Saipem S.p.a. · MIL:SPM
Saipem — FY2021 Earnings Presentation
48 slides from Saipem's earnings presentation, Mar 25, 2022
Slide 1: Full Year 2021 Results, Updated 2022-25 Plan and Financing Package
FULL YEAR 2021 RESULTS, UPDATED 2022-25 PLAN AND FINANCING PACKAGE March 25th, 2022 0
Slide 2: Disclaimer
Disclaimer NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION This communication does n
Slide 3: Agenda
CEO introduction FY 2021 results Strategic plan and financing package Agenda Closing remarks Q&A 2
Slide 4: Our future – Saipem investment case
Our future – Saipem investment case New organization and executive team Backlog review de-risks portfolio and enhances visibility of future results Q4 results confirm momentum of growth cycle in O&G Revised 4Y strategic plan accelerates deployment of key priorities Comprehensive financing package su
Slide 5: FY 2021 Key Highlights
FY 2021 Key Highlights €7.2bn €24.7bn Order Intake Backlog1 O&G growth cycle Sizable backlog -€1.2bn €1.5bn Adjusted EBITDA Net Debt post IFRS-16 After €1bn impact of Backlog review Better than anticipated 1. Of which c. 1.9 B€ non-consolidated @ year-end 2021 4
Slide 6: Q4 2021 – positive momentum
Q4 2021– positive momentum Contract acquisitions Drilling Offshore Drilling Onshore driven by E&C +12% Revenues +22% Revenues >5x Order Intake Q4 vs Q3 Q4 vs Q3 Q4 vs Q3 +29% Adj. EBITDA +26% Adj. EBITDA 1.3x Q4 Book to Bill Q4 vs Q3 Q4 vs Q3 Group EBITDA 120M€ Q4 adjusted EBITDA w/o backlog review
Slide 7: Our future – Saipem investment case
Our future – Saipem investment case New organization and executive team Backlog review de-risks portfolio and enhances visibility of future results Q4 results confirm momentum of growth cycle in O&G Revised 4Y strategic plan accelerates deployment of key priorities Comprehensive financing package su
Slide 8: Agenda
CEO introduction FY 2021 results Strategic plan and financing package Agenda Closing remarks Q&A 7
Slide 9: Backlog review in a nutshell
Backlog review in a nutshell Review perimeter Outcomes 22 projects covering c.88% of E&C backlog1 Europe Conventional, Infrastructure, Margin revised on 8 Offshore Wind projects Americas: Middle East: SURF, Conventional, Gas Floaters Monetiz. & Upstream c.1 B€ of negative EBITDA impact accounted in
Slide 10: FY 2021 results - YoY comparison
FY 2021 results - YoY comparison Revenue (M€) Adjusted EBITDA1 (M€) Adjusted net result1 (M€) 614 7,342 6,875 -268 -1,192 -1,914 FY20 FY21 FY20 FY21 FY20 FY21 8.4% n.m. Adj. EBITDA (%) 9 1. Excluding special items
Slide 11: FY 2021 results – P&L YoY comparison
FY 2021 results – P&L YoY comparison Saipem Group – Adjusted Income Statement1 M€ FY 20 FY 21 Var. Revenue 7,342 6,875 (467) Total costs (6,728) (8,067) (1,339) EBITDA 614 (1,192) (1,806) margin 8.4% n.m. D&A (591) (521) (70) EBIT 23 (1,713) (1,736) Financial expenses (166) (140) 26 Result from equi
Slide 12: FY 2021 net result - Reconciliation adjusted vs reported
FY 2021 net result - Reconciliation adjusted vs reported Net Result (M€) Costs from Covid-19, safety first Health & Cost mainly related to management of FY21 Safety Write- FY21 pandemic and safeguarding people’s health Adjusted (Covid-19) Others1 down2 Reported o Cost of personnel on stand-by o Pers
Slide 13: Statutory equity share capital reduced by over one third
Statutory equity share capital reduced by over one third Saipem Group Balance Sheet (M€) Statutory Balance Sheet (M€) FY 20 FY 21 Var. FY 20 FY 21 Var. Fixed assets 4,413 4,200 (213) Fixed assets 2,884 1,007 (1,877) Net current asset (2) (2,070) (2,068) Net current asset 366 81 (285) Employee benefi
Slide 14: Year-end 2021 net debt better than anticipated
Year-end 2021 net debt better than anticipated FY 2021 Net Debt Evolution (B€) 0.18 1.39 (1.02) 0.32 1.54 1.23 0.35 0.16 1.22 (0.66) 0.30 0.87 Net debt IFRS 16 Net debt Adjusted Cash Backlog Delta WC Capex Others 1 Net debt IFRS 16 Net debt 31-Dec-2020 impact 31-Dec-2020 Net Result Special review in
Slide 15: Debt maturity contractual profile
Debt maturity contractual profile @ December 31, 2021 Debt original contractual maturities (M€) – Gross debt total 3.5B€ 1,021 Bonds Billion € FY 21 168 708 ECA Facilities Gross Debt 3.5 263 113 566 560 Bank Facilities 500 (Total liquidity) (2.3) 90 95 66 60 Other Debt Net Debt (pre IFRS 16) 1.2 500
Slide 16: FY 2021 backlog - Well-diversified and sizeable backlog
FY 2021 backlog - Well-diversified and sizeable backlog IFRS Backlog (M€) E&C Offshore Drilling Offshore o/w 254 M€ E&C Onshore1 Drilling Onshore in Russia 22,400 6,875 7,208 22,733 347 256 1,588 236 1,497 394 2,716 360 518 3,286 Billion € December 31, 2021 2,848 4,000 IFRS backlog 22.7 13,439 14,00
Slide 17: Agenda
CEO introduction FY 2021 results Strategic plan and financing package Agenda Closing remarks Q&A 16
Slide 18: Minor exposure to Russia
Minor exposure to Russia Full compliance Limited share Negligible Cash advances with applicable of Russian potential cash are in balance regulation projects in flow impact with actual backlog1 progress No new acquisitions in Russia included in 2022-25 plan 17 1. 1% of IFRS Backlog; 8% of backlog inc
Slide 19: Key guidelines of revised strategic plan
Key guidelines of revised strategic plan 1 Full-life project economics include backlog review outcomes 2 Positive market outlook confirmed for Offshore E&C & Drilling 3 Plans to unlock liquidity and accelerate fixed cost reduction 4 De-risking and financial deleveraging 18
Slide 20: Positive market outlook
Positive market outlook E&C Offshore Market Offshore Drilling Market Offshore Wind Market1 CAGR 21-25 CAGR 21-25 CAGR 21-25 8% 16% >30% ~ ~ ~ ~ ~ ~ Rebound driven by Short term double-digit Fast growing and conventional and SURF, focus market growth at global sizable market in Middle East and Africa
Slide 21: Key actions to accelerate return to profitability
Key actions to accelerate return to profitability Path to return to profitability 1 2 3 Increase E&C Offshore order Selective E&C Onshore Phased intake and leverage acquisitions approach for Offshore Drilling Focus on energy transition Offshore Wind • Historically higher margins/ • Focus on selected
Slide 22: Increase E&C Offshore order intake
1 Increase E&C Offshore order intake E&C Offshore1 expected order intake Positive market outlook (B€|22-25) CAGR 2021-25 E&C Offshore +14% +8% market Historical double-digit EBITDA +15% Average Saipem E&C Offshore c.13% adjusted EBITDA 2016-20 Strong competitive advantage +13% – Unique fleet portfol
Slide 23: Capture Drilling market upside - Offshore
1 Capture Drilling market upside - Offshore Drilling Vessel Engagement Map (’21-’23) 2021 2022 2023 Client Area Mozambique, Saipem 12000 Eni Kenya Ultra Deep-water and Harsh Env. Saipem 10000 Eni Worldwide Santorini1 Eni US GoM Scarabeo 9 Eni Angola to 2025 Winthershall, Scarabeo 8 Norway Aker BP As
Slide 24: Selective E&C Onshore acquisitions
2 Selective E&C Onshore acquisitions E&C Onshore expected order intake (B€|22-25) By geography By segment -14% -14% Russia Others APAC Sustainable Infrastructures Americas Europe LNG Gas Monetization “Bridge to transition” Africa Middle East Upstream Downstream 23
Slide 25: Focus on energy transition and circular economy
2 Focus on energy transition and circular economy Robotics & Industrialized Solutions’ portfolio Robotics & Plastic Offshore Wind CCUS Green H2 Subsea facilities Recycling •Fixed and •Carbon capture •Life-of-field •Chemical •Green H2 Floating solutions drones Recycling generation, •Offshore •CCS net
Slide 26: Phased approach for Offshore Wind
3 Phased approach for Offshore Wind Offshore Wind expected order intake Full Potential Strategy Full ownership of design Low-risk repositioning OFW full potential phase to mitigate execution risks Asset investments financed through non-consolidated vehicles Partnering with local players in developed
Slide 27: Accelerate fixed cost rationalization and unlock liquidity
4 Accelerate fixed cost rationalization and unlock liquidity Acceleration of fixed cost reduction … Double down on cost rationalization program Embedded in Fabrication yards footprint optimization 2022-25 plan … with further cash boost actions Drilling Onshore value unlocking >1.5 B€ Monetization of
Slide 28: Double down on cost rationalization program and yards footprint optimization
4 Double down on cost rationalization program and yards footprint optimization Target1 by year (M€) Example of cost saving actions based on 2021 cost baseline Run-rate International offices footprint impact rationalization G&A spending review Process optimization annual run-rate from cost-saving 80
Slide 29: New organization and executive team
New organization and executive team A new operating model fully … enabled a step change in the operational … way we work 1• New business lines according to strategic priorities ✓ Risk discipline from commercial to execution 2• Role of the “center” in risk management and cost control ✓ Tailored appro
Slide 30: Solid future revenue coverage, EBITDA recovery and CAPEX Discipline
Solid future revenue coverage, EBITDA recovery and CAPEX Discipline Revenues by nature (B€|21-25) Adj. EBITDA (B€|21-25) CAPEX (B€|21-25) CAGR 2022-25 +31% CAPEX Discipline CAGR 2021-25 +15% Yearly avg ~ 0.3 B€ Double-digit EBITDA margin Backlog review from 2024 impact ~1.3 B€ of cumulated CAPEX in
Slide 31: Free Cash Flow evolution
Free Cash Flow evolution FCF1 evolution before financing package (B€|2021-25) 2022-25 PLAN … … WITH >1.5 B€ ADDITIONAL UPSIDES2 ✓ Drilling Onshore value unlocking ✓ Monetization of identified fixed assets ✓ Margin improvement from selected contract re-negotiations FCF inflection 1. FCF pre IFRS 16,
Slide 32: Financing package to support plan execution and de-risk the business model
Financing package to support plan execution, strengthen the balance sheet and de-risk the business model Key objectives Reinstate adequate shareholders equity Deleverage the business Restore adequate liquidity alongside the revised Business Plan Stabilize credit rating Ensure access to debt capital
Slide 33: Rights issue and short-term financing
Rights issue and short-term financing Overview of the proposed financing package ⚫ Irrevocable commitment by ENI and CDP Industria (the “Main Shareholders”) to subscribe pro-rata to their respective stakes (c.43%) €2.0bn ⚫ Pre-underwriting agreement obtained from a syndicate of banks in relation to
Slide 34: Financing package to ensure quick deleveraging and reinstate adequate equity
Financing package to ensure quick deleveraging and reinstate adequate equity Net Debt1 post financing package Expected group equity2 evolution post (B€|YE21-YE25) financing package (B€|YE21-YE25) EXCLUDING >1.5 B€ ADDITIONAL CASH-IN UPSIDE ~ ~ Expected Net Debt close to zero by Y-E 2025 Positive rat
Slide 35: Step changes in strategy to boost growth and profitability
Step changes in strategy to boost growth and profitability • c.15% CAGR in 2021-25 driven by Offshore Selective revenue growth E&C and Offshore Drilling • >150 M€ saving target in 2022 Double down on fixed costs1 • >300 M€ run-rate saving target in 2024 • 2022 adj EBITDA >0.5 B€ Return to profitabil
Slide 36: Agenda
CEO introduction FY 2021 results Strategic plan and financing package Agenda Closing remarks Q&A 35
Slide 37: Closing Remarks – Saipem Investment Highlights
Closing Remarks – Saipem Investment Highlights Strength of competitive positioning, built on client relationships, assets and technology portfolio Supportive market outlook, growing opportunity-set in Offshore E&C and Drilling Sizeable and de-risked backlog, underpinning short-term results Revised 4
Slide 38: Appendix
Appendix 37
Slide 39: Top-ranked ESG player among peers
Top-ranked ESG player among peers ESG Rating1 Saipem 78/100 89/100 4.2/5 67.8/100 62/100 19.8 (100<0) E&C peers 35/100 71/100 2.3/5 48.6/100 n.a. 24 (100<0) average2 Saipem ranking3 1st 1st 1st 1st 1st 5th ESG culture and achievements recognized externally 1 Rating as of 31 December 2021 2 Peer grou
Slide 40: ~30 B€ of globally diversified opportunities in the short run
~ 30 B€ of globally diversified opportunities in the short run Europe c. 1.8 B€ Asia Pacific ▪ Conventional ▪ Pipelines c. 0.5 B€ Americas ▪ Conventional c. 4.6 B€ ▪ Pipelines c. 5.2 B€ ▪ Downstream Middle East ▪ Pipelines ▪ Infrastructures c. 2.7 B€ ▪ Conventional c. 2.5 B€ ▪ Downstream ▪ ▪ SURF Su
Slide 41: FY 2021 backlog distribution by year and breakdown
FY 2021 backlog distribution by year and breakdown Sizeable backlog provides support for the mid-term Current E&C backlog 214 in Russia including non-consolidated (M€) 8,062 7,915 418418 4% 42 in Russia 739 5% 20% 262 6,756 19 340340 79 3% 3,693 4,038 5,708 68% 2,287 3,689 NON-OIL 77% 2,299 1,449 RE
Slide 42: FY 2021 results – E&C
FY 2021 results – E&C YoY comparison (M€) E&C offshore E&C onshore1 Revenue Adjusted EBITDA Revenue Adjusted EBITDA 8.5% margin 5.0% margin 2,749 2,848 235 3,882 193 3,286 (436) (954) FY20 FY21 FY20 FY21 FY20 FY21 FY20 FY21 • Higher volumes in Europe, Middle East and America, partially offset by • R
Slide 43: FY 2021 main awards
FY 2021 main awards A diversified set of awards, book to bill of c.1x in FY 2021 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 Courseulles-sur-Mer 2 T&I projects: Jansz- Scarborough export NFPS EPCO additional 5 LTA contacts, Saudi Offshore Wind Farm, lo, Australia and trunkline, Woodside, SoW, Qatar, Qat
Slide 44: FY 2021 results – drilling
FY 2021 results – drilling YoY comparison (M€) Drilling offshore Drilling onshore Revenue Adjusted EBITDA Revenue Adjusted EBITDA 24.8% margin 29.4% 27.1% margin 23.6% 394 417 113 116 347 294 82 73 FY20 FY21 FY20 FY21 FY20 FY21 FY20 FY21 • Revenue increase mainly driven by Saipem 12000, Saipem 10000
Slide 45: Onshore Drilling Fleet
Onshore Drilling Fleet FLEET @ DECEMBER 31, 2021: 66 RIGS1 AMERICAS EMEA 30 RIGS1 36 RIGS1 AVERAGE UTILISATION AVERAGE UTILISATION RATE2 IN FY21: 33% RATE2 IN FY21: 59% vs 31% in FY20 vs 75% in FY20 FY2021 AVERAGE2 UTILISATION RATE: 47% vs 55% in FY2020 1. Excluding 17 rigs stacked in Venezuela and
Slide 46: FY 2021 Results – D&A, Financial Expenses and Taxes
FY 2021 Results – D&A, Financial Expenses and Taxes (M€) 591 521 D&A M€ 297 261 FY 2020 89 127 121 78 69 70 FY 2021 D&A Offshore Onshore E&C E&C Total Drilling Drilling Onshore1 Offshore D&A FY2021 M€ 15 (3) 140 128 Financial Expenses 2 Financing costs Project hedging Exchange Differences Financial
Slide 47: FY 2021 Results – QoQ Trend
FY 2021 Results QoQ Trend (M€) Revenue Adjusted EBITDA1 Adjusted Net Result1 1,864 1,811 (25) (206) (901) (1,052) 3Q 2021 4Q 2021 3Q 2021 4Q 2021 3Q 2021 4Q 2021 1. Not including special items 46
Slide 48: FY 2021 Results - Divisions
FY 2021 Results - Divisions QoQ Trend (M€) E&C Offshore E&C Onshore1 Revenue Adjusted EBITDA Revenue Adjusted EBITDA 951 3.9% margin n.m. 865 28 721 722 (107) (576) (394) 3Q 2021 4Q 2021 3Q 2021 4Q 2021 3Q 2021 4Q 2021 3Q 2021 4Q 2021 Drilling Offshore Drilling Onshore Revenue Adjusted EBITDA Revenu