Annual General Meeting Calgary, Alberta. June 21, 2017

Transcription

1 Annual General Meeting Calgary, Alberta June 21, 2017

2 Disclaimer Forward-looking information Certain information included in this presentation may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by terminology such as may, will, should, expect, plan, anticipate, believe, estimate, predict, potential, continue or the negative of these terms or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management s future outlook and anticipated events or results and may include statements or information regarding the future plans or prospects of ClearStream Energy Services Inc. ( ClearStream or the Company ) and reflects management s expectations and assumptions regarding the growth, results of operations, performance and business prospects and opportunities of ClearStream. Without limitation, information regarding the future operating results and economic performance of ClearStream constitutes forward-looking information. Such forward-looking information reflects management s current beliefs and is based on information currently available to management of ClearStream. Forward-looking information involves significant risks and uncertainties. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking information including risks related to investments, conditions of capital markets, economic conditions, dependence on key personnel, limited customer bases, interest rates, regulatory change, ability to meet working capital requirements and capital expenditures needs, factors relating to the weather, and availability of labour. These factors should not be considered exhaustive. Risks and uncertainties about ClearStream s business are more fully discussed in the Company s disclosure materials, including its Annual Information Form and MD&A for the year ended December 31, 2016, filed with the securities regulatory authorities in Canada and available at In formulating forward-looking information herein, management has assumed that business and economic conditions affecting ClearStream will continue substantially in the ordinary course, including without limitation with respect to general levels of economic activity, regulations, taxes and interest rates. Although the forwardlooking information is based on what management of ClearStream consider to be reasonable assumptions based on information currently available to it, there can be no assurance that actual events or results will be consistent with this forward-looking information, and management s assumptions may prove to be incorrect. This forward-looking information is made as of the date of this presentation, and ClearStream does not assume any obligation to update or revise it to reflect new events or circumstances except as required by law. Undue reliance should not be placed on forward-looking information. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. 2

3 About ClearStream We Provide the People, Experience, and Expertise that Improves our Customers Facilities and Operations Oil and Gas Customers (90% of Revenue) Primarily Production Cycle (95% of Revenue) 10 Operating Centers in AB and BC Calgary Head Office Fort St. John River Edmonton (x2) Sherwood Park Calgary Fort McMurray (x2) Lloydminster 3

4 About ClearStream Services We Provide Two Reporting Divisions Maintenance and Construction Fabrication, Wear Technology and Transportation Services 4

5 About ClearStream Services We Provide Maintenance and Construction 1. Steady State Maintenance Plant and field support, planning, scheduling and cost control, quality control, safety and subcontractor management 2. Turnarounds/Shutdowns Scheduled facility and plant maintenance 3. Facility Construction and Sustaining Projects Facility construction services, including estimation, scheduling, inspection, procurement, project management and execution 4. Labour Supply Qualified heavy equipment operators, mechanics, field operators 5

6 About ClearStream Services We Provide Fabrication, Wear, and Transportation 1. Fabrication Pipe Spooling, Skid Packages, Vessels, and Structural Fabrication 2. Wear Technology Industry Leader in Patented Overlay Pipe Coating Technology that Materially Extends Pipe Life Primarily Oilsands Driven Demand Tailings Pipe 3. Transportation A Modern Fleet With Experienced Operators Pipe Management and Storage Services 6

7 ClearStream Competitive Advantage Competitive Positioning ClearStream is a Premier Mid-Size Company Within the Industry Compete With Both Large Multi-National and Small Local Competitors Not Many Competitors Our Size Operational Execution Sophisticated Safety, Quality and Recruiting management systems Two Labour Offerings Unionized Labour Force Clearwater Brand Non-Union Labour Force ClearStream Brand Integrated Service Offering Fabrication, Transportation, Maintenance, Projects 7 Fort St. John Lloydminster Sherwood Park Calgary

8 ClearStream Investment Highlights Current Market Share is <2% Geographic Expansion Service New Industries Strong Growth Opportunities Low Capital Requirements Predictable Revenue Stream Value Contracted Revenue Resilient Demand Fort St. John Track Record of Operational Performance Long-Standing Customer Relationships Blue Chip Customer River Base Sherwood Park Calgary Fort McMurray (x2) Lloydminster Safety Recruitment Quality Control 8

9 2016 Market Overview Low oil and gas prices led to: Less spending by our customers on maintenance programs Deferral of project/capital spending Price reductions on the services we provide (5% - 15%) Fort St. John River Fort McMurray (x2) Fort McMurray Fires: Evacuated 1052 employees Sherwood from the Park region safely Calgary Impacted 2016 financial results Lloydminster 9

10 Debt Refinancing Successfully refinanced long-term debt in March 2016 Obtained an ABL Credit Facility to fund working capital 2016 Accomplishments Cost Reductions/Efficiency Improvements Lowered Fixed Costs By 40% Closed 7 Non-Essential Locations Improved Critical Customer Service Processes Protected and Grew Market Share Renewed all expiring major customer contracts in 2016 Added new customers Transition to a Publicly-Traded Company October 18, 2016 ClearStream Energy Services Inc. (CSM) Fort St. John River Fort McMurray (x2) Lloydminster Sherwood Park Calgary Improved Safety Results 52% improvement in TRIF (total recordable incident frequency) compared to

11 2017 Outlook Will be better than 2016 Expect an Increase in Year-Over-Year Demand Due to the Extent of Delays and Deferrals in 2016 Modest Commodity Price Recovery Expected to Lead to Improved Project and Fabrication Demand River More Turnarounds/Shutdowns Scheduled in 2017 Fort Relative St. John to 2016 Fort McMurray (x2) Expect an Increase in Year-Over-Year Activity Due to Post-Fire Recovery in Fort McMurray Sherwood Park ClearStream Revenue is Contracted Not Spot Market Price Calgary Expect Pricing to be Flat Lloydminster 11

12 2017 Strategic Focus Protect and Grow Market Share Market Share Estimate < 2% Renew 2017 Expiring Contracts Improve efficiencies and costs Lean, Efficient Business Model Keep Costs Low - Increase Revenue Without Increasing Fixed Cost Structure Fort St. John River Fort McMurray (x2) Customer Service/Operational Execution Focus on Safety, Quality, and Timely Execution Within Budget Improve Financial Flexibility Deliver Financial Results Execute Strategies to Improve Balance Sheet 12 Lloydminster Sherwood Park Calgary

13 Organic Growth Strategies Existing Customer Base Maintenance Spending Expected to Increase in 2017 New Industries Midstream Markets Expand Outside of Oil and Gas New Geographies Expand Outside of Alberta and B.C. Recent Contract Win in Sask. Fort St. John River Fort McMurray (x2) Lloydminster Sherwood Park Calgary Joint Ventures Aboriginal Entities Engineering Entities 13

14 Q Financial Performance (in $ 000) Q Q Change Revenue $77,689 $68,640 13% Cost of Sales - Direct $66,740 $56,477 18% Cost of Sales - Indirect $4,409 $6,847-35% Gross Profit $6,540 $5,316 23% SG&A $4,528 $4,952-9% Adjusted EBITDA $2,049 $ % Q Highlights Revenue growth driven by market improvements and market share gains Fixed Costs (indirect and SG&A) declined by a combined 24% River Fort EBITDA Fort improved St. John by 389% McMurray (x2) Began operations in SK during Q Pricing declines led Lloydminster Sherwood to increase Park direct costs as a % of revenue market Calgary remains very competitive 14

15 Financial Performance 140, , ,000 80,000 60,000 40,000 20,000 - Quarterly Financial Performance Fort St. John River 14,000 12,000 10,000 8,000 6,000 Fort McMurray 4,000 (x2) 2,000 Lloydminster - Sherwood Park Calgary Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Revenue Adj EBITDA Increased maintenance and turnaround demand expected in Q compared to Q Turnaround demand is typically strong during Q2 and this is expected to be the case in

16 Contact Us Dean MacDonald Executive Chairman and Interim Chief Executive Officer Gary Summach Chief Financial Officer