2. HII Technologies, Inc.
Disclaimer
This presentation and related commentary may contain "forward- looking statements" within the meaning of Private Securities Litigation Reform Act of 1995. Any statements as to matters that are not of historic fact are forward-looking statements. These forward-looking statements are based on HIIT's current expectations, estimates and projections about HIIT, 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 2014 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 HIIT will be unable to achieve its financial, capital expenditure and operational projections, including quarterly projections of revenue and risks that HIIT's expectations regarding future activity levels, customer demand, and pricing stability may not materialize (whether for HIIT 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 HIIT's businesses, worsen from the recent market declines, and/or that HIIT could experience further unexpected declines in activity and demand for its rental equipment service, risks relating to HIIT's ability to implement technological developments and enhancements; risks relating to
1
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 HIIT's businesses; risks relating to changes in the demand for or the price of oil and natural gas; risks that HIIT 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 HIIT'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.
Because such statements involve risks and uncertainties, many of which are outside of HIIT's control, HIIT'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 HIIT'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, HIIT 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 HIIT files periodically with the Securities and Exchange Commission.
3. HII Technologies, Inc.
HII TECHNOLOGIES
2
HII Technologies (HIIT) in Houston, Texas is a frac water management services company focused on providing total water management for oilfield companies. HIIT also has supporting service solutions with Safety and Power.
Services for horizontal drilling and hydraulic fracing in the domestic U.S.
4. HII Technologies, Inc.
$46.5
million
Market Cap
HII Technologies Inc. is publicly traded and quoted on the OTCQB under the symbol HIIT
Market Cap, Price, Shares Outstanding and Average Volume: as of 8/15/14
Assets, Liabilities, and Equity numbers: as of 6/30/14
Current Price
In thousands
Balance Sheet
$0.87
Approximately 53.1 million shares outstanding
Average volume (3m): 111,216
Management & Board own approximately 23% of shares
Current Financial Snapshot
Stock Performance
Total Assets
$20,573
Total Liabilities
$16,567
Total Equity
$4,006
Cash Position
$1,728
Accounts Receivable
$6,271
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
2013A
2014E
Revenue
$MM
$14.6
Recently added guidance *Pro forma
$50-$53*
5. HII Technologies, Inc.
AES Water Solutions (AES) AquaTex, and Hamilton Water Transfer support hydro-fracturing through complete water management services including water transfer, flow back and well testing, frac water recycling, evaporation, and tank storage.
South Texas Power (STP) manages remote power needs in the field for oil operators by supplying portable generated power and lighting on a rental basis.
AES Safety Services (AES-SS) maintains compliance with safety regulations for operators by providing certified safety contractors, training and inspection.
HIIT has aggressively built a full suite of services, which are essential to the activity of domestic E&P companies.
Key Products and Services
WATER
SAFETY
POWER
& Hamilton
6. HII Technologies, Inc.
8
9
10
11
12
13
14
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
5
As oil and gas activity continues to expand, the demand for water used for drilling and fracing is also growing.
Market Demand
U.S. Crude Oil and Liquid Fuels Production million barrels per day (MMBBL/D)
EIA Data as of May 6, 2014
Total Production
Production Forecast
Market Research firm Lux Research expects the frac water clean-up market to grow to $9 Billion in 2020
By 2015, the Energy Information Administration expects U.S. annual crude oil production to exceed 2013 levels by 24%.
The 2015 forecast represents the highest annual average level of production since 1972.
8. HII Technologies, Inc.
7
Water Transfer
The Company's water division is hired by oilfield operators to provide above ground temporary pipe or lay flat hose infrastructure from a water source such as a river or a pond to a frac site – usually into tanks for frac companies to perform frac completion work.
Our high volume pumps, turbo engines, no- leak hose, and connectors typically deliver 5- 10 million gallons of water per frac job, and the average job requires 5 miles of hose.
We offer clients significant savings over the transportation costs of trucking water to frac sites.
Company pumps
Water Source
Frac
Hydraulic
Fracing
Site
Our pipe,poly, flat hose
Revenue is earned by rentals charged by the foot and by the day, plus ancillary rental fees on pumps, manifolds, and road crossings.
9. HII Technologies, Inc.
8
›Direct high temperature/high pressure water into onsite tanks
›Separate gas and sand from the flow back water
›Use flare stacks until lines and storage tanks are in place
“Flow back” is water used to fracture the shale that flows back to the surface. The volume of recovery may be between 20 and 40% of the initial volume injected.
We provide services to handle the large volume of water that flows back after a frac is completed.
Compny manifolds, sand traps, & gas separators
Tanks
Flow back
Services
Frac
Hydraulic
Fracing
Site
Flow Back
Revenue is earned by equipment rentals charged on a day rate basis.
10. HII Technologies, Inc.
9
Recycling
›Removes 99% Total Suspended Solids (TSS) above 5 microns
›Kills ~99% bacteria
Our technology addresses the need for solids-free water for reuse:
Trucking water means significant costs and issues, plus friction between E&P companies and the communities in which they operate.
We address these issues by offering mobile units which can clean up to 20,000 barrels of frac flow back per day, on site.
The treated water can then be used for additional hydraulic fracturing: eliminating costs associated with disposal and use of additional fresh water.
Revenue is earned by clients paying per barrel of water recycled.
11. HII Technologies, Inc.
HIIT has an exclusive for Oklahoma and Texas with Resource West and its environmentally friendly Landshark & Barracuda wastewater evaporators.
Resource West was formed in 2006, and has evaporation equipment in 26 states and 11 countries.
Besides the economic benefits compared to trucking/disposal, evaporation from on-site water containment eliminates the following concerns of local communities:
›Road deterioration
›Noise
›Pollution
›Property devaluation
10
Evaporation:
Innovative Green Technology In Lieu of Expensive Trucking and Disposal
Revenue is earned by a per barrel charge.
12. HII Technologies, Inc.
Other Water Service Offerings
Above ground on-site water storage tanks
›Can be assembled in under 7 hours
›Capacities of up to 53,000 barrels of water
›Necessary when time on-site doesn’t allow for pits
Top-hole solids control systems and drilling fluids reprocessing Water well drilling and open pit design/procurement
11
Revenue is earned based on day rates charged for rental equipment.
13. HII Technologies, Inc.
On-site rapid accelerated pit evaporation
Solids removal
Pit remediation
FRESH WATER
WATER TRANSFER
FRAC JOB
FLOW BACK SYSTEM
RECYCLE UNIT
ABOVE GROUND WATER STORAGE
50+ miles aluminum pipe& lay flat non- leak flat hose
Low profile road crossings
High performance water transfer pumps
On-site 2x2 manifolds
Gas separators packages
Sand traps
Flare stacks
Well testing equipment
Mobile & on-site
Water storage tanks
Quick set up & demobilization
Up to 53,000 barrel water capacity
Water transfer
Distribution manifolds
Recycle up to 20,000 barrels/day of water
Removes up to 99% total metals & TSS
99% Bacteria removals
EVAPORATION
Total Frac Water Management
12
14. HII Technologies, Inc.
16
Complements HIIT existing water division:
›Geographic focus is eastern Oklahoma covering the Woodford- Cana and Mississippian Lime formations
›Customer base is mostly different E&P operators
›Broad suite of service offerings including above-ground tanks, onsite high volume recycling and evaporation services
›Inventory of approx. 50 miles of aluminum pipe and lay flat hose as well as pumps, and other related equipment, which they deploy in a services rental business model similar to AquaTex and AES Water Solutions.
›Oilfield operators contract with HIG to provide the necessary 5 to 10 M gallons of water needed for a single hydraulic fracturing completion or ‘frac’ of a well.
Hamilton Water Transfer Acquisition - August 2014 - $11.3 M in cash and stock
Hamilton provides frac water transfer services to oilfield services companies located in Oklahoma and North Texas.
2012
2013
Revenues
$8.5 M
$12 M
EBITDA
$2.3 M
$4.3 M
Hamilton Financials
16. HII Technologies, Inc.
AES Safety Services Overview
14
AES Safety Services (AES-SS) provides on-site safety personnel on a contract basis to oilfield clients.
AES-SS revenues derived from:
›On-site safety engineers from drilling to completion
›Procedure monitoring and inspection
›Safety Training
›Developing customized HSE programs and safety plans for compliance
›Site remediation
Allows HIIT to cross-pollinate services with water and power divisions
Due to increasing regulatory requirements, many E&P companies are relying on outsourced safety personnel.
18. HII Technologies, Inc.
16
STP revenues are derived from the rental of:
›Diesel & natural gas generators
›Light towers
›Safety trailers
›Related power equipment
Portable onsite power generation is critical to oilfield operations.
About STP Portable power management solutions company
Plus, STP offers 24/7 service contracts
20. HII Technologies, Inc.
0
10
20
30
40
50
60
70
80
APR
JUN
AUG
OCT
DEC
FEB
APR
JUN
AUG
OCT
DEC
FEB
APR
2012
2013
Customer Growth
2014
14.1% Compounded Monthly Growth
21. HII Technologies, Inc.
61%
of the U.S. land based oil & natural gas drilling rigs are located in Oklahoma and Texas
Source: BHI Rig Count 5/30/14
HIIT participates in the following unconventional tight oil and shale formation plays:
›Eagle Ford Shale
›Permian Basin
›Eaglebine
›Mississippian Lime
›Woodford
›Cline Shale
›Granite Wash
›Utica Shale and others
Activity Concentration
19
22. HII Technologies, Inc.
Barriers to Entry
20
Competitive Advantages
›80+ MSAs
›Typical range of 3-5 years
›Bundled service providers are preferred over single service companies
Master Service Agreements (MSAs)
›Management team has multiple decades of experience with customer base
›Reputation for quality equipment and service
›Local presence
Long-Term Relationships
›Exclusive relationship with Resource West
›Significant cost savings vs. trucking to disposal wells
Leading Evaporation Technology
›Substantial cost savings relative to sourcing fresh water
›Full spectrum of frac water services
Recycling Commercialization
23. HII Technologies, Inc.
MATTHEW FLEMMING CEO & President of HII Technologies
›20+ years industrial, oilfield and manufacturing experience
›Former Director and CFO at Hemiwedge Industries, Inc. (sold 2011)
›Former CEO of Faro – a specialty products company (successfully merged)
›Significant acquisition and capital raise experience
BRENT MULLINIKS President of AES Water Solutions and Director of HIIT
›Petroleum engineer with over 25 years of experience
›Former VP of Engineering at Reichmann Petroleum Corporation
›Former VP of Oil and Gas Operations for Devonian Resources, Inc.
›Involved with horizontal drilling and fracing in the Barnett Shale since inception
BILLY COX Vice President AES Water Solutions
›More than 25 years experience in oilfield services, operations, field crew management, and business development
›Responsible for all aspects of water transfer used in hydo-fracing and AES field operations.
CHARLES DAVIS President AES Safety Services
›Ten years experience in all aspects of oil and gas safety services with Petrohawk and Talisman companies
›Experienced in managing safety engineering contractors in Ohio and West Virginia
CHAD CRADY President, South Texas Power
›10+ years experience in oilfield portable power generation, construction and fabrication
›Experienced in servicing E&P, refinery, petrochemical and midstream sectors of the oil and gas industry
Management & Board
CHRIS GEORGE President of AquaTex
›20 years experience in oilfield services and water management
MARK HAMILTON President of Hamilton Water Transfer
24. HII Technologies, Inc.
2014 Guidance
•Pro forma 2014 revenue projected to be $50 to $53 million
•Pro Forma Adjusted EBITDA projected to be $8 to 10 million Total shares outstanding (before any other acquisitions) are approximately 53.1 million post-close of the Hamilton acquisition; 64.3 million on a fully diluted basis using the Treasury Method
25. HII Technologies, Inc.
Focus on Critical Oilfield Services
Investment Highlights
›Relatively inelastic market
›Full suite of frac water services
Leading Position in Core Oilfield Markets
›Increased activity forecasted
›Relationships with leading E&Ps
Proven Financial Platform & Strategy
›Strong organic financial growth
›Successful acquisition integration
Innovative Technology
›Exclusive relationship
›Economically prudent, ecologically desirable
Highly Experienced Management Team
›CEO Matt Flemming and President Brent Mulliniks (50+ years combined experience)
›Proven track record of delivering shareholder value
24
26. HII Technologies, Inc.
Contact
25
HII Technologies, Inc.
710 N. Post Oak Road, Suite 400
Houston, Texas 77024
713-821-3157
www.HIITinc.com
Investor Relations
MZ Group
Derek Gradwell - SVP, Natural Resources
512-270-6990
dgradwell@mzgroup.us
www.mzgroup.us
