RAE Systems Q2/2008 (AMEX: RAE)

Transcription

1 RAE Systems Q2/2008 (AMEX: RAE) Robert Chen, President and CEO Randy Gausman, CFO Bob Durstenfeld, IRO August 4, 2008 Protection Through Detection

2 Safe Harbor Statement This presentation (including information incorporated or deemed incorporated by reference herein) contains forward-looking statements within the meaning of the Private Litigation Reform Act of Forward-looking statements are those involving future events and future results that are based on current expectations, estimates, forecasts, and projects as well as the current beliefs and assumptions of our management. Words such as outlook, believes, expects, appears, may, will, should, anticipates, or the negative thereof or comparable terminology, are intended to identify such forward looking statements. Any statement that is not a historical fact, including estimates, projections, future trends and the outcome of events that have not yet occurred, is a forward-looking statement. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore actual results may differ materially and adversely from those expressed in any forwardlooking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed under the section entitled Risk Factors in our reports filed with the SEC. Many of such factors relate to events and circumstances that are beyond our control. You should not place undue reliance on forward-looking statements. Protection Through Detection 2

3 Leader in Sensing Technology For Hazardous Materials Enabling customers to identify safety and security threats with real-time information for making lifecritical decisions Providing rapidly-deployable, personal, portable and wireless sensor networks Leveraging first-to-market advantage and established, China-based manufacturing, sales channel and customers Protection Through Detection 3

4 Investment Rationale Technology leader with broad IP portfolio Toxic gas and radiation sensors Wireless networks RoHS compliant sensors Riding the industrialization growth wave in China Established local sales force Cost efficient manufacturing Strong brand & growing customer base Focus on global market growth Industrial - petrochemical and mine safety Energy - Oil/gas/coal/nuclear Government - First responders & homeland security Environmental remediation Growth in 2007 & 2008 Strong global sales channels: Distribution Direct Sales 2007 growth of 32% 2008 Profitable revenue growth of 15-20% Protection Through Detection 4

5 New RAE Systems Products Protection Through Detection

6 7 New RAE Systems Products Protection Through Detection 6

7 Technology Leader Technology Pocket & handheld photoionization detector (PID) Multi-gas monitors with PID Products MiniRAE 3000 ppbrae 3000 MultiRAE Plus Chemical separation with PID measurement for benzene UltraRAE Wireless toxic gas detection and radiation detection AreaRAE Combined radiation detection & dosage measurement Solid polymer sensors, lead-free & RoHS compliant GammaRAE II R QRAE II Protection Through Detection 7

8 Global Advantages Differentiated sensing technology 19 chemical sensor patents Producing over 14,000 sensors per month Wireless network technology Well-known RAE Systems brand since 1991 Over 225,000 gas detection units shipped world wide since 2002 Multi-language products Low-cost manufacturing Global intrinsic safety certifications Protection Through Detection 8

9 RAE Systems 4 Global Target Markets Protection Through Detection

10 Energy Oil Coal Gas Nuclear Protection Through Detection

11 Industrial Safety Metals Chemicals Plastics Protection Through Detection

12 Government Programs First Responders & Emergency Response Public Safety & Public Venue Protection Homeland Security Defense Protection Through Detection

13 Environmental Site Monitoring Remediation Indoor Air Quality Protection Through Detection

14 Large Market Opportunities Industrial Chemical Sensor Market Homeland Security CBRNE Spending China Industrial Spending Growth China Coal Safety Tax Funds $2.8 Billion 8.5% projected growth per year through 2008 $442 Million FY2009 budget request 5% Y/Y growth +11% GDP 2007/ % Industrial Output for Q1/08 $360 Million in 2008 ($2.00 per metric ton tax on 2.5 billion tons of coal produced in 2007) Freedonia report: Chemical Sensors to 2008: Liquid, Gas & Biosensors U.S. Department of Homeland Security And Civitas Group China National Bureau of Statistics May 2008 Protection Through Detection 14

15 Sensor Technology A world leader in photo-ionization technology for detection of volatile organic compounds (e.g. gasoline, benzene) Photo-Ionization Detection (PID) Combustible Infrared Solid Polymer Electro-chemical Ion Mobility Corona Discharge Chemical Detection Tube Radiation Speciation Protection Through Detection 15

16 Total Gas Detection Instruments Shipped Worldwide per Year Units Shipped per Year 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Protection Through Detection 16

17 Worldwide Presence Benelux Denmark San Jose, CA U.K. France Spain Beijing Fushun Tokyo Dubai Hong Kong Shanghai Protection Through Detection 17

18 Growing Global Customer Base Industrial Customers Government Customers Protection Through Detection 18

19 Competitive Environment Wireless Sensor Network Chem. Sensor Mfg. PID Radiation Sensors China Market Expert Protection Through Detection 19

20 Sales Channel Distribution & Direct Americas 130 distributors EU/MEA/Asia 60 distributors China RAE Beijing + RAE Fushun (170 direct) Protection Through Detection 20

21 China Market Growth Opportunities Mine safety Chemical production Metals production Energy sector Coal Oil/Gas Nuclear Environmental protection & remediation Protection Through Detection 21

22 Revenue History & 2008 Guidance *(G= Guidance per August 4, 2008 Earnings Call) $120 $ Sales Guidance $104M to $109M* 15%-20% growth over 2007 $90.8M $104M to $109M (G)* Revenue in $ Millions $80 $60 $40 Asia Europe Americas $31.3M $45.5 M $60.3M $68.0M $20 $21.8M $ (*G) Protection Through Detection 22

23 Region Revenue Growth 13% 2007 $90.84M 41% 2006 $67.72M 13% 46% Americas 49% Asia 2005 $60.29M 11% 38% Europe 33% 56% Protection Through Detection 23

24 Quarterly Revenue Growth Revenue in $ Millions $30 $25 $20 $15 $10 $5 Asia Europe Americas $12.2 $13.6 $18.3 $16.2 $12.4 $15.9 $18.6 $21.1 $27.5 $25.3 $24.7 $20.1 $17.9 $17.9 $0 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Protection Through Detection 24

25 Summary Financials (In thousands, except per share amounts) *in thousands, exept for share amounts Q Q Mos. 6/ Mos. 6/ Year Ended 12/31/2007 Year Ended 12/31/2006 Net Sales $24,647 $20,056 $42,516 $37,990 $90,836 $67,721 Gross Profit 13,091 9,987 21,946 19,121 46,408 35,523 Net income (loss) (467) (2,455) (2,803) (4,774) (14,696) (1,529) Net Income (loss) per Share $(0.01) $(0.05) $(0.05) $(0.08) $(0.25) $(0.03) Weighted average common stock outstanding (diluted, thousands) 59,178 58,769 59,089 58,764 58,852 58,425 As of: 6/30/ /31/ /31/2006 Working capital $40,571 $40,850 $36,641 Total assets 87,717 85,343 89,753 Long-term liabilities 9,565 10,442 5,441 Shareholders equity $47,209 $46,356 $56,179 Protection Through Detection 25

26 Investment Rationale Technology leader with broad IP portfolio Toxic gas sensors Radiation sensors Wireless networks Global growth market opportunities: Industrial: petrochemical and mine safety Energy: oil/coal/gas/nuclear Government: first responders, public safety, homeland security, and defense Environmental remediation Worldwide brand & strong China presence Products deployed in 85 countries Localized sales & support / cost-efficient manufacturing in China Growth in 2007 & Revenue growth of 32% compared to Profitable with 15-20% revenue growth Protection Through Detection 26

27 RAE Systems APPENDIX Protection Through Detection

28 Company History Est. manufacturing operations in Shanghai, China RAE Beijing (KLH acquisition) $1.1M angel funding Public via reverse merger Company founded by Robert I. Chen (current CEO) & Peter Hsi (current CTO) Sept. 11, 2001 Moved to AMEX $32 M secondary offering Joint Venture: RAE Fushun Protection Through Detection 28

29 Convergence of Safety and Security High Degree of Safety Canary Pre-1900s Personal Protection 1900s Area Protection 2000s Guns, Gates & Guards Safety Security Video Surveillance Analog 1980s Digital 1990s Pervasive Sensing and Integrated Data Management Today Low Low Degree of Security High Protection Through Detection 29

30 Public Venue Security Protection Through Detection 30

31 Portable Applications Protection Through Detection 31

32 Incident Command & Control Protection Through Detection 32

33 Fixed Industrial Applications Petrochemical and Heavy Industry Protection Through Detection 33

34 Emerging Application Building Air Quality & Security Monitoring Sensor/RF Node Network Interrogator Protection Through Detection 34

35 RAE Beijing Industrial safety and security expertise Integrated supplier with captive channel distribution Protection Through Detection 35

36 RAE Beijing Regional Offices North West Region Beijing, HQ North East Region South West Region Eastern Region Southern Region Protection Through Detection 36

37 RAE Fushun Coal Mine Safety Instruments Co. Formed from Fushun Anyi (Established in 1953) First mine safety instrument company in China 70% Owned by RAE Systems and 30% owned by the Liaoning Province Government Employs 575 workers Current Mine Safety Certified products (60): Respiratory protective products Fixed & portable gas detection systems Ventilation & Methane pumps Distribution products Protection Through Detection 37

38 RAE Shanghai Manufacturing Manufacturing Center Established 1995 Radiation Calibration Lab Protection Through Detection 38

39 RAE Shanghai Engineering & Sensor Centers Protection Through Detection 39

40 Contact Us Company Information: IR Agency Contact: Becky Herrick Protection Through Detection 40