Red Hook - Investor Relations Solutions

Transcription

Red Hook - Investor Relations Solutions
Lexmark To Acquire Kofax
Lexmark + Kofax
Creates $1.4 Billion Higher Value Solutions Business
March 24, 2015
Safe Harbor Statement
The contents of this presentation that are not statements of historical fact are
forward-looking statements and involve risks and uncertainties that are discussed
in the Safe Harbor section of our earnings releases and SEC filings. Actual
results may differ materially from such statements. Lexmark undertakes no
obligation to update any forward-looking statements.
This presentation contains non-GAAP financial measures, unless otherwise
noted. Lexmark has provided reconciliations of GAAP to non-GAAP financial
measures and a discussion of management’s use of non-GAAP financial
measures on its investor relations website located at http://investor.lexmark.com.
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© 2015 Lexmark International, Inc. All rights reserved.
Key Transaction Details
Lexmark to Acquire Kofax
Transaction Value
Synergies and EPS Impact
Financing
Expected Closing
Closing Conditions
Management / Integration
 $11 per share in cash
 Approximately $1 billion
 Accretive to 2015 non-GAAP EPS: ~$0.10 per share
 Revenue scale drives increased contribution margin
 Cost synergies deliver at least $40 million of operating leverage
 Non-US cash balance
 Existing short-term credit facilities
 Second quarter of 2015
 Customary closing conditions and regulatory approvals
 Approval of more than 75% of the voting shares of Kofax
 Kofax and Perceptive Software will combine into an enterprise software segment
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© 2015 Lexmark International, Inc. All rights reserved.
Overview of Kofax
Business Overview
•
•
•
•
HQ in California, Domiciled in Bermuda
2014 Revenue of $297 million*
Market share leader in Capture
Leader in technology to streamline business
processes that are both people and information
intensive
• Leverages systems of engagement, such as
smart MFPs, mobile apps and web portals to
integrate customers and knowledge workers into
mission critical processes
Fiscal 2014 Revenue*
By Product
Professional
Services
̶
Loan and mortgage applications, claims
submissions, new account opening and customer
onboarding, benefits enrollment
• Smart Mobile Applications
̶
Mobile mortgage, remote check deposit, bill pay
Asia Pacific
Software
27%
Maintenance
Licenses
37%
EMEA
Americas
License
Maintenance
32%
2014 Revenue = $297 million*
Established, Diversified Customer Base
Key Products
• Smart Process Applications
By Geography
•
•
•
•
>20,000 customers worldwide
80 customers on Fortune’s Global 100 list
>850 channel partners globally
Best known customers include:
• Process Intelligence and Analytics
• Data and Content Integration
• Multi-Channel Capture
̶
Smart MFPs, mobile, web portals, batch and
distributed scan
* Kofax non-IFRS revenue for fiscal year 2014 ending June 30,2014
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© 2015 Lexmark International, Inc. All rights reserved.
Kofax Accelerates Lexmark’s Value Creation Model
Lexmark is Transforming to a Higher Value Portfolio
 Focused on Higher Value Solutions to solve customers’ unstructured information challenges
 Increasing participation in growing market for Higher Value Solutions
 Higher Value Solutions revenue exceeded $1.1 billion in 2014 ($1.4 billion including Kofax)
Lexmark is Creating Shareholder Value
 Growing a more predictable annuity revenue base, now ~70% of revenue
 13 consecutive calendar years of positive free cash flow
 Transforming through expansion and acquisitions
 Returned >78% of free cash flow to shareholders through dividends and
share repurchases 1Q11 – 4Q14
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© 2015 Lexmark International, Inc. All rights reserved.
Strategic Rationale
Kofax Enhances Lexmark's Capture, Process and Mobile Capabilities
• Creates ~$1.4 billion growing higher value solutions business
• Adds new enterprise customers & channel partners, enhances leadership in several vertical markets
• Strengthens technology and capabilities in multi-channel capture, smart process applications, data/content
integration, and process analytics supporting transformation to higher value solutions portfolio
Laser
Hardware Platform
Asset Management
Software Platform
Mono & Color
A4 MFPs & Printers
Fleet Asset
Management
Content & Process Management
Software Platform
Perceptive
Capture
Perceptive
Content
Perceptive
Process
Perceptive
Search
Industry-specific solutions
Retail
Manufacturing
Hardware Solutions
• Print
• Scan
• Classify & Sort
Banking
Insurance
Asset Mgmnt Solutions
• Smart Managed Print
Services
Healthcare
Government
Education
Back Office
Content & Process Management Solutions
• Documents
• Images
• Video / Audio
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© 2015 Lexmark International, Inc. All rights reserved.
Financial Rationale
Transaction provides multiple value creation opportunities
Enhanced Scale and
Growth Potential
• Consolidated pro forma
solutions revenue
> $1.4B
• Creates ~$700M
growing enterprise
software business,
significantly increasing
scale and profitability
• Creates >$300 million
software maintenance
and subscription
annuity stream
Significant Synergies
• Increased scale
supports cost and
expense reductions
with synergies of at
least $40M
• Revenue synergies
from improvements to
product offering and
cross-selling deliver
higher contribution
margin
Efficient Balance
Sheet
• Deploys available cash
balances
• Efficient use of
non-US cash
(Repatriation tax >30%)
EPS Accretive
• Accretive to non-GAAP
EPS in 2015:
~$0.10 per share
• Accelerated EPS
growth as synergies
ramp
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© 2015 Lexmark International, Inc. All rights reserved.
Lexmark + Kofax Solving the Unstructured Information Challenge
Explosion of content
outside enterprise
applications
Digital: Documents, email,
forms, images, audio,
video
Paper: Documents, mail,
notes, forms
Customers
Suppliers
Enterprise
ERP
Resource Planning
CRM
HRIS
Human Resources
Information System
EMR
Kofax enhances Lexmark’s
capabilities to uniquely
focus on connecting the
unstructured printed and
digital information across
the enterprise with the
processes, applications and
people that need it most
SIS
Customer Relationship
Education
Healthcare
Management
Internal
Processes
Employees
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© 2015 Lexmark International, Inc. All rights reserved.
Growing Market For Content & Process Management
Kofax’s expertise and reach, combined with Lexmark’s Perceptive Software,
delivers scale and supports growth potential
Market
~$14B
Content & Process
Management Software
Expected to grow
at ~10% CAGR
~$10B
Source: Industry sources, public information, and other internal and external sources
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© 2015 Lexmark International, Inc. All rights reserved.
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Kofax Helps to Achieve Perceptive Software Revenue Target
Addition of Kofax creates growing ~$700 million enterprise software segment
Nearly doubles size of Lexmark’s enterprise software business
Creates $1.4 billion higher value solutions business
$1,437
$1,134
Perceptive Software
4Q14 Run Rate + Kofax
~$700
Pro forma Revenue
Exceeds $500M Target
$616
$500
Target
Revenue $M
Perceptive
Software
$683
$313
$100
Managed Print
Services
Perceptive
Software $M
*Pro forma revenue based on Kofax ($303 million) and Perceptive Software ($313 million) calendar year 2014 non-GAAP revenue
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© 2015 Lexmark International, Inc. All rights reserved.
Kofax Helps to Achieve Perceptive Software Profit Target
Kofax helps Perceptive Software achieve
operating income margin % target of ~25% (end of 2016)
Operating Income Margin %
~25%
~10%
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© 2015 Lexmark International, Inc. All rights reserved.
Pro Forma Balance Sheet
Ample Post-Acquisition Liquidity
• Flexible balance sheet with ample liquidity
̶
~$325M undrawn short term credit facilities
̶
Significant balance sheet cash remains
• Committed to paying down short term debt through both free cash flow and other
significant sources of cash made available through integration activities
Pro Forma Capital Structure ($M)
Short term credit facilities ($625M Capacity)
~$300
Long term debt
~$700
Total Debt
~$1,000
Total Cash
~$250
Net Debt
~$750
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© 2015 Lexmark International, Inc. All rights reserved.
Capital Allocation Increasing Shareholder Value
Kofax acquisition consistent with capital allocation framework
 Continued acquisitions to strengthen and grow solutions capabilities
 Dividend currently yielding > 3%
 Share repurchases paused, will resume when short term debt is paid (18 - 24 months)
Acquisitions
Free Cash Flow
Return of Capital
Invested ~ $1B
2010 – 2014
~90% to 100% of Non-GAAP Net Income
Returned 78% of 1Q11 – 4Q14
Free Cash Flow
Accelerating
transformation to
higher value
solutions business
Significantly
expanded strategic
software capabilities
Long Term Assumption:
$1.1B
<50%
>50%
$0.9B
Share
Repurchase
Cash
for
Investment
Strengthen & Grow
Solutions Capabilities
Return
to
Shareholders
Free
Cash
Flow
Dividends
1Q11 To 4Q14
Return >50% on Average through
Dividends & Repurchases
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© 2015 Lexmark International, Inc. All rights reserved.
Summary
A compelling combination for all Stakeholders
 Enhanced financial profile, more efficient balance sheet
Investors
 Annualized cost savings of at least $40M
 Significantly accelerates scale and profitability in ~$700M software business
 Accretive to 2015 Non-GAAP EPS of approximately $0.10 per share
Customers
• Better positioned to address customers’ ever-evolving unstructured
information challenges
• Complementary skills, technologies and product capabilities deliver
innovative and cost-effective solutions
 Opportunity to market and a sell broader array of market-leading solutions to
solve customers’ unstructured challenges
Employees
 Opportunity to create unique solutions by leveraging industry-leading
Smart Capture, Content, Process and MPS technologies
 Advances industry-leadership enhancing Lexmark’s ability to attract and
develop talent
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© 2015 Lexmark International, Inc. All rights reserved.
© 2015 Lexmark International, Inc. All rights reserved.