Q1 2009 Earning Report of National Instruments Corp


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Q1 2009 Earning Report of National Instruments Corp

  1. 1. National Instruments
  2. 2. Safe Harbor Warning During the course of this presentation, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are just predictions and that actual events or results may differ materially. We refer you to the documents the company files regularly with the Securities and Exchange Commission, specifically the company's most recent Form 10-K and 10-Q. 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. 2
  3. 3. Profile • Leaders in Computer-based Net Revenue in Millions Record Revenue of Measurement and Automation $821 Million in 2008 • Long-term Track Record of Growth and Profitability • $821M Revenue in 2008 • $158 M Revenue in Q1 2009 •More than 5,000 employees; operations in 40+ countries •Fortune’s 100 Best Companies to Work For 10th Consecutive Year • Cash and short-term investments $241 million 3
  4. 4. What We Do Low-Cost Modular Productive Software Highly Integrated Measurement and Development Tools Systems Platforms Control Hardware Used By Engineers and Scientists for Test, Design and Control 4
  5. 5. Empowering Users Through Software CERN Large Hadron Collider LEGO Mindstorms NXT “the most powerful instrument “the smartest, coolest toy on earth” of the year” 5
  6. 6. NI’s Increased Value to Customers Control Traditional Complete Simple PC-Based Instruments System Solutions Measurements PXI System Platform LabVIEW Software Compact FieldPoint System Platform LabVIEW Real-Time GPIB Instrument Control CompactRIO Industrial PC Data System Platform Acquisition $10 K-$100 K+ $1 K - $15 K < $2 K 1980s 1990s 2000s Typical Order Size 6
  7. 7. Test and Measurement – a $12 Billion Market General Purpose Test Communications Test Semiconductor ATE • Products used in • Communications • Manufacturing focused, electronic design and test equipment design and Semiconductor and board test test •Measurement needs •Trend to software-based • Low volume, high dollar increasingly met by commercial technologies systems and increasing systems sales (cyclic) complexity Growing market share Large NI growth in automated test potential NI is an OEM supplier $4.2B $3.9B $3.8B Source: Frost and Sullivan, 2006 7
  8. 8. Today’s Challenges: The Traditional Approach Function Programmable Switch Generator Oscilloscope Communications Analyzer Pattern Generator Logic Analyzer Power Supply Spectrum Analyzer LCR Meter DMM 8
  9. 9. NI’s Value Proposition • Lower cost • Higher performance • Smaller size • Flexible • Easily upgraded • User-defined 9
  10. 10. Industrial and Embedded – a >$40 B Market PLC/PAC Custom Design SBC/Embedded • PC-based architectures • Plant automation • Trend to FPGAs • Open • Machine builders • Trend to high-level tools • Time to market driven • Enterprise trend • Price and cost driven • Fragmented market • Rugged, simple IO • Fragmented tool chain • Software and hardware Companies NI delivers quality NI compliments PLCs NI makes design easier measurements >$13B >$24B $3B NI Estimate 10
  11. 11. Development Platform for the Next 30 Years Graphical System Design Prototype Deploy Design 11
  12. 12. Graphical System Design Examples In-Vehicle Data Acquisition Machine Monitoring Machine Control • In-Vehicle Data Acquisition Packaging/Processing • Machine Condition Monitoring – Automobiles, motorcycles, High-speed motion control, – Bearing order analysis, lubrication  recreational vehicles, research batch control, discrete control monitoring, cooling, combustion, … aircraft, trains Heavy Machinery Control • Mobile/portable DSA, NVH • Engine and ECU test cells Real-time signal processing and  – Noise, vibration, harshness, dynamic – HIL testing of engines and engine control of power electronics, signal analysis, acoustics controllers, sensor simulation using hydraulic systems FPGA • Distributed Acquisition Semiconductor/Biomed • Rapid Control Prototyping – Central controller with distributed I/O Custom motion and vision  nodes over Ethernet/wireless inspection, material handling – Automotive/aerospace control prototyping 12
  13. 13. Diversity of Applications No industry is greater than 15% of revenue Academic Computers Automotive Semiconductors Electronics Telecom Advanced Food ATE Petrochemical Textiles Military/Aerospace Research Processing 13
  14. 14. Virtual Instrumentation Everywhere More than 30,000 companies >90% of Fortune 500 manufacturing companies 14
  15. 15. Strong Track Record of Growth and Profitability Record Revenue of $821 Million in 2008 Net Revenue in Millions 15
  16. 16. Success Defined • Goals  Sustained revenue growth >20%  Sustained operating income ~18% • Strategies for the 2000’s economic era Get R&D to 16% to fund the long term   Gross Margin ~76%  Get operating Income back to 18%  Be able to grow >10% through moderate industrial recessions  Invest incremental leverage to drive revenue growth >20% 16
  17. 17. Strategic Plan for the Current Environment Mitigating threats and exploiting opportunities created by the recession Prudent Financial Management Focusing on the Long-term • Strong cash position • Deepen customer relationships • Maintaining stable gross margins • Continue strategic R&D investment • Flexible manufacturing cost structure • Acquire key technical expertise • Use strength to achieve lower component costs • Enter large new adjacent markets where our disruptive technology offers significant cost • Foster strong employee productivity and savings over traditional solutions innovation • Serve our existing markets as they focus on • Optimize operating expenses efficiency gains and cost reduction. 17
  18. 18. R&D Headcount 18
  19. 19. Growth in Strategic Product Revenues Success with Virtual Instrumentation and Graphical System Design 19
  20. 20. NI’s Revenue Compared to US Public T&M and Semi Test Companies* *Agilent electronic measurements, Cognex, Keithley, LeCroy, LTX-Credence, Teradyne 20
  21. 21. JP Morgan Global PMI vs. NI Revenue Growth
  22. 22. Field Sales Expansion Plan Budget 22
  23. 23. Worldwide Average Order Size 23
  24. 24. Non-GAAP Gross Margin Reconciliation of the company’s GAAP and non-GAAP results can be found at ni.com/pdf/nati/us/grossmarginreconciliation.pdf 24
  25. 25. Non-GAAP Operating Income and R&D as a Percentage of Revenue 25
  26. 26. Financial Plan for the Current Environment a prudent and realistic approach to the economy TTaking • Sustained investment in R&D • Moderating field sales force expansion • Budgeting for full year 2009 total operating expenses to decline 10% year-over-year, compared to 14% YOY growth in 2008. • Manage costs with a focus on balancing our short-term operational needs while making the strategic investments that best ensure our future success. 26
  27. 27. National Instruments