Vallourec Sa · EURONEXT:VK
Vallourec Sa — Investor Presentation (May 2024)
34 slides from Vallourec Sa's investor presentation, May 2024
Slide 1: Investor Presentation
Investor Presentation May 2024
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements This presentation includes 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”, “shoul
Slide 3: Investment Overview
Investment Overview YY vallourec
Slide 4: The Vallourec Investment Case
The Vallourec Investment Case Vallourec is a mission-critical supplier of complex steel Financial Figures tubular solutions supported by industry-leading R&D and world-class production facilities. Zero Net Debt by year-end 2025 at the latest We are making Vallourec more profitable, more resilient an
Slide 5: The New Vallourec Plan
The New Vallourec Plan Key Objectives Tools Utilized Primary Financial Operational Governance Strategic Goals Targets Initiatives Improvements €230m EBITDA / €250m FCF Improvement1 Realigning Our Deliver Industrial Footprint Reshaping Our Best-in-Class Profitability Management Team Close Profitabili
Slide 6: Significantly Reshaped Production Footprint
Significantly Reshaped Production Footprint Changes resulting from the New Vallourec plan Closed ~700kt of rolling capacity and various finishing sites Premium finishing capacity North America Europe increased by 40kt Domestic Capacity for Finishing and Reduced rolling capacity by Domestic Demand Ni
Slide 7: 2022 New Vallourec Plan Fully Executed; More to Come
2022 New Vallourec Plan Fully Executed; More to Come Already Implemented More to Come • Enhanced global pricing policies Go-to-Market • Develop premier New Energies franchise • Exit of European Industry market Strategy • Grow services and accessories revenues • Exit of China domestic market1 • Plann
Slide 8: A Significant Balance Sheet Transformation
A Significant Balance Sheet Transformation Debt Liquidity Net Debt (€ Million) € Million 1 714 1 493 1 590 1 130 1 498 1 539 186 1 000 868 1 391 190 741 177 570 181 485 1 203 185 462 462 462 189 462 312 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 703 462 Gross Debt (€ Million) 1 784 1 68
Slide 9: Holistic Debt Refinancing Executed in April 2024
Holistic Debt Refinancing Executed in April 2024 Gross debt to be reduced by €550m+ Strong liquidity for all market conditions € Million € Million 396 129 194 88 1 023 93 1 714 1 551 750 1 341 923 68 194 Q1 2024 2026 PGE PGE to be 2032 Other Pro Forma Q1 2024 Cash PGE to be Increased Increased Pro F
Slide 10: Operations & Financials
Operations & Financials Le vallourec
Slide 11: Supplier of Mission-Critical Premium Seamless Tubular Solutions
Supplier of Mission-Critical Premium Seamless Tubular Solutions Focused on high-end seamless tubular solution Highly demanding applications for our products Vallourec Focus Vertical Well Commercial Airline Section Cruising Altitude Up to 10,000 meters ~10,000 meters Welded Tubes Seamless Tubes Mount
Slide 12: The Seamless Tube Production Process
The Seamless Tube Production Process Heat Raw Material Sourcing Steelmaking Rolling Treatment Threading Externally sourced scrap OCTG Only and recycled process scrap Scrap Metal Iron Ore Pelletizing Plant Pellets Cast Iron Lumber Kiln Charcoal Blast Furnace Conversion of scrap Piercing and Heating a
Slide 13: Midcycle Tubes Earnings Power Simulation
Midcycle Tubes Earnings Power Simulation Metric Assumption Comments Operating Assumptions Total sales volumes (k tonnes) 1,700 Maximizing premium mix as opposed to maximizing volumes Vallourec average selling price ($) $2,800- $3,000 Assumes market prices in the low-mid $2k per tonne range + Tier 1
Slide 14: The Mining Process
The Mining Process Beneficiation Plant Dispatch & Sales Run of Mine Iron Ore (ROM) Open Pit Wet Tailings Dewatering Filter Waste Pile Dry Tailings Waste Waste and Dry Tailings External Waste 14
Slide 15: Mine Earnings Power and Growth Potential
Mine Earnings Power and Growth Potential Near-term operational targets Two-phase extension plan in progress New near-term1 annual iron ore production 6.0m Phase 1 Phase 2 target (m tonnes) Incremental Annual Production used to support Tubes – +1mt – 2mt 1.0m Iron Ore Production4 production business
Slide 16: Midcycle Cash Flow Simulation: Significant Potential Returns
Midcycle Cash Flow Simulation: Significant Potential Returns Metric Assumption Comments EBITDA (€) Tubes €750m Mine & Forest €125m Holding & Other, Intersegment (€25m) Group EBITDA €850m Cash Flows (€) Capital expenditures €175m Including mine extensions, can reduce to ~€125m in downturn Financial c
Slide 17: 2024 Earnings, Cash Flow and Net Debt Outlook
2024 Earnings, Cash Flow and Net Debt Outlook Second Quarter 2024 Full Year 2024 Volumes to increase sequentially due to higher Strong international market environment to Tubes international shipments; EBITDA per tonne to persist with results benefiting from strong decline primarily due to lower US
Slide 18: Market Dynamics
Market Dynamics YY vallourec
Slide 19: Key Seamless Tubes Markets
Key Seamless Tubes Markets Oil Country Tubular Project Line Pipe Industry New Goods (OCTG) (PLP) & Process & Other Energies 2023E ASP (price/tonne) Mid $3k Low-mid $2k Low $2k1 2023E Total Market Size (mt) 9.6 4.4 Not Analyzed High-Growth Emerging Market 2023E Served Market Size (mt) 5.4 1.1 0.4 % o
Slide 20: Limited Set of Premium Seamless Tube Suppliers
Limited Set of Premium Seamless Tube Suppliers Tier 1 Global Suppliers ~6 million tonnes annual production Suppliers Unable to Access Global Premium Market Regional Western Suppliers Asia and CIS Suppliers ~2.5 million tonnes annual production >10 million tonnes annual production Note: reflects prod
Slide 21: Major Seamless OCTG Markets
Major Seamless OCTG Markets 2023 Market Size (Million Tonnes) CIS North America 1.3 Europe 0.2 2.9 China 2.9 1.0 Africa 0.3 Middle East Asia Pacific 0.5 Ex-China 0.5 South America Dominant Connection Technology Proprietary API Sources: Internal market intelligence based on public peer commentary, Ry
Slide 22: US OCTG Market: Pricing Not Yet Reflecting Market Balance
US OCTG Market: Pricing Not Yet Reflecting Market Balance Rig count stable since October Inventories have normalized Pricing still somewhat lower US Horizontal Rig Count Months of OCTG Inventory Seamless OCTG Price ($ / Tonne) 750 8,0 * 4 062 3 538 7,0 650 2 992 2 567 6,0 2 382 2 235 550 5,0 450 4,0
Slide 23: International OCTG Market: Demand Remains Robust
International OCTG Market: Demand Remains Robust International offshore activity at post-COVID high International market pricing remains strong Onshore Rig Count Offshore Rig Count Seamless OCTG Price ($ / Tonne) Onshore (L Axis) Offshore (R Axis) Middle East North Sea 3 500 800 250 2 920 3 000 3 00
Slide 24: Strong Market Prices Reflecting Tight Supply-Demand, Costs
Strong Market Prices Reflecting Tight Supply-Demand, Costs Tubes market in the midst of a strong upturn Industry costs point to higher landing for prices Historical OCTG Market Pricing ($ / tonne) Tier 1 OCTG Supplier Average Cash Cost of Sales ($ / tonne) International United States Weighted Market
Slide 25: Significant Growth Potential in Our New Energies Business
Significant Growth Potential in Our New Energies Business Carbon Capture, Utilization and Geothermal Hydrogen Storage (“CCUS”) Primary Tubes Casing for Casing and tubing for CO2 injection wells; H2 storage systems; transportation Application geothermal wells transportation line pipes line pipes Heat
Slide 26: Financial Data
Financial Data Le vallourec
Slide 27: Summary Income Statement
Summary Income Statement € million, unless noted 2019 2020 2021 2022 1Q23 2Q23 3Q23 4Q23 2023 1Q24 Revenues 4,173 3,242 3,442 4,883 1,338 1,358 1,142 1,276 5,114 990 Cost of sales (3,435) (2,634) (2,605) (3,807) (926) (890) (818) (886) (3,520) (669) Industrial m argin 738 608 837 1,076 412 468 324 3
Slide 28: Summary Balance Sheet
Summary Balance Sheet € million, unless noted 2019 2020 2021 2022 1Q23 2Q23 3Q23 4Q23 2023 1Q24 Goodw ill & intangible assets 427 74 83 76 89 89 87 82 82 80 PP&E and biological assets 2,705 1,748 1,790 1,891 1,871 1,923 1,960 2,050 2,050 2,040 Other non-current assets 509 357 443 442 443 451 468 384
Slide 29: Cash Flow Summary
Cash Flow Summary € million, unless noted 2019 2020 2021 2022 1Q23 2Q23 3Q23 4Q23 2023 1Q24 EBITDA 347 258 492 715 320 374 222 280 1,196 235 Non-cash items in EBITDA (22) 1 (37) (68) 13 (21) 11 (1) 2 10 Financial cash out (234) (232) (228) (110) (18) (61) (8) (1) (88) 5 Tax payments (47) (93) (180)
Slide 30: Segment Data
Segment Data Segment Key Performance Indicators € million, unless noted 2021 1Q22 2Q22 3Q22 4Q22 2022 1Q23 2Q23 3Q23 4Q23 2023 1Q24 Volume sold* 1,640 395 433 462 514 1,804 431 396 343 382 1,552 292 Revenue (€m) 3,030 902 1,096 1,197 1,467 4,663 1,258 1,279 1,068 1,196 4,802 932 Tubes Average Sellin
Slide 31: Definitions of Non-GAAP Financial Data and Concepts
Definitions of Non-GAAP Financial Data and Concepts Adjusted free cash flow is defined as adjusted operating cash flow +/- change in operating working capital and gross capital expenditures. It corresponds to net cash used in operating activities less restructuring and non-recurring items +/- gross
Slide 32: Definitions of Non-GAAP Financial Data and Concepts
Definitions of Non-GAAP Financial Data and Concepts Free cash flow, as previously defined, may continue to be derived as follows: total cash generation - asset disposals & other cash items. This is also defined as EBITDA adjusted for changes in provisions, less interest and tax payments, changes in
Slide 33: Definitions of Non-GAAP Financial Data and Concepts
Definitions of Non-GAAP Financial Data and Concepts Net working capital requirement is defined as working capital requirement net of provisions for inventories and trade receivables; net working capital requirement days are computed on an annualized quarterly sales basis. Non-cash adjustments to net
Slide 34: Share Information and Financial Calendar
Share Information and Financial Calendar Share Information Financial Calendar Euronext Paris • July 26th, 2024: Publication of Second Quarter ISIN code: FR0013506730 and First Half 2024 Results Ticker: VK • November 15th, 2024: Publication of Third Quarter and Nine-Month 2024 Results USA: American D