leveraging your sales model with finance partnerships
TRANSCRIPT
Leveraging Your Sales Model with Finance Partnerships
Presented by
Mark Stevens
Municipal Services Group
Who Are We?
A boutique investment banking firm Specializing in Municipal Finance for 18 years
Over 3100 municipal customers
$172 MM in recent transportation financings
Offices in Denver, Charlotte, Los Angeles and Seattle
The Problem for Manufacturers
1) Accelerate the decision making process
2) Provide greater value to prospects
3) Control the transaction
Who Can Benefit from Tax Credits?
Manufacturers probably have too much debt Can’t use tax credit
Investors can benefit with pass through using
Certificates of Participation Lease divided into shares or Certificated Leases
Pass Through Tax Credit to Investor
Subject to final IRS rules
Accelerate Decision Making Process
Financial models that detail: Fuel Expense Model
Maintenance Expense Model
Equipment Pricing Model
AAA – Accelerated Acquisition Analysis
Buy Now, Not Later: Example
Buying 4 CNGs under traditional model subject to inflationary pressure leave little for capital expenditures
Leasing model – lease pymt $671K for 12 years fixed Leaves $580K 0- $760K to handle capital needs
Installment Purchase vs. PAYGO
$-$500,000
$1,000,000$1,500,000$2,000,000
2006 2007 2008 2009 2010
Cost Remainder LeaseBal
Fuel Expense Model
Number Number Average Miles MilesOf Old Of New Fuel Cost Annual Per Gallon Per Gallon Fuel
Year Units Units Per Gallon Milage Old Units New Units Costs2002 30 8 $1.04 50,000 3.33 4.7 $556,9792003 25 13 $1.04 50,000 3.33 4.7 $534,2202004 25 13 $1.04 50,000 3.33 4.7 $534,2202005 25 13 $1.04 50,000 3.33 4.7 $534,2202006 10 28 $1.04 50,000 3.33 4.7 $465,9432007 5 33 $1.04 50,000 3.33 4.7 $443,184
Traditional Plan Fuel Costs $3,068,767
2002 30 8 $1.04 50,000 3.33 4.7 $556,9792003 0 38 $1.04 50,000 3.33 4.7 $420,4262004 0 38 $1.04 50,000 3.33 4.7 $420,4262005 0 38 $1.04 50,000 3.33 4.7 $420,4262006 0 38 $1.04 50,000 3.33 4.7 $420,4262007 0 38 $1.04 50,000 3.33 4.7 $420,426
Accelerated Plan Fuel Costs $2,659,107
Fuel Savings From Accelerated Acquisition $409,661
FUEL CONSUMPTION COST COMPARISONSEstimated Fuel Consumption - Traditional Plan
Estimated Fuel Consumption - Accelerated Plan
Maintenance Expense Model
Year Number Average Old Units New Units Old Units
Of Old Annual Maintenance Maintenance Excess Per Mile
Units Milage Costs Per Mile - Costs Per Mile - Maintenance -
$0.84 $0.34 $0.50
2002 30 50000 $1,260,000 $510,000 $750,0002003 25 50000 $1,050,000 $425,000 $625,0002004 25 50000 $1,050,000 $425,000 $625,0002005 25 50000 $1,050,000 $425,000 $625,0002006 10 50000 $420,000 $170,000 $250,0002007 5 50000 $210,000 $85,000 $125,000
Totals $5,040,000 $2,040,000 $3,000,000
Estimated CARB Compliance Refurbishment -
Estimated CARB Compliance Refurbishment -
$20,000 Per Unit for 25 units: $20,000 $500,000Total Estimated Maintenance and CARB Refurb Costs $3,500,000
Equipment Pricing Model
Purchase CPI Price Number TotalYear Base Price Per of Unit
Price Increase Unit Units Cost2002 $330,000 16 $5,280,0002003 $330,000 0.0% $330,000 5 $1,650,0002004 $330,000 3.0% $339,900 0 $02005 $339,900 3.0% $350,097 0 $02006 $350,097 3.0% $360,600 15 $5,408,9992007 $360,600 3.0% $371,418 5 $1,857,0902008 $371,418 3.0% $382,560 5 $1,912,802
$15,180,000 vs. 46 $16,108,890
Deferred Vehicle Purchase
Traditional acquisition cost vs. Accelerated = $929,000 in savings
Acquisition Model Example: Monterrey Salinas Transit
What Should You Expect from a Financial Partner
Asset acquisition management
Underwriting management
Regulatory agency coordination
Multi-year procurement plans – with indexed pricing
Service (throughout the term)
Key Points of a Public-Private Partnership
Capital investment assessment
Analyze funding options
Design acquisition model Asset cost factors
Asset revenue generation factors
Asset efficiency savings factors
Asset useful life factors
Asset debt service factors
Sample List of Properties
Underwriting Management
Internal Underwriting includes: Developing financing structure and documentation
Working with outside rating agenices
Handling all bond insurance requirements
Value in Vendor – Finance Partnerships
Private Label Programs
Building turn-key finance program for manufacturer
Platform including: Finance
Marketing
Technology
Private Label Platform
Branded Finance program
Joint customer list sharing – 3000 municipalities under our Master Lease
Co-Op Marketing Programs for direct marketing both online and offline
Technology initiatives – building online tools for marketing automation, online financial modeling
Real World Examples
List Sharing: Leveraging Master Lease Midwest Manufacturer
Co-Op marketing program to prospects
$12 million in volume in 1st 4 months
Technology + Finance: Online Engineering firm: 100+ years in business
private intranet launch to 40 locations
$63 Million in quoted activity within 1st 7 weeks
Direct Marketing + Finance
For More Info and an Online Demo
Mark StevensNeville McGilchristJudy Dennis
[email protected](800) 530-3100