Subsea 7 S.a. · OSL:SUBC
Subsea 7 — Q3 2014 Earnings Presentation
37 slides from Subsea 7's earnings presentation, Nov 12, 2014
Slide 1: Earnings Presentation Third Quarter 2014
Earnings Presentation Third Quarter 2014 12 November 2014 12:00 noon UK time
Slide 2: Forward-looking statements
Forward-looking statements Certain statements made in this announcement may include ‘forward-looking statements’. These statements may be identified by the use of words like ‘anticipate’, ‘believe’, ‘could’, ‘estimate’, ‘expect’, ‘forecast’, ‘intend’, ‘may’, ‘might’, ‘plan’, ‘predict’, ‘project’, ‘s
Slide 3: A strong quarter both operationally and financially
A strong quarter both operationally and financially FINANCIAL OPERATIONAL • Revenue increased 22% from prior year • Good overall project execution third quarter • 91% Group vessel utilisation, up from 86% • 22% Adjusted EBITDA margin during Q3 2013 • Diluted earnings per share of $0.57, up • Further
Slide 4: Backlog and order in-take
Backlog and order in-take • Backlog ended Q3 2014 at $9.4 billion, net of $300 million negative foreign exchange impact • Order intake in Q3: $0.4 billion, which included contracts below $50 million value, escalations on existing contracts and is before foreign exchange impact • New award announced
Slide 5: Income statement – key highlights
Income statement – key highlights Three months ended 30 Sept 14 30 Sept 13 In $ millions, unless otherwise indicated Revenue 1,902 1,564 Net operating income (NOI) 324 269 Income before taxes 288 219 Taxation (83) (60) Net income 206 160 Adjusted EBITDA1 426 359 Adjusted EBITDA margin 22.4% 23.0% Di
Slide 6: Territory performance – Q3 2014
Territory performance – Q3 2014 AFGOM Brazil $624m $249m $83m $88m Revenue NOI Revenue NOI APME NSC $784m $246m $109m $35m Revenue NOI Revenue NOI Note: excludes contribution from Corporate segment Page 6
Slide 7: Income statement – supplementary details
Income statement – supplementary details Three months ended In $ millions 30 Sep 14 30 Sept 13 Administrative expenses (86) (74) Share of net income of associates and joint ventures 24 49 Net operating income 324 269 Net finance costs (2) (12) Other gains and losses (34) (38) Income before taxes 288
Slide 8: Overview of YTD 2014 cash flow
Overview of YTD 2014 cash flow $ millions Cash and cash equivalents at 31 Dec 2013 650 * Includes decrease in net operating Net cash generated from operating activities 1,070 assets of $170m Includes capital expenditure of $635m Net cash flow used in investing activities (600) mainly on new vessel c
Slide 9: Summary balance sheet
Summary balance sheet 30 Sept 31 Dec 30 Sept 31 Dec In $ millions 2014 2013 In $ millions 2014 2013 Assets Equity & Liabilities Non-current assets Total equity 6,842 6,612 Goodwill 2,578 2,585 Non-current liabilities Property, plant and equipment 4,419 4,098 Non-current portion of borrowings 648 636
Slide 10: Financial guidance
Financial guidance Full year 2014 guidance reaffirmed and refined: • Group revenue expected to increase from 2013 level • Adjusted EBITDA expected to increase moderately from that achieved in 2013 after adding back the $355 million full life loss recognised on the Guará-Lula NE project • Capex: $950
Slide 11: Capital expenditure for on-going vessel new-build programme
Capital expenditure for on-going vessel new-build programme1 $ millions 397 557 595 225 215 Up to 31 Dec 2013 2014 E 2015 E 2016 E Forecast Actual spend to date Note: 1 Includes four PLSVs being constructed for long-term contracts with Petrobras (including the Seven Waves, which was operational from
Slide 12: Fleet investments to meet growth objectives: vessel new-build programme
Fleet investments to meet growth objectives: vessel new-build programme Ship Vessel Type Rationale Operational Seven Waves Under 5-year contract with 2nd Quarter 2014 Petrobras Pipelay Support Vessel (commenced operations (PLSV) mid May) Seven Rio Under 5-year contracts 4th Quarter 2015 Seven Sun wi
Slide 13: Market overview
Market overview SURF: • Uncertainty around timing of awards continues; a number of large potential SURF market awards have been postponed from 2014 to 2015, for various reasons • Recent oil price weakness creates additional uncertainty around project timing Life-of-Field: • Demand for Life-of-Field
Slide 14: Market outlook – Africa and Gulf of Mexico
Market outlook Africa SURF: • Tendering in West and East Africa remains high but timing of market awards remains uncertain • Potential market awards over the next twelve months include: – West Nile Delta - Zinia Phase 2 – Bonga SouthWest - Chissonga Conventional and Hook-up: • One significant tender
Slide 15: Market outlook – APME
Market outlook APME SURF: • Potential market awards for large projects in Indonesia and India over the next twelve months: – KG-D6 and Vashista in India - Gehem-Gendalo in Indonesia • Market award of large SURF projects unlikely near-term in Australia as local development costs remain a major challe
Slide 16: Market outlook – Brazil
Market outlook Brazil Territory financial turn-around in line with expectations • Good operational progress on the Guará-Lula NE project since the beginning of the year – 22 of 27 risers successfully installed by end of Q3 2014 – completion of risers installation expected by year end 2014, according
Slide 17: Market outlook – North Sea and Canada
Market outlook North Sea and Canada SURF: • A number of tendered projects have been postponed to 2015 • Statoil postponing capex projects in Norway until 2015 and 2016 • Our technology remains a key differentiator – Strong interest from operators for our Bundle solution Life-of-Field: • Demand has b
Slide 18: Examples of Subsea 7 technology application
Examples of Subsea 7 technology application • Bubi® pipe – First successful reeled installation on the Guará-Lula project in Brazil – New application with the Aasta Hansteen project in Norway in 2015 – Several other opportunities • High performance Pipe-in-Pipe solutions – Electric heat-traced flow
Slide 19: Adapting to changing market conditions
Adapting to changing market conditions • With our clients and suppliers: – Early engagement to help lower the overall cost of field developments • F.E.E.D., engineering and procurement expertise • Integrated project teams and new business model • Proprietary technologies • Standardisation • Internal
Slide 20: Summary
Summary • A strong quarter both operationally and financially – 22% Adjusted EBITDA margin; $0.57 diluted EPS – Good overall project execution and significant progress on the Guará- Lula NE project in Brazil – High Group vessel utilisation at 91% • Order backlog fell to $9.4 billion, net of $300 mil
Slide 21: Appendix
subses 7 Appendix www.subsea7.com seabed-to-surface
Slide 22: Major project progression
Major project progression Continuing projects >$100m between 5% and 95% complete as at 30 September 2014 excl. PLSVs and Life-of-Field day-rate contracts Eldfisk (Norway) Knarr (Norway) Guará Lula NE (Brazil) Clair Ridge (UK) Brazil Enochdhu (UK) Africa, Gulf of Ofon 2 (Nigeria) Mexico & Gorgon HLTI
Slide 23: Backlog progression
Backlog progression Backlog progression ($ billions) 11.8 11.8 11.6 11.2 10.2 10.4 9.4 9.1 8.7 8.3 8.1 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Page 23
Slide 24: Segmental analysis
Segmental analysis For the three months ended 30 September 2014 In $ millions AFGOM APME BRAZIL NSC CORP TOTAL Revenue 624 246 249 784 (1) 1,902 Net operating income from ops 83 35 88 109 10 324 Finance income 4 Other gains and losses (34) Finance costs (6) Income before taxes 288 For the three mont
Slide 25: Adjusted EBITDA
Adjusted EBITDA • Adjusted earnings before interest, taxation, depreciation and amortisation (‘Adjusted EBITDA’) is a non-IFRS measure that represents net income before additional specific items that are considered to impact the comparison of the Group’s performance either year-on-year or with other
Slide 26: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net operating income to Adjusted EBITDA Three Months Ended Three Months Ended For the period (in $millions) 30 Sep 2014 30 Sep 2013 Net operating income 324 269 Depreciation, amortisation and mobilisation 99 88 Impairment 3 2 Adjusted EBITDA 426 359 Revenue 1,902 1,
Slide 27: Our operational facilities
Our operational facilities Spoolbases Fabrication Yards Page 27
Slide 28: Rigid pipelay/heavy lift assets
Rigid pipelay/heavy lift assets 1 1 1 1 Owned and operated by a joint venture Page 28
Slide 29: Diving Support Vessels
Diving Support Vessels 1 1 Formerly Seven Havila Page 29
Slide 30: Construction/vertical flex-lay assets
Construction/vertical flex-lay assets 1 1 2 1 1 Long-term charter 2 Long-term charter from a vessel-owning joint venture Page 30
Slide 31: Construction/horizontal flex-lay assets
Construction/horizontal flex-lay assets 1 2 2 1 Formerly the Seven Sisters 2 Long-term charter Page 31
Slide 32: Life-of-Field/Light Construction Vessels
Life-of-Field/Light Construction Vessels 1 2 2 2 3 2 2 1 Long-term charter from a vessel-owning joint venture 2 Long-term charter 3 Call-out contract Page 32
Slide 33: Other assets
Other assets Jack-up vessel Trenching vessel 1 … and over 175 ROVs 1 Long-term charter Page 33
Slide 34: Under construction
Under construction Construction/vertical Flex-lay Vessels Diving Support Vessel Page 34
Slide 35: Vessel Divestments from 2011 to the end of Q3 2014
Vessel Divestments from 2011 to the end of Q3 2014 Rigid Pipelay / Construction: Jun 2011 Sep 2011 Jan 2013 DSV: Construction / Horizontal Flex-lay: Jan 2013 Aug 2013 LOF / Light Construction: Aug 2011 Feb 2013 Page 35
Slide 36: Terminated Long-Term Vessel Charters from 2011 to the end of Q3 2014
Terminated Long-Term Vessel Charters from 2011 to the end of Q3 2014 DSV: May 2011 LOF / Light Construction: Dec 2012 Jan 2014 Jan 2014 Mar 2014 Page 36
Slide 37: Page 37
seabed-to-surface www.subsea7.com