TTS GROUP ASA Q1 Results 2015 Oslo, 13 May 2015 Björn Andersson, CEO Henrik Solberg-Johansen, CFO Photo: Jan Rolf Jacobsen/Norlines
NEWS: New PCTC contract of MNOK120 Cargo access equipment to two PCTCs (Pure Car Truck Carriers). Total order value is approx. MNOK 120. Under construction - Korean Shipyard. Deliveries completed during 2016. 2
Agenda 1 st quarter headlines Strategy and market outlook 1 st quarter consolidated accounts Segment info Shareholder structure Strategy and market outlook Summary 3
TTS Group ASA 1 st quarter 2015 key figures Turnover 1Q MNOK 599 up from MNOK 554 1Q last year EBITDA 1Q of MNOK 1, up from MNOK -28 in 1Q 2014, in line with Q3 2014, but reduced compared to 4Q 2014 Order intake 1Q MNOK 301 excl. 50/50 companies. Total order intake 1Q MNOK 590 (incl 100% of 50/50 companies)* Order backlog 1Q 2015 MNOK 4 418, incl. 100% of 50/50 companies (*)TTS holds 50% of the 50/50 companies 4
TTS Group ASA 800 700 Turnover Turnover and EBITDA development 600 500 593 554 400 Q1 2015 Q1 2014 EBITDA 60,0 10 % 40,0 20,0 5 % 0,0-20,0-40,0 Act Q2 2012 Act Q3 2012 Act Q4 2012 Act Q1 2013 Act Q2 2013 Act Q3 2013 Act Q4 2013 Act Q1 2014 Act Q2 2014 Act Q3 2014 Act Q4 2014 Act Q1 2015 0 % -5 % -60,0-10 % -80,0-100,0-15 % -120,0-20 % EBITDA EBITDA margin Note: - Restated 2012 due to changes in IAS 19, recognition of actuarial gain/loss on pension liabilities - EBITDA Q4 2014 of MNOK 36 is excluding positive pension effect of MNOK 101 5
TTS Group ASA Order intake and order backlog MNOK 1 400 1 200 1 000 800 600 400 200 - Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 1,8 1,6 1,4 1,2 1,0 0,8 0,6 0,4 0,2 - Book to bill Order intake per quarter 2013-2015 including 100 % of 50/50 s Book to bill = Order intake / Revenues Order intake (ex JV) Order intake JV (100 %) Book to bill (incl 100 % JV) Order backlog per 31.03.2015 is MNOK 4 417 including 100 % of 50/50 owned companies Divided per year of delivery; 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2015 2016 2017+ Group ex JVs JV 100 % 6
Agenda 1 st quarter headlines Strategy and market outlook 1 st quarter consolidated accounts Segment info Shareholder structure Summary 7
Overall vision for TTS Group Vision The global supplier of handling systems to the maritime and offshore industry with the strongest focus on end user satisfaction Values that drive us System & Technology competence Reliability & Customer satisfaction Health Safety & The Environment A preferred global supplier means: Strategy Be on the makers list and get market share > 30 % in each market segment where we are positioned Product technology among the top 3 in each segment where we compete Customer oriented solution that support the life cycle of the vessel from new design to recycling. Wider product offerings to support package sales and reduce sales costs Profitability on par with industry average 8
Our long-term goal Building a global BNOK 6 System and Service provider company in the maritime and offshore industry within 2020 Grow by internal efficiency and capture market share Add peripheral products to complement Product costs on par with the market Key accounts to support customer relationships Major focus to penetrate our installed base and third party equipment 9
TTS revenue growth potential Potential for growth towards 2020, goal of BNOK 6 turnover BNOK 7 6 5 4 3 2 1 0 2014 revenue Growth in current product sales Package sales gain New products Growth in lifecycle services 2020 revenue potential 10
Operational Excellence & Synergies Phase 1 (2013) Phase 2 (2014) Organizational adjustments and merging units Integration of Container/Bulk/Tank business unit initiated. Focus on efficient operation/process Downsizing in Offshore and Multipurpose General Cargo finalized and new work process implemented Enhance market focus Key account structure implemented Corporate driven controller structure implemented. Momentum cost reduction projects Product development started in all divisions. Cost savings operational cost ~ MNOK 70 + sourcing cost ~MNOK 60 Phase 3 (2015) Customer driven growth market shares to increase Ship-type focus Increase product leverage per ship Profitability through cost efficiencies substantial lower sourcing costs Closing gaps /product development reinforced competitive position Lean and mean business substantial better focus on segments where higher productivity are achieved In 2014 MNOK 130 were released in operation & sourcing costs In 2015 we will eliminate another MNOK 100
TTS has a strong position in the biggest global shipbuilding market China and Korea account for ~70% of global shipbuilding TTS China market share Strategy % of global shipbuilding backlog (CGT) Hatch covers 90 % 80 % 65 % 70 % Uniquely positioned to capitalize on China partnerships and through BU presence in Korea 60 % 50 % 40 % 30 % Hose handling cranes 55 % A new Chinese 50/50 owned company is established for Multipurpose & General Cargo 20 % 10 % 0 % 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Cargo cranes 22 % Increased operational focus on Chinese JVs China Korea Japan Source: Clarkson Research Services 12
Positive underlying market drivers World economy, seaborne trade and shipbuilding Growth 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% -- - 2,0% - 4,0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 The demand for TTS equipment offering is related to the overall activity in shipping markets An important driver for shipping and shipbuilding markets is the state of the world economy World GDP expected to grow at CAGR 3.8% until 2017, in line with historic growth and a slight increase in growth relative to 2012-2014 Seaborne trade is highly correlated to growth in world GDP Shipbuilding is a cyclical market and experienced a large increase in activity in the mid 2000 s until the financial crisis Uptick in contracting and orderbook in 2013/14 Fleet has consistently grown by more than 2% since 2000-6,0% World seaborne trade (m. tonnes) World GDP World fleet (dwt)
Healthy underlying markets Global economy to remain solid World economy GDP growth 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% -- 2,7% -- 5,4% 4,1% World seaborne trade by type bn tonnes 12,0 10,0 8,0 6,0 4,0 2,0 -- 3,4% 3,3% 3,3% 3,5% 3,7% 4,1% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Other Gas Oil products Crude oil Container Minor bulk Major bulk Growth in seaborne trade vs world GDP 1990-2014 Seaborne trade growth 10,0% 8,0% 6,0% 4,0% 2,0% -- -- - 2,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% - 4,0% GDP growth - 6,0% Comments Healthy growth expectations for the world economy GDP projected to grow at 3.5-4% towards 2017 Seaborne trade volumes are highly related to the world economy, and is therefore expected to move in the same direction Seaborne trade volumes have shown steady growth for many decades Key growth contributors include container and bulk Source: Clarksons, IMF
Contracting, fleet growth and new build prices Fleet growth Growth (dwt) 10,0% 9,5% 8,7% 9,0% 8,0% 6,9% 6,9% 6,9% 7,0% 7,1% 7,0% 6,1% 5,7% 6,0% 5,0% 3,7% 4,0% 3,4% 3,0% 2,7% 2,5% 3,0% 2,1% 2,0% 1,0% -- 2000 2001 2002 2003 20042005 2006 2007 2008 2009 2010 2011 2012 2013 2014 New build prices USDm 180 160 140 120 100 80 60 40 20 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 VLCC Aframax Capesize Panamax 2014 Contracting by region CGT 6 000 5 000 4 000 3 000 2 000 1 000 -- 200020012002200320042005200620072008200920102011201220132014 Asia Europe RoW Asia share (%) 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % Contracting by ship type # of vessels 7 000 6 000 5 000 4 000 3 000 2 000 1 000 -- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Tankers Bulkers Container Gas MPP & GC Car carriers Passenger & cruise Offshore Other
TTS currently addressing NOK 28 bn of the global market TTS market by product group Estimated annual market size (NOKbn) Estimated market 16,0 Marine Offshore Solutions size for marine product categories 0,5 totalling NOK 14,0 15bn 2,2 0,2 Largest product 12,0 0,4 types within 3,1 marine are roro 10,0 equipment, 0,8 winches, hatch 8,0 6,0 6,6 covers and cranes 1,7 14,7 Estimated market 13,0 size for offshore & heavy lift segments at NOK 4,0 13bn 2,9 7,2 Largest market for 2,0 0,7 offshore cranes, drillship cranes 1,5 and offshore -- winches
Agenda 1 st quarter headlines Strategy and market outlook 1 st quarter consolidated accounts Segment info Shareholder structure Summary 17
TTS Group ASA Profit and loss statement 1st quarter Year MNOK 2015 2014 2014 Turnover 593 554 2 454 EBITDA 1-28 105 Operating profit -8-38 61 Net financial items -15-9 -38 Profit/loss before tax -23-47 23 Net result continued business -28-47 -22 Net result incl discontinued business -28-47 18 18
TTS Group ASA Balance Sheet MNOK 31.03.2015 31.03.2014 31.12.2014 Non-current assets 916 931 927 Current assets 1 642 1 161 1 484 TOTAL ASSETS 2 558 2 093 2 411 Equity 584 503 610 Gross interest bearing liabilities 404 372 386 Other liabilities and provisions 1 570 1 218 1 415 TOTAL EQUITY AND LIABILITIES 2 558 2 093 2 411 Net interest bearing debt / Covenants Net interest bearing debt increased to MNOK 348. Total cash reserve is MNOK 214 as per 31.03.2015 Equity ratio including subordinated convertible debt is 26.5 % at the end of 1Q 2015 Covenants at 1Q 2015 are met 19
TTS Group ASA Cash flow / Working capital / Interest bearing debt Cash flow Q1 Q1 Year MNOK 2015 2014 2014 Net cash flow from operations -74-157 -150 Net cash flow from investments -1-7 27 Net cash flow from financial activities -7-131 101 Net change in cash -82-32 -21 Cash and bank deposits at the start of the period 131 156 156 Effect of exchange rate changes in bank/cash 3-7 -4 Cash and bank deposits at the end of the period 52 117 131 Cash flow from operations MNOK -74, mainly from increased working capital Offshore and RCN projects MNOK Q1 15 Q4 14 Q3 14 Q2 14 Q1 14Q4 13 Short term interest b. debt 314 297 273 295 187 50 Long term int. bearing debt 0 1 1 1 103 103 Convertible Bond(*) 95 95 95 95 95 95 Total 409 393 369 391 385 248 Cash 52 131 88 88 117 156 NIBD (**) 357 262 281 303 268 92 (*) Convertible loan included at nominal value (**) Negative indicates net asset position Net working capital 20
TTS Group - Turnover and EBITDA 1Q 2015 TTS Group ASA Turnover: MNOK 593 EBITDA: MNOK 1 RoRo/Cruise/Navy Container/Bulk/ Tank Offshore Multi Purpose/ General Cargo Shipyard Solutions Services Turnover: MNOK 160 EBITDA: MNOK 15 Turnover: MNOK 72 EBITDA: MNOK 2 *) Turnover: MNOK 79 EBITDA: MNOK -24 Turnover: MNOK 94 EBITDA: MNOK -4 Turnover: MNOK 51 EBITDA: MNOK 4 Turnover: MNOK 136 EBITDA: MNOK 13 Turnover and EBITDA 1Q 2015 *) Includes 50 % of JVs
RoRo / Cruise / Navy Cargo handling solutions for car carriers, cruise ships and specialized vessels as well as port handling equipment. Q1 Periodic Full Year MNOK 2015 2014 2014 Turnover 160 135 599 EBITDA 15 11 77 Order backlog 707 834 854 Improved turnover and profit for the business unit Market for RoRo, particularly PCTC, is positive Competition is fierce and prices are low in the port segment Cruise business is developing The Navy segment is promising 22
Container / Bulk / Tank Cargo handling solutions for container ships, tankers and bulk carriers; including winches, cranes and hatch covers. Q1 Periodic Full Year MNOK 2015 2014 2014 Turnover 72 112 422 EBITDA 2 1-5 Order backlog *) 1 601 1 192 1 687 *) Includes 50 % of orderbacklog in 50/50 owned companies Profit from 50/50 companies MNOK 8,4 (3,6) in Q1 Order backlog driven by strong market positions for the 50/50 companies in China The outlook is strong for container and shows cyclic reduction for tank. The market for big bulk is slow, but emerging in small bulk and special tonnage Moving of business unit head-quarter from Germany to South Korea is completed 23
Multipurpose / General Cargo Heavy lift cranes, mooring winches, hatch covers and side loading systems for multipurpose vessels and cargo ships. Q1 Periodic Full Year MNOK 2015 2014 2014 Turnover 94 28 138 EBITDA -4-13 -35 Order backlog 445 281 562 Improved turnover and EBITDA Continued positive activity in Chinese shipyards - several projects are tendering heavy lift cranes Improved order backlog combined with cost cutting measures, basis for improved EBITDA margins New 50/50 company TTS-SCM approached Chinese market in Q1 and achieved large orders in April 2015 24
Shipyard Solutions Production lines and systems for cargo handling to shipyards, focusing on transfer systems for docking and launching. Q1 Periodic Full Year MNOK 2015 2014 2014 Turnover 51 37 192 EBITDA 4-3 32 Order backlog 265 278 271 Stable activity in the quarter. Several interesting projects may develop in 2015 TTS with a strong position in the ship lift market. 25
Offshore Cranes for offshore vessels and offshore installations. Q1 Periodic Full Year MNOK 2015 2014 2014 Turnover 79 121 572 EBITDA -24-26 -50 Order backlog 230 524 254 Segment strongly affected by downturn in offshore market Cost reduction efforts implemented. Due to long lead time for projects effect expected gradually during 2015 Additional cost reduction efforts initiated in 1Q going forward into 2Q Decrease in order backlog. Low order intake Low utilisation and EBITDA under pressure expected in quarters to come 26
Services Complete services within maintenance, including spare parts, interval agreements and life time service. Q1 Periodic Full Year MNOK 2015 2014 2014 Turnover 136 120 530 EBITDA 13 7 96 Solid activity in the quarter, and stabile margin Market demand in the segment provides basis for increased turnover, and improvement to the overall profit margin Service market remains influenced by low ship charter rates in some segments 27
TTS Group ASA Shareholder structure at May 8 th 2015: Rasmussengruppen AS 13.29% Skeie Technology AS 10.31% Lesk AS 6.13% Stisk AS 6.13% Skeie Capital Investment AS 4.85% Barrus Capital AS 4.00% Skandinaviska Enskilda 3.67% Skagen Vekst 3.53% Holberg Norge Verdipapirfondet 2.50% Tamafe Holding AS 2.49% 10 largest shareholders 56.91% Other (1407 shareholders) 43.09% Total 100,00% Skeie Technology AS, Skeie Capital Investment AS and members of the Skeie family own in total 32,0 %. 28
Agenda 1 st quarter headlines Strategy and market outlook 1 st quarter consolidated accounts Segment info Shareholder structure Strategy and market outlook Summary 29
Summary Positive quarter and improved overall turnover ex Offshore Positive 1Q EBITDA for the third quarter after four negative previous quarters Turnover ex. Offshore continues to improve EBITDA margin ex. Offshore at industry average level Offshore affected by downturn in the market Improvement processes on track We have a road map for the improvement processes going forward in 2015 that has not changed. Up to now we have: Finalized the cost cutting programs in MPGC, CBT and Offshore (Offshore continues cost cutting due to weak market development in 2015) Value chain development in several product segments (sourcing, product development, sales) Positive view on significant market segments The marine market remains good Contracting of new vessels continues to be on a cyclic low level, and the marked is particularly under pressure in some segments, especially Bulkers Car carriers continue with several repeats Container ships grow, especially feeder-size and mega size Multipurpose/General cargo has improved from 2Q 2014 Offshore market under heavy pressure TTS continues to explore new strategic opportunities to further strengthen the business, this may include sale of a part of the group, acquisition of new business or strategic cooperation with new partners 30
For further information, please visit us at www.ttsgroup.com TTS GROUP ASA 31