Investor Presentation November 2018
Disclaimer Forward Looking Statements This presentation and our accompanying comments include “forward - looking statements” within the meaning of the Private Securitie s Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements abou t f uture financial and operating results, the Company’s plans, objectives, estimates, expectations, and intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward- looking statements. These risks and uncertainties include, but are not limited to, those set forth in the Company’s Registrat ion Statement on Form S-1 filed on June 4, 2018 with the Securities and Exchange Commission (“SEC”) and in our other reports filed from time to time with the SEC. There may be other factors of which we are not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements. Non-GAAP Financial Measures Included in this presentation are certain non-GAAP financial measures designed to complement the financial information presented in accordance with GAAP because management believes such measures are useful to investors. The non-GAAP financial measures are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP. The calculations of the non- GAAP financial measures are subjective, based on management’s belief as to which items should be included or excluded in order to provide the most reasonable and comparable view of the underlying operating performance of the business. We may, from time to time, modify the amounts used to determine our non-GAAP financial measures. When applicable, management’s discussion and analysis includes specific consideration for items that comprise the reconciliations of its non -GAAP financial measures. Reconciliation of non-GAAP financial measures are included in the Supplemental Slides in the Appendix of this presentation. Market & Industry Data This presentation includes industry and trade data, forecasts and information that was prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys and other independent sources available to the Company. Some data also are based on the Company’s go od faith estimates, which are derived from management’s knowledge of the industry and from independent sources. These third-party publications and surveys generally state that the information included therein has been obtained from sources believed to be reliable, but that the publications and surveys can give no assurance as to the accuracy or completeness of such information. The Company has not independently verified any of the data from third-party sources nor has it ascertained the underlying economic assumptions on which such data are based. 1
Why Invest in Charah Solutions? Industry Comps Suggest Significant Upside Potential 1 Valuation Discount ▪ Stock trading at a substantial discount to peer group averages of 11.2x – 17.1x ▪ Expect double-digit free cash flow yield in 2019 ▪ Newly public company; market does not yet appreciate growth potential Substantial Growth Potential ▪ More than $3 billion in bids outstanding (multi-year revenue opportunity); timing 2H 2019 and beyond ▪ New technology offering expected to provide competitive advantage in 2H 2019 and beyond Improving Cash Flow and Balance Sheet ▪ Expected significant free cash flow generation in 2019 (Brickhaven contract completion) ▪ Ample liquidity ($36 million as of 9/30/18; to increase by mid-2019) ▪ Plan to further reduce debt and have excess cash available for growth ▪ Net leverage ratio of 2.5x (as of 9/30/18) Each 1-point Increase in EV / EBITDA Multiple ~ $3.30 / share or 50% 2 1. LTM EV/EBITDA average multiple is 12.9x (Environmental Services 11.6x, Industrial Services 11.8x, Misc. Commercial Services 17.1x, Construction Materials 11.2x). Source: Factset 11/26/18 2 2. Based on closing stock price on November 23, 2018 and 3Q 2018 LTM Adjusted EBITDA of $96M
Company Snapshot A Leading Provider of Environmental and Maintenance Services to the Power Generation Industry Expanding National Footprint Diverse Customer Portfolio ▪ 35+ Coal-Fired Power Plants ▪ 13 Nuclear Power Plants ▪ 30+ MultiSource TM Materials Network Locations Q3 FY18 Highlights ▪ $186 M revenue, up 56% YoY ▪ Net Income (loss) of $(17.4)M ▪ $33 M Adjusted EBITDA 1 ▪ Net Leverage of 2.5x Well Positioned for Continued Growth ▪ Large addressable market driven by environmental regulations ▪ Robust pipeline – over $3B in bids outstanding Service Location Corporate Headquarters Service Area 1 ▪ Deployment of proprietary technologies Stats as of 9/30/2018 3 1. Please refer to the supplemental slides in the Appendix for Adjusted EBITDA reconciliation to GAAP
Investment Highlights Leading Provider of Broad Suite of Services ▪ Industry-leading quality, safety and compliance record ▪ Provide services critical to continued power plant operations and environmental compliance ▪ Uniquely positioned with customers seeking to consolidate service providers Contract-Based Financial Model Provides Long-Term Stability and Financial Protection ▪ Long-term partnerships with leading power generators; ~90% renewal rates in Fossil Services ▪ Cost-reimbursable or unit-price contracts; no commodity exposure; little cyclicality to business ▪ Strong balance sheet (net leverage of 2.5x) and ample liquidity; contract-related payment in 1H 2019 to enable further delevering and result in excess cash available for growth Robust Growth Strategy with More than $3 Billion in Bids Outstanding ▪ Capitalize on growing need for remediation of coal ash ▪ Increase market share and expand range of service offerings ▪ Execute on technology deployment to enhance competitive position 4
Broad Suite of Services Maintenance & Technical Services Environmental Solutions Remediation & Embedded Power Plant Presence Fossil Services Compliance Services Sustainable Solutions Segment Overview Segment Overview Recurring, routine Ash pond and landfill design, operations & maintenance at closure & remediation as coal-fired and nuclear power well as recycling and selling plants of coal ash Nuclear Services Byproduct Sales Recurring & Mission-Critical Significant Market Opportunity 5
Contracts & Customers Provide Stability & Financial Protection Diverse Customer Base with Key Contract Features Leading Power Generators ✓ Long-term partnerships with leading power generators ✓ ~90% contract renewal rates historically in Fossil Services 20+ ~50 ✓ Contract lengths between 18 months and five years Utility ✓ Primarily cost-reimbursable or unit-price contracts Plants Customers ✓ Capital expenditures tied to new contracts Minimal contract risk; no commodity exposure; little cyclicality to business Contract-related payment in 1H 2019 to enable further delevering and result in excess cash available for growth Predictable revenue stream leads to stable balance sheet with low net leverage (2.5x) and significant liquidity Charah’s Embedded Presence Leads to Long -Lasting Relationships 6
Significant Market Opportunities Maintenance & Technical Services Environmental Solutions $8 B 1.5 B tons $75 B+ Annual estimated spend on coal ash management ( $3B ) and nuclear outsourced of coal ash stored in Total estimated coal maintenance and capital projects ( $5B ) 1,100+ ash ponds & ash remediation landfills opportunity Aging Fleets Remediation need accelerated by coal plant closures Increasing need for recurring maintenance services 20 M+ tons $1 B+ Only 2-3 days 12-24 months Estimated annual Annual market for of on-site storage for coal Frequency of nuclear byproduct demand Byproduct Sales ash is typical for coal power power plant maintenance Acquired technologies create additional market opportunities plants; in excess of 100 M & refueling outages tons is generated annually Over $3 Billion in Bids Currently Outstanding, Largest in Company History Source: Energy Information Administration, September / November 2017; American Coal Ash Association, 2016; U.S. Environmental Protection Agency (EPA), 2014; 7 Management Estimates
Recommend
More recommend
