West Holdings Corporation · TSE:1407
West — Investor Day (February 2016)
51 slides from West's investor day presentation, Feb 19, 2016
Slide 1: Analyst Day February 19, 2016
Analyst Day February 19, 2016 Exhibit 99.1
Slide 2: Forward Looking Statements and Non-GAAP Financial Information
Forward Looking Statements and Non-GAAP Financial Information This presentation contains forward-looking statements within the meaning of federal securities laws, which are subject to risks and uncertainties. All statements other than statements of historical facts contained in this presentation are
Slide 3: Agenda
Agenda Welcome – Dave Pleiss Overview – Tom Barker Finance – Jan Madsen Unified Communications Services – Scott Etzler Break Safety Services – Ron Beaumont Interactive Services – Skip Hanson Specialized Agent Services / Healthcare / One West – Nancee Berger Wrap Up – Tom Barker Q&A Lunch 3
Slide 4: Today's Themes
Today’s Themes Segment details Stability of conferencing Growth opportunities Strong cash flow generation Ability to use cash to make West more valuable
Slide 5: West Corporation Overview
West Corporation Overview We are a leading provider of technology-driven communication services, serving clients in a variety of industries, including: telecommunications, retail, financial, public safety, education, technology and healthcare. 2015 Revenue $2.28B Headquarters Omaha, NE Employees 10,
Slide 6: Diversity Across Markets, Customers & Geographies
Diversity Across Markets, Customers & Geographies 2015 Segment Performance Strong Growth Dynamics 2015 Sales by Geography Global Scale Selected Customers Leading Customer Base Safety Services Interactive Services Specialized Agent Services Unified Communications Services Healthcare / Pharmaceutical
Slide 7: Acquisition Strategy and Accomplishments
Acquisition Strategy and Accomplishments Overall Acquisition Strategy Faster and more profitable growth Drive higher-value activities to West platforms Increase utilization of infrastructure and core competencies Leverage existing client relationships Add adjacent businesses and new markets Fit with
Slide 8: Acquired Companies are Faster Growing and More Profitable with West
Acquired Companies are Faster Growing and More Profitable with West 2011/2012 Acquisitions (1) TTM Pre-Acquisition 2012 (2) 2013 2014 2015 Revenue from Acquired Companies $190M $210M $230M $260M $280M Revenue Growth NA NA 12% 12% 8% Adj. EBITDA Margin 15% 20% 24% 31% 32% 2014 Acquisitions (1) TTM Pr
Slide 9: Results of Recent Acquisitions
TTM Adj. EBITDA / Net Investment (1,2) Year of Acquisition Aggregate Purchase Price TTM pre-acquisition (pre- synergies) TTM Multiple after 1st full year (3) Beyond first year 2011/2012 $330M Above West’s EV/EBITDA multiple 5.0x EV/EBITDA Multiple continues to decrease 2014 $400M 7.6x Results of Rec
Slide 10: West: we connect. we deliver.
west we connect. we deliver.
Slide 11: Financial Priorities
Financial Priorities Grow Revenue Profitable organic growth Continue to enhance product portfolio Strategic acquisitions Cross-selling to the enterprise Expand Earnings Operating improvement initiatives Deleveraging Drive sustainable Adjusted EPS growth Drive Cash Flow & Manage Capital Structure Imp
Slide 12: Capital Structure
Capital Structure Capital Structure Highlights Balances as of 12/31/15 $MM, except net leverage Cash $182 Total Secured Debt $2,400 Total Debt $3,400 Net Debt $3,218 Weighted average interest rate: 3.88% 70% floating rate debt, majority with LIBOR floor of 75 bps; target 50% floating rate debt with
Slide 13: Dividends and 2016 Capital Allocation Priorities
Dividends 2016 Capital Allocation Priorities Debt pay down to decrease interest expense and drive growth in EPS Opportunistic share buybacks will offset dilution and drive additional growth in EPS Pursue accretive acquisition opportunities to accelerate revenue growth Acquisitions and Share Repurcha
Slide 14: 2016 Guidance
2016 Guidance Revenue $2,276 - $2,346 Adjusted EBITDA* $653 - $679 Adjusted Operating Income $524 - $551 Adjusted EPS – Diluted* $2.93 - $3.09 Cash Flows from Operations* $390 - $420 Capital Expenditures $135 - $160 Free Cash Flow* $235 - $260 * From Continuing Operating Activities 2016 guidance ass
Slide 15: 2016 Estimated Revenue by Segment
2016 Estimated Revenue by Segment Specialized Agent Services Interactive Services Safety Services UCaaS & Telecom Services Conferencing & Collaboration Unified Communications Services segment
Slide 16: 2016 - 2017 Operating Margin Initiatives
2016 - 2017 Operating Margin Initiatives Procure to Pay transformation Consolidation of Enterprise Technology Infrastructure organization Consolidation of Carrier Management organization 2016 guidance assumes 50 to 100 basis point impact to consolidated operating margins
Slide 17: Unified Communications Services
west we connect. we deliver. Unified Communications Services
Slide 18: Unified Communication Services Overview
Unified Communication Services Overview Conferencing and Collaboration Services UCaaS Leading Market Share in Collaboration Services Global Distribution Capabilities (800+ Sales Personnel) Strong Margins and Cash Flow Large, Diversified Client Base Industry-leading Cost Structure Recognized as Indus
Slide 19: Unified Communications Defined
Unified Communications Defined Unified Communications Unified Conferencing & Collaboration Unified Messaging Unified Telephony Unified Communications (UC) integrates everyday communications and collaboration solutions, allowing users to easily be reached and reach others. Web Conference Video Confer
Slide 20: Leader in Conferencing & Collaboration Market
Leader in Conferencing & Collaboration Market Worldwide Audio Conferencing Ranking by Volume Attended Unattended Total Audio West West West Cisco AT&T AT&T BT BT BT Orange PGi PGi Verizon Verizon Verizon Source: Wainhouse Research 4% CAGR $M
Slide 21: UCaaS Market Opportunity
UCaaS Market Opportunity Our focus is on midmarket clients Cloud Seats (000) On-Premise Seats (000) Hosted Seat Count CAGR = 28% On-Premise Seat Count CAGR = -4% Source: Gartner 2016 Worldwide UCaaS Market: $12B Growing to $17B by 2019 Very Large EE 5,000+ Rev > $1B Large EE 1,000-5,000 Rev $250 - $
Slide 22: UCaaS Magic Quadrant – Leader
UCaaS Magic Quadrant – Leader 4 consecutive years Webcasting Magic Quadrant Visionary for 2 consecutive years “West Unified Communications Services has one of the most comprehensive portfolios to support communication by knowledge workers. It sells a variety of products, from modest conferencing to
Slide 23: We Sell Solutions, Not Just Technology
We Sell Solutions, Not Just Technology Offer integrated proprietary and partner services We deploy solutions with our technology Full integration with Skype for Business and Cisco Points of presence globally to offer local support Easy to use/easy to access/very reliable Excellent global quality and
Slide 24: Managing Margins
Managing Margins Average sales price decline poses margin challenges We are maintaining our margins through: Growth in high-margin value added services Leveraging Telecom Services to reduce cost of delivery Revenue pulled through collaboration sales Continuing to utilize IP Cross-selling other servi
Slide 25: Challenges and Opportunities – Conferencing & Collaboration
Challenges and Opportunities – Conferencing & Collaboration Market leader in audio conferencing 25 years of adapting to new technology World’s largest reseller of WebEx Strong industry partnerships with Cisco and others Price pressure on traditional audio conferencing Skype for Business/Office 365 “
Slide 26: Challenges and Opportunities – UCaaS
Challenges and Opportunities – UCaaS Recognized leader for successful deployments of Enterprise UCaaS Strong partnership with Cisco technology and sales team Limited awareness of West brand in marketplace Much of UCaaS market is still with smaller businesses – not our emphasis Skype for Business Wel
Slide 27: Safety Services
Safety Services west we connect. we deliver.
Slide 28: Safety Services Overview
Safety Services Overview Networking & Routing Mobility & VoIP PSAP Solutions and Services Enterprise 9-1-1 Solutions Leading Provider Long-Term Contracts with High Renewal Rates Strong Expansion into New Vertical Markets Leveraging Core Competencies into the Enterprise Market Public Safety Grade Rel
Slide 29: Safety Services Solutions
Safety Services Solutions Location data management to 90% of U.S. wireline market Next Generation routing and data management to 28 million people I3-compliant Emergency Services IP Network (ESInet) Networking and Routing Call handling and geographic information services to PSAPs Positioned well to
Slide 30: Enterprise 9-1-1 Solutions
Enterprise 9-1-1 Solutions West entered the enterprise 9-1-1 market in 2014 through the acquisition of 911 Enable Expands the total addressable market by Safety Services via the growing market for enterprise 9-1-1 capability on all phones (VoIP and TDM) Solution provides E9-1-1 provisioning capabili
Slide 31: Next Generation 9-1-1
Next Generation 9-1-1 Evolution from feature phones to smartphones has increased the 9-1-1 needs for text messaging, multi-media messaging, voice calls with data, and interactive video calls Next Generation 9-1-1 initiatives provide a new communications infrastructure to allow the general public to
Slide 32: Challenges and Opportunities – Safety Services
Challenges and Opportunities – Safety Services Leading technology platform in safety communication and infrastructure services Longstanding relationships with customers and carrier partners Long-term contracts with low customer attrition Solution with ties into the entire public safety ecosystem Inc
Slide 33: Interactive Services
nem y — west . < EX . A) we connect. ON SS we deliver. a = : Interactive Services
Slide 34: Interactive Services Overview
Interactive Services Overview Proactive Notifications & Mobility IVR Self-Service & Routing Leading Provider in Several Verticals Extensible platform, applications and services integration Performance Optimization and Analytics Scale Scope of Services Managed and Professional Services Key Highlights
Slide 35: Verticals We Serve
Verticals We Serve Financial Services, Cable, Telco, Satellite, Travel, Retail Self-service applications, notifications and services for enterprise brands Commercial Notifications, mobile applications and content management for K-12 schools and districts Education Emergency outage and restoration co
Slide 36: Growth Driven by Market Trends
Growth Driven by Market Trends Always-On Approach Personalized Service Segmented & Differentiated Offers Data and Analytics Driven Modular/ Cloud-based Rising Customer Expectations
Slide 37: Interactive Services Investments
Interactive Services Investments $20 Million Data Center Modernization over three years $5+ Million Process/Methodology Advancement and Enterprise Architecture $16 Million CapEx Investments for Customer Experience Management (CXM) over next three years $145 Million Acquisitions to Grow Footprint in
Slide 38: Challenges and Opportunities – Interactive Services
Challenges and Opportunities – Interactive Services Scalability and reliability of platforms, applications and services Integration and flexibility to design, install, and optimize solutions Scope and breadth of services – both products and custom solutions Financial stability and valued enterprise
Slide 39: Specialized Agent Services
a vw Specialized gent Services we connect. we deliver.
Slide 40: Specialized Agent Services Overview
Specialized Agent Services Overview Revenue Generation Healthcare Advocacy Leading Market Share in Healthcare Advocacy Diverse Portfolio of Clients Sales Productivity Enhancements Key Highlights 2015 Revenue: $277M Operating Income: $30M 10.9% Operating Income Margin Slide 55
Slide 41: Revenue Generation Services
Revenue Generation Services Leading providers of business-to-business sales and account management services Dedicated inside sales associates support or replace field sales Higher value, higher complexity sales across diverse product portfolios and decision making processes Primary vertical expertis
Slide 42: Challenges and Opportunities – Revenue Generation Services
Challenges and Opportunities – Revenue Generation Services Market leading experience across key verticals Improving sales productivity through innovation and differentiation Tenured leadership team by market segment Leveraging technology to improve sales effectiveness and efficiencies In-house opera
Slide 43: Healthcare Advocacy
Healthcare Advocacy Pioneer and leading provider in Healthcare Advocacy 10,000+ clients reaching over 40 million members Proprietary technology and data analytics Suite of complementary solutions Navigate complex healthcare and insurance-related issues Encourage better health and well-being Improve
Slide 44: Challenges and Opportunities – Healthcare Advocacy
Challenges and Opportunities – Healthcare Advocacy Positioned to capitalize on trends in healthcare Highly-recurring revenue (~90%) with low attrition Very strong competitive position – leading provider with unique service offering and strong value proposition Comprehensive offering to more fully en
Slide 45: Population Health Management
Population Health Management Health Advocacy Cost Management The global PHM market is estimated to reach $31B in 2020 and will grow at a ~20% CAGR between 2015 and 2020 (2) Healthcare Advocacy, EAP and Corporate Wellness market is estimated to be $15B (2) Based on estimates of payment error rates, t
Slide 46: Full Spectrum of Integrated Healthcare Solutions
Transition Care Support RX Refill Notification Appointment Reminders Cost Containment Wellness Coaching Access Center Modernization Health Advocacy Medication Adherence Chronic Care Support Data Analytics Routine Care Management Full Spectrum of Integrated Healthcare Solutions We serve a wide range
Slide 47: $300 Million in Healthcare Revenue
MILLION Dollars in healthcare revenue excluding on-demand conferencing 300 PHARMACY PAYER MANUFACTURER PROVIDER INTERMEDIARY EMPLOYER [Marketing graphics omitted]
Slide 48: We Are Transforming
We Are Transforming: Our Culture Our Leadership Our Planning Our Process Our Integration One West
Slide 49: Sum of the Parts Valuation Metrics
Sum of the Parts Valuation Metrics Segment/Business Metric Multiple Basis for Multiple Conferencing Trailing EBITDA 9x-10x PGi sold for 9.5x trailing EBITDA (12/2015) UCaaS Forward Revenue 2x–4x EGHT, RNG, recent M&A Telecom Services Forward EBITDA 4x-5x IQNT, GTT trading at 5-6x forward EBITDA Safe
Slide 50: Key Investment Highlights
Key Investment Highlights At the end of 2016: Half of revenue from conferencing business Stable, very profitable, strong cash flow Half of revenue from diversified fast growing businesses Free Cash Flow guidance of $235-265M Disciplined capital allocation to add value Acquisitions support revenue gr
Slide 51: Thank you
Thank you