power Matters
Going To Market – The Solution Engagement
7
FPGA
ASIC
RFIC/MMIC
PMIC
Module
Timing Cisco
Lockheed
Siemens
Com
munic
ations
Aero
space
Industr
ial
Defe
nse a
nd S
ecurity
Le
ve
rag
e
Power Matters
Real Customers and Real Programs
Engine Control and System Management FPGA, HV MOSFET, Analog ASIC, Power Module, TVS
8
Server System and Power Management Customizable SoC, DC-DC, HV MOSFET
Basestation and Backhaul Systems IEEE 1588/SyncE, PLL, FPGA
Power Bus and System Management FPGA, MOSFET, Analog ASIC, Power Module, TVS
Implantable Medical Device Systems Ultra Low-Power Radio, HV IGBT/MOS FET, FPGA
Hi-Temp Down-Hole Drilling Solutions FPGA, HV FET & IGBT, HV Power Module
Power Matters
Microsemi Market Focus
9
Based on FQ3 2013 revenue
Wireless Backhaul
Base Station
Routing & Switching
Networking
Access & CPE
Wireless Terminal
Communications 28% of Revenue
Defense & Security 31% of Revenue
Aerospace 19% of Revenue
Industrial 22% of Revenue
Military
Communication
Military Aircraft
Unmanned Vehicle
Information Assurance
Security Scanners
Anti-Tamper
Commercial Air
Engine Control
Avionics
Actuation
Space
Power Delivery
Payload Electronics
Launch Systems
Industrial Control
Medical Devices
Alternative Energy
Hybrid Vehicles
SEMI Cap Equipment
Machine to Machine
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Communications Market
28% of Revenue
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• Leader in timing synchronization solutions
Broad and complete communications equipment timing solution
Most flexible and highest monolithic density OTN timing solution
High performance and cost-efficient clock management solutions
System knowledge that solves customers’ most sophisticated network, compliance or clock tree challenges
• Field proven with Tier 1 wireline and wireless infrastructure suppliers
Solidifying Microsemi’s Market Leadership
11
Microsemi provides world class
timing solutions
Power Matters
Addressing Higher Growth Communications Markets
Source: Databeans 12
11% CAGR Service Providers
Routers & Switches [2012 – 2016]
17% CAGR OTN Infrastructure
Equipments [2011-2016]
14% CAGR Ethernet Mobile
Backhaul [2012 – 2016]
Broadband Access & Metro Core & Storage User / Mobile
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
CY11 CY12 CY13 CY14 CY15 CY16
Reven
ue (
US
$M
)
Ethernet MBH gateways SONET/SDH and WDMMicrowave radio--dual Ethernet/TDM Ethernet MBH routersMicrowave radio--Ethernet
$0
$5,000
$10,000
$15,000
$20,000
$25,000
CY11 CY12 CY13 CY14 CY15 CY16
Reven
ue
(U
S$M
)
IP edge routers IP core routers Carrier Ethernet switches
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16
Reve
nu
e $
US
M)
SONET/SDH WDM OTN
Power Matters
Leadership Position Amongst Competitors
13
Performance
Featu
res,
Inte
gra
tio
n &
Fle
xib
ilit
y
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Integration Capability a Key Differentiator
14
802.11ac
WiFi 5GHz FEM
802.11ac
WiFi Dual-Band FEM
Monolithic SiGe FEM • Highest level of integration
• Lowest BOM cost
• Lowest cost of ownership
Technology advantages • Digital tuning vs. board level tuning
• Optimized power management
• Multiple radio bands on one chip
• Faster time to production
Power Matters 16
Commercial Air Unit Market to Double
~30k planes
$3.5 trillion
7 year OEM backlog
16 Source: Airbus, Boeing September 2011
An
nu
al
De
live
rie
s
0
500
1000
1500
2000
2500
3000
2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031
Power Matters
Avionics
11% CAGR 2011-2016
Higher speed, wider bandwidth
Increased connectivity
Size, weight, power
Integration
Electrical Power Systems
14% CAGR 2011-2016
Power Optimization
Reliability, Safety, Cost
Power Quality & Thermal Control
Eco friendly, Zero Emissions
Electrification Accelerating Growth Prospects
17 Source: Frost & Sullivan
Revenue in US$, Billions
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Growing Content & Capabilities
RF & Microwave Systems
Navigation & Guidance Systems
Satcom
X-Band weather radar
Communication/navigation radios
Integrated surveillance
Engine Systems & Controls
FADEC
Engine start and power
conversion, and distribution
systems
Engine & APU Controls
Power system monitors
Fuel management systems
Cabin Management Systems
Cabin lighting and control
Air conditioning and management
Systems
Flight entertainment systems
Cockpit Avionics
Flight control computer
Data management systems
Primary and secondary flight
control
Health monitoring systems
Crew interface systems
Actuation Systems
Primary actuator systems
Secondary actuation systems
High lift control and monitoring
Landing systems
Wheels and braking systems
De-icing systems
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Power Matters 19
0
20
40
60
80
100
120
140
160
Commercial Sats Civil Sats Military Sats University Sats
Number of Launches Per Year World Wide
Catering to a Growing Satellite Market
There will be more satellites for launch during the next 10 years than at any time during the
past two decades.
Source: Teal Group
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Imaging
• Commercial imaging requirements
• Governments using merchant suppliers
• GEO communications platforms and buses supporting larger payloads and greater versatility
Digital communications
• Iridium Next constellation
• Large geosynchronous digital communications payloads
Space exploration and science
• NASA budget offset by Russia, India
– Europe and Japan flat
• Increasingly complex sensor data processing on board the spacecraft
Capitalizing on Growth Drivers in Space
20
Power Matters
Technology Differentiation
FPGA Technology
Equivalent Functional Failure – FIT Rates per Device
Ground-Level Applications Commercial
Aviation Military Aviation
Sea Level 5,000 Ft 30,000 Ft 60,000 Ft
Microsemi
Antifuse FPGA
1M-Gate
150nm Antifuse No Failures
Detected
No Failures
Detected
No Failures
Detected
No Failures
Detected
Microsemi
Flash FPGA
1.5M-Gate
130nm Flash No Failures
Detected
No Failures
Detected
No Failures
Detected
No Failures
Detected
Microsemi
Upcoming Next Gen
Flash FPGA
65nm Flash No Failures
Detected
No Failures
Detected
No Failures
Detected
No Failures
Detected
SRAM FPGA
Vendor 1
1M-Gate
90nm SRAM 320 FITs 1,100 FITs 47,000 FITs 150,000 FITs
SRAM FPGA
Vendor 2
1M-Gate
90nm SRAM 730 FITs 2,500 FITs 108,000 FITs 346,000 FITs
Neutron Testing Results: iRoC Technologies: www.irochtech.com
Regular testing at Los Alamos National Labs neutron test facility
21
Power Matters
Satellite Content
MSCC: Total Solution
22
Technology Application Product $ Content
Power
Power Supply,
Distribution,
Conditioning
Diodes 220,000
Power
Power Supply,
Distribution,
Conditioning
Transistors 80,000
Power
Power Supply,
Distribution,
Conditioning
RadHard
Mosfets 120,000
Power
Power Supply,
Distribution,
Conditioning
Hybrids 100,000
Mixed-Signal Bus Control High Side
Drivers 280,000
Mixed-Signal Bus Control Telemetry
ASICs 325,000
Mixed-Signal Bus Control Digital Gate
Arrays 100,000
SoC AOC & TT&C FPGAs 400,000
SoC PIU FPGAs 60,000
PMG Power Supply,
Control
DC/DC
Converters 320,000
PMG SSPA Power
Supply SSPAs 750,000
Total: $ 2,750,000
Source: Company Data, Commercial GEO Telecom Satellite Electrical Power System
Power Matters
Defense & Security Market
31% of Revenue
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Worldwide interconnection of critical data and systems of all types
• DoD weapons and systems
• Navigation and timing
• Electric grid, transportation and refining
• Banking, finance, medical
Evolution of unmanned systems
• Using robotics, sensors, machines and automation
Technology of security threats not static—evolving quickly.
• Demands flexible / programmable architectures
Nation state actors with substantial motivation and resources to steal IP
• Cyber, counterfeiting, and tampering
Expanding U.S. foreign military sales. Risk of loss of critical technology.
• UAE, Saudi, Turkey, Korea, more
Key Defense & Security Market Drivers
24
Power Matters
Security & Interconnected World
25
Prestige & Thrill Substantial Time, Tools, Social Engineering, Hacktivism
Revenge Inside Information
Monetary Gain Sophisticated Tools, Expertise
and Substantial Resources
Industrial Espionage Advanced Persistent Threat
MOTIVE
Insiders
Organized Crime, Competitors
“Cyber-Warriors”
Hackers, Crackers
The National Cybersecurity
Agenda is Rising in Importance National Security
ADVERSARY
DAMAGE/IMPACT TO LIFE & PROPERTY
Script Kiddies
Power Matters
Defense & Security Market TAM & SAM
26
0
2000
4000
6000
8000
10000
12000
14000
2012 2013 2014 2015 2016
TAM
FPGA & ASICS Integrated Solutions
Systems & Subsystems
0
200
400
600
800
1000
1200
1400
1600
1800
2012 2013 2014 2015 2016
SAM
FPGA & ASICS Integrated Solutions
Systems & Subsystems
Revenue in US$, Millions
Source: Company Estimates
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Industrial Market
22% of Revenue
Power Matters
Global economic conditions and competition forcing many into redesign for differentiation
Increased international standards to ensure quality and high reliability
Application areas such as functional safety on the rise to protect life and expensive operating costs
Concerns over IP protection and malicious attacks driving embedded security measures
Industrial Trends Favor Microsemi Position
28
Market Sub-segment 2016 CAGR
Energy 13.7%
Factory Automation 11.1%
Building Automation 8.8%
Business Automation 3.6%
Test, Scientific, Measurement 3.6%
Source: IMS
Power Matters
Deployment Examples at Industrial Leaders
Factory / Building Automation
• PLC controller
• Servo motor control
• Motor shaft wear sensor
• Elevator motor control
• Industrial laser
• Safety laser scanner controller
• Gas flow meter
• Utility power service controller
Business Automation
• Point of sale terminal
• Touch screen display controller
• Toll tag reader
• RFID reader
Test, Scientific and Medical
• Seismic data recorder
• Industrial network tester
• Blood analyzer
• Implant telemetry
• LCD monitor
• Purification system
• Mobile X-Ray
• Patient monitoring
Energy
• Inverters
– PV, wind and automotive
• Battery chargers
• Battery cell tester
• Industrial LED lighting
Power Matters
“Telehealth” Market Drivers
Budgets • Remote patient monitoring solutions reduce readmissions and hospital stays
• Reduce in-office visits
• Better manage the health of individuals with long-term conditions
Patients • 400 million people with obesity, 860 million people with chronic diseases
• In 10 years, 32% more people in the U.S. will be over 65 years old.
• By 2025, 1.2 billion people world-wide will be over 50 years old .
Regulation • Medicare reform
• Healthcare mandates Electronic Medical Record (EMR) by 2014
• EMR requirements will add more infrastructure for wireless sensor networks.
Sources: Qualcomm, World Health Organization, and MDDI 30
Power Matters
Financials
Power Matters
Financial Strength / Target Model
FY12 FY13
Q3 Q4 Q1 Q2 Q3
Net Sales 259.2 263.1 247.6 235.3 242.6
Gross Profit 145.6 150.4 142.6 133.5 138.3
Gross Margin 56.2% 57.2% 57.6% 56.7% 57.0%
Operating
Income 60.7 64.5 56.7 50.0 54.8
Operating Margin 23.4% 24.5% 22.9% 21.2% 22.6%
EBITDA 67.6 71.5 63.7 56.5 61.7
Net Income 48.3 51.8 45.0 38.9 44.8
Diluted EPS 0.55 0.58 0.50 0.43 0.49
Target Model
Revenue Growth 15%
Gross Margin 60%
Operating Margin 30%
Note: Non-GAAP, amounts in millions except EPS.
32
Power Matters
Balance Sheet
FY12 FY13
Q3 Q4 Q1 Q2 Q3
Cash & Cash Equivalents $ 167.1 $ 204.3 $ 203.3 $ 206.9 $ 220.9
Accounts Receivable 153.7 153.2 159.4 158.4 151.2
Inventories 155.5 159.1 158.9 162.7 166.6
Total Assets $ 1,938.7 $ 1,934.6 $ 1,918.0 $ 1,903.5 $ 1,894.8
Current Liabilities $ 180.1 $ 156.5 $ 140.4 $ 136.9 $ 129.0
Long Term Debt 797.9 776.0 751.0 726.0 699.0
Stockholders’ Equity 885.4 928.0 954.8 968.9 996.1
Total Liabilities & Stockholders’ Equity $ 1,938.7 $ 1,934.6 $ 1,918.0 $ 1,903.5 $ 1,894.8
Days Sales Outstanding 53 53 58 62 58
Days of Inventory 125 128 138 144 144
Operating Cash Flow $ 54.7 $ 55.2 $ 28.1 $ 31.9 $ 52.6
Balance Sheet & Cash Flow
33
Amounts in millions
Power Matters
Thank you