RadiSys Company Overview APRIL 28, 2009

Transcription

1 RadiSys Company Overview APRIL 28, 2009

2 Safe Harbor FORWARD-LOOKING STATEMENTS ARE INCLUDED IN THIS PRESENTATION. Any statements in this presentation regarding future expectations for the business of RadiSys constitute forward-looking statements that involve a number of risks and uncertainties. We caution you not to place undue reliance on these statements. Factors that could cause actual results to differ materially from those in the forward-looking statements can be found in our SEC filings, including our 2007 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. THIS PRESENTATION IS AS OF APRIL 28, The content of this presentation contains time-sensitive information that is accurate only as of the time hereof. RadiSys undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company s expectations. 2

3 Company Overview HEADQUARTERS EXPERIENCE HILLSBORO, OR 20+ YEARS DEVELOPING EMBEDDED PRODUCTS EMPLOYEES GLOBAL PRESENCE 660 EMPLOYEES WITH 240 IN R&D CUSTOMERS & OPERATIONS IN NORTH AMERICA, EUROPE & ASIA 3

4 What We Do WE PROVIDE ADVANCED EMBEDDED SOLUTIONS & COMPLETE LIFECYCLE OWNERSHIP Embedded Boards, Blades, Software, Systems & Turnkey Platforms Concept, Design, Delivery, Sustaining & End of Life THAT ENABLES OUR CUSTOMERS TO Get more products to market Get products to market faster Redeploy R&D to higher value Reduce product costs 4

5 The Markets We Serve COMMUNICATIONS NETWORKING 80% OF SALES 80% OF R&D COMMERCIAL 20% OF SALES 20% OF R&D TRADITIONAL: CUSTOM PRODUCTS MEDICAL NEXT-GENERATION: ATCA NEXT- GENERATION: MEDIA SERVER TEST & MEASUREMENT 5

6 Media Server Market Leader RADISYS MEDIA SERVERS Powerful, multi-service platforms for manipulating voice, video and images in real-time Highly standards based, extremely scalable and flexible Gross Margins of ~70% APPLICATIONS Conferencing, Messaging, Call Center, Voice Services, Interactive Voice Recognition Move from TDM to IP where IP media servers are required Global presence and global opportunities 6

7 Award Winning ATCA Products RADISYS ATCA PRODUCTS Leading 10G System -switching to handle high throughput applications Platform software to manage shelf management, datapath software, blade/switch management Wide selection of ATCA blades optimized for target applications Best in class partners CG Linux OS, HA Middleware, building block assets - silicon, chassis APPLICATIONS IPTV, Voice Quality Enhancement (VQE), Radio Network Controller (RNC), Media Gateways -VoIP, IP Multimedia Subsystem (IMS), WiMax, 4G, Military Communications 7

8 Commercial Market Products MEDICAL IMAGING SOLUTIONS High performance image processing, long life solutions Applications MRI, Ultrasound, CAT Scan Products Embedded Servers, Computer on Module Express GRAPHICS COMPUTE PLATFORMS Mobile, low power, small form factor Applications Mobile security, patient monitoring, portable instruments, in-flight entertainment, gaming Products Computer on Module Express & Single Board Computers 8

9 Our Customers COMMUNICATIONS NETWORKING COMMERCIAL 9

10 Principle Competitors OUR CUSTOMERS Choose to keep development in-house and proprietary. PLATFORM PROVIDERS BOARD PROVIDERS 10

11 Global Operations Vancouver Dublin Munich Hillsboro Boca Raton Shanghai Japan Shenzhen Penang Research & Development Centers Sales/ Support Sites Internal / Contract Manufacturing 11

12 Leadership Team Scott Grout President & CEO Brian Bronson CFO Andrew Alleman CTO Office Anthony Ambrose VP / GM Communications Networking Market David Smith VP / GM Media Server Market Wade Clowes VP / GM Commercial Market Chris Lepiane VP Global Sales and Service John Major VP Global Operations 12

13 Strategic Transformations FROM TO PROGRESS Engineering Services Hardware Only ASPs $2-$4K GM% in the 20s Revenue Concentrated US Centric In-house Manufacturing Technology Centric Product Company Hardware, Software & Systems ASPs $20-$30/$60K ATCA 30%+, Media Server ~70% Revenue Diversified Global Ops, R&D, Customers Outsourced Manufacturing Market Centric & Tech Enabled 75% Wins Standard Based $100M+ Next-Gen Com Revenue More ATCA Systems & Media Server Systems GM% of 33.5% in Q109* 100+ New Customers Diversified 08 Revenues: 32% - NA, 37% - Europe, 31% - Asia 80% Outsourced Manufacturing Product Marketing Team *Represents non-gaap results. A reconciliation of GAAP to Non-GAAP results is located on earnings releases filed on Form 8-K. 13

14 Deploying & Wining New Business MEANINGFUL NEW ATCA SYSTEM DEPLOYMENTS Now shipping for deployment of 3G Femtocells with North American wireless carrier Passed validation testing with French telecom operator for Enterprise Femtocell solution New business won with ZTE in China for unified communications applications STRONG LEVEL OF DESIGN WINS CONTINUE Significant ATCA Wireless Gateway win with large telecom equipment provider Growth in higher margin next-gen communications product wins Design win traction in new markets like military / defense CONTINUED DIVERSIFICATION 6 new customers entered top 10 customer list in past couple years Design wins with 100+ new customers in past few years Increasing number of new customers by also penetrating new markets *Represents non-gaap results. A reconciliation of GAAP to Non-GAAP results is located on earnings releases filed on Form 8-K. 14

15 Global Business Growth Q EMEA 42% APAC 4% NA 54% APAC 27% EMEA 41% NA 33% APAC 37% EMEA 33% NA 31% 15

16 Next-Generation Revenue Growth INCREASING REVENUE OF NEW, HIGHER VALUE PRODUCTS $104M of Next-generation Communications revenues in 2008 up from $36M in 2007 $25M of Next-generation Communications revenues in Q109 Next-generation Communications revenues currently include ATCA and Media Server products Q Next-gen Communications Traditional Communicaitons Commercial 16

17 Gross Margins Increasing FAVORABLE PRODUCT MIX Revenue growth / mix of business moving to higher value products 33.5% IMPROVED MANUFACTURING COSTS Excess & obsolesce inventory charges down year over year Cost reductions 25.3% 27.4% 27.8% 26.6% 30.8% 29.4% 31.6% Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Note Gross margin % represents Non-GAAP results, a reconciliation of GAAP to Non-GAAP results is located on earnings releases filed on Form 8-K. 17

18 Cash Flow Generator OPERATING CASH FLOW Generated between $10M and $35M a year since 2002 Generated $35M in 2008 and $4M in Q109 Current EBITDA break-even currently equates to revenue of approximately $61M - $64M, depending on product mix $25 $18 $25 $32 $20 $35 $ Q109 $4 18

19 Growing EPS GROWING NON-GAAP EPS From a net loss per share of ($0.04) in Q207 to projected net income per diluted share of $0.11 in Q209** IMPROVING GAAP LOSS PER SHARE From a net loss per share of ($0.38) in Q207 to projected net loss per share of ($0.04) in Q209** $ millions Q207 Q208 Q209 F** Non-GAAP * Revenue $ 75.5 $ 97.6 $ 75.0 Non-GAAP gross margin % 29.4% 32.5% Non-GAAP operating expense % 24.5% 27.6% Non-GAAP operating income (loss) (1.2) % 4.9% 4.9% Tax provision (benefit) (0.5) Non-GAAP Net income (loss) $ (1.0) $ 3.5 $ 2.9 Non-GAAP EPS $ (0.04) $ 0.14 $ 0.11 Diluted w eighted avg. shares GAAP Stock-based compensation $ 2.7 $ 2.5 $ 2.3 Acquistion related (intangibles) Restructuring charges Tax impact of adjusting items (1.9) (1.8) (0.7) GAAP Net income (loss) $ (8.2) $ (3.1) $ (1.0) GAAP EPS $ (0.38) $ (0.14) $ (0.04) Basic w eighted avg. shares *Represents non-gaap results. A reconciliation of GAAP to Non-GAAP results is located on earnings releases filed on Form 8-K. ** Per the Company's guidance on April 28,

20 Balance Sheet $ millions 31-Dec Dec Mar-09 ASSETS Cash & ST Investments $123 $74 $79 LT Investments Settlement Right (UBS) Accounts Receivable Inventory Goodwill & Intangibles Deferred Tax Assets Other Assets TOTAL ASSETS $393 $309 $270 LIABILITIES & EQUITY Current Liabilities $72 $59 $56 ST Convertible Notes ST Line of Credit - UBS LT Convertible Notes LT Line of Credit - SVB Other Long-term Liab Shareholders' Equity TOTAL LIABILITIES & EQUITY $393 $309 $270 20

21 Q1 Results & Q2 Outlook REVENUE Q1 09 RESULTS EPS* Q2 09 OUTLOOK REVENUE $77.6M, down 10% year over year GROSS MARGIN* 33.5%, up 5.7 percentage points year over year OPERATING INCOME* 6.7%, up 5.9 percentage points year over year $4.9M or 19 cents, up 22 cents year over year CASH FLOW Operating cash flow of $4.3M CASH & INVEST. + $79M of Cash & Equiv. + $53M of LT Invest. + $10M of UBS Right - $40M of UBS LOC = $102M Net Cash/Inv (assumes $50M 2013 LT Debt converts to equity) $72M to $78M, growth in next-gen and lower Traditional Comm. / Commercial ** EPS* $0.08 to $0.14 ** Seeing increased uncertainty & projected softening in demand Remain focused on core strategies, while monitoring expenses to continue to generate operating cash flow *Represents non-gaap results. A reconciliation of GAAP to Non-GAAP results is located on earnings releases filed on Form 8-K. ** Per the Company's guidance on April 28,

22 Why Invest in RadiSys? Well positioned for growth in a transforming market Industry shift to merchant supplied embedded platforms Selling new products with higher ASP s, more value, more margin ATCA, Media Servers, Imaging Servers Next-generation communication revenue of $103M in 2008, $25M in Q Significant new wins and now ramping Many new customers in compelling applications Meaningful financial progress Gross margin* from a low of 25% in 07 to 33.5% in Q109 Operating income* from 0% to 6.7% over past 6 quarters Strong cash position and generating cash flow Cash of $79 million ending Q Operating cash flow of $34M in 2008, $4M in Q *On a non-gaap basis. A reconciliation of GAAP to Non-GAAP results is provided in quarterly earnings releases filed on Form 8-K. 22