Gaztransport & Technigaz Sa · EURONEXT:GTT
Gaztransport & Technigaz Sa — H1 2019 Earnings Presentation
57 slides from Gaztransport & Technigaz Sa's earnings presentation, Jul 26, 2019
Slide 1: Investor Presentation H1 2019 results
Investor Presentation H1 2019 results 26 July 2019
Slide 2: Disclaimer
Disclaimer This document is strictly confidential. Any unauthorised access to, appropriation of, copying, modification, use or disclosure thereof, in whole or in part, by any means, for any purpose, infringes GTT’s rights. This document is part of GTT’s proprietary know-how and may contain trade sec
Slide 3: Disclaimer
Disclaimer This presentation does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in France, the United States or any other jurisdiction. It includes only summary information and does not purport to be comprehensive. No representation,
Slide 4: Agenda
Agenda 1. Company overview & key highlights 2. Core business: Market & Activity update 3. New businesses: LNG Fuel developments 4. Service activity 5. Stategic roadmap 6. Financials 7. Outlook Appendices 4
Slide 5: Company overview & Key highlights
1 Company overview & Key highlights 5
Slide 6: GTT at a glance
GTT at a glance Profile A French technology and engineering Consolidated key figures company with more than 50-year track record in € million H1 2019 Expert in liquefied gas containment systems GTT is a public company listed on the Total Revenues 123 Euronext Stock Exchange (Paris), Royalties (newbu
Slide 7: H1 2019 key Highlights
H1 2019 key Highlights Core business : strong level of new orders 26 new LNGC orders in first half (+ 2 in July) Compared to 48 LNGC FY 2018 New commercial successes in LNG Fuel business including: An additional order to equip a container ship converted to LNG An order to equip 5 additional containe
Slide 8: Core Business as at June 30, 2019: A strong order book
Core Business as at June 30, 2019 A strong order book H1 2019 movements new orders 26 LNGC deliveries 14 LNGC © Shell 2 FSRU Order book of 107 units LNGC FSRU/RV FLNG Onshore storage Notes: LNGC – Liquefied Natural Gas Carrier, VLEC – Very Large Ethane Carrier, FSRU – Floating Storage and Regasifica
Slide 9: New Business (LNG as Fuel) as at June 30, 2019: A growing order book
New Business (LNG as Fuel) as at June 30, 2019 A growing order book © SCF Group © GTT © GTT Order book of 18 units H1 2019 movements ULCS (Ultra Large Container Ships) new orders 1 LNG Bunker ship Container vessel (converted to LNG) 1 Container vessel 5 ULCS Cruise ship LNG bunker ships 9
Slide 10: Core business: Market & activity update
2 Core business: Market & activity update 10
Slide 11: Overall long term outlook bright for gas and LNG
Overall long term outlook bright for gas and LNG Gas share in the energy mix LNG share in total gas trade Gas is the only fossil energy to increase share in Gas is increasingly exported thanks to the energy mix LNG Gas is expected to exceed coal by 2025, and could LNG to overpass pipeline trade by b
Slide 12: LNG 2035 demand outlook keeps rising
LNG 2035 demand outlook keeps rising Evolution of 2035 LNG demand outlook 700 Q2 2019 650 Q4 2018 600 +115 Mtpa Q4 2017 550 Q4 2016 Mtpa 500 450 400 350 300 2018 2020 2022 2024 2026 2028 2030 2032 2034 Source : Wood Mackenzie 2035 LNG demand expectations of Wood Mackenzie has kept increasing over th
Slide 13: LNG Supply & Demand: new capacity needed
LNG Supply & Demand: new capacity needed LNG Supply & Demand balance forecast 600 270 Mtpa 500 400 Mtpa 300 200 100 0 2001 2015 2020 2034 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 2017 2018 2019 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2035 So
Slide 14: Liquefaction projects: more FIDs expected in 2019-20
Liquefaction projects: more FIDs expected in 2019-20 Volume Project Country Operator Comments (Mtpa) Canada LNG Canada Shell 14 FID taken Tortue FLNG Senegal/Mauritania BP 2.4 Moss conversion since Oct. Golden Pass US Exxon, QP 15.6 2018 4.5 Sabine Pass T6 US Cheniere Cheniere has now 36 Mtpa capaci
Slide 15: Core business long term estimates
Core business long term estimates GTT H1 2019 Sales GTT order estimates over 2019-2028 Services LNGC: between 280 and 310 units(1) Other 6% FLNG 4% 2% FSRU FSRU: between 30 and 40 units 10% FLNG: Up to 5 units LNGC Onshore and GBS tanks: between 10 and 78% 15 units Courtesy of Shell Courtesy of Exce
Slide 16: New businesses: LNG Fuel developments
3.2 3 New businesses: LNG Fuel developments 16
Slide 17: IMO 2020: different approaches to reduce the emissions, among them LNG
IMO 2020: different approaches to reduce the emissions, among them LNG 1 0,75 Base 1 LNG is the only solution 0,5 HFO 0,25 HFO+ Scrubber allowing comprehensive 0 LSHFO environmental compliance LNG New LNG bunkering infrastructure under development Improving availability International O&G companies n
Slide 18: LNG Fuel: open loop scrubbers banned in key areas
LNG Fuel: open loop scrubbers banned in key areas Map of open loop scrubbers ban areas Norway Ireland Lithuania, Latvia Belgium California Connecticut China UAE India Singapore Source : GTT, Lloyd’s list NB: Not exhaustive list - Other ports in Ireland and the US ban open loop scrubbers 3 major anno
Slide 19: LNG as fuel is a short payback solution
LNG as fuel is a short payback solution Payback of LNG as fuel vs compliant fuels 100 80 $60/bl : LNG payback 4 years 60 M$ 40 $80/bl : LNG payback <1.5 year 20 0 (Year 1) Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 11 Year 10 Year 12 Year 13 Year 14 Year 15 Extracapex 2022 -20 Curr
Slide 20: LNG as fuel is economically the best solution
LNG as fuel is economically the best solution Payback of LNG as fuel and scrubber vs compliant fuels 50 40 30 LNG payback vs LSHFO: 2.5 years 20 M$ 10 After 7years, LNG more profitable than scrubber 0 (Year 1) Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 11 Year 10 Year 12 Year 13 Ye
Slide 21: GTT's LNG Fuel solutions offering
GTT’s LNG Fuel solutions offering GTT has developed solutions for the main applications of LNG Fuel Solutions for Container Vessels new build and retrofit Cruise Ship – optimizing the space for additional passengers Lean bunker barge to Cost effective solution for bulk carriers standardize the marke
Slide 22: LNG Fuel: dedicated GTT Services are key for our new customers
LNG Fuel: dedicated GTT Services are key for our new customers LNG Training Services: courses and software Particularly suited for newcomers in LNG Fuel Assistance to first bunkering operations Advising the world’s first LNG bunkering operations HEARS – Hotline for emergency situations Available 24/
Slide 23: LNG Fuel: wide network of partnerships
LNG Fuel: wide network of partnerships 25 shipyards under licensed agreements Network of membrane tank outfitters A close relationship with engine makers and FGHS1 providers (1) Fuel Gas Handling System
Slide 24: Commercial successes: container ships
Commercial successes: container ships… European ship-owner ULCS – Newbuilds – 14,000 m³ 5 ships in June 2019 Built at Jiangnan Shipyard Hapag Lloyd VLCS - LNG Retrofit – 6,700 m³ 1 ship in April 2019 Hudong-Zhonghua as membrane outfitter CMA CGM ULCS – Newbuilds – 18,600 m³ 9 ships in November 2018
Slide 25: Cruise ships and bunker vessels
… Cruise ships and bunker vessels PONANT Expedition Ship – 4,500 m³ 1 ship in July 2018 Built at VARD Norway GTT acting as EPC for the LNG tank Oct. 2018 MOL1 LNG Bunkering Vessel – 18,600 m³ 1 ship in January 2018 Built at Hudong Zhonghua Shipyard MOL1 LNG Bunkering Vessel – 12,000 m³ 1 ship in Mar
Slide 26: Service activity
3.3 4 Service activity 26
Slide 27: Services to make LNG easy
Services to make LNG easy Support of GTT’s LNG core activities Support for the development of LNG as fuel CONSULTING TRAINING LNG OPERATIONS EMERGENCY to get LNG as fuel to raise awareness to support operators in the to avoid escalation and projects on track about LNG first LNG operations minimise i
Slide 28: Strategic roadmap
5 Strategic roadmap 28
Slide 29: GTT's strategic roadmap
GTT’s strategic roadmap Growth, Towards a Gas handling technologies Technology, lower emission Transformation Maritime world Fuel Gas handling system for vessels Superior LNG gas handling systems Advanced decision support systems Enlargement New applications Transfer operations Advisory and LNG as f
Slide 30: Financials
6 Financials 30
Slide 31: H1 2019: Order book overview (core business) – IFRS 15
H12019: Order book overview (core business) – IFRS 15 Order book in units Order book by year of delivery (units per year) In units In units 60 47 48 120 107 40 (1) 97 30 30 30 90 16(4) 20 60 14 5 0 30 2019 2020 2021 2022 As at Dec 31, 2018 As at June 30, 2019 As at Dec 31, 2018 As at June 30, 2019 O
Slide 32: H2 2019 Royalties from core business will benefit from strong flow of orders
H2 2019 Royalties from core business will benefit from the last 24 months strong flow of orders In € million 32
Slide 33: GTT is gearing up
GTT is gearing up Increase of core business Increase of subcontractors through a sustained flow of and headcount orders: 51 in FY 2018 26 in H1 2019 Increase of R&D effort Ramp-up of LNG as Fuel: Extension of facilities 18 orders as of today 33
Slide 34: H1 2019 financial performance
H1 2019 financial performance Summary consolidated accounts Key highlights In € M H1 2018 H1 2019 Change Revenues Newbuilds (royalties): -4% Total Revenues 127.2 122.6 -3.6% • Royalties from LNGCs and FSRUs will fully benefit EBITDA(1) 84.2 70.9 -15.8% from the 2018 strong flow of orders from H2 201
Slide 35: H1 2019 Cost base
H1 2019 Cost base GTT consolidated operational costs Key highlights in € M H1 2018 H1 2019 Change (%) External costs: +32% Goods purchased (1.3) (2.6) +98.8% Subcontractors +57%, due to strong flow of orders % sales -1% -2% Other external costs +19% (mainly fees from external advisors and patent fil
Slide 36: Outlook
7 Outlook 36
Slide 37: 2019 Outlook upgraded
2019 Outlook upgraded 2019 consolidated revenue estimated in a range of €260M to €280M GTT revenue(1) (vs €255M to €270M previously) 2019 consolidated EBITDA estimated in a range of €160M to €170M EBITDA (vs €150M to €160M previously) Dividend 2019 and 2020 payout of at least 80% Payment(2) (1) In t
Slide 38: Thank you for your attention
Thank you for your attention Image courtesy of STX, Engie, Excelerate, SCF Group, Shell, CMA CGM, Matthieu Pesquet, Conrad
Slide 39: Appendix
GIT Appendix
Slide 40: A streamlined group and organisation
A streamlined group and organisation GTT Group Philippe Berterottière* Chairman and Chief Executive Officer GTT SA organisation Lélia Ghilini* Secretary General General Counsel Frédérique Marc Haestier* Julien Bec David Colson* Karim Chapot* Human Coeuille* Finance & LNG as fuel Commercial Technical
Slide 41: GTT exposure to the liquefied gas shipping and storage value chain
GTT exposure to the liquefied gas shipping and storage value chain Exploration Off Take / Liquefaction Shipping Regasification & Production Consumption Liquefied Natural Gas LNG fuelled Offshore Carrier ship clients: (LNGC) shipyards Platform / Gas-to-wire Installation Floating LNG Production, Float
Slide 42: GTT ecosystem
GTT ecosystem Oil & Gas Companies Shipowners End clients and End clients and prescribers prescribers provides services provides services and maintenance Classification Societies Regulatory oversight of the industry Shipyards Direct clients receives new technology certification and licences its membr
Slide 43: GTT membrane technologies
GTT membrane technologies Primary General principle: membrane Two membranes Primary insulation Two layers of insulations Secondary membrane Containment system Secondary insulation anchored to the inner hull Hull Mark III system NO96 system 43
Slide 44: NO96 Flex: a low boil-off system at a reasonable incremental cost
NO96 Flex: a low boil-off system at a reasonable incremental cost September 2018: AiP from Bureau Veritas for the development of NO96 Flex This new version benefits from the NO96 proven technology as well as the use of an efficient foam panel insulation Guaranted boil-off rate at 0.07%V per day 44
Slide 45: Ageing LNGCs represent an additional market potential for GTT
Ageing LNGCs represent an additional market potential for GTT LNGC fleet by date of delivery 700 1. Future Orders associated 600 to new LNG projects 500 Nb of sips 400 300 200 100 2. Future Orders associated to replacement of old vessels 0 Source : Clarksons 1970 1980 1990 2000 2010 2020 Vessels >30
Slide 46: US LNG still competitive in Asia
US LNG still competitive in Asia US LNG vs. Asian LNG price depending on Henry Hub and Oil prices 10 Asian oil indexed Asian LNG LNG competitive competitive US LNG 9 LNG price ($/Mmbtu) HH : $3,5/Mmbtu 8 Spread HH : $3/Mmbtu US LNG 2018 avg. 7 HH : $2,5/Mmbtu 2019 avg. 6 5 Main sources: 40 45 50 55
Slide 47: LNG short term charter rates are stabilising
LNG short term charter rates are stabilising Spot Charter rates have stabilised since the beginning of 2019 at around $60k/d Short term outlook remain positive, as 1 year charter rate stabilising at around $90k/d 47
Slide 48: LNG and LNG shipping remain LT market
LNG and LNG shipping remain LT market Only ≈25% of the LNG market and ≈10 % of the LNG fleet are spot (GIIIGNL, Poten) Fundamentals of the newbuild market remain driven by long term contracts SPA/equity for LNG market (liquefaction projects) Chartering contracts for shipping Spot is a secondary mark
Slide 49: LNGCs – Our main business
LNGCs – Our main business Vessels equipped for transporting LNG Existing GTT fleet: 382 units1 In order: 95 units1 26 construction shipyards under license1 Our strengths Technological leadership, boil-off divided by 2 in the last 5 years Long term industrial partnerships with major shipyards A uniqu
Slide 50: FSRUs – The game changer for new importing countries
FSRUs – The game changer for new importing countries Major competitive advantage vs. land-based terminals: Quick to build/deploy & mobile Better local acceptability & easier permitting Affordable / no upfront CapEx Adapted to more volatile LNG prices Quality controlled construction in shipyards with
Slide 51: FLNGs – the new frontier of the LNG world
FLNGs – the new frontier of the LNG world Floating units which ensure treatment of gas, liquefy and store it Existing GTT fleet: 2 units1 In order: 2 units1 Courtesy of Shell Main drivers GTT key advantages Monetisation of stranded Extended amortization offshore gas reserves perspectives Better acce
Slide 52: Current LNG Fuel tank market situation
Current LNG Fuel tank market situation Total LNG fuel tank by ship type (in service & on order) 20 000 Max Total LNG tanks capacity Avg. 15 000 Min cbm 10 000 5 000 Market avg ~1,500 cbm 0 Notes: Data available for ~80% of the 320 vessels in service and Source: DNV GL on order Recent market that sta
Slide 53: LNG Fuel market potential for GTT
LNG Fuel market potential for GTT Relevant Market Segments Historical 10y Shipping Markets Fleet at end 2018 for GTT annual orders MAIN TARGETS Container Ships 3-20+ kTEU Bulkers 100+ kdwt ~260 ~5,400 Oil Tankers 125+ kdwt Cruise Ships All size ~40 ~1,200 Car & Truck Carriers TOTAL SHIPPING MARKET A
Slide 54: Focus on GTT's competitive advantages
Focus on GTT’s competitive advantages GTT’s technology positioning (1) GTT Moss SPB KC-1 Technology ▶ Membrane ▶ Spherical tank ▶ Tank ▶ Membrane ▶ Requires less steel and Construction ▶ Slightly higher costs aluminum than tanks for ▶ Higher costs ▶ Higher costs costs than GTT a given LNG capacity ▶
Slide 55: An attractive business model supporting high cash generation
An attractive business model supporting high cash generation Invoicing and revenue recognition Business model supports high cash generation % of contract (1) c. 9 to12 months c. 18 months Delivery Revenue is recognized pro-rata 10000 studies royalties temporis between construction milestones 8000 Sh
Slide 56: Appendix: track record of high margin and strong backlog
Appendix: track record of high margin and strong backlog 2008 2011 Economic crisis Fukushima US shale gas boom 120 112 66 30 18 52 77 99 114 118 96 89 97 47 44 37 34 35 51 Evolution of new 26 21 19 GTT orders (1)(2) 7 4 5 1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LNGC/VLEC F
Slide 57: Contact
Contact: information-financiere@gtt.fr / +33 1 30 23 20 87
Gaztransport & Technigaz (GTT) — H1 2019 Earnings Presentation on 6ix