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Delivering The Blueprint For Growth

Delivering The Blueprint For Growth. July 20, 2004.

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Delivering The Blueprint For Growth

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  1. Delivering The Blueprint For Growth July 20, 2004

  2. This presentation contains projections of future results and other forward-looking statements that involve a number of trends, risks and uncertainties and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The following important factors could cause actual results to differ materially from those projected in such forward-looking statements. Demand for D&B’s products is subject to intense competition, changes in customer preferences and, to a lesser extent, economic conditions which impact customer behavior. The Company’s results are also dependent upon its continued ability to: reallocate expenses to invest for growth through its financial flexibility program; invest in its database and maintain its reputation for providing reliable data; execute on its plan to improve the business model of its International segment and thereby improve its global data quality while realizing improved financial performance in that segment; rely on its customers’ belief in the value of the DUNSRight™ quality process as a key driver of revenue growth; manage employee satisfaction and maintain its global expertise as it implements its financial flexibility program; protect against damage or interruptions affecting its database or its data centers; develop new products or enhance existing ones to meet customer needs. The Company is also subject to the effects of foreign economies, exchange rate fluctuations and U.S. and foreign legislative or regulatory requirements. Its results are also dependent upon the availability of data from its database and the ability of its strategic partners to fulfill their contractual obligations to satisfy the Company’s customers and promote and protect the D&B brand. In addition, the Company’s ability to repurchase shares is subject to market conditions, including trading volume in the Company’s stock. Developments in any of these areas could cause actual results to differ materially from those that have been or may be projected. In addition, the Company’s projection for free cash flow in 2004 is dependent upon the Company’s ability to generate revenue, the Company’s collection processes, customer payment patterns and the amount and timing of payments related to tax matters and legal proceedings involving the Company as more fully described in the Company’s 2004 1st Quarter Form 10-Q. For a more detailed discussion of the trends, risks and uncertainties that may affect D&B’s operating and financial results and its ability to achieve the financial objectives discussed in this presentation, readers should review the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, including the section entitled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”),” and the subsection entitled “Trends, Risks and Uncertainties” in the MD&A. Copies of the Company’s Annual Report on Form 10-K and 2004 1st Quarter Form 10-Q are available on its web site at www.dnb.com and on the SEC’s web site at www.sec.gov. D&B cautions that the foregoing list of important factors is not complete and does not undertake to update any forward-looking statements. Forward-Looking and Cautionary Statements

  3. This presentation contains certain non-GAAP financial measures, including core revenue before the effect of foreign exchange, organic core revenue growth, operating income and diluted earnings per share before non-core gains and charges, and free cash flow.  We define core revenue as total revenue less the revenue of divested businesses. We analyze core revenue growth before the effect of foreign exchange. We also separate and analyze core revenue growth before the effect of foreign exchange among two components, organic core revenue growth and core revenue growth from acquisitions. We define non-core gains and charges as restructuring charges (whether recurring or non-recurring) and certain other items we consider do not reflect our underlying business performance. We define free cash flow as net cash provided by operating activities minus capital expenditures and additions to computer software and other intangibles. We believe these measures are useful because they reflect how we manage and evaluate the performance of our business, they provide an important insight into the underlying health of our business and they are the primary indicators management uses as a basis for the planning and forecasting of future periods and for compensation purposes. Please see D&B’s Form 8-K dated and filed on July 19, 2004 with the Securities Exchange Commission for additional discussion of how the Company defines these measures, why it uses them and why it believes they provide useful information to investors. Except for our revenue growth aspirations which are provided only on a non-GAAP basis because we are unable to predict the future movements of foreign exchange rates or potential business model changes, the most directly comparable GAAP measure and reconciliation between each non-GAAP measure and the comparable GAAP measure can be found in the Appendix to this presentation. Our revenue growth results and aspiration are provided only on a non-GAAP basis, or as core revenue growth before the effect of foreign exchange, unless otherwise noted. In addition, all references to operating income and diluted earnings per share growth results and aspirations are before non-core gains and charges, unless otherwise noted. Non-GAAP Financial Measures

  4. Yesterday, we announced strong Q2 revenue and earnings results… D&B Announces Strong Second Quarter Resultsand Raises 2004 Core Revenue Guidance PRESSRELEASE

  5. …which represents our third consecutive quarter of strong organic revenue growth D&B Quarterly Revenue Growth Percent Total growth Organic growth 11 9 8 7 7 7 6 2 3Q 4Q 1Q 2Q 2003 2004

  6. We also continue to deliver strong EPS growth D&B Quarterly EPS Growth Percent 22 20 18 17 3Q 4Q 1Q 2Q 2003 2004

  7. For 2004, we increased our revenue guidance to 6% to 8% and confirmed our EPS guidance Guidance Revenue growth 6 - 8% EPS $2.94 - $2.99 For a reconciliation to the most comparable GAAP measure, see appendix.

  8. Today, we’ll show you how we are transforming D&B and laying the foundation to create even more shareholder value in 2005-2007 • Allan:We have accomplished a lot and there’s even more ahead • Steve:We are confident we will deliver our 7% to 9% revenue growth aspiration • Greg:We will continue to drive growth and profitability in our International business • Sara:We are confident we will grow margins by 100+ basis points and continue to deliver EPS in the mid to upper teens

  9. Let’s start by looking back at the progress we’ve made since our journey began four years ago Become a Growth Company with an Important Presence on the Web

  10. We said we would transform D&B from an under-performing company to a high-performing company To High-Performing Growth Company Delivering Consistent Returns to Shareholders From Under-Performing Organization with Under-Leveraged Assets

  11. And that we would achieve this without sacrificing earnings To High-Performing Growth Company Delivering Consistent Returns to Shareholders From Under-Performing Organization with Under-Leveraged Assets Revenue Growth 3% Operating Income Growth 10% EPS Growth 10%

  12. We are doing that and even more 2003 Results Oct. 2000 Commitment Revenue Growth 3% 5% Operating Income Growth10% 13% EPS Growth 10% 18%

  13. We also achieved our Web revenue aspiration and continue to focus on delivering even more 2004 YTD Oct. 2000 Commitment Revenue Delivered Over the Web Majority 80%

  14. Our progress is driven by our Blueprint for Growth strategy, which serves as the roadmap for our transformation

  15. We are turning our Winning Culture, Brand and Flexible Business Model into powerful competitive advantages

  16. Let’s start with a review of our Winning Culture, which powers our strategy

  17. We know that our focus on building a Winning Culture through improved leadership is making a difference

  18. We have more than 5,000 team members engaged in driving our success Survey participation 98%

  19. Our team understands and has confidence in our strategic direction Survey participation 98% Understand our Blueprint 87% Confidence in our Blueprint 75%

  20. We are world-class at taking ownership to become better leaders Survey participation 98% Understand our Blueprint 87% Confidence in our Blueprint 75% Taking steps to improve leadership 92%

  21. And we know that when our customers win, D&B and our shareholders win Survey participation 98% Understand our Blueprint 87% Confidence in our Blueprint 75% Taking steps to improve leadership 92% Understand my role in enabling customers to Decide with Confidence 91%

  22. Through our investments in building a Winning Culture, we are creating a company of great leaders focused on driving our success Survey participation 98% Understand our Blueprint 87% Confidence in our Blueprint 75% Taking steps to improve leadership 92% Understand my role in enabling customers to Decide with Confidence 91%

  23. We are also unlocking the value of one of our most under-leveraged assets – our Brand

  24. When we launched our Blueprint for Growth strategy, the D&B Brand was highly recognized, but its value was built on being a data provider Data Provider

  25. To unlock the value of our Brand, we first repositioned it as one that enables customers to make confident business decisions… A confident business decision experience Data Provider

  26. …and created one powerful visual representation of the value we provide to our customers…

  27. …and we go to market with one compelling value proposition – our DUNSRightTM quality process Quality Assurance Corporate Linkage 4 Entity Matching 2 D-U-N-S® Number 3 Predictive Indicators 5 Global Data Collection 1 Quality Information D&BGlobalDatabase

  28. In addition to our Culture and our Brand, we are also transforming our Business Model to fund growth and create value for shareholders

  29. And we’ve done this year after year… Annualized Savings Derived from Financial Flexibility $ Millions (Annualized) 130 80 80 75 70 2000 2001 2002 2003 2004E Year Announced Before any restructuring charges and transition costs and before any reallocation of spending

  30. … which has been a key contributor to margin improvements Operating Margin Percent 23.3 22.5 19.9 17.1 2000 2001 2003 2002

  31. By establishing a foundation built on our Brand, our Business Model and our Culture, we are driving growth and creating value

  32. Last year, we communicated our aspiration to deliver 7% to 9% sustainable revenue growth by 2005-2007 and continue to deliver strong EPS 2005-2007 Aspiration Revenue Growth 7-9% EPS GrowthMid to upper teens

  33. And we are making great progress toward this aspiration in 2004 2004 Guidance 2005-2007 Aspiration 6-8% Revenue Growth 7-9% EPS GrowthMid to upper teens 16-18%

  34. As shareholders, you have seen the results of delivering on our Blueprint for Growth strategy

  35. We expect our EPS will have doubled in the last four years EPS $ per share 2.94 - 2.99 1.47 2000 2004E

  36. We expect our free cash flow will have grown considerably… Free Cash Flow $ Millions 230 - 245 135* 2000 2004E *2000 free cash flow has been adjusted for the one-time tax payment to the IRS related to the utilization of capital losses 1989-1990. See appendix for reconciliation of free cash flow.

  37. …which will enable us to repurchase $485 million of shares Share Repurchase $ Millions 200 100 85 100 2001 2004E 2003 2002

  38. Our stock price performance has begun to reflect these results Shareholder Return $ Millions 350 D&B 209% 300 250 200 Indexed Chart S&P 400 9% 150 100 S&P 500 -23% 50 3/29/02 9/29/00 3/29/01 6/29/01 9/29/01 6/29/02 9/29/02 3/29/03 6/29/03 9/29/03 3/29/04 7/15/04 12/29/00 12/29/01 12/29/02 12/29/03

  39. We believe our strategy has even more potentialto deliver greater value to our customers and drive sustainable growth for D&B

  40. As a result, we have evolved our Aspiration to reflect our intensified focus on our customers’ success To be the most trusted source of business insight so our customers can decide with confidence

  41. Now, let’s show you how our strategy will drive sustainable revenue growth going forward • Allan:We have accomplished a lot and there’s even more ahead • Steve:We are confident we will deliver our 7% to 9% revenue growth aspiration • Greg:We will continue to drive growth and profitability in our International business • Sara:We are confident we will grow margins by 100+ basis points and continue to deliver EPS in the mid to upper teens

  42. We are making progress toward achieving our 7% to 9% revenue growth aspiration Revenue Growth Percent 8 5 3 1 2004 YTD 2002 2001 2003

  43. Before we review our progress, let’s provide an overview of the key revenue sources, first from a geographic perspective… 2003 Revenue by Geography Percent International 25 75 North America

  44. …and then by customer solution set 2003 Revenue by Solution Percent Sales & Marketing 28 Supply Management 3 67 2 E-Business Risk Management

  45. Driving our progress has been our focus on seven strategic priorities 1. Build the brand of D&B around the DUNSRightTM quality process 2. Grow RMS by 3-5% annually 3. Grow S&MS by 4-7% annually 4. Grow SMS by 15-20% annually 5. Acquire or develop a 5th product line 6. Grow E-Business to consistently deliver 1 point per year 7. Implement a financially flexible business model Winning Culture is at the foundation of these priorities

  46. Our first strategic priority is to build the Brand around DUNSRightTM– our unique value proposition Quality Assurance Corporate Linkage 4 Entity Matching 2 D-U-N-S® Number 3 Predictive Indicators 5 Global Data Collection 1 Quality Information D&BGlobalDatabase

  47. Our DUNSRightTM quality process powers all our Customer Solution Sets Corporate Linkage 4 Entity Matching 2 D-U-N-S Number® 3 Predictive Indicators 5 Global Data Collection 1 Quality Information D&BGlobalDatabase Quality Assurance DUNSRightTM

  48. Should I extend credit to this new customer? What credit limit should I set? Will this customer pay me on time? Our second priority, Risk Management Solutions (RMS), helps our customers increase profitability while mitigating risk • What is my total credit risk exposure? • Should I change my credit policies? • How can I proactively manage my cash flow?

  49. Our RMS revenue has grown recently afteryears of marginal performance RMS Revenue Growth Percent 7 • We’ve extracted more value from our DUNSRightTMquality process • We’ve implementeda new risk management subscriptionplan 3 1 1 2004 YTD 2001 2002 2003

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