Corporate Overview
June 2009 – Confidential
Company Overview
Highlights
Supply automotive software to dealerships throughout North America.
Third largest supplier of Dealership Management Systems to GM
dealerships in Canada.
Selected as the new technology choice under GM’s Integrated Dealer
Management Systems (IDMS) initiative in North America.
Microsoft Strategic Partner for North American automotive (MS - Gold
Certified and ISV-Managed Partner).
Currently supported OEM integration: all GM franchises, Chrysler, Isuzu
MD, Hyundai Canada and Kia Canada.
Market Focus
Exclusively Automotive Retail, North America.
85 % of customers are GM Dealerships (accounts for 90% + revenue)
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Navigating a Difficult Environment
Car Sales and Dealership News
Car Sales Decline
2009 10 million SAAR
2008 13.2 million
2007 16.1 million
GM US Entered Bankruptcy - June 1st
Dealership Closures
GM US
6200 down to 3600
GM Canada
700 down to 400
Chrysler US
3600 down to 2800
Chrysler Canada
– 42%
– 42%
– 25%
Unknown
Chrysler Exits Bankruptcy in 42 days – June 10th
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Navigating a Difficult Environment
Dealership News – Impact to Quorum
Dealership Closures – 225 Quorum dealership rooftops
GM US
GM Canada
6200 down to 3600
700 down to 400
Industry
Quorum
– 42%
– 42%
- 16%
- 26%
Dealers will not have their Oct 2010 franchise agreement renewed
85% of Quorum’s customers are GM; however, 90% of our
dealerships are effected by GM closures
Estimate that at least 60% of our GM dealerships that are losing
their franchise should stay in business
Net effect to Quorum – likely to lose 10% of our customer base
over the next 18 months
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Navigating a Difficult Environment
GM Bankruptcy – Impact to Quorum
GM US in Chapter 11
GM Canada not in bankruptcy
75% of Quorum support revenue from Canada
Under Chapter 11 – typically don’t get paid for open AR
Quorum has two GM Revenue Streams – BARS and Integration
Quorum named Essential Supplier – June 4th
Quorum IDMS Contract Assigned to New GM – June 18th
Quorum should have no interruption in GM payments
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High Level Market Strategy
Q2 09
Q3 09
Q4 09
Q1 10
Aggressive Lower Pricing to Primary GM Market
Reduction in monthly support requirements and aggressive marketing to GM dealers – direct price leader competition
“Blitz” Hyundai Canada Market
Direct marketing to all Canadian Hyundai dealers with existing product (continue to pursue addt’l integration oppty)
Independent Dealer Market (“new breed”)
Specifically target former new car dealers – some small product changes
Small Add-On OEMs
Ability to handle secondary franchises
Adjacent (RV, marine, etc.)
Position product for non-Auto (TENTATIVE)
Chrysler US (Tentative)
Complete “usability” of existing integration, market to surviving Chrysler US dealers
Chrysler Canada (Tentative)
Add parts file and file select Canadian dealers – need certification
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Cost Structure
Atlantic Canada Opportunities Agency (ACOA)
$0.5 million unsecured, interest free loan agreement
Continue to grow St. John’s office (currently 55% of our staff)
Cost Structure
Recent layoffs
Continual improvement - Find 50 & Business Transformation
eResearch
12-month valuation - price range of $0.20 to $0.37
Quorum’s valuation is severely impacted by GM
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Forecast
Sales
2006
2007
2008
Q1
2009
Installs / Migrations
$3.3
$3.4
$2.4
$0.3
$1.0
Support
$2.8
$4.3
$5.5
$1.4
$5.5
Integration / Services
$1.3
$0.5
$0.6
$0.2
$0.9
Total Sales
$7.4
$8.2
$8.5
$1.9
$7.4
EBITDA ($)
-$3.7
- $1.1
- $0.0
$0.4
$1.2
EBITDA (%)
-50%
-18%
0%
20%
16%
($ Millions)
Notes:
- Integration / Services in 2006 includes $1.1 Million in one-time Palm Revenue
- Dramatic Improvement in EBITDA - Higher margin support revenue drives EBITDA
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