Sbm Offshore Nv · EURONEXT:SBMO
Sbm Offshore Nv — FY2018 Earnings Presentation
44 slides from Sbm Offshore Nv's earnings presentation, Feb 14, 2019
Slide 1: Full Year 2018 Earnings Update
Full Year 2018 Earnings Update February 14, 2019
Slide 2: Disclaimer
Disclaimer The companies in which SBM Offshore N.V. directly and indirectly owns investments are separate legal entities. In this presentation “SBM Offshore” and “SBM” are sometimes used for convenience where references are made to SBM Offshore N.V. and its subsidiaries in general. These expressions
Slide 3: Investment case
Investment case TURNKEY LEASE AND OPERATE Core business Project management $ Recurring cash flows Valuation Early cycle growth Contractual backlog Game changing Full life cycle Fast4WardTM Digitalization Innovation Gas Renewables Technology 3 © SBM Offshore 2019. All rights reserved. www.sbmoffshore
Slide 4: Positioned for growth
Positioned for growth Turned the page in 2018 Increasing dividend; launch of share repurchase TM Investing for growth 4 © SBM Offshore 2019. All rights reserved. www.sbmoffshore.com
Slide 5: HSSE
HSSE Safety Process Safety Management Environment Total Recordable Injury Frequency Rate 1 2018 Performance Fleet Green House Gas emission3 • Monitoring enabled by introduction of 2.00 measurement 1.80 Oil Majors • 4 Tier 1 events Benchmark 2 1.60 1.40 SBM Offshore 10 Process Safety Fundamentals -39
Slide 6: Sustainable Development Goals: 2019 targets
Sustainable Development Goals: 2019 targets Post 2019 20% reduction in gas flared under SBM Offshore account additional SDGs 25% of energy in SBM Offshore offices from green providers Total recordable injury frequency rate < 0.29 100% of ‘qualified’ vendors1 sign Supply Chain Charter Volume of oil s
Slide 7: The Market
The Market S B M O f f s h o r e ’s S t r a t e g y FY2018 Financials Outlook 7
Slide 8: FPSO market – prospects funnel 2019-2021
FPSO market – prospects funnel 2019-2021 ~ 40 prospects > 30 potential awards ~ 12 projects within target market Disciplined in bidding and execution: 2+ FPSO project wins per year 8 © SBM Offshore 2019. All rights reserved. www.sbmoffshore.com
Slide 9: Prospective award areas 2019-2021
Prospective award areas 2019-2021 2 1 2 1 1 4 6 4 13 5 1 Prospective FPSO award area Prospective Turret award area 9 © SBM Offshore 2019. All rights reserved. www.sbmoffshore.com
Slide 10: Guyana largest deepwater discovery of past decade
Guyana largest deepwater discovery of past decade Potential Guyana FPSO awards PAYARA 1 LIZA UNITY FUTURE #1 FUTURE #2 Under construction 2019 2020 2021 4 Prospective up to 2021 4,000 Guyana Deepwater Capex (US$ millions) Guyana 3,000 >5bn boe discovered 2,000 to date 1,000 Sources: ExxonMobil, Hess
Slide 11: Brazil remains biggest FPSO market
Brazil remains biggest FPSO market Potential Brazil FPSO awards PQ. DAS BALEIAS MARLIM 2 GATO DO MATO MARLIM 1 CARCARA MERO 2 48 SEAP 1 Producing BÚZIOS 5 ITAPU FUTURE #1-4 ~13 2019 2020 2021 Prospective 25,000 Brazil Deepwater Capex up to 2021 (US$ millions) 6 20,000 Petrobras Brazil Under construc
Slide 12: Total FPSO market awards
To t a l F P S O m a r k e t a w a r d s SBM Offshore capacity for 2+ FPSO projects wins per year 16 14 12 10 8 6 4 2 3 3 1 0 2011 2012 2013 2014 2015 2016 2017 2018 e2019 e2020 e2021 SBM Offshore awards FPSO awards 12 © SBM Offshore 2019. All rights reserved. www.sbmoffshore.com
Slide 13: SBM Offshore's Strategy
The Market S B M O f f s h o r e ’s S t r a t e g y FY2018 Financials Outlook 13
Slide 14: Our strategy
Our strategy Optimize Tr a n s f o r m Innovate Cash flow generation Making Fast4WardTM New products in gas and the industry reference renewables market E N E R G Y. C O M M I T T E D . 14 © SBM Offshore 2019. All rights reserved. www.sbmoffshore.com
Slide 15: Optimize
Optimize Projects update Operational performance FPSO fleet oil production capacity1 Completion FPSO Liza Destiny 50% <75% +31% 1,540 1,180 Castberg Turret 25% <50% 2013 2018 2018 2019 2020 2021 2022 Fleet uptime 99.4 99.1 99.1 98.3 98.0 96.8 Fast4WardTM • 2 hulls under construction • 3rd planned fo
Slide 16: Transform
Tr a n s f o r m Client first Standardization Flawless execution Integrated supply chain Digital solutions Fast-tracking client projects 3rd standardized hull Delivering on time, c. 40 frame agreements 570,000 barrels per day order planned within budget in place end 2018 production capacity digitize
Slide 17: Innovate
Innovate Innovate Renewables Transform Optimize Gas Fast4WardTM Fleet operations Technology development Digital transformation Turrets and Mooring Systems FPSO conversion Core growth Growth potential Energy transition 17 © SBM Offshore 2019. All rights reserved. www.sbmoffshore.com
Slide 18: FY2018 Financials
The Market S B M O f f s h o r e ’s S t r a t e g y FY2018 Financials Outlook 18
Slide 19: Directional overview
Directional1 overview Revenue (US$ millions) Underlying EBITDA (US$ millions) 1,676 1,703 806 784 Reported EBITDA 995 Reported EBITDA 596 FY 2017 FY 2018 FY 2017 FY 2018 Pro-forma backlog (US$ billions) Net debt2 (US$ billions) 16.8 14.8 2.9 2.4 FY 2017 FY 2018 FY 2017 FY 2018 (1) Directional view,
Slide 20: Financial performance per segment
Financial performance per segment Directional, US$ millions Lease and Operate Turnkey Revenues Underlying EBITDA Revenues Underlying EBITDA 1,501 1,298 954 406 824 175 24 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 -86 “Other” Underlying EBITDA FY 2018 US$(64) million vs FY 2017
Slide 21: 2018 Sources and uses of cash
2018 Sources and uses of cash Directional, US$ millions Underlying cash from operations Working capital (excluding tax, working capital and Fast4WardTM) Cash balance Dec. 2017: 878 Sources of cash 751 237 Cash variation 2018: (221)1 35 Uses of cash 385 176 480 54 51 Cash balance Dec. 2018: 657 Tax G
Slide 22: Balance sheet overview
Balance sheet overview Directional, US$ billions Balance sheet is orientated to L&O1 Assets Liabilities and net assets PPE (right of use assets) 0.1 Cash and equivalents 0.7 Net working capital, provisions and other 1.0 Other Financial assets 0.4 Lease liabilities (IFRS16) 0.2 Project debt 2.8 Lease
Slide 23: Business model
Business model Lease and Operate: Turnkey: stable free cash flow generator growth facilitator, cash flow upside SPV SPV SPV Total backlog 14.8 • Asset portfolio with US$1.3 billion net assets • Retained capacity and experience • Non-recourse debt • Flexible resourcing model • Firm cash flow visibili
Slide 24: Financing model
Financing model FPSO value cost margin Cost Project debt Equity Corporate guaranteed debt Non-recourse debt RCF Project financing Project financing Construction phase First Operating phase oil • Refinanced US$1 billion RCF • Equity sell-down is choice based on • Linked to backlog value liquidity/fin
Slide 25: Dividend policy and capital allocation
Dividend policy and capital allocation Dividend policy Capital allocation The Company’s policy is to maintain a stable Dividend dividend, which grows over time. Determination of the dividend is based on the Company’s assessment of its underlying cash flow position. Growth Option for Share Repurchase
Slide 26: Pro-forma cash analysis
Pro-forma cash analysis Directional, US$ millions 6 year backlog outlook Avg. 1,150 2019 2020 2021 2022 2023 2024 ~ 60% conversion1 Cash flow – including Liza Destiny2 Average amount Operating Cash From L&O ~690 Backlog Debt Redemptions ~(360) Interest ~(110) L&O Net Cash Contribution ~220 Corporate
Slide 27: Shareholder returns
Shareholder returns Building track-record of growing dividend + 76% Dividend per share (US$) 1 0.37 0.25 1 0.23 0.21 2016 2017 2018 2019 Dividends US$ millions 45 47 51 75 Share Repurchases US$ millions 166 c. 200 (1) Dividend over 2018, to be paid in 2019 is subject to AGM approval and assumes 205
Slide 28: Outlook
The Market S B M O f f s h o r e ’s S t r a t e g y FY2018 Financials Outlook 28
Slide 29: Outlook and guidance
Outlook and guidance • New cycle with increased confidence in market • Visibility on FPSO awards Outlook • Well positioned for growth • Focus on shareholder returns • Directional Revenues around US$2.0 billion of which: • Lease and Operate around US$1.3 billion Guidance • Turnkey around US$0.7 billi
Slide 30: Appendix
Appendix 31
Slide 31: Backlog and borrowings repayment
Backlog and borrowings repayment Directional, US$ billions Pro-forma directional backlog1 Average of 63% of L&O backlog US$ 14.8 bn represents operating cash flow 1.5 L&O average portfolio duration: 1.3 10.3 years2 1.1 0.9 13.4 0.7 Turnkey (in billion 0.5 US$) backlog 0.3 2019 0.4 0.1 2020 0.1 1.4 2
Slide 32: P&L: Underlying items 2017/2018
P&L: Underlying items 2017/2018 Directional, US$ millions Directional underlying items FY 2017 FY 2018 Impact P&L Segment Total underlying items (283) 188 Turritella gain on disposal - 217 EBITDA Turnkey YME insurance claim 125 37 EBITDA Turnkey Settlement Brazilian prosecutor - (43) EBITDA Other SB
Slide 33: Lease and Operate P&L
Lease and Operate P&L Directional, US$ millions Directional FY 2017 FY 2018 Variance Revenue 1,501 1,298 (203) Gross Margin1 512 413 (99) EBIT 487 418 (69) Depreciation, amortization and impairment (467) (406) 61 EBITDA 954 824 (130) Underlying EBITDA 954 824 (130) Comments Vessels In - Vessels Out
Slide 34: Turnkey P&L
Tu r n k e y P & L D i r e c t i o n a l , U S $ m i l l i o n s FY 2017 FY 2018 Variance Revenue 175 406 231 Gross Margin1 4 93 89 EBIT 11 225 214 Depreciation, amortization and impairment (10) (54) (44) EBITDA 21 278 257 Underlying EBITDA (86) 24 110 Comments Ongoing Projects Castberg turret moori
Slide 35: Group P&L
Group P&L Directional, US$ millions FY 2017 FY 2018 Variance Revenue 1,676 1,703 27 Gross Margin 516 506 (10) Overheads (200) (181) 19 Other operating income / (expense) (199) 189 388 Net impairment gain / (loss) 0 19 19 EBIT 117 533 416 Underlying EBIT 328 314 (14) Depreciation, amortization and im
Slide 36: 2018 Sources and uses of cash
2018 Sources and uses of cash Directional, US$ millions L&O 824 Turnkey 24 Other (64) Underlying EBITDA 784 Provision (33) movements Underlying Cash from Operations Working capital (excluding tax, working capital & Fast4ward) Cash balance Dec. 2017: 878 Sourcesof Sources ofcash cash 751 237 35 Cash
Slide 37: Cash flow statement
Cash flow statement D i r e c t i o n a l , U S $ m i l l i o n s FY 2018 EBITDA 995 Addition/(release) provision and non-cash items (126)1 Changes in operating assets and liabilities (209)2 Income taxes paid (35) Net cash flows from (used in) operating activities 625 Capital expenditures (332) Othe
Slide 38: Balance sheet
Balance sheet Directional, US$ millions Dec-31-17 Dec-31-18 Variance Comment Property, plant & equipment and Asset recognition (IFRS 16) and FPSO Liza Destiny project Capex partially 4,692 4,799 107 Intangibles offset by depreciation Investments in associates and other 304 366 62 Net loan increase t
Slide 39: IFRS 10 & 11 Joint Ventures
I F R S 1 0 & 11 Lease Contract Joint Ventures SBM Share % Directional IFRS Type FPSO N’Goma FL 50% Proportional Equity FPSO Saxi Batuque FL 50% Proportional Equity FPSO Mondo FL 50% Proportional Equity FPSO Cdde de Ilhabela FL 62.25% Proportional Full consolidation FPSO Cdde de Maricá FL 56% Propor
Slide 40: Group net debt and borrowings
Group net debt and borrowings Directional, US$ millions Net debt 1 Average cost of debt 3,500 4.9% 4.8% 2,905 2,000 2,353 500 FY 2017 FY 2018 -1,000 FY 2017 FY 2018 Lease liabilities Other Project finance Cash FY18 borrowings 2 FY18 Undrawn facilities + cash FY 2018 2,821 FY 2018 2,377 RCF Cash Undr
Slide 41: Loans and borrowings
Loans and borrowings US$ millions Net book value as of December 31, 2018 Full Amount IFRS Directional PROJECT FINANCE FACILITIES DRAWN FPSO Cidade de Paraty 524 524 265 MOPU Deep Panuke 202 202 202 FPSO Cidade de Anchieta 339 339 339 FPSO Cidade de Ilhabela 792 792 493 FPSO N’Goma FPSO 257 0 128 Nor
Slide 42: 2019 RCF covenant definitions
2019 RCF covenant definitions Key financial covenant Definition Solvency ratio Tangible net worth1 divided by total tangible assets2 > 25% Interest cover ratio Underlying EBITDA3 divided by net interest payable4 > 4.0 Lease backlog cover ratio Net present value of the lease backlog5 divided by the t
Slide 43: Lease and Operate portfolio
Lease and Operate portfolio L&O portfolio average duration: 10.3 years1 2 Initial lease period Confirmed extension Contractual extension option (1) Assumes the exercise of all lease extensions, assumes accelerated transfer of FPSO Lisa Destiny to the client within 2 years of operation (2) Assumes ac
Slide 44: Delivering the full product lifecycle
Delivering the full product lifecycle Engineering Procurement 60 years of industry firsts Integrated supply chain Leading edge technology Global efficiencies Local sourcing Product Life Extension Construction Leader in FPSO relocation Strategic partnerships World class after sales Unrivalled project