Vallourec Sa · EURONEXT:VK
Vallourec Sa — Q3 2017 Earnings Presentation
31 slides from Vallourec Sa's earnings presentation, Nov 9, 2017
Slide 1: Q3 – 9M 2017 Results
Q3 – 9M 2017 RESULTS Investor Presentation 9 November 2017
Slide 2: Information and forward-looking statements
INFORMATION Quarterly financial statements are unaudited and are not subject to any review Half year financial statements are subject to limited review by statutory auditors Full year consolidated financial statements at 31 December are audited Unless otherwise specified, indicated variation
Slide 3: 9M 2017 at a Glance
9M 2017 AT A GLANCE Improved financial performance in EBITDA(1) (in millions of €) each of the 3 quarters : Higher Oil & Gas revenues in the US Realized benefits from the Transformation Plan Q3 2017 EBITDA: +€9m, +€61m YoY 9M 2017 EBITDA: up €147m YoY, to -€9m Range for FY 2017 EBITDA ta
Slide 4: Market Trends – General Overview
MARKET TRENDS – GENERAL OVERVIEW US OCTG market recovery confirmed: International OCTG market: Active rig count more than doubled NOCs capex stable since May 2016, plateauing at high level since this summer IOCs progressively starting to sanction new projects US OCTG price increase: +28%
Slide 5: 9M 2017: Continuous Volume Improvement
9M 2017: CONTINUOUS VOLUME IMPROVEMENT VOLUMES SHIPPED 2013 – Q3 2017 (Kt) 2013 2014 2015 2016 2017 2,159 Kt 2,323 Kt 1,411 Kt 1,281 Kt 1,601 Kt 9M 2017 vs. 9M 2016: +77%, incl. Tianda acquisition and VSB full consolidation +31% at constant scope, driven mostly by North America * Incl. Tianda and VS
Slide 6: Improved 9M 2017 Revenue
IMPROVED 9M 2017 REVENUE +26.0% 30.7% 2.5% 12.4% €2,680m -19.6% €2,127m REVENUE UP 26% THANKS TO HIGHER VOLUMES IN O&G AND SCOPE EFFECT * Scope effect is calculated by eliminating the effect of changes in the Group’s scope by taking into account on 1 January of Year N-1 the scope variations which ha
Slide 7: 9M 2017 Revenue Growth Mainly Driven by O&G
9M 2017 REVENUE GROWTH MAINLY DRIVEN BY O&G Revenue up 26.0% in 9M 2017 vs. 9M 2016 +11.1% at constant scope and exchange rate 9M 2017 revenue Oil & Gas +32.3%* (+13.0%**) Industry & Other +27.5%* (+19.7%**) in millions of € USA: revenue up Europe: revenue up • Rebound in onshore volumes • H
Slide 8: Q3 2017 P&L – Positive EBITDA
Q3 2017 P&L – POSITIVE EBITDA VALLOUREC Q3 Q3 Change Improved EBITDA: +€61m to In millions of euros 2017 2016 YoY €9m REVENUE 964 693 39.1% Cost of sales (850) (637) 33.4% Industrial margin up €58m: Industrial margin 114 56 103.6% • Revenue increase (as % of revenue) 11.8% 8.1% 3.7 pts • Savings
Slide 9: 9M 2017 P&L – Close to EBITDA Breakeven
9M 2017 P&L – CLOSE TO EBITDA BREAKEVEN VALLOUREC 9M 9M Change Improved EBITDA In millions of euros 2017 2016 YoY Industrial margin up €149m, REVENUE 2,680 2,127 26.0% Cost of sales (2,353) (1,949) 20.7% • Revenue increase Industrial margin 327 178 83.7% • Savings and scope change from (as % of
Slide 10: 9M 2017 Free Cash Flow
9M 2017 FREE CASH FLOW 9M 9M Change Vallourec Q3 Q3 Change 2017 2016 (€ m) In millions of euros 2017 2016 (€ m) (208) (275) +67 Cash flow from operating activities (FFO) (A) (48) (72) +24 Change in operating WCR (B) (103) (17) -86 1 24 -23 [+ decrease, (increase)] (86) (100) +14 Gross capital expend
Slide 11: A Solid Liquidity Position and Long Term Maturity
A SOLID LIQUIDITY POSITION AND LONG TERM MATURITY MATURITIES OF BONDS(1,2) Net debt at 30 September 2017: €1,645m in €m 800 Gross debt €2.6bn (incl. €1.1bn LT debt: bonds, leasing...) Cash: €1.0bn Liquidity at 30 September 2017 €1.0bn of cash €1.4bn undrawn LT committed bank facilities (
Slide 12: Outlook for the Months to Come
OUTLOOK FOR THE MONTHS TO COME NORTH AMERICA EAMEA EAMEA O&G Rig count expected to plateau, assuming no IOCs: Progressively starting to sanction new projects significant change in WTI price NOCs: Expected to remain sustained High load of Vallourec domestic facilities Q4 2017: impacted by
Slide 13: Appendix
y vallourec APPENDIX
Slide 14: 9M 2017 Financials
9M 2017 FINANCIALS VALLOUREC INVESTOR PRESENTATION - NOVEMBER 2017 14
Slide 15: 9M 2017: EBITDA up €147m YoY
9M 2017: EBITDA UP €147M YoY VOLUMES SHIPPED(1) (In Ktons) REVENUE (in millions of €) EBITDA(2) (in millions of €) FREE CASH FLOW(3) (in millions of €) 9M 2016 9M 2017 - 392 - 397 (1) Incl. Tianda and VSB full consolidation (2) Earnings Before Interest, Taxes, Depreciation and Amortization (3) Non-G
Slide 16: 9M 2017 Revenue Breakdown
9M 2017 REVENUE BREAKDOWN AS % OF TOTAL GROUP REVENUE REVENUE BY MARKET REVENUE BY REGION * Tianda and 100% of VSB consolidation VALLOUREC INVESTOR PRESENTATION - NOVEMBER 2017 16
Slide 17: Revenue by Geography
REVENUE BY GEOGRAPHY 9M As % of 9M As % of Change In millions of euros 2017 revenue 2016 revenue YoY Europe 420 15.7% 461 21.7% -8.9% North America 676 25.2% 366 17.2% 84.7% South America 452 16.9% 378 17.7% 19.6% Asia & Middle East 869 32.4% 559 26.3% 55.5% Rest of World 263 9.8% 363 17.1% -27.5% T
Slide 18: 9M 2017 Balance Sheet
9M 2017 BALANCE SHEET In millions of euros 30-Sept 31-Dec 30-Sept 31-Dec Assets 2017 2016 Liabilities 2017 2016 Equity, Group share 2,619 3,284 Net intangible assets 96 125 Non-controlling interests 471 494 Goodwill 349 383 Total equity 3,090 3,778 Shareholder loan 74 84 Net property, plant and equi
Slide 19: 9M 2017 Net Debt
9M 2017 NET DEBT (in millions of €) Net Debt as at Net Debt as at 31 Dec. 2016 30 Sept. 2017 Net Net debt = debt = 34.1% 53.2% of of equity equity Cash flow from operating activities Change Gross Asset (1,287) in WCR(1) Dividends capital disposals paid expenditure & other items (208) - 39 (103) (86)
Slide 20: Capital Expenditure
CAPITAL EXPENDITURE (in millions of €) VALLOUREC INVESTOR PRESENTATION - NOVEMBER 2017 20
Slide 21: Q3 2017 Financials
Q3 2017 FINANCIALS VALLOUREC INVESTOR PRESENTATION - NOVEMBER 2017 21
Slide 22: Improved Q3 2017 Revenue
IMPROVED Q3 2017 REVENUE +39.1% 38.7% 13.7% €964m -4.0% -9.3% €693m * Scope effect is calculated by eliminating the effect of changes in the Group’s scope by taking into account on 1 January of Year N-1 the scope variations which have occurred during Year N-1. VALLOUREC INVESTOR PRESENTATION - NOVEM
Slide 23: Q3 2017: Positive EBITDA
Q3 2017: POSITIVE EBITDA VOLUMES SHIPPED(1) (In Ktons) REVENUE (in millions of €) EBITDA(2) (in millions of €) FREE CASH FLOW(3) (in millions of €) (1) Incl. Tianda and VSB full consolidation (2) Earnings Before Interest, Taxes, Depreciation and Amortization (3) Non-GAAP measure defined as cash flow
Slide 24: Q3 2017 Revenue Breakdown
Q3 2017 REVENUE BREAKDOWN AS % OF TOTAL GROUP REVENUE REVENUE BY MARKET REVENUE BY REGION * Tianda and 100% of VSB consolidation VALLOUREC INVESTOR PRESENTATION - NOVEMBER 2017 24
Slide 25: Q3 2017 Revenue by Market
Q3 2017 REVENUE BY MARKET In millions of euros Q3 As % of Q3 As % of Change 2017 revenue 2016 revenue YoY Oil & Gas 616 63.9% 411 59.3% 49.9% Petrochemicals 65 6.7% 28 4.0% 132.1% Oil & Gas, Petrochemicals 681 70.6% 439 63,3% 55.1% Power Generation 94 9.8% 108 15.6% -13.0% Mechanicals 90 9.3% 73 10.
Slide 26: Business Appendix
BUSINESS APPENDIX VALLOUREC INVESTOR PRESENTATION - NOVEMBER 2017 26
Slide 27: Vallourec at a Glance
VALLOUREC AT A GLANCE FY 2016: Worldwide presence with c.19,000 employees in more than 20 countries Over 50 production facilities worldwide delivering a large spectrum of products for diversified applications, geographies and sectors Sales volume: 1,281 Kt Highly innovative with 6 advanced R&D
Slide 28: With a Fully Invested Industrial Set Up
WITH A FULLY INVESTED INDUSTRIAL SET UP Two highly Global capabilities A unique position with high-end rolling competitive routes redeployed and finishing capabilities from Brazil and with a shift from Europe in all regions China for international to Asia and the Americas O&G markets Centre of techn
Slide 29: Well Positioned to Benefit from Market's Recovery
VALLOUREC IS WELL POSITIONED TO BENEFIT FROM MARKET’S RECOVERY TO COME, AND … NEW OIL PRODUCTION CAPACITY REQUIRED PER YEAR DEMAND/SUPPLY BALANCE Demand growth +0.5% Production (per year – decline rate 2014-2040) of post-peak fields (per year) -6% Source: World Energy Outlook 2016 – November 2016 So
Slide 30: The Transformation Plan Successful Implementation
… THE TRANSFORMATION PLAN SUCCESSFUL IMPLEMENTATION €750m EBITDA CONTRIBUTION TARGETED FROM TP Transformation Plan objectives confirmed in €m 750(1) 400 350 SG&A decrease YoY: cost savings more than offsetting the negative scope and forex impact Efficient CAPEX management Over 9M: 250 Dive
Slide 31: Investor Relations Contact
EURONEXT PARIS: ISIN CODE: FR0000120354, TICKER: VK USA: AMERICAN DEPOSITARY RECEIPT (ADR) - ISIN CODE: US92023R2094, TICKER: VLOWY Investor Relations Contact - Vallourec Group Tel: +33 1 49 09 39 76 Email: investor.relations@vallourec.com www.vallourec.com