S O L U T I O N S M A T T E R + 2020 INVESTOR DAY Assets protected with RFID data-enabled end caps
DISCLOSURE STATEMENT This presentation includes certain statements that reflect management’s expectations and objectives for the Company’s future performance, opportunities and growth, which statements constitute "forward looking information" and "forward looking statements" (collectively "forward looking information") under applicable securities laws. Such statements, other than statements of historical fact, are predictive in nature or depend on future events or conditions. Forward looking information involves estimates, assumptions, judgements and uncertainties. These statements may be identified by the use of forward looking terminology such as "may", "will", "should", "anticipate", "expect", "believe", "predict", "estimate", "continue", "intend", "plan" and variations of these words or other similar expressions. These statements of forward looking information are based on assumptions, estimates and analysis made by management in light of its experience and perception of trends, current conditions and expected developments as well as other factors believed to be reasonable and relevant in the circumstances. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from those predicted, expressed or implied by the forward-looking information. Additional information on the risks and uncertainties on the Company’s business can be found in the Company’s current Annual Information Form, annual and quarterly reports and in other reports and filings made with the securities regulatory authorities and available at www.sedar.com and www.shawcor.com. The forward-looking information is provided as of the date of this presentation and the Company does not assume any obligation to update or revise the forward-looking information to reflect new events or circumstances, except as required by law.
→ AN ENGINE FOR SUSTAINED GROWTH BUSINESS FINANCIAL INHERENT VALUE → Pipeline & Pipe Services → Management → Sum of the Parts → Composite Systems → Commitment to Shareholders → Automotive & Industrial → Performance
→ BUSINESS OUTLOOK PIPELINE & PIPE SERVICES International and offshore projects will drive Pipeline Protection & improved profitability and cash generation in Products 2020 and beyond Work secured will result in step-up in H2 2020 performance Additional awards will build backlog and be supportive for 2020 and future years Well positioned in new EPC model and the cycle Integrity Management DRIVERS FOCUS EXPECTATION Greener Bid, win and Step-up alternatives - Gas execute performance in H2 2020 Lower offshore Technology Backlog build development monetization costs through 2020 Optimized Aging footprint 2020 inflection Management & Engineering infrastructure point for future Services replacement years
→ BUSINESS OUTLOOK COMPOSITE SYSTEMS Growing acceptance and established base business will drive high growth Composite Pipe Market share supports forward performance Addressable market expansion provides a hedge for near term results Conversion to Composites is just starting and will support future growth Composite Tanks DRIVERS FOCUS EXPECTATION Continued Expansion Short term conversion to volatility US Products Composites land Markets Aging 2020 better Added value infrastructure than 2019 Services replacement High growth in Digital Oil and gas future years Oilfield Asset Management development
→ BUSINESS OUTLOOK AUTOMOTIVE & INDUSTRIAL Stable outlook with growth prospects in core Automotive & Industrial markets Heat Shrink Tied to stable core markets of automotive and industrial Near term upside with nuclear refurbishment Continued base growth underpinned by electric vehicle production and electrical content Automotive Appliances DRIVERS FOCUS EXPECTATION Specifications Short term Automotive volatility likely production Global capacity Aging Base business - Equipment and infrastructure consistent aftermarket growth Electric vehicles service Upside from and electrical Nuclear content Specialty Wire & Cable
→ FINANCIAL STRENGTHS CAPITAL & EXPENSE DISCIPLINE Preserve global, large project operating advantage through disciplined financial management Global footprint and mobile assets remain an advantage $1.2 billion in capital assets require less than $50 million to maintain Ongoing review of Pipeline & Pipe Services footprint 1,400 1,237 1,231 1,186 1,171 1,170 220 1,200 Capital Assets* (C$M) 1,058 CAPEX (C$M) 1,000 180 800 140 Capital Assets* 600 CAPEX 89.2 100 77.6 76.2 400 61.1 44.9 41 60 200 0 20 2014 2015 2016 2017 2018 2019 CAPEX as % of 7.3% 5.2% 7.5% 6.2% 3.5% 3.7% Capital Assets *Property Plant & Equipment - Gross Book Value
→ FINANCIAL STRENGTHS CAPITAL & EXPENSE DISCIPLINE Ensure SG&A expenses are appropriate to our scope and operating dynamics All encompassing view of SG&A Disciplined SG&A management practices – 2019 declined as % of revenue Management incentive programs linked to real business metrics 2,000 30% 1,890 1,811 1,800 25.1% 25% 1,565 1,600 1,489 1,409 1,400 20% Revenue 1,209 19.8% 1,200 19.7% 19.7% 19.3% 18.1% C$M SG&A* 1,000 15% 800 SG&A* (as 10% % of 600 revenue) 359 342 400 303 308 287 278 5% 200 0 0% 2014 2015 2016 2017 2018 2019 *SG&A excludes management incentives
→ FINANCIAL STRENGTHS COMMITMENT TO DIVIDEND Sustaining our track record of paying dividends through economic cycles is a priority $238 million paid in the last 6 years Maintained the dividend during the downturn Committed to returning cash to shareholders from sustainable earnings 300 243 250 200 164 134 150 Dividend 91 C$M 100 FCF* 41.9 42.0 42.0 38.7 38.7 35.3 50 37 0 2014 2015 2016 2017 2018 2019 -50 -38 -100 *Free Cash Flow = Cash from operations before change in non-cash working capital - CAPEX + Proceeds from sale of assets & investment in associate - Repayment of Lease Liabilities
→ FINANCIAL STRENGTHS COMPANY & SEGMENT EBITDA PROFILE SHAWCOR’s EBITDA potential is significant with all three Segments contributing Adjusted EBITDA % (1) Pre-Downturn 2018 Actual (2) 2019 Actual Average (2) (3) Future Scenarios SHAWCOR TOTAL 11% 9% 18% 11% 13% 16% 18% PIPELINE & 6% 2% 22% 5% 10% 15% 20% PIPE SERVICES COMPOSITE 23% 22% 21% 22% SYSTEMS AUTOMOTIVE & 19% 18% 17% 18% INDUSTRIAL (1) Adjusted EBITDA is a non-GAAP measure. See MD&A Section 12.0: Reconciliation of non-GAAP Measures (2) Adjusted EBITDA % for prior years revised to reflect similar level of benefit from adoption of IFRS16 as 2019 (3) Pipeline segment – late cycle average 2013 to 2015, Composite segment – early cycle average 2014 to 2015, Automotive & Industrial segment – no downturn average 2013 to 2015
→ FINANCIAL STRENGTHS CAPITAL ALLOCATION SHAWCOR has clear priorities for use of future cash generated Maintain 60¢ / share Dividends to Shareholders $40-50 million / year 1 PRIMARY Maintenance CAPEX Visibility of Net Debt Strengthened Balance Sheet Leverage < 1.5x Non-Oil & Gas M&A Selective Growth Programs Composite Products International Expansion 2 SECONDARY Digital & New Technology Additional Returns To Dividends Shareholders Share Repurchase
→ INHERENT VALUE DIVERSIFICATION SHAWCOR’s diversification imperative has created inherent value not yet recognized. Comparison of Trading Multiples - (EV/EBITDA) 2020 Consensus (1) PIPELINE & Oceaneering 8.7 PIPE SERVICES Dril-Quip 10.6 Offshore 4 – 10x Transocean 10.2 Services Technip FMC 3.9 Oil States 8.4 COMPOSITE Hexcel 11.1 SYSTEMS Materials Celanese 8.0 6.8x 8 – 11x Technology NOV 9.2 TPI Composites 9.7 ZCL Composites 10.7 (2) AUTOMOTIVE & Thermon 10.4 INDUSTRIAL Automotive & Anixter 9.5 Industrial 8 - 11x Prysmian 8.8 Technology Belden 7.7 TE Connectivity 11.3 (1) Values per Bloomberg as at Feb. 28, 2020 (2) Acquisition multiple
→ SHAWCOR INVESTMENT HIGHLIGHTS 1 Supportive Market Fundamentals Financial Discipline & 2 Organizational Capability 3 Strong Competitive Positioning 4 Positive Outlook 5 Attractive Entry Point
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