Information Services Group, Inc. · NASDAQ:III
Information Services — Deutsche Bank Small and Mid-Cap Growth Conference 2011
26 slides from Information Services's conference presentation, Feb 15, 2011
Slide 1: Deutsche Bank Small and Mid-Cap Growth Conference
NASDAQ: III Deutsche Bank Small and Mid-Cap Growth Conference February 15, 2011 Michael P. Connors, Chairman & CEO David E. Berger, Executive Vice President & CFO
Slide 2: Forward-Looking Statement
Forward-Looking Statement This communication contains “forward-looking statements” which represent the current expectations and beliefs of management of ISG concerning future events and their potential effects. Statements contained herein including words such as “anticipate,” “believe,” “contemplate
Slide 3: Agenda
Agenda ISG Overview and Recent Developments TPI + Compass + STA Investment Thesis Questions and Answers
Slide 4: ISG Overview
ISG Overview Year Founded July 2006 in Stamford, CT IPO IPO in January 2007 Deals TPI, November 2007 Compass, January 2011 STA, February 2011 Global Presence Operate in 21 countries Employees Nearly 700 LTM Revenue & EBITDA $135 million Revenue $17 million adj. EBITDA ‘To be a high-growth, leading p
Slide 5: Recent Developments
Recent Developments Responded quickly to the sharp decline in demand for advisory services and TPI revenue Reduced headcount and cut operating expenses by $30 million Achieved LTM EBITDA margin of 13% on $40 million lower revenue Penetrated new industries by investing in government, healthcare and f
Slide 6: TPI + Compass + STA
TPI + Compass + STA Unites sourcing insight with performance improvement data and analytics Can deliver deeper industry expertise and leverage global footprint Share a heritage of providing independent, objective fact-driven insight Increases penetration of public sector industry vertical Proprietar
Slide 7: Investment Thesis
Investment Thesis Advisory, Analytics and Sourcing Markets Dynamic, Global and Growing Own Market Share Leaders That Have Scale, Depth, Insight, Independence and Phenomenal Client Relationships Managed Successfully Through the Downturn and Positioned for the Recovery Developing Acquisition Opportuni
Slide 8: Favorable Industry Dynamics
Favorable Industry Dynamics Financial Post-recession need to reduce operating costs, increase cost variability, minimize capex Organizational Quest for capability enhancements that improve service delivery models and re-skill for the future Need to replace aging public sector workforce Competitive I
Slide 9: Transition Creates Opportunity
Transition Creates Opportunity Private & Public Sector Benefits Advisory Relationships Cost & Operational Process Efficiency Multi-Initiative Partnerships Technology-Driven Innovation Project Delivery Workforce Alternatives
Slide 10: TPI – The Platform Company
TPI – The Platform Company Year Founded 1989 in Houston Presence 15 Countries Employees ~ 450 Professionals Clients 300+ Clients Global 2K and Gov’t LTM Revenue $135 million ‘The world’s leading sourcing data and advisory firm’ Overview Clients and Awards
Slide 11: TPI Operating Model
TPI Operating Model From 1996 to 2008, TPI recorded a 28% CAGR; during the recession revenue declined Key metrics have stabilized, with bill rates averaging more than $300/hr. and utilization rates of about 70% Revenue stabilized in 2010, with re-acceleration in 2H11 due to: Gradual rebound in the s
Slide 12: Compass Overview
Compass Overview Year Founded 1980 in Sweden Presence 16 Countries Employees ~ 180 Professionals Clients 250+ Clients Global 2K and Gov’t 2011 est. Revenue $35-36 million ‘The premier independent provider of business & IT benchmarking, performance improvement, data and analytics services’ Overview C
Slide 13: Compass Operating Model
Compass Operating Model Prior to slowdown, Compass grew revenue in the double-digits While revenue declined during the recession, growth is expected to re-accelerate to mid-single digits in 2011 due to: Increased demand for benchmarking services Growth in Asia Pacific, U.S., Nordics Revenue synergie
Slide 14: Compass Synergies
Compass Synergies Unites sourcing insight with a content database of best-performance and industry-specific assets Complementary industry focus (IT, Insurance, Mortgage Processing and Corporate Benefits) fits with the TPI Manufacturing and Financial Services verticals and STA Consulting public-secto
Slide 15: STA Consulting Overview
STA Consulting Overview Year Founded 1997 in Austin, TX Presence U.S. Employees ~ 40 professionals Clients Public Sector 2011 est. Revenue $14-15 million ‘A premier independent technology advisor serving the public sector’ Overview Clients and Awards
Slide 16: STA Consulting Operating Model
STA Consulting Operating Model STA has delivered double-digit top line growth despite resource constraints Bill rates average ~$175/hr., utilization rates of more than 80% and historically low turnover While revenue growth is expected to slow in 2011 due to the completion of a large client project,
Slide 17: STA Consulting Synergies
STA Consulting Synergies STA Consulting immediately strengthens the public sector vertical, a key focus for ISG Highly complementary geographic footprint STA Consulting can develop and grow its advisory practice into the commercial sector through TPI and Compass Compass can capture the STA Consultin
Slide 18: The Opportunity
The Opportunity Favorable Industry Dynamics Three Great Go-to-Market Brands Offering Unique Characteristics to Penetrate Industry Substantial Top Line Growth Potential Groundwork Laid for Very Strong Second Half
Slide 19: Managing through the Cycle
Took $30 million in costs out of the business Delivered 13% LTM adj. EBITDA margin Invested $10 million in new services, people and regions Managing through the Cycle Managed the Downturn Positioned for a Recovery Integrate and grow recently closed acquisitions Expand new products and services and g
Slide 20: Acquisition Strategy
Acquisition Strategy Participated in dozens of discussions with potential partners over the last two years Remain highly selective, seeking complementary firms with proprietary data or new capabilities that have strong brands and are well-known to us and are attractively priced Long lead times, but
Slide 21: Achievable Financial Goals
Achievable Financial Goals 2011 targeting revenue at ~$180 million and adjusted EBITDA margin at ~12-13% Focus on integrating acquisitions and realizing revenue and cost synergies Free cash flow will be used to pay down debt or repurchase shares absent a deal Longer-term, target operating businesses
Slide 22: Revenue and EBITDA Set To Grow
Revenue and EBITDA Set To Grow $MM 173 175 133 135 180 20 29 20 17 Revenue 2007 2008 2009 LTM 9/30 TGT 2011 EBITDA Target 2011 ~ 12 - 13% margin
Slide 23: Revenues: Geographic Split
Revenues: Geographic Split Americas EMEA Asia Pacific Americas EMEA Asia Pacific FY 2007 FY 2011 Estimate 6% 48% 46% 6% 66% 28% Revenues outside Americas will grow to 50%, up from 34%
Slide 24: Leverage
Leverage $95 $70 $25 million in debt repaid $MM 2007 Sept. 2010 Year Debt
Slide 25: Investment Thesis
Investment Thesis Sourcing and Advisory Industry is Dynamic, Global and Growing Own Market Share Leaders That Have Scale, Depth, Insight, Independence and Phenomenal Client Relationships Managed Successfully Through the Downturn and Positioned for the Recovery Developing Acquisition Opportunities No
Slide 26: Information Services Group
* ISG ] INFORMATION SERVICES GROUP NASDAQ: III
Information Services Group — Deutsche Bank Small and Mid-Cap Growth Conference 2011 on 6ix