Tubacex, S.a. · BME:TUB
Tubacex — Merger or Acquisition (November 2014)
52 slides from Tubacex's merger presentation, November 2014
Slide 1: IBF – A strong step towards becoming a complete Oil&Gas solutions provider
TUBACEX Palacio de la Bolsa de Madrid IBF – A strong step towards becoming a complete Oil&Gas solutions provider 1
Slide 2: Table of Contents
Table of Contents 1 Results Release 9M 2014 2 Status of the Strategic Plan 3 IBF Acquisition Transaction and Impact a. Introduction to IBF b. Strategic Fit c. Transaction and Impact IBF – A strong step towards becoming a complete Oil&Gas solutions provider 2
Slide 3: 9M Results Release
TUBACEX 9M Results Release IBF – A strong step towards becoming a complete Oil&Gas solutions provider 3
Slide 4: Significant events during the period
Results Release 9M 2014 Significant events during the period Collective agreement Promissory notes Urea order Anticipation of Dividends OCTG order for Strategic Plan payment Total TUBACEX – 9M 2014 Results Release 4
Slide 5: Main Financial Figures
Results Release 9M 2014 Main Financial Figures 9M 2013 9M 2014 % €M Sales 412.0 400.0 -2.9% EBITDA 38.6 49.0 26.9% EBITDA Margin 9.4% 12.3% EBIT 24.1 33.9 40.4% EBIT Margin 5.9% 8.5% Profit Before Tax 12.8 25.2 97.0% Margin on sales 3.1% 6.3% Dec. 2013 9M 2014 % Working Capital 217.6 210.1 -3.4% Net
Slide 6: Main ratios
Results Release 9M 2014 Main ratios FY 2013 9M 2014 €M EBITDA Margin 9.3% 12.3% EBIT Margin 5.7% 8.5% EBT Margin 3.0% 6.3% R.o.E. 5.8% 7.9% R.o.C.E. 6.9% 9.5% Interest coverage 2.3x 3.7x Net working capital / sales 39.3% 38.8% Net Financial Debt / EBITDA 3.8x 2.4x Net Financial Debt/ Shareholders’ E
Slide 7: Sales breakdown by sector
Results Release 9M 2014 Sales breakdown by sector* Others 3% Chem & Petroch. 13% E&P Oil&Gas 39% PowerGen 15% Oil&Gas sector maintain its increasing weight in Group sales Important orders in Subsea sector with important orders for tubes for high pressure equipment and tubes for Oil&Gas productio
Slide 8: Geographic Sales Breakdown
Results Release 9M 2014 Geographic Sales Breakdown 58% 13% 26% Europe U.S. and Canada Asia 3% ROW Asia becoming an important hub for Oil&Gas TUBACEX – 9M 2014 Results Release 8
Slide 9: Share Performance
Results Release 9M 2014 Share Performance +17.3% +45.6% 18.09.2014 Dec. 2012 4.33€ 1.99€ 27.01.2014 2.75€ 31.10.2014 3.39€ Dec. 2013 2.89€ TUBACEX shares have increased by 17.3% until 31st October TUBACEX – 9M 2014 Results Release 9
Slide 10: Traded Volume
Results Release 9M 2014 Traded Volume Traded shares (million shares) Traded shares (million shares) +18% X1.7 140,0 127,6 140,0 127,6 120,0 108,1 120,0 100,0 100,0 75,9 80,0 80,0 60,0 60,0 42,1 40,0 30,4 40,0 20,0 20,0 0,0 0,0 2012 2013 9M 2014 9M 2012 9M 2013 9M 2014 Increasing trend in traded volu
Slide 11: Shareholders Structure
Results Release 9M 2014 Shareholders Structure JM Aristrain 11,0% Amber Capital 6,9% Changes to the structure of TUBACEX Cartera significant shareholders during the first Ind. Rea quarter of the year 5,0% Ecofin Corporacion Aristrain 4,9% Itzarri 3,2% Amber Capital Free - float 69,0% Shareholder
Slide 12: Status of the Strategic Plan
TUBACEX Status of the Strategic Plan IBF – A strong step towards becoming a complete Oil&Gas solutions provider 12
Slide 13: Main Ratios Evolution
Status of the Strategic Plan Main Ratios Evolution EBITDA Margin (%) EBIT Margin (%) 12,3% 8,5% 8,6% 9,3% 5,7% 5,0% FY 2012 FY 2013 9M 2014 FY 2012 FY 2013 9M 2014 EBT Margin (%) NFD/EBITDA 5,7x 6,3% 3,8x 3,0% 2,4x 2,5% FY 2012 FY 2013 9M 2014 FY 2012 FY 2013 9M 2014 Improving significantly margins
Slide 14: Fulfillment of the Strategic Plan
Status of the Strategic Plan Fulfillment of the Strategic Plan Cash Generation Growth Phase I Phase II 2013-2014 2015-2016 9M 2014 30% High Value Added 40% High Value Added Product Mix Products vs. 70% Products vs. 60% 35.3% Traditional Traditional Sales Growth >15% > 15% +9.0%1 EBITDA Margin 10% 12
Slide 15: Phase II Focus
Status of the Strategic Plan Phase II Focus CHANGE OF BUSINESS PRODUCTIVE MODEL MODEL OPTIMIZATION GROWTH MANAGEMENT (organic and MODEL inorganic) IMPLEMENTATION ACCELERATION We have included the Growth Axis TUBACEX – 9M 2014 Results Release 15
Slide 16: Growth Strategy
Status of the Strategic Plan Growth Strategy Growth Vision: Be a solutions provider Phase II Organic and inorganic growth focused on value generation and 2015-2016 looking for complementarity and synergies. 40% High Value Added Maintain debt multiples of 2-3 times EBITDA. Products vs. 60% Tradit
Slide 17: Organizational Structure
Status of the Strategic Plan Organizational Structure Spain Austria EE.UU. IBF xx… Financial & Controlling IMPLEMENTING SYSTEMS, MANAGEMENT MODELS AND Commercial & Trading ACHIEVING SYNERGIES HR Policies Purchasing R&D & Innovation Operations CLEAR P&L RESPONSIBILITY Organizational structure ready f
Slide 18: M&A Forum
Status of the Strategic Plan M&A Forum The M&A Forum was created in 2013 with a specific process map The M&A Forum is responsible for analyzing any M&A opportunity in the market and its fit in Tubacex Group Since its creation this Forum has screened more than 30 companies The Best opportunity
Slide 19: IBF
IBF A strong step towards becoming a complete Oil&Gas solutions provider IBF – A strong step towards becoming a complete Oil&Gas solutions provider 19
Slide 20: Table of Contents
Table of Contents 1 Introduction to IBF 2 Strategic fit 3 Transaction and Impact IBF – A strong step towards becoming a complete Oil&Gas solutions provider 20
Slide 21: IBF strengths
Introduction to IBF IBF strengths Recognized as leading players Highly qualified personnel in Oil&Gas & Power Gen Extensive industry Demand expected to sharply expertise increase Certifications Consolidated and Vendor lists privileged Limited competition relationships with customers
Slide 22: History
Introduction to IBF History 1979 1980 1990 2000 2010 2013 1979 2011 IBF establishment 1987 1996 Production range Establishment of Production site increasing from 40’’ 2002 to 72’’ CFF (Cold Formed construction in Acquisition of the Pipes 1980 Fittings) in Castel Vittuone for the Division from Union
Slide 23: Geographical presence
Introduction to IBF Geographical presence Italian manufacturing facilities Chinese JV Fittings Division (San Head office (Colnago) Pipes Division (Vittuone) Nicolò) Total Area: 542 sqm Plant 1: 13,333 sqm Plant 1: 20,790 sqm JSI CO. Ltd (Jilin City) Plant 2: 17,184 sqm Domestic nuclear business Plan
Slide 24: Sales destination 2013
Introduction to IBF Sales destination 2013 Europe 24% North Asia America 58% 17% Others 2% Excellent geographic position IBF – A strong step towards becoming a complete Oil&Gas solutions provider 24
Slide 25: Sales destination 2013
Introduction to IBF Sales destination 2013 25% 15% 37% 11% Strategic focus on Oil&Gas and Energy IBF – A strong step towards becoming a complete Oil&Gas solutions provider 25
Slide 26: Product portfolio: Pipes Division
Introduction to IBF Product portfolio Pipes Division Outside diameter: from 0.5’’ to 42’’ Wall Thickness: any Length: from 0.5mt to 20 mt Execution: seamless Material: stainless steel, duplex / superduplex, austenitic steel, nickel alloy, ferritic steel, low alloy steel, carbon steel Pro
Slide 27: Product portfolio: Fittings Division
Introduction to IBF Product portfolio Fittings Division Outside diameter: from 0.5’’ to 72’’ Wall Thickness: any Length: from 0.5mt to 20 mt Execution: welded and seamless Material: austenitic steel, nickel alloy, titanium alloy, ferritic steel, low alloy steel, carbon steel Process: hot
Slide 28: Product portfolio: 2013 revenues breakdown
Introduction to IBF Product portfolio: 2013 revenues breakdown By Product Fittings 51% Pipes 49% By Channel End Users 10% EPC 45% Package compilor 45% By Steel grade Low alloy 8% Carbon 4% Ferritic SS 12% High alloy 39% Austenitic SS 15% Nickel alloy 22% IBF – A strong step towards becoming a comple
Slide 29: Technological process
Introduction to IBF Technological process Pipes Division s 1. Outside 2. Boring 3. Lapping 4. Heat 5. Sampling & 6. Hydrostatic 7. Visual & 8. Ultrasonic 9. Bevelling 10. Marking & machining Treatment mech. test test dimensional test Packing Fittings Division s 1. Cutting 2. Heating 3. Heat 4. Extra
Slide 30: Research & Development
Introduction to IBF Research & Development R&D Strong engineering & R&D capabilities Cooperation with University of Milan in testing innovative materials and potential new applications The technological office focus on designing new products and performing feasibility studies of new equipment
Slide 31: Financials
Introduction to IBF Financials Income Statement (€M) Balance Sheet (€M) 2012 2013 2014F 2013 jun-14 Total Sales 114,5 135,7 142,3 Fixed assets 18,3 16,0 Gross Profit 55,4 59,1 59,5 Inventories 63,0 46,5 EBITDA 11,4 12,2 12,8 Receivables 31,8 45,3 EBIT 5,3 6,4 7,1 Others 4,6 4,3 Total Assets 117,6 11
Slide 32: Table of Contents
Table of Contents 1 Introduction to IBF 2 Strategic fit 3 Transaction and Impact IBF – A strong step towards becoming a complete Oil&Gas solutions provider 32
Slide 33: Investment rationale
Strategic fit Investment rationale R&D opportunities for Tubacex becomes the development of new only manufacturer with products / materials complete dimensional range Significant Synergies that allow to improvements as increase contribution consequence of TxPS margin implementation The acquisition a
Slide 34: Commercial synergies: Product (i)
Strategic fit Investment rationale Commercial synergies: Product (i) Tubacex becomes the only Company that can offer the complete dimensional range in Seamless Stainless Steel Tubes Outside Diameter BOP/Well Heads Risers Pipeline Up to 8’’ Up to 25’’ Umbilicals Wall Thickness Flowline Manifold Man
Slide 35: Commercial synergies: Product (ii)
Strategic fit Investment rationale Commercial synergies: Product (ii) The acquisition allows Tubacex to increase significantly its position in the fittings market − Manifolds, special components, laterals, etc. The deal strengths the Tubacex competitiveness position by offering a combination of
Slide 36: Commercial synergies: Product (iii)
Strategic fit Investment rationale Commercial synergies: Product (iii) Downhole OCTG Oil & Gas E&P Subsea Well Intervention Onshore and Offshore Trees, Manifolds, Flow lines Umbilical, Control lines Risers, Jumpers, Connections Top side Platforms, FPSO Transportation Ships Process, re-gas Process pi
Slide 37: Commercial synergies: Sector
Strategic fit Investment rationale Commercial synergies: Sector TBX current IBF acquisition allows Tubacex Premium offer Group to increase its premium offer by 30% Post IBF: + 30% Increase of the offer by application sector E&P Onshore E&P Offshore PowerGen* Downstream +32% +13% x2 +39% TBX TBX
Slide 38: Commercial synergies: Customers
Strategic fit Investment rationale Commercial synergies: Customers Clear commercial synergies due to the complementarity of clients End User EPC / Contractors Traders Move forward in the Value Chain IBF – A strong step towards becoming a complete Oil&Gas solutions provider 38
Slide 39: Commercial synergies: Geographic
Strategic fit Investment rationale Commercial synergies: Geographic Revenues breakdown by customer country Europe North America Asia Tubacex: 58% Tubacex: 13% IBF: 29% Tubacex: 26% IBF: 17%* TBX+IBF: 50% IBF: 58% TBX+IBF: 14% TBX + IBF: 34% RoW Tubacex: 3% IBF: 2% TBX + IBF
Slide 40: Purchasing synergies
Strategic fit Investment rationale Purchasing synergies Synergies when buying raw material Potential improvement in the management and sale of stainless scrap Potential improvement in the purchase of other consumables and goods Potential for synergy concerning the reuse of carrots as mother
Slide 41: Operational synergies
Strategic fit Investment rationale Operational synergies TxPS implementation would allow significant improvements in capacity and productivity Substantial operational improvements in reducing operating costs and rationalizing of working capital Together towards excellence IBF – A strong step tow
Slide 42: Operational synergies: TxPS Guidelines
Strategic fit Investment rationale Operational synergies TxPS Guidelines Focused Improvement Advanced Tools Improvement Infrastructures Support Change Proactive Connection SDCA + PDCA Empowerment Customer - Supplier mC, deployment of Objectives Elimination of Losses and Waste Micro layout, SMED, TPM
Slide 43: Operational synergies: goals achieved
Strategic fit Investment rationale Operational synergies Goals Achieved: − Strong reduction of working capital thanks to lean manufacturing methods − Decrease of lead time − Productive improvement (OEE increase) together with cost cutting − Better use of materials improving refuse index and MauM P
Slide 44: Technological and R&D Opportunities
Strategic fit Investment rationale Technological and R&D Opportunities Opportunities from the customer development point of view Common R&D projects (materials, solutions, etc.) A strong step towards becoming a full provider of solutions Combined process to extend the product range Stronger
Slide 45: Technological and R&D Opportunities: know-how
Strategic fit Investment rationale Technological and R&D Opportunities Opportunities from know-how point of view Complementary technologies to manufacture a broader range of products Development of process know-how Best-practice deployment Oil & Gas tube Umbilical Coiled tubing - small OD Extr
Slide 46: Potential of improvement in IBF Results
Strategic fit Investment rationale R&D opportunities Only manufacturer with through combination of complete dimensional different processes range and combinations of fittings and pipes IBF Medium Term Expected EBITDA: 20M€ Significant Synergies that allow to improvements as increase contribution con
Slide 47: Table of Contents
Table of Contents 1 Introduction to IBF 2 Strategic fit 3 Transaction and Impact IBF – A strong step towards becoming a complete Oil&Gas solutions provider 47
Slide 48: Transaction details
Transaction & impact Transaction details TUBACEX takes over 65% of IBF share capital with a call option for the remaining 35% Benefits of the deal Improvement in TUBACEX competitive positioning getting closer to become a solutions provider Commitments and goals of the Strategic Plan are TUBACE
Slide 49: Fit with TUBACEX Strategic Goals
Transaction & impact Fit with TUBACEX Strategic Goals TUBACEX GOALS Double the Reduce Market Be a benchmark Be the company for company's value in 5 Volatility supplier which people want years to work CONTRIBUTION Unique position as Geographic and Management team Expected medium term manufactur
Slide 50: Impact on revenues
Transaction & impact Impact on revenues TUBACEX TUBACEX + IBF* Others 3% Others 3% Revenues by Asia 26% Asia 34% geographical Europe 50% aera Europe 58% USA + Canada 13% USA + Canada 14% Others 3% Others 5% PowerGen Nuclear 3% 15% E&P Powergen E&P Oil&Gas Revenues by Oil&Gas 20% 36% application 39%
Slide 51: Pro-forma financial figures 9M 2014
Transaction & impact Pro - forma financial figures 9M 2014 TBX + IBF €M TBX IBF 9M 2014 Sales 400.0 125.4 525.4 EBITDA 49.0 10.6 59.6 EBITDA Margin 12.3% 8.4% 11.3% EBIT 33.9 6.1 40.0 EBIT Margin 8.5% 4.9% 7.6% EBT 25.2 4.8 30.0 EBT Margin 6.3% 3.8% 5.7% Working Capital 210.1 72.5 282.6 Net Financia
Slide 52: Many thanks for your attention
MANY THANKS FOR YOUR ATTENTION WWW.TUBACEX.COM IBF – A strong step towards becoming a complete Oil&Gas solutions provider 52