Investor Relations
Presentation
Forward-Looking Information
Advisory Regarding Forward-Looking Statements
• This document contains forward-looking statements concerning future events or the Company’s future performance, including the Company’s objectives or
expectations for revenue and earnings growth, business opportunities in the Petroleum Products, Water Products, Corrosion Products and other markets, efforts to reduce administrative and production costs, manage production levels, anticipated capital expenditure trends, activity in the petroleum and other industries and markets served by the Company and the sufficiency of cash flows and credit facilities available to cover normal operating and capital expenditures. Forward-looking statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “plan,” “continue,” “estimate,” “expect,” “may,” “will,” “project,” “predict,” “potential,” “targeting,” “intend,” “could,” “might,” “should,” “believe” and similar expressions. Actual events or results may differ materially from those reflected in the Company’s forward-looking statements due to a number of known and unknown risks, uncertainties and other factors affecting the Company’s business and the industries the Company serves generally.
• These factors include, but are not limited to, fluctuations in the level of capital expenditures in the Petroleum Products, Water Products, and Corrosion
Products markets, drilling activity and oil and natural gas prices, and other factors that affect demand for the Company’s products and services, industry competition, the need to effectively integrate acquired businesses, uncertainties as to the Company’s ability to implement its business strategy effectively, political and economic conditions, the Company’s ability to attract and retain key personnel, raw material and labour costs, fluctuations in the US dollar, euro and Canadian dollar exchange rates, and other risks and uncertainties described under the heading “Risk Factors” in the Company’s most recent Annual Information Form, and elsewhere in this document and other documents filed with Canadian provincial securities authorities. These documents are available to the public atwww.SEDAR.com.
• In addition to the factors noted above, management cautions readers that the current economic instability in the world today could have a negative impact
on the markets in which the Company operates and on the Company’s ability to achieve its financial targets. Factors such as continuing global economic uncertainty, tighter lending standards, volatile capital markets, fluctuating commodity prices, and other factors could negatively impact the demand for the Company’s products and the Company’s ability to grow or sustain revenues and earnings. Fluctuations in conversion rates of the US dollar to Canadian dollar and euro to Canadian dollar have the potential to impact the Company’s revenues and earnings.
• The Company believes that the expectations reflected in the forward-looking statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and such forward-looking statements included in this report should not be unduly relied upon.
• The forward-looking statements in this report speak only as of the date of this presentation. The Company does not undertake to update any forward-looking
statement, whether written or oral, that may be made from time to time by the Company or on the Company’s behalf, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.
Mission Statement
Our Vision Is
“To be the leading global
provider of environmentally-friendly
liquid storage, fluid handling and
corrosion resistant industrial products.”
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TSX symbol
ZCL
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Basic common shares o/s
30.3 MM
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Shares held by mgmt & directors
2.9 MM
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Equity market capitalization
$180-$200 MM
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Net cash (June 30, 2015)
$14.8 MM
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Dividend per share (quarterly/annual)
$.045/$0.18
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Yield
3%
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Dividend Payout Ratio
25 - 30%
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NCIB implemented March 2015
up to 750,000 shares
178,600 shares repurchased at 8/27/15
Management Team
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President & CEO
Ron Bachmeier
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Chief Financial Officer
Kathy Demuth
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VP Sales & Marketing, Canadian Petroleum
Kent Halliday
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VP Sales & Marketing, US Petroleum & Water
Tom Tietjen
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VP Sales & Marketing, Corrosion
Mike Stark
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VP Field Operations
Andy Mikalauskas
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VP Human Resources
Joe Santoro
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Director of Health & Safety
Patrick Williams
Board of Directors
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Tony Franceschini, Chair
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Ron Bachmeier
(not independent)
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Bruce Bentley
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Leonard Cornez
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Allan Olson
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Harold Roozen
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Ralph Young
North American Coverage
Legend:
Underground
(Petroleum & Water)
Aboveground
(Corrosion)
Petroleum Products
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Downstream Petroleum
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Midstream Petroleum
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Upstream Petroleum
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International (licensee’s)
Downstream Petroleum
Market Size
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$25 MM to $35 MM addressable market in Canada (estimated market share > 85%)
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$125 MM - $150 MM addressable market in United States (estimated market share > 45%)
Competitors
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Fiberglass – CSI Denali
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Steel – Modern Welding, Highland, Northern Steel, and many regional manufacturers
Market Growth Focus
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Mature market – demographic shift/new replacements
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1980’s tanks reaching end of original 30 year warranty (both steel and FRP)
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Future fuels (E15, E85, biofuels) – replacement and upgrades
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Diesel Exhaust Fluid (DEF) – highway, off-road construction, marine
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Historically high retail marketers margins providing capital for investment in expansion and
replacement
Downstream Petroleum – continued
Current Market Conditions
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US market activity very strong, led by “big box” retailers
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Canadian market slower – integrated major oil company capital spending cutbacks impacting
downstream
Midstream Petroleum
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Pipeline expansion will drive sales growth (pump station sump tanks)
Current Market Conditions
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Regulatory approvals needed to stimulate growth
Upstream Petroleum
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Future growth will be driven by increased natural gas drilling activity due to potential LNG
export expansion
Current Market Conditions
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Spending “at the well head” will need to recover before revenues return to growth
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Demand expected to be lower, at least through H1 2016
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Potable
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Onsite Decentralized Wastewater
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Fire Protection
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Water Collection/Conservation (Green Building/LEED)
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Wet Wells and Lift Stations for Municipal/Industrial Applications
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Grease Interceptors
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Specialty Markets—Washdown tanks, Food Processing Drain tank
s
Market Size
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Total addressable market size of $400 - $500 MM in North America
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Market niches vary from $20 MM to $100 MM
Competitors
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Concrete is dominant (>80%) with hundreds of regional suppliers
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FRP – CSI Denali, LF, Canwest, Barski, Nemo and numerous small regional tank manufacturers
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Poly – Norwesco, Darco and many national and regional manufacturers
Market Growth Focus – gain market share against concrete
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Environmental awareness: ”scarce commodity with value” is a key opportunity
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Water reuse/recycle movement is macro driver
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Emphasize specifications, life cycle cost and sustainability advantages over concrete
Current Market Conditions
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Tied to construction cycle – recovering, but still weak compared to 2008 peak
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Broad water market should benefit from increased construction activity and economic
growth due to low oil and gas prices
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Evolving government regulations for wastewater, storm water, and fire submarkets will
support growth
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Oil Sands
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Industrial Corrosion
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Chemical, Chloralkali and Industrial Tanks
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Power Generation
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Metals, Mining and Energy
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Industrial Pollution Control
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Pulp and Paper
Market Size
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$25 - $50 MM annual addressable market for products and services
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Principle application is aboveground chemical storage for SAGD and mining
Competitors
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Several steel tank competitors
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Regional FRP competitors for smaller diameter FRP tanks (>14’ diameter)
Market Growth Focus – broaden applications
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Long term committed spend is well documented, near term activity will be negatively
impacted by lower oil and gas prices
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Leverage “design one, build many” strategy with EPC firms as cost reductions increase in
priority
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Expand op-ex and maintenance services to capture both capital and operating spend
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Leverage the interface between Oil Sands, water, and chemicals
Current Market Conditions
Many projects postponed or suspended at least into 2016 – outlook beyond that is uncertain
Market Size
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Industrial Corrosion is a $1 B addressable market for composite and dual laminate products
Competitors
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Denali (Ershigs, Fabco, Belco)
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RPS (NMR, Sealtech), Augusta, Plasticon /AC Plastiques, DKG (An-Cor), RL Industries
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Many small regional competitors
Market Growth Focus – broaden customer base
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Expansion up-cycle for North American Chemical Industry due to cheap and abundant energy
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Emerging LNG export terminal expansion should drive demand for both dual-laminate and
FRP products
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Expand op-ex and maintenance service offerings
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Leverage expanding sales team and broader sales channels
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Economic growth due to lower energy prices should be beneficial for this market
Current Market Conditions
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Slow order activity – smaller value projects
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Quoting activity (mostly budgetary) very active
Earnings Per Share
*the 2010 Loss per Share displayed has been adjusted to remove the write-down of goodwill and intangible assets of $0.36 per share
