Transcript Document
Trusts in Focus
TD Newcrest Conference
September 25, 2007
The DATA Group Income Fund
Corporate Overview
David Odell President & Chief Executive Officer
THE DATA GROUP INCOME FUND
Forward-Looking Statements
Certain statements in this document are “forward-looking statements”, which reflect management’s current beliefs and expectations regarding the Fund and The DATA Group’s future growth, results of operations, performance, and business prospects and opportunities. Forward-looking statements involve risks and uncertainties related to factors that could cause actual results to differ materially from anticipated results, including those factors discussed in the Fund’s periodic filings with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described in this document. Unless required by applicable securities law, the Fund does not intend and does not assume any obligation to update these forward-looking statements.
THE DATA GROUP INCOME FUND
Solutions Beyond Print
• Began trading December 21, 2004 under symbol DGI.UN
• In business since 1959 • 23.5 million units outstanding and $35.0 million in convertible debentures • Annualized distribution of $1.1587 per unit
State-of-the-Art Manufacturing, Warehousing and Distribution
Leading provider of total document management solutions
THE DATA GROUP INCOME FUND
Diversified Long-Term Blue-Chip Customer Base
• 11,800 customers • Majority of Top 25 >10 year relationships
THE DATA GROUP INCOME FUND
Focus on Related Segments
Magazines Canadian Printing Industry Packaging
Business Documents Financial Printing Marketing & Promotion
Newspapers
Event Tickets
Book Publishing Newspaper Inserts Greeting Cards
Stationery Labels
THE DATA GROUP INCOME FUND
Canada’s Leader in Total Document Management Solutions
Organize Manage Migrate
THE DATA GROUP INCOME FUND
Broad High Value-Added Products and Services
• • • • • • • • • • • • •
Total Document Management Services Event Tickets Print-On-Demand Forms Direct Mail Printed Products Stock Tab Annual Reports Marketing & Promotions Materials Labels Transportation Documents Transactional Documents Lottery Gift Cards THE DATA GROUP INCOME FUND
Update – Relizon Acquisition
• On August 31, 2006 acquired Relizon Canada Inc.
• Relizon Canada Inc. was our largest and best competitor • Purchase price of $141.0 million • $112.0 million in cash, issued 2.9 million units to the vendor • Public offering of 5.650 million units at $9.50 each and $35.0 million 6.75% convertible debentures • Increased credit facility to $90.0 million, drew $30.0 million for a total of $70.0 million outstanding
THE DATA GROUP INCOME FUND
Update – Relizon Acquisition
(cont’d) • Solid financial and operating performance • Significant opportunities to achieve meaningful synergies • Leveraging complementary strengths as a larger combined business • Increasing The DATA Group’s size and financial strength • Further enhancing The DATA Group’s stable cash flow
THE DATA GROUP INCOME FUND
Update – Relizon Acquisition
(cont’d) • Restructuring initiatives update: – Announced March 1, 2007 closure of 4 facilities – Resulted in elimination of 121 jobs and the transfer of 99 jobs – Completed other initiatives to reduce management, sales and administration – Announced sale/leaseback of Brockville facility for $4.5 million which is expected to close before October 15, 2007 – 3 owned facilities listed for sale – Originally projected synergies at approximately $7.0 million per annum – We now estimate synergies to be $1.0 to $3.0 million higher at $8.0 million to $10.0 million per annum
THE DATA GROUP INCOME FUND
Competitive Advantages
• High value-added products and services
It truly is DATA, Solutions Beyond Print
• Unparalleled performance against service level and savings deliverables • Proprietary systems – Highly efficient – Differentiation of offering – Very professional, highly-trained, consultative sales organization
THE DATA GROUP INCOME FUND
Financial Overview
Paul O’Shea Chief Financial Officer
2006 Financial Results
• Fund revenue of $286.7 million • Gross Profit of $79.9 million • Gross Profit of 27.9% • Adjusted EBITDA of $33.1 million • Adjusted EBITDA of 11.6% of revenue
Financial results for the period of January 1, 2006 to December 31, 2006
THE DATA GROUP INCOME FUND
2006 Distributable Cash
• Cash available for distribution of $24.5 million or $1.326 per unit • Distribution to unitholders of $21.4 million or $1.159 per unit • Excess cash per unit of $0.167
• Payout ratio of 87.4%
For the period January 1, 2006 to December 31, 2006
THE DATA GROUP INCOME FUND
Q2 and YTD 2007 Financial Results
• Revenue of $97.2 million and $201.2 million • Gross Profit of $25.4 million and $53.0 million • Gross Profit of 26.1% and 26.3% • Adjusted EBITDA of $7.4 million and $17.4 million • Adjusted EBITDA of 7.6% and 8.6% of revenue
Q2 and YTD 2007 Distributable Cash
• Cash available for distribution of $4.4 million or $0.186 per unit in Q2 and $11.7 million or $0.499 per unit YTD • Payout ratio of 156.2% in Q2 and 116.1% YTD • Adjusting for integration costs of $2.4 million and capital expenditures of $1.0 million, a payout ratio of 88.1% in Q2 and 84.3% YTD
Balance Sheet - at June 30, 2007
• Total current assets of $103.3 million • Total assets of $377.5 million • Total current liabilities of $55.3 million • Long-term obligations including bank loans, convertible debentures, future income taxes & pension obligations of $127.4 million • Total unitholder equity of $194.8 million
THE DATA GROUP INCOME FUND
Summary
David Odell President & Chief Executive Officer
Strategic Focus
• Continued concentration on revenue mix with the key focus upon value-added • Integration of Relizon and DATA operations • Maintain / build upon leadership position • “Stick to our knitting” • Exceed client S.L.A. expectations • Pursue strategic, accretive acquisitions
THE DATA GROUP INCOME FUND
Business Summary
• Long history as a cash generator • Diverse mix of high quality blue-chip customers with whom we enjoy long-term relationships • Leading or significant share in segments we participate in • Multiple revenue streams derived from broad range of value-added products and services, resulting in little or no seasonality • Reasonable capex requirements, disciplined investment process • Nearly all business conducted in Canada, resulting in minimal exposure to foreign exchange risk
THE DATA GROUP INCOME FUND
Solutions beyond print.
The DATA Group Income Fund