Vallourec Sa · EURONEXT:VK
Vallourec Sa — Q2 2022 Earnings Presentation
29 slides from Vallourec Sa's earnings presentation, Jul 27, 2022
Slide 1: Q2 2022 Results
Q2 2022 Results July 27, 2022 27 July, 2022 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: Today's Agenda
TODAY’S AGENDA 1. Highlights of the Second Quarter 2. Q2 2022 Results 3. 2022 Outlook 4. Update on the New Vallourec Project 5. Key Take-Aways 6. Appendices: Q2 Financials and Market Environment 3
Slide 4: Highlights of the Second Quarter
1. HIGHLIGHTS OF THE SECOND QUARTER ► Q2 EBITDA of €160 million, €115 million increase as compared to Q1 Solid Q2 performance ► Positive trajectory of worldwide Tube business, especially in the U.S. ► Iron Ore mine restarted but still performing below full production potential ► Favorable OCTG price
Slide 5: 2. Q2 2022 Results
Y vallourec 2. Q2 2022 RESULTS
Slide 6: Q2 2022 Key Figures
Q2 2022 KEY FIGURES TUBE VOLUMES (k tonnes) REVENUE (€ million) 433 1,144 842 +35.9% +13.6% 381 Mine revenue Tube revenue Q2 2021 Q2 2022 Q2 2021 Q2 2022 EBITDA (€ million) FREE CASH FLOW (€ million) ~240 Q2 2021 Q2 2022 160 16 148 (42) Mine normalized EBITDA (187) Working Mine EBITDA (92) capital F
Slide 7: Q2 2022 Financial Highlights
Q2 2022 FINANCIAL HIGHLIGHTS ► EBITDA of €160 million, margin 14% Q2 2021 – Q2 2022 Revenue bridge (€ million) • €254 million Industrial margin, or 22% of revenue o Highly favorable Oil & Gas market in North America o Negative impact from iron ore mine 164 (79) 1,144 o Robust performance in Industry
Slide 8: Cash Flow
CASH FLOW Q2 2022 EBITDA to FCF bridge (€ million) Q2 21/22 Net Working Capital (€ million) o/w 160 (21) €1,471m 139 (49) inventory (17) 1,471 (32) 41 o/w €870m inventory 928 (187) (146) (25) (171) Q2 2022 Provisions Cash Interest Tax Other (incl Operating Change in Operating Capex Free Cash EBITDA
Slide 9: Net Debt and Liquidity
NET DEBT AND LIQUIDITY € million Net Debt Net Debt as of as of ► Liquidity position of €752 million: March 31 June 30 ► Cash of €365 million 2022 2022 ► Revolving Credit Facility of €462 million o/w €387 million remaining headroom ► Average debt maturity of 4 years ► Vallourec Outlook Revised To Pos
Slide 10: 3. 2022 Outlook
3. 2022 OUTLOOK Y vallourec 10
Slide 11: Iron Ore Mine: Operating Below Potential
IRON ORE MINE: OPERATING BELOW POTENTIAL Operational Update Actual and assumed production (in Mt) ► Base iron ore mine operations ► Assumptions for H2 2022 8 • Production ~1.5 million tonnes data • H2 2022 consensus estimates for iron • Annual production capacity of 8.7 ore average prices c. US$ 120
Slide 12: Tube Business: Continued Positive Market Conditions
TUBE BUSINESS: CONTINUED POSITIVE MARKET CONDITIONS NORTH AMERICA ► Highly favorable market conditions to continue in H2 2022, in both price and volume terms ► Market very tight in terms of available supply EUROPE-AFRICA & MIDDLE EAST- ASIA ► Oil & Gas: volumes expected to continue to modestly recov
Slide 13: 2022 EBITDA Outlook
2022 EBITDA OUTLOOK 2022 EBITDA €650 to €750 million ► 2022 EBITDA now expected in a range of €650 to €750 million (€ million) ~1,000* ► EBITDA driven by growth of tube business [650-750] (particularly in North America) 492 ► This strong performance more than offsets significantly lower than normali
Slide 14: 4. Update on the 'New Vallourec' Project
4. UPDATE ON THE ‘NEW VALLOUREC’ PROJECT 14
Slide 15: Foundations of the 'New Vallourec'
FOUNDATIONS OF THE ‘NEW VALLOUREC’ Streamline overheads to lower breakeven 1 Reshape industrial footprint 2 and increase efficiency ► Closure of German sites ► Simplified organization ► All European OCTG products to be produced in Brazil by end of • Leaner organization in all regions, North America,
Slide 16: Further New Appointments to the Executive Committee
FURTHER NEW APPOINTMENTS TO THE EXECUTIVE COMMITTEE… ► ENRICO SCHIAPPACASSE NATHALIE JOANNES ► Senior Vice President Strategy & Development General Counsel of Vallourec Group ► June 1, 2022 July 4, 2022 ► 25-year track record in the energy, strategy and consulting ► Extensive global experience in li
Slide 17: Completing the Team That Will Drive 'New Vallourec'
… COMPLETING THE TEAM* THAT WILL DRIVE ‘NEW VALLOUREC’ TRANSFORMATION PLAN Philippe Guillemot Chairman & CEO Regions Operations Central Functions Bertrand Frischmann Sascha Bibert Philippe Carlier North America CFO Industrial Group & Eastern Hemisphere Ludovic Oster Pierre d’Archemont Human South Am
Slide 18: New Industrial Footprint 2024
NEW INDUSTRIAL FOOTPRINT 2024 EASTERN HEMISPHERE (CHINA) 2024 Rolling capacity after NORTH AMERICA transfer: 600,000 tonnes Steel capacity: 750,000 tonnes Rolling capacity: 750,000 tonnes SOUTH AMERICA Steel capacity: 950,000 tonnes Rolling capacity: 1,100,000 tonnes (30)% Reduced CO2 content of tub
Slide 19: P&L and Cash Profile of the New Vallourec Implementation
P&L AND CASH PROFILE OF THE NEW VALLOUREC IMPLEMENTATION Ramp-up of €230 million recurring EBITDA uplift Illustrative cash flow profile Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q4-24 Q1-25 Restructuring Cash Out (a) Restructuring Cash In (
Slide 20: Key Take Aways
6. KEY TAKE AWAYS ► Q2 results significantly increased by €115 million as compared to Q1 ► FY 2022 EBITDA quantified at €650 to €750 million assuming conservative iron ore mine production ► With normalized iron ore production, EBITDA would have been approximately €1.0 billion* in 2022 ► Free Cash Fl
Slide 21: Appendices
6. APPENDICES Y vallourec 21
Slide 22: Q2 2022 P&L
Q2 2022 P&L In € million Q2 2022 Q2 2021 Change Revenue 1,144 842 35.9% Cost of sales (890) (599) 48.6% Industrial Margin 254 243 4.5% (as a % of revenue) 22.2% 28.9% (6.7)p.p. Sales, general and administrative costs (98) (81) 21.0% (as a % of revenue) (8.6)% (9.6)% (1)p.p. Other 4 (14) na EBITDA 16
Slide 23: Revenue Breakdown – Q2 2022
REVENUE BREAKDOWN – Q2 2022 REVENUE BY REGION As % of As % of In € million Q2 2022 Q2 2021 Change revenue revenue Europe 142 12.4% 134 15.9% 6.0% North America (Nafta) 461 40.3% 194 23.0% 138.2% South America 264 23.0% 283 33.6% (6.7)% Asia and Middle East 231 20.2% 173 20.5% 34.1% Rest of the world
Slide 24: Balance Sheet as at June 30, 2022
BALANCE SHEET AS AT JUNE 30TH, 2022 In € million Assets 06/30/2022 12/31/2021 Liabilities 06/30/2022 12/31/2021 Equity - Group share * 1,627 1,763 Non-controlling interests 48 45 Net intangible assets 43 45 Total equity 1,674 1,808 Goodwill 43 38 Shareholder loan - - Net property, plant and equipmen
Slide 25: Indebtedness
INDEBTEDNESS In € million 06/30/2022 Bond issue – maturing in June 2026 1,150 PGE 216 RCF 75 ACC ACE 264 Other 49 TOTAL GROSS FINANCIAL INDEBTEDNESS 1,754 Cash 365 TOTAL NET FINANCIAL INDEBTEDNESS 1,389 25
Slide 26: Supportive Market Environment
SUPPORTIVE MARKET ENVIRONMENT 26
Slide 27: Tubes: Supportive Long-Term E&P Fundamentals
TUBES: SUPPORTIVE LONG-TERM E&P FUNDAMENTALS Projected E&P Capex (in $ bn) expected to surpass 2019 levels 700 551 557 566 481 494 450 441 410 348 368 300 2014 2015 2016 2017 2018 2019 2020 2021 2022E 2023E 2024E 2025E North America Middle East Latin America Africa Asia Pacific Europe Russia and Cas
Slide 28: Higher Drilling and OCTG Prices Supporting Prices
HIGHER DRILLING AND OCTG PRICES SUPPORTING PRICES Global Rig Count OCTG Price Evolution Increase from +85% 3 578 +178% +60% +47% COVID Trough $3 585 2 337 2 211 2 177 $2 500 2 029 $2 100 1 593 1 650 1 352 1 361 $1 654 $1 631 $1 592 $1 654 $1 290 $1 350 $1 312 $1 350 $ 920 2014 2015 2016 2017 2018 20
Slide 29: Investor Relations Contact
► Euronext Paris: ISIN code: FR0013506730, ► Financial calendar: Ticker: VK • November 21, 2022 – Publication of Q3 and nine- USA: American Depositary Receipt (ADR) - ISIN month 2022 results code: US92023R4074, Ticker: VLOWY ► Investor Relations Contact - Vallourec Group ► Conference and roadshow •