Security Investor Conference Company Presentation Interface - IC SIC... · Recognized leader and pioneer in providing a proprietary, comprehensive bundle of monitored, mission- critical

Interface Security Systems Holdings, Inc.December 10, 2015

Security Investor Conference

Company Presentation

2 Interface Security Systems, LLC ® 2015

Interface at a Glance

Recognized leader and pioneer in providing a proprietary, comprehensive bundle of monitored, mission-critical managed network, physical security, interactive video monitoring and business intelligence (“BI”) services over a private payment card industry (“PCI”) compliant cloud-based network to many of North America’s most recognized companies across multiple business sectors including the retail, hospitality, dining, jewelry and QSR industries.

Bundled solutions enable multi-site customers to SIMPLIFY TO THE POWER OF ONE®

− Streamlines system operations and administration

− Enhances network efficiency and security

− Integrated services provide customers with superior data gathering and BI analytics capabilities

Headquarters in St. Louis, MO

− ~670 employees and over 81,000 customer sites

− Secure Operations Center (“SOC”) / Network Operations Center (“NOC”) in St. Louis and Dallas

− Data Centers in Salt Lake City and Atlanta

Supported by superior proprietary software and monitoring technology and technical “know-how”

$10.1 million RMR as of September 2015 with $1.7 million of installable RMR in contracted backlog

− Pro Forma RMR of $11.8 million

Ranked #12 in 2015 SDM 100 rankings of companies that provide electronic security systems and services (includes both commercial and residential revenue)

− #7 in 2015 SDM 100 rankings of companies for most commercial installation revenue


Michael Shaw: Chief Executive Officer40+ years building and operating subscriber based service companies Founder and CEO – Sonitrol Security Systems 1973-1986 Co-Founder and COO – SecurityLink Corporation 1986-1991 Founder and CEO – Interface since 1995

Michael McLeod: Chief Operating Officer30+ years of senior operations management experience in security industry General Manager – API Security 1985-1993 VP Operations – Sonitrol Corporation 1993-1998 National VP of Operations – Security Technologies Group 1998-2000 COO of Interface since 2000

Ken Obermeyer: Chief Financial Officer20+ years of senior financial management experience in security industry Various accounting positions in Ohio-based security businesses VP of Finance – Centennial Security Systems 1995-1997 CFO of Interface since 1997

Chuck Moeling: Chief Marketing Officer 20+ years of strategy, sales, operations and IP technology experience 12 years consulting with Bain & Company and Accenture/Andersen Consulting Vice President of Retail at Radiant Systems (now NCR) Executive Vice President and Chief Marketing Officer with Westec Intelligent Surveillance Executive Vice President of Sales at Interface 2012 – 2015 CMO of Interface since July 2015

Experienced Senior Management Team


Company Overview

This presentation contains forward-looking statements that are based on our management’s currentexpectations, estimates and projections about our business and operations and are subject to a numberof risks and uncertainties. Our actual results may differ from the results referred to in the forward-lookingstatements, and such differences may be material. See “Cautionary Statement RegardingForward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the year endedDecember 31, 2014.


Company Profile

Secure Managed Broadband

PCI Compliance

Managed Digital Voice

Physical Security Secured Network

Managed Wireless Networks

Fire/Life Safety Systems

Interactive Video Surveillance

Alarm/Event Monitoring

Managed Access Control

• Real-time monitoring of physical and logical cloud-based security services• Most comprehensive technology-enabled managed security solution in the market • First to market with IP enabled managed bundled service offerings• 82% of revenue is contracted RMR• Commercial ARPU of $162.67 in 3Q15 – up almost 17% year over year• Industry leading attrition rates

Interface is a leading national provider of physical security and secured network services to primarily large, commercial, multi-site customers

®

Proximity Beacons

Energy MgmtServices


Company History

2001 2007 2008 2010 20112006 2009 2012 2013

SunTx acquisition

Acquired Loss Prevention

Management: resulted in the integration of

Secure Managed Broadband platform and ISS Monitoring

Center

Raised $115 million in

Senior Contingent Cash Pay Notes in private markets

Completed installation of 10,000+ Dollar General Stores

Created first to market IP Managed Service Provider in

convergence of physical security and

secured network services

Expanded to CA, TX and

upper/ lower MI with key acquisitions

Added $2.5 million of net

new RMR

Added Michael’s Stores and Dollar

General to Customer Base

Merged with Westec, the leading provider of

remote interactive video monitoring

Raised $230 million in Senior Secured Notes in

public markets

2014 2015

Added $2.2 million of RMR to

Contracted Backlog YTD 2015

Signed agreement to provide managed services

to all Family Dollar locations

Focus on continuing to scale the business

Raised $67 million in

Unsecured Notes in private markets


Interface Security Systems: Bundling IP Services

Secure Managed Broadband

PCI Compliance

Alarm/Event Monitoring

Managed Digital Voice

Interactive Video Surveillance

Managed Access Control

Fire/Life Safety Systems

Physical Security Secure Network Services

Managed Wireless Networks

Proximity BeaconsSolution

Energy Management

Services

=


Alarm and Event Monitoring

State-of-the-art IP system serves as upgrade over traditional land-line phone systems

Faster & more reliable over a secure network Less expensive Faster response times Managed 24 hours a day

Monitor and report events such as intrusion, fire / smoke, sprinkler and carbon monoxide levels

Scheduled and random event monitoring lowers employee and customer theft, and raises overall security

Ability to connect to system from any location to support Bring Your Own Device (via smartphone, tablet or PC) with real-time updates and remote-control

GSM wireless transmission as both primary and back-up means of communication and back-up

Alarm verification using two-way voice and live video reduces false alarm rates and improves response times

IP alarm and event monitoring offers leading value over traditional land-line alarm systems


Secure Managed Broadband “SMB”

Interface has adopted its life safety / emergency response culture and has applied the same quality of service and level of urgency in monitoring SMB

Private, closed-loop secured network infrastructure Custom configured on a national scale down to the store level All physical and network security services are safely and easily connected through one

broadband connection Protect sales transactions and reduce the risk of fines, penalties and loss of payment card

privileges Compliant with PCI Data Security Standards

Secure Operations Center (“SOC”) / Network Operations Center (“NOC”) monitors and manages the network 24/7/365

Ensures 99+% up-time Customers receive immediate alerts regarding the health of their network and can monitor

events from any web-based device in real-time Eliminates time and cost of managing a network for customers

Large multi-site customers can retrieve point-of-sale and other store operations data from the Data Center to their back-of-house headquarters

Commercial / Retail Location Data Center SOC / NOC


Digital Witness Interactive Video

Proprietary video surveillance technology - allows for remote, event-based monitoring

Offered through the merger of Westec (now re-branded as Digital Witness) in March 2012

~4,400 active monitoring sites in the luxury retail, dining, QSR and hospitality vertical sectors

Interactive services include: Video tours Video verification Rapid response Video escorts Snapshot audits

Largest, most sophisticated interactive video monitoring Central Command Center (“C3”) in the U.S. located in Plano, Texas handling over 2.0 million events per year

Only Dual Certified Video Monitoring Center in U.S.

Proprietary technology enables best-in-class video surveillance service offering that is unrivaled in the industry


Interface Energy Management is a robust platform that provides in-depth intelligence and control of HVAC systems, lighting, refrigeration and more.

• enhance operational efficiency• maximize guest comfort• detect hidden maintenance issues • and reduce energy usage while giving

control and visibility over all of your retail locations.

Dwell Times - Visitor Dwell Time per store and per department.

Visit Frequencies - Visits per time of day, store and department.

Offer Conversion Rates - Direct insight in offer performance and usage.

Interface Energy Management

Interface Proximity is a managed Bluetooth network and mobile platform that improves customer engagement and retail analytics.

• Recognize, track and engage customers • Target customer messages to personalize

shopping • Measure traffic flow, dwell, demographics,

redemption, and conversion rates instantly• Combine with loyalty and store apps

New Services 2015: Energy Management and Proximity

Interface Proximity


Top National Vertical Penetration Rate

Interface monitors over

one million devices across North America

and responds to more than 3

million events every year.

Retail

Jewelry

Quick Service Restaurant

Dine-In Restaurant

Lodging/Hospitality

5 of the Top 10 Jewelry Retailers

5 of the Top 15 Largest Retailers

8 of the Top 10 QSRs

7 of the Top 10 Dine-In Restaurants

6 of the Top 10 Lodging/Hospitality

* Ranking based on site count. Note: Sources include Chain Store Guide (Feb 2014), National Jeweler (12/14), Nations Restaurant News (12/14), and Hospitality Crossing. (12/14)


Installation & Sales Coverage

With over 80,000 customer sites across North America, Interface maintains a robust installation and service network.

Data Center

SOC/NOC


Bundled service offering leads to higher than industry ARPU and low attrition rates

Historical Average Net Attrition

ARPU of $124.70 $162.67 for commercial customers $32.48 for residential customers Average ARPU for new national account

sales in 3Q15 was $253.07 4.1% attrition rate in 3Q15 for national account

customers with IP Managed Services Average net attrition rate of 6.7%

ARPU

RMR – Commercial vs. Residential($ in millions)

ARPU and RMR

$0$20$40$60$80

$100$120$140$160$180

2010 2011 2012 2013 2014 3Q15

Commercial Accounts Residential Accounts

9.4%8.2% 8.4%

10.0% 10.4%

6.7%

0%

4%

8%

12%

2010 2011 2012 2013 2014 3Q15

$2.9 $4.1

$6.1 $6.7 $7.6

$9.3 $1.6

$1.7

$1.7 $1.7

$0.8

$0.8 63.5% 70.3%

77.8% 79.8% 90.5% 92.1%

10.0%

100.0%

$0

$2

$4

$6

$8

$10

$12

2010 2011 2012 2013 2014 3Q15

Commercial Accounts Residential Accounts % of RMR - Commercial


Industry Overview


Highly Competitive and Fragmented Security Monitoring Market

Security Monitoring Market

Top Security Monitoring Companies

Source: SDM Magazine – 2015 SDM 100.

Rank 12/31/2014 Avg. RMRGross

Revenue 20142015 Company Location ($ mm) Subscribers per Sub FTEs ($ mm)

1 ADT Boca Raton, FL $262.3 6,663,000 39.37$ 16,000 $3,408.02 Tyco Integrated Security Boca Raton, FL 62.5 500,000 125.00 10,000 3,876.0 3 Stanley Convergent Security Indianapolic, IN 53.8 300,000 179.33 8,300 1,700.04 Vivint Inc. Provo, UT 48.7 894,175 54.46 10,210 564.05 Monitronics International Dallas, TX 44.1 1,059,266 41.63 1,100 539.56 Protection 1 Remoeoville, Il 29.7 1,501,000 19.79 2,755 468.07 Diebold Security Untiontown, OH 14.2 200,000 71.00 1,000 628.08 Vector Security Inc. Pittsburgh, PA 14.1 289,275 48.74 1,275 288.29 Guardian Alarm Company Warrendale, PA 12.9 295,098 43.71 1,030 169.910 ASG Security Beltsville, MD 10.0 208,826 47.89 1,163 145.811 Bay Alarm Company Pacheco, CA 8.7 128,395 67.76 761 122.312 Interface Security Systems Holdings Earth City, MO 8.4 77,403 108.52 666 122.813 Central Security Group Inc. Tulsa, OK 7.1 209,450 33.90 410 82.014 Alarm Capital Alliance Newtown Square, PA 6.6 183,956 35.88 515 76.915 CPI Security Systems, Inc. Charlotte, NC 5.5 124,133 44.31 480 70.116 Protect America Austin, TX 5.3 129,594 40.90 304 65.017 Safe Security Companies San Ramon, CA 5.1 129,328 39.43 355 51.918 Guardian Alarm Company Sounthfield, MI 5.0 116,787 42.81 n/a 69.819 Kastle Systems Falls Chruch, VA 4.6 n/a n/a 415 78.020 Ackerman Security Systems Atlanta, GA 3.1 123,476 25.11 300 50.8


Business Strategy


According to Allied Market Research, the North American market for IP video surveillance and Video Surveillance-as-a-Service (VSaaS) is forecast to expand dramatically, rising from $2.4 billion in 2013 to $18 billion by 2020

33% compound annual growth rate Winners in the market will be companies that

“provide integrated services”

According to BIS Research, the North American market for IP video surveillance and Video Surveillance-as-a-Service (VSaaS) is also forecast to expand dramatically, rising from $4.56 billion in 2013 to $15.81 billion by 2020

19% compound annual growth rate Projecting greater demand for VSaaS

Large Video Market Growth Opportunity


National Account Growth

Installed $2.1 million of net new national account RMR YTD Q3 2015 76% of total company RMR and 94% of sold RMR is from national accounts pipeline National accounts with IP bundle attrition was 4.1% during YTD Q3 2015 – target attrition of 4-5% National account sales initiatives are driving consistent and substantial RMR growth - over 40%

annual growth since 2011 and expected growth rates of 20%+ for 2016 to 2018

Ending National Account RMR($ in thousands)

National account sales initiatives are driving consistent and substantial RMR growth

$2.4

$4.3 $4.8

$5.9

$7.7

48%

63% 64%

70%

76%

40%

60%

80%

100%

$-

$2.0

$4.0

$6.0

$8.0

$10.0

2011A 2012A 2013A 2014A 3Q15A

National Account RMR National Account RMR as % of Total


Sustainable Core Growth from Existing Customers

Existing customers provide a significant growth channel through both new store location openings and service upgrades

Most of the Company’s national accounts are expecting continued net new store growth The new store sales from existing customers will continue to grow faster than attrition creating a

bigger net positive annual contribution over time

Stable, Sustainable Growth from Existing Customer Base More Than Offsets Attrition Before Any New Sales RMR Contribution from the Company’s Sales Force

RMR from Existing Customers vs. Attrition($ in thousands)

$810 $833

$759

$733

$600

$700

$800

$900

YTD 9/30/15 Annualized Q3 '15 Annualized

Existing Customer RMR Creation Net Attrition


National Partnership Selling Ecosystem Driving Growth

….and 690+ other local service providers

Honeywell Dealer of the Year (Dec 2014)

CradlePoint Partner of the Year (Feb 2015)

Cisco Systems Partner Summit – notable Deal of the Year (Mar 2015)

Star2Star Partner of the Year (Mar 2015)

Three-peat Channel Partner 360° Business Value Award winner (Mar 2013, 2014, and 2015)

− Recognizes solution providers that create business value for their customers taking a holistic approach to technology solutions

One of the largest Verizon Wireless Partner in North America (2015)

Select Partnership Awards and Recognition


Financial Overview


Financial Overview

CAGR: 24%

($ in millions) ($ in millions)

($ in millions)

CAGR: 18%

($ in millions)

Total Revenue RMR

New RMR RMR with Backlog

* 2010 through 2013 PF for $0.9M of sold Hawk Residential RMR.

* Includes $1.7M of contracted backlog.

$67.3

$87.4

$110.4 $126.7 $122.8

$148.4

2010 2011 2012 2013 2014 3Q15 LQA

$3.6

$4.9

$6.9 $7.5

$8.4

$10.1

2010 2011 2012 2013 2014 3Q15

$3.6 $4.9

$6.9 $7.5 $8.4

$11.8

2010 2011 2012 2013 2014 3Q15*

$1.1

$1.8

$1.2 $1.5

$1.8

$2.9

2010 2011 2012 2013 2014 3Q15YTDA


Exceptionally Low Attrition

Established Blue Chip Customer Base

High Growth - Significant Contracted Backlog and Pipeline

Experienced Management Team

Leader in Monitored and Managed Network, Physical Security and Business Intelligence Services

Low Subscriber Acquisition Costs

Strong Financial Profile

High ARPU Bundled Service Customers

Summary of Key Company Attributes

Proprietary Technology Platform –Sales, Installation, Service and Monitoring

New Sales from Existing Customers Exceeds Attrition Replacement

www.interfacesystems.com

Security Investor Conference Company Presentation Interface - IC SIC... · Recognized leader and pioneer in providing a proprietary, comprehensive bundle of monitored, mission- critical

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