Mcdermott International Ltd · OTC:MCDIF
Mcdermott International — Debt Investor Presentation (October 2019)
29 slides from Mcdermott International's debt investor presentation, Oct 21, 2019
Slide 1: Project Sprint Lender Presentation October 2019
Exhibit 99.2 Project Sprint Lender Presentation October 2019 Highly Confidential Exhibit 99.2 Project Sprint Lender Presentation October 2019 Highly Confidential
Slide 2: Important Notice to Recipients
Important Notice to Recipients THIS CONFIDENTIAL PRESENTATION CONTAINS MATERIAL NON-PUBLIC INFORMATION CONCERNING MCDERMOTT INTERNATIONAL, INC., ITS AFFILIATES, OR THEIR RESPECTIVE SECURITIES (COLLECTIVELY, “COMPANY SECURITIES”). BY ACCEPTING THIS CONFIDENTIAL PRESENTATION, THE RECIPIENT AGREES TO U
Slide 3: Forward-Looking Statements
Forward-Looking Statements In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott cautions that statements made in, or in connection with, this presentation which are forward-looking, and provide other than historical information, involve ris
Slide 4: Non-GAAP Disclosures
Non-GAAP Disclosures This presentation includes several “non-GAAP” financial measures, as defined under Regulation G of the U.S. Securities Exchange Act of 1934, as amended. McDermott reports its financial results in accordance with U.S. generally accepted accounting principles, but the company beli
Slide 5: Financial Forecasts Disclaimer
Financial Forecasts Disclaimer The estimates and assumptions underlying the forecast financial information presented below (the “Forecast Information”) are inherently uncertain and, although considered reasonable by the management of McDermott, as of the date of the preparation of the Forecast Infor
Slide 6: Table of Contents
Table of Contents I. Near-Term Liquidity Challenges II. Long-Term Value Creation Opportunity III. Deleveraging Opportunities from Technology Business and Other Sales Appendix Highly Confidential Table of Contents I. Near-Term Liquidity Challenges II. Long-Term Value Creation Opportunity III. Delever
Slide 7: I. Near-Term Liquidity Challenges
I. Near-Term Liquidity Challenges Highly Confidential I. Near-Term Liquidity Challenges Highly Confidential
Slide 8: Financing Case Forecast – Next 18 Months
Financing Case Forecast – Next 18 Months $ in millions Backlog Revenue ~$20 billion of expected new $30,000 $8,000 bid wins in next 15 months $25,073 $6,548 $24,381 driving backlog growth $5,926 $24,000 $6,400 $20,778 $20,031 $20,031 $5,161 $18,000 $4,800 $2,869 $12,000 $3,200 $2,292 $6,000 $1,600 $
Slide 9: Financing Case Forecast – Next 18 Months (Cont'd)
Financing Case Forecast – Next 18 Months (Cont’d) $ in millions n Combination of free cash flow losses and net LC posting requirements results in liquidity trough in Q2’20 Free Cash Flow Net Incremental LC Usage Includes LC postings on 2 $400 $600 projects of $375 million $121 $390 $ - $400 ($86) $1
Slide 10: FY19 Financing Case Forecast vs. Guidance
FY19 Financing Case Forecast vs. Guidance $ in millions Revenue Adjusted EBITDA Free Cash Flow $725 $9,600 $750 $ - $9,509 $9,500 $9,480 $600 ($400) $474 ($640) $9,360 $450 ($800) $9,240 $300 ($1,200) ($1,194) $9,120 $150 ($1,600) $9,000 $ - ($2,000) FY 2019 FY 2019 FY 2019 2019 Guidance Financing C
Slide 11: 2H'19 Financing Case Forecast – Bridge from Public Guidance
2H’19 Financing Case Forecast – Bridge from Public Guidance $ in millions 2H 2019 Adj. EBITDA Potential Adjustments 1 1 Q3 2019 Potential Adjustments n ($175) potential adjustments on certain projects $449 (primarily NCSA) in Q3 2019E n ($70) potential adjustments on projects in Q4 ($80) 2019E ($33)
Slide 12: Cameron and Freeport Update
Cameron and Freeport Update Cameron LNG Freeport LNG 1 1 Cumulative POC (as of Q2 2019): 93% Cumulative POC (as of Q2 2019): 95% Targeted Substantial Completion: Targeted Substantial Completion: n Train 1 – Q3 2019 n Train 1 – Q3 2019 n Train 2 – Q1 2020 n Train 2 – Q1 2020 n Train 3 – Q3 2020 n Tra
Slide 13: Framing the Quantum of Financing Need
Framing the Quantum of Financing Need $ in millions n The Company’s minimum liquidity requirement is ~$1 – 1.25 billion Bridge to Financing Need as of any quarter-end $1,000 ~$1.7 billion combined cash + LC financing need $1,698 n The Financing Case model shows liquidity trough in Q2’20 of negative
Slide 14: Use of Proceeds Summary
Use of Proceeds Summary $ in millions n The Company continues to generate positive cash flow from the bulk of its 1 Notable Uses of Liquidity (Financing Case, Q4’19 – Q2’20) contract backlog, including the Tanks and Technology businesses $2,000 n The proposed financing will fund certain negative liq
Slide 15: II. Long-Term Value Creation Opportunity
II. Long-Term Value Creation Opportunity Highly Confidential II. Long-Term Value Creation Opportunity Highly Confidential
Slide 16: Overview of Long-Term Value Creation Opportunity
Overview of Long-Term Value Creation Opportunity n With adequate liquidity supported by the requested financing, the Company expects to be able to bridge through its forecast challenges and maximize value for all stakeholders by executing on substantial mid- and long-term opportunities: „ Record bac
Slide 17: Highlights of the McDermott Platform
Highlights of the McDermott Platform 1 Limited Set of Focus Projects Inherited from Substantial Backlog (~$21 Billion ) of New Legacy CB&I, All of Which Are Expected to Be Projects Bid under Rigorous McDermott Risk Completed in 2020 Management Procedures New projects bid under strict One McDermott W
Slide 18: Financing Case Forecast – Long-Term
Financing Case Forecast – Long-Term $ in millions Backlog Revenue $35,000 $20,000 $31,672 $17,137 $29,783 $28,000 $16,000 $25,073 $14,303 $12,473 $20,031 $21,000 $12,000 $9,509 $14,000 $8,000 $7,000 $4,000 $ - $ - 2019 2020 2021 2022 2019 2020 2021 2022 Adjusted EBITDA Free Cash Flow $2,000 20.0% $1
Slide 19: Approach to Project Risk Management – One McDermott Way
Approach to Project Risk Management – One McDermott Way Vertically integrated and proprietary capabilities allow McDermott to manage project risk effectively and ensure execution flexibility In-House Capabilities Fortify Disciplined Centralized Contracting and Project Execution Risk Management and P
Slide 20: McDermott's Business Model and Contract Bidding Approach Minimizes Risks
McDermott’s Business Model and Contract Bidding Approach Minimizes Risks n Legacy CB&I projects were not bid to the proven McDermott standards; however, since the Combination, all projects have been bid under the strict One McDermott Way Then – Cameron Now – Golden Pass Chiyoda Chiyoda and Zachry Ot
Slide 21: Summary of Backlog and Expected Roll-off
Summary of Backlog and Expected Roll-off $ in billions Details of $20.5 billion of Backlog as of June 30, 2019 Backlog 1 By End Market By Segment Roll-off by Year History $7.4 Power TECH Legacy CB&I (Non-U.S.) APAC $0.5 2% 3% $0.6 4% Legacy CB&I (U.S.) 6% $0.8 10% $1.3 $2.0 $4.8 $4.2 $4.2 $6.3 Downs
Slide 22: McDermott's Ability to De-Risk New Projects
McDermott’s Ability to De-Risk New Projects >$500 Million Experience / Onshore / Bid Under One Expected to Repeat FEED Fab Yard vs. Stick 1 2 Project Name Project Size Region Replicable Offshore McDermott Way be Profitable Customer Study Built Construction Design Cameron LNG Project Mega NCSA Onshor
Slide 23: III. Deleveraging Opportunities from Technology Business and Other Sales
III. Deleveraging Opportunities from Technology Business and Other Sales Highly Confidential III. Deleveraging Opportunities from Technology Business and Other Sales Highly Confidential
Slide 24: Status of Previously Announced Business Sales
Status of Previously Announced Business Sales n McDermott continues to pursue the sale of the remaining portion of the pipe fabrication business n McDermott has decided to terminate its previously announced sale process for its industrial storage tank business n Net cash proceeds that could result f
Slide 25: Lummus Technology – Business Overview
Lummus Technology – Business Overview $ in millions Expanded Technology Licensing Offering 2019E Summary Financials n McDermott’s Lummus Technology is a leading licensor of proprietary n Revenue: $650-750 million technologies critical to the processing of hydrocarbons „ A strategic enabler with a fo
Slide 26: Appendix
Appendix Highly Confidential Appendix Highly Confidential
Slide 27: Detailed Financing Case Projections
Detailed Financing Case Projections $ in millions Quarterly Semi-annual Annual Q3'19 Q4'19 H2'19 H1'20 H2'20 TY'19 TY'20 TY'21 TY'22 New Orders $2,524 $2,123 $4,647 $10,275 $7,240 $18,623 $17,515 $19,012 $19,026 Backlog $20,778 $20,031 $20,031 $24,381 $25,073 $20,031 $25,073 $29,783 $31,672 Revenue
Slide 28: Financial Covenant-Related Disclosures
Financial Covenant-Related Disclosures $ in millions Q3’19E Leverage Ratio Debt Projected Cash Receipts / Disbursements 4 Weeks Ending Senior Notes $1,300 Term Loan 2,226 11/15/19 12/13/19 1/10/20 1 Revolver Draw 801 Operating Receipts $463 $748 $654 NO 105 12 Covenant Disbursements (863) (751) (809
Slide 29: Additional Disclosures – EBITDA & Free Cash Flow Reconciliations
5 Additional Disclosures – EBITDA & Free Cash Flow Reconciliations $ in millions Reconciliation of Non-GAAP to GAAP financial measures Semi-Annual Annual 1) We define EBITDA as net income plus depreciation and amortization, interest expense, net, accretion of and dividends on $ in millions Q3'19 Q4'
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