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Questar Presentation Spring 2007 Final (2)


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Investor Presentation - Making Money Investing in Educational Assessment Field - Questar Assessment

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Questar Presentation Spring 2007 Final (2)

  1. 1. Questar Assessment, Inc. (OTCBB:QUSA) “ Creating Quality Educational Solutions” Spring 2007
  2. 2. <ul><li>Please note: Statements contained in this presentation that are not historical facts are “forward-looking” statements as contemplated by the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are subject to risks and uncertainties, which are enumerated in the Company’s reports filed with The Securities and Exchange Commission. These risks and uncertainties could cause actual results to differ materially from those projected or implied in the forward-looking statements . </li></ul>
  3. 3. Agenda <ul><li>Overview of the Education Assessment Market </li></ul><ul><li>Corporate Branding / Alignment Initiative </li></ul><ul><li>Key Financial Metrics </li></ul><ul><li>Discussion </li></ul>
  4. 4. Education Assessment Market <ul><li>Overall education assessment market currently has 14% annual compound growth rate </li></ul><ul><li>Note - rapid growth of testing allows educators to address weaknesses (i.e. formative instruction assessment) – growing 19% per annum. </li></ul><ul><li>Summative market (high stakes) growing 8% per annum. </li></ul><ul><li>Target market estimated $2+ Billion </li></ul><ul><li>Mandated programs: </li></ul><ul><ul><li>English Language Arts/Math 3-8 plus high school </li></ul></ul><ul><ul><li>Science – 3 grades </li></ul></ul><ul><ul><li>English as a second language </li></ul></ul><ul><ul><li>Alternate assessments </li></ul></ul>
  5. 5. K-12 Testing/Assessment Source: McGraw Hill QUSA market projected to grow 14% annual blended rate (8% summative and 19% formative)
  6. 6. Assessment Industry Drivers <ul><li>Federal emphasis – No Child Left Behind Act (NCLB) </li></ul><ul><li>States financially rewarded with funding by complying with NCLB </li></ul><ul><li>Programs being added to federally supported initiative </li></ul><ul><li>Technology / innovation creating new delivery methods for assessment activities </li></ul><ul><li>Continuous evolution from proprietary products to state-level custom project work creates growth opportunities </li></ul>
  7. 7. Questar Assessment Branding & Alignment Initiative
  8. 8. TASA Acquires Beck Evaluation And Testing (BETA) TASA Acquires Achievement Data, Inc. (ADI) TASA Acquires Assessment Evaluation Concepts (AEC) TASA Acquires Questar Educational Systems (Questar) 6/2005 6/2006 3/2007 1/2005 Questar Assessment, Inc. Convergence & Emergence Timeline 1998
  9. 9. <ul><li>Test design and development </li></ul><ul><li>Psychometric analysis </li></ul><ul><li>Standard setting </li></ul><ul><li>Distribution, scoring for niche programs </li></ul><ul><li>Leadership in research, psychometric, standard setting, test design </li></ul><ul><li>Large staff: senior development, analytical </li></ul><ul><li>professionals </li></ul><ul><li>Creatively meeting demand for customized </li></ul><ul><li>assessment products: </li></ul><ul><li>On line / web based capabilities </li></ul>Strengths Prior TASA Division - Capabilities <ul><li>Distribution and scanning/scoring for large scale state programs </li></ul><ul><li>High volume hand / performance scoring </li></ul><ul><li>Ability to print millions of tests </li></ul><ul><li>High-speed scanning, scoring </li></ul><ul><li>High-volume distribution </li></ul><ul><li>Hand scoring </li></ul>Strengths Prior Questar Division - Capabilities
  10. 10. The New Questar Assessment, Inc. <ul><li>Dynamic and resourceful educational assessment organization </li></ul><ul><li>Client relationships in over 30 states from current and/or former projects </li></ul><ul><li>Experience as prime and subcontractor in multiple-participant projects </li></ul><ul><li>Extremely flexible, innovative and responsive to specific, constantly evolving client needs </li></ul><ul><li>Partner with clients to promote and enhance student learning through </li></ul><ul><li>informing, supporting and guiding instructional decisions </li></ul><ul><li>Provides full range of delivery options for small district level programs as well as large scale assessment solutions for single-source organizations </li></ul><ul><li>Advanced web-based technologies </li></ul>
  11. 11. Questar Assessment Service RFP Development Content Creation Standards Alignment Psychometric Evaluation Test Publishing Test Distribution Test Delivery Test Scoring Score Analysis And Reporting Program Evaluation End-to-End Assessment Products and Services
  12. 12. <ul><li>Key Financial Metrics: </li></ul><ul><li>Revenue </li></ul><ul><li>EBITDA </li></ul><ul><li>Margin Opportunities </li></ul>
  13. 13. Actual /Pro forma Net Revenues For years ended October 31
  14. 14. Q1 Actual / Pro forma Net Revenues
  15. 15. Revenue Drivers 2007 <ul><li>Large pipeline of requests for proposals </li></ul><ul><li>Increased average contract bid size </li></ul><ul><li>Expand business with current customers </li></ul><ul><ul><li>Full range capabilities creates new options </li></ul></ul><ul><li>Business development initiative led by senior executives with significant industry experience and client relationships </li></ul><ul><li>New formative testing products </li></ul>
  16. 16. Gross and Net Margin Opportunities <ul><li>Higher dollar value projects more effectively leverage overhead expenses </li></ul><ul><li>Eliminated operating unit redundancy during recent corporate realignment </li></ul><ul><li>Versatile facilities for different-sized scoring projects </li></ul><ul><li>Reduce costs with innovative web-based products </li></ul><ul><li>Subsequent fiscal years will be less impacted by non-cash amortization charges </li></ul>
  17. 17. Determining Gross Margins in Contract Proposals <ul><li>Projects that emphasize Questar’s value-add (command higher margins) </li></ul><ul><li>Project’s impact on idle capacity </li></ul><ul><li>Incumbent contract holder </li></ul><ul><ul><li>Opportunity to take market </li></ul></ul><ul><li>Leverage for future contracts from same source, opens new doors </li></ul>
  18. 18. <ul><li>Accelerating revenue </li></ul><ul><li>+ margin expansion </li></ul><ul><li>= Free Cash Flow </li></ul><ul><li>“ EBITDA” Growth </li></ul>
  19. 19. Q1 2007/2006 Pro Forma EBITDA
  20. 20. EBITDA Performance <ul><li>Full year 2006 pro forma EBITDA $6.5 million vs. 2005 pro forma EBITDA $6.3 million </li></ul><ul><li>2006 EBITDA increased despite $1.78 million in pre-tax charges to operating income </li></ul><ul><li>Future SG&A expected to decline as % of revenue </li></ul><ul><li>Revenue and net cash generated (EBITDA) best measures of financial success </li></ul>
  21. 21. Investment Highlights <ul><li>Size, scope to compete on large contracts as either prime or subcontractor </li></ul><ul><li>Overall gross and net margin efficiencies yet to be fully realized </li></ul><ul><li>Recurring revenues from long-term contracts </li></ul><ul><li>Focus on free cash flow </li></ul><ul><li>Strong balance sheet </li></ul><ul><li>Only “pure play” public entity in educational assessment market </li></ul>
  22. 22. “ Our mission is to provide the education market with innovative and responsive assessment products and services.  Through exceptional and personalized customer support, we partner with our clients to promote and enhance student learning.” Questar Assessment, Inc. OTCBB: QUSA Questar Assessment Goal