April 2012 Corporate Presentation
Don Caron, Chief Executive Officer Jason Theiss, Chief Financial Officer
TSX: BRY
www.brichem.com
April 2012 Corporate Presentation Don Caron, Chief Executive - - PowerPoint PPT Presentation
April 2012 Corporate Presentation Don Caron, Chief Executive Officer Jason Theiss, Chief Financial Officer TSX: BRY www.brichem.com Forward-Looking Statement TSX: BRY April 2012 Certain statements set forth in this presentation are forward
April 2012 Corporate Presentation
Don Caron, Chief Executive Officer Jason Theiss, Chief Financial Officer
TSX: BRY
www.brichem.com
TSX: BRY April 2012
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Certain statements set forth in this presentation are forward looking statements. Although Bri-Chem Corp. management believe their expectations are based on reasonable assumptions, they give no assurance that expected results will be achieved. There are numerous risks and uncertainties that can effect the outcome and timing of such events, including many factors beyond the control of Bri-Chem Corp.’s management. These factors include, but are not limited to, economic and political conditions, government regulation, commodity prices for oil and gas, steel commodity prices, fluctuations in the level of oil and gas, the need to effectively integrate acquired businesses, uncertainties as to Bri-Chem’s ability to implement its business strategy effectively in Canada and the United States, Bri-Chem’s ability to attract and retain key personnel, currency fluctuations and other factors that affect demand for the Company’s product. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the actual results and plans for fiscal 2012 and beyond could differ materially from those expressed in the forward looking statements. Additional information on these and other factors and uncertainties are described under the heading “Risk Factors” in the Company’s most recent Annual Information Form (“AIF”) and other continuous disclosure materials filed by the Company with Canadian securities regulators, which are available to the public at www.sedar.com. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is
information, future events or otherwise, except as required by law. Furthermore, certain measures we use are not recognized measures under International Financial Reporting Standards (“IFRS”). Specific measures used are earnings before interest, taxes, depreciation, amortization and non-cash stock based compensation (“EBITDA”). We strongly recommend the participants review the discussion of these statements in the “Management’s Discussion and Analysis – Non-IFRS Measures and Reconciliations” section of our 2011 Annual Report.
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Distribution – 350 Products Proprietary Blending & Packaging
Distribution – Seamless Pipe Manufacturing – Large Diameter
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2007 - $60M 2011 - $186M
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5 Management Directors and Insiders 38% Institutional 20% Retail 42%
Shareholder Breakdown
As of April 16, 2012 Exchange Toronto Stock Exchange Shares Outstanding 17.2M/FD18.0M Share Price $3.05 52 Week High/Low $4.42/$2.20 Market Capitalization $52.6 million P/E (1) 5.0 X EBITDA (1) $16.4M EV/EBITDA (1) 4.8 X Earnings per FD share (1) $0.61 EBITDA per FD share (1) $1.00 Book Value per FD share (1) $2.55
(1) For the year ended December 31, 2011
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North America continues to drill deeper and longer reach horizontal wells which are completed utilizing multi-stage fracturing which consumes more:
Estimated at $1.0B(1) Largest Independent Supplier of Drilling Fluids in
Canada
Targeting Stimulation Fluids Segment
Wholesale Oilfield Chemical Demand (est. $1.0B CAN, USA $9.1B)
(1) Company Estimate
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2011 Canadian Drilling Fluids Revenue $152 million
>50% market share – drilling fluids
segment(1)
27% YOY Increase in sales
<10% market share – stimulation
fluids segment(1)
39% YOY increase in sales
(1) Company Estimate $ (000’s) Year Drilling Fluids Blend/Pack
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Distribution Warehouses 1 - High Level, AB 2 - Grande Prairie, AB 3 - Slave Lake, AB 4 – Edson, AB 5 - Blackfalds, AB 6 - Consort, AB 7 - Brooks, AB 8 - Lloydminster, AB 9 - Fort Nelson, BC 10 - Fort St. John, BC 11 - Swift Current, SK 12 - Estevan, SK Blending & Sales 13 - Acheson, AB (Blending & Distribution) 14 - Camrose, AB (Packaging & Distribution) 15 - Calgary, AB (Sales office) Legend Strategic Stock Point Office / Blending & Warehouse
12 9 1 10 11 8 7 2 3 15 13 14 6 5 4
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Completed Stryker acquisition May 2011 Acquired sales of $6.5M Denver, CO Head Office
Bri-Chem aggressively expanding: 3 to 9 Warehouses 6 to 10 Trucks 1 to 4 National sales Additional Warehouse expansion plans Establish liquid mud blending facility
Capture a >10% of $3.4B Drillings Fluids Market Establish the dominate independent drilling fluids distribution network for the USA
2011 USA Drilling Fluids Revenue $6.0 million
400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 $ Month Supply Trans
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Warehouses 1 – Denver, CO 2 – Ulster, PA 3 – Leetsdale, PA 4 – Grande Junction, CO 5 – Alice, TX 6 – Tyler, TX 7 – Casper, WY 8 – Myton, UT 9 - Bakersfield, CA Proposed 1 – North Dakota 2 – Oklahoma 3 – Oklahoma Legend Current Strategic Stock Point Proposed Stock Point
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Wholesale distributor of steel pipe for the
energy industry
Pipe size ranging from ½ to 36 inch: Gas Line pipe Fluid Transmission pipe Shifted YOY Product Mix:
Lower Inventory Increased Margins (2010 – 7.6% 2011 - 19%) Higher Inventory Turns Distributor of Large Diameter
Source Steel Pipe from: North America Asia India Vietnam Master Distributors:
2011 Steel Pipe Distribution Revenue $27 million
10,000 15,000 20,000 25,000 30,000 35,000 2008 2009 2010 2011 Millions of $ Year
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Large Diameter Seamless Pipe Production 14” – 36” TPE Process Exclusive to North America QA/CDA 2011 Capital Investment $6M Completion of commissioning phase Q1 2012 2012 Estimated Production Ramp-up(1) Q1 – 1000MT Q2 – 2000MT Q3 – 3500MT Q4 – 4500MT Average Market Selling Price(1) $2K per MT Target Market Energy Fluid and Gas Line Pipe Estimated Production at Full Capacity(1) 24K – 30K MT
(1) Company Estimate 12
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Canada 2012 Wells Drilled Forecast(1) 13,350 up 3% 2012 Average Active Rig Forecast(2) 407 up 1% 2012 Current Rigs Operating – Early spring breakup (2) 187 USA 2012 Wells Drilled Forecast 47,918 up 6.7% 2012 Average Active Rig Forecast (4) 2,019 up 7.6% 2012 Current Rigs Operating (3) 1,979 North America Oil and Gas Prices Approved Exploration Expenditures
(1) PSAC Forecast as of January 26, 2012 (2) CAODC Forecast as of November 8, 2011 (3) Baker Hughes as of April 5, 2012 (4) World Oil Report as of February 2012
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Revenues $185.7M – 22% YOY increase
EBITDA $16.4M – 29% YOY increase EBITDA per share $1.00 ($0.91 - 2010) Earnings $9.5M – 33% YOY increase EPS of $0.61 ($0.51 - 2010)
2,000 3,000 4,000 5,000 6,000 7,000
20,000 30,000 40,000 50,000 60,000 70,000 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q 11 EBITDA (Millions of $) Revenue (Millions of $) Revenue EBITDA
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Year Ended 2007 2008 2009 (1) 2010 2011 Revenue $ 59,519 $ 111,283 $ 96,480 $ 152,495 $185,723 EBITDA 5,668 10,012 3,744 12,712 16,441
2011 EBITDA to Sales – 8.9% EBITDA Per share – $1.00
EBITDA& Earnings (000’s)
(1) Normalized earnings and EPS for 2009
$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 2007 2008 2009 2010 2011 Revenue(000's)
EBITDA Revenue
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$0.19 $0.33 $0.51 $0.61 $9.5M $7.1M $4.5M $2.4M $0.2M 2007 2008 2009(1) 2010 2011 $0.02
$Millions $/Share
1) 2009 financial results have been normalized for impairment charge of $6.8M on goodwill and intangibles and $2.9M of inventory writedown
Net Earnings EPS
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As of December 31, 2011 Available Credit ($80M ABL) $31.1M Net working capital $32.4M Inventory $54.2M Inventory Turnover 3.2 Total Assets $125.7M Long-term Debt $0.7M Shareholders Equity $43.9M Return on Assets 7.5% Return on Equity 21.5% Capital Expenditures $3.8M Free Cash Flow $6.8M
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Acquisition Criteria
Accretive Profitable Experienced Management Complementary Fit Opportunity for Growth Geographic Expansion
Current Focus
Production Chemicals USA Liquid Mud Operations Stimulation Chemicals Small Diameter Steel Manufacturing Threading & Upsetting
Structure
years
years
Agreement 2007 2008 2009 2010 2011
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Revenue to Employee Count
10 20 30 40 50 60 70 80 90
40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2005 2006 2007 2008 2009 2010 2011 Employee Count (000's C$)
Fluids sales Steel sales employees
Sept 30 TTM Total Revenue Per Employee (81): $2.3 million (1)
8 15 17
Based on core business, additional 19 employees for steel manufacturing division
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USA Drilling Fluids Market Segment - $3.4B
Stryker Acquisition – 9 Warehouses Establish Additional Warehouse Locations Establish Liquid Mud Service Facilities
Canada - Expand Chemical Blending Capacity
Production Stimulation Cementing
Ramping up Production of Manufacturing Facility Explore Small diameter seamless Micro Mill opportunity
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Increased Market Share North American Leader Strong Organic Growth Bri-Chem Today Bri-Chem Tomorrow Broad Geographic Expansion
Strengths
– Strong Balance Sheet – Profitable – Experienced Management – Proven Business Model – Acquisition Strategy
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BRI-CHEM CORP.
Don Caron Jason Theiss Chief Executive Officer Chief Financial Officer 53016 Highway 60, Unit #15 53016 Highway 60, Unit #15 Acheson, Alberta Acheson, Alberta T7X 5A7 T7X 5A7 Email: dcaron@brichem.com Email: jtheiss@brichem.com Ph: 780.420.6885 Ph: 780.455.8667x237
Contacts
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Chief Executive Officer & Director Director of Edmonton based Private Equity Firm. Founder of International Technologies Inc. which merged to create CCS Income Trust. (1992) Founder of CFE Industries Inc. which merged to create Commercial Solutions Inc. (2002) Founder of mBase Inc. which merged to create Bri-Chem Corp. (2007)
Albert Sharp
Director Former Chief Executive Officer of Altus Geomatics, partnership residing under Altus Group Income Fund. (TSX: AIF.UN) Retired Trustee of Altus Group Income Fund. Member of: The Canadian Institute of Geomatics; The International Right of Way Association; and, The Alberta
Association of Surface Land Agents. Eric Sauze
Director & Chair
Former Chief Operating Officer and Chief Financial Officer of Commercial Solutions Inc. (TSX:CSA) Chartered Accountant and Chartered Financial Analyst. Chief Financial Officer of Western Canadian based oil and gas valve company.
Brian Campbell
Director Over 25 Years of field and managmenet experience in the drilling fluids industry. Founded Bri-Chem in 1985. Former President of Bri-Chem Fluids division.
Trent Abraham
President of Fluids Division Over 20 years experience in the drilling fluids industry, oversees the day to day operations Former owner of Millennium Technologies which was purchased by Bri-Chem (2007).
Jason Theiss
Chief Financial Officer
Neil Rasmussen
President of Steel Division Chartered Accountant. Prior, controller of private income trust, and senior auditor with public accounting firm. Joined Bri-Chem in 2007. President of Bri-Steel Corporation and Bri-Steel Manufacturing with over 15 years of steel industry experience Founded Bri-Steel Corporation.
Appendix – Board of Directors & Management Bios