JT 8.2016This article, written by Jennifer Tan (left, Director, Research & Products,  Equities & Fixed Income, at the Singapore Exchange), originally was published in SGX's kopi-C: the Company brew series on 6 January 2017. The article is republished with permission.


ProcurriCEOProcurri CEO, Sean Murphy 
(Photo: Company)

An entrepreneurial spirit runs deep in Sean Murphy's blood.

Driven by an innate need to create and build, the IT industry veteran dares to live his dreams, and is passionate about turning possibilities into reality.

"Entrepreneurship is my passion," said the global Chief Executive Officer of Procurri Corp, a Singapore-listed provider of data centre equipment and maintenance services.

"It's about embracing challenges, solving problems and taking risks. And most of all, it shows that no matter where you come from, what your background is, you can achieve tremendous success if you are willing to work for it."

"Entrepreneurship is about embracing challenges, solving problems and taking risks. And most of all, it shows that no matter where you come from, what your background is, you can achieve tremendous success if you are willing to work for it."

- Sean Murphy
CEO,
Procurri

The Economics graduate from Emory University in Atlanta, Georgia, began his career in technology sales in 1988.

Ten years later, together with three partners, he launched Canvas Systems - an independent reseller of pre-owned enterprise computer systems - which was acquired by Avnet Inc in 2012.

His string of successes included co-founding Optimus Solutions in 2001, which was eventually sold to Softchoice Corporation in 2008.

Murphy, 50, had a vision of building a global aggregator of enterprise hardware and services, providing seamless convergence between technology, finance and logistics domains for its clients. This is in sharp contrast to the current fragmented state of the market.

The IT industry has always been dominated by a handful of brand-name manufacturers, including IBM, Dell and HP, each with its own global network of resellers and vendors. So, a large corporation with say, 50 offices worldwide, would have to grapple with a plethora of suppliers - perhaps 20 vendors for hardware, and another 20 or 30 for software and other services, he noted.

The enterprises of today, however, are increasingly brand-agnostic, focusing on cost-effective and quality IT hardware. They prefer to extend the life of their IT infrastructure by using pre-owned equipment, as well as opting for independent maintenance services, to capture up to 60% in cost savings.


Change the World

Procurri, incorporated in 2013, aims to unlock opportunities in the industry by changing the way the world buys technology through a sharing platform.

It specialises in supplying data centre equipment across major IT brands, and matching buy/sell opportunities between original equipment manufacturers (OEMs), resellers, hardware brokers and cloud companies. It also offers IT maintenance solutions independent of OEM service level agreements, and aids customers with refurbishment and disposal of their IT assets, including data destruction.

"This vision, which I've mulled over for more than two decades, has the capacity to shake up the IT world," Murphy said.

 

"Procurri is not a short-term play - we're here for the long haul. Some of the clients we serve are among the biggest companies in the world, and if we do a good job, we're going to be very large and very profitable."


- Sean Murphy
CEO,
Procurri

"Procurri is not a short-term play - we're here for the long haul. Some of the clients we serve are among the biggest companies in the world, and if we do a good job, we're going to be very large and very profitable."

His vision is shared by long-time friend and business partner Vesmond Wong. Wong is the Chairman and Group CEO of IT incubator DeClout Ltd, which is listed on Singapore Exchange's Catalist board.

Procurri, with a market capitalisation of about S$110 million, made its trading debut on SGX on 20 July 2016, and was the sole technology initial public offering (IPO) on the Mainboard last year. DeClout, its largest shareholder, has a 47.26% stake.

The company's annual revenues expanded to S$122.8 million in 2015 from S$28.4 million in 2013, representing a three-year compounded annual growth rate (CAGR) of 108%. Net profit grew to S$8.8 million from S$2.0 million over the period, reflecting a three-year CAGR of 112%.

Its peers in the hardware and maintenance services segment include NYSE-listed Avnet Inc, Ingram Micro Inc and Arrow Electronics Inc, as well as Beijing Trust & Far Technology Co Ltd, which trades on the Shenzhen Stock Exchange.

♦ Lead the Pack

Procurri means "lead the pack" in Latin. "We're in a race to emerge as leader of the pack - the name is aspirational," Murphy pointed out.

While many competitors have used the terms "computer" or "systems" to name their businesses, Murphy wanted to tell a different story.

"Procurri represents a totally new vision, one that portends disruption to the industry. We're neither a pure hardware nor services company - we're part of the disruptive force that comes with the cloud," he said.

Procurri emeaProcurri's warehouses house different types of data equipment, including servers and storage. Its back-end is governed by a bespoke inventory management system.
Above: Warehouse for Europe, Middle East and Africa markets. (Photo: Company)

So what differentiates the company from its rivals? It's all about the customer.

"We're trying to build a business designed around what the customer wants, using leading-edge technologies and 21st century tools, whereas many of our competitors are still saddled with legacy systems and commoditised products," he noted.

Procurri aims to capture as many opportunities as possible within the US$30 billion industry. "We want to be the world leader in the three businesses of hardware, maintenance and lifecycle services, across the continents of North America, Europe and Asia. To do that, we need to embark on an aggressive acquisition strategy over the next one and a half to two years," he added.

While the company has an excellent global sales force, it lacks large engineering capabilities in Europe and North America to deliver maintenance and lifecycle services.

Procurri

Stock Price

43 c

Market Cap

S$123.2 m

52-week High Low

35-55 c

Price/Book Value

1.9

PE Ratio

12.9

Source: SGX StockFacts
(data as of 11 Jan 2017)

Procurri's first post-IPO acquisition - completed last November - was EAF Supply Chain Holdings, a supplier of IT spare parts.

The purchase, which cost 1.5 million pounds and was fully funded from IPO proceeds, augments cross-selling opportunities within the enlarged group, and aligns with Procurri's plan to boost the higher margin lifecycle services business.

"Procurri is already a sales dynamo, so we're now focused on getting the highest calibre engineering talent. Asia is the only place within the group that is strategy-complete at this time, and rightly so, because in the next 10 years, all the excitement in IT will be in this region," Murphy said.

"This is also why we chose Singapore as our Asian headquarters and listing location."

Once the group is "strategy-complete" across its key geographies, management will focus on organic growth and building scale.

"This is a scalable business, a business where the big boys win. As we get bigger, and the complexity of the jobs increases, our margins will continue to expand," he added.


Ducks in a Row


And the outlook is bright. The global hardware resale market is forecast to grow revenues to US$34.8 billion in 2020 - registering a five-year CAGR of 16.9%, according to data from Frost & Sullivan. The global independent maintenance services market is projected to expand revenues by a five-year CAGR of 15.7% to US$4.4 billion by 2020, while the IT asset disposition market is seen increasing revenues to US$17.1 billion - a CAGR of 21.5% - over the same period.

All of Procurri's ducks are now lined up. "Our vision is in place, along with a strong management bench - each one of us has more than two decades of industry experience," Murphy said.

Procurri EngineeringCentreProcurri's warehouses are housed in the same building as its engineering centres. (Photo: Company)
The capital - net proceeds of S$34.6 million from the Singapore IPO - is already in the bag, and the final prong is execution. "From now until 2018, it's an execution story," he added.

"Today, we have all the ingredients of a global company, but you're not seeing the full results. Once we finish our M&As and get strategy-complete across geographies, you will be able to see the power of our assets pulling together in the same direction."

"We have a very strong core business, we're acquiring some very talented plug-in acquisitions, and our game plan is fairly simple. The difficulty lies in managing our operations around the world."

- Sean Murphy
CEO,
Procurri

The toughest challenge, however, lies in Procurri's operations.

"We have a very strong core business, we're acquiring some very talented plug-in acquisitions, and our game plan is fairly simple. The difficulty lies in managing our operations around the world.

"If we don't execute well, all the opportunities out there will slip through our fingers, and that would generate a great deal of frustration," he added.

His single biggest worry is integrating the team. "Our staff includes Americans, Europeans and Asians, and a wide range of cultures. The key is getting everyone to work together."

After running international businesses in 25 of the 28 years in his career, Murphy believes all human beings essentially have the same traits. "This is what I always share with those I interact with - people are the same all over the world, even if the language or culture is different."

 

♦ Pay it Forward

Values he holds in high regard are encoded in the "Procurri Promise" - the company's core set of ideals.

One is integrity. "That word is used a lot, but it basically means doing the right thing," Murphy said.

Innovation is another. "We don't want to hold the future back - Procurri is part of the disruption of the cloud, and we want to bring that innovation to clients, shareholders and staff."

Excellence and expertise are also qualities he focuses on. "The world does not need more people who are doing an OK job. If we don't have the expertise, we won't take on the job. At the same time, we should always strive to be the best we can be.".

By extension, Murphy finds immense satisfaction in nurturing talent and building strong teams within the organisation. "I want to create a company that people are proud to work for - that's my way of paying it forward."

ProcurriHelpdeskProcurri's 24/7 global helpdesk provides a single point of contact for all systems-related queries. Its toll-free hotlines are manned by trained, experienced, and multi-lingual personnel who handle customer calls and emails, logging and tracking each case through to its resolution. 
(Photo: Company)
And in business, nothing is more critical than your reputation, he added.

"It's taken a lifetime for me to build my reputation, and every day, I face at least one decision, if taken, could ruin it in less than five minutes."

His grandmother's advice remains at the back of his mind: Do things right during the day and you will not have any trouble sleeping at night. "Those are words I live by," he added.

At home, the father of four children - three sons aged 12, 16 and 18, and a daughter, 20 - is an active parent. Family time means mostly outdoor activities, such as fishing and hiking.

"I want to get the kids away from social media, video games and the TV. I want to be able to look them in the eye and have a proper conversation with them - I guess I'm old-fashioned that way," he said with a chuckle.

"I know many business people who have regrets, wishing they had spent more time with their children. I want to make sure that doesn't happen to my kids."


Financial results

Year ended 31 December
(S$ 000)
FY2015 FY2014 FY2013
Revenue 122,814 76,901 28,400
Profit before tax 9,997 4,008 1,656
Net profit 8,772 3,266 1,953

 

Quarter ended 30 September (S$ 000) 3QFY2016 3QFY2015 yoy chg
Revenue 31,849 33,543 -5.1%
Profit before tax after IPO expenses -178 2,401 NM*
Net profit -178 1,964 NM*

* NM: Not meaningful
Source: Company data




Outlook & Risks
    • The Group maintains a cautiously optimistic outlook for its fourth quarter performance, which typically experiences stronger sales demand, in view of the current subdued market sentiment.
    • On 7 November 2016, the Group completed its first acquisition post-listing of EAF Supply Chain Holdings Ltd, a provider of information technology spare parts. This acquisition is a strategic fit for the Group's Independent Maintenance Services segment, which corresponds to its strategy to ramp up contribution from the higher-margin Lifecycle Services, especially in the UK. At the same time, the enlarged customer base from this acquisition will also create new cross-selling opportunities for the Group.
    • The Group will continue to pursue M&A opportunities to reinforce its recurring revenue streams and achieve income resilience.


Procurri Corporation Ltd

Procurri is one of the leading global independent providers of Data Centre Equipment and Lifecycle Services. By offering a converged network that combines technology, finance and logistics domains, Procurri aims to be a global aggregator of enterprise hardware and services to its channels. Since its incorporation in 2013, Procurri has grown rapidly through the years and now operates offices across three regional hubs - Asia Pacific, Americas and EMEA - with its global headquarters located in Singapore. Through its direct presence and global network of partners, Procurri's business covers over 80 countries worldwide, providing a single touch point for customers' Data Centre Equipment and Lifecycle Services needs.

The company website is: www.procurri.com

Click here for the company's StockFacts page.

For its results for the quarter ended 30 Sep 2016, click here.

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