A GROWTH-ORIENTED OILFIELD SERVICES COMPANY. August 14, 2018

Transcription

1 A GROWTH-ORIENTED OILFIELD SERVICES COMPANY August 14, 2018

2 Safe Harbor Disclaimer This presentation and related commentary may contain "forward-looking statements" within the meaning of Private Securities Litigation Reform Act of Any statements as to matters that are not of historic fact are forward-looking statements. These forward-looking statements are based on SMGI's current expectations, estimates and projections about SMGI, its industry, its management's beliefs and certain assumptions made by management, and include statements regarding future operational and activity expectations, anticipated financial performance in 2018 and beyond. No assurance can be given that such expectations, estimates or projections will prove to have been correct. Whenever possible, these "forward-looking statements" are identified by, words such as "expects," "believes," "anticipates" and similar phrases. Readers and any audience are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, but not limited to: Risks that SMGI will be unable to achieve its financial, capital expenditure and operational projections, including quarterly projections of revenue and risks that SMGI s expectations regarding future activity levels, customer demand, and pricing stability may not materialize (whether for SMGI as a whole or for geographic regions and/or business segments individually); risks that fundamentals in the U. S. oil and gas markets may not yield anticipated future growth in SMGI's businesses, worsen from the recent market declines, and/or that SMGI could experience further unexpected declines in activity and demand for its rental equipment service, risks relating to SMGI's ability to implement technological developments and enhancements; risks relating to Health And Safety Compliance compliance with environmental, health and safety laws and regulations, as well as actions by governmental and regulatory authorities; may not be able to reduce, and could even experience increases in, the costs of labor, fuel, equipment and supplies employed and used in SMGI's businesses; risks relating to changes in the demand for or the price of oil and natural gas; risks that SMGI may not be able to execute its capital expenditure program and/or that any such capital expenditure investments, if made, will not generate adequate returns; and other risks affecting SMGI's ability to maintain or improve operations, including its ability to maintain prices for services under market pricing pressures, weather risks, and the impact of potential increases in general and administrative expenses. Risks and Uncertainties Because such statements involve risks and uncertainties, many of which are outside of SMGI's control, SMGI's actual results and performance may differ materially from the results expressed or implied by such forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Other important risk factors that may affect SMGI's business, results of operations and financial position are discussed in its most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K and in other Securities and Exchange Commission filings. Unless otherwise required by law, SMGI also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. However, readers should review carefully reports and documents that SMGI files periodically with the Securities and Exchange Commission.

3 Corporate Profile An oilfield product and service company serving drilling rig contractors and E&P operators Listing and Ticker Symbol- OTCQB SMGI Recent Share Price $0.74 Shares Outstanding 10.3 million Market Capitalization $7.7 million Enterprise Value $8.7 million Headquarters Houston, TX

4 A Growing Platform The acquisition of MG Cleaners LLC, closed on 09/19/2017, representing a new strategic platform for future growth and acquisitions. Acquired RigHands product line in February 2018 further adding to existing product portfolio and related distribution channels. Recently established a location in South Texas to service the Eagle Ford Shale and surrounding areas

5 Business Overview Proprietary Branded Products Service Crews Business Overview Miracle Blue Wicked Green Savage Red Luma Brite Rig Hands On Site Repairs Roustabout crews Maintenance Drilling Rig Wash Combined Revenue Segments Q2 18 Sales 6% 10% 15% 48% Equipment Sales Air Compressors Combination Units Generators Industrial Pressure Washers & MiTM Products Water/Trash Pumps 21% Parts and Accessories Pressure Washing Guns High Pressure Hoses Tips and Fittings Service Crews Parts and Accessories Rentals Proprietary Branded Products Equipment Sales

6 Our proprietary products include detergents, surfactants and degreasers used in oilfield operations; some of which are represented in the following brands: MG Cleaners Snapshot Before After Rig Hands Luma Brite

7 Geographic Target Our geographic target is Texas where currently about 50% of the rigs operating in the U.S. are located. 524 drilling rigs currently operating in Texas (according to BHI). WTI Price Chart

8 Solutions for Challenges Facing Drillers and E&P Operators Cleaner is safer Less accidents Compliance with environmental regulations Established presence in the Permian Basin. Headquartered in Houston with facilities in Odessa, Carthage, and Alice, Texas Minimize down time Reducing operational problems

9 Customer Base Drilling Midstream E&P Operators Distribution Co s Noah Supply Leading reference customers across several verticals within the oil patch

10 Growth and Acquisition Philosophy High Growth Product and Service Segments Investment opportunities within Drilling Services and Completions Solutions capitalizing on shale boom Attractive Return on Capital Invested Accretive to Margins Broadens Customer Base Responsive to Current Customers Needs Immediate geographic target in Texas where nearly 50% of U.S based drilling rigs are currently operating Current customer relationships and MSA s allow easy integration and expansion of any acquisition targets product and/or service offerings Attractive acquisition platform for small owner/operators looking for an exit

11 Drilling Current Market Focus -MG Cleaners LLC. Most elastic segment Nov 2017 Domestic Rig Count up 192% since May 2016 lows Concentrated Rig Count in Texas makes for efficient targeting Completions Completions market segment several fold larger than Drilling Currently difficult segment to profitably operate Some service companies breaking even to hold on till tomorrow Production Less elastic segment of market Business lines typically higher visibility on future cash flows Future opportunities possible in chemicals and production enhancements

12 COMPETITION Competition is made up of mostly mom and pops. Hyper-fragmented market. Most competitors operate in a single business line; e.g. only repair services, only products sales. SMGI management believes its advantage comes from offering a comprehensive portfolio of products and services along with on-site repair reducing down time for drillers and operators.

13 REVENUE PROFILE Total revenue for FY2017 was $2,465,897, up 54%, from FY2016 Revenue increased 86% to $1,167,305 for Q2 2018, from $625,897 in Q Gross margin grew from an average of 42% for all of 2017 to 46.5% for the first half of 2018 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- Annual Revenue Run Rate $2,465,897 $1,603,395 FY 2016 FY 2017 Revenue Q2 Revenue Run Rate $1,167,305 $625,897 Q Q Please see our FORM 10-Q dated 8/13/2018

14 CAPITAL STRUCTURE Capital Structure: Authorized Shares 25,000,000 Outstanding Shares 10,309,190 As of August 13, 2018 Warrants: Options: 100, ,000 Ave. exercise price $0.75 Ave. exercise price $0.50 As of August 13, 2018 Insider Ownership 29% As of August 13, 2018 Estimated Float 1,650,000 As of August 13, 2018 Debt: LOC $1m revolver *Other Notes No Convertible Debt or Preferred Securities *Not including capital leases or accrued expenses $571,000 $836,000 6/30/18 10 Q

15 Leadership Management Team BOARD OF DIRECTORS Matthew Flemming Chief Executive Officer and Chairman 20 Years Experience as CEO & CFO Stephen Christian President, MG Cleaners LLC, Former Rig Manager of Nabors Drilling Kris Boen Vice President, MG Cleaners LLC, Former DNOW Odessa Matthew Flemming Chairman John P. Boylan Director; Former CEO NYSE listed E&P Steven E. Paulson Director; President and CEO of Contech Control Services Michael A. Gilbert II Director; Co-founder, Managing Partner of Sable Power and Gas

16 Highly Attractive Investment Profile Strong revenue growth. Branded industry products such as Miracle Blue degreaser. Multiple revenue streams. Experienced management team. Diversified customer base. Acquisition strategy anticipated to add to current organic growth in Permian Basin and throughout Texas.

17 Contact Us Headquarters: 710 N Post Oak Road Suite 400 Houston, Texas Phone: (713) info@smgindustries.com Investor Relations: FieldView Capital Markets Phone: (858) x9 scott@fvcapitalmarkets.com