Investor Presentation - Altus Group€¢Market standard software solutions for global CRE property...
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Transcript of Investor Presentation - Altus Group€¢Market standard software solutions for global CRE property...
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altusgroup.com
Forward Looking Statements
Certain information in this presentation may constitute “forward-looking information” within the meaning of applicable securities legislation. All information contained in
this presentation, other than statements of current and historical fact, is forward-looking information. Forward-looking information includes information that relates to,
among other things, objectives, strategies and intentions, and future financial and operating performance and prospects. Generally, forward-looking information can be
identified by use of words such as “may”, “will”, “expect”, “believe”, “plan”, “would”, “could” and other similar terminology. All of the forward-looking information in this
presentation is qualified by this cautionary statement. Forward-looking information includes, but is not limited to, the discussion of Altus Group’s business and operating
initiatives; its expectations of future performance for its various business units and its consolidated financial results; and its expectations with respect to cash flows and
its level of liquidity.
Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information is based on, among other things, opinions,
assumptions, estimates and analyses that, while considered reasonable by Altus Group at the date the forward-looking information is provided, inherently are subject to
significant risks, uncertainties, contingencies and other factors that may cause actual results, performance or achievements, industry results or events to be materially
different from those expressed or implied by the forward-looking information. The material factors or assumptions that were identified and were applied by Altus Group
in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to: the successful execution of Altus
Group’s business strategies; consistent and stable economic conditions or conditions in the financial markets; consistent and stable legislation in the various countries
in which Altus Group operates; no disruptive changes in the technology environment; the opportunity to acquire accretive businesses; the successful integration of Altus
Group’s businesses; and the continued availability of qualified professionals.
Inherent in the forward-looking information are known and unknown risks, uncertainties and other factors that could cause Altus Group’s actual results, performance or
achievements, or industry results, to differ materially from any results, performance or achievements expressed or implied by such forward-looking information.
Given these risks, uncertainties and other factors, investors should not place undue reliance on forward-looking information as a prediction of actual results. The
forward-looking information contained herein is current as of the date of this presentation and, except as required under applicable law, Altus Group does not undertake
to update or revise it to reflect new events or circumstances. Additionally, Altus Group undertakes no obligation to comment on analyses, expectations or statements
made by third parties in respect of Altus Group, its financial or operating results, or its securities. Please consult Altus Group’s most recent regulatory filings on SEDAR
for more information on the Company’s forward-looking statements.
Altus Group uses certain non-IFRS measures (such as Adjusted EBITDA and Adjusted EPS), and as indicators of financial performance. Readers are cautioned that
they are not defined performance measures under IFRS and may differ from similar computations as reported by other similar entities and, accordingly, may not be
comparable to financial measures as reported by those entities. We believe that these measures are useful supplemental measures that may assist investors in
assessing an investment in our shares and provide more insight into our performance.
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altusgroup.com
Altus Group at a Glance
Helping clients maximize the valueof their real estate assets & portfolios through:
C O N N E C T I N G T H E G L O B A L C O M M E R I C A L R E A L E S T A T E M A R K E T P L A C E
Software & data solutions for CRE
investment management
Independent technology-enabled CRE
professional services
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altusgroup.com
Uniquely Positioned Market Leader
Market Standard Software & Data Solutions
• Heavily embedded in customers’ daily workflows
• Market standard software solutions for global CRE property and portfolio analysis
• Market standard for investment performance benchmarking & attribution analysis
standard for US CRE institutional investors
• Leading provider of Canadian real estate market data
Established Market Leader
• Leading provider of independent advisory services, software and
data solutions to the global commercial real estate (CRE) industry
Unmatched Global Blue Chip Client Base
• Serving the world’s largest CRE industry participants
Global Scale
• Headquartered in Canada, with 75 offices & 2,500+ employees in major markets
across North America, Europe & Asia Pacific
Depth in Expert Services
• Trusted CRE advisor in property tax management, valuations, market
research, development cost consulting & project management, and
geometrics services
• Leading market share in CRE consulting practices
Strong Financial Profile
• Solid balance sheet with strong cash generation
• Extended financial flexibility with Real Matters investment
• Strong track record of profitable growth
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altusgroup.com
Connecting the Global CRE Market
Collect Property Data in the Cloud
Understand How Assets Stack Up
APPRAISAL MANAGEMENT
Make Informed Decisions
COST CONSULTING PROPERTY TAX
Tax Analytics Platform
ALTUS CLIENT PLATFORMSingle point of contact / view of assets – on a common web & data warehouse platformD
ata
Flo
w
5
Evaluate & Manage
Development Opportunities
Optimize Property Tax &
Expense Management
Gain Data-Driven Insight
VALUATION ADVISORY
Canadian Market Data
Providing Data for Visibility and Insight to Global CRE Market
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altusgroup.com
Evolving Financial Profile
Growing Altus Analytics Revenues
$0
$100
$200
$300
$400
$500
$600
2014 2015 2016 2017
Altus Analytics CRE Consulting Geomatics
$85 M
$67 M$247 M
$85 M
$67 M
$45 M$370 M
$416 M$443 M
$151 M
$91 M
$126 M
Reve
nu
es (
C$ M
)
$260 M
$49 M
$478 M
$169 M
$194 M
$223 M
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altusgroup.com
The Institutionalization of Commercial Real Estate
Sources: (1) Cornell research, 2016; (2) Savills research, 2016 ; (3) Prequin report, 2016; (4) IREI report, 2016 (based on survey of 194 real estate investment managers around the world who control nearly $2.8 trillion
of real estate assets); (5) IDC report, 2016; (4) Prequin report, 2016.
Real estate investment allocation expected to reach 10.3% in 2017
(up from 9.6% in 2015).1
Global, investible commercial real estate market estimated to have
reached $19 trillion in 2015.2
Pension funds are leading institutional investors in invested real estate
assets.3
Majority of invested real estate assets (based on AUM) are in North
America & Europe.4CRE continues to lag other industries in “big data & analytics”
spending.5
47%
37%
6% 4%1%
5%
0%
10%
20%
30%
40%
50%
North
America
Europe Asia Australia Latin
America
Other
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altusgroup.com
Information Services Model
Leveraging data to deliver
insights and outcomesTransaction processing efficiency is no longer a differentiator – customers demand insights
Labor arbitrage and economies of scale are disappearing – clients demand better outcomes
Source: Wells Fargo Securities
Moving Towards Analytics Applications & Services R
ep
res
en
tati
ve
Co
mp
an
ies
FINANCIAL TECHNOLOGY &
TRANSACTION PROCESSING STRATEGIC OUTSOURCINGINFORMATION SERVICES
Characteristics
• Business models characterized by high margins, operating leverage, low capex and strong free cash flow
• Proliferation of data and low computing costs driving demand for Big Data Analytics
• Strong demand for proprietary data supported by predictive analytics embedded in workflows
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Altus Analytics Growth Drivers
• Same customer revenue growth by:
- Adding more seats, upselling on new modules & cross selling
- Ongoing conversion from legacy DCF & ValCap products to
ARGUS Enterprise (AE) +3,500 clients using AE
• New client wins (driven by new products & roadmap
enhancements)
• Geographic expansion powered by global CRE companies -
significant opportunity for new sales in untapped Europe/EMEA &
Asia markets
• Customers adding more assets on platform & increasing frequency of valuations (pricing based on # of assets on platform and frequency of valuations)
• New client additions (open-end funds) & growing demand from “other” client types: closed-end funds, pension funds, private equity, REITS, etc.
• Expanded target market from new data analytics capabilities (attribution & risk analysis)
• New market opportunity for appraisal management in Europe, driven by new AIFMD regulation (first to market advantage)
ARGUS Software Appraisal Management
Same Customer
Sales
New Clients & New Users
New Geographies
New Verticals &
Applications
Increasing upselling and cross selling
– more licenses/seats, more assets on
our platforms, etc.
Expanding into new geographies – most
penetrated in North America with a lot of
upside in Europe & Asia
Adding more clients and increasing penetration
with new client types
Adding more functionality with new
applications/ product roadmap enhancements
to expand target market & access new
markets users
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altusgroup.com
Altus Analytics Growth Strategy
SET THE STANDARD GLOBALLY
Wave 1 Wave 2 Wave 3
North America DCF Upgrade
Committed; Deployment Ongoing
UK ValCap Upgrade
UK & Continental Europe
Go Global
Enterprise Agreements
UPSELL
Same Client Application Sale & SME
Strong re-purchase rates from current AE customers (adding more seats and/or functionality)
INNOVATE
New Applications & Partnerships ARGUS in the Cloud Data Monetization
New Markets & Applications (ex. Debt Markets)
Upgrade Sale Enterprise Sale Global Solution
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altusgroup.com
Technology-Enabled Expert Services
Modernization Through Technology
• Leading provider of independent CRE advisory services
• Services provide access to robust CRE data
• Unparalleled insights and efficiencies provided by Altus
Analytics
• Pursuing investments in technology to leverage extensive
proprietary databases, drive internal efficiencies & enhance
client value
• Tax analytics platform for benchmarking and client
management
• Historical valuation and construction cost benchmarking
platforms
• Future potential for benchmark & index products
• Cross selling with Altus Analytics
• Property tax market consolidation opportunity in US & UK (Nov.
2017 acquisition of CVS doubled our UK practice)
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altusgroup.com
Financial Strength
Strong Cash Generation
Prudent Financial
Management
Strong Financial Growth
Financial Flexibility
Increasing recurring revenue from global blue chip client base
DSO as at Dec. 31, 2017 was 70 days compared to 74 days at end of 2016
8% 5-year Revenue CAGR up to 2017
10% 5-year Adj. EBITDA CAGR up to 2017
$28.1 M cash position
$150.4 M bank debt
1.84x bank funded debt to EBITDA ratio
As at Dec. 31, 2017
Strong Shareholder
Returns
19% share price increase in 2017 & 21% TSR
$23.1 M declared in dividends in 2017 (including DRIP)
altusgroup.com
For investor inquiries, please contact:
Ali Mahdavi
Investor Relations
416-641-9710
CONNECTING THE GLOBAL REAL ESTATE MARKETPLACE TSX: AIF
Appendix
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altusgroup.com
Capital Markets Stats
SECURITY SYMBOLS TSX: AIF
MARKET CAPITALIZATION $1.2 Billion
SHARES OUTSTANDING 38.6 M
RECENT SHARE PRICE $31.40 (Feb. 28)
52-WEEK RANGE $37.89 / $25.25
3-MTH AVG. TRADING VOLUME ~130,000
QUARTERLY DIVIDEND $0.15 per share (1.9% yield)
ADJUSTED EPS $1.13 per share (2017)
OWNERSHIP~70% Institutions &
~10% Employees
Included in S&P/TSX Composite Index
ANALYST COVERAGE
BMO, Stephen MacLeod
Canaccord, Yuri Lynk
Cormark, Maggie MacDougall
CIBC, Stephanie Price
GMP, Deepak Kaushal
National Bank, Richard Tse
RBC, Paul Treiber
Scotia, Paul Steep
TD, Daniel Chan
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altusgroup.com
Financial Performance By Business Segment
In thousands of Cdn. dollars Q4 2017 Q4 2016 % change FY 2017 FY 2016 % change
ALTUS ANALYTICS
Recurring (data & software subscriptions, maintenance) 29,994 29,115 2.8% 117,777 111,928 5.2%
Non-recurring (licenses & services) 11,956 13,120 (8.9%) 51,458 39,552 30.1%
Revenues 41,900 42,235 (0.8%) 169,235 151,480 11.7%
Adjusted EBITDA 7,165 11,818 (39.4%) 48,412 40,987 18.1%
Adjusted EBITDA Margin 17.1% 28.0% 28.6% 27.1%
COMMERCIAL REAL ESTATE CONSULTING
Property Tax 41,972 36,511 15.0% 158,696 151,155 5.0%
Valuation & Cost Advisory 27,433 25,250 8.6% 102,511 96,109 6.7%
Revenues 69,405 61,761 12.4% 261,207 247,264 5.6%
Property Tax 5,064 4,276 18.4% 40,346 40,091 0.6%
Valuation & Cost Advisory 2,794 2,193 27.4% 12,039 12,059 (0.2%)
Adjusted EBITDA 7,858 6,469 21.5% 52,385 52,150 0.5%
Adjusted EBITDA Margin 11.3% 10.5% 20.1% 21.1%
GEOMATICS
Revenues 11,589 11,549 0.3% 48,536 45,082 7.7%
Adjusted EBITDA 32 185 (82.7%) 3,493 (868) 502.4%
Adjusted EBITDA Margin 0.3% 1.6% 7.2% (1.9%)
CONSOLIDATED
Revenues 122,735 115,334 6.4% 478,137 442,891 8.0%
Adjusted EBITDA 20,367 22,120 (7.9%) 82,220 74,088 11.0%
Adjusted EBITDA Margin 16.6% 19.2% 17.2% 16.7%
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altusgroup.com
Revenue Streams
ALTUS ANALYTICS
• ARGUS software tools for CRE portfolio & investment
management - for asset valuation, portfolio management,
budgeting, forecasting, sensitivity analysis, data
management, etc.
• Industry valuation/ transactions standard (ARGUS Enterprise & DCF)
• Global footprint
• First to market advantage in CRE data management
• Appraisal management advisory with data analytics tools -
attribution analysis, benchmarking, risk analysis
• US industry standard in fund valuation data (used by 22/23 NCREIF
open-end index funds)
• First to market in Europe
• Canadian market data subscription products (RealNet, Altus
InSite, HPI) • Largest CRE data provider in Canada
EXPERT SERVICES
• Property Tax management & administration services - tax
assessment reviews, appeals & negotiations, expert witness
services, etc.
• Cross-border capability
• Canadian & UK market leader
• One of top 5 providers in US
• Valuation & advisory services – valuations/appraisals, due
diligence, market research, economic consulting, etc.
• Independence
• Canadian market leader in valuations & independent market
research
• Cost consulting and project management services -
construction feasibility studies, budgeting, cost planning, risk
management, loan monitoring, etc.
• Canadian market leader & dominant position with developer market
• Strong presence in Asia Pacific
• Geomatics technical services - field & construction surveys,
3D scanning, internet mapping• Market leader in geomatics services in Western Canada
~70% of Altus
Analytics Revenues
are Recurring
Recurring revenues include
data & software subscriptions
& maintenance revenues
Non-recurring includes
licenses and services
Pricing for services is
based on a fixed fee or
time and materials fee
basis, and for a significant
number of projects in
Property Tax, on a
contingency basis
Competitive Strengths:
Competitive Strengths:
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altusgroup.com
Management Committee
MITCH ETTINGER
President,
Geomatics
ALEX PROBYN
President,
Property Tax, UK
TERRY BISHOP
President, Property
Tax, Canada
MICHAEL COMMONS
President, Cost Consulting, N.A.
NIALL MCSWEENEY
Senior Director,
Cost Consulting,
Asia Pacific
ROBERT
COURTEAU
CEO
LIANA TURRIN
General Counsel and
Corporate Secretary
ANGELO BARTOLINI
CFO
JIM DERBYSHIRE
Global
President,
Property Tax
COLIN JOHNSTON
President, RVA
Canada
TRISH BALL
Chief Human
Resources
Officer
ED ORLIK
CIO
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CARL
FARRELL
President
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altusgroup.com
Board of Directors
RAYMOND MIKULICH, CHAIRMAN
Mr. Mikulich currently serves as the Managing Partner and Chief Investment Officer for Ridgeline Capital Group, LLC, a real estate investment
and asset management company, and the Chief Executive Officer of HomeLPC, LLC, a real estate investment company based in New York, NY.
He was head of Apollo Global Real Estate North America. Mr. Mikulich was a member of the investment committee and the co-head of the Real
Estate Private Equity Group of Lehman Brothers and the Group Head of Global Real Estate Investment Banking at Lehman Brothers. He has
served as a Trustee of the Urban Land Institute, on the Board of The Real Estate Roundtable, as a member of the Advisory Board of the National
Association of Real Estate Investment Trusts (NAREIT) as well as numerous other industry organizations.
ROBERT COURTEAU, CEO
Mr. Courteau is Chief Executive Officer of Altus Group. An accomplished senior executive, Mr. Courteau has extensive experience in leading new
business initiatives and achieving growth objectives with some of the world’s foremost companies. He was a corporate executive with SAP AG, a
global market leader in enterprise application software, including roles as the President, North America and Global Chief Operating Officer. He
has been an active board member of numerous North American not-for-profit organizations and has served on boards of several publicly-traded
companies. Mr. Courteau holds a Bachelor of Commerce degree from Concordia University and was awarded an Honorary Doctor of Laws
degree from Concordia University in 2011. In recognition of his commitment to education and endorsement of international standards and
regulation, he was awarded an Honorary Fellowship with RICS (FRICS) in 2014.
CARL FARRELL, PRESIDENT
Mr. Farrell is President of Altus Group. He is a seasoned technology executive with over 30 years of extensive global experience in the software,
data and professional services industry. Mr. Farrell most recently served as the Executive Vice President & Chief Revenue Officer for SAS
Institute, the global leader in the business analytics market. During his 15-year tenure with SAS, he held responsibilities for sales, professional
services, marketing and overall global operations. Previously, Mr. Farrell held executive positions at Vignette Corporation, Idiom Technologies, JD
Edwards and JBA Plc.
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altusgroup.com
Board of Directors
ERIC W. SLAVENS
Mr. Slavens currently serves on the boards of NexGen Financial Corporation, an asset management company, Effort Trust Company, a financial
services, real estate and asset management company, and Titanium Corporation Inc., an oil sands services and technology company. He is a
Fellow of the Chartered Professional Accountants of Ontario. Mr. Slavens was a partner of PricewaterhouseCoopers LLP for 30 years, serving
most recently as the National Leader, IPO Services. Mr. Slavens has a Bachelor of Commerce from the University of Toronto and is a graduate of
the Directors’ Education Program co-sponsored by Rotman School of Management and the Institute of Corporate Directors.
DIANE MacDIARMID
Ms. MacDiarmid is President, MacDiarmid & Company, a strategy and organizational effectiveness consulting firm. Previously she was Executive
Vice President, Corporate Resources with Bentall Kennedy LP, a North American real estate investment and services company. Prior to joining
Bentall Kennedy, Ms. MacDiarmid was President of Oliver Wyman Delta Canada. Earlier in her career she worked in financial services, consulting
engineering and the oil industry. Ms. MacDiarmid holds a Master of Business Administration from the Schulich School, York University, Toronto
and a Bachelor of Applied Science (Civil Engineering) from Queen’s University, Kingston, Ontario. She is a member of the boards of Morneau
Shepell and Altus Group and is past chair of the board of AMREF (African Medical and Research Foundation) Canada.
TONY GAFFNEY
Mr. Gaffney was formerly Chief Executive Officer of Aon Hewitt Canada, a human capital and management consulting company. Previously, he
was Managing Partner, Toronto, of Accenture Inc. Mr. Gaffney has served as President and Chief Executive Officer of BCE Emergis, a publicly-
traded company, and Bell Nexxia. Mr. Gaffney has also held international leadership positions with SHL Systemhouse Inc. and MCI Corp. He
currently sits on the boards of President’s Choice Bank, Canada’s Walk of Fame and Bishop Strachan School. Mr. Gaffney holds a Bachelor of
Engineering (B.A.I) degree and M.A. from Trinity College in Dublin, Ireland. He is also a graduate of the Rotman Corporate Directors program
(ICD.D).
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altusgroup.com
Board of Directors
JANET WOODRUFF
Ms. Woodruff is an experienced corporate director and senior executive with over 30 years of business experience in the energy, transportation
and health sectors, including her most recent role as acting Chief Executive Officer of Transportation Investment Corporation, a B.C. Crown
Corporation. Ms. Woodruff currently serves on the boards and audit committees of Capstone Infrastructure Corporation and FortisBC Inc. Ms.
Woodruff is a member of the Institute of Corporate Directors, holding the ICD.D designation, and is a Fellow Chartered Accountant of British
Columbia. She earned her Honours Bachelor of Science from the University of Western Ontario and her Master of Business Administration
degree from York University.
ANGELA BROWN
Ms. Brown is an experienced executive with more than 25 years in the payments industry, including merchant acquiring, consumer and
commercial payment products, payment processing and merchant acceptance. Ms. Brown currently serves as President and Chief Executive
Officer of Moneris Solutions Corporation. Prior to joining Moneris, Ms. Brown was Group Executive, Enterprise Development, Merchants &
Acceptance, for MasterCard Worldwide. She was responsible for cultivating MasterCard’s relationship with merchants, creating new merchant
value propositions and expanding the reach of MasterCard’s network. Previously, Ms. Brown spent 13 years at the Canadian Imperial Bank of
Commerce within the ATM and Cards divisions. Ms. Brown graduated with a Master’s degree in Business Administration from the Schulich School
of Business at York University in Toronto.