Jefferies 10 th Annual Industrials Conference August 13, 2014

Transcription

1 Jefferies 10 th Annual Industrials Conference August 13, 2014 Luis Manuel Ramirez President and CEO Randy K. Guba Senior Vice President and CFO NASDAQ: GLPW

2 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of that term set forth in the Private Securities Litigation Reform Act of These statements reflect our current views of future events and financial performance and are subject to a number of risks and uncertainties. Our actual results, performance or achievements may differ materially from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, decreased demand for new gas turbine power plants, reduced demand for, or increased regulation of, nuclear power, loss of any of our major customers, cost increases and project cost overruns, unforeseen schedule delays, poor performance by our subcontractors, cancellation of projects, competition for the sale of our products and services, shortages in, or increases in prices for, energy and materials such as steel that we use to manufacture our products, damage to our reputation, warranty or product liability claims, increased exposure to environmental or other liabilities, failure to comply with various laws and regulations, failure to attract and retain highly-qualified personnel, loss of customer relationships with critical personnel, effective integration of acquisitions, modification of preliminary 2014 outlook, volatility of our stock price, deterioration or uncertainty of credit markets, and changes in the economic, social and political conditions in the United States and other countries in which we operate, including fluctuations in foreign currency exchange rates, the banking environment or monetary policy. Other important factors that may cause actual results to differ materially from those expressed in the forward-looking statements are discussed in our filings with the Securities and Exchange Commission, including the section of our Annual Report on Form 10-K filed with the SEC on March 17, 2014 titled Risk Factors. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and we caution you not to rely upon them unduly. 2

3 Luis Manuel Ramírez President and Chief Executive Officer NASDAQ: GLPW

4 Global Power is a Comprehensive Provider of Engineered Products and Services to the Power, Energy Infrastructure and Process Industries Energized management team to drive strategy Realigned structure - Improving efficiencies and simplifying processes Providing commercially integrated solutions Driving LEAN process improvement for productivity & margin expansion Strong capital structure with ample liquidity Evaluating acquisition opportunities Strategic Goal: double revenue and operating margins over next 3 to 5 years 4

5 Global Power Market cap (NASDAQ: GLPW) $277.2M Recent price $15.86 Avg. daily trading vol. (3 mos.) 70.8K Q Revenue: $114.7 million Common shares outstanding 17.0M Book value per share $16.38 Institutional ownership 88.8% Insider ownership 3.0% Annual dividend/yield $0.36/2.2% Product Solutions 52% Nuclear Services 36% Energy Services 12% Market data as of market close on 7/1/2014 [Source: Bloomberg]; book value per share as of 3/31/14 and institutional ownership data as of 3/31/14 5

6 Expanding Product Portfolio Electrical Solutions Added new markets and customers through acquisitions; serves the - Oil & gas midstream pipeline - Distributed power - Back-up power - Transmission & distribution - Commercial data centers - Utility-scale power generation Integration of controls and switches with respected brand and strong reputation for quality - Packaged control house - Generator enclosures - Industrial tanks Currently addressing strong demand in pipeline industry 6

7 Broaden Product Offering Auxiliary Products Well established market position in utility-scale natural gas turbine power generation - Proven and respected supplier to turbine OEMs - Large, global installed base Investing in capacity and new product development Emal Smelter Complex UAE. Large GE Frame Gas Turbine in industrial setting. Includes: R stage self cleaning filter house with evaporative cooling; Inlet silencing; Inlet plenums; Exhaust bypass stacks and diverter damper. Focused on building aftermarket opportunities 7

8 Energy Services Expanding Capabilities Creating growth opportunities - Added new service solutions through acquisition - Addressing broader geographic markets - Leader in brazed aluminum heat exchanger emergency repair services Leading with natural gas trend - Liquefied natural gas Petro-chemical facility undergoing performance modifications concurrent with planned maintenance - Chemical / petrochemical plant modification and construction services 8

9 Nuclear Services Leading with Safety and Value-Added Services Create value for customers: Provide cost-saving service solutions - Modification, maintenance, repair - Specialty service Develop new customer relationships through solid execution on project work Create opportunity with alliances and partnerships by adding engineering expertise 9

10 Progress, Plans and Outlook Commercial Strategy - Demonstrated value of business realignment Diversified customers and markets - Collaboration expands addressable market Providing combined products and services - Focused on natural gas infrastructure investments in U.S. - Broader long-term perspective on global energy markets Productivity - Completed four major LEAN events with three more planned in Executing dozens of Kaizan/Continuous Improvement projects throughout organization Global Power

11 2014 Priorities Simplification - Stable operations - Streamlined processes - Value-added solutions Execution - Provide focused resources to identify adjacent opportunities - Integrate offerings and collaborate selling efforts - Deepen relationships with customers and increase customer base - Drive productivity through greater efficiencies - Refresh inorganic pipeline Deliver Earnings Growth Global Power

12 Randy Guba Sr. Vice President and Chief Financial Officer NASDAQ: GLPW

13 Product Solutions Second Quarter Results ($ in millions) Revenue $59.2 $35.9 Aftermarket 8% Oil & Gas 7% By Market Q Revenue: $59.2 million Other 16% Power Generation 69% Q Q Gross Profit and Margin $11.6 $ % 23.8% Q Q Organic growth and 2013 IBI acquisition more than offset ~$10 million of customer related shipment delays Electrical Solutions represented 34% of Product Solutions revenue; industry-wide supply chain challenges impacted sales Gross profit & margin unfavorably impacted by a $0.9 million interco COGS reclassification Global Power

14 Energy Services Second Quarter Results ($ in millions) Revenue $14.1 $13.6 Gas Processing 18% Industrial Gas 20% By Market Q Revenue: $14.1 million Oil & gas 21% Other Industrial 8% Fossil 33% Q Q Gross Profit and Margin $2.9 $ % 13.8% Hetsco, acquired April 2013, contributed $5.3 million of revenue in Q Incremental month of Hetsco improved segment gross margin Gross profit & margin benefitted from a $0.9 million interco COGS reclassification Q Q Global Power

15 Nuclear Services Second Quarter Results ($ in millions) $41.4 Revenue $66.4 By Contract Type Q Revenue: $41.4 million Cost Plus 92% Fixed Price 8% Q Q Gross Profit and Margin $8.4 $ % 12.6% Q Q Timing of U.S. nuclear outages impacted revenue Prior-year period included a nonannual outage at a large customer's plant Solid execution on fixed priced contracts drove 130 basis point gross margin improvement Global Power

16 Operating Summary Second Quarter Results ($ in millions) Consolidated Revenue Gross Profit and Margin $114.7 $116.0 $20.3 $18.8 Q Q Operating Expenses (as a percent of sales) $18.8 $16.8 D&A 17.6% $ % 17.7% 16.2% Q Q Adjusted EBITDA & Margin* $4.5 SG&A 17.1% 15.3% 8.1% 3.5% 4.5% 9.5% 6.3% 5.2% 3.9% 1.1% 4.4% 16.4% 14.5% Q Q Q Q *See supplemental slides for Adjusted EBITDA disclosure and reconciliation 16

17 Strong Balance Sheet ($ in millions) Long-term debt to total capitalization: 10.0%; $31 million of long-term debt outstanding on 6/30/2014 Borrowed $18 million in quarter; repaid $12 million CapEx increasing in 2014 to drive growth and margin expansion $99.5 Cash & Cash Equivalents $32.0 $13.9 $ /30/2014 Stockholders Equity Capital Expenditures $258.7 $270.0 $279.6 $277.9 $3.8 $5.8 $5.2 $ /30/2014 $ E* 6/30/14 YTD * Guidance of approximately $10 million provided on August 1, 2014 Global Power

18 Backlog ($ in millions) Energy Services Product Solutions Nuclear Services $393.7 $390.3 $27.8 $17.0 $113.2 Consolidated $176.6 $252.7 $196.7 $434.6 $51.8 $165.0 $ /31/ /31/2013 6/30/2014 Second highest backlog in company history Combined ~$255 million of backlog scheduled for delivery in 2014 Strong confidence in Energy Services and Auxiliary Products Electrical Solutions challenged with industry-wide supply chain issues Nuclear Services has ~$20 million of go-get in second half Global Power

19 2014 Guidance* Guidance Remains Unchanged Consolidated revenue of $525 million $550 million - Product Solutions expected to improve on stronger power generation and oil and gas markets, and full year of acquisition revenue - Energy Services expected to improve primarily due to a full year of acquisition revenue - Nuclear Services expected to be down modestly, with fewer outages Moderate improvement in gross profit as a percentage of revenue (roughly basis points), compared with 17.6% in 2013 Operating expenses expected to moderately decline as a percent of revenue (roughly basis points), compared with 15.1% in 2013 * Guidance provided as of August 1, 2014 Global Power

20 Supplemental Information NASDAQ: GLPW

21 Driving Organic Growth and Productivity Strategy Expand margins through simplification Energy Services - LEAN process improvements - Stable operations Advance commercial strategy Nuclear Services - Customer-focused solutions - Deepen and broaden customer base Product Solutions Auxiliary Products Electrical Solutions - Increase addressable market with integrated offerings 21

22 Driving Margin Expansion LEAN process improvements Consolidated procurement practices Fundamental cost discipline Shared services cost structure Higher margin mix Volume leverage 22

23 2013: Realignment Completed GOAL: Double revenue and operating margins over next three to five years STRATEGY + Move from product-based to solutions-oriented organization: drive revenue opportunity + Expand margins through simplification, productivity improvements and organic & inorganic growth ACTION: Successful Realignment of Business and Leadership Structure STATUS Simplified organization; improved efficiencies & transparency Energized leadership team; closer to customer Driving LEAN process improvements for productivity & margin expansion Diversified customer base; broadened solutions offering New Structure Drives Value and Growth 23

24 Energized Leadership CEO Luis Ramírez CFO Randy Guba* Electrical Solutions Penny Sherrod-Campanizzi* Auxiliary Products John Durkee* Nuclear Services Neil Riddle* Energy Services Tedd Sellers* * Denotes new leader and/or role in 2013 Legal & Business Development Tracy Pagliara Supply Chain Management Gary McCloskey* 24

25 GAAP to Non-GAAP Adjusted EBITDA Reconciliation Three Months Ended June 30, Six Months Ended June 30, GAAP income (loss) from continuing operations $ 864 $ 742 $ 792 $ (459) Add back: Income tax expense Interest expense, net Depreciation and amortization 2,515 1,850 5,257 3,281 Stock based compensation 1, ,744 2,504 Non-GAAP adjusted EBITDA from continuing operations (1) $ 5,170 $ 4,541 $ 8,880 $ 5,867 Adjusted EBITDA from continuing operations represents income from continuing operations adjusted for interest, income taxes, depreciation and amortization and stock-based compensation. The Company believes adjusted EBITDA from continuing operations is an important supplemental measure of operating performance and uses it to assess performance and inform operating decisions. However, adjusted EBITDA from continuing operations is not a GAAP financial measure. The Company s calculation of adjusted EBITDA from continuing operations should not be used as a substitute for GAAP measures of performance, including net cash provided by operations, operating income and net income. The Company s method of calculating adjusted EBITDA from continuing operations may vary substantially from the methods used by other companies, and investors are cautioned not to rely unduly on it. Global Power

26 Products and Competitive Landscape 26

27 Services and Competitive Landscape 27