Marketing Presentation Peter Mabson , President & Chief Executive - - PowerPoint PPT Presentation
Marketing Presentation Peter Mabson , President & Chief Executive Officer February 2016 Sean Maybee , Chief Financial Officer F2015 Results This document does not provide full disclosure of all material facts relating to exactEarth. This
February 2016 F2015 Results
Peter Mabson, President & Chief Executive Officer Sean Maybee, Chief Financial Officer
This document does not provide full disclosure of all material facts relating to exactEarth. This presentation is not, nor part of, an offer to sell or a solicitation of offers to buy any of exactEarth’s securities.
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This presentation contains forward-looking statements that relate to the Company’s current expectations and views of future events. In some cases, these forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “aim”, “estimate”, “intend”, “plan”, “seek”, “believe”, “potential”, “continue”, “is/are likely to” or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The Company has based these forward-looking statements on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. These forward- looking statements include, among other things, statements relating to: expectations regarding the Company’s revenue, expenses and operations; anticipated industry trends; anticipated new Order Bookings; research and development spending levels; revenue growth guidance; gross margin trending, future growth plans and growth strategy; anticipated future launch dates and launch locations for satellite assets; anticipated and continued benefits the Company’s strategic collaboration agreement with SRT and the Second Generation Constellation on-board Iridium NEXT; expected useful lives of satellite assets and anticipated completion of additional ground stations. Forward-looking statements are based on certain assumptions and analysis made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments and other factors the Company believes are appropriate, and are subject to risks and uncertainties. Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. Given these risks, uncertainties and assumptions, prospective purchasers should not place undue reliance on these forward-looking statements. Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, which are discussed in greater detail in the ‘‘Risk Factors’’ section of the Company’s management’s discussion and analysis for the interim period ending July 31, 2015 (the “MD&A”) and include: operational risks, actual commercial service lives of the Company’s satellites, launch failures and failure to reach planned orbital locations, insurance, uninsured risks and insurance against satellite-related losses, replacement cost of a satellite at the end of its service life, delay of satellite launches, risks associated with the capabilities of Iridium NEXT being greater than the Company’s existing capabilities, risks related to Iridium having priority over the Second Generation Constellation, risks associated with our inability to control various aspects of Iridium NEXT, risks related to revenue sharing, decision-making and co-ownership of intellectual property rights under the Harris Agreement, co-ownership of data, non-competition and exclusivity provisions under the Harris agreement, risks related to the termination of the Harris Agreement, revenue targets, risks associated with the Company’s history of losses, failure of ground operations, failure due to unforeseen technical problems, operator error or orbital collisions, unused orbital locations, hardware and software defects, infringement of intellectual property rights, failure to protect the Company’s intellectual property rights, dependence on third party contractors, reliance on certain relationships with third parties, competition, technological changes, changing customer requirements, reliance on a limited number of customers and government contracts, political change and regulations, current and future global financial conditions, ability to raise adequate capital, software errors, security risk, dependence on the Internet, indemnifications and guarantees, risks related to future acquisitions, dispositions and strategic transactions, failure to manage growth, dependence on an increasing share of a growing market, reliance on key employees, risks related to global operations, foreign currency risk, interest rate risk, credit risk, liquidity risk, fluctuation of revenue and operating results, taxes, accounting estimates, litigation, use and protection of personal information, risks related to operating in a regulated industry, environmental, legal and regulatory compliance, risks related to Canadian and UK sanction laws, the Company’s reliance on resellers, agents and suppliers in other jurisdictions to obtain and abide by laws of foreign jurisdictions, dividends, provisions
discounts, risks related to financial reporting and other public company requirements, the additional regulatory burden as a public company, changes in accounting and tax rules (whether expected or unexpected). In addition to statements relating to the matters set out above, this presentation contains forward-looking statements related to our target operating model. The model speaks to an
Although the forward-looking statements contained in this presentation are based upon what the Company’s management believes are reasonable assumptions, these risks, uncertainties, assumptions and other factors could cause the actual results, performance, achievements and experience to differ materially from the Company’s expectations, future results, performances or achievements expressed or implied by the forward-looking statements. The forward-looking statements made in this presentation relate only to events or information as of the date on which the statements are made in this presentation. Except as required by law, we do not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, future event or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. An investor should read this presentation with the understanding that the Company’s actual future results may be materially different from what the Company expects.
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In this presentation, all amounts are in Canadian dollars unless otherwise indicated. The Company has not authorized any other person to provide investors with additional or different information. If anyone provides investors with additional or different or inconsistent information, including information or statements in media articles about the Company, investors should not rely on it. Investors should assume that the information appearing in this presentation is accurate only as of the date of this presentation, regardless of its time of delivery. This presentation does not constitute an offer to sell or solicitation to buy any securities of the Company.
In this presentation the Company provides information about Order Bookings, EBITDA, Adjusted EBITDA, EBITDA Margin and Subscription Revenue. Order Bookings, EBITDA, EBITDA Margin and Subscription Revenue are not defined by IFRS as issued by the International Accounting Standards Board and the Company’s measurement of them may vary from that used by
similar measures presented by other companies. Rather, these measures are provided as additional information to complement the IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation or as a substitute for analysis of the Company’s financial information reported under IFRS. The Company defines ‘‘Order Bookings’’ as the dollar sum of fully executed contracts for the supply of the Company’s products and/or services to customers received during a defined period of time. Order Bookings are indicative of firm future revenue streams; however, they do not provide a guarantee of future net income and provide no information about the timing
The Company measures EBITDA as net income plus interest, taxes, depreciation and amortization. The Company measure EBITDA Margin as EBITDA, divided by the Company’s total
foreign exchange gains. The Company believes that EBITDA is useful supplemental information as it provides an indication of the income generated by the Company’s main business activities before taking into consideration how they are financed or taxed. Prospective purchasers should be cautioned, however, that EBITDA should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of the Company’s performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Company defines Subscription Revenue as the dollar sum of fully executed contracts for the Company’s products and/or services to the Company’s customers that are subscription- based, typically sold with a one-year period of service and recognized in the Company’s “Subscription Services” segmented revenue.
maritime awareness
detection technology
ground data processing
ON and Harwell, U.K.
$9.6 $12.0 $15.8 $26.6 2012 2013 2014 2015
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Revenue Growth (C$millions)
CAGR
Global update < 1 hour
Vessels tracked
> 165,000
8 million
AIS messages/day > 6.5 billion archived messages
and infrastructure
proprietary S-AIS technology
and service offering
– Over 90% government customer retention since inception
invested by existing shareholders 5
8 Satellites 21 Ground Stations Satellite and Terrestrial Data 2 Data Processing Centres
Iridium NEXT satellite constellation
real-time information
customer base and markets
U.S. Government customers 6
U.S. Military / Government customer base (F2014) F2014 Revenue:
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Patented and proprietary technology delivers best-in-class S-AIS capabilities Positioned as the market leader in S-AIS with trusted brand and reputation Global customer base with subscription-based revenues High-growth business with significant barriers to entry Proven management team and expert technical staff
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Automatic Identification System (AIS) Satellite-AIS
Broadcasts AIS signals between ships and to terrestrial stations Satellite constellation “hears” AIS signal broadcasts
A Comprehensive View of Maritime Traffic – 90% of Global Trade
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Cargo Fishing Tanker Passenger
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exactEarth Other S-AIS Satcom Systems SatRadar Satoptical Coastal Systems Patrol Assets
Vessel Detection Vessel Identification Population Tracked Data Cost Data Quality Vessel Movement History Update Rate Coverage Range
Good Capability Limited Capability Poor or No Capability
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Growing Addressable Market Broadening User Base
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Maritime Surveillance Commodities Tracking Illegal Fishing Environmental Search & Rescue Anti-Piracy
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Maritime Security
Unusual / illegal behavior?
Port Authority
Arrival time?
Customs
Unusual cargo or suspicious behavior?
Commodities Trader
Source and value
Ship Owner
Length of journey and final destination?
Insurer
Unnecessary risks or unplanned route?
Environmental Regulations
Travelled through protected waters?
13 Search and Rescue
State of emergency?
exactEarth Provides the Answers
Selected Customers 14
Government Commercial 73% 27%
~ 275 Total Customers
A r m a d a A r g e n t i n a
Revenue Mix*
~ 120 Subscription Based Customers
Revenue = 77%
* For the fiscal year ended October 31, 2015
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Direct Channel Partners Country partners 51% 38% 11% Current Global Footprint Sales Channel Mix*
* As at Oct 31, 2015
45% 10% 45%
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(C$000)
Note: Fiscal years ended October 31 * 2012-2015
Total Revenue Gross Margin Adjusted EBITDA
8,347 10,570 12,667 20,592 9,640 11,978 15,836 26,600 2012 2013 2014 2015 Subscription Revenue 2,187 5,334 8,140
16,486
22.7% 44.5% 51.4% 62.0% 2012 2013 2014 2015 Gross Profit Margin (3,626) 409 1,811 9,033 (37.6%) 3.4% 11.4% 34.0% 2012 2013 2014 2015 Adjusted EBITDA Margin 29% CAGR*
Infrastructure
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*Only AIS data revenue components are subject to revenue share
Exclusive Territory
Deal Economics Benefits
with no infrastructure risk
exclusive access to only planned satellite infrastructure
exactEarth Harris
Harris Revenue Share
Class A Transponder Data 82% 18% Other Data 50% 50%
exactEarth Revenue Share*
First $40M Annual Revenue 40% 60% Subsequent Annual Revenue 33% 67%
potential for tiered pricing based on higher service level data
Up-front payment
Annual op. ex cost payment
Revenue Growth 29%
(2012–2015)
30% 30% Gross Profit 62% 50% 60% SG&A 34% 20% 17.5% Product Development 5% 15% 7.5% Adjusted EBITDA Margin 34% 15% 35% 18
As at Oct 31, 2015 Adjustments related to the Spin-Out Transaction Pro-forma after giving effect to the Spin-Out Transaction
Cash 2,365 17,500 19,865 Debt: Shareholder loans 44,801 (44,801) Government loans 1,797 1,797 Equity: Share capital 55,120 67,769 122,889 Share Data: Basic Shares Outstanding (mm) 11.1 10.4 21.5 FD Shares Outstanding (mm) 11.7 10.5 22.1 Ownership: FD Management Ownership (%) 2.9% FD Hisdesat Ownership (%) 26.2%
(C$000)
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Transaction adjustments, including shareholder debt conversion, a new money contribution from shareholders and management’s treasury share purchase
Build upon market leadership in S-AIS maritime data Expand to new maritime customers and applications Higher value services through integration of additional datasets New information products through data analytics Develop disruptive “Internet of Things” M2M offering
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AIS Market
US$43M
US$163M
Global Maritime Information Market
US$880M
US$2.1B Global M2M Market
US$200B
US$1.2T
CAGR
CAGR
CAGR
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Peter Mabson Director, President and CEO
Sean Maybee (CPA, CMA) CFO
in the data services industry
Graham Stickler VP, Products and Services
geospatial based information technology
Exor Corporation David Martin VP, Global Sales and Marketing
software products and data service engineering solutions
Philip Miller VP, Operations and Engineering
company’s satellite constellation, ground station network, and data processing systems
Anita Davis VP, Contracts and Organizational Development
high tech joint venture projects
Memorial Hospital, Women’s Crisis Services of Waterloo Region, and two local private schools
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Eric Zahler (Chair) Independent Director Managing Director of Sagamore Capital Group LLC
The Honorable Dennis Kloske, Independent Director
Pui-Ling Chan, Independent Director
investment sectors
satellite terminal and communication services to the global land and maritime applications markets. Maria Izurieta, Independent Director CFO, 3Pillar Global
technology companies including: CEO (acting) and CFO, Wireless Matrix; and CFO, VIPdesk
Miguel Angel Panduro Panadero CEO, Hisdesat
Committee for the Support of Technology (COTEC); Chair of the working group of the International Telecommunications Union
Miguel Angel Garcia Primo COO, Hisdesat
Peter Mabson President and CEO, exactEarth
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Patented and proprietary technology delivers best-in-class S-AIS capabilities Positioned as the market leader in S-AIS with trusted brand and reputation Global customer base with subscription-based revenues High-growth business with significant barriers to entry Proven management team and expert technical staff