Subsea 7 S.a. · OSL:SUBC
Subsea 7 — Q3 2017 Earnings Presentation
31 slides from Subsea 7's earnings presentation, Nov 9, 2017
Slide 1: Third Quarter 2017 Earnings Presentation
Third Quarter 2017 Earnings Presentation 9 November 2017 1 © Subsea 7 - 2017 subsea7.com
Slide 2: Forward-looking statements
Forward-looking statements Certain statements made in this presentation may include ‘forward-looking statements’. These statements may be identified by the use of words like ‘anticipate’, ‘believe’, ‘could’, ‘estimate’, ‘expect’, ‘forecast’, ‘intend’, ‘may’, ‘might’, ‘plan’, ‘predict’, ‘project’, ‘s
Slide 3: Third Quarter 2017
Third Quarter 2017 Jean Cahuzac, CEO - Highlights Ricardo Rosa, CFO - Financial performance Jean Cahuzac, CEO - Strategy and outlook - Q&A 3 © Subsea 7 - 2017 subsea7.com
Slide 4: Q3 2017 results
Q3 2017 results FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Revenue $1.1 billion • Strong execution and continued • Adjusted EBITDA $250 million focus on cost control • Adjusted EBITDA margin 24% • Vessel Utilisation • Diluted EPS $0.34 Active: 78% Total: 69% • Net cash $877 million ORDER INTAKE •
Slide 5: Some of our activities
Some of our activities WND Ph.2/GFR (Egypt) Maria (Norway) Western Isles (UK) OCTP SURF(Ghana) Beatrice (UK) Mad Dog 2 (US GoM) EPRS (Australia) PLSVs (Brazil) 5 © Subsea 7 - 2017 subsea7.com
Slide 6: Backlog and order intake
Backlog and order intake Backlog of $5.3 billion(1), as at 30 September 2017 • $538 million awarded Backlog by Execution Date Backlog by Service Capability in the third quarter SURF andand SURF • Contract extensions 2017 Conventional Conventional (2) for three PLSVs, 2019 $1.0bn $4.4bn $1.7bn $4.2bn
Slide 7: Income statement – Q3 highlights
Income statement – Q3 highlights Three months ended 30 September 2017 30 September 2016 In $ millions, unless otherwise indicated Unaudited Unaudited Revenue 1,063 928 Net operating income (NOI) (1) 149 195 Income before taxes 123 186 Taxation (12) (37) Net income 111 149 Adjusted EBITDA(2) 250 289
Slide 8: Adjusted EBITDA progression
Adjusted EBITDA progression • High Group margins for previous 8 quarters reflected strong contribution from projects awarded before the downturn, good execution and cost control • Near-term margins will be lower with fewer large projects completing and a competitive tendering environment Average 32%
Slide 9: Business Unit performance – Third quarter
Business Unit performance– Third quarter Revenue NOI $1,063m $195m $928m $8m $232m $30m $19m $76m $97m $149m $45m $6m $214m $755m $801m $103m 2017 2016 2017 2016 SURF & Conventional i-Tech Services Renewables & Heavy Lifting Corporate segment: net operating loss Q3 2017 $4m (net operating loss Q3 20
Slide 10: Summary of third quarter 2017 cash flow
Summary of third quarter 2017 cash flow $m 250 (5) (23) (48) (54) 30 (94) (6) 1,524 1,474 Cash at 30 June EBITDA Repayment of Repurchase of Tax Paid Capex Dividends Decrease in Net Other Cash at 30 2017 Borrowings Convertible Received Operating September 2017 Bonds Liabilities • Net cash of $877 mil
Slide 11: EMAS Chiyoda Subsea (ECS) integration
EMAS Chiyoda Subsea (ECS) integration • ECS acquired projects progressing in line with expectations – Hasbah (Saudi Arabia) nearshore work underway – OCTP SURF (Ghana) offshore work continued – TVEX (US GoM) pipeline welding commenced at Ingleside • ECS People transitioned to Subsea 7 • Lewek Champi
Slide 12: Post quarter end events
Post quarter end events • Convertible bond matured and repaid – $358 million bonds outstanding at 30 September redeemed for cash, $342 million bonds previously repurchased cancelled • Agreement to discontinue SapuraAcergy joint venture – Sapura 3000 vessel sold to Sapura Energy Sapura 3000 – ~$100 m
Slide 13: Financial guidance
Financial guidance 2017 Guidance Revenue Higher than 2016 Adjusted EBITDA percentage margin Lower than 2016 Administrative expense $230 million - $240 million Net finance cost $0 million - $5 million Depreciation and Amortisation $410 million - $420 million Full year effective tax rate 25% - 28% Cap
Slide 14: Delivering in the downturn and preparing for future growth
Delivering in the downturn and preparing for future growth • Investing in the qualities that differentiate us and help lower the cost of development for our clients 14 © Subsea 7 - 2017 subsea7.com
Slide 15: Project delivery based on our expertise and know-how
Project delivery based on our expertise and know-how Our People Number of people working at Subsea 7 12,000 • Increase in workforce size associated with growth in 10,000 Renewables and Conventional 8,000 activities 6,000 − Supported by skilled and experienced people joining from SHL and ECS 4,000 2,
Slide 16: Latest key technology development areas
Latest key technology development areas 16 © Subsea 7 - 2017 subsea7.com
Slide 17: A diverse fleet of vessels
A diverse fleet of vessels 31 Vessels in the 4 Vessels 1 Vessel under active fleet stacked construction • Aligning fleet capability and • Two chartered Life of Field vessels capacity to expected market returned to their owners in the activity third quarter • Vessel utilisation expected to • Preparin
Slide 18: Our Client Partnerships
Our Client Partnerships • Volund Infill: first project executed in the partnership alliance with Aker BP • Sanctioned June 2016, completed July 2017 • Common incentive model • ~30% saving on PM&E hours • Two well tie-in delivered 25% faster than scheduled • Project executed in 13 months, 9 months fa
Slide 19: Subsea Integration Alliance
Subsea Integration Alliance + = Enhanced production Reduced cost and risk Pore-to-shore perspective 19 © Subsea 7 - 2017 subsea7.com
Slide 20: Business Unit outlook
Business Unit outlook SURF and Conventional i-Tech Services • Gradual recovery with highly • Tendering activity gradually increasing: competitive pricing, awards to market - IRM in the North Sea and US Gulf of Mexico, could increase in first half 2018 - Drill rig ROV support in the North Sea and Asi
Slide 21: © Subsea 7 - 2017 subsea7.com
21 © Subsea 7 - 2017 subsea7.com
Slide 22: Appendix
Appendix Major project progression Track Record Fleet Financial summaries 22 © Subsea 7 - 2017 subsea7.com
Slide 23: Major project progression
Major project progression • Continuing projects >$100m between 5% and 95% complete as at 30 September 2017 excluding PLSV and Life of Field day-rate contracts Catcher (UK) Announced Maria (Norway) size of Aasta Hansteen (Norway) project Sonamet (Angola) Major Culzean (UK) (Over $750m) Beatrice (UK)
Slide 24: Track record: projects and clients
• Beatrice wind farm, BOWL • Catcher, Premier • Martin Linge, Total • Culzean, Maersk • Aasta Hansteen, Statoil • Callater, Apache • Maria, Wintershall • Western Isles, Dana • Mariner, Statoil • Montrose, Talisman • USC & Pipelay, Shell • SCIRM, BP • Al-Khalij, Total • Coulomb Ph2, • DSVi, Various S
Slide 25: 36 Vessels including 31 active vessels at end Q3 '17
36 Vessels including 31 active vessels at end Q3 ‘17 12 vessels released since May 2015 Skandi Seven (returned to owner Q3 ‘15) Seven Polaris (Scrapped Q4 ‘15) Havila Subsea (returned to owner Q4 ‘15) Acergy Viking (returned to owner Q4 ‘15) Skandi Skansen (returned to owner Q4 ’15) Skandi Neptune (
Slide 26: Income statement – supplementary details
Income statement – supplementary details Three months ended 30 September 17 30 September 16 In $ millions Unaudited Unaudited Administrative expenses (64) (63) Share of net (loss)/income of associates and joint ventures (13) 11 Depreciation and amortisation (101) (94) Net operating income 149 195 Ne
Slide 27: Segmental analysis
Segmental analysis For the three months ended 30 September 2017 Renewables & In $ millions (unaudited) SURF & Conventional i-Tech Services Heavy Lifting Corporate TOTAL Revenue 755 76 232 - 1,063 Net operating income/(loss) 103 6 45 (4) 149 Finance income 6 Other gains and losses (26) Finance costs
Slide 28: Summary balance sheet
Summary balance sheet 30 Sept 2017 31 Dec 2016 30 Sept 2017 31 Dec 2016 Unaudited Audited Unaudited Audited In $ millions In $ millions Assets Equity & Liabilities Total equity 5,904 5,537 Non-current assets Non-current liabilities Goodwill 701 628 Non-current portion of borrowings 264 - Property, p
Slide 29: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net operating income to Adjusted EBITDA Three Months Ended 30 September 2017 Three Months Ended 30 September 2016 For the period (in $millions) Unaudited Unaudited Net operating income 149 195 Depreciation, amortisation and mobilisation 101 94 Impairment of intangib
Slide 30: Summary of year-to-date 2017 cash flow
Summary of year-to-date 2017 cash flow $ millions Cash and cash equivalents at 31 Dec 2016 1,676 Net cash generated from operating activities 191 Included decrease of $559 million in net operating liabilities Included cash outflows on acquisition of Seaway Heavy Lifting, $111 million and ECS, $38 Ne
Slide 31: Contact: Isabel Green, Investor Relations Director
Contact: Isabel Green, Investor Relations Director eMail: isabel.green@subsea7.com Direct Line +44 20 8210 5568 Website www.subsea7.com 31 © Subsea 7 - 2017 subsea7.com