nine energy service investor presentation q3 2018/media/... · oriented work 10 how does nine build...
Post on 01-Oct-2020
1 Views
Preview:
TRANSCRIPT
1
NINE ENERGY SERVICE
INVESTOR PRESENTATION
Q3 2018
Forward-Looking Statements & Non-GAAP Financial MeasuresCertain statements in this presentation are forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this presentation, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this presentation, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements may include statements about the volatility of future oil and natural gas prices; our ability to successfully manage our growth, including risks and uncertainties associated with integrating and retaining key employees of the businesses we acquire; availability of skilled and qualified labor and key management personnel; our ability to accurately predict customer demand; competition in our industry; governmental regulation and taxation of the oil and natural gas industry; environmental liabilities; our ability to implement new technologies and services; availability and terms of capital; general economic conditions; operating hazards inherent in our industry; our financial strategy, budget, projections, operating results, cash flows and liquidity; and our plans, business strategy and objectives, expectations and intentions that are not historical. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements contained herein are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved.
For additional information regarding known material factors that could affect our operating results and performance, please see our final IPO prospectus, Current Reports on Form 8-K, Annual Report on Form 10-K and Quarterly Reports on Form 10-Q which are available at the SEC’s website, http://www.sec.gov. Should one or more of these known material risks occur, or should the underlying assumptions change or prove incorrect, our actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statement. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. All subsequent written or oral forward-looking statements concerning us are expressly qualified in their entirety by the cautionary statements above. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by law. All information in this presentation is as of September 30, 2018 or December 31, 2017 as indicated unless otherwise noted.
In addition to reporting financial results in accordance with GAAP, the Company has presented Adjusted EBITDA, Adjusted EBITDA margin and return on invested capital (ROIC). These are not recognized measures under, or an alternative to, GAAP. The Company’s management believes that this presentationprovides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its results of operations and financial condition. In addition, management uses these measures for reviewing the financial results of the Company. These non-GAAP measures are intended to provide additional information only and do not have any standard meaning prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. In particular, because of its limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to use to reinvest in growth of the Company’s business, or as a measure of cash that will be available to meet the Company’s obligations. These non-GAAP measures have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.
Industry and Market DataThis presentation includes market data and other statistical information from third party sources, including independent industry publications, government publications and other published independent sources. Although the Company believes these third party sources are reliable as of their respective dates, the Company has not independently verified the accuracy or completeness of this information.
2
DISCLAIMER
COMPANY OVERVIEW
4
NINE COMPANY OVERVIEW
PRO FORMA REVENUE BY SERVICE LINE3
• Focused on ROIC
• Leveraged to increasing completion intensity including mega-well pads, lateral lengths and stage count
• Super lateral, deep reach capable service offering and focus
• Agnostic to completion style – plug and perf (94%1 of horizontal market) and sleeve completions (6%1 of horizontal market)
• Able to provide downhole conveyance services coupled with forward-leaning technology
• Diversified completion portfolio and geography
OUR COMPANY
PRO FORMA FINANCIAL OVERVIEW ($MM)2
1Spears and Associates. 2Revenue and Adjusted EBITDA pro forma to include Magnum. Calculations are based on Nine’s historical consolidated financial statements and Magnum’s historical consolidated
financial statements as adjusted to give effect to Nine’s acquisition of Magnum and the related financing transactions. H1 2018 represent annualized figures.; 3Financials based on H1 2018 revenue and pro
forma for Magnum acquisition. Blue color indicates Completion Solutions segment. See appendix for Adjusted EBITDA reconciliation
Cementing21%
Coiled Tubing19%
Wireline25%
Well Service9%
Completion Tools26%
$633
$903
$84$161
2017 H1 2018 Annualized
Revenue Adj. EBITDA
Adj. EBITDA Margin13%
Adj. EBITDA Margin18%
TECHNOLOGY-DRIVEN COMPLETIONS OFFERING
SmartStart – Strategic alliance
FlowGun – Owned IP
TOE OF THE WELLHORIZONTAL LATERAL
ProprietaryLiner
Hanger Tools
MVPTM & Hollow PointTM Dissolvable–Owned IP
Offering includes tools & equipment capable of completing super laterals (10,000 ft.+)
Coil Activated Frac Sleeve –Strategic Alliance
EON Ball Drop Sleeve System–Strategic Alliance
PRE & POST STIMULATION
Long-stringCementing
Scorpion Composite Plug–Owned IP
MorphPackers StormTM Re-frac Packer – Strategic Alliance
2019E New NA HZ Wells Drilled: 23,6721 2019E NA Stage Count: 775,0081
5
Extremely reliable in super laterals (10,000 ft.+)
2019E New NA HZ Wells Drilled: 23,6721
Large Diameter Coil + Memory Tools
BreakthruTM Casing Flotation Device- Owned IP
Nine is capable of addressing 100% of the onshore wells drilled in North America, regardless of completion type
1 Spears & Associates as of October, 2018.
MagnumDiskTM
- Owned IP
• Able to serve the entire addressable isolation tool (isolation tool = plug) market with proven dissolvable
and composite offerings (1 frac stage = 1 plug)
• 2019E NA Stage Count: 775,0081
• # 2 market share in dissolvable frac plugs and #1 in polymer-based (plastic) dissolvable plugs
PREMIER ISOLATION TOOL PROVIDER
SCORPIONTM COMPOSITE
EXTENDED RANGE PLUGSFor Challenging or Impaired Casing
HIGH TEMP MVPTM
Eagles Ford, Haynesville, Duvernay
MID TEMP MVPTM
Permian, Bakken, Midcon, DJ/Niobrara, Duvernay, Montney
LOW TEMP MVPTM (Plastic)Permian, Marcellus/Utica, Fayetteville, Montney
LOW TEMP Hollow PointTM (Magnesium)Permian, Marcellus/Utica, Fayetteville
DISSOLVABLE FRAC PLUGS
· Completely dissolvable eliminating plug drill-out
· Applications to address temperatures in all NAM basins
· Plastic and Magnesium offering
COMPOSITE FRAC PLUGS
· Fully composite
· Shorter design, minimizing bit wear and tear and resulting
in faster drill-out times
· Variety of sizes (3.5”-5.5”) including extended range
PLUGS All Basins
61 Spears & Associates as of October, 2018.
SUSTAINABLE VALUE PROPOSITION OF SERVICE & TECHNOLOGY
7
Service and technology drives efficiencies and lowers total cost of ownership for operators
SERVICE/TECHNOLOGY PERFORMANCE DAYS SAVED REVENUE GENERATION FOR OPERATORS1
ScorpionTM Composite Plug 144 plugs drilled out with
1 drill-bit. Eliminated a
bit trip
~2.5 days per
well
6 well pad = $5.9mm
21 well pad = $20.5mm
MVPTM & Hollow PointTM
Dissolvable Plugs
Dissolvable plugs
eliminate drill-out times
and reduces overall NPT
and operational risks
~4 days per
well2
6 well pad = $9.4mm
21 well pad = $32.8mm
Toe Valves
Prep and stimulate stage
1 in under 5 hours
~1 day per
well
6 well pad = 2.3mm
21 well pad = $8.2mm
Nine Wireline10+ stages per day with
99% success rate
~1.75 days3
per well
6 well pad = $4.1mm
21 well pad = $14.3mm
Illustrative Days Saved and
Revenue Generated
~9.25 days per
well
6 well pad = $21.6mm
21 well pad = $75.8mm
1 Assumes IP rates of 1,000 boe/d at $65 WTI and $390,000 of revenue per day. 2 Assumes 7,000-10,000 ft. lateral. 3 Assumes 70 stages per well with competitive comparison at 8 stages per day.
LONGER LATERALS l TIGHTER SPACING l PAD DRILLING
Concentration of dollars / pad + exponential impact of Non-Productive Time = highly selective customers
SINGLE-WELL PAD COMPLETIONS MULTI-WELL PAD COMPLETIONS
Source: Spears & Associates as of October 2018 and Company Estimates. 1Assumes IP rates of 1,000 boe/d at $65 WTI.
• Total well cost: $5-$7mm
• ~8,000 feet of lateral length completed
• 40 stages
• 12mm pounds of sand
• 1,000 boe/d oil produced
• Total pad cost: $30-$42mm
• ~48,000 feet of lateral length completed
• 240 stages
• 72mm pounds of sand
• 6,000 boe/d oil produced
E&P Revenue/Day = ~$65,0001
BARRIERS TO ENTRY CONTINUE TO INCREASE
Increased capital efficiency →↑ROIC
6 wells on a pad requires 1 wireline unit
• Dissolvable plugs can save operators
~24 days per 6-well pad in reduced
drill-out time & ~12 days saved with
clean-out run
• Generating between $9.4 - $4.7mm of
incremental revenue in this featured
well pad
• Eliminates time and risk of drilling out
plugs, as well as associated service
costs E&P Revenue/Day = ~$390,0001
8
MULTI-WELL PADS CONCENTRATE RISK
6 single wells required 6 wireline units
BROAD FOOTPRINT ENABLES TECHNOLOGY LEADERSHIP
Service Coverage Area and Revenue by Region1
Major Unconventional Basins
1 YTD as of 12/31/2017 and pro forma for Magnum acquisition.
Permian 35%
Rockies 5%
MidCon 10%
Marcellus / Utica 18%
Haynesville 9%
Bakken 8%
Canada 4%
Barnett 1%
Eagle Ford 9%
FOOTPRINT IN EVERY MAJOR NAM BASIN –significant benefit to potential
strategic partners through
distribution volume
EXCELLENT NAM REACH CAPABILITY –
proximity to
the field, customer
and acreage
LOCALIZED TEAMS WITH REGIONAL KNOWLEDGE –
share best practices
internally and
with customers
~2% of overall revenue comes from outside NAM
9
BARRIERS TO ENTRY THROUGH TECHNOLOGY AND SERVICE
COMPLETION SOLUTIONS PERFORMANCE BARRIERS EQUIPMENT BARRIERS → FIT FOR “DEEP REACH”
Cementing Services • ~14,000 cementing jobs with on-time rate of ~90%1
• High-quality dedicated Midland, Delaware and Eagle Ford labs (to API specs) with testing capabilities to cement laterals over 10,000’ long → Redundant pumps with 1,000 HP and dual-sided bulk plants
Completion Tools • ~154,000 isolation and stage 1 tools and ~22,000 frac sleeves deployed2
• ~31,000+ dissolvable plugs deployed3
• Owned IP of one of the most critical and prolific isolation tools for laterals reaching beyond 10,000’ →Highly dependable “toe” and casing flotation solutions
Wireline Services • ~99,000 stages with a success rate over 99%1
• Conveying greaseless wireline with less friction in super laterals
• Longest wireline completion of 19,000+ feet in lateral
Coiled Tubing Services • ~7,100 jobs and ~147 million running feet of coiled tubing with a success rate greater than 99%4 (Average lateral length/job +20,000 feet)
• ~ 75% of coil fleet by end of year will be “Big Pipe” deep reach (≥2.375” diameter) → coupled with high HP fracpumps to push coil further downhole
PRODUCTION SOLUTIONS PERFORMANCE BARRIERS EQUIPMENT BARRIERS → FIT FOR “DEEP REACH”
Well Services • 65% utilization rate compared to 46% industry average5
• Fit for purpose fleet• ~40% of fleet capable of performing completion-
oriented work
10
HOW DOES NINE BUILD MOATS AROUND THE BUSINESS?
Service + technology / equipment + people to service the longest laterals today and tomorrow
1 Management estimates for time period from January 2014 to September 30, 2018. 2 Management estimates for time period from March 2011 to September 30, 2018. 3 Management
estimates from Magnum for time period from January 2014 through September 2018. 4 Management estimates for time period from April 2014 to September 30, 2018. 5 Industry average
based on Association of Energy Service Companies; period from January 2015 to September 30, 2018.
5.5
14.5
2014 Q3 2018
27
48
2014 2017
6%
16%
2014 Q3 2018
Nine Holds a Competitive Advantage in US Cementing Leading to Significant Market Share Gains
11
1 2
167%
PROOF OF PERFORMANCE
Nine US Wireline & Completion Tools % of stages completed
Nine Avg. Stages Completed Per Well Stages / Employee / Month2
17%
28%
YE 2014 9/30/2018
Nine % rigs followed – South Texas2
10%
13%
YE 2014 9/30/2018
Nine % rigs followed – West Texas2
Source: 1Management estimates of legacy Nine frac stages relative to industry frac stages based on Spears & Associates updated Oct 2018. Does not include Magnum; 2Company Information. Does not include Magnum
78%
65%30%
Majority Of Nine’s Completion Work Is Long Laterals Has Led To Increased Efficiencies And Higher Barriers To Entry
164%
CUSTOMERS WHO TRUST US
COMPLETION PRODUCTION
12
Diverse, blue-chip customer base with minimal concentration
PROFESSIONALIZED HSE PROGRAM
IMPROVED HSE REPORTING AND PERFORMANCE ACROSS SERVICE LINES
Nine TRIR1
2.47
1.50
1.261.44
0.8
2014 2015 2016 2017 2018 YTD (Q3)
67% Reduction
131Does not include Magnum
14
RETURNS-FOCUSED GROWTH PHILOSOPHY
Permian Midcon Northeast Bakken Rockies Canada Eagle Ford Haynesville
Wireline
Cementing
Completion Tools
Coiled Tubing
Well Service
NINE PRESENCE
Balance of Organic Growth and Strategic M&A:Augment technology portfolio + Enhance NAM footprint
ORGANIC GROWTH
• Strategic expansion of existing service lines within NAM basins
• Deployment of capex for high-quality and differentiated equipment and facilities within the most active basins
• Market share gains through service and technology
• Securing and maintaining best talent in the industry
DISCIPLINED M&A
• Continue to consolidate highly fragmented industry
• Target only best-in-class companies and management teams
• Competitive advantage securing and sourcing non-marketed deals
• Entrepreneurs want to partner and stay with “like-minded” and nimble management team
FINANCIAL OVERVIEW
15
$24
$31
$38
Q1 18 Q2 18 Q3 18
3%
8%
12%
Q1 18 Q2 18 Q3 18
Revenue
$2
$9
$14
Q1 18 Q2 18 Q3 18
$174
$206$218
Q1 18 Q2 18 Q3 18
NINE STANDALONE 2018 FINANCIAL PERFORMANCE
16
2018 QUARTERLY RESULTS – LEGACY NINE ($MM)
+~18%
Does not include any financial information for MagnumSee appendix for Adjusted EBITDA and ROIC reconciliation.
Adjusted EBITDA
+~27%
+~429%
+~167%
+~6% +~25%
Adj. EBITDA Margin
14% 15% 18%
Net Income ROIC
+~51%+~50%
$57
$90
$145
$2
$23
$44
2016 2017 1H 2018(annualized)
17
MAGNUM OIL TOOLS OVERVIEW
MAGNUM STANDALONE FINANCIAL OVERVIEW ($MM)
• On October 25, 2018 Nine acquired Magnum Oil Tools
• Transaction is accretive to EPS, margins and long-term ROIC, and will significantly enhance Nine’s free
cash flow generation while reducing capital and labor intensity
• Provides patented, market-leading downhole completions products
• Proprietary designs and technology with 80+ patents
• Product sales in major U.S. unconventional basins and internationally
• Robust in-house R&D team with engineers experienced in designing and commercializing new technology
• Debt free balance sheet
$0.2 $0.3 $0.6
2016 2017 1H 2018(annualized)
REVENUE & ADJUSTED EBITDA CAPEX
4% 26% 31%% margin:
$2
$23
$44
2016 2017 1H 2018(annualized)
ADJUSTED EBITDA LESS CAPEX
Note: 1H 2018 represents annualized figures.
18
PRO FORMA FINANCIAL OVERVIEWAD
JUST
ED E
BITD
A -
CAPE
X
$283
$544 $759
2016 2017 1H 2018
$57 $90 $145
2016 2017 1H 2018
$10 $60
$109
2016 2017 1H 2018
$2 $23 $44
2016 2017 1H 2018
$0.4 $13
$73
2016 2017 1H 2018
$2 $23 $44
2016 2017 1H 2018
NINE MAGNUM
Note: 1H 2018 represents annualized figures.1Pro forma calculations are based on Nine’s historical consolidated financial statements and Magnum’s historical consolidated financial statements as adjusted to give effect to Nine’s acquisition of Magnum
and the related financing transactions
ADJU
STED
EBI
TDA
% Margin:
$340
$633
$903
2016 2017 1H 2018
$12
$83
$153
2016 2017 1H 2018
$3 $38
$116
2016 2017 1H2018
PRO FORMA1
CAPE
X
$9 $45 $36
2016 2017 1H 2018
$0.2 $0.3 $0.6
2016 2017 1H 2018
$9 $46 $37
2016 2017 1H 2018
($mm)
REVE
NUE
3% 11% 14% 4% 26% 31% 4% 13% 17%
19
PRO FORMA CAPITALIZATION (10/25/18)
In conjunction with the Magnum transaction, which closed on October 25, 2018, Nine put a new capital
structure in place with long-dated maturities and enhanced financial flexibility
• Total upfront consideration of $493mm consisted of approximately $334mm of cash, subject to customary adjustments, as well as 5 million shares of Nine common stock
• In conjunction with the transaction, Nine issued $400mm in aggregate principal amount of 8.75% senior unsecured notes due 2023 at par and closed on a new asset-based loan credit facility with total commitments of $200mm with ~$111mm available at close
• Nine anticipates a reasonable pathway to reach target leverage of 1x net debt/EBITDA within the next 12-24 months
PRO FORMA CAPITALIZATION
As of October 25, 2018
($MM)
Cash $50.6
Debt
New ABL Credit Facility 35.0
New Senior Unsecured Notes 400.0
Total debt $435.0
Net Debt $384.4
Total cash $50.6
ABL availability $111.0
Total liquidity $161.6
COMMENTARY
UNIQUE VALUE PROPOSITION
Completions focused
Technology and service differentiation
Ability to service the most technically demanding wells
Returns-focused business philosophy
Access to entire addressable market
Leading market position across broad geographic footprint
Entrepreneurial, highly incentivized and aligned management team
Strategy works in every basin for every well
20
CLOSE TO PERFECTION.
FAR FROM ORDINARY.
DRIVEN TO SUCCEED.
21
APPENDIX
(1) Nine closed the acquisitions of Crest Pumping Technologies on June 30, 2014 and Dak-Tana Wireline on April 30, 2014 and Beckman closed the acquisitions of RedZone Coil Tubing on May 2, 2014 and Big Lake Services, LLC on August 29, 2014. As a result, financial results relating to each acquisition for periods prior to the close of each of the aforementioned acquisitions are not reflected in the full year 2014 results. We believe that presenting investors with the annualized information for the six months ended December 31, 2014 provides a representative period of the profitability of our business in a high demand environment, including six months of results from the acquisitions of Dak-Tana Wireline, Crest Pumping Technologies and RedZone Coil Tubing and the results of the acquisition of Big Lake Services, LLC from August 29, 2014 through December 31, 2014. For comparative purposes, we have also included such information for the six months ended June 30, 2014. (2) For 2014, represents a non-cash impairment charge related to the divestiture of certain assets of a subsidiary whose primary focus was conventional completions. (3) Loss or gain related to the revaluation of liability for contingent consideration relating to our acquisition of Scorpion to be paid in shares of Company common stock and in cash, contingent upon quantities of Scorpion Composite Plugs sold during 2016 and gross margin related to the product sales for three years following the acquisition. (4) Amount represents fees and legal settlements associated with legal proceedings brought pursuant to the Fair Labor Standards Act and/or similar state laws.
NINE STANDALONE ADJ. EBITDA RECONCILIATION
Three Months Ended Year ended December 31Six months
endedSix months
ended
($ mm unless otherwise noted) 30-Sep-18 30-Jun-18 31-Mar-18 2017 2016 2015 2014
June 30,
20141
December 31,
20141
EBITDA Reconciliation
Net income (loss) $13.7 $9.0 $1.68 ($67.68) ($70.90) ($39.10) $48.00 $27.10 $20.90
Interest expense 1.6 1.8 2.9 15.7 14.2 9.9 9.6 2.8 6.7
Depreciation 13.7 13.2 13.1 53.4 55.3 58.9 40.2 13.1 27.1
Amortization 1.9 1.9 1.9 8.8 9.1 8.7 6.4 2.1 4.3
Provision (benefit) from income taxes 1.1 .65 0.09 -5.0 -26.3 -14.3 44.5 17 27.6
EBITDA $31.9 $26.6 $19.71 $5.26 ($18.70) $24.00 $148.60 $62.00 $86.60
Adjusted EBITDA Reconciliation
EBITDA $31.9 $26.6 $19.71 $5.26 ($18.70) $24.00 $148.60 $62.00 $86.60
Impairment of goodwill and other intangible assets - - - 35.3 12.2 35.5 - - -
Transaction expenses 2.3 - 0.4 3.6 - 0.2 3.9 2.8 1.1
Loss from discontinued operations2 - - - - - 0.9 28.2 2 26.2
Loss or gains from the revaluation of contingent liabilities3 0.5 0.6 1.1 0.4 1.7 -0.3 - - -
Loss on equity investment 0.8 0.1 .08 0.4 - - - - -
Non-cash stock-based compensation expense 3.5 4.0 2.2 7.6 5.7 5.5 5.4 1.9 3.5
Loss or gains on sale of assets (1.2) (0.9) 0.4 4.7 3.3 2 1 - 0.9
Legal fees and settlements4 1.7 0.2 0.3 1.0 4.1 - - - -
Inventory writedown - - - 1.4 0.3 2.8 1 - 1
Restructuring costs - - - - 1.1 3.3 - - -
Adjusted EBITDA $38.4 $30.6 $24.1 $59.58 $9.80 $73.90 $188.20 $68.80 $119.40
Revenue 218.4 205.5 173.8 543.7 282.4 478.5 663.2 240 423.2
% Adj. EBITDA margin 18% 15% 14% 11% 3% 15% 28% 29% 28%
23
NINE STANDALONE ROIC RECONCILIATION
($ MM UNLESS OTHERWISE NOTED)
Three Months Ended
30-Sep-18
Three Months Ended
30-Jun-18
Three Months Ended
31-Mar-18
Year Ended December 31
2014
After-tax net operating profit reconciliation:
Income (loss from continuing operations net of tax) $13.7 $9.0 $1.7 $76.2
Add back: Interest expense $1.6 1.8 2.9 9.6
Exclude: Taxes on interest (0.3) (0.4) (0.6) (3.5)
After-tax net operating profit $14.9 $10.5 $4.0 $82.2
Total capital as of prior period-end:1
Total stockholders' equity $472.2 $459.4 $287.4 $192.5
Total debt 115.3 115.3 242.2 140.8
Less: Cash and cash equivalents (70.9) (72.9) (17.5) (18.5)
Total capital $516.6 $501.8 $512.1 $314.8
Total capital as of period-end:
Total stockholders' equity $490.6 $472.2 $459.4 $389.6
Total debt 115.3 115.3 115.3 379.7
Less: Cash and cash equivalents (86.5) (70.9) (72.9) (24.2)
Total capital $519.4 $516.6 $501.8 $745.1
Average total capital $518.0 $509.2 $506.9 $529.9
ROIC 12% 8% 3% 16%
ROIC is defined as after-tax net operating profit divided by average total capital. After-tax net operating profit is defined as income (loss) from continuing operations (net of tax) plus interest expense, less taxes on interest. Total capital is defined as book value of equity plus the book value of debt less balance sheet cash and cash equivalents. Book value of equity is average of current and prior year total equity balances. Book value of net debt is average of current and prior period-end net debt balances.1 For 2014, total capital as of prior year-end is based on Beckman and Nine combined unaudited historical financial information.
24
25
MAGNUM STANDALONE ADJ. EBITDA RECONCILIATION
($ mm unless otherwise noted) 2016 2017 1H'18
EBITDA Reconciliation
Net income (loss) $1 $22 $21
Interest expense 0 0 0
Depreciation 1 1 0.4
Income tax expense (benefit) 0 0 1
EBITDA $2 $23 $22
Adjusted EBITDA Reconciliation
EBITDA $2 $23 $22
Transaction expenses - - -
Adjusted EBITDA $2 $23 $22
26
NINE PRO FORMA ADJ. EBITDA RECONCILIATION
($ mm unless otherwise noted) 2017 1H'18
EBITDA Reconciliation
Net income (loss) ($71) $15
Interest expense 36 18
Depreciation 55 27
Amortization 19 9
Income tax expense (benefit) (7) 3
EBITDA $31 $72
Adjusted EBITDA Reconciliation
EBITDA $31 $72
Impairment of goodwill and other intangible assets 35 -
Transaction expenses 4 0.4
Loss from the revaluation of contingent liabilities 0.4 2
Loss on equity investment 0.4 0.2
Non-cash stock-based compensation expense 8 6
(Gain) loss on sale of assets 5 (1)
Legal fees and settlements 1 0.5
Adjusted EBITDA $84 $80
The above pro forma Adjusted EBITDA calculations are based on Nine’s historical consolidated financial statements and Magnum’s historical consolidated financial statements as adjusted to give effect to Nine’s acquisition of Magnum and the related financing transactions
• Nine has a total liquidity position of $136.0mm as of 9/30/18
• Nine will be disciplined with capital deployment, with a ROIC-focused philosophy
27
BALANCE SHEET & LIQUIDITY POSITION (9/30/18)
CAPITALIZATION
As of September 30, 2018
($MM)
Cash $86.5
Debt
New Revolving Credit Borrowings 0.0
New Term Loan 115.3
Total debt 115.3
Net Debt $28.8
Total cash $86.5
RCF availability 49.5
Total liquidity $136.0
COMMENTARY
top related