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Overview of Emtec Dinesh Desai: CEO Greg Chandler: CFO March 2, 2010 AGC’s West Coast Growth Conference

Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

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Page 1: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Overview of Emtec

Dinesh Desai: CEOGreg Chandler: CFO

March 2, 2010

AGC’s West Coast Growth Conference

Page 2: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Forward-Looking StatementsThis presentation contains forward-looking statements concerning the Company’s current expectations as to future Growth.

These statements are based upon a review of industry reports, current business conditions in areas where the Company does business, the availability of qualified professionals and product availability from vendors and other factors that involve risk and uncertainty.

As such, actual results may differ materially in response to a change in such factors.

Page 3: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Emtec Corporate Profile$230MM Systems

Integrator

Publically Traded – OTC: ETEC

Locations Coast to Coast U.S.,

Canada, & India

Growing and Profitable

Focus on Public Sector, Education &

selected Commercial sectors

600 Employees -450 Technical

Staff

Management Team: Growth

Oriented, Successful Track

Record

Page 4: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Experienced, Growth Oriented Management

Team

• 171% growth in services revenue, and 33% growth in EPS – in a tough economic climate

• $223M+ profitable and growing revenue platform

• Company has added significant management talent to enable it to run a much larger organization

Track Record of Smart Acquisitions & Integrations which have been accretive

to the bottom line

• Two $100 million acquisitions merged and successfully integrated

• Five smaller acquisitions integrated

• Actively looking for opportunities for consolidation

Track Record

Page 5: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Strong Vertical Approach

BUSINESS STRATEGY & PROCESS

MANAGED SERVICES

Solu

tions

Vertical Industry Segments With Unique Value-Propositions

Secu

rity

Serv

ices

Util

itySe

rvic

es

App

Serv

ices

Info

rmat

ion

& D

ata

Security Application

ITO

pera

tions

Operations

IT STRATEGY & PLANNINGN

etw

orks

Plat

form

s

Infrastructure

AD

VISO

RYPR

OJE

CTS

/ ST

AFF

ING

SUST

AIN

/ M

AN

AG

E

PartnerBIG 4

TIER 1 SI

BOUTIQUE

On-

Site

/Off-

Shor

eO

ff-Sh

ore

IT PROCESS OPTIMIZATION (VBM)

Page 6: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Significant Industry Consolidation has created a bifurcated model of competitors• IBM/PwC• HP/EDS• Oracle/Sun• DELL/Perot

Offshore, especially Indian players changing cost/price expectations

Technology Change Continues Unabated

Economy has impacted every market segment, with the exception of U.S. Federal, Education and Healthcare• “Cost take out” is the primary driver

for most CIOs – leading to infrastructure and process optimization requirements

Changing Landscape

Page 7: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Market Positioning

NichePerficient, Adea, Acuity

Collebra, DarwinBlueFin

Global SIIBM, HP,

ACN, CSC,CG

Size

Port

folio

Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application and infrastructure services provider

Access to large managed services multi-year clients with recurring revenuePresence in high growth market verticals

US Federal Government, Education and Healthcare

Page 8: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Major TrendsStudent Information SystemsSecurityVirtual/Remote Learning systemsElimination of Textbooks

Growth Drivers“No Child Left Behind”“One teacher, one subject, one classroom” will not be the normReducing the total number of faculty while improving the quality of education through technologyStudents use of technology accelerates more quickly than schools can keep up with it

Market: K-12 Education

Page 9: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Major TrendsPrivate CloudGovernment ERPITSM/ITILRole of CIO in agencies increasingly important

Growth DriversRetiring Baby Boomers – Outsourcing TrendMove toward “Government 2.0” – citizen-driven, employee-centric, transformational. Cyber Security ThreatsIntelligence

Market: Federal

Page 10: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Industries

Life SciencesCommercialFederal State & Local

Education Federal

Business Strategy & Process Consulting

IT Planning & Consulting Services

Application Services

Business Process Outsourcing

IT Infrastructure Services

On-shore, Near-shore, Off-shore, Application Services

Emtec Acquisition Targets

Solu

tions

Growth Through Synergistic Acquisitions

Growth Drivers – Highly Diversified Industry & Vendor Consolidation

Page 11: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

$20.5 $55.8 $56.4

$190.5

$167.2 $170.6

$-

$50.0

$100.0

$150.0

$200.0

$250.0

2008 2009 LTM (Nov 2009)

Revenue

Consulting Services Procurement Services

LTM data is unaudited

Scale with Shifting Revenue Mix

Page 12: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

$-

$2.0

$4.0

$6.0

$8.0

2008 2009 LTM (Nov 2009)

$4.7 $6.4

$7.3

Reported EBITDA*(FYE Aug 31)

$-

$0.03

$0.06

$0.09

$0.12

$0.15

2008 2009 LTM (Nov 2009)

$0.09 $0.12

$0.14

Fully Diluted EPS (FYE Aug 31)

*LTM Adjusted EBITDA per the Company’s earning releases was $8.9M

LTM data is unaudited

Leading to Greater Profitability

Page 13: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

LTM data is unaudited

Vertical Breakdown

Page 14: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Balance Sheet as of Nov 30, 2009 (Unaudited)

Tangible Assets of over $67M• Over $43M in receivables

Net debt of $11.4M

Debt/EBITDA 1.5x

Debt to adjusted EBITDA 1.3x

Cash flows

Nearly $9M in Adjusted EBITDA and Positive Cash flows from

operations

Low Capex (approximately $1M in 2009)

Balance Sheet & Cash Flow Highlights

Page 15: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Appendix

Page 16: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Clients

CommercialStrong Vertical Approach in Federal and State & Education SectorsDiverse Set of Long-Term Client RelationshipsNot leveraged, except for GwinnettOpportunity to Leverage Across a Broad Solution SetRight-Shore Approach to Service DeliveryAccelerating Financial Profile

Page 17: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Government Clients

Federal ClientsCivilian AgenciesDepartment of Justice, CDC, VADOD ClientsArmy, Air Force

State & Local ClientsState of NJCity of NY

Page 18: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Education Clients

EducationGwinnett County Schools (outside Atlanta)Duval County Schools (Jacksonville)Patterson NJ

Page 20: Overview of Emtec - Digital Transformation · Flexible, value based, full life-cycle Systems Integrator Appropriate mix of on-shore, off-shore delivery Flexible, full-lifecycle, application

Questions?

Dinesh Desai: CEOGreg Chandler: CFO

March 2, 2010