madrid 2003 recall corporation - investis...

Madrid 2003Recall Corporation

December 2, 2003

Presentation Outline

Overview and Introductions

Highlights of FY03

Recall Business Model & Strategic ObjectivesPerfect Order Strategic Dots on Map

Business Line Review – The World of RecallCore Business – Drivers for Continued Profitable Growth

Financial Overview

Summary

Questions & Answers

AL TRUJILLOPresident and CEO

Recall Corp.

AJIT HABBUSenior Vice President

and Chief Financial Officer

LOU SWANSONSenior Vice President

Global Operations and Quality

Global Leadership Team

BRIAN BEARDVice President

and Chief Information Officer

SARA DUNHAMVice President

Human Resources

RUSSELL SKINNERVice President

Business Integration

MARK ALVAREZPresident

Recall North America

JEAN-RENE GAINPresident

Recall Europe

GERALDO CAVAGNARIVice President

Integrated Document Solutions

NINO PALAPresident

Recall Asia Pacific

ROBERTO GREGORIGeneral Manager

Recall South America

FY 2003 Highlights

Strong financial resultsMaintained strong revenue growth

Overall growth 17.5%, internal growth 8.1%Continued improvement in margins

17.4% % to 18.9% EBITA (18.3% discounting 1-time French insurance payment of €2.9M)

Business development program / geographic expansion18 acquisitions, increased information management centers to 239Strengthened North American DMS footprint Increased countries from 21 to 23 (added Sweden & Finland)

Perfect Order initiative – benefits from global TQM programGlobal standard operating environment leads to implementation ofstatistically based quality improvement programEstablishes Recall’s market position as leading quality supplier

Recall At a Glance

Annual Revenues: £258M

Employees: 3,985

Global client base: Over 78,000 customer locations

Locations: 239 centers in 5 continents in 23 countries

Global Headquarters: Atlanta, USA

Playing Field: Information Management

Service LinesDocument Management ServicesIntegrated Document SolutionsData Protection ServicesSecure Destruction Services

Compelling Investment Fundamentals

Positive arenaRecurring revenue with inherent growth (organic)Diversified and stable customer baseLarge unvended (un-outsourced) market

Consolidation playHighly fragmentedEconomies of scaleLeverage for large players

Industry gap in quality of serviceThe “Perfect Order” Story

Significant growth opportunitiesPrivacy concernsDigitalization

Global leader - #1 or #2 in every market

Key Objectives

Perfect Order – Complete the quality storyExpand Perfect Order from service quality to all components of the value chain.

Perfect Order is delivering increased value in the eyes of our customers by providing Consistent, Accurate, Reliable and Efficient services.

Strategic Dots on Map – Grow our footprint in critical marketsContinue to expand our strategic footprint through acquisitions and greenfields to

attain necessary regional coverage and economies of scale.

Maximize BVA – Improve internal efficiencyAchieve business results by implementing efficient, world benchmarked cost

structures, allowing the achievement of continued BVA growth.

Customer Intimacy – Develop industry focused business solutionsTurn IDS into a viable service offering. Improve market position as document

management outsource provider by exploring vertical market integrated document solutions.

Communicate – Tell the story

Lou Swanson Senior Vice President

Global Operations and Quality

Recall’s Quality Imperative

Global Business Model

Global Standardization – Speed / Quality

“All Things Begin and End with the Customer”

ConsistentServiceMenu Standard

OperatingProcedures

(SOP)

Global IT Platform

(ReQuest)

SOP’sFeedback

KPI’s

Continuous Improvement Methodology

Perfect Order Results Continue to Improve Globally

Perfect Order is achieved when a work order is executed 100% “on time” and complete according to our standard service offerings,and in

compliance with Recall standard operating procedure.

Perfect Order Results Continue to Improve Globally

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

JANUARY

FEBRUARY

MARCH

APRIL

MAY

JUNE

JULY

AUGUSTSEPTEMBER

OCTOBER

MONTH

ON

TIM

E &

CO

MPL

ETE

(%)

NORTH AMERICAEUROPEASIAAUSTRALASIASOUTH AMERICA

Individual “Report Cards” - Every Customer

Automated and “Actionable” KPI’s from Global to Customer level drill downs Automated and “Actionable” KPI’s from Global to Customer level drill downs

Focus on Service Quality is Starting to Pay Off

September 2003 Global DMS Overall Customer Satisfaction Customer Value Driver Survey Results

5% 3%10% 6%

27%22%

36%

47%

22% 22%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Res

pon

den

ts (

%)

VeryDissatisfied

Dissatisfied Neutral Satisfied Very Satisfied

20022003 N= 659

N= 511

Current Customer Satisfaction Increased 19%, or 11 Points Over 2002 Levels Based on September Customer Value Driver Survey Results

Current Customer Satisfaction Increased 19%, or 11 Points Over 2002 Levels Based on September Customer Value Driver Survey Results

Automated dashboards that provides global, regional and “drill downs” to facility level performance for growth,

capacity, productivity, and cost

Key Performance Measurementsintegrated with standard

operating procedures will help us eliminate waste and inefficiency

Recall Performance Management: Internal Effectiveness

E

D

V

vVD

bDEbED

S

vDV

sESsSE

oDS

tDV

oSD

yFD

lC

jOD

mSO

C

iCO iOC

F

xD

O

DtVD

(S1) Density (S2) Capacity Utilization

(D1) Productivity

(C1) Growth(C2) Perfect Order(C3) Revenue

F(F1) Cost (F2) Profitability

dCV

Process Mapping our value chain gave us a clear strategy on how to

drive internal effectiveness

Change Management: It’s all about the People

Recall Hong Kong Team & Nino Pala - President Asia-Pacific

Recall Baltimore Team &Al Trujillo - CEO

Recognition: Over 68% of all DMS holdings worldwide have achieved recognition in the 5-Star program. A 5-Star Information Center must achieve 99% Perfect Order from a 3 month consecutive period.

Training: Our Perfect Order Certification process ensures we enable and empower our associates to eliminate all service failures.

Finish the Perfect Order Story

Perfect Order is more than Service Quality:

We will complete the Perfect Order story to establish a sustainable competitive advantage.

We are on our way!

LogisticsService Quality

LogisticsService Quality C.A.R.E.C.A.R.E.

Internal Effectiveness

Internal Effectiveness

CustomersCustomersInvoicingInvoicing

CompetitiveAdvantage

CompetitiveAdvantage

AccountManagement

AccountManagement

Strategic Dots on Map

Grow our footprint in Strategic markets

Historical Timeline

1970s – entered information management in Australia

1991 – entered North America with first acquisition

1996 – entered European market; operated as multi-regional business

1999 – launched Recall as global business

Fiscal Year 1999 2000 2001 2002# of Locations: 130 150 180 203# of Countries: 14 15 18 21# of Employees: 2000* 2500* 3100 3694

* Approximate numbers

Recall Today

3,985 employees in 239 centers in 23 countries, across five continents

Acquired Revenue FY00 - FY03

Successful acquisition program

Fiscal Year 2000 2001 2002 2003 Total# of Acquisitions 4 14 14 18 50

Revenue Acquired (£M) 15 45 12 30 102

Key Product Expansions SDS NA SDS NASDS EU

SDS NADMS NADMS EU

Key Geographic Expansion Brazil MexicoHong Kong

BrazilNorway

DenmarkGermany

UK - LondonSwedenFinland

USA - DC & MN

Strategic Dots on Map – Grow our footprint in critical markets

Our goal is to continue to grow our service footprint through acquisitions and “greenfield” start-ups to attain the customer required geographic coverage and economic economies of scale.

North America Service Coverage

Strategic Market Selection Criteria

Population rank – 2000Population rank – 2010Population growth# of service workers# of Attorneys# of F.I.R.E. employees# of hospital beds

A Viable National Service Provider

Strategic Growth in North America

•Have achieved competitive footprint in North American Market

Fiscal Year Total Number of Markets Served

Top 25 Markets Served

1995 9 7

1999 30 12

2001 43 21

2003 55 24

Europe Service Coverage

High quality # 2 player in UKCompetitive London scale with DMS Sentinel acquisitionSDS provides cross sell opportunity

Leading position in Continental Europe

National footprint in FranceMarket leader in Italy, Spain and ScandinaviaLargely unvended market in Germany, still up for grabs Smaller presence in Belgium, Holland

DMS European Market Share Comparison

CountryIron

Mountain + Hays

Recall

UK 56% 14%London 57% 21%

France 5% 30%Spain 17% 33%Italy 0% 25%Belgium 90% 5%Germany 70% 2%

Recall – a competitive supplier in Europe and UK

Document Management Services (DMS)

Integrated Document Solutions (IDS)

Data Protection Services (DPS)

Secure Destruction Services (SDS)

Business Line Review

2003 Revenue by Service Line

57%

2%13%

28%Document Management Services

Data Protection Services

Secure Destruction Services

IntegratedDocument Solutions

Lifecycle Management

NUMBER OF RETREIVALS AND/ORNUMBER OF PEOPLE REQUIRING ACCESS

USER ACTIVITY LEVEL

1 Week

1 Day

10 Minutes

3 Seconds

2 Hours

DMS

LegacySM

OnCallSM

ReFile SM

Pronto! SM

ReViewSM

SDS

IDS

RETR

IEVA

L TI

MEOriginal

CopyDigital

Seconds

Minutes

Hours

Day

Week

Unvended Market – Elusive Goal

£5.1B

Document Management Services

Data Protection Services

Secure Destruction Services

Grand TotalVended vs. Unvended

£1.9B

VendedUnvended

£7.0BTotal Global Market Size =

Took over 20 years to achieve vended market penetration“Low hanging fruit”, inactive records, has been largely outsourced (75%+) by large Financial, Insurance, Medical companies. Largely seen as a less sophisticated spend, a real estate buy – primarily a space economy buy.Unvended market includes on site, more active files that are part of customers’ business processes – more complex requirement.

DMS Service Description

INDEXING & SENTENCINGCOLLECTION

BAR CODING & STORAGE

CUSTOMERPREPARATION

LOCATE

RETRIEVE

DELIVER TO CUSTOMER

DMS Key Drivers

Continued opportunity for growthUnvended business in developing marketsConsolidation of large customers in mature markets

Geographic expansion / acquisitionsMigration to digital not an imminent threat

Global and local scale has advantageRecall Mega Centers

State-of-the-art facilities with more than 1M SCE capacityLogistics, racking and audit systems, Security / Protection systemsAdditions:

Houston (July 2003)Oslo (September 2003)Boston (October 2003Sao Paulo (July 2003)Mexico City (July 2002)Singapore (September 2003)

IDS Basic Service

CUSTOMER

Recall

CUSTOMER WORK PROCESS DOCUMENT DIGITALIZATION

IDS Key Advantage

RecallOpportunity to move up the value chain

More active information filesBridge between digital and paperLeverage “power of the package” to cross sell

CustomerTotally outsourced hosted model – persuasive ROILeading edge security for digital informationShield against technology obsolescence

Global coordination (Brazil, Spain, Philippines, India, US)High value-addAccess to large, unvended government market

DPS

Well run business, providing data risk management service in larger metropolitan areas

Risk management awareness (post 9-11) and explosive data growth drives expansion opportunity

0100,000200,000300,000400,000500,000

600,000700,000800,000900,000

1,000,000

1999 2000 2001 2002 2003 2004 2005 20060500,0001,000,0001,500,0002,000,0002,500,000

3,000,0003,500,0004,000,0004,500,0005,000,000

Total Units Tape Drives Worldw ide Total Storage - Terabytes

Data volume growth outpaces tape capacity increases

Exceptional service quality leads to improving market share

Expanding service offeringsData Center product salesOnPlan DR planning, consulting solutions

SDS Basic Service

RECALL DESTRUCTION

CENTER

CUSTOMER

SHREDDING

Size of Vended vs. Unvended Potential SDS Market

86%

14%

Unvended £2B

Vended £0.3B

Large Market Potential -Unvended, fragmented and

nascent market

SDS

Benefit of regional or national scaleRoute density drives collection efficienciesSize of facility drives destruction efficiencies

Recall is well positioned to grow this market

Internal growthAcquisitionsGreenfield start ups

Recall’s fastest growing businessBrand name provides leverage

Leading national/global Secure Destruction providerSuperior geographic coverage provides Banking/Finance sector with a vendor who can service their distributed locations

“Growing Revenuewhile

Improving Profitability”

Financial Overview

Ajit Habbu Sr VP and Chief Financial Officer

Ajit Habbu Sr VP and Chief Financial Officer

Financial Performance

Steady revenue growth

Increased profit margin

Leading to profit growth faster than revenue

Positive operating cash flow

Return on capital above cost of capital

All figures at constant currency June 2002 exchange rates

Steady Revenue Growth

0

50

100

150

200

250

FY00 FY01 FY02 FY03

GB

P M

FY01 FY02 FY03 CAGRGrowth 43% 22% 18% 27%Internal 9% 10% 8%

Steady Regional Revenue Growth

0

20

40

60

80

100

120

NA SA Europe Aus / NZ Asia

GBP

M

FY03FY00 FY 01 FY 02

NA SA EU ANZ Asia TotalCAGR 37% 165% 25% 6% 20% 27%

* NA = North America (US/Canada/Mexico), SA = South America

And Steady Product Line Growth

0

50

100

150

DMS DPS IDS SDS

GB

P M

FY03FY00 FY 01 FY 02

DMS DPS IDS SDS TotalCAGR 15% 24% 44% 91% 27%

Financial Characteristics and Growth Potential

ProductCapitalIntensity

OrganicGrowth

GrowthPotential

Profitability Annuity

DMS £££ +++ ++ ££

££

£££

?

+++

SDS ££ + +++ +

DPS £ + + ++

IDS ££ +++ +++ +++

£ / + Below Average ££ / ++ Average £££ / +++ Above Average

Acquisition Process

Business strategy and priorities set globallyBy product line and market

Financial attractiveness Risk adjusted return expectations

Discounted cash flow model

Detail due diligence prior to acquisition

Internal disciplineBusiness integration process and resources

Line management held accountable

Acquisition progress reviewed during transition

Increased Profit Margin

0

15

30

45

FY00 FY01 FY02 FY03

GB

P M

FY01 FY02 FY03 CAGRRevenue Growth 43% 22% 18% 27%EBITA Growth 49% 33% 29% 37%EBITA Margin 16% 17% 19%

Note: FY03 results include business interruption insurance payment of 2.9M EurosWithout it, EBITA margin is 18% and EBITA CAGR is 35%

Generating Positive Operating Cash Flow

0

10

20

30

40

FY00 FY01 FY02 FY03

GB

P M

Note: Operating Cash Flow = EBITDA +/- Working Capital Changes less CAPEX

Return on Capital Invested

0%

4%

8%

12%

16%

FY00 FY01 FY02 FY03

Return on capital invested above cost of capital

Financial Performance

Steady revenue growth

Increased profit margin

Leading to profit growth faster than revenue

Positive operating cash flow

Return on capital above cost of capital

Summary

Positive market characteristics

Excellent competitive positionSolid, profitable core business streamsDiversified and stable customer baseConsolidated playIndustry gap in quality of service – Perfect Order

Experienced management team

Significant growth opportunities

This presentation may contain certain “forward-looking statements” with respect to certain of Brambles’ plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Brambles’ control including among other things, UK and Australian domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatoryauthorities, the impact of competition, inflation, deflation, the timing, impact and other uncertainties of future acquisitions orcombinations within relevant industries, as well as the impact of tax and other legislation and other regulations in the jurisdictions in which Brambles and its affiliates operate. As a result, Brambles’ actual future financial condition, performanceand results may differ materially from the plans, goals and expectations set forth in Brambles’ forward-looking statements.

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