Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - March 2012

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Why Own Safeguard? …

Why Own Safeguard?
- Full Value Yet to be Realized
- Ownership Stakes in Exciting Partner Companies
- Top Performance of Proven Team
- Financial Strength, Flexibility and Liquidity
- Strong Alignment of Interests

Forward-Looking Statements
Statements contained in this presentation that are not historical facts are forward looking statements which involve certain risks and uncertainties including, but not limited to, risks associated with the uncertainty of managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, our ability to execute our strategy, the uncertainty of the future performance of our partner companies, acquisitions and dispositions of additional partner companies, the inability to manage growth, government regulation and legal liabilities and the effect of economic conditions in the business sectors in which our partner companies operate, negative media coverage and other uncertainties as described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.

Safeguard does not assume any obligation to update any forward looking statements or other information contained in this presentation.

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  • 1. March 2012 Investor Presentation
  • 2. Forward Looking Statements
    • Statements contained in this presentation that are not historical facts are forward looking statements which involve certain risks and uncertainties including, but not limited to, risks associated with the uncertainty of managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, our ability to execute our strategy, the uncertainty of the future performance of our partner companies, acquisitions and dispositions of additional partner companies, the inability to manage growth, government regulation and legal liabilities and the effect of economic conditions in the business sectors in which our partner companies operate, negative media coverage and other uncertainties as described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.
    • Safeguard does not assume any obligation to update any forward looking statements or other information contained in this presentation.
  • 3. The Safeguard Difference (NYSE: SFE) SIGNIFICANTLY UNDERVALUED
  • 4. Why Own Safeguard?
    • Full Value Yet to be Realized
    • Ownership Stakes in Exciting Partner Companies
    • Top Performance of Proven Team
    • Financial Strength, Flexibility and Liquidity
    • Strong Alignment of Interests
  • 5. Experienced Team Peter J. Boni President and CEO Jim Datin EVP and Managing Director Brian Sisko SVP and General Counsel John E. Shave III VP, Corporate Communications and Business Development Steve Zarrilli SVP and CFO Prime Response Online Software International
  • 6. The Company We Keep JA3 Partners Alliances & Syndication Partnerships Technology & Life Sciences Advisory Boards SFE Board of Directors
  • 7. Safeguard Today
  • 8. Safeguard Positioning
  • 9. Go To Market Strategy
    • Growth Financing
    • Typically Deploy Up to $25M
    • Generally Primary Shareholder
    • Realize Value
    • GROWTH DRIVERS
    • Maturity
    • Migration
    • Convergence
    • Compliance
    • Cost Containment
    • CRITERIA
    • Management
    • Market
    • Model
    • Momentum
    • Moat
  • 10. Attractive Sectors * Represents % of Capital Deployed in Current Partner Companies.
  • 11. Recent Success Stories * Includes Amounts Held in Escrow, if any, but not Earnout, where Applicable. ** Proceeds include $61M from Sale of CLRT Shares during Q3’09. *** Based on achievement of difficult earnout provisions. Return Potential Could Approach 8x*** Market Cap Increased 5x Acquired By Proceeds* Cash-on-Cash Return $36M 4x $146M 14x $36M 3x $208M** 3x
  • 12. Revenue Stages
  • 13. Case Study: SFE Stake 25%
    • Medical Technology Company
    • Developed and is Commercializing emPower!
    • emPower! Most Significant Change in Eyeglasses Since Bifocal in 1784
    • 100M Bifocals and Progressive Lenses Sold Per Year
    • Every 1% Penetration = $400M in Revenue
    • 1000+ Eye Care Professionals Signed On
    • SFE Deployed Capital in April 2011
  • 14. Case Study: SFE Stake 40%
    • Top 10 Provider of Medical Billing and Practice Management Services
    • U.S. Market Opportunity Exceeds $4B Annually
    • <20% Physician Practices Outsource Billing and Practice Management
    • Gaining Meaningful Scale via Organic Growth and Strategic Acquisitions
    • Completed Five Acquisitions since mid-2009
    • 2011 Revenue Increased 40% YoY to ~$40M
    • Inc.5000 Three Consecutive Years; Ranked #10 Fastest Growing Co. in NJ
    • Safeguard Deployed $15.3M since November 2006
    Market for AHS' Services Approx. $4B - $8B 1 1 Billing and Practice Management Service Market (Falcon Capital): $8.0B; Total RCM Market (Wallingford Capital/HBMA, 2007): $4.75 B; Top 10 Billing cos.: $1.0B
  • 15. Case Study: SFE Stake 22%
    • Provides Enterprise-Class Technology and Services to Advertisers/Agencies
    • ‘ Bloomberg’ Terminal: Media Buying Platform
    • Recognized Industry Leader
    • 2011 U.S. Online Advertising Forecast to Grow 20% to $31B
    • Strong Growth Continues
    • Expanding Domestic, International Operations
    • Strong Client Roster – All Agency Groups, Dozens of Fortune 500
    • SFE Deployed $16.9M since July 2009
  • 16. Safeguard Partner Companies
    • 17 Partner Companies Today
    • 27 Board Seats Across 17 Companies
    • 16 Companies Generating Revenue
    • 4 Companies EBITDA Positive
    • 1 Company Filed NDA
    • Deployed $181M in Current Partner Companies
    • Realized $632M Since January 2006 (2.4x CoC)
    • Strong Partner Company Satisfaction
    * Aggregate revenue guidance for 2012 and prior years, presented above, reflects revenue on a net basis. Revenue figures utilized for certain companies pertain to periods prior to Safeguard’s involvement with said companies and based solely on information provided to Safeguard by such companies. Safeguard reports the revenue of its equity method and cost method partner companies on a one-quarter lag basis. Aggregate Revenue*
  • 17. Financial Highlights
    • Net Cash, Cash Equivalents and Marketable Securities
      • $258M at 12/31/11 vs. $226M at 12/31/10
    • 2011 Primary Uses of Cash = $145M
    • 2012 Projected Uses of Cash = $100M to $150M
      • Corporate Expenses
      • Capital Deployment into New Partner Companies
      • Follow-on Funding for Current Partner Companies and Penn Mezzanine Participations
      • Platform Expansion
    * As of 12/31/11
  • 18. Strategy for Growth
    • Build Value in Current Holdings
    • Realize Some Valuable Exits
    • Replenish The Holdings with Winners
    • Expand the Platform
  • 19. Why Own Safeguard?
    • Full Value Yet to be Realized
    • Ownership Stakes in Exciting Partner Companies
    • Top Performance of Proven Team
    • Financial Strength, Flexibility and Liquidity
    • Strong Alignment of Interests
  • 20. The Safeguard Difference (NYSE: SFE) SIGNIFICANTLY UNDERVALUED
  • 21. Investor Presentation March 2012