Slide 1: Third Quarter 2023 Results
Third Quarter 2023 Results November 16, 2023
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements This presentation includes forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms as “believe”, “expect”, “anticipate”, “may”, “assume”, “plan”, “intend”, “will”, “shoul
Slide 3: Agenda
Agenda Topic Speaker Slide 1 Q3 2023 Highlights Philippe Guillemot, Chairman & Chief Executive Officer 4 2 Market & Commercial Environment Philippe Guillemot, Chairman & Chief Executive Officer 8 3 Q3 Results Review Sascha Bibert, Chief Financial Officer 13 4 Outlook & Key Takeaways Philippe Guillem
Slide 4: Q3 2023 Highlights
1 Q3 2023 Highlights Philippe Guillemot Chairman & Chief Executive Officer
Slide 5: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights Results & Outlook Continued New Vallourec Execution and Balance Sheet Deleveraging • EBITDA of €222m up €24m YoY driven by robust Tubes profitability • Tubes EBITDA of €193m (up €25m YoY) supported by 20% YoY average selling price increase and overall strong operating p
Slide 6: The New Vallourec Plan
The New Vallourec Plan Key objectives of the New Vallourec plan New Vallourec production footprint (2024) Primary Financial Strategic Goals Targets North America France Domestic Capacity for Finishing and Domestic Demand Niche Products Saudi Arabia €230m EBITDA / €250m FCF Local Value-Add East Asia
Slide 7: Update: New Vallourec Near-Term Targets
Update: New Vallourec Near-Term Targets Year-End Target Current Status Tube production to be finalized imminently, ahead of Closure of German tube operations schedule Final phases of project underway, full benefits to be Execution of €110m capex program in Brazil realized in 2024 Cost reductions exp
Slide 8: Market & Commercial Environment
3 Market & Commercial Environment Philippe Guillemot Chairman & Chief Executive Officer
Slide 9: US OCTG Market: Expecting Stabilization in Near-Term
US OCTG Market: Expecting Stabilization in Near-Term Rig count appears to be stabilizing Imports at multi-year lows OCTG prices near global averages US Horizontal Rig Count Monthly US OCTG Imports (Th. Tonnes) Seamless OCTG Price ($ / Tonne) 800 350 5,000 700 4,500 4,277 4,354 600 300 4,062 500 4,00
Slide 10: International OCTG Market: Broad-Based Demand Strength
International OCTG Market: Broad-Based Demand Strength International rig count holding at healthy levels Market pricing solid, new order prices increasing Onshore Rig Count Offshore Rig Count Seamless OCTG Price ($ / Tonne) Onshore (L Axis) Offshore (R Axis) Middle East North Sea 3,500 800 250 2,920
Slide 11: Tubes Overview: Profitability Remains Robust
Tubes Overview: Profitability Remains Robust Tubes profitability down sequentially, up YoY Key business highlights Tubes EBITDA / Tonne (€) • Tubes results improved YoY but down sequentially 832 due to US market dynamics • EBITDA outside of US continues to grow driven by strong market conditions and
Slide 12: Mine & Forest Overview
Mine & Forest Overview Mine production down slightly in Q3 Key business highlights Iron Ore Production Sold (Million Tonnes) • Mine EBITDA flattish year-over-year due to 1.9 offsetting iron ore price and non-cash IAS 41 forest 1.8 revaluation impacts 1.5 1.4 1.5 • Expect production sold to be 1.7m t
Slide 13: Q3 Results Review
4 Q3 Results Review Sascha Bibert Chief Financial Officer
Slide 14: Key Group Figures
Key Group Figures Revenues EBITDA € Million € Million 1,282 222 1,142 198 (11%) +12% Q3 2022 Q3 2023 Q3 2022 Q3 2023 Adjusted Free Cash Flow Net Debt € Million € Million 217 868 (€127)m 741 +€274m (57) Q3 2022 Q3 2023 Q2 2023 Q3 2023 Please see “Definitions of Non-GAAP Financial Data” in the Appendi
Slide 15: Tubes Production and Revenue Details
Tubes Production and Revenue Details Volume Sold Average Selling Price Revenues Thousand Tonnes € / Tonne € Million 462 3,115 1,197 2,591 1,068 (26%) 343 +20% (11%) Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Revenue Mix by Geography Revenue Mix by Market % of Q3 2023 Revenues % of Q3 2023 Reven
Slide 16: Tubes Profitability
Tubes Profitability EBITDA and EBITDA Margin EBITDA per Tonne € Million and % of Revenues € / Tonne 563 193 168 +15% +55% 364 18% 14% Q3 2022 Q3 2023 Q3 2022 Q3 2023 Please see “Definitions of Non-GAAP Financial Data” in the Appendix 16
Slide 17: Mine & Forest Performance
Mine & Forest Performance Production Sold Average Iron Ore Price Million Tonnes $ / Tonne (Quarterly Average) 1.8 114 103 1.5 +10% +21% Q3 2022 Q3 2023 Q3 2022 Q3 2023 Revenues EBITDA € Million € Million and % of Revenues 82 88 +7% 38 39 +1% 47% 44% Q3 2022 Q3 2023 Q3 2022 Q3 2023 Please see “Defini
Slide 18: Group Financial Analysis
Group Financial Analysis YoY Revenue Bridge YoY EBITDA Bridge € Million € Million 127 231 7 7 9 67 20 310 1,281 1,142 198 67 222 Q3 2022 Forex Volume Price / Mix Mine & Q3 2023 Q3 2022 Forex Volume Price / Cost Mine & Other Q3 2023 Forest Mix Inflation Forest SG&A Expense Trend EBITDA to Net Income
Slide 19: Group Cash Flow Bridge
Group Cash Flow Bridge € Million 97 11 8 51 54 63 4 222 23 217 171 150 127 EBITDA Non-cash Financial Tax Adj. Chg. in Gross Adj. Restruct. Asset Total Non-cash (Increase) items in cash out payments operating working capital free cash & non- disposals & cash adj. to net decrease EBITDA cash flow capi
Slide 20: Net Debt and Liquidity
Net Debt and Liquidity Net Debt Liquidity € Million € Million 1,493 1,590 1,498 1,391 190 1,130 181 1,203 185 1,000 462 868 189 462 312 741 703 462 412 938 894 855 552 291 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Cash and cash equivalents Available RCF Availabl
Slide 21: Outlook & Key Takeaways
5 Outlook & Key Takeaways Philippe Guillemot Chairman & Chief Executive Officer
Slide 22: Earnings and Cash Flow Outlook
Earnings and Cash Flow Outlook • Tubes: continuation of offsetting US and international pricing dynamics • Expect improvement in International EBITDA due to strong market environment and further improved execution • Expect lower pricing in the US, largely offset by a recovery in volumes Q4 2023 • Mi
Slide 23: Key Takeaways
Key Takeaways We are on track to realize the initial €230m EBITDA benefit of the 1 New Vallourec plan in 2024 and see more opportunities ahead The premium tubes business remains in a multi-year upturn 2 due to robust customer activity and constrained supply We remain on track to deleverage our balan
Slide 24: Appendices
Appendices Y vallourec
Slide 25: Analyst Toolkit
Analyst Toolkit EBITDA €1,075m - €1,175m Cash Flow Items Financial cash out ~€150m Tax payments ~€175m Gross capital expenditures ~€220m of which: Recurring investment ~€150m of which: New Vallourec implementation ~€70m Restructuring charges & non-recurring items ~€350m Please see “Definitions of No
Slide 26: Key Performance Indicators
Key Performance Indicators Q3 2023 Q2 2023 Q3 2022 QoQ chg. YoY chg. Volume sold* 343 396 462 (14%) (26%) Revenue (€m) 1,068 1,279 1,197 (16%) (11%) Tubes Average Selling Price (€) 3,115 3,226 2,591 (3%) 20% EBITDA (€m) 193 330 168 (42%) 15% Capex (€m) 44 61 29 (28%) 52% Volume sold* 1.8 1.9 1.5 (5%
Slide 27: Tubes Revenue Breakdown
Tubes Revenue Breakdown Revenue by Region QoQ YoY in € million Q3 2023 Q2 2023 Q3 2022 % chg. % chg. North America 460 663 544 (31%) (16%) South America 198 229 212 (13%) (6%) Middle East 162 157 118 3% 37% Europe 116 102 135 14% (14%) Asia 80 73 100 10% (20%) Rest of World 52 56 87 (7%) (41%) Total
Slide 28: Income Statement
Income Statement € million, unless noted Q3 2023 Q2 2023 Q3 2022 QoQ chg. YoY chg. Revenues 1,142 1,358 1,282 (216) (140) Cost of sales (818) (890) (1,004) 72 186 Industrial margin 324 468 278 (144) 46 (as a % of revenue) 28.4% 34.5% 21.7% (6.1) pp 6.7 pp Selling, general and administrative expenses
Slide 29: Balance Sheet
Balance Sheet In € million Assets 30-Sep-23 31-Dec-22 Liabilities 30-Sep-23 31-Dec-22 Equity - Group share 2,120 1,643 Net intangible assets 45 37 Non-controlling interests 53 42 Goodwill 42 40 Total equity 2,173 1,685 Net property, plant and equipment 1,886 1,829 Bank loans and other borrowings (A)
Slide 30: Cash Flow Summary
Cash Flow Summary In € million Q3 2023 Q2 2023 Q3 2022 QoQ chg. YoY chg. EBITDA 222 374 198 (152) 24 Non-cash items in EBITDA 11 (21) (39) 32 50 Financial cash out (8) (61) (9) 53 1 Tax payments (54) (60) (18) 6 (36) Adjusted operating cash flow 171 232 132 (61) 39 Change in working capital 97 8 (13
Slide 31: Financial Indebtedness and Liquidity
Financial Indebtedness and Liquidity Financial Indebtedness In € million 30-Sep-23 31-Dec-22 8.500% Bonds due 2026 1,113 1,135 1.837% PGE due 2027 227 220 (a) ACC ACE 271 282 Other 68 43 Total gross financial indebtedness 1,679 1,681 Cash and cash equivalents 938 552 Total net financial indebtedness
Slide 32: Definitions of Non-GAAP Financial Data and Concepts
Definitions of Non-GAAP Financial Data and Concepts Adjusted free cash flow is defined as adjusted operating cash flow +/- change in operating working capital and gross capital expenditures. It corresponds to net cash used in operating activities less restructuring and non-recurring items +/- gross
Slide 33: Definitions of Non-GAAP Financial Data and Concepts
Definitions of Non-GAAP Financial Data and Concepts Free cash flow, as previously defined, may continue to be derived as follows: total cash generation - asset disposals & other cash items. This is also defined as EBITDA adjusted for changes in provisions, less interest and tax payments, changes in
Slide 34: Definitions of Non-GAAP Financial Data and Concepts
Definitions of Non-GAAP Financial Data and Concepts Net working capital requirement is defined as working capital requirement net of provisions for inventories and trade receivables; net working capital requirement days are computed on an annualized quarterly sales basis. Non-cash adjustments to net
Slide 35: Share Information and Financial Calendar
Share Information and Financial Calendar Share Information Financial Calendar Euronext Paris • March 1st, 2024: Publication of Fourth Quarter ISIN code: FR0013506730 and Full Year 2023 Results Ticker: VK • May 16th, 2024: Publication of First Quarter 2024 Results USA: American Depositary Receipt (AD