BROADVIEW NETWORKS HOLDINGS INC - FORM 8-K - EX-99.1 - COMPANY PRESENTATION DATED DECEMBER 31, 2011

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8-K - FORM 8-K - BROADVIEW NETWORKS HOLDINGS INC	d328573d8k.htm

Year Ended December 31, 2011

Company Presentation

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Exhibit 99.1

Safe Harbor Statement

This presentation may contain forward-looking statements, including statements regarding,

among other items, the Company’s expected financial position, business, risk factors and

financing plans. These statements may be identified by the use of forward-looking terminology

such as “believes,” “expects,” “may,” “will,” “should,” “estimates,” or “anticipates” or the

negative thereof or other variations thereon or comparable terminology, or by discussions of

strategy that involve risks and uncertainties. These forward-looking statements are subject to a

number of uncertainties and risks, many of which are outside of Broadview’s control that could

cause actual results to differ materially from such statements. Some of these risks can be found

in Broadview's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports

filed with the Securities and Exchange Commission.

Adjusted EBITDA, Free Cash Flow and other financial measures as presented herein are not

necessarily comparable with those of other companies. Adjusted EBITDA as presented herein

represents net loss before depreciation and amortization, interest income and expense, other

income, provision for income taxes, share-based compensation, severance and related

separation costs, costs associated with initial public offering, costs associated with early lease

terminations and professional fees related to strategic initiatives. Adjusted EBITDA is not a

measure of financial performance under GAAP. Adjusted EBITDA is a non-GAAP financial

measure used by our management, together with financial measures prepared in accordance with

GAAP such as net loss, income from operations and revenues, to assess our historical and

prospective operating performance.

Readers are cautioned not to place undue reliance on these forward-looking statements, which

speak only as of the date they are made. The Company undertakes no obligation to publicly

update or revise any forward-looking statements, whether as of a result of new information, future

events or otherwise.

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Highlights

Leading Provider of Next-Generation Communications Solutions

T-1 and Cloud based products represented 78% of new retail sales in 4Q 2011

Cloud communications represented 13% of retail revenue and 30% of new sales in 4Q 2011

State-of-the-Art Network Infrastructure

Advanced, IP / MPLS network and over 3 years of experience deploying Ethernet-over-Copper

3,000 fiber route miles, 3 data centers, 260 colocations

Large & Diversified Customer Base

Approximately 38K SMB customers with a significant opportunity to sell into the base

86% of retail revenue is from customers with greater than $500 MRR

Target market represents the largest concentration of communications spending in the U.S.

Strong and Improving Key Operating Metrics

Steadily increasing revenue per customer

Churn rates are at pre-recession levels and falling

Recurring FCF and Increasing Profitability Margins

Over 75% of revenue under contract

400 basis point improvement in adjusted EBITDA margin in past 3 years

Experienced Management

Senior management has on average 24 years of industry expertise

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Company Overview

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Regional Focus With National Coverage

Strong local presence with strategic regional sales offices

Significant addressable market for telecommunications and data services in our Northeast footprint,

before cloud opportunity

Strong, existing customer relationships

Able to increase revenue per customer through up-selling new cloud-based products and services to

new and existing customers

Requires less local presence allowing nationwide expansion without significant capital investment

Quality of service supported through MPLS network

Ability

address

out-of-region

multi-location

customers

through

OfficeSuite™

and

other

cloud-based

services

Cloud Services Available Nationwide

Dense Northeast & Mid-Atlantic Footprint

Regional Player with Cloud Services to Address Customers Nationwide

Boston

Washington, D.C.

New York

Philadelphia

Cloud-based services and MPLS network allow us to extend our reach

Large, Untapped Opportunity

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Broadview At A Glance

Customers & Market

Total Business Customers

38K

Average Revenue per Customer

$674

Network

Retail Access Line Equivalents

616K

Retail T-1 Circuits

25K

Colocation Sites

~260

Ethernet-over-Copper Equipped Colos (EoC)

38%

Fiber Route Miles

~3,000

Employees as of 12/31/11

Total Employees

900

Quota-Bearing Sales Reps (all Channels)

160

Agent Channel Partners

~300

Company Stats

Commendation for

High Quality

Service from the

State of New York

Superior Customer Service & Quality

Stevie Award for

Innovation in Customer

Service at the 2011

American Business

Awards

Recognized by Crain’s

as the 54

Largest

Private Company in

the New York area

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Successful Integration Track Record

2005

Allow Broadview

to control the

developmental

roadmap to key

technology

Enhance scale,

diversify product

portfolio, expand

fiber network

Create merger of

equals with a new,

T-based strategy,

scale and

operational

efficiencies

2008

2007

2006

2009

Improve product

offerings and

strengthen and increase

market footprint

Strengthen presence in

existing market, expand

next-gen product

portfolio

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Broadview’s Business Evolution

Retail Revenue Mix

Network Mix

(3)

Traditional

Voice

Attached

to T-1 18%

Circa 2006

Today

(1) (2)

EoC 8%

79%

Standard

T-1 &

IP-based

53%

Traditional

Voice / Data

not attached

to T-1 21%

(1) For the quarter ended December 31, 2011.

(2) Voice includes allocated portion of integrated access

(3) Retail access line equivalents.

Voice, 88%

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

(1) Broadview standalone 2006.

(2) Broadview December 2011 Billing Database.

Beginning in 2005, the Company shifted its go-to-market strategy to focus on T-1,

cloud-

and IP-based products and services

86% of Broadview’s retail revenue is generated by customers spending more than

$500 monthly versus 59% in 2006

Growing Revenues From Larger Customers

Present

(2)

Retail Revenue By Customer Size

2006

(1)

59%

86%

$0 -

$500, 14%

$500 -

$1,000, 17%

$1,000 -

$5,000,

37%

$5,000 -

$10,000,

11%

$10,000 -

$25,000,

11%

> $25,000, 9%

$0 -

$500, 41%

$500 -

$1,000, 18%

$1,000 -

$5,000,

28%

$5,000 -

$10,000,

$10,000 -

$25,000,

> $25,000, 2%

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Diversified Product & Customer Base

Approximately 38K SMB customers

Diverse customer base and low revenue concentration risk

Retail Revenue by Product Type –

Q4 2011

(1)

Percent based on Retail Voice & Data revenue.

Focused on Serving Customers with High Capacity, IP-based Products

Revenue by Segment –

Q4 2011

74%

74% of Retail Revenue Associated with T-1, cloud-

and IP-based Accounts

All Other

Traditional

Products, 26%

Traditional

Voice

Attached to a

T-1, 15%

T-1 Based

Products /

Managed

Services, 46%

Cloud

-based

Products, 13%

Retail Voice &

Data, 87%

Wholesale, 6%

Carrier, 5%

Other, 2%

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Steady Growth In Revenue Per Customer

Today, T-1, IP-based and cloud-based products

make up over three-fourths of new sales

This has resulted in higher average MRRs

Overall revenue loss is below 2%

(1)

86% of current customer base is over

$500 in MRR with significantly lower

revenue loss characteristics

Average Revenue per Business Customer (Retail)

Focus on Next-Gen Products and Services

New Retail Sales (Q4 2011)

Cloud-based

services

~30%

Q4 2011 Revenue Loss By Account Size

(1) Broadview’s calculation of revenue loss is a comprehensive metric and may not be comparable to

revenue

loss

churn

metrics

reported

other

companies

the

industry.

Account Size

Total Revenue Loss: 1.74%

$504

$526

$542

$553

$570

$598

$606

$610

$626

$642

$656

$674

$300

$400

$500

$600

$700

Mar

'09

Jun

'09

Sep

'09

Dec

'09

Mar

'10

Jun

'10

Sep

'10

Dec

'10

Mar

'11

Jun

'11

Sept

'11

Dec

'11

T-1 & IP-

Based

Products, 78%

Traditional

Voice & Data

Products, 22%

2.84%

1.94%

1.55%

1.14%

1.23%

0.37%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

$0 -

$500

$500 -

$1,000

$1,000 -

$5,000

$5,000 -

$10,000

$10,000 -

$25,000

> $25,000

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Focused Sales Strategy

Direct sales: 65% of new sales

Dedicated teams focused on new customer acquisition,

upselling, renewals and customer retention

Sales to new customers average >$900 MRR

Sales to existing customers represents 40% of new

sales

Approximately 300 agents

Primary go-to-market for cloud-based services

nationwide

Awarded “Top 50 Channel Program”

by PHONE+

Magazine’s Indirect Sales Channel Partners

Sells our core products and services including MPLS,

POTS, T’s, data colocation to other carriers throughout

our footprint

Distribution Partners and Web Marketing

Total

LTM

New

Sales

Channel

(1)

Targeting Mid-sized SMB, Single and Multi-location Companies

(1)

Last Twelve Months (LTM) as of December 31, 2011.

160 Quota-bearing sales reps across all channels

Wholesale,

12%

Agent, 23%

Direct, 65%

Agent sales: 23% of new sales

Wholesale sales: 12% of new sales

2012 Channel Expansion

Leveraging Our Customer Base

Increasing Walletshare Through New Cloud-based Products and Services

Technology Enabling Us to Target Additional Customer Spend

Approximately 38K existing

business customers

A trusted provider of mission

critical network services (voice

and data)

Over 5 years experience

providing cloud-based

solutions with OfficeSuite™

New cloud-based technologies

allowing us to address greater

walletshare of IT spend

Source: Computer Economics, IT Spending and Staffing Benchmarks 2010/2011.

Business IT Spend Breakdown

53%

Computers,

Servers, Storage &

Peripherals

18%

Application

Software, Security

& Business

Continuity

20%

Carriers & Network

Infrastructure

11%

Utilities, Power, IT

Floorspace & Other

Personnel

47%

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Cloud-based Products Overview

OfficeSuite™

Cloud-based Communication System

•

Full featured cloud-based VoIP communications

systems

•

IP “Quadruple”

play

voice, data, managed services

and hardware

•

Enterprise grade quality and features

•

Broadview owns underlying intellectual property

•

One of the largest hosted VoIP providers in the U.S.

communications industry

Hosted E-mail Including Enterprise And

Microsoft Exchange

Blended solutions for cost-efficiency without

sacrificing quality

Hosted Microsoft SharePoint

A collaboration tool that creates a secure intranet

site to improve productivity

Hosted

Office

Anywhere

–

Virtual

Desktop

Seamlessly access and store Microsoft Office and

business application data

Hosted Business Applications

Support for all your business applications in a

secure SAS 70 Type II certified data center

Complete Backup And Recovery

A network-based solution that allows you to

quickly restore files on-demand

Virtualized And Dedicated Servers

Secure, redundant and scalable server options

with a 99.99% SLA guaranteed uptime

Cloud Computing Product Suite

TOP 10 SERVICE PROVIDER

2009 | 2010 | 2011

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Awards & Recognition

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Capitalizing On Market Growth In Cloud-based Services

Broadview is Well-Positioned to Capture Meaningful Market Share Having Been in

the Cloud Services Market for 5 Years

U.S. Cloud Services Market

Annual Revenue $ Billions

Source: IDC. Worldwide and Regional Public IT Cloud Services; June 2010.

Cloud Communications and Other Cloud-based Revenue

Broadview Results to Date

Industry Opportunity

Annual Revenue $ Millions

$15

$20

$25

$30

$35

$40

2009

2010

2011

$10

$15

$20

$25

$30

2010

2012

2014

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Financial Overview

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Revenue Drivers

Improving Trends

Traditional Voice Decline Slowing

Increasing Revenue per

Business Customer

Growth From Cloud

Total Revenue (4Q11)

Approaching Inflection Point

Larger product set

Increased geographic sales reach

Continued MRR moving up-market

Increasing install and up-selling of

cloud-based products

Increased utilization of web

marketing efforts

3Q’11 and 4Q’11 revenue trajectory directionally influenced by 3Q Verizon work stoppage and Hurricane Irene

effects. However, management believes that no additional charges or financial reserves were required as a result of

these influences

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Improved Revenue Composition –

Stable EBITDA

Historical Adjusted EBITDA & Margins

(1)

Historical Revenue

$496.9

$456.5

$407.7

2008

2011

Adj. EBITDA

(1)

Adj. EBITDA Margin:

4Q Revenue loss:

$71.0M

14.3%

2.42%

$69.0M

18.3%

1.74%

Enhanced Value of Customer Base

Revenue:

$496.9 M

$378.2M

Avg. customer life:

3+ yrs

4+ yrs

Shifting revenue composition to

higher value-added services

Higher margin services

Greater % of revenue shifting to larger

clients, resulting in reduced churn

Increasing Profitability Margins

(1)

Adjusted

EBITDA

presented

herein

represents

net

loss

before

depreciation

and

amortization,

interest

income

and

expense,

other

income,

provision

for

income

taxes,

share-based

compensation,

severance

and

separation

costs,

costs

associated

with

initial

public

offering,

costs

associated

with

early

lease

terminations

and

professional

fees

strategic initiatives.

$378.2

T1 & Cloud Account Revenue

Traditional Voice in T-1 Accounts

Other Revenue

$252.5

$241.6

$233.9

$255.2

($Millions)

$241.7

$204.0

$166.1

$144.3

$100

$200

$300

$400

$500

$600

2008

2009

2010

2011

$71.0

$77.2

$69.9

$69.0

14.3%

16.9%

17.1%

18.3%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

$15

$30

$45

$60

$75

$90

2008

2009

2010

2011

Recurring Free Cash Flow

Quarterly Update

(2) Free Cash Flow (“FCF”) defined as Adjusted EBITDA less Capital Expenditures.

Capital Expenditures

($Millions)

Revenue

(1)

Adjusted EBITDA

Free Cash Flow

(2)

$98.7

$98.4

Other Revenue

Traditional Voice in T-1 Accounts

$59.5

$59.1

$95.5

$58.4

$93.4

$57.3

$90.8

T1 & Cloud Account Revenue

(1) Prior Periods Updated to Current Revenue Categories

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Strong Operating Performance

Strong financial performance driven by focused customer and product strategy

Increased revenue from more profitable, stickier T-1 & IP-based and cloud-based products

Consistent growth in adjusted EBITDA margin

EBITDA margins in-line with comparable public companies

Comparable

Companies

LTM

EBITDA

Margin

(1)(2)(3)

(1)

LTM represents Last Twelve Months as of 12/31/2011, XOHO LTM as of 3/31/2011, PAET LTM as of 9/30/11.

(2)

PAET LTM EBITDA margin pro forma for Cavalier and XETA.

(3)

Comparable

companies

reflect

public

company

comparables:

Cbeyond,

Inc.

(CBEY),

PAETEC

Holding

Corp.

(PAET)

and

Holdings,

Inc.

(XOHO).

Consistent EBITDA and Above Average Margins Relative to Peer Group

Adjusted EBITDA Margin

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Balance Sheet

Components of Debt

12/31/11

12/31/10

Revolving Credit Facility

$17.1

Capital Lease Obligations (incl. Current Portion)

4.6

5.0

Senior Secured Notes (excl. Premium)

300.0

Total Debt (excl. Premium)

$321.7

$322.1

Premium on Senior Secured Notes

0.8

2.0

Total Debt (incl. Premium)

$322.6

$324.1

($ Millions)

12/31/11

12/31/10

Assets

Cash and Investments

$38.9

$41.7

Accounts Receivable

33.1

35.9

Other Current Assets

9.9

10.7

Total Current Assets

$81.9

$88.3

Property & Equipment, net

80.6

85.1

Goodwill

98.2

Intangible Assets, net

9.7

15.1

Other Assets

6.3

8.1

Total Assets

$276.7

$294.8

Liabilities & Stockholders' Deficiency

Current Liabilities

$53.1

$59.6

Current Portion of LTD

319.8

2.3

Total Current Liabilities

$372.9

$61.9

Long Term Debt

0.0

319.1

Capital Leases

2.7

Other Liabilities

10.8

9.0

Total Liabilities

$386.4

$392.7

Total Stockholders' Deficiency

(109.7)

(97.8)

Total Liabilities & Stockholders'

Deficiency

$276.7

$294.8

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

•

Top Down Run Rate

–

$69M LTM Adjusted EBITDA less $30M LTM

Capex less $35M run rate interest = marginally cash flow positive

(pre transaction cost, settlements and other non-recurring)

•

CIT revolver $18M, including funded L/Cs outstanding

Facility matures in June 2012

•

Cash and Investments balance at 12/31/11: $38.9M

•

Cash coupon of $17M paid 3/1/12

Liquidity

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Highlights

Leading Provider of Next-Generation Communications Solutions

Large & Diversified Customer Base

Recurring FCF and Increasing Profitability Margins

State-of-the-Art Network Infrastructure

Strong and Improving Key Operating Metrics

Experienced Management

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Appendix

2012

Broadview

Networks

Holdings,

Inc.

Confidential

and

Proprietary

Adjusted EBITDA Reconciliation

Three Months Ended

LTM Ended

Fiscal Year Ended December 31,

Sept 30,

Dec 31,

March 31,

June 30,

Sept 30,

Dec 31,

2009

2010

2011

2010

2011

(Unaudited)

Statement of Operations Data:

456,452

407,704

378,154

100,423

98,668

98,419

95,537

93,444

90,754

378,154

225,431

193,860

178,500

47,214

46,981

45,837

45,028

43,853

43,782

178,500

231,021

213,844

199,654

53,209

51,687

52,582

50,509

49,591

46,972

199,654

154,722

148,917

132,460

36,573

34,874

34,770

32,813

33,360

31,517

132,460

49,922

44,085

39,653

11,402

9,932

9,781

9,987

9,941

9,944

39,653

26,377

20,842

27,541

5,234

6,881

8,031

7,709

6,290

5,511

27,541

(39,197)

(38,379)

(38,302)

(9,397)

(9,620)

(9,717)

(9,616)

(9,625)

(9,344)

(38,302)

112

183

(12,691)

(17,464)

(10,508)

(4,129)

(2,716)

(1,666)

(1,707)

(3,317)

(3,818)

(10,508)

(1,179)

(1,288)

(1,347)

(521)

(237)

(372)

(319)

(382)

(274)

(1,347)

(13,870)

(18,752)

(11,855)

(4,650)

(2,953)

(2,038)

(2,026)

(3,699)

(4,092)

(11,855)

Other Financial Data:

76,316

64,927

67,377

16,636

16,813

17,812

17,879

16,230

15,455

67,377

77,202

69,913

69,039

17,055

17,317

18,006

17,812

17,316

15,904

69,039

16.9%

17.1%

18.3%

17.0%

17.6%

18.3%

18.6%

18.5%

17.5%

18.3%

(13,870)

(18,752)

(11,855)

(4,650)

(2,953)

(2,038)

(2,026)

(3,699)

(4,092)

(11,855)

39,197

38,379

38,302

9,397

9,620

9,717

9,616

9,625

9,344

38,302

(112)

(73)

(70)

(34)

(23)

(20)

(17)

(18)

(15)

(70)

1,179

1,288

1,347

521

237

372

319

382

274

1,347

49,922

44,085

39,653

11,402

9,932

9,781

9,987

9,941

9,944

39,653

76,316

64,927

67,377

16,636

16,813

17,812

17,879

16,230

15,455

67,377

3,669

552

1,121

295

419

422

152

295

101

137

595

100

420

595

955

233

(183)

77,202

69,913

69,039

17,055

17,317

18,006

17,812

17,316

15,904

69,039

(33,747)

(29,879)

(30,134)

(6,698)

(6,707)

(8,816)

(8,505)

(7,425)

(5,388)

(30,134)

43,455

40,034

38,905

10,357

10,610

9,190

9,307

9,891

10,516

38,905

costs associated with initial public offering, costs associated with early lease terminations and professional fees related to strategic initiatives.

Net loss..........................................................................................................................

Interest expense............................................................................................................

Adjusted EBITDA margin...............................................................................................

Revenues.......................................................................................................................

Cost of revenues (exclusive of depreciation and amortization).....................................

Selling, general and administrative................................................................................

Depreciation and amortization.......................................................................................

Gross profit.................................................................................................................

Adjusted EBITDA........................................................................................................

EBITDA.......................................................................................................................

Adjusted EBITDA (1).....................................................................................................

Other Income.................................................................................................................

Professional fees related to strategic initiatives (c).......................................................

Share-based compensation (e).....................................................................................

Depreciation and amortization.......................................................................................

Interest income..............................................................................................................

Provision for income taxes............................................................................................

Costs associated with initial public offering (a)..............................................................

Severance and related separation costs (b)..................................................................

Costs associated with early termination of lease (d).....................................................

Capital expenditures......................................................................................................

Free Cash Flow (2).....................................................................................................

(1) Adjusted EBITDA represents net loss before depreciation and amortization, interest income and expense, other income, provision for income taxes, share-based compensation, severence and related separation costs,

(2) Free Cash Flow defined as Adjusted EBITDA less capital expenditures.

(3) As adjusted data gives effect to this offering and the use of proceeds therefrom as if each had occurred on March 31, 2011.

(a) Represents one-time, non-recurring costs associated with initial public offering.

(b) Relate primarily to guaranteed severance payments and employee health benefits.

(e) Represents non-cash expenses incurred as part of executive compensation.

(d) Represents expenses that management believes are not reflective of our core operations.

Loss before income taxes...........................................................................................

Income (loss) from operations....................................................................................

Other income (expense)................................................................................................

Provision for income taxes............................................................................................

EBITDA (1)....................................................................................................................

Net loss.......................................................................................................................

Interest expense............................................................................................................

Interest income..............................................................................................................

BROADVIEW NETWORKS HOLDINGS INC - FORM 8-K - EX-99.1 - COMPANY PRESENTATION DATED DECEMBER 31, 2011 - April 2, 2012

Attached files

BROADVIEW NETWORKS HOLDINGS INC Reports