Gulf Marine Services Plc · LSE:GMS
Gulf Marine Services — FY2018 Earnings Presentation
43 slides from Gulf Marine Services's earnings presentation, Mar 26, 2019
Slide 1: 2018 Full Year Results
2018 Full Year Results Gulf Marine Services 26 March 2019 | www.gmsuae.com 1
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Gulf Marine Services PLC (the "Company") and comprises the slides for a presentation to analysts concerning the Company. This presentation has been prepared solely for informational purposes and does not constitute or form part of or contain any invi
Slide 3: Agenda
Agenda 1 Welcome and Annual Results Overview 2 Financial Review 3 Repositioning Plan 4 Appendices 3
Slide 4: Welcome and Annual Results Overview
Welcome and Annual Results Overview Duncan Anderson CEO 4
Slide 5: 2018 Annual Results Overview
2018 Annual Results Overview ◼ Improved utilisation rate 1 for the SESV fleet of 80% (2017: 61%) ◼ Improving demand in our markets, progress in building backlog during the year, but difficult to predict when improved demand will be reflected in increased charter rates ◼ Seven new contract2 awards: c
Slide 6: Improved Backlog at 1 March 2019
Improved Backlog at 1 March 2019 By vessel class 17% 28% 55% Small Mid Size Large By Firm / Options (US$m) Firm 127.3 Options 111.9 Total 239.2 ◼ Near 50% increase in total backlog US$ 239.2 million as at 1 March 2019 (1 March 2018: US$ 160.6 million) ◼ At this point in the market cycle our aim is t
Slide 7: Financial Review
Financial Review John Brown CFO 7
Slide 8: Trading Summary
Trading Summary (US$m) 2018 2017 % Change ▪ Revenue increased by 9%. Revenue 123.3 112.9 9.2% Improvement in utilisation partly offset by pressure on day rates Adjusted Gross profit* 47.0 43.3 8.5% ▪ Cost of sales reflect utilisation, mobilisations and reactivation costs Adjusted Gross margin* 38.1%
Slide 9: Revenue
Revenue ▪ GMS has worked hard to deliver Revenue Diversification diversified contract opportunities by region and sector e.g. By Location - No one country provides more 14% than 50% exposure 8% 28% 34% - Expanding our capability to take FY 2018 FY 2015 advantage of growing renewables 59% 5% market 8
Slide 10: Performance Indicators for SESV Fleet
Performance Indicators for SESV Fleet Small Class Mid-Size Class Large Class Total SESVs (6 vessels) (3 vessels) (4 vessels) (13 vessels) 2018 2017 2018 2017 2018 2017 2018 2017 Utilisation (based on available 67% 53% 90% 71% 98% 70% 80% 61% days) Utilisation (based on calendar 64% 49% 75% 71% 73% 5
Slide 11: Delivered Reductions on Opex
Delivered Reductions on Opex US$ per day per Vessel Class(1) Mid-Size Primarily achieved by: Small Class Large Class Year Class FY 2015 $10,000 $17,000 $21,000 ▪ Reduction in crew salaries cost -10% -23% -23% ▪ Reduction in well servicing cost % Reduction base through employment of in-house equipmen
Slide 12: Delivered Reductions on G&A and New build Expenditure
Delivered Reductions on G&A and New build Expenditure Gross Cash G&A Expenses(1) New build Expenditure Year US$ millions Year No. of Personnel FY 2015 28.1 FY 2015 221(2) % Reduction -32% % Reduction -91% FY 2018 19.0 FY 2018 19 Primarily achieved by: Primarily achieved by: ▪ Reduction in employee h
Slide 13: Newly Identified Cost Savings Whilst Maintaining a Competitive Edge
Newly Identified Cost Savings Whilst Maintaining a Competitive Edge Business-wide review identifying cost Primarily achieved by: saving initiatives, delivering annualised • Competitive retendering of catering savings of circa US$ 6 million contract in H2 2018 • Scaled back quayside facility to reduc
Slide 14: 2018 Cashflow Analysis – Applications of Cash
2018 Cashflow Analysis – Applications of Cash Interest expense • Operating cashflows US$ 32 million expected to be sufficient Operating Cashflows to service 2019 debt and Debt repayment US $58m* interest US$ 21 million Decrease in cash • No material capital Capex US $27m expenditure planned for US$
Slide 15: Capital Structure Outlook Remains as at December 2018
Capital Structure Outlook Remains as at December 2018 (US$m) At 31 December 2018 At 31 December 2017 Bank Debt 411.5 411.8 Cash at Bank (11.0) (39.0) Total Net Debt 400.5 372.8 ◼ Net debt is expected to reduce to c. US$ 390.0 million by the end of Q1 2019 ◼ Banking syndicate supportive, amendment ag
Slide 16: Leveraged for Charter Rate Recovery
Leveraged for Charter Rate Recovery Modest improvement in day rates Return to 2015-2018 average day rates Gross margin improvement from 10% increase in 2018 Gross margin improvement from return to 2015 – 2018 day rates ($US m) day rates (($US m) Large Mid-size Small Large Mid-size Small Utilisation
Slide 17: Repositioning plan
Repositioning plan Duncan Anderson CEO 17
Slide 18: Recent Strategic Context
Recent Strategic Context Strategy was to build expanded fleet to achieve diversification away from local oil and gas market ✓Expansion focused on Mid-Size and Large Class vessels, where we saw the future market direction ✓Larger vessels can operate in deeper water, are more sophisticated and flexibl
Slide 19: Taking our Strategy Forward
Taking our Strategy Forward Flexibility and Diversity Remain Key ▪ Working hard to diversify using our client base - geography - sector - technological advances allow us to be flexible to client needs (e.g. crew transfer tower, decommissioning and cantilever awaiting opportunities) ▪ Business contin
Slide 20: Whilst End-Markets Remain Challenging, GMS is Well Positioned to the Upside
Whilst End-Markets Remain Challenging, GMS is Well Positioned to the Upside 1 MENA Market Outlook 2 European Market Outlook ▪ GCC economic recovery with government spending ▪ Offshore renewables market remains increasingly likely to increase in medium-term attractive as European energy transition pr
Slide 21: Positive Industry Data
Positive Industry Data Industry data published by Westwood Global Energy Group on the following two slides shows trends towards offshore recovery and significant growth in Renewables Oil and Gas Renewables The increase in the number of drilling Significant development of offshore jack up rigs in MEN
Slide 22: Middle East Activity Outlook
Middle East Activity Outlook Increasing Offshore Activity in the Middle East Activity in offshore Middle East has been relatively resilient to the impact of the downturn. A number of NOCs in the region have announced plans to increase expenditure, supporting a continued recovery in the offshore sect
Slide 23: North Sea Renewables Outlook
North Sea Renewables Outlook North Sea to Drive Renewables Growth Ambitious offshore wind (OFW) generation targets across Europe (incl. the North Sea) is expected to drive activity over the next decade and beyond. The resulting large number of expected turbine installations, represent significant op
Slide 24: Putting our Strategy into Practice
Putting our Strategy into Practice Implementing a three pronged plan to rebuild shareholder value and optimise future prospects of the Group. Steps taken to date: Corporate Governance Strengthen leadership and provide appropriate governance: ▪ Stuart Jackson, CFO – expected to join July 2019, excell
Slide 25: Outlook
Outlook ▪ Improving demand in our markets, but difficult to predict when improved demand will be reflected in increased charter rates ▪ Our expectation is that our financial performance in 2019 will show only limited improvement, if at all ▪ Sector opportunities may vary but operational flexibility
Slide 26: Q&A
Q&A Wind Turbine Topside Well Commissioning & Installation, Maintenance Intervention Accommodation Maintenance & Accommodation Questions can be emailed to: IR@gmsuae.com 26
Slide 27: Appendices
Appendices ▪ Introduction to GMS ▪ Clients – A Well-Diversified Client Base ▪ Key Strengths and Competitive Advantage ▪ SESV Fleet Overview ▪ High Specification Premium Fleet ▪ Large Class SESV Overview ▪ Mid-Size Class SESV Overview ▪ Small Class SESV Overview ▪ What Differentiates GMS from other O
Slide 28: Introduction to GMS
Introduction to GMS Operator of a fleet of 13 self-propelled self-elevating support vessels (SESVs) ▪ SESVs provide a stable platform from which clients perform a wide range of activities throughout the lifecycle of the offshore oil, gas and renewable energy projects ▪ GMS fleet is one of the younge
Slide 29: Clients – A Well-Diversified Client Base
Clients – A Well-Diversified Client Base Oil and Gas Renewable Energy 29
Slide 30: Key Strengths and Competitive Advantage
Key Strengths and Competitive Advantage YOUNG TECHNICALLY GMS SESV fleet of 13 vessels one of the youngest and most well-invested in the industry, with an ADVANCED FLEET average age of eight years and an expected future useful life of more than 25 years FLEXIBLE GMS ensures its fleet is highly flexi
Slide 31: SESV Fleet Overview
SESV Fleet Overview Large Class Mid-Size Class Small Class ▪ 4 units ▪ 3 units ▪ 6 units ▪ Avg age: 6 years ▪ Avg Age: 4 years ▪ Avg age: 12 years ▪ Water Depth: 65-80m ▪ Water Depth: 55m ▪ Water Depth: 45-55m ▪ Accommodation for up to 300 people ▪ Accommodation for up to 300 people ▪ Accomodation f
Slide 32: High Specification Premium Fleet
High Specification Premium Fleet Comparative Vessel Capabilities GMS Jackup Semi-subs/ Accommodation WTIVs (3) Mobility Fleet self-propelled fleet drilling rigs construction rigs vessels Rig move Faster jacking time Construction and Maintenance Construction & ✓ ✗ ✓ ✗ ✗ Flexibility Accurate Large and
Slide 33: Large Class SESV Overview
Large Class SESV Overview The flagship of the GMS fleet Main crane ▪ 300 tonnes & 400 tonnes Gusto MSC ▪ Heavy oil & gas lifting 2500X design ▪ Wind turbine installation ▪ Offering higher technical and Four-leg design operational capabilities ▪ Stable and more positioning flexibility ▪ Faster rig ja
Slide 34: Mid-Size Class SESV Overview
Mid-Size Class SESV Overview New generation addition to the GMS fleet Main crane Gusto MSC NG1800-X ▪ 150 tonne main ▪ 15 tonne auxiliary Design ▪ Proven technology Accommodation with high reliability ▪ Accommodates 150 people which can be expanded to and flexibility 300 ▪ Harsh weather capability 5
Slide 35: Small Class SESV Overview
Small Class SESV Overview The origins of the GMS fleet Main crane ▪ 36-45 tonne ▪ (Pepper vessel: new cranes from Wärtsilä design Q2 2019: 40 / 75 Tonne) ▪ Oil & gas lifting Four-leg design ▪ Proven technology with ▪ Stable and more positioning high reliability and flexibility flexibility ▪ Faster r
Slide 36: What Differentiates GMS from other Operators?
What Differentiates GMS from other Operators? ▪ In-house expertise to enhance vessels and services ▪ All our SESVs have four legs, safer and more efficient than three-legged vessels ▪ Pioneered development of Large and Mid-Size Class SESVs, which include dynamic positioning systems for closer positi
Slide 37: SESV Cantilever System v Drilling Rig
SESV Cantilever System v Drilling Rig GMS is the first to introduce a cantilever capability on a self-propelled SESV, significantly increasing our market opportunities. Allowing delivery of well intervention services previously only carried out by drilling rigs including: ▪ Change out of electric su
Slide 38: Significant Barriers to Entry
Significant Barriers to Entry Successfully operating SESVs in GMS’ markets has a number of challenges for new entrants and incumbents: GMS SHAMAL and GMS SCIROCCO GMS SHAMAL and GMS SCIROCCO 1 Operational Track Record Essential to Secure Contracts 2 Safety Case Required for North West Europe O&G wor
Slide 39: Vessel Costs
Vessel Costs ▪ Vessel costs very much vary dependant upon client requirements and scope of work ▪ Average Small Class daily operating costs range from US$ 7,700 - US$ 10,300 per day ▪ Major client specific costs that cause daily operating costs to vary include: • Level of client personnel on board (
Slide 40: Historic Results
Historic Results Revenues Adjusted EBITDA (1) and Margin 250 $ 219.7 160 $ 138.5 100% 196.6 m 124.7 124.8 m 184.3 179.4 140 200 106.8 142.6 120 94.6 EBITDA Margin (%) 100 80% 150 106.9 112.9 69.5 80 58.5 100 60 66% 68% 65% 64% 63% 60% 60% 40 52% 50 20 0 0 40% 2011A 2012A 2013A 2014A 2015A 2016A 2017
Slide 41: Timeline
Timeline ▪ Establishment of Gulf Marine Services 1977 - 2006 ▪ Four Small Class SESVs built (including the world’s first 4-leg SESV 1982) ▪ Acquisition of GMS by Gulf Capital (2007) 2007 - 2008 ▪ Appointment of new CEO and Management team ▪ New strategy: began disposal of non-core assets and investm
Slide 42: Board Composition
Board Composition Simon Heale Duncan Anderson Simon Batey Independent Chief Executive Officer Senior Independent Non- Executive Director Non-Executive Chairman ▪ Deputy Chairman at Brooge ▪ Joined GMS in 2007 ▪ Capital programme consultancy work Petroleum and Gas ▪ Previously COO of Investment Compa
Slide 43: Contact
Contact T: +971 (2) 502 8888 E: IR@gmsuae.com W: www.gmsuae.com John Brown - Chief Financial Officer Anne Toomey - Investor Relations Manager