Vallourec Sa · EURONEXT:VK
Vallourec Sa — Q3 2021 Earnings Presentation
35 slides from Vallourec Sa's earnings presentation, Nov 17, 2021
Slide 1: Q3 & 9M 2021 Results Investor Presentation
Q3 & 9M 2021 RESULTS INVESTOR PRESENTATION November 17, 2021 Confidential 1
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER Forward-Looking Statements This presentation may include 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”, “sh
Slide 3: Key Highlights of the Quarter
1 KEY HIGHLIGHTS OF THE QUARTER 3
Slide 4: Key Highlights
KEY HIGHLIGHTS Q3 2021: solid YoY revenue and EBITDA growth driven by the A decisive move to strengthen Vallourec competitiveness and dynamism of the Oil & Gas market in North America and the higher profitability mine contribution ► A two-legged transformation ► €834m revenue, up 16.4% ► Launch of t
Slide 5: Q3 2021 Results
2 Q3 2021 RESULTS 5
Slide 6: Q3 2021 Key Figures
Q3 2021 KEY FIGURES VOLUMES (kt) REVENUE (€m) +15% at constant FX EBITDA (€m) FREE CASH FLOW (€m) Q3 & 9M 2021 Results Presentation 6
Slide 7: Q3 2021 Revenue by Market
Q3 2021 REVENUE BY MARKET Oil & Gas Industry and Other -0.3% YoY (-1%1) +67% YoY (+64%1) Q3 2021 revenue in million € ► North America: and as a % of revenue ► Europe: • Revenue more than doubled YoY • Industry revenue up reflecting higher volumes ► EA-MEA: ► South America: • Revenue decrease reflect
Slide 8: Q3 2021 Revenue Bridge and EBITDA
Q3 2021 REVENUE BRIDGE AND EBITDA Q3 2020 – Q3 2021 REVENUE BRIDGE (€m) ► Revenue of €834m, up 16.4% YoY (+15% at constant exchange rates) • +23% volume impact mainly driven by Oil & Gas in North America and Industry & Other • -8% price/mix due to Oil & Gas in EA-MEA more than offsetting the rebound
Slide 9: Q3 EBITDA to Net Income
Q3 EBITDA TO NET INCOME ► €72m operating income versus €7m in Q3 2020, resulting mainly from the EBITDA improvement ► Financial income at (€36)m versus (€64)m in Q3 2020 reflecting the new balance sheet structure ► Income tax amounting to (€41)m mainly related to Brazil ► Net income, Group share at
Slide 10: Q3 2021 Working Capital Requirement
Q3 2021 WORKING CAPITAL REQUIREMENT QUARTERLY NET WORKING CAPITAL REQUIREMENT IN DAYS1 Number of days 133 Annual Quarterly Average 112 113 108 106 Period Q1.16 Q2.16 Q3.16 Q4.16 Q1.17 Q2.17 Q3.17 Q4.17 Q1.18 Q2.18 Q3.18 Q4.18 Q1.19 Q2.19 Q3.19 Q4.19 Q1.20 Q2.20 Q3.20 Q4.20 Q1.21 Q2.21 Q3.21 Annualiz
Slide 11: Q3 2021 Free Cash Flow
Q3 2021 FREE CASH FLOW ► (€103)m free cash flow versus €35m in Q3 2020 1► Cash flow from operating activities at €18m versus (€32)m in Q3 2020, reflecting mainly improved EBITDA and lower financial interests paid, partly 1 offset by higher tax. 2► Operating WCR increase by (€93)m, 2 versus a €94m de
Slide 12: Net Debt and Liquidity
NET DEBT AND LIQUIDITY Q3 2021 NET DEBT BRIDGE €m ► €993m net financial debt as at September 30th 2021 vs. Net Debt Net Debt €720m as at June 30th 2021: as at as at June 30th 2021 Sept 30th 2021 • (€103)m free cash flow Asset disposals • (€171)m asset disposals & & other items other, including the a
Slide 13: 2021 Outlook
3 2021 OUTLOOK 13
Slide 14: 2021 Outlook
2021 OUTLOOK NORTH AMERICA EUROPE-AFRICA & MIDDLE EAST- ASIA ► Oil & Gas: 2021 remains significantly impacted by the sharp ► Oil & Gas market improvement continues to be driven by slowdown in order intake in 2020. Tendering activity has started the significant increase in prices in addition to the t
Slide 15: Launch of the Disposal Process of German Assets and Relocation to Brazil
A DECISIVE MOVE TO STRENGTHEN VALLOUREC 4 COMPETITIVENESS AND PROFITABILITY: LAUNCH OF THE DISPOSAL PROCESS OF ALL GERMAN ASSETS AND RELOCATION OF THEIR OIL & GAS ACTIVITIES IN BRAZIL TO SERVE INTERNATIONAL MARKETS 15
Slide 16: Four Steps: Footprint, European Mills, Brazil Capacity, Transformational Move
Vallourec has implemented several steps over the last years to strengthen its industrial 1 footprint’s competitiveness 2 European rolling mills’ viability is structurally challenged The recently acquired additional capacity in Brazil will enable to serve EA-MEA customers more 3 cost effectively Tran
Slide 17: Gradual Reshape of Vallourec's Industrial Footprint Achieved
1 GRADUAL RESHAPE OF VALLOUREC’S INDUSTRIAL FOOTPRINT ACHIEVED OVER THE LAST 5 YEARS Rebalanced rolling capacities towards most competitive routes… …coupled with their increased utilization to serve EA-MEA customers 62% of Oil & Gas premium orders in EA-MEA were served from low-cost routes in 20201
Slide 18: Full Ownership of US and Brazil Assets Simplifies Corporate Structure
1 FULL OWNERSHIP OF US AND BRAZIL ASSETS SIMPLIFIES CORPORATE STRUCTURE AND CREATES STRATEGIC BENEFITS Recent acquisitions of minority interests VAM-USA VStar VSB ► 1 Well-timed acquisition of minority Location interests Timing Jul. 2021 Sept. 2021 Mar. 2021 ► 2 300 kt/y additional capacity in Brazi
Slide 19: Highly Efficient Production Hubs in North America, Brazil and China
1 HIGHLY EFFICIENT PRODUCTION HUBS IN NORTH AMERICA, BRAZIL AND CHINA NORTH AMERICA EUROPE Competitive, right-sized and low-carbon Footprint reduced since 2016 manufacturing tools dedicated to the local market Integrated production base: steel plant, two rolling Operations mostly located in Germ
Slide 20: Industrial Footprint Competitiveness Steps
Vallourec has implemented several steps over the last years to strengthen its industrial footprint’s 1 competitiveness 2 European rolling mills’ viability is structurally challenged The recently acquired additional capacity in Brazil will enable to serve EA-MEA customers more 3 cost effectively Tran
Slide 21: Seamless Tubes Rolling in Europe Is Performed in Germany
2 VALLOUREC’S SEAMLESS TUBES ROLLING IN EUROPE IS PERFORMED IN GERMANY… Vallourec’s European footprint (seamless tubes) German rolling mills: capacity, products, end-markets GERMANY Mülheim Rath Plug Rath Pilger Bellshill Mülheim Rath- Düsseldorf (x2) UK Capacity c.350kt c.300kt c.35kt Tube Small Me
Slide 22: German Operations Continue to Significantly Underperform
2 … WHICH CONTINUES TO SIGNIFICANTLY UNDERPERFORM Tubes produced in Germany * (kt/y) ► Tubes production in Germany is dedicated to the 600 Industry Oil & Gas European Industry markets and both the local and 500 400 52% 57% international Oil & Gas markets 55% 49% 66% 29% 300 58% 200 ► The production
Slide 23: European Rolling Mills' Viability Is Structurally Challenged
Vallourec has implemented several steps over the last years to strengthen its industrial footprint’s 1 competitiveness 2 European rolling mills’ viability is structurally challenged The recently acquired additional capacity in Brazil will enable to serve EA-MEA customers more 3 cost effectively Tran
Slide 24: Additional Capacity in Brazil Will Serve EA-MEA Customers More Cost Effectively
3 VALLOUREC’S ADDITIONAL CAPACITY IN BRAZIL WILL SERVE EA-MEA CUSTOMERS MORE COST EFFECTIVELY Vallourec’s Brazilian footprint (seamless tubes) Servicing customers from Brazil is significantly more cost effective Production variable costs (medium diameter tube) delivered to Middle-East Belo Horizonte
Slide 25: Transformational Move Summary
Vallourec has implemented several steps over the last years to strengthen its industrial footprint’s 1 competitiveness 2 European rolling mills’ viability is structurally challenged The recently acquired additional capacity in Brazil will enable to serve EA-MEA customers more 3 cost effectively Tran
Slide 26: A Transformational Move: Disposal of German Assets and Transfer to Brazil
4 A TRANSFORMATIONAL MOVE: LAUNCH OF THE DISPOSAL PROCESS OF GERMAN ASSETS, AND PROGRESSIVE TRANSFER OF THEIR OIL & GAS ACTIVITY TO THE HIGHLY COMPETITIVE BRAZILIAN HUB A two-legged ► Launch of the disposal process of German assets transformation ► German rolling activity for Oil & Gas progressively
Slide 27: Key Considerations
4 KEY CONSIDERATIONS ► Perimeter: all German manufacturing assets • Modular asset deal (separate/joint offers for Rath/Mülheim) to optimize actionability • Flexibility in consideration to be received to maximize buyer universe Launch of the disposal ► Rationale: process of German • A new operator, b
Slide 28: Clear Benefits for Vallourec and Its Stakeholders
4 CLEAR BENEFITS FOR VALLOUREC AND ITS STAKEHOLDERS -30% +€130m +€20m Reduced CO2 content of Run rate EBITDA increase Capex reduction tubes produced in Brazil vs. Germany Q3 & 9M 2021 Results Presentation 28
Slide 29: Appendices
APPENDICES 29
Slide 30: 9M 2021 P&L
9M 2021 P&L na = not applicable * 9M 2021 & 9M 2020 figures impacted by new number of shares following reverse stock split effective on May 25 2020 Q3 & 9M 2021 Results Presentation 30
Slide 31: Q3 2021 Revenue Bridges
Q3 2021 REVENUE BRIDGES Q3 2020 – Q3 2021 REVENUE BRIDGE PER MARKET (€m) Q3 2020 – Q3 2021 REVENUE BRIDGE BY GEOGRAPHY Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Q3 & 9M 2
Slide 32: Revenue Breakdown – Q3 2021
REVENUE BREAKDOWN – Q3 2021 REVENUE BY REGION REVENUE BY MARKET Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Q3 & 9M 2021 Results Presentation 29 July, 2020 32
Slide 33: Balance Sheet as at September 30th, 2021
BALANCE SHEET AS AT SEPTEMBER 30TH, 2021 Q3 & 9M 2021 Results Presentation 33
Slide 34: Gross Indebtedness
GROSS INDEBTEDNESS Q3 & 9M 2021 Results Presentation 34
Slide 35: Investor Relations Contact
► Euronext Paris: ISIN code: FR0013506730, Ticker: VK USA: American Depositary Receipt (ADR) - ISIN code: US92023R4074, Ticker: VLOWY ► Investor Relations Contact - Vallourec Group • Email: investor.relations@vallourec.com • www.vallourec.com 35