Höegh LNG The floating LNG services provider. 1Q 2017 Presentation of financial results 24 May 2017

Transcription

1 Höegh LNG The floating LNG services provider 1Q 2017 Presentation of financial results 24 May 2017

2 Forward looking statements This presentation contains forward-looking statements which reflects management s current expectations, estimates and projections about Höegh LNG s operations. All statements, other than statements of historical facts, that address activities and events that will, should, could or may occur in the future are forward-looking statements. Words such as may, could, should, would, expect, plan, anticipate, intend, forecast, believe, estimate, predict, propose, potential, continue or the negative of these terms and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Unless legally required, Höegh LNG undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changes in LNG transportation and regasification market trends; changes in the supply and demand for LNG; changes in trading patterns; changes in applicable maintenance and regulatory standards; political events affecting production and consumption of LNG and Höegh LNG s ability to operate and control its vessels; change in the financial stability of clients of the Company; Höegh LNG s ability to win upcoming tenders and securing employment for the FSRUs on order; changes in Höegh LNG s ability to convert LNG carriers to FSRUs including the cost and time of completing such conversions; changes in Höegh LNG s ability to complete and deliver projects awarded; changes to the Company s cost base; changes in the availability of vessels to purchase; failure by yards to comply with delivery schedules; changes to vessels useful lives; changes in the ability of Höegh LNG to obtain additional financing, including the impact from changes in financial markets; changes in the ability to achieve commercial success for the projects being developed by the Company; changes in applicable regulations and laws; and unpredictable or unknown factors herein also could have material adverse effects on forward-looking statements. 2

3 Q highlights Operational update Market outlook Financial overview Summary Appendix 3

4 Highlights EBITDA of USD 36.7 million and profit after tax of USD 11.4 million USD per share dividend declared for Q HLNG01 refinanced with NOK 1,500 million bond HoA with LNG producers for FSRU terminal infrastructure in Pakistan Höegh Giant delivered and USD 190 million in debt drawn 4

5 Q highlights Operational update Market outlook Financial overview Summary Appendix 5

6 Solid operational track record Technical availability % % % % % >99.50 % Höegh Grace Independence Arctic Princess Neptune Höegh Gallant FSRU NB GDF Suez Cape Ann FSRU NB Arctic Lady PGN FSRU Lampung TD Target LTIF 1 FSRU NB 1.07 < TD Target 1 Lost Time Injury Frequency 6

7 Increasing diversification as revenue backlog grows Revenue backlog 1 by charterer GEI 15 % Statoil 4 % Total 4 % Engie 9 % Revenue backlog of USD 6.2 billion 1 Around 14 years average remaining contract length QP and GEI contracts further diversify backlog Quantum Power 14 % GNL Penco 14 % Each contract for 20 years with an average EBITDA contribution of USD 36 million annually No contract exceeding 17% of backlog EGAS 2 % PGN LNG 14 % SPEC 17 % Klaipedos Nafta 7 % 55% of backlog from counterparts operating in investment grade countries (Norway, France, Colombia, Chile, Lithuania) 1 Proportionate share of JVs EBITDA 7

8 Pakistan FSRU project: Further progress for the infrastructure Key terms: 20 year FSRU contract with USD 36 million in annual EBITDA signed Rationale: Cover energy deficit in power production and industry by using low-cost LNG Onshore facilities Höegh LNG working together with LNG producers QatarPetroleum, Total, ExxonMobil and Mitsubushi to develop, own and operate the jetty and pipeline to connect the FSRU with the local gas grid Easy access from sea FSRU site 16 km offshore pipeline route, to be constructed by the consortium Timeline: Target to complete the EPC contract for the infrastructure in mid-2017 with FID thereafter. Startup under the FSRU contract in 2H 2018 Source: Navionics maps, HLNG, GEI 8

9 Quantum Power/Ghana working towards FID in mid-2017 New pipeline to be provided by Quantum Power Spread mooring system (QP) FSRU site FSRU: 20 year FSRU contract with USD 36 million in annual EBITDA signed Infrastructure: EPC agreement between Quantum and Micoperi contractors signed Rationale: Replace expensive liquid oil products with LNG and cover energy deficit in power production Timeline: Objective mid-2017 FID and startup under the FSRU contract in mid-2018 Pipeline to shore (QP) Source: Navionics maps, Quantum Power 9

10 Penco Lirquen FSRU project in Chile subject to delay Illustration of FSRU terminal in Bay of Concepcion HLNG and Penco has agreed extension to existing Charter Party Start-up is delayed by months, i.e. now end-2019/q Penco LNG and its shareholders Electricite de France, BioBio Genera and Cheniere remains fully committed to the project Indigenous consultation process has been restarted EPC contract to be re-tendered shortly Financing package for the infrastructure and power plant to be restarted end

11 Fleet update: Höegh Giant delivered on 27 April Höegh Giant delivered from Hyundai Heavy Industries on 27 April, 2017 The FSRU will start a LNGC short-term contract early June and trade until start-up under a 20-year contract in Ghana mid-2018 Outstanding HSE construction track record: Zero fatalities Zero LTIs USD 190 million in debt drawn down to pay for the final USD 161 million yard installment, thus releasing USD 29 million of equity 11

12 Q highlights Operational update Market outlook Financial overview Summary Appendix 12

13 LNG supply to exceed demand and keep prices competitive 13 Source: Wood Mackenzie

14 Floating regas is key to open up new markets for LNG 14 Source: Wood Mackenzie

15 Major strategic shifts taking place in the market The LNG market has shifted from a seller s market to a buyers market US/China agreement allowing Chinese companies to import LNG directly from the US, will put pressure on all Asian exporters South Korea s new President decided to phase out coal in power production, will increase significantly demand for LNG Long market and competitive prices drives significant increase in demand in Q across all markets: Total market, 75 million tonnes, + 13% from Q Japan, 25 million tonnes, + 12% South Korea, 11.6 million tonnes, + 22% China, 6.1 million tonnes, + 29% India, 4.9 million tonnes, + 12% 15 Source: Fearnley volume data

16 New FSRUs planned to take advantage of Buyer s market: Location Australia Croatia Hong Kong Argentina 3rd FSRU Poland Bangladesh 2nd FSRU Lebanon 1-3 FSRU s Turkey 2nd FSRU Strategic rationale To cover regional gas shortage To diversify gas imports To access world market for natural gas To meet increasing power demand To diversify away from pipeline gas To cover energy deficit To replace expensive liquid fuels To cover gas shortage and diversification of supply Non-exhaustive list 16

17 Pipeline of around 40 projects around the globe Existing Under construction / awarded Potential 17

18 Units Stable orderbook FSRU FSRU fleet fleet and and orderbook 1 by owner and and employment Höegh LNG Excelerate Golar LNG BW Gas Other Maran Exmar Kolin Gazprom MOL OLT The orderbook stands at 11 FSRUs, of which 4 are uncommitted Uncommitted FSRUs (4 newbuildings, 1 existing unit) compare to 14% of the total fleet and orderbook of FSRUs Four existing FSRUs are serving contracts that are about to expire, or at contracts with undetermined timelines On contract Available Committed NB Uncommitted NB 1 Orderbook defined as firm orders, excluding LOIs, options, conversions 18

19 Q highlights Operational update Market outlook Financial overview Summary Appendix 19

20 Financial highlights USD million 1Q Q Q 2016 FY 2016 Income statement Total income EBITDA Net profit after tax Dividend per share (USD per share) Free cash flow Financial position Cash and marketable securities Total assets 1,843 1,713 1,667 1,713 Adjusted equity Net interest bearing debt Adjusted equity ratio 36.6 % 39.5 % 35.5 % 39.5 % 20

21 USD million Earnings to make further stepwise improvements as new contracts start up EBITDA trajectory, current assets and orderbook Q annualised EBITDA 1 Q ex. Grace Höegh Grace Höegh Giant FSRU #8 FSRU #9 FSRU #10 2 Höegh Grace adding USD 10 million to Q EBITDA 20 year contract with SPEC in Colombia Next earnings drivers: Höegh Giant, 20 year contract in Ghana: EBITDA contribution of USD 36 million per year FSRU #9, 20 year contract in Pakistan: EBITDA contribution of USD 36 million per year Pakistan infrastructure project FSRU #8, 20 year contract in Chile: EBITDA contribution of USD 36 million per year FSRU #10, marketed for longterm contracts Further newbuildings 21 1 Equity portion of JVs 2 Assumed contract

22 USD million Fully funded for remaining newbuilding programme Funding of remaining capex (USD 0.9 billion) 1 Liquidity reserve 31 March 2017 (ex HMLP) Source USDm Cash & cash equivalents (2) 126 Marketable securities Outstanding amount seller s credit >200 HLNG01 repayment -104 Cash & cash equivalents Committed financing FSRU# >200 >200 Total committed funding Assumed financing FSRU#8-10 > Total funding >1, Remaining newbuilding capex 900 FSRU #7 debt FSRU #8 debt FSRU #9 debt FSRU #10 debt Equity 22 1 Includes only committed capex 2 Excluding restricted cash and cash in Höegh LNG Partners

23 USD million Höegh LNG Partners remains an attractive funding source HMLP distributions to Höegh LNG Q annualized Drop-down of 51% of Höegh Grace completed 2 January, 2017 EV/EBITDA 9.25x Net proceeds: USD 92 million Following the 51% drop-down, distributions were increased by 4.2%. Höegh LNG as parent now receives USD 6.6 million per quarter, as well as USD 0.3 million in IDR distributions Drop-down of the remaining 49% dependent on market conditions, but a targeted dropdown is expected in 2017 MLP distribution IDR 23

24 HMLP Operations BD and project execution Corporate and other Total 2 Updated segment reporting 1 Group ex. HMLP Segment information USDm Q1 Q1 Q1 Q1 Q1 Income statement Freight revenue Management and other income Share of results from inv. in JVs TOTAL INCOME Charter hire expenses - (8.8) - - (8.8) Bunker and other voyage related expenses (0.1) (0.1) Operating expenses (6.2) (5.2) (0.4) - (11.8) Project administrative expenses (1.0) (1.8) (1.5) - (4.3) Group administrative expenses (1.6) - - (3.5) (5.1) Business development expenses - - (1.9) - (1.9) EBITDA (3.8) (3.5) 36.7 Investments in FSRUs and NBs ,374 Interest-bearing debt ,084 EBITDA from assets owned by HMLP, including 100% consolidation of Höegh Grace EBITDA from commercial contracts and assets on the water Costs of securing new business The cost of managing the group 24 1 Please see note 3, Segment information, in the 1Q 2017 quarterly report for further details, as well as note 5 commitments and financing for a detailed debt overview 2 Due to US GAAP reconsiliation the HMLP segment is not directly comparable to reported financials from Höegh LNG Partners

25 Q highlights Operational update Market outlook Financial overview Summary Appendix 25

26 Summary Underlying results reaching a new high in Q USD per share dividend declared for 2Q 2017 USD 6.2 billion in contracted revenues Long LNG market and competitive prices continue to drive demand for new FSRUs 26

27 Q&A session Call-in details: Norway United Kingdom +44 (0) United States Participant passcode:

28 Q highlights Operational update Market outlook Financial overview Summary Appendix 28

29 Income Statement Joint Ventures according to equity method USD million 1Q Q2016 3Q2016 2Q2016 1Q2016 Freight revenues 64,5 56,9 53,6 52,3 51,1 Management and other income 0,7 1,7 1,0 1,5 1,0 Share of results from investments in joint ventures 3,4 3,7 3,5 3,3 3,3 TOTAL INCOME 68,6 62,3 58,1 57,1 55,4 Charterhire expenses (8,8) (8,9) (8,9) (8,8) (8,8) Bunker expenses (0,1) (0,2) (0,2) (0,1) (0,0) Operating expenses (11,7) (10,6) (12,1) (11,7) (9,3) Project administrative expenses (4,3) (4,3) (2,9) (2,9) (3,0) Group administrative expenses (5,1) (5,7) (5,2) (4,8) (4,8) Business development expenses (1,9) (1,4) (2,3) (1,8) (2,9) EBITDA 36,7 31,2 26,5 27,0 26,6 Depreciation (9,3) (9,1) (9,2) (9,2) (7,3) Reversal of impairment (impairment) EBIT 27,4 22,1 17,3 17,8 19,3 Interest income 0,4 0,3 0,3 0,4 0,5 Interest expenses (13,8) (13,3) (14,3) (14,6) (12,9) Other financial items (0,6) (5,6) 1,1 0,4 0,2 PROFIT (LOSS) BEFORE TAX 13,4 3,5 4,4 4,0 7,1 Taxes (1,9) (2,7) (1,1) (0,5) (0,8) NET PROFIT (LOSS) 11,4 0,8 3,3 3,5 6,3 29

30 Financial position- Joint Ventures according to equity method USD million Newbuildings under construction and vessels Shareholder loans to joint ventures Mark-to-market on hedging instruments Other assets Restricted cash (non-current) Current cash and marketable securities TOTAL ASSETS Total equity Investments in joint ventures Interest bearing debt Mark-to-market on hedging instruments Other liabilities TOTAL EQUITY AND LIABILITIES Total equity adjusted for hedging reserves Equity ratio adjusted for hedging reserves 37 % 40 % 36 % 36 % 36 % Net interest bearing debt

31 Cash flow statement- Joint Ventures according to equity method USD million 1Q2017 4Q2016 3Q2016 2Q2016 1Q2016 Net profit or (loss) before tax Adjustments of non-cash P&L items and interest Net changes in working capital, other (5) (3) (4) (4) 5 Net cash flow from operating activities Net (investments) proceeds in marketable securities (75) Investments newbuildings under construction and vessels (111) (33) (4) (30) (199) Proceeds from sale of vessel Proceeds of repayment on shareholders loans Net cash flow from/(used in) investing activities (185) (18) (168) Net proceeds form equity issuance Proceeds from borrowings Repayment of borrowings (27) (15) (15) (15) (12) Dividend paid to non-controllling interest (MLP) (7) (5) (4) (4) (4) Dividend paid to shareholders of the parent (10) (8) (8) (8) (8) Interest paid (14) (14) (14) (14) (12) Increase/decrease in restricted cash 3 (1) - (2) 4 Other financing activities (8) (2) Net cash flow from/(used in) financing activities (41) (43) 166 TOTAL CASH FLOW (45) (42) 13 31