CIMPRESS OVERVIEW
MAY 2020
SAFE HARBOR STATEMENT
This presentation, as well as the question and answer session that follows, contains statements about our future expectations, plans, and prospects of our business that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, including our expectations for the growth and development of our businesses and revenues during and after the pandemic; Cimpress' financial resources and liquidity, and compliance with our debt covenants; the anticipated effects of the cost reduction measures we are undertaking and plan to undertake, including the anticipated cost savings; the post-pandemic competitive landscape and possibility of an economic recession; the development of technology infrastructure in our Vistaprint business; and the deployment and anticipated benefits to our businesses of our mass customization platform. Forward-looking projections and expectations are inherently uncertain, are based on assumptions and judgments by management, and may turn out to be wrong. Our actual results may differ materially from those indicated by the forward-looking statements in this document as a result of various important factors, including but not limited to flaws in the assumptions and judgments upon which our forecasts and estimates are based; the development, duration, and severity of the COVID-19 pandemic; our failure to anticipate and react to the effects of the pandemic on our customers, supply chain, markets, team members, and business; our inability to take the actions that we plan to take or the failure of those actions to achieve the results we expect; loss or unavailability of key personnel; our failure to develop and deploy our mass customization platform or Vistaprint technology infrastructure or the failure of either platform to drive the performance, efficiencies, and competitive advantage we expect; unanticipated changes in our markets, customers, or businesses; our ability to maintain compliance with our debt covenants and pay our debts when due; general economic conditions; and other factors described in our Form 10-K for the fiscal year ended June 30, 2019 and the other documents we periodically file with the U.S. SEC.
In addition, the statements and projections in this presentation represent our expectations and beliefs as of the date of this presentation, and subsequent events and developments may cause these expectations, beliefs, and projections to change. We specifically disclaim any obligation to update any forward-looking statements. These forward-looking statements should not be relied upon as representing our expectations or beliefs as of any date subsequent to the date of this presentation.
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ABOUT CIMPRESS
- Founded in 1995 by Chairman and CEO, Robert Keane, in Paris
- Mass customization capabilities at our core
- Product categories include signage, business cards, photo merchandise, invitations and announcements, promotional products, apparel and much more
- Cimpress manages a portfolio of businesses, each with its own unique customer value proposition
- USD $2.8 billion revenue (TTM Q2 FY2020)
- ~14,000 team members in +40 offices and manufacturing facilities
- Long-termmindset: ~40% of outstanding shares are represented by long-term holders on Board of Directors
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LONG TRACK RECORD OF MARKET DISRUPTION
ANNUAL REVENUE, USD MILLIONS
$2,593 | $2,751 | $2,791 | ||||||||||||
$2,135 | ||||||||||||||
$1,788 | ||||||||||||||
$1,494 | ||||||||||||||
$1,167 | $1,270 | |||||||||||||
$1,020 | ||||||||||||||
$817 | ||||||||||||||
$670 | ||||||||||||||
$516 | ||||||||||||||
$401 | ||||||||||||||
$256 | ||||||||||||||
$152 | ||||||||||||||
FY2006 | FY2007 | FY2008 | FY2009 | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | Q2 FY20 |
TTM |
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STRONGLY PROFITABLE AS CLEAR MARKET LEADER
ADJUSTED EBITDA ($M) | ADJUSTED FREE CASH FLOW AND CASH INTEREST ($M) | ||
$500 | $471 | |||
$450 | ||||
$400 | $387 | |||
$350 | $326 | |||
$300 | $283 | |||
$250 | $243 | $238 | ||
$200 | $165 | $181 | ||
$145 | $143 | |||
$150 | $140 | |||
$117 | ||||
$100 | $81 | |||
$51 | ||||
$50 | $32 |
$-
Adjusted FCF | Cash interest related to borrowing | |
$64
$57 | ||||||||||||||||||||||||||||||
$9 | $31 | $49 | ||||||||||||||||||||||||||||
$281 | ||||||||||||||||||||||||||||||
$1 | $212 | |||||||||||||||||||||||||||||
$157 | ||||||||||||||||||||||||||||||
$121 | $5 | $6 | $152 | $38 | $139 | |||||||||||||||||||||||||
$1 | ||||||||||||||||||||||||||||||
$1 | $95 | |||||||||||||||||||||||||||||
$72 | ||||||||||||||||||||||||||||||
$2 | $46 | $52 | $54 | $45 | ||||||||||||||||||||||||||
$2 | ||||||||||||||||||||||||||||||
$71 | $19 | |||||||||||||||||||||||||||||
$(13) | ||||||||||||||||||||||||||||||
Note: See ir.cimpress.com for a reconciliation of non-GAAP measures. | 5 |
MASS
CUSTOMIZATION
Producing goods and services to meet individual customers' needs with near mass production efficiency
Tseng & Jiao, 2001
Generating an infinite variety of goods and services, uniquely tailored to customers
Stan Davis, 1987
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MARKETS WELL
BEYOND
TRADITIONAL
PRINTING
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LARGE TOTAL ADDRESSABLE MARKET
OVER $100 BILLION TAM IN NORTH AMERICA AND EUROPE
LARGE | PROMOTIONAL | ||
SMALL FORMAT | |||
PRODUCTS, | |||
FORMAT | PACKAGING | ||
PRINTING | APPAREL & | ||
PRINTING | |||
GIFTS | |||
~20% MASS CUSTOMIZED
<5% MC
Size of product category boxes are illustratively representative of the relative sizes of each market within the mass customization space (i.e., small and medium production runs)
CUSTOMIZED | MASS CUSTOMIZED | 8 | |
CUSTOM MADE
Hyper-fragmented market, job-shop economics and low economic returns
Example: U.S. Commercial Printing Establishments
by Employee Size Category
1 to 4
5 to 9
10 to 19
20 to 49
50 to 99
100 to 249
250+
Source: "Latest Commercial Printing Demographics Show 1,200 Fewer Establishments" published May 15, 2013 on whattheythink.com citing US Commerce Department census data from 2011
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MASS PRODUCED
Economies of scale drive market consolidation and high economic returns for the leader
Vistaprint Windsor, Canada Facility | Pixartprinting Quarto d'Altino, Italy Facility |
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LOW COST, HIGH QUALITY SERVICE OPERATIONS
Order of Magnitude Competitive Differentiation Relative to Offline Local Competitors
- Workflow software & CRM automates and improves customer experience
- High efficiency of customer-support time to total hours worked
- Trained graphic designers
- Low attrition, high engagement
- 24 x 7 x 365 global operations
- > 80% of team members in low cost countries
- Co-designchat, phone and video with customers
- 5,000 service ops team members
- Major centers in Tunisia, Philippines, India, Jamaica, Ireland, Tennessee
- Smaller-scalefacilities in Germany, Italy, Japan, Texas, and elsewhere
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STRONG COMPETITIVE BARRIERS
BUILT THROUGH YEARS OF INVESTMENT
- $3.1B of technology and manufacturing investments:
- About $1B of cumulative capital investments
- Over $2B of cumulative investments in software and manufacturing engineering
- 295 issued patents
- $3.3B of cumulative advertising investments; significant brand equity built over many years targeting small businesses is difficult to replicate
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OUR BUSINESSES
Over 17M customers served by our businesses around the world
Upload & Print | National Pen | BuildASign | Early-Stage | |
Vistaprint | Businesses |
- of revenue Geography
Target
Customers /
Sales Channels
Customer
Economics
Financial
53%
North America, Europe,
Australia, New Zealand, India,
Japan
Microbusinesses, Hobbyists,
Consumers;
e-commerce sales with small direct sales to larger accounts
Ad spend ~15% of revenue; AOV ~$50 and annual per customer revenue ~$100
GM ~60%; negative working capital; strong FCF conversion
28%
Europe
Graphic Designers, Agencies,
SMBs;
e-commerce sales
Ad spend <5% of revenue; AOV ~€100 and annual per customer revenue >€600
GM ~30%; range of
profitability and cash flow depending on scale and business model
13%
North America, Europe, Japan,
Australia
Small Businesses;
Majority mail order and telesales with growing e- commerce sales
Ad spend ~25% of revenue; AOV ~$200 - $250 and annual per customer revenue ~$300
GM ~55%; highly seasonal profits; significant inventory drives different working capital needs
5%
North America
Wide range of business sizes, consumers, political campaigns; e-commerce sales with small direct sales to larger accounts
Ad spend ~20% of revenue; AOV ~$90 and annual per customer revenue ~$130
GM ~50%; seasonal revenue
and profits in Q2
1%
Brazil (Printi), China (YSD),
North America (VIDA)
SMBs and consumers;
E-commerce and partner sales
Varies by business
Varies by business, but all are
currently net investments
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OUR STRATEGY
Cimpress invests in and builds | We drive competitive advantage | |||||
customer-focused, | across Cimpress by investing in | We limit all other central | ||||
entrepreneurial, mass | ||||||
a select few shared strategic | activities to only those which | |||||
customization businesses for | ||||||
capabilities that have the | absolutely must be performed | |||||
the long term, which we manage | ||||||
greatest potential to create | centrally. | |||||
in a decentralized, autonomous | ||||||
manner. | company-wide value. | |||||
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DECENTRALIZATION:
STAYING SMALL AS WE GET BIG
Autonomy enables our business to focus on customer needs, value proposition improvements, team member engagement and financial returns specific to their business.
- Better decisions, faster
- More entrepreneurial
- Clear accountability for customer satisfaction and investment returns; business leaders increasingly compensated on the performance of their business
- Efficient cost structure
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SHARED
STRATEGIC
CAPABILITIES
We drive competitive advantage across Cimpress through a select few shared strategic capabilities that have the greatest potential to create Cimpress-wide value.
- Technology platform & architecture
- Central procurement
- Talent infrastructure in India
- Peer-to-peerknowledge sharing and talent rotation
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FY20 INVESTMENTS TO REACCELERATE FUTURE GROWTH
Strong consolidated profitability even as we invest in new technology, services, products, production capabilities and geographies
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OPPORTUNITY IN EVERY DIFFICULTY
COVID-19
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EARLY AWARENESS FROM CHINESE & ITALIAN OPERATIONS
COVID-19 COST REDUCTIONS
- Ad spend reduction to 6-month payback
- Manufacturing and customer service operations
- Layoff of temporary contract employees
- Furloughs of permanent team members
- Reduced number of shifts and shift length
- RSU swap for cash compensation
- Mandatory PTO usage
- Optional reduction of hours and unpaid leave
- Pausing 401k match
- Hiring freeze
- No capex other than critical maintenance capex
- Supplier negotiations (terms, price, service levels)
- Government aid and social safety nets in EU and Canada
Significant reduction of fixed costs and reduction of variable costs in line with COVID-19 demand impact.
Ensure we save cash
during a period of reduced demand
yet can ramp back up
as we emerge from this period.
Protecting most promising growth investments and team member engagement.
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FORTIFY OUR CAPITAL STRUCTURE
TO WIN THE POST-PANDEMIC OPPORTUNITY
REVENUE
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
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CIMPRESS HAS DONE WELL IN PAST TOUGH ECONOMIC TIMES
- Lower-costoption vs. the offline traditional players that serve 80% of the market
- Secular shift to online purchasing behaviors
- Strong Vistaprint growth through the 2007-10 world financial crisis
- Strong U&P growth in Italy, Spain & France during debt crisis measures and recessions
STRONG VISTAPRINT REVENUE GROWTH
THROUGH WORLD FINANCIAL CRISIS & RECESSION
2007 - 2010 CAGR: 38%
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PIVOT TO PROVIDE WHAT PEOPLE NEED NOW
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Q&A
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Cimpress plc published this content on 20 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 May 2020 12:43:03 UTC