BROADVIEW NETWORKS HOLDINGS INC - FORM 8-K - EX-99.1 - COMPANY PRESENTATION DATED MARCH 31, 2012

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8-K - FORM 8-K - BROADVIEW NETWORKS HOLDINGS INC	d358640d8k.htm

Exhibit 99.1

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Exhibit 99.1

Broadview Networks®

Beyond Service. Beyond Software. Beyond Solutions.

Company Presentation

Quarter Ended March 31, 2012

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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 and retention 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.

Broadview NETWORKS®

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Highlights

Leading Provider of Next-Generation Communications Solutions

T-1 and Cloud based products represented 79% of new retail sales in 1Q 2012

Cloud communications represented 14% of retail revenue and 34% of new sales in 1Q 2012

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 36K 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

Recurring FCF and Increasing Profitability Margins

Over 75% of revenue under contract

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

Experienced Management

Senior management has on average 24 years of industry expertise

Broadview NETWORKS®

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Company Overview

Broadview NETWORKS®

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Regional Focus With National Coverage

Regional Player with Cloud Services to Address Customers Nationwide 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

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

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

Large, Untapped Opportunity

Ability to address out-of-region multi-location customers through OfficeSuite™ and other cloud-based services

Dense Northeast & Mid-Atlantic Footprint

Boston

New York

Philadelphia Washington, D.C.

Cloud Services Available Nationwide

Broadview NETWORKS®

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Broadview At A Glance

Company Stats

Customers & Market

Total Business Customers 36K

Average Revenue per Customer $692

Network

Retail Access Line Equivalents 601K

Retail T-1 Circuits 25K

Colocation Sites ~260

Ethernet-over-Copper Equipped Colos (EoC) 38%

Fiber Route Miles ~3,000

Employees as of 3/31/12

Total Employees 850

Quota-Bearing Sales Reps (all Channels) 150

Agent Channel Partners ~300

Superior Customer Service & Quality

WINNER

Commendation for

High Quality Service from the State of New York

Stevie Award for Innovation in Customer Service at the 2011 American Business Awards

Recognized by Crain’s as the 54th Largest Private Company in the New York area

Broadview NETWORKS®

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Successful Integration Track Record

Objective

Create merger of equals with a new, T-based strategy, scale and operational efficiencies

Objective

Enhance scale, diversify product portfolio, expand fiber network

Objective

Allow Broadview to control the developmental roadmap to key technology

2005 2006 2007 2008 2009

Objective

Improve product offerings and strengthen and increase market footprint

Objective

Strengthen presence in existing market, expand next-gen product portfolio

Broadview NETWORKS®

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Diversified Product & Customer Base

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

Approximately 36K SMB customers

Diverse customer base and low revenue concentration risk

Revenue by Segment – Q1 2012

Retail Revenue by Product Type – Q1 2012 (1)

Carrier, 4% Other, 2%

Wholesale, 6%

Retail Voice & Data, 88%

Cloud-based Products, 14%

T-1 Based Products, 46%

All Other Traditional Products, 25%

Traditional Voice Attached to a T-1, 15%

75%

(1) Percent based on Retail Voice & Data revenue.

75% of Retail Revenue Associated with T-1, cloud- and IP-based Accounts

Broadview NETWORKS®

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Broadview’s Business Evolution

Circa 2006

Today (1) (2)

Retail Revenue Mix

Data, 12%

Voice, 88%

Cloud, 14%

Data, 26%

Voice, 60%

Network Mix (3)

T-1 & IP-based, 33%

Traditional Voice, 67%

EoC 8%

Standard T-1 & IP-based 54%

Traditional Voice / Data not attached to T-1 20%

Traditional Voice Attached to T-1 18%

80%

(1) For the quarter ended March 31, 2012.

(2) Voice includes allocated portion of integrated access (3) Retail access line equivalents.

Broadview NETWORKS®

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Growing Revenues From Larger Customers

Retail Revenue By Customer Size

2006 (1)

Present (2)

> $25,000, 2%

$10,000—$25,000, 4%

$5,000—$10,000, 6%

$1,000—$5,000, 28%

$0—$500, 41%

$500—$1,000, 18%

59%

> $25,000, 9%

$10,000—$25,000, 11%

$5,000—$10,000, 11%

$0—$500, 14%

$500—$1,000, 17%

$1,000—$5,000, 38%

86%

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

(1) Broadview standalone 2006.

(2) Broadview March 2012 Billing Database.

Broadview NETWORKS®

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Steady Growth In Revenue Per Customer

Focus on Next-Gen Products and Services

New Retail Sales (Q1 2012)

Average Revenue per Business Customer (Retail)

Traditional Voice & Data Products, 21%

T-1 & IP-Based Products, 79%

$800 $700 $600 $500 $400 $300

CAGR: 11%

$692 $674 $642 $656 $626 $598 $606 $610 $570 $526 $542 $553 $504

Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sept Dec ‘ Mar ‘09 ‘09 ‘09 ‘09 ‘10 ‘10 ‘10 ‘10 ‘11 ‘11 ‘11 11 ‘12

Q1 2012 Revenue Loss By Account Size (1)

3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00%

Total Revenue Loss: 1.89%

2.93%

1.97%

1.76%

1.59%

0.90%

0.79%

$0—$500 $500—$1,000—$5,000—$10,000—> $25,000 $1,000 $5,000 $10,000 $25,000

Account Size

Cloud-based services ~34%

Today, T-1, IP-based and cloud-based products make up approximately 79% 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

(1) Quarterly average of monthly revenue loss. Broadview’s calculation of revenue loss is a comprehensive metric and may not be comparable to revenue loss or churn metrics reported by other companies in the industry.

Broadview NETWORKS®

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Focused Sales Strategy

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

150 Quota-bearing sales reps across all channels

Direct sales: 63% of new sales

Dedicated teams focused on new customer acquisition, upselling, renewals and customer retention Sales to new customers average >$900 Sales to existing customers represents 40%+ of new sales

Agent sales: 24% 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

Wholesale sales: 13% of new sales

Sells our core products and services including MPLS, POTS, T’s, data colocation to other carriers throughout our footprint

2012 Channel Expansion

Distribution Partners and Web Marketing

Total LTM New Sales by Channel (1)

Wholesale, 13%

Agent, 24%

Direct, 63%

(1) Last Twelve Months (LTM) as of March 31, 2012.

Broadview NETWORKS®

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Leveraging Our Customer Base

Increasing Walletshare Through New Cloud-based Products and Services

Approximately 36K 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

Business IT Spend Breakdown

Utilities, Power, IT Floorspace & Other 4%

Carriers & Network Infrastructure 11%

Application Software, Security

& Business Continuity 20%

Personnel 47%

Computers, Servers, Storage & Peripherals 18%

53%

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

Technology Enabling Us to Target Additional Customer Spend

Broadview NETWORKS®

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Cloud-based Products Overview

OfficeSuite™ Cloud-based Communication System

OfficeSuite™

Platform Switch

Mobile Phone Internet

Teleworker Mobile Pro

Branch Office

• 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

Awards & Recognition

TOP 10 SERVICE PROVIDER

2009 | 2010 | 2011

Infonetics

Research

Leadership

TMC

NGN

2011 Award

Cloud Computing Product Suite

Hosted E-mail Including Enterprise And Microsoft Exchange

Blended solutions for cost-efficiency without sacrificing quality

Microsoft

SharePoint Server

Hosted Microsoft SharePoint

A collaboration tool that creates a secure intranet site to improve productivity

Microsoft

Office 2010

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

Broadview

Networks®

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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

Broadview Results to Date

Cloud Communications and Other Cloud-based Revenue

Annual Revenue $ Millions

$40 $35 $30 $25 $20

$15

2009 2010 2011 30% Cagr

Industry Opportunity

U.S. Cloud Services Market

Annual Revenue $ Billions

$30

$25

$20

$15

$10

2010 2012 2014

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

18% Cagr

Broadview

Network®

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Financial Overview

Broadview

Networks®

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Revenue Drivers

Improving Trends

Traditional Voice Decline Slowing

$50 $47.2

$44.1

$41.4

$39.2

$40 $37.1

$35.2 $34.2

$32.7

$31.6

$30.4 $29.4

$30 $27.8 $27.0

$20

$10

Q1’09 Q3’09 Q1’10 Q3’10 Q1’11 Q3’11 Q1’12

(5.7%) Avg Q decline (3.7%) Avg Q decline

Approaching Inflection Point

Larger product set

Increased geographic sales reach Continued MRR moving up-market Increased utilization of web marketing efforts 1Q 2012 Reflects $1.3 million sequential drop in Carrier revenue –improved sequential decline in Voice

& Data revenue

Increasing Revenue per Business Customer

$800 $750 $692 $674 $700 $656 $642 $626 $650 $598$ 606$610 $570 $600 $526$ 542$ 553 $550 $504 $500 $450 $400 $350 $300 $250

Q1’09 Q3’09 Q1’10 Q3’10 Q1’11 Q3’11 Q1’12

11% Cagr

Growth From Cloud

$12 $10.8

$10.1

$9.6

$10 $9.0

$8.3

$7.8

$8 $7.2

$6.6

$6.2

$5.4 $5.5 $5.8

$6 $4.9

Q1’09 Q3’09 Q1’10 Q3’10 Q1’11 Q3’11 Q1’12

30% Cagr

Total Revenue (1Q12)

$130.0 $122.0 $116.0 $111.8 $120.0 $106.7 $105.7 $110.0 $102.9 $100.4 $98.7 $98.4 $95.5 $93.4 $90.8 $100.0 $88.5 $90.0 $80.0 $70.0 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $

Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12

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.

Broadview

Networks®

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Improved Revenue Mix – Stable EBITDA Margins

($Millions)

Historical Revenue

$600 $496.9 $500 $456.5 $407.7 $378.2 $368.3 $400 $241.7 $204.0 $166.1 $144.3 $300 $136.6 $200 $255.2 $252.5 $241.6 $233.9 $231.7 $100 $0 2008 2009 2010 2011 LTM Q1’12 T1 & Cloud Account Revenue Other Revenue Traditional Voice in T-1 Accounts

Historical Adjusted EBITDA & Margins (1)

$90 $71.0 $77.2 22.0% $69.9 $69.0 $65.7

$75 20.0% $60

$45 18.0%

18.3% 17.9%

16.9% 17.1% 16.0% $30

$15 14.0%

14.3%

$0 12.0% 2008 2009 2010 2011 1Q12 LTM

Enhanced Value of Customer Base

2008 2011

Revenue: $496.9 M $378.2M

Adj. EBITDA(1): $71.0M $69.0M Adj. EBITDA Margin: 14.3% 18.3%

4Q Revenue loss: 2.42% 1.74% 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

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

Broadview

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Recurring Free Cash Flow

Quarterly Update

($Millions)

Revenue (1)

$125

$100 $98.7 $98.4 $95.5 $93.4 $90.8 $88.5

$75 $39.2 $39.3 $36.4 $35.0 $33.5 $31.7

$50 $59.5 $59.1 $59.1 $58.4 $57.3 $56.9

$25

Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12

T1 & Cloud Account Revenue

Other Revenue

Traditional Voice in T-1 Accounts

Capital Expenditures

$12

$10 $8.8 $8.5

$8 $6.7 $7.4 $6.5

$6 $5.4

Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12

(1) Prior Periods Updated to Current Revenue Categories

Adjusted EBITDA

$20 $18.0 $17.8 25%

$17.3 $17.3

$18 $15.9

$16 $14.7 20%

$14 18.6%

$12 17.6% 18.3% 18.5% 17.5% 15%

16.6%

$10

$8 10%

$4 5%

$0 0%

Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12

Free Cash Flow (2)

$12 $10.6 $10.5

$9.9

$10 $9.2 $9.3

$8.2

Q4’10 Q1’11 Q2’11 Q3’11 Q4’11 Q1’12

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

Broadview

Networks®

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Balance Sheet

($ Millions) 12/31/11 3/31/12

Assets

Cash and Investments $38.9 $25.1 Accounts Receivable 33.1 30.6 Other Current Assets 9.9 11.0

Total Current Assets $81.9 $66.7

Gross P,P &E 247.6 253.5 Accumulated Depreciation (167.0) (174.8) Property & Equipment, net 80.6 78.7 Goodwill 98.2 98.2 Intangible Assets, net 9.7 8.9 Other Assets 6.3 5.8

Total Assets $276.7 $258.3

Liabilities & Stockholders’ Deficiency

Current Liabilities $53.1 $41.5 Current Portion of LTD 319.8 318.4

Total Current Liabilities $372.9 $360.0

Long Term Debt 0.0 0.0 Capital Leases 2.7 2.3

Other Liabilities 10.8 11.1

Total Liabilities $386.4 $373.4

Total Stockholders’ Deficiency (109.7) (115.0)

Total Liabilities & Stockholders’ Deficiency $276.7 $258.3

Components of Debt

12/31/12 3/31/12

Revolving Credit Facility $17.1 $16.1 Capital Lease Obligations (incl. Current Portion) $4.6 $4.1

Senior Secured Notes (excl. Premium) $300.0 $300.0

Total Debt (excl. Premium) $321.7 $320.2

Premium on Senior Secured Notes $0.8 $0.5

Total Debt (incl. Premium) $322.6 $320.7

Broadview

Networks®

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Liquidity

• Top Down Run Rate – $66M LTM Adjusted EBITDA less $28M LTM Capex less $35M run rate interest = marginally cash flow positive (pre transaction cost and certain professional fees, settlements and other non-recurring items)

• CIT revolver facility ($16M funded and $1M of outstanding L/Cs as of 3/31/12) matures on June 1, 2012

• Cash and Investments balance at 3/31/12: $25M

• Cash coupon of $17M paid 3/1/12

Broadview

Networks®

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Highlights

Leading Provider of Next-Generation Communications Solutions State-of-the-Art Network Infrastructure Large & Diversified Customer Base Strong and Improving Key Operating Metrics Recurring FCF and Increasing Profitability Margins Experienced Management

Broadview

Networks®

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Appendix

Broadview

Networks®

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Adjusted j EBITDA Reconciliation

($ in Thousands) Three Months Ended

Fiscal Year Ended December 31, Dec 31, March 31, June 30, Sept 30, Dec 31, March 31,

2009 2010 2011 2010 2011 2011 2011 2011 2012

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Statement of Operations Data:

Revenues $ 456,452 $ 407,704 $ 378,154 $ 98,668 $ 98,419 $ 95,537 $ 93,444 $ 90,754 $ 88,548

Cost of revenues (exclusive of depreciation and amortization) 225,431 193,860 178,500 46,981 45,837 45,028 43,853 43,782 43,052

Gross profit 231,021 213,844 199,654 51,687 52,582 50,509 49,591 46,972 45,496

Selling, general and administrative 154,722 148,917 132,460 34,874 34,770 32,813 33,360 31,517 31,613

Depreciation and amortization 49,922 44,085 39,653 9,932 9,781 9,987 9,941 9,944 9,301

Income ((loss)) from operationsp 26,377, 20,842, 27,541, 6,881, 8,031, 7,709, 6,290, 5,511, 4,582,

Interest expense (39,197) (38,379) (38,302) (9,620) (9,717) (9,616) (9,625) (9,344) (9,697)

Interest income 112 73 70 23 20 17 18 15 18

Other income (expense)( p ) 17 - 183 - - 183 - - -

Loss before income taxes (12,691) (17,464) (10,508) (2,716) (1,666) (1,707) (3,317) (3,818) (5,097)

Provision for income taxes (1,179)( ) (1,288)( ) (1,347)( ) (237)( ) (372)( ) (319)( ) (382)( ) (274)( ) (248)( )

Net loss $ (13,870) $ (18,752) $ (11,855) $ (2,953) $ (2,038) $ (2,026) $ (3,699) $ (4,092) $ (5,345)

Other Financial Data:

EBITDA (1) $ 76,316 $ 64,927 $ 67,377 $ 16,813 $ 17,812 $ 17,879 $ 16,231 $ 15,455 $ 13,883

Adjusted EBITDA (1) 77,202 69,913 69,039 17,317 18,006 17,812 17,317 15,904 14,705

Adjusted EBITDA margin 16.9% 17.1% 18.3% 17.6% 18.3% 18.6% 18.5% 17.5% 16.6%

Net loss $ (13,870) $ (18,752) $ (11,855) $ (2,953) $ (2,038) $ (2,026) $ (3,699) $ (4,092) $ (5,345)

Interest expense 39,197 38,379 38,302 9,620 9,717 9,616 9,625 9,344 9,697

Interest income (112) (73) (70) (23) (20) (17) (18) (15) (18)

Provision for income taxes 1,179, 1,288, 1,347, 237 372 319 382 274 248

Depreciation and amortization 49,922 44,085 39,653 9,932 9,781 9,987 9,941 9,944 9,301

EBITDA 76,316 64,927 67,377 16,813 17,812 17,879 16,231 15,455 13,883

Costs associated with initial public offering (a) - 3,669 - - - - - - -

Severance and related separationp costs (b)( ) 552 1,121 295 422 152 83 31 29 371

Professional fees related to strategic initiatives (c) 101 137 595 82 42 33 100 420 451

Costs associated with early termination of leaselease (d) - - 955 - - - 955 - -

Share-based compensation (e) 233 59 - - - - - - -

Other Income - - (183) - - (183) - - -

Adjustedj EBITDA 77,202 69,913 69,039 17,317 18,006 17,812 17,317 15,904 14,705

Capital expenditures (33,747) (29,879) (30,134) (6,707) (8,816) (8,505) (7,425) (5,388) (6,501)

Free Cash Flow (2) $ 43,455 $ 40,034 $ 38,905 $ 10,610 $ 9,190 $ 9,307 $ 9,892 $ 10,516 $ 8,204

(1) Adjusted EBITDA represents net loss before depreciation and amortization amortization, interest income and expense, other income, provision provision for income taxes, share-based compensation, severance and related separation and retention costs, costs associated with initial public offering, costs associated with early lease terminations and professional fees related to strategic initiatives.

(a) Represents one-time, non-recurring costs associated with initial public offering. (b) ( ) Relates primarily p y to guaranteed g severance payments p y and employee p y health benefits.

(c) Represents expenses that management believes are not reflective of our core operations. (d) Represents expenses that management believes are not reflective of our core operations. (e) Represents non-cash expenses incurred as part of executive compensation.

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

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