Ces Energy Solutions Corp · TSX:CEU
Ces Energy Solutions — Investor Presentation (August 2023)
22 slides from Ces Energy Solutions's investor presentation, Aug 10, 2023
Slide 1: Leading Provider of Consumable Chemical Solutions
Leading Provider of Consumable Chemical Solutions August 2023
Slide 2: Forward Looking Information and Statements
Forward Looking Information and Statements Certain statements in this presentation may constitute forward-looking information or forward-looking statements (collectively referred to as “forward-looking information”) which involves known and unknown risks, uncertainties and other factors which may ca
Slide 3: Investment Highlights
Investment Highlights North American Vertically Decentralized Low capital provider of operations in Resilient & integrated countercyclical intensity & molecular level consumables key attractive strong free cash chemical markets balance sheet business model flow generation solutions Share Price1 $2.9
Slide 4: Leading Provider of Consumable Chemical Solutions
Leading Provider of Consumable Chemical Solutions TTM 2023 Revenue By Geography 9 lab facilities 93 reactors & blend tanks 68% US C$2.2 Billion 32% Canada 85 200+ scientists, patents engineers & technicians ~2,200 US operations • Permian Canadian operations • Montney employees ~1,550 US • Eagleford
Slide 5: Solving Problems and Adding Value through Technology & Customer Service
Solving Problems and Adding Value through Technology & Customer Service Analyze & Solve Evolving Client Needs Study Data & Identify, Samples in Recommend & Laboratories Produce Chemical Treatments DEMULSIFIERS | VISCOCIFIERS Optimize Chemical EMULSIFIERS | LUBRICANTS CORROSION INHIBITORS Solutions t
Slide 6: Improving Trends & Stable End Markets
Improving Trends & Stable End Markets Drilling Fluid Chemical Requirements Increasing North American Crude Oil Production by Basin1 20 $120 $100 15 Avg. WTI ($US/bbl) Vertical Horizontal $80 Well Well MMbbl/d Drilling Fluids: Drilling Fluids: 10 $60 2–5% 5 – 10 % $40 of total well cost of total well
Slide 7: Strong Competitive Positioning
Strong Competitive Positioning Worldwide Drilling & Completion Fluids Market Size(1) Worldwide Production and Specialty Chemicals Market Size(1) $15,000 $12,000 $12,000 $9,000 $9,000 Revenue USD ($M) Revenue USD ($M) $6,000 $6,000 $3,000 $3,000 $0 $0 2015 2016 2017 2018 2019 2020 2021 2022 2016 2017
Slide 8: Well Positioned for Growth with Decentralized Model
Well Positioned for Growth with Decentralized Model DRILLING FLUIDS COMPLETION CHEMICALS PRODUCTION CHEMICALS PIPELINES & MIDSTREAM INDUSTRIAL/ COSMETICS/OTHER Allocation of capital dedicated to the most attractive basins and markets while leveraging decentralized entrepreneurial model and basic che
Slide 9: Quality Customer Base
Quality Customer Base Top 50 Customer Breakdown – 2023 (TTM Revenue) 73% Public Companies 27% Private Companies 66% of top 50 public company revenue was from customers with Market Top 50 Public Customers – By Market Capitalization1 Capitalizations of $10Bn to $600Bn $10Bn to $600Bn 66% $CBn $1Bn to
Slide 10: Low Capital Intensity
Low Capital Intensity CES – Historical Capital Spend 280 260 14.0% 240 220 12.0% Adjusted EBITDAC(1) 200 180 10.0% $MM 160 Net Capex(2) 8.0% 140 120 6.0% 100 Net Capex as a % of Revenue(3) 80 4.0% Significant expansion 60 40 2.0% capex largely complete 20 - 0.0% Expansion Projects 2019 2020 2021 202
Slide 11: Resilient & Countercyclical Balance Sheet
Resilient & Countercyclical Balance Sheet Historical Leverage & Working Capital Working Capital Surplus $84M Exceeds Total Working $65M Debt Capital Working Harvest Capital Harvest on 700 Flat YoY Revenue Total debt primarily 600 comprised of working capital 500 Monetization of working capital 400 r
Slide 12: Strong Financial Momentum
Strong Financial Momentum 120 16% 14% 100 12% 80 10% Drivers of Improving Results: $MM 60 8% ▪ Increased activity & market share 6% 40 ▪ Adoption of price increases 4% ▪ Prudent cost structure 20 ▪ Strategic inventory purchases 2% - 0% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Slide 13: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation Free Cash Flow3 60 35.0% Since 2006 IPO, ~C$375 million2 30.0% in dividends paid to shareholders and 50 grew PP&E1 base to ~C$351 million 25.0% 40 Since July 2018, ~C$89.3 million2 in share buybacks representing 16% 20.0% of shares outstanding since inception $MM 30
Slide 14: Prudent Capital Structure & Liquidity Profile
Prudent Capital Structure & Liquidity Profile Current Capitalization Maturity Schedule Share Price1 $2.99 Shares Outstanding1 248,300,825 700 Undrawn Canadian Term Loan MARKET CAPITALIZATION $742MM 600 250 Facility(8) Dividend Yield1 3.3% 500 Senior Notes 400 1 Senior Facility Draw $98MM 300 Senior
Slide 15: Investment Highlights
Investment Highlights North American Vertically Decentralized Low capital provider of operations in key Resilient & integrated countercyclical intensity & molecular level consumables attractive strong free cash chemical markets balance sheet business model flow generation solutions 15
Slide 16: Contact information
Contact information CES Energy Solutions Suite 1400, 332 – 6th Avenue SW Calgary, Alberta Canada T2P 0B2 T 403.269.2800 F 403.266.5708 Toll Free 1.888.785.6695 TSX | CEU WWW.CESENERGYSOLUTIONS.COM/IR 16
Slide 17: Appendix
wh Cate APPENDIX
Slide 18: Management Team
Management Team Senior management has approximately 125 years combined experience and broad in-depth knowledge of CES’ products and end markets Management and insiders currently own approximately 4% of outstanding common shares and are aligned with shareholders in creating long-term sustainable valu
Slide 19: Board of Directors
Board of Directors Individual Position Biography • Director of Mullen Group Ltd. and The Calgary Foundation Director and Chairman of Board of Philip Scherman • Former Audit Partner of KPMG Directors • Over 45 years of experience • Formerly Chief Investment Officer and Senior Vice President at Empire
Slide 20: Historical Financial Information
Historical Financial Information 2020 2021 2022 LTM Q2 2023 Revenue $888,047 $1,196,420 $1,922,319 $2,160,926 Adjusted Gross Margin1 $231,291 $302,557 $447,650 $513,624 Adjusted Gross Margin % of Revenue 1 26.0% 25.3% 23.3% 23.8% Adjusted EBITDAC1 $102,168 $156,156 $257,022 $304,534 Adjusted EBITDAC
Slide 21: Non-GAAP & Other Financial Measures
Non-GAAP & Other Financial Measures Non-GAAP Measures & Non-GAAP Ratios This presentation uses certain financial measures and ratios that are not recognized under IFRS, where management believes they assist the reader in understanding CES’ results. These measures and ratios do not have a standardize
Slide 22: Non-GAAP & Other Financial Measures (cont.)
Non-GAAP & Other Financial Measures (cont.) Total Debt / Adjusted EBITDAC – is a non-GAAP ratio that Management believes is a useful measure of the Company’s liquidity and leverage levels, and is calculated as Total Debt divided by Adjusted EBITDAC. Total Debt and Adjusted EBITDAC are non-GAAP measu
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