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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
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(Name of Registrant as Specified In Its Charter) |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
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Fee paid previously with preliminary materials.
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Investor Presentation
May 22, 2012
Steve Herbert, Chairman and CEO
Dave DeMedio, CFO
Veronica Rosa, VP Investor Relations
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SafeHarborStatement
. All statements other than statements of historical fact included in this presentation are forward-
looking statements. Actual results could differ materially from those contemplated by the
forward-looking statements as a result of certain factors, including but not limited to, business,
financial, market and economic conditions and the outcome of the pending proxy contest. A
detailed discussion of risks and uncertainties that could cause actual results and events to differ
materially from such forward-looking statements is included in USA’s most recent filings with
the Securities and Exchange Commission (the “SEC”), including the Form 10-Q report for the
quarter ended March 31, 2012, which you will find on our website, www.usatech.com, under
the “Investor Relations” tab and USAT’s Definitive Proxy Statement filed with the SEC on May 18,
2012. Undue reliance should not be placed on any such forward looking statement, which speak
only as of the time they are made. The Company undertakes no obligation to update any
forward looking statement, whether as a result of new information, future events or otherwise.
. Non-GAAP Information: This presentation will include a discussion of Adjusted EBITDA which is
a non-GAAP financial measure which we believe is useful for an understanding of our ongoing
operations. This non-GAAP financial measure is supplemental to, and not a substitute for, GAAP
financial measures such as net income or loss. Details of these items and a reconciliation of this
non-GAAP financial measure to GAAP financial measures can be found in this presentation and
in our Form 10-Q report for the quarter ended March 31, 2012 which is on our website,
www.usatech.com, under the “Investor Relations” tab.
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USATechnologiesOverview
MarketLeadership
. Leading provider of wireless, cashless payment and machine-to-machine
solutions for small ticket, self-serve retail industries such as vending and kiosk.
. Provider of energy saving technology to the cold beverage industry
. Cashless and contactless small ticket, unattended market is largely
Large, Untapped untapped, having traditionally relied on cash transactions
Market Opportunity . Millions of potential locations (connections)
Recurring Revenues . Growing and reliable revenue stream driven by value-added service model
Fueled by Service (network service fees; transaction processing)
Model . 80% of revenues 3Q FY12
ImprovingOperationalPerformance
. Working toward profitability as service connection rates and customer wins
grow
. Existing customers have potential for 2.5 million connections (USAT estimate)
TechnologyBarriers
. Proprietary technology with a strong patent portfolio
. 79 patents
Strengthened . New leadership; new strategic plan capitalizes on market trends, sustainable
Leadership & growth and profitability
Direction . Stronger board composition
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TO: Cashless payments systems
and business intelligence at
operational and customer level
FROM: unattended,
cash only options with
little insight into customer
behavior
Cashless,Small-TicketInTransition
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MarketOpportunityisVast
• The small ticket, self-serve market is largely untapped
Sources:
US Department of Transportation, 2008IHL Kiosk Study, 2010 (2011 *Includes self-checkout systems, ticketing kiosks
projections)First Research, March 2011, June 2010Automatic check-in kiosks, food ordering kiosks, postal
Merchandisers State of the Coffee Industry 2009Vending Times Census and other retail kiosks.
2010Smart Card Alliance 2006
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MarketForcesDrivingAdoption• Demandforconvenience;cashlesspreferred• Increasingrelianceonmobilephones• Smallticketgrowth• Increasingly“social”
• Meetcustomerdesireforcashless• Reverseshrinkingmarginsthroughoperationalbenefits• Visa/MasterCardseeopportunitytodriveacceptance• Mobilepayments• Incrementalbusiness• Wirelessperformanceup/costsdown• MigrationtocloudbasedorSAASsolution• DeclineinhardwarecostsCONSUMERMARKET(STAKEHOLDERS)
TECHNOLOGYOURCUSTOMERSThe
confluence of
several
compelling
drivers should
further drive
market
adoption
6
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RevenuesNow80%Recurring
. Revenues
. $30 million annualized (based on 3Q ended
3/31/12)
. 80% of revenue mix from reliable,
recurring revenues
. Two technology platforms
. ePort & ePort Connect cashless
payment networking and other
services
. eMiser -energy management
technology
. Cashless payment adoption drives
substantial service base
. 2,825 customers; 148,000 connections
(as of 3/31/12)
. “JumpStart” facilitates industry
adoption and fuels service model
. Continuing to innovate and launch new
valued-added services
(in thousands)
$25,000
$20,000
$15,000
$10,000
$5,000
$0
FY2009FY2010FY2011EquipmentLicense&TransactionFees7
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Products&ServicesePortSoftwareDevelopmentKit-------------Product------------------Services------
..ePortEDGE,ePortG8
..G8NFCenabled
..Wireless;PCAcompliant
..Drivingconnectionsthrough“JumpStart”
..CustomersbuyePortConnectservices
..ePortConnectservice
..Currentmonthlyfeecoverstransactionprocessinganddatatelemetryservices
..Connectionsandcustomersgrowing
..EnergyMiser
..Canreducemachineenergyuseby35%-
45%
..Cansaveupto$150/machine/year8PaymentProcessingProduct,CustomerandOperationalDataTelemetryandCashPaymentSystemsEnergyConservationManagement
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BusinessModelExample
Equipment Sales Gross Profit
A US Bank Compa
Targets
• Range30% -35%
• Range30% -40%
Transaction
Fees
ePort Connect
Service Fee
9ePort Connect
w Terminal Incl.
PerDevice• Avg.$100PerDevice• $200-$330• $30activationfeePerconnection:
• $7-$10/monthformajorityofconnectedbase• MinimalcustomerchurnPerconnection:
• JumpStartprogram(withePortConnect)
• $12-$15/monthover3yearsPerconnection:
• 3-5.95%pertransaction• Costproviders:
Elavon,majorCC’s
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UnmatchedEnd-to-EndSolutions
Device
Sales / Accounting
Card Processing /
Solution
Reporting Services
Merchant Services
Customer Solution
USA Technologies
InOne Technology / Coinco
First Data
Crane Mdse
Systems
Cantaloupe
Systems
MEI
Heartland Payments
USA Technologies / Heartland Payments
Apriva/USA Tech.
Bank of America /
First Data
One-StopShoppingUSATistheonlycompanythatoffersacompleteturn-keysolution,
fromactivationtocustomerservice10
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USAT is Executing a Strategy
for Growth and Path to
Profitability
11
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GrowthThroughMoreConnections…
Market
Potential
VerticalMarkets
. e.g. Kiosks
. e.g. Leverage strength
and breadth of partner
Expanded Reach 1,500 + M2M sales team
to drive adoption
Existing Customer . Existing 2,825 customers operate
Base approximately 2.5 million locations
. Drive adoption in these accounts
. Leverage performance data and new services
Connections and Time
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GrowthThroughConnections -
JumpStart
• Jumpstart has accelerated adoption, increased revenues
and created competitive advantage
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GrowthThroughConnections–
ExpandingCustomerBase
• Customer base has more than tripled since introduction
of the JumpStart rental program
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ExpandedSalesReach-
ThroughStrategicPartners
• Over 1,500 Verizon Wireless M2M sales representatives
M2M sales toolkit
• National training kickoff in quarter ended
3/31/12
• Co-Marketing Events
• April-May 2012 -USAT participates in
10 city M2M Connected Technology
Tour
• USAT featured in Verizon Wireless
booth at CTIA
nowcarryUSAT’scashlesspaymentsolutionsintheir
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GrowingtheValueofaConnection–
ServiceExpansion
. 148,000 connections as of 3/31/12
. A PCI compliant, end-to-end suite of
cashless payment and telemetry
services tailored to fit the needs of self-
service retail industries.
NewNew
Cashless and M2M Prepaid and Interactive
contactless Telemetry Loyalty Media
payments Services Program Services
(Q1 FY2013) (Q1 FY2013)
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DrivingGrowthByExpandingtheValueofaConnection
Jan.2012
CustomerDemonstrationsQ32012
CustomerDemonstrationsQ32012
Introduced two-tier pricing to ePort Connect service
• Increases ROI for operators by enabling them to offset
processing fees
Interactive Media Services
• Engage consumers at the point of
sale
Prepaid & Loyalty Program
• Reloadable card; cash back rewards and
coupons
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MobileReadiness
. NFC-based mobile payment is poised to further push cashless
. 65,000 NFC-enabled ePort devices already mobilized
. Opportunities: couponing, incentives, prepay, loyalty, social media
integration…
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ImprovingOperationalPerformance
. Substantially
stronger recurring
revenue base due to
increased
connections and
customers
. More than $2
million in annualized
efficiencies through
revenue, cost and
expense actions
taken since CEO
transition
. Enabled USAT to
quickly move to
positive adjusted
EBITDA for the third
quarter ended
March 31, 2012
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BalanceSheet20• Nolossesfundedin3Q;
thisisexpectedtocontinuefor4Qexcludingproxycosts.
• Currently,ourprimaryuseofcashisJumpstart;
usingJumpstartstrategicallytoaccelerateadoption,
increasedrevenuesandcreatedcompetitiveadvantages
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PathtoProfitabilityFueledbyGrowingRecurringRevenueBase
Quarterly Revenue Trend
(in thousands) Expect continued
$10,000 $8,000 $6,000 $4,000 $2,000 $0
License&TransactionFeesnow80%ofrevenuesTotalRevenue• PositiveEBITDAfor3/31/12• 2,825customersgrowthin• 148,000connectionsrevenuesrecurring
6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011
3/31/2012 6/30/2012
Adjusted EBITDA (see reconciliation of Net Loss to Adjusted EBITDA)
(in thousands)
Estimate -and
excludes proxy
$2,000 Includes CEO costs severance & related costs $0 -$2,000
6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012 6/30/2012
-$4,000
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SummaryUSATechnologies(Nasdaq:USAT)
. Positioned to capture benefits of market shift to cashless
. Growing recurring revenue customer & connection base
. Growth strategies building scale and closing in on profitability
. New verticals and expanded service opportunities
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Appendix
23
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Non-GAAPReconciliation
Adjusted EBITDA
-------
-----
-
. Adjusted EBITDA represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization,
and change in fair value of warrant liabilities and stock -based compensation expense. We have excluded the non-operating item,
change in fair value of warrant liabilities, because it represents a non-cash charge that is not related to USA Technologies' (USAT) operations.
We have excluded the non-cash expenses, stock-based compensation, as it does not reflect the cash-based operations of USAT. Adjusted EBITDA
is a non-GAAP financial measure which is not required by or defined under GAAP (Generally Accepted Accounting Principles). The presentation
of this financial measure is not intended to be considered in isolation or as a substitute for the financial measured prepared and presented in
accordance with GAAP, including the net income or net loss of USAT or net cash used in operating activities. Management recognizes that non-
GAAP financial measures have limitations in that they do not reflect all of the items associated with USAT's net income or net loss as determined
in accordance with GAAP, and are not a substitute for or a measure of USAT's profitability or net earnings. Adjusted EBITDA is presented because
USAT believes it is useful to investors as a measure of comparative operating performance and liquidity, and because it is less susceptible to
variances in actual performance resulting from depreciation and amortization and non-cash charges for changes in fair value of warrant liabilities
and stock-based compensation expense.
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