Pareto Oil & Offshore Conference

Transcription

1 Pareto Oil & Offshore Conference September 4, 2013

2 Cautionary Note Regarding Forward-Looking Statements This presentation includes forward-looking statements that reflect Aker Philadelphia Shipyard's current views with respect to future events and financial and operational performance. These forward-looking statements can be identified by the use of forward-looking terminology; including the terms "assumes", "projects", "forecasts", "estimates", "expects", "anticipates", "believes", "plans", "intends", "may", "might", "will", "would", "can", "could", "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements are not historical facts. They appear in a number of places throughout this presentation and include statements regarding the Issuer's intentions, beliefs or current expectations concerning, among other things, goals, objectives, financial condition and results of operations, liquidity, outlook and prospects, growth, strategies, impact of regulatory initiatives, capital resources and capital expenditure and the industry trends and developments in the markets in which the company operates. Recipients of this presentation are cautioned that forward-looking statements are not guarantees of future performance and that the company's actual financial position, operating results and liquidity, and the development of the industry in which the company operates may differ materially from those contained in or suggested by the forward looking statements contained in this presentation. The company cannot guarantee that the intentions, beliefs or current expectations that these forward-looking statements are based will occur. By their nature, forward-looking statements involve and are subject to known and unknown risks, uncertainties and assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, the outcome may differ materially from those set out in the forwardlooking statements. Should one or more of these risks and uncertainties materialise, or should any underlying assumption prove to be incorrect, the company's business, actual financial condition, cash flows or results of operations could differ materially from that described herein as anticipated, believed, estimated or expected.

3 The Jones Act Merchant Marine Act of 1920: U.S. built U.S. crews U.S. flag U.S. ownership

4 The Jones Act I would like to see the Jones Act repealed

5 The Jones Act National Security Skilled Crews Shipbuilding Capability International Objectives Political Support Labor Unions Bi-partisan support Presidential endorsements Economic Impact ~40,000 vessels ~400,000 jobs ~$40 bn. GDP Dissenters will continue but to no avail

6 Facilities in 1997

7 Facilities Today

8 People Productive relationship with union Emphasis on training and apprentices High access to quality labor Proven ability to match workforce to workload 1,600 Total Workforce Experienced management team 1,200 1, , APSI Union Subs + Staff Working as One Shipyard to deliver on our commitments, every time

9 Culture as a Competitive Advantage Recordable Frequency Industry average APSI Employees; OSHA Recordable Frequency The platform to deliver on our commitments, every time

10 Track Record Track Record Capabilities 4 Container Vessels Tankers 14 Product Tankers 2 Aframax Tankers Container Vessels 4-8 PT s* Specialty Vessels *4 firm PT s: 2 deliveries in 2015 and 2 in 2016 Successfully delivered 18 vessels predictable performance

11 ExxonMobil Aframax Tankers Contract signed September 2011 AKPS contract value ~$330M Samsung Heavy Industries used as design and procurement partner Vessels to transport ANS crude oil from Alaska to U.S. West Coast Deliveries April and Dec On track to deliver on-time and on-budget

12 Tight Oil Revolution Tight oil production doubled < 2 years Significant future increases predicted Total recoverable reserves estimated to be as much as 120 billion bbls U.S. imports of crude trending down 5,000 U.S. Shale Crude Production Forecast 4,000 Existing pipeline and rail infrastructure not able to meet transportation needs MMB/d 3,000 2,000 1,000 0 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 Source: MJLF Profound shift in U.S. energy landscape

13 Product Tanker Market Fleet utilization currently at 100% 25% of fleet used to transport crude 1,000 bbls 25,000 20,000 15,000 Jones Act Fleet 2000 to % Aging of the fleet; newbuild capacity constrained Substantial fuel savings on new product tankers Longer term charters being offered 10,000 5,000 0 In $1,000 $90 $80 $70 $60 $50 $40 $30 $20 $10 $ Tankers + Barges > 25k DWT and < 70k DWT Representative TCE Rates '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 Source, both exhibits: Navigistics Consulting's Wilson Gillette Report August 2013 High level of commitments being made by end users

14 Crowley Partnership Signed ~$500M shipbuilding contract for four product tankers (21-24) on August 8 AKPS to invest ~$115M in vessels Vessels are fully Jones Act compliant, with Crowley 75% owner and 100% technical and commercial manager AKPS will enjoy 49.9% economic interest in the deal through a combination of AKPS equity and debt Working together to build and deliver these two vessels, APSI and Crowley proved to be a winning team. Tom Crowley Working to grow partnership Long-term partnership expected to create significant value for customers and shareholders

15 Product Tanker Owners Crowley is the largest Jones Act tanker/barge operator & owner Industry dynamics likely to change within months AKPS in position as lowest-cost PT builder to opportunistically grow profit sharing assets 1 1 Product Tankers Large Barges Includes only companies with > one product tanker Includes tankers on order Options included under AKPS AKPS vessels are owned 75% by Crowley AKPS has attractive assets in a market with growth potential

16 Financial Position per Q2 13 Statement of Financial Position Net Cash per 30 June, June USD millions 2013 Property, plant and equipment $57.6 Deferred tax assets 2.7 Cash and cash equivalents 81.4 Restricted cash 20.0 Other non-current assets 4.9 Work-in-process, net - Prepayments and other receivables 27.0 Total assets $193.6 Total equity $111.5 Interest-bearing short-term debt 2.6 Interest-bearing short-term constr. loan - Interest-bearing long-term debt 4.2 Customer advances, net 40.7 Deferred tax liabilities 4.2 Taxes, trade payables and accr. liabilities 30.4 Total equity and liabilities $ June USD millions Cash and restricted cash $ Interest bearing debt Deferred real estate taxes Customer advances 40.7 = Net Cash $47.3 Book values per 30 June, 2013 USD/NOK 6.1 Net cash Book equity Share price (3.9.13) Metrics per Share Per Share 28.4 NOK 66.9 NOK 67.0 NOK Strong financial position with $47M in net cash

17 Financial Overview AKPS Key Assumptions Shipbuilding Today: 7.5% EBITDA NB 21-24: 10%+ EBITDA 3 x 50k DWT equiv. / year Shipping 17-18: Today: $2.9M/year $70K/day = $6M / year $80K/day = $9M / year $90K/day = $12M / year NB 21-24: $70K/day = $14M / year $80K/day = $21M / year $90K/day = $28M / year Investing ~$115M in JV for AKPS 49.9% economic interest in NB (of which 25% is equity ownership) AKPS returns dependent on what Crowley is able to obtain in timecharter market Raising term debt during Q3; new equity not required Construction period financing to be secured during Q3 Pre-tax cash flows; accounting treatment may differ Based on projected 2017/18 assumptions & results Assumes conventional vessel financing and current interest rate outlook sums two ships; sums four ships Normalized capex levels of $4.0M per year Significant increase in EBITDA expected over 2-3 years

18 Containership Market Average fleet age is ~30 years Main trade routes are US Mainland to Hawaii, Alaska and Puerto Rico APSI only U.S. yard to deliver a pure containership in < 20 years New environmental regulation in 2020 will eliminate steam ships Age Profile (CV & Ro/Ro) LNG propulsion valuable due to high bunker costs of current fleet No. vessels years years years < 10 years On Order Significant replacement need < year 2020

19 Investor Highlights 1. 1 Leading Jones Act shipyard with strong earnings potential... Strong operational performance and predictable results Firm shipbuilding contracts at healthy margins High bidding activity for 2017 slots across various segments 2. 2 Direct exposure to tight oil revolution Six vessels with profit sharing Potential to add additional vessels with profit sharing Partnership with first-class tanker operator Crowley 3. 3 High visibility out 2017 Firm shipbuilding contract to mid-2016 with options for deliveries out 2017 Profitable charter contracts expected with solid term durations 4. 4 Paying dividends starting from 2013 accounts Record strong financial position High confidence in expected profit sharing cash flows out 2020 Management focused on investor-friendly capital allocation Poised to capitalize on tight oil boom and help create #1 Jones Act tanker player

20 Summary Accomplishments since 2011 We will Delivered all vessels on-time Delivered all vessels below budget Tripled size of organization Successfully implemented SAP Invested heavily in automated equipment Won orders > $1.1 billion Implemented major culture enhancements 1. 1 Deliver on operational commitments 2. 2 Capitalize on newbuilding demand and pursue profit sharing opportunities 3. 3 Maximize value of shipping assets with opportunistic ownership strategy 4. 4 Start paying dividends Increased investor communications Delivered record earnings Positioned AKPS for tight oil revolution Transformation well underway, but we re just getting started

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