Dell Technologies Inc. · NYSE:DELL
Dell Technologies — Merger or Acquisition (July 2018)
36 slides from Dell Technologies's merger presentation, Jul 9, 2018
Slide 1: The Essential and Trusted Technology Partner Leading the Way to Digital Transformation
The Essential and Trusted Technology Partner Leading the Way to Digital Transformation July 2018 Filed by Dell Technologies Inc.; Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934. Subject Company: Dell Technologies
Slide 2: Important Notices
Important Notices No Offer or Solicitation This communication does not constitute an offer to sell or a solicitation of an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in whi
Slide 3: Important Notices (Cont'd)
Important Notices (Cont’d) Participants in the Solicitation Dell Technologies and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from its stockholders in favor of the proposed merger and the other tr
Slide 4: Today's Speakers
Today’s Speakers Jeff Clarke Tom Sweet Tyler Johnson Hall Butler Vice Chairman, Products and Operations Chief Financial Officer Senior Vice President, Treasurer Director, Investor Relations
Slide 5: Transaction Overview
Transaction Overview For each Class V share, existing stockholders can elect to receive: 1.3665 shares of Dell Technologies Class C common stock, or $109 in cash per DVMT share (~29% premium to the Class V share closing price prior to announcement and ~22% premium to the Class V all-time high) Impli
Slide 6: Transaction Rationale
Transaction Rationale Simplifies Dell Technologies capital and ownership structure Creates attractive public security in leading global end-to-end infrastructure provider Provides Class V stockholders with significant and immediate premium, plus ability to participate in the future upside of Dell Te
Slide 7: What Has Changed Since Going Private
What Has Changed Since Going Private Market Perception prior to Take-Private in October 2013 Today Essential and Trusted Technology Partner Client and Server Provider Uncertainty regarding client trajectory / sustainability Limited presence across certain IT infrastructure segments Weak position in
Slide 8: Company Overview
Company Overview Client, Software & Peripherals Managed Security Services Server, Storage, HCI Cloud Native SW Development Software Defined Data Center Multi-cloud Management
Slide 9: Dell Technologies in Numbers
Dell Technologies in Numbers $83.5B Non-GAAP Revenue (TTM)1 $12B+ R&D Invested over Past 3 Fiscal Years2 $9.7B Adjusted EBITDA (TTM) (11.6 % of Non-GAAP Revenue)1 40K+ Sales Force #1 Virtualization, Storage, Servers, Client3 17% Non-GAAP Revenue Growth YoY (Q1 FY2019)1 99% of Fortune 500 Served $7.7
Slide 10: New Data Era Driving Significant Market Growth
New Data Era Driving Significant Market Growth Edge Computing / IoT 1 Connectivity AI / Machine Learning Significant IT Investment Required to Leverage Transformational Technologies 2 3 Broadband 5G Ethernet Client Client Client Server x86 / Mainframe Cloud Client / Server Edge / IoT Unprecedented D
Slide 11: Dell Technologies Provides a Comprehensive Solution
Financial ServicesTM Global Services Dell Technologies Provides a Comprehensive Solution Applications Digital Transformation Security Transformation IT Transformation Infrastructure Cloud Our Users Workforce Transformation Enabled by Best-in-Class Go-To-Market and Channel Program with Industry-leadi
Slide 12: Investment Highlights
Investment Highlights Integrated, end-to-end technology provider at scale 1 Best-in-class go-to-market model 2 Unique portfolio of complementary solutions 3 Attractive financial model with accelerating momentum 4 Strong pro forma balance sheet and financial flexibility 5 World-class, founder-led man
Slide 13: Integrated, End-to-End Technology Provider at Scale
Client Storage Server Networking Virtualization Cybersecurity Cloud Platform $84B Source: Company filings Note: TTM Non-GAAP revenue presented for all companies. Cisco’s Whiptail storage business considered immaterial. Integrated, End-to-End Technology Provider at Scale 1
Slide 14: ISG Industry Context
ISG Industry Context External Storage Industry Revenue Forecast ($B) ISG remains a clear leader in storage and HCI, now #1 in total x86 server revenue and units Share Overview Hyperconverged Infrastructure x86 Servers Clear #1 share position in total storage and all major and emerging storage catego
Slide 15: CSG Industry Context
CSG Industry Context Worldwide PC Revenue Forecast PC Unit Share Trend (Units Sold) Industry has stabilized and has been consolidating Dell Y/Y Change in Global PC Unit Share (bps) IDC forecasts trajectory to stabilize over next few years Demand supported by release of new operating systems and supp
Slide 16: Best-in-Class Go-to-Market Model
2 Best-in-Class Go-to-Market Model Dell Technologies Go-To-Market Model Broad go-to market reach across geographies and customer segments Direct sales force Enables deeper customer relationships with greater opportunity for peripheral and services attach in addition to solution cross-sell 40K+ direc
Slide 17: Unique Portfolio of Complementary Solutions
Servers Client1 Virtualization Client Revenue / Profitability Client Monitors Globally Total Revenue and Units x86 Servers Server Virtualization Software # 1 # 1 # 1 $189B Sector Size $76B Sector Size $31B Sector Size Source: Gartner, IDC market research, Company filings; 1 Statistic calculated by D
Slide 18: Driving Outperformance vs. Market
-0.2% +6.4% +0.1% +4.4% Forecast -1.5% Forecast +1.2% Forecast -4.5% TOTAL CLIENT COMMERCIAL CONSUMER Forecast +16.3% MAINSTREAM SERVER REVENUE2 Forecast +51% HYPERCONVERGED SYSTEMS REVENUE3 -23.2% -2.9% +2.8% +9.0% +6.4% +4.5% -1.1% -3.4% +1.6% -8.2% +4.3% -3.9% +76% +142% +71% +112% +77% 1 Externa
Slide 19: Attractive Financial Model & High FCF Conversion
Attractive Financial Model & High FCF Conversion 4 ($ in billions) TTM Q1 FY2019 Revenue $74.4 $8.1 $0.5 $0.5 $83.5 Operating Income $5.8 $2.7 $(0.1) $(0.0) $8.4 Op. Inc. Margin (%) 7.8% 33.6% N/A N/A 10.0% Net Income $2.7 $2.2 $(0.1) $(0.0) $4.8 Adjusted EBITDA $6.9 $2.9 $(0.1) $(0.0) $9.7 Adj. EBI
Slide 20: Significant Momentum Across Businesses
Significant Momentum Across Businesses Source: Dell Technologies Q1 FY2019 10-Q public filing. 1 See appendix for reconciliation of GAAP to Non-GAAP measures. Note: Financial metrics may not visually foot due to rounding. (Non-GAAP Revenue; $ in billions) Q1 FY2018 Q1 FY2019 % YoY Growth Infrastruct
Slide 21: Strong Balance Sheet and Financial Flexibility
Strong Balance Sheet and Financial Flexibility Source: Dell Technologies Public Filings Note: Core Debt represents the total principal amount of our debt, less: (a) unrestricted subsidiary debt, (b) DFS related debt, and (c) other debt. See appendix for further information regarding capital structur
Slide 22: World-Class, Founder-Led Management Team
World-Class, Founder-Led Management Team 6 Michael S. Dell Chairman of the Board & Chief Executive Officer Jeff Clarke Vice Chairman, Products and Ops. Bill Scannell President, Global Enterprise Sales Dell EMC Tom Sweet CFO Mike Cote CEO SecureWorks Marius Haas President and Chief Commercial Officer
Slide 23: Simplifies Dell Technologies' Capital Structure While Maintaining VMware Independence
Simplifies Dell Technologies’ Capital Structure While Maintaining VMware Independence Remaining committed to a disciplined financial policy as we re-emerge in the public equity markets Disciplined Investment Approach Targeted investment strategy focused on long-term sustained free cash flow growth C
Slide 24: Financial Guidance on Non-GAAP Revenue / Income
Financial Guidance on Non-GAAP Revenue / Income [ ] Non-GAAP Revenue Non-GAAP Operating Income Non-GAAP Net Income Total ISG Growth CSG Growth 10% – 12% 7% – 10% $4.5B – 4.8B $8.1B – 8.4B $86.5B - 88.5B ~5 – 7pts Mainstream Server growth premium vs. market ~8 – 9pts External Storage growth premium v
Slide 25: Illustrative Value Framework
Illustrative Value Framework Source: Public filings, Bloomberg market data as of 29-Jun-2018; reflects fully diluted market capitalization; Pivotal share price of $24.27, Secureworks share price of $12.45 and VMware share price of $146.97. See appendix for reconciliation of GAAP to Non-GAAP measures
Slide 26: Illustrative Implied Valuation Multiple
Illustrative Implied Valuation Multiple Source: Public filings, Bloomberg market data as of 29-Jun-2018; reflects fully diluted market capitalization for publicly traded companies; see appendix for footnotes (1) For illustrative purposes only and assumes that each share of DVMT receives Class C shar
Slide 27: Committed Long-Term Stockholders
Committed Long-Term Stockholders Michael Dell will continue to serve as Chairman and CEO Michael remains a committed stockholder and will beneficially own ~47 – 54% of Dell Technologies on a fully diluted basis Michael’s shares will be subject to 180-day lockup period Silver Lake remains a committed
Slide 28: Michael Dell Closing Thoughts
Michael Dell Closing Thoughts
Slide 29: Appendix: Supplementary Materials
Appendix: Supplementary Materials
Slide 30: Capital Structure
($ in billions) EMC Close 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 Cash & Short-Term Investments $ 15.5 $ 14.9 $ 15.2 $ 18.0 $ 20.3 $ 21.7 Cash & Short-Term Investments (excluding VMware) 6.8 6.0 6.0 6.1 8.3 8.1 Core Secured Debt 35.4 30.7 29.3 29.1 28.7 29.1 Core Unsecured Debt 13.4 11.2 11.2 11.2 11.2 10.7 T
Slide 31: GAAP to Non-GAAP Reconciliation Summary Overview
GAAP to Non-GAAP Reconciliation Summary Overview Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
Slide 32: GAAP to Non-GAAP Reconciliation: Dell Technologies Consolidated
GAAP to Non-GAAP Reconciliation (Cont’d) Dell Technologies Consolidated Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
Slide 33: GAAP to Non-GAAP Reconciliation: Secureworks
GAAP to Non-GAAP Reconciliation (Cont’d) Secureworks Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
Slide 34: GAAP to Non-GAAP Reconciliation: Pivotal
GAAP to Non-GAAP Reconciliation (Cont’d) Pivotal Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
Slide 35: GAAP to Non-GAAP Reconciliation: VMware
GAAP to Non-GAAP Reconciliation (Cont’d) VMware Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
Slide 36: GAAP to Non-GAAP Reconciliation: Derived Core Dell
GAAP to Non-GAAP Reconciliation (Cont’d) Derived “Core Dell” (Excluding Public Subsidiaries) Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
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