corporate presentation | august 15,...
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CORPORATE PRESENTATION | AUGUST 15, 2017
The information contained in this corporate presentation (the "Presentation") is based on public information and Aveda Transportation and Energy Services Inc.'s ("Aveda" or the "Company") information. Theinformation contained in this Presentation does not purport to be all-inclusive or to contain all information that prospective investors may require. The information contained in this Presentation is not intendedto provide financial, tax, legal or accounting advice. Prospective investors are encouraged to conduct their own analysis and reviews of the Company, including the merits and the risks involved, and of theinformation contained in this Presentation. Without limitation, prospective investors should read the Company’s entire audited financial statements and management’s discussion and analysis for 2016 andconsider the advice of their financial, legal, accounting, tax and other advisors and such other factors they consider appropriate in investigating and analyzing the Company.
Forward Looking Statements
This Presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadiansecurities laws. All statements other than statements of 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, suggestingfuture outcomes.
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 arebased 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 factorsare presented elsewhere in this Presentation in connection with the forward-looking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specificmaterial 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 productionlevels; capital expenditure programs and other expenditures by Aveda and its customers; the ability of Aveda to retain and hire qualified personnel in Canada and the United States; the ability of Aveda to obtainparts, 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 tomarket its services successfully to existing and new customers; the ability of Aveda to retain customers post-acquisitions; the ability of Aveda to obtain timely financing on acceptable terms and the receipt ofregulatory approval for proposed financings; currency exchange and interest rates; risks associated with foreign operations; changes under governmental regulatory regimes and tax, environmental and otherlaws 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 involveknown 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 resultsexpressed 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 andanalysis for the year ended December 31, 2016 (the "MD&A") and contained in the short form prospectus thereto filed on SEDAR at www.sedar.com. Any forward-looking statements are made as of the datehereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.
The forward-looking statements contained in this Presentation are made as of the date on the front page and the Company assumes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. Certain information contained herein is based on, or derivedfrom, information provided by independent third-party sources. The Company believes that such information is accurate and that the sources from which it has been obtained are reliable. The Company cannotguarantee the accuracy of such information, however, and has not independently verified the assumptions on which such information is based. The Company does not assume any responsibility for the accuracyor completeness of such information.
Non-International Financial Reporting Standards Measures
This Presentation may contain the terms Adjusted EBITDA and working capital which are defined in the MD&A. These measures are commonly utilized in the oilfield services industry and are consideredinformative for management and stakeholders. Neither working capital nor Adjusted EBITDA have a standardized meaning prescribed by international financial reporting standards ("IFRS") and therefore Aveda'scalculations may not be comparable with the calculation of similar measures for other entities. Management uses Adjusted EBITDA to analyze the operating performance of businesses. Adjusted EBITDA aspresented is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS
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DISCLAIMER
OUR HISTORY Founded in 1994 as Phoenix Oilfield Hauling Inc. Went public on the TSX Venture Exchange in 2006. Renamed Aveda Transportation and
Energy Services (TSX-V: AVE) Grew significantly through strategic acquisitions and organic expansion, making Aveda the
largest rig moving company in North America; most recently:- 2012: Organic expansion into South Texas (Pleasanton, TX) and West Texas (Midland, TX);
Acquisition of Complete Energy Service Inc. rental assets in Alberta- 2013: Organic expansion into Utica Shale region (NE USA); Acquisition of Belair Rentals assets
in Alberta- 2014: Organic expansion into Mid-Continent (Oklahoma); Acquisitions of M&K rig moving and
rentals assets in North Dakota, and Precision Drilling’s rig moving assets in Texas- 2015: Acquisition of Hodges Trucking Company, L.L.C.’s rig moving assets located across the
USA- 2016: Increased footprint in Permian with addition of second terminal- 2017: Expanded operational footprint by opening a new terminal in Casper, WY in Q1 and a
third terminal in the Permian in Q3, and Martins Ferry, OH in Q3
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MANAGEMENT TEAM
Ronnie Witherspoon – President and CEO Over 20 years of oilfield industry experience Former President of Superior Well Services and Executive Vice President of Nabors Completion and Production
Services
Bharat Mahajan – VP, Finance and CFO Former CFO of several oilfield service companies, including Wellpoint Systems Inc. and Norex Exploration
Services Inc. Held several positions with Magna International overseeing various international growth initiatives
Tom Halliday – VP, USA Operations Over 40 years of oilfield industry experience Former rig manager for Shell and senior manager with Nabors and Baker Hughes
Les Ovelson – VP, Canada Operations Over 25 years of oilfield industry experience Former COO of ATK Oilfield Transportation and senior manager with KOS Oilfield Transportation
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Track Record of Growth – Revenue & Adjusted EBITDA North America Rig Count (1)
Significant Adjusted EBITDA Improvement Exposure to Resilient US Market/Strong Dollar
INVESTMENT HIGHLIGHTS
5(1) Active rigs within 100 miles of Aveda terminals
Capitalization Balance Sheet Summary
Historical High Share Price (September 10, 2014) $5.85 Operating Line Available (ABL Revolver) ($MM) (2) $31.3
Current Share Price (August 14, 2017) $0.33 Property and Equipment per Balance Sheet ($MM) (1) $94.6
Tangible Asset Value per Share (1) $0.67 FMV of Property and Equipment ($MM) (5) $115.1
Shares Outstanding (MM) (2) 57.4 Working Capital ($MM) (1) $21.6
Shareholders’ Equity ($MM) (1) $38.8
Debt to Equity (1) 2:1
Market Capitalization ($MM)(1) $21.7
Loans and Borrowings (ABL Revolver) ($MM) (1) (3) $42.9 Shareholder Summary
Long Term Note Payable ($MM) (1) (4) $35.0 Werklund Capital Corporation andWerklund Ventures Ltd.
25.0%
Enterprise Value ($MM) $99.6 MM Asset Management Inc. 14.6%
(1) Calculated by the Corporation as of June 30, 2017.(2) Calculated by the Corporation as of August 11, 2017.(3) Loans and Borrowings due May 31, 2019. No covenant test as long as excess availability, including supressed availability is greater than $14MM. Excess availability at August 11, 2017 is $49.2 MM.(4) Long Term Note Payable due June 15, 2020. No principal repayment required until maturity date. Bears interest at 9% per annum.(5) Independent appraisal report dated March 31, 2017 by Gordon Brothers Asset Advisors, LLC (dba Gordon Brothers-AccuVal).
CAPITALIZATION SNAPSHOT (TSX-V: AVE)
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Map Legend
Oil Focused
NGL Focused
(1) Active rigs on or about July 21,2017 (source: Baker Hughes)
(2) Aveda researched the top 4 rigproviders in North America andcategorized each fleet intolarge rigs (≥ 1,500HP) and smallrigs ( < 1,500HP) and appliedthe ratio to the current activerigs. Aveda estimates large rigsmove on average 8 times peryear at an average cost of$175,000; and small rigs moveon average 36 times per year atan average cost of $71,000.Based on the North Americanrig count of 1,133, theestimated value of the marketis $2.1B
(3) US Corporate Office
NORTH AMERICAN OPERATIONS
Permian(373 Rigs)
Williston/Bakken (53 Rigs)
WCSB (191 Rigs)
Eagle Ford(80 Rigs)
Anadarko (70 Rigs)
Houston, TX (3)Houston, TX (3)
Midland, TX(2 Locations)
Midland, TX(2 Locations)
Pleasanton, TXPleasanton, TX
Oklahoma City, OKOklahoma City, OK
Calgary, ABCalgary, AB
Edson, ABEdson, AB
Leduc, ABLeduc, ABWilliston, NDWilliston, ND
There are 1,133 Active Rigs in North America(1) representing an estimated market size of $2.1B(2). Aveda’scurrent terminal locations cover almost 70% of the potential North American market
Marshall, TXMarshall, TXHaynesville (43 Rigs)
Marcellus/Utica (73 Rigs)
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Pecos, TXPecos, TX LARGEST RIG MOVING COMPANYIN NORTH AMERICA
Williamsport, PAWilliamsport, PACasper, WYCasper, WYPowder River/DJ-Niobrara
(29 Rigs)
Martins Ferry, OHMartins Ferry, OH
BUSINESS UNIT OVERVIEW
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Aveda has a diversified revenue base across all of the major US Basins which in aggregate account forover 90% of the Company’s revenue.
Total Revenue$20,931,000
Total Revenue$93,021,000
A company-wide philosophy based on over 20 years of rig moving experience (the bestpeople, working safely, using the best equipment = industry leading results)
THE “AVEDA WAY”
An IndustryLeader
An IndustryLeader
SAFETY‒ Zero incident rate mentality (TRIR .71 at July 2017)
‒ Among the most advanced/developed safetyprograms in the industry
PEOPLE‒ One of the lowest turn-over rates in the industry
‒ Competitive wages, on-going development opportunities androom for advancement attract top talent
EQUIPMENT‒ Among the most modern fleets in the industry
‒ Strict maintenance policy
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Blue Chip Customer Base
OILFIELD HAULING OVERVIEW
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COMPANY PERFORMANCE
KEY TAKEAWAYS Inflection Point Revenue and Adjusted
EBITDA on the rise Over 90% US Operations
Strong Management Team Focus on margin expansion
and generating positive cashflow
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Bharat Mahajan, CPA, CAVP Finance & Chief Financial Officer
Aveda Transportation and Energy ServicesSuite 300, 435 – 4th Avenue SW
Calgary, AB T2P 3A8(403) 264-5769
Ronnie WitherspoonPresident & Chief Executive Officer
Aveda Transportation and Energy ServicesSuite 1200, 333 N. Sam Houston Parkway E.
Houston, TX 77060(832) 937-5334
CONTACT
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