Working Capital Management Supply Chain Financing and Dynamic

Working Capital Management Supply Chain Financing and Dynamic Discounting

Foundation Concepts

Procure-to-Pay Process Invoice Matching Purchase Order Created (Procurement) Good or Services Received Invoice Received Payment Terms (i. e. 2/10 Net 30) Invoice Paid Purchase Order Sent to Vendor © 2015 Kyriba Corporation. All rights reserved. Invoice Approved PROPRIETARY & CONFIDENTIAL. 3

The Cash Flow Statement q Free Cash Flow Ø Operating cash flow less capital expenditures (investments in the business) Ø Cash that can be returned to investors © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 4

Free Cash Flow Drivers • • Free Cash Flow Debt reduction Acquisitions Share re-purchases Dividends Free Cash Flow - Net Income Revenue - COGS - Ø Seen as most important driver of shareholder value Ø 81% of the F 500 focus on working capital mgmt** Cap. Ex & Other SG&A Other AR + Working Capital Inventory - AP * Depreciation addition not included since it’s not influenceable ** PWC survey © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 5

Working Capital Ratios – Cash Conversion Cycle DSO = 50 Days DIO = 70 Days Inventory Held Until Product Sold DPO = 45 Days Payment Terms With Suppliers PO To Supplier Day 0 Receive Material & Invoice Payment Terms With Customers Cash Conversion Cycle = 75 Days Gap Between Cash To Paid Supplier & Cash Received From Customer Day 45 Pay Suppliers Day 70 Deliver Product Day 120 Paid By Client Day 20 Approve Invoice © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 6

How Supply Chain Finance Creates Value

Guiding Principles of Reverse Factoring § Companies want to increase Free Cash Flow § Increasing AP is best option for some companies to increase FCF – Companies have many levers they can pull to increase FCF – However, some (e. g. increasing revenue) may not be an option in the short term § Negative effects of increasing AP (supplier terms) offset by Reverse Factoring – Increasing AP negatively impacts supplier cash flow & costs – This is where Reverse Factoring can help – Reverse Factoring completely offsets the cash flow impact and offsets some, or all, of the cost impact © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 8

Guiding Principles of Dynamic Discounting § Companies want to improve Gross Margin § Buyer’s earn low interest rates on shortterm cash – Interest rates are still low by historical standards § Some Suppliers will pay Buyer more for FCF than Buyer’s current returns © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 9

How Supply Chain Finance Creates Value • Debt reduction • Acquisitions • Share repurchases • Dividends $1 M impact per $1 Billion of spend Revenue Free Cash Flow - Net Income - COGS - Cap. Ex & Other SG&A Other AR + Inventory Dynamic Discounting Reduces COGS, increases gross margin and net income * Depreciation addition not included since it’s not influenceable © 2015 Kyriba Corporation. All rights reserved. $50 M impact per $1 Billion of spend Working Capital - AP Dynamic Discounting has a negative impact on AP, working capital and cash flow Reverse Factoring RF and DD Reduce AR for suppliers increases free cash flow PROPRIETARY & CONFIDENTIAL. helps extend supplier payment terms which positively impacts AP, working capital and cash flow 10

Supply Chain Finance Prospect Prioritization

The Ideal Reverse Factoring Scenario - Business Characteristics Business Characteristic Companies With Poor Options To Grow FCF High % Spend With Suppliers High Cash Flow Needs Leverage Over Suppliers Value SCF Highly © 2015 Kyriba Corporation. All rights reserved. How Do We Identify Them? Metric • Low revenue growth • Low FCF / revenue • High impact 15 day term ex vs FCF < 5% < 10% > 25% • Low gross margin < 50% • High Cap Ex / Sales, WC/Sales • Shareholder returns • Turnarounds, M&A • Upstream SCF > 10% • Industry concentration • High % spend with SIG suppliers PROPRIETARY & CONFIDENTIAL. 12

Business Characteristics Example - Welbilt Preliminary SCF Measurements 2017 From Financials Net Sales Cost of Sales SG&A Cash from Ops Capital Expenses Ending AP Ending Cash Calculated Free Cash Flow Average AP DPO 2016 2015 2017 Revenue Growth Free Cash as a % of Revenue $ 1, 445. 40 $ 908. 50 $ 278. 20 $ 137. 80 $ 20. 70 $ 103. 60 $ 128. 40 $ 1, 456. 60 $ 923. 80 $ 290. 10 $ 125. 80 $ 16. 00 $ 108. 40 $ 53. 80 $ 1, 570. 40 $ 1, 068. 40 $ 291. 60 $ 143. 00 $ 13. 20 $ 121. 70 $ 117. 10 $ 109. 80 $ 129. 80 $ 106. 00 $ 115. 05 42. 59 45. 46 © 2015 Kyriba Corporation. All rights reserved. Gross Margin Impact of 15 -day DPO Increase 2016 -1% -7% 8% 37% 32% $37 M Benchmark Verification Benchmark Revenue Growth <5% Free Cash as a % of Revenue <10% Gross Margin <50% Impact of 15 -day DPO Increase >25% PROPRIETARY & CONFIDENTIAL. 2015 13

Limited Levers – Wel. Bilt Example • Debt reduction • Acquisitions • Shareholder returns Significant headwinds for these levers Revenue Nat’l Restaurant Association current situation index is weak © 2015 Kyriba Corporation. All rights reserved. Free Cash Flow - Net Income - COGS - Already improved 450 bps 2016 -2017. including 940 bps from cost reductions SG&A Other Cap. Ex & Other Margin goals require Cap. Ex • Interest expense rising • 19% effective tax rate (2014 -2016) will rise to 29% - 32% per 2017 Q 4 earnings call PROPRIETARY & CONFIDENTIAL. AR - Working Capital ++ Inventory - AP Low payment terms relative to peers Reverse Factoring helps extend payment terms 14

Reverse Factoring Solution

Reverse Factory Workflow Buyer Supplier 1 2 Supplier views payables online, chooses to sell some or all invoices Buyer uploads approved payables data to Kyriba’s Platform. 4 At invoice maturity date, the Buyer pays either: Funder if supplier chose to receive early payment or Supplier if supplier did not choose early payment 3 Funder receives and processes early payment requests , provides funding to supplier Funder © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 16

Reverse Factoring Solution Elements Whole Product • All products/services required by client to meet objective • Each “feature” can be provided by us, partners or client • Term Ex Success • Free Cash Flow 1 Payables Portal © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 3 4 2 5 Payments 17

Reverse Factoring Solution Elements 4 3 Funder(s) • Term Ex Success • Free Cash Flow 2 1 Payables Portal © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 5 Payments 18

Reverse Factoring Solution Elements 4 3 Funder(s) • Term Ex Success Legal • Free Cash Flow 2 1 Payables Portal © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 5 Payments 19

Reverse Factoring Solution Elements 4 3 Funder(s) • Term Ex Success Legal • Free Cash Flow 2 1 Payables Portal © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 5 Payments Supplier Onboarding 20

Reverse Factoring Solution Elements 4 3 Funder(s) • Term Ex Success Legal • Free Cash Flow Program Design Working Capital Analysis Procurement Training Program Management 2 1 Procurement Services 5 Payables Portal Payments Supplier Onboarding • Solution design • Supplier prioritization • Payment terms benchmarking • Supplier messaging • Buyer/Supplier impact • Program Mgmt – monitor results through dashboards, KPIs • Stakeholder alignment © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 21

Reverse Factoring Business Value Buyer Supplier § Extend DPO to increase free cash flow • Reduce DSO to increase Free Cash Flow § Extend DPO to increase free cash flow • Reduce interest expense § Extend DPO to increase free cash flow • Predictable cash flow § Enhance productivity with fewer AP inquiries • Address offsets / credit memo issues much sooner which improves Free Cash Flow § Reward Banks • Automated collections § Secure business critical supplier relationships • Full remittance information at no cost © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 22

Dynamic Discounting Solution

Dynamic Discounting Workflow Buyer Supplier 1 2 Supplier views payables online, chooses to sell some or all invoices Buyer uploads approved payables data to Kyriba’s SCF Platform. 4 At invoice maturity date, the Buyer pays the Supplier if supplier did not choose early payment 3 Buyer © 2015 Kyriba Corporation. All rights reserved. Buyer receives and processes early payment requests , provides funding to supplier PROPRIETARY & CONFIDENTIAL. 24

Dynamic Discounting Solution Elements 4 3 Funder(s) • Term Ex Success Legal • Free Cash Flow Program Design Procurement Training 2 1 Working Capital Analysis Procurement Services • Solution design • Payment terms benchmarking & optimized terms • Buyer/Supplier impact • Stakeholder alignment through analytics • Supplier prioritization • Supplier messaging © 2015 Kyriba Corporation. All rights reserved. 5 Payables Portal Payments Supplier Onboarding • Much easier than Reverse Factoring • No KYC or Lien filings PROPRIETARY & CONFIDENTIAL. 25

Dynamic Discounting Business Value Buyer § Improve return on excess cash § Enhance productivity with fewer AP inquiries § Improve supplier relationships § Secure business critical supplier relationships © 2015 Kyriba Corporation. All rights reserved. Supplier • Transparency to AR invoices • Predictable cash flow • Reduce DSO, Improve working capital & reduce interest expense • Payment on demand PROPRIETARY & CONFIDENTIAL. 26

Overall Reverse Factoring Value Proposition Increase Free Cash Flows by extending days payable outstanding (DPO) and optimizing working capital in a single portal that is integrated with your liquidity management, banks and suppliers © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 27

Overall Dynamic Discounting Value Proposition Through a single portal, integrated with your overall liquidity management and suppliers, reduce Cost of Goods Sold and earn better return on excess cash by paying your suppliers early in exchange for a discount on the goods and services you purchase © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 28

Competitive Landscape q Many providers Ø Primarily focused on large company (>$5 B), investment grade market q Funders Ø Ø Tier 1 – own SCF technology Tier 2 – private label SCF technology Tier 3 – co-sell with fintech SCF provider Tier 4 – purchase assets from others q Fintechs Ø Ø SCF only Purchase to Pay B 2 B Marketplaces Treasury Management © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 29

Competitive Landscape Funders Fin. Tech Banks Funder(s) Own Platform Payables Finance Portal Payments / Treasury Mgmt P 2 P / Marketplaces Non-Banks Re-sell Co-sell Buy Assets © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 30

Q&A Thank You! © 2015 Kyriba Corporation. All rights reserved. PROPRIETARY & CONFIDENTIAL. 31