2013 southwest ideas 1 6-2014

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NASDAQ: PCYGwww.parkcitygroup.com

Investor Presentation2013 Southwest IDEAS Conference

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Forward‐Looking Statement

Statements in this presentation that relate to Park City Group's future plans, objectives,expectations, performance, events and the like are "forward‐looking statements" within themeaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Actof 1934. Future events, risks and uncertainties, individually or in the aggregate, could causeactual results to differ materially from those expressed or implied in these statements. Thosefactors could include changes in economic conditions that may change demand for theCompany's products and services and other factors discussed in the "forward‐lookinginformation" section and the "risk factor" section of the management's discussion and analysisincluded in the Company's report on Form 10‐K and 10‐Q or current reports on Form 8‐K filedwith the Securities and Exchange Commission. This presentation is comprised of interrelatedinformation that must be interpreted in the context of all of the information provided and careshould be exercised not to consider portions of this presentation out of context. Park CityGroup uses paid services of investor relations organizations to promote the Company to theinvestment community. Investments in any company should be considered speculative andprior to acquisition, should be thoroughly researched. Park City Group does not intend toupdate these forward‐looking statements prior to announcement of quarterly or annualresults.

Sell More – Stock Less – See Everything

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Sell More, Stock Less, See Everything

Customer Value Proposition> Reduced out‐of‐stocks = Increase in sales 4% to 6%> Lower Inventories / working capital – 10% to 30%> Increased margins – reduced labor and check‐in time> Improve food & drug safety ‐ Track & Trace food and drugs


PCG is a cloud‐based, big data softwarecompany that detects, exposes and solves sales, inventory and product problems in the global food and drug supply chainSupplier

Supplier

Distributor Wholesaler Retailer Customer

Downstream

Upstream

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Park City Group Investment Highlights> Recurring revenue streams with multi‐year visibility – ~90%+ customer retention rate gives strong earnings visibility.

> Generating significant positive cash flow… Significant operating leverage with 75%+ incremental margin. No need to raise capital.

> Accelerating growth & strong balance Sheet–in both revenue and EPS due to recent national account wins.

> Strong competitive advantage – 16 years of development and ~$125 million of invested capital in propriety platform.

> ReposiTrak™ partnership is well positioned to become the standard for tracking and tracing food and drugs in the global supply chain.

> Influential board of directors and experienced management team – current and former grocery, retailing, consumer products, dairy, and magazine industry senior executives.


NYSE MKT: PCYGHeadquarters: Salt Lake City, Utah

Recent Price (11/12/13) $9.84

52‐Week Range $2.71 ‐$9.94

Shares Outstanding 16.1 MM

Fully Diluted Shares 17.6 MM

Market Capitalization $163.0 MM

TTM Revenue $11.4 MM

TTM Adjusted‐EBITDA $2.6 MMOwnership

~40% Insider Ownership

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The Central Issue in the Grocery Industry Today…


• 50% will purchase at a competitor, up 20% from six years ago

• 38% won’t purchase the item at all, an increase of 30% from six years ago

• 12% will switch brands, down 15% from six years ago

Source: Progressive Grocer “Out‐of‐Stocks Greatest Influencer of Trip Satisfaction”: Study by Retail Feedback Group , October 16, 2012

… is eliminating out‐of‐stocks!

When shoppers can’t find what they want…

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What’s Causing the Out‐of‐Stocks?


Today’s supply chain is broken, using delivery history as the basis for replenishing products…even if it was WRONG!

The consumer is faced with substitution or going elsewhere

Supply doesn’t match demand

Forecasting is based on what was delivered last time, and available space to hold it

Consumer | Retailer | Retailer Distribution | Supplier Distribution | Supplier Plant

Mistakes in manufacturing quantities are repeated

Product is pushed into the supply chain based on inaccurate forecasted sales

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Park City Group Solves the Out‐of‐Stock Problem…


PCG’s solutions work along the entire supply chain to ensure the product is available for the consumer by using consumer demand through point‐of‐sale data to drive downstream replenishment and manufacturing

The consumer is THE best demand signal

Exposing and solving out‐of‐stocks will increase sales

Improving forecast accuracy will reduce inventory levels and increase order fill rates

Consumer | Retailer | Retailer Distribution | Supplier Distribution | Supplier Plant

Smoothing the demand allows more efficient manufacturer planning

…at each level of the supply chain by pulling the right amount of product through

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Park City Group Solutions> Provide greater visibility into consumer demand> Turn data into actionable information across the entire supply chain> Enable collaboration between the Retailer and the Supplier (“collaborative commerce”)

Customer Value Proposition> Reduced out‐of‐stocks = Increase in sales 4% to 6%> Lower Inventories / working capital – 10% to 30%> Increased margins through greater logistic efficiency, inventory accuracy and less promotional spending


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Evidence of PCG Effectiveness

PCG growth opportunities

OOS = Out‐of‐stock


PCG dominant in these categories

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Leveraging PCG’s Proven Technology Platform…


More foods are being imported (80% of seafood)Fewer inspections occurring (less than 2% of imported seafood is being inspected)Greater awareness of Food & Drug Safety (over 237 recalls in calendar 2012)

…to address the growing importance of food and drug safety

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Why Do Food & Drug Companies Care?


Regulator Risk – New food and drug safety lawFinancial Risk – Food is the next tobacco for litigatorsBrand Risk – Loss of confidence in the brand

The new Food Safety Modernization Act is 2,000 pages and growing…

The new Food Safety Modernization Act is 2,000 pages and growing…

Marler is reportedly seeking $100 million in damages from Walmart and others in the cantaloupe supply chain. The potential for litigation plays a major role in retailers changing their food supply system.

‐Bill Marler, Attorney for 37 clients in Jensen Farms Litigation, June 2012

Marler is reportedly seeking $100 million in damages from Walmart and others in the cantaloupe supply chain. The potential for litigation plays a major role in retailers changing their food supply system.

‐Bill Marler, Attorney for 37 clients in Jensen Farms Litigation, June 2012

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ReposiTrak™‐Global Food and Drug Track & Trace System

Michael O. Leavitt – former U.S. Secretary of Health and Human Services, and Administrator of the Environmental Protection Agency and 3‐time governor of UtahDr. David Acheson – former FDA Associate Commissioner of Foods, former Chief Medical Officer at the FDA's Center for Food Safety & Applied Nutrition (CFSAN)

Park City Group joins with Leavitt Partners to create ReposiTrak

Park City Groups brings proven technology

Leavitt Partners brings thought leadership in the fields of food and drug safety

16 years and $125 million of invested CapitalProcesses millions of transactions per day


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ReposiTrak™‐Global Food and Drug Track & Trace System …Provides opportunity to accelerate growth of PCG’s existing hub and spoke network…

• Tracks and traces products and components to products throughout the food, drug and dietary supplement supply chains

• Receives, stores, shares, and maintains regulatory documentation all in one convenient location

• Near real‐time identification of the supply chain path taken by recalled products

• Strong retailer and supplier value proposition • Inexpensive to use ($100 per month per participant)

• Several million possible participants• Compliance with food and drug safety law• Reduces litigation risk• Provides point of differentiation for early adopters


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Rapidly Becoming the Standard for…


Initial retail, wholesaler and supplier implementations began in August 2012 ROFDA adopts ReposiTrak in May 2013 (Retailer Owned Food Distributors & Associates) as part of a trade‐association wide initiative with 14 possible wholesalers representing 20% of the supermarket stores in the US with more than 150,000 suppliers

…tracking and tracing food & drugs in the global supply chain

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Large Addressable Market

Addressable Market

$550 million addressable U.S. market > ~150 ‐ 200 Retailers> ~100,000 total connections @ ~$5K each

Additional supply chain management services> From basic service to enterprise supply

chain management > Increase average rev. per connection

$1 billion+ food & drug safety> 167,000 domestic manufactures,

processors, warehouses; 254,000 foreign> 570,000 U.S. facilities in the food service

segment> 2 million farmers / 5 million international

Base Level Service

$550 million

Food & Drug Safety

Additional Services[2x Base Level]


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Impactful Leadership TeamName ExperienceRandy Fields Chairman & CEO Co‐founder Mrs. Fields Cookies, Co‐founder Captiva Software

Ed Clissold CFO & General Counsel

Previously served as General Counsel for Mrs. Fields’ Cookies and was also in private practice

Robert Allen Director Former CEO of Southern Belle Dairy and EVP of Borden, Inc.

Austin Noll Director Consumer packaged goods consultant. Former executive at General Foods, Borden, and Nabisco

Rich Juliano Director Grocery retailer consultant. Former executive at SUPERVALU, Giant Eagle, and others

James Gillis Director Co‐CEO of Source Interlink Companies, Inc., a marketing and fulfillment company of entertainment products

Bob Hermanns Director Director of Food Industry Programs at the University of Southern California and former CEO of Associated Grocers

Bill Kies Director Principal of Kies Consulting, specializing in the supermarket industry. Former COO of IGA, Inc.

Ronald Hodge Director Former CEO of Delhaize America and former CEO of Hannaford Bros. Co.


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Select Retailer Partners


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Select Supplier Customers


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“Hub & Spoke” Financial Model3 terms of art:

Hub = RetailerSpoke = SupplierConnection = Retailer & Supplier data exchange which requires no installation of software AND no on‐site visit

Original market of smaller hubs and their spokesRetailers paid an annual subscription and “rolled‐out” platform to Supplier baseHistorical Hub/Spoke subscription value of $500,000 to $1,000,000 annually

Now shift in focus to larger hubs & upsell opportunitiesLarger hubs with a national footprint have a potential $3 ‐ 5,000,000 in annual subscriptionOpportunities to upsell additional supply chain modules increase revenue per connection by an order of magnitude

Strong customer retention equals recurring revenuePCG solutions become foundational, making PCG invaluable with a 90%+ retention rate


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Contribution Margin Going Forward

100%100% 75%75%

25%25%

Incremental Revenue Incremental Cost of Sale

Marketing AllowanceSales CommissionsTravelSales PromotionsMiscellaneous

Incremental Contribution Margin


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Financial “Snapshot”

* Adjusted EBITDA: EBITDA plus bad debt expense, stock compensation & expenses, and acquisition related costs

Net Debt

$1.2

$1.3

$1.4

$1.5

$1.6

$1.7

$1.8

$1.9

$2.0

$2.1

$2.2

Subscription Revenue Growth ($MM)

‐$3

‐$2

‐$1

$0

$1

$2

$3

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Adjusted EBITDA*($MM)

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Park City Group Investment Highlights> Recurring revenue streams with multi‐year visibility – ~90%+ customer retention rate gives strong earnings visibility.

> Generating significant positive cash flow… Significant operating leverage with 75%+ incremental margin. No need to raise capital.

> Accelerating growth & strong balance Sheet–in both revenue and EPS due to recent national account wins.

> Strong competitive advantage – 16 years of development and ~$125 million of invested capital in propriety platform.

> ReposiTrak™ partnership is well positioned to become the standard for tracking and tracing food and drugs in the global supply chain.

> Influential board of directors and experienced management team – current and former grocery, retailing, consumer products, dairy, and magazine industry senior executives.


NYSE MKT: PCYGHeadquarters: Salt Lake City, Utah

Recent Price (11/12/13) $9.84

52‐Week Range $2.71 ‐$9.94

Shares Outstanding 16.1 MM

Fully Diluted Shares 17.6 MM

Market Capitalization $163.0 MM

TTM Revenue $11.4 MM

TTM Adjusted‐EBITDA $2.6 MMOwnership

~40% Insider Ownership

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Nasdaq: PCYGwww.parkcitygroup.com

Thank You

For more info, contact:

Dave MossbergInvestor RelationsThree Part Advisors817‐310‐0051

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APPENDIXPark City Group


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Early results show an incredible time savings for category management personnel who previously took months to get the info consolidated for analysisConsolidation of over 50 million points of data into a usable format enabling analysis by store cluster, which validated and improved on the retailer’s previous analysisPCG recommended quantity and assortment by UPC for prescribed store clusters


In Focus in a Fraction of the TimeDSD Visibility/Category Review for a Retailer

Large, national retail chain and their reading glasses vendor

The Category Manager needed to know how much inventory to carry in each store cluster and getting this information together was previously a long, manual, tedious process (taking months)

PCG brought the necessary info together in one place (ScoreTracker) enabling analysis by PCG’s retail‐tenured category management experts

Long‐term expectation is to improve distribution voids, reduce inventory by $15+ million and begin following an automated approach to ensure appropriate ordering

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Got (the right amount of) Milk!SBT / SLR for a Supplier

Borden Dairy

Borden lacked visibility to in‐store performanceWas not using actual consumer demand via point‐of‐sale data to create replenishment ordersSuffered from high out‐of‐stocks, and high returns (dumps)


Sales are up ~10%Out of stocks have been cut by 50% (an identified problem at certain stores)Returns have been cut by almost 50%

Through a scan‐based trading go‐to‐market strategy coupled with PCG’s store‐level replenishment solution, Borden was able more closely match delivery to actual consumer demand

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Spend a Dollar, Make ElevenScan‐based Trading & DSD Visibility

Mid‐Size Mid‐western Grocery Chain

Scan‐based TradingOver the previous three years, and a $300,000 investment (combined monthly subscription and implementation costs), this chain has recorded an ROI of ELEVEN times the cost ($3.4m) with a modest SBT group of less than half a dozen vendors

DSD VisibilityFuture program expansion will be to utilize PCG’s DSD Visibility solution where out of stock and overstock situations can be identified and corrected and the targeted savings is about $5,000,000 annually.

Executing an SBT program developed from scratch, this mid‐western chain of about 130 stores was super cost conscious when it came to a third‐party SBT service provider


PCG will continue engagement with merchandising using our “Customer First” approach, to locate lost sales opportunities for the SBT vendorsFuture expansion to remaining DSD vendors (non‐SBT) to enable a complete view of the out‐of‐stock and overstock situations

2013 southwest ideas 1 6-2014

Business

Transcript of 2013 southwest ideas 1 6-2014