Safeguard Scientifics, Inc. · OTC:SFES
Safeguard Scientifics — Investor Day (October 2008)
55 slides from Safeguard Scientifics's investor day presentation, Oct 1, 2008
Slide 1: Creating & Realizing Value for 55 Years
Creating & Realizing Value for 55 Years
Slide 2: Agenda
Agenda 8:05 - 8:50am Company / Financial Update 8:50 - 9:45am Technology 10:00 - 10:55am Life Sciences 10:55 - 11:30am CLRT Presentation 11:30 Closing Remarks 11:45am Lunch w/Informal Conversation
Slide 3: Safeguard Scientifics Overview
Safeguard Scientifics (NYSE: SFE) Experienced Management Team Competitive Strategy & Differentiation Holding Company: Technology & Life Sciences Growth Capital for Entrepreneurs 55-Year History of Building Market Leaders Significantly Undervalued Create Value Realize Value
Slide 4: Safeguard History of Innovation
Safeguard History of Innovation
Slide 5: Safeguard Today
Safeguard Today Safeguard Today
Slide 6: Strategic Themes
Maturity Migration Convergence Compliance Cost Containment Strategic Themes
Slide 7: Go To Market Strategy
Go To Market Strategy Out-Bound Deal Sourcing In-Bound Deal Sourcing Current Safeguard Partner Companies Growth Financing $5 Million to $50 Million Primary or Minority Shareholder Realize Value Management Market Model Momentum Moat
Slide 8: Deploy Capital
Deploy Capital SAFEGUARD EQUITY DEPLOYED ~ $112 Million* Technology Life Sciences * Represents equity deployed since January 1, 2006. Capital Deployed $9.0M $8.5M $13.5M $8M $5.8M $2.2M $8.8M $3.35M SFE % Ownership 38% 19.9% 37% 21% 2.2% 14% 47% 29% Capital Deployed $10.8M $2.4M $7.3M $6M $6M $20M S
Slide 9: Safeguard Partner Companies
Safeguard Partner Companies
Slide 10: Tomorrow's Success Stories
Tomorrow’s Success Stories CBSES Video C3 swaptree ome @ ORs 10
Slide 11: Build Value: Technology
Build Value Tuck-ins / Acquisitions Non-Core Asset Sales New Products Introduced Expanded Facilities Award Recipients EBITDA Achievement Technology Represents Current Safeguard Partner Companies
Slide 12: Build Value: Life Sciences
Build Value Tuck-ins / Acquisitions Non-Core Asset Sales New Products Introduced Expanded Facilities Award Recipients EBITDA Achievement Life Sciences Represents Current Safeguard Partner Companies
Slide 13: Valuing Safeguard - Aggregate Revenue
Valuing Safeguard - Aggregate Revenue 2008 2008 Life Sciences 100 Technology 100 Combined 100 100 Range: $85M - $100M Range: $175M - $200M Range: $90M - $100M * Aggregate revenue guidance is not adjusted to reflect the impact of GENDBAND's acquisition of NextPoint Networks
Slide 14: Realize Value
Realize Value ~ $274 Million PARTNER ‘COMPANIES Private Equity ALUIANCE Holdings pene : Southwest Operations CLARGENT aos i Au Loureate?harmer ‘Underutized Facility ‘Ru LoureatePharme’ CE 4
Slide 15: Realize Value
Realize Value §) SAFEGUARD' 15
Slide 16: Safeguard Scientifics Overview
Safeguard Scientifics (NYSE: SFE) Experienced Management Team Competitive Strategy & Differentiation Holding Company: Technology & Life Sciences Growth Capital for Entrepreneurs 55-Year History of Building Market Leaders Significantly Undervalued Create Value Realize Value
Slide 17: Creating & Realizing Value for 55 Years
Creating & Realizing Value for 55 Years
Slide 18: Financial Update
G SAFEGUARD Financial Update
Slide 19: Pro Forma Summarized Balance Sheet - Parent Company
Pro Forma Summarized Balance Sheet - Parent Company ($ in millions except per share) As Reported 6/30/2008 Pro Forma 6/30/08(1) Cash $ 152.7 $ 122.7 Long-Term Liabilities $ 5.3 $ 5.3 Convertible Senior Debentures $ 129.0 $ 91.0 Shareholder's Equity $ 129.7 $ 137.6 (1) To Give Effect to Convertible D
Slide 20: Convertible Debentures
Convertible Debentures Original Issue - $150.0M Current Balance - $91.0M Rate 2.625% Stated Maturity - March 15, 2024 Conversion Rate - $7.22 Per Share Put Dates: March 21, 2011 March 20, 2014 March 20, 2019
Slide 21: Repurchase of Convertible Debentures
Repurchase of Convertible Debentures Last Repurchase September 22, 2008 - 78 3/4% of Face Value $38M of Face Value Repurchased for $30M Repurchased $59M at Blended Rate of Approximately 77% Continued Emphasis on Repurchases Will Take Advantage of Opportunities to Repurchase Based on Market Condition
Slide 22: Stock Buy-Back and Splits
Stock Buy-Back and Splits Stock Buy-Back Board of Directors Authorization to Acquire up to $10M Will Update on Q3 Purchases in 10-Q Reverse Stock Split Shareholder Approval Received in July 2008 Board will Continue to Assess Advantages of Pursuing
Slide 23: Corporate Expense Trend
Corporate Expense Trend Q1 Q2 Q3 Q4 2007 5.22 4.33 5.01 4.5 2008 4.73 4.12 NOTE: Excludes depreciation and stock-based compensation expense ($ in millions)
Slide 24: Status of Partner Companies
Status of Partner Companies* ($ in millions) *6/30/08 **9/30/08
Slide 25: Uses of Capital
Uses of Capital Up to 6 New Partner Companies Per Year (On Average) Follow-on Funding to Existing Partner Companies ..5 to 1.0 Times Original Funded Amounts Opportunistic Repurchase of Debt at a Discount Stock Repurchases
Slide 26: Valuing Safeguard
Carrying Value Pro Forma As of 6/30/08(1) Market Value As of 9/30/08 Parent Company Cash $ 122.7 Majority Partner Companies Clarient, Inc. (Nasdaq: CLRT) $ 19.2 3.9x $ 74.5 $ 141.9 Minority Partner Companies (Aggregate) $ 79 Tax Loss Carryforwards $ 450 Convertible Debt $ 91 Market Cap $ 152 Market
Slide 27: Incentive Compensation
Incentive Compensation Emphasis on Value Creation and Exit Value Impacts Cash Incentive (Annual) Equity Incentive (Longer Term) 2008 New Option Vesting Structure Grants Tied to Pools of Capital Deployed Vesting Upon Achievement of Aggregate Exit Values
Slide 28: Key Financial Goals
Key Financial Goals Repurchase of Converts by 2011 Explore Alternate Sources of Capital Enhanced Credit Facilities Improved Visibility into Existing Investments Management of Overhead Expenses
Slide 29: Financial Update
G SAFEGUARD Financial Update
Slide 30: Technology Overview
G SAFEGUARD Technology Overview
Slide 31: Agenda
Agenda 8:50 - 9:05am Technology Overview Kevin Kemmerer, SVP Technology & Managing Director Technology Team Strategic Themes & Target Markets Partner Companies Valuing Safeguard Critical Success Factors 9:05 - 9:45am Technology Partner Companies / Q&A Bridgevine Swaptree
Slide 32: Technology Team
Technology Team Kevin Kemmerer Senior Vice President & Managing Director Erik Rasmussen Vice President & Managing Director Mark Mitchell Senior Associate Mike Glick Senior Analyst Salomon Brothers, Inc.
Slide 33: Strategic Themes
Further Integration of Internet Services into Daily Routine of Businesses and Consumers Migration of Software Companies to Technology- Enabled Services Businesses Adoption of Web 2.0 and SOA Technologies Continued Innovation of eCommerce and Payment Platforms Strategic Themes
Slide 34: Target Markets - Technology
Financial Services Healthcare IT Internet-Based Businesses Software As A Service Technology-Enabled Services Vertical Software Solutions Recurring Revenue Business Models Verticals Target Markets - Technology
Slide 35: Company Description: AHS
Company Description Technology-enabled Application Services Provider (ASP) that offers outsourced medical billing services to physician groups primarily in Radiology, Pathology, Anesthesiology and Emergency Medicine. AHS is headquartered in Warren, NJ. CEO David Langsam SFE Board Members Kevin Kemme
Slide 36: Company Description: Authentium
Company Description The developer of SafeCentral, is a leading security software company. Authentium provides security software that protects consumers from identity threats and other online threats. SafeCentral is the most secure method of accessing sensitive information online (i.e. bank accounts,
Slide 37: Company Description: Beyond.com
Company Description Provider of the Internet's Largest Network of Niche and Local Online Technology and Career Services to Job Seekers and Corporations. Beyond.com is headquartered in King of Prussia, PA Founder and CEO Rich Milgram SFE Board Member Erik Rasmussen Attainable Market Opportunity Fragm
Slide 38: Company Description: NextPoint
Company Description A fast-growing developer of carrier-grade interconnect, access & fixed-mobile connectivity solutions to enable operators to navigate the borders among fixed & mobile networks. NextPoint formed in January 2008 merger of NexTone Communications & ReefPoint Networks. In September 200
Slide 39: Company Description: Kadoo
Company Description Kadoo is a web 2.0 company that enables its users to enjoy greater sharing & privacy controls along with 10 free GBs of storage to share photos, videos, files and more. CEO Christopher Etesse - CEO, Dan Cane - CTO (co-founder of Blackboard) SFE Board Member Erik Rasmussen Attaina
Slide 40: Company Description: Portico
Company Description Offers Health Plans Software Solutions Exclusively Focused on Unlocking the Value of the Provider Network Management. It is a vertically focused recurring revenue software and service company than provides Provider Network Management software for health insurance plans. Portico i
Slide 41: Critical Success Factors
Critical Success Factors Generate Significant Deal Flow Build Value in Partner Companies Generate Industry Best Practice Exits with Leading IRRs Create Exceptional Shareholder Value
Slide 42: Technology Overview
G SAFEGUARD Technology Overview
Slide 43: Life Sciences Overview
G SAFEGUARD Life Sciences Overview
Slide 44: Agenda
Agenda 10:00 - 10:15am Life Sciences Overview Jim Datin, EVP Life Sciences Life Sciences Team Strategic Themes & Target Markets Partner Companies Valuing Safeguard Critical Success Factors 10:15 - 10:55am Life Sciences Partner Companies / Q&A Advanced BioHealing Avid Radiopharmaceuticals 10:55 - 11:
Slide 45: Life Sciences Team
Life Sciences Team Jim Datin EVP & Managing Director Wei Zhang, PhD Senior Associate Gary Kurtzman, MD VP & Managing Director Jim O'Connell Senior Associate
Slide 46: Strategic Themes
Cost of Healthcare Aging of Population Rise of Consumerism Cost of Drug Development Medical Solutions Strategic Themes
Slide 47: Target Markets - Life Sciences
Administering Healthcare Identifying Disease Making Products Available Molecular & Point of Care Diagnostics Specialty Pharma Medical Devices Segments Products Technology Enabled Services Treating Disease Using Products Business Models Verticals Target Markets - Life Sciences
Slide 48: Company Description: Alverix
Company Description A Point-of-Care Diagnostics Technology Provider. Alverix is headquartered in San Jose, CA Management Jim Merselis, CEO Patrick T. Petruno, Founder and COO SFE Board Member Gary Kurtzman, MD Attainable Market Opportunity $9 Billion Fragmented Point-of-Care and $18.7 Billion Centra
Slide 49: Company Description: Cellumen
Company Description Cellular Systems Biology Company that Produces the Most Accurate Predictability of Drug Efficacy and Safety, Reducing Failure Rates and Improving Cost Management. Cellumen is headquartered in Pittsburgh, PA President and CEO Lans Taylor, PhD Board Member Jim Datin Attainable Mark
Slide 50: Company Description: NuPathe
Company Description Specialty Pharmaceutical Company Developing Products for Neurological and Psychiatric Diseases. SmartReliefTM Product Ready to Enter Phase III for Migraines. NuPathe is headquartered in Conshohocken, PA. Co-Founder and CEO Jane Hollingsworth SFE Board Member Gary Kurtzman, MD Att
Slide 51: Company Description: Rubicor
Company Description A Medical Device Company Focused on the Development and Commercialization of Minimally Invasive Breast Biopsy and Tissue Removal Technologies. Rubicor is Headquartered in Redwood City, CA. Management Jim Vetter, MD, Founder & Chairman SFE Board Members Peter Boni and Jim Datin At
Slide 52: Syndication Partners
Syndication Partners S6oiqsciENCE )( sH Ore \ONewVenture formate a CAMMY PARTNERS ‘NOVITAS+ CAPITAL g SAFEGUARD 10 Lity Qu Ventures iA SeeORD WHEATLEY PARTNERS ize
Slide 53: Build Value: Life Sciences
Build Value Tuck-ins / Acquisitions Non-Core Asset Sales New Products Introduced Expanded Facilities Award Recipients EBITDA Achievement Life Sciences Represents Current Safeguard Partner Companies
Slide 54: Critical Success Factors
Critical Success Factors Generate Significant Deal Flow Build Value in Partner Companies Generate Industry Best Practice Exits with Leading IRRs Create Exceptional Shareholder Value
Slide 55: Life Sciences Overview
G SAFEGUARD Life Sciences Overview