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Investor Presentation June 2011. Forward-Looking Statements. - PowerPoint PPT Presentation
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Investor PresentationJune 2011
Forward-Looking Statements
Certain statements in this document are “forward-looking statements”, which reflect management’s current beliefs and expectations regarding the Fund and The DATA Group’s future growth, results of operations, performance, and business prospects and opportunities. Forward-looking statements involve risks and uncertainties related to factors that could cause actual results to differ materially from anticipated results, including those factors discussed in the Fund’s periodic filings with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described in this document. Unless required by applicable securities law, the Fund does not intend and does not assume any obligation to update these forward-looking statements.
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Overview
• Industry-leading market position with strong customer base
• Diversified product & service offering in traditional products and new
technology / delivery
• Long history as a cash generator – monthly unitholder distributions
• Reasonable capex requirements, disciplined investment process
• Focused, multi-part growth strategy
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• Founded in 1959
• 32 locations across Canada
• Customers include many of Canada’s largest companies
• TSX: DGI.UN / DGI.DB.A
• Market Cap: ~ $150 M equity / ~$45 M debentures
• DGI.UN annualized distribution: $0.65 / unit
• 2010 Revenue / EBITDA: $332 M / $30.8 M
Corporate Profile
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Customer Value Proposition
Reduce costs and increase revenue
• Constructive, problem-solving approach
• Broad range of capabilities
• Use of technology
Minimize risk
• Financial strength
• Scale of operations
• Focus on operational risk reduction for
“mission critical” documents
State-of-the-Art Manufacturing, Warehousing and Distribution
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Solid Customer Base
• Large, blue-chip customers
• Majority of top 25 > 10 year relationships
• No single customer > 5% of revenue
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Industry Overview
*Segments in which Data Group operates
Marketing & Promotion*
Packaging
Labels*
Financial Printing*
Book Publishing
Business Documents*
Greeting Cards Stationery*
Newspapers
Magazines
Newspaper Inserts
Event Tickets*
Canadian Printing Industry
Strong growth in outsourcingand direct marketing
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Key Markets Served
Outsourced Document Management Direct Marketing
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DATA Group Services Agreement
DATA creates a database of allcustomer documents and establishes standard operating procedures
DATA electronically stores the documents and enables customerto place orders via e-commerce system
Customer engages DATA in amulti-year agreement for documentmanagement services
DATA commences reporting procedures on process improvement recommendations and key success factors
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Customer Case Study
DATA meets customer to assessdocument requirements (quantity, design, timing, distribution, budget)
DATA designs document
DATA implements “Economic Order Quantity” analysis
DATA stores documentsin warehouse or electronically
Client branch managers place orders via DATA’s e-commerce site, and DATA fulfills order / ships documents
DATA advises client when the items need to be replenished
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Production: paperor electronic
Products
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Services
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DATA warehouseDATA e-Commerce site DATA electronic order form
Competitive Advantages
• Cost-effective, single source solutions provider• Scale:
Range of products National presence Invest in R & D / product innovation
• Long-term relationships, trusted partner and customer insight
• Experienced management team
• Financial strength
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Financial Review
5 Year Financial Review
Cash Available ForDistribution (CAFD)Adjusted EBITDARevenue
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(C$ Millions)
Q1 2011 Financial Review
Three months ended,(C$ millions, except percent & per share amounts)
March 31, 2011 March 31, 2010
Revenue 84.3 85.6
Gross profit 21.4 20.9
SG&A expenses 14.9 14.4
Adjusted EBITDA 8.0 8.2
EBITDA margin 9.5% 9.6%
Net earnings 1.8 3.4
Net earnings / unit 0.07 0.14
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Q1 2011 Distributable Cash
Three months ended, (C$ millions, except percent and per share amounts)
March 31, 2011
March 31, 2010
Cash provided by (used in) operating activities 1,557 12,846
Capital Adjustments: Maintenance Capex
Other adjustments incl. discretionary items: Changes in working capital Pension plan wind-up contributions Other Corporate conversion costs
(561)
3,765--
101161
(250)
(7,489)1,260(227)
--
Cash available for distribution 5,023 6,140
Distributions to unitholders 3,820 6,805
Cash available for distribution per unit 0.214 0.261
Distributions per unit 0.163 0.290
Payout ratio 76.1% 110.8%
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Balance sheet
As at March 31, 2011 (C$ millions)
Cash & Equivalents 5.2
Total current assets 91.2
Total assets 285.6
Total current liabilities 38.5
Long-term obligations, including bank loans, convertible debentures, future income taxes and pension obligations 121.0
Total unitholder equity 126.0
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Growth Strategy
Industry Dynamics
• Growth in web, electronic and wireless (mobile device) applications
• Decline in traditional, printed forms business
• Increasing complexity: what is the right product, delivery and technology?
Opportunity for trusted, consultative, single source provider
Opportunity for integration with customer business processes & systems
• Importance of proximity to customers Negligible threat of offshore competition
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Growth Strategy
Aggressive sales efforts in core markets
• New VP Sales, DATA East
• New VP Sales, Ontario
• New managers / re-org of reporting structure / sales compensation
• New sales training
• New web site / enhanced e-commerce site
• Direct marketing campaigns
• Enhanced sales information systems
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22 New products & services
• Enhanced expertise: New CIO New VP, Digital & Direct Marketing New Director, Product Research
• New products: Photobooks: web-to-print, utilizing existing assets, double-digit growth
category Multi-channel direct marketing: e-mail, mobile messaging, promotional
web pages, data analytics, leverages existing direct mail business
• New equipment: Short-run, personalized marketing print and gift / loyalty cards
Growth Strategy
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Customer joins the Shoe Mart Loyalty Rewards Club after receiving a direct mail offer
She receives regular print, email and mobile messages with special offers tailored to her
She responds by visiting a personalized Shoe Mart web site, and shops online
She visits retail store and redeems her special
She receives a “Thank you” postcard with special Gift Card attached
DATA tracks her responses to determine which direct marketing offers work best
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3
6 5
4
Multi-Channel Direct Marketing
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Growth Strategy
Incremental cost savings
• Review internal processes & IT systems
• New supply chain and procurement professionals
• Real estate
Acquisitions
• Consistent with plans for new product development
• Accretive
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Investment Highlights
• Industry-leading market position with strong customer base
• Diversified product & service offering in traditional products and new
technology / delivery
• Long history as a cash generator – monthly unitholder distributions
• Reasonable capex requirements, disciplined investment process
• Financial strength
• Experienced management team
• Focused, multi-part growth strategy
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