Investor Presentation December 5, 2017
Reader Advisory This presentation contains forward-looking statements, within the meaning of applicable securities legislation, concerning Empire's business and affairs. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". These forward looking statements are based on current expectations, and are naturally subject to uncertainty and changes in circumstances that may cause actual results to differ materially. Readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking information is provided as of the date of this presentation, and Empire assumes no obligation to update or revise them to reflect new events or circumstances, except as may be required under applicable securities laws. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this presentation. 1
Company Strengths Compelling Industry Trends Experienced Management Team Unique Expertise & Proprietary Products & Service Proven Growth & Ability to Execute Strategy Strong Customer Relationships 3
Global leader in rapid growth market Ø Transformed from an industrial mini-conglomerate to a global leader solely focused on the Attractions market Ø Award-winning businesses, recognized as the ‘world’s best’ in: Ø High-tech, media-based attractions market (Dynamic Attractions) Ø Large telescope market (Dynamic Structures) Ø Exceptional, long term growth expected in the attractions market Ø Strategic plan to enhance highly-successful contract manufacturer business with co-ownership of attractions now underway 4
Global growth in entertainment Ø The middle class is growing rapidly, particularly in Asia, with a disposable income and increased appetite for entertainment. Ø Theme park construction is growing fast, particularly in Asia, where Empire is well- established. Financial Post, September 11, 2014 5
Creator of the most popular attractions Ø Designer and builder of premium, media-based attractions Ø Proprietary product line, such as Robotic Vehicles, Flying Theatres, Special Effects Roller Coasters, Autonomous Vehicles Ø Recent awarded USD $120 million contract; size considered an industry record Ø Contract backlog of $235 million (September 30, 2017) 6
Empire earns industry’s top award, again! Ø In November the company launched new products, demonstrating its game-changing technological capabilities. Ø These innovative products come at a time when theme park operators are All-Terrain Dark Ride aggressively seeking differentiating rides to attract guests. Flightcycle Ø Earned the coveted ‘Best New Product Concept’ at IAAPA 2017, the industry’s definitive annual convention. Ø This is the company’s third successive win. 7
Products and Services Ø Proprietary Products v Iconic Dark Rides (tracked & trackless (autonomous vehicles) v High-tech theatre products v Special effects roller coasters v Self-propelled race vehicles Ø Custom Manufactured Ride Systems v Cutting-edge rides that have never been built before v Created for famous entertainment destinations Ø Unlimited Attractions™ v Turn ‘rides’ into ‘attractions’ v Integrate story-telling, lighting, media, special effects with the ride system Ø Parts and Services v Parts for rides manufactured by Dynamic and others v Maintenance and consulting services 8
Proprietary Products 9
Built 50 iconic rides around the world 10
Co-ventures to generate recurring revenues Ø Co-ventures are a natural extension of Empire’s business, from manufacturer of ride systems and supplier of turnkey media-based attractions. Ø Co-own and operate the Dynamic Attractions’ Flying Theatre and its other proprietary attractions, under an exclusive license. Ø Co-venture subsidiaries will partner directly with high traffic, tourist- based locations. Ø Targeted profit is expected to be recurring and predictable, all of which is valuable from a market valuation perspective, especially in China. Ø In August 2017, Empire announced a $31 million Co-venture initiative – a letter of intent to structure and fund two flying theater attractions at key tourist venues in North America and China 11
Co-venture Start-Up Capital Ø Source of Funds ... $31 million $12 million - Equity to Dynamic Entertainment from Empire $5 million - Private placement with a strategic investor* …………………..directly into Dynamic Entertainment …………………..($4 million will be invested into the Chinese affiliate) $14 million - Private placement with a strategic investor* …………………..in the Chinese affiliate Ø Use of Funds ......... $31 million $13 million - North American Co-venture (smaller theater) $18 million - Chinese Co-venture (larger theater) * James Chui is joining the Empire Board and the Dynamic Entertainment Board and the Co-venture subsidiaries once the transaction closes successfully. James Chui’s biography is in Empire Industries’ August 28, 2017 news release. 12
Strategic Leadership Team 13
Capital Markets Information Stock Price 52 week high/low $0.74/$0.30 Number of Shares 68.4 million (84.6 million FD) Avg Daily Trading * 38,000 Market Cap (Dec 1, 2017) $37.8 million ($0.55/share) TTM Revenues* $133.3 million TTM EBITDA ^ $9.6 million Long Term Funded Debt ^ $13.4 million 14 *As at Sept 30, 2017
Financial Highlights 3 months 3 months 9 months 9 months (C $000) FY 2016 FY 2015 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Revenue 41,501 32,330 105,760 90,456 117,987 131,225 Adjusted EBITDA 2,657 2,014 8,400 4,415 5,594 8,139 Adjusted EBITDA % 6.4% 6.2% 7.9% 4.9% 4.7% 6.2% Net Income 889 -312 3,174 5,673 3,978 1,370 Net Income Per Share-Basic $0.01 ($0.00) $0.04 $0.06 $0.06 $0.02 15
Comparables: Opportunity for multiple growth at Empire Ma Mark rket Ma Mark rket EBITDA EB Di Diluted EPS P/LTM P/ TM TE TEV/LTM TM Cap/LTM Ca P/ P/Book Company Name Co Currency cy Ca Capitalization [L [LTM] ] Excl cl. Extra Items Diluted Di EB EBITDA To Total Value Va ($ millions) ($ ($ ($ millions) [LTM] [L ] EPS EP Re Revenues Merlin Entertainments plc (LSE:MERL) CAD 6,172.0 803.4 0.35 10.3x 2.4x 18.2x 9.7x CAD The Walt Disney Company (NYSE:DIS) 201,240.1 21,314.2 7.28 10.8x 2.9x 18.2x 53.7x CAD Comcast Corporation (NASD: CMC) 221,725.3 36,169.2 2.67 8.4x 2.1x 17.8x NM Six Flags Entertainment Corporation (NYSE:SIX) CAD 6,967.6 723.8 2.51 13.9x 4.1x 33.1x NM Cedar Fair, L.P. (NYSE:FUN) CAD 4,851.5 568.1 3.41 11.7x 2.9x 25.3x NM Brogent Technologies Inc (GTSM:5263) CAD 509.9 15.7 0.23 31.0x 8.9x 50.8x 4.8x D-Box Technologies Inc. (TSX:DBO) CAD 53.7 0.5 ( 0.02 ) 89.8x 1.6x NM 2.9x CAD IMAX China Holding, Inc. (SEHK:1970) 1,363.3 67.5 0.13 17.5x 9.0x 29.7x 4.5x Me Mean n 55, 55,821. 821.9 7,481. 7, 481.5 2. 2.07 07 24. 24.5x 4. 4.2x 27. 27.6x 30. 30.2x 2x Medi Me dian n 5, 5,677. 677.0 646. 646.0 1.43 1. 43 12. 2.8x 2. 2.9x 25. 5.3x 7. 7.25x 25x Em Empire Industries (TSXV:EI EIL) CAD CA 37.8 37. 9. 9.6 ( ( 0.01) ) 6. 6.2x 2x 0. 0.5x 5x NM NM 2. 2.4x 4x Source: Capital IQ and Yahoo Finance, Nov 17, 2017 16
Strong catalysts for growth Ø ‘Go-to supplier’ for theme parks undertaking significant capital expansion programs worldwide, including the two industry leaders Ø Well positioned for Asia’s growing demand: § Bilingual management with strong background in Asia § Empire is building/has installed rides in China, Japan, Malaysia, Indonesia, South Korea, Hong Kong and Macau Ø Unrivalled technical and creative knowledge for iconic attractions Ø Successfully closed an equity raise of $7.9 million in early December 2017 which will help fund the planned growth and co-venture initiative Ø Negotiated a $19 million private placement with a strategic investor directly into the co-venture initiative, expected to close in Q1 2018 17
Why invest in Empire Ø Empire is focused on benefiting from the global phenomenon of accelerating growth in entertainment capital spending. Ø Empire is leveraging its reputation as a ride system supplier to expand profit margins in four ways: § building the complex ride systems for the leaders in the theme park industry § Turning ride systems into turn-key attractions with its Orlando office and Unlimited Services TM § Recurring revenue and profit from replacement parts and services § Recurring revenue and profit from Co-ventures Ø Insiders, Officers & Directors own 50% of the company 18
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