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.
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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
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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.
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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%
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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
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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
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(1) ) Active rigs on or about November 1 in relevant year; as per Baker Hughes & CAODC
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
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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
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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
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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
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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
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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
$0.5 million in transportation management systems planned for 2013
Organic Growth Initiatives
Existing Customers
Rig moving and ancillary equipment (e.g. tanks, trailers, cranes, etc.)
Implement transportation management systems (e.g. GPS, satellite communications)
Expansion into New Areas – new satellite branch in Buckhannon, WV
Target high activity resource plays focused on oil and NGL exploration
Growth Through Acquisitions
Acquire complementary fleets in both new and existing geographies
Typical acquisition multiples of 3.0x to 3.5x EBITDA
Evaluating potential acquisitions of various sizes in high activity regions
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14. FINANCIAL PERFORMANCE: REVENUE
• Reported 14 consecutive quarters of record revenue growth as compared to the same period of the prior year
– 11% overall revenue growth in the first nine months of 2013 vs. 2012 despite year-over-year average rig
count decline of approximately 7% in the areas the Company operates (1)
– 40% revenue growth in the U.S. in the first nine months of 2013 vs. 2012
Annual Revenue ($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. 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. 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
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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
bharat.mahajan@avedaenergy.com
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