Business Process Outsourcing for Middle Market Enterprises
Patrick Dolan - CEO
Jim Cortens - President
Don Rutherford - CFO
Safe Harbor Statement
Certain statements in the following presentation relate to future results that are
forward looking statements as defined in the Private Securities Litigation Reform Act
of 1995. Actual results may differ materially from those projected as a result of
certain risks and uncertainties, including but not limited to those noted in our forms
and other filings with the SEC. This presentation includes historical and forward-
looking pro forma information. The Company assumes no responsibility to update
the information contained in this presentation.
forward looking statements as defined in the Private Securities Litigation Reform Act
of 1995. Actual results may differ materially from those projected as a result of
certain risks and uncertainties, including but not limited to those noted in our forms
and other filings with the SEC. This presentation includes historical and forward-
looking pro forma information. The Company assumes no responsibility to update
the information contained in this presentation.
This presentation and the information contained herein is the property of BPO
Management Services, Inc.
Management Services, Inc.
2
Non-GAAP Measures
The Company uses non-GAAP measures of (a) Earnings Before Interest Taxes Depreciation and Amortization ("EBITDA") and (b) Adjusted
EBITDA because it considers the information an important supplemental measure of the Company's performance and believes that these
measures are frequently used by security analysts, investors and other interested parties in the evaluation of companies with comparable
market capitalization. When either non-GAAP measure is presented in these slides, a reference is made to another slide which contains a
reconciliation to the most comparable GAAP financial measure.
EBITDA because it considers the information an important supplemental measure of the Company's performance and believes that these
measures are frequently used by security analysts, investors and other interested parties in the evaluation of companies with comparable
market capitalization. When either non-GAAP measure is presented in these slides, a reference is made to another slide which contains a
reconciliation to the most comparable GAAP financial measure.
(a) EBITDA represents net income before interest, taxes, depreciation and amortization. The Company presents EBITDA because it considers
such information an important supplemental measure of its performance and believes it is frequently used by securities analysts, investors and
other interested parties in the evaluation of companies with comparable market capitalization, many of which present EBITDA when reporting
their results. The Company also uses EBITDA to evaluate and price potential acquisition candidates.
such information an important supplemental measure of its performance and believes it is frequently used by securities analysts, investors and
other interested parties in the evaluation of companies with comparable market capitalization, many of which present EBITDA when reporting
their results. The Company also uses EBITDA to evaluate and price potential acquisition candidates.
EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Company's results
as reported under GAAP. Some of these limitations are: (a) EBITDA does not reflect changes in, or cash requirements for, the Company's
working capital needs; (b) EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or
principal payments, on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized may have to be replaced in the future, and EBITDA does not reflect any cash requirements for such capital
expenditures. Because of these limitations, EBITDA should not be considered as a principal indicator of the Company's performance. The
Company compensates for these limitations by relying primarily on the Company's GAAP results and using EBITDA only on a supplemental
basis.
as reported under GAAP. Some of these limitations are: (a) EBITDA does not reflect changes in, or cash requirements for, the Company's
working capital needs; (b) EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or
principal payments, on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized may have to be replaced in the future, and EBITDA does not reflect any cash requirements for such capital
expenditures. Because of these limitations, EBITDA should not be considered as a principal indicator of the Company's performance. The
Company compensates for these limitations by relying primarily on the Company's GAAP results and using EBITDA only on a supplemental
basis.
(b) Adjusted EBITDA is defined as EBITDA plus all one time or non-recurring expenses associated with the acquisition of new businesses and
the resulting integration expenses. The Company presents Adjusted EBITDA because it considers such information to be an important
supplemental measure of the Company’s performance and believes it is frequently used by securities analysts, investors and other interested
parties in the evaluation of companies with comparable market capitalization.
the resulting integration expenses. The Company presents Adjusted EBITDA because it considers such information to be an important
supplemental measure of the Company’s performance and believes it is frequently used by securities analysts, investors and other interested
parties in the evaluation of companies with comparable market capitalization.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of the
Company’s results as reported under U.S. Generally Accepted Accounting Principles ("GAAP"). These limitations include that Adjusted
EBITDA excludes other significant cash disbursements, such as legal and accounting expenses, severance costs and other operating
expenses incurred by the Company during an acquisition and resulting follow-on integration period. Because of these limitations, Adjusted
EBITDA should not be considered as a principal indicator of the Company’s performance. The Company compensates for these limitations by
relying primarily on the Company’s GAAP results and using Adjusted EBITDA only on a supplemental basis.
Company’s results as reported under U.S. Generally Accepted Accounting Principles ("GAAP"). These limitations include that Adjusted
EBITDA excludes other significant cash disbursements, such as legal and accounting expenses, severance costs and other operating
expenses incurred by the Company during an acquisition and resulting follow-on integration period. Because of these limitations, Adjusted
EBITDA should not be considered as a principal indicator of the Company’s performance. The Company compensates for these limitations by
relying primarily on the Company’s GAAP results and using Adjusted EBITDA only on a supplemental basis.
3
The Company
5
What We Do
Provide back-office business functions on an outsourced basis
Middle market cost per unit much higher than larger companies
BPOMS platform provides economies of scale and delivery capability similar to Global 2000
Significant cost savings passed along to BPOMS customers
Outsourced Services = Recurring Revenue
Primary business functions offered
Human Resources
Enterprise Content Management
Finance and Accounting
Information Technology
Services provided on standard BPOMS delivery platform
Global delivery capability
Software as a Service delivery ‘SaaS’
Leverage our data center infrastructure & IP
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Who We Are
90
94
00
03
04
05
Future
Build SHL outsourcing
Grow SMS $6m - $120m
Sell SMS to Marconi - $130m
SMS buy back - $2m
SMS re-build
Sell SMS to IFOX - $40m
IFOX integration
Establish BPOMS
BPOMS build
History of Creating
Shareholder
Wealth
Wealth
Enhance Value with Focus on
Recurring Revenue Model
Acxiom acquisition
IFOX market cap increase $150m
SHL sold to MCI/EDS - $1b
Capital raise RLH
Capital raise - GIP
Capital raise - Roth
Acquire ADAPSYS
Strategix acquisition
Verizon buy
Successfully executed similar business model
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Reverse Merger - NGRU
SMS 1
SMS 2
IFOX
BPOMS
SHL
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Management Team
Patrick Dolan, Chairman and CEO
Co-Founder
Prior to co-founding BPOMS, Mr. Dolan served as president and chief operating officer of
Infocrossing Inc. [Nasdaq: IFOX], chairman and chief executive officer of Systems Management
Specialists (SMS) and spent the early years of his career with Affiliated Computer Services (ACS)
and SHL Systemhouse
Infocrossing Inc. [Nasdaq: IFOX], chairman and chief executive officer of Systems Management
Specialists (SMS) and spent the early years of his career with Affiliated Computer Services (ACS)
and SHL Systemhouse
25 years outsourcing industry experience
Jim Cortens, President and COO
Co-Founder
Prior to co-founding BPOMS, Mr. Cortens served as executive vice president of Infocrossing Inc.
[Nasdaq: IFOX], president and director of Systems Management Specialists (SMS), and spent the
early years of his career with SHL Systemhouse
[Nasdaq: IFOX], president and director of Systems Management Specialists (SMS), and spent the
early years of his career with SHL Systemhouse
25 years outsourcing industry experience
Don Rutherford– Chief Financial Officer
Over 35 years as chief financial officer and in other senior management capacities for companies in
the technology, resource, venture capital and life sciences sectors including General Automation,
USGT Resources, Grant Life Sciences, Aspeon, LifePoint, Wordplex, and VentureTek.
the technology, resource, venture capital and life sciences sectors including General Automation,
USGT Resources, Grant Life Sciences, Aspeon, LifePoint, Wordplex, and VentureTek.
CFO partner with Tatum LLC, the nation's fastest growing executive services and consulting firm.
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The Middle Market Problem
Middle market enterprises have common problems
Significant expense - Non-core back office business functions create
significant pain and needless expense when not managed effectively and
efficiently
significant pain and needless expense when not managed effectively and
efficiently
Middle market lacks scale - Mid-market companies lack financial size
necessary to benefit from economies of scale and technology investments
necessary to benefit from economies of scale and technology investments
Middle market lacks expertise - Required domain expertise not resident in-
house
house
IT intensive - Back office services require enterprise applications and a robust
support function provided from a hardened data center – audit, regulatory and
compliance concerns
support function provided from a hardened data center – audit, regulatory and
compliance concerns
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The BPOMS Solution
Passes on significant bottom-line savings
Economies of scale, workflow improvements and standardized technology deployment
yield direct cost savings of 20% - 45% to customers
yield direct cost savings of 20% - 45% to customers
On-demand model provides cost-effective mechanism to handle peak business volumes
Increases customer’s ability to focus resources on core business objectives
Provides back-office expertise
Improves customer’s back-office operations by taking advantage of BPOMS domain
expertise
expertise
Provides technology expertise
Common delivery platform leverages BPOMS technology expertise and provides faster
implementation and reduced risk
implementation and reduced risk
Is a “Trusted Advisor”
Initial consulting arrangement allows clients to ease into relationship and reduces
perceived risk profile
perceived risk profile
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BPOMS Service Model
CFO
Web Services - SaaS – Applications
near/off-shore resources
Data Centers/Data Capture/Infrastructure
HRO
ECM
Domain Expertise
Application Support
Compute/Process Utility
Outsourcing = Cost Savings
Valuation Driver
Initial Access
ITO
Project management/Implementation
Workflow Optimization
FAO
Workflow/Solution design
Integration Skills
Comprehensive outsource of back-office functions
Substantially the
the same
across verticals
Requires specific
domain expertise
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Our Customers
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Global Footprint
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Market Opportunity
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Very Large Marketplace
North American
BPO Market Opportunity
including Fortune 500
($billions)
CAGR=15%
(Source: IDC, Everest Group)
Addressable Market is Huge
Thousands of mid-market companies in US
with total back-office spend >$1t
with total back-office spend >$1t
(Source: BPOMS est.)
Finance and Accounting Outsourcing
$15B in 2005 and growing rapidly
Enterprise Content Management
Projected to grow to $8B by 2007
Human Resource Outsourcing
Dramatic growth since early 2000
Information Technology Outsourcing
Large & mature market with a 6% CAGR
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Market Opportunity
Tier 1 providers (IBM, EDS, Accenture, etc.) focused on Fortune 500
Tier 1 providers focused on large contract value
Tier 1 has low market penetration into middle market
Annual revenues of $100m to $3b
Customer contracts average $500K- $5M per year
Industry renewal rates of +95% results in long term relationship
Untapped mid-market opportunity entering ‘emerging rapid growth’ phase
Over 30,000 businesses in U.S. middle market
Greater cost savings/margin potential
BPO adoption by middle market companies is very low
Current marketplace of mid-market BPO providers is highly fragmented
Requires several service providers to meet needs
Unable to achieve scale economics
18
Growth Strategies
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Significant Growth Opportunities
Increase penetration into current customer base
Leverage comprehensive back-office outsourcing platform
Expand middle market presence – accelerate organic growth
Become the ‘One Stop Shop” for busy management providing significant cost
savings compared to in-house spend – Tier 1 model
savings compared to in-house spend – Tier 1 model
Pursue strategic acquisitions
Acquire/consolidate selected niche players to add capability, geographic presence
and financial critical mass
and financial critical mass
Initial growth platform completed - Adapsys, Digica, Novus, NetGuru
Finalizing SPA’s for 2 strategic acquisitions
Cross sell comprehensive back-office solutions into acquired customer base
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DocuCom - Outsourced ECM solution provider
Founded in 1996, formerly Bell + Howell, Canada
Provides document imaging/management services to large corporations
Serves entire Canadian marketplace – national recognition
200+ customers
Approximately 50% of revenue stream is through recurring service contracts
Vertical Market Strengths
Financial Services
Government
Expand existing service offering into larger marketplace in eastern Canada & U.S.
Significant up selling opportunity for existing document management solutions
Acquisition 1: DocuCom
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HRMS - HR software solutions
Founded in 1983 – pioneer in HR information systems
HR software for middle market enterprises; Cornerstone for full HRO offering
100+ customers
National presence in most vertical markets
Approx. 50% of revenue is recurring maintenance & support
Cross selling opportunity for expanding HRO Services within existing
customer base
customer base
Acquisition 2: HRMS
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Acquisition Profile
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Financial Overview
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Milestones to Date
$4.2 million founders investment
Completed Reverse Merger with netGuru to become publicly traded
Acquired companies in second half of 2005 and 2006 to create initial growth platform
ADAPSYS – Canadian based provider of document management solutions
BPOMS/CA – California based HRO company led by former Adecco executive
DIGICA – New Jersey based ITO provider
NOVUS – Canadian based provider of imaging and document management solutions
netGuru – California based provider of document management technology and IT
services
services
Hired new CFO to strengthen management team
Completing application to OTC Bulletin Board
Closing on 2 complementary BPO services companies
Strengthen product and services offerings
Expand current client base and enhance cross selling opportunities
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Financial Projections
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Investment Highlights
Significant market opportunity
Large emerging market - mid-market segment; Minimal penetration
HR and other back-office functions create significant pain point
Significant cost savings opportunity for outsourcing customers
BPOMS platform
Comprehensive, scalable, outsourced back-office solution (One Stop Shop)
Acquisition strategy provides:
Financial growth and earnings
Significant cross-selling opportunities
Additional back-office support capabilities
Strong management team - proven growth and acquisition strategy
Outsourced business services, technology deployment & rapid business growth
Acquisitions and business integration
27
Appendix
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Agility Logistics Profile:
Global logistics company offering broad range of freight
management and customized logistics solutions backed by
a single, company wide IT system operating in over 100
countries
management and customized logistics solutions backed by
a single, company wide IT system operating in over 100
countries
Challenges:
Required provisioning and deployment of IT components to
support global expansion plans and 24*7 management of
critical logistic systems
support global expansion plans and 24*7 management of
critical logistic systems
BPOMS Solution:
24 X 7 network support center
Management of global AT&T back-bone network
24 x 7 management of over 90 servers
Procurement, configuration and deployment services for all
desktops and servers
desktops and servers
Full desktop support for over 1,100 users
Results:
24*7 support of global IT systems infrastructure that
reduced operating costs, improved system availability
levels and allows real-time visibility into all logistics support
systems worldwide.
reduced operating costs, improved system availability
levels and allows real-time visibility into all logistics support
systems worldwide.
Outsourced provisioning services provides rapid
deployment capability to support new office locations on an
on-demand basis.
deployment capability to support new office locations on an
on-demand basis.
Agility Logistics
“BPOMS gives us the resources we need to meet
the ongoing needs of our current customers, as
well as providing us with a flexible platform to
support growth for future customers. We wanted
to work with a single organization on a global
basis.”
basis.”
– Bill Flynn, President & CEO, Agility Logistics
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Canadian Tire Profile:
Canada ’s most-shopped general merchandise retailer, operates more
than 1,100 stores, gas bars and car washes in a national inter-related
network of businesses engaged in retail, financial services and
petroleum. Over 50,000 employees work in the enterprise’s retail,
financial services, and petroleum businesses.
than 1,100 stores, gas bars and car washes in a national inter-related
network of businesses engaged in retail, financial services and
petroleum. Over 50,000 employees work in the enterprise’s retail,
financial services, and petroleum businesses.
Challenges:
Canadian Tire Financial Services (CTFS)whichmanages
approximately 4 million Canadian Tire MasterCard accounts and
markets related financial products and services required an automated
scan/capture and data retrieval system to support their in-store credit
card application and approval process.
approximately 4 million Canadian Tire MasterCard accounts and
markets related financial products and services required an automated
scan/capture and data retrieval system to support their in-store credit
card application and approval process.
BPOMS Solution:
Designed and implemented a document management system to scan
and process all in-store credit card applications and other banking
documents (Loan applications, Know Your Customer, Pre-authorized
Payments, etc.)
and process all in-store credit card applications and other banking
documents (Loan applications, Know Your Customer, Pre-authorized
Payments, etc.)
Management and support for this system on a 24*7 basis.
Results:
Faster approval of credit card and loan applications at a lower unit cost
Improved accuracy of data captured
Ability to retrieve and analyze captured data from digitized credit card
applications – target promotion/sales campaigns
applications – target promotion/sales campaigns
Improved turnaround and customer service
Ability to deal with high business volumes during holiday seasons
without having to staff to meet peak demand period
without having to staff to meet peak demand period
Canadian Tire
“BPOMS implemented a document management
system which resulted in faster-turn around of
credit card applications and more accurate data
capture allowing CTFS to cross-market other
financial services yielding additional revenue
opportunities and an enhanced customer service
experience. In addition, their 24*7 scalable support
model reduces our need to add staff during the
business-critical holiday season.”
system which resulted in faster-turn around of
credit card applications and more accurate data
capture allowing CTFS to cross-market other
financial services yielding additional revenue
opportunities and an enhanced customer service
experience. In addition, their 24*7 scalable support
model reduces our need to add staff during the
business-critical holiday season.”
– Mr. Todd LaFontaine Manager, Web Enabled
Business Solutions
Business Solutions
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Deutsche Post-DHL
Deutsche Post Profile :
Deutsche Post AG (LSE: DPO)is a German postal, logistics and
courier company headquartered in Bonn. Comprising of Deutsche
Post and DHL, Deutsche Post World Net (DPWN) employs half a
million people in 220 countries and territories,and generates revenue
of over €50 billion annually.
courier company headquartered in Bonn. Comprising of Deutsche
Post and DHL, Deutsche Post World Net (DPWN) employs half a
million people in 220 countries and territories,and generates revenue
of over €50 billion annually.
Challenges:
DP recognized that to maintain high service levels and to efficiently
process shipments from customers, it needed superior document
review, management, and approval workflow.
process shipments from customers, it needed superior document
review, management, and approval workflow.
DP’s priority was to increase the efficiency of the administrative, HR,
invoice and AR processing so the accounting staff could access, view,
collaborate and resolve all customer queries on the spot from their
desktop without having to make follow up calls
invoice and AR processing so the accounting staff could access, view,
collaborate and resolve all customer queries on the spot from their
desktop without having to make follow up calls
BPOMS eReview Solution:
Integrated into the DP electronic Document processing architecture,
eReview allowed quick access to the pertinent documents for viewing,
annotation and stamping depending on business rules and privileges
eReview allowed quick access to the pertinent documents for viewing,
annotation and stamping depending on business rules and privileges
Results:
Manual handling of the paperwork in the approval process has been
eliminated
eliminated
Authorized users can retrieve and stamp an image or a document
from a global data warehouse directly from their desktop
from a global data warehouse directly from their desktop
Online document workflow, review and collaboration resulted in faster
response time and reduced operating expense
response time and reduced operating expense
“Because of the type of organization we are, the
amount of paperwork we generate is phenomenal:
from customs clearance documents to invoices,
proofs of delivery and airway bills. The paperwork
just multiplies and multiplies.”
amount of paperwork we generate is phenomenal:
from customs clearance documents to invoices,
proofs of delivery and airway bills. The paperwork
just multiplies and multiplies.”
– Derek Monahen, IS Director
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BBK Worldwide Profile:
A leader in clinical trial patient recruitment for the Pharmaceutical,
Medical Device, Biotech, and Public Health Industries.
Medical Device, Biotech, and Public Health Industries.
Challenges:
Create an e-business suite of tools for patient recruitment that
maximizes the clinical trial study’s enrollment potential, enrollment
projection modeling, effective site selection, accurate measurement of
site performance, gauging the pace of patient recruitment, CRO
assessment, control clinical trial costs
maximizes the clinical trial study’s enrollment potential, enrollment
projection modeling, effective site selection, accurate measurement of
site performance, gauging the pace of patient recruitment, CRO
assessment, control clinical trial costs
BPOMS Solution:
Created a web-based product that offers Study Forecaster, Site
Selection, Patient Generator for effective recruitment outreach, track
and manage regulatory approvals and study materials, protocol
compliance, foster collaboration amongst the study community
Selection, Patient Generator for effective recruitment outreach, track
and manage regulatory approvals and study materials, protocol
compliance, foster collaboration amongst the study community
Provide ongoing maintenance support, new feature development,
integration, documentation, and training using on-shore, near-shore
and off-shore resources.
integration, documentation, and training using on-shore, near-shore
and off-shore resources.
Results:
BPOMS is the exclusive technology partner of BBK and provides other
e-business integration and management services to support this
important initiative
e-business integration and management services to support this
important initiative
BPOMS on-demand support model allows BBK to scale their support
effort to match changing market/product development demands
effort to match changing market/product development demands
BBK Worldwide
“TrialCentralNet 4.0 was developed by BBK in
concert with BPOMS. The goal was to combine a
highly advanced study enrollment data capture and
analysis system with online study communication
and study community-building functions. The
challenge was to make it as efficient as possible
using the most advanced technology”
concert with BPOMS. The goal was to combine a
highly advanced study enrollment data capture and
analysis system with online study communication
and study community-building functions. The
challenge was to make it as efficient as possible
using the most advanced technology”
– A recent BBK Healthcare Press Release
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Cap Table
33
Comparable Company Analysis
34
Major Financial Assumptions
Close DocuCom and HRMS transactions by 3/31/07 according to agreed
upon terms
upon terms
Complete financing package required to close acquisitions and fund
future growth activities under terms agreeable to Company
future growth activities under terms agreeable to Company
Achieve organic growth rate of 5% per quarter across all business lines
generating gross margins consistent with existing Company
performance
generating gross margins consistent with existing Company
performance
Successful integration of acquisitions and new business according to
Company plans
Company plans
Business/financial performance of individual Company operating units
will be consistent with recent history
will be consistent with recent history
Continued favorable conditions in economy and North American BPO
marketplace
marketplace
35
Adjusted EBITDA Reconciliation
36
Adjusted EBITDA Reconciliation
37