Title: Enabling the Digital World in the Home
1180 CONNECT INC. INVESTOR PRESENTATION
Enabling the Digital World in the Home
2Forward-Looking Statement
- This investor presentation contains
forward-looking statements which reflect
Management's expectations regarding the
Corporation's future growth, results of
operations, performance and business prospects
and opportunities. Statements about the
Corporation's future plans and intentions,
results, levels of activity, performance, goals
or achievements or other future events constitute
forward-looking statements. These statements
reflect Management's current beliefs and are
based on information currently available to
Management. Forward-looking statements involve
significant risk, uncertainties and assumptions.
Many factors could cause actual results,
performance or achievements to differ materially
from the results discussed or implied in the
forward-looking statements. These factors should
be considered carefully and prospective investors
should not place undue reliance on the
forward-looking statements. Although the
forward-looking statements contained in this
investor presentation are based upon what
Management believes to be reasonable assumptions,
the Corporation cannot assure that actual results
will be consistent with these forward-looking
statements.
3Table of Contents
- Executive Summary
- Business Overview
- Satellite
- Cable
- Network Services
- Digital Interiors Home
- Growth Opportunities
- Financial Overview
- Conclusion
4Executive Summary
5180 Connect Overview
- North Americas largest provider of installation,
integration and fulfillment services to the home
entertainment, communications, security and home
integration service industries - Dominant player in rapidly growing industry
- More than 3,300 highly-trained technicians and a
fleet of over 3,000 Company-owned vehicles - Operates 85 branches across the United States and
Canada - Performs approximately 2.5 million in-home visits
per year - Only national contractor dedicated to the
residential market - Scalable, market driven, technology centric
operating service model - 2006E Revenue and EBITDA of 316 and 14.0
million, respectively, representing revenue
growth of 13 over 2005
180 Connect is in a position to leverage these
dynamics to become a leader in the broader home
services industry
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6The Critical Connection
QUALITY
HUMAN CAPITAL
TRAINING
Infrastructure
Trend toward outsourcing
Family of Companies
Ironwood Digital Interiors - Home Digital
Interiors Security Wirecomm Piedmont Network
Services
TECHNOLOGY
2
7Business Transformation
- Focus on Core Earnings and Cash Flow v. Revenue
Growth - Intense analysis of technician efficiency, fleet
utilization, use of sub- contractors and
operating metrics - Local management compensation based on branch
profitability - Significant focus on customer satisfaction
experience, resulting in customer bonus
eligibility - Balance Sheet Strengthening
- Natural de-leverage of capital leases
- As a result of prepaid insurance plan with
current provider - Rebuilding True Partnership with Customers
- DIRECTV desires greater throughput and customer
satisfaction - Economic model rewards quality performance
- Cable customers looking to expand 180 Connect
within existing branch network - Develop New Programs associated with Core Assets
2.5 million home visits per year
3
8Diversified Service Offering
Satellite
Cable
- Performs satellite installations, upgrades and
service calls for DIRECTV residential and
commercial customers - 54 branches, primarily in the western U.S., with
approximately 2,800 technicians and 2,300
Company-owned vehicles (COVs) - Second largest of 13 members in the DIRECTV HSP
Network - Formulating up-sell initiatives to enhance
margins
- Performs residential cable installations,
reconnections, disconnections, service upgrades
and downgrades as well as general service calls - Operates in 28 branches, primarily in the eastern
U.S., employing approximately 675 technicians - Growth in popularity of digital cable, VoIP, and
data services are increasing the size of this
business
Digital Interiors Home
- Home integration services business that functions
as a subcontractor to home builders and
developers to install video, audio, security,
telecommunications and data cabling in new homes - Developed through the acquisition of Digital
Interiors in March 2005 - Currently in California and Texas with expansion
plans into the southwestern U.S.
4
9Leading Provider of Outsourced Home Installation
Services
- Ability to manage large contracts which are
geographically dispersed - One of the largest members of the DIRECTV Home
Service Provider (HSP) Network of installers - Largest installation contractor of cable services
for Cablevision and Rogers - Superior quality and customer satisfaction
ratings - Recently awarded contracts with ONteriors and
Boise Airport
180 Connect Service Locations
Cable dominates serviceoffering in eastern U.S.
Satellite dominates serviceoffering in western
U.S.
Pro Line upsell, Digital Interiors and Network
Servicesbusinesses can leverage the existing
infrastructure
5
10Large and Growing End-Markets
180 Connect is well-positioned to enable the
digital world in the home
- DIRECTV subscriber base projected to grow at a
7.7 CAGR from 15 million in 2005 to 22 million
in 2010. DIRECTV reacting to the cable triple
play with partnered offerings and heavily
subsidized high definition equipment - Convergence of technology driving demand for
additional installation services in the home,
including Triple Play (voice, data and video)
in the cable industry. Increased demand for
fully integrated security offering into existing
Triple Play platform - Strong upgrade trend from basic to digital cable
- Introduction of a variety of other new
technologies (e.g.,HDTV, DVRs, increased local
channel access, foreign language programming) in
both cable and satellite markets - Growth of digital homes wired for sound,
security, and data combined with historically
strong housing starts (in 2006 over 60 of the
two million new homes built will have an advanced
structured wiring feature built into the base
specifications) - Market primed for consultative up-sell arising
from the complexity of in-home technology which
supports 180 Connects up-sell initiative.
6
11Significant Operating Leverage Margin Expansion
Opportunity
- Recent investments in infrastructure, personnel
and vehicles position the Company to realize the
benefits of significant growth opportunities - Centralized back-office and off-shore call center
operations - Fleet of over 3,000 Company-owned vehicles
- Additional margin expansion opportunities
available through product and market synergies,
further benefits of scale, the elimination of
redundant corporate overhead and improved
insurance rates
7
12Strong, Experienced Management Team
M. Brian McCarthyExecutive Director35 Years of
Experience
Peter GiacalonePresident CEO25 Years of
Experience
Nick WainwrightPresident Cable20 Years of
Experience
Steven WestbergCFO30 Years of Experience
Brian DalmassPresident Digital Interiors
and Network Services20 Years of Experience
Ed NollingerSenior VP Business Operations 34
Years of Experience
Zachary McGuirePresident Satellite 15 Years
of Experience
- Over 150 years of combined experience primarily
in the satellite, cable and telecommunications
industries - Proven record of successful entrance into
adjacent markets with rapid revenue growth
8
13Recently Completed Initiatives
- Deployed over 2,200 new Company-owned vehicles in
2005 - Launched Network Services, a fiber network
engineering line of business that has earned
significant new contracts - Acquired Digital Interiors
- Consolidated all back-office functions to one
shared service center - Relocated a portion of call center operations
off-shore - Upgraded technical skills of over 3,300
technicians - Recruited top IT professionals enhancing controls
and financial reporting - Initiated remote technician dispatch
- Initiated regionalized dispatch operations
- Completed the re-financing of the Companys long
term debt
9
14Business Overview
15Satellite
16Satellite
10
17Cable
18Cable
11
19Network Services
20Network Services
12
21Digital Interiors Home
22Digital Interiors Home
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23Growth Opportunities
24Growth Opportunities
180 Connect has positioned itself for significant
growth driven by a combination of opportunities
across each of its business components
- Cable and satellite operators are increasingly
outsourcing residential services to professional
installers - Strong DIRECTV subscriber growth and cable
subscriber churn will continue to drive increased
installation volume - 180 Connect has earned significant DIRECTV
customer satisfaction bonus in 2006 and is
consistently ranked number 2 or 3 in the HSP
network - Increased demand for new products and technology
upgrades will result in additional upgrade truck
rolls - Leverage infrastructure into complementary
services
14
25Financial Overview
26Historical and Projected Revenue
( in millions)
2004-2006E CAGR 22.65
15
27Historical and Projected EBITDA
( in millions)
2004-2006E CAGR 50.6
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282005 A Year of Transition
- Rapid growth significant growth related costs
- Deployed 2,200 new service vehicles and 950 new
field technicians - Upgraded technical skills of over 3,300
technicians - Recruited top IT professionals to focus on work
order and supply chain systems - Consolidated back office functions in Denver
- Settled Mountain Center acquisition liabilities
and several longstanding DOL claims - Company repositioning five operating lines of
business poised for contribution - Launched Network Services and integrated Digital
Interiors - Relocated major portion of call center operations
off-shore - Launched Pro Line upsell
- Positioned for strong future growth
- Maturity of growth related costs behind us
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29EBITDA Margin Improvement Initiatives
Reduced Subcontractor Rate Card Strategically
Deploy Based on Seasonal Trends
Fleet Conversion
GACost Reduction
Safety Training- Improved Insurance Trends
ImprovedConsumable Sourcing
Margin Improvement
Off-Shore CallCenter
Direct Sales
Technician Up-Sell Program Proline
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30Balance Sheet Strengthening
- Refinancing Completed
- Debt refinance of up to a maximum of 57 million
of debt available comprising a revolving credit
facility and a term facility with interest rates
ranging from prime plus 3 to prime plus 5. - Excludes 32.7 million of capital lease
obligations - Recently completed 10 million refinancing of
fleet resulting in 2.1 million of incremental
cash flow
19
31Balance Sheet Summary
( in millions)
- Long-term debt includes current portion.
- Capital lease obligations includes current
portion.
20
32Capital Expenditures and Working Capital
Capital Expenditures Summary
( in millions)
- Capital expenditures, excluding fleet purchases,
projected to be between 2.6 million and 2.5
million annually over next three years - Capital expenditures relate primarily to
supporting the Companys IT initiatives - The Company also transitioned to a Company-owned
vehicle model, resulting in purchasing 2,200 new
vehicles to replace privately-owned vehicles
21
33Conclusion
34Investment Highlights
- Leading Provider of Outsourced Home Installation
Services - One of the largest members of the DIRECTV Home
Service Provider (HSP) Network of installers - Largest installation contractor of cable services
for Cablevision and Rogers - Superior quality and customer satisfaction
ratings - Large and Growing End-Markets
- DIRECTV subscriber base projected to grow at a
7.7 CAGR from 15 million in 2005 to 22 million
in 2010 - Convergence of technology driving demand for
Triple Play (voice, data and video) service
installations for the cable industry - Strong upgrade trend from basic to digital cable
- Growth of digital homes wired for sound,
security, and data combined with historically
strong housing starts (in 2006 over 60 of the
two million new homes built will have an advanced
structured wiring feature built into the basic
specifications) - National Footprint/ Leverageable Network
- Over 3,300 highly-skilled, highly-trained
technicians completing approximately 2.5 million
in-home visits per year - Highly leverageable branch network capable of
supporting a multitude of home services (e.g.,
security, data networking, home theater,
communications) - 85 branch locations across the U.S. and in
Ontario, Canada - Significant Operating Leverage Margin Expansion
Opportunity - Recent investments in infrastructure, personnel,
and equipment position the Company to realize
benefits of significant growth opportunities - Centralized back-office and off-shore call center
operations - Fleet of over 3,000 company-owned trucks
- Additional margin expansion opportunities
available through product and market synergies,
further benefits of scale, the elimination of
redundant corporate overhead and improved
workers compensation insurance rates - Strong, Experienced Management Team
22
35Fact Sheet As at September 30, 2006
- Symbol NCT.U (TSX)
- Shares 24.4 million basic
- Debt
- Long Term 39.9 million (includes current
portion) - Convertible Debt 7.7 million
- Capital Leases 29.6 million
- Cash 0.5 million
-
- Restricted Cash 14.5 million
- Technicians 3,300
- Branches 85
- Website www.180connect.net
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