Investor Presentation Noble Capital Markets 13th Annual Investor
Investor Presentation Noble Capital Markets 13th Annual Investor Conference January 30-31st 2017 ORBIT ELECTRONICS GROUP BEHLM AN ELE CTRON ICS EMS MBAT SYST INTEG RATED CO ORATO
RY MENT LAB EVELO P TULIP D ORBIT INSTRU MENT OTC Pink: ORBT ORBIT POWER GROUP Forward-Looking Statements This presentation contains discussion of items that may constitute forward-looking statements. Although Orbit International believes the expectations reflected in such forward-looking statements are based on reasonable
assumptions, it can give no assurances that its expectations will be achieved. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the Companys expectations as discussed in detail in the Companys press releases posted with OTC Disclosure and News Service, which investors are encouraged to review. 2 Agenda Introduction Investment and financial strength Products and growth opportunities
Financial highlights Goals for 2017 Investment conclusions 3 About Orbit . Business Segments Electronics Group Power Group Orbit Instrument Division Behlman Electronics Tulip Development Labs Commercial Division COTS (Custom) Division Integrated Combat Systems
Standard and custom operator interface systems Standard, modified standard, custom and subsystems, supporting shipboard, avionic, and COTS AC power sources, vetronic and shore-based applications frequency converters, inverters, DC Naval gun weapon systems DC, ACDC System integration and integrated logistics support Uninterruptible power supplies (UPS) Prime contractor & government procurement Commercial, industrial and military agency support mission critical applications 9 mos. ending 9/30/2016 Net Sales by Segment 6.4 8.8
4 Investment Considerations Major new and repeat orders anticipated Organic and acquisition-driven growth opportunities Legacy programs / high barriers to entry Product portfolio with range of ruggedized products Enduring military, commercial, industrial relationships Sole source supplier on many contracts Programs less vulnerable to defense spending cuts Lengthy process to be a qualified supplier 5
Investment Considerations Compelling Valuation: Tangible book value of $3.23/share (9/30/16) excludes any value for the potential deferred tax asset from operating loss carryforwards and temporary differences that could offset future taxable income (value of deferred tax asset approximates $1.49 per share at 9/30/16) Share repurchase program: Over 326,000 shares bought since 1/1/15 In January 2017, we completed a $600,000 repurchase plan of our outstanding common stock Will continue to return capital to shareholders through stock repurchases so long as it meets our criteria Strong financial position at 9/30/16 Approximately $2.6 million in cash, cash equivalents & marketable securities at 9/30/16 Unused $4 million credit facility (8/1/18 maturity date) Generated free cash flow of approximately $3.03 million during trailing 18 months ending 9/30/16 6 Share Repurchase Program Over 695,000 shares repurchased since 1/1/12
Currently 4.16 million shares outstanding Share Repurchases (in thousands) 250 218 196 200 150 125 102 100 50 27
29 0 7 Debt Repayments Approximately $3,300,000 of debt repayments since 12/31/12 Debt Outstanding (in thousands) $3,500 $3,324 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 12/31/2012 $2,100
Pre-production Initial Initial Production Production // Qualification Qualification Follow-on Follow-on Orders Orders We have taken a number of initiatives in each division to expand our revenue stream Focus on new programs from our existing customer base Major push into VPX technology New sales hires for OPG 9
Growth Opportunities Organically Through acquisitions New opportunities: A significant amount of new opportunities has moved from the prototype and preproduction stages into initial production. Recurring programs: Orbit has been grandfathered into recurring programs which generate ongoing revenues. Also Orbit designs are often selected to replace its own legacy programs. Refurbishment: Benefits from demand for refurbishment and modernization efforts supporting defense electronics systems and power solutions. - Synergies with existing operations. - To achieve better utilization through consolidation via
tuck-in acquisition. - Budget uncertainty vs. unrealistic seller expectations. Crossmarketing by its operating units. 10 Markets we Serve Military/Defense Oil and Gas Telecommunication Markets Transportation: Railroad & Air Traffic Control
Energy/Utilities 11 Electronics Group Electronics Group Orbit Instrument Division Tulip Development Labs Integrated Combat Systems Standard and custom operator interface systems and subsystems, supporting shipboard, avionic, vetronic and shore-based applications Naval gun weapon systems System integration and integrated logistics support Prime contractor & government procurement agency support 12 Electronics Group . Products Keyboards
Predator Keyboard E2D Kneeboard FAA Keyboard E2C Keyboard Avionics Bullnose 13 Electronics Group . Products 8.4 Tablet for Intl Military Helicopter Tablets New Smart Touch Tablet
Switch Panels Color Entry Panel NAVICP Color SAS CPDA Remote Control Unit 14 Electronics Group . Products Displays for CVN MCS USN 20.1 Sunlight Readable Touch Display 6.5 Smart Display Military Aircraft
12.1 Smart Touch Display for Ordnance Control USN P-8A Poseidon Program CH-53 and HH60 Program 15 Electronics Group . Products Displays V22 CDWS 15 inch Avionics Display E2D Display 16 Electronics Group . Products Aerial Surveillance Air Traffic Control
Unmanned Aerial Vehicle (UAV) STARS Keyboard - Raytheon ARTS Lockheed Martin Custom standard Trackball/Keyboard for General Atomics ground control stations MK 119 Gun Computer Cabinet (GCC) U.S. Navy Aboard AEGIS Class Destroyers and Cruisers as well as the Coast Guard WMSL 750 Class 17 Electronics Group Customers 18 The Power Group
Standard, modified standard, custom and COTS AC power sources, frequency converters, inverters, DCDC, ACDC Uninterruptible power supplies (UPS) Commercial, industrial and military mission critical applications 19 Power Group . Products Production/Facility Power 60/50 Hz 400 Hz Power/Testing AC-AC Railroad AC Signaling Gas & Oil Exploration AC-AC Utility DC-AC & AC-DC 20 Power Group . Products
COTS (MIL STD Compliant) Power Products Airborne Shipboard Ground/Mobile VPXtra Customers 21 VPX - Market Penetration Power Group entered the marketplace with the VPXtra power supply series Consistent focus on industry-leading designs Competitors are Dawn VME, PCI-Systems, North Atlantic
Industries, X-ES Inc. and Milpower Source Inc. 22 VME and VPX Product Mix Source State of the VITA Technology Industry (April 2014) 23 VME and VPX Sectors Source State of the VITA Technology Industry (April 2014) 24 U.S. Defense Spending. DoD Topline, FY 2001- 2020 (current dollars in billions) Trump Effect? 25
Historical Financial Highlights Orbit has recorded six consecutive quarters of profitability from Q2 2015 through Q3 2016, principally due to the following cost cutting measures: Decision to go dark and delist from NASDAQ in Oct 2014 o approximate annual savings of over $370K Closing of TDL-PA facility in 2014 o approximate annual savings of $2m 33 % reduction in personnel since 2012 Elimination of 74,000 square feet of production and engineering space $800 In thousands Net Income (Loss) $583 $600 $331 $400
Q1 2016 Q2 2016 Q3 2016 ($326) Net Income (Loss) 26 During Calendar Year 2016. Approximately $1.4 million of free cash flow generated during the first 9 months of 2016. Orbit used the cash it generated from operations to pay down debt and repurchase its shares.
Since 1/1/16, approximately 225,000 shares of stock were repurchased at an average price of $3.67 per share (since 1/1/12, in excess of 695,000 shares of stock were repurchased at an average price of $3.50 per share). Tangible book value at 9/30/2016 of $3.23 per share (does not include the value of approximately $1.49 per share for the potential deferred tax asset from our operating loss carryforwards and temporary differences that could offset future taxable income). 27 Going Forward. Calendar Year 2017: Continue to repurchase shares
Seek opportunities on new programs to layer onto our legacy awards Focus on promoting operating efficiencies Explore M&A activities tuck in acquisitions 28 Investment Conclusions 1. Compelling valuation 2.
Legacy programs / high barriers to entry 3. Favorable order flow expected 4. Strong financial position 5. Focused on organic and acquisition-driven growth 29 Seasoned Management Team CEO Orbit International Mitchell Binder
CFO Orbit Internation al David Goldman Accounting Human Resources Information Tech. President of OPG Executive VP/ COO President of OEG Ronald Storm
Karl Schmidt Kenneth Ice Procurement/ Materials MGT. Sales and Marketing Product Development OPG Divisions Behlman Electronics OP Group Operations Manufacturing, Planning, Engineering,
Program Mgt., Quality OE Group Operations Manufacturing, Planning, Engineering, Program Mgt., Quality Sales and Marketing Product Developmen t OEG Divisions Orbit Instrument ICS
Tulip 30 Contact us Orbit International Corp. Mitchell Binder President & CEO 631 435-8300 Contact us 31
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