Cantaloupe, Inc. · NASDAQ:CTLP
Cantaloupe — USA Technologies — Proxy Contest (April 2020)
19 slides from Cantaloupe's proxy contest presentation, Apr 9, 2020
Slide 1: HEC Investor Presentation April 9, 2020
HEC Investor Presentation April 9, 2020
Slide 2: Disclaimer
Disclaimer 2 The views expressed in this presentation (the “Presentation”) represent the opinions of Hudson Executive Capital LP and/or certain affiliates (“Hudson Executive”) and the investment funds it manages that hold shares in USA Technologies, Inc. (the “Company”). This Presentation is for inf
Slide 3: USA Technologies (OTC: USAT)
USA Technologies (OTC: USAT) 3 USA Technologies (OTC: USAT) provides wireless networking, cashless transactions, and asset monitoring services, principally to the small ticket, unattended point of sale (POS) retail marketPrimarily serves the food and beverage vending industry with expansion opportun
Slide 4: Significant Value Destruction Under Incumbent Leadership
Significant Value Destruction Under Incumbent Leadership 4 Share Price Performance Since Last Shareholder Meeting (April 26, 2018) Source: Bloomberg as of 4/3/2020.Note: USAT peers based on equal-weighted composite index of USAT’s April 2018 proxy peers. Peers include: AGYS, AMBR, CALD, EXA, LLNW, N
Slide 5: USAT Board Has Failed to Impose Adequate Financial Controls
5 USAT Board Has Failed to Impose Adequate Financial Controls Significant financial control break: 13-month failure to fileIndependent auditors resignedCurrent Board allowed CEO to remain in place despite significant red flagsPrior Audit Chair remains on Board and USAT proposed slateCurrent Board an
Slide 6: Nasdaq De-Listing: A Comedy Of Errors
6 Nasdaq De-Listing: A Comedy Of Errors Company first notified of non-compliance by Nasdaq on October 2, 201818 months later, USAT remains de-listed from the Nasdaq and trades over-the-counterAppealed decision with Nasdaq despite no path to successfully appeal listing rulesRepeated assurances from m
Slide 7: Operating Performance: Growing Costs and Share Count Without Profits
7 Operating Performance: Growing Costs and Share Count Without Profits Unable To Demonstrate Sustainable Profitability Despite Highly Scalable Business Historical Reported EBITDA & Adj. EBITDA ($ in millions) Historical SG&A & Share Count (In millions) (1H20 Annualized) SG&A compounded at 25% from 2
Slide 8: Capital Allocation: Current Board Responsible for Disastrous Recent Financing
8 Capital Allocation: Current Board Responsible for Disastrous Recent Financing Most recent financing on October 9, 2019: expensive, dilutive and ill-advised Sold equity the day before long-awaited financial filings at ~30% discountReplaced existing bank debt with credit facility from a distressed c
Slide 9: Governance: A Total Disregard For Shareholders
Governance: A Total Disregard For Shareholders 9 In Our View, The Company’s Actions Demonstrate Complete Disregard For Shareholders Current Board has failed at basic duties and does not represent shareholders5 of 7 directors were appointed to the Board and have never been elected by shareholdersFail
Slide 10: Current Board: Declined Every Settlement Offer
Current Board: Declined Every Settlement Offer 10 All settlement proposals were initiated by Hudson during the past year Hudson Proposal USAT Response February / March 2019 Hudson meets with Board and expresses concern and ability to help with Bank credit agreement, accounting issues and Nasdaq dead
Slide 11: Current Management: Failure To Deliver What USAT Has Said
Current Management: Failure To Deliver 11 What USAT Has Said Reality Nasdaq Listing Repeated assurances from Board and then CEO, Steve Herbert, that USAT would meet Nasdaq filing deadlines. Indicated to shareholders that situation was “under control”“Let me just reiterate for a moment my key priorit
Slide 12: Current Management: Failure To Deliver (cont'd)
Current Management: Failure To Deliver (cont’d) 12 What USAT Has Said Reality Operating Performance “I want to assure all of you that my top priorities are to drive the company to profitability, deliver increased customer and shareholder value, and provide improved shareholder visibility by better c
Slide 13: What Other Shareholders Are Saying?
What Other Shareholders Are Saying? 13 “Our investment in the company was predicated on Hudson winning since we considered the stock uninvestable under your leadership. The current board was responsible for governance during a period when USAT materially misstated its quarterly filings and financial
Slide 14: What Other Shareholders Are Saying? (cont'd)
What Other Shareholders Are Saying? (cont’d) 14 Source: https://www.prnewswire.com/news-releases/usa-technologies-shareholder-kurt-king-issues-letter-to-board-of-directors-calling-out-egregious-corporate-governance-actions-in-advance-of-annual-meeting-on-april-30-301019039.htmlNote: Bold formatting
Slide 15: Hudson Executive Capital's Recommendations
Hudson Executive Capital’s Recommendations 15 Bolstering Senior Management Team HEC has retained executive search firm Korn Ferry to identify qualified CEO candidates from the financial payments and technology industries. HEC has conducted over 35 interviews to evaluate candidate interest and qualif
Slide 16: Near-Term Plan to Protect And Create Shareholder Value
16 Near-Term Plan to Protect And Create Shareholder Value Immediately evaluate USAT’s cash liquidity profile in light of COVID-19 pandemic (expected time frame: 1-2 weeks)Adjust short-term cash costs to ensure USAT has ample resources to weather impact of lockdowns while continuing to ensure appropr
Slide 17: Highly-Qualified Independent Director Nominees
17 Highly-Qualified Independent Director Nominees For 10 Member Board Candidate Background Lisa BairdCommissioner of National Women’s Soccer League Previously Chief Marketing Officer for New York Public Radio and Untied States Olympic and Paralympic CommitteeExtensive experience in branding, develop
Slide 18: Highly-Qualified Independent Director Nominees (cont'd)
18 Highly-Qualified Independent Director Nominees (cont’d) Candidate Background Michael PassillaDirector, Priority Technology Holdings Served as Vice Chairman at Chase Merchant Services, the global payment processing division of JPMorgan Chase &Co, from 2016 to 2018Prior to that, he was the Chief Ex
Slide 19: Conclusion: Change Is Needed At USAT
19 Conclusion: Change Is Needed At USAT USAT’s Board has overseen significant shareholder value destructionUSAT’s Board has failed to impose adequate financial controls, which have led to the company’s continued failure to get re-listed by NasdaqUSAT’s Board has failed to increase profitability whil