Boart Longyear — H1 2015 Earnings Presentation
39 slides from Boart Longyear's earnings presentation, Aug 23, 2015
Slide 1: 1H 2015 Results
MDR700: Mobile Coring Rig 1H 2015 Results August 2015
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer • This presentation has been prepared by Boart Longyear Limited, ABN 49 123 052 728 (Boart Longyear or the Company). It contains general information about the Company’s activities as at the date of the presentation. It is information given in summary form and does not
Slide 3: Safety & Environment
Safety & Environment Our goal is adding value with zero harm – leading our industry with our employees returning home safely each day and performing our work with minimal impact to our neighbours or the environment. 4.00 Total Case Incident Rate1 0.40 Lost Time Incident Rate1 3.50 0.35 0.34 3.26 3.0
Slide 4: Consolidated Results Summary: 1H 2015
Consolidated Results Summary: 1H 2015 (US $M) Revenue • 1H 2015 continued to be a difficult period for the industry $450 388 422 and the Company due to declining or stagnant prices for metals and mined commodities. $300 • Stable demand for underground applications and products. $150 • Consolidated r
Slide 5: Key mining performance indicators continue to decline
Key mining performance indicators continue to decline Mining Performance Key Commodity Trends4 SNL MEG3 Gold ($/oz.) 1,750 - Exploration Spend (US$ Billions) 2012 Avg 21.5 1,500 SNL expects 2015 2013 Avg 18.2 exploration budgets to be down ~10% from 2014 1,250 15.2 14.4 11.4 12.1 1,000 2014 Avg 11.4
Slide 6: Operating rigs & Products' backlog showing less variability
Operating rigs & Products’ backlog showing less variability but remain at historically low levels Year over Year % Change in Drilling Services’ Operating Rigs5 60.0% 50.0% 40.0% 30.0% YOY % Change 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% Flat -50.0% Year over Year % Change in Products’ Order Bac
Slide 7: Continuing to manage our overall cost structure very closely
Continuing to manage our overall cost structure very closely (US $M) Reduced expenditure profile by over $1.1 billion since 20126 Realised in 2013 Realised in 2014 2015 Initiative $2,081 $(460) To-Date* $(232) $(115) $1,274 $(252) Realised over $800M of expenditure $(25) $(58) reductions in FY2013 $
Slide 8: Financial Overview
Financial Overview gy BOART GS LONGYEAR™
Slide 9: Consolidated Overview: 1H 2015
Consolidated Overview: 1H 2015 Price concessions partially offset by improved volume and cost savings (US $M) Revenue Bridge $421 ($29) ($14) $392 $9 $387 1H 2014 FX 1H 2014 Price & Mix Volume 1H 2015 Flexed Adjusted EBITDA2 Bridge $19 ($11) $8 ($14) $5 $0 $2 $3 1H 2014 FX 1H 2014 Price & Mix Volume
Slide 10: Consolidated Overview: 1H 2015 Proforma Adjusted EBITDA
Consolidated Overview: 1H 2015 Proforma Adjusted EBITDA shows operational improvement (US $M) Proforma Adjusted EBITDA2 Bridge $19 $(11) $8 $(9) $(1) $2 $1 $14 $(1) $(14) $3 1H 2014 FX 1H 2014 One-timers 8 1H 2014 Price Volume Other COGS 1H 2015 One-timers 1H 2015 Adjusted Adjusted Adjusted & Mix Va
Slide 11: Half over Half Overview: 1H 2015 vs 1H 2014
Half over Half Overview: 1H 2015 vs 1H 2014 Statutory Adjusted2 % Change % Change US $M, except EPS 1H 2015 1H 2014 Fav / (Unfav) US $M 1H 2015 1H 2014 Fav / (Unfav) Revenue 387.5 421.5 (8.1%) Revenue 387.5 421.5 (8.1%) Gross Margin 17.5 7.7 127.3% Adjusted Gross Margin 51.6 55.9 (7.7%) Gross Margin
Slide 12: Net debt increased by $8M to $556M
Net debt increased by $8M to $556M (US $M) Gross Debt Cash $65 $234 $(36) $716 $(16) $700 $(35) $(31) $12 $677 1 $169 $(11) 4 $(34) 2 3 5 $121 2 Debt Recap. Post Term Loan Accreted Debt Cash Recap. Post Operations Changes in Investing Financing Cash Dec 2014 Recap. (Tranche A) Interest Jun 2015 Dec
Slide 13: 2015 Full Year Outlook
2015 Full Year Outlook 2015 Volumes consistent with first half 2015 runrate, but adjusting for any further: Revenue > Read-through of price reductions from 2014 > Currency movements SG&A Similar to first half 2015 runrate, with full year expectations between US$165 million to US$170 million Consider
Slide 14: Business Overview
Drilling Services Agricultural Site: California, USA Business Overview
Slide 15: Drilling Services: 1H 2015 Operations
Drilling Services: 1H 2015 Operations Lower operating rig variability but 2014 pricing impacting results Change (US $M) 1H 2015 1H 2014 Key Performance Indicators 1H 2015 1H 2014 Change Fav/(Unfav) Revenue 281 308 (9%) Average Operating Rigs5 340 333 2% COGS 258 281 8% Average Rig Utilisation5 37% 3
Slide 16: Drilling Services: 1H 2015 Performance Bridges
Drilling Services: 1H 2015 Performance Bridges (US $M) Drilling Services Revenue Bridge $308 $(16) $292 $(14) $3 $281 • Adjusted for FX, revenue down due to price 1H 2014 FX 1H 2014 Price & Mix Volume 1H 2015 Flexed Drilling Services EBITDA2 Bridge $37 $(2) $35 $(14) • Margins primarily impacted by
Slide 17: Drilling Services: Revenue by Rig Type
Drilling Services: Revenue by Rig Type Surface coring remains depressed while underground applications, including coring and percussive are stable 100% 7% 4% 4% 7% 7% 90% 7% 80% 16% 16% 15% 70% 12% % of total DS Revenue 14% 17% Sonic 60% Percussive Water Well 50% 20% 27% Rotary 24% 40% UG Coring Sur
Slide 18: Drilling Services: Revenue by Commodity
Drilling Services: Revenue by Commodity Copper and Gold remain our key commodities 100% 3% 1% 0% 5% 9% 11% 90% 7% 4% 5% 5% 7% 80% 7% 6% 3% 12% Environmental 70% 9% 9% 7% Other Metals % of total DS Revenue 60% Nickel 19% 19% Water Services 50% 22% Iron 40% Energy Copper 30% Gold 45% 46% 20% 39% 10% 0
Slide 19: Drilling Services: A Comprehensive Approach
Drilling Services A Comprehensive Approach Overhead Commercial Costs Practices Operational Efficiency Diversification Opportunities 1H 2015 Results - See pages 38 & 39 for footnote descriptions 19
Slide 20: Global Products: 1H 2015 Operations
Global Products: 1H 2015 Operations Markets appear to be stabilising, with order backlog and profitability improving Change Key Performance Indicators Change (US $M) 1H 2015 1H 2014 1H 2015 1H 2014 Fav/(Unfav) (US $M, except headcount) Fav/(Unfav) Revenue 106 113 (6%) Average Backlog 10 19 16 16% CO
Slide 21: Global Products: 1H 2015 Performance Bridges
Global Products: 1H 2015 Performance Bridges (US $M) Products’ Revenue Bridge $113 $(13) $106 $100 $0 $6 • Adjusted for FX, revenue improved due to volume; price relatively flat 1H 2014 FX 1H 2014 Price & Mix Volume 1H 2015 Flexed Products’ EBITDA2 Bridge $1 $(0) $0 $7 $6 $(0) $6 $0 • EBITDA up prim
Slide 22: Global Products: Product Innovation
Global Products: Product Innovation Focus on Safety and Productivity Launched BLH Reverse Circulation Hammer: a new hammer for reverse circulation applications that deliver LS250 MiniSonic™ Rig: performance, reliability, simplicity, Compact footprint rig with a and low operating costs. proven sonic
Slide 23: Conclusion
LM 90 Underground Rig Conclusion
Slide 24: 125 Years Strong
125 Years Strong • Make safety personal Safety • Product innovation to enhance operational safety • Continuous improvement initiatives • Focus product development efforts around customer needs Customer • Increase focus on commercial processes and profitability analysis • Continue to drive efficienci
Slide 25: Safety Leaders
Safety Leaders TOP 16% Performance by Boart Longyear in FY 2014 as Measured by Lost Time Injury Frequency Rate 1H 2015 Results - See pages 38 & 39 for footnote descriptions 25
Slide 26: Questions?
QUESTIONS? 1H 2015 Results - See pages 38 & 39 for footnote descriptions 26
Slide 27: Appendix
Appendix BOART PP eg LONGYEAR'
Slide 28: Key Performance Indicators
Key Performance Indicators Quarters ended Quarters ended Quarters ended 2015 2014 2013 US$ Millions Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Positives Total Com pany • Drilling services for underground and Revenue 200.3 187.2 205.8 239.3 224.1 197.4 224.5 279.5 348.7 370.2 large rotary have remained stable, al
Slide 29: Debt Maturity Schedule
Debt Maturity Schedule (US $M) 350 7% Sr. 40 Unsecured 300 Notes 105 Term Loan - 284 250 tranche B 1 US$ millions 200 195 150 10% Sr. ABL 40 100 Secured Notes 85 Term Loan - 50 tranche A 0 2015 2016 2017 2018 2019 2020 2021 1 If Term Loan-tranche B and 10% Senior Secured Notes have not been 1 refina
Slide 30: Tax Audit Update
Tax Audit Update 2007-2009 Canada Audit • Disputed amounts relate entirely to inter-company transactions (Product sales, Royalties and Management Fees). These proposed adjustments were Total Exposure (taxes determined on substantially the same basis as the assessments for the 2005 Income Adjustment
Slide 31: Inventory
Inventory (US $M) Inventory Balance • Peaked at ~$570M gross in October 2012 • Continued focus on supply chain efficiencies to further decrease total company inventory 1H 2015 Results - See pages 38 & 39 for footnote descriptions 31
Slide 32: Diversified End Market Exposure
Diversified End Market Exposure 1H 2015 Total BLY Revenue – Products & Services 1H 2015 Total BLY Revenue by Region – Products & Services Global Global Drilling revenue base Services: 72% Drilling Underground LAM, 16% Equipment, 6% Coring, 20% Rotary/RC, USA, 26% 20% BLY Revenue - Products & Service
Slide 33: Income Statement
Income Statement Half-ye ar Half-ye ar e nde d e nde d 30 June 2015 30 June 2014 US$'000 US$'000 Continuing ope r ations Revenue 387,470 421,495 Cost of goods sold (370,013) (413,841) Gross margin 17,457 7,654 Other income 1,885 4,310 General and administrative expenses (67,101) (65,430) Selling and
Slide 34: Balance Sheet
Balance Sheet 30 June 31 De ce m be r 2015 2014 US$'000 US$'000 Curre nt as s e ts Cash and cash equivalents 120,738 168,784 Trade and other receivables 152,996 137,442 Inventories 220,332 241,260 Current tax receivable 9,548 15,446 Prepaid expenses and other assets 18,996 18,723 Total curre nt as s
Slide 35: Cash Flow Statement (1 of 2)
Cash Flow Statement (1 of 2) Half-year Half-year ended ended 30 June 2015 30 June 2014 US$'000 US$'000 Cash flow s from operating activities Loss f or the period (152,349) (142,826) Adjustments provided by operating activities: Income tax expense recognised in profit 33,583 28,771 Finance costs reco
Slide 36: Cash Flow Statement (2 of 2)
Cash Flow Statement (2 of 2) Half-year Half-year ended ended 30 June 2015 30 June 2014 US$'000 US$'000 Cash flow s from investing activities Investment in unconsolidated subsidiary (1,706) - Purchase of property, plant and equipment (9,535) (6,451) Proceeds from sale of property, plant and equipment
Slide 37: Restructuring & Impairment Detail
Restructuring & Impairment Detail For the half-ye ar e nde d 30 June 2015 2015 2014 2014 US$ M illions US$ Millions US$ Millions US$ Millions US$ M illions EBITDA (39.4) (33.0) NPAT (152.3) (142.8) Recapitalisation costs 2.1 2.1 - - Impairments Property, plant and equipment 31.0 31.0 41.4 41.4 Intan
Slide 38: Footnote Disclosures
Footnote Disclosures • Footnote 1: Per 200,000 work hours. • Footnote 2: Loss from Trading Activities, Adjusted Gross Margin, Adjusted Operating Loss, Adjusted SG&A, Adjusted EBITDA and Adjusted NPAT Loss are non-IFRS measures and are used internally by management to assess the underlying performanc
Slide 39: Footnote Disclosures cont.
Footnote Disclosures cont. • Footnote 10:Backlog as of 30 June 2015 was $19M. • Footnote 11: Transactions between segments are carried out at arm’s length and are eliminated on consolidation. 1H 2015 Results - See pages 38 & 39 for footnote descriptions 39