Investor and Analyst presentation Senvion S.A.

Transcription

1 Investor and Analyst presentation Senvion S.A. Nine month results for the period ended on 30 September November 2018

2 Disclaimer This presentation (the Presentation ) has been prepared by Senvion S.A. ( Senvion and together with its subsidiaries, we, us or the Group ) solely for informational purposes and has not been independently verified, and no representation or warranty, express or implied, is made or given by or on behalf of the Group. Senvion reserves the right to amend or replace this Presentation at any time. This Presentation is valid only as of its date, and Senvion undertakes no obligation to update the information in this Presentation to reflect subsequent events or conditions. This Presentation may not be redistributed or reproduced in whole or in part without the consent of Senvion. Any copyrights that may derive from this Presentation shall remain the sole property of Senvion. This Presentation does not constitute or form part of, and should not be construed as, an offer or invitation or inducement to subscribe for, underwrite or otherwise acquire, any securities of Senvion, nor should it or any part of it form the basis of, or be relied on in connection with, any investment decision with respect to securities of Senvion or any other company. Certain statements in this Presentation are forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial consequences of the plans and events described herein. Actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, but not limited to, future global economic conditions, changed market conditions affecting the wind industry, intense competition in the markets in which the Group operates, costs of compliance with applicable laws, regulations and standards, diverse political, legal, economic and other conditions affecting the Group s markets, and other factors beyond the control of the Group). Neither Senvion nor any of its respective directors, officers, employees, advisors, or any other person is under any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak of the date of this Presentation. Statements contained in this Presentation regarding past trends or events should not be taken as a representation that such trends or events will continue in the future. In particular, no statements in this Presentation should be construed as concrete guidance as to the results of operations, cash-flows, balance sheet data or any non-financial metrics as of or for the financial year ending December 31, 2018 or any subsequent financial period. Certain financial data included in the presentation consists of non-ifrs financial measures. These non-ifrs financial measures may not be comparable to similarly titled measures presented by other companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. You are cautioned not to place undue reliance on any non-ifrs financial measures and ratios included herein. This Presentation does not constitute or contain any investment, legal, accounting, regulatory, taxation or other advice. Due to rounding, numbers presented through out this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. 2

3 Agenda Key highlights Q Markets and orders Financials Future outlook Key takeaways Appendix 3

4 1. Key highlights

5 Q key highlights at a glance Financials Revenue guidance adjusted to ~ 1.6bn with adj. EBITDA of ~5%; 200m revenues shift to early bn revenue coverage for 2019 Quarter-on-quarter step up in revenues and EBITDA Q3 revenues at 343m with EBITDA of 8.6%, 9M 18 revenues at 809m with EBITDA of 5.3% Working capital at 2.8% with cash balance of 146m Operational developments Corporate Equity raise of 62.5m to support growth in 2019; shows support of key shareholders including Centerbridge Strengthened management board with appointment of Yves Rannou as CEO Orders More than 1 GW of conditional orders announced; new market re-entries US and Spain Alliance with Toshiba in Japan for onshore and offshore segment Efficiency Further 26m cost saving in fixed cost and interest cost achieved in 9M CY18 India supply chain expansion in progress Service Continuous growth in order book now stands at 2.8bn, up c.11% yoy Robust cash flow + double digit growth + predictable revenues - CY18e revenues of ~ 350m with ~42% contribution margin YTD Notes: Financials with IFRS 15 changes adopted; Contribution margin = Revenues minus the cost of goods sold, including production, material, logistics, construction site costs, commissioning costs, general warranty provisions and the cost of managing these direct cost centres. 5

6 Successful placement of new shares Proceeds to support higher growth Transaction summary and rationale Raised 62.5m via Accelerated Book at 7.7/share Increasing financial flexibility Timing driven by certainty of the deal (underwriting availability) Upfront investments to support growth in markets such as Chile and India 100% underwritten transaction 60% underwritten by Centerbridge with remaining 40% backstop provided by Berenberg Participation driven by existing investors Capital to support growth capex: India Expansion of nacelles production facility to support growth China Mobile factory being planned Strong commitment from existing and new investors to grow the business 6

7 Good order momentum in Q3 More than 1 GW of orders* announced 355 MW 20 MW firm orders 335 MW conditional orders Installation in 2019/2020 First US order and confirmation of product fit 130 MW Firm order 4 MW Conditional order of 14 MW Installation in Prototype in installation Entry into two new markets: Spain and US 205 MW Converted to firm already 205 MW conditional order Installation in 2020 Showcasing the global potential of the new 2MW turbine Firm 300 MW 245 MW conditional orders Installation in 2019 Confirmation for product competitiveness Order breakup Conditional 250 MW 250 MW conditional orders Installation in 2019/2020 Total 720 MW orders won in India in 2018 Framework Supported by new products: Testament of product competitiveness Partnership agreement with Toshiba to seize market opportunities in Japan Increasing revenue visibility until 2020 ~230 MW ~845 MW ~165 MW Strong order pipeline to secure revenues also beyond 2019 Re-entry into market *-Order status as of Sept end 7

8 Progress on cost out initiatives 26m fixed cost and interest cost reduction YTD M 2018 Fixed cost evolution ( m) Consolidation of production footprint Three factories closed in Germany Capacity reduced to 2.7 GW New suppliers added from Asia; ramp-up under way Reduction of employees Net reduction in employees - ~600 Fixed costs reduction 2017 Opex costs cut by 19% 2017 interest costs cut by 28% Interest cost OPEX Personnel 122-7% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Total savings in m Total savings in 9M m 8

9 Growing service business Efficient set-up to drive resilient and profitable growth Key results Key attributes Service revenue ( m) 220m 244m Significant growth YTD growth at 11.4% Working towards digitisation Predictable annuity like revenues % Q1 17 Q2 17 Q3 17 Q1 18 Q2 18 Q3 18 GW under service High visibility High visibility from 2.8bn service order book 10+ years 1 average duration providing annuity-like revenue % % 14.0 High renewal rate 2 (~75% last 3 years) Q3 16 Q3 17 Q3 18 High margins and cash flow contribution Stronger contribution margin v/s turbine business Higher FCF contribution Service margins (Contribution margins 3 ) 34.6% 42.3% 33.9% 9M 16 9M 17 9M 18 Service provides a growing, predictable, annuity-like cash flow stream to the business Notes. 1. Only includes active contracts and tenors weighted by no. of WTGs, 2. Turbine renewal rate of service contracts since 2016 based on quarterly data, 3. Contribution margin = Revenues minus the cost of goods sold, including production, material, logistics, construction site costs, commissioning costs, general warranty provisions and the cost of managing these direct cost centres 9

10 2. Markets and Orders

11 Stabilising prices Senvion progress Strong market Market developments Senvion growing rapidly in India Indian Auctions India Market development Size of the key auctions completed (GW) Auctions Min tariff achieved /kwh +10% Market outlook Strong growth expected in 2019 based on auctions already completed Prices Auction prices improving with price for right turbines improving SECI I SECI II SECI III Firm orders Senvion orders (MW) Conditional orders SECI II Guj Auction SECI III SECI IV 250 SECI IV SECI V 681 Total Senvion Building market share Order book build up from Zero beginning of 2018 to 680 MW by end of 2018 Local facilities being expanded Nacelle facility expanded to 1 GW Local partnership for blade manufacturing German Auctions German market developments Auction prices /MWh 14% FIT May 17 Aug 17 Nov 17 Feb 18 May-18 Aug 18 Oct 18 Undersubscribed last auction (363 MW out of 670 MW) due to lower availability of permitted projects Government announced 4 GW extra auctions between Senvion well positioned with new turbines in Notes: NTPC = National Thermal Power Corporation

12 Order book of 5.8bn Firm order book improving by 37% yoy Order book ( bn) Net Firm Orders Conditional Service Total Q split by geography Net firm orders at 2.0bn Figures in m Q ,002 Offshore 295 Q Q % Q New markets 1,215 Onshore 1.7bn Q3 17 Q Germany UK France Others Q Q3 18 Offshore Onshore Service orders Note: Net Firm orders are confirmed orders minus PoC revenues already booked. Conditional orders are signed contracts where either building permit and/or grid connection and/or financing is missing. 12

13 YTD firm onshore order intake marginally higher Firm WTG order intake ( m) 9M CY16 ON - 825m 9M CY17 ON - 970m 9M CY18 ON - 1,006m OFF - NIL OFF - 306m Q1 16 Q2 16 Q3 16 Q1 17 Q2 17 Q3 17 Q1 18 OFF - NIL Q2 18 Q3 18 Order intake profile changing due to our conscious efforts to expand into new markets Conversion of large conditional orders expected in next few quarters driven by India, Australia and Argentina Offshore New markets Current Markets High conditional order intake to support uptick in firm orders in upcoming quarters 13

14 17% higher installations in Q3 v/s H Still recovering from delays experienced earlier 1, Installations Back-end loaded 2018 In MW Step up in installations in Q3 In MW Similar installations achieved in Q416 1, ~1,300 c e Q1 18 Q % Q3 18 Changing nature of geographical profile adding to the seasonality Some delays in new markets due to initial learning curve and country specific issues Step up in Q3 installations mainly driven by UK and Chile Heavy pace of installations continue in Q4 mainly driven by LatAM, UK and Australia Q4 installations Q2 installations New markets France Q3 installations Q1 installations Other current markets Germany UK Some installations shift to early 2019 due to bad weather conditions and other unusual external factors 14

15 3. Financials

16 Key highlights Step up in financials, ahead of heavy Q4 ( m) Adj. Q3 17 Adj. Q3 18 Adj. 9M 17 Adj. 9M 18 Revenue , Gross profits Gross margin % 28.5% 34.7% 30.4% 40.7% Adj. EBITDA Adj. EBITDA % 8.6% 8.6% 7.9% 5.3% Adj. EBIT (11) Adj. EBIT % 5.6% 3.7% 4.3% (1.4%) Adj. PAT 18 (3) 34 (32) Working Capital % 0.4% 2.8% 0.4% 2.8% Lower revenues driven by delays in installations and effects of IFRS 15 compared to last year Higher share of service revenues drive gross margins Working capital remained flat due to some delays in order intake and installations Higher cash position of 146m driven by capital raise completed in the quarter Working Capital Net Debt / (Cash) Note: Q3/9M 2018 financials are adjusted for PPA and extraordinary expenses related to restructuring, Q3/9M 2017 financials are adjusted for PPA effects, extraordinary expenses and one off expenses in relation to high yield bond refinancing Q3/9M 2017 financials are not restated to reflect change in IFRS 15, hence only a limited comparison can be made between the financial figures of Q3/9M 2017 with Q3/ 9M

17 Additional key performance metrics Continued improvement Material cost development ( m) 28.0% 28.5% 30.4% Adj. COGS Gross margin 40.7% 9M 18 margins driven by higher service revenue component and offshore income 1,618 1,355 1, M 17 9M 18 Cost breakdown ( m) D&A OPEX -6% Personnel Continued OPEX reduction Net employee costs reduced despite expected growth in 2019 Working on further cost reduction in 2019 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Note: Financials adjusted for PPA in D&A 17

18 Breakup of total Capex and R&D Spending in line with last year Total intangible and tangible capex 1 ( m) 2.7% % 3.8% 5.8% Investments according to plan Expansion of Indian blade and nacelle factory has started M 17 9M 18 [%] Capex over sales R&D expenditure ( m) 3.1% % 4.3% 8.7% Key R&D spending focused on acceleration of 4.XM and 2.XM platforms Slightly higher R&D costs expected yoy due to accelerated focus on ensuring the realisation of LCoE reduction M 17 9M 18 [%] R&D over sales Expensed Capitalised 1. Excluding capitalised R&D. 18

19 Net working capital Meaningful WC improvement expected in next few quarters Net working capital 1 evolution ( m) Net working capital NWC 1 % of trailing 12 months revenue 4.6% 2.5% 3.1% (0.2)% 0.4% 99 (3.7)% % (5) 8.3% (83) Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q % 2.8% Q2 18 Q3 18 Working Capital remained stable due to installation profile Further inventory build up of 79m in Q3 18 due to build up of Q4 projects WC expected to normalise in next two quarters Quarterly free cash flow evolution ( m) 14 (109) (173) (60) (40) (43) Seasonal effects of inventory build up generated negative cash flow in first half Improved FCF generation expected in next two quarters Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Free cash flow Operating cash flow Investing cash flow 1. Net working capital defined as current assets (adjusted for liquid funds and assets of disposal Group classified as held for sale) minus total current liabilities (adjusted for provisions, liabilities of disposal Group classified as held for sale and short-term loans and current portion of long-term loans). 19

20 4. Future outlook

21 Guidance 2018 Revenue guidance adjusted Former Guidance 2018 Revised Guidance M 18 Revenues bn ~ 1.6bn 806m Adj. EBITDA margin % ~ 5.0% 5.3% 21

22 1.7bn revenue coverage for 2019 Further commentary on 2019 with Q4 results and new CEO on board 2018 Revenue drivers Business Split 20% to 40% growth Targets 2019 Revenues Onshore ~70-75% 1.1bn+ of firm orders already covered Order conversions expected in six to nine months Significant revenue growth potential ~ 1.6bn Offshore and service 25-30% c. 600m covered for 2019 Underpinned by 1.7bn firm order coverage 2018 EBITDA drivers Healthy EBITDA growth Targets 2019 Adj. EBITDA margin ~5% Material cost out Fixed cost reduction Higher volumes to drive EBITDA recovery Cost out from scale driven component pricing possible as component demand doubles due to higher installations Increase in EBITDA 22

23 5. Key takeaways

24 Key takeaways 1 Sequential step up in revenues and EBITDA 2 Growth in conditional orders, with expected conversions over upcoming quarters 3 MOVE FORWARD Intensive cost outs to deliver margins 4 Service business continues to grow with healthy margins & cash flows 5 High revenue visibility for 2019 with 1.7bn firm orders secured and a healthy pipeline in place 24

25 6. Appendix

26 Financial calendar Financial Calendar 2018 Event Date Q Results November 14, 2018 Your Investor Relations Team: Dhaval Vakil VP Capital Markets & Public Relations Phone UK: Mobile: Anja Siehler Sr. Manager Capital Markets Phone Lux: Mobile: For general queries: 26

27 Income Statement Q3 18 Bridge between reported and adjusted earnings m Adj Q3 18 Adj. Adj Q3 18 Revenue 1, Total performance 1, Material expenses (1,355) (295) (295) Gross profit Gross margin % 28.5% 34.7% 34.7% Other operating income Personnel expenses (260) (62) (62) Other operating expenses (153) (30) (30) FX gain/loss (4) 0 0 EBITDA EBITDA % 8.0% 8.6% 8.6% Depreciation & Amortization (66) (27) 1 10 (17) EBIT EBIT% 4.5% 0.8% 3.7% Extraordinary Expenses 0 (4) Net interest (41) (11) (11) Taxes (0) (2) 3 (3) (5) Net Profit from continued ops 45 (14) (3) PAT % 2.4% (4.1%) (0.9%) Key adjustments PPA adjustment (non cash) Extraordinary expenses of 3.8m relate to second phase of initiatives to cut further costs and include legal and consulting costs and employee termination benefits PPA adjustment (non cash) 27

28 Quarterly Income Statements Income Statement Adj. Adj. Adj. Adj. Adj. Adj. m Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Revenue Total performance Material expenses (308) (338) (317) (255) (255) (295) Gross profit Gross margin % 31.5% 28.5% 24.2% 39.3% 52.2% 34.7% Other operating income Personnel expenses (66) (65) (57) (63) (64) (62) Other operating expenses (35) (36) (42) (36) (35) (30) FX gain/loss (2) 0 (3) (2) (1) 0 EBITDA EBITDA % 9.2% 8.6% 8.4% 0.3% 6.0% 8.6% D&A (15) (14) (19) (17) (20) (17) EBIT (16) (7) 13 EBIT% 5.7% 5.6% 5.0% (6.4%) (3.5%) 3.7% Extraordinary exp. (19) (3) 1 (1) (6) (4) Net interest (9) (9) (10) (8) (9) (11) Taxes (1) 0 (8) 3 8 (5) Net Profit from continued ops (21) (8) (3) Financials adjusted for PPA, restructuring expenses in CY18 PPA, restructuring expenses and HYB refi expenses in CY17 28

29 9M Income Statements Income Statement Adj. Adj. m 9M 17 9M 18 Revenue 1, Total performance 1,436 1,134 Material expenses (1,038) (805) Gross profit Gross margin % 30.4% 40.7% Other operating income 20 6 Personnel expenses (203) (189) Other operating expenses (111) (102) FX gain/loss (2) (2) EBITDA EBITDA % 7.9% 5.3% D&A (46) (54) EBIT 57 (11) EBIT% 4.3% (1.4%) Extraordinary exp. (55) (11) Net interest (31) (27) Taxes 8 6 Net Profit from continued ops 34 (32) Financials adjusted for PPA, restructuring expenses in CY18 PPA, restructuring expenses and HYB refi expenses in CY17 29

30 Balance Sheet Assets ( m) Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Liquid Funds Current Assets (excluding liquid funds) ,058 1,103 Receivables Inventories Others Property, plant & equipment Intangible assets Other Non current assets Deferred tax assets Total 1,808 1,808 1,820 1,977 2,033 Liabilities ( m) Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Loans (short term, long term and High Yield Bond) Current liabilities (excl. provisions and short term loans) ,018 1,064 Advance payments received Trade payables Gross amount due to customers for contract work as a liability Others Provisions Deferred tax liability Total equity capital Total 1,808 1,808 1,820 1,977 2,033 Notes: 1. includes assets held for sale 30

31 Cash flow summary ( m) Q3 17 Q3 18 9M 17 9M 18 Result before income taxes (11) (11) (126) (79) Adjustments for Depreciation on property, plant and equipment, amortization of intangible assets and write-offs on financial assets Interest income (0) (4) (1) (4) Interest expenses Increase/decrease in provisions (50) (38) (42) (82) Profit or loss from sales of property Change in working capital 115 (1) (73) 8 Interest received (0) Interest paid (5) (8) (50) (23) Income tax paid/received (27) 2 (33) (8) Cash flow from operating activities 71 (18) (149) (68) Cash receipts from the sale of property, plant and equipment, intangible and other long-term assets 0 (3) 3 2 Cash payments for the purchase of intangible assets (11) (12) (34) (40) Cash payments from purchase of property, plant and equipment and other longterm assets (16) (10) (57) (38) Cash flow from investing activities (27) (25) (89) (76) Cash proceeds from Capital Increase Acquisition of treasury shares (2) 0 (8) 0 Net Cash repayments of amounts borrowed / repayments (1) (0) (4) (2) Cash flow from financing activities (4) 59 (12) 57 Increase/decrease in cash and cash equivalents (249) (87) Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Liquid funds Short-term bank liabilities (6) (2) (6) (2) 31

32 Revenue development Growth in service and offshore revenues Onshore revenues ( m) Service revenues ( m) Offshore revenues ( m) % M 17 9M 18 Q3 Q2 Q1 +11% M 17 9M M M 18 Other revenues at 1.3m in Q ( 1.3m in Q3 2017) and 16.7m in H ( 4.4m in 9M 2017) Onshore revenues breakdown ( m) Euope ( m) Americas ( m) Asia-Pacific ( m) M M 18 Lower revenues mainly due to low installation in Germany and UK M 17 9M 18 9M 17 9M 18 Increase in revenues due to pick up in Chile Includes revenues from Japan and Australia H1 Q3 32

33 Overview of PPA Adjustments Net PPA booked in CY18 ( m) Expected yearly P&L effects 1 ( m) Q e 28 Q e 28 Q e 27 9M CY18 Notes: 1. Including deferred tax impacts and is not the complete schedule; assumed group tax rate of % for calculations. Source: Company information; Deloitte analysis. 33