lonestar west inc .corporate presentation november 2014
TRANSCRIPT
This presentation contains certain statements that may be deemed "forward-looking statements". All
statements in this document, other than statements of historical fact, that address events or
developments that Lonestar West Inc. (“the Company”) expects to occur, are forward looking
statements. Forward looking statements are statements that are not historical facts and are generally,
but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential" and similar expressions, or that events or conditions "will",
"would", "may", "could" or "should" occur.
Although the Company believes the expectations expressed in such forward-looking statements are
based on reasonable assumptions, such statements are not guarantees of future performance and
actual results may differ materially from those in the forward- looking statements. Factors that could
cause the actual results to differ materially from those in forward looking statements include, failure
to successfully negotiate or subsequently close such transactions, inability to obtain required
shareholder or regulatory approvals, uncertainty with respect to findings under exploration programs
and general economic, market or business conditions. Investors are cautioned that any such
statements are not guarantees of future performance and actual results or developments may differ
materially from those projected in the forward-looking statements. Forward looking statements are
based on the beliefs, estimates and opinions of the Company's management on the date the
statements are made. The Company undertakes no obligation to update these forward-looking
statements in the event that management's beliefs, estimates or opinions, or other factors, should
change.
Forward-Looking Statements
Page 2
Lonestar Service AreaHEAD OFFICE:
Sylvan Lake, Alberta
BASES:
Fort McMurray, Alberta
Bonnyville, Alberta
Edmonton, Alberta
Whitecourt, Alberta
Carlyle, Saskatchewan
Moose Jaw, Saskatchewan
Melita, Manitoba
Toronto, Ontario
U.S.A.:
Sacramento, California
Elk City, Oklahoma
Tulsa, Oklahoma
Nashville, Tennessee
Beaumont, Texas
Dallas, Texas
Odessa, Texas
San Antonio, Texas
Witchita, Kansas
CANADA
UNITED STATES
Page 3
Sacramento
San Antonio
DallasOdessa
Beaumont
Elk City
Witchita
Nashville
California
Texas
Kansas
TennesseeOklahoma
Fort McMurray
Bonnyville
Edmonton
Sylvan Lake
Whitecourt
Carlyle
Moose JawMelita
Alberta
Saskatchewan
Manitoba
Ontario
Toronto
Tulsa
What Is Hydro-Excavation?
The process of excavating rock and soil
to expose underground utilities and
pipelines.
Uses pressurized water to agitate the
earth, and a powerful vacuum to
remove the soil and debris.
Non-destructive method of excavating
which replaces a conventional backhoe
and manual digging.
Page 4
Benefits Of HVAC Excavation?
Safer and faster than traditional
excavation methods when operating
around sensitive infrastructure.
Can excavate frozen ground because
of onboard water heaters.
Reduces environmental liability and
potential restoration costs.
Page 5
HVAC Truck
A new HVAC truck
costs $475,000.
Lonestar currently
operates 83 HVAC trucks;
with 34 in the U.S.
6Page 6
HVAC Applications
Oil & Gas Industry
• Tank cleaning
• Pipeline trenching
• Facility maintenance
Utility Sector
• Piling & pole hole excavation
Communication Companies
• Uncovering buried utilities
Environmental Cleanup
• Debris removal & cleanouts
Construction Industry
• Shoring & slot trenching
Page 7
HVAC Competitors
• 80 HVAC trucks (estimated)
• 80 HVAC trucks (estimated)
• Over 60 smaller HVAC trucks
• North America’s largest
provider of non-destructive
daylighting services
• 391 HVAC trucks
in Canada
• 517 HVAC trucks
in the U.S.
Page 8
Vacuum “VAC” Truck
A new VAC truck costs
~$400,000.
Lonestar currently
operates 26 VAC trucks;
with 12 in the U.S.
Broad based
competition.
Page 9
VAC Applications
• Fuel tank cleaning
• Spill cleanup
• Car wash
• Flood damage
• Septic tanks
• Sewers
Well Sites
• Remove drilling fluids
• Disposing of fluids in either spread
fields or authorized disposal facilities
Industrial
• Fuel tank cleaning
• Spill cleanup
• Car wash
Pipeline
• Non-destructive testing
Other
• Flood damage
• Septic Tanks
• Sewers
Page 10
Safety Record
• Strong Health, Safety & Environmental
Program (HSE).
• AASP approved Certificate of
Recognition (COR).
• Prequalified by ISNetworld,
Complyworks, Canqual & PIC’s Auditing
as a low-risk supplier.
• Continuously evolving HSE program to
stay ahead of changes in the industry.
• GPS monitoring enhances safety.
• Low lost-time incident frequency.
Page 11
Lonestar Advantage
• Increased efficiency, saving time and money
Superior Trucks
• Qualified for major corporate accounts
Superior Safety Record
• Trained to be safe and efficient
Top Crews
• Over 100 years combined management experience
Experienced Managers
• Founding management
Operating 13+ Years
Page 12
Capital Structure
Issued:
• Insiders: 8.3 m
• CEO (insider) 7.3 m
• Public float 20.9 m
Total Issued: 29.2 m
• Unexercised options: 574,909
Fully Diluted: 29.7 m
Financings:
• June/14 $20.0m @ $3.30
• July/13 $10.1m @ $2.60
• Nov/12 $3.04m @ $1.40
• Aug/11 $1.2m @ $0.60
• Dec/08 $1.2m IPO @ $0.50
Page 13
U.S. Expansion
• U.S. growth – Continually adding to U.S. fleet.
• California (4)
• Oklahoma (10)
• Texas (23)
• Kansas (6)
• Tennessee (3)
• California (infrastructure)
• OK, TX & KS (oil & gas)
• Key management hires
• Growing revenue per truck
• California has fewer Hydrovac trucks than are
located in Edmonton!
Page 14
What We Have Accomplished
Fleet Growth
• 130 – Oct. 2014
• 65 – Oct. 2013
Platform Growth
• 16 Bases – Oct. 2014
• 9 Bases - Oct. 2013
• U.S. operations gaining traction.
• Bought Deal Financing at a premium to recent trading for $20 m.
• Recent close of Vamp acquisition.
Page 15
Clear Growth Trend
-500
500
1,500
2,500
3,500
4,500
5,500
6,500
7,500
8,500
9,500
10,500
11,500
Q1F11 Q2F11 Q3F11 Q4F11 Q1F12 Q2F12 Q3F12 Q4F12 Q1F13 Q2F13 Q3F13 Q4F13 Q2F14 Q2 14
Revenue 1,602 2,883 4,005 2,671 3,812 4,535 5,828 4,442 6,156 6,750 8,777 6,212 9,281 9,555
Net Earnings (loss) -12 221 561 -343 318 521 666 -198 664 624 762 -448 -280 -132
EBITDAC 233 473 840 191 575 792 1,268 381 1,267 1,145 1,556 209 420 808
Lonestar West: TSX-V LSI(Full fiscal year changed to Dec 31 from Jun 30 as of 2014)$ Thousand
Page 16
In One YearTrucks
14,989
21,074
314 7031,765
2,933
0
25
50
75
100
125
-500
4,500
9,500
14,500
19,500
First Half 2013 First Half 2014
RevenueNet Earnings (loss)EBITDACTrucks
53
122$ Thousand
Page 17
In One Year$ Thousand
6,212
9,555
-448 -132
209808
0
25
50
75
100
125
-500
1,000
2,500
4,000
5,500
7,000
8,500
10,000
Q4F13 Q2 14
RevenueNet Earnings (loss)EBITDACTrucks
53
122
Trucks
Page 18
Leadership TeamOfficers
James Horvath – President & Chief Executive Officer
David Prussky - Chairman
Kristin York – Vice President
Kristina Scade – Chief Financial Officer
Directors
James Horvath – President & Chief Executive Officer
Tracy Graf – CEO, Carfinco Financial Group Inc.
Joe MacLean – President and CEO, AOI Capital, LLC
Maurice Kagan – CEO, Danika Associates Limited
David Prussky – Director, Patica Securities Limited
Senior Managers13 senior HVAC and Vacuum managers
(includes U.S. Business Development, U.S. Operations Manager and all Base Managers)
Page 19
Key Investment Highlights
Large and growing client base
Diversified
U.S. Expansion
Quickly becoming a noted competitor
in the Canadian HVAC industry
Energy, infrastructure &
mining
Oklahoma
Texas (energy)
California (utilities & infrastructure)
Page 20
Key Investment Highlights
Strong projected growth.
Superior safety record.
Highly experienced management
with field experience.
28% inside ownership.
Page 21
Analyst Coverage
Target
Price
BUY
$4.25
BUY
$5.00
Strong BUY
$4.75
Outperform
$4.75
Forecast
Revenue
2015
$72.2
Million
$91.2
Million
$65.6
Million
$85.2
Million
Forecast
EBITDA
2014 / 8.7 m
2015 / 14.3 m
2014 / 7.5 m
2015 / 16.2 m
2014 / 7.1 m
2015 / 10.0 m
2014 / 10.1 m
2015 / 16.2 m
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