Network - Pivot Technology Services · 2018-06-29 · diverse partner network and Silicon...

ANNUAL GENERAL MEETING

June 27, 2018

L I F E C Y C L E S E R V I C E S

Integration

D a t a C e n t r e

Security

Engineering

Network

1

Head Table

Wade K. DaweChairman of the Board

Kevin ShankPresident and Chief Executive Officer

Matt GirardotChief Legal Officer and Corporate Secretary

David ToewsInterim Chief Financial Officer

Kurt SteinhauerCEO, Smart-Edge.com

Copyright 2018 Not For Re-Distribution

Agenda

Formal Business

Wade Dawe

Financial Review

David Toews

Business Update and Agenda

Kevin Shank

Smart Edge™ Update

Kurt Steinhauer

Q&A

3


2017 Developments

Continued commercial transformation

Introduced Smart EdgeTM

Investments in Cloudscapes and Applied

Addressed internal control environment

Repurchased over 1.5M shares

Paid our regular quarterly dividend

4


Comparison of 5-Year Cumulative Total Return

5

Assuming Initial Investment of $100(December 31, 2013 - December 31, 2017)

Pivot

S&P/TSX


Business of the Meeting

Appointment of Secretary and Scrutineers

Notice

Presentation of Financial Statements

Election of Directors

Reappointment of Auditors

Termination

6


Forward-Looking StatementsThis presentation contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking

statements" within the meaning of applicable Canadian securities laws. Forward-looking statements include statements regarding

user data for 5G technology, US MEC installations, improvements in profitability and margins, and other 2018 priorities to create

shareholder value growth and the assumptions underlying any of the foregoing. Pivot uses words such as "may", "would", "could",

"will", "likely", "expect", "believe", "intend", "anticipate" and similar expressions to identify forward-looking statements. Any such

forward-looking statements are based on assumptions and analyses made by Pivot and others in light of its experience and its

perception of historical trends, current conditions and expected future developments, including the rate of adoption of 5G

technology and improvements in margins on the sale of products and services in 2018, and that the general business climate will

not deteriorate, as well as other factors Pivot believes are appropriate under the relevant circumstances. However, whether actual

results and developments will conform to Pivot's expectations and predictions is subject to any number of risks, assumptions and

uncertainties. Many factors could cause Pivot's actual results to differ materially from those expressed or implied by the forward-

looking statements contained in this presentation. These factors include, without limitation: uncertainty in the global economic

environment; delays in the purchasing decisions of Pivot's customers; the competition Pivot faces in its industry and/or

marketplace; the possibility of technical, logistical or planning issues in connection with the deployment of Pivot's products or

services; the possibility that Smart Edge is not commercialized on time or in the manner that management assumes; the risk that

costs of integrating acquired businesses will negatively impact Pivot’s results of operations; the possibility that Pivot will not be

able to further align its support functions with the selling and delivery arms of the business; the possibility that Pivot will be unable

to capitalize on opportunities it has identified in the manner and timeframe anticipated, and the possibility that Pivot will not be able

to successfully sustain growth or grow its profitability. The "forward-looking statements" contained herein speak only as of the date

of this presentation and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise

such information, whether as a result of new information, future events or otherwise.

7

Financial ReviewDavid Toews, Interim CFO


Annual Performance – Revenue

1.14

1.25

1.371.42

1.51

2013 2014 2015 2016 2017

Revenue1

$ Billions

9

2017 growth of 6.5%

Product revenue up 5.8%

Services revenue up 12.6%

Services revenue growth of 13.5% (excluding

sales of OEM maintenance contracts)

1. Excludes GTS


Annual Performance – Gross Margin

11.4% 11.6% 11.6%12.1%

11.2%

2013 2014 2015 2016 2017

Gross Margin1

(%)

10

2017 gross profit $169m vs $171m in 2016

Basic profit generation stayed strong

Future growth of Pivot’s service business

intended to drive margin

1. Excludes GTS


Annual Performance – SG&A

144.1 137.0

1.8 7.6

2016 2017

SG&A Expenses1

($ Millions)

SG&A TeraMach SG&A

11

SG&A decreased $1.3m overall

Decrease was $7.1m excluding the acquisition

of TeraMach

Cost reductions completed to offset investment

in new offerings / expanding capabilities

Includes $3.3m investment in Smart EdgeTM

1. Excludes GTS


Annual Performance

24.8

33.4

30.3

25.1 24.1

2013 2014 2015 2016 2017

Adjusted EBITDA1,2

$ Millions

12

Performance reflected higher sales to major

customers, product pricing pressure and lower

rebates, partially offset by strong cost

management and higher service margins

Invested $3.3m in Smart EdgeTM

1. Excludes GTS

2. Non IFRS measure


322.4

369.3

34.1

39.3

Q1 2017 Q1 2018

Gross Profit Revenue

Revenue/Gross Profit$ Millions

1. Non IFRS measure

Revenue 14.5% above Q1 2017

On growth in product sales,

Pivot-direct services

Adjusted EBITDA¹ $3.1M above

Q1 2017

First Quarter 2018 Performance

10.6%

10.6%

(1.6)

1.5

Q1 2017 Q1 2018

Adjusted EBITDA¹$ Millions

13


Credit Agreement Senior Secured Credit Agreement (“Asset Based Lending Agreement”)

Term 5 Year – expiring September 2020

Size $225M + remaining accordion of $50M

Drawn Amount As at March 31, 2018: $127.6M

Average Undrawn

Availability (Q1/18)$83.8M

Financial Covenants Fixed Cost Coverage Ratio 1.1 if Undrawn Availability < 12.5%

Negative Covenants Limitation on amount of dividends, share buybacks, acquisitions and other

Interest Rate Libor+ 1.5% to 1.75%

Credit Facility – Flexible for Growth

14


Capital Market Strategies

Acquired ~1.55M shares during 2017

Acquired ~ 230k shares in 2018

New NCIB for 2018 began June 22

Paid $0.04 dividend every quarter

15


2014 2015 2016 2017 2018

Share Structure

TSX: PTGListed: Toronto Stock Exchange

Trading Symbol: PTG

Dividend: C$0.04 per share paid quarterly, Yield ~7.9%

Total Shares Out: 40,122,869

Market Cap: ~C$80.4 million (25/05/18)

52-week High/Low: C$2.94 / C$1.78

Founded: 2010

One of a few Dividend-Paying Tech Companies Listed on the TSX

• Renewed NCIB in June 2017

• Repurchased 1.55M shares in 2017

• Repurchased 231,000 shares subsequent to Q1 2018

•Share Buy-back Program:

1.50

1.00

0.50

2.50

2.00

Sh

are

Pri

ce

16


Comparison of 5-Year Cumulative Total Return

17

Assuming Initial Investment of $100(December 31, 2013 - December 31, 2017)

Pivot

S&P/TSX

Business UpdateKevin Shank, CEO


Pivot At A Glance

2017 Revenue¹

US$1.5B

2017 Adjusted

EBITDA2

US$24.1M

Customers

~2000

Technology

Partners

400+

Knowledge

Based

Workforce

800

Growing

Services

Portfolio

Global Touch

and Reach

A Leading Provider of IT Products and Services

Supporting the IT infrastructure needs

of many of the world’s

most successful companies

1. Excludes GTS

2. Non IFRS measure 19


Trusted Partner To Global Technology Leaders

More than

400Technology Partners

Approximately

40%Engineers, Technicians,

Subject Matter Experts

20


Blue Chip Customer Base

Approximately

2,000 Customers

Majority:

Enterprise-Class Companies

Across 5 Business Sectors

Energy

Finance

Healthcare

Retail

Public Sector

21


A Large and Growing Available Market

Sources: IDC, Markets and Markets

US IT Spending

Expected to Grow

Especially in Services

Pivot

Addressable Market

~$280B

Pivot

$1.5B

Field Service Market Forecast to Grow 21% Annually to 2020

22


Core Growth Strategies

Company

Strategy (High-Level)

• Build on core products and services business

• Enhance services/solutions capabilities and portfolio

• Emerging technology & cloud strategy

• Drive a commercial transformation

• Follow the customer

• Improve cost management

• Address legacy issues

• Commercialize Smart Edge™

Positioned

for

Success

Size and scale

Sales force

Deep relationships

Industry knowledge

Access to customers

Strength

Core product business is solid

Services business gaining momentum

Capacity to take on large, complex projects

Adding new services

Enhancing portfolio

Emerging technologies

Selling broader mix to existing clients

IP - Smart Edge™

Capability Innovation

23


Sourcing Design & procurement

Integration Lifecycleservices

VALUE

Today Services ~ 30% EBITDA

Products ~70% EBITDA

Tomorrow

Evolving Our Market PositionCommercial Transformation to Services Underway: recurring revenue, stability, predictability,

growth in earnings, higher value to clients, stickiness, ability to differentiate, higher GM%

Notional View Of Competitive LandscapeRecurring Revenue

HigherMargin

24


Evolution to Service Growth

Services

Portfolio

Creation

Solution

Skills

Service

Commercial

Transformation

Creation

Service Deal

Assembly Line

Expansion

of Installed

Accounts

New PTS

Service

Capabilities

Knowledge

Experts in

MS

Short-Term Longer-Term

Ongoing

25


5 Service

Channels

5 Solution

DisciplinesWorkplace Security

Digital

Infrastructure

Integration

Services

Deployment

Services

Workforce

Services

Managed

ServicesProfessional

Services

Assess > Design > Implement > Manage > OptimizeServices

Value Stream

CloudEmerging

Technology

2018: Pivot Services Portfolio 5x5

26


27

2018: Growth Focus Areas

A practice-based approach that

leverages our broad experience,

diverse partner network and Silicon

Valley-based technologists to gain

early insight into solutions that

change or challenge the status quo.

Emerging

Technology

A solutions mini-suite that leverages

our broader portfolio as fully-

integrated solution sets using

industry best practices to “run IT like

a business” with real data and

analytics to enable business value.

Business

Technology

Management (MS 2.0)

A platform that enables transformation

through automation and innovation,

improving IT effectiveness through

better cost control management,

visibility and enhanced support of our

customer’s complex cloud

infrastructure.

CLOUDx

Guiding Our Client’s Digital Journey with Transformative

Approaches to Technology & Operations

Guiding Our Clients’ Digital Journey with Transformative

Approaches to Technology & Operations


Business Technology Management (MS 2.0)Integrated Solutions Sets

Business

Technology

Management

User Experience

Lifecycle Services

Managed Workplace

Infrastructure Operations

Cloudx

IT Financial Management

•Service Desk

•Contact Center•Call Center

•ITSM Frameworks

•Integration

Services

•Asset

Management

•Contract Mgmt.

•Depot Services

•Recovery Services

•Image Management

•Corporate

Desktop/HVDI

•Mobile Device

(EMM/MAM)

•Unified Comms

•Cloud App Support

•Kiosk/Vending

•Cognitive,

Personas, Analytics

•Enterprise

Command Center

•NOC/SOC

•Infrastructure as a

Service

•Data Center

Operations

•Cloud Foundation

•Cloud Enablement•Cloud Connectivity

•Consumption &

Optimization

•Procurement & Logistics

•Device as a Service

•Utility/Consumption Operations

28


Customer X End User Network Data Center Collaboration

Fulfillment Services$2.23M $13.8M $14.67M

Deployment Services

Professional Services$184K

Workforce Services$2.2M (3rd Party)

Managed

Services

Commercial Transformation – Client Example

Tremendous growth potential via the introduction of:

Account planning methodology (5x5)

Account based marketing approach

New Portfolio Capabilities

Introduction of adjacent service offerings to existing product sales

Solution management and selling methodology

Increased attach and annuity revenue via Managed Services & Lifecycle Solutions

29

Sizeable, Sticky,

Annuitized

Revenue…Driving

Enterprise Value For Pivot

Existing Capability

Penetrated

Existing Capability

Not Penetrated

New or Enhanced Capability

Opportunity

Product & Service Disciplines

Serv

ice C

hannels


Building On The Core

State-of-the-art integration center

for staging, configuration, testing,

inventory management & shipping

Integration Facilities & Capabilities

30


Digital Enterprise B2B eCommerce platform delivering customer procurement integration

New customers on the platform:

Large telco

Large software company

Large beverage company

Large wireless company

2015 2016 2017

$22m $215m $326m

11,000 transaction 46,000 transactions 83,000 transactions

Building On The Core

Digital Ecommerce - Interconnect

31


Disparate & Under

Leveraged Capabilities

Building Client, Partner &

Industry Portfolio Awareness

5 Service

Channels

4 Solution

DisciplinesEnd User Data Center CollaborationNetwork

Fulfillment Services

Deployment Services

Workforce Services

Managed Services

ProfessionalServices

Client Care

Customer First Experience

Outcome Based Accountability

PMO

Common Methodology

Consistent, Repeatable, Successful

Solutions Management

Forward Thinking

Radical Transparency

Technology Innovation

Capability Expansion

Value Continuum

Building Our Brand

Brand

Identity

32

Smart EdgeTM

Kurt Steinhauer

MEC – Merging 5G and IT

Accelerating the Move to the Network Edge

1.5 GBOF TRAFFIC / DAY

Avg. internet user

4 TBOF DATA/DAY

Autonomous vehicles Connected Airplane

5 TBOF DATA/DAY

Smart Factory

1 PBOF DATA/DAY

Cloud video providers

750 PBOF VIDEO/DAY

By 2020

Smartdevices

access technology

Access AND edge

network

Corenetwork Cloud

Virtual, software-defined, cloud-ready: enabling the 5G future35

Where is the Edge?

Core

Core Telco Network Cloud Data Center

CENTRAL OFFICES

WIRELINE

Edge Devices/things

Edge Compute

Node

Network or other

Intermediary Data Hub

Edge Compute NodesMillions of on-premise sites;Typically virtualized servers, gateways, and traditional

Routers/Switches/Appliances

Network or otherIntermediary Data HubAccess points & traditional

network infra; transitioning to virtualized servers providing

infra. & compute (NGCO)

Regional Data Center or Co-lo Site

Typically virtualized servers

Cloud continue to invest in regional

infrastructure

Regional Data Center or Co-lo Site

IOT & On-Premise, Fog Node

WIRELESS

36

Above calculations conservatively based on 5us latency / km + congestion + transfer/processing + overheads

5G

ClientsCloud / OTTBase Station Local CO Regional CO

BACKBONEROUTER

Core

Massive Data Sets

Data Sovereignty / Privacy

LATENCY= 40mS+

LATENCY= <5 mS

LATENCY= 10mS+

LATENCY= 100mS+

37

WIRELESS

WIRELINE

Restricted

EXT-ND

RestrictedArchitecture Summary

38EXT

U.S. MEC Installations by Vertical, 2017-2026

39

The Business Case for MEC in Retail May 2017, as presented by iGR, intel, Hewlett Packard and ACS

Converged Platform

Mobility Core Ran

IT ApplicationsOperations

WirelinevCPEBNGVNFs

TheSmart Edge

40

New digital value chain

applications already exist.

Harness where people

and technology meet

at the edge.

MEC Enabling Killer Applications

Moving ForwardKevin Shank, CEO


Commercialize Smart EdgeTM Technology

Focus on Services/Solutions Sales Growth

Improve Profitability & Margins

Advance Commercial Transformation

Drive Cash Generation (stronger cost management)

Focused M&A

1.

2.

3.

4.

5.

6.

2018 Priorities To Create Shareholder Value

43


Summary

PAYMENTS

1.

2.

3.

4.

5.

6.

7.

44

Large addressable market featuring attractive growth trends/prospects

Proven business serving ~2,000 customers, generating US$1.5 billion of revenues

Trusted vendor relationships with the world’s leading IT companies

Expanding capabilities to organically grow our service revenues

Positioned to offer potentially disruptive and/or emerging technologies

Experienced and proven services and technology leadership talent

Dividend payer with ~8% yield

ANNUAL GENERAL MEETING

June 27, 2018

L I F E C Y C L E S E R V I C E S

Integration

D a t a C e n t r e

Security

Engineering

Network

45

Network - Pivot Technology Services · 2018-06-29 · diverse partner network and Silicon...

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Transcript of Network - Pivot Technology Services · 2018-06-29 · diverse partner network and Silicon...