Clarke Inc. · TSX:CKI
Clarke — Shareholder Meeting (May 2008)
34 slides from Clarke's shareholder meeting presentation, May 12, 2008
Slide 1: Annual General Meeting May 12, 2008
Navigating a course toward long-term value Annual General Meeting May 12, 2008 Navigating a course toward long-term value
Slide 2: Agenda
AGENDA ø Official Business ø COO Address: Navigating a Course Toward Long-Term Value ø Financial Review ø Outlook: George Armoyan Navigating a course toward long-term value
Slide 3: Official Business
OFFICIAL BUSINESS Hugh Smith Chairman of the Board Navigating a course toward long-term value
Slide 4: Official Business
Official Business ø Appointment of Scrutineer and report on attendance and quorum ø Notice of Meeting and Minutes of last Meeting ø Receipt of 2007 consolidated financial statements ø Nominees for election as Director ø Appointment of Auditors ø Amendment of Stock Option Plan ø Other Business Naviga
Slide 5: Clarke 2007: Navigating a Course Toward Long-Term Value
CLARKE 2007: Navigating A Course Toward Long-Term Value Rob Normandeau Chief Operating Officer Navigating a course toward long-term value
Slide 6: Overview
Overview • Summary of overall results for 2007 • Overview of accomplishments for Clarke Freight • Summary of key investment gains during 2007 and key holdings at year-end • Goals established at the end of 2007 • Case studies: Granby and Sure Gro • New core investments for 2008 Navigating a course to
Slide 7: 2007: A Year of Realized Gains
2007: A Year of Realized Gains ø Best-ever one-year performance in Clarke history: ø 185% increase in EBITDA over 2006 ø Growth largely due to strategic investments ø 294% EBITDA increase in Investment Segment alone Navigating a course toward long-term value
Slide 8: Clarke Freight: Significant Improvement
Clarke Freight: Significant Improvement • Under leadership of Dean Cull – Clarke Transport • Improved focus on customer service • Increased efficiencies • Revitalized sales team – Clarke Road Transport • Continued growth in specialized services • Maintained and developed strong management team • Del
Slide 9: Significant Dispositions - 2007
Significant Dispositions- 2007 ø Significant Dispositions (Gains before income taxes): øHalterm Income Fund - $3.4 million øWarehouse Segment Property - $5.1 million øVersacold Income Fund - $30.8 million øSobeys Inc. - $17.9 million øEntertainment One Income Fund - $6.5 million øFishery Products In
Slide 10: Significant Holdings - End of 2007
Significant Holdings- End of 2007 ø Art in Motion Income Fund ø Avenir Diversified Income Trust ø Blackwatch Energy Services Trust ø Bonnett’s Energy Services Trust ø Canwel Building Materials Income Fund ø Cinram International Income Fund ø Clearwater Seafoods Income Fund ø Granby Industries Income
Slide 11: Goal: Improved Focus and Refined Approach to Long Term Value
Goal: Improved Focus and Refined Approach to Long Term Value • Reduce number of holdings and focus on larger businesses with a defined set of goals • Continue to be active with publicly listed businesses while also working with certain private entities • Invest alongside experienced operators and st
Slide 12: Privatized Investment: Granby
Privatized Investment: Granby ø Market Related Issues: ø rise of the Canadian dollar ø escalation in the price of oil ø decline in U.S. housing sales ø increased price competition in a shrinking market ø Strategic Issues: ø required new products with demonstrable value ø needed to address excess pro
Slide 13: Privatized Investment: Granby (cont'd)
Privatized Investment: Granby (cont’d) ø The Opportunity: ø Excellent senior management team eager to invest in revitalized business ø State of the art manufacturing facility and industry leading engineering and design team ø Exceptional customer base ø The Challenge: ø Stabilize the business ø Achi
Slide 14: Privatized Investment: Granby (cont'd)
Privatized Investment: Granby (cont’d) øAccomplishments in 2008 øBusiness stabilized: through Clarke balance sheet support, rapid privatization and information campaign for customers and employees øEfficiencies realized: elimination of public company expenses and other efforts led by management øPro
Slide 15: Joint Venture: Sure-Gro
Joint Venture: Sure-Gro ø Market Related Issues: ø highly seasonal business with intense working capital requirements ø industry under regulatory pressure ø certain low margin categories required specialized approach ø big box retail customer base demanded scale and efficiencies ø Strategic Issues:
Slide 16: Joint Venture: Sure-Gro (cont'd)
Joint Venture: Sure-Gro (cont’d) ø The Opportunity: ø Co-leader in established industry, strong proven brands ø Over $100M in annual sales ø Support of strong strategic partner- Roycap ø Excellent former CEO and CFO available as partners ø The Challenge: ø close asset purchase at an attractive price
Slide 17: Joint Venture: Sure-Gro (cont'd)
Joint Venture: Sure-Gro (cont’d) øAccomplishments in 2008 øAcquisition Completed: at an attractive price and former CEO and CFO retained, as equity partners øSeasonality blunted: through battery distribution agreement signed with Pure Energy øGreen Solution honed: through realignment of strategic ap
Slide 18: New Core Investments for 2008
New Core Investments for 2008 • Cinram International Income Fund • Supremex Income Fund • Avenir Diversified Income Trust Navigating a course toward long-term value
Slide 19: 2007: An Excellent Year
2007: An Excellent Year ø Outstanding performance in Investment Segment: taking advantage of the right market conditions to realize significant returns ø Strong turnaround underway with significant progress in the Freight Transportation Segment - 64% improvement in EBITDA ø Solid position going forw
Slide 20: Fiscal 2007 in Review
FISCAL 2007 IN REVIEW Blair Cook Chief Financial Officer Navigating a course toward long-term value
Slide 21: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements This presentation may contain forward -looking statements related to expected future events and financial and operating results of Clarke that involve risks and uncertainties. Forward-looking statements, which include the use of words such as “expect”, “a
Slide 22: Annual Highlights ($ Millions)
ANNUAL HIGHLIGHTS ($ MILLIONS) Fiscal Fiscal 2007 2006 REVENUE AND OTHER INCOME $296.5 $203.6 EBITDA $100.0 $35.1 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY IN $86.7 $24.5 EARNINGS OF LONG-TERM INVESTMENT Navigating a course toward long-term value
Slide 23: EBITDA Reconciliation ($ Millions)
EBITDA Reconciliation ($ MILLIONS) Fiscal Fiscal 2007 2006 Income from continuing operations $ 64.0 $ 17.2 (Income) loss from discontinued operations (3.9) 0.9 Provision for income taxes 23.2 6.5 Interest expense 13.7 7.7 Depreciation and amortization 3.0 2.8 EBITDA from continuing operations $100.0
Slide 24: Per Share Results
Per Share Results Fiscal Fiscal 2007 2006 Basic earnings per share Income from continuing operations 2.22 0.70 Income (loss) from discontinued operations 0.14 (0.03) Net income 2.36 0.67 Diluted earnings per share Income from continuing operations 1.40 0.59 Income (loss) from discontinued operations
Slide 25: Investment Segment: Focusing on Long-Term Value
Investment Segment: Focusing on Long-Term Value ø Investment Segment drives long-term performance, but quarter-to- quarter returns fluctuate based on the market environment ø Tale of two tapes ø First 3 quarter of 2007, Basic EPS of $2.58 - strong capital markets ø 4th quarter of 2007, Basic EPS of
Slide 26: First Quarter Results
First Quarter Results Navigating a course toward long-term value
Slide 27: Per Share Results
Per Share Results Q1 Q1 2008 2007 Basic EPS from continuing operations $ (0.16) $ 0.31 Diluted EPS from continuing operations** $ (0.16) $ 0.20 Weighted-average common shares outstanding 28,548 25,372 (‘000) Weighted-average diluted common shares 50,011 52,318 outstanding (‘000)** Note: figures adju
Slide 28: EBITDA for the 1st Quarter
EBITDA for the 1st Quarter Q1 Q1 Reporting Segments: 2008 2007 Investment $1.1 $13.8 Freight Transportation 0.8 1.0 Home & Garden 2.2 ? Home Décor (1.0) ? Steel Tanks 0.0 ? Other (0.4) 0.9 EBITDA $2.7 $15.7 $ millions Navigating a course toward long-term value
Slide 29: EBITDA Reconciliation ($ Millions)
EBITDA Reconciliation ($ MILLIONS) Q1 Q1 2008 2007 Net income (loss) $(2.1) $12.1 Income from discontinued operations (2.4) (4.1) Provision for income taxes 2.7 3.1 Interest expense 3.5 3.8 Depreciation and amortization 1.0 0.8 EBITDA $2.7 $15.7 Navigating a course toward long-term value
Slide 30: Significant Transactions
Significant Transactions • Art in Motion Income Fund control block • Sure-Gro Holdings Inc. – Pure Energy – Modugno-Hortibec • Granby Industries Income Fund privatization Navigating a course toward long-term value
Slide 31: Market Value of Marketable Securities
Market Value of Marketable Securities Market Value of Marketable Securities 300 250 $ millions 200 150 100 50 - 07 07 08 06 07 06 6 7 c-0 c-0 ar- ar- n- n- p- p- Ju De De Ju Se Se M M Navigating a course toward long-term value
Slide 32: Clarke 2008: Outlook
CLARKE 2008: OUTLOOK George Armoyan President & CEO Navigating a course toward long-term value
Slide 33: Outlook: 2008
Outlook: 2008 Goals for the year • Consolidate number of open positions • Focus on key strategic investments • Achieve targeted results • Investment Segment • Freight Segment • Other: Sure Gro, Granby, Art in Motion • Continue to build and develop the team • Navigating a course toward long-term valu
Slide 34: Thank You
Thank You Navigating a course toward long-term value