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Multiband Corporation (MBND)

April 2013 / Confidential

MultiBand Corporation
Overview

Multiband Corporation (Multiband, MBND or the Company) provides contract installation services for Pay TV services and act as a master service operator for DIRECT TV customers at certain multi dwelling apartment units.
Company

operates in three segment: (i) field services; (ii) multidwelling unit; and (iii) Engineering, energy, and construction

Ticker: Nasdaq: MBND

Equity market capitalization of ~$40 million

Recent stock price: $2.12

(1)

Enterprise valuation of ~$72 million

(1) Based on stock price as of April 8, 2013.

Luzich Partners LLC / April 2013

Situation Overview
Activist Investor
Cannell Capital owns ~ 13% of the Companys shares

Importance of DirecTV
DirecTV is the most significant customer for the Company, in both its Field Services segment and its Multi Development Unit segment

On Dec 17, 2012, Cannell started its activist campaign by writing a letter with two proposals to MBNDs management: (1) hire an advisor to sell the Company; (2) cut costs and focus on generating cash to strengthen the balance sheet

In total, DirecTV generates ~87% of the Companys revenue

Company has been trying to diversify its customer base by working with cable providers and ViaSat Recent customer acquisition strategy changes from DirecTV negatively impacted Companys important FS business segment

Valuation

New Financing Increases Leverage

Valuation seems fully priced based on a 7.0x 2012 EBITDA and 6.4x EBITDAR multiple

Based off a current earnings figure that might be depressed; however, management believes DirecTV installation revenue will be flat next year as well

In March and April 2013 , the Company obtained new financing ($40 mm term loan and $15 mm revolver) from Fifth Third Bank

New funds will be used to repay existing debt and for acquisitions/expansions purposes Pro Forma leverage at 4.8x 2012 EBITDA

The acquisition firepower of a strategic competitor like Unitek Global is limited due to Uniteks high net debt balance

Source: SEC filings, Company filings.

Luzich Partners LLC / April 2013

Non-Investment Highlights
Recent debt financing increases the Companys enterprise value such that the Company is fully valued at 7.0x EBITDA or 6.4x 2 012 EBITDAR

While MBNDs multiple is based off a low EBITDA figure, its competitor Unitek is currently trading at 4.7x EBITDA/EBITDAR A portion of debt proceeds will be used for the acquisition of MDU Communication International (no more than $28 mm, as stated in the commitment letter with Fifth Third Bank)

DirecTVs conservative customer acquisition strategy will not generate growth for the Companys Field Services segment (Company expects 2013 fulfillment volumes to be flat/slightly higher than 2012)

Companys expansion into satellite and cable fulfillment diversifies revenue customer concentration, but based on financials, these businesses seem to be less profitable than DirecTV In the FS segment, 2012 EBIT margins of 2% vs. 2011 EBIT margins of 8.5%

While the involvement of activist investor Cannell Capital serves as a catalyst, the acquisition firepower of the Companys largest strategic competitor, Unitek Global, is limited with a net debt balance of $180 mm and a leverage ratio of 3.8x

A sale to a financial investor is possible

Companys MDU segment became profitable in 2012, achieving an operating margin of 3.2% on $28 mm of revenue

Acquisition of MDU Communication will double the revenue

Luzich Partners LLC / April 2013

MBND Historical Balance Sheet


($Millions)

2010 Cash AR Inventories Costs in excess of billings Prepaid Expenses Income Tax receivable DTA Total Current Assets PP&E Goodwill Intangibles Restricted Cash Insurance Collateral Other Assets DTA Total Assets ST Debt Accounts Payable Billings in excess of costs Accrued liabilities Deferred service obligations Total Current Liabilities Accrued Liabilities LT Debt & Capital Lease Total Liabilities Preferred Stock Common Stock Accumulated Deficit Total Equity $ 1 18 11 0 2 3 8 43 7 38 17 0 4 2 112 1 27 23 2 53 4 35 91

2011 $ 19 28 14 1 1 0 7 71 6 38 15 8 2 1 141 6 32 0 24 2 64 5 30 99

2012 $ 18 20 11 2 1 1 7 60 12 38 11 2 11 2 5 140 19 24 0 21 0 65 7 22 94 3 117 (73) 47

15 87 (82) 20 $

3 115 (75) 43 $

Source: Company filings.

Luzich Partners LLC / April 2013

MBND Historical Income Statement and Cash Flow Statement


($Millions)

2010 Revenue COGS SG&A D&A EBIT Impairement of Assets Interest Expense Other EBT Taxes Net Income EBITDA Operating Vehicle Lease EBITDAR EBITDAR Margins Capex / Acquisitions $ $ $ $ 266 (186) (57) (8) 14 (0) (4) 0 10 5 15 22 8 30 11% (1)

2011 $ 300 (215) (64) (7) 15 (0) (4) (0) 11 (4) $ $ $ 7 22 9 31 10% (5) $ $ $ $

2012 306 (225) (70) (7) 3 (1) (4) (0) (1) 4 3 10 16 26 9% (5)

Cash From Operations Capex Purchase of Customers Acquisition Other Cash from Investing Cash from Financing Change in Cash
Source: Company filings.

2010 $ 12 (1) (0)

2011 $ 21 (2) (1) (2) (7) 3 17

2012 10 (4) (1)

(1) (11) $ (1) $

(5) (5) $ (0)

Luzich Partners LLC / April 2013

Field Services Segment

The Companys Field Services (FS) business segment generates 87% of the Companys total revenue ($267 million in 2012)

DirecTVs customer acquisition strategy shift negatively affects the Company

DirecTV has indicated a shift in customer acquisition strategy, which negatively impacts MBND

DirecTV will not be acquiring stores of subscribers since its too expensive for DirecTV
2012 FS Revenue
ViaSat 3%

To reduce its reliance on DirecTV, the Company has focused on diversifying its revenue stream by working with ViaSat and cable providers
Cable 4%

DirecTV 93%

However, ViaSat and Cable fulfillment business are less profitable than the DirecTV installation business
2010 FS - Revenue FS - Operating Income Margin $ 243 21 8.5% 2011 $ 272 23 8.5% $ 2012 267 6 2.1%

Source: Company filings.

Luzich Partners LLC / April 2013

Multi-Dwelling Unit Segment

Companys Multi-Dwelling unit (MDU) segment revolves around being a master service operator for DIRECTV

MBND bills subscribers as the owner/operator and receives net cash payments for managing video subscribers Company utilizes its own support center and billing platform

Market demand drivers for MDU services come from property owners due to the simple one -stop nature and the more aesthetically pleasing set up, as compared to multiple individual satellites

From DIRECTVs perspective, utilizing a MDU service agreement with companies like MBND is a low-cost method to expand its customer breach (similar to franchising)

Pending acquisition of MDU Communications meant to expand Companys MDU business

2010 MDU - Revenue MDU - Operating Income Margin $ 22 (3) (11.8%)

2011 $ 21 (3) (13.5%) $

2012 28 1 3.2%

Source: Company filings and investor presentation.

Luzich Partners LLC / April 2013

Capital Structure
Debt

In March 2013, the Company announced a significant financing


Company obtained a $20 million term loan and a $10 mm revolver from Fifth Third Bank Proceeds were used to finance all pre-existing debt Terms include (i) upfront fee of 2% on facility; (ii) $50,000 commitment fee; (iii) free cash flow sweep of 50% for additional principal amortization

Revolver availability based on 80% of eligible AR plus 50% of inventory

In April 2013, Company and Fifth Third Bank agreed to an amended commitment of a $55 mm financing ($40 mm of term loans and $15 mm in a revolver facility, increased from the amounts above) to be structured and syndicated by Fifth Third Bank

Additional proceeds to be used for acquisition and expansion purposes


E st. P F Cap Structure Drawn Revolver 2013 Term Loan Total PF Debt Revolver Availability Total Availability Est. Cash Balance 2012 EBITDA E st. Leverage 1.0x 4.8x

Amount $ 10.0 40.0 $ 50.0 5.0 5.0 29.3 10.4

Maturity 4/31/2018 4/31/2018

Interest R ate L + 550 L + 550

4/31/2018

L + 550

$ $ $

Source: Estimated from Companys 8-K filings.

Luzich Partners LLC / April 2013

Capital Structure Preferred Stock


Preferred Stock
Class of Preferred Stock A C F G Converted Into # of Shares 1.0 0.4 1.0 1.3 Conversion Value @ Stock Price $ 26,916 92,432 318,000 26,500

# of Shares 12,696 109,000 150,000 10,000

Redemption Price $ 133,308 1,090,000 1,500,000 100,000 $ 2,823,308

Redemption Redemption Redemption Redemption

Based on current share price, the Companys convertible preferred shares will be redeemed rather than converted

Source: Website.

Luzich Partners LLC / April 2013

Valuation Summary
Market Valuation
Market Price Common Shares Outstanding M arket Cap of Com m on E quity Cash Debt & Capital Lease Obligations (1) Redeemable Preferred Stock EV Capitalized Operating Vehicle Lease @ 6.0x Adj . E V 2012 EBITDA 2012 EBITDAR EV / EBITDA Adj. EV / EBITDAR $ $ 2.1 21.8 46.2 (29.3) 52.5 2.8 72.2 94.3 166.5 10.4 26.1 7.0x 6.4x

$ $ $ $

Source: Company filings. (1) Debt and cash estimated as per recent news release regarding new debt facilities.

Luzich Partners LLC / April 2013

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Unitek Globals Acquisition Firepower is Limited

Unitek Global, which attempted to acquire MBND in June 2011 for $4.50 per share, currently has a limited balance sheet

Net debt of $182 mm at a 3.8x leverage ratio Uniteks financial covenant include a maximum leverage ratio of 4.75x and a fixed charge ratio of 1.2x Hence, Unitek is unlikely to acquire MBND in its current financial position

Unitek Market Summary Unitek Market Price Shares Outstanding Market cap Cash Debt EV EBITDA EV / EBITDA Debt / EBITDA

2.0 21.8 $ 43.6 (0.5) 182.9 $ 226.0 $ 48.0 4.7x 3.8x

Capital Structure Revolving Loan Term Loan Total Financial Debt Capital Lease Obligations Cash Net Debt 2012 LTM EBITDA

Amount 35.2 129.8 $ 165.0 18.0 $ 0.5 $ 182.4 $ 48.0

Maturity 2016 2018

Interest R ate L + 276 L + 900

Leverage 0.7x 3.4x 3.8x

Source: Company filings and investor presentation.

Luzich Partners LLC / April 2013

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Growth via Acquisition

Timeline 2008-2009

Target DirecTECH (DTHC)

Description

Company purchased DTHC for $50 million to increase its market share of installing video services in single family homes

9/1/2011

WPCS International

Company purchase WPCS International, a design, engineering and construction firm for $2 million In December 2012, the Company announced the acquisition of MDUC for $12.9 mm in convertible preferred shares (conversion price at $4.00, dividend coupon of 6.25%) In April 2013, the Company announced a financing commitment letter with Fifth Third bank, which limited the acquisition price to a cash consideration not to exceed $28 mm

2012 (closing date TBD)

MDU Communication International (MDUC)

Source: Company filings.

Luzich Partners LLC / April 2013

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