Investor Presentation November 2013


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Investor Presentation November 2013

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Investor Presentation November 2013

  1. 1. Investor Presentation | November 2013
  2. 2. FORWARD LOOKING INFORMATION This presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes. In particular, this presentation contains forward-looking statements relating to: future growth; results of operations; operational and financial performance; projected capital expenditures and commitments and the financing thereof; benefits derived from capital expenditures; expansion opportunities; increases in revenue; equipment delivery and deployment dates; effect of and ability to complete rebranding; geographic allocation of equipment; customer commitments; ability to establish a working relationship with third party suppliers; expectations regarding the Corporation's ability to raise capital and to increase its equipment fleet; benefits associated with financial results; activity levels; business strategy; successful integration of structural changes; restructuring plans; organic growth potential; acquisitions opportunities and availability of insurance coverage. Aveda Transportation and Energy Services Inc. (“Aveda” or the “Company”) believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this presentation in connection with the forwardlooking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to: • the performance of Aveda’s businesses, including current business and economic trends; • oil and natural gas commodity prices and production levels; • capital expenditure programs and other expenditures by Aveda and its customers: • the ability of Aveda to retain and hire qualified personnel in Canada and United States; • the ability of Aveda to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities; • the ability of Aveda to maintain good working relationships with key suppliers; • the ability of Aveda to market its services successfully to existing and new customers; • the ability of Aveda to obtain timely financing on acceptable terms; • currency exchange and interest rates; • risks associated with foreign operations; • changes under governmental regulatory regimes and tax, environmental and other laws in Canada and the United States; and • a stable competitive environment. Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Aveda’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified by Aveda’s annual information form and management discussion and analysis for the year ended December 31, 2012 (the "MD&A") and contained herein under the heading "Risk Factors". Any forward-looking statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise. 2
  3. 3. COMPANY OVERVIEW  Aveda Transportation and Energy Services (“Aveda” or the “Company”) is a growing provider of specialized oilfield hauling and rentals to the US and Western Canadian oil and gas industry  Aveda was founded in 1994, went public in 2006 and was recapitalized in 2011  The Company is well positioned to take advantage of attractive organic and acquisition growth opportunities throughout North America  Multiple cross-over business opportunities achieved through oilfield hauling and rental business units Oilfield Hauling    Rig moving Heavy hauling Hot shot services Oilfield Rentals    Matting Tanks Light towers 3
  4. 4. MANAGEMENT AND BOARD OF DIRECTORS Management David Werklund – Executive Chairman  Has been the Chairman of Aveda since 2006 and served as Interim President and CEO of Aveda from September 2011 to November 2012. Appointed as Executive Chairman in November 2012  Began career in 1965 at Shell Canada as a Production Operator  Founder and Chairman of the Board of Directors of CCS Corporation (now Tervita Corporation)  Co-Founder of Concord Well Servicing  Founder & Executive Chairman of Werklund Capital Corporation  The 2005 Ernst & Young's Canadian Entrepreneur of the Year  The 2013 Calgary Business Hall of Fame Laureate Kevin Roycraft - President and CEO  Joined Aveda in November 2012  More than 20 year of Transportation Industry Experience  Former Vice-President of Operations for Liquid Transport Corp (one of North America’s largest bulk chemical and oil transportation company) Bharat Mahajan – Vice-President, Finance & CFO  Joined Aveda in October 2011  Held several positions with Magna International overseeing various international growth initiatives  Former CFO of several oilfield service companies, including Wellpoint Systems Inc. and Norex Exploration Services Inc. Board Members Stefan Erasmus  President of Werklund Capital Corporation  Director of several private companies and charitable organizations  Former Managing Director of Resources Global Professionals Doug McCartney  Managing Partner of Burstall Winger LLP  Practices in the areas of securities and corporate finance and corporate and commercial law  Director or officer of several private companies Paul Shelley  President of Convinco Financial Ltd.  Former Senior Vice President, Corporate Development at Kos Corp. Investments Ltd. 4
  5. 5. MANAGEMENT TRACK RECORD  David Werklund founded CCS Corporation (now Tervita Corporation) in 1984 and built it largely through the consolidation of several oilfield services companies and organic growth  CCS privatized in 2007 for approximately C$3.5 billion (the largest Trust privatization in Canadian history) Historical Shareholder Returns CAGR 24% CAGR 2490% Total Return CCS Source: FactSet Total Return CCS 24% CCS Selected Historical Acquisitions 2490% 5
  6. 6. CAPITALIZATION SNAPSHOT Capitalization Share price (November 15, 2013) Shares Outstanding Basic (mm)(4) Balance Sheet Summary(1)(5) $4.04 Operating Line Available ($mm)(5) $26.3 10.1 Property and Equipment ($mm)(5) $48.6 $10.1 Shares to Issue for Convertible Debentures (mm)(2) 1.9 Working Capital ($mm) (1) Outstanding Stock Options (mm)(4) 0.9 Total Assets/Tangible Assets ($mm)(5) Shares Outstanding Fully Diluted (mm)(2)(4) FD Market Capitalization ($mm) 12.9 Tangible Book Value/Share(1) $71.5/$63.4 $2.67 $52.1 Net Debt ($mm) Shareholder Summary(4) Loans and Borrowings(5) $22.8 Werklund Capital Corp Cash(1)(3) ($2.8) Other Insiders 2.3% Total Net Debt ($mm) $20.0 Total Insiders 49.0% Enterprise Value ($mm) $72.1 46.7% (1) At September 30, 2013 (2) Aveda has the unilateral right to convert $4.7 million of debenture into equity. Management intends to convert these debentures in 2013. For the purposes of this calculation, assumed conversion of $4.7 million debenture into 1,850,980 common shares at $2.55 conversion price (3) Includes potential cash from exercise of all options of $2.1 million (4) At November 15, 2013 (5) Balance sheet value as at September 30, 2013 adjusted for effect of oilfield rental acquisition as per slide 12 6
  7. 7. OILFIELD HAULING MARKET Approximately 2,100 Active Rigs in North America(1)    Aveda has a targeted growth plan that is focused on targeting oil/liquid rich weighted basins across North America Based on a recent market analysis, Aveda estimates each rig moves approximately 1.4 times per month or 17 times per year (approx. 35,292 moves per year based on the Nov. 1 2013 rig count) Aveda’s reputation, customer relationships and quality service results in high utilization of its transportation equipment North American Active Land Rig Count(1) WCSB 2013 2012 Active in Play / Region Recently Opened Office Expansion Opportunity Oil Focused 2,489 2010 175 2,132 2011 365 2,076 2,082 Williston/ Bakken Utica Northern Texas/ Oklahoma 36 85 Marcellus 216 451 Permian 55 Barnett 226 Eagle Ford NGL Focused 7 (1) ) Active rigs on or about November 1 in relevant year; as per Baker Hughes & CAODC
  8. 8. NORTH AMERICAN OPERATIONS      New satellite branch in Buckhannon, WV Twelve offices located in the heart of the key North American resource plays Significant expansion opportunities especially in U.S. markets Flexible workforce can be transferred cross border to high activity areas Experienced team of more than 270 employees Fixed Asset Allocation Geographic Locations SLAVE LAKE EDSON LEDUC SYLVAN LAKE CALGARY MIDLAND 49% (1) 51% 52% (2) US (1) (2) BUCKHANNON WILLIAMSPORT 48% PLEASANTON MINERAL WELLS Canada Based on total equipment Net Book Value at September 30, 2013 Based on total equipment Net Book Value at September 30, 2013 and adjusted for the effect of acquisition as per slide 12 8
  9. 9. OILFIELD HAULING OVERVIEW     Modern, well maintained fleet  569 pieces of equipment (167 power units) 279 employees (163 operators) Fragmented industry makes for attractive consolidation opportunities Primary competitors include TransForce, Mullen, Flint and regional specialty haulers Blue Chip Customer Base 569 Pieces of Equipment in Hauling Fleet Trailer Winch Tractor Miscellaneous Bed Truck Picker/Loader 0 50 100 150 200 250 300 350 9
  10. 10. OILFIELD HAULING CASE STUDY  Aveda has outperformed its competitors as a result of:  Newer, more specialized equipment  Experienced personnel  Planning and communications  Ability to meet industry demands for heavier equipment and larger loads 40 mile rig move – Marcellus Shale (1) Competitor Aveda 11 days 4 days  The Result:  11% price premium for Aveda  64% reduction in rig downtime for customer (1) 1,250 hp, jackknife triple rig, ~ 70 loads 10
  11. 11. OILFIELD RENTALS OVERVIEW      Modern, well maintained equipment with 868 pieces in the rental fleet Contributed approximately 6% of revenue in 2012 Plan to build critical mass through the acquisition of competitors with similar or complementary equipment Recent acquisition of complementary equipment Typical acquisition multiples identified at 3.0x to 3.5x EBITDA Blue Chip Customer Base 868 Pieces of Equipment in Rental Fleet Rig Mats Tanks Miscellaneous Light Towers Well-site shacks/trailers 0 50 100 Pre-Acquisition 150 200 250 New Acquisition 300 350 400 11
  12. 12. KEY OILFIELD RENTALS ACQUISITION Lon Dan Enterprises Ltd. DBA Belair Rentals in Edson, Alberta  $4.0 million initial purchase price ($0.5 million equity at $3.63/share and $3.5 million cash)  Additional $0.5 to $1.5 million cash consideration contingent on achieving certain EBITDA target  3.06 – 3.21 times target EBITDA multiple based on achieving earnout  Expected annual EBITDA of $1.4 – 1.8 million  Added more than 140 pieces of higher margin contributing equipment that are complementary to existing equipment base (well-site shacks, light towers, matting)  Expanded geographical footprint to better serve our customers  Create synergy by improving utilization of existing rental equipment 12
  13. 13. GROWTH STRATEGY Capital Expenditure Program  Completed capital expenditure of $25 million in 2012  On track to complete $4 - $5 million capital expenditure planned for 2013  $4 - $4.5 million of oilfield hauling and rental fleet maintenance  $0.5 million in transportation management systems planned for 2013 Organic Growth Initiatives  Existing Customers  Rig moving and ancillary equipment (e.g. tanks, trailers, cranes, etc.)  Implement transportation management systems (e.g. GPS, satellite communications)  Expansion into New Areas – new satellite branch in Buckhannon, WV  Target high activity resource plays focused on oil and NGL exploration Growth Through Acquisitions  Acquire complementary fleets in both new and existing geographies  Typical acquisition multiples of 3.0x to 3.5x EBITDA  Evaluating potential acquisitions of various sizes in high activity regions 13
  14. 14. FINANCIAL PERFORMANCE: REVENUE • Reported 14 consecutive quarters of record revenue growth as compared to the same period of the prior year – 11% overall revenue growth in the first nine months of 2013 vs. 2012 despite year-over-year average rig count decline of approximately 7% in the areas the Company operates (1) – 40% revenue growth in the U.S. in the first nine months of 2013 vs. 2012 Annual Revenue ($MM) Revenue by Geography $100.0 $75.0 $50.0 $83.3 $72.2 $39.8 $33.9 68% $25.0 2013 $0.0 2009 2010 2011 2012 32% First Nine Months Revenue ($MM) $66.9 $70.0 $60.0 Canada United States $60.3 46% 2012 54% $50.0 $40.0 First Nine Months 2012 First Nine Months 2013 (1) As per Baker Hughes & CAODC Canada United States Growing exposure to the resilient U.S. market
  15. 15. FINANCIAL PERFORMANCE: EBITDA • First nine months of 2013 EBITDA of $12.0 million, an increase of $4.8 million compared to 2012, reflecting: Annual EBITDA ($MM) $11.3 $12.0 $9.8 – Higher utilization across North America – Premium pricing in key resource plays – Operational efficiencies resulting in increased margins $8.0 $4.2 $4.0 $2.1 $0.0 2009 2010 2011 2012 First Nine Months EBITDA ($MM) $15.0 $12.0 $10.0 $7.2 $5.0 $0.0 First Nine Months 2012 First Nine Months 2013
  16. 16. INVESTMENT HIGHLIGHTS  Proven management team with a history of value creation  Solid industry fundamentals supported by continued strong oil prices  Strong balance sheet and cash flow generation  Significant growth opportunities across emerging oil-weighted resource plays  Organic growth  Acquisitions 16
  17. 17. CONTACT Bharat Mahajan Chief Financial Officer Aveda Transportation and Energy Services Suite 300, 435 – 4th Avenue SW Calgary, AB T2P 3A8 (403) 264-5769 17