AUGUST 2010 Exhibit 99.1 |
2 • This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act. Such forward- looking statements include, but are not necessarily limited to, our anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar statements concerning anticipated future events and expectations that are not historical facts. • These forward-looking statements are based on current information and expectations. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including our reliance on contracts and subcontracts funded by the U.S. government, intense competition in the ground systems industry, the competitive bidding process to which our government and commercial contracts are subject, our dependence on the satellite industry for most of our revenues, rapid technological changes in the satellite industry, our acquisition strategy and other risks and uncertainties noted in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended September 25, 2009, and subsequent filings. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. INTEGRAL SYSTEMS SAFE HARBOR |
3 INTEGRAL SYSTEMS AT A GLANCE The Integral Systems Family of Solution Providers • NasdaqGS: ISYS • Founded: 1982 • Employees: 700 employees • Locations: 17 locations |
4 INTEGRAL SYSTEMS DIVERSIFIED GLOBAL CUSTOMER BASE A Leader in Our Industry: • U.S. SBA Region III Contractor of the Year, 2009 • Washington Post Top 200 Companies, 2009 |
5 INTEGRAL SYSTEMS MARKET LEADER IN COMMERCIAL SPACE CONTROL |
6 Enterprise Network Management • Communications Infrastructure Management (Newpoint Compass) • Remote Site Monitoring (Newpoint Mercury) Signal Processing & Data Communications • Software-Defined Front-End Systems (RT Logic) • SATCOM-On-The-Move (SATCOM Solutions) Communications Information Assurance • Interference Detection; RF Monitoring; Digital Signal Processing • Spectrum Monitoring (SigMon), Interference Geolocation (satID) Services • Satellite Communications Network Operations (SATCOM NetOps) • Subscription Services INTEGRAL SYSTEMS MARKET SEGMENTS |
7 INTEGRAL SYSTEMS ALIGNED OPERATIONS |
8 X, Ku, and Ka Band Micro Terminals • Smaller, Lighter, More Power Efficient SATCOM Terminals • Enable SATCOM-on-the-Move for Military, Special Operations, National Guard, Government Agencies SATCOM Solid State Power Amplifiers (SSPA) • Smaller, Lighter, More Power Efficient • Ku, Ka -Band 25W – 100W • Travelling Wave Tube Amplifier (TWTA) Replacement Space Situational Awareness & Cyber Security • RF Interference, Detection, Geolocation & Cataloging • Cyber Enabled Products • Space Situational Awareness Architecture INTEGRAL SYSTEMS FUTURE GROWTH ENGINES |
9 Intelligence Programs • Satellite Command & Control (Market Leader for Commercial Geo Operations) • SATCOM RFI Detection, Characterization, & Geolocation • SATCOM Data Link Information Assurance & Cyber Security Unmanned Aerial Systems (UAS) • Common Data Link Test Sets – We Are the Gold Standard • UAS Modems & Communication Systems • UAS Flight & Ground RF Interference (RFI) Detection & Countermeasure Systems Network Operations Services • Global Quality of Service, RFI Detection & Geolocation Services for Future COMSATCOM Services Acquisition (FCSA) • RFI, Geolocation, & Network Operations Outsourcing for SATCOM Network Providers • SATCOM Data Link Information Assurance & Cyber Security INTEGRAL SYSTEMS FUTURE GROWTH ENGINES |
10 INTEGRAL SYSTEMS GLOBAL SERVICES CAPABILITIES |
11 FINANCIAL OVERVIEW |
12 Significant Non-Recurring Expenses • Accounting – $2.7M Reserve Against DCAA Adjustments • Operating Expenses: Q3/YTD – Acquisition Integration Expenses: $600K/$1.8M – Legal Fees: $500K/$850K – Staff Reduction: $400K – Compliance Fees: $300K/$1.0M Significant Other Expenses • P&L: Non-Cash Stock-Based Compensation – $600K/Q through Q411 • Cash: Real Estate: $1.2M/year through 2015 – Reserved through 6/2010 FY10 Investments • Integral Systems Service Solutions (IS3): $2M • SATCOM Solutions R&D: $750K • EPICOR Material Resource Planning System: $1M • Product Revamp Newpoint Technologies: $300K REVISED FY10 GUIDANCE Revenue $170M - $174M Gross Profit Margin 37% - 39% EBITDA $9M - $12M Bookings $170M - $180M INTEGRAL SYSTEMS RECENT DEVELOPMENTS – IMPACTS TO Q3 & FY10 |
13 INTEGRAL SYSTEMS EBITDA RECONCILIATION 2010 FORECAST VARIANCE EBITDA (A) EBITDA (E) Q1 $ 4.0 Total Q1 $ 4.0 Q2 $ 4.0 M&A - CVG Integration $ 1.8 Total Q2 $ 1.8 $ 2.2 Q3 $ 6.0 Rate Reserve $ 2.7 CVG Avtec Revenue Miss $ 4.6 CVG Avtec Direct Costs $ (1.9) Legal Costs $ 0.5 Compliance Costs $ 0.2 Employee Severance $ 0.4 M&A - CVG Integration $ 0.6 Gross Margin - Civil, Lumistar $ 0.6 Total Q3 $ 7.8 $ (1.8) Q4 $ 8.0 CVG Avtec Revenue Reduction $ 2.0 CVG Avtec Direct Costs $ (0.3) Compliance Costs $ 0.3 Total Q4 $ 2.0 $ 6.3 Total EBITDA (Variance) $ 22.0 $ 11.6 Revised FY2010 EBITDA(E) $ 10.7 |
14 Key Opportunities FY10 – FY12 • USAF Joint Space Operations Center Mission Systems (JSpOC MS) High Accuracy Catalog • USAF RAIDRS ECP-009 & ECP-010 • Special Operations (SOCOM) Forces Deployable Nodelite (SDN-Lite) • USN Military Sealift Next Generation Wideband • Future COMSATCOM Service Acquisition (FCSA) • Army SMD Wideband SATCOM Operations & Technical Service (WSOTS) • Intelligence Community INTEGRAL SYSTEMS BOOKINGS, BACKLOG, AND PIPELINE Information reflect Q3 results as reported 8/2/10 |
15 *BASED UPON Q3 FY 2010 RESULTS DOES NOT ACCOUNT FOR INTERCOMPANY ELIMINATION **BASED UPON FY 2009 RESULTS DOES NOT ACCOUNT FOR INTERCOMPANY ELIMINATION YTD FY10 SALES BY SEGMENT* INTEGRAL SYSTEMS YTD FY10 SALES Information reflect Q3 results as reported 8/2/10 FY 2009 SALES GEOGRAPHY** |
16 REVENUE EBITDA GROSS PROFIT MARGIN CAPITAL EXPENDITURES INTEGRAL SYSTEMS FINANCIAL PERFORMANCE & EXPECTATIONS Information reflect Q3 results as reported 8/2/10 |
17 INTEGRAL SYSTEMS SUMMARY |
18 BACK UP INTEGRAL SYSTEMS |
19 USE OF NON-GAAP FINANCIAL MEASURES INTEGRAL SYSTEMS EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-GAAP financial measure used by management to evaluate operating performance. Management believes that the presentation of EBITDA helps management and investors to make a meaningful comparison between our operating results and those of other companies, as well as providing a consistent comparison of our relative historical financial performance. The presentation of this non-GAAP financial measure is not to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Below are reconciliations of fiscal years 2007 - 2012 net income to EBITDA: 2007 2008 2009 2010(E) 2011(E) 2012(E) ($ millions) Net Income $ 12.8 $ 18.2 $ 1.1 $ (1.2) $ 4.1 $ 10.1 Other Income (Expense), net $ (2.2) $ (0.3) $ 0.1 $ 0.9 $ 2.4 $ 1.2 Provision for Income Taxes $ 6.3 $ 7.1 $ (1.0) $ 1.1 $ 3.5 $ 5.0 Income From Operations $ 16.9 $ 25.0 $ 0.2 $ 0.8 $ 10.0 $ 16.3 Non-Cash Stock Compensation $ 0.9 $ 1.1 $ 3.5 $ 2.6 $ 2.3 $ 1.7 Depreciation and Amortization $ 3.0 $ 2.6 $ 4.3 $ 7.3 $ 10.3 $ 10.5 EBITDA $ 20.8 $ 28.7 $ 8.0 $ 10.7 $ 22.6 $ 28.5 |
20 USE OF NON-GAAP FINANCIAL MEASURES INTEGRAL SYSTEMS EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-GAAP financial measure used by management to evaluate operating performance. Management believes that the presentation of EBITDA helps management and investors to make a meaningful comparison between our operating results and those of other companies, as well as providing a consistent comparison of our relative historical financial performance. The presentation of this non-GAAP financial measure is not to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Below is a reconciliation for the first three quarters of fiscal years 2010 and 2009 net income to EBITDA: Quarter Ended December 25, 2009 Quarter Ended March 26, 2010 Quarter Ended June 25, 2010 Quarter Ended December 26, 2008 Quarter Ended March 27, 2009 Quarter Ended June 26, 2009 ($ millions) Q1 2010 Q2 2010 Q3 2010 Q3 YTD 2010 Q1 2009 Q2 2009 Q3 2009 Q3 YTD 2009 Net Income (Loss) 1.2 0.1 (3.8) (2.5) 1.0 2.7 (1.5) 2.2 Other income ( Expense) 0.2 (0.1) (0.3) (0.5) 0.0 0.0 (0.1) (0.1) Provision for income taxes (Benefit) 0.6 0.3 (1.6) (0.7) 0.3 1.5 (2.4) (0.6) Income from Operations 2.0 0.3 (5.1) (2.7) 1.3 4.2 (3.8) 1.7 Stock-based compensation 0.6 0.6 0.9 2.1 1.0 0.6 1.0 2.6 Depreciation & Amortization 1.4 1.2 2.4 5.1 0.6 1.0 1.3 2.9 EBITDA 4.0 2.2 (1.8) 4.5 2.9 5.8 (1.5) 7.2 |