Cimpress Plc · NASDAQ:CMPR
Cimpress — Vistaprint — Investor Day (August 2014)
108 slides from Cimpress's investor day presentation, Aug 8, 2014
Slide 1: Vistaprint N.V. Investor Day 2014
Vistaprint N.V. Investor Day 2014 Webcast will begin at 8:30am ET August 6, 2014 Investor Day 2014 Exhibit 99.1
Slide 2: Welcome
Welcome Meredith Burns Vice President, Investor Relations Investor Day 2014
Slide 3: Welcome: Presentations
Welcome Presentations 10:45am Robert Keane, President and CEO _Introduction and Overview Trynka Shineman, EVP and Vistaprint Brand President of Vistaprint Business Unit Don Nelson, EVP and President of | Manufacturing & Supply Software and Manufacturing Platform Chain Ernst Teunissen, EVP and CFO Lo
Slide 4: Housekeeping Items
Housekeeping Items Restrooms are located outside the room and to the right Please use the rear doors when entering and exiting the room Please silence all mobile devices
Slide 5: Safe Harbor Statement
Safe Harbor Statement Today’s presentations contain statements about our future expectations, plans and prospects of our business that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, including but not limite
Slide 6: Introduction & Overview
Introduction & Overview Robert Keane President and Chief Executive Officer Investor Day 2014
Slide 7: Our Focus
What we are passionate about Where we can be the best in the world What drives our economic engine Our Focus What we are passionate about Where we can be the best in the world What drives our economic engine
Slide 8: What we are passionate about
What we are passionate about Empowering people to make an impression Empowering people to make an impression
Slide 9: Where we can be the best in the world
Where we can be the best in the world Where we can be the best in the world Computer-Integrated Manufacturing Computer-Integrated Manufacturing
Slide 10: What drives our economic engine
Vistaprint Volume Low Volume Markets High Volume Markets What drives our economic engine Large scale in small quantities
Slide 11: Our Focus: Mass Customization
Our Focus: Mass Customization
Slide 12: Mass customization definition
12 Mass customization is about producing, with the reliability , quality and affordability of mass production , small individual orders where each and every one embodies the personal relevance inherent to customized physical products.
Slide 13: Focus on Scale Advantage
Focus on Scale Advantage Focus on Scale Advantage
Slide 14: Shared Computer-Integrated Manufacturing Platform
Shared Computer-Integrated Manufacturing Platform New Geographies
Slide 15: Driving Financial Returns
Driving Financial Returns • Strive to maximize intrinsic value per share (i.e. DCF/share) o Present value of free cash flow per share over the long-term, not for the near-term or for a specific point in time • We seek to achieve this through thoughtful combination of revenue growth, margin expansion
Slide 16: What You Will Hear Today
What You Will Hear Today Steadfast in our move to reposition the Vistaprint brand Even though it continues to create revenue headwinds, we believe it is important to long-term value creation Manufacturing investments are driving significant value with improvements to cost, productivity, quality and
Slide 17: Investor Day 2014
Investor Day 2014
Slide 18: Vistaprint Brand
Vistaprint Brand Trynka Shineman President, Vistaprint Business Unit Investor Day 2014
Slide 19: Vistaprint Brand Overview
Context for our performance and brand evolution FY 2014 investment examples Why we are confident Vistaprint Brand Overview
Slide 20: Opportunity in the $30B microbusiness market
Price Primary Higher Expectations Locally Focused A great deal of opportunity to gain share in the $30B microbusiness market* * All segment views are illustrative only; not a precise view of market sizes
Slide 21: Re-centering our target segments
Price Primary (PP) Micro Businesses Higher Expectations (HE) Micro Businesses Locally Focused Micro Businesses Re-centering our target, widening our bulls-eye
Slide 22: PP and HE micro business comparison
PP-centric Common HE-centric HEs tend to market themselves more, but many of the qualities of PP and HE are similar Demographics of Business Products Purchased Purchase Frequency/ Channel More Part-time Businesses A sub-segment only buys business cards 1-3 per year Online Common in business tenure,
Slide 23: Expanded focus from PP to HE
PP-centric Common HE-centric We’ve expanded our focus from PP to also include HE; significant commonalities Customer Comms • Promotions/ Deals • Low quantities • Basic products • Relevant marketing • Basic customer support • e-commerce standard site experience • Design Help • Great value • Category
Slide 24: Brand evolution video
Brand evolution video
Slide 25: Vistaprint Brand Overview
Context for our performance and brand evolution FY 2014 investment examples Why we are confident Vistaprint Brand Overview
Slide 26: Improving every aspect of our customer experience
Improving every aspect of our customer experience Customer Communications End-to-End Experience (Site and Service) Product offering Pricing
Slide 27: Communications Evolution: Personalized Content
Product in Cart Replenishment Browsed Communications Evolution: Personalized Content Showing relevant products in our mass email communications proves significant increases in $/customer and purchase rate Lifts $/customer: 5% Purchase Rate: 4% Dynamically rendering the products and designs in a cust
Slide 28: Communications Evolution: More Brand-Forward Site
Communications Evolution: More Brand-Forward Site
Slide 29: Communications Evolution: More Brand-Forward Site
Communications Evolution: More Brand-Forward Site
Slide 30: Customers want and need Design Help
They lack the skill, both artistic and technical, and time to do it themselves “If I have to do it myself, I’m not a pro and I don’t know how to do the technical things like uploads and layout” They want a customized design, even with DIY templates “I want the design to be unique to me…. I see even
Slide 31: Design Services: Examples across the continuum
DIY Templates and Build a Design DIWH- Recreation Services DIFY- Custom Design Design Services: Examples across the continuum
Slide 32: Website Experience: New Design Studio
Smart guides for easy alignment Tablet-friendly user interface Error detection Access to support Website Experience: New Design Studio
Slide 33: Website Experience: Product Rendering
Spot Gloss Animation Dynamic Image Preview Standard Product Preview Website Experience: Product Rendering Our new rendering technology allows customers to see their personalized product in a real-life context. We measured a significant conversion rate increase and reduced design complaint rates with
Slide 34: Recreation: Snap 2-3
a Recreation: Snap 2-3 Confirm A +1 Business Day Re-create Vistaprint
Slide 35: Product Offering Evolution: Delivered Quality
Vistaprint Controlled Customer Design Errors Product Offering Evolution: Delivered Quality Planned initiatives to improve Delivered Quality: 1. Pre-printing design checks 2. DIY error detection Only half of customer dissatisfaction with quality is Vistaprint controllable Unknown
Slide 36: Expanded assortment to increase category credibility
To credible assortment Product Offering Evolution: Expanded assortment to increase category credibility From a limited selection per category
Slide 37: Digital-Physical Innovation
Product Offering Evolution: Digital -Physical Innovation Facebook Postcard Distribution Use your postcard design to generate a matching Facebook ad Turn nearby Facebook users into customers Quick and easy way to trial social media marketing Strong take rate during vapor testing indicated customer de
Slide 38: Pricing Evolution: Rationale for Reinvents
Pricing Evolution: Rationale for “ Reinvents” • Customers did not like our high shipping prices ; we weren’t e-commerce standard with our shipping as a % of order value • Too proactive up- and cross-selling hurt customer trust and satisfaction , especially charging for digital items like image uploa
Slide 39: Pricing Evolution: maintaining PP leadership
Pricing Evolution: maintaining PP leadership Introducing lower quantities for our lead offer at a lower face price
Slide 40: Pricing Evolution: balancing segment needs
Pricing Evolution: balancing segment needs Targeting HE vs. PP with different quantities/price points to increase relevance
Slide 41: Vistaprint Brand Overview
Context for our performance and brand evolution FY 2014 investment examples Why we are confident Vistaprint Brand Overview
Slide 42: Promising trends in profit per customer
Promising trends in profit per customer Improved spend leverage Improvements in customer satisfaction Better retention Canada’s growth has been driven by a number of KPIs, some of which we’ re starting to see in other, reinvented countries
Slide 43: Signs of Progress - Canada
Better retention Improved spend leverage Improvements in customer satisfaction Promising trends in profit per customer Signs of Progress - Canada YoY change
Slide 44: Signs of Progress - UK
Promising trends in profit per customer Improvements in customer satisfaction Improvements in customer satisfaction Promising trends in profit per customer Signs of Progress - UK
Slide 45: Signs of Progress - U.S. and Germany
Improvements in customer satisfaction Signs of Progress – U.S. and Germany
Slide 46: Why do pricing reinvents take so long to improve repeat rates?
Why do the Pricing Reinvents take so long to see improvements to Repeat Rates?
Slide 47: What we expect to see long term
47 • Higher quality customers • More efficient advertising • Stronger brand loyalty What we expect to see long term with this strategy
Slide 48: Real, Unscripted Customers
Real, Unscripted Customers
Slide 49: Investor Day 2014
Investor Day 2014
Slide 50: Manufacturing and Supply Chain
Manufacturing and Supply Chain (M+S) Don Nelson President, Software and Manufacturing Platform Investor Day 2014
Slide 51: Manufacturing + Supply Chain Overview
Current State of M+S o Our network and capabilities o Scale advantage through operational excellence • Superior quality and conformance • Low COGS Changes to support our strategy o M+S and the Orion fulfillment system o Expanded selection o Commitment to conformance o Transferring scale advantage th
Slide 52: Manufacturing + Supply Chain: Who we are
Manufacturing & Supply Chain Manufacturing operations (COGS) >1,000 FTE Manufacturing + SC capabilities (OPEX ) >160 FTE Manufacturing + Supply Chain: Who we are • M+S is a unit deeply committed to providing distinctive speed and value to our customers while operating with best-in-class internal cos
Slide 53: M+S global delivery organization
Prod. plant Windsor, CA >500,000 ft 2 Software Development Lexington, MA Prod. plant Ypenburg, NL Albumprinter > 64,000 ft2 Prod. plant Venlo, NL >320,000 ft2 Design/Tech Center Winterthur, CH >160 FTE Prod. Plant Treviso, IT Pixartprinting 170,000 ft2 Asia Sourcing Hong Kong Prod. plant Bhiwandi, I
Slide 54: Manufacturing: Capturing scale advantage
Manufacturing – Capturing scale advantage • M+S is concluding a 3-year program that greatly improved our operational capabilities and performance • This has reinforced our unique competitive advantage of combining scale and operational excellence in a mass customization environment • As a result, we
Slide 55: Operational improvements in customer-facing areas
Improved speed, quality, consistency, and efficiency assure excellent conformance to customer expectations at low cost -72% -38% -62% +48% We have driven operational improvements in many key customer facing areas Quality Complaints Production Throughput Time Late Deliveries Direct Labor Productivity
Slide 56: Combining scale advantage in ways others cannot match
Combining scale advantage in ways others cannot match >5.5 billion business cards, 4 million signs, 5.6 million garments per year >90,000 orders shipped per average day with a focus on lean manufacturing >$1.2 billion output/yr from >1 million ft of plant space, with 24 hour operation Very little di
Slide 57: Scale impact on COGS and margin
Savings are deployed to fund investments in quality, offset inflation, or increase gross margin This scale and performance optimization has a material impact on COGS and margin • ROIC: increasing levels of volume and revenue flowing across equipment and facilities with 24 hours of daily production •
Slide 58: Next Wave: Product Diversity
Today we offer 8 colors of Men’s embroidered polo shirts. In the future, we want much higher selection across multiple product categories. Next Wave: Product Diversity • Even as we offer costs well below competitors • 3 to 5 year project similar in scope and ambition as just finished • Includes: o P
Slide 59: Manufacturing + Supply Chain Overview
Current State of M+S o Our network and capabilities o Scale advantage through operational excellence • Superior quality and conformance • Low COGS Changes to support our strategy o M+S and the Orion fulfillment system o Expanded selection o Commitment to conformance o Transferring scale advantage th
Slide 60: M+S is now part of Orion platform
Shared Computer-Integrated Manufacturing Platform New Geographies M+S is now part of Orion, a platform that is creating scale advantage through selection, cost, and conformance • Multiple customer facing brands all leveraging mass customization through shared computer integrated manufacturing platfo
Slide 61: Why this is difficult
Why this is difficult • SKU management without inventory proliferation • Data systems to manage massive increase in substrates • Off-the-shelf equipment either o Small job shop – unreliable, high unit costs o Mass volume – high set up costs not economic for small order volumes • We want to do it dif
Slide 62: Platform to move toward long tail selection
Conceptual Flexible Automation Product & delivery platform Product and Delivery Platform Outsourcing, potentially in-sourced decoration for low quantity … Platform to move toward a “long tail” selection Product line (category) … … … Traditional Vistaprint Fringe products Not offered
Slide 63: Dramatically increasing SKU selection
~600 ~1800 ~3300 ~5700 Dramatically increasing SKU selection Vistaprint SKUs, start of FY14 SKUs of acquired companies in FY14 SKUs of apparel, soft goods and other products planned in FY15 (in Beta phase) Total potential SKUs M+S is increasing selection by >800% with Orion, and we plan to increase
Slide 64: Example: Signage from acquired companies
Before After We will materially expand our signage offering for the Vistaprint brand starting in H2 FY15 with knowledge from People & Print Group and Pixartprinting Example: Signage from acquired companies • 10 – 15 banner sizes • New substrates • New features like reinforced grommets, roll-up banne
Slide 65: Radical increase to apparel & soft goods selection
Example: radical increase to apparel & soft goods selection
Slide 66: Apparel and soft goods in quantities of one
By Q3 of FY15 we plan to make a large portion of the (currently beta) product line available starting at QUANTITIES OF ONE Traditionally high file processing and setup costs mean that the market does not effectively serve small customized quantities – therefore most logo apparel and soft goods produ
Slide 67: Large Scale in Small Quantities
Vistaprint (currently in development) Traditional resellers of apparel & soft goods importers and decorators Asian and other LCC suppliers to apparel & soft goods importers Large Scale in Small Quantities Quantity of custom decorated items in a given order Low Volume High Volume
Slide 68: Improving conformance while increasing selection
As we further develop our unique approach to mass customization, we are building the capability to improve conformance while simultaneously increasing selection The conformance lever: we will have great consistency while expanding selection Customization & Selection Level VPNV today* Our planned tra
Slide 69: Leveraging scale advantage as selection expands
No cost advantage Limited cost advantage Significant cost advantage Great cost advantage We leverage our scale advantage & capabilities as we greatly expand selection Level of advantage when offering high selection levels Automated file preparation software Specialized lean direct labor optimization
Slide 70: Transferring capabilities and scale advantages to acquisitions
Orion makes these advantages modular and easy to transfer. Example: Albumprinter achieved post-acquisition: • Reduction in cost of purchased materials • Increased labor productivity • Lower production throughput time Unique Capabilities brought by VPNV: • Proprietary software • Patented scheduling a
Slide 71: Summary
Summary 71 • Established history of technology-enabled operational advantage has led to improvements in quality, cost, reliability and throughput time • Proactively investing to further traditional advantages • Building new capabilities that likewise break traditional constraints of low-volume produ
Slide 72: Investor Day 2014
Investor Day 2014
Slide 73: Long-Term Financial Strategy
Long-Term Financial Strategy Ernst Teunissen EVP and Chief Financial Officer Investor Day 2014
Slide 74: Long-Term Financial Strategy
o o Long -Term Financial Strategy • Maximize long-term intrinsic value per share (DCF/share) • In our core business return to pre-FY12 margins, while continuing to invest for long-term health and growth • Use cash flow and balance sheet to drive DCF/share beyond core business: Synergistic M&A Share
Slide 75: Still early in our journey
Still early in our journey FY15 GAAP and non-GAAP EPS guidance as of July 30, 2014 Please see non-GAAP reconciliation at the end of this deck
Slide 76: Increasing margins in FY13-15
After two years of investment in advertising and opex, increasing margins in FY13 -15 *Midpoint Net Income margin guidance for fiscal year 2015 provided on July 30,
Slide 77: Margins improving most in advertising and G&A
Margins improving most in advertising and G&A P&L line items as a percent of revenue
Slide 78: Select P&L line items: FY2014 actual and FY2015 guidance
Select P&L Line Items (as % of revenue) FY2014 Actual FY2015 Midpoint Guidance Comments: Expectations excluding Recent Acquisitions* Comments: Expected Impact of Recent Acquisitions* Expect to continue margin expansion in FY15 Gross Margin 64.5% ~60% - 62% Increased manufacturing productivity, offse
Slide 79: Significant investments: Vistaprint brand
Significant investments: Vistaprint brand • Continued upgrades to product substrates, formats and shipping options • Pricing and marketing changes in remaining European markets • Opportunity to increase advertising as a percent of revenue for Vistaprint brand • Design service expansions
Slide 80: Significant investment: new capabilities
New Product Capabilities Platform to Support Multiple Front Ends New Geographies Significant investment: new capabilities Additional investments beyond those we are making to reposition the “Vistaprint” brand.
Slide 81: M&A Approach
M&A Approach • As discussed for years, scale matters in our business model o Lower unit costs (supply chain, production focus & automation) o Expansion of product breadth and delivery options o Quality and engineering systems • Increasing interest in pursuing M&A to accelerate scale o Brands that ar
Slide 82: Share repurchases as a driver of FCF per share
We have reduced our share count by 26% since the end of FY10; we compare any allocation of capital for M&A or the business against additional share repurchases FY10 FY11 FY12 FY13 FY14 Share Repurchases can be a powerful driver of FCF per share Shares outstanding (MM) 43.9 43.1 34.1 32.8 32.3 Shares
Slide 83: Sources and Uses of Capital
Sources and Uses of Capital * Net debt defined as bank debt less cash and cash equivalents
Slide 84: Financial Leverage
Financial Leverage • June 30, 2014 bank debt of $448M o Committed credit facility $794M ($640M revolver, $154M term loan A) o Floating rate debt at 1.81% (2.06% including swaps) o Leverage (Debt/TTM EBITDA) at 2.5x pro forma* • Total leverage covenant currently 3.25x o Q1 FY15 additional borrowing c
Slide 85: Capital Structure Philosophy and Outlook
Capital Structure Philosophy and Outlook • Given cost of borrowing we believe medium/long-term leverage levels as allowed in credit facility are attractive assuming we continue to find high-returning opportunities to invest in o If opportunities are not there, FCF generated will naturally decrease o
Slide 86: Summary
Summary 86 • We continue to have multiple levers for driving long-term profit and cash flow growth • We have demonstrated profit margin and FCF growth and expect to continue this focus over a multi-year period • We believe the investment options we have created by leveraging our balance sheet are cr
Slide 87: Investor Day 2014
Investor Day 2014
Slide 88: Closing Remarks
Closing Remarks Robert Keane President and Chief Executive Officer Investor Day 2014
Slide 89: Vistaprint and acquired company brands
le pixartprinting §— @Aeempxinier Vistaprint PEOPLE&PRINT? webs GROUP
Slide 90: Our Focus: Mass Customization
Our Focus: Mass Customization
Slide 91: Reasons to change the name of the corporate parent company
Compelling reasons to change the name of the corporate parent company Vistaprint means different things to different stakeholders • Increasing divergence between Vistaprint the brand and customer value proposition and Vistaprint the corporation • Strategy to preserve the differentiation and independ
Slide 92: Vistaprint
Vistaprint
Slide 93: Cimpress
cimpress
Slide 94: Next Steps
Next Steps • This is a corporate name change, not a change to any customer-facing brands • As a Dutch company, a name change requires shareholder approval • This proposal will be on the ballot for our 2014 Annual Meeting in November • We would expect the name change to take effect along with a corre
Slide 95: Our Big Picture
Our Big Picture Steadfast in our belief that we can drive excellent long-term returns by consolidating our industry • Vistaprint brand • Thoughtful M&A • Shared CIM platform We are committed to growing DCF per share 95
Slide 96: Investor Day 2014
Investor Day 2014
Slide 97: Non-GAAP Reconciliation and Reference Information
Non-GAAP Reconciliation and Reference Information Investor Day 2014
Slide 98: About non-GAAP financial measures
About non-GAAP financial measures To supplement Vistaprint’s consolidated financial statements presented in accordance with U.S. generally accepted accounting principles, or GAAP, Vistaprint has used the following measures defined as non- GAAP financial measures by Securities and Exchange Commission
Slide 99: Non-GAAP Measure Definition
Non-GAAP Measure Definition Non-GAAP Financial Measures Definitions Non-GAAP Net Income/EPS The items excluded from the non-GAAP adjusted net income measurements are share-based compensation expense and its related tax effect, amortization of acquisition-related intangibles, tax charges related to t
Slide 100: Reconciliation: GAAP to Non-GAAP Net Income
FY 2006 FY 2007 FY 2008 FY 2009 FY2010 FY2011 FY2012 FY2013 FY2014 Reconciliation: GAAP to Non-GAAP Results Net Income (Loss) – Annual ($ in thousands) GAAP Net Income $19,234 $27,143 $39,831 $55,686 $67,741 $82,109 $43,994 $29,435 $43,696 Share-based compensation and related tax effect $4,850 $8,76
Slide 101: Reconciliation: GAAP to Non-GAAP Diluted EPS
FY 2006 FY 2007 FY 2008 FY 2009 FY2010 FY2011 FY2012 FY2013 FY2014 Reconciliation: GAAP to Non-GAAP Results Diluted Earnings Per Share - Annual GAAP Net Income per share $0.45 $0.60 $0.87 $1.25 $1.49 $1.83 $1.13 $0.85 $1.28 Share-based Compensation and related tax effect per share $0.09 $0.18 $0.31
Slide 102: Reconciliation: Free Cash Flow
FY 2006 FY 2007 FY 2008 FY 2009 FY2010 FY2011 FY2012 FY2013 FY2014 Reconciliation: GAAP to Non-GAAP Results Free Cash Flow- Annual ($ in thousands, except share and per share amounts and as noted) Net cash provided by operating activities $34,637 $54,240 $ 87,731 $120,051 $153,701 $162,634 $140,641
Slide 103: Constant-Currency Revenue Growth: Asia-Pacific and Europe
ASIA-PACIFIC Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 EUROPE Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Reconciliation: Constant-Currency/ex. Acquisition Revenue Growth Rates Quarterly Reporte
Slide 104: Constant-Currency Revenue Growth: North America and Total
NORTH AMERICA Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 TOTAL COMPANY Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Reconciliation: Constant-Currency/ex. Acquisition Revenue Growth Rates Quarterly
Slide 105: Constant-Currency Revenue Growth Rates: Annual
FY2010 FY2011 FY2012 FY2013 FY2014 Reconciliation: Constant-Currency /ex. Acquisition Revenue Growth Rates Annual Reported revenue growth 30% 22% 25% 14% 9% Currency impact (favorable)/unfavorable (2%) - 0% 2% (1%) Revenue growth in constant currency 28% 22% 25% 16% 8% Impact of FY14 acquisitions to
Slide 106: Constant-Currency Revenue Growth by Region
FY2014 North America Europe Asia-Pacific Total Company Reported revenue growth 9% 11% (4%) 9% Currency impact (favorable)/unfavorable - (4%) 10% (1%) Revenue growth in constant currency 9% 7% 6% 8% Impact of FY14 acquisitions to growth in constant currency (favorable)/unfavorable - (10%) - (4%) Reve
Slide 107: Revenue and EPS Guidance
Consolidate d Revenue and EPS Guidance* (as of July 30, 2014) The Company is providing the following assumptions to facilitate non-GAAP adjusted net income per diluted share comparisons that exclude share-based compensation related expenses, amortization of acquired intangible assets, tax charges re
Slide 108: Capital Expenditures Guidance
Consolidate d Capital Expenditures Guidance (as of July 30, 2014) Expressed as percent of revenue Actuals Guidance $63M $63M $76M $100M $80M $101M $37M $46M $79M $72M