belden to acquire tripwires2.q4cdn.com/591876415/files/doc_presentations/2014/belden_tahoe... ·...

© 2014 Belden Inc. | belden.com | @BeldenInc

Investor Summary

Belden to Acquire Tripwire

December 2014

© 2014 Belden Inc. | belden.com | @BeldenInc 2

Our commentary and responses to your questions may contain forward-looking statements, including our outlook for Tripwire’s performance and the 2014 fourth quarter and full year and 2015. Forward-looking statements include projections of sales, earnings, general economic conditions, market conditions, working capital, market shares, free cash flow, pricing levels, and effective tax rates. Belden undertakes no obligation to update any such statements to reflect later developments, except as required by law. Actual results may differ materially from those expressed or implied. Such differences may result from a variety of factors, including: legal or regulatory proceedings or other matters that affect the timing or ability to complete the transactions as contemplated; the risk that the businesses will not be integrated successfully; the loss of senior management or key employees of Belden or Tripwire; the possibility of disruption from the merger making it more difficult to maintain business and operational relationships; the possibility that the merger does not close, including due to the failure to satisfy the closing conditions; any actions taken by either of the companies, including restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions); developments beyond the companies' control, including: changes in domestic or global economic conditions, competitive conditions and consumer preferences; natural disasters; international, political or military developments; and technological developments. Additional Information on factors that could cause actual results to vary materially from those discussed today is available in this morning’s announcement, our most recent Annual Report on Form 10-K as filed with the SEC on February 27, 2014 (including those discussed under “Risk Factors” in Part I, Item 1A and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7), and our subsequent filings with the Securities and Exchange Commission.

Safe Harbor Statement

Non-GAAP Measures On this call we will discuss some non-GAAP measures (denoted by footnote) in discussing Belden and Tripwire’s expected performance, and the reconciliation of those measures to the most comparable GAAP measures is contained within this presentation or available at our website www.Belden.com under Investor Relations.

http://www.belden.com/


Tripwire At A Glance

Company Name Tripwire

Consideration* $710 million cash

Revenue** ~ $165 million

EBITDA** ~ $53 million

Application Security and Vulnerability Management

Products Cybersecurity solutions

Customers Financial Services, Retail, Energy, Healthcare/Pharma, Industrial, Government, and Media

• Highly profitable • Founded in 1997, based in Portland,

Oregon • Over 400 employees • Over 9,000 customers, 50% of the

Fortune 500 • #2 market share in Vulnerability

Management • >90% renewal rate

* Net of cash acquired ** 2015 expected adjusted results. Excluding share-based compensation


Understanding Tripwire’s Business

The Markets The Products

The Applications The Differentiation

Mission critical and fast growing Security and Vulnerability Market

Software and services designed to prevent, detect, and respond to threats.

Securing the network across data centers, control rooms, and the “Internet of Things”

Highly specialized and proven solutions solving critical business threats.

Tripwire locks the “doors and windows” on critical networks to prevent unauthorized access, detect intruders and respond in real-time.

Vulnerability Assessment Security Configuration Management Log Intelligence Analytics & Reporting

Automates security for fast detect/fix Prioritizes threat issues with business

needs Integrates security data for 360° view Experts in vertical market security nuances

Secure bank payment systems Protect employee and retail customer data Automate cyber security protection for

energy/utilities Detect compliance issues for healthcare

Highly fragmented Application expertise valued over broad

offering Leveraged across Enterprise, Industrial

and Broadcast markets


Tripwire Is A Leader In The Security And Vulnerability Market

Cyberthreat Solutions

Vulnerability Assessment

Targeted Attack Detection

Threat Analytics

Strategic Rationale

Balanced approach of innovation and financial discipline.

A history of delivering reliable products focused on up-time for mission critical applications

Core strengths in file integrity management and security configuration management

Engaged with all leading utilities and understand the market potential for protection of critical infrastructure


50

100

150

200

2011 2012 2013 2014 2015

Tripwire Has A Very Attractive Financial Profile

A long history of significant revenue growth….

15% CAGR

in millions ($)

Adj

uste

d R

even

ues


2011 2012 2013 2014 2015

Tripwire Has A Very Attractive Financial Profile

…. and a solid track record of generating profits

0

20

40

60

>30% EBITDA Margin

1. Adjusted results excluding share-based compensation expense

in millions ($)

EB

ITD

A1


Customers Challenged to Close the Gap

Advanced attacks are harder to detect

Too many alerts that are uncoordinated and do not provide business risk prioritization

Traditional networks and endpoint security fail to detect and respond in real-time

Significant Threat Landscape

229 Days to detect a significant threat on a corporate network

>123 Days to resolve a malicious data breach

>350 days to detect and resolve cybersecurity breaches

Source: Mandian, Ponemon

Why Cybersecurity Is Critical to Protect the Infrastructure


The Threat Landscape Is Evolving Rapidly


The Enterprise Perimeter Has All But Disappeared


Adoption of Cybersecurity Solutions Occurring Now and Continues Within the Markets We Serve

2011 Today 3 Yrs. 7 Yrs. 10+ Yrs.

Industrial

Enterprise

Broadcast

Energy Process Discrete

Transportation

Creators Aggregators Distributors

Financial Services

Retail Government Healthcare

Tripwire improves Belden’s growth profile by 100 basis points


Billions of Sensors, Smart Machines and Intelligent Systems

Connecting to Create High Value IP-based Networks of Mission-Critical Applications

All Potentially Vulnerable

to Cyberthreats

SECURITY around these highly valuable, mission critical networks is essential to make the promise of the Internet of Things a secure reality

As Internet of Things Proliferates… Cybersecurity Becomes Crucial


The Transformation Continues

Investment in software R&D drives margin expansion and predictable revenues

R&D % of revenues

EBITDA Margin

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2005 2008 2011 2014 2017

Hardware Software EBITDA %


A Significant Positive Impact On Consolidated Results

1. Adjusted results including revenues from synergies. See attached reconciliation for comparable GAAP results.

2. Based on management’s best estimate assuming close of transaction on 1/1/15 3. Adjusted results. See attached reconciliation for comparable GAAP results.

Financial Impact (with revenue synergies)2 2015 2016 2017

Revenues1 (millions) $165 $195 $235

EPS3 $0.65 $0.85 $1.10

2014 – 2017 Growth ~17% CAGR1

EBITDA Margin >30%

Gross Profit Margin >80%

+

+

Organic Growth +100 bps

EBITDA Margin +80 bps

Gross Profit Margin +300 bps

+

+


An Outstanding Strategic Fit

Product Portfolio

Solid Growth

Commercial Synergies

Financial Impact

Creates an extensive portfolio to deploy, secure, and monitor the Internet of Things

Improves the portfolio’s growth opportunities

Offers a solution to existing customers that can be leveraged across all served markets

Provides immediate significant margin and earnings accretion to Belden’s consolidated results


• Webcasts & Videos

− http://www.tripwire.com/it-resources/?filter_type=videocast − http://www.tripwire.com/it-resources/?filter_type=webcast-archived

• Case Studies − http://www.tripwire.com/it-resources/?filter_type=case-study

• White Papers

− http://www.tripwire.com/it-resources/?filter_type=white-paper

• Datasheets

− http://www.tripwire.com/it-resources/?filter_type=datasheet

Other Information About Tripwire

http://www.tripwire.com/it-resources/?filter_type=videocast

http://www.tripwire.com/it-resources/?filter_type=webcast-archived

http://www.tripwire.com/it-resources/?filter_type=case-study






http://www.tripwire.com/it-resources/?filter_type=white-paper






http://www.tripwire.com/it-resources/?filter_type=datasheet





Reconciliation of GAAP to Non-GAAP Measures

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