q1 2009 earning report of national instruments corp
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National Instruments
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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.
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Profile•Leaders in Computer-based Measurement and Automation
•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
Net R
evenu
e in M
illion
s
Record Revenue of
$821 Million in 2008
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What We Do
Low-Cost Modular
Measurement and
Control Hardware
Productive Software
Development Tools
Highly Integrated
Systems Platforms
Used By Engineers and Scientists for Test, Design and Control
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Empowering Users Through Software
LEGO Mindstorms NXT
“the smartest, coolest toy
of the year”
CERN Large Hadron Collider
“the most powerful instrument
on earth”
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NI’s Increased Value to CustomersControl Traditional
InstrumentsComplete
System SolutionsSimple PC-Based
Measurements
PC Data Acquisition
Typical Order Size
Compact FieldPoint System Platform
LabVIEW Real-Time
PXI System Platform
GPIB Instrument Control
LabVIEWSoftware
1980s 1990s 2000s
< $2 K
$1 K - $15 K
$10 K-$100 K+
CompactRIO IndustrialSystem Platform
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Test and Measurement – a $12 Billion Market
• Manufacturing focused,
Semiconductor and board
test
• Low volume, high dollar
systems sales (cyclic)
NI is an OEM supplier
Semiconductor ATE
$3.9B
• Products used in
electronic design and test
•Measurement needs
increasingly met by
commercial technologies
Growing market share
in automated test
General Purpose Test
$3.8B
• Communications
equipment design and
test
•Trend to software-based
systems and increasing
complexity
Large NI growth
potential
Communications Test
$4.2B
Source: Frost and Sullivan, 2006
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Today’s Challenges: The Traditional Approach
Oscilloscope
Logic Analyzer
Spectrum Analyzer
DMM
Communications Analyzer
LCR Meter
Function
Generator
Power Supply
Pattern Generator
Programmable Switch
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• Lower cost
• Higher performance
• Smaller size
• Flexible
• Easily upgraded
• User-defined
• Lower cost
• Higher performance
• Smaller size
• Flexible
• Lower cost
• Higher performance
• Smaller size
NI’s Value Proposition
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Industrial and Embedded – a >$40 B Market
• Plant automation
• Machine builders
• Enterprise trend
• Rugged, simple IO
• Software and hardware
Companies
NI compliments PLCs
PLC/PAC
• Trend to FPGAs
• Trend to high-level tools
• Price and cost driven
• Fragmented tool chain
NI makes design easier
Custom Design
• PC-based architectures
• Open
• Time to market driven
• Fragmented market
NI delivers quality
measurements
SBC/Embedded
>$13B >$24B $3B
NI Estimate
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Development Platform for the Next 30 Years
Graphical System DesignDesign Prototype Deploy
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Graphical System Design Examples
Machine ControlPackaging/Processing High-speed motion control,
batch control, discrete control
Heavy Machinery Control Real-time signal processing and
control of power electronics, hydraulic systems
Semiconductor/Biomed Custom motion and vision
inspection, material handling
Machine Monitoring
• Machine Condition Monitoring– Bearing order analysis, lubrication
monitoring, cooling, combustion, …
• Mobile/portable DSA, NVH– Noise, vibration, harshness, dynamic
signal analysis, acoustics
• Distributed Acquisition– Central controller with distributed I/O
nodes over Ethernet/wireless
In-Vehicle Data Acquisition• In-Vehicle Data Acquisition
– Automobiles, motorcycles, recreational vehicles, research aircraft, trains
• Engine and ECU test cells– HIL testing of engines and engine
controllers, sensor simulation using FPGA
• Rapid Control Prototyping– Automotive/aerospace control
prototyping
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Diversity of Applications
ElectronicsSemiconductors Computers
No industry is greater than 15% of revenue
Advanced
ResearchPetrochemical
Food
ProcessingTextiles
AutomotiveTelecom
ATE Military/Aerospace
Academic
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Virtual Instrumentation EverywhereMore than 30,000 companies
>90% of Fortune 500 manufacturing companies
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Strong Track Record of Growth and ProfitabilityN
et Reven
ue in
Millio
ns
Record Revenue of $821 Million in 2008
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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%
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Strategic Plan for the Current EnvironmentMitigating threats and exploiting opportunities created by the recession
Prudent Financial Management
• Strong cash position
• Maintaining stable gross margins
• Flexible manufacturing cost structure
• Use strength to achieve lower component costs
• Foster strong employee productivity and
innovation
• Optimize operating expenses
Focusing on the Long-term
• Deepen customer relationships
• Continue strategic R&D investment
• Acquire key technical expertise
• Enter large new adjacent markets where our
disruptive technology offers significant cost
savings over traditional solutions
• Serve our existing markets as they focus on
efficiency gains and cost reduction.
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R&D Headcount
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Growth in Strategic Product RevenuesSuccess with Virtual Instrumentation and Graphical System Design
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*Agilent electronic measurements, Cognex, Keithley, LeCroy, LTX-Credence, Teradyne
NI’s Revenue Compared to US Public T&M and Semi Test Companies*
JP Morgan Global PMI vs. NI Revenue Growth
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Field Sales Expansion Plan
Budget
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Worldwide Average Order Size
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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
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Non-GAAP Operating Income and R&D as a
Percentage of Revenue
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Financial Plan for the Current EnvironmentTTaking a prudent and realistic approach to the economy
• 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.
National Instruments