Select Water Solutions, Inc. · NYSE:WTTR
Select Water Solutions — Select Energy Services — Merger or Acquisition (July 2017)
20 slides from Select Water Solutions's merger presentation, Jul 19, 2017
Slide 1: Disclaimer Statement
Disclaimer Statement 2 Cautionary Statement Regarding Forward Looking Statements All statements in this communication other than statements of historical facts are forward-looking statements which contain our current expectations about our future results. We have attempted to identify any forward-lo
Slide 2: Strategic Rationale for Combination
By merging with Rockwater, Select (WTTR) strengthens its position as the only public company devoted to water solutions for the unconventional oil and gas industry A combination of Select and Rockwater has compelling industrial and financial logic Strategic Rationale for Combination 3 Further streng
Slide 3: Combination of Highly Complementary Businesses
Combination of Highly Complementary Businesses 4 Merger expected to be meaningfully accretive to Select’s EPS, CFPS and EBITDA per share in 4Q’17P, 2018P and 2019P before any contribution from synergies Accretive for Shareholders 37,953,214 common shares of Select issued to Rockwater shareholders $5
Slide 4: Rockwater: A Leading Water Services & Oilfield Chemicals Company
Rockwater: A Leading Water Services & Oilfield Chemicals Company 5 Leading provider of comprehensive water management solutions and complementary chemical products Presence in many of the most active unconventional plays in North America Exposure to the life-cycle of a well from completion to produc
Slide 5: Strong Strategic Fit
Water Sourcing Strong Strategic Fit 6 Permanent Water Pipeline Infrastructure Saltwater Disposal Wells Hydraulic Fracturing Water Gathering Pipeline Completion Chemicals Production Chemicals Pre-Frac and Well Testing Activities Directly Tied to Well Completions Flowback, Water Hauling and Disposal A
Slide 6: Complementary Product and Service Offerings
Complementary Product and Service Offerings 7 Combination will enhance Select’s position across multiple business lines ¹ Excludes unallocated corporate expenses. % of Pro Forma % of Pro Forma Business Line Select Rockwater Q2 '17 Revenue Q2 '17 EBITDA¹ Water Sourcing PPP P Water Transfer PPP PP Wat
Slide 7: Rockwater oilfield chemicals business
Rockwater develops, manufactures and provides a full suite of chemicals utilized during the well completion and production process, providing exposure to completions intensity as well as long-lived production Rockwater operates three manufacturing facilities and distributes proprietary chemicals to
Slide 8: Attractive Relative Valuation
Attractive Relative Valuation 9 Ratio of Enterprise Value to Tangible Adjusted Book Value¹,² ¹ Source: Capital IQ. As of July 17, 2017. ² Tangible adjusted book value defined as shareholders’ equity plus net debt less goodwill and other intangible assets. ³ Tangible adjusted book values as of May 31
Slide 9: Expansion of Earnings Base and Capacity
Expansion of Earnings Base and Capacity 11 Source: Capital IQ. As of July 17, 2017. Annualized EBITDA is not intended to reflect a forecast of future performance. Total enterprise value WTTR and Pro Forma based on midpoint of Q2 range ($ in millions) Q2 ‘17P Annualized EBITDA¹ (Wall Street Consensus
Slide 10: Revenue Mix and Geographic Diversification
Revenue Mix and Geographic Diversification 12 Source: Management estimates based on midpoint of projected range Regional breakout of estimated revenue for U.S. Water Solutions segment Select Standalone Q2’ 2017 Pro Forma Combined Q2’ 2017 Select Revenue By Business Segment¹ Water Solutions Oilfield
Slide 11: Complementary Customer Relationships
Complementary Customer Relationships 13 Source: Management estimates Estimated top customer revenue for Water Solutions segment through 1st half of 2017 Blue-chip customer base with very complementary overlay across all service lines and geography No customer to represent more than 6.8% of the combi
Slide 12: Strong Combined Management Team
Strong Combined Management Team 14 Select Legacy Rockwater David Nightingale Executive Vice President Wellsite Services Paul Pistono Senior Vice President Oilfield Chemicals Cody Ortowski Executive Vice President Business Strategy Michael Skarke Executive Vice President Water Solutions Adam Law Seni
Slide 13: Financially Compelling Transaction
Stock-for-stock transaction enables all stockholders to participate in future upside Pro forma ownership1: ~64.4% Select and ~35.6% Rockwater Select maintains a strong, unlevered pro forma balance sheet Upsized credit facility with Wells Fargo of $150 million committed at signing with expected expan
Slide 14: Significant Earnings Capacity & Growth Potential
Significant Earnings Capacity & Growth Potential 16 The pro forma combined companies generated $2.1 billion of revenue and $322 million of Adjusted EBITDA in 2014 Select and Rockwater have invested over $350 million in combined capital expenditures and acquisitions since 2014, including the buildout
Slide 15: Balance Sheet and Liquidity Provides Flexibility
Best-in-class balance sheet with significant liquidity and attractive public currency Upsized credit facility allows financial flexibility for large scale infrastructure development opportunities and future M&A transactions Balance Sheet and Liquidity Provides Flexibility 17 Pro Forma Balance Sheet
Slide 16: Strategic Rationale for Combination
By merging with Rockwater, Select (WTTR) strengthens its position as the only public company devoted to water solutions for the unconventional oil and gas industry A combination of Select and Rockwater has compelling industrial and financial logic Strategic Rationale for Combination 18 Further stren
Slide 17: Appendix: Non-GAAP Reconciliation
Appendix: Non-GAAP Reconciliation 19
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation 20 We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income, plus taxes, interest expense, and depreciation and amortization. We define Adjusted EBITDA as EBITDA plus/(minus) loss/(income) from discontinued operations, plus any
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation 21 Select Energy Services Rockwater Energy Solutions1 Rockwater 2014, 2015 and 2016 figures are reported on a pro forma basis for the March 2017 acquisition of Crescent Companies, LLC Year Ended December 31, 2017 ($ in millions) 2014 2015 2016 Q2 (Low) Q2 (High) Net Income/(L
Slide 20: Non-GAAP Reconciliation
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