Corporate Presentation December 2015 Dividend and Growth TSX-V: CFL CFL 1 TSX-V
Forward Looking Statements or expectations upon which they are based will Certain information with respect to CERF The Company cannot can guarantee future results, “Company”) occur. By its nature, forward-looking Incorporated (the in this levels of activity, performance or achievements. information involves numerous assumptions, presentation herein contain certain forward- Consequently, there is no representation by the known and unknown risks and uncertainties, looking statements and forward looking Company that actual results achieved will be the both general and specific, that contribute to the information which are based upon the same in whole or in part as those set out in the Company’s possibility that the predictions, forecasts, current internal expectations, forward-looking statements and information. Some projections and other forward looking estimates, projections, assumptions and of the risks and other factors, some of which are beliefs. In some cases, words such as “plan”, statements will not occur. Forward-looking beyond the Company’s control, which could cause “expect”, “project”, “intend”, “believe”, statements and information in this presentation results to differ materially from those expressed in “anticipate”, “estimate”, “may”, “will”, herein include, but are not limited to, the forward-looking statements and information “potential”, “proposed” and other similar words, statements with respect to: contained in this presentation herein include, but or statements that certain events or conditions are not limited to: • results of various projects of the Company; “may” or “will” occur, are intended to identify • general economic conditions in Canada, the • growth expectations within the Company; forward-looking statements and forward- United States and globally; • the performance and characteristics of the • looking information. These statements are not failure to realize anticipated benefits of Company’s rental fleet; guarantees of future performance and involve acquisitions; • capital expenditure programs; • known and unknown risks, uncertainties and stock market volatility and market valuations; • realization of the anticipated benefits of • other factors that may cause actual results or competition for, among other things, capital and acquisitions and dispositions; and events to differ materially from those skilled personnel; • pro forma estimates for 2015 based on • anticipated in the forward-looking statements the availability of capital on acceptable terms; analyst consensus. or information. In addition, this presentation and Although the Company believes that the • may contain forward-looking statements and the need to obtain required approvals from expectations reflected in the forward-looking information attributed to third party industry regulatory authorities; P.O Box 1326 statements are reasonable, there can be no sources. Undue reliance should not be placed Vernon, BC, V1T 6N6 Readers are cautioned that the foregoing list of assurance that such expectations will prove to on these forward-looking statements, as there factors is not exhaustive . be correct. can be no assurance that the plans, intentions CFL 2 TSX-V
Financial Snapshot Leveraged to Northern Alberta’s Industrial and Commercial Construction and Oil and Gas Sectors As at December 1, 2015 CFL Trading Symbol TSX-V 36.4 mm Shares outstanding (Basic) Share price $0.72 52 week high / low $2.96 / $0.70 Volume (30 day avg.) 43,916 Yield 11% Market Capitalization $26 mm Net Debt (Q3) (1) $30.6 mm Enterprise value (EV) $57.0 mm CFL (1) Net debt is calculated as bank debt + interest bearing obligations – unrestricted cash 3 TSX-V
Diverse Revenue Streams Industrials Division 2014 INDUSTRIAL RENTALS SEGMENT WASTE MANAGEMENT SEGMENT (1) 2014 Energy Services OILFIELD RENTALS SEGMENT (2) Division • Surface Rentals • Down Hole Equipment (1)(2) • Accommodations CFL (1) Adjusted EBITDA shown here does not include $2.4 mm in unallocated corporate fees 4 (2) Includes Winalta for 4 months of 2014 and Empire for 7 months of 2014 TSX-V
Track Record As at December 1, 2015 $0.70 $0.09 Current Price Earnings Per Share (TTM) 41 $3.54 Total Distributions Consecutive / Share Quarterly Dividends $0.08 Current Annualized Dividend CFL 5 TSX-V
Our Strategy Organic Growth Strategic opportunities within the business segments Target top-line growth rate of 10% Complementary Acquisitions Six accretive acquisitions to date 3 energy services / 3 industrials Balanced cash and share Target - high margin / low head count Dividend Diversified model provides dividend stability More than $26 mm paid in dividends to date 41 consecutive quarterly dividends CFL 6 TSX-V
Industrials Division Waste Management Industrial Rentals Segment Segment Heaters Manage 5 Government Landfills Generators Manage 2 Government Transfer Stations Compaction Contracted Transfer Services Other Equipment Commercial Waste Collection CFL 7 TSX-V
Construction Rentals Equipment to Facilitate Commercial Construction Projects 400 plus active customers 85% repeat customers Economic growth in Alberta Major construction contractors Top 10 customers Alberta TTM building permits up 18%* Home builders 1/3 revenue Est. 2% population growth in 2015 Government and infrastructure Average relationship 14 yrs. * Alberta Finance and Enterprise 35K sq. ft. facility on 6 Acres Heaters 20% Generators 16% Compaction 10% Other 45% Compressors 9% CFL CFL 8 8 TSX-V TSX-V
Waste Management MCL provides heavy equipment and personnel 7 Regional Facilities Landfills 5 Government AB Cities 2 Government transfer stations Rose Ridge Drayton Long term contracts Valley Edmonton Commercial waste collection Leduc Hinton Aspen Roll-off bin and collections services Camrose EBITDA margins of approximately 20% Calgary Opposite seasonality to Equipment Rental Business CFL 9 TSX-V
Growth Opportunities Industrial Rentals Segment Organically grown since 1998 Large and growing market in Canada Waste Management Segment Provide additional services for existing facilities Add new contracts Acquisitions Vertically integrate waste management services o Acquisition Strategy Geographic expansion Undercapitalized targets CFL CFL 10 TSX-V TSX-V
Energy Services Downhole Equipment Accommodations Surface Rentals Modern, diverse rental fleet Specialty pipe High-quality modular accommodations 400 bbl. Tanks Heavy weight drill pipe Wellsite accommodations Floc Tanks Drill pipe Integrated Wellsite System (IWS) Drill collars Generators Drill Camps Full complement of equipment Related handling equipment Dedicated Geo labs (DGL) Surface Rentals $ 81mm $19 mm / 23% Downhole Equipment Replacement Value $8 mm / 10% Accommodations $54 mm / 67% CFL 11 TSX-V
Putting it Together Drill Pipe Floc Tanks 400 bbl Tanks Light Towers Shale Tanks Generators Specialty Drill Pipe Wellsite Accommodation CFL 12 TSX-V
Growth Opportunities Leveraging existing client relationships and expanding product offering CAPEX allocation to assets required for customers operating longer-term, less seasonal Operational efficiencies through better utility of services technicians Acquisitions that expand operational footprint CFL CFL 13 TSX-V TSX-V
Financial Performance $70 $58 $60 $47 $50 $40 ($MM) $34 $27 $30 $19 $20 $15 $13 $8 $8 $10 $5 $0 2010 2011 2012 2013 2014 Revenue EBITDA CFL Note: 2015 CERF consensus includes estimates by Global Securities and Alta Corp, Industrial Alliance and Mackie Research 14 TSX-V
Balance Sheet Assets $144 mm $33 $35 4.5 Net Debt (1) Dec 31, Dec 31, $29 4.0 2014 2013 Liabilities $30 $48 mm 3.5 $25 $1,603 $557 Net Debt (1) 3.0 Cash and equivalents $20 / EBITDA (2) $20 2.5 $17 2.0 $15 $10,060 $2,271 $11 Working capital 1.5 $10 1.0 $5 0.5 $33,351 $18,907 Long-term debt $0 0.0 2010 2011 2012 2013 2014 (1) all interest bearing debt ( bank debt + financial leases) (2) CERF Adjusted EBITDA plus stock based comp, acquisition expenses + non recurring expenses CFL 15 TSX-V
Management and Board of Directors Insiders Own ~ 17% Independent Directors Joined Management Joined Chairman and Chief Executive Artie T. Kos Austin Fraser Former President of 2015 Officer of ATK Oilfield 2014 Executive Chairman Winalta Inc. Transportation Inc. President J. Blair Goertzen President and CEO of 2014 Over 25 years financial Enerflex Ltd. Director Derrek Wong, MBA,CFA,FCMA 2014 management and capital markets CFO experience Bill Guinan 2005 Partner of BLG LLP Director Skip Kerr 30 years of waste industry and 2013 management experience COO David Maplethorpe 2011 Former CEO of MCL Director Brad R. Munro President and CEO of Bittercreek 2014 Capital Corp. Director Wayne Wadley Founder and former President and 2014 CEO of CERF Incorporated. Director Ken Stephens Former CFO of CERF Incorporated 2005 CFL (Retired) Director 16 TSX-V
Why CERF Compelling organic growth opportunity in Northern Alberta’s diversified energy services and industrial sectors Disciplined acquisition strategy • Robust pipeline of complementary business targets Diversified cash flow supports dividend CFL 17 TSX-V
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