Petrowest Corporation MANAGEMENT PRESENTATION

Transcription

1 Petrowest Corporation MANAGEMENT PRESENTATION Year Ended December 31, 2014

2 forward-looking statements FORWARD-LOOKING INFORMATION This presentation included forward-looking information within the meaning of applicable securities laws (also known as forward-looking statements) with respect to Petrowest, including without limitation, statements regarding its proposed acquisitions, projected costs, business operations and strategy, and financial performance and condition. These statements generally can be identified by the use of forward-looking words such as may, will, expect, intend, plan, estimate, anticipate, or continue, or the negative thereof, or similar variations. Also pro forma financial information in this presentation is forward-looking information. Although Petrowest s management believes that the expectations reflected in such forward-looking statements are reasonable and represent Petrowest s internal projections, expectations and belief at this time, such statements involve known and unknown risks and uncertainties which may cause the actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements and should not be read as guarantees of future performance or results. Those risks and uncertainties include, among other things, risk related to: share prices,; liquidity; credit risk and business concentration; interest rate and other debt related risk; tax risk; ability to access capital markets; competition; environmental matters; changes in legislation and indebtedness of Petrowest. Management believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions and information currently available, which include, management s current expectations, estimates and assumptions about certain projects and the markets in which Petrowest operates, the global economic environment, interest rates and Petrowest s business strategy, plans outlook, projections, targets and operating costs; however, management can give no other things, general economic and market factors, commodity prices, interest rates, business competition, changes in the government regulations or in tax laws, in addition to those factors discussed or referenced in the Risk Factors section in Petrowest s annual information form filed on SEDAR at The forward looking statements contained herein are expressly qualified in their entirety by this cautionary statement. Except as otherwise noted, the forward-looking statements included in this presentation are made as of June 30, 2014 and Petrowest does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise, except as expressly required by applicable securities laws. NON-IFRS MEASURES There are a number of non-ifrs measures used in this presentation, including earnings before interest, taxes, depreciation, and amortization (EBITDA), EBITDA Margin, Funds from Operations, Gross Margin and Gross Margin Percentage. Petrowest believes that these non-ifrs measures are appropriate measure of the operating performance of the Company. These and other non-ifrs measures do not have any standardized meaning prescribed by IFRS. The Company s calculation of these measure may differ from the methodology used by other issuers and, accordingly, may not be comparable to such other issues. See Petrowest s most recently filed Management s Discussion & Analysis of financial results on SEDAR at for more information on the Company s calculation of these non-ifrs measures. The Company believes that these measures are appropriate measures of the Company s operating performance because they facilitate an understanding of the Company s operating performance without giving effect to certain non-cash expenses. None of these measures is equivalent to net income or cash generated from operating activities determined in accordance with IFRS. 2

3 what we are Founded in 2006 through the consolidation of 10 established energy and infrastructure service companies based in Northern Alberta May 2007 Acquired an additional 5 companies, expanding into Northeastern British Columbia Provider of pre-drilling and post-completion services to the northern region of Alberta and northeastern region of British Columbia On July 2, 2011 Petrowest Energy Services Trust converted to Petrowest Corporation () On May 27, 2014 acquired Enviro-Mulch Land Clearing Solutions Ltd. On October 1, 2014 acquired CJM Trucking Ltd. On October 17, 2014 acquired Trans Carrier Ltd. and Trans Carrier Rentals Ltd. 3

4 what we are A diversified infrastructure and construction company with over 10 Locations in Western Canada Strategically and centrally located in the industrial heartland of oil sands and oil and natural gas activity Exposure to, and growing opportunities with, non-oil and gas revenue streams such as highway construction, hydro construction, reclamation and commercial Fort Nelson projects Peejay Revenues are generated from five divisions: Construction Division (50%) Civil Division (33%) Fort St.John Worsley Grande Prairie Fort McMurray Fox Creek Edmonton Transportation Services (14%) Rental Division (1%) Environmental Division (2%) Calgary 4

5 comparative quarter Consolidated Financials (C$ 000s) Q Q December 31, 2014 December 31, 2013 Revenue 63,124 63, , ,873 Expenses 54,707 53, , ,007 Gross Margin 8,417 9,729 42,005 38,866 Gross Margin % 13.3% 15.4% 15.6% 16.8% Adjusted EBITDA 7,346 7,732 34,906 32,649 Adjusted EBITDA % 11.6% 12.2% 13.0% 14.1% Net Income (loss) (11,041) (₁) 597 (5,148) (₁) (584) (₁) includes non-cash impairment charge of $8.5 million 5

6 balance sheet ($000 s) Select Balance Sheet Items December 31, Assets Current assets Cash 597-9,086 Restricted cash Trade and other receivables 60,517 50,828 34,077 Prepaid expenses and other 6,740 5,763 2,709 Inventories 6,787 7,541 7,239 75,366 64,132 53,111 Non-current assets Property and equipment 104,979 65,146 60,701 Intangible assets 7,620 7,365 7,753 Goodwill 2, Deferred income tax asset 1,487 3,652 3,172 Total Assets 192, , ,743 Liabilities Current liabilities Bank overdraft Trade and other payables 27,020 22,319 17,292 Current portion of finance lease liabilities 10,206 6,750 6,732 Current portion of contingent consideration ,200 Current portion of long-term debt 7,592 7,270 10,108 45,218 37,273 36,935 Non-current liabilities Finance lease liabilities 13,840 8,177 11,496 Contingent consideration 1,328 1,787 1,300 Long-term debt 49,515 43,813 43,218 Decommissioning liabilities Deferred income tax liability 2, Total Liabilities 113,230 91,454 93,341 Shareholders equity Shareholders capital 100,287 65,871 49,125 Warrants Contributed surplus 2,740 1, Deficit (24,090) (18,942) (18,358) Total Shareholders Equity 79,061 48,841 31,402 Total Liabilities and Shareholders Equity 192, , ,743 6

7 division overview CONSTRUCTION CIVIL TRANSPORTATION RENTAL ENVIRONMENTAL Revenue contribution: 59% Revenue contribution: 30% Revenue contribution: 9% Revenue contribution: 1% Revenue contribution: 1% Oilfield well site lease preparation and land clearing Road construction Site Servicing Earth moving Reclamation projects Mulching service Contract rock and gravel crushing Oilfield safety services, H2S monitoring - Provides reliable, quality-driven safety equipment to the oilfield industry Equipment transportation Log loading & hauling Gravel hauling General transportation services Heavy hauling in North America Picker services Specializes in heavy equipment rentals to oil and gas companies and independent contractors Used in: - Oil and gas industry - Oil sands - Mining - Logging Onsite acceptance and handling of hazardous waste materials Contaminated waste disposal facility servicing the oil and gas sector - Civil construction industries 7

8 heavy equipment fleet Type As at Dec 31, 2014 New Additions Type As at Dec 31, 2014 New Additions 1 Rock Trucks Skid Steers Dozers Highway Trucks Excavators/ Backhoes Wheel Loaders Graders Compactors Scrapers Log Loaders 14 - Total Fleet: 1,107 (includes 181 new additions and 320 trailers) New replacement value: One-quarter billion dollars Fair market value: $152.0 million (as at December 23, 2014) 8

9 where we are Over 10 Locations in Alberta and British Columbia Strategically and centrally located near oil sands and natural gas activity Fort Nelson Peejay Fort St.John Worsley Fort McMurray Coal Fields Oil Sands Oil Fields Grande Prairie Gas Fields Fox Creek Edmonton Lloydminster Coal Mines Calgary 9

10 construction division Liard River- NWT/BC 10

11 typical multi-pad drill site 11

12 crushing equipment (Spy Hill site - Calgary, AB) Petrowest operates 9 separate crushing sites 12

13 current environment Over 50% decrease in price of oil since July, 2014 with the following effects: E&P clients have significantly reduced their 2015 capital expenditure budgets and delayed certain projects Increased competition due to reduced activity with margin compression occurring Effect on the Construction division and the heavy hauling segment of the Transportation division Road bans are coming on very early this year due to the unprecedented warm weather (positive is they should come off earlier) Civil division has solid backlog Transportation division is strong in the log hauling segment Environmental division is now operating more effectively 13

14 petrowest Significantly reduced subcontractors Maintenance capital expenditures are only made as required and discretionary costs are delayed until activity increases Hiring and salary freeze 2014 bonuses deferred Reduced full time head count by 50 with approximately $4.0 million in annual operating cost savings Imposed certain salary rollbacks Opportunities Site C both early works and main dam project LNG, depending on a Final Investment Decision 14

15 petrowest strengths Significant presence in northeastern British Columbia where Site C and LNG are Diversified with strong Civil division, Environmental and certain portions of the Transportation division Largest fleet in the area Long-term relationships with First Nations Strong client base 15

16 opportunity: Site C Dam - Fort St. John, BC 1,100 megawatts of capacity 5,100 gigawatt hours of electricity annually Third dam and hydroelectric generating station on the Peace River One of four shortlisted consortiums to bid on main dam project bid due July 17, 2015 $7.9 Billion- Commencing 2015 Submit a bid on early works on March 27,

17 Site C Dam 17

18 the opportunity: LNG (liquefied natural gas) - Northern BC 18

19 KITIMATLNG site work has commenced 19

20 who we are James H. Coleman Executive Chairman Mr. Coleman is a Senior Partner of Norton Rose Fulbright Canada LLP, Barristers and Solicitors, and former Chairman of Macleod Dixon LLP, as it was prior to joining Norton Rose Fulbright Canada LLP. He has extensive experience in energy and resource sectors in addition to corporate finance, banking and securities. He has been a director of various public companies and chaired various independent committees of public companies relating to corporate governance and securities matters. Richard (Rick) Quigley Director, President and Chief Executive Officer Mr. Quigley has over 25 years of experience in the oilfield industry working in the drilling and construction industries. Mr. Quigley built Quigley Contracting from 1990 to 2007 when the company was sold to the Trust. Mr. Quigley was the general manager of the British Columbia operations of Petrowest from 2007 to October 29, 2010, when he became the President and Chief Executive Officer of Petrowest. Roy Larson Director and Chief Operating Officer Mr. Larson has over 30 years experience in the oilfield construction industry. Mr. Larson is the Chief Operating Officer of Petrowest, and was previously the Executive Vice President of Petrowest s Construction Division. Mr. Larson built Roy Larson Construction Ltd. From 1998 until its sale to the Trust in He has held various positions within the oil and gas industry in western Canada. 20

21 who we are Jim Moffatt Executive Vice President, Marketing & Sales and Construction Division Mr. Moffatt has over 30 years experience in the oilfield construction industry. Mr. Moffatt is the Executive Vice President of Sales & Marketing for Petrowest, and was recently named Executive President, Construction Division. The Construction Division conducts business in oilfield well site lease preparation, road construction, earth moving reclamation and commercial projects business and is operated under Petrowest Construction LP. Mr. Moffatt built Moffatt Construction from 1983 until its sale to the Trust in Lloyd Wiggins Chief Financial Officer From October 2004 to August 2007, Mr. Wiggins was Chief Financial Officer of the general partner of Movie Distribution Income Fund. Mr. Wiggins is currently the Chief Financial Officer of Petrowest and has held that position since January Bernie Reed Executive Vice President, Civil Division Mr. Reed has over 40 years experience in the construction and infrastructure industry. He is the founder of R Bee Crushing and operated throughout Alberta and British Columbia. He is considered one of the leaders in the aggregate industry in improving productivity and cost effectiveness. 21

22 financing milestones $7.5 million rights offering $8.6 million equity raise at $0.50 $30.0 million 3 year revolving credit facility Refinanced the mezzanine non-revolver Secured by Accounts Receivable Interest rates approximate 4% $23.0 million equity raise at $1.25 June 2010 June 2011 October 2012 February 2013 September 2013 November 2013 September 2013 January 2015 $75.0 million refinancing of bank syndicate $50.0 million 3 year term facility Refinanced the term facility Secured by PP&E Interest rates approximate 6% $17.3 million equity raise at $0.80 $50 million 3 year revolving reducing term loan and $40 million revolving credit facility Refinanced the February 2013 term facility and September 2013 revolving credit facility $50.0 million term secured by PP&E $25.0 million mezzanine non-revolver secured by Accounts Receivable. Interest rates > 12% 22

23 questions

24 Discussion