INVESTOR PRESENTATION MAY 2018

Transcription

1 INVESTOR PRESENTATION MAY 2018

2 Forward-Looking Statements Cautionary Statement Regarding Forward-Looking Statements The statements contained in this presentation and any oral statements made in connection with this presentation that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of Words such as may, will, could, should, expect, plan, project, intend, anticipate, believe, estimate, predict, potential, pursuant, target, continue, and similar expressions are intended to identify such forward-looking statements. The statements in this presentation that are not historical statements, including statements regarding the Company s plans, objectives, future opportunities for the Company s services, future financial performance and operating results and any other statements regarding FTSI s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond FTSI s control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to the operations of FTSI; results of litigation, settlements and investigations; actions by third parties, including governmental agencies; volatility in customer spending and in oil and natural gas prices, which could adversely affect demand for FTSI's services and their associated effect on rates, utilization, margins and planned capital expenditures; global economic conditions; excess availability of pressure pumping equipment, including as a result of low commodity prices, reactivation or construction; liabilities from operations; weather; decline in, and ability to realize, backlog; equipment specialization and new technologies; shortages, delays in delivery and interruptions of supply of equipment and materials; ability to hire and retain personnel; loss of, or reduction in business with, key customers; difficulty with growth and in integrating acquisitions; product liability; political, economic and social instability risk; ability to effectively identify and enter new markets; cybersecurity risk; dependence on our subsidiaries to meet our long-term debt obligations; variable rate indebtedness risk; and anti-takeover measures in our charter documents. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in FTSI's Securities and Exchange Commission ( SEC ) filings, including the most recently filed Forms 10-Q and 10-K. FTSI's filings may be obtained by contacting FTSI or the SEC or through FTSI's website at or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at FTSI undertakes no obligation to publicly update or revise any forward-looking statement. Statements made in this presentation include non-u.s. GAAP financial measures. The required reconciliation to U.S. GAAP financial measures are included at the end of this presentation. Nothing in this presentation shall constitute a solicitation to buy or an offer to sell shares of FTSI's common stock. 2

3 Company Overview Pure play provider of hydraulic fracturing services with market leading positions in the most active basins 1.4 million active horsepower across 28 active fleets Clear growth path with 4 idle fleets ready for reactivation and two newbuild fleets under construction Marketable capacity of 1.7 million horsepower across 34 fleets expected by year-end Leader in profitability and efficiency metrics Vertically integrated with in-house manufacturing and maintenance of equipment 3

4 Management Team Michael Doss Chief Executive Officer Joined FTSI in January 2014, CEO since October 2015 Previously held positions with Energy Transfer, Moody s and Ernst & Young Buddy Petersen Chief Operating Officer Joined FTSI in June 2015, COO since October 2015 Previously held positions with GoFrac, Frac-Chem, Compass Well Services, Allied Cementing and Halliburton Lance Turner Chief Financial Officer and Treasurer Joined FTSI in April 2014, CFO since October 2015 Previously with Ernst & Young in its Transaction Advisory Services Group Certified Public Accountant 4

5 Footprint 28 fleets currently active across 5 operating locations 29 th fleet expected to be deployed in June 2018 or July 2018 Quarter Ending Active HHP HHP in thousands 1Q17A 1,050 Marcellus/Utica Shale Active Fleets 7 Office Location Washington, PA 2Q17A 1,150 Midcontinent Active Fleets 2 Office Location Elk City, OK 3Q17A 1,300 Permian Basin Haynesville Shale Active Fleets 12 Office Location Odessa, TX Active Fleets 4 Office Location Shreveport, LA 4Q17A 1,350 1Q18A 1,400 Eagle Ford Shale Active Fleets 3 Office Location Pleasanton, TX Legend Corporate Headquarters (Fort Worth, TX) Manufacturing & Refurb Facilities (Fort Worth & Aledo, TX) District Locations 5

6 Cost-Advantaged, In-House Manufacturing At full utilization, we believe our in-house manufacturing capability generates as much as $85mm of savings per year, in addition to improving our operational efficiency Frac Units We manufacture our own frac units and ancillary equipment Rebuild frac units at an estimated 50% cost advantage Continual improvement due to feedback from field operations Pumps We manufacture our own power ends and fluid ends Estimated 50% - 60% cost advantage, resulting in savings of over $64mm per year just for fluid ends (1) Frac Unit New Construction Cost Frac Unit Rebuild Cost $ in Thousands $ in Thousands 33% savings 49% savings $1,150 $700 Cost Savings: $385 $765 $224 Cost Savings: $340 $360 $96 $140 $229 $216 $87 $45 $88 FTSI In-House Cost Estinated 3rd Party Cost FTSI In-House Cost Estinated 3rd Party Cost Engine Transmission Power and Fluid Ends Chassis / Other (1) Based on 4Q17 production level for fluid ends. 6

7 Utilizing Innovative Technologies to Improve Operations National Operations Center Partnered with KCF Technologies and use their SmartDiagnostics vibration sensors to give our equipment a voice Wireless vibration and temperature sensors track the condition of our equipment during operations Data enables predictive maintenance and helps avoid costly failures Completed construction of our new National Operations Center ( NOC ) in Aledo, TX, which operates 24/7 Dedicated work station for each fleet Monitors real-time job and equipment data for anomalies Assists in development of equipment automation algorithms Allows production of enhanced job reports for customers Helps us redesign certain components of our fleets to improve performance and reduce wear Example Data: Equipment Vibration & Damage Accumulation 7

8 Recent Financial & Operational Performance Stages per Active Fleet Revenue & Net Income $ in millions $500 $400 $344.9 $449.0 $458.7 $ $300 $200 $ $100 $- 1Q17 2Q17 3Q17 4Q17 1Q18-1Q17 2Q17 3Q17 4Q17 1Q18 Net Income ($20.1) $44.3 $83.6 $92.9 $78.7 Adjusted EBITDA (1) Annualized Adjusted EBITDA per Active Fleet (1) $ in millions $ in millions $150 $138.5 $25 $127.4 $129.1 $20.5 $21.1 $125 $20 $18.8 $100 $15.6 $86.8 $15 $75 $10 $50 $25 $20.0 $5 $4.0 $- 1Q17 2Q17 3Q17 4Q17 1Q18 $- Active Fleet Per Quarter (1) For a reconciliation of Adjusted EBITDA and a discussion on why we consider this Non-GAAP measure helpful, see Appendix 1Q17 2Q17 3Q17 4Q17 1Q

9 Industry Leading Cash Generation $19-21 EBITDA per fleet (million) (1) $2.5 Maintenance capex per fleet (2) (million) Zero Effective federal tax rate (3) Best in class cash conversion Solid execution with a focus on safety and efficiency In-house manufacturing drives lower operating expenses and maintenance capex Tax amortization of goodwill and net operating loss carryforwards eliminate cash taxes (1) Annualized Adjusted EBITDA per active fleet was $18.8 million in Q and $21.1 million in Q For a reconciliation of Adjusted EBITDA and a discussion on why we consider this Non- GAAP measure helpful, see Appendix (2) Maintenance capex calculated as total capex excluding amounts spent on new fleet constructions, equipment reactivation, and other growth items (3) Due to utilization of net operating loss carryforwards 9

10 On Track to Achieve Gross Debt Target of $500 Million Significant Deleveraging Progress $ in millions $1,400 $1,200 $1,000 $800 $600 $400 $200 $127 $139 $194 $1,081 $1,069 $1,014 $208 $922 $735 $580 $500M reduction in net debt ~$200M above IPO proceeds $0 1Q17 2Q17 3Q17 4Q17 1Q18 (1) Net Debt Gross Debt Industry leading profitability and low capex generates considerable amount of cash flow to reduce debt Over the last four quarters, we reduced our net debt by $500 million, approximately $200 million above IPO proceeds, while also building working capital by $100 million to support growth Repaid another $50 million of debt in April 2018 Gross debt down to $685 million as of today, one step closer to our target of $500 million or less Line of sight to reach target gross debt by year-end with excess cash flows generated for additional growth, further deleveraging and/or returns to shareholders (1) Net debt calculated as aggregate principal amount of long-term debt less cash and cash equivalents 10

11 Appendix

12 Reconciliation Adjusted EBITDA Reconciliation ($ in millions) Three Months Ended March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 March 31, 2018 Net income (loss) $ (20.1) $ 44.3 $ 83.6 $ 92.9 $ 78.7 Interest expense, net Income tax expense Depreciation and amortization (Gain) loss on disposal of assets (0.4) (0.4) (0.8) Gain on insurance recovery (2.6) (0.3) Loss on extinguishment of debt Stock-based compensation (1) Adjusted EBITDA $ 20.0 $ 86.8 $ $ $ (1) Adjusted EBITDA is a non-gaap financial measure that we define as earnings before interest, income taxes, and depreciation and amortization; as well as, the following items, if applicable: gain or loss on disposal of assets; debt extinguishment gains or losses; inventory write-downs, asset and goodwill impairments; gain on insurance recoveries; acquisition earnout adjustments; stock-based compensation; and acquisition or disposition transaction costs. The most comparable financial measure to Adjusted EBITDA under GAAP is net income or loss. Adjusted EBITDA is used by management to evaluate the operating performance of our business for comparable periods and it is a metric used for management incentive compensation. Adjusted EBITDA should not be used by investors or others as the sole basis for formulating investment decisions, as it excludes a number of important items. We believe Adjusted EBITDA is an important indicator of operating performance because it excludes the effects of our capital structure and certain non-cash items from our operating results. Adjusted EBITDA is also commonly used by investors in the oilfield services industry to measure a company s operating performance, although our definition of Adjusted EBITDA may differ from other industry peer companies. (2) Annualized Adjusted EBITDA per fleet is calculated by (A) dividing Adjusted EBITDA for the quarter by the average active fleets for that quarter and (B) multiplying the result in (A) by four 12

13 Contact Corporate Office: 777 Main Street, Suite 2900 Fort Worth, Texas Investor Relations: Lance Turner (Chief Financial Officer) Michael Messina (Investor Relations) 13