Investor Presentation

Transcription

1 Investor Presentation February 2013 NYSE MKT: PCYG 1

2 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 the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Those factors could include changes in economic conditions that may change demand for the Company's products and services and other factors discussed in the "forward-looking information" section and the "risk factor" section of the management's discussion and analysis included in the Company's report on Form 10-K and 10-Q or current reports on Form 8-K filed with the Securities and Exchange Commission. This presentation is comprised of interrelated information that must be interpreted in the context of all of the information provided and care should be exercised not to consider portions of this presentation out of context. Park City Group uses paid services of investor relations organizations to promote the Company to the investment community. Investments in any company should be considered speculative and prior to acquisition, should be thoroughly researched. Park City Group does not intend to update these forward-looking statements prior to announcement of quarterly or annual results. 2

3 Park City Group Business Overview Hub & Spoke Model Software-as-a-Service ( SaaS ) provider Provide third-party Wal-Mart like data exchange between grocery stores and their suppliers Strong value proposition for retailers & suppliers Improve financial performance Optimize inventory Enhance customer experience Food and Drug Safety tracks the path of food and drugs from farm to fork Scalable to support infinite retailer/supplier connections. 3

4 Park City Group Investment Highlights > Strong Competitive Position 16 years of development and ~$125 million of invested capital in propriety platform. > Recurring revenue streams with multiyear visibility ~90%+ customer retention rate gives strong earnings visibility. > At inflection point in growth curve in both revenue and EPS. NYSE MKT: PCYG Headquarters: Park City, Utah Recent Price (2/8/13) $ Week Range $ $4.28 Shares Outstanding 12.3 MM Fully Diluted Shares 15.6 MM Market Capitalization $51.4 MM TTM Revenue $10.2 MM TTM Adjusted-EBITDA $2.0 MM Ownership 46% Mgmt & Board / 13% Institution > Significant operating leverage 75%+ incremental margin Generating positive free cash flow no need to raise additional capital. > Food and Drug Safety Partnership increases addressable market/ accelerates growth Opportunity to become global standard for tracking food and drugs throughout global supply chain 4 > Influential Board of Directors and Experienced Management Team Current and former grocery, retailing, consumer products, dairy, and magazine industry executives.

5 Core Issue #1 Grocery Industry Challenges Risk adverse, low growth industry > 1% revenue growth with ~3% pre-tax margin > Balance sheets are highly leveraged > Asset intensive industry highly dependent on inventory turns Huge challenge Out of stocks! > When customers cannot find products they want > 31% will purchase at a competitor > 9% won t purchase the item at all Source: Out of Stock study funded by P&G, sponsored by FMA, FMI and NACDS and conducted by Thomas W. Gruen,Ph.D., University of Colorado at Colorado Springs, USA and Dr. Daniel Corsten, IE Business School Madrid 5

6 Current Grocery Retailer Supply Chain POS scanners at the register do price look up / NOT used to managed supply chain Supply chains view the world from what has shipped NOT based on what has sold Inaccurate data perpetuates the supply chain problem Proof of an inefficient supply chain > 2% drop in consumer demand corresponding drop of 17% in industrial production 6

7 Grocery Retailer Supply Chain Food Supplier Grocery Store Chain Consumer Traditional ERP Vendors (e.g. SAP, Oracle, JDA Software) Ordering, Manufacturing, Planning based on What was shipped to the grocery store No visibility to what is actually sold = OUT OF STOCK OVERSTOCK Park City Group Ordering, Manufacturing, Planning based on What was sold to the consumer 7

8 Core Issue #2 Supply Chain Issue No visibility in the supply chain > Supply chains view the world from what has shipped NOT based on what has sold > Inaccurate data perpetuates the supply chain problem Supply chain is incredibly complicated Proof of an inefficient supply chain 8 > 2% drop in consumer demand corresponding drop of 17% in industrial production

9 Core Issue #3 WalMart s Impact on the Grocery Industry Wal-Mart s grocery industry market share from 0% to ~25% in 15 years AND they recently announced a price decrease! -Business Insider 9

10 Park City Group Solution > Supply chain visibility STARTS with point of sale data and works back up the supply chain > Capture information at the point of sale > Provide greater visibility into consumer demand > Turn data into actionable information across the entire supply chain > Collaboration between the Retailer and the Supplier ( collaborative commerce ) Customer Value Proposition 10 > Reduce 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

11 PCG Success and Large Direct Store Delivery Growth Opportunity PCG dominant in these segments PCG growth opportunities OOS = Out-of-stock 11

12 Select Retailer Partners 12

13 Select Supplier Customers BREAD/ BAKERY SPECIALTY/ CENTER STORE DAIRY/ FROZEN Cards JUICE SNACKS CONFECTION 13

14 Impactful Leadership Team Name Experience Randy 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. 14

15 Hub & Spoke Financial Model 3 Terms of Art: > Hub = Retailer > Spoke = Supplier > Connection = Retailer & Supplier data exchange Retailers ( Hubs ) > Retailers roll-out platform to Supplier base > ~$100,000 annual subscription revenue > Connection requires no installation of software AND no on-site visit 15 Suppliers ( Spokes ) > Depending on Hub type, base level subscription revenue of ~$4,000 - $8,000 per year for each connection > Connection requires no installation of software AND no on-site visit > Opportunities to upsell additional supply chain modules increase rev per connection by an order of magnitude We monetize EACH Connection

16 Additional Services Upsell Opportunities Visibility - Base level service Reporting of key metrics, e.g. sales, deliveries, returns, days of supply, lost sales Scan-based Trading (SBT) with Visibility Include SBT shrink reporting to the above and get a complete picture Computer Assisted Ordering (CAO) Retailer-focused distribution center ordering Store Level Replenishment (SLR) Supplier-focused Vendor Managed Inventory (VMI) Supplier-focused Demand Planning (DP) Supplier-focused Fresh Market Manager (FMM) Perishable production planning and ordering tool Data Metrics & Analysis Business analysis and Category Management services including Plano-grams 16

17 ReposiTrak - Global Food and Drug Track & Trace System Park City Group joins with Leavitt Partners to create ReposiTrak Park City Groups brings proven technology 16 years and $125 million of invested Capital Processes millions of transactions per day Leavitt Partners brings thought leadership in the fields of food and drug safety Michael O. Leavitt former U.S. Secretary of Health and Human Services, and Administrator of the Environmental Protection Agency and 3-time governor of Utah Dr. David Acheson former FDA Associate Commissioner of Foods, former Chief Medical Officer at the FDA's Center for Food Safety & Applied Nutrition (CFSAN) 17

18 ReposiTrak - Global Food and Drug Track & Trace System 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 18

19 ReposiTrak - Global Food and Drug Track & Trace System Large Addressable Market U.S. Market alone is $1 billion annually 167,000 domestic manufactures, processors, warehouses 570,000 facilities in the food service segment 2 million farmers Opportunities Internationally 254,000 foreign food manufacturers 5 million farmers o Initial retail, wholesaler and supplier implementations began in August 2012 o Currently implementing one wholesaler (11,000) suppliers as part of a tradeassociation wide initiative with 14 possible wholesalers controlling 20% of the supermarket stores in the US o In negotiations with the Chinese FDA 19

20 Large Addressable Market $550 million addressable U.S. market: > ~ Retailers > ~100,000 total ~$5K each Additional supply chain management services: > From basic service to enterprise supply chain management > Increase average rev. per connection Food safety initiatives: > Includes all supplier facilities from Fork to Farm Addressable Market Additional Services [2x Base Base Level Level] Service $550 million Food Safety Initiative 20

21 Contribution Margin Going Forward Incremental Revenue Incremental Cost of Sale Marketing Allowance Sales Commissions Travel Sales Promotions Miscellaneous Incremental Contribution Margin 100% 75% 25% 21

22 Financial Snapshot Subscription Revenue Growth Qtrly ($millions) Adjusted EBITDA: EBITDA plus bad debt expense, stock compensation & expenses, and acquisition related costs. Free Cash Flow: Net cash provided by (used in) operating activities less replacement purchases of property and equipment Net Debt $3.3m $1.6m $3 Free Cash Flow * ($millions) Adjusted EBITDA * ($millions) $2 $3 $1 $2 $1 $0 $0 ($1) ($1) ($2) ($2) 22 ($3) FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 ($3) FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

23 Investment Summary > Strong Competitive Position 16 years of development and ~$125 million of invested capital in propriety platform. > Recurring revenue streams with multiyear visibility ~90%+ customer retention rate gives strong earnings visibility. > At inflection point in growth curve in both revenue and EPS. NYSE MKT: PCYG Headquarters: Park City, Utah Recent Price (2/8/13) $ Week Range $ $4.28 Shares Outstanding 12.3 MM Fully Diluted Shares 15.6 MM Market Capitalization $51.4 MM TTM Revenue $10.2 MM TTM Adjusted-EBITDA $2.0 MM Ownership 46% Mgmt & Board / 13% Institution > Significant operating leverage 75%+ incremental margin Generating positive free cash flow no need to raise additional capital. > Food and Drug Safety Partnership increases addressable market/ accelerates growth Opportunity to become global standard for tracking food and drugs throughout global supply chain 23 > Influential Board of Directors and Experienced Management Team Current and former grocery, retailing, consumer products, dairy, and magazine industry executives.

24 24 Thank You NYSE MKT: PCYG