Descartes Systems Group Inc. · TSX:DSG
Descartes Systems — The Descartes Systems Group — Investor Presentation (May 2018)
26 slides from Descartes Systems's investor presentation, May 2018
Slide 1: Descartes – Uniting Business in Commerce
Descartes – Uniting Business in Commerce May 2018 : DSGX : DSG Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements to be made today and in this presentation, and that may be made in response to questions, constitute forward-looking information for the purposes of applicable securities laws (“forward-looking statements”), including, but not limited to: statements using the
Slide 3: Investment Highlights
Investment Highlights World’s Largest Multi-Modal and Neutral Logistics Network Cloud-Based Software Applications and Data Content Automating and Optimizing the $ 4 Trillion Logistics Market Strong Market Position with Significant Competitive Barriers Disciplined M&A Strategy Highly-Experienced Mana
Slide 4: Descartes: A History of Strong and Profitable Growth
Descartes: A History of Strong and Profitable Growth Revenue ($US MM) Founded in 1981 in Waterloo, 237 Canada Compelling combination of network, software applications and data content 59 Disciplined M&A strategy with 39 acquisitions since April 2006 FY08 FY18 Highly-recurring Adj. EBITDA ($U
Slide 5: $4 Trillion Global Logistics Market
Global Logistics Is Highly Complex $ 4 Trillion Global Logistics Market(1) Numerous constituents Multi-modal Resource-intensive Limited visibility and control Cross-border regulations (1) Market Data estimate per MarketInsight (CompaniesandMarkets.com). Global Logistics Market report, published on 3
Slide 6: The Global Logistics Network
The Global Logistics Network One place to research, plan and execute shipments RESEARCH & PLAN EXECUTE & MONITOR A N A LY Z E & I M P R O V E Forwarders/ Ocean NVOCCs Carriers Customs Air Brokers Carriers Ground Retailers Carriers Business Ports & Service Terminals Providers Cargo Bookings Manufac
Slide 7: Broad Array of Logistics Management Solutions
Broad Array of Logistics Management Solutions Customs & Regulatory Transportation Compliance Forwarder & Management Broker Routing, Mobile Trade Content Subscription and per Enterprise & Telematics transaction fee based Subscription and per Solutions Subscription based on transaction fee on number o
Slide 8: Industry Leading Customers
Industry Leading Customers Air Ocean Truck Intermediaries Retailers Manufacturers Distributors Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved. 8
Slide 9: Customer Case Studies
Customer Case Studies Leverages Descartes’ Leverages many Descartes Descartes’ solutions help Advanced Home Delivery solutions across multiple DHL American Airlines meet a solution for: operating groups: growing number of logistic challenges across the globe: Real-time delivery Global Forwarding
Slide 10: Why We Win
Why We Win Global Multi- Neutral modal Network Pure play logistics technology provider with compelling combination of network, applications and data content Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved. 10
Slide 11: Growth Drivers and Opportunities
Growth Drivers and Opportunities Cloud Enables • Network offers operational excellence and higher precision through cloud Increasing Automation integration and automation Global Security and • Heightened regulatory compliance requirements and scrutiny of global Compliance Increasing trade will creat
Slide 12: Disciplined and Strategic M&A Approach
Disciplined and Strategic M&A Approach Acquired May 2017 Acquired February 2018 Acquired August 2017 for ~$14.0MM plus up to $3.0MM in for ~$32.4MM for ~$107.0MM performance-based consideration Cloud-based provider of back- Electronic transportation Cloud-based provider of multi- office transp
Slide 13: Highly-Experienced Management Team
Highly-Experienced Management Team J. Scott Pagan Edward J. Ryan Allan Brett President & Chief Operating Officer Chief Executive Officer Chief Financial Officer Years at Descartes: 18 Years at Descartes: 18 Years at Descartes: 4 Ed Gardner Raimond Diederik Kenneth Wood Chris Jones Michael Verhoeve E
Slide 14: Financial Overview
Financial Overview The Descartes Systems Group Inc. is a publicly traded company. Nasdaq:DSGX | TSX: DSG Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved.
Slide 15: Financial Highlights for FY18
Financial Highlights for FY18 Consistent Revenue Growth 15% - 10 Year CAGR Highly-Recurring Services Revenue 86% Strong Adjusted EBITDA Margins 34% Significant Operating >89% of Adjusted EBITDA Cash Flow Diversified Revenue 18,500+ Customers, 160+ Countries The Descartes Systems Group Inc. is a publ
Slide 16: Quarterly Operating Results
Quarterly Operating Results Summary of Unaudited Results (US$ millions) % % Q1 Q4 ∆ Q1 ∆ FY19 FY18 Q/Q FY18 YoY Revenues $67.0 $63.6 5% $54.5 23% Services Revenues $57.8 $55.0 5% $46.7 24% Services Revenues as a % of 86% 86% 86% Revenues Gross Margin 72% 73% 74% Net Income $7.0 $6.7 4% $6.9 1% Net I
Slide 17: Annual Operating Results
Annual Operating Results Summary of Unaudited Results (US$ millions) % FY18 FY17 ∆ Revenues $237.4 $203.8 16% Services Revenues $204.4 $173.0 18% Services Revenues as a % of 86% 85% Revenues Gross Margin 73% 72% Net Income $26.9 $23.8 13% Net Income as a % of Revenues 11% 12% EPS $0.35 $0.31 13% Adj
Slide 18: Strong Revenue Growth
Strong Revenue Growth $US MM 237 204 185 171 151 127 114 99 74 66 59 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved. 18
Slide 19: Strong Adjusted EBITDA Growth
Strong Adjusted EBITDA Growth $US MM 81 70 61 52 45 38 33 27 20 17 14 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved. 19
Slide 20: Strong Conversion of Adjusted EBITDA to Operating Cash Flow
Strong Conversion of Adjusted EBITDA to Operating Cash Flow $US MM 81 73 72 Adjusted EBITDA 70 Cash 61 54 52 49 45 43 38 33 30 27 24 19 20 20 17 17 14 12 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved. 20
Slide 21: High and Expanding Margins
High and Expanding Margins Adjusted EBITDA Margin Gross Margin 73% 34% 29% 27% 68% 66% FY11 FY14 FY18 FY11 FY14 FY18 Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved. 21
Slide 22: Capital Structure
Capital Structure • Common shares at April 30, 2018 • 76.8 million - Outstanding • 77.7 million - Fully diluted • Preliminary short-form base shelf prospectus filed on May 24, 2018 (up to $750 million) • Cash and cash equivalents at April 30, 2018 • $US 36.2 million • Acquisition line of credit at A
Slide 23: Baseline Calibration
Baseline Calibration Actual % of Figures per Qtr Baseline Actual Baseline Q2’18 Revenue $52.5 $57.3 109% Adj. EBITDA $15.5 $19.8 128% Adj. EBITDA Margin 29.5% 34.6% Q3’18 Revenue $56.8 $62.0 109% Adj. EBITDA $16.2 $20.6 127% Adj. EBITDA Margin 28.5% 33.2% Q4’18 Revenue $59.5 $63.6 107% Adj. EBITDA $
Slide 24: Investment Highlights
Investment Highlights World’s Largest Multi-Modal and Neutral Logistics Network Cloud-Based Software Applications and Data Content Automating and Optimizing the $ 4 Trillion Logistics Market Strong Market Position with Significant Competitive Barriers Disciplined M&A Strategy Highly-Experienced Mana
Slide 25: Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA - Q1-19
Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues – Q1-19 We prepare and release quarterly unaudited and annual audited financial The table below reconciles Adjusted EBITDA and Adjusted EBITDA as a percentage of statements prepared in acc
Slide 26: Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA - FY18
Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues – FY18 We prepare and release quarterly unaudited and annual audited financial statements The table below reconciles Adjusted EBITDA and Adjusted EBITDA as a percentage of prepared in acco
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