Introduction To LTI


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Introduction To LTI

  1. 1. Introduction To LTI Leasing Technologies International, Inc. 221 Danbury Road Wilton, CT 06897 203-563-1100
  2. 2. Discussion Topics  LTI Overview – LTI At A Glance – Background – Markets – Marketing Efforts – Operations – Credit Process  Outlook 2
  3. 3. LTI At A Glance  Specialty finance company founded in 1983  LTI serves emerging growth companies and venture capital backed startups in the U.S.  We offer equipment leases and loans to customers as a growth and equity conservation tool  Since inception, LTI has originated over $300 million in transactions involving over 500 customers  Transactions typically range in size from $250,000 to $2.5 million. Terms typically range from 18 to 48 months (36 month average)  Headquartered in Wilton, CT. Regional offices in Boston and LA. Services are offered nationally.  15 employees  Privately owned 3
  4. 4. LTI Background: Brief History  Founded in 1983 by Jerry Sprole, George Parker and Arnie Hoegler  Originally focused on FMV leasing of technology equipment to Fortune companies until the early 1990s  In the early 1990s, LTI made the strategic decision to target emerging growth and venture capital-backed startups  LTI grew profitably to over $100 million in assets and $19 million in revenues by 2000 (achieved 15 consecutive years of profits and booked over $300 million in leases over this period).  A terminated purchase of LTI by a Fortune 500 energy company just prior to the 2001 downturn led to LTI’s restructuring/downsizing through 2004.  A successful legal settlement at beginning of fiscal 2006 allowed LTI to resume originations and growth.  LTI presently is pursuing a growth strategy consisting of originating transactions for its own account and managing structured lease funds sponsored by a major NYC investment advisory firm. 4
  5. 5. LTI Background: Management  Jerry Sprole, President: has 35 years in equipment financing, venture lending and banking. Formerly CFO at Intech Capital Corp. and VP at Bank of Boston. Past Board member of EAEL association.  George Parker, EVP & CFO: over 30 years in equipment financing, venture lending and banking. Formerly VP-Treasurer at DPF Computer Leasing, Inc. and Second VP at Continental Illinois Bank. Present Treasurer and Board member of NEFA assoc.  Arnie Hoegler, EVP & COO: over 30 years in equipment financing, venture lending and accounting. CPA and formerly Sr. Audit Manager at KPMG. Past President and Board member of EAEL.  Hugh Baum, Corporate Counsel: over 35 years in equipment financing, venture lending and legal work. Formerly Counsel for Randolph Computer Leasing and Partner in private practice. 5
  6. 6. LTI Background: Value Proposition  LTI’s financial services assist young growth companies in conserving equity capital, building enterprise value between equity rounds, and minimizing ownership dilution. 6
  7. 7. LTI Background: Market Positioning  LTI is positioned as a national provider of equipment financing to emerging growth companies and venture-backed startups in the U.S. LTI targets growth companies, primarily in technology markets, that have already received their A - round of venture capital financing, that have begun marketing their products or service, and that are typically ineligible to receive traditional bank financing.  LTI offers its customers flexibility and efficiency in the form of well- structured financing solutions, enabling them to conserve equity capital, to fund equipment purchases as needed, and to avoid ownership dilution and loss of management control. Flexible transaction sizes of $250,000 to $2.5 million, lease and loan terms that range from 18 - 48 months, and funding availability for up to one year, allow these companies to satisfy most of their equipment needs.  Unlike many of its competitors, LTI offers customers flexible equipment financing without the requirement of warrants or board participation. 7
  8. 8. LTI Background: Markets Served  Venture-backed growth companies  Emerging growth companies with positive operating trends  Structured FMV transactions for major companies  Vendor lease programs requiring FMV leases 8
  9. 9. Market Overview: Venture Leasing  VCs invested $28.3B during 2008 compared to $105B during the 2000 peak and $8B annually during the mid-1990s  Venture Leasing/Equipment Lending has historically totaled 5% – 10% of aggregate VC investments  Market Drivers: economic growth, innovation, financial liquidity, and available exit channels  Competition: a few banks, several specialty leasing/finance cos., and a few dedicated lease funds  Lessee prospects: 2,500 to 3,000 VC-backed companies per year that raise new equity rounds. 9
  10. 10. Marketing: Channels  Direct Sales professionals  Third-party originations  Referrals from banks, past & present customers, and other contacts  Vendors  In-house direct marketing 10
  11. 11. Operations: Key Functional Areas  Marketing – strategy, advertising, promotions, transaction originations, PR  Lease Administration – lease documentation & review, processing, reporting  Legal – corporate and transactional legal services  Credit – credit reviews, due diligence, monitoring, collections, work-outs, credit policies  Accounting – bookkeeping, financial reporting, taxes, financial controls, billing, payables, audits  Treasury – funding, cash management, banking relations, investor relations, compliance  Remarketing – equipment assessments, renewals, equipment remarketing 11
  12. 12. Credit Process: Key Credit Criteria  The caliber and amount of Venture Capital Sponsorship  An experienced and talented management team  Compelling business model and prospects  Adequate operating track-record relative to milestones  Sufficient cash and liquidity  Equipment: mission-critical and readily re-marketable  Adequate credit enhancements and security 12
  13. 13. Summary and Outlook For LTI  Although the economy has slowed significantly with a resulting softness in capital goods acquisitions, demand for equipment leasing within the emerging growth and venture-backed segments has not slowed as dramatically as many other leasing segments.  Many VC-backed companies receiving new equity rounds today have survived the triage process of their VCs. They represent the most compelling situations, many having met or exceeded significant milestones.  The credit squeeze has caused several of competitors to either abandon the market or to significantly reduce their activities, creating a unique opportunity to gain market share and to acquire transactions with excellent returns and structures.  LTI has already benefited from these market conditions and its disciplined marketing efforts. We anticipate being able to further exploit these market dynamics over the next year.  LTI has secured sufficient lease commitments to fill the first Fund ($20MM), and secured additional commitments to jumpstart the next fund. We plan to pursue a dual strategy of developing our internal portfolio utilizing bank financing while continuing to expand via our Fund partnerships. 13