Financial Results for the Period Ended 31 December Investor Call, 25 March 2019

Transcription

1 Financial Results for the Period Ended 31 December 2018 Investor Call, 25 March 2019

2 FY 2018 RESULTS HIGHLIGHTS Strong operating performance across all regions and multiple significant contract awards Strong growth in profitability FY2018 revenue of US$349 million, 43% above 2017 FY2018 EBITDA of US$190m, 61% above 2017 Positive PAT for the year, driven by strong 2H Major contract awards in Q Secured long-term contract extension to 2025 (plus options) with BP for 12 vessels in Azerbaijan Contracts were secured for two newbuilt subsea vessels being delivered from shipyard in January 2019 Market leading asset portfolio and fleet utilisation rates Overall core fleet utilisation at 86% with significant improvements in MENA and Africa Market-leading US$1.7bn contract backlog providing long-term earnings visibility and financial strength All Tengiz vessels deployed, contributing significantly to the financial results US$45m revenue and US$40m EBITDA generated by the strategic marine logistics Tengiz project in Q All 20 vessels were earning full revenue as at 31 December 2018 Robust financial performance driving balance sheet deleveraging Full compliance with all financial covenants with headroom Proven health and safety track record Topaz s strong commitment to health and safety illustrated by 36 consecutive months without Lost Time Injuries ( LTIs )

3 SECTOR VIEW OSV sector utilisation still around 60% - higher utilisation required to materially drive up rates E&P news Oil price volatility continued with Brent at a 4-year high of US$86/bbl in October , subsequently dropping to US$57/bbl Analysts still forecast an average of nearly US$70/bbl per barrel for Brent over the year, still providing oil companies with a decent base for E&P investments 4 With a Brent rebound, 2019 s offshore project sanctioning has the potential to reach US$123b the highest level of activity since Chevron has announced a US$20b CAPEX budget for 2019, marking the first budget boost after a low CAPEX for four years in a row. The budget for 2018 was US$18.3b 6 Ensco and Rowan are merging to create the world s largest offshore drilling company, valued at US$12b 6 OSV news As of the beginning of January 2019, the utilisation of the global OSV fleet was estimated at 57% 2 (Q3 2018: 59%). This must improve further before rates can be driven materially upwards, and we expect continued distressed financial performance in our peer group in saw 61 OSV deliveries and 93 vessel removals as demolition picked up noticeably. The orderbook remains 253-vessels strong, though it is unclear when or if ever some units might be delivered 2 The global oilfield service sector is expected to be back at pre-downturn market levels by 2024 measured in value 5 Investment interest in the companies working in the digitalization of the maritime sector has increased significantly 3 Sources: 1 Yahoo! Finance 2 Clarkson s 3 ShippingWatch 4 UpstreamOnline 5 Rystad Energy 6 OffshoreEnergyToday, measured by fleet size Page 3

4 3 NORTH SEA/BALTICS 1 13 SAUDI ARABIA 2 QATAR 2 UAE 9 RUSSIA CORE AREAS OF OPERATIONS Leader in core markets of Caspian, MENA and West Africa Caspian MENA & Subsea West Africa Solutions Vessels Vessels Vessels Vessels EBITDA Margin 67 % 63 % 19% 24% NM 26% % TOPAZ SOLUTIONS 21 AZERBAIJAN 29 KAZAKHSTAN 6 TURKMENISTAN Utilization 80% 80% 85% 53% 84% 40% 100% 12 NIGERIA ANGOLA Key Customers Notes: As at 31 Dec 2018 incl. newbuilds 1 North Sea / Baltics includes subsea vessel Topaz Installer and two subsea vessels being delivered from yard early 2019 Page 4

5 STRONG PERFORMANCE THROUGH THE CYCLE The greatest contracted revenue backlog in the industry providing revenue visibility Robust historical contract backlog evolution 1 (US$bn) CAGR: +10% provides high revenue visibility long term (2018 US$m) $41 $376 $32 $345 $23 $243 $56 $109 $75 $70 $ $51 $ & Firm Option beyond 10% Others 3% Eni 3% Saudi Ara 5% Drago 29% TCO 50% BP $1,220 Firm $430 Option $1,650 Total KEY HIGHLIGHTS Contract wins have further strengthened company backlog and earnings visibility BP2025 concluded, adding US$~375m to the backlog Contracts worth US$81m for two newbuild subsea vessels Proven ability to secure longterm contracts in challenging operating conditions Focus on development and production phases of the energy cycle underpins stability Preferred global supplier status with a number of IOCs/NOCs Increasing IOC/NOC tender activity signaling growing confidence in the E&P sector Source: Company data, Capital IQ 1 Backlog consists of estimated revenue from the uncompleted portion of all vessel charter contracts, based on day rates and assuming extension of contracts at the option of our clients Page 5

6 INCREASING PROFITABILITY Record growth in the quarter ( US$m) Q4 Full Year Variance Variance Revenue % % Operating costs & overheads % % EBITDA % % EBITDA margin 45% 58% 13ppt 48% 54% 6ppt Cash flow from operations % % Interest expense % % REVENUE Q4 BY REGION (US$ m) 100% 80% 60% 40% 20% REVENUE 2018 BY REGION (US$ m) 100% 80% 60% 40% 20% KEY HIGHLIGHTS Robust growth achieved in the MENA and Africa regions Tengiz project in Topaz Solutions ramped up as per expectation; all vessels earning full day rate at the end of 2018 Operating costs and overheads increased in line with revenue increase and TCO ramp-up EBITDA margin continued on an upwards trend 0% Q Q Caspian MENA Africa Solutions 0% FY 2017 FY 2018 Caspian MENA Africa Solutions 1 Defined as Cashflow from operations less Taxes paid Page 6

7 QUARTERLY TREND DATA Positive PAT achieved in Q3 and Q PROFIT & LOSS (US$ m) Q Q Q Q Q Q4 18 vs Q4 17 Revenue % EBITDA % EBITDA margin 45% 50% 52% 55% 58% +13ppt PAT (before exceptions) NM PAT margin (before exceptions) -9% -5% 6% 9% 17% +26ppt PAT (after exceptions) NM PAT margin (after exceptions) -114% -5% -1% 5% 13% +127ppt REVENUE (US$ m) EBITDA (US$ m) EBITDA margin 60% Q4 17 Q1 18 Q2 18 Q3 18 Q Q4 17 Q1 18 Q2 18 Q3 18 Q % 20% 0% Exceptions include Vessel and goodwill impairment of US$65.2m and US$7.8m respectively in Q4 17. Loss of sale of disposal of 4 vessels of US$6m in Q2 2018, loss on disposal on sale of 1 vessel in Q of U$3m and Vessel impairment in Q of US$4m.

8 FY 2018 BUSINESS PERFORMANCE Significant year-on-year improvement in utilisation Selected KPIs FY 2017 FY 2018 Variance Utilisation of core fleet 65% 86% +21ppt Caspian 80% 85% +5ppt Caspian Azerbaijan 92% 84% -8ppt Caspian Others 39% 86% +47ppt MENA 53% 84% +31ppt Africa 40% 80% +40ppt Topaz Solutions 100% 100% - Average day rate, core fleet $15,349 $15, % Contract backlog (US$b) % No. of vessels Average vessel age KEY HIGHLIGHTS Continued improvement in utilisation due to uptick in MENA, Africa and Turkmenistan, compared to 2017 Caspian position remains strong on the back of solid contract cover in Azerbaijan and Turkmenistan Azerbaijan performance set to improve in Q on the back of new contract awards for our project vessels All Tengiz vessels (Topaz Solutions) were earning full, operational day rate as at 31 December 2018 Contract backlog further increased post BP contract extension and new subsea vessel contracts 1 As at 31 December 2018; Excludes two subsea vessels being delivered from yard in January 2019 Page 8

9 DEBT COVENANTS Compliant with all financial covenants Financial Covenants Threshold Actual Dec 18 Headroom Net Interest Bearing Debt (NIBD 1 ) to EBITDA 2 < 4.75x 3.35x 30% Tangible Net Worth 3 > US$275m US$316m 15% Total Free Liquidity > US$30m US$76m 152% EBITDA to DSCR 4 > x 62% Continued focus on working capital management Leverage ratio reducing inline with expectations 1 NIBD = Total Debt less free cash less subordinated debt 2 EBITDA = Last twelve months 3 Tangible Net Worth = Shareholder funds (including MI) less intangibles 4 Calculated based on: EBITDA / (Interest + Current Portion of Total Debt) Page 9

10 LIQUIDITY POSITION AS AT 31 DEC 2018 Strong focus on liquidity US$m Limit Drawn Available Tenor RCF (committed lines) Expires April 2020 Cash & Bank Balances Total Liquidity 76 Page 10

11 QHSSE PERFORMANCE 36 MONTHS without any LTI - TRIR well within industry benchmark Lost Time Injury Frequency (LTIf 12 months rolling) Industry benchmark = 0.44 * Q1 17 Q2 Q3 Q4 Q1 18 Q2 18 Q3 18 Q4 18 KEY HIGHLIGHTS Topaz has now operated for 36 months without any LTI We incurred eight Recordable Injuries and two Medical Treatment cases in Total Recordable Injury Rate (TRIR 12 months rolling) Industry benchmark = 1.76 * Q1 17 Q2 Q3 Q4 Q1 18 Q2 18 Q3 18 Q4 18 * IMCA Safety Statistics for 2017, published by IMCA in March 2018 Page 11

12 Q&A