Subsea 7 S.a. · OSL:SUBC
Subsea 7 — Q4 2016 Earnings Presentation
38 slides from Subsea 7's earnings presentation, Mar 2, 2017
Slide 1: Earnings Presentation Fourth Quarter and Full Year 2016
Earnings Presentation Fourth Quarter and Full Year 2016 2 March 2017 1
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: Jean Cahuzac, CEO
subses 7 Jean Cahuzac CEO
Slide 4: 2016 operational highlights
2016 operational highlights • Consistent and safe operational performance with several large projects successfully completed • Vessel utilisation 66% full year and 65% fourth quarter – Active vessel utilisation 80% full year, 78% fourth quarter • $3.4 billion full year order intake, 0.9 book-to-bill
Slide 5: 2016 project highlights
2016 project highlights PLSVs TEN Montrose Aasta Hansteen (Brazil) (Ghana) (UK) (Norway) Hess Stampede WND Ph. 1 EPRS (LoF) (GOM) (Egypt) (Asia Pacific) Catcher Maria Hebron (UK) (Norway) (Canada) 5
Slide 6: 2016 financial highlights
2016 financial highlights Fourth quarter financial highlights Full year financial highlights • Fourth quarter revenue $932m • Full year revenue $3.6bn • Adjusted EBITDA $288m, • Adjusted EBITDA $1,142m, 31% margin 32% margin • Adjusted diluted earnings per • Adjusted diluted earnings per share(1) of
Slide 7: Positioning for the long-term
Positioning for the long-term • Acted early to reduce our capacity and deliver strong performance though the downturn • Protected our differentiated capability, positioning us to outperform over the long-term • Industry conditions remain challenging in the near term • The oil price has stabilised in
Slide 8: Year end Backlog and Q4 order intake
Year end Backlog and Q4 order intake • Backlog of $5.7 billion(1), as at 31 December 2016 • $0.6 billion order intake, including announced awards: − Atoll Development, offshore Egypt − Greater Western Flank Phase 2, offshore Australia − Oda, offshore Norway − Dalmatian (a Subsea Integration Alliance
Slide 9: Business Unit outlook
Business Unit outlook SURF and Conventional • Remaining competitive, with the right project risk profile • Active SURF project tenders include: • Mad Dog 2 (US GoM) • Fortuna (Equatorial Guinea) • KG-D6, R-Cluster (India) • Golfinho (Mozambique) • Skarfjell (Norway) • KG-DWN, block 98/2 (India) • Pi
Slide 10: Ricardo Rosa, CFO
subses 7 Ricardo Rosa CFO
Slide 11: Income statement – key highlights
Income statement – key highlights Three months ended Twelve months ended 31 Dec 16 31 Dec 15 31 Dec 16 31 Dec 15 In $ millions, unless otherwise indicated Unaudited Unaudited Audited Audited Revenue 932 1,025 3,567 4,758 Impairment of Goodwill (90) (521) (90) (521) Net operating (loss)/income (NOI)
Slide 12: Income statement – supplementary details
Income statement – supplementary details In $ millions Three months ended Twelve months ended 31 Dec 16 31 Dec 15 31 Dec 16 31 Dec 15 Unaudited Unaudited Audited Audited Administrative expenses (58) (68) (242) (305) Share of net income of associates and (7) 2 46 63 joint ventures Depreciation and am
Slide 13: Business Unit performance – Q4 2016
Business Unit performance – Q4 2016 Revenue NOI Q4 2016 Q4 2016 (1) $932m $1,025m $46m $106m $3m $99m $142m $85m $204m $153m $923m $705m ($9m) ($9m) ($99m) ($90m) 2016 2015 2016 2015 SURF & i-Tech Corporate (2) Conventional Services (includes Renewables and Heavy Lifting) (1) Net operating income wa
Slide 14: Business Unit performance - Full Year 2016
Business Unit performance - Full Year 2016 Revenue NOI Full Year 2016 Full Year 2016 (1) $3,567m $4,758m $611m $665m $29m $446m $22m $38m $178m $377m $841m $4,283m $717m $3,011m ($144m) ($198m) 2016 2015 2016 2015 SURF & i-Tech Corporate Conventional Services (includes Renewables and Heavy Lifting)
Slide 15: Our Adjusted EBITDA margin performance
Our Adjusted EBITDA margin performance Adjusted EBITDA margin - Historical performance 32% 26% 21% 18% 18% 16% 2011 2012 2013 2014 2015 2016 2017e • Adjusted EBITDA percentage margin driven by: – Alignment of capacity and cost with activity – Project execution and de-risking – Mix of activity and ph
Slide 16: 2016 expenses overview
2016 expenses overview $1.2 billion vessel and workforce cost savings since 2014 $ bn 7 6.0bn 6 0.8 5 0.4 4.2bn 4 2.0 0.8 3.0bn 3 0.4 0.6 2 1.4 0.4 2.8 1.0 1 1.6 1.0 0 2014 2015 2016 • Vessels and other costs(2): Including vessel costs, onshore facilities, IT infrastructure and other fixed overheads
Slide 17: Summary of full year 2016 cash flow
Summary of full year 2016 cash flow $m 1,142 40 (300) (106) 1,676 (18) (141) 112 947 Cash at 31 EBITDA W/Cap Capex Repurchase of Acquisition of Tax Paid Other Cash at 31 December Movement Convertible business December 2015 Notes 2016 • Net cash of $1.2 billion as at 31 December 2016 compared to $423
Slide 18: Our priorities for capital allocation
Our priorities for capital allocation 1. Invest to •Completion of new-build vessel programme grow and •Focused investment in technology and innovation strengthen our •Integrated solutions with OneSubsea business •Offered to acquire remaining 50% of SHL 2. Maintain an •Net cash $1.2 billion at 31 Dec
Slide 19: Financial guidance
Financial guidance 2017 Guidance Revenue Broadly in line with 2016 Adjusted EBITDA percentage margin Significantly lower than 2016 Administrative expense $190 million - $210 million Net finance cost $10 million - $15 million Depreciation and Amortisation $370 million - $390 million Full year effecti
Slide 20: Jean Cahuzac, CEO
subses 7 Jean Cahuzac CEO
Slide 21: Our focus on performance
Our focus on performance • We acted early to deliver through the downturn and position for long-term success in our core market segments: SURF and Conventional, i-Tech Services and Renewables and Heavy Lifting Delivering through the downturn Reduce Reduce Maintain Act early capacity costs capability
Slide 22: Delivering through the downturn
Delivering through the downturn Cost reduction and resizing Workforce (‘000s) actions taken early 14.4 13.4 • Centralised expertise in 9.8 8.5 our Global Project 8.0 Centre offices • Workforce reduced by Q4 '13 Q4 '14 Q4 '15 Q4 '16 Q1 '17E approximately 40% • Six chartered vessels Vessels returned t
Slide 23: Positioning for the long-term - Innovation
Positioning for the long-term - Innovation Technology investment Our five strategic maintained technology programmes • Invested through the Riser cycle to develop new Systems enabling and cost- reducing technologies Flowline Systems • Owns one of the largest and most recent groups of patents in our
Slide 24: Positioning for the long-term - Investment
Positioning for the long-term - Investment New-build vessel programme • Six vessel new-build programme completed in Seven Waves Seven Rio January 2017 • Total cost $1.9 billion • Four high-specification flex-lay vessels on long term contracts with Seven Sun Seven Cruzeiro Petrobras • Seven Arctic an
Slide 25: Positioning for the long-term – Market focus
Positioning for the long-term – Market focus Beatrice offshore wind farm Presence in Renewable and Heavy Lifting • $1.3 billion EPCI contract, offshore N.E. Scotland • Renewables and Heavy • 84 jacket-based wind turbine Lifting are long-term foundations – 120,000t steel growth markets • Fully integr
Slide 26: Positioning for the long term - Alliances
Positioning for the long term - Alliances Collaboration – Alliances and Partnerships • We are working collaboratively with industry partners and clients to develop and deliver optimal solutions Integrated Early Client solutions engagement partnerships 26
Slide 27: A gradual market recovery
A gradual market recovery • Industry conditions remain challenging in the near term • We are investing strategically to enhance our differentiated offering • We are innovating and working collaboratively to deliver optimal solutions for our clients • The oil price has stabilised in recent months and
Slide 28: Q&A
subsed 7 Q&A
Slide 29: Appendix
Appendix • Our global presence • Major project progression • Our fleet • Adjusted EBITDA • Segmental analysis • Cash Flow • Balance Sheet 29 29
Slide 30: Our global presence
Our global presence • Beatrice Wind Farm, BOWL • Catcher, Premier • Culzean, Maersk • Martin Linge, Total • Callater, Apache • Aasta Hansteen, Statoil • Western Isles, Dana • Maria, Wintershall • USC & Pipelay, Shell • Mariner, Statoil • SCIRM, BP • Oda, Centrica • DSVi, Various • Stampede, Hess • C
Slide 31: Major project progression
Major project progression Continuing projects >$100m between 5% and 95% complete as at 31 December 2016 excluding PLSV and Life of Field day-rate contracts Mariner (UK/Norway) Clair Ridge (UK) Announced Aasta Hansteen (Norway) size of project SLMP (Norway) Catcher (UK) Major (Over $750m) West Nile D
Slide 32: Our fleet as at 31 December 2016
Our fleet as at 31 December 2016 • 29 vessels in the active fleet 7 Chartered: 22 Owned: • Rockwater 2 • Seven Antares • Skandi Acergy • Seven Borealis • Seven Atlantic • Seven Waves • Grant Candies • Seven Oceans • Seven Falcon • Seven Pacific • Normand Subsea • Seven Condor • Seven Osprey • Seven
Slide 33: 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 period-on-period or with o
Slide 34: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net operating income to Adjusted EBITDA Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended For the period (in $millions) 31 Dec 2016 31 Dec 2015 31 Dec 2016 31 Dec 2015 Net operating (loss)/income (45) (415) 521 144 Depreciation, amortisat
Slide 35: Segmental analysis
Segmental analysis For the three months ended 31 December 2016 In $ millions (unaudited) SURF & Conventional i-Tech Services Corporate TOTAL Revenue 705 85 142 932 Net operating income/(loss) excluding goodwill 153 (9) (99) 46 impairment Impairment of goodwill (90) - - (90) Net operating income/(los
Slide 36: Summary of full year 2016 cash flow
Summary of full year 2016 cash flow $ millions Cash and cash equivalents at 31 Dec 2015 947 Increase of $40 million in net Net cash generated from operating activities 1,046 operating liabilities Included capital expenditure of Net cash flow used in investing activities (199) $300 million mainly on
Slide 37: Summary balance sheet
Summary balance sheet 31 Dec 31 Dec 31 Dec 31 Dec 2016 2015 2016 2015 In $ millions Audited Audited In $ millions Audited Audited Assets Equity & Liabilities Total equity 5,537 5,346 Non-current assets Non-current liabilities Goodwill 628 767 Non-current portion of borrowings - 524 Property, plant a
Slide 38: 1-Mar-17 Page 38
1-Mar-17 Page 38