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Hypatia©
Product Support/Aftermarket
Financial Analytics Software Tool
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Investor Overview
Giuntini & Co. Overview
• Management consulting firm started in 1991.
• Employees a team of industry-specific Subject Matter
Experts.
• Focused on assisting commercial and military OEMs,
and their key suppliers.
• Develop business cases for supplying traditional and
innovative solutions impacting the efficiency and
effectiveness of the Product Support/Aftermarket
processes employed throughout the life of a machine.
o Configuration of solution offering.
o Financial statements.
o Channels of distributions.
o Source of resource employed.
o Value to machine user: decrease Total Ownership
Cost [TOC], increase machine availability and
mitigate risks.
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Giuntini & Co./Hypatia Clients
Past and present clients that have utilized and helped evolve Hypatia include the following:
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Expertise
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• WSJ: Quoted on Product Support business issues.
• IDGA: Provided a dozen lectures on the military Product Support Enterprise,
many published articles, webinars, podcasts, etc.
• Indiana University Kelley School Of Business Journal General business article
on Product Support future trends.
• Material Handling & Logistics Trade publication; advisory board expert on
Product Support, numerous articles included.
• Center for Remanufacturing: Business advisor to academic and technical Product Support community.
• Warranty Chain Management Conference: workshop leader for
international conference.
• ReedSmith: Supply Chain Management Subject Matter Expert for a $70M
lawsuit.
• Booz&Co.: Management consultant in NYC office.
• US Int. Trade commission: Provided expertise for large scale study on the
global trade of Product Support products.
• SAE: Presented Product Support, peer reviewed, whitepaper for International professional conference.
What is Hypatia?
• First-of-its-kind, scenario-based Product Support/Aftermarket (assures machine’s
Capabilities, Reliability, Availability and Capacity [CRAC] through-life)
financial analytics software tool.
• Developed and validated over 35+ years with some of the world's largest defense
and commercial capital equipment enterprises.
• Delivers an unparalleled drill-down into the deepest levels of Product
Support/Aftermarket lifecycle financials.
o Income statement
o Balance sheet
o Cash flow
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Most Recent Hypatia Clients
and Program Costs
GE: Waukesha Engine Product Line of Power & Water Business Unit ($1B)
Hypatia function: Remanufacturing/Rebuild Product Support/Aftermarket
market sizing and prescriptive analytics
FLIR/DOD: DRSKO (Dismounted Reconnaissance Sets Kits Outfits), Joint
CBRNe Program ($500M)
Hypatia function: Lifecycle Product Support/Aftermarket
Revenue/Expenditures
CACI: WIN-T (Warfighter Information Network Tactical) ($4B)
Hypatia function: Lifecycle Product Support/Aftermarket
Revenue/Expenditures
Navistar: MRAP (Mine Resistant Ambush Protected) Vehicle Program ($4B)
Hypatia function: Lifecycle Product Support/Aftermarket
Revenue/Expenditures
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Commercial Off The Shelf [COTS]
The Product Support Market
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•U.S. $500 billion annual expenditures employed in Product
Support/Aftermarket processes.
• 175 US publically-held OEMs, segmented into multiple divisions.
• 500 key suppliers divisions segmented into multiple divisions.
• US global share of market is 35%.
• <10% of OEMs and suppliers segment Product Support/Aftermarket on 10K; “the invisible profit driver”.
• Product Support/Aftermarket profit margins are 50% to 100% higher than new product sales.
• Product Support/Aftermarket future profits can be financially material in the acquisition of an OEM or
a supplier; impacts goodwill.
• Existing tactical application software is considered “poor” by Product Support/Aftermarket
community; SAP has publically acknowledged their failings.
• No known Hypatia comparable software product exists, extensive research performed.
• OEM/supplier leadership often “in the dark” on overall Product Support/Aftermarket financial
performance.
• Note that Hypatia can be scaled for use by in-house maintenance teams, although not targeted.
Value of Hypatia to the Market
• Drastically reduces time to perform analytics.
• Delivers outputs that have been proven to be
accurate.
• Provides reasonable default assumptions for any data
input lapses – outputs delivered no matter what.
• Customer does not require large amounts of data to
be collected; large proprietary data base is employed.
• Provides extensive what-if capabilities.
• Provides all outputs in graphic presentation.
• Employs Monte Carlo simulations for estimating
accuracy.
• All inputs normalized.
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Why Invest In Hypatia?
• Pricing Power: A unique prescriptive analytic software tool with no known
current competitor.
• High Entry Difficulty: A proprietary data base of Cost Estimating Relationships
[CER] composed over several decades.
• IP Remains in Developer’s Domain: A subscription service with a recurring
revenue pricing model.
• Low R&D Costs: Software already field tested as MS Excel workbook; SQL data
base conversion extremely efficient.
• Premium Pay for Output Access: Niche market focused upon higher level
professionals.
• Hypatia Could Be Worth $50-$100 Million Within 4-7 Years: All major
ERP software companies will want to acquire software to complete current product
line; given PTC’s recent acquisition in this area.
Projected Financials
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Pro Forma Revenue/Expenditures
Inputs Year ($millions)
0 1 2 3 4 5
# of new projects 0 7 15 75 102 196
# of active projects 0 7 22 97 199 395
Market Penetration 0 0.2% 0.5% 2.4% 4.8% 9.6%
Consulting project initialization
fees $0.00 $0.53 $1.13 $5.63 $7.65 $14.70
Subscription fees $0.00 $0.25 $0.77 $3.40 $6.97 $13.83
Revenues Total $0.00 $0.77 $1.90 $9.02 $14.62 $28.53
Revenue Growth Rate N/A N/A 146% 376% 62% 95%
Software Development $0.45 $0.45 $0.45 $0.40 $0.40 $0.40
Marketing/ Sales $0.15 $0.18 $0.55 $1.25 $2.94 $3.75
Subject Matter Experts/
Consultants $0.10 $0.39 $0.84 $4.22 $5.74 $11.03
Management/ Indirect/ IT
infrastructure/Legal $0.18 $0.12 $0.28 $1.35 $2.19 $4.28
Expenditures Total $0.88 $1.14 $2.13 $7.22 $11.27 $19.45
Giuntini & Company, Inc. Hypatia Software
Projected Financials (Cont.)
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Tax rate assumption: 30%
Giuntini & Company, Inc. Hypatia Software
Pro Forma Profit/Cash Flow/Investor ROI
Inputs Year ($millions)
0 1 2 3 4 5
EBITDA -$0.88 -$0.37 -$0.23 $1.80 $3.35 $9.07
EBITDA% of TTM Revenue N/A N/A N/A 19.9% 22.9% 31.8%
Taxes @30% rate -$0.26 -$0.11 -$0.07 $0.54 $1.00 $2.72
Equity Investment $1.50 $0.50 $0.25 $0.00 $0.00 $0.00
Cum equity Investment $1.50 $2.00 $2.25 $2.25 $2.25 $2.25
Period Cash Flow; excludes tax loss carryover
$0.62 $0.13 $0.02 $1.26 $2.34 $6.35
Cum Gross Cash Flow $0.62 $0.75 $0.77 $2.03 $4.37 $10.72
Investor Dividend $0.00 $0.00 $0.00 $0.50 $0.50 $0.75
Investor Cum Dividend $0.00 $0.00 $0.00 $0.50 $1.00 $1.75
Cum Net Cash Flow $0.62 $0.75 $0.77 $1.53 $3.37 $8.97
Projected Financials (Cont.)
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6th Year Investment Exit
Estimated enterprise value ($million)
based upon projected 5th year ending:
TTM revenue, revenue growth rate and
EBITDA %
$65.00
Investor equity stake % 7.0%
Investor equity value ($million) $4.55
Simple investor annual ROI% 36.0%
Giuntini & Company, Inc. Hypatia Software
Contact Information
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Ron Giuntini – Principal and CEO
570.713.4795
Greg Giuntini – Partner and Director of Business Development
646.280.8374
www.giuntinicompany.com
Replacement Value Breakdown
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Current U.S. replacement
value of commercial and
military systems broken down
by industry. Figures in millions.
Hypatia Workflow
1. Baseline Inputs: o Building product library
along with Hypatia reference data down to the most granular level.
2. Baseline Outputs:
o Initial data points/calculations based on configuration entry.
3. Dynamic Simulation:
o Live simulation comparing baseline data against rapidly adjustable data points.
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1. Forecast 777 Installed Base • What-if Boeing’s planned aircraft deliveries are changed?
• What-if the planned operator aircraft retirements are changed?
• What if Parker’s planned warranty program effectivity duration is changed?
• Employing a limited Monte Carlo simulation for identifying the what-if scenario that
appears to have high probability of being accurate.
2. Forecast Total Annual Product Support/Aftermarket Expenditures/Revenues Segmented
by Process Employed • What-if mod/upgrade/reman/overhaul/reset/recapitalize programs planned
frequencies are changed?
• What-if the planned transactional revenue of a program is changed?
3. Forecast Product Support/Aftermarket Global Parts Investment Employed by All
Processes • What-if parts availability levels are changed?
• What-if the flight hours of a segment of the fleet operators is changed?
Recent Boeing Hypatia Demo Simulations:
Control System Division's Boeing B777 1567700-3
Flaperon PCU Assembly
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4. Forecast Total Market Size of Direct Parts Purchases; Segmented By Processes • What-if a % of parts employed for a process is changed
• Impact upon parts market size
• Impact upon Full Time Equivalent (FTE) required for process
5. Parts Market Size & Parker Share • What if the current/planned configuration of the product is changed?
• What-if the current/planned source of design of individual parts is changed?
6. Forecast of Market Size of Shop Revenue • What-if the planned aged-based reliability is changed?
• What if the planned inflation rate is changed?
• What-if the planned Continuous Process Improvement [CPI] rate is changed?
7. Parker Shop Market Share • What-if the planned Beyond Economic Rate [BER] for reparable shop parts is
changed?
• What-if the planned No Defect Found [NDF] rate is changed?
Recent Boeing Hypatia Demo Simulations:
Control System Division's Boeing B777 1567700-3
Flaperon PCU Assembly
