UCT Shareholder Meeting February 11, 2014 UCT COATINGS, INC. - PowerPoint PPT Presentation

Shareholder Meeting UCT Shareholder Meeting February 11, 2014 UCT COATINGS, INC. February 11, 2014 3300 SW 42 ND AVENUE PALM CITY, FL USA This Document Contains Information that is Confidential and Proprietary to UCT Coatings, Inc

2013 Accomplishments • Completed new plant and offices (cost of $2M) with internally generated funds • Moved out of and remediated the Stuart, Florida facility (cost of $160K) • Paid off the remaining debt on Palm City plant ($300K) • Enhanced IT infrastructure and improved data backup capabilities • Increased sales – UCT ‐ Up 53% (from $3.4M to $5.2M) – IKS ‐ Up 6.5% (from $20M to $21.4M) • Increased EBITDA – UCT EBITDA increased 340% (from $257K to $872K) – Consolidated EBITDA up 25% (from $2.4M to $3.0M) White out this line

2013 Challenges UCT • Move to new plant location ($160K) and time and interruption of production schedule • New plant failures, vendor support, quality issues • Difficulty fulfilling FailZero orders • General Contractor dispute on office construction IKS • Defendant on lawsuit filed in Washington state (IKS’ insurance company has also filed to a lawsuit to deny coverage) • Capacity and mechanical breakdown issues White out this line

Consolidated Financial Overview UCT Coatings Consolidated Statements Of Operations 2008 2009 2010 2011 2012 2013 Revenue $ 30,117,881 $ 21,528,239 $ 19,689,319 $ 20,517,147 $ 23,647,804 $ 26,548,327 COGS 22,187,303 14,828,098 10,703,016 11,171,753 16,642,947 18,631,779 Gross Margin 7,930,578 6,700,141 8,986,303 9,345,394 7,004,857 7,916,548 SG&A 17,794,475 16,142,885 11,035,580 25,580,452 5,401,647 6,061,012 Net Income (loss) $ (9,863,897) $ (9,442,744) $ (2,049,277) $ (16,235,058) $ 1,603,210 $ 1,855,536 EBITDA $ (5,490,700) $ (2,115,647) $ (780,688) $ 539,990 $ 2,378,295 $ 2,658,166 White out this line

UCT Financial Overview UCT Coatings Statements Of Operations 2008 2009 2010 2011 2012 2013 Revenue $ 14,963,297 $ 7,974,581 $ 2,913,950 $ 2,560,682 $ 3,584,750 $ 5,184,312 Cost of Sales 10,624,511 5,098,313 2,054,250 1,684,414 2,225,607 3,074,088 Gross Margin 4,338,786 2,876,268 859,700 876,268 1,359,143 2,110,224 SG&A 14,254,967 12,842,858 4,198,572 17,977,028 1,421,132 1,615,627 Net Income (loss) $ (9,916,181) $ (9,966,590) $ (3,338,872) $ (17,100,760) $ (61,989) $ 494,597 EBITDA $ (6,028,286) $ (3,157,276) $ (2,414,749) $ (781,469) $ 256,018 $ 872,294 White out this line

IKS Financial Overview International Knife and Saw Statements Of Operations 2008 2009 2010 2011 2012 2013 Revenue $ 15,154,584 $ 13,553,658 $ 16,775,369 $ 17,956,465 $ 20,063,054 $ 21,364,015 Cost of Sales 11,562,792 9,729,785 8,648,766 9,487,339 14,417,340 15,557,691 Gross Margin 3,591,792 3,823,873 8,126,603 8,469,126 5,645,714 5,806,324 SG&A 3,539,508 3,300,027 6,837,008 7,603,424 3,980,515 4,445,385 Net Income 52,284 523,846 1,289,595 865,702 1,665,199 1,360,939 EBITDA $ 537,586 $ 1,041,629 $ 1,634,061 $ 1,321,459 $ 2,122,277 $ 1,785,872 White out this line

Business Overview budget White out this line

Business Overview 2011 2012 2013 2014 Commercial Arms Spikes Tactical 139 199 156 240 Sales by Market 2011 2012 2013 2014 LWRC Intl 197 151 544 365 Freedom Group 38 105 218 160 Commercial Arms 981 1,367 2,671 2,150 Government 408 121 146 175 Brownells 66 227 256 200 Oil & Gas 603 1,509 1,951 1,900 RSR Group 45 240 405 300 Industrial 40 62 26 50 Amchar 90 100 131 100 Affiliates 342 369 368 450 Rifle Gear 132 100 Chemistry, R&D, Other Plating 16 0 23 100 FailZero Kits 88 176 360 120 Key Acct Total 663 1,198 2,202 1,585 Totals 2,390 3,428 5,185 4,825 % of Segment sales 68% 88% 82% 74% Oil & Gas Baker Hughes Centrilift 368 1089 1156 1070 GE Oil & Gas 112 261 688 700 Key Acct Total 480 1,350 1,844 1,770 % of Segment sales 80% 89% 95% 93% White out this line

2014 Business Development Plans • Mitigate Firearm Market Cool ‐ down Following 2013 Frenzy • Expand FailZero Distribution & Dealer Program • With Baker Hughes – Launch Abrasion Resistant Stage Program • Take Advantage of Oil & Gas Applications Successes – Oil Tools, Plunger Lift Systems, Ball Valves • Broaden Oil & Gas Customer Base – Schlumberger, Halliburton, IES Valves USA, IPS Systems • Commercialize Russian Licensee White out this line

2014 Strategic Plan ‐ UCT • Develop and implement a preventive maintenance program for the Palm City plant • Hire product development engineer and commercial arms manager • Continue to focus on the oil and gas and commercial arms markets • Develop production procedures and methodologies to reduce operating costs • Prepare feasibility study for opening new UCT plants in Houston and Northeast U.S. White out this line

2014 Strategic Plan ‐ IKS • Develop and implement a preventive maintenance program • Develop metrics for quality, service and productivity • Focus on selling grinding system to key customers (new patent pending) • Continue to aggressively sell UCT coated log saw blades at high margins • Take steps to increase sales in new markets, esp. South America and Europe White out this line

2014 Budget UCT Coatings 2014 Consolidated Budgets IKS UCT Coatings Intercompany Consolidated Revenue $ 23,556,000 $ 4,007,000 $ (450,000) $ 27,113,000 Cost of goods sold 16,460,519 2,653,421 (450,000) 18,663,940 Gross Margin 7,095,481 1,353,579 8,449,060 Selling, general and administrative 4,761,375 1,309,705 6,071,080 Other expense, net (96,220) (129,800) (226,020) Net Income (loss) $ 2,237,886 $ (85,926) $ 2,151,960 EBITDA $ 2,606,662 $ 355,749 $ 2,962,411 White out this line

Questions? White out this line