NRC — Q4 2018 Earnings Presentation
36 slides from NRC's earnings presentation, Mar 18, 2019
Slide 1: Q4 & Full Year 2018 Earnings Presentation
Slide 2: Important Disclaimers
Important Disclaimers This presentation contains financial information and forecasts with respect to NRC Group Holdings Corp. Our auditors did not audit, review, compile or perform any procedures with respect to the projections included herein, and accordingly, do not express an opinion or provide a
Slide 3: 2018 Summary
2018 Summary Transformative Year for NRCG v v v Ended 2018 on a strong note, capping a transformative year Exceeded both pro forma revenue and Adj. EBITDA guidance for 2018 Combined legacy NRC and Sprint formed NRC Group in June while enhancing debt with a covenant light term loan Completed acquisit
Slide 4: Q4 & 2018 Financial Summary
+ Revenue increased 15% to $107.3 million. + Adjusted EBITDA’ increased 30% to $31.4 million. + Net loss was $45.8 million, or $(1.83) per share’, compared to net income of $7.7 million. + Adjusted net income’, which is adjusted for one- time deal related costs, was $2.2 million, or $0.09 per share’
Slide 5: NRCG Financial Review
Karnes Waste Disposal Facility NRCG FINANCIAL REVIEW
Slide 6: NRCG - Financial Performance Summary
NRCG - Financial Performance Summary > Exceeded PF Revenue & Adj. EBITDA Guidance, positioned for growth in 2019 ($ in millions) Q4 Revenue Q4 Adj. EBITDA 107.3 29.6% ___» —_——— | 31.4 Q4 2017 Q4 2018 Q4 2017 Q4 2018 2018 Revenue 2018 Adj. EBITDA SBF: 2018 388.7 | apt 360.2 bil 85-90 2017 2018 Guida
Slide 7: Q4 & 2018 YOY Financial Overview
Q4 & 2018 YOY Financial Overview 2018 2017 ($ in millions, except per-share data) 2018 2017 Revenue $107.3 $93.0 15.3% $360.2 $277.6 29.7% Operating Expense (73.7) (62.6) 17.8% (242.2) (185.5) 30.6% SG&A (13.7) (10.4) 31.4% (53.1) (39.4) 34.8% Other (8.0) (8.5) (5.6%) (34.0) (31.6) 7.5% Operating In
Slide 8: Sprint Segment — Financial Performance
Sprint Segment — Financial Performance > Strong contribution from Karnes waste disposal facility and Quail Run acquisition ($ in millions) Q4 Revenue Q4 Operating Profit Performance Summary 19.6% * Q4 revenue increased 50% to $21.2 million ee while operating profits increased 61% to $9.5 million 212
Slide 9: Domestic ES Segment — Financial Performance
Domestic ES Segment — Financial Performance > Strong revenue growth driven by SWS acquisition and 14% organic ($ in millions) Q4 Revenue Q4 Operating Profit (oe (9.2%) + Q4 2017 Q4 2018 Q4 2017 Q4 2018 2018 Revenue 2018 Operating Profit 32s —* Performance Summary + Q4 revenue increased 29% to $70.9
Slide 10: Standby Segment — Financial Performance
($ in millions) Q4 Revenue Q4 Operating Profit 19.7 Emergency [ Response ~ | pooh oy Retainer ii Revenue L 7 Q4 2017 Q4 2018 Q4 2017 Q4 2018 2018 Revenue 2018 Operating Profit Emergency [ Response — (23.4%) Revenue | oS Revenue Retainer J 2017 2018 2017 2018 Standby Segment — Financial Performance >
Slide 11: International Segment — Financial Performance
International Segment — Financial Performance > Expansion of Clean Line capabilities throughout UK adding to growth ($ in millions) Q4 Revenue Q4 Operating Profit Performance Summary * Q4 revenue increased 64% to $6.8 million 20 while operating profits increased 69% to $1.1 million + Full year 2018
Slide 12: 2019 Outlook
2019 Outlook > Reiterating Revenue and Adj. EBITDA outlook and updating Capex and free cash flow conversion’ v Revenue expected to be between $420 million to $460 million, an increase of 8% to 18% compared to pro forma revenue of $388.7 million in 2018 v Adjusted EBITDA‘ is still expected to be betw
Slide 13: Continued Execution of Growth and Profitability
Continued Executi Revenue by Segment ($ in millions) of Growth and Profitability Capital Expenditures (¢ in millions) $500 ots $420-460 $389 ~ $400 $356 _ $300 $200 $100 $0 PF 2015 PF 2016 PF 2017 PF 2018 2019E =U.S. Standby mDomesitc ES Sprint (incl. QR) m= International Adjusted EBITDA by Segment)
Slide 14: NRCG Adjusted EBITDA Bridge — 2019 Plan
NRCG Adjusted EBITDA Bridge — 2019 Plan Adjusted EBITDA") Bridge ($ in mitlions) * $1 bal pms 8105-8115 ($3-4) $3-4 91 $1-2 ss Ce 2018 U.S. Standby Domestic ES. Sprint International Corporate 2019E Management Commentary + U.S. Standby — steady growth in core domestic retainer business, incremental g
Slide 15: NRCG - Free Cash Flow & Capital Expenditures
NRCG - Free Cash Flow & Capital Expenditures NRCG Capital Expenditures (s in millions) (Sin millions) 2018A 2019E [ 2020E | $60 $58 Maintenance Capex $13 $20 Growth Capex 5 5 “7 Subtotal Capex $18 $25 $40 As a % of Revenue 5% 6% 5-6% One-Time Waste Disposal u 33 ~12 $30 Total Capex $25 $58 20 As a %
Slide 16: NRCG 2019 Strategic Focus - Priorities
NRCG 2019 Strategic Focus - Priorities Y Build new waste disposal facilities including both landfill and wastewater facilities (on track for Q2 launch in Permian Basin) Y Continue to execute growth strategy in core markets v Execute Mexico growth strategy for the Standby segment Y Roll-out and grow
Slide 17: Key Takeaways
Key Takeaways vy Exceeded our pro forma revenue and Adj. EBITDA guidance in 2018 v¥ 2018 was a transformative year for the business and we are uniquely positioned to drive long-term profitable growth v Generated strong momentum in the business and are solidly on track for our 2019 objectives v¥ Coya
Slide 18: Appendix
Emergency Response — Oil Spill NRCG APPENDIX
Slide 19: NRCG Core Services
NRCG Core Services v Offering three core services across four reporting Segments v Unique and diversified portfolio of assets across environmental, compliance Services Offered r= o = a ® 2) 3 £ c io) ro3 ® o« and waste management services 1 1 4 v ~~, Standby International Domestic ES * 9% of 2019 Es
Slide 20: Diverse End Market Exposure
Diverse End Market Exposure > Highly Diversified Revenue Across End Markets, Servicing 5,000+ Customers 2018 Revenue by End Market") + Substantial portion of revenue (67% in 2018) is comprised of customers that require high-volume, low- ticket projects across industrial, transportation, utility, min
Slide 21: Numerous Drivers of Growth
Numerous Drivers of Growth (4) Established Acquisition Platform 3 ) Near-Term Waste Expansion @) National Corporate Account Growth 1) Multi-Pronged Standby Services Growth
Slide 22: Standby Services Market Overview
Standby Services Market Overview > Commercial Standby Services Provider with 75% Market Share in Core Markets Market Overview U.S. Crude Oil Exports & Production + Legislation enacted post-Exxon-Valdez (OPA-90) requires 2,500,000 14,000 onshore and offshore facilities and vessels carrying oil or 8 2
Slide 23: Environmental Services Market Overview
Environmental Services Market Overview > Regulatory and End Market Dynamics Position NRC for Sustained Growth Supportive End-Market Conditions & Outlook $17 Billion Addressable Market") + Robust and increasing EH&S regulatory requirements provide fundamental support to the environmental services mar
Slide 24: Waste Disposal Market Overview
Waste Disposal Market Overview > Industry and Capex Dynamics Position NRC to Achieve Outsized Growth Supportive End-Market Conditions & Outlook West Texas Drives Oilfield Demand“) * Steadily increasing focus on environmental stewardship 100% 140 + Waste streams are regulated by federal and state law
Slide 25: Waste Disposal Market Overview (cont’d)
Waste Disposal Market Overview (cont’d) > Sustainable Improvements in Shale Economics Driven by Lower Lifting Costs Eagle Ford Breakeven ($/bbi) Breakeven costs have continued to move lower driven primarily $100 by advances in technology, efficiency gains, and well performance 180 $78 s $68 $67 $55
Slide 26: Near-Term Waste Disposal Expansion
Near-Term Waste Disposal Expansion > Strategically Located Sites to Support Existing Customers’ Demand Commentary Permian Basin — Facility Locations + Currently in various stages of development on three waste disposal sites in the Permian Basin, providing strategic access to customers in the Delawar
Slide 27: Competitive Advantages
Competitive Advantages Comprehensive Suite of Specialized Services National Scale with Global Service Capabilities Significant Barriers to Entry Highly Recurring, Non-Discretionary Demand Attractive Market Opportunity Exceptional Cash Flow Generation Multi-Pronged Growth Strategy OO Established Acqu
Slide 28: Benchmarking to Peers — Valuation
Benchmarking to Peers — Valuation 2017 — 2019E Revenue CAGR 2017 — 2019E Adjusted EBITDA CAGR 12.0x Mean ‘ate: Prectons fr pute por asad on consnave Wal Steet Research esas ta Capt
Slide 29: NRCG Capital Structure
NRCG Capital Structure (Sci Comments (S in millions, except per-share data) 12/31/18 Cash $18.4 Revolving Credit Facility $10.0 | $45M Commitment ($35M Undrawn) Senior Term Loan ‘? $341.4 Includes $35M Incremental issued Oct 2, 2018 Equipment Loan $0.8 Total Debt $352.2 Total Net Debt $333.8 Convert
Slide 30: NRCG — 2018 Income Statement
NRCG — 2018 Income Statement ‘Years Ended December 31 2018 2017 Operating revenue S$ 360,170 $277,631 Costs and expenses, Operating expenses, including cost of revenue (exclusive of depreciation and amortization) 242,208 185,484 General and administrative expenses 53,144 39.410 Depreciation and amor
Slide 31: NRCG — 2018 Balance Sheet
NRCG —- 2018 Balance Sheet 2018 2017 ASSETS Current assets CCash and cash equivalents Ss 18365 Ss Receivables: ‘Trade, net of allowance for doubtful accounts of $0.9 million and $0.9 million , respectively 102,709 Other ies Inventory 71287 Prepaid expenses and other current assets 4 ‘Total current a
Slide 32: NRCG — 2018 Statement of Cash Flows
NRCG — 2018 Statement of Cash Flows ‘Years Ended December 31 2018 2017 2016 ‘Cash Flows from Operating Activities: Net (loss) income S (47257) $ 5672 $(49,146) ‘Adjustments to reconeile net income/(Ioss) to net cash (used in) provided by operating activities: 23,963 20,380 22,370 6242 5,768 10,103 ‘
Slide 33: Adjusted EBITDA & Free Cash Flow Reconciliation
Adjusted EBITDA & Free Cash Flow Reconciliation For the Quarter Ended December 31, _For the Years Ended December 31 6 thousands) 2018 2017 2018 2017 Net cash provided by operating atsities oasiy 6301 esony 17036 Depreciation of property and equipment (6599) 65383) (23963) 20380) “Amortization of int
Slide 34: Pro Forma Revenue Reconciliation
Pro Forma Revenue Reconciliation Pro Forma Revenue Bridge (¢ in millions) $7 $389 $21 ee 2018 Clean Line sws Quail Run 2018 Pro Forma + 2018 Pro Forma Revenue includes full year benefit of all acquisitions (Clean Line, SWS, and Quail Run) as if acquisition commenced on Jan 1, 2018. * Clean Line - ac
Slide 35: Adj. Net Income Reconciliation
Adj. Net Income Reconciliation Adj. Net Income Bridge (gin millions) $5 Adj. $26 $2 EPS" — $0.20 $19 — ($47) EPS() — ($1.89) 2018 Reported Net Income Acquisition Related Expenses NRC Transaction Expenses ‘SPAC Related Deal Costs Misc. Deal Expenses 2018 Adjusted Net Income Management Commentary + Ac
Slide 36: NRCG
NRCG CONTACT: Liolios Group, Investor Relations Cody Slach 949.574.3860