NexTier Oilfield Solutions Inc
NexTier Oilfield Solutions — Investor Presentation (October 2022)
28 slides from NexTier Oilfield Solutions's investor presentation, Oct 25, 2022
Slide 1: NexTier Oilfield Solutions Investor Update
voodoo NexTier Oilfield Solutions Investor Update October 25, 2022 1 NYSE: NEX
Slide 2: Forward Looking Statements & Disclosures
Forward Looking Statements & Disclosures All statements other than statements of historical facts contained in this presentation and any oral statements made in connection with this presentation, including guidance for 2022 and beyond and other outlook information (including with respect to the indu
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures We have included in this presentation and in oral comments made in connection with this presentation certain non-GAAP financial measures. These measurements provide supplemental information which management believes are useful to analysts and investors to evaluate our ong
Slide 4: Introduction
Introduction 4
Slide 5: NexTier At a Glance
NexTier At a Glance Market Cap $2.7B 2022 YTD Daily Avg Trading Volume Integrated Platform Amplified with Scale $29M Wireline + Logistics + Natural Gas Fueling + Number of Employees NexHubTM Digital 4,300 Predominantly Oil Region Predominantly Gas Region Headquarters Houston, TX Balanced Customer Ba
Slide 6: Capital Allocation Strategy
Capital Allocation Strategy 6
Slide 7: Capital Allocation Summary
Capital Allocation Summary ▪ NexTier has executed on its strategic plans and believes it is positioned to generate high returns and deliver free cash flow through the cycle. ▪ NexTier will remain conservative with our balance sheet and support cost structure to be nimble, while remaining disciplined
Slide 8: NexTier Capital Allocation Framework
NexTier Capital Allocation Framework MAXIMIZ E S H ARE HOLDER RE T URN S Repeatable Shareholder Non-CapEx Allocation Return Program Option to participate in strategic M&A Allocation Target return of at least 50% of Free and/or increase shareholder return program; target maximum returns Strategy Cash
Slide 9: Maintain our Balance Sheet Strength
BALANCE SHEET ANNUAL CAPEX SHAREHOLDER RETURNS FLEXIBILITY Maintain our Balance Sheet Strength Significantly reduced Net Debt and Leverage Total Liquidity more than doubled over the past year Net Debt to LTM Adjusted EBITDA was 0.2x as of 9/30/2022 $622 million of liquidity as of 09/30/2022; Revolve
Slide 10: Maintain and Transition the Fleet, Grow the Integration Machine
BALANCE SHEET ANNUAL CAPEX SHAREHOLDER RETURNS FLEXIBILITY Maintain and Transition the Fleet, Grow the Integration Machine 2023 CapEx Budget Percent of Total Revenue ~1 3 12% ~$350mm 8-9% 2023 CapEx Budget ~2 3 Peers NEX High-Return Projects and Sustain the Fleet: CapEx at 8-9% of Annual Revenue Wel
Slide 11: Transition to Natural Gas-Power Over Time
BALANCE SHEET ANNUAL CAPEX SHAREHOLDER RETURNS FLEXIBILITY Transition to Natural Gas-Power Over Time Natural Gas Capable Fleets Outpacing the Industry in Percent of Active Total Natural Gas-Powered Frac US Land1 NexTier ▪ Over half of NexTier’s fleet can be powered by natural gas 70% ▪ Natural gas-p
Slide 12: The Integration Machine
BALANCE SHEET ANNUAL CAPEX SHAREHOLDER RETURNS FLEXIBILITY Sustain and Grow The Integration Machine NexMile Logistics Power Solutions CNG Fueling Innovative NexHub Digital Engineering Operations Natural Gas- Powered Fleet $7M/Fleet Engineering / Client Pumpdown Potential Annual Incremental Adjusted
Slide 13: Deliver a Repeatable Shareholder Return Program
BALANCE SHEET ANNUAL CAPEX SHAREHOLDER RETURNS FLEXIBILITY Deliver a Repeatable Shareholder Return Program $250 MILLION SHARE BUYBACK AUTHORIZATION IN PLACE ▪ Authorization represents 9% of market cap1 NexTier targets returning at least 50% of its ▪ Expect to return $250 million to shareholders thro
Slide 14: Optimizing High-Return Investments: Non-CapEx Allocation
BALANCE SHEET ANNUAL CAPEX SHAREHOLDER RETURNS FLEXIBILITY Optimizing High-Return Investments: Non-CapEx Allocation Shareholder Returns Opportunistic M&A Potential Excess Free Cash Flow allocated to expand shareholder return authorization and/or seek opportunistic M&A Inorganic Technology Frac M&A E
Slide 15: 2023 Free Cash Flow Summary
BALANCE SHEET ANNUAL CAPEX SHAREHOLDER RETURNS FLEXIBILITY 2023 Free Cash Flow Summary BALANCE SHAREHOLDER RETURNS 2023 ESTIMATED FREE CASH FLOW: $500M AND INORGANIC GROWTH ~$500M FCF PATH TO NET DEBT ZERO IN 2023 ▪ Net Debt of $115 million as of 9/30/2022 Non-CapEx Allocation Share Repurchase ▪ No
Slide 16: Macro Outlook
Macro Outlook 16
Slide 17: Increased frac intensity and limited supply sets up historically high utilization
Increased frac intensity and limited supply sets up historically high utilization Frac crew utilization rate expected to surpass prior cycle peaks U.S. Shale Frac Fleet Count Scenarios1 Total U.S. Frac Fleets 300 J.P. Morgan: -5% Frac Demand and Useful HHP Capacity -10% Useful Capacity U.S. Frac Dem
Slide 18: Industry Dynamics Trending in Favor of Frac
Industry Dynamics Trending in Favor of Frac Shale DUC count is already increasing While Operators push for increasing Frac intensity… Wells per Month, U.S. Shale Regions HHP Demand per Working Fleet, U.S. Land Average Drilled Wells Finalized Fracs 1,300 57,583 55,707 1,100 53,453 51,865 900 700 500
Slide 19: Operational Update
Operational Update 19
Slide 20: Financial Results Summary
Financial Results Summary Third Quarter 2022 vs. Third Quarter 2021 Revenue Adj. EBITDA1 Adj. EPS2 Net Debt $896M $195M $0.52 $115M -52% +128% >7x Negative in Q321 13Q22 Adjusted EBITDA includes $10 million in gain on the sale of assets vs $1 million gain on the sale of assets in 3Q21. 2Per Diluted
Slide 21: Executing on our Plan
Operational Update Executing on our Plan NexTier Free Cash Flow has accelerated… …in addition to improved profitability Generated significant Free Cash Flow early in the cycle Consistent growth in Adjusted Net Income Free Cash Flow Free Cash Flow Margin Adj. Net Income Adj. Diluted EPS $150 20% $150
Slide 22: Valuation
Valuation 22
Slide 23: EV / 2023 EBITDA Multiple
Capital Allocation Strategy Prioritizes Strong and sustainable Sustained FCF Conversion FCF conversion profile and a value proposition… 14.0x WHD ▪ Significant portion of free cash CLB flow will target shareholder returns 12.0x ▪ Discounted valuation relative to NOV SLB 10.0x historic periods 1 EV /
Slide 24: Why NexTier?
Winning Capital Allocation Strategy Balancing shareholder returns and strategic investments Why invest with Resilient Macro Backdrop Fleets already sold out | Healthy demand expected to continue NexTier? Attractive Valuation Trading below historic multiples | Strong FCF conversion 24
Slide 25: Appendix
Appendix 25
Slide 26: Reconciliation and Calculation of Non-GAAP Financial Measurements
Reconciliation and Calculation of Non-GAAP Financial Measurements ($ thousands) Three Months Ended Dec. 31, 2020 Mar. 31, 2021 Jun. 30, 2021 Sept. 30, 2021 Dec. 31, 2021 Mar. 31, 2022 Jun. 30, 2022 Sept. 30, 2022 Net Income $ (60,206) $ (54,502) $ (31,781) $ (43,994) $ 10,854 $ 8,792 $ 68,458 $ 104,
Slide 27: Reconciliation and Calculation of Non-GAAP Financial Measurements
Reconciliation and Calculation of Non-GAAP Financial Measurements Adjusted Net Income and Adjusted Diluted EPS ($ thousands) Three Months Ended (1) Represents transaction and integration costs related to acquisitions, including earn out September 30, 2021 September 30, 2022 payments. Net Income $ (4
Slide 28: Reconciliation and Calculation of Non-GAAP Financial Measurements
Reconciliation and Calculation of Non-GAAP Financial Measurements Total Liquidity ($ thousands) Three Months Ended Sept. 30, 2021 Dec. 31, 2021 Mar. 31, 2022 Jun. 30, 2022 Sept. 30, 2022 Cash 135,525 110,695 99,788 158,136 250,207 Undrawn portion of our asset-based credit facility 154,131 205,615 24
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