Network - Pivot Technology Services · 2018-06-29 · diverse partner network and Silicon...
Transcript of Network - Pivot Technology Services · 2018-06-29 · diverse partner network and Silicon...
ANNUAL GENERAL MEETING
June 27, 2018
L I F E C Y C L E S E R V I C E S
Integration
D a t a C e n t r e
Security
Engineering
Network
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Head Table
Wade K. DaweChairman of the Board
Kevin ShankPresident and Chief Executive Officer
Matt GirardotChief Legal Officer and Corporate Secretary
David ToewsInterim Chief Financial Officer
Kurt SteinhauerCEO, Smart-Edge.com
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Agenda
Formal Business
Wade Dawe
Financial Review
David Toews
Business Update and Agenda
Kevin Shank
Smart Edge™ Update
Kurt Steinhauer
Q&A
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2017 Developments
Continued commercial transformation
Introduced Smart EdgeTM
Investments in Cloudscapes and Applied
Addressed internal control environment
Repurchased over 1.5M shares
Paid our regular quarterly dividend
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Comparison of 5-Year Cumulative Total Return
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Assuming Initial Investment of $100(December 31, 2013 - December 31, 2017)
Pivot
S&P/TSX
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Business of the Meeting
Appointment of Secretary and Scrutineers
Notice
Presentation of Financial Statements
Election of Directors
Reappointment of Auditors
Termination
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Forward-Looking StatementsThis presentation contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking
statements" within the meaning of applicable Canadian securities laws. Forward-looking statements include statements regarding
user data for 5G technology, US MEC installations, improvements in profitability and margins, and other 2018 priorities to create
shareholder value growth and the assumptions underlying any of the foregoing. Pivot uses words such as "may", "would", "could",
"will", "likely", "expect", "believe", "intend", "anticipate" and similar expressions to identify forward-looking statements. Any such
forward-looking statements are based on assumptions and analyses made by Pivot and others in light of its experience and its
perception of historical trends, current conditions and expected future developments, including the rate of adoption of 5G
technology and improvements in margins on the sale of products and services in 2018, and that the general business climate will
not deteriorate, as well as other factors Pivot believes are appropriate under the relevant circumstances. However, whether actual
results and developments will conform to Pivot's expectations and predictions is subject to any number of risks, assumptions and
uncertainties. Many factors could cause Pivot's actual results to differ materially from those expressed or implied by the forward-
looking statements contained in this presentation. These factors include, without limitation: uncertainty in the global economic
environment; delays in the purchasing decisions of Pivot's customers; the competition Pivot faces in its industry and/or
marketplace; the possibility of technical, logistical or planning issues in connection with the deployment of Pivot's products or
services; the possibility that Smart Edge is not commercialized on time or in the manner that management assumes; the risk that
costs of integrating acquired businesses will negatively impact Pivot’s results of operations; the possibility that Pivot will not be
able to further align its support functions with the selling and delivery arms of the business; the possibility that Pivot will be unable
to capitalize on opportunities it has identified in the manner and timeframe anticipated, and the possibility that Pivot will not be able
to successfully sustain growth or grow its profitability. The "forward-looking statements" contained herein speak only as of the date
of this presentation and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise
such information, whether as a result of new information, future events or otherwise.
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Financial ReviewDavid Toews, Interim CFO
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Annual Performance – Revenue
1.14
1.25
1.371.42
1.51
2013 2014 2015 2016 2017
Revenue1
$ Billions
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2017 growth of 6.5%
Product revenue up 5.8%
Services revenue up 12.6%
Services revenue growth of 13.5% (excluding
sales of OEM maintenance contracts)
1. Excludes GTS
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Annual Performance – Gross Margin
11.4% 11.6% 11.6%12.1%
11.2%
2013 2014 2015 2016 2017
Gross Margin1
(%)
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2017 gross profit $169m vs $171m in 2016
Basic profit generation stayed strong
Future growth of Pivot’s service business
intended to drive margin
1. Excludes GTS
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Annual Performance – SG&A
144.1 137.0
1.8 7.6
2016 2017
SG&A Expenses1
($ Millions)
SG&A TeraMach SG&A
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SG&A decreased $1.3m overall
Decrease was $7.1m excluding the acquisition
of TeraMach
Cost reductions completed to offset investment
in new offerings / expanding capabilities
Includes $3.3m investment in Smart EdgeTM
1. Excludes GTS
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Annual Performance
24.8
33.4
30.3
25.1 24.1
2013 2014 2015 2016 2017
Adjusted EBITDA1,2
$ Millions
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Performance reflected higher sales to major
customers, product pricing pressure and lower
rebates, partially offset by strong cost
management and higher service margins
Invested $3.3m in Smart EdgeTM
1. Excludes GTS
2. Non IFRS measure
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322.4
369.3
34.1
39.3
Q1 2017 Q1 2018
Gross Profit Revenue
Revenue/Gross Profit$ Millions
1. Non IFRS measure
Revenue 14.5% above Q1 2017
On growth in product sales,
Pivot-direct services
Adjusted EBITDA¹ $3.1M above
Q1 2017
First Quarter 2018 Performance
10.6%
10.6%
(1.6)
1.5
Q1 2017 Q1 2018
Adjusted EBITDA¹$ Millions
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Credit Agreement Senior Secured Credit Agreement (“Asset Based Lending Agreement”)
Term 5 Year – expiring September 2020
Size $225M + remaining accordion of $50M
Drawn Amount As at March 31, 2018: $127.6M
Average Undrawn
Availability (Q1/18)$83.8M
Financial Covenants Fixed Cost Coverage Ratio 1.1 if Undrawn Availability < 12.5%
Negative Covenants Limitation on amount of dividends, share buybacks, acquisitions and other
Interest Rate Libor+ 1.5% to 1.75%
Credit Facility – Flexible for Growth
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Capital Market Strategies
Acquired ~1.55M shares during 2017
Acquired ~ 230k shares in 2018
New NCIB for 2018 began June 22
Paid $0.04 dividend every quarter
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2014 2015 2016 2017 2018
Share Structure
TSX: PTGListed: Toronto Stock Exchange
Trading Symbol: PTG
Dividend: C$0.04 per share paid quarterly, Yield ~7.9%
Total Shares Out: 40,122,869
Market Cap: ~C$80.4 million (25/05/18)
52-week High/Low: C$2.94 / C$1.78
Founded: 2010
One of a few Dividend-Paying Tech Companies Listed on the TSX
• Renewed NCIB in June 2017
• Repurchased 1.55M shares in 2017
• Repurchased 231,000 shares subsequent to Q1 2018
•Share Buy-back Program:
1.50
1.00
0.50
2.50
2.00
Sh
are
Pri
ce
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Comparison of 5-Year Cumulative Total Return
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Assuming Initial Investment of $100(December 31, 2013 - December 31, 2017)
Pivot
S&P/TSX
Business UpdateKevin Shank, CEO
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Pivot At A Glance
2017 Revenue¹
US$1.5B
2017 Adjusted
EBITDA2
US$24.1M
Customers
~2000
Technology
Partners
400+
Knowledge
Based
Workforce
800
Growing
Services
Portfolio
Global Touch
and Reach
A Leading Provider of IT Products and Services
Supporting the IT infrastructure needs
of many of the world’s
most successful companies
1. Excludes GTS
2. Non IFRS measure 19
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Trusted Partner To Global Technology Leaders
More than
400Technology Partners
Approximately
40%Engineers, Technicians,
Subject Matter Experts
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Blue Chip Customer Base
Approximately
2,000 Customers
Majority:
Enterprise-Class Companies
Across 5 Business Sectors
Energy
Finance
Healthcare
Retail
Public Sector
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A Large and Growing Available Market
Sources: IDC, Markets and Markets
US IT Spending
Expected to Grow
Especially in Services
Pivot
Addressable Market
~$280B
Pivot
$1.5B
Field Service Market Forecast to Grow 21% Annually to 2020
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Core Growth Strategies
Company
Strategy (High-Level)
• Build on core products and services business
• Enhance services/solutions capabilities and portfolio
• Emerging technology & cloud strategy
• Drive a commercial transformation
• Follow the customer
• Improve cost management
• Address legacy issues
• Commercialize Smart Edge™
Positioned
for
Success
Size and scale
Sales force
Deep relationships
Industry knowledge
Access to customers
Strength
Core product business is solid
Services business gaining momentum
Capacity to take on large, complex projects
Adding new services
Enhancing portfolio
Emerging technologies
Selling broader mix to existing clients
IP - Smart Edge™
Capability Innovation
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Sourcing Design & procurement
Integration Lifecycleservices
VALUE
Today Services ~ 30% EBITDA
Products ~70% EBITDA
Tomorrow
Evolving Our Market PositionCommercial Transformation to Services Underway: recurring revenue, stability, predictability,
growth in earnings, higher value to clients, stickiness, ability to differentiate, higher GM%
Notional View Of Competitive LandscapeRecurring Revenue
HigherMargin
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Evolution to Service Growth
Services
Portfolio
Creation
Solution
Skills
Service
Commercial
Transformation
Creation
Service Deal
Assembly Line
Expansion
of Installed
Accounts
New PTS
Service
Capabilities
Knowledge
Experts in
MS
Short-Term Longer-Term
Ongoing
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5 Service
Channels
5 Solution
DisciplinesWorkplace Security
Digital
Infrastructure
Integration
Services
Deployment
Services
Workforce
Services
Managed
ServicesProfessional
Services
Assess > Design > Implement > Manage > OptimizeServices
Value Stream
CloudEmerging
Technology
2018: Pivot Services Portfolio 5x5
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2018: Growth Focus Areas
A practice-based approach that
leverages our broad experience,
diverse partner network and Silicon
Valley-based technologists to gain
early insight into solutions that
change or challenge the status quo.
Emerging
Technology
A solutions mini-suite that leverages
our broader portfolio as fully-
integrated solution sets using
industry best practices to “run IT like
a business” with real data and
analytics to enable business value.
Business
Technology
Management (MS 2.0)
A platform that enables transformation
through automation and innovation,
improving IT effectiveness through
better cost control management,
visibility and enhanced support of our
customer’s complex cloud
infrastructure.
CLOUDx
Guiding Our Client’s Digital Journey with Transformative
Approaches to Technology & Operations
Guiding Our Clients’ Digital Journey with Transformative
Approaches to Technology & Operations
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Business Technology Management (MS 2.0)Integrated Solutions Sets
Business
Technology
Management
User Experience
Lifecycle Services
Managed Workplace
Infrastructure Operations
Cloudx
IT Financial Management
•Service Desk
•Contact Center•Call Center
•ITSM Frameworks
•Integration
Services
•Asset
Management
•Contract Mgmt.
•Depot Services
•Recovery Services
•Image Management
•Corporate
Desktop/HVDI
•Mobile Device
(EMM/MAM)
•Unified Comms
•Cloud App Support
•Kiosk/Vending
•Cognitive,
Personas, Analytics
•Enterprise
Command Center
•NOC/SOC
•Infrastructure as a
Service
•Data Center
Operations
•Cloud Foundation
•Cloud Enablement•Cloud Connectivity
•Consumption &
Optimization
•Procurement & Logistics
•Device as a Service
•Utility/Consumption Operations
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Customer X End User Network Data Center Collaboration
Fulfillment Services$2.23M $13.8M $14.67M
Deployment Services
Professional Services$184K
Workforce Services$2.2M (3rd Party)
Managed
Services
Commercial Transformation – Client Example
Tremendous growth potential via the introduction of:
Account planning methodology (5x5)
Account based marketing approach
New Portfolio Capabilities
Introduction of adjacent service offerings to existing product sales
Solution management and selling methodology
Increased attach and annuity revenue via Managed Services & Lifecycle Solutions
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Sizeable, Sticky,
Annuitized
Revenue…Driving
Enterprise Value For Pivot
Existing Capability
Penetrated
Existing Capability
Not Penetrated
New or Enhanced Capability
Opportunity
Product & Service Disciplines
Serv
ice C
hannels
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Building On The Core
State-of-the-art integration center
for staging, configuration, testing,
inventory management & shipping
Integration Facilities & Capabilities
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Digital Enterprise B2B eCommerce platform delivering customer procurement integration
New customers on the platform:
Large telco
Large software company
Large beverage company
Large wireless company
2015 2016 2017
$22m $215m $326m
11,000 transaction 46,000 transactions 83,000 transactions
Building On The Core
Digital Ecommerce - Interconnect
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Disparate & Under
Leveraged Capabilities
Building Client, Partner &
Industry Portfolio Awareness
5 Service
Channels
4 Solution
DisciplinesEnd User Data Center CollaborationNetwork
Fulfillment Services
Deployment Services
Workforce Services
Managed Services
ProfessionalServices
Client Care
Customer First Experience
Outcome Based Accountability
PMO
Common Methodology
Consistent, Repeatable, Successful
Solutions Management
Forward Thinking
Radical Transparency
Technology Innovation
Capability Expansion
Value Continuum
Building Our Brand
Brand
Identity
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Smart EdgeTM
Kurt Steinhauer
MEC – Merging 5G and IT
Accelerating the Move to the Network Edge
1.5 GBOF TRAFFIC / DAY
Avg. internet user
4 TBOF DATA/DAY
Autonomous vehicles Connected Airplane
5 TBOF DATA/DAY
Smart Factory
1 PBOF DATA/DAY
Cloud video providers
750 PBOF VIDEO/DAY
By 2020
Smartdevices
access technology
Access AND edge
network
Corenetwork Cloud
Virtual, software-defined, cloud-ready: enabling the 5G future35
Where is the Edge?
Core
Core Telco Network Cloud Data Center
CENTRAL OFFICES
WIRELINE
Edge Devices/things
Edge Compute
Node
Network or other
Intermediary Data Hub
Edge Compute NodesMillions of on-premise sites;Typically virtualized servers, gateways, and traditional
Routers/Switches/Appliances
Network or otherIntermediary Data HubAccess points & traditional
network infra; transitioning to virtualized servers providing
infra. & compute (NGCO)
Regional Data Center or Co-lo Site
Typically virtualized servers
Cloud continue to invest in regional
infrastructure
Regional Data Center or Co-lo Site
IOT & On-Premise, Fog Node
WIRELESS
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Above calculations conservatively based on 5us latency / km + congestion + transfer/processing + overheads
5G
ClientsCloud / OTTBase Station Local CO Regional CO
BACKBONEROUTER
Core
Massive Data Sets
Data Sovereignty / Privacy
LATENCY= 40mS+
LATENCY= <5 mS
LATENCY= 10mS+
LATENCY= 100mS+
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WIRELESS
WIRELINE
Restricted
EXT-ND
RestrictedArchitecture Summary
38EXT
U.S. MEC Installations by Vertical, 2017-2026
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The Business Case for MEC in Retail May 2017, as presented by iGR, intel, Hewlett Packard and ACS
Converged Platform
Mobility Core Ran
IT ApplicationsOperations
WirelinevCPEBNGVNFs
TheSmart Edge
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New digital value chain
applications already exist.
Harness where people
and technology meet
at the edge.
MEC Enabling Killer Applications
Moving ForwardKevin Shank, CEO
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Commercialize Smart EdgeTM Technology
Focus on Services/Solutions Sales Growth
Improve Profitability & Margins
Advance Commercial Transformation
Drive Cash Generation (stronger cost management)
Focused M&A
1.
2.
3.
4.
5.
6.
2018 Priorities To Create Shareholder Value
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Summary
PAYMENTS
1.
2.
3.
4.
5.
6.
7.
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Large addressable market featuring attractive growth trends/prospects
Proven business serving ~2,000 customers, generating US$1.5 billion of revenues
Trusted vendor relationships with the world’s leading IT companies
Expanding capabilities to organically grow our service revenues
Positioned to offer potentially disruptive and/or emerging technologies
Experienced and proven services and technology leadership talent
Dividend payer with ~8% yield
ANNUAL GENERAL MEETING
June 27, 2018
L I F E C Y C L E S E R V I C E S
Integration
D a t a C e n t r e
Security
Engineering
Network
45