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November 2007
Loring Ward International Ltd.Company Update
2November 2007
Loring Ward International Ltd. (TSX: LW)
The following presentation has been placed on the Loring Ward company website at www.loringward.com.
Following listing of the company’s common stock on the Toronto Stock Exchange (TSX), Loring Ward International Ltd. (Loring Ward) will be holding presentations for the investing public for the purpose of informing them about Loring Ward. This presentation along with the company’s most recently released financial statements and management’s discussion and analysis will be distributed from time to time to attendees of the in-person presentations.
Information in this presentation that is not current or historical factual information may constitute forward-looking statements within the meaning of securities laws. Forward-looking statements may include those relating to the company’s objectives and strategies, as well as statements of our beliefs, plans, expectations and intentions. Implicit in this information are assumptions regarding future revenue and expenses, economic conditions, and the results of a pending lawsuit involving the Company, as well as our business strategy, expectations, intentions, and other matters. These assumptions may prove to be incorrect, and actual outcomes and results, including the future operating results and economic performance of the company, may differ materially because of many factors, including those discussed in this presentation and in our other public filings. For more information on risks and challenges faced by the company you should refer to our detailed financial statements, management's discussion and analysis, and complete risk disclosures which are available at www.sedar.com. Forward-looking statements contained in this presentation are based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. You should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. The company disclaims any intention or obligation to update the information in this presentation or revise any other forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.
The company, in the ordinary course of its business, may explore potential strategic opportunities and transactions, which may include strategic joint venture relationships, significant cash, debt or equity investments in or by the company, the acquisition or disposition of material assets or business lines, mergers, new products or services, new distribution methods and other similar strategic opportunities or transactions. The company’s policy is generally not to publicly disclose the pursuit of a potential strategic opportunity or transaction unless and until a definitive binding agreement is reached. The public announcement of such matters could potentially materially affect the price or value of the company’s securities. As a result, there can be no assurance that investors who buy or sell the company’s securities are doing so at a time when the company is not pursuing a particular strategic opportunity or transaction that, if publicly disclosed, could materially affect the price or value of the company’s securities.
3November 2007
Investor Presentation Outline
1. Investment highlights
2. Industry overview
3. Growth strategy
4. Loring Ward Advisor Services
5. Financial review
November 2007
Investment Highlights
5November 2007
Loring Ward Share Price Performance
$0
$3
$6
$9
$12
$15
Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07
Sh
are
Pri
ce
(C
$)
Price and Volume Chart
January 1, 2006 to November 12, 2007
Source: Toronto Stock Exchange www.tsx.com 11/12/07
May 2006 – Feb 4, 2007• Unlisted trading only
May 2007• Company approves Substantial Issuer Bid• Announces C$0.07 quarterly dividend
6November 2007
Investment Highlights
Record of growth
Positive industry fundamentals
Enormous market opportunity
Proven investment philosophy
Globally diversified portfolio
Strong financial condition
Experienced management team
7November 2007
Record of Growth: Loring Ward Advisor Services Assets
(US$ millions)
$100
$200
$300
$400
$500
2001 2002 2003 2004 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
New
Ass
ets
$-
$1,200
$2,400
$3,600
$4,800
$6,000
To
tal Assets
Gross Quarterly New Assets
Net Quarterly New Assets
Total Assets
Gross Yearly New Assets
Net Yearly New Assets
8November 2007
Record of Growth: Loring Ward Advisor Services Client Accounts
-
1,200
2,400
3,600
4,800
6,000
Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
New
Acc
ou
nts
-
5,000
10,000
15,000
20,000
25,000
To
tal # of A
ccou
nts
Gross New Accounts with Value
Net New Accounts with Value
Total Accounts with Value
9November 2007
Record of Growth: Loring Ward Advisor Services Advisors
26
12 1115
2521
16 1511
37
27
3532
0
20
40
60
80
100
Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
New
Ad
viso
rs w
ith
Acc
ou
nts
400
480
560
640
720
800
To
tal Ad
visors w
ith A
ccou
nts
Net Quarterly New Advisors with Accounts Total Advisors with Accounts
10November 2007
Positive Industry Fundamentals – TAMP Market Growth
(US$ billions)
Source: Tiburon Strategic Advisors TAMP Research Report 1/07
$1 $4$16
$22$33
$51
$78 $78$91
$120
$170
$193
$250
1986 1994 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
2001 – 2006 CAGR: 2
6%
11November 2007
Enormous Market Opportunity
Source: CapGemini/Merrill Lynch 2006 Wealth Report. For illustrative purposes only. Loring Ward’s actual share size of U.S. Investable Personal Assets does not appear to the human eye within a pie chart.
Share of $17 Trillion in U.S. Investable Personal Assets
LWAS = $5.5 billion (9/30/07)
Estimated Share of Current Broker/Dealer Client Business
>20,000 Advisors
724 Loring Ward Advisors
Broker / Dealer Assets > $750bn
Loring Ward Advisor Services = $5.5bn
*Represented above are the 90+ Broker / Dealers with selling agreements at Loring Ward. The number of B/D advisors and assets are estimates.
*Not to scale
*
12November 2007
Proven Investment Philosophy
• Fama/French Multi-Factor Model– Invest in equities
– Overweight small company stocks
– Overweight high-book-to-market stocks
• Markowitz Modern Portfolio Theory
– Effectively diversify Fixed Income/Equity
Domestic/International
Size and Style
• Dimensional Fund Advisors LP– Enhanced indexing
– Trading advantages
– Fixed income maturity <5 years
– True to asset classes
– Flexibility in construction
– Institutional pricing
– Tax efficiency
13November 2007
Globally Diversified Portfolio
U.S. Core0.4%
U.S. Market16.6%
U.S. Large Value13.9%
International Small9.0%
Emerging Markets2.4%International Core
0.3%
REITs0.9%
International Large0.5%
International Value23.6%
U.S. Small11.2%
Fixed Income21.2%
Domestic54.7%
International45.3%
Loring Ward Client Investment Portfolios (1) Equity Domestic / International (1)
1. Assets include all SA and DFA Funds as of June 30, 2007. Source: Loring Ward, 7/07.
14November 2007
Experienced Management Team
• Loring Ward is led by a seasoned team of professionals who have collectively almost 200 years of financial services industry experience
Name Title Industry Experience
Bob Herrmann President and Chief Executive Officer 20
Bob Badolato Chief Financial Officer 20
Nicole Newlin Chief Operating Officer 7
Steve McGinnis General Counsel & Corporate Secretary 37
William Chettle Managing Director - Marketing 13
Ron Howard Director – Broker/Dealer Marketing 31
Mark Kalinowsky Western Division Director 13
Randy Hardy Eastern Division Director 9
Susan Kornegay Managing Director – Advisor Practice Consulting 23
Joni Clark Chief Investment Strategist 18
November 2007
Industry Overview
16November 2007
Substantial Growth of Fee-Based Managed Accounts
High-net-worth individualsturning to financial advisors
to manage their assets
Increasing number of high-net-worth investors
Financial advisors migrating towards fee-based model
(US$ billions)
Source: Tiburon Strategic Advisors TAMP Research Report 1/07
$82 $115$117$120$180
$235
$356$452
$662
$769$800
$927
$1,081
$1,208
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
17November 2007
Increased Specialization & Increased Outsourcing
Financial Advisors
Personal Advisor & Planner
Fund Managers
Investment Management
Turnkey Asset Management Programs (TAMPs)
Portfolio Management
Back Office Administration
Business Development / Marketing
Advisor Education & Training
Client Relationships
18November 2007
TAMP Market Growth
(US$ billions)
Source: Tiburon Strategic Advisors TAMP Research Report 1/07
$1 $4 $16 $22 $33$51
$78 $78 $91$120
$170$193
$250
$650
1986 1994 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2010
2006
– 2
010E
CA
GR
: 27%
19November 2007
TAMP Market Trends
TAMP market is expected to grow at a 27% compounded
annual rate
Fee-account market share increased from 11% in 2002 to
over 15% in 2006
Growth in fee-based accounts
Trend towards specialization
Source: Tiburon Strategic Advisors TAMP Research Report 1/07
November 2007
Growth Strategy
21November 2007
Loring Ward is Ready for Growth and Profitability
• Capitalize on strong industry fundamentals• Continue to advance advisor experience and capabilities• Improve and expand programs and services• Improve efficiency/expand capacity, so that assets and accounts can
grow dramatically without increased operating costs• Expand marketing within Broker/Dealers• Pursue potential strategic acquisition(s)
22November 2007
4%
13%
18%
39%
35%
32%
(3%)
(10%)
0%
10%
20%
30%
40%
50%
2004 2005 2006 YTD Average SmallCaps
Average MidCaps
Average LargeCaps
Trading Comparables (LTM)
EB
ITD
A M
arg
in
Note: EBITDA included the results of the asset management businesses, run-off businesses, and corporate costs.1. Actual results for the first nine months of 2007.
2. Includes Waddel Reed, Cohen & Steers, GAM CO Investors, W.P. Stewart, US Global Investors, Diamond Hill, Westwood Holdings and Hennessy Advisors. Source: Capital IQ, 11/12/07
3. Includes Affiliated Managers, Nubeen Investments, Eaton Vance, Janus Capital, Federated Investors, and Calamos Asset Management. Source: Capital IQ, 11/12/07
4. Includes Franklin Resources, AllianceBernstein, BlackRrock, Legg Mason, T. Rowe Price, and SEI Investments. Source: Capital IQ, 11/12/07
Margin Opportunity
(2) (3) (4)
(1)
November 2007
Loring Ward Advisor Services
24November 2007
Loring Ward Advisor Services: TAMP Business Model
Client
• Client Acquisition
• Investment Advisor
• Relationship Manager
• Financial Planner
Investment Advisor
Loring Ward
SA Funds $3.1 Billion 9/30/07
Loring Ward – AdviserDimensional Fund Advisors LP
Sub-Adviser /Investment Manager
DFA Funds$2.1 Billion 6/30/07
Affiliate ofDimensional
Mutual Funds
Portfolio Management
• Investment strategy• Portfolio models• Fee-based programs• Performance reporting• Research & analytics
Adviser to SA Funds
• Investment strategy• Asset class allocation• Performance analytics• Sub-adviser oversight• Distributor services
Back Office
• Account opening• Custodian interface• Portfolio set-up / trading• Monitoring & rebalancing• Transfers / distributions• Billing & fee collection
Investment Advisor Support
• Education & training• Business development• Private label marketing• Client communications• Practice consulting
25November 2007
SecuritiesAvailable
AssetClasses
Portfolio Size
>$500,000
GlobalFixed Income
US Fixed Income
Intl ValueEquities
US Small CapEquities
Intl Small CapEquities
US ValueEquities
Emerging Markets Equities
US REITsUS Large Cap
Equities
<$500,000
DFA FundsSA FundsThe Universe of
Funds & Securities
Loring Ward Fee-Based Investment Programs
26November 2007
Program Fee Structures
Loring WardRevenue
Loring Ward Variable Expenses
Loring WardGross Margin
<$500,000 >$500,000 >$500,000Closed Program
SA FundsAverage Portfolio: 100 bps
Administrative FeeAverage Portfolio: 50 bps
Fund Reimbursement, Var Comp, IT Platform, B/D Supervisory Fees
Average Portfolio: 30 bps
Average Portfolio: 30 bps Average Portfolio: 25 bps
Management FeeAverage Portfolio: 95 bps
PortfolioSize
The above chart is an approximation of the revenue and variable expense flow of Loring Ward programs and is shown for illustrative purposes only. Refer to Loring Ward’s Financial Results at www.loringward.com for actual results.
Var Comp, IT Platform, B/D Supervisory Fees
Average Portfolio: 20 bps
Advisor Fees, Var Comp, IT Platform, B/D Supervisory Fees
Average Portfolio: 70 bps
Average Portfolio: 70 bps
AUM as of Sept 30, 2007(in USD millions)
$1,357 $1,026$3,131
27November 2007
Cost Overview
• Downward trend of fixed operating expenses even with growth in AUM and revenue
• Business model has significant operating leverage
LWAS (1) 2004 2005 2006
(1)
LWAS (1) 2004 2005 2006Half Year
Annualized (1)
1. Q3 2007 annualized
2. AUM is as of December 31 for the year indicated, except for LQA column, as of 9/30/07
Note: LQA figures adjusted for $0.9MM of non-recurring costs
LWAS 2004 2005 2006Half Year
Annualized (1)LWASUS$ Millions
2004 2005 2006 LQA 1
AUM2 $2,311 $3,070 $4,324 $5,459
Revenue 20.9 27.0 35.1 47.4
Variable Expense $9.6 $10.9 $13.0 $19.9
% of revenue 46% 40% 37% 42%
Fixed Operating Expenses $9.7 $12.5 $13.2 $13.5
% of revenue 46% 46% 38% 28%
Operating Margin 8% 13% 25% 30%
28November 2007
Advisors Overview
• 724 independent investment advisors spread across U.S. in 37 states• Exclusive community of proven fee-based advisors sharing same investment
philosophy • Advisors commit to grow and move assets to Loring Ward• Long-standing advisors typically have most of clients’ assets with Loring Ward
55 Registered Investment Advisors (RIAs)
724Advisors
669 Investment Advisor Representatives (IARs)
Registration through 90 Broker / Dealers
Independent Registration
29November 2007
Client Account Overview
• Offering is attractive for all levels of investor affluence• Percentage of assets in HNW / UHNW segments continuing to increase
As of 6/30/07.
Account Size % of Total # Accounts % of Total Accounts
Mass Affluent <$500,000 $2,742 50% 20,220 89%
Affluent $500,000 - 1 million $1,188 22% 1,745 7%
High Net Worth $1-5 million $1,324 24% 814 4%
Ultra High Net Worth >$5 million $205 4% 26 <1%
Total Value (US$MM)
30November 2007
Growth of Advisors
459 459 461 467 479 490 505 530 551 567 582 593630 657
692
- 2 6 12 11
11
459 461 467 479 490 505530
551 567 582 593630
657692
724
32
27
1525
21 16 1537
35
0
200
400
600
800
Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
Nu
mb
er o
f A
dv
iso
rs
Advisors at Beginning of Period Net New Advisors
31November 2007
Increasing Average Advisor AUM at Loring Ward
$2,851
$1,887 $1,984$2,027
$2,311 $2,384$2,562
$3,070
$3,428$3,583
$3,849
$4,324
$4,710
$5,199
$5,459
-
$1,200
$2,400
$3,600
$4,800
$6,000
Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07
AU
M
$4
$5
$6
$7
$8
$9
$10
AU
M p
er Ad
viso
r
Loring Ward Advisor Services AUM at Period End AUM per Advisor
32November 2007
Dimensional Fund Advisors LP
• SA Funds are sub-advised by Dimensional• Loring Ward clients can invest in directly-managed DFA funds• Loring Ward working with Dimensional since 1992
Solid Reputation Investment Management
US$ 150 billion in assets1
1. AUM balance as of 6/30/07
Adheres to distinct discipline, with goal of providing greater consistency and predictability of results, as well as broader diversification across and within asset classes
Recognized throughout the industry for the long-term success of its enhanced indexing strategy
November 2007
Financial Review
34November 2007
Financial Highlights
• Positive operating trends– Increasing assets under management and revenue– Increasing operating income and margins (after non-recurring items)– Increasing free cash flow– Significant operating leverage – Substantial reduction in corporate costs
• Improved financial condition– No debt – $25 million cash (including escrow)– Tax loss asset of $19 million– Recurring asset-based revenue stream– Bank and market access to capital– Completed substantial issue bid of purchasing 750,000 shares of Loring Ward stock– Declared & paid a quarterly dividend of $0.07 CDN per share in each of first three quarters– Initiated a buyback program to purchase up to 10% of the public float (approximately 560,000
shares). Over 260,000 shares purchased as of October 31, 2007
• Diversification of revenue and profit– 22,805 clients through 724 advisors and 90 B/Ds– Effective global portfolio diversification
As of 9/30/07
35November 2007
Selected Quarterly Financial Data
Note: Loring Ward Financial Statements and Management, Discussion & Analysis 2005- 2007
US$ millions (except per share data) 2005 2006 2007Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307
LWAS Revenue $6.4 $6.7 $7.3 $7.8 $8.0 $8.6 $9.2 $9.4 $10.4 $11.3 $11.9 LWCM Revenue 1.3 1.2 1.3 1.3 1.4 1.4 1.4 1.2 1.0 0.9 0.9
$7.7 $7.9 $8.6 $9.1 $9.4 $10.0 $10.6 $10.6 $11.4 $12.2 $12.8
Operating Income $1.0 $1.2 $1.7 $1.9 $1.8 $2.4 $2.8 $2.9 $3.3 $3.0 $2.7 Corporate Costs 2.3 3.2 3.2 3.9 2.6 2.4 2.0 1.7 1.4 1.5 1.5 Pretax Earnings ($1.4) ($0.6) ($0.9) ($1.6) ($0.4) $1.3 $0.8 $1.4 $3.7 $1.6 $0.9
Net Income from Continuing Operations ($0.8) ($0.4) ($0.5) ($1.0) ($0.3) $0.7 $0.5 $0.8 $2.2 $1.0 $0.5 Net Income 0.1 0.5 0.7 (0.7) 0.2 1.1 0.8 (0.4) 1.6 0.9 0.4
EPS (loss) from Continuing Operations Basic (10¢) (5¢) (6¢) (12¢) (3¢) 8¢ 6¢ 9¢ 24¢ 11¢ 7¢ Diluted (9¢) (4¢) (6¢) (11¢) (3¢) 8¢ 6¢ 9¢ 24¢ 11¢ 7¢
Operating Cash Flow From Continuing Operations ($0.6) $0.6 $0.1 $1.4 $0.4 $1.5 $1.5 $2.0 $2.7 $2.2 $1.9 Cash 5.1 7.0 5.6 8.9 4.5 4.7 8.7 28.2 29.6 36.2 25.1 Debt 7.9 7.1 6.4 5.7 5.0 4.3 3.6 - - - -
36November 2007
Investment Highlights
Record of growth
Positive industry fundamentals
Enormous market opportunity
Proven investment philosophy
Globally diversified portfolio
Strong financial condition
Experienced management team
37November 2007
Challenges and Risks Affecting the Company
We believe that the risks and uncertainties identified below and those in the company’s public filings available at www.sedar.comimpose the greatest threat to our business. However, there are other risks and uncertainties that exist that may be unknown to us or, in the present opinion of our management, do not currently pose a material risk of harm to us. The risk and uncertainties facing our business, including those described below, could materially adversely affect our business, results of operations, financial condition and liquidity, as well as our reputation and prospects.
•Our revenues and earnings are affected by changes in the capital markets, as well as general economic conditions. •Our business is subject to extensive governmental regulation. •We are exposed to systems and technology risks and data security risks.•We are highly dependent upon third-party service providers in our operations and generally exposed to operational risks. •We are subject to the risks associated with concentration in a single business. •We operate in a highly competitive environment and are subject to risks related to the loss of clients. •We are subject to concentration risks related to one investment philosophy/strategy and assets primarily with one investment manager. •We are subject to risks associated with realizing our significant tax loss assets.•We are subject to risks of litigation. Given the nature of our business, we may from time to time be subject to claims or complaints from clients and there can be no assurance that such claims would not be material.
We have been named as defendants in certain legal actions in the course of our business, including an action whereby a former Business Management client is seeking damages. This claim alleges certain deficiencies and breaches of duty relating to information allegedly prepared in connection with a marital dispute. We believe we have meritorious defenses to the plaintiff’s claims and intend to defend vigorously. We believe that it is more likely than not that we will prevail in the litigation. Litigation is by its nature subject to uncertainties, and there can be no assurance that we will be successful in obtaining a dismissal of such claims, or a satisfactory settlement, or be successful on the merits. Although the amount of damages sought is unspecified, if we are not successful in dismissing the claim, it could be subject to the expense and burden of an extended trial process and an adverse result in a trial, either of which could have a material adverse effect upon us.
November 2007
Loring Ward International Ltd.Company Update