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Daegis Inc. Message Board

  • profitassurance profitassurance Jun 30, 2010 1:29 AM Flag

    Daegis Merger Conference Call Tidbits

    Daegis Merger Conference Call Tidbits
    • There is no competing solution in the market today that combines e/discovery and e/mail archiving (basically solving both IT and legal department issues).
    • Gartner: e/mail archiving in 2009 was $500M and is expected to grow to well over $1b by 2013 // e-discovery in 2009 was $1B and is expected to grow to $2B by 2013.
    • Daegis, founded in 1999, 100 employees, headquartered in SF less than 2h drive from unfy hq.
    • 30M debt is $24M Term note and $6M revolver of which $4 are currently drawn upon. Intention is to quickly repay these $4M using $4M of receivables from Daegis. Year 1 Principal repayment is $1.2M and Year 2 is $2.4M. Unfy may use 50% of its excess cash flow to reduce this principal without prepayment penalty.
    • Daegis to generate $5.75M Ebitda for the remainder of Fiscal 2011 (10 months)

    Q&A PORTION (Roth Capital / Security Research Associates / Herbst Capital Mgt. / Webber Capital Mgt.)
    • Revenue growth expectation for Daegis going forward is north of 10%
    • Annual interest expectation for first year is $2.4-$2.5M (17c per share outstanding)
    • Product Roadmap: First and biggest item is to integrate archiving capability into Doc-hunter product.
    • Cross Selling: Biggest opportunity is that almost all archiving customers are using an e-discovery service like the one Daegis offers and there is very little overlap. Very few of these potential customers have a solution purchased but use an outsourced vendor. Conversation with those customers would demonstrate on how much more expeditious and cost effective Doc Hunter does work together with Unifys archive solution due to the integration of it. Secondly, many of Deagis customers would benefit from e/mail archiving making both customer bases fertile ground for cross selling.
    • Integration Issues? Little. Daegis business extremely successful as it is and unfy has no intention to mess it up and will leave it as is. There will be integration of Sales and Marketing team. They will start working together very soon. Technology teams will work together on technical integration but otherwise there is going to be little integration. Will happen over next 12 months.
    • Kurt Jensen will mainly continue day to day operations of Daegis. He will have a significant sales responsibility. He is now second largest stockholder of unfy.
    • Assuming conversion of promissory notes the outstanding share count will be 14.4M shares. Add to this dilution of old warrants and 700k warrants issued to Hercules in connection with the financing.
    • Daegis Competitors: epic, fti, currel (?) on track.
    • Unfy hired a banker in August 2009 to find an e-discovery partner to complement AXS1 acquisition.
    ---------------------------

    Some thoughts: Unify is currently valued at about 35/3=11.6 times Ebitda multiple. They bought Daegis at 38/6.5=5.85 EBITDA multiple. Excellent price! Deal is immediately accretive to EPS. Annual run rate of combined companies using my personal growth projections is 97c per share ebitda. Any thoughts/opinions/insights?

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DAEG
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