Acquisition of Wachs Valve and Hydrant Services LLC

Transcription

1 Acquisition of Wachs Valve and Hydrant Services LLC Supplemental Information February 17,

2 Pure Announces Acquisition of Wachs Water Over 85 Contracts Across North America Strong Order Book ~US$13.6 million 32% Contract Growth CAGR from 2001 to 2014 Established Customer Base U.S. small/medium sized utilities Fits Pure s Stated Strategy of Becoming an End-to-end Provider of Underground Infrastructure Management Solutions 2

3 Key Transaction Details Catalyst for Growth Pure Technologies is acquiring U.S. based Wachs Valve and Hydrant Services LLC ( Wachs Water ) Wachs Water is a leading provider of flow control maintenance and support services, leak detection, and related asset management services in the water and wastewater pipeline sector US$18.5 million acquisition price 1 consisting of US$13.5 million cash and US$5.0 million common shares of Pure Technologies (878,640 common shares) Attractive multiple of 6.2x TTM EBITDA 2 Anticipated close early in the second quarter of 2015 Expected to be immediately accretive 1. Purchased on a cash-free and debt-free basis and includes US$3.5 million of net working capital. 2. TTM as at September 30, Unaudited, non-gaap financial measure. 3

4 Expands and Enhances Pure s Product Portfolio Opportunity to Cross-sell Other Products to Wachs Water s Customer Base Continues to build complete end-to-end solutions in the underground infrastructure industry, the Wachs Water acquisition expands capabilities and enhances product portfolio Access to large number of municipal clients, increases market penetration and scale of the business Underground Infrastructure Management Solutions Pipeline inspection and condition assessment Pre-stressed concrete cylinder pipe ( PCCP ) management Managing metallic pipelines Sewer force main inspection Pipeline leak detection systems Pipeline engineering services Water and asset management software Emergency shutdowns Valve and hydrant management Pipeline management Pipeline leak detection systems Geographic information systems field validation Blockage detection 4

5 Underground Infrastructure Management Capability Underground Infrastructure Management Non Revenue Water Condition Assessment Monitoring Field Services Audits PCCP Acoustic Fiber Optic Control Free-Swimming Inspection (SmartBall ) Tethered Pipeline Inspection (Sahara ) Correlators Metering Metallic Valves Hydrants Distribution Mains Leak Detection Pressure (Transient) Existing Capability Wachs Water Capability Capability Not Currently Offered by Pure Geographic Info. Systems Unidirectional Flushing Condition Assessment Support 5

6 Wachs Water Overview Water Distribution Asset Management Solutions Valve and Hydrant Management North American leader in large, multi-year assessment and rehabilitation programs Experience assessing over 700,000 valves and hydrants Proven track record on large valves Successfully operated on valves installed in 1800 s Restored operability in 88% of frozen valves, eliminating need for costly replacement Water Pipelines and Leak Detection Emerging business in pipeline inspection and condition assessment Opportunity to deploy Pure s technology portfolio to accelerate business line Experience performing over 5,000 shutdowns Commercialized pressurized water main CCTV systems for distribution and transmission pipelines 40% of Water Valves Inefficiently Operating 1 Other 6% Valves in wrong position 9% Valves buried or paved 10% 1. Source: Wachs Water management. Unaudited. Cannot be located 15% 6

7 Diversified Revenue Profile Wachs Water TTM Revenue by Segment 1 Geographic Information Systems 4% Waste Water 5% Hydrant Management 10% Emergency Shutdowns 11% Other 6% Valve Management 56% Leak Detection 8% 1. Unaudited Revenue for the trailing 12 months ended September 30,

8 Wachs Water Adjusted EBITDA Wachs Water Adjusted EBITDA 1 (US$ millions) Wachs Water Adjusted EBITDA Margin % % 13% LTM LTM 1. EBITDA adjusted to exclude non-employee compensation, owner management fees and other one time adjustments. TTM Financials as of September 30, Unaudited, non-gaap financial measures. 8

9 Wachs Water Contract Growth Number of contracts per year 1 has increased at a compound annual growth rate of 32% since Number of contracts per year may include multiple services under separate contracts for the same city. Source: Wachs Water s management (unaudited). 9

10 Highly Complementary Customer Base Significant Increase in Client Base Serving 10K to 500K Populations Market Size (Number of Customers 1 ) Pure has achieved significant success with large utilities in North America And seeks to match this performance in the small and medium sized segments Wachs Water has a significant customer base and long standing relationships in the small and medium sized utilities 49,500 4, K to 10K 10K to 100K 101k to 500K 500K Plus Average Daily Population Served Market Share 1 - <1% <10% ~86% 1. Excludes Mexico Source: United States Environmental Protection Agency 2013 and Pure Management estimates. Unaudited. 10

11 Improved Financial Stability Through Diversification Before Transaction Unaudited revenue for the trailing 12 months 1 $78 million in revenue Consulting Services 13% Monitoring, Licensing and Technical Support 10% Equipment Sales 22% After Transaction Unaudited pro forma revenue for the trailing 12 months 1 $98 million in revenue Monitoring, Licensing and Technical Support 8% Valve and Hydrant Management 19% Equipment Sales 17% Oil and Gas Inspection 13% Inspection Services 42% Consulting Services 10% Oil and Gas Inspection 10% Inspection Services 35% 1. As at September 30, Includes HM acquisition. Unaudited. 11

12 Attractive Financial Profile TTM Revenue (C$ millions) TTM EBITDA 1 (C$ millions) Pro Forma Pro Forma 1. Assumes no cost synergies. Non-GAAP financial measure. TTM Financials as of September 30, Unaudited. TTM historical average CAD/USD exchange rate of

13 Combination Drives Synergies Well Positioned for Revenue and Cost Synergies Expands In-pipe Leak Detection Business Sahara Develops Non-revenue Water Business Increases Presence in Wastewater Sector 13

14 Fits with Pure s Established Growth Strategy Wachs Water Acquisition Hits on 4 of Pure s 6 Stated Vector s of Growth Components of Growth 14

15 Attractive Financial Profile Combined Impact of HM and Wachs Water Acquisitions TTM Revenue (C$ millions) TTM EBITDA 1 (C$ millions) Pro Forma Pro Forma 1. Assumes no cost synergies. Non-GAAP financial measure. TTM Financials as of September 30, Unaudited. TTM historical average CAD/USD exchange rate of

16 Summary Acquisition Key Benefits New Customer Base Attractive Financial Metrics Revenue and Cost Synergies New Product Offerings Scale and Diversification 16