Power Matters
Microsemi Corporation Jefferies 2013 Global Technology, Media & Telecom Conference New York City May 8, 2013
© 2013 Microsemi Corporation.
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
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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
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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 FY120
50
100
150
200
250
FY07 FY08 FY 09 FY 10 FY11 FY12
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A Model of Managed Growth
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2012 2006 2001
Small Signal Transistors Medium Signal Transistors Inverters LDOs
2001 SAM: $500M
2006 SAM: $850M GaAs Diodes RF Power Amplifiers Power Switching Small Signal Transistors
2012 SAM: $5.2B Network Timing & Sync Power-over-Ethernet Voice Line Circuits WLAN Power Amplifiers FPGAs/SoCs Anti-tamper Board Level Systems DC/DC
– ICs – Converters – Subsystems
GaAs Diodes LED Backlighting RadHard
– MOSFETS – Hybrids – Transistors
Consistently Driving SAM Expansion
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Macro Growth Drivers
Ban
dwid
th
4G Deployment Bi-directional Data
High Definition Media The Cloud
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Information Assurance Counterfeiting
Anti-tamper
Transportation Power Generation
Energy Management
Secu
rity
Elec
trifi
catio
n
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Going To Market – The Solution Engagement
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FPGA
ASIC
RFIC/MMIC
PMIC
Module
Timing Cisco
Lockheed
Siemens Com
mun
icat
ions
Aer
ospa
ce
Indu
stria
l
Def
ense
and
Sec
urity
Leve
rage
Power Matters
Real Customers and Real Programs
Engine Control and System Management FPGA, HV MOSFET, Analog ASIC, Power Module, TVS
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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
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Microsemi Market Focus
9 Based on FQ2 2013 revenue
Wireless Backhaul Base Station Routing & Switching Networking Access & CPE Wireless Terminal
Communications 27% of Revenue
Defense & Security 34% of Revenue
Aerospace 19% of Revenue
Industrial 20% 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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Addressing Higher Growth Communications Markets
Source: Databeans 11
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
$9,000
CY11 CY12 CY13 CY14 CY15 CY16
Rev
enue
(US$
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
$25,000
CY11 CY12 CY13 CY14 CY15 CY16
Rev
enue
(US$
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
Rev
enue
$U
SM)
SONET/SDH WDM OTN
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Leadership Position Amongst Competitors
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Performance
Feat
ures
, Int
egra
tion
& F
lexi
bilit
y
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Aerospace Market
19% of Revenue
Power Matters
Avionics 11% CAGR 2011-2016 Higher speed, wider bandwidth Increased connectivity Size, weight, power Integration
Electrical Power Systems 14% CAGR 2011-2016 Power Optimisation Reliability, Safety, Cost Power Quality & Thermal Control Eco friendly, Zero Emissions
Electrification Accelerating Growth Prospects
14 Source: Frost & Sullivan
Revenue in US$, 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 16
020406080
100120140160
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
Power Matters
Satellite Content MSCC: Total Solution
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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
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
Expanding U.S. foreign military sales. Risk of loss of critical technology. • UAE, Saudi, Turkey, Korea, more
Key Defense & Security Market Drivers
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Defense & Security Market TAM & SAM
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FPGA’s & ASICS – components, PMG-PHX+WL Complex Assemblies, RFIS - systems
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
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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
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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
Financial Strength / Target Model
FY12 FY13
Q2 Q3 Q4 Q1 Q2
Net Sales 249.3 259.2 263.1 247.6 235.3
Gross Profit 137.0 145.6 150.4 142.6 133.5
Gross Margin 55.0% 56.2% 57.2% 57.6% 56.7%
Operating Income 54.9 60.7 64.5 56.7 50.0
Operating Margin 22.0% 23.4% 24.5% 22.9% 21.2%
EBITDA 63.2 67.6 71.5 63.7 57.2
Net Income 40.3 48.3 51.8 45.0 38.9
Diluted EPS 0.46 0.55 0.58 0.50 0.43
Target Model
Revenue Growth 15%
Gross Margin 60%
Operating Margin 30%
Note: Non-GAAP, amounts in millions except EPS.
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