Boart Longyear — H1 2016 Earnings Presentation
27 slides from Boart Longyear's earnings presentation, Aug 22, 2016
Slide 1: 1H 2016 Results
TruScanTM Prototype 1H 2016 Results August 2016 Marcus Randolph – Executive Chairman
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer • This presentation has been prepared by Boart Longyear Limited, ABN 49 123 052 728 (Boart Longyear or the Company). It contains general information about the Company’s activities as at the date of the presentation. It is information given in summary form and does not
Slide 3: 1H 2016 Summary
1H 2016 Summary (Results compared to 1H 2015, except as otherwise indicated) Safety1 o Lost time incident rate (LTIR) at 0.12 – 33% improvement over FY 2015 reflects success at mitigating significant risks o Moderate increase in total case incident rate (TCIR) – still among the lowest in the industr
Slide 4: Drilling Services Productivity Initiative Update
Drilling Services Productivity Initiative Update Shift Productivity Drill Rate + 17% + 21% • Tracking key metrics daily • Results reported and highly visible throughout company • Coaching and performance management for underperformers Productivity initiative driving measureable improvements with cus
Slide 5: Productivity & cost controls are improving results
Productivity & cost controls are improving results - 20% + 694% + 15% Significant improvement in EBITDA and cash despite revenue decline 1H 2016 Results – See page 27 for footnote descriptions 5
Slide 6: Becoming a data provider, not just a driller
Becoming a data provider, not just a driller • Data acquisition done by third parties at our rigs Today • Assay done off-site • Slow, costly and not user-friendly for our customers • Core orientation, core logging, survey and assay all done by our crews at the rig Future • Direct data feed into cust
Slide 7: Financial Overview
Financial Overview Jeff Olsen – CEO
Slide 8: Consolidated Results Summary: 1H 2016
Consolidated Results Summary: 1H 2016 (US $M) • Revenue down $77M, driven by volume and FX • Price down slightly • Demand relatively stable in underground and production drilling applications • Increase in requests for proposals • Adjusted EBITDA up $12M, driven by cost control and increased product
Slide 9: Half-Over-Half Comparison
Half-Over-Half Comparison Statutory Adjusted2 Change Change (US $M except EPS) 1H 2016 1H 2015 (US $M) 1H 2016 1H 2015 Fav / (Unfav) Fav / (Unfav) Revenue 310 387 -20% Revenue 310 387 -20% Gross Margin 39 2 2341% Adjusted Gross Margin 40 36 13% GM as % of Revenue 13% 0% Adj. GM as % of Revenue 13% 9
Slide 10: Consolidated Overview: 1H 2016
Consolidated Overview: 1H 2016 Volume and price declines offset by operational improvements (US $M) Consolidated Revenue Bridge Consolidated Adjusted EBITDA2 Bridge 1H 2016 Results – See page 27 for footnote descriptions 10
Slide 11: Debt and Cash Bridges
Debt and Cash Bridges (US $M) Gross Debt Cash Working capital build in 1H 2016 consistent with seasonality of business Total liquidity as of 30 June 2016 was $57M ($16M available under ABL) Typical seasonality = cash use in first half, cash generation in second half 1H 2016 Results – See page 27 for
Slide 12: Business Overview
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Slide 13: Drilling Services: 1H 2016 Operations
Drilling Services: 1H 2016 Operations Productivity improvements offset lower volumes Change Change Key Financials (US $M): 1H 2016 1H 2015 Key Performance Indicators 1H 2016 1H 2015 Fav / (Unfav) Fav / (Unfav) Revenue 220 281 -22% Average Operating Rigs 3 279 340 -18% COGS 200 266 25% Headcount (per
Slide 14: Drilling Services: Revenue by Commodity
Drilling Services: Revenue by Commodity Gold drives bulk of revenue 1H 2016 Results – See page 27 for footnote descriptions 14
Slide 15: Global Products: 1H 2016 Operations
Global Products: 1H 2016 Operations Headwinds from lower volume & FX partially offset by cost control Change Change Key Financials (US $M): 1H 2016 1H 2015 Key Performance Indicators 1H 2016 1H 2015 Fav / (Unfav) Fav / (Unfav) Revenue 91 106 -14% Average Backlog (US $M) 13 19 -30% COGS 70 85 17% Hea
Slide 16: Capital structure review commenced
Capital structure review commenced Material improvements in productivity and margins Market indicators improving Sufficient liquidity for near-term but challenged in 2017 Improved capital structure required to ensure long-term sustainability and capture market recovery “Emphasis of matter” included
Slide 17: Conclusion
Conclusion Marcus Randolph – Executive Chairman
Slide 18: Positive signs in recent commodity trends…
Positive signs in recent commodity trends… Long-Term Commodity Trends5 Recent Commodity Trends5 (since Jan-16) 1H 2016 Results – See page 27 for footnote descriptions 18
Slide 19: …as well as recent equity raising activity by junior mining companies
…as well as recent equity raising activity by junior mining companies Note: “Juniors” defined as mining companies with a market cap of less than $500M 1H 2016 Results – See page 27 for footnote descriptions 19
Slide 20: We remain committed to our Strategic Priorities
We remain committed to our Strategic Priorities Safety o Continue to be an industry leader Operations o Continue to improve on the 20% productivity gains we have made in the last year o Get paid a fair price for the products and services we deliver Technology o Strong focus on acquiring data from ou
Slide 21: Questions?
Questions? @ BOART LONGYEAR
Slide 22: Appendix
Appendix » BOART re LONGYEAR™
Slide 23: Safety & Environment
Safety & Environment Our goal is to add value with zero harm – leading our industry with our employees returning home safely each day and performing our work with minimal impact to our neighbors or the environment. • Safety Performance o Improvement in lost time incident rate o Moderate increase in
Slide 24: Key Performance Indicators
Key Performance Indicators Quarters ended Quarters ended Quarters ended 2016 2015 2014 US$ Millions 1 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Total Com pany Revenue 168.7 141.8 160.9 186.8 200.3 187.2 205.8 239.3 224.1 197.4 EBITDA 15.5 (12.4) (75.2) (0.7) (25.2) (14.2) (61.9) 12.3 (31.1) (1.9) Adjusted EBITD
Slide 25: Diversified End-Market Exposure
Diversified End-Market Exposure 1H 2016 Total Revenue by Type – Products & Services 1H 2016 Total Revenue by Region – Products & Services 1H 2016 Drilling Services Revenue by Stage 1H 2016 Drilling Services Revenue by Commodity 1H 2016 Results – See page 27 for footnote descriptions 25
Slide 26: Debt Maturity Schedule
Debt Maturity Schedule (US $M) 7% Senior 40 Notes (unsecured) Term Loan 105 Tranche B 1 284 10% Senior ABL 40 Notes 195 (secured) Term Loan Tranche A 85 2016 2017 2018 2019 2020 2021 Senior Notes Term Loan ABL If Term Loan – Tranche B and 10% Senior Secured Notes have not been refinanced prior to Ju
Slide 27: Footnote Disclosures
Footnote Disclosures • Footnote 1: Per 200,000 work hours. • Footnote 2: Loss from Trading Activities, Adjusted Gross Margin, Adjusted Operating Loss, Adjusted SG&A, Adjusted EBITDA and Adjusted NPAT Loss are non-IFRS measures and are used internally by management to assess the underlying performanc