ORIGIN INTERNATIONALINC CompanyPresentation PM... · CompanyPresentation. November 2019. Origin’s...
Transcript of ORIGIN INTERNATIONALINC CompanyPresentation PM... · CompanyPresentation. November 2019. Origin’s...
ORIGIN INTERNATIONAL INCSustaining Communities | Protecting The Environment
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Company PresentationNovember 2019
Origin’s Vertically Integrated Environmental Platform
Collection Sale
Basic Treatment(Low Sulphur utility fuel oil, etc.)
Recycling Plant(High quality marine gasoil and lubricants, etc.)
* For illustrative purposes only
Experienced Management is Key Element Group Expertise
Logistics Infrastructure and Storage
Targeted Capex InvestmentSourcing high margin feedstock
Guaranteed oil sale andefficient risk
management
Origin’s success derives from the synergy of bringing together local waste oil collection, processing infrastructure and global oilsupply and trading which creates a unified and vertically integrated environmental platform.
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2 Capital, asset development and good site logistics
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=• High profit margins• Long term growth• Stable and assetbacked
2© 2019 Copyright Origin International Inc All rights reserved.
2018 2019+2017
• Nicholas Myerson resignsfrom Gunvor SA
• Element Group & NicholasMyerson agree to form Origin
• Initial $15mm of equity raised• $100mm debt facility withOrion
Energy Partners signed• Board of Directors identified• First asset identified in Baltimore,
Maryland
Baltimore1st Asset Acquired
Stabilize Operations
Financial Performance
Finance, technical, HSE andcommercial teams established
Annualized operating EBITDA >$4mm
Acquisition & Development Pipeline
Locations
Services
Processing
Vertical Integration & Diversification
Financial Stability & Reduced Debt Costs
USA
North West Europe &
Mediterranean
Caribbean
• Baltimore asset acquired, establishing Origin as the largest independent used oil collector in the mid-Atlantic basin
• Financial Controller, Treasurer,Head of Technical & HSE, and Head of US Commercial hired and respective departments established
• Achieved above forecasted performance in the first financialyear
• Acquisition and development pipeline refined and progressed with Texas and Antwerp beingsecured and implemented as well as five other projects shortlisted
• Geographic diversification helping withminimizing seasonality aspects of used oil collection volumes combined with the Baltimore recycling plant construction for great vertical integration
• Origin providing de-gassing, filtration, cryogenic, vaporizing services as part of the Antwerpacquisition, which diversifies Origin’s service revenue as well ascreating strong organic growth by rolling out these new services in all of Origin’s US locations
Increase Balance Sheet Strength
Annualized asset operatingEBITDA > $10mm
Lower financing costs with
traditional banks
3© 2019 Copyright Origin International Inc All rights reserved.
Origin’s Firm History
• Purchase under utilized assets at attractive valuations
• Focus: distressed feedstocks with significant margin and limited competition
• Includes maritime slops/sludges, used motor oils, contaminated crude oils and pipelinetransmixes
• Strategic locations with excellent logistics for feedstock and product flow (rail, truck, vessel and barge)
• Deploy cost effective and flexible recycling units to maximize margin
• Proven and safe technology
• Rapid construction and commissioning (~18 months)
• First class engineering and construction partners
• Optionality from increased feedstocks and refined product streams
• Immediate increase in profitability by leveraging Element’s offtake capability
• No incremental capital required to execute
• Hedging and risk management to protect from falling commodity prices
• Trade finance to increase volumes and market share on collected feedstock
• Immediate profitability uplift from execution of trading strategy
• Rapid investor pay back on recycling plant deployments
• Strong cash flow margins driven by diverse feedstock optionality
• Substantial risk reduction and downside protection via control of existing assets in strategic locations
• Opportunistic private or public exit strategy
Monetize
Deploy
Transform
Purchase
4© 2019 Copyright Origin International Inc All rights reserved.
The Purchase, Transform and Deploy Strategy provides investors with:
• Rapid cash generation and compelling unlevered returns
• Substantial downside protection through enhanced cash flows as well as underlying hard assetvalues
• An investor friendly structure due to a pre-agreed arms length marketing fee for all products traded between Element andOrigin
Capital will be drawn down in phases consistent with the purchase of assets, transformation, and deployment of the recycling units over the next 2 years
Origin’s Execution Strategy: Purchase, Transform & Deploy
Origin’s Target Market: Highly Fragmented & Scalable
47%
2% 2%4% 3%
Marine Slops
14%
Used Lubricants
Abundant and Diverse Supply of Low Cost Feedstocks
Available Feedstock Breakdown (bbl pa, USA and Europe)
SUPPLY Highly Fragmented Asset Base with Attractive Entry ValuesASSETS
~50%Used oil burnt in
incinerators
Only ~25%Recycled
Transmixes
9%
Contaminated Crudes 19%
5© 2019 Copyright Origin International Inc All rights reserved.
Available QuantityPerProduct
Annum(BBL)
Used Lubricants 50,000,000
Contanimated Crudes 19,600,000
Marine Slops & Sludges 10,000,000
Pipeline Transmixes 14,800,000
High Moisture Crudes 4,320,000
Petroelum Tank Bottoms 3,600,000
Off Specification asphalt blend stocks (flash point, viscosity anddensity) 2,160,000
Off Secification vaccum gasoils (color andchlorides) 1,900,000
TOTAL 106,380,000
Origin’s Acquisition Strategy: Prudent Cash Flowing Growth Assets
• Facilities in US and Europe going through a generational change, with limited financial sophistication
• Origin offers liquidity while allowing vetted incumbent families to carry on running the company they built and/or allowing them to capture future upside as the platform grows
• The acquisition pipeline includes key logistically located terminals to receive and process feedstocks with storage and trans-loading viatruck, rail, barge, vessel or pipe.
• Origin has already acquired three well established and positive EBITDA producing businesses in the US and Belgium
Pipeline50 Projects
Shortlisted8 Projects
Acquired3 Assets
Origination50 projects reviewed in detail in last 18 months
Selection
Cash flow accretion Initial screening, desk top duediligence Initialdiscussion on valuation and transaction terms
Target Valuation justified on standalone cash flow basis Defensible regional market competitive barriers Feasible offtake to de-riskproduction
Successful Acquisitions
Strategically located in key port locations with robust logistics including rail, barge, truck and deep water vessel access
Existing cash flow and opportunity for growth
1 Strategic regional role for the aggregation, processing and storage of waste hydrocarbon streams sought after by Origin’s Europeancustomers
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3 Undergoing generational transition in ownership or experiencing some form of dislocation (e.g. access to capital)
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6© 2019 Copyright Origin International Inc All rights reserved.
Current Focus
Origin’s Asset Base Overview
Current Locations Pipeline LOI/HOT
Today Origin operates three core waste hydrocarbon recycling assets, all of which are anchored by multiple long-term offtake contracts. TheFirm has over 125 employees across:
Origin has pre-identified acquisitions of existing EBITDA-producing, positive cash flow businesses that are currently under LOI/HOT negotiations
1 BALTIMORE, MARYLAND
Acquisition Date: March 2018
Collection/Service: 500-1000 bbl UMO/day
2 HOUSTON, TEXAS
Acquisition Date: March 2019
Collection/Service: 1,500 bbl UMO/day
3 ANTWERP, BELGIUM
Acquisition Date: May 2019
Collection/Service: Degassing+
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7© 2019 Copyright Origin International Inc All rights reserved.
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Baltimore Overview
• ~50 Acre terminal in the Baltimore port, including 250 mbbl ofoil products storage and 10 acres of dry bulkstorage
• Origin is the only UMO collection company on the US east coast with deep water draft maritimeaccess
• Oil collection volumes are between 500 to 1,000 BBL per day, and are decanted and de-sedimented at the Baltimore terminal andthen sold as a utility fuel oil to Element per a 7-year offtakeagreement
• Site is serviced by CSX rail (8 rail car off/on loading stations), includestruck on and off loading for oil and dry bulk products and has a 700ftdock with a 24ft draft
• Asset also includes the largest independent used motor oilcollection company in the Mid-Atlantic basin, with over 25 collection trucks servicing the states of Maryland, Pennsylvania, Delaware and Virginia
• Element further provides risk management and inventoryfinancing
BALTIMORE, MARYLAND
Acquisition Date: March 2018
Collection/Service: 500-1000 bbl UMO/day
HIGHLIGHTS
– Recycling plant will be running at 70% capacity in 2021and 90% capacity in FY2022
• Additionally, capex is being allocated for adding 16 rail car loading/offloading spots, connection to the Colonial pipeline toallow receipt of pipeline feedstocks (transmix) and diesel/gasoil blending, and repairing and rebuilding the existingdock
GROWTH• Mid-Atlantic region has no base oil or VGO re-refining capacity. Origin
is constructing a fully integrated UMO recycling plant to extract a highyield of low Sulphur vacuum gasoil:
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solutions for Origin such as hedging and prepayments© 2019 Copyright Origin International Inc All rightsreserved.
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Baltimore Overview (Continued)Site Overview
• ~41-acre site with truck, rail, vessel / barge loading andunloading capability
• Dock has ~28ft draft and 600ft length
• On-site warehouses for agricultural and bulk and break-bulk storage
• ~250,00 bbl of in-service liquids storage including asphalt / bitumen,and used oil (see summary table below)
• 30 total trucks, 22 of which are currently inservice
Origin Baltimore Terminals
Buckeye Terminal
CSX Railroad
Arclight Terminal
Interstate 895
Summary of Assets
Warehouse
Dock Structure
Asphalt Tanks
UMO tanks storage prior
to sale
Excluded AcreageUMO tanks for
processing
CSX Rail
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9© 2019 Copyright Origin International Inc All rights reserved.
Baltimore Recycling Plant Construction
Compelling Thesis Unit yield, UMO to VGOVGO 81%Flux (asphalt) 13%Naphtha 1%Water 5%
• Apply Origin’s contractually guaranteed offtake to a larger spread between VGO andUMO
• Origin have shovel ready plans and permits in place to build a recycling plant at the Baltimore location
• Extremely high barrier to entry with no existing re-refining capacity nearby – a greenfieldcompetitor
would need ~7 years to permit and build a newfacility
Compelling Operating Model• Feedstock will be additional collected UMO, contaminatedgasoline
and diesel, pipeline transmix and ship slops &sludges
• Product will be vacuum gasoil, naphtha andasphalt
• 2,200 bbl/day product generation
• Well-positioned facility that can provide blending sales and
feedstock optionality (via pipeline, rail, marine and truck) to further
lower cost of production
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10© 2019 Copyright Origin International Inc All rights reserved.
Houston (Flex) Overview
• Largest independent collector and third party purchaser in the state of Texas for used motor oils, with a fleet of 20 collection trucks and 4 collection terminals that it rents in various locations throughout the state (which include Tyler, Waco and SanAntonio)
• Oil collection volumes are on average over 1,500 BBL perday
• Main terminal is located on the Houston ship channel, where all thefeedstock is gathered, treated in the same manner as Baltimore andthen sold as a utility fuel oil to Element ona similar basis
• Remote monitoring of tank levels anddiagnostics
HOUSTON, TEXAS
Acquisition Date: March 2019
Collection/Service: 1,500bbl UMO/day
HIGHLIGHTS
• Gives Origin a strategic position in the US Gulf Coast and supports the acquisition of a terminal in the region and potentially the development of a recycling plant (similar to the one being constructed in Baltimore)
• Origin intends to be rolling out additional services at the Texas sites that are being offered at other locations such as vacuum truck services, additional waste water collections, degassing and filtering services
• Other smaller collectors in the region are alsobeing screened aspotential acquisitionadditions
GROWTH
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11© 2019 Copyright Origin International Inc All rights reserved.
Antwerp (AQ) Overview
• Largest mobile degassing provider in Europe for commercial ships,tankage and refineries; full range of off-specification filtration andtreatment services
• Degassing is a system of capturing and recovering vapours from oils and chemicals that evaporate into the atmosphere, and then either re-condense those vapours into liquid products that can be resoldor (if required by law) vaporize the recovered vapours through mobile flaring
ANTWERP, BELGIUM
Acquisition Date: May 2019
Collection/Service: Degassing+
HIGHLIGHTS
• Gives Origin a strategic position in northwest Europe for service provision and feedstock for future regional Origin recycling plantsto be developed
• The degassing platform that the business has developed will be additionally rolled out in all Origin locations in the US andEurope providing a further environmental service to customers and integrating the various business units of Origin to maximize profitable synergies
GROWTH
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12© 2019 Copyright Origin International Inc All rights reserved.
Antwerp (AQ) Overview (Continued)
• Ship to ship services to the oil andshipping industries since 2009
• Transfer between vessels of any size
• Equipment includes reducers, fenders and hoses
• Certified by SIR
• Emission reduction to comply with local regulations
• Mobile Cryogenic Unit – Recovery of product
• Mobile Scrubber, evaporator, mobile flareand mobile activated carbonunit
• Cooling down LNG tanks beforeloading
• Temperatures lowered to -170o Celsius
• Removing water
• Removing particles (rust, sediments,etc.)
• Deodorizing
• Discoloration
Founded in 2005 in Antwerp, Belgium as a treater of off-spec liquid bulk shiploads, AQ has grown to offer arange of at-the-port vesseltreatment and cleaning services.
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13© 2019 Copyright Origin International Inc All rights reserved.
© 2019 Copyright Origin International Inc All rights reserved.
• Head of Residual Oils, Gunvor SA• Head of waste oils and off specification crude oil processing and trading, as well
as niche gasoil and bitumen blending and break bulk programs.• Commercial management positions at OW Bunker and NEOS Resources PLC• Responsible for processing and trading maritime and land based waste oils• MA in Law, Cambridge University
• Founding partner of CRI Global Grupo CRI de Mexico,ECR4Kids, Lightspeed Outdoors, Mobile home Ventures2004, PR Investors, LFT Capital, which primarilymanufacture various products in Mexico/Asia forwholesale distribution, manufactured home financingand real estate development
• Sr. Exec Vice-President, Director and Member ofExecutive Committee of Costco/Price, President, Directorand Member of Executive Committee of the Board ofDirectors of The Price Company and a Founding Directorof Bodega Latina, a privately owned warehouse grocerychain operation
• Currently a Director of PriceSmart (NASDAQ: PSMT) thatowns/ operates U.S.-style membership shoppingwarehouse clubs in Latin America and the Caribbean
• BA Economics and MS Business Administration, UCLA
• Nearly 20 years experience trading physical oil, refinedproducts, oil derivatives & credit derivatives.
• Trading & management positions at companies such asMaddox (former PS Trading SA), SET Select Energy, Citigroup, JP Morgan, or Mendex
in English, Russian,• Native German speaker, also fluentSpanish and French
• Business degree from ESCP Paris, Madrid, Oxford and Masterfrom City University London. Nino co-founded ELEMENT withGregor La Valette
Dr. Christoph Beckmann: Non-ExecDirector
• Top Management positions in first class internationalcompanies
• Led project finance team at Deutsche Bahn AG and wasManaging Director for Opus 5 Interaktive Medien GMBH
• Then joined Swiss International Airlines Ltd first as SeniorVice President of Corporate Strategy and a year after as ChiefMarketing & Strategy Officer and Member of theManagement Board.
• Greatly contributed to the turnaround of SWISS into aleading European airline
• Mentor and executive coach for top managers, as well asfounding and co-owning Turgot Ventures AG, a venturecapital firm, investing in and helping to build innovative earlystage companies
Gregor von la Valette: Non-ExecDirector
Michael O’Hara: USA Head of Commercial
• Senior positions at Ergon West Virginia Inc including Vice President of Refining, Plant Manager, Technical Services Manager
• Senior technical managerial positions at Amerada Hess Corporation and Exxon Company USA
• Brings Origin sophistication and operational excellence to Origin’s capitaldeployment as well as HS&E and operations/management
Diana Ryan: Group Controller &Treasurer
• Senior financial positions at large multinationals Laureate InternationalUniversities (Senior Finance Manager), Aveniu Brands (Financial Controller),Under Armour (Director of Financial Planning), Ernst & Young (Audit Manager),Mclean, Kheler (Audit and Tax Associate)
• Led Under Amour’s financial planning department of through its 2005 IPO andsecondary offering in 2006
Management
Nicholas Myerson: CEO & Executive Director
ELEMENT Representatives
Nino Mendiburu: Non-Exec Dir & Chairman
Independent Shareholder Representatives
Mitch Lynn: Non-Executive Director
Neil Stanton: Head of Technical &HSE
• Track record in commodity trading & leveraged finance• Analyst then associate at Morgan Stanley (New York and
London) Leveraged Finance.• Oil Product Trader at Maddox SA focused on physical oil
operations, risk management and all aspects of book• Degree in International Business Economics, University of
Maastricht• Co-founded ELEMENT with Nino Mendiburu.
Derek Becht: Non-Executive Director
Andrew Caplan: Non-Executive Director
• Vice-President of Operations and Sales for Origin Baltimore asset since 2006• Senior management at NFIB and RSC Equipment Rental• Sales expertise and continuity with 12 years of oil collection experience• Well equipped to lead the roll out expansion in the USA
• Started at Valero Energy improving refinery day-to-dayoperations through plant troubleshooting, operationalsupport, training & mentoring, and capital projectinvestment
• Becht Engineering (family business) in 2015 to develop theProcess Engineering & Process Safety division
• Vice President, Maintenance and Projects with oversightof the Turnaround, Capital Projects, Heavy Lift, MechanicalIntegrity, Inspection Planning and Advisor ResourcesDivisions in 2017
• Professional Engineer (PE) with Bachelor’s in ChemicalEngineering, Rowan University and MBA, IndianaUniversity
• Wealth of global commodity supply and trading knowledge• Head of Aluminium at Trafigura Pte and Glencore
International PLC over a 20 year period• Chair of Origin’s audit and compensation committees
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Origin’s Deep Expertise in Environmental Processing, Asset Development, Trading & Principal Investments
Wade Adkins, CPA: VP ofFinance
• Regional Controller and Sr Executive Director of Accounting, Laureate Education:lead IPO preparation, accounting strategy, disclosure pronouncements for SECand US GAAP compliance and financial due diligence in M&A contexts
• Dual bachelor of sciences in accounting and management information systems,Salisbury University (summa cum laude)
Legal Organizational Structure
ORIGIN INTERNATIONAL
INC
ORIGIN AMERICAS LLC
ORIGIN EUROPE BVBA
15%
100%100%
85%
ORIGIN BALTIMORE LLC
ORIGIN BALTIMORE RECYCLING LLC
ORIGIN BALTIMORE TERMINALS LLC
AQ GROUP BVBA
AQDEGASSING
BVBAAQ NV
Degassing & filtering Antwerp, Belgium
ORIGIN TEXAS RECYCLING LLC
UMO collection & storage Houston, TX
UMOcollection Baltimore, MD
UMO recycling and storage Baltimore, MD
Orion Energy Partners (Debt Provider)
KBC (Debt Provider)
OTHER SHAREHOLDERSMANAGEMENT
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