Investor Presentation 2019 TSX: TVK Forward Looking Statement This - - PowerPoint PPT Presentation

Investor Presentation 2019 TSX: TVK

Forward Looking Statement

This presentation contains “forward-looking statements” within the meaning of applicable Canadian securities laws, including (but not limited to) statements about the EBITDA projection, future performance of TerraVest Industries Inc. (“TerraVest” or the “Company”) and similar statements concerning anticipated future results, circumstances, performance or expectations. A statement is forward-looking when it uses what TerraVest knows and expects today to make a statement about the future. Forward-looking statements may include words such as anticipate, assumption, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, seek, should, strive, target and will. These statements relate to future events or future performance and reflect current assumptions, expectations and estimates of Management regarding growth, results

• f
• perations,

performance, business prospects and

• pportunities,

Canadian/U.S. economic environment and ability to attract and retain customers. Such forward-looking statements reflect current assumptions, expectations and estimates of Management and are based on information currently available to TerraVest as at the date of this Presentation. Forward-looking statements are subject to certain risks and uncertainties, and should not be read as guarantees of future performance or results and actual results may differ materially from the conclusion, forecast or projection stated in such forward-looking statements. These risks, uncertainties and other factors include but are not limited to the following: cyclicality of the oil and gas sectors, weather related issues, economic cycles, input costs, customer expectation for equipment standards, competition, employee/labour, environment, regulatory requirements, exchange rate, availability of capital, cost increases, credit, interest rate and litigation. Such assumptions, expectations, estimates, risks and uncertainties are discussed throughout this Presentation and, in particular, in “Risk Factors”. Consequently, we cannot guarantee that any forward-looking statements will materialize. Readers should not place any undue reliance

• n such forward-looking statements.

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Our Company

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• TerraVest Industries Inc. (“TerraVest” or the “Company”) is a leading

provider of products and services to niche infrastructure markets #1 manufacturer of home heating oil products in North America #1 manufacturer of propane, anhydrous ammonia (“NH3”) and natural gas liquids (“NGL”) transport vehicles and storage vessels in Canada and top #3 in the U.S. #1 manufacturer of wellhead processing equipment in Canada

• Fiscal 2018 ~ $270 million in revenue, $41.6 million in EBITDA and growing

Market Leader in Home Heating Products

• Our Home Heating Products division is the #1 player in

home heating oil tanks and related accessories in North America, while also producing furnaces and commercial fuel tanks

• Strong brand reputation with +65 years of operating

history

• We are a critical supplier to the heating oil market in

North America offering a full suite of products

• 5 operating facilities and approx. 300 employees

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Product Lines Select Customers

Residential Furnaces Commercial Fiberglass

Market Leader in LPG/NH3/NGL Storage & Transport Equipment

• We are the only manufacturer of

LPG/NH3/NGL storage and transport equipment with a national footprint in Canada

• Strategically located to service mid-

west and north-east markets in U.S.

• Broadest scope of product offering

among all North American competitors

• Significant in-house engineering and

technical expertise

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LPG/NH3/NGL Storage & Transport Equipment (cont’d)

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Product Lines Select Customers

Domestic Tanks Bulk Storage Bobtails Dispensers Service Trucks Refurb B-Trains Nurse Wagons Trailers Field Service/Installation

Market Leader in Energy Processing Equipment

• Our Energy Process Equipment division is the #1 player

in wellhead processing equipment in Canada

• Strong brand reputation with +50 years of operating

history

• We are a critical supplier to many of the largest oil and

gas producers in North America

• 3 operating facilities and approx. 350 employees

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Product Lines Select Customers

Separation Line Heating Tanks Oil Treating

Expansive Operational Footprint

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Coast to Coast Manufacturing Operations

• TerraVest is the largest Propane/NH3/NGL equipment provider in Canada with coast to coast
• perations

– U.S. operations reside in Michigan, the largest state for propane consumption, and products are sold regionally and nationally

• Home Heating products are manufactured in the Northeast, strategically located near the largest

market for heating oil products; and

• Energy Processing equipment is manufactured in Western Canada

Propane/NH3/NGL Home Heating Energy Processing

Participating in the Entire Fuel Infrastructure Supply Chain

• TerraVest is involved in all aspects of manufacturing products for the fuel

infrastructure supply chain – Products consist of storage vessels at gas plants/refiners through to transport vehicles and domestic tanks at the retail home

Nat Gas Pipeline Gas Plant NGL Transport Fractionator Propane Pipeline Storage Rail to Propane Terminal Refinery Propane Terminal Transport to Retailer Propane Retailer Residential Commercial /Industrial Agricultural

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Strategy and Highlights

• Operate market leading and reputable businesses in all of our

segments

• Offer full scale product suites to become critical suppliers in each of
• ur segments

– Add to existing product offering via acquisitions of well-known and reputable businesses – Add to existing product offering via new manufacturing lines and capacity expansions

• Continue to invest in state of the art manufacturing technologies

across all of our businesses

• Young and motivated management team (average age of 43)

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$5.9 $15.7 $25.1 $11.7 $11.1 $27.1 $12.8 $23.1 $35.4 $24.8 $24.2 $41.6 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 2013 2014 2015 2016 2017 2018 EBITDA Cash Flow Available for Distribution

Strong Financial Performance and High Cash Flow Generation

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Strong Cash Flow Generation HISTORICAL EBITDA ($MM)

2013 – 2018A EBITDA CAGR 28.1%

($4.1) ($5.0) ($4.4) ($4.0) ($5.4) ($4.2) 19% 18% 18% 14% 13% 15% 72% 44% 29% 63% 66% 27% 2015 Peak Oil & Gas Market Diversification of Cash Flows through Acquisitions Maint. Capex Dividend Payout Ratio EBITDA Margin

Manufacturer of home heating and propane storage products. Diversified cash flow and created a platform for growth

History of Successful Acquisitions

2014 2014 2015 2016 2015

Manufacturer of oil and gas processing

• equipment. Enhanced

customer base, manufacturing capability and management expertise Manufacturer of propane service trucks, delivery trucks and transport

• trailers. Added a core

group of leading U.S. fuel distributers as customers Manufacturer of patented storage tank products for the oil and gas industry. Complimentary product for existing oil & gas customers Provider of patented sand separation equipment to the oil and gas industry. Differentiated product that is leveraged to cross sell existing products

2017 2017 2018

Manufacturer of steel and fiberglass home heating

• il tanks. Enhanced

market share Manufacturer and refurbisher of domestic propane tanks. Added to the suite of complimentary propane products for customers Manufacturer of LPG and NH3 transport trailers and NGL storage vessels. Created a national platform for products in Canada

12 Complimentary businesses Ability to leverage expertise in metal fabrication Standalone operational capability Quality brand/reputation Attractive valuations to shareholders

✓ ✓

Acquisition Criteria

✓ ✓ ✓

Added 25,000 square feet

• f manufacturing capacity

to existing Pro-Par facility to expand capacity in bobtail and transport trailer production

History of Organic Growth

2015 2016 2016 2017 2017

Added 10,000 square feet

• f manufacturing capacity

and heavy craneage to support new transport trailer manufacturing line Added automatic CNC pipe profiler to expand pressure vessel manufacturing capacity, improve efficiency and reduce lead times Added new automated domestic tank manufacturing line and bulk storage growing line expanding Pro-Par’s product offering to the LPG market Added brand new automated domestic tank manufacturing line expanding Fischer’s product offering to the LPG market

2018 2018 2018

Internalized nondestructive testing to increase capacity and improve quality and lead times Moved into new 90,000 square foot manufacturing facility expanding capacity by 100% Added new interchangeable plate rolls to improve efficiency and lead times

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2019

Moved into new 125,000 square foot facility expanding capacity and giving the ability to add new product lines

Adds to product

• ffering

Expands capacity Improves efficiency Improves quality Attractive return on investment

✓ ✓

Investment Criteria

✓ ✓ ✓

23.9% 93.5% (5.2%) 36.2% 28.4% LTM Last 3 Years Since 2014

$25,000,000

Successful Return for Shareholders

June 2014

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$6.10 Per Share

$20,000,000 Equity Bought Deal April 2015

$8.25 Conversion

7.0% Convertible Debenture Bought Deal

Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19

Current Dividend $0.40 Implied Yield 3.7% Acquisitions

$4.53 $10.75 Share Price Performance Total Return Performance

TerraVest S&P TSX Composite Index Information as at January 15, 2019. Source: Capital IQ.

214.9%

Insider Ownership TerraVest Capital Structure

Meaningful Insider Ownership and Conservative Capital Structure

• TerraVest is a public company with majority

control by 3 major shareholders Clarke Inc. 5,386,440 32% Charles Pellerin 3,200,000 19% Dale Laniuk 1,934,992 11% Other Insiders 1,013,575 6% Public Float 5,519,489 32% Basic S/O 17,054,496 100%

• Approximately 1.2mm options outstanding with

an average exercise price of ~$8.13

• $13.6MM convertible debentures outstanding

with a conversion of $8.25 Share Price $10.75 Basic Shares Outstanding 17,054,496 Shares Outstanding with Converts 18,700,920 Equity Value $201,034,893 Convertible Debentures $13,583,000 Net Debt (ex. Converts) $95,667,000 Enterprise Value (Diluted Convts.) $296,701,893 LTM EBITDA $45,511,000 LTM Cash Flow Available for Distrib. $27,602,000 Dividend (Per Share) $0.40 LTM Payout Ratio 25% Net Debt to LTM EBITDA (with convts.) 2.4x Net Debt to LTM EBITDA (ex. convts.) 2.1x EV/LTM EBITDA 6.5x Price/ Cash Flow Available for Distrib.(1) 7.1x

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1) Calculated on a fully diluted basis.

Strong Free Cash Flow Generation Sound Management Team Focused

• n Cost

Competitivenes, Growth and Technology Products Part of a North American Niche Infrastructure Market Product and Geographical Diversification, Reducing Exposure to Economic Cycles Market Leader in Residential Home Heating Oil Product Manufacturing Market Leader in Propane/NH3/NGL Transport and Storage Vessel Manufacturing Market Leader in Canada for Wellhead Processing Equipment Manufacturing Barriers to Entry

Summary of TerraVest Key Investment Highlights

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TerraVest Value Proposition

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Attractive Dividend Yield & Low Payout Ratio Organic and Acquisition Growth Opportunities Driven by Operational Streamlining between Segments, Enhanced Sales Strategy and Moving into New Geographic Territories Diversification of Cash Flows Management Team With Integration Expertise Strong Balance Sheet Substantial Retained Interest by Management and Existing Shareholders Motivated to Enhance Shareholder Value Over the Long-Term Proven Ability to Grow Through Acquisitions and Organically