Presentation for investor conferences

EX-99.1 2 dex991.htm PRESENTATION FOR INVESTOR CONFERENCES Presentation for investor conferences

Protection through Detection

RAE Systems Inc.

(AMEX: RAE)

Bob Chen, President & CEO

Don Morgan, Vice President & CFO

Bob Durstenfeld, Dir., Corp. Marketing

Exhibit 99.1

Protection through Detection

Safe Harbor Statement

This

presentation

(including

information

incorporated

deemed

incorporated

reference

herein)

contains

“forward-looking

statements”

within

the

meaning

the

Private

Litigation

Reform

Act

1995.

Forward-looking

statements

are

those

involving

future

events

and

future

results

that

are

based

current

expectations,

estimates,

forecasts,

and

projects

well

the

current

beliefs

and

assumptions

our

management.

Words

such

“outlook”,

“believes”,

“expects”,

“appears”,

“may”,

“will”,

“should”,

“anticipates”,

the

negative

thereof

comparable

terminology,

are

intended

identify

such

forward

looking

statements.

Any

statement

that

not

historical

fact,

including

estimates,

projections,

future

trends

and

the

outcome

events

that

have

not

yet

occurred,

forward-looking

statement.

Forward-looking

statements

are

only

predictions

and

are

subject

risks,

uncertainties

and

assumptions

that

are

difficult

predict.

Therefore

actual

results

may

differ

materially

and

adversely

from

those

expressed

any

forward-looking

statements.

Factors

that

might

cause

contribute

such

differences

include,

but

are

not

limited

to,

those

discussed

under

the

section

entitled

“Risk

Factors”

our

reports

filed

with

the

SEC.

Many

such

factors

relate

events

and

circumstances

that

are

beyond

our

control.

You

should

not

place

undue

reliance

forward-looking

statements.

Protection through Detection

Our

Our Business

PRODUCTS

Detect toxic gases &

radiological agents

Portable

Rugged

Battery operated

SYSTEMS

Provide integrated &

actionable threat

information

Wireless networks

Remote monitoring / Web

Integrated data (GPS, weather)

Application-specific system SW

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Markets

Industrial / Environmental Safety & Hygiene

Confined Space

Hazardous Waste

Oil & Gas

Environmental

Monitoring

Homeland Security

Military

First Responders

Public Venue

Protection

Port / Border

Security

Protection through Detection

Customers

Regulatory

Economic

Purchase

Drivers

Health & Safety

Security

Health & Safety

Security

Enterprise

Government

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RAE Systems Business

Portables

Integrated

Wireless Systems

Components & Accessories

ents &

Services

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Business Mix -

2004

Portables

48%

Integrated

Wireless Systems

18%

Distribution

17%

Service

Consumables

13%

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Global Operations

Cost-efficient

infrastructure

in China

Headquarters in

Silicon Valley,

USA

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Worldwide Presence`

Shanghai

Tokyo

Hong Kong

Singapore

France

Spain

U.K.

Benelux

Beijing

San Jose, CA

Denmark

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Geographic Mix

Americas

65%

Europe

10%

Asia

25%

Americas

56%

Europe

11%

Asia

33%

2004

2005

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Channels & Partnerships

Americas

Direct sales

Distributors & reps

Europe

HQ in Denmark with pan-

European direct sales staff

Subsidiaries in U.K & France

Direct presence in Middle East

Asia

Direct sales through KLH

in China

HK sales office

Distributors elsewhere

OEM

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Products,

Technology

Applications

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Sensor Technology

Photo-Ionization Detection (PID)

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Combustible

Chemical Detection Tube

Corona Discharge

Ion Mobility

Electro-chemical

Solid Polymer

Infrared

Radiation

Speciation

A world leader in photo-

ionization technology for

detection of volatile

organic compounds

(e.g. gasoline, benzene)

2005

2006

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Intellectual Property

18 patents focused on

chemical sensor

technologies

years

remaining

fundamental

PID

patents

Protection through Detection

Alarm

(detect & warn)

Measurement

(instrument data)

Hazard

Hazard Detection

Evolution

Area Monitoring

(manned multiple monitoring

products,

wireless

point-to-

point network)

Pervasive Sensing

(unmanned multiple sensors,

wireless mesh network)

Value-Add =

Real-Time

Decision

Support

Protection through Detection

Technology & Products

RAEWatch

AreaRAE

MultiRAE

MiniRAE 2000

ppbRAE

ToxiRAE

BadgeRAE

Products

Technology

Alarm

(detect & warn)

Measurement

(instrument data)

Area Monitoring

(manned multiple

monitoring products,

point-to-point network)

Pervasive Sensing

(unmanned multiple

sensors, mesh network)

Protection through Detection

Enterprise

First Responders,

Military

Government

Environmental

Agency

Applications

Alarm

(detect & warn)

Measurement

(instrument data)

Area Monitoring

(manned multiple

monitoring products,

point-to-point network)

Pervasive Sensing

(unmanned multiple

sensors, mesh network)

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Application Scenarios

Incident Command

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Application

Scenarios

Public Venue Security

Protection through Detection

Emerging

Application Scenarios

Building Air Quality Monitoring

Sensor/RF Node

Network Interrogator

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Emerging

Application Scenarios

Perimeter Monitoring

Sensor/RF Node

Network Interrogator

Protection through Detection

Emerging

Application Scenarios

Cargo Container Monitoring

Sensor/RF Node

Network Access Point

Satellite Communicator

Door Lock and RFID

Interior sensors monitor and

communicate through the door lock

sensor to the Network Access Point

and onto the Satellite Communicator

Door lock sensor protects against

intrusion and responds to RFID

signals to transmit container log to

RAE reader at portal on the dock

Protection through Detection

Emerging

Application Scenarios

Truck/Trailer Theft Prevention

Sensor/RF Node

Satellite Communicator

Network Interrogator

Door Lock

Door

Lock

Protection through Detection

Markets &

Growth Opportunities

Protection through Detection

Market Opportunity

Homeland

Security

Spending

$41.1 Billion

FY2006 budget request

7% Y/Y growth

U.S. Department of

Homeland Security

Chemical

Sensor

Market Size

$2.8 Billion

8.5% projected growth per

year through 2008

Freedonia report:

Chemical Sensors to

2008: Liquid, Gas &

Biosensors

Growth of

Investment in

Fixed Assets

(factories, equipment,

property & infrastructure)

25.8%

in 2004

United States

China

The Economist

27 Jan 2005

Protection through Detection

Market Drivers

Developing countries

Growing industrial

infrastructure

Increasing focus on

human health & safety

Industrialized world

Terrorism & other

safety concerns

Environmental &

industrial regulations

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Competitive Environment

History: North American mining industry

COMPETITIVE

STRENGTHS

•

A technology

leader in PID &

emerging wireless

systems

•

Strong brand

•

Broad product

offering

•

Cost-efficient

infrastructure in

China

Protection through Detection

Information

Value

Real-time

Decision

Support

Emerging Market Potential

$500

$10,000

$0.10

Thousands

Millions

Number of Sensors

Personal

Protection

Area

Protection

Pervasive

Sensing

Protection through Detection

Growth Strategy

Expand leadership position in emerging

wireless sensor networks

Enhance & defend portable product line

Increase revenue in Europe & Asia

Aggressively pursue rapidly growing safety

market in China

Selectively pursue strategic acquisitions &

partnerships

Gain scale &/or address adjacent products & markets (accretive)

Acquire complementary technologies

Protection through Detection

Financial

Overview

Protection through Detection

Company History

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

2005

Company founded by

Robert I. Chen (current CEO)

& Peter Hsi (current CTO)

$1.1M angel

funding

Public via

reverse merger

$32 M

secondary

offering

KLH acquisition

Moved to AMEX

Sept. 11,

2001

Established operations

in China

Protection through Detection

Revenue Growth

9.4

10.8

18.398

19.039

21.828

31.361

45.54

60.3

$10

$20

$30

$40

2004

2003

2002

2001

2000

1999

1998

$31.4M

$21.8M

$19.0M

$18.4M

$10.8M

$9.4M

$45.5M

CAGR

30%

$50

$60

2005

$60.3M

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2006 Guidance

(*per February 2006 conference call)

$10

$20

$30

$40

2004

2003

2002

2001

2000

1999

1998

$31.4M

$21.8M

$19.0M

$18.4M

$10.8M

$9.4M

$68-73M

(E)

2006 Sales

Guidance

$68M to $73M*

$50

2005

$45.5M

$60

$70

$60.3M

2006E*

Protection through Detection

Income Statement

2005 -2004 Comparison

2005 -UNAUDITED

2005

2004

Total Year

2004

Revenue

Gross Profit

R&D

Sales &

Mktg

G&A

Net

Income (Loss)

EPS

$ 60.3 M

COGS

$( 0.6)M

$35.6 M

$ 16.6 M

$ 24.7 M

TOTAL

$ 5.3 M

$ 13.2 M

$ 37.1 M

$(0.01)/share

$15.0 M

$ 0.4 M

$8.1 M

$ 2.4 M

$ 6.9 M

$ 1.4 M

$ 3.8 M

$ 7.6 M

$0.01/share

$ 18.3 M

$ 0.3 M

$ 10.5 M

$4.5 M

$7.8 M

$ 1.7 M

$4.0 M

$ 10.2 M

$0.00/share

$45.5 M

$2.3 M

$ 27.0 M

$10.3 M

$ 18.5 M

$ 4.3 M

$8.9 M

$ 23.5 M

$0.04/share

$ 2.0 M

Loss on

Lease

Total Year

2005

Protection through Detection

High-Leverage

Business Model

Gross Margin

50% -

60%

Pre-Tax

Operating Income

Target

10% -

20%

Strong

Balance Sheet

Cash &

Investments

$29.5 M

Debt

$1.7 M

* As of December 31, 2005, Unaudited

Protection through Detection

Summary

RAE Systems Investment Proposition

Growing

worldwide

markets

Broad

customer

base

rapidly

emerging

applications

Sustainable

technical

advantages

Proprietary

sensor

technology

System

know-how

domain

knowledge

Growing

consumables

service

revenue

High-margin

“annuity”

business

Strong

brand

worldwide

market

presence

Globally

distributed

infrastructure

Localized

sales

support

cost-efficient

manufacturing

China

Financial

strength

Strong

balance

sheet

High-leverage

business

model

Access

capital

Protection through Detection

Company Information:

InvestorRelations@RAESystems.com

408-952-8449

www.RAESystems.com

IR Agency Contact:

David Barnard, CFA

415-433-3777

David@lhai-sf.com

Protection through Detection

Index

RAE Systems Inc.

Safe Harbor

Our Business

Markets

Customers

RAE Systems Business Segments

Business

Segment

Mix

2004

Global Operations

Worldwide Presence

10.

Geographic

Mix

2004

11.

Channels & Partnerships

12.

Products, Technology & Applications

13.

Sensor Technology

14.

Intellectual Property

15.

Hazard Detection Evolution

16.

Technology & Products

17.

Applications

18.

Application

Scenarios

Incident

Command

19.

Application

Scenarios

Public

Venue

Security

20.

Emerging

Application

Building

Air

Quality

Monitoring

21.

Emerging

Application

Perimeter

Monitoring

22.

Emerging

Application

Cargo

Container

Monitoring

23.

Emerging

Application

Truck/Trailer

Theft

Prevention

24.

Markets & Growth Opportunities

25.

Market Opportunity

26.

Market Drivers

27.

Competitive Environment

28.

Emerging Market Potential

29.

Growth Strategy

30.

Financial

Overview

31.

Company History

32.

Revenue Growth

33.

2005 Guidance

34.

Income Statement

35.

High-Leverage

Business

Model

36.

Summary