Bob Carrigan March 10, Credit Suisse 16 th Annual Global Services Conference. D&B Growth Strategy

Transcription

1 Bob Carrigan March 10, 2014 Credit Suisse 16 th Annual Global Services Conference D&B Growth Strategy Dun & Bradstreet March 2014

2 Forward looking statements and non-gaap measures This presentation contains estimates and projections of future results and other forward looking statements that are subject to a number of trends, risks and uncertainties and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of For example, throughout this presentation we discuss our business strategy and certain short and long term financial and operational expectations that we believe would be achieved based upon our planned business strategy for the next several years. These expectations can only be achieved if the assumptions underlying our business strategy are fully realized some of which we cannot control (e.g., market growth rates, macroeconomic conditions and customer preferences). As part of our annual planning process, we will review these assumptions and we intend to update these expectations from time to time as appropriate. We will continue to provide financial guidance to shareholders on an annual basis. The trends, risks and uncertainties that may cause actual results to vary materially from those anticipated, estimated or projected are more fully described in our filings with the SEC, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and the notes to the financial statements included therewith (copies of which are available on our Web site at and on the SEC s web site at Except as otherwise required by federal securities laws, we do not undertake to update any forward-looking statement we may make from time to time. This presentation also includes non-gaap financial measures, as that is how we manage our business. For example, when we discuss core revenue growth and revenue growth we are referring to the non-gaap measure core revenue growth before the effect of foreign exchange, unless otherwise noted. And when we discuss EPS, our discussion is on a non-gaap basis, before non-core gains and charges, unless otherwise noted. Reconciliations between the non-gaap financial measures used in this presentation and the most directly comparable GAAP measures can be found in the Appendix and on the D&B Investor Relations website located at Dun & Bradstreet March

3 D&B is the global leader in providing data and insight on business WORLDS LARGEST B2B DATABASE WITH OVER 230 Million Records DATABASE UPDATES 5 Million Daily COVERAGE OF OVER 200 Countries Dun & Bradstreet March

4 D&B enables customers to make critical business decisions 75% NORTH AMERICA CORE REVENUE $1.7B 25% INTERNATIONAL Revenue Mix North America 56% International Key Needs Addressed Note: 2013 Core Figures RISK MANAGEMENT (RMS) $1.05B 84% Make credit decisions Increase cash flow Manage risk and improve controls SALES & MARKETING (S&MS) $0.6B 44% 16% Acquire prospects Retain/grow customers Develop a 360 view of customer base Dun & Bradstreet March

5 Since the financial crisis, revenue has stalled but we have maintained strong profitability CORE ORGANIC REVENUE GROWTH AND OPERATING MARGIN 25% 29% 28% 28% 29% 29% 29% 28% 31% 30% 6% 6% 6% 6% 5% (0%) 2% 0% 1% (3%) See appendix for GAAP reconciliation Core Organic Revenue Growth Operating Margin Before Non-Core Gains and Charges Dun & Bradstreet March

6 This has resulted in significant free cash flow FREE CASH FLOW (IN MILLIONS) $375 $352 $300 $225 $238 $284 $284 $305 $296 $249 $252 $283 $278 $150 $75 $ See appendix for GAAP reconciliation Dun & Bradstreet March

7 And we have returned considerable cash to shareholders CUMULATIVE CASH RETURNED TO SHAREHOLDERS ( ) TOTAL $2.8B $1.5 B REPURCHASED $0.5 B DIVIDENDS $0.8 B (OF $1B AUTHORIZATION) REPURCHASED $1B SHARE REPURCHASE DRIVEN BY: Historically low valuation Poised for future growth Low interest rates Dun & Bradstreet March

8 Our goal is to return to long-term sustainable growth CORE ORGANIC REVENUE GROWTH 6% 0% RETURN TO LONG-TERM SUSTAINABLE GROWTH NEW STRATEGY THAT UNLOCKS MARKET OPPORTUNITIES Creating insight for customers from Big Data Entering higher growth adjacent and new markets Unlock the true potential of our brand CAGR CAGR Dun & Bradstreet March

9 Big Data presents big challenges for today s customers 90% of the world s data was created in the last 2 years 2.7 billion likes are posted on Facebook daily & 30 billion pieces of content 2.5 Exabyte's of data created everyday Customers are spending money to gain insight from Big Data Data is growing by 50%/year Every hour enough information is consumed to fill 7 million DVDs More data crosses the internet every second than the amount that was stored on the net 20 years ago Dun & Bradstreet March

10 Customers needs for insight presents a $20+ billion market opportunity for D&B $10B+ $20B+ Other Supply Chain Compliance >$3B Digital Marketing ~$7B Sales & Marketing Information Sales & Marketing Commercial Credit Traditional Target Market Definition Data Services New Markets D&B Addressable Market Dun & Bradstreet March

11 Our Strategy We will be one global company delivering indispensable content through modern channels to serve new customer needs Dun & Bradstreet March

12 We have defined five priority areas to advance our strategy Invest in Content Modernize Delivery Globalize the Business Modernize the Brand Create a Forward-Leaning Culture Dun & Bradstreet March

13 We are making real investments in 2014 to drive new value to customers Improving global data quality and consistency Cultivating new sources of data Improving predictive capability $ 70 Investment M Modernizing content delivery Dun & Bradstreet March

14 Our content roadmap is focused on providing transparency and foresight Transparency on business relationships Providing globally consistent data and insights Addressing the need for complete view of risks and opportunities from customers and prospects Foresight to take proactive actions Leveraging advanced analytics to improve insights Providing competitive edge to enable our customers growth Dun & Bradstreet March

15 Transparency is accomplished by providing a single, complete and actionable view Website Traffic Sales Interaction Marketing Outreach Purchase History Bill To, Ship To Product Usage Product Lifecycle Finance / Collections Customer Service Activity Signals Financial Health Legal Hierarchy Search Inquiries Spend Behavior Contacts / Buyers Payment History Age, SIC, Size, Geo Economic Trends Dun & Bradstreet March

16 Foresight is accomplished by distilling and transforming subtle signals into meaningful insight Payment Behavior Spend Behavior Physical Size Changes Financial Obligations D&B Proprietary Anticipatory Analytics Future Material Change Commercial Activity Patterns Financial Size Changes Early warning growth or decay may lie ahead Combination of customer, D&B and third-party data Dun & Bradstreet March

17 We will modernize delivery of our content with lightweight applications and cloud-based delivery CUSTOMER NEEDS Large: integration into proprietary platforms to make complex decisions Mid-sized: pre-configured solutions into their workflows D&B DELIVERY Flexible, lightweight applications that embed directly into their systems Flexible, lightweight applications and cloud-based delivery Small: simple solutions embedded into applications they use everyday Cloud-based delivery through Alliances Dun & Bradstreet March

18 This will enable our content to flow throughout customer ecosystems CRM Systems Intranets & Portals Marketing Automation Third Party Developers D&B CONTENT ERP, Risk & Finance Purchasing & Supply Customers & Partners Product Integration Dun & Bradstreet March

19 We are also making our content available when and where customers need it Firmographic Data Optional Custom Models, e.g.: Propensity to Buy Risk Prescreen Business Insight Real-time Location Information & Nearby Companies Integration with Custom Data Sources Industry Information Additional Contacts with D&B s Professional Contacts Dun & Bradstreet March

20 We expect to drive growth in two primary areas Strategic Customers Expand relationships with largest customers through globalization and verticalization Alliances Acquire new small and mid-size customers by globalizing alliances and establishing new ones Dun & Bradstreet March

21 We have opportunities for growth within strategic customer relationships STRATEGIC CUSTOMER BUSINESS OVERVIEW Relationships with 90% of Fortune 500 companies Low penetration among many GLOBALIZATION Globally consistent content Global account management Seamless experience PENETRATION DRIVERS VERTICALIZATION Deeper vertical expertise to solve industry-specific challenges More customers within existing verticals New verticals Dun & Bradstreet March

22 For example, we have greatly expanded our business with a leading financial services customer through this model Global 50 Financial Services Customer Example PREVIOUS Significant spend with D&B, but little outside home market Fragmented data purchases around the world Limited use of D&B predictive analytics ACTIONS Implemented global account management structure Beat current data providers in head-tohead competition Co-developing custom analytic solutions NOW Displacement of local data providers in 17 markets 35% increase in spend Significant opportunity for future growth Dun & Bradstreet March

23 Alliances expand our market reach and unleash our content Work with companies in categories such as CRM, ERP, etc. Leverage their customer relationships Deliver our content through our partners technology environments to embed into customers workflows Grow our customer base faster than we can alone Dun & Bradstreet March

24 For example, our content in Salesforce.com is driving measurable improvements to sales effectiveness for their customers 19% 23% 33% HIGHER TEAM ATTAINMENT OF SALES QUOTA SALES PRODUCTION BOOST SHORTER SALES CYCLE 21% 25% INCREASE IN CRM ADOPTION SALES OPPORTUNITY BOOST Source: Data.com customer impact, 2013 Dreamforce presentation Dun & Bradstreet March

25 For our traditional trade credit risk customers, we are moving DNBi to the cloud to deliver more value CURRENT STATE Multiple platforms Inflexible technology Difficult to innovate to meet evolving needs Availability in a few markets only FUTURE STATE Single cloud-based solution for all trade credit customers Highly adaptable Globally available Modest Decline Modest Growth Dun & Bradstreet March

26 Our revenue mix will shift over time as strategic customers and alliances grow faster than traditional DISTRIBUTION MIX ALLIANCES STRATEGIC CUSTOMERS SMALL & MID-SIZED BUSINESSES GROWTH TRAJECTORY Continued growth from global expansion of current alliances and new alliances Continued growth from penetration of existing customers through globalization and verticalization Stabilize and modestly grow through modern, cloud-based trade credit solution Dun & Bradstreet March

27 A modern brand and forward-leaning culture are critical enablers of the strategy Dun & Bradstreet March

28 And we have put in place a new global structure to ensure we re well positioned to deliver President & CEO Bob Carrigan Chief Operating Officer Josh Peirez Chief Marketing Officer Rishi Dave Chief Sales Officer Mark Geneste Chief Legal Officer Chris Hill Chief Financial Officer Rich Veldran Chief People Officer John Reid-Dodick Dun & Bradstreet March

29 We believe our strategy will create substantial value for shareholders over time Significant growth opportunities Scalable business model with high incremental margin and low capital intensity Strong free cash flow generation Solid balance sheet with investment grade debt Prudent capital allocation Investments in organic growth Disciplined acquisitions Return of excess cash Dun & Bradstreet March

30 Appendix Dun & Bradstreet March

31 RECONCILIATION OF CORE ORGANIC REVENUE GROWTH RATES TOTAL COMPANY GAAP TO NON-GAAP Total Revenue As Reported (AFX) (1%) (5%) 5% (1%) (2%) 8% 8% 7% 1% 1% Divested Revenue Contribution (2%) (5%) (2%) (3%) 1% 2% 0% 1% (5%) (7%) Core Revenue Growth (AFX) 1% 0% 7% 2% (3%) 6% 8% 6% 6% 8% Foreign Exchange Impact 0% (1%) 1% 0% (2%) 0% 1% 0% 0% 1% Core Revenue Growth (BFX) 1% 1% 6% 2% (1%) 6% 7% 6% 6% 7% Acquisition Contribution 0% 1% 4% 2% 2% 1% 1% 0% 0% 1% Core Organic Revenue Growth (BFX) 1% 0% 2% 0% (3%) 5% 6% 6% 6% 6% Dun & Bradstreet March

32 RECONCILIATION OF OPERATING INCOME GAAP TO NON-GAAP (Amount in Millions) Reported Operating Income $437.1 $432.1 $424.8 $409.1 $464.5 $469.7 $425.6 $393.7 $364.6 $316.1 Operating Income Impact: Restructuring Charges Impaired Intangible Assets MaxCV Legal and Other Professional Fees and Shut-Down Costs Related to Matters in China Impairments Related to Matters in China Impairments Related to Matters in China Impaired Assets - Data Supply Chain Impaired Assets - Third Party Arrangement Impaired Assets - China Trade Portal Impaired Assets - Trademark in Australia Settlement of International Payroll Tax Matter Related to a Divested Entity Charge Related to a Dispute on the Sale of the Company's French Business Total Operating Income Impact Operating Income Before Non-Core (Gains) Charges $491.7 $520.3 $500.1 $480.8 $490.6 $501.1 $451.5 $419.2 $395.7 $348.1 Dun & Bradstreet March

33 RECONCILIATION OF FREE CASH FLOW (GAAP TO NON-GAAP) (Amount in Millions) Free Cash Flow Net Cash Provided by Operating Activities from Continuing Operations (As Reported) $333.3 $357.8 $312.9 $319.4 $369.5 $433.9 $384.6 $290.8 $261.4 $266.7 Less Capital Expenditures (As Reported) Additions to Computer Software & Other Intangibles (As Reported) Free Cash Flow $278.2 $283.4 $259.5 $253.5 $304.2 $374.4 $312.5 $238.6 $233.5 $238.3 Legacy Tax Matters (Refund) Payment - - (7.6) (4.3) (8.0) (22.5) (8.0) Free Cash Flow Excluding Legacy Tax Matters $278.2 $283.4 $251.9 $249.2 $296.2 $351.9 $304.5 $284.2 $283.8 $238.3 Dun & Bradstreet March