Lonestar January 2015

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Investor Presentation TSX Venture Exchange: LSI.V January 2015

Transcript of Lonestar January 2015

Investor Presentation

TSX Venture Exchange: LSI.V

January 2015

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

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Lonestar Service Area

HEAD OFFICE:

Sylvan Lake, Alberta

CANADA:

Fort McMurray, Alberta

Bonnyville, Alberta

Edmonton, Alberta

Whitecourt, Alberta

Carlyle, Saskatchewan

Moose Jaw, Saskatchewan

Melita, Manitoba

Toronto, Ontario

U.S.A.:

Sacramento, California

Witchita, Kansas

Lake Charles, Louisiana

Calcutta, Ohio

Elk City, Oklahoma

Tulsa, Oklahoma

Williamsport, Pennsylvania

Nashville, Tennessee

Beaumont, Texas

Dallas, Texas

Odessa, Texas

San Antonio, Texas

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Sacramento

San Antonio

Dallas

Odessa

Elk City

Witchita

Nashville

California

Texas

Kansas

Tennessee Oklahoma

Fort McMurray

Bonnyville

Edmonton

Sylvan Lake

Whitecourt

Carlyle

Moose Jaw Melita

Alberta

Saskatchewan

Manitoba

Ontario

Toronto

Tulsa

Louisiana

Pennsylvania Ohio

Calcutta

Lake Charles

Williamsport

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.

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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.

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HVAC Truck

A new HVAC truck

costs $475,000.

Lonestar currently

operates 89 HVAC trucks;

with 38 in the U.S.

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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

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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

• 405 HVAC trucks

in Canada

• 552 HVAC trucks

in the U.S.

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Vacuum “VAC” Truck

A new VAC truck costs

~$400,000.

Lonestar currently

operates 27 VAC trucks;

with 12 in the U.S.

Broad based

competition.

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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

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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.

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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

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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

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U.S. Expansion

• U.S. growth – Continually adding to U.S. fleet.

• California (4)

• Texas (23)

• Kansas (5)

• Tennessee (7)

• Pennsylvania (3)

• Louisiana (1)

• California (infrastructure)

• OK, TX & KS (oil & gas)

• Key management hires

• Growing revenue per truck

• California has fewer Hydrovac trucks than are located in Edmonton!

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What We Have Accomplished

Fleet Growth

• 139 – Jan. 2015

• 65 – Oct. 2013

Platform Growth

• 18 Bases – Jan. 2015

• 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.

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Clear Growth Trend Lonestar West: TSX-V LSI

(Full fiscal year changed to Dec 31 from Jun 30 as of 2014) $ Thousand

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-500

500

1,500

2,500

3,500

4,500

5,500

6,500

7,500

8,500

9,500

10,500

11,500

12,500

13,500

Q3F12 Q4F12 Q1F13 Q2F13 Q3F13 Q4F13 Q1F14 Q2F14 Q2 14 Q3 14

Revenue 5,828 4,442 6,156 6,750 8,777 6,212 8,301 9,281 9,555 13,016

Net Earnings (loss) 666 -198 664 624 762 -448 92 -280 -132 771

EBITDAC 1,268 381 1,267 1,145 1,556 209 912 420 808 2,442

Revenue

In One Year Trucks

14,989

21,074

314 703 1,765

2,933

0

25

50

75

100

125

-500

4,500

9,500

14,500

19,500

First Half 2013 First Half 2014

Revenue Net Earnings (loss) EBITDAC Trucks

53

122 $ Thousand

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In One Year $ Thousand

6,212

9,555

-448 -132

209 808

0

25

50

75

100

125

-500

1,000

2,500

4,000

5,500

7,000

8,500

10,000

Q4F13 Q2 14

Revenue Net Earnings (loss) EBITDAC Trucks

53

122

Trucks

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Leadership Team Officers

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 Managers

13 senior HVAC and Vacuum managers

(includes U.S. Business Development, U.S. Operations Manager and all Base Managers)

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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)

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Key Investment Highlights

Strong projected growth.

Superior safety record.

Highly experienced management

with field experience.

28% inside ownership.

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Analyst Coverage

Target

Price

BUY

$4.25

BUY

$5.00

Strong BUY

$5.00

Outperform

$4.75

Forecast

Revenue

2015

$72.2

Million

$88.1

Million

$62.3

Million

$84.0

Million

Forecast

EBITDA

2014 / 8.7 m

2015 / 14.3 m

2014 / 7.9 m

2015 / 15.8 m

2014 / 7.4 m

2015 / 10.8 m

2014 / 8.4 m

2015 / 15.7 m

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Thank-You

Lonestar West Inc. TSX Venture Exchange: LSI

January 2015

For further information, please contact:

Lonestar West Inc.

lonestarwest.com

403-887-2074

Investor Relations

The Howard Group

Jeff Walker/Ariel Cobangbang

403-221-0915

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