2020 INVESTOR DAY Assets protected with RFID data-enabled end caps - - PowerPoint PPT Presentation

2020 investor day
SMART_READER_LITE
LIVE PREVIEW

2020 INVESTOR DAY Assets protected with RFID data-enabled end caps - - PowerPoint PPT Presentation

S O L U T I O N S M A T T E R + 2020 INVESTOR DAY Assets protected with RFID data-enabled end caps DISCLOSURE STATEMENT This presentation includes certain statements that reflect managements expectations and objectives for the


slide-1
SLIDE 1

+

S O L U T I O N S M A T T E R

2020 INVESTOR DAY

Assets protected with RFID data-enabled end caps

slide-2
SLIDE 2

This presentation includes certain statements that reflect management’s expectations and objectives for the Company’s future performance, opportunities and growth, which statements constitute "forward looking information" and "forward looking statements" (collectively "forward looking information") under applicable securities laws. Such statements, other than statements of historical fact, are predictive in nature or depend on future events or conditions. Forward looking information involves estimates, assumptions, judgements and uncertainties. These statements may be identified by the use of forward looking terminology such as "may", "will", "should", "anticipate", "expect", "believe", "predict", "estimate", "continue", "intend", "plan" and variations of these words or other similar expressions. These statements of forward looking information are based on assumptions, estimates and analysis made by management in light of its experience and perception of trends, current conditions and expected developments as well as other factors believed to be reasonable and relevant in the circumstances. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from those predicted, expressed or implied by the forward-looking information. Additional information on the risks and uncertainties on the Company’s business can be found in the Company’s current Annual Information Form, annual and quarterly reports and in other reports and filings made with the securities regulatory authorities and available at www.sedar.com and www.shawcor.com. The forward-looking information is provided as of the date of this presentation and the Company does not assume any obligation to update or revise the forward-looking information to reflect new events or circumstances, except as required by law.

 DISCLOSURE STATEMENT

slide-3
SLIDE 3

→ AN ENGINE FOR SUSTAINED GROWTH

BUSINESS

→ Pipeline & Pipe Services

FINANCIAL INHERENT VALUE

→ Composite Systems → Automotive & Industrial → Commitment to Shareholders → Sum of the Parts → Management → Performance

slide-4
SLIDE 4

→ BUSINESS OUTLOOK

International and offshore projects will drive improved profitability and cash generation in 2020 and beyond

  • Work secured will result in step-up in H2 2020

performance

  • Additional awards will build backlog and be

supportive for 2020 and future years

  • Well positioned in new EPC model and the cycle

 Step-up performance in H2 2020  Backlog build through 2020  2020 inflection point for future years  Bid, win and execute  Technology monetization  Optimized footprint

PIPELINE & PIPE SERVICES

 Greener alternatives - Gas  Lower offshore development costs  Aging infrastructure replacement DRIVERS FOCUS EXPECTATION Integrity Management Management & Engineering Services Pipeline Protection & Products

slide-5
SLIDE 5

→ BUSINESS OUTLOOK

COMPOSITE SYSTEMS

Growing acceptance and established base business will drive high growth

 Short term volatility US land  2020 better than 2019  High growth in future years  Expansion

  • Products
  • Markets

 Added value

  • Services
  • Digital

 Continued conversion to Composites  Aging infrastructure replacement  Oil and gas development

  • Market share supports forward performance
  • Addressable market expansion provides a hedge

for near term results

  • Conversion to Composites is just starting and will

support future growth

DRIVERS FOCUS EXPECTATION Composite Tanks Oilfield Asset Management Composite Pipe

slide-6
SLIDE 6

→ BUSINESS OUTLOOK

AUTOMOTIVE & INDUSTRIAL

Stable outlook with growth prospects in core markets

 Short term volatility likely  Base business - consistent growth  Upside from Nuclear  Specifications  Global capacity  Equipment and aftermarket service  Automotive production  Aging infrastructure  Electric vehicles and electrical content

  • Tied to stable core markets of automotive and

industrial

  • Near term upside with nuclear refurbishment
  • Continued base growth underpinned by electric

vehicle production and electrical content

DRIVERS FOCUS EXPECTATION Automotive Appliances Specialty Wire & Cable Automotive & Industrial Heat Shrink

slide-7
SLIDE 7

→ FINANCIAL STRENGTHS

Preserve global, large project operating advantage through disciplined financial management

  • Global footprint and mobile assets remain an advantage
  • $1.2 billion in capital assets require less than $50 million to maintain
  • Ongoing review of Pipeline & Pipe Services footprint

1,058 1,171 1,186 1,170 1,237 1,231 77.6 61.1 89.2 41 76.2 44.9 200 400 600 800 1,000 1,200 1,400 2014 2015 2016 2017 2018 2019 20 60 100 140 180 220

Capital Assets* (C$M) CAPEX (C$M)

Capital Assets* CAPEX

CAPEX as % of Capital Assets 7.3% 5.2% 7.5% 3.5% 6.2% 3.7%

CAPITAL & EXPENSE DISCIPLINE

*Property Plant & Equipment - Gross Book Value

slide-8
SLIDE 8

→ FINANCIAL STRENGTHS

CAPITAL & EXPENSE DISCIPLINE

Ensure SG&A expenses are appropriate to our scope and operating dynamics

  • All encompassing view of SG&A
  • Disciplined SG&A management practices – 2019 declined as % of

revenue

  • Management incentive programs linked to real business metrics

*SG&A excludes management incentives

1,890 1,811 1,209 1,565 1,409 1,489 342 359 303 308 278 287 18.1% 19.8% 25.1% 19.7% 19.7% 19.3% 0% 5% 10% 15% 20% 25% 30% 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

2014 2015 2016 2017 2018 2019 C$M

Revenue SG&A* SG&A* (as % of revenue)

slide-9
SLIDE 9

→ FINANCIAL STRENGTHS

COMMITMENT TO DIVIDEND

Sustaining our track record of paying dividends through economic cycles is a priority

35.3 38.7 38.7 41.9 42.0 42.0 243 134

  • 38

164 37 91 2014 2015 2016 2017 2018 2019

  • 100
  • 50

50 100 150 200 250 300

C$M

Dividend FCF*

  • $238 million paid in the last 6 years
  • Maintained the dividend during the downturn
  • Committed to returning cash to shareholders from sustainable earnings

*Free Cash Flow = Cash from operations before change in non-cash working capital - CAPEX + Proceeds from sale of assets & investment in associate - Repayment of Lease Liabilities

slide-10
SLIDE 10

11% 2018 Actual (2) 2019 Actual Pre-Downturn Average (2) (3) Future Scenarios PIPELINE & PIPE SERVICES COMPOSITE SYSTEMS AUTOMOTIVE & INDUSTRIAL 9% 11% 13% 16% 6% 2% 5% 10% 15% 23% 22% 21% 22% 19% 18% 18%

→ FINANCIAL STRENGTHS

COMPANY & SEGMENT EBITDA PROFILE

(1) Adjusted EBITDA is a non-GAAP measure. See MD&A Section 12.0: Reconciliation of non-GAAP Measures (2) Adjusted EBITDA % for prior years revised to reflect similar level of benefit from adoption of IFRS16 as 2019 (3) Pipeline segment – late cycle average 2013 to 2015, Composite segment – early cycle average 2014 to 2015,

Automotive & Industrial segment – no downturn average 2013 to 2015

SHAWCOR’s EBITDA potential is significant with all three Segments contributing

18% 20% 22% 18% 17% SHAWCOR TOTAL

Adjusted EBITDA % (1)

slide-11
SLIDE 11
  • Dividends to Shareholders
  • Maintenance CAPEX
  • Strengthened Balance Sheet

→ FINANCIAL STRENGTHS

CAPITAL ALLOCATION

SHAWCOR has clear priorities for use of future cash generated

$40-50 million / year Visibility of Net Debt Leverage < 1.5x

  • Selective Growth Programs
  • Additional Returns To

Shareholders

  • Non-Oil & Gas M&A
  • Composite Products

International Expansion

  • Digital & New Technology
  • Dividends
  • Share Repurchase

SECONDARY Maintain 60¢ / share PRIMARY 1 2

slide-12
SLIDE 12

→ INHERENT VALUE

SHAWCOR’s diversification imperative has created inherent value not yet recognized.

  • Oceaneering 8.7
  • Dril-Quip 10.6
  • Transocean 10.2
  • Technip FMC 3.9
  • Oil States 8.4

6.8x 4 – 10x 8 – 11x 8 - 11x

PIPELINE & PIPE SERVICES COMPOSITE SYSTEMS AUTOMOTIVE & INDUSTRIAL

  • Hexcel 11.1
  • Celanese 8.0
  • NOV 9.2
  • TPI Composites 9.7
  • ZCL Composites 10.7(2)
  • Thermon

10.4

  • Anixter 9.5
  • Prysmian 8.8
  • Belden 7.7
  • TE Connectivity 11.3

DIVERSIFICATION

Offshore Services Materials Technology Automotive & Industrial Technology

(1) Values per Bloomberg as at Feb. 28, 2020 (2) Acquisition multiple

Comparison of Trading Multiples - (EV/EBITDA) 2020 Consensus (1)

slide-13
SLIDE 13

Strong Competitive Positioning Supportive Market Fundamentals Positive Outlook Attractive Entry Point Financial Discipline & Organizational Capability

→ SHAWCOR INVESTMENT HIGHLIGHTS

1 2 3 4 5

slide-14
SLIDE 14

Shareholders

  • Growth
  • Yield
  • Sustainability

Employees

  • Purpose
  • Growth
  • Compensation

Communities

  • Contributions
  • Safety
  • Citizenship

Customers

  • Solutions
  • Execution
  • Partnership

Deliver Positive Returns On Resources Invested Generate Sustainable Profitable Growth

Today

  • Protect
  • Capture
  • Deliver

Leverage and Build On Core Strengths For The Future

Tomorrow

  • Select
  • Seed
  • Structure

Continual transition from where we are to where we need to be . . .

  • Markets
  • Competencies
  • Capability
  • Technology

FUNDAMENTALS

SUPPLY / DEMAND IMBALANCE IMPORTANCE OF ASSET OWNERSHIP ENERGY SECURITY AND ASSURANCE GREENER ALTERNATIVES

→ ELEMENTS OF SHAWCOR SUCCESS