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UWFA Stock Pitch Competition:
Avigilon (TSX: AVO)
Presented by: Varun Bhambhani and Irene Liu
March 8, 2014
Introduction
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SPX Index
AVO
• Share Price:• Market Cap:• Enterprise Value:• Revenue LTM:• EBITDA Margin:• Capital Structure:• Shares out. (mm):• 52 wk High/Low:• Diluted EPS:• Dividend Yield %:• Beta:
$31.83$1.37B$1.26B$155.1M16%100% Equity43.034.5/11.0110.45N/A1.36
Normalized Performance
Avigilon (TSX: AVO) is a Canadian-based manufacturer of high definition and megapixel network-based video surveillance systems and equipment for the security market worldwide. The company was incorporated in 2004.
Avigilon’s system is promoted by its sales staff and sold through a global network of security installers and dealers.
Product Lines
Company Description Key Financials
• Video management software• High-definition IP cameras• Recording hardware• System accessories
Company Overview
Company Overview
Investment Thesis
Macro OutlookCatalysts &
RisksValuation
YoY Revenue Management Team
Alexander Fernandez, Founder & CEO
Brad Bardua,CFO
Bryan Schmode,COO
2008 2009 2010 2011 2012 2013 -
20 40 60 80
100 120 140 160 180 200
Annual Revenue
Reve
nue
(in m
illio
ns C
AD)
CAGR = 102%
Canada US UK EMEA Asia Pacific
Latin America
- 10 20 30 40 50 60 70 80 90
100 Revenue by Region
2011
2012
2013
in m
illio
ns C
AD
Name Background
Alexander Fernandez Previous success with Qimaging
Brad Bardua Previously CFO of Gateway Casinos Group, where the executive team grew revenue from $80 to $250 million in a short amount of time
Bryan Schmode Over 15 yrs of experience in the industry; instrumental in success of companies such as Broadware
Investment Thesis
1. Strong revenue growth driven by expansion into US & other geographic regions
Company Overview
Investment Thesis
Macro OutlookCatalysts &
RisksValuation
2. Avigilon’s recent acquisitions of VideoIQ and RedCloud will drive growth in 2014 and beyond
3. As one of the few end-to-end solution providers, Avigilon will maintain an edge over competitors
Macro Outlook
Company Overview
Investment Thesis
Macro OutlookCatalysts &
RisksValuation
The global market for video surveillance equipment is expected to grow by more than 12% in 2014, as per a study conducted by HIS, a global think tank
There is push towards video data analytics; the ability to differentiate products will be important in 2014.
The rising use of big data means that cloud computing would become more prevalent.
Governments across the globe have been increasing their budgets for video surveillance, which will drive growth in this industry in 2014.
180/360 degree panoramic network cameras will be high demand with global unit shipment forecast to increase by more than 60% YoY
Catalysts & RisksCatalysts
Risks
Successful integration and synergy from acquisition of VideoIQ: VideoIQ provides analytics and active learning technology that detects intrusion from video surveillance without human involvement. This has the potential to become a selling factor for Avigilon.
Major contract wins and global expansion: Avigilon has been focusing on expanding the reach of its products in the US and EMEA.
End-to-end solution: Avigilon provides end-to-end solution to its customers, which is a significant advantage over competitors who only provide either the software or hardware for video surveillance.
Large competitors: Avigilon’s competitors have a much greater scale, which could impact its ability to compete at the global stage.
Ability to innovate: Given that video surveillance can essentially be considered a commodity, Avigilon needs to continue to innovate in order to set the brand apart from its competitors.
M&A Integration: There is a risk that the integration of VideoIQ and RedCloud (both acquired in 2013) might not go smoothly and it can impact Avigilon’s ability to leverage the synergies.
Company Overview
Investment Thesis
Macro Outlook ValuationCatalysts &
Risks
Valuation - DCF
Company Overview
Investment Thesis
Catalysts & Risks
Macro Outlook Valuation
Valuation - DCF
Company Overview
Investment Thesis
Catalysts & Risks
Macro Outlook Valuation
Valuation – Trading Comparables
Company Overview
Investment Thesis
Macro OutlookCatalysts &
RisksValuation
Comparables Universe
DCF
52-week
0 10 20 30 40 50 60 70
Recommendation
Company Overview
Investment Thesis
Macro Outlook ValuationCatalysts &
Risks
Football Field
Entry & Exit Strategy
Entry Price: Market Price
Target Price: $40.43
Price Upside: 27%
Time Horizon: 12 months
Stop Loss: $20
1. Strong revenue growth driven by expansion into US & other geographic regions
2. Avigilon’s recent acquisitions of VideoIQ and RedCloud will drive growth in 2014 and beyond
3. As one of the few end-to-end solution providers, Avigilon will maintain an edge over competitors
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