investor presentation | april 2017 - micronet enertec ...micronet-enertec.com/images/ir images/2017...
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Investor Presentation | April 2017
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Forward Looking Statement
This presentation contains express or implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. Federal securities laws. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,” “should,” “approximately,” potential” or, in each case, their negative or other variations thereon or comparable terminology, although not all forward-looking statements contain these words. These forward-looking statements include, but are not limited to, those statements regarding our future growth, potential catalysts for growth, our being well position to capture market opportunities and our continued effort to develop and launch new products. Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics, and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines thananticipated. Although we believe that we have a reasonable basis for each forward-looking statement contained in this presentation, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this presentation as a result of, among other factors, the factors referenced in the “Risk Factors” section of our annual report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this presentation, they may not be predictive of results or developments in future periods. Any forward-looking statement that we make in this presentation speaks only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of thispresentation.
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MICT provides high tech solutions for severe environments and battlefields, includingmissile defense technologies for Aerospace & Defense (Enertec – wholly owned) andrugged mobile devices for the growing commercial Mobile Resource Management (MRM)market (Micronet - controlling interest).
Company Overview
www.enertec.co.il www.micronet.co.il
Enertec designs, develops, manufactures and supplies customized military computer-based systems, simulators, ATE and electronic instruments, addressing a multi-billion-dollar defense industry. Solutions and systems are integrated into critical systems such as command and control, missile fire control, maintenance of military aircraft and missiles for the Israeli Air Force, Israeli Navy and by foreign defense entities. For more information see slides 19-34.
Micronet develops, manufactures and provides mobile computing platforms for the multibillion dollar mobile logistics management market in the United States, Europe and Israel. American-manufactured systems are designed for outdoor and challenging work environments in trucking, distribution, logistics, public safety and construction.For more information see slides 6-18.
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Strong Track Record
Over 20 years
Strong Sales, Backlog & Balance Sheet
$8m of new purchase orders Over $14m in backlog (end of Q1 2017)
Growth Engines and Inflection Point
Catalyst for substantial growth:
New transportation regulation: Electronic Logging Devices (ELD) Introducing new products to the market - Hardware & SoftwareIncrease in US military spending and strong aid to foreign governments New joint venture with a major foreign defense partner
Strong and Stable Customer Base
Strong customer base in both segments
Holds high security clearance
Products are fully compliant with ELD mandate in the US
Investment highlights
A&D Spin-OffOn March 31,2017 our board of directors approved the Spinoff of our aerospace and defense division into a standalone company.
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Financial Highlights
NASDAQ: MICTPrice per Share (04/24/17): $1.20Shares Outstanding: 6.5 M as of March 31, 2017Market Cap (as of 03/31/17): $7.8M52 Trading Week Range (as of 03/31/17): $1.1-$2.850 Days Average Volume: 24,044
FINANCIAL ASSETS HIGHLIGHTSCash (12/30/16): $8.1 M Accounts Receivables (12/30/16): $11.6 MFY 2016 Revenues : $22.7 M
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Micronet’s mission is to provide Connected-Fleet Service
Providers with advanced solutions to enhance their
growth and profitability.
Micronet Mission Statement
Micronet’s mobile computing devices and software platforms
help its global customers to grow their customer base,
monetize telematics data in new and innovative ways and
maintain the loyalty of their fleet customers.
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Mobile Data Terminal
BlackBoxes
Rugged Tablets
Apps (recurring)
Apps(recurring)
$0.5B
$1.5B
Entering new market segments
Expanding to Software by leveraging Micronet’s
devices with an App Store
Micronet Massive Opportunities$4B
Micronet until 2017
Micronet from 2017
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More than 30 years of developing rugged mobile computing platforms for the Fleet Management and Mobile Workforce Management markets
Headquartered in Salt Lake City, Utah,with R&D in Tel Aviv, Israel
Global reach with main focus on North America
MicronetCompany Profile
Tel Aviv – Israel
Salt Lake City – US
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Info and instruction for driver
Micronet's In-Vehicle Telematics Device
SourceVehicle
Info and instruction for driver
Micronet:How does it work
Processed info for fleet manager
Fleet Manager
Raw data from vehicle environment
TSP
Micronet's Customer
TAX
MaintenanceTheft RecoveryParkingSmart Coupons Proactive Driver Coaching
Emergency Call Driver Behavior
Fuel EfficiencyRoadside Assistance
Usage Based Insurance
Vehicle Diagnostics
Fuel Tax Weight Station Bypass
Location Based Services
3RD Party Apps on Micronet App Store
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Selected CustomersMicronet’s Customers
Micronet’s customers are Telematics Service Providers (TSP) who integrate Micronet’sdevices with their own software and provide a complete Fleet Management solution to commercial fleets
Micronet has dozen of customer both domestic and globally
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Main Uses for Micronet’s ProductsFleet Management and Fleet Efficiency Track and trace, navigation and routing, task and schedule management, communication and messaging, alerts
ComplianceElectronic Logging Device (ELD), Hours of Service (HOS), Driver vehicle inspection report (DVIR)
Remote Diagnostics and Preventive MaintenanceInterpretation of engine fault codes and suggested remedies, early identification of technical failures
Driver Behavior and SafetyTracking acceleration, breaking, cornering and speeding for driver scores and driver coaching
Fuel EconomyTracking fuel efficiency, Idling alerts, fuel theft alerts, driver coaching
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Acquisition of BEIJER MRM Division
Growing U.S. customer base
Merging U.S. and Israel operations
Building U.S. Headquarters
Recruited an experienced and capable U.S. CEO
Growing the sales team
Developing new product lines to address additional
market segments
Launching new product lines
Focusing on the ELD regulation opportunity
Entering the software space by integrating
3rd party software applications with
Micronet’s devices
Identifying Growth Engines
Grow customer base to over 10 major
customers
Micronet | 2014-2017
20172015-2016
ACCELERATING THE US PRESENCEESTABLISHING THE US OPERATION
2014
GROWTH
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in K$ 2016 2015
Revenue 13,284 14,569
Cost of Goods 10,657 9,955
Gross profit 2,627 4,614
%Gross profit 20% 32%
EBITDA (3,269) (221)
Cash Balance (net) 3,463 7,861
Equity 10,557 14,968
Current Ratio 2.2 2.1
Micronet Financials
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Growth Engines
Double digit growth in all segments of the Mobile Resource Management market
ELD regulation = More than 2 million additional connected trucks in the next year
New products for new market segments. Addressing over 10X of current market
Micronet App Store: recurring revenue from 3rd-party applications integrated with Micronet’s devices
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New Products for New Market Segments
Micronet SmarTab is a next generation handheld device, designed for both in-vehicle and out-of-vehicle use:
Fully rugged for demanding environmental conditions
Android open system allowing for easy integration with 3rd party applications
Smart cradle for vehicle bus interface
Advanced sensors and processing capabilities
Micronet SmarHub is a next generation On-Board-Computer:
Introduced to market end of Q4 2016
Supporting Black Box capabilities
Android open system allowing for easy integration with 3rd
party applications
Vehicle bus interface
Advanced sensors and processing capabilities
Received Orders for 10,000 units
Black Box Market ($1B)
Rugged Tables & Handhelds Market ($3B)
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MicronetApp Store ELD/HOS
complianceLocation-based
servicesRemote
Diagnostics
Preventive Maintenance
Fuel-efficiency VOIP
ADAS Safety Warnings
Fatigue Recognition
Video Analytics
App Store
Navigation Driver behavior
Advanced Applications for Connected Fleets
3rd party advanced applications integrated with Micronet’s devices
Expanding to Software
Recurring revenue on top of device sale
Cost savings by eliminating double hardware
Market ($3B)
Market ($1B)
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Thank You
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Always In Front
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Company Overview
A leading manufacturer
of specialized electronic
systems for the military
market
Over 22 years of proven
track record in
development of complex
Command and Control
systems
A highly skilled team of
85 professionals, majority
of whom are engineers
and technicians with vast
military experience
Electronic Complexed
systems with the latest
and most advanced
technology
Strong and stable
customer base
Strategic partnerships
with multibillion dollar
Aerospace & Defense
integrators
A leading Designer and developerof advanced electronic systems for military applications
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Land Combat
Electronic Systems
Naval Combat
Electronic Systems
Our Systems
Power Supply
Systems
Missile
Launching Systems
Aerospace Combat
Electronic Sys
Mission
computersSimulators
Command &
Control Systems
Automatic Testing
SystemsC&C Centers
ProjectManagement
System
EngineeringDevelopment Production Integration
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Industry Applications
Mobile Trailers Command, Control and
Protection of Sensitive
Installations
Tanks Combat Aircraft
Boats and
Submarines
UAVs
Satellites
Missile Defense Sys
Of Various Types
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A potential Israeli Market of $1.5B annually *
$150MATE
(Automatic Testing
Equipment)
$150MCommand &
Control Centers
$450MPDU, RF, Ruggedized
Computers (Subsystems)
$800MCombat Ready Systems
* Based on internal research January, 2017
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A Strong and Solid Customer Base
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Israel
Other
U.S.
2016
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Goals:
• Become the vendor of choice for the multibillion dollar A&D
domestic Integrators
• Reach a revenue of $50M annually by 2022
Tasks completed during 2016 including:
Strengthening the
engineering team
Completed the 1st order of a
highly potential growth engine –
the Command and Control Centers
Strengthen the project
control tool
Upgraded the finance department by
adding a seasoned CFO highly
experienced in the Defense industry
A 5 year Growth Plan
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Historical Financial Highlights
%2016%2015In K$
9,4649,018Revenues
84%7,94170%6,328Cost of Goods
16%1,52330%2,690Gross Profit
(10%)(983)1%120Operating Profit (Loss)
8,4999,222Account Receivables
1,4691,933Inventory
5,2946,440Equity
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Cash and Debt
Israel
Other
U.S.
As of December 31
,2016
As of December 31
,2015In K$
4,0233,594Cash and Cash equivalent
(6,312)(7,005)Short Term bank loans
(669)(661)Long Term Loans
(2,958)(4,072)Net Debt
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Israel
Other
U.S.
Growth Engines
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Organic Growth
Israel
Other
U.S.
The Domestic Aerospace and Defense market is dominated by a 3 multibillion players : IAI, Rafael and
Elbit
Increasing Outsourcing of
internal projects to more reliable
and capable vendors
Seeking Strategic Alliances with
top vendors
Enertec is positioned as
potentially one of the top and
most reliable vendors
A clear trend of the Big 3:
Enertec strategic goal is to become the vendor of choice in the
following areas :
ATE’s and missile
defense systems
Command & Control
centers
Diagnostic and
simulation systems
for UAV’s
Full systems
commencing 2018
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Local U.S.
Partner
Management
Training
Quality assurance
Israeli client liaison
Procurement &
Manufacturing
Foreign Military Sales (“FMS”)
During Q3 of 2016, the
Obama administration
approved a $38B military
assistance to Israel over
the next decade (largest
ever), out of which $5B is
to be allocated to missile
defense systems
A multi billions Israeli
integrator has started
publishing FMS tenders and
recently inquired Enertec (as
a sole vendor) of its
capabilities to meet FMS
standards
In order to meet FMS standards
Enertec has:• Commenced negotiations with
several U.S. vendors to be used as
Subcontractors for Enertec.
• Examine potential acquisitions of a
US defense contractors
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Offset with India
Design, Development,
Quality assurance
Israeli client liaison
Procurement
Manufacturing
In order to meet India’s MoD’s regulation, Enertec recently signed a teaming agreement with an Indian
Corporation named CYIENT www.cyient.com ($0.5B in revenues, 12,000 Employees) based on the
following:
Enertec and CYIENT will apply jointly for offset tenders
Enertec will lead the planning and designing
CYIENT will lead the procurement and production
Israeli defense systems annual
sales amounts to $4B with 40%
signed with the Indian government
and army *
According to the Indian Ministry of Defense regulation
"DPP 2006", any such transaction (over a certain
amount) necessitates an offset procurement of 30% of
its value
* Indo-Israel Defense Offset Procurement, BDO Israel, August 30, 2016
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C&C Centers
500K$ - 1M$
2 companies specializing in
mechanical engineering and
electrical systems manufacturing
for shelters
During 2016, Enertec entered into a new vertical: Command & Control Centers
A ruggedized Command & Control shelter to be deployed in the battle field
The shelters used mostly for missile defense and UAV’s
=
Enertec received a first order for
8 Centers for an amount of $2.2M
During2016Enertec received
an additional order and expects to receive continuous orders
during 2017
A Corporation with a leading shelter manufacturer will
potentially yield additional orders
December2016 2017onwards
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Always In Front