Upload
amy-holland
View
220
Download
3
Tags:
Embed Size (px)
Citation preview
1
Investor PresentationQ3 FY11
2
Forward-looking statements
Certain statements in this presentation constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and
assumptions include, among others, the following: our dependence on the successful development and
market introduction of new products; our ability to integrate any business, technologies, product lines or
services that we have or will acquire; our dependence on revenue generation from our legacy products in
order to fund development of our new products; current market and economic conditions, which may increase
our operating costs or reduce our revenue, thereby negatively impacting our operating results; our ability to
operate profitably and generate positive cash flows in the future; customer inventory management in some
end-markets; our dependence on our foundry suppliers and third-party subcontractors; order cancellations
and deferrals by our customers; our substantial indebtedness could adversely affect our financial position;
the cost and accounting implications of compliance with new accounting standards; and other factors
referenced in our Annual Report on Form 20-F. Investors are encouraged to consider the risks detailed in this
filing
3
Who we are
Communicationproducts
Medicalproducts
World leading mixed signal
chip technology
3
4
Delivering results and setting the stage for continuing growth
Focusing on Growing MarketsFocusing on Growing Markets
Strengthening Financial ProfileStrengthening Financial Profile
Increasing Revenue from New ProductsIncreasing Revenue from New Products
~ 14% year-on-year revenue
growthTargeting growing timing, line circuit and medical wireless markets
~ 70% revenue from new products
Transition from legacy products nearing completion, with growth from new products outpacing decline in legacy portfolio
~ $124M cash position
Increasing cash position used to augment growing timing business, improving gross margins and strong customer design pipeline
5
• >1B chips installed worldwide
• World’s largest equipment manufacturers are customers
• >400 customers in more than 100 countries
• 100M chips shipped per year
• >900 active products
• 30+ year operating history
Our market leadership
5
6
US$204.6M revenue in F2010*
*Company sold optical business May 17, 2010, so results have been reported as discontinued operations for current and comparative periods**~10% of revenue derived from custom products
Our business summary
6
Communicationproducts
Medicalproducts
• Timing products enabling multimedia, data and voice services over wireless and wired networks
• Line circuits for voice-over-broadband deployments
• Low-power radios for new wireless medical devices and therapies
~ 78% of revenue
~ 12% of revenue
77
1. Smartphones & Mobile Internet
2. Packet Network Evolution
3. Wireless Healthcare
• Higher bandwidth mobile video and data services driving wireless carriers to packet networks
• Network timing to ensure service quality
• Telcos and cable network investments to deliver triple play voice, video and data services
• Line circuits at subscriber locations & network timing to ensure quality
• Improve patient care, reduce physician visits, eliminate surgeries
• Standards-compliant, low-power, medical-grade radios
key trends
Driving Growth3
High-bandwidth smartphone services driving timing opportunity
8
Growth opportunity for timing – less than 5% of cell sites in U.S. converted to packet backhaul
• T1/E1 lines connecting base stations with network backbone unable to meet bandwidth demands created by new content & expensive to operate
Packet Network Timing for Wireless Backhaul• Higher bandwidth, lower cost packet networks to connect cellular sites and network backbone• Requires timing at base stations and routers to synchronize network and ensure services for new
and existing communication applications
Ethernet Backhaul
New High Bandwidth Content Overwhelming Traditional Networks
9
Growing market opportunity for timing portfolio
Packet timing focused on wireless evolution, ClockCenter targets core network upgrades
• New ClockCenter platform supports all communication services over optical networks to help solve capacity and bandwidth issues in the core
• Carriers deploying optical networks to support greater number of services on least amount of infrastructure
CPE & ACCESS METRO CORE
Wireless base station
OTN
Packet Timing
ClockCenter
Base station controller
10
DSL
FTTx
Hybrid
Cable
fiber
FTTx
fiberfiber
fiber
cable
copper
copper
NTT & Verizon
Belgacom
AT&T
China Telecom
Comcast & Rogers
Line circuit opportunities in telco and cable networks
10
fiber
11
Fiber deployments driving demand for new line circuit solutions
Growing opportunity for line circuits in developing and under-developed countries
Zarlink Next Generation Carrier Chipset (NGCC)
• Deployed in Multi-Service Access Nodes (MSAN) “pizza boxes” or pedestal at the subscriber in developing and under-developed countries, greenfield fiber deployments
• Field programmable, upgradable & remote line diagnostics support lower operating costs by reducing technical service calls
High-quality voice
over broadband
Line circuit at subscriber replaces functions traditionally supported at Central Office
Remote diagnosticslower operating costs
12
Only supplier of medical-grade, low-powered, wireless radios for in-body applications
With wireless patient monitoring and device programmingReplace this
Improves patient care- “Always-on” home monitoring sends
patient health and device data to physician
Reduces healthcare costs- Extended wireless range allows
programming equipment to be located outside sterile operating
field
12
13
Growth opportunities for our wireless medical expertise
Deep brain stimulation
Hearing assistance Neuro-stimulator
Cardiac pacemaker/Energy harvesting
Defibrillator
Drug delivery/Insulin pump
Bladder control
Functional stimulation
Wireless endoscopy
Gastric stimulator
13
Zarlink has long-term joint R&D projects with lead customers
Blood pressure
14
Financial review
14
Year-on-year revenue growth of 14%
All values in USD unless otherwise stated*Company sold optical business May 17, 2010, so results have been reported as discontinued operations for current and comparative periods
$0
$10
$20
$30
$40
$50
$60
$70
Q3 F2009 Q4 F2009 Q1 F2010 Q2 F2010 Q3 F2010 Q4 F2010 Q1 F2011 Q2 F2011 Q3 F2011
0%
10%
20%
30%
40%
50%
60%Revenue OPEX Gross Margins
(In
mill
ions
)
$49.7 $49.8 $50.0 $55.2 $58.7 $59.9
$17.8 $20.0 $20.7$21.6 $20.2$18.9
50%
53%52%51% 52%
50%
15
$46.9$48.3
$19.3 $23.6
48%49%
$56.9
$22.3
51%
16
Approximately 70% of revenue from new timing, line circuit and medical wireless products
New products driving revenue growth
0%
10%
20%
30%
40%
50%
60%
70%
80%
Legacy Products New Products
Per
cent
age
of r
even
ue
17
Income statement highlights*
$USD Q3 F’11 Q2 F’11 Q3 F’10
Revenue $56.9M $59.9M $50.0M
Gross Margin 52% 51% 52%
R&D $9.9M $10.7M $9.5M
SG&A $12.4M $9.6M $10.5M
Net Income* $34.6M $7.2M $0.6M
Non-GAAP Net Income** $7.4M $9.4M $6.1M
Basic EPS* $0.28 $0.06 $0.0
Non-GAAP Basic EPS* $0.06 $0.07 $0.05
**For a full definition, see Company’s MD&A and Financial Statement and notes filings for the period ended December 24, 2010.
*Includes reduction in valuation allowance of $17.5M related to deferred tax assets in Canada and a gain of $14.1 million related to the previously announced sale of real estate in Sweden
18
2008 2009 2010
2008 2009 2010
Revenue by product segment
z
$7.2M
$4.3M
$45.4M
Custom Products
Medical Products
Communication Products
Medical Products
Custom Products
$33.2M$24.2M $29.7M
Communication Products
$30.0M$28.0M $34.7M
Diversified and growing product opportunities
Q3 Fiscal 2011
2008 2009 2010
$141.4M
$115.4M
$140.0M
All values in USD unless otherwise stated*Company sold optical business May 17, 2010, so annual results have been reported as discontinued operations for current and comparative periods
19
$USD
As at December 24,
2010
As at September 24
2010 As at March
26 2010
Cash and cash equivalents* $124.2M $109.7M $74.4M
Total current assets $172.5M $158.6M $152.7M
Total current liabilities $36.9M $38.5M $41.7M
Long-term debt (convertible debentures)
$70.4M $69.0M $68.9M
Balance sheet highlights
• During the quarter the Company:• Announced the sale of real estate in Sweden, for $13.5 million in cash • Invested $5.0 million in in Multigig, a private company developing advanced
timing technologies• Used $1.7 million to repurchase 870,000 common shares
20
Cash position increased by $62 million over past four quarters
Generating strong cash flow
$124
$45 $45 $47$56
$62
$74
$99$109
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
Q3 F2009 Q4 F2009 Q1 F2010 Q2 F2010 Q3 F2010 Q4 F2010 Q1 F2011 Q2 F2011 Q3 F2011
($ in
mill
ions
)
21
Outlook: F2011 fourth quarter guidance*
Revenue $51M-$55M
Gross Margin 50%-52%
Operating Expenses $20M-$21M
Net Earnings Per Share1 $0.01-$0.03*All values in USD unless otherwise stated1 Excluding any potential impact of f/x gains/losses related to the Company’s Canadian dollar denominated debenture
22
Appendix
22
23
Market data
Trading Symbol TSX: ZL
Market Cap. ~$238M
Share price $1.95 (01/21/11)
Shares outstanding 122M
52 week range $1.00- $2.24
Management, board and employee ownership
~3.0M common shares or ~2.5% of shares outstanding
Fiscal Year end March 31
24
Management team
Kirk Mandy President and CEO
Andre Levasseur Sr. VP Finance & CFO
Gary Tanner Chief Operating Office
Dr. Stan Swirhun Chief Technology/Marketing Officer
Steve Swift Sr. VP & GM, Medical Products Group
Renato Pontello VP & General Counsel and Corporate Secretary
Eileen Speirs VP Human Resources
Board of directors
Dr. Adam Chowaniec Semiconductor Industry Advisor
Oleg Khaykin President and CEO, International Rectifier
Hubert T. Lacroix President and CEO, CBC/Radio Canada
Spencer Lanthier Management Consultant
Kirk Mandy President and CEO, Zarlink Semiconductor
Jules Meunier General Manager, Alcatel-Lucent 3G Wireless Division
Dennis Roberson Professor and Administrator, Illinois Institute of Technology
25
26
Detailed management & board ownership
Kirk Mandy, CEO 788,500
Gary Tanner, COO 400,000
Stan Swirhun, CTO and CMO 322,210
Steve Swift, Sr. VP & GM, Medical Products 91,648
Renato Pontello, VP & General Counsel 26,000
Eileen Speirs, VP Human Resources 7,309
Andre Levasseur, Sr. VP Finance & CFO 14,001
Adam Chowaniec, Director 136,000
Hubert Lacroix, Director 100,000
Jules Meunier, Director 85,000
Dennis Roberson, Director 50,522
Spencer Lanthier, Director 45,000
Oleg Khaykin, Director 25,000
*Insiders and employees combined own ~3.0M common shares or ~2.5% of shares outstanding