Vallourec Sa · EURONEXT:VK
Vallourec Sa — Q1 2018 Earnings Presentation
32 slides from Vallourec Sa's earnings presentation, May 17, 2018
Slide 1: Q1 2018 Results Investor Presentation
Q1 2018 RESULTS INVESTOR PRESENTATION May 17, 2018 May 17, 2018 Q1 2018 RESULTS – INVESTOR PRESENTATION
Slide 2: Information and Forward-Looking Statements
INFORMATION Quarterly financial statements are unaudited and are not subject to any review Half year financial statements are subject to limited review by statutory auditors Full year consolidated financial statements at 31 December are audited Unless otherwise specified, indicated variation
Slide 3: Q1 2018 Highlights
Q1 2018 HIGHLIGHTS May 17, 2018 Q1 2018 RESULTS – INVESTOR PRESENTATION
Slide 4: Q1 2018 at a Glance
Q1 2018 AT A GLANCE IMPROVED FINANCIAL PERFORMANCE Revenue of €862m, up 10.1% year-on-year (+22.1% at constant exchange rates) Q1 2018 EBITDA improved YoY at -€5m Strong revenue growth YoY in North America CONFIRMATION OF MARKET TRENDS IN O&G U.S. rig count expected to remain robust Higher
Slide 5: Q1 2018 Key Figures
Q1 2018 KEY FIGURES REVENUE (in millions of €) EBITDA(1) (in millions of €) FREE CASH-FLOW(2) (in millions of €) 862 Q1 2017 Q1 2018 Q1 2017 Q1 2018 783 -5 - 21 - 220 - 254 Q1 2017 Q1 2018 YoY revenue increase: mainly driven by Oil & Gas operations in the U.S. despite negative forex YoY EBITDA i
Slide 6: Q1 2018 Financial Results
Q1 2018 FINANCIAL RESULTS May 17, 2018 Q1 2018 RESULTS – INVESTOR PRESENTATION 6
Slide 7: Q1 2018 Revenue by Market
Q1 2018 REVENUE BY MARKET Revenue up 10.1% vs. Q1 2017 +22.1% at constant exchange rates Q1 2018 revenue in millions of € Oil & Gas and as a % of revenue Industry & Other +1.2%1 (+15.3%2) +8.4%1 (+16.9%2) USA: Strong recovery Rebound in volumes along with higher prices Europe: Weakening
Slide 8: Q1 2018 Revenue and EBITDA
Q1 2018 REVENUE AND EBITDA +10.1% €783m 13.7% €862m Revenue 8.4% Positive volume and price/mix effect, essentially -12.0% +22.1% thanks to Oil & Gas operations in the U.S. Negative forex impact EBITDA improved +€16m YoY Industrial margin up €2m Q1 2017 Currency Translation Volume Price/Mix
Slide 9: Q1 2018 vs Q1 2017: EBITDA to Net Income
Q1 2018 VS Q1 2017: EBITDA TO NET INCOME VALLOUREC Q1 Q1 Change Higher EBITDA In millions of euros 2018 2017 YoY Non-recurring impairment and “asset EBITDA (5) (21) +€16m disposals, restructuring and other”: EBITDA as % of revenue -0.6% -2.7% +2.1pts Depreciation of industrial assets (70) (79) -
Slide 10: Q1 2018: Free Cash-Flow
Q1 2018: FREE CASH-FLOW Vallourec Q1 Q1 Change Q4 In millions of euros 2018 2017 (€m) 2017 Cash-flow from operating activities (FFO) (A) (83) (82) -1 (124) Change in operating WCR (B) (152) (104) -48 164 [+ decrease, (increase)] Gross capital expenditure (C) (19) (34) +15 (66) Free cash-flow1 (A)+(B
Slide 11: Q1 2018 Net Debt
Q1 2018 NET DEBT (in millions of €) Net Debt Net Debt as at as at 31 Dec. 2017 31 Mar. 2018 Cash-flow from operating Asset activities Change disposals in WCR1 Gross & other items (1,542) (83) capital expenditure (152) (19) 13 (1,783) Free cash-flow = -€254m Mainly forex impacts 1 Change in Working C
Slide 12: Debt and Liquidity
DEBT AND LIQUIDITY GROSS DEBT BREAKDOWN (in €m) Net debt as at 31 March 2018 Bank & Other Financing (ST) Gross Debt: €2,622m €318m Cash & Cash equivalents: €839m Net Debt: €1,783m Commercial Papers (ST) €491m 31 Mar. Bonds (LT) 2018 €1,494m Liquidity as at 31 March 2018 Bank & Other Financ
Slide 13: Outlook
OUTLOOK May 17, 2018 Q1 2018 RESULTS – INVESTOR PRESENTATION
Slide 14: Outlook for 2018
OUTLOOK FOR 2018 NORTH AMERICA EAMEA Average rig count expected to remain robust O&G: Vallourec anticipates higher bookings with This should allow Vallourec to pass further OCTG positive impacts on deliveries to materialize starting price increases in H2 2018 late H2 2018 Vallourec will also
Slide 15: Appendix
APPENDIX May 17, 2018 Q1 2018 RESULTS – INVESTOR PRESENTATION
Slide 16: Q1 2018 Financials
Q1 2018 FINANCIALS May 17, 2018 Q1 2018 RESULTS – INVESTOR PRESENTATION 16
Slide 17: Revenue Breakdown
REVENUE BREAKDOWN REVENUE BY GEOGRAPHIC REGION In millions of euros Q1 2018 As % of revenues Q1 2017 As % of revenues Change YoY Europe 137 15.9% 115 14.7% 19.1% North America 279 32.4% 187 23.9% 49.2% South America 140 16.2% 163 20.8% -14.1% Asia & Middle East 264 30.6% 276 35.2% -4.3% Rest of Worl
Slide 18: Balance Sheet
BALANCE SHEET (in millions of €) Assets 31-Mar 2018 31-Dec 2017 Liabilities 31-Mar 2018 31-Dec 2017 Equity, Group share 2,193 2,426 Net intangible assets 82 89 Non-controlling interests 443 459 Goodwill 339 348 Total equity 2,636 2,885 Shareholder loan 71 72 Net property, plant and equipment 2,840 2
Slide 19: Capital Expenditure
CAPITAL EXPENDITURE (in millions of €) 909 873 803 677 567 529 388 268 175 152 19 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2018 May 17, 2018 Q1 2018 RESULTS – INVESTOR PRESENTATION 19
Slide 20: 2017 Financials
2017 FINANCIALS May 17, 2018 Q1 2018 RESULTS – INVESTOR PRESENTATION 20
Slide 21: Revenue Breakdown
REVENUE BREAKDOWN REVENUE BY GEOGRAPHIC REGION In millions of euros FY 2017 As % of revenues FY 2016 As % of revenues Change YoY Europe 594 15.8% 647 21.8% -8.2% North America 1,033 27.6% 559 18.9% 84.8% South America 612 16.3% 467 15.7% 31.0% Asia & Middle East 1,175 31.3% 848 28.6% 38.6% Rest of W
Slide 22: FY and Q4 P&L
FY AND Q4 P&L Q4 2017 Q4 2016 Change YoY In millions of euros FY 2017 FY 2016 Change YoY 1,070 838 27.7% REVENUE 3,750 2,965 26.5% 1 (944) (778) 21.3% Cost of sales (3,297) (2,727) 20.9% 126 60 110.0% Industrial margin 453 238 90.3% 11.8% 7.2% +4.6 pts (as % of revenue) 12.1% 8.0% +4.1 pts (117) (11
Slide 23: Balance Sheet
BALANCE SHEET (in millions of €) Assets 31-Dec 2017 31-Dec 2016 Liabilities 31-Dec 2017 31-Dec 2016 Equity, Group share 2,426 3,284 Net intangible assets 89 125 Non-controlling interests 459 494 Goodwill 348 383 Total equity 2,885 3,778 Shareholder loan 72 84 Net property, plant and equipment 2,977
Slide 24: FY and Q4 Free Cash Flow
FY AND Q4 FREE CASH FLOW Q4 Q4 Change Vallourec FY FY Change 2017 2016 (€m) In millions of euros 2017 2016 (€m) (124) (124) - Cash flow from operating activities (FFO) (A) (332) (399) +67 Change in operating WCR (B) 164 196 -32 61 179 -118 [+ decrease, (increase)] (66) (75) +9 Gross capital expendit
Slide 25: Business Appendix
BUSINESS APPENDIX May 17, 2018 Q1 2018 RESULTS – INVESTOR PRESENTATION 25
Slide 26: Oil & Gas Market Fundamentals
OIL & GAS MARKET FUNDAMENTALS DEMAND/SUPPLY BALANCE NEW OIL PRODUCTION CAPACITY REQUIRED mb/d mb/d Production decline rate 104 4.5 4,5 of post-peak conventional +0.9% +0.4% oil fields (per year) 102 3.5 3,5 100 2.5 2,5 Demand growth Demand growth New Policies Scenario Current Policy Scenario 98 1.5
Slide 27: Oil & Gas Market Trends
OIL & GAS MARKET TRENDS E&P CAPITAL SPENDING (€bn) RIG COUNT AND WTI PRICES ($) 800 Latin America 2,500 120 702 Russia & Caspian 2,000 100 600 493 North America 80 1, 500 352 378 Middle East 60 400 1, 000 Europe 40 200 Asia-Pacific 500 20 Africa 0 0 0 Global Capex J-14 J-14 N-14 A-15 S-15 F-16 J-16
Slide 28: Transformation Plan
TRANSFORMATION PLAN STRICT CAPEX DISCIPLINE TRANSFORMATION PLAN EXECUTION ON TRACK AND WORKING CAPITAL MONITORING Savings delivered ahead of plan: Efficient CAPEX management: €315m gross savings in 2 years in millions of € (€164m in 2017, after €151m in 2016) 268 Compared to a target of €400
Slide 29: Vallourec at a Glance
VALLOUREC AT A GLANCE FY 2017 Worldwide presence with c.19,500 employees in more than 20 countries Over 50 production facilities worldwide delivering a large spectrum of products for diversified applications, geographies and sectors Highly innovative with 6 advanced R&D and 4 connection test c
Slide 30: Vallourec Product Offering and Applications
VALLOUREC PRODUCT OFFERING AND APPLICATIONS OIL & GAS POWER GENERATION Copyright: Total CONVENTIONAL POWER PLANT NUCLEAR POWER PLANT Key components Welding for conventional and nuclear power plants Higher efficiency achieved Production riser for ultra super critical conventional coal fired power
Slide 31: With a Fully Invested Industrial Set Up
WITH A FULLY INVESTED INDUSTRIAL SET UP A unique position Two highly competitive routes Global capabilities redeployed with high-end rolling and finishing from Brazil and China with a shift from Europe capabilities in all regions for international O&G markets to Asia and the Americas Centre of techn
Slide 32: Investor Relations Contact
EURONEXT PARIS: ISIN CODE: FR0000120354, TICKER: VK USA: AMERICAN DEPOSITARY RECEIPT (ADR) - ISIN CODE: US92023R2094, TICKER: VLOWY Investor Relations Contact - Vallourec Group Tel: +33 1 49 09 39 76 Email: investor.relations@vallourec.com www.vallourec.com May 17, 2018 Q1 2018 RESULTS – INVESTOR PR