SOLUTIONS
THAT FIT
2
Forward-Looking Statements
This presentation contains certain statements that constitute forward-looking information within the meaning of applicable securities laws (“forward-looking statements”). Statements concerning D+H’s objectives, goals, strategies, priorities, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of D+H are forward-looking statements. The words “believe”, “expect”, “anticipate”, “estimate”, “intend”, “may”, “will”, “would”, “could”, “should”, “continue”, “goal”, “objective”, and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
D+H has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. While D+H considers these factors and assumptions to be reasonable based on information currently available, there can be no assurance that actual results will be consistent with these forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause D+H’s actual results, performance or achievements, or developments in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.
Providing banks and credit unions with software and related technology to serve their
customers, compete, and grow
Customer base of approximately 7,000 banks and credit unions
Solid track record of long-term performance and growth
Executing on growth strategy
A North American FinTech Leader
Adjusted revenues
by Country
1Adjusted revenues
by Service Area
1Our Vision: To be the leading FinTech provider to the financial services industry by
helping our clients grow, compete and optimize their operations
Lending Solutions Payments Solutions Enterprise Solutions
53%
47%
54%
25%
21%
Payments
solutions
Lending
solutions
Enterprise
solutions
4
D+H Strategy
Objectives
EPS growth
Margin expansion
High recurring revenues
Strategy:
-
Establish leading positions in growing markets in the financial services industry
-
Reinforce these positions with integrated technology solutions
-
Deliver increasing value to our clients and shareholders
Growth through disciplined acquisitions
Canada
True trusted supplier with deep relationships
Lending and Payments domain experience
Deeply entrenched in client base
U.S.
Leading lending origination and compliance
platform
Broad client base for cross-sell strategy
Multiple growth vectors
Leadership in all service areas
Strong enterprise solutions
Leveraging Strengths
High Demand for
FinTech Products
•
Increasing regulatory complexity
•
“Consumerization” of banking technology
•
Legacy IT updating and replacement
Well-positioned for
FinTech Market
Opportunities
•
Available market ~13,000 banks and credit unions
•
Market leading in-demand products
•
Cross selling opportunities with 7,000 customers
•
New business opportunities with other 6,000
Proven
Business Model
and Strategies
•
Long-term contracts
•
Highly recurring revenues with attractive margins
•
Strong cash flows to support growth, deleveraging,
and dividend
6 $318 $370 $367 $445 $584 $656 $695 $866 $1,159 $297 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015
$679
$923
$738
$901
$1,056
$998
$1,277
$2,405
$3,168
$3,350
90%
Payments solutions % of Adj. revenues2006
2008
2009
2011
2012
2013
2014
Q1 2015
D+H FinTech Journey and Transformation
1) Non-IFRS measure. See Appendix A for details. 2) Debt to EBITDA ratio, net of up to C$40M cash in bank.
1.58X
1.26X
1.38X
2.08X
2.03X
3.05X
2.11X
22.34x
2Equity Market Cap
(C$ millions, unaudited)
25%
Payments solutions % of Adj. revenues
Revenue Growth and Diversification
1 1
Adjusted revenues
Service Areas and Key Business Drivers
Service Areas
Key Business Drivers
L
e
n
d
in
g
S
o
lu
ti
o
n
s
•
U.S. Lending
•
Canadian Mortgage
Technology
•
Canadian Collateral
Management Solutions
•
Canadian Student Lending
•
Regulatory changes / Bank demand for lending products
•
Residential mortgage activity
•
Economic growth, particularly in the auto sector
•
Post-secondary school, college, university, and apprenticeship
enrolment levels
P
a
y
m
e
n
ts
S
o
lu
ti
o
n
s
•
Cheque program
•
Enhancement Services
•
Cheque usage
•
Large Canadian bank clients income strategies
•
Banks embracing new consumer product offerings
E
n
te
rp
ri
s
e
S
o
lu
ti
o
n
s
•
U.S. Core banking platforms
•
U.S. Channel Solutions
•
U.S. Cloud Solutions
•
Core technology spend
•
Demand for self-service (e.g. online and mobile)
8
Solid Market Positions
LENDING
SOLUTIONS
PAYMENTS
SOLUTIONS
ENTERPRISE
SOLUTIONS
Q1 2015
Adjusted
Revenues
1
54%
25%
21%
Market
Position
•
Leader in:
U.S. loan compliance
U.S. POS
Canadian mortgage
technology
Canadian lien registry
and collateral recovery
•
Exclusive provider:
Canada Student
Loans Program
•
Leader in Canadian
cheque programs
•
Enhancement Services
innovator
•
Top 4 in U.S. core
banking
2Product Offerings
Service Areas
Products
L
e
n
d
in
g
S
o
lu
ti
o
n
s
•
U.S.
Lending
•
Canada:
Mortgage Technology
Collateral Management
Student Lending
•
LaserPro compliant loan documentation
•
POS online loan application
•
LOS loan origination solution
•
Broker-originated mortgage platform
•
Lien registration
•
Collateral recovery management
•
Student Loans Program
P
a
y
m
e
n
ts
S
o
lu
ti
o
n
s
•
Canada:
Cheque programs
Enhancement Services
•
Personal and business cheques
•
Credit Monitoring and Identity Protection
E
n
te
rp
ri
s
e
S
o
lu
ti
o
n
s
•
U.S.
Core Banking
Channel Solutions
Cloud Hosting
10
Long Term Financial Objectives
Adjusted revenues 5-7%
Adjusted EBITDA 8-10%
12
627
639
639
651
157
29
57
227
508
139
656
695
866
1,159
297
2011
2012
2013
2014
Q1 2015
Canada
US
27% 28% 30% 29% $1.80 $1.82 $2.02 $2.34 $0.55 2011 2012 2013 2014 Q1 2015Solid Financial Performance
Adjusted revenues
1 (All figures in C$ millions)Adjusted EBITDA
1Adjusted net income per share
1 (All figures in C$ millions) (All figures in C$)1) Non-IFRS measure. See Appendix A for details. 2) Totals may not add due to rounding.
Adj. EBITDA Margin
$3,350M $230M $346M $505M
Bonds Credit Facility
Convertible Debentures Common Equity
Enterprise Value = $4.4B
Strong and Flexible Capital Structure
(All figures in C$unless otherwise
indicated, unaudited)
Secured Credit Facilities
•
Non-Revolver: C$339M (US$ Denominated debt)
•
Revolver: C$7M
•
Revolver-Undrawn: C$443M
Secured Bonds
•
C$100M and C$405M (US$ Denominated debt)
Convertible Debentures
•
C$230M
•
6% Convertible Unsecured Subordinated
Debentures maturing September 30, 2018
•
Conversion price of C$28.90
Equity Capitalization
•
86,591,242 Shares Outstanding
•
Book Value $1.32B
Note: Excludes committed financing for Fundtech
acquisition
Strong balance sheet and conservative debt to capital ratio of 24%
11.4%
% of TEV
7.8%
5.2%
14
Financing Strategy and Current Debt Structure
(Excludes Fundtech Acquisition)
Debt Structure
1Weighted Average
Debt Balance
Interest
Rate
Term to
Maturity
(Years)
(C$M)
Credit Facility
BA/LIBOR
+ 1.70%;
PRIME
+0.70%
4.4
346
Bond
5.68%
2.3
80
Bond
(US$63M)5.59%
6.0
80
Bond
(US$32M)3.94%
7.2
40
Bond
5.76%
8.4
20
Bond
(US$225M)5.51%
8.4
285
Bonds
5.44%
7.0
505
Convertible Debentures
6.00%
3.5
230
Total Debt
5.51%
45.4
1,081
1) As at March 31, 2015 before deferred financing costs 2) Excludes convertible debentures
3) Debt/EBITDA ratio adjusted to remove the impacts of foreign exchange fluctuations
•
Diversified funding sourcing
•
Mix of fixed and floating rate debt
•
Well staggered debt maturities
•
Diversified institutional / retail investor base
•
Capacity for business growth and investment
•
Draw of C$7M in Q1. Repaid in April
•
Increase in ratio due to FX impact, draw and
lower cash balance as compared to Q4-2014
Historical Debt Balance and Leverage Ratio
2 (C$ Millions)4) The weighted average interest rate includes the effect of deferred financing fees and accretion of convertible debentures. 5) Debt to EBITDA ratio, net of up to C$40M cash in bank.
352 346 934 960 926 961 781 850 1.90x 1.75x 2.87x 2.76x 2.75x 2.64x 2.11x 2.34x 2011 2012 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Debt Balance Debt / EBITDA
3
3 3 3 5 5
Appendices
16
Canadian Mortgage Technology
D+H is the leader in broker-originated mortgage technology solutions
•
D+H Expert
is a web-based residential mortgage
origination solution that connects brokers with more
than 70 banks/lenders and processes $80B+ of
transactions annually
‒
Application creation and submission, compliance,
marketing and reporting
•
D+H Express
automates the mortgage underwriting
process
‒
Provides clients with credit risk, cross-portfolio
exposure, and portfolio trends
•
D+H Exchange
provides flexible and secure document
management
•
Brokers originate 25-30% of all residential mortgages
(40% of first-time home buyers)
1start
Credit
bureaus
Mortgage
Insurers
Insurance
companies
Express
Bank sales
specialists
Mortgage
brokers
Banks/Lenders
Expert
Recurring Revenue Model
•
Blend of value and number of mortgages funded on our
platform
•
D+H paid by banks/lenders on basis of mortgages funded
Collateral Management Solutions
D+H is Canada’s leading provider of search and lien registration management and
technology-based asset recovery, remarketing and insolvency solutions
Recovery Services
• Market-leading integrated process and technology solutions for:
– Location, recovery, transportation, appraisal, and
remarketing of automotive, marine and RVs
– Insolvency management – Unsecured recoveries – Real property recovery
• Leverage technology to link hundreds of independent recovery
organizations across Canada
Banks/Lenders
Public Registries
Registry Services
• Canada’s leading provider of technology and services for
search and lien registration management
• Automated links to all provincial and federal government
registries to facilitate PPSA, Corporate, land, and Bank Act security transactions
– 4M+ lien-related transactions processed per year
– D+H eSearch is a web-based solution that fully meets global
KYC standards
– Provides a managed service for the registration of Mortgage
Discharges
Recovery Suppliers
Bankruptcy Trustees
Revenue Model
Revenue Model
• Flat fee per transaction type (search, registration, amendment)
• Typically paid by bank customer at time of sale (e.g., contract for auto purchase)
• Recurring revenue based on term contracts and continuing volumes year-over-year
• Fees based on percentage of value of recovered or remarketed assets plus a file management or workflow fee
18
Student Lending
D+H is the largest provider of student loan program administration solutions to governments
and financial institutions across Canada
1
Discharge
Repayment
Maintenance
Origination
•
Document gathering and
validation
•
Adjudication
•
Funds disbursement
•
Customer service
•
Product accounting
•
Payment processing
•
Statement issuance
•
Borrower communications
•
Customer service
•
Repayment counseling
•
Campaign strategy and
management
•
Portfolio management
•
Loan restructuring
•
Discharge of
fully-amortized loans
Provincial
Govts
Banks
Federal
Govt
•
1.7M post-secondary students
serviced
•
Customer loan portfolio of $22B
•
The Federal government has issued an
RFP for a new contract
•
D+H has submitted its application in
January 2015 in accordance with the
terms of the RFP
Contract Renewal
•
A monthly servicing fee per student
based on status
•
Servicing incentives
•
Professional services
Recurring Revenue Model
Canadian Payments Solutions
•
Enhancement Services
− Subscription-based value-added solutions that
banks use to drive loyalty, increase acquisitions and
enhance revenue from their core banking customers
Optional (customer-paid) credit
monitoring solution
Optional ID theft solution
Payment Manager
− Enables new bank customers to easily transfer their
existing pre-authorized payments to their new
account or credit card
Credit Unions
Banks
Banks and Credit Union Customers
Credit Rating Agencies Cheques Payment Manager Enhancement Services
•
Market leader in Canadian cheque-based payments
solutions
− 20 Million personal accounts
− 2 Million small business accounts
•
Supplier to all major Canadian banks
•
Reliable source of revenue and cash flow
Enhancement Services / Payment Manager
Cheques:
Recurring Revenue Model
•
Subscription revenue is monthly from banks’ customers
•Additional revenue opportunity through increased
20
U.S. Lending Solutions
The combination of LaserPro and other lending products together with the POS and LOS
solutions from prior acquisitions positions us as the leading Lending Solutions provider to
U.S. banks, community banks, credit unions and specialty lenders
•
Our offerings enable the origination and servicing of
consumer, mortgage and commercial loans
•
Includes loan / origination and lending compliance solutions
− LaserPro
®is the Number 1 loan documentation and
compliance solution in the U.S. with over 3,200 clients
− Nearly 25% of U.S. Fl’s use LaserPro
1− 50 of the top 100 U.S. banks use LaserPro
•
Mortgage and Consumer Point of Sale and Loan Origination
Solutions serving U.S. banks and credit unions and some
mortgage companies
•
Commercial Lending includes commercial lending risk
management, underwriting, portfolio management
Revenue Model
•
Subscription
•
Maintenance
•
License
•
Professional Services & Other
•
Transaction Revenue
Cross-Selling Opportunity – Lending Lifecycle
MORTGAGE APPLICATION
UNDERWRITING
ORIGINATION
COMPLIANCE
LOAN CLOSING
22
Enterprise Solutions
Enterprise includes core banking and channel solutions such as Teller, Online and Mobile Banking,
Payments, and Cloud computing
•
Innovative channel solutions support self-service,
business intelligence and branch automation
•
Cloud and Infrastructure solutions move mission
critical data and systems to private cloud and
provide lower cost to clients, with higher security
and technology currency
•
Online and Mobile banking provides key capabilities
for retail bank customers
•
Core processing platforms enable
− Transaction recording / posting
− Financial accounting
− Content management
− Payments solutions
− Business Intelligence
Core Banking
PhoenixEFE
UltraData
Sparak
Intrieve
Bankway
Teller Platform –
Encore, EZTeller
Online and Mobile
Banking
Cavion, uBanking
Cloud Solutions / IaaS
- Compushare
Business Intelligence
-Touche
Online Banking
Mobile Banking
Teller Applications
Client Management
Deposit/lending
transactions
Customer
information
Payments
Financial
accounting
Cross-Selling Opportunity - Enterprise Solutions
Top Four U.S. Provider of Core Banking Technology
24
Executive Leadership Team
Gerrard Schmid
Appendix A - Non-IFRS Financial Measures
This presentation makes reference to certain non-IFRS financial measures. These non-IFRS financial measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further
26
Disclaimer
This documentation is a presentation of general background information about D+H’s activities and is current as of the date of the presentation. It is information in a summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate.
The information contained in this presentation is derived solely from otherwise publicly available information concerning D+H and does not purport to be all-inclusive or to contain all the information that an investor may desire to have in evaluating whether or not to make an investment in D+H. The information has not been independently verified and is subject to material updating, revision and further amendment, and is qualified entirely by reference to the D+H’s publicly disclosed information. Without limiting the generality of the foregoing, the selected financial information included in this presentation is qualified in its entirety by, and should be read together with D+H’s Consolidated Audited Financial Statements for the year ended December 31, 2014 on SEDAR at www.sedar.com.
No representation or warranty, express or implied, is made or given by or on behalf of D+H or any of its affiliates or subsidiary undertakings or any of the directors, officers or employees of any such entities as to the accuracy, completeness or fairness of the information or opinions contained in this presentation and no responsibility or liability is accepted by any person for such information or opinions. In furnishing this presentation, D+H does not undertake or agree to any obligation to provide the attendees with access to any additional information or to update this presentation or to correct any inaccuracies in, or omissions from, this presentation that may become apparent. No person has been authorised to give any
information or make any representations other than those contained in this presentation and, if given and/or made, such information or
representations must not be relied upon as having been so authorised. The information and opinions contained in this presentation are provided as at the date of this presentation. The contents of this presentation are not to be construed as legal, financial or tax advice. Each prospective
investor should contact his, her or its own legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice.
The securities of D+H have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This presentation does not constitute or form part of any offer or invitation for the sale or purchase of securities or any of the assets, business or undertaking described herein nor shall it or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever. Recipients of this presentation who are
considering acquiring securities of D+H are reminded that any such purchase or subscription must not be made on the basis of the information contained in this presentation but are referred to the entire body of publicly disclosed information regarding D+H.
