EX-99 2 ex99p1.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1
 
 

 
 
 
 
Searchable text section of graphics shown below
 
 

 

To Every Customer Every Day

[picture]
 
Angelica Corporation
January, 2007






This presentation contains forward-looking statements, which reflect Angelica Corporation’s current views with respect to future events and financial performance and are made pursuant to the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause our actual results to be materially different from those expressed or implied by these statements. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in Angelica Corporation’s filings with the Securities and Exchange Commission.


[Angelica logo]






Vision
   
Delightful Service through Innovation
   
Mission
   
Every healthcare provider desires our superior services based on our high quality standards, passion and creativity. This will deliver industry-leading growth and exceptional stakeholder value.
   
Strategies
   
Delight the Customer
   
People, Family, Talent, Teams
   
Strengthen the Base
   
Business Expansion
   
Values
   
Excellence  Establish high standards and routinely surpass them
   
Respect Care and concern for customers and employees
   
Ethics Integrity and trust in all we do
   
Teamwork Work together, celebrate and reward successes
   
Communications Open, Honest, Always

[Angelica logo]





   
• Exchange/Symbol (IPO in 1958)
NYSE: AGL
• Share Price as of 1/5/07
$27.20
• Market Capitalization
$256M
• Shares Outstanding
9.4M
• Market Cap/Revenues (ttm)
0.60
• Dividend/Yield
$0.44/1.6%

[Angelica logo]





Founded in 1878 and grew to three divisions in 1960’s:
Manufacturing, Textile Services and Retail
   
Sold Manufacturing division in 2002
   
Beginning in 2004 through 2006:
   
 
Sold Retail division (2004)
     
  Focused textile services on healthcare market (2005)
     
   
•  Restructured organization from an operations centric model to a customer market centric model
     
  Resolved 18 month union corporate campaign with 10 year labor peace agreement (2005)
     
  Implemented Delight the Customer strategy (2006)
 
 

[Angelica logo]





 
Angelica Today

•   Delightful service to every customer every day
 
•   29 service centers in nine markets located in U.S.

[map]

[Angelica logo]




§
Angelica network reaches approximately 60% of the U.S. healthcare market
 U.S. Healthcare Linen Market
§
Current market share in these geographic markets
 Estimated at $5.8 Billion
 
§ Hospitals -25%
 
 
§ Clinics -3%
 [pie chart]
 
§ Long-Term Care -6%
Long-Term Care $1.0B
§
Aging population means demand for healthcare services and hence, healthcare linen usage will grow
Hospitals $2.2B
Clinics $2.6B
§
Continued outsourcing growth potential
 

 
[Angelica logo]




 Acute Care Markets in which AGL Participates
Untapped Acute Care
 
Markets in which AGL does not Participate
 
 
31% still done by
hospitals themselves
 
   
 [pie chart]
 [pie chart]
   
Coops 9%
Coops 7%
On-Premise Laundries 22%
On-Premise Laundries 34%
Angelica 25%
Competitors 59%
Competitors 44%
 
 
41% still done by
hospitals themselves

[Angelica logo]





With less than 10% share of the total healthcare market, Angelica leads a fragmented $5.8 billion market
   
Only two national hospital competitors (Crothall Services, a Compass division, and Sodexho Laundry Services)
   
Approximately 10 mid-size regional hospital providers
   
In clinics, small and regional players dominate, but some national competition (Aramark and Alsco)
   
In long-term care, Health Care Services Group is an indirect national competitor as most do own laundry

[Angelica logo]



Key Environmental Issues
 
Industry standard practices revolve around internal operations, leading to average customer service (poor fill rates and on-time delivery)
   
Hospital providers, long term care and clinic providers are often distinct, even though affiliations across channels are frequent
   
Standard industry products have been cost driven versus patient satisfaction driven
   
Operations practices are experienced based versus state of the art manufacturing techniques
 
[Angelica logo]



How Does Angelica Win

1. Delight the customer
     
 
100% fill and on-time deliveries
     
 
Higher quality products for patient satisfaction
     
 
Innovative new products to help customers
     
2. Leverage our existing Delighted customer base to
     
 
Sell all products and services to all customers
     
 
Service satellite clinics and LTC facilities of acute customers
     
 
Realize fair pricing for outstanding service
     
3. Implement operations best practices in all service centers and delivery areas and improve infrastructure

[Angelica logo]



Expected Outcomes

Higher customer satisfaction scores
   
Higher renewal rates on expiring contracts with fair pricing
   
Higher sales to existing customer base of current and new products
   
Greater sales to customer related clinics and long term care facilities
   
Price increases equal to inflation
   
Offsetting inflationary pressures on operating costs via improved productivity in operations and delivery

[Angelica logo]



Net Result

Organic growth rate increasing to 7% to 10%
   
Gross margin growing to 20% of revenues
 
 
 

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HISTORICAL RESULTS*
 
 
               
 
FY02
FY03
FY04
FY05
YTD   
FY06**
TARGET
FY08   
 
COMMENTS
               
               
Revenues
100%
100%
100%
100%
100%
100%
Assumes 3.5% annual price gains
               
All Merchandise Costs
19.9%
19.4%
19.3%
17.7%
17.0%
17.3%
Higher quality product offsets purchasing
efficiency
               
Utilities
6.6%
7.3%
8.4%
9.8%
9.6%
8.3%
Natural gas levels at pre-Katrina historic highs as
percentage of revenue
               
A/O Production Expense
41.4%
41.0%
43.0%
45.5%
45.0%
42.6%
Gains from FY06 Best Practices Project offset
wage inflation
               
Delivery Expense
12.7%
13.3%
13.4%
14.1%
13.7%
11.9%
Impact of GPS and Distribution Software
               
Gross Margin
19.5%
19.0%
15.8%
12.9%
14.7%
20.0%
 
               
SG&A
14.1%
13.9%
12.2%
12.0%
12.9%
11.0%
Projected needs at volume levels

* Discontinued operations removed from historical results
** First 9 months

[Angelica logo]


 
 
(See 10-K for complete list of risks)
 
Risks
 
Opportunities
         
Cant realize inflationary price increases despite delightful service
 
Delightful service permits sale of higher priced, higher margin products
         
Natural gas remains around 5% of revenues vs. historic high of 4%
 
Higher quality products increase useful life of linen
         
Industry-wide wage pressures arent adequately offset via productivity gains
 
Potential for additional savings via more efficient
sourcing
         
Escalating fuel and driver wages lessen savings from GPS and distribution software
 
Greater productivity gains allow A/O production expense to return to FY03 levels
         
     
Efficiency and scale help drive SG&A below 11% of revenue
 
[Angelica logo]
 


 
 
 
FY05
1st 9 Mos.
FY06
# Markets with 20+ % Gross Margin
1
1
     
# Markets with 17.5% to 19.9% Gross Margin
1
1
     
# Markets with 15.0% to 17.4% Gross Margin
0
2
     
# Markets with 12.5% to 14.9% Gross Margin
2
3
     
# Markets with 10.0% to 12.4% Gross Margin
4
1
     
# Markets with <10% Gross Margin
1
1

[Angelica logo]



 
     
PER POUND COSTS
FY05
Base*
1st 9 Mos.
FY06
Total Production Cost
100
99.5
Total Production Cost - Linen Cost
100
100.9
Total Production Cost - Linen - Utilities
100
101.0
Total Production Cost - Linen - Utilities - Delivery
100
101.8
     
*Twelve Months Ending 1/28/06    
 

[Angelica logo]




Since November 2003, we have purchased over $130 million in net healthcare revenue, while selling about $24 million of non-healthcare business
   
Strategic focus is filling in market presence in Eastern and Southern United States with complementary, quality service providers
   
Acquisitions range from small tuck-in volume to multiple free-standing facilities
   
Interested in accretive acquisitions with 15% internal rate of return and 18% return on net assets.

[Angelica logo]


 

Steve O’Hara, Chairman, President & CEO
Became President & CEO in September 2003 after 3 years as outside director; added Chairman role in February 2006; 26 years business experience
Jack Olbrych, CAO
Joined Angelica in December 2006, previously CEO of Carrus Publishing and held
various senior management positions in the aviation industry
Russell Watson, SVP
5 years with Angelica, after 12 years with National Service Industries
Richard Oliva, SVP
3 years with Angelica, following 13 years with Ashland Chemicals
Jim Shaffer, CFO
CPA with 30 years finance experience, including 7 years with Angelica
Steve Frey, General Counsel
30 years experience, including corporate, regulatory and acquisitions. Over 7 years with Angelica.
Mel Davis, Vice President Operations
Joined Angelica in November 2005. 18 years experience in supply chain management and operations.

[Angelica logo]



 
 
Oct 29, 2006
First 9 Months Ended
Oct 30, 2005
Percent change
       
Continuing Operations:
     
       
Revenues
$ 320,060
$ 313,281
2.2%
       
Gross profit
47,167
42,946
9.8%
Gross margin
14.7%
13.7%
 
       
Selling, general and administrative expenses
(41,237)
(36,105)
14.2%
       
Amortization and other operating income, net
(309)
(2,112)
-85.4%
       
Income from operations
5,621
4,729
18.9%
       
Interest expense
(7,055)
(4,951)
42.5%
       
Non-operating income, net
567
1,179
-51.9%
       
(Loss) income from continuing operations pretax
(867)
957
nm
       
Income tax benefit
1,228
270
354.8%
       
Income from continuing operations
361
1,227
-70.6%
       
       
Diluted earnings (loss) per share:
     
Income from continuing operations
$ 0.04
$ 0.13
-69.2%
       
 
$ in thousands, except per share amounts      

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Historical Gross Margin
 
 
[bar graph]

1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
$15.5
$13.0
$12.8
$10.6
$13.8
$14.4
$16.1
 Hurricane Katrina - 8/05
     
 
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Condensed and unaudited as of October 29, 2006 ($000,000)

ASSETS
   
LIABILITIES AND EQUITY
 
         
Cash
$5.4
 
Current Maturities of Debt
$ 0.2
         
Receivables - Net
57.6
 
Accounts Payable
33.6
         
Linens
49.2
 
Accrued Compensation
8.5
         
Prepaid & other current assets
3.0
 
Other Accrued Liabilities
40.7
         
Total Current Assets
115.2
 
Total Current Liabilities
83.0
         
Net PP& E
97.8
 
 
 
         
Goodwill
49.3
 
Long-Term Debt, Less Current Maturities
82.6
         
Other Acquired Assets
38.9
 
Other Long-Term Obligations
15.2
         
Other Long-Term Assets
24.9
 
Shareholders’ Equity
145.3
         
Total Assets
$326.1
 
Total Liabilities and Equity
$326.1

[Angelica logo]




§
FY06
     
 
§
Revenues of approximately $425 million
     
 
§
Net income slightly above FY05
     
§ FY07
     
 
§
Net revenues up about 5% as organic growth gains are offset by walking away from unprofitable contracts
     
 
§
Sequential gross margin growth resumes in first quarter
     
 
§
Operating income and pre-tax income up at least 50% from FY06
     
§
FY08
     
 
§
Targeting 7-10% organic revenue growth
     
 
§
Gross margin target of 20% of revenues, assuming natural gas returns to pre-Katrina past 10 year high as percentage of revenue
     
  § SG&A at or below 11% of revenues

[Angelica logo]




§
Market leader in healthcare textile services committed to great service every day for every customer
   
§
Extensive national reach, with regional focus
   
§
Implementing operational best practices systemwide now to provide scalable base
   
§
Strong, experienced management team focused on profitable growth
   
§
Dividend, currently at $0.11 per share quarterly, provides 1.6% return

[Angelica logo]





By pursuing its stated initiatives, Angelica will
be the leading provider of linen management
services to the U.S. healthcare market with
healthcare providers desiring our services due
to our quality standards, passion and
creativity, allowing us to reach our goal of
delivering industry-leading growth and
exceptional stakeholder value.

[Angelica logo]



To Every Customer Every Day
 
[picture]
 
Angelica Corporation
January, 2007