Q2 Annual Meeting of Shareholders Financial Highlights 2018
Forward-Looking Statements (For definitions of capitalized terms, please refer to the Glossary in Enercare’s MD&A dated August 13, 2018) This presentation contains certain forward-looking statements within the meaning of applicable Canadian securities laws (“forward-looking statements” or “forward-looking information”) that involve various risks and uncertainties and should be read in conjunction with Enercare Inc.’s (“Enercare”) 2017 audited consolidated financial statements, and Enercare’s condensed interim consolidated financial statements for the three and six months ended June 30, 2018. Additional information in respect of Enercare, including the AIF, can be found on SEDAR at www.sedar.com. Statements other than statements of historical fact contained in this presentation may be forward-looking statements, including, without limitation, management’s expectations, intentions and beliefs concerning anticipated future events, results, circumstances, economic performance or expectations with respect to Enercare, including Enercare’s business operations, business strategy and financial condition. When used herein, the words “anticipates”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “goal”, “intends”, “may”, “might”, “outlook”, “plans”, “projects”, “schedule”, “should”, “strive”, “target”, “will”, “would” and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. These forward-looking statements may reflect the internal projections, expectations, future growth, results of operations, performance, business prospects and opportunities of Enercare and are based on information currently available to Enercare and/or assumptions that Enercare believes are reasonable. Many factors could cause actual results to differ materially from the results and developments discussed in the forward-looking information. In developing these forward-looking statements, certain material assumptions were made. These forward-looking statements are also subject to certain risks. These risks include, but are not limited to: • actual future market conditions being different than anticipated by management; • the risk that the roll out of rental HVAC offerings beyond the present 23 states in the United States does not realize anticipated results as the rental model is a new concept in this industry in the United States; and • the risks and uncertainties described under “Risk Factors” in Enercare’s MD&A dated August 13, 2018. Material factors or assumptions that were applied to drawing a conclusion or making an estimate set out in forward-looking statements include: • management’s views regarding current and anticipated market conditions; • industry trends remaining unchanged; • Enercare’s financial and operating attributes as at the date hereof and its anticipated future performance of Enercare and Service Expert s; • assumptions regarding the volume and mix of business activities remaining consistent with current trends; and • assumptions regarding the interest rate of the 2016 Term Loan, 2014 Revolver, foreign exchange rates and commodity prices. Annual Meeting There can be no assurance that recent results from the introduction of the rental model to Service Experts in Canada and the United States are indicative of future results. of Shareholders Readers are cautioned that the preceding list of material factors or assumptions is not exhaustive. Although forward-looking statements contained in this presentation are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Accordingly, readers should not place undue reliance on such forward-looking statements and assumptions as management cannot provide assurance that actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Enercare. All forward-looking information in this presentation is made as of the date of this presentation. These forward-looking statements are subject to change as a result of new information, future events or other circumstances, in which case they will only be updated by Enercare where required by law. Please see the section entitled “Risk Factors” in Enercare’s MD&A dated August 13, 2018 for a discussion in respect of the material risks relating to the business and structure of Enercare. 2
JOHN MACDONALD President & CEO Annual Meeting of Shareholders
Strong Q2 2018 Results & Performance 14% U.S residential rental mix + 7% +9% +15% +11% +11,000 Sales & Rental Increase in unit growth Growth in Increase in revenue to Rental unit billable units EBITDA to $343M additions $87M Annual Meeting of Shareholders EBITDA and customer base expansion in each segment 4
2018 Strategic Priorities Home Services Service Experts Sub-metering 1. Grow net rental units 1. Strong organic growth 1. Grow contracted units 2. Grow protection plan 2. Continue rental 2. Expand products portfolio program roll out and services Annual Meeting 3. Roll out Enercare 3. Execute roll-up 3. Focus on customer Smarter Home acquisition strategy satisfaction of Shareholders Stable EBITDA Growth 5
Home Services Rental Units Provide Base For Cross Selling (as of Q2 2018) 73% of 19% of 1.1 M 553,000 Q2 2018 Q2 2018 Rental Units Protection Plans Revenue Revenue 80% of protection plan Large water heater and customers are cross sold HVAC rental unit base from the water heater provides significant relationship platform for cross-selling Building Long-term Customer Relationships 6% of 2% of Annual Meeting Q2 2018 Q2 2018 Revenue Revenue Other of Shareholders ~4,300 HVAC Products Units Installed YTD Opportunity to cross-sell other products Two-thirds of HVAC including plumbing units are from protection and duct cleaning plan relationships 6
Home Services Focused On Growing Protection Plans Q2 2018 Q2 2017 Protection Plan + 6,000 547,000 553,000 Contracts Improvement Our Protection Plans: PROTECT STRENGTHEN Customers’ Our customer Annual Meeting investment relationships of Shareholders GROW The customer base 7
Transforming The Customer Experience HVAC Water Leak Performance Sensor & Remote Monitoring Water Shut Off Video Monitoring Monitor & Control Energy Usage Annual Meeting of Shareholders Switch Lock & Lighting & Outlet Unlock Control Control Doors Good initial uptake as we continue to roll-out the program 8
Dramatic Increase In Service Experts U.S Rental Penetration Key Accomplishments 9% Increase in Originations (Q2 2018 vs Q2 2017) 6% Increase in EBITDA (As of Q2 2018) 6 Centers through 3 completed M&A transactions (2018) 23 Annual Meeting Of 29 States Completed Rental Rollout of Shareholders (As of June 30, 2018) 14% U.S residential rental penetration compared to Q2 2017 of 4% (As of Q2 2018) 9
Scale In Sub-metering Delivering EBITDA Growth Unit Continuity (In thousands) R G A C % 270 5 1 266 261 235 205 13% CAGR 193 189 185 183 166 165 156 155 151 140 136 136 15% CAGR 132 130 116 115 103 96 94 93 82 77 71 57 50 Annual Meeting 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018 Q2 2018 of Shareholders Contracted Installed Billable Strong embedded revenues in contracted units pipeline: 2 to 1 versus billable units 10
Geoff Lowe CFO Annual Meeting of Shareholders
Successfully Growing Long-Term Recurring Revenues 69% increase in Total Revenue-Second Quarter 1 net rental unit growth ($ millions) 7% 343 (Q2 2018 vs. 320 Q2 2017) 11 9 Home Services 212 197 14% U .S residential rental mix 9% sales and 121 114 rental unit growth Service Experts Annual Meeting 2017 2018 of Shareholders 2 Sub-metering 2 Service Experts Home Services 15% increase in billable units Sub-metering 12 1. Excludes Corporate Segment 2. Sub-metering Q2 2017 revenues have been restated to reflect the implementation of IFRS 15
EBITDA Performance By Business Segment Adjusted EBITDA 1 EBITDA ($ millions) ($ millions) 5% 11% 88.6 84.3 13% 87.4 78.9 7.5 1.0 4.6 4.6 3.6 3.6 21.5 21.0 25.1 19.9 70.3 69.5 65.1 65.4 Annual Meeting -7.8 -7.8 -9.8 -9.8 of Shareholders 2017 2018 2017 2018 Impact to Adjusted EBITDA due to Home Services Service Experts Sub-metering Corporate rentals Had U.S residential rental additions been sales, Adjusted EBITDA would have increased by $7.5M and grown by 13% 13 1. See “Non-IFRS Financial and Performance Measures” in Enercare’s MD&A
Capital Structure Key Statistics Maturity Schedule BBB (Stable) – S&P C$263 C$55 Drawn Revolver BBB (Stable) – DBRS Term Loan 3.8% Bonds C$275 Weighted Average C$225 C$225 Interest Rate C$90 2018 2019 2020 2021 2022 2023 2024 Annual Meeting of Shareholders Stable Credit Metrics 14
Enercare Inc. & Brookfield Infrastructure Transaction Next Steps: Aug Announced Arrangement Agreement 1 Aug Information Circular to be distributed to Shareholders Sept Special Meeting of the Shareholders 24 Q4 Annual Meeting Anticipated closing of transaction 2018 of Shareholders 15
Q&A Annual Meeting of Shareholders
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