Descartes Systems Group Inc. · TSX:DSG
Descartes Systems — The Descartes Systems Group — Investor Presentation (September 2016)
25 slides from Descartes Systems's investor presentation, September 2016
Slide 1: Descartes – Uniting Business in Commerce
Descartes – Uniting Business in Commerce September 2016 : DSGX : DSG Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved.
Slide 2: Safe Harbor
Safe Harbor Certain statements made today and in this presentation including, but not limited to, statements regarding our expectations concerning future revenues, earnings and gross margins, including potential variances from period to period; our expectations regarding the cyclical nature of our b
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 ($US MM) Founded in 1981 in Waterloo, Canada 185 Compelling combination of network, software applications and data content 46 Disciplined M&A strategy with 32 acquisitions since April 2006 FY06 FY16 Highly-recurring Adj. EBITDA ($U
Slide 5: Global Logistics Is Highly Complex
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 Foundation: Descartes Global Logistics Network
The Foundation: Descartes Global Logistics Network™ Cargo Bookings Forwarders / Booking Confirmation Non-Vessel Operating Common Bills of Lading Carriers Ocean Delivery Status Updates Carriers Customs & Security Filings Customs Trade Data Brokers Air Carriers Retailers Ground Carriers Bu
Slide 7: Broad Array of Logistics Management Solutions
Broad Array of Logistics Management Solutions Customs & Routing, Mobile Regulatory Trade Content Transportation Forwarder & & Telematics Compliance Management Broker Subscription based on Enterprise number of countries Subscription or Subscription and per Subscription and per and type of trade licen
Slide 8: Industry Leading Customers
Industry Leading Customers Air Ocean Truck Intermediaries Retailers Manufacturers Distributers 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 Real-time delivery Global Forwarding globe:
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 July 2015 Acquired November 2015 Acquired April 2016 for $80.2MM for $29.5MM for $10.4MM High-growth, premium denied Automates logistics and Germany-based provider of party screening trade data supply chain processes for e- technology solutions f
Slide 13: Highly-Experienced Management Team
Highly-Experienced Management Team J. Scott Pagan Edward J. Ryan Allan Brett President & Chief Operating Officer Chief Executive Officer Chief Financial Officer Years at Descartes: 15 Years at Descartes: 15 Years at Aastra: 18 Ed Gardner Raimond Diederik Kenneth Wood Chris Jones Michael Verhoeve Exe
Slide 14: Financial Overview
Financial Overview The Descartes Systems Group Inc. is a publicly traded company. Nasdaq:DSGX | TSX: DSG Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved.
Slide 15: Financial Highlights for FY16
Financial Highlights for FY16 Consistent Revenue Growth 15% - 10 Year CAGR Highly-Recurring Services Revenue 95% Strong Adjusted EBITDA Margins 33% Significant Operating 89% of Adjusted EBITDA Cash Flow Diversified Revenue 13,000+ Customers, 160+ Countries The Descartes Systems Group Inc. is a publi
Slide 16: Quarterly Operating Results
Quarterly Operating Results Summary of Unaudited Results (US$ millions) % % Q2 Q1 ∆ Q2 ∆ FY17 FY17 Q/Q FY16 YoY Revenue $50.5 $48.9 3% $45.2 12% Service Revenue $48.6 $47.5 2% $42.8 14% Service as a % of Rev. 96% 97% 95% Gross Margin 73% 72% 70% Net Income $5.8 $6.0 (3%) $5.1 14% EPS 0.08 0.08 0.07
Slide 17: Year-to-Date Operating Results
Year-to-Date Operating Results Summary of Unaudited Results (US$ millions) % 1H17 1H16 ∆ Revenue $99.4 $89.6 11% Service Revenue $96.1 $84.5 14% Service as a % of Rev. 97% 94% Gross Margin 72% 70% Net Income $11.8 $10.0 18% Adjusted EBITDA $33.8 $28.8 17% Adjusted EBITDA as a % of Rev. 34% 32% Opera
Slide 18: Strong Revenue Growth
Strong Revenue Growth $US MM 185 171 151 127 114 99 74 66 59 52 46 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 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 61 52 45 38 33 27 20 17 14 11 7 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 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 61 54 52 49 45 43 38 33 30 27 24 19 20 20 17 17 14 11 12 7 7 7 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 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 Operating Cash Flow Margin 33% 29% 29% 28% 27% 22% FY10 FY14 FY16 FY10 FY14 FY16 Proprietary and Copyright of The Descartes Systems Group Inc. All rights reserved. 21
Slide 22: Capital Structure – July 31, 2016
Capital Structure – July 31, 2016 • Fully diluted shares outstanding • 76.5 million common shares • Cash and cash equivalents • $US 69.6 million • Acquisition line of credit • $US 150.0 million ($US 8.1 million drawn) • Mixed-Shelf filed on April 18, 2016 – up to US $500m Proprietary and Copyright o
Slide 23: Baseline Calibration
Baseline Calibration Actual % of Figures per Qtr Baseline Actual Baseline Q3 ’16 Revenue $45.0 $47.4 105% Adj. EBITDA $12.5 $15.8 126% Adj. EBITDA Margin 27.8% 33.3% Q4 ’16 Revenue $45.5 $48.0 105% Adj. EBITDA $12.8 $16.3 127% Adj. EBITDA Margin 28.1% 34.0% Q1’17 Revenue $46.1 $48.9 106% 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
Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues We prepare and release quarterly unaudited and annual audited financial The table below reconciles Adjusted EBITDA and Adjusted EBITDA as a percentage statements prepared in accordance wit
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