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Page 1: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

December 2017

Page 2: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Forward-looking Statements

This presentation may contain forward-looking statements, including statements regarding the business and anticipated financial

performance of ENTREC Corporation (“ENTREC” or the “Company”). These forward-looking statements involve known and

unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the

Company to be materially different from any future results, performance or achievements expressed or implied by such forward-

looking statements. A number of factors could cause actual results to differ materially from those in the forward-looking

statements, including, but not limited to, fluctuations in commodity prices, weather, access to capital markets, competition,

changes in technology and government policies, decreases in capital spending by customers, decreases in exploration and

development spending by customers, the ability or inability of the Company to increase profit margins or utilization, the ability or

inability of the Company to expand to new markets, the ability or inability of the Company to successfully acquire and integrate

other businesses, the ability or inability of the Company to leverage its existing presence to expand its geographic footprint, the

ability or inability of the Company to improve operational efficiencies, and the degree to which committed and prospective

revenues materialize.

In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such

information should not be regarded as a representation by the Company or any other person that the objectives and plans of

ENTREC will be achieved. The Company believes that the expectations reflected in these forward-looking statements are

reasonable; however, no assurance can be given that these expectations will prove to be correct and such forward-looking

statements included in this presentation should not be relied upon. In addition, these forward-looking statements relate to the

date on which they are made. Unless otherwise required by applicable securities legislation, the Company disclaims any

intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events

or otherwise.

2

Page 3: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Investment Highlights

Diversified industry exposure and client base

– Broad exposure to customers in the oil & gas, mining, petro chemical, pulp & paper, power generation and infrastructure industries

Niche industry with high barriers to entry

– Actively increasing market share (completed 14 acquisitions since 2011)

Strong recurring revenue base

– Multiple touch points with customers through construction and maintenance, repair and operation phases

Historically strong track record of revenue and EBITDA growth

Proven management team with extensive operating background

Significantly undervalued despite best-in-class long-lived assets

3

Page 4: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

4

Company Information

Toronto Stock Exchange ENT

Basic Shares Outstanding (March 31, 2017) 109.6 million

Share Price (Dec 1, 2017): $0.19

Market Capitalization: $21 million

Working capital (September 30, 2017) $21 million

Property, plant and equipment FMV (September 30, 2017) $217 million

Net Debt (September 30, 2017) $151 million

Net tangible asset value (September 30, 2017) $72 million

52 Week Trading Range: $0.14/$0.28

Management and Board Holdings 52%

Page 5: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

The Right Management Team

5

Extensive Industry Experience

Rod Marlin Executive Chairman

Former President, CEO and Director of Eveready Inc., acquired by Clean Harbors Inc. in July 2009

Founder and former President of Marlin Travel Group, Canada’s largest travel company, until 1993 sale

John Stevens President, CEO + Director

Former President and Director of NC Services Group, a private crane and hauling company

Former Senior Vice President of Eveready and its predecessor companies

Jason Vandenberg

CFO

Former VP Finance and CFO of Eveready and its predecessor companies

Former Manager with Grant Thornton

Glen Fleming

Executive VP, Operations

Former Executive Vice President of Clean Harbors post acquisition of Eveready

Prior thereto, was Vice President and COO of Eveready

Gavin Mcleod

VP, Finance + Operations

Former Director of Finance with Petrocom Construction

Joined ENTREC in 2011

Whitney Irwin

VP, HSE and Training

Formerly with Flint Energy Services, a former parent company of ENTREC

Re-joined ENTREC in 2011

Page 6: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Complementary Crane and Specialized Transportation Solutions

6

Our Business

Page 7: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Specialized Cranes for Every Application

7

Crawler Cranes: 21 FMV: $29 MM

Used for: oil & gas, mining, petro chemical, power generation and infrastructure construction

1

Rough Terrain Cranes: 38 FMV: $19 MM

Used for: oil sands mining and in situ construction, LNG construction, other construction and oil & gas

2

Hydraulic Truck Cranes: 10 FMV: $8 MM

Used for: oil & gas, oil sands MRO, mining, petro chemical, power generation and infrastructure industries

5

Boom/Picker Trucks: 86 FMV: $29 MM

Used for: oil & gas, oil sands in situ MRO, mining, petro chemical, power generation and infrastructure industries

6

Carry Deck Cranes: 7 FMV: $1 MM

Used for: plant site maintenance and construction

3

All Terrain Cranes: 28 FMV: $36 MM

Used for: oil & gas, oil sands MRO, mining, petro chemical, power generation and infrastructure industries

4

Page 8: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Specialized Heavy Haul Fleet

8

Conventional Multi-wheeled Trailers: 750

FMV: $33 MM

Multiple configurations (up to 96 wheels)

1 Hydraulic Platform Trailers: 375

FMV: $13 MM

Modular, highly customizable

2 Tractors: 190

FMV: $27 MM

Large diverse fleet of prime movers, winch tractors and highway tractors

3

1 2 3

Page 9: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Asset Overview

9

Equipment Units

Crane Fleet

Crawler Cranes 21

Rough Terrain Cranes 38

Carry Deck Cranes 7

All Terrain Cranes 28

Hydraulic Truck Cranes 10

Boom / Picker Trucks 86

Total 190

Specialized Transportation Fleet

Conventional Multi-Wheeled Trailers 750

Hydraulic Platform Trailer Lines 375

Tractors 190

ENTREC has an extensive fleet of cranes, trailers and tractors that serve all industries

– 190 cranes with multiple uses allow ENTREC to provide a crane for every application

– Large fleet of trailers reaching up to 96 wheels

September 30, 2017 net tangible asset value of $71.7 mm

Total Assets 230,808

Less: intangible assets (998)

Add: fair market value of PPE 217,200

Less: net book value of PPE (192,240)

Tangible Assets 254,770

Total Liabilities 183,097

Tangible Net Asset Value 71,673

Per Basic Share 0.65

Current Share Price (December 1, 2017) 0.19

Premium (Discount) to Net Tangible Asset Value -70.9%

Net Tangible Asset Value

Page 10: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Recently Extended ABL Senior Debt Facility

Recently completed 5 year extension of ABL Facility led by Wells Fargo

No Principal repayments until maturity in October 2022

Effective interest rate (including transaction costs) of 3.9% at September 30, 2017

Borrowing base calculated on net orderly liquidation value of fleet plus accounts receivable

Must maintain $15 million excess borrowing capacity at all times

Key Metrics at September 30, 2017:

If the excess borrowing capacity declines below 12.5% of the borrowing base ($19.4 million at September 30, 2017), we must also maintain a fixed charge coverage ratio of great than 1.0x. Our ratio was 1.14x at September 30, 2017

10

Borrowing base (% of equipment and accts receivable) $155.3 mm

ABL Facility utilized $126.9 mm

Excess borrowing capacity $28.4 mm

Page 11: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Where We Operate

Industries Served: Conventional oil & gas

Mining

Petro chemical

Pulp & paper

Infrastructure

Refining

Power generation

11

Oil Sands

LNG Industry

Bakken Oil Fields

Thompson, Manitoba Recent Expansion into

Manitoba market through HighMark Crane acquisition

Western Canada & North Dakota

Exposure to natural resource, infrastructure and

transportation industries

Midland, Texas Strong presence

established in the Permian Basin of

West Texas

Bakken Oil Fields ENTREC Location

General Movement of Goods

Colorado Recent greenfield

expansion in Milliken, Colorado

Page 12: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

US Growth Strategy Continues to Accelerate

US Drilling and Completion Annual Expenditures Expected to Double by 2022

12

US revenue up 231% in Q3 2017 over the prior year

US now represents approximately 40% of our consolidated revenue

Strategically located in highest future growth areas

Recent greenfield expansion into the DJ-Niobrara basin of Colorado

Now completing our first industrial construction project on the US Gulf Coast

Page 13: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Significant Exposure to Power Transmission Spending

Significant Exposure to Several Proposed Power

Transmission Projects

Through a 2016 acquisition, ENTREC now has the

ability to bid on diversified power transmission

projects throughout Canada

– Power projects include upgrades, extensions and/or

new: power plants, transmission lines and

substations, generating stations, power generating

dams, solar and other power infrastructure projects

Stable and consistent spending over near

to medium term through Canadian, US and

government owned entities with growing

capital power spending project budgets: Opportunities with Basin

Electric’s $1 bn worth of projects in North Dakota

Valard transmission line

ATCO/Alberta Powerline: Fort McMurray west transmission line, ATCO: gas fired power plant and forest fire damage rehabilitation

SaskPower: Boundary Dam upgrades and

expansion, transmission lines and

substations

Manitoba Hydro: Keeyask

Generating Station, Bipole

III project, Conawapa generating

station

Nalcor Energy:

Labrador-Island Link

transmission system

Emera: Maritim

e Link

MAXIM: Deerland Peaking station

GTE Power: Brooks 1 Solar + TransAlta: Sundance gas fired

power plant

Ontario Hydro: Mattagami, New Post

Creek, Ranney Falls station,

Niagara Tunnel,

P.Sutherland Gen station

13

Northeast Texas approved transmission line projects: Marshall-Hallsville improvements + Valliant-NW Texarkana

FGE Texas: Mitchell

County $1.2 bn natural gas power plant

Tenaska: Building of Brownsville electric

generating station in Cameron County, Texas

Page 14: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Diverse Customer Base

14

Natural Resource Producers

EPCs / Manu. / Oilfield Service

Page 15: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

High Barriers to Entry

High capital costs to build competitive fleet

Scale of fleet

Requires specialized knowledge and extensive experience

Critical importance of safety

15

Page 16: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Annual Results

16

Adjusted EBITDA & Margin Revenue

2013 2014 2015

Acquisitions $60 mm $9 mm $0 mm

Capex (net of disposals) $56 mm $56 mm $16 mm

Total Capital Spend $116 mm $65 mm $16 mm

2016

$5 mm

($15 mm)

$10 mm

Page 17: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

2017

Quarterly Results

Adjusted EBITDA & Margin

Quarterly Revenue

2015 2016

2015 2016

2017

Page 18: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Strong Strategic Ownership Positions

18

40% Ownership

Between two strategic

investors in the industry

14% Ownership

Employee Ownership

Majority of Company Ownership between Two Industry Members and ENTREC Employees

Top Institutional Shareholders Shares (000s) Interest

JV Driver Corporation 22,422 20.5%

Manitoulin Transport 21,431 19.6%

Top Institutional Shareholders 43,853 40.0%

Top Insider Shareholders Shares (000s) Interest

Glen Fleming - Executive VP, Operations 4,767 4.3%

Rod Marlin - Executive Chairman 4,856 4.4%

Peter Lacey - Director 2,472 2.3%

John M. Stevens - President, CEO & Director 800 0.7%

Jason Vandenberg - CFO 184 0.2%

Other Directors and Officers 190 0.2%

Top Insider Shareholders 13,269 12.1%

Employee Ownership Plans (excluding RSUs) 1,730 1.6%

Implied Retail and Unidentified Institutional 50,750 46.3%

Basic Shares Outstanding 109,602 100.0%

Source: SEDI

Page 19: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Strategic Ownership in ENTREC

Alberta based company established in 1989

Provider of contractor and fabrication

services for the industrial, commercial /

multi-unit residential and industrial buildings,

marine, environmental and public

infrastructure industries

Clients include CNRL, Imperial Oil, Shell,

Devon

Currently hold 20.5% of ENTREC’s basic

shares outstanding

Manitoulin has one of the most extensive

transportation networks in Canada

– 50 years of operating experience

Provides truckload, less than truckload,

trans-border, rail intermodal and

specialized transportation services from

over 100 locations across Canada

Recently acquired Hi-Way 13’s less-than-

truckload division (built out Alberta

coverage)

– $136 mm transaction value (including debt)

On October 29, 2015, Manitoulin Transport

announced a strategic investment into

ENTREC, acquiring ownership of 15.4%

– Since then, they have acquired more stock to

take ownership up to 19.6%

19

Page 20: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Strategy

Short-term strategies

– Continued USA expansion

– Focus on MRO business

– Power transmission

– Cross sell crane and heavy haul services

– Reduction of long-term debt

Long-term strategies

– Continued geographic expansion and industry diversification

20

Page 21: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Investment Highlights

Diversified industry exposure and client base

– Broad exposure to customers in the oil & gas, mining, petro chemical, pulp & paper, power generation and infrastructure industries

Niche industry with high barriers to entry

– Actively increasing market share (completed 14 acquisitions since 1995)

Strong recurring revenue base

– Multiple touch points with customers through construction and maintenance, repair and operation phases

Historically strong track record of revenue and EBITDA growth

Proven management team with extensive operating background

Significantly undervalued despite best-in-class long-lived assets

21

Page 22: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Appendix

22

Page 23: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Board of Directors

23

Experienced Board of Directors

Board of Directors

Rod Marlin Executive Chairman

Former President, CEO and Director of Eveready Inc., acquired by Clean Harbors Inc in July 2009

Founder and former President of Marlin Travel Group, Canada’s largest travel company, until sale in 1993

Peter Lacey

Director

President, CEO and Director of Cervus Equipment Corporation and its predecessor companies since 1998

Former Director and Chairman of Eveready and its predecessor companies until sale in 2009

Dwayne Hunka

Director

President of DHI Group and Hunka Capital

Prior thereto, was VP, Business Development for JV Driver Projects, a provider of construction services

Mark Maybank

Director

Active private investor, director, advisor and entrepreneur associated with a variety of private companies

Former President and COO of Canaccord Genuity until 2011

Charles Sanders

Director

CFO with JV Driver since 2008, formerly held the position of corporate accountant with the organization

Former accountant with Hill and Partners

Don Goodwill

Director

President of Manitoulin Transport, a Canadian transportation company with 74 Canadian terminal locations

Became a Director of ENTREC on November 23, 2015 following a significant investment into the company

Brian Tod

Director

Business lawyer acting as counsel to the Edmonton office of Miller Thomson, a national law firm

Has been with Miller Thomson since 1971

John Stevens

President, CEO and Director

Former President and Director of NC Services Group, a private crane and hauling company

Former Senior Vice President of Eveready and its predecessor companies

Page 24: December 2017 - ENTREC€¦ · paper, power generation and infrastructure industries Niche industry with high barriers to entry – Actively increasing market share (completed 14

Contact Information

24

Corporate Office

ENTREC Corporation 28712 – 114 Avenue Acheson, AB T7X 6E6

Company Contacts

Rod Marlin Executive Chairman

780.962.1600

[email protected]

John Stevens President and Chief Executive Officer

780.960.5625

[email protected]

Jason Vandenberg Chief Financial Officer

780.960.5630

[email protected]