Annual General Meeting September 18, 2017

Transcription

1 Annual General Meeting September 18, 2017

2 Reader Advisory This presenta,on contains forward-looking statements, within the meaning of applicable securi,es legisla,on, concerning Empire's business and affairs. In certain cases, forward-looking statements can be iden,fied by the use of words such as "plans", "expects" or "does not expect", "budget", "scheduled", "es,mates", "forecasts", "intends", "an,cipates" or varia,ons of such words and phrases or state that certain ac,ons, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". These forward looking statements are based on current expecta,ons, and are naturally subject to uncertainty and changes in circumstances that may cause actual results to differ materially. Readers are cau,oned not to place undue reliance on such forwardlooking statements. Forward-looking informa,on is provided as of the date of this presenta,on, and Empire assumes no obliga,on to update or revise them to reflect new events or circumstances, except as may be required under applicable securi,es laws. Neither the TSX Venture Exchange nor its Regula,on Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this presenta,on. 2

3 Who We Are Ø Media-Based A+rac.ons company v Design v Manufacture v Theming v Co-Ventures Ø Empire is focused on the rapidly growing, global A+rac.ons business Ø Empire wholly owns two businesses that are the world s best suppliers of media-based a+rac.ons (Dynamic A+rac.ons) and large telescopes (Dynamic Structures) Ø Leveraging Intellectual Property in recently announced co-venture ini.a.ve Ø Trading on TSXV since 2006.cker symbol EIL. 3

4 Our Recent Accomplishments Ø USD $120 million contract win largest of its kind awarded Ø Transformed and recently restructured Empire with key execu.ve hires and promo.ons to focus on profit-center accountability Ø Spun-out Tornado Global Hydrovacs (TGH.V) to shareholders in Recently strengthened its balance sheet and restored a 25% ownership in TGH.V by Empire. Ø Launching a new business of a+rac.on co-ventures, leveraging our proprietary ride systems and a+rac.on development capability. These co-ventures target making investments that generate recurring revenue and profit. 4

5 Transforma<on of Business & Revenue Mix All Other Con.nuing Opera.ons All Other Con.nuing Opera.ons ADrac<ons ADrac<ons Media-Based AVrac<ons 5

6 Realigned Strategic Leadership Team 6

7 Financial Highlights (C $000) 6 months Q months Q FY 2016 FY 2015 Revenue 64,259 58, , ,225 Adjusted EBITDA 5,743 2,401 5,594 8,139 Adjusted EBITDA % 8.94% 4.13% 4.75% 6.21% Net Income 1,424 6,848* 3,978* 1,370 Net Income Per Share-Basic $ 0.02 $ 0.11 $ 0.06 $ 0.02 * Includes $5.6 million of unrealized forex gain in the 6 months of 2016 and $4.4 million on the full year. 7

8 Capital Markets Informa<on Stock Price 52 week high/low $0.74/$0.30 Number of Shares 68.4 million Avg Daily Trading* 107K Market Cap (Sep 13, 2017) $35 million ($0.51/share) Annual Revenues^ $124 million Annual EBITDA^ $8.9 million Long Term Funded Debt^ $15.5 million *Last 3 months; ^Jun 30, 2017 (TTM) 8

9 Comparables Demonstrate Opportunity for Valua<on Mul<ple Growth at Empire Company Name Currency Market EBITDA [LTM] Capitaliza<on ($ millions) ($ millions) Diluted EPS Excl. Extra Items [LTM] TEV/LTM EBITDA Market Cap/LTM Total Revenues P/LTM Diluted EPS P/Book Value Merlin Entertainments plc (LSE:MERL) CAD 7, x 2.9x 21.6x 11.5x The Walt Disney Company (NYSE:DIS) CAD 186, , x 2.7x 17.5x 20.0x Comcast Corpora.on (NASD: CMC) CAD 212, , x 2.1x 18.6 NM Six Flags Entertainment Corpora.on (NYSE:SIX) CAD 5, x 3.6x 52.3x NM Cedar Fair, L.P. (NYSE:FUN) CAD 4, x 2.8x 27.3x NM Mean 59, , x 3.4x 27.4x Median 6,011, x 2.8x 24.0x D-Box Technologies Inc. (TSX:DBO) CAD 53.7 ( 0.1 ) ( 0.02 ) NM 1.7x NM 2.8x IMAX China Holding, Inc. (SEHK:1970) CAD 1, x 8.2x 26.9x 4.5x Empire Industries (TSXV:EIL) CAD ( 0.02 ) 5.6x 0.3x NM 2.5x (Source: Capital IQ, Yahoo Finance, September 13, 2017) 9

10 Our Strategy Ø Focus on the rapidly growing, global a+rac.ons industry by expanding revenues, margins, and profitability through five profit centres. Ø Complete the financing for Dynamic Entertainment and then close one co-venture in North America and one in China to prove Empire can generate significant recurring revenues and profit Ø Leverage ownership of Dynamic Structures to fabricate and install the Thirty Meter Telescope and con.nue to commercialize the new innova.ons it generates Ø Con.nue to ra.onalize the steel fabrica.on business and re-deploy the investment towards suppor.ng media-based a+rac.ons 10

11 Business Units A+rac.ons Telescopes Co-ventures (100%) (100%) (62.5%) A+rac.on Development Ride System Integra.on Marke.ng Precision Design Fabrica.on R&D (30%; option to increase to 51%) Non-Core Investments (~25%) (49%) (100%) (45%) 11

12 Global Leader for Premium ADrac<ons Ø Proprietary products include iconic Dark Rides and a range of Theatre products Ø Unlimited Services TM, headquartered in our 80,000 square foot Orlando office, broadens our services offering beyond the ride system and into theming, story-telling, media produc.on, customer mock-ups and other services required for a complete a+rac.on Ø Expanding our ater-sales service offering from just North America to global Ø Current contract backlog of CAD $260 million as at June 30,

13 50+ Iconic Rides Around the World 13

14 Global Leader for designing and building large telescopes Ø Have designed and built over half of the world s largest observatory telescopes. Ø Named by the Government of Canada as the company to design, manufacture and supervise the installa.on of the Thirty Meter Telescope enclosure (h+p://bit.ly/2x9hi5d), which is Canada s contribu.on to this interna.onal project. v It will be the world s largest op.cal telescope v Planned to be designed, manufactured and installed over the next five years v Consor.um of five na.onal governments v Awarded $10 million Detailed Design contract in August 2016 v Manufacturing contract expected in spring of 2018 Ø Con.nuing to develop proprietary, mirror-polishing technology with poten.al to radically reshape the observatory telescope industry. 14

15 Products and Services Ø Proprietary Products v Iconic Dark Rides (robo.c vehicles &trackless vehicles) v Special effects roller coasters v High-tech theatre products v Self-propelled race vehicles Ø Custom Manufactured Ride Systems v Cuung-edge rides that have never been built before v Created for famous entertainment des.na.ons Ø Unlimited A+rac.ons v Turn rides into a+rac.ons v Integrate story-telling, ligh.ng, media, special effects with the ride system Ø Parts and Services v Parts for rides manufactured by Dynamic and others v Maintenance and consul.ng services 15

16 Proprietary Products 16

17 Co-ventures to Generate Recurring Revenues Ø Co-ventures are a natural extension of Empire s business, from manufacturer of ride systems and supplier of turnkey media-based a+rac.ons. Ø Co-own and operate the Dynamic A+rac.ons Flying Theatre and its other proprietary a+rac.ons, under an exclusive license in the co-venture market, Ø Co-venture subsidiaries will partner directly with high traffic, tourist-based loca.ons. Ø Targeted profit is expected to be recurring and predictable, all of which is valuable from a market valua.on perspec.ve, especially in China. Ø In August 2017, Empire announced a $31 million Co-venture ini.a.ve a le+er of intent to structure and fund two a+rac.ons at key tourist venues in North America and China 17

18 Start-up Capital for Co-ventures Ø Source of Funds v $12 million of equity to Dynamic Entertainment from Empire Ø Ø Ø $3 million from private placement with the Strategic Investor* Up to $5.1 million from a rights offering to shareholders Balance of required $12 million will come from other sources, such as non-core asset sales, new debt of Empire, etc. v $5 million from private placement with the Strategic Investor directly into Dynamic Entertainment ($4 million of this will be invested into the Chinese affiliate) v $14 million from private placement with the Strategic Investor in Chinese affiliate Ø TOTAL Source of Funds $31 million Ø Use of Funds v $13 million for North American Co-Venture (smaller theater) v $18 million for Chinese Co-Venture (larger theater) Ø TOTAL Use of Funds $31 million * James Chui is joining the Empire Board and the Dynamic Entertainment Board and the Co-venture subsidiaries once the transac.on closes successfully. James Chui s biography is in Empire Industries August 28, 2017 news release. 18

19 Financing Structure for Co-ventures Up to $5.1MM Rights Offering $3MM for Subscrip.on Receipts for 6MM Common Shares ($0.50 per share) $12MM for 62.5% ownership (if diluted by Management Op.ons) Payable in 2 tranches of $6MM each Excellence Raise Overseas Ltd. (EROL) or Assigns $5MM for 22.5% ownership (if diluted by Management Op.ons) Payable in 2 tranches of $2.5MM each Empire Industries Shareholders Other Financing (DEGL) 15% ownership if Management Op.ons are exercised for $2.5MM DEGL Management $4MM for 30% ownership* $14MM for 70% ownership* * If DEGL s Op.on is exercised for $11.1MM, DEGL s ownership share increases to 51% and EROL s is reduced to 49% (DTSH) If DEGL s Op.on is not exercised, and EROL exercises its follow-on op.on, DEGL s ownership share is diluted to 21% and EROL s 19 ownership in increased to 79%

20 Illustra<on of a Co-Venture ADrac<on 20

21 Why Invest in Empire? Ø Focused on capitalizing on the global phenomenon of accelera.ng growth in leisure and entertainment capital spending. Ø Is the go to supplier for many of the world s leading entertainment companies which seek a technologically-advanced, differen.ated a+rac.on product line. Ø Empire has moved beyond being just a supplier of ride systems into a supplier of turnkey, proprietary a+rac.ons and ater sale service Ø Has unrivalled technical and crea.ve knowledge to deliver iconic media-based a+rac.ons globally Ø Poten.al for recurring revenue and profit from co-ventures. Ø Healthy balance sheet and adequate financial resources to capitalize on its excep.onal pipeline of opportuni.es. Ø Market has yet to fully appreciate Empire s transforma.on and outstanding poten.al for capital apprecia.on 21

22 Thank you