Focused, Managed Growth

Transcription

1 Focused, Managed Growth Pure Technologies Ltd. Corporate Presentation March,

2 Forward-Looking Statements This presentation contains forward-looking statements, including, without limitation, statements containing the words "should", "believe", "anticipate", "may", "plan", "will", "continue", "intend", "expect", "estimate" and other similar expressions. These statements constitute forward-looking information within the meaning of applicable Canadian securities laws. These statements are based on the Company s current expectations, estimates, forecasts and assumptions. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other important factors that could cause the Company s actual performance to be materially different from that projected. Examples of these statements would include those where the Company forecasts the timing of new and existing projects, the success of the Company s new technologies and entering new markets, the Company s ability to generate future cash flows and the timing and amount of future dividend payments. The assumptions, risks and uncertainties that could cause actual results to differ materially from the forward-looking information, include, but are not limited to, market changes, the Company s ability to deliver services in a timely and cost effective manner, technological change, changes in general economic conditions and other risks detailed from time to time in our ongoing filings with the Canadian securities regulatory authorities, including those in the Company s Annual Information Form, which filings can be found at Given these assumptions, risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by applicable securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise. Unless otherwise stated, all dollar amounts are expressed as CAD$. 2 2

3 Mission & Vision About Pure At Pure, we work to protect the critical infrastructure necessary for everyday life. We are driven by the ambition to change the way this infrastructure is managed. Our technologies and expertise are being used around the world to help manage pipeline deterioration and reduce loss. By fostering an environment that values and encourages creativity and innovation, we have become the world leader in the development and application of innovative technologies for inspection, monitoring and management of pipeline infrastructure. Mission To provide owners of critical infrastructure with innovative technologies and management solutions that prevent failures, reduce capital expenditure and lost revenue, and contribute to a sustainable future. Vision To remain a trusted advisor for infrastructure owners around the world as they assess and renew their critical infrastructure assets; Pure will remain renowned for its engineering and technical expertise, client-first approach and ability to develop innovative technologies. 3

4 Investment Profile TSX: PUR 53.0M 1 ~$420M ~15% Trading Symbol Shares Outstanding Market Capitalization Directors & Officers Ownership Investment Highlights Themes: Sustainability, clean technology, water, and infrastructure High gross margins Strong R&D capabilities Low capex requirements Recurring revenue stream Highly experienced management Approximately 400 employees 1. Includes 878,640 shares, to be issued in equal tranches on the 6-month, 12-month, and 18-month anniversaries of closing the Wachs Water acquisition. 4

5 Pure Technologies at a Glance Revenue FY 2014 revenue of $77.8 million, up 28% year-over-year 36% five-year CAGR 1 Adjusted EBITDA 2 FY 2014 Adjusted EBITDA of $15.6 million, up 21% year-over-year 20% margin (vs. ~10% for conventional engineering services sector) Dividend $0.03 quarterly dividend ($0.12 annualized) Board of Directors to consider future increases Strong Financial Position Recent Acquisitions Over $80 million in current order book; does not include monitoring, licensing and technical support revenue (~$8 million per year), or contracts captured by recent acquisitions Substantial cash position with no debt Flexibility in our capital allocation decisions HM Pipeline Services Inc. for $8 million purchase price (closed October 1, 2014) TTM revenue of $10 million 3 New PureHM TM Oil and Gas Pipeline Integrity Division Wachs Water Services for US$18.5 million purchase price (announced February 17, 2015) FY 2014 revenue of US$19.3 million; EBIDTA US$2.9 million (unaudited) Leader in valve and hydrant management 1. Excludes Libya revenue. 2. Adjusted EBITDA is EBITDA before gains or losses on foreign exchange, earn-out provisions related to acquisitions, costs directly attributable to acquisitions, stock-based compensation transactions, management restructuring costs, and other significant one-time expenses. See Non-GAAP Measures. 3. As at September 30,

6 Revenue Growth * Libya revolution 6 6

7 Geographic and Sector Diversification 7 7

8 Acquisitions Review PureHM TM Wachs Water New, dedicated oil and gas pipeline integrity division with unparalleled technology and services offering Established October 1, 2014 Large existing market for SmartBall TM and SmartBall PWA technology Industry consolidation opportunities HM brings 200+ existing clients Leading provider of flow control maintenance and support services, leak detection, and related asset management services in the U.S. water and wastewater pipeline sector Established customer base in the small and medium size utility space Fits Pure s strategy in becoming an end-to-end provider of underground infrastructure management solutions Acquisition expected to close early in the second quarter of

9 Improved Financial Stability Through Diversification Pure s Revenue (12-mths ended Dec. 31, 2014) $78 million Combined Revenue 1 $110 million Monitoring, Licensing and Technical Support 11% Consulting Services 16% Equipment Sales 22% PureHM 9% Valve and Hydrant Mangement 22% Equipment Sales 16% Inspection Services 51% Monitoring, Licensing and Technical Support 8% Consulting Services 11% Inspection Services 34% 1. Includes: Pure FY rev. as at Dec. 31, 2014 excluding PureHM; TTM HM rev. as at Sept 30/14; Wachs Water FY rev as at Dec. 31, 2014; CAD/USD Exchange rate of (unaudited). 9

10 Improved Financial Profile Combined Revenue 1 (C$ millions; unaudited) Combined Adjusted EBITDA 2 (C$ millions; unaudited) Combined Combined 1. Includes: Pure FY rev. as at Dec. 31, 2014 excluding PureHM; TTM HM rev. at Sept. 30, 2014; Wachs Water FY rev. as at Dec. 31, 2014; CAD/USD Exchange rate of Includes: Pure FY Adj. EBITDA as at Dec. 31, 2014 excluding PureHM; TTM HM Adj. EBITDA as at Sept. 30, 2014; Wachs Water FY Adj. EBITDA as at Dec. 31, 2014; CAD/USD Exchange rate of

11 Growth Drivers Aging Water Infrastructure in Developed Markets Annual multi-billion dollar shortfall to replace or repair aging facilities to comply with water regulations has forced utilities to change Utilities are spending smarter not more Emerging Economies with Developing Infrastructure Population growth, growing economic activity and high water losses drive the need for infrastructure investments and cost effective management and maintenance programs Government Budgetary Pressure and Environmental Regulations Increasingly stringent environmental regulations surrounding critical water and oil and gas infrastructure systems Emerging non-revenue water regulations 11 11

12 The Challenges - U.S. Infrastructure Report Card Infrastructure Type Grade Aviation D Bridges C+ Dams D Drinking Water D Energy D+ Hazardous Waste D Inland Waterways D- Levees D- Ports C Public Parks / Recreation C- Rail C+ Roads D Schools D Solid Waste B- Transit D Wastewater D D+ Infrastructure G.P.A. ~US$3.6 trillion Needed to achieve B grade by 2020 Water, Wastewater & Energy Reported as some of the lowest grade infrastructure type in the U.S. Note: Each category was evaluated on the basis of capacity, funding, future need, operation and maintenance, public safety and resilience Source: ASCE 2013 Report Card for America s Infrastructure

13 What Pure Does Business Model Inspecting and assessing water, wastewater and oil and gas pipelines Sale of monitoring equipment for pipelines, bridges and structures Cost effective asset management services for water and wastewater infrastructure Fibre-optic monitoring of critical water and wastewater pipelines to prevent failures 13

14 Underground Infrastructure Management Capability Underground Infrastructure Management 14

15 Water Technology Overview 15 15

16 Water Technology Portfolio Monitoring Leak Detection Condition Assessment Data Management Pure s monitoring solutions allow owners of critical infrastructure to monitor their assets in real-time to prevent catastrophic failures. SoundPrint Acoustic Monitoring SoundPrint Acoustic Fibre Optics Inline leak detection allows pipeline operators to detect small leaks on their water, wastewater and oil and gas pipelines. SmartBall Sahara Using a suite of proprietary solutions, Pure can determine the condition of a variety of pipe materials under different operating conditions. SmartBall PWA Sahara PureEM PureMFL PipeDiver PureRobotics In order to help utilities manage their complex water and wastewater systems, Pure provides software which allows utilities to manage their infrastructure more efficiently PureNet 16

17 Addressable Market Water Pipeline Network North America PCCP 2.7% Pure s growth has historically come from services related to Pre-stressed Concrete Cylinder Pipe ( PCCP ; 2.7% of pipe market) Non-ferrous 31.9% Over 862,000 Miles Metallic 65.4% Significant opportunities continue to exist Metallic pipes (cast, ductile iron and steel) represent 65% of the total Over 20 times larger than PCCP market; Pure has expanded its offerings into this large market Source: State of Technology Review Report US EPA,

18 Addressable O&G Market Pipeline Inventory Natural Gas, Crude, and Petroleum Products Km USA Russia Canada Algeria Mexico Australia Iran ~70% Of O&G Pipelines Un-piggable Approximately 70% of North American oil and gas pipelines are unable to accept inline inspection tools due to access limitations Significant opportunities to leverage Pure s existing SmartBall PWA technology Argentina China Germany 0 400, ,000 Source: CIA World Factbook, 22 August 2006 via NationMaster. 18

19 PureHM Catalyst for Growth Oil and Gas Pipeline Integrity Services PureHM TM New, dedicated oil and gas pipeline integrity division with unparalleled technology and services offering 60+ full-time staff, including fully trained and qualified field technicians with extensive pipeline experience Significant Business Drivers Increased scrutiny on oil and gas pipeline safety Increasing regulatory surveillance Significant Synergies Highly accretive transaction for Pure HM brings 200+ existing clients Strong combined R&D capabilities Substantial, Market Opportunity Large existing market for SmartBall and SmartBall PWA technology Industry consolidation opportunities 19 19

20 PureHM Business Overview PureHM offers a wide range of proprietary, premium technology-driven products and services for the O&G pipeline industry throughout North America Strong industry presence with an excellent reputation Fully trained to deploy Pure s SmartBall and SmartBall PWA technologies TTM revenue of ~$10 million 1 and experiencing strong YoY revenue and business growth Third Party Pipeline Pig Tracking Proprietary ARMADILLO technology Wireless, remote pig-tracker Real-time, web-based user interface to track in-line inspection tools Industry leading tool Pipeline Right of Way Surveys Proprietary SPECTRUM XLI technology Depth of cover analysis Leak detection Coating condition and cathodic protection River crossings Pipeline Optimization and Management Proprietary PipeWISE software platform Turnkey Standardization of in-line inspection data Regulator compliance consulting 1. As at September 30, Unaudited

21 PureHM TM Unparalleled Suite of Services Strategies: Continue to provide the most innovative technical solutions set for oil and gas pipeline operators Maintain exemplary safety record, one of the best in the industry Exceed client and regulatory requirements and maximize customer satisfaction Maintain significant North American presence and expand scope of services with existing clientele Growth Expectations Growth Vehicle for Pure: 20%+ per year organic growth Target 20%+ EBITDA margin Opportunities for selective acquisitions 21 21

22 Global Footprint A Direct Presence in High-Growth Markets Offices Project Locations 22

23 Moving Ahead Selected to lead multi-year work worth over $50 million Does not include: recurring revenues of over $8M/yr from pipeline monitoring; or, expected US$20M Baltimore contract in Q2/15 Increased emphasis on turn-key asset management contracts for water utilities Increased adoption in international markets including Europe, South Africa, SE Asia and the Middle East PureHM expected to be a catalyst for growth in oil and gas pipeline sector Strong presence in the oil and gas industry with an excellent reputation Leverage SmartBall and SmartBall PWA technologies Wachs Water expected to increase penetration in the water and wastewater sector Added capabilities in underground infrastructure management Established customer base in the U.S. small and medium sized utilities Investments made in 2014 personnel and improvements to internal processes are expected to maximize internal efficiencies and promote rapid growth in key markets 23 23