Annual Shareholder Meeting. May 6, 2009

Transcription

1 Annual Shareholder Meeting May 6, 2009

2 Safe Harbor Statement This presentation contains forward-looking statements that involve risks and uncertainties. Forward-looking statements in this document and those made from time to time by L-1 Identity Solutions, Inc. through its senior management are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of These forward-looking statements reflect the Company's current views based on management's beliefs and assumptions and information currently available. Forward-looking statements concerning future plans or results are necessarily only estimates, and actual results could differ materially from expectations. Certain factors that could cause or contribute to such differences include, among other things, the availability of government funding for L-1's products and solutions and the unpredictable nature of working with government customers, L-1 s federal, state, local and international contract awards and the size and timing of such awards, L-1 s performance on existing and future contracts, general economic and political conditions and other factors affecting spending by customers, generally. Additional risks and uncertainties are described in the Securities and Exchange Commission filings of the Company, including the Company's Form 10-K for year ended December 31, The Company expressly disclaims any intention or obligation to update any forward-looking statements.

3 Evolution of Identity Management Issues Emerge A New Market Evolves Customer-Centric Solutions are Formed Security Defense Technology Intelligence

4 L-1 Strategic Vision To be the premier identity solutions company with customized and interoperable solutions and services that meet any ID program requirements, on time and in budget Remain at the forefront of the latest advances in multi-modal biometric recognition capabilities as a means to uniquely identify individuals Use advanced technologies to produce the most secure identification documents possible that serve as proof of identity Offer government consulting services that address the most important areas of security and intelligence in the U.S. today Achieve organic growth in the 15% - 20% range annually complemented by a focused acquisition strategy Profitable, with solid margins and strong cash flow

5 Results / Expectations L-1 is the leading end-to-end identity solutions provider #1 in facial recognition #1 in iris software and mobile products #1 in credentialing solutions $800 $600 $400 $200 $0 Revenues (in millions) '05 '06 '07 '08 '09E #1 enrollment services provider DoD standard for fingerprint, facial and iris Achieving compound organic growth of 15%-20% Strong and trusted customer relationships $120 $100 $80 $60 $40 $20 Adjusted EBITDA (in millions) Federal intelligence agencies and branches of the U.S. military (i.e. DoD, CIA, NGA, NSA) More than 29 international governments Homeland security (DoS, DHS) State governments, law enforcements Majority of U. S. DMV s $80 $60 $40 $20 $0 $0 '05 '06 '07 '08 '09E Unlevered Free Cash Flow (in millions) '05 '06 '07 '08 '09E

6 Growth through Strategic Acquisitions December December AutoTest Division of Openshaw Media Group December August February July March February August October July August

7 Customer-Driven Solutions ID Solutions Passports, Visas, Passport Card, BCC CAC Driver s Licenses Automated Skills Testing National ID Voter Registration Authentication Top Tier algorithms (Face, Finger, Iris) Multi Modal Civil and Criminal Search Facial Screening Mobile ID Criminal Booking Civil Enrollment Jail Management Fingerprint Facial 3D Logical

8 Customer-Driven Services ID Services HAZPRINT TWIC Civil - Day worker - Healthcare - Financial - Insurance - School employees - Government employees Criminal / law enforcement Intelligence Services Engineering & Analytical Solutions Information Technology Services

9 Competitive Landscape Live Scan Full Hand Mobile ID AFIS Biometric Data-Mining Facial Recognition Credentialing (Pay-by-Click) Iris Intel Svcs ABIS Access Control Strong Presence Limited Presence Minimal Presence No Presence

10 Secure Credentialing Solutions Systems integration and solutions for the entire secure credential lifecycle Automated Skills Testing, Proofing/Vetting, Enrollment, Biometrics, Authentication, Issuance, Inspection More than 100M secure credentials produced annually 90% of U.S. use our solutions for secure driver s license issuances 80% of total U.S. driver s license volume is based on our technology International credential programs in 29 countries credentialing and authentication systems deployed worldwide Key contracts State driver s licenses U.S. Passport U.S. Passport Card, Border Crossing Card Voter registration, National ID and other citizen credentialing programs across the globe

11 Core Technologies Unparalleled Facial Recognition Solutions De-duplication State Drivers Licenses Visa and Green Card 1:N or 1:n Facial Recognition Applications DOS Database of > 80 Million Records, Largest in the World! Real Time Video Surveillance Applications Face-based Physical Access Control Mug Shot Booking Station Face-based Mobile Identification Face Examiner Workstations (FEWS) Person Image Capture System/Mobile Identification System PICS/MIS

12 International References in Document Issuance 12

13 Biometric Solutions Solutions built on top tier face, finger, hand and iris recognition technology Including industry-standard Daugman 08 iris algorithm Wide range of applications Multi-modal civil and criminal search Facial screening Mobile ID Criminal booking Civil enrollment Jail management Diverse product and solution sets ABIS System Mobile ID (HIIDE, PIER, IBIS) Touchprint Live Scan systems Omni Jail Management Proven experience Developed and integrated DoD s only large scale tri-modal database State Department Visa applications 70 million record database Over 7,500 HIIDE devices currently fielded into areas of conflict around the world

14 Enterprise Access Solutions Biometric-based access control FIPS approved finger reader for HSPD-12 / PIV market Finger and 3D face readers for physical access applications Software for enrollment and device management used with finger and 3D face readers Global channel partners include Tyco, Honeywell, GE, ADI, Lenel and Kronos, among others Strong presence in the worldwide commercial and government markets 400+ global partners Install base of 290,000+ access control reader units Management Software Enrollment and reader administration Finger Biometric Reader FIPS approved for use with PIV credentials Finger Biometric Readers Reader options for commercial Access Control 3D Face Reader Hands-free system for commercial market

15 Enrollment Services Total business & technology infrastructure for outsourcing biometric capture 675+ locations 46 states + Canada Approx. 6M people printed to date >1.5M customers annually Key contracts New York state HAZPRINT HSPD-12 TWIC Texas DPS, California DSS and 9 other state agencies

16 Government Consulting SpecTal Intelligence Services Counterterrorism Information sharing and analysis Counterintelligence Behavioral science Vulnerability assessments Surveillance, surveillance detection Computer forensics Operational support Training McClendon Engineering & Analytical Solutions Imagery analysis Spectral science, hyperspectral / multi-spectral systems Geospatial systems Model making and prototype fabrication Advanced Concepts Information Technology Solutions Cyber Security Information assurance Systems engineering Telecommunications R&D Public safety consulting

17 Strong Partnerships and Distribution Networks Robust open architecture technologies position L-1 as a sub or prime contractor and as a preferred partner of important global distributors

18 Strong Revenue and Organic Growth Four Year Revenue CAGR 83% ($ in millions) $ % $390M 13% $563M** 18% $740M** 200 $66M $164M 0 * FY05A FY06A FY07A FY08A FY09E Organic Growth*** * Only includes nine months of Bioscrypt and 4 ½ months of Digimarc ** Approximate midpoint of the guidance range *** See Organic Growth definition Total Revenues

19 Quarterly Financial Review Q1 06(A) Q1 07(A) Q1 08(A) Q1 09 (A) Revenues $23.4m $70.0m $116m $150.2m Adj. EBITDA $2.5m $5.7m $12.6m $19.3m EPS ($0.07) ($0.12) ($0.04) ($0.04)

20 FY 06/ 07/ 08 Review and FY 09 Expectations FY 06 (A) FY 07 (A) FY 08(A) FY 09 (E) Revenue $164.4m $389.5m $562.9m $725.0-$750.0m Adj. EBITDA $23.6m* $60.1m $83.5m $ $110.0m Unlevered Free Cash Flow $5.7m $39.7m $47.5m $ $85.0m * After excluding non-recurring charges of $3.3 million

21 Diverse Backlog Government Consulting Services Enrollment Services 21% 34% Secure Credentialing 40% Biometric Solutions 5% Approximately $1.1 Billion of Total Backlog

22 Consistent Gains in Margins and Effective Operating Leverage Operating leverage across all divisions Services margins remain stable 45.0% 32.5% 47.0% 50.0% 48.0% 49.0% source of cash flow 28.0% 30.0% 29.0% 29.0% 29.0% 28.0% 24.5% 24.0% 23.0% FY'05 FY'06 FY'07 FY'08 FY'09E Services Cash Margins Operating Expense Solutions Cash Margins *On a pro forma basis, as if all of the companies were acquired as of 1/1/05, excluding non-cash items

23 Solid Adjusted EBITDA and Strong Cash Generation Four Year Adjusted EBITDA CAGR 105% ($ in millions) $ $6M 0 ($1M) $24M $9M $60M $40M $83M $50M $105M* $80M* FY05A FY06A FY07A FY08 FY09E EBITDA Margins 10% 15% 15% 15% 15% EBITDA Unlevered Free Cash Flow * Reflects midpoint of the range

24 Strong Cash Flow Provides Ample Liquidity Visibility With Growing Backlog and Strong Cash Flow Provides Ample Liquidity to Pay Down Term Debt Total Net Debt ($ in millions) $500 $400 $300 $200 $100 $0 FY08 FY09E FY10E MidFY11E Convertible Bond Bank Term Loan

25 The $1 Billion Vision L-1 in 2010 We believe that L-1 s existing and recurring businesses, and a continually expanding pipeline of opportunities combined with a focused growth strategy, will yield a business of over $1 billion in revenue by the end of 2010 $1 Billion $100M- $150M $270M Organic Growth Areas $630 M Base Business 2010 Target Acquisitions/Other Bolt on / synergistic Growth Areas 20% + Real ID upgrades / National IDs / Passport US and International Intelligence Solutions Mobile DoD POR TWIC / HSPD-12 / Census / State Enrollment State / Local AFIS solutions Cyber Security Base Business Large and Growing Backlog $1 billion + Strong Intel / DoD Budgets Identity solution offering mobile, credential, search, access control Human intelligence / infrastructure Signal intelligence / CYBER issues State and Federal Fingerprinting

26 Defined Financial Terms Adjusted EBITDA L-1 Identity Solutions uses Adjusted EBITDA as a non-gaap financial performance measurement. Adjusted EBITDA is calculated by adding back to net income (loss) interest, income taxes, impairments of long-lived assets and goodwill, depreciation, amortization, stock-based compensation expense, including retirement plan contributions settled in common stock, and acquisition related costs. Adjusted EBITDA is provided to investors to supplement the results of operations reported in accordance with GAAP. Management believes Adjusted EBITDA is useful to help investors analyze the operating trends of the business before and after the adoption of SFAS 123 (R) and to assess the relative underlying performance of businesses with different capital and tax structures. Management believes that Adjusted EBITDA provides an additional tool for investors to use in comparing L-1 Identity Solutions financial results with other companies in the industry, many of which also use Adjusted EBITDA in their communications to investors. By excluding non-cash charges such as impairments of long-lived assets and goodwill, amortization, depreciation and stock-based compensation, as well as non-operating charges for interest, income taxes and acquisition related costs, investors can evaluate the Company's operations and can compare its results on a more consistent basis to the results of other companies in the industry. Management also uses Adjusted EBITDA to evaluate potential acquisitions, establish internal budgets and goals, and evaluate performance of its business units and management. L-1 Identity Solutions considers Adjusted EBITDA to be an important indicator of the Company's operational strength and performance of its business and a useful measure of the Company's historical and prospective operating trends. However, there are significant limitations to the use of Adjusted EBITDA since it excludes interest income and expense, impairments of long lived assets and goodwill, stock compensation expense, including retirement plan contribution settled with common stock, income taxes and acquisition related costs, all of which impact the Company's profitability, as well as depreciation and amortization related to the use of long term assets which benefit multiple periods. L-1 Identity Solutions believes that these limitations are compensated by providing Adjusted EBITDA only with GAAP net income (loss) and clearly identifying the difference between the two measures. Consequently, Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss) presented in accordance with GAAP. Adjusted EBITDA as defined by the Company may not be comparable with similarly named measures provided by other entities.

27 Defined Financial Terms Unlevered Free Cash Flow Unlevered free cash flow represents cash flow from operating activities, plus cash interest expenses and cash income taxes, less capital expenditures. L-1 believes unlevered free cash flow is a useful measure for assessing the company's liquidity, its ability to meet debt service requirements and making acquisitions. Unlevered free cash flow is not necessarily comparable to similar measures used by other entities and is not a substitute for GAAP measures of liquidity such as cash flows from operating activities. Backlog L-1's backlog represents sales value of firm orders for products and services not yet delivered and for long term executed contractual arrangements (contracts, subcontracts, and customer commitments), the estimated future sales value of estimated product shipments, transactions processed and services to be provided over the term of the contractual arrangements, including renewal options expected to be exercised. L-1 may not realize the full amount of revenues reflected in backlog because L-1 is subject to the risks that clients may modify or terminate projects and contracts and may decide not to exercise contract options or the estimate of quantities may not materialize.

28 Defined Financial Terms CAGR Compound Annual Growth Rate (CAGR) is the year-over-year growth rate of an investment over a specified period of time. It is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered. Organic Growth Organic growth represents the increase in revenues in the current period, expressed as a percentage. It excludes businesses acquired in 2008 but includes businesses acquired in 2007 for the full years of 2007 and 2008.