Argon ST. Company Overview January 2009

Transcription

1 Argon ST Company Overview January 2009

2 Safe Harbor Statement With the exception of historical information, the statements set forth in this presentation include forward-looking statements that involve risk and uncertainties. The company cautions that a number of important factors could cause actual results to differ materially from those forward-looking statements. These and other factors which could cause actual results to differ materially from those in the forward-looking statement are discussed in the company s filing with the Securities and Exchange Commission, including its filings on forms S-4, 10-Q, and 10-K, including the most recent 10-K dated December 5, The company also cautions that any guidance referred to herein is as of December 4, 2008 and this presentation should not be regarded as an update. Slide 2

3 Investor Snapshot Corporate Headquarters Ownership Fairfax, VA Public: NASDAQ (STST) Founded / History Argon-Sensytech merger 2004 Argon Engineering Assoc., Inc Sensytech (and predecessors) 1968 Fiscal Year Fully Diluted Shares Outstanding September 30, million 1 Insider Ownership Approximately 40% 2008 Revenue $341 million 2009 Revenue Guidance $375 to $395 million Employees 990 as of September 30, % possess security clearances 50% possess TS/SCI clearances 30% of technical staff have Masters or PhD 75% of technical staff are software engineers Key Programs SSEE, SSTD, OT-TES, EP3/Guardrail Slide 3

4 Argon ST Overview We provide systems and services to the command, control, communications, computers, combat systems, intelligence, surveillance and reconnaissance (C5ISR) market New threat environments continue to create need for intelligence Prime on 76 percent of contracts (2008 revenue) We strategically focus on the following markets: Maritime Airborne Tactical Communications and Networking Systems Ground Systems Security / International / Other We differentiate ourselves by Designing, developing and delivering technically advanced systems and capabilities Installing and supporting our systems on platforms in operational environments Slide 4

5 Investment Highlights Well positioned in SIGINT Argon s objective is to be a national asset We participate in programs of national importance Our technical capabilities are recognized as world-class We are a premier C5ISR company Higher performance/lower risk systems COTS hardware and reusable software business model Highly productive, technically skilled, and cleared workforce with specific domain knowledge Significant backlog weighted toward desirable classified work Strong opportunity pipeline in our markets Double digit top line growth targets Organic growth and disciplined acquisitions Increased market share and growth of C5ISR market Proven management team with significant industry experience Slide 5

6 Core Capabilities Signals Intelligence Information Operations Collecting information and producing intelligence from the detection, interception and evaluation of signals, including communication signals ( COMINT ) and electromagnetic signals, such as radar ( ELINT ). Employment of non-lethal measures to exploit, influence and manipulate an enemy s C5ISR processes, including radio and network communications, to protect own force and friendly information and sensors. Slide 6

7 Core Capabilities (cont.) Electronic Warfare Acoustic Sensing and Countermeasures Detecting, identifying and countering adversary forces, weapons and sensors through collection of adversary signals. Measures include launching deceptive signals and electronic counter-measures and using electronic support measures ( ESM ) to identify and locate emitters on both platforms and weapons. Employment of acoustic sensors and signals to detect, identify and counter undersea threats including, but not limited to, enemy torpedoes. Slide 7

8 Core Capabilities (cont.) Tactical Communications and Networking Threat Simulation Imaging The use of computer and virtual based replication of signals and sensors for training and analysis of adversary capabilities. Deployment of mobile, terrestrial, and satellite radio receivers and transmitters, to include point to point links and extensive networks, supporting tactical operations, intelligence production and dissemination, movement of data and information, and management of the radio frequency spectrum. Production and analysis of information from light spectrum sources, including multispectral, hyperspectral, infra-red, electro-optical and visible light. Slide 8

9 Argon and the C5ISR Market We target the entire C5ISR market with a range of capabilities and solutions In a sophisticated and complex market Argon approaches each opportunity with a life cycle approach leveraging technology advances and incumbency Slide 9 9

10 Our Business Model Program Lifecycle ~5-10 year duration Cost (~6-9+% margins) Cost & Fixed Fixed (~12-15% margins) Fixed & Cost We approach each program with a lifecycle process which ensures optimal opportunity for long-term relationships with high margin production content Slide 10

11 Contract Mix (By Contract Type) Future Forecast 60-75% Fixed/T&M % 30% 40% 50% 60% 70% 80% Fixed/T&M Slide 11

12 Diversified Revenue Base Other US Government 22% Commercial / Other 5% Army 10% Customers (FY2008) International 8% Navy 55% Slide 12

13 2008 Financial Highlights Record revenues of $341 million for the year with record quarterly revenues of $95 million in the fourth quarter Seven straight quarters of growth in TTM revenue Record bookings of $375 million representing a book to bill of 1.1 Record year-end backlog of $327 million with over 80% fully funded Record Adjusted EBITDA of $44.7 million or 13.1% of revenue for the year Reduced DSOs and improved cash generation Balance sheet with no debt Slide 13

14 Record Revenue Dollars in millions CAGR ~ 20% ` Sensytech Argon Engineering/ Argon ST 50 Slide Notes: 1 For purposes of this graph, 2009 Revenue is shown as the midpoint of guidance

15 Seven Straight Quarters of TTM Revenue Growth Dollars in millions QUARTER REVENUE TTM REVENUE Quarterly Revenue TTM Revenue Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Slide 15

16 Operating Income Dollars in millions Sensytech Argon Engineering/ Argon ST 5 Slide Notes: 1. Represents operating income from Argon Engineering and Sensytech 2. FAS 123R adopted Non-GAAP excluding impairment & other one-time charges 4. For purposes of this graph, 2009 Operating Income is shown as the mid point of guidance

17 60 1 Record Adjusted EBITDA Dollars in millions Slide Notes: 1. Adjusted EBITDA is a non-gaap measure defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, acquisition related retention, and excludes impairment of intangible assets and other one-time charges 2. Represents Argon Engineering adjusted EBITDA only (without Sensytech acquisition) Operating Income represents the mid point of guidance

18 Record Backlog Provides Visibility for Future Growth Dollars in millions Slide 18 Argon Engineering/Argon ST Sensytech

19 Balance Sheet ASSETS Cash and cash equivalents Accounts receivable Other current Property, equipment and software, net Goodwill Intangibles and other assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses Deferred revenue Other current Other liabilities Equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 30 Sep 2008 $ $ $ $ Sep 2007 $ $ $ $ Slide 19 19

20 2008 Operational Highlights Achieved key results that will facilitate future growth opportunities: Completed the design and development on SSEE Inc F Achieved breakthroughs in system performance for airborne platforms by combining LIGHTHOUSE technology with special airborne processing Successfully tested the new AN/SLQ-25C configuration of surface ship torpedo defense system and received certification for production Demonstrated Common Range Integrated Instrumentation System Rapid Prototype Initiative radios and started low rate initial production Successful prototype testing of Operational Test Tactical Engagement System Expanded our customer base Coast Guard, intelligence agencies, satellite communication payloads More relationships with large primes Improved efficiency Production emphasis on Six Sigma processes Reduced operating costs Slide 20

21 2009 Business Focus Maintain and expand our role with the Navy Expand into platform computing, navigation, collection processing, and intelligence dissemination Expand our role in torpedo seekers, countermeasures, and UUV sensors Grow airborne reconnaissance Expand position on current system upgrades to meet urgent requirements Capture new roles on planned competitions such as EPX and ACS Accelerate growth with the intelligence agencies Achieve growth in communications and networks OT-TES, CRIIS RPI, CRIIS, and test range targets Gateways, satellite communications, telematics Navigation systems Expand ground sensor role in the US market Continue to evaluate strategic acquisitions to complement our technology and/or to achieve new customer relationships Slide 21

22 2009 Business Focus Predicting the Future has always been difficult, this is especially true in the current environment Dramatic dislocations in the financial community Very large federal deficit New Executive Branch with a large and ambitious domestic agenda Our positives for 2009 Solid backlog A base of momentum programs Excellent customer relationships State-of-the-art technology A quality staff to provide development, production and support of our systems We continue to see important work in our pipeline and are cautiously optimistic that we will continue the growth we achieved in 2008 through 2009 and beyond Slide 22

23 FY 2009 Outlook and Guidance For the fiscal year ending September 30: Revenue - $375 to $395 million Operating income - $34 to $38 million Adjusted EBITDA - $48 to $53 million Slide 23

24 Slide 24 Q & A