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Fairmount and Unimin Merger – Fairmount Santrol

Fairmount Santrol · May 9, 2018 · 42 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Fairmount and Unimin Merger – Fairmount Santrol – slide 1
    Fairmount and Unimin to create Covia A Compelling Strategic Transaction Creating a Leader in Proppant and Industrial Materials Solutions May 2018
  2. Fairmount and Unimin Merger – Fairmount Santrol – slide 2
    Section 1 Covia Significant Value Delivered to Fairmount Shareholders
  3. Fairmount and Unimin Merger – Fairmount Santrol – slide 3
    Fairmount Shareholders Get a Very Compelling Deal SIGNIFICANT VALUE FOR FMSA SHAREHOLDERS FROM UNIMIN 170M cash distribution, (0.74 per share) (1) 35% ownership, a premium to historical and projected EBITDA contribution Participation…
  4. Fairmount and Unimin Merger – Fairmount Santrol – slide 4
    35% Ownership Implies a Premium Even at Equal Multiples Implied Value Contribution to Combined Company (1) (2) 28% 72% 35% Ownership for FMSA Cumulative EBITDA 2015-17A Fairmount Santrol Unimin Capital structure…
  5. Fairmount and Unimin Merger – Fairmount Santrol – slide 5
    Industrial Businesses Command Higher Multiples Industrial Peer Multiples (1,2) 14.0x 12.9x 11.7x 12.0x 11.0x Peer Average 10.1x 10.0x 8.8x 8.4x 8.0x 7.6x 6.0x 4.0x 2.0x 0.0x Martin Eagle Compass Mineral Granite US…
  6. Fairmount and Unimin Merger – Fairmount Santrol – slide 6
    Substantial Identified Synergies Rigorous synergy analysis performed by leading consultants over two months in clean room setting Immediate and Substantial Synergies Expected at Low Implementation Costs (1) 150M of Run-Rate Annual…
  7. Fairmount and Unimin Merger – Fairmount Santrol – slide 7
    Origin / Destination Pairings: Illustrative Synergy Example Commentary Case Study (1) Rates between similar lanes Unimin cost can vary up to 13 per ton to advantage to the same destination the Bakken Further freight reductions…
  8. Fairmount and Unimin Merger – Fairmount Santrol – slide 8
    Roadmap to Completion Shareholder Approval Form S-4 Effective Shareholder Vote (May 25, 2018) Regulatory Approval US Anti-Trust Clearance Mexican Anti-Trust Clearance Integration Preparation Management Appointment New Name…
  9. Fairmount and Unimin Merger – Fairmount Santrol – slide 9
    Section 2 Covia Key Investment Highlights
  10. Fairmount and Unimin Merger – Fairmount Santrol – slide 10
    Key Pro Forma Investment Highlights Covia: A Differentiated Business Model 1 Industry Leading Scale 2 Broad Product Portfolio Strong, 3 Expansive and Advantaged Distribution Network sustainable competitive advantages 4…
  11. Fairmount and Unimin Merger – Fairmount Santrol – slide 11
    1 Industry Leading Size & Scale 2017A Reserves (1) 2017A Volumes (Bt) (Mt) 1.5 1.4 50.0 40.0 36.0 1.0 0.8 30.0 20.0 15.1 0.5 0.4 0.4 8.9 0.1 10.0 5.5 2.4 0.0 0.0 Covia SLCA SND HCLP EMES Covia SLCA HCLP EMES SND 2017A…
  12. Fairmount and Unimin Merger – Fairmount Santrol – slide 12
    1 Covia Platform Has A Leading Operational Footprint Canada Footprint of more than 50 processing & coating plants across North America (1) Access to all major railways serving major oil & gas basins Well-positioned Industrial…
  13. Fairmount and Unimin Merger – Fairmount Santrol – slide 13
    2 Broadest Suite of Products in Our Industry Broad Product Portfolio High-Purity Nepheline Syenite Custom Resin Products Propel SSP DustShield Sands & Other Minerals Blending High quality silica Resin systems and Silica-free…
  14. Fairmount and Unimin Merger – Fairmount Santrol – slide 14
    3 Broad and Complementary Distribution Network Canada Access to all major Class 1 railways serving major oil & gas basins 75% of Covias capacity comes from unit train capable facilities (1) Extensive terminal network with 94…
  15. Fairmount and Unimin Merger – Fairmount Santrol – slide 15
    3 Diversified, Strong & Highly Complementary Logistics Network Highly Complementary Large-Scale Access To Major Rail Lines Enhances Flexibility and Diversity Terminal Network Proppant Rail and Regional Capacity (1) Annual Oil & Gas…
  16. Fairmount and Unimin Merger – Fairmount Santrol – slide 16
    4 Longstanding, Blue-Chip Customer Base A leading asset footprint and national logistics network allows Covia to serve blue-chip customers across end markets 2,000 (1) Total Customers Broad and loyal customer base comprised of S&P…
  17. Fairmount and Unimin Merger – Fairmount Santrol – slide 17
    5 Diversity Across Segments, Geographies and Minerals 2017A Covia Industrial Revenues Diverse Geographies Canada RoW Complementary Segments Drive Value Mexico United States Industrial Energy 40% 60% Variety of Minerals…
  18. Fairmount and Unimin Merger – Fairmount Santrol – slide 18
    5 Resilient Cash Flow Generation Through-the-Cycle Covia to be further supported by substantial synergy realization Industrial business provides resilient EBITDA base through the business cycle Covias Significant Adjusted EBITDA…
  19. Fairmount and Unimin Merger – Fairmount Santrol – slide 19
    5 Strong Pro Forma Business and Financial Profile Covia Q118 LTM Tons Sold 37.1M Q118 LTM Revenue 2.4B Q118 LTM Adj. EBITDA (1) 550M Q118 LTM Adj. EBITDA + Synergies (1) (2) 700M 3/31/18 Net Debt (2025 1.65Bn Maturity)…
  20. Fairmount and Unimin Merger – Fairmount Santrol – slide 20
    5 Fairmount Santrol Financial Update and Outlook First-quarter 2018 results Sequential proppant volumes -5%, driven by seasonal impacts on production, process engineering changes, and to a lesser extent, rail delays Raw sand pricing…
  21. Fairmount and Unimin Merger – Fairmount Santrol – slide 21
    5 Unimin Financial Update and Outlook First-quarter 2018 results Sequential Energy volumes +4%, driven by seasonal impacts on production in Q4 Proppant pricing increases of 3 sequentially on like-for-like basis Industrial volumes and…
  22. Fairmount and Unimin Merger – Fairmount Santrol – slide 22
    6 Experienced and Proven Management Team for Covia Best in Class Management Team with Extensive Industry Experience Years of Industry Experience Prior Positions President and Chief Executive Officer of Fairmount Santrol since 2013…
  23. Fairmount and Unimin Merger – Fairmount Santrol – slide 23
    Section 3 Covia Industry Update
  24. Fairmount and Unimin Merger – Fairmount Santrol – slide 24
    2018 Tailwinds in Industrial End-Markets Consumer Confidence at 130.8 (2) Industrial Production highest level since 2000 and above +3.2% YoY growth vs. 2.0% in 2017 (1) 2017 average of 120.5 Industrial profitability aided by…
  25. Fairmount and Unimin Merger – Fairmount Santrol – slide 25
    Industrial Market Overview Demand Company Products Applications Demand Drivers GDP+ Growth Silica Feldspar GDP Container Fiberglass Glass Nepheline Clay & Kaolin Consumer Trends Float Display Syenite DustShield Auto Silica…
  26. Fairmount and Unimin Merger – Fairmount Santrol – slide 26
    Expected Increase in Proppant Demand for 2018 Increasing Number of Well Completions (1) Higher Proppant Intensity Per Well (2) U.S. HORIZONTAL LAND RIG COUNT AVERAGE PROPPANT TONS PER U.S. HORIZONTAL WELL 850 800 750 6,500 -…
  27. Fairmount and Unimin Merger – Fairmount Santrol – slide 27
    Growing Demand Across All Basins Expected 2018 demand to be supplied by both Northern White and Local/Regional sands Millions of tons 100M Tons or more in 2018 100 80 75M tons of demand supplied outside of the Permian 60…
  28. Fairmount and Unimin Merger – Fairmount Santrol – slide 28
    Permian Assets Strategically Placed to Meet Local Needs Kermit, TX Capacity: 3.0 Mt Reserves: Combined 6 million ton capacity 165 Mt Snyder Hobbs Lamesa Two plants in complementary Carlsbad locations with attractive grade mix…
  29. Fairmount and Unimin Merger – Fairmount Santrol – slide 29
    Well Suited to Meet Demand Across All Basins Northern White Supplier of Choice in All Basins Operational & Logistics Footprint 75M tons Northern White Demand Mix (Permian + Rest of North America) 25% 33% 42% Production Mix…
  30. Fairmount and Unimin Merger – Fairmount Santrol – slide 30
    A Compelling Strategic Combination Creating a Leader in Proppants and Industrial Materials Solutions Transaction creates significant value for FMSA shareholders: 170 million cash consideration Approximately 35% ownership of stronger,…
  31. Fairmount and Unimin Merger – Fairmount Santrol – slide 31
    Covia Appendix
  32. Fairmount and Unimin Merger – Fairmount Santrol – slide 32
    A Fully Integrated I&R Products Solutions Provider HIGH-PERFORMANCE ENGINEERED HIGH-PURITY SANDS CUSTOM BLENDING RESIN-COATED SANDS RESIN SYSTEMS 99.9% pure silica Expert custom blends of Traditional foundry resin Engineered…
  33. Fairmount and Unimin Merger – Fairmount Santrol – slide 33
    Energy Products to Address All Well Environments Value Add RAW SAND RESIN-COATED SAND TRANSPORT TECHNOLOGY Texas Gold Permian Northern White Precured Curable Frac Sand Sand Silica Sands (Tempered) Propel SSP Strength…
  34. Fairmount and Unimin Merger – Fairmount Santrol – slide 34
    Unimins Industrial Business Large, Resilient, and Growing Business Generating Strong Cash Flows 2017 Highlights Key Segment Highlights Highly resilient and growing business Large, stable blue-chip customer base Tons Sold 12.1M…
  35. Fairmount and Unimin Merger – Fairmount Santrol – slide 35
    Unimins Energy Business A Leading Supplier of Proppants to the O&G Segments 2017 Highlights Product Highlights Select Flagship Plants Comprehensive portfolio of API quality Capacity: 3.2Mt quartz proppants, resin coated sands, Tons…
  36. Fairmount and Unimin Merger – Fairmount Santrol – slide 36
    Covias Minerals Serve a Wide Variety of Industries Coatings & Metals & Sports & Oil & Gas Glass Ceramics Construction Filtration Polymers Castings Recreation Silica Nepheline Syenite Feldspar Olivine Clay & Kaolin Lime…
  37. Fairmount and Unimin Merger – Fairmount Santrol – slide 37
    Covia Financials
  38. Fairmount and Unimin Merger – Fairmount Santrol – slide 38
    Covia Historical Financials Key Financial Figures FY FY FY Q1 2018 (1) Volumes in 000's; in M's 2015 2016 2017 Low - High Energy Segment 13,998 13,250 21,494 5,612 Industrial Segment 13,756 14,592 14,548 3,549 Total Volumes…
  39. Fairmount and Unimin Merger – Fairmount Santrol – slide 39
    Unimin Historical Financials Key Financial Figures MD&A Volumes in 000's; in M's FY 2015 FY 2016 FY 2017 Q1 2017 (1) Low - High Q1 2018 (1) Low - High LTM 2018 (1) Low - High Unimin revenue decreased 27% from 2015 to…
  40. Fairmount and Unimin Merger – Fairmount Santrol – slide 40
    Fairmount Santrol Historical Financials Key Financial Figures MD&A Volumes in 000's; in M's FY 2015 FY 2016 FY 2017 Q1 2017 Q1 2018 LTM 2018 FMSA revenue decreased 35% from 2015 to 2016, but saw a 79% uptick from 2016 to…
  41. Fairmount and Unimin Merger – Fairmount Santrol – slide 41
    Unimin Reconciliation of Net Income (Loss) to Adj. EBITDA Adjustments Twelve Months Ended Period December 31, Ended March 31, Description (1) (1) ( in millions) 2015 2016 2017 Q1'17 Q1'18 LTM '18 1 Goodwill and other asset…
  42. Fairmount and Unimin Merger – Fairmount Santrol – slide 42
    Fairmount Santrol Reconciliation of Net Income (Loss) to Adj. EBITDA Adjustments Twelve Months Ended Period December 31, Ended March 31, Description ( in millions) 2015 2016 2017 Q1'17 Q1'18 LTM '18 1 Represents the non-cash expense…

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