NRC — Hennessy Capital Acquisition Corp. III — SPAC Merger (October 2018)
42 slides from NRC's SPAC merger presentation, Oct 2, 2018
Slide 1: Investor Presentation October 2018
I NVESTOR P RESENTATION October 2018 Important Disclaimers Use of Projections and NRC 2017 Financial Information This presentation contains financial forecasts with respect to NRC Group Holdings LLC’s (“NRC” or the “Company”) projected revenues, Adjusted EBITDA, and net capital expenditures for NRC’
Slide 2: Presenters
3 Chris Swinbank Chief Executive Officer Presenters Experienced Team Committed to Continuous Growth & Improvement Joe Peterson Chief Financial Officer Daniel Hennessy Chairman & Chief Executive Officer Jim O’Neil III Independent Director
Slide 3: Executive Summary
4 Executive Summary (1) Post - combination, HCAC’s name will be changed to reflect the combination with NRC. References to NRC post -or the Company) combination in this Current NRC ownership J.F. Lehman Company (JFL) have committed to a $50 million new equity investment in the proposed business comb
Slide 4: The NRC Opportunity for Investors
5 12.2x 20.0x 9.1x 12.5x 9.4x 18.1x 7.2x 11.6x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x NRC Peers NRC Peers 2018E 2019E The NRC Opportunity for Investors (1) 2008 - 2011 (prior ownership period) based on NRC management estimates, as adjusted to exclude $ 603 million in 2009 - 2010 related to Deepwate
Slide 5: Table of Contents
6 I. Company Overview II. Growth Strategies III. Financial Summary IV. Appendix Table of Contents 8 20 27 34
Slide 6: Company Overview
C OMPANY O VERVIEW Marine Standby Response
Slide 7: Investment Highlights
8 x Provides an Integrated Solution x Unmatched Suite of Essential EH&S Services x Delivers Scale with Global Capabilities x Blue - Chip Customers Across Diverse End Markets x Significant Barriers to Entry x Complex & Stringent Regulatory Environment x Stability through Recessions & Commodity Cycles
Slide 8: Scalable Platform Poised for Growth
9 2018E Adj. EBITDA $85M - $90M Scalable Platform Poised for Growth (1) AOST is a partnered local emergency response provider . Key Figures Service Offering Breakdown Global Platform Diverse Offering, Global P latform and Blue - Chip C ustomer B ase Drive NRC Longstanding Blue - Chip Customer Base C
Slide 9: NRC Provides an Integrated Solution
10 Key Customer Value Proposition NRC Provides an Integrated Solution Comprehensive Suite of Non - Discretionary, Mission - Critical Capabilities Standby Services (23% of 2018E Adj. EBITDA (1) ) Environmental Services (47% of 2018E Adj. EBITDA (1 ) ) Waste Disposal Services (30% of 2018E Adj. EBITDA
Slide 10: Unmatched Suite of Essential EH&S Services
11 Company Standby Services Environmental / Industrial Services Emergency Response Waste Disposal Unmatched Suite of Essential EH&S Services NRC is the ONLY Provider Of End - to - End Environmental Solutions Core Focus Non - Core Focus
Slide 11: NRC Delivers Scale with Global Capabilities
12 100 + Strategically Located Facilities Augmented by ICN, MRN, and ARN to Greatly Enhance Capabilities (1) • Independent Contractor Network (“ICN”): ICN is a highly skilled network of 140+ emergency response companies with over 500+ locations • Marine Resource Network (“MRN”): Priority access to a
Slide 12: Blue-Chip Customers Across Diverse End Markets
13 32% 14% 12% 11% 7% 5% 3% 3% 12% Industrial Non - Regulated O&G OPA - 90 Utility / Municipal Oil & Gas Waste Disposal Transportation Government Pharma Other Blue - Chip Customers Across Diverse End Markets (1) Revenue excludes all domestic environmental services customers <$30,000. Highly Diversif
Slide 13: Significant Barriers to Entry
14 Significant Barriers to Entry Specialized Asset Base and Essential Regulatory Certifications Investment in Asset Base Required Certifications & Accreditations x $200+ million asset base (1) across Standby Services, Environmental Services, and Waste Disposal x Unique equipment not readily availabl
Slide 14: Complex & Stringent Regulatory Environment
15 Environmental Services Regulations Have Consistently Become Increasingly Stringent Complex & Stringent Regulatory Environment Complexity of Regulatory Compliance Driving Demand to Comprehensive Providers of Scale Regulatory History Why NRC Wins x Safety Record x Track Record x Brand Recognition x
Slide 15: Stability through Recessions & Commodity Cycles
16 Historical Revenue Trend Stability through Recessions & Commodity Cycles (1) 2008 - 2011 (prior ownership period) based on NRC management estimates, as adjusted to exclude $ 603 million in 2009 - 2010 related to Deepwater Horizon. Audited revenue utilized for 2012 - 2017 , together with NRC manag
Slide 16: Highly Visible & Profitable Financial Model
17 are under retainer and over 60% have retainer contracts spanning with tenure of standby services Resilient 50,000 Revenue Stability Coupled with Exceptional Margins Drives Extraordinary Free Cash Flow Highly Visible & Profitable Financial Model NRC presented on a pro forma basis for intra - perio
Slide 17: Proven Management Team with Significant Experience
18 Proven Management Team with Significant Experience NRC’s Senior Management Team Averages 20+ Years of Experience • 21+ years of environmental services experience • Founded, built, and sold several waste management related businesses since 2005 • Served in various capacities at several Sprint enti
Slide 18: Growth Strategies
G ROWTH S TRATEGIES Karnes Waste Disposal Facility
Slide 19: Scalable Platform with Multiple Avenues for Growth
20 Scalable Platform with Multiple Avenues for Growth Multi - Pronged Standby Services Growth 1 x Proven ability to increase contracted retainers with unmatched retention x Increasing “tolling” revenue and roll - out of Global Response Services x First - mover advantage in newly privatized Mexican o
Slide 20: Multi-Pronged Standby Services Growth
21 Multi - Pronged Standby Services Growth Global Presence Enables NRC to Capitalize on Attractive Growth Prospects 1 (1) NRC management estimates. (2) Based on NRC management estimates and of historical segment performance. (3) Based on 2016 commissioned industry study by a leading consulting firm.
Slide 21: National Corporate Account Growth
22 National Corporate Account Growth (1) ER = Emergency response; IC = Industrial Cleaning; SR = Site Remediation; WM = Waste Management .. (2) Data based on 2017 projects and is not pro forma for acquisitions of Cleanline and SWS. Leverage Unmatched Scale & Service Offering to Drive Customer Penetr
Slide 22: Proven Waste Disposal Model
23 Meaningful market share gain driven by unique value proposition – since June 2017, volume has increased by 20% despite rig count declining by 2% 0 20 40 60 80 100 120 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-
Slide 23: Near-Term Waste Disposal Expansion
24 Near - Term Waste Disposal Expansion (1) Based on NRC management estimates. If new facilities achieved a similar ramp in volume and market share as the existing Karnes facility, annual adjusted EBITDA would be expected to exceed these estimates. Strategically Located Sites To Support Existing Cus
Slide 24: Established Acquisition Platform
25 Established Acquisition Platform (1) EV / EBITDA multiples based on pro forma LTM adjusted EBITDA. (2) ES includes all Environmental Services except emergency response. ER includes land - based emergency response services . WD includes all waste disposal and waste water treatment. (3) Any acquisi
Slide 25: Financial Summary
F INANCIAL S UMMARY NRC Upstream Customer
Slide 26: Summary Financial Performance
27 Summary Financial Performance Note: 2015 excludes $37 million of revenue and $9 million of adjusted EBITDA related to a large response event. NRC presented on a pro forma basis for intra - period acquisitions. (1) Total adjusted EBITDA includes corporate overhead expenses of ($7) million in 2015,
Slide 27: Adjusted EBITDA Bridge
28 Adjusted EBITDA Bridge Multiple Avenues of Growth Driving High Visibility Adjusted EBITDA Bridge ($ in millions) • Projected financials do not include additional M&A activity or the impact of any major event, which could represent upside to the projections • Standby Services – Majority of growth
Slide 28: June 2018 YTD Financial Performance
1 18% 22% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 1H 2017 1H 2018 $26 $40 $10 $15 $20 $25 $30 $35 $40 $45 1H 2017 1H 2018 $149 $180 $100 $110 $120 $130 $140 $150 $160 $170 $180 $190 $200 1H 2017 1H 2018 June 2018 YTD Financial Performance Significant EBITDA Growth Driven by Strong Toplin
Slide 29: Benchmarking to Peers – Growth & Margins
30 75% 56% 60% 62% 68% 66% 60% 0% 20% 40% 60% 80% NRC ADSW CLH RSG ECOL WCN WM 24% 28% 15% 28% 23% 32% 28% 0% 10% 20% 30% 40% NRC ADSW CLH RSG ECOL WCN WM 22% 8% 10% 4% 12% 9% 5% 0% 10% 20% 30% NRC ADSW CLH RSG ECOL WCN WM 11% 3% 8% 2% 7% 6% 3% 0% 2% 4% 6% 8% 10% 12% NRC ADSW CLH RSG ECOL WCN WM Mea
Slide 30: Benchmarking to Peers – Valuation
31 9.4x 16.5x 17.0x 16.7x 19.2x 21.4x 17.5x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x NRC ADSW CLH RSG ECOL WCN WM 12.2x 17.9x 18.8x 18.3x 21.9x 23.9x 19.3x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x NRC ADSW CLH RSG ECOL WCN WM 7.2x 9.5x 10.6x 10.6x 13.4x 14.4x 11.0x 0.0x 4.0x 8.0x 12.0x 16.0x 20.0x NRC
Slide 31: Conclusion
32 x Provides an Integrated Solution x Unmatched Suite of Essential EH&S Services x Delivers Scale with Global Capabilities x Blue - Chip Customers Across Diverse End Markets x Significant Barriers to Entry x Complex & Stringent Regulatory Environment x Stability through Recessions & Commodity Cycle
Slide 32: Appendix
A PPENDIX Emergency Response – Oil Spill
Slide 33: Indicative Transaction Overview
34 Indicative Transaction Overview (1) Based on estimated $263 million cash held in trust at closing and assumes 35% redemptions for illustrative purposes, which is th e scenario that provides maximum cash to NRC selling shareholders but no proceeds for debt reduction. If redemptions are lowe r t ha
Slide 34: Jim O'Neil – Executive Chairman
35 • Former CEO and Director of Quanta Services ( NYSE:PWR ) where he grew the business to over $7 billion of revenue and over $5 billion of market capitalization • Quanta completed nearly 200 acquisitions under Jim’s leadership • He is currently a director at First Energy, National Trench Safety an
Slide 35: Jim Baumgardner – Independent Board Member
36 • Over 30 years of diverse business experience in various executive roles • Formerly President, CEO, COO, CFO, and Director of US Ecology, Inc. ( NASDAQ:ECOL ) where he successfully grew the business organically and through acquisitions to over $250 million of revenue with a $500 million market c
Slide 36: Customer Case Studies
37 Situation Overview • Customer: • Location: Britton, SD • Service: Standby Services Customer Case Studies Customers Rely on NRC’s Solutions to Maintain Uptime & EH&S Compliance Standby Services Environmental Services Waste Disposal Services Situation Overview • Customer: • Location: 3 Facilities •
Slide 37: Standby Services Market Overview
38 (1) Source: U.S . Energy Information Administration. (2) Source: U.S. Energy Information Administration. Represents U.S. Refinery Annual Operable Atmospheric Crude Oil Distillation Capacity (Barrels per Stream Day), and U.S. Refinery Catalytic Reforming, Catalytic Cracking, and Catalytic Hydrocra
Slide 38: Environmental Services Market Overview
39 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Number of Reported Incidents Environmental Services Market Overview (1) Source: IBISWorld. (2) Source: IHS Markit. (3) Source: Natio
Slide 39: Waste Disposal Market Overview
40 80 58 51 36 35 0 20 40 60 80 100 80 73 49 46 46 0 20 40 60 80 100 Waste Disposal Market Overview (1) Source: Spears. (2) Represents cumulative production volume in 2016. Industry and Capex Dynamics Position NRC to Achieve Outsized Growth Supportive End - Market Conditions & Outlook • Steadily inc
Slide 40: Waste Disposal Market Overview (cont'd)
41 $32 $32 $35 $35 $35 $35 $36 $36 $37 $38 $38 $39 $41 $42 $43 $43 $44 $46 $47 $47 $49 $49 $51 $54 $61 $66 $84 $0 $20 $40 $60 $80 $100 $78 $68 $67 $55 $45 $40 $37 $36 $0 $20 $40 $60 $80 $100 2012 2013 2014 2015 1H16 2H16 1H17 Current Waste Disposal Market Overview (cont’d) Sustainable Improvements i
Slide 41: Adjusted EBITDA Reconciliation
2 Adjusted EBITDA Reconciliation (1) GAAP net income. (2) Consists of one - time set - up costs for growth opportunities in Mexico, senior management placement fees, as well as expenses related to ad d - on acquisitions such as severance, one - time legal, rebranding, and closure costs. (3) Stub per
Slide 42: Summary Debt Terms
43 Summary Debt Terms Term Loan Maturity: 6 years Indicative Interest Rate: L + 525 bps LIBOR Floor: 1.0% Amortization: 1% p.a. Prepayment Premium: 101 soft call premium first 6 months Financial Covenants (1) : None Acquisition Facilities: Unlimited subject to, if first lien indebtedness, a First Li
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