Corporate Overview - Enghouse Systems · Corporate Overview ... • Networks Division - Software and services for telecom providers Dual-growth strategy based on organic expansion

Corporate Overview March, 2013

2

Corporate Overview

Publicly listed (TSX:ESL), global software and services

company focused on specific market segments

Business Segments

– Interactive Group

• Customer interaction software solutions

– Asset Management Group

• Transportation Division - Public transit and transportation software

• Networks Division - Software and services for telecom providers

Dual-growth strategy based on organic expansion and accretive

acquisitions

Financial Snapshot FY 2012

– Revenue: $136m

– Adjusted EBITDA: $35m or $1.35/share

– Dividend: $0.23/share (cumulative annual dividend)

– Net Cash: $84m (no debt)

3

Build a larger, more diverse enterprise software and services

company through:

– Growing our existing live and self-service solutions business (Interactive

Management Group)

– Growing our existing network solutions and transportation management

software businesses (Asset Management Group)

– Consistently generating income and positive cash flow

– Completing selective acquisitions within existing markets and entering

new growth software markets

Strategy

4

Enghouse Interactive

Delivers leading solutions to maximize the value of customer

interaction, spanning unified communications, contact center

and self-service

Comprehensive portfolio of platform independent interaction

management software products:

– Multi-Tenant Contact Center, Cloud and Premise-Based Solutions

– Attendant Consoles

– Self-Service (IVR)

– Call Recording and Workforce Optimization

1000’s of customers world-wide

Global reseller and distribution channels including business

relationships with Cisco, Microsoft, NEC, Avaya, Shoretel and

Mitel

700+ dedicated staff across 16 international operations

5

Interactive Portfolio

CCU Service Provider

Call

Connect SMB

Zeacom SME

CIM Enterprise

Sin

gle

-site

Multi-site

Scale

Informal Formal

Formality

6

Enghouse Transportation

Specialize in software solutions for the transportation industry

Systems that maximize efficiency with back office applications

for both fixed route (conventional) and demand response

(paratransit) operations and public facing IVR systems

Customers include some of the largest transit agencies in North

America

– New Jersey Transit, MARTA, Toronto Transit Commission (TTC)

Established partnerships with most Transit ITS (Intelligent

Transportation Systems) vendors and 3rd party vendors

including ESRI and Loquendo

7

Transportation Portfolio

TRANSIT OPERATIONS • TransView – Demand Response/Paratransit Scheduling · Dispatching

• Sched21 – Fixed Route Scheduling · Rostering · Runcutting

• TeleDriver – Driver Management

• HandyLine – Paratransit IVR

• BusLine – Fixed Route IVR

• CrewLine – Operator IVR

• TripFinder – Web Based Trip Planning

COMMUNICATIONS

• CoachWorks – Charter Management

• Tour Manager – Tour Management

PRIVATE TRANSPORTATION

8

Enghouse Networks

Delivers technology solutions to optimize performance for next

generation network operators

– Cloud based Billing, Order Management Workflow and Automated

Provisioning

– Intelligent Routing, Global Local Number Portability roaming solutions

– GIS platform enables business intelligence through visual computing

Proven solution deployments around the world

– On-premise licensed, cloud and managed services

– Tier 1, 2 and 3 global Telecommunications operators

– Utilities

– Pipeline operators

Strategic relationships

– Esri, Neustar, Transaction Network Services (TNS)

Operations in Canada, USA, UK, and Sweden

9

Networks Portfolio

Sales CRM · Order Management · Product Catalog · Rating

Taxation Invoicing · LSR · SOA · CNAME

Site Build-out · Lease Management · Asset Management

Workflow

Outside Plant · Inside Plant · Provisioning · FTTH

Data Entry · Transformation · Cleansing · Reconciliation

GEOGRAPHIC INFORMATION SYSTEMS & MAPPING

MOBILE NETWORK ROLLOUT

HOSTED BILLING, WORKFLOW & PROVISIONING

INTELLIGENT NETWORK PLATFORM

DATA SERVICES

Least Cost Routing · Media Node · Advanced Routing · Toll Free Routing

Global Number Portability

10

ANNUAL RESULTS

11

FY 2012 Highlights

FY 2012 FY 2011

Revenue - a year over year increase of 11% $136.4m $122.6m

Revenue by Segment

Interactive Management Group $119.1m $109.7m

Asset Management Group $17.3m $12.9m

License revenue - large 3rd party license sale in FY11 $45.1m $45.7m

Recurring revenue - a year over year increase of 22% $71.6m $58.5m

Profitability

Net Income¹ $20.9m $23.1m

Earnings¹ per diluted share -

excluding one-time tax adjustments, $0.70 FY 2012 and

$0.59 FY 2011

$0.80 $0.90

Adjusted EBITDA per diluted share - an increase of 7%

$1.35 $1.26

Note 1: FY 2011 includes a one-time tax adjustment of $7.9m due to transition to IFRS and FY 2012 includes a $2.5m tax

loss carry-forward set up

12

FY 2012 Highlights

FY 2012 FY 2011

Cash flow from operating activities - increase of 14%

over FY 2011 $36.2m $31.8m

Cumulative annual dividend - per common share,

based on date of record, an increase of 28% over FY 2011 $0.23 $0.18

Cash spent on annual dividend $5.9m $4.5m

Cash spent on acquisitions $32.5m $16.8m

Cash balance - beginning of period $99.6m $78.2m

Cash balance - end of period $83.7m $99.6m

Acquisitions

CustomCall Data Systems, Inc. March 1st

Zeacom Group Limited June 1st

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Revenue Distribution

US 46%

UK 26%

EUROPE 15%

CANADA 6%

APAC 7%

REVENUE BY GEOGRAPHY FY 2012

INTERACTIVE

GROUP

ASSET

MANAGEMENT GROUP

REVENUE BY BUSINESS SEGMENT FY 2012

17m

119m

License

33%

Recurring

53%

Services

13%

Hardware

1%

REVENUE BREAKDOWN FY 2012

14

Fiscal Year Results

FY 08 FY 09 FY10 FY11 FY 12

53m

78m

94m

123m

136m TOTAL REVENUE

FY 08 FY 09 FY10 FY11 FY 12

30m

41m

47m

59m

72m

57% 53% 50% 53%

RECURRING REVENUE

48%

Note 1: FY 2011 includes a one-time tax adjustment of $7.9m due to transition to IFRS and FY2012 includes a $2.5m tax loss carry-forward set up

FY 08 FY 09 FY 10 FY 11 FY 12

12.4m

17.0m

21.5m

32.2m 35.1m

ADJUSTED EBITDA

FY 08 FY 09 FY10 FY11¹ FY 12¹

6.0m 6.7m

10.2m

15.2m

18.4m

23.1m

20.9m

NET INCOME

15

Fiscal Year Results

FY 08 FY 09 FY 10 FY 11 FY 12

$0.50

$0.68

$0.85

$1.26

$1.35 ADJUSTED EBITDA

PER SHARE

FY 08 FY 09 FY 10 FY 11 FY 12

$0.10 $0.11

$0.14

$0.18

$0.23

DIVIDEND PER SHARE (based on date of record)

Note 1: FY 2011 includes a one-time tax adjustment of $7.9m due to transition to IFRS and FY 2012 includes a $2.5m tax loss carry-forward set up

FY 08 FY 09 FY10 FY11¹ FY 12¹

$0.23 $0.27

$0.40

$0.59

$0.70

$0.90

$0.80

EARNINGS PER SHARE

FY 08 FY 09 FY 10 FY 11¹ FY 12¹

11% 12%

5% 6%

8%

16%

13%

RETURN ON EQUITY

16

Balance Sheet October 31 October 31

FY 2012 FY 2011

$59,544 $65,624

24,108 33,967

31,368 23,006

3,853 3,479

118,873 126,076

3,365 1,543

42,637 29,709

64,358 44,242

10,477 9,548

$239,710 $211,118

$26,053 $22,686

2,008 3,520

1,676 1,267

1,621 2,442

35,935 28,933

67,293 58,848

13,241 9,525

- 420

1,236 1,404

81,770 70,197

55,751 52,134

2,847 2,970

99,371 84,782

(29) 1,035

157,940 140,921

$239,710 $211,118

Short-term investments

Assets

Current assets:

Cash and cash equivalents

Deferred income taxes

Accounts receivable, net

Prepaid expenses and other assets

Non-current assets:

Property, plant and equipment

Acquired software and customer relationships

Goodwill

Non-current liabilities:

Total assets

Liabilities

Current liabilities:

Trade payables

Income taxes payable

Dividends payable

Accrued provisions

Deferred revenue

Total liabilities and equity

Deferred income tax liabilities

Long-term income taxes payable

Deferred revenue

Total liabilities

Shareholders’ Equity

Share capital

Contributed surplus

Retained earnings

Accumulated other comprehensive (loss) gain

Total equity

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Income Statement

2012 2011 Chg % 2010

Revenue (GAAP)

Software licenses 45,108 45,691 -1% 30,198

Hosted and maintenance service 71,608 58,526 22% 47,404

Professional services 18,083 15,734 15% 13,900

Hardware 1,569 2,608 -40% 2,706

136,368 122,559 11% 94,208

Direct costs

Software licenses 4,115 5,208 -21% 4,363

Services 31,410 26,635 18% 22,429

Hardware 1,134 1,966 -42% 1,845

36,659 33,809 8% 28,637

Revenue, net of direct costs 99,709 88,750 12% 65,571

Operating expenses

Selling, general and administrative 43,069 40,861 5% 31,446

Research and development 21,492 15,678 37% 12,477

Amortization of property, plant and equipment 1,386 1,102 26% 1,331

Special charges 544 1,775 -69% -

66,491 59,416 12% 45,254

Results from operating activities 33,218 29,334 13% 20,317

Amortization of acquired SW and CR (10,974) (10,291) 7% (8,458)

Finance income 987 692 43% 434

Finance expenses (269) (201) 34% (170)

Other income 145 956 -85% 1,145

Income before income taxes 23,107 20,490 13% 13,268

Provision for recovery of income taxes 2,234 (2,575) -187% 3,030

Net income for the period 20,873 23,065 -10% 10,238

Earnings per share

Basic 0.82$ 0.91$ -10% 0.41$

Diluted 0.80$ 0.90$ -11% 0.40$

For the year ended October 31

18

QUARTERLY RESULTS

19

Q1 FY 2013 Highlights

Q1 2013 Q1 2012

Revenue - a 37% increase over Q1 FY 2012 $42.0m $30.5m

Revenue by Segment

Interactive Management Group $36.7m $27.5m

Asset Management Group $5.2m $3.1m

License revenue - a 43% increase over Q1 FY 2012 $15.1m $10.5m

Recurring revenue - a 29% increase over Q1 FY 2012 $20.6m $16.0m

Profitability

Net Income - excluding special charges of

$1.8m related to acquisition restructuring costs,

$5.2m for Q1 2013

$3.4m $4.1m

Earnings per diluted share - excluding special

charges of $0.07 per diluted share related to

acquisition restructuring costs, $0.20 for Q1 2013

$0.13 $0.16

Adjusted EBITDA per diluted share $0.36 $0.30

20

Q1 FY 2013 Highlights

Q1 2013 Q1 2012

Cash flow from operating activities - includes $1.8m of

special charges related to acquisition restructuring costs in

Q1 2013

$8.3m $8.3m

Quarterly dividend - per common share, based on date

of record $0.065 $0.05

Cash spent on dividend $1.7m $1.3m

Cash spent on acquisitions $10.0m $0.2m

Cash balance - beginning of period $83.7m $99.6m

Cash balance - end of period $80.1m $101.5m

Acquisitions

Visionutveckling Nov 1st

Albatross Dec 1st

21

Quarterly Results

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY 10 FY 11 FY 12 FY 13

ADJUSTED EBITDA $ millions

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0


FY 10 FY 11 FY 12 FY 13

RECURRING REVENUE $ millions

$0$5

$10

$15

$20

$25

$30

$35

$40

$45$50


FY 10 FY 11 FY 12 FY 13

REVENUE $ millions

$0.00

$0.01

$0.02

$0.03

$0.04

$0.05

$0.06

$0.07

$0.08


FY 10 FY 11 FY 12 FY 13

DIVIDEND PER SHARE based on date of record

22

Balance Sheet Q1

January 31, 2013

October 31, 2012

Assets

Current assets: Cash and cash equivalents $ 50,535 $ 59,544 Short-term investments 29,516 24,108 Accounts receivable, net 38,114 31,368 Income tax receivable 151 - Prepaid expenses and other assets 4,610 3,853

122,926 118,873 Non-current assets: Property and equipment 3,512 3,365 Intangibles 117,073 106,995 Deferred income taxes 8,318 10,477

Total assets $ 251,829 $ 239,710

Liabilities

Current liabilities: Trade payables $ 29,419 $ 26,053 Income taxes payable - 2,008 Dividends payable 1,680 1,676 Accrued provisions 2,876 1,621 Deferred revenue 41,590 35,935

75,565 67,293 Non-current liabilities: Deferred income tax liabilities 13,433 13,241 Deferred revenue 1,303 1,236

Total liabilities 90,301 81,770

Shareholders’ Equity

Share capital) 56,460 55,751 Contributed surplus 2,800 2,847 Retained earnings 101,126 99,371 Accumulated other comprehensive (loss) gain 1,142 (29)

Total equity 161,528 157,940

Total liabilities and equity $ 251,829 $ 239,710

23

Income Statement Q1

Actual Actual

2013 2012 Chg %

Revenue

Software licenses 15,064 10,518 43%

Hosted and maintenance service 20,563 15,979 29%

Professional services 5,491 3,740 47%

Hardware 839 296 183%

41,957 30,533 37%

Direct costs

Software licenses 1,429 909 57%

Services 9,584 6,896 39%

Hardware 593 206 188%

11,606 8,011 45%

Revenue, net of direct costs 30,351 22,522 35%

72% 74%

Operating expenses

Selling, general and administrative 13,406 9,861 36%

Research and development 7,343 4,803 53%

Amortization of property, plant and equipment 468 278 68%

Special charges 1,815 -

23,032 14,942 54%

Results from operating activities 7,319 7,580 -3%

Amortization of acquired SW and CR (3,584) (2,438) 47%

Finance income 333 243 37%

Finance expenses (81) (41) 98%

Other income (expense) 361 (2)

Income before income taxes 4,348 5,342 -19%

Provision for income taxes 913 1,282 -29%

Net income for the period 3,435 4,060 -15%

Earnings per share

Basic 0.13$ 0.16$ -19%

Diluted 0.13$ 0.16$ -19%

For the 3 months ended

January 31

24

Acquisition Strategy

Established track record of value creation through acquisitions

To consistently generate positive operating cash flows to fund

further growth and drive shareholder value

Economic factors favorable for acquisitions especially for

small-cap companies

Target companies in the $5m - $50m range preferably with

strong recurring revenue

Objective is for a cash payback within 5 - 6 years

25

Recent Acquisitions

Q1 FY 2013

CosmoCom

April 1, 2011

Q2 FY 2011

CustomCall

March 1, 2012

Q2 FY 2012

Zeacom

June 1, 2012

Q3 FY 2012

Visionutveckling

Nov 1, 2012

Q1 FY 2013

Albatross

Dec 1, 2012

Q1 FY 2013

Locus

March 1, 2013

Q2 FY 2013

26

THANK YOU!

Corporate Overview - Enghouse Systems · Corporate Overview ... • Networks Division - Software and services for telecom providers Dual-growth strategy based on organic expansion

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