executing the westcongroup strategy platform drive value for cloud service providers and resellers...
TRANSCRIPT
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Executing the WestconGroup strategy Investor overview
February 2016
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WestconGroup Team Introduction
• Management and strategic direction of the company’s top global vendor and partner relationships
• 20+ years executing channel, sales and partner initiatives around the world
• Led business development, solutions enablement and corporate marketing across the full portfolio and led WestconGroup’s global Cisco relationship
• Lead global finance, including operational support, budgeting/forecasting, accounting/controls, legal, procurement, risk management and lender relations
• Business partner orientation, corporate governance, risk management
• Extensive background in global financial management
• Lead the company’s cloud and data center businesses as well as all go-to-market, strategy and investment activity
• 20+ years experience leading strategic go-to-market initiatives for innovative IT services and business solutions providers
• Drive company’s strategic direction and overall management
• 20+ years business-to-business and channel leadership experience
• Track record of managing global organizations that couple premier technology-based solutions and services with strong operational capabilities
Dolph Westerbos Chief Executive Officer
(2014)
Cathy Jessup Chief Financial Officer
(2014)
Bill Corbin EVP, Global Sales &
Partner Management (2007)
Steve Garrou EVP, Solutions
Development & Strategy (2014)
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End User
End Customer
MSPs & Telcos
OEMs/Vendors
Value Added Resellers
Telcos and Service Providers
System Integrators
IT supply chain and eco-system overview
Tier 1 Tier 2 Distribution
4
• Year two of plan
• Emerging markets have been challenging
• Harnessing a solid foundation
• Focusing on efficiencies and systems
• Improving customer experience and growing our base
• Building new solutions and revenue streams
Driving profitability improvement and creating new opportunities in a dynamic environment
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Westcon-Comstor at a glance: specialization, global, balanced, growth
NA
37%
EU 33%
MEA
10%
LA 10%
APAC 10%
Region
$4.9B
180+
4,000
30
FY15 net revenue
Countries & territories shipped to on behalf of customers
Employees
Years
27 Logistics & stocking facilities
70+ Countries with physical presence
Networking 23%
Data Center/Other
17%
Unified Communication
and Collaboration (UCC) 26%
Security 34%
Reseller 67%
Systems Integrator
19%
Service Provider
14%
Customer type
Technology Practice
Global Customers = 10% revenue
Net Revenue FY16 December YTD
6 6
Executive Leadership Team
Lynn Murphy North America (1998)
Jeremy Butt EMEA (2012)
Otavio Lazarini LATAM (1998)
Wendy O’Keeffe APAC (2001)
Dolph Westerbos (2014)
Chris Leeming
Ops & Global Deployment
(2007)
Bill Corbin Global Sales & Partner Mgmt. (2007)
Cathy Jessup
CFO (2014)
Pedro Galatas Services
(1997)
Steve Garrou Solutions Dev. & Strategy (2014)
Adam Kuta CIO (2014)
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Transforming IT distribution Our strategic priorities
GLOBAL SERVICES
SOLUTION PORTFOLIO
EFFICIENCY
PARTNER ENABLEMENT
CLOUD DISTRIBUTION
Streamline our tools and processes
to improve profitability and speed to market
Increase partners’ potential with effective programs that generate growth
Accelerate our partners’ transformation to cloud
with solutions to conduct digital business
Develop the most compelling solution offers in the channel
Extend our partners’ reach through a broad suite of
logistics, financial, technical and business operations services
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Financial performance and our drive for efficiencies
9
Historical financial performance
$3 184 $3 720 $3 822 $4 065
$4 855
$4 066 $4 191
FY11 FY12 FY13 FY14 FY15 FY15 YTD FY16 YTD
Net revenue growth
FY16 December YTD net revenue growth
(10%) 10%
11%
6%
(6%)
3%
North America
Latin America
Europe
Middle East & Africa
Asia Pacific
Consolidated
As reported Constant currency (see note 2 in legal notice slide 26)
(12%)
12%
16%
13%
11%
0%
10
Historical financial performance
Historical EBITDA
$105
$133
$117
$91
$125
$56 $52
FY11 FY12 FY13 FY14 FY15 FY15 H1 FY16 H1
35
27
Feb-14 Feb-15
NWC days
• FY16 impacted by:
– Angola FX
– BPO transition costs
– Weak emerging markets
– General slowdown in H2
• Successfully managing the balance sheet:
– NWC days continue to improve
– Improved DIO; DPO
– DSO stable
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Our key objective is to improve margins
• Centralizing and outsourcing transactional work (BPO)
• Consolidating businesses, management, processes and locations
• Creating better tools for automation, self service, customer experience
• Prioritizing investments: IT, Cloud, Services
• FY17 cost reductions:
‒ Africa, Brazil restructurings (late FY16)
‒ Corporate overhead reductions
‒ Constricting SG&A growth
‒ T&E cutbacks
2.3%
FY14
3.5%
GP% protection, shifting mix to
Services and other higher GP offerings
SG&A leverage on base business
SG&A efficiency through BPO, shared
services and IT
EFFICIENCY
12 12
EFFICIENCY Utilizing IT to streamline business operations
• Creating a technology foundation by completing SAP
• Enabling a better user experience through automation and self service
• Providing new capabilities around services and cloud
SAP Global ERP Foundation
Digital Transformation
CRM, e-commerce & order management automation
FY18 FY13
Canada US
NZ Singapore
AU
FY17
NA
Africa
LATAM
LATAM
Europe
APAC (6 countries)
Finish APAC (7 countries) Middle East
EMEA
FY15
APAC
FY16
Technical upgrade
13 13
Standardizing processes and driving efficiencies through business process outsourcing (BPO)
Objective:
• Consolidate back office activities (such as order processing, accounting and credit services) with BPO provider GenPact in low-cost locations
Results:
• Standardized processes
• Scalability
• Increased commercial focus
• Reduced cost
EFFICIENCY
FY16 FY17 FY18
EMEA APAC
NA LATAM
Transformation virtually complete
with no major issues
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Building strong global relationships
SOLUTION PORTFOLIO
PARTNER ENABLEMENT
15 15
Global vendors
• Focused on 15 market leaders
• Dedicated vendor management
• Global strategy and approach
• Regional alignment and execution
• Vendor service integration
SOLUTION PORTFOLIO
Global customers
• Comprehensive strategy for global system integrators and service providers
• Global contract, business plans and credit services
• Technical and market expertise
• Alignment with global vendors
• Service portfolio integration
PARTNER ENABLEMENT
Differentiated global relationship management strengthens partnerships, enhances market share and protects margins
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Strong growth momentum with our global partners SOLUTION PORTFOLIO
Total Y/Y global customer growth: 24%
Figures based on December YTD gross sales
Ra
nk
ing
Global
Customers FY16 Y/Y Growth
<0% 0-5% 5-20% 20-50% >50%
New FY16
New FY16
New FY16
Global Vendors
Global Disti Rank
FY16 Y/Y Growth
<0% 0-5% 5-20% 20-50% >50%
#2
#1
#1
#1
#1
#2
#1
#1
#2
#1
#2
#1
Total Y/Y global vendor growth: 9%
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“All in” strategy starts our engagement at the beginning of the profit curve and provides global scale for emerging software vendors
Vendor value
• Aligns business plans, commitment and investment
• Provides global relationship management and alignment
• Drives global expansion, channel development and scale
Westcon-Comstor value
• Accelerate incremental revenue and market share
• Gain “first mover” competitive advantage
• Enhance and complement our core technologies
PARTNER ENABLEMENT
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Accelerate profitability and differentiation
through services and cloud
GLOBAL SERVICES
CLOUD DISTRIBUTION
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Managed Services
Professional Services
Support Services
Supply Chain
Services
Global Deployment
Services
Financial Services
Education Services
Business Operations
Services
343 TECHNICAL ENGINEERS
GLOBAL SERVICES
TOTAL TECHNOLOGY CERTIFICATIONS
2,175
68
TRAINING ROOMS
Services extend our partners’ portfolio and create deeper integration
10 GLOBAL SUPPORT CENTERS
LOGISTICS & STOCKING FACILITIES 27
20 20
Services accelerate our profitability
Improve the shape of our business
33% gross margin
GLOBAL SERVICES
$60M revenue
~20% CAGR over 3 years
FY16
21
Westcon-Comstor will enable the channel to capitalize on the cloud opportunity
CLOUD DISTRIBUTION
Source: Cisco Global Cloud Index, 2013-2018
2013 2019
$3.72T $3.68T
$0
IT spend driven by cloud IT spend based on legacy
$900B+ Amount our customers will spend on technology driven by cloud over the next three years
Source: IDC Worldwide Predictions 2015: Accelerating Innovation on the 3rd Platform
23% CAGR
3% CAGR
$370B
Vendors
• Reach new markets
• Facilitate transition to cloud
• Educate and enable
• Aggregate and integrate with complementary products
• Achieve better visibility and insight
Customers
• Simplify buying process
• Facilitate transition to cloud
• Leverage education, enablement and support
• Configure and deliver hybrid solutions
• Streamline business operations
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Logistics, analytics, enablement and a channel-centric platform drive value for cloud service providers and resellers
CLOUD DISTRIBUTION
Complete solution
License management (physical, digital or hybrid)
Logistics and service delivery expertise (enables engagement with the “long tail”)
Extend reach and boost portfolio for partners
Hybrid distribution
Business operation services
Marketing and service support
Bundles, credit and logistics
Consumption-based billing
Service management automation
Retain and improve relevancy
Partner enablement
Cloud Service Provider
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CLOUD DISTRIBUTION
NA
LA
EU
MEA
APAC
Our portfolio blends Westcon-Comstor traditional vendors and cloud innovators
$60M Revenue
FY16
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• Year two of plan
• Emerging markets have been challenging
• Harnessing a solid foundation
• Focusing on efficiencies and systems
• Improving customer experience and growing our base
• Building new solutions and revenue streams
Driving profitability improvement and creating new opportunities in a dynamic environment
25
26
LEGAL NOTICE
1) This presentation contains certain historical financial information relating to WestconGroup (“Westcon” and “Westcon-Comstor”) which
has been consolidated into financial statements of Datatec Group (“Datatec” or the “Group”). Such financial information up to the year
ended 28 February 2015 has been the subject of audit by the Group’s external auditors. Information relating to the current year
ending 29 February 2016 (including information consolidated in Datatec’s Interim Results to 31 August 2015 and information published
in the Group’s Interim Management Statement covering the ten months ended 31 December 2015) has not been audited or reported
on by the Group’s external auditors.
2) The pro forma constant currency information on page 9, which is the responsibility of the Datatec directors, presents the impact of
changes in foreign currency exchange rates on Westcon’s revenues as reported in US dollars. This information is for illustrative
purposes only and because of its nature, may not fairly present Westcon’s revenues. This information has not been audited or
reported on by the Group’s external auditors.
To determine the revenues in constant currency terms, the current financial reporting period’s monthly revenues in local currency have
been converted to US dollars at the average monthly exchange rates prevailing over the same period in the prior year. The calculation
has been prepared for each of Westcon’s currencies, materially being that of the British Pound, Euro, Brazilian Real, Australian
Dollar, Canadian Dollar, Singapore Dollar, Mexican Peso and South African Rand.
3) This presentation may contain statements regarding the future financial performance of Westcon and the Group which may be
considered to be forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty, and although
the Group has taken reasonable care to ensure the accuracy of the information presented, no assurance can be given that such
expectations will prove to have been correct. The Group has attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions,
events or results not to be as anticipated, estimated or intended. It is important to note, that:
• forward-looking statements indicate the Group’s expectations and have not been reviewed or reported on by the Group’s
external auditors;
• actual results may differ materially from the Group`s expectations if known and unknown risks or uncertainties affect its
business, or if estimates or assumptions prove inaccurate;
• the Group cannot guarantee that any forward-looking statement will materialize and, accordingly, readers are cautioned
not to place undue reliance on these forward-looking statements; and
• the Group disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if
new information becomes available, as a result of future events or for any other reason, other than as required by the JSE
Limited Listings Requirements and / or AIM rules.
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• Responsible for strategic direction and overall management
• 20+ years business-to-business and channel leadership experience
• Track record of managing global organizations that couple premier technology-based solutions and services with strong operational capabilities
Experience:
• Group President of Asia Pacific and EMEA, CHEP – Brambles
• VP of Solutions and Services for EMEA, Dell
• 12 years with ModusLink, serving as President – EMEA, SVP Inter-national Operations – Asia and Europe, VP Worldwide Sales & Marketing, CIO, among others
Education:
• B.A. in Business Administration from Maastricht Hotel Management School in the Netherlands
• M.S. in Management from Stanford University’s Graduate School of Business
WestconGroup Team Introduction
• Responsible for the management and strategic direction of the company’s most critical partner relationships worldwide
• 20+ years executing channel, sales and partner initiatives around the world
• Led business development, solutions enablement and corporate marketing across the full portfolio and led Westcon-Comstor’s global Cisco relationship
Experience:
• Founder and Managing Partner at RedCard Solutions
• CEO at Network Catalyst
• CEO and Chairman of nVision Software
Education:
• B.A. in Communications from California State University, Fullerton
• Responsible for the global finance function, including operational support, budgeting/forecasting, accounting/controls, legal, procurement, risk management and lender relations
• Business partner orientation, corporate governance, risk management
• Extensive background in global financial management
Experience:
• CFO, Pitney Bowes Services
• CFO of North America at Diageo Plc.
• Corporate CFO, The Topps Company
• Cathy also held a range of finance positions at PepsiCo, Inc.
Education:
• B.A. in Russian Studies from Duke University
• MBA in Finance from Indiana University
• Responsible for leading the company’s cloud business, new solutions development in areas such as IoT and Services, as well as strategy and investment activity
• 20+ years experience leading strategic go-to-market initiatives for innovative IT services and business solutions providers
Experience:
• VP of Global Solutions Management, CenturyLink Technology Solutions
• Director, IT Outsourcing Strategy and Portfolio Management, Unisys
• Director, Offer Management and Marketing, AT&T Solutions
Education:
• B.S. in Economics and an MBA in Finance and Marketing from the University of Tulsa
Dolph Westerbos Chief Executive Officer (2014)
Cathy Jessup Chief Financial Officer (2014)
Bill Corbin EVP, Global Sales & Partner Management (2007)
Steve Garrou, EVP, Solutions Development & Strategy (2014)