PowerPoint Presentationm.softchoice.com/files/pdf/about/AGM2010presentation.pdf · Current Low...
Transcript of PowerPoint Presentationm.softchoice.com/files/pdf/about/AGM2010presentation.pdf · Current Low...
Investor Presentation May 2011
Forward Looking Statements
This presentation material does not constitute an offer to sell nor a solicitation to buy common shares of Softchoice Corporation. The same is being disseminated for information purposes only.
In the interest of providing Softchoice shareholders and potential investors with information regarding the Company, including Management’s assessment of the Company’s future plans and operations, certain statements throughout this report are ‘forward-looking statements’ and represent the Company’s internal projections, estimates or beliefs concerning, among other things, future operating results and various components thereof of the Company’s future economic performance.
The projections, estimates and beliefs contained in such forward-looking statements necessarily involve known and unknown risks and uncertainties which cause the Company’s actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements.
We also use the terms “Imputed Revenue”, “Total Imputed Revenue” and “EBITDA”. These are non-GAAP measures. Please refer to our MD&A for an explanation of these terms.
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Agenda
• Chairman’s Message
• Business of the Meeting
• CEO’s Message
• Financial Review & Strategy Going Forward
• Questions
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Welcome & Chairman’s Message
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Bill Linton Chairman of the Board
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Welcome
Annual General Meeting May 2011
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Business of the Meeting
Business of the Meeting
Annual General Meeting May 2011
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CEO’s Message
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David MacDonald President & CEO
Softchoice at a Glance
• Leading N.A. provider of IT solutions and services: – Software, hardware, solution design and services
• 46 local offices & 4 regional call centers
• Key 2010 Financials – Revenue: US$884M (17% growth) – Gross Profit: US$164.6M (19% of rev) – EBITDA: US$41.2M (4.7% of rev) – Cash: US$35.8M – Debt: US$12.7M
• Market cap: ~US$180M
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Percent of Revenues through the Channel
(2010)
Softchoice Role
2010 Softchoice Large Account Reseller
(LAR) Ranking
D I D Y O U K N O W ?
Partners Play a Key Role In the Distribution Channel
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95%
93%
75%
1 of only
6 authorized
LARs across N. America
#1 in Canada
#5 in US
Entering a New Growth Era
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Accelerated Growth
2010+
Diversification
2002 – 2008
Invested for the Future
2009 – 2010
• Completed integration of 5 major acquisitions
• Repaid $41M in debt
• Added engineering & solutions resources
• Capturing transformational tech spending
• Leveraging infrastructure
Well-positioned in changing marketplace
T H E S I S
Well Positioned, Long Growth Runway
Well-positioned in changing marketplace
A differentiated business model
Delivering strong results
Going forward – powerful drivers
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W H A T W E D O
Softchoice Delivers Comprehensive IT Solutions
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PRODUCTS VALUE-ADDED
PROPOSITION
CUSTOMERS /
GEOGRAPHY
Microsoft: 45%
Server, Storage, Networking: 28%
Client Computing: 23%
Services: 4%
SMB: 43%
Enterprise: 35%
Government: 22%
• Assessment-led
• Broad product offering
• Solution design
• Services
• Efficient fulfillment
• Asset management
US: 56%
Canada: 44%
46 locations in N. America
Capabilities Provide Unique Positioning
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– Efficient supply chain – National scale – Complex Solutions
Low technical
complexity
High technical
complexity
Value
High number of customers
Low number of customers
Volume
National Resellers – CDW – DELL
Local Solution Providers – Presidio – Logicalis
Case Study: Value in Action
Customer
• RBC >$725B assets, Top 10 bank in N. America
Softchoice role
• Solutions for all PCs, printers, monitors, company-wide
– over 3,000 locations
– ship >30,000 units annually
Advantages we bring
• N. America-wide, highly efficient supply chain
• Excellent service
• Local presence in all key markets
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Market Poised for Growth
Key Drivers
• Windows 7
• Cloud
• Mobility
• Virtualized Data Center
Accelerating IT Investment
Cycle
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T H E S I S
Well Positioned, Long Growth Runway
Well-positioned in changing marketplace
A differentiated business model
Delivering strong results
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Going forward – powerful drivers
A Differentiated Business Model
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1 Assessment-led approach
3 Broad solutions offering
5 Ensure loyal, repeat customers
4 Leverage low- cost, efficient infrastructure
c u l t u r e
2 Solutions design
Our Culture Drives Success
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Our Culture
• Grow talent from within
• Developmental programs spanning entry-level to senior management positions
• Career paths from the call center to field sales and sales and marketing leadership
Results
• High employee retention
• High productivity
• High customer satisfaction
87% of employees say they are proud to
work at Softchoice
Our Culture Drives Success
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$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
Gross Profit/Headcount
Softchoice
Insight
PCMall
PCCC
CIBER
Total Competitors
Engaged, highly motivated employees driving industry-leading productivity
1. Assessment-led Approach – Drives Scale
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Discovery Data Collection Analysis Recommendation
Proprietary Assessment Capabilities
• Networking • Storage • Server Workload • Desktop Virtualization
• Software Licensing • Systems Lifecycle • Cloud Readiness
2. Solutions Design
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Solutions Focus
• Server & Storage Virtualization
• Mobility
• Back up & Recovery
• Private Cloud
• Desktop Virtualization
• Unified Communications & Collaboration
3. Broad and Complex Solutions Offering
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Private Cloud Infrastructure
Security
Client PCs & Desktop Virtualization
Mobility
Collaboration Public Cloud
4. Leverage Low Cost, Efficient Infrastructure
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Leverage through Efficiency
• Exceptional cash flow
• Low working capital
• Highly Scalable model
• Single CRM platform
• Virtual Integration with suppliers
• Rich customer intelligence
5. Ensure Loyal Repeat Customers
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• Bricks and mortar presence – 46 locations, ‘live’ support
Why We Win
• Partner relations – Top-tier vendor relations / authorizations
• Excellence in service – Customer satisfaction
• Expertise – enterprise architecture group resources – Data center / private cloud solutions
• People relationships – Service culture / sales model
• Our sales model – Outbound and ISAM dual coverage
T H E S I S
Well Positioned, Long Growth Runway
Well-positioned in changing marketplace
A differentiated business model
Delivering strong results
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Going forward – powerful drivers
Attractive Financial Characteristics of Our Business Model
$0
$40
$80
$120
$160
$200
10%
12%
14%
16%
18%
20%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Stable Trailing 12 month Gross Margin %
TTM Gross Profit
GM%
2009 2010 2011
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-$60
-$40
-$20
$0
$20
$40
$60
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Positive Net Cash Trajectory
US$M
2009 2010 2011
Business Model Delivers Industry-Leading Performance
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Five Year Avg. Sales Growth vs. Peer Group*
Five Year Avg. ROIC vs. Peer Group**
Note: MVC Associates International. Independent Performance Analysis 2010 * Year ended 2010 ** Year ended 2009
13.0%
4.5%
Softchoice Peer Median
23.2%
4.9%
Softchoice Peer Median
2010 Highlights
• 2010 reported revenues up 17 percent
• Annual adjusted net earnings up 41 percent: – Adjusted EPS up 26% to US$0.91 per diluted share
• Strong growth across all product categories: – Microsoft up 15 percent
– Hardware solutions up 20 percent
• Year end cash position of $35.8 million
• Impact of change in accounting policy: – Reduction in revenue and cost of sales of approx. $85 million in Q4
2010 and $66 million in Q4 2009
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2010 Consolidated Statement of Earnings* (000’s of US$’s)
Actual Prior Year YOY Growth
Gross Sales $1,188,260 $1,000,248 18.8%
Reported revenue $884,014 $754,144 17.2%
Gross Profit $164,579 $142,269 15.7%
EBITDA $41,164 $35,074 17.4%
Total operating expenses $132,851 $118,051 12.5%
Operating income $31,728 $24,218 31%
Earnings before income tax $30,805 $31,840 -3.3%
Net earnings $20,242 $22,263 -9.1%
Adjusted net earnings $18,019 $12,749 41.3%
Adjusted net earnings per share (diluted)
$0.91 $0.72 26.4%
*Canadian GAAP reporting
2011 Q1 Financial Highlights
• Total revenue for the quarter up 24 percent to US$250 million
• Gross profit increased 21 percent to US$43.9 million
• Strong growth across key product segments: – Hardware solutions up 31%
– Software solutions up 45%
– Microsoft up 5%
• Adjusted net earnings grew 52 percent to $4.2 million – Adjusted EPS up 50 percent to US$0.21 per diluted share
• Quarter end cash position of $46.1 million
• Adoption of IFRS effective Jan 1, 2011
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Q1 - 2011 Consolidated Statement of Earnings* (000’s of US$’s)
Actual Prior Year YOY Growth
Total reported revenue $249,718 $201,561 23.9%
Gross Profit $43,914 $36,448 20.5%
EBITDA $9,228 $7,229 27.7%
Total operating expenses $36,887 $31,172 18.3%
Net finance costs ($219) ($780) (71.9%)
Earnings before income taxes $7,246 $6,056 19.7%
Net earnings $5,160 $4,388 17.6%
Adjusted net earnings $4,172 $2,738 52.4%
Adjusted net earnings per share (diluted)
$0.21 $0.14 50%
*IFRS adopted Jan 1, 2011
T H E S I S
Well Positioned, Long Growth Runway
Well-positioned in changing marketplace
A differentiated business model
Delivering strong results
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Going forward – powerful drivers
Powerful Revenue and Margin Drivers
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Leverage Microsoft relationship to expand share of wallet
Build strategic engagements
Capitalize on the cloud opportunity
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2
3
Continue strategic acquisitions 4
1. Leveraging Microsoft Relationship
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• Microsoft – a strategic enabler
• Software drives hardware
2. Leverage Our People – Build Strategic Engagements
Sales Rep Productivity
• Efficient phone-based coverage • Leveraging scale and efficiency • High volume transactions
$
$
Call Centers Assessment-led Outbound sales coverage
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15,000 customers huge opportunities
• Face to face engagement • Complex solutions • High value, high margin
3. Capitalize on the Cloud Opportunity
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Cloud Computing a Key Opportunity
Private Cloud Computing
Solutions to Enable Cloud Computing
• Assessment Services • Solution Design • Professional Services • Infrastructure • License rationalization • SaaS
Public Cloud Computing
New growth opportunities
4. Selective Acquisitions: Leverage our Scale
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A Record of Success: – Average integration time < 1 year – One set of systems to manage all lines of business
– Accretive to shareholders
Expand Customer Base Diversify Solution Set
Optimus Solutions (2008)
Software Plus (2007)
NexInnovations (2007)
3-Soft Software (2005)
Beyond.com Government Systems Group (2002)
Record of Successful Acquisitions
2010* 3-5 Year Goals
Revenue growth 17% > market growth
Recurring revenue % <30% 30% to 40%
Service revenue % < 5% > 20%
EBITDA margin % 4.7% > 6%
EPS* 26% > revenue growth
3- 5 Year Goal: EPS to Grow Faster Than Revenues
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**Adjusted for foreign exchange
*Based on 2010 net revenue reported
Current Low Valuation – Market Still Catching Up to Softchoice Positioning
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P/E Ratios 2011E Earnings*
*Source: Capital IQ May 9, 2011
SO
PCCC
SNX
NSIT
Group Avg
IM
TECD
8.1X
8.5X
8.7X
9.1X
9.1X
10.1X
10.3X
Well-positioned in changing marketplace
T H E S I S
Well Positioned, Long Growth Runway
Well-positioned in changing marketplace
A differentiated business model
Delivering strong results
Going forward – powerful drivers
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Thank You