Millennium Offshore Services Superholdings, LLC First Quarter 2014 Results Conference Call May 21, 2014 1
Disclaimer & Safe Harbor Statement This presentation may contain forward looking statements within the meaning of the U.S. federal securities laws regarding future financial performance, results, events and other statements that are not historical facts. The words believe, anticipate, plan, expect, project, estimate, predict, intend, target, assume, may, could, will and similar expressions are intended to identify such forward looking statements. Such statements are made on the basis of assumptions and expectations that Millennium Offshore Services Superholdings, LLC ( MOS or The Company ) believes to be reasonable as of the date of this presentation, but may prove to be erroneous. Such forward looking statements involve known and unknown risks and uncertainties and other factors which may cause the Company s actual results, business, financial condition, results of operations, performance or achievements or industry results to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward looking statements. Such factors include, among others, those more fully described in Risk Factors and elsewhere in the Company s annual report for the year ended December 31, 2013. You are therefore cautioned against relying on any of these forward looking statements. Except as required by law or regulation, the Company assumes no obligation to update such forward looking statements or to update the reasons for which actual results could differ materially from those anticipated in such forward looking statements. 2
MOS Strategic Highlights 1 2 A leading jackup ASV owner / operator focused on the large and growing market for offshore oil and gas installation (i) inspection, maintenance and repair, and (ii) construction, hook-up and commissioning projects in both the MENA and Asia- Pacific regions Capitalizing on growing trend in the ASV sector of using jackup ASV solutions versus floating solutions 3 Large backlog resulting in significant visibility into future revenues 4 Strong relationships with high-quality customers resulting in significant repeat business and exercise of customer extension options 5 Resilient EBITDA margins and strong free cash flow generation 6 Diverse, well-maintained, certified and valuable fleet 7 Market-leading health and safety track-record 8 Experienced management team with significant sector expertise 3
MOS ASV Fleet Overview MOS Frontier Burj Ahmed Trident One Marinia Leen Deema ASV Conversion Dates 2014 2 2011 3 1993 2000¹ 1986 1999 1990 Self-Propelled No No No Yes No Yes No Current Location UAE Australia / Timor Egypt UAE Qatar UAE Qatar Water Depth (ft) 300 350 300 180 151 131 190 Max Passenger Capacity Number of Cranes / Max Crane Lift (MT) DNV Certified / Last 5-Year Special Survey Date 290 Key Feature Large 290 person capacity with 2014 design accommodation facilities and man riding crane capability 236 (Upgradable to 300) 300 126 240 (Upgradable to 280) 150 475 3 / 200 3 / 200 3 / 110 2 / 64 2 / 110 2 / 37 3/ 200 NA Yes / Jan-2012 Yes / Dec-2010 Yes / Jul-2009 Yes / Mar-2010 Yes / Jun-2013 Yes / Feb-2010 Deepest waterdepth jackup ASV globally Only one of two ASVs in the MENA region capable of accommodating 300+ POB (the other is Deema) Purpose-built accommodation / work-over platform and selfpropelled One of only 3 jackup ASVs in the MENA 4 region capable of accommodating 240+ POB (others are Ahmed and Deema) Significant capital invested to upgrade fleet and tailor ASV specifications to better meet customer demands Self-propelled with NOC / IOC JV since 2008 with customer extension options until 2016 Largest passenger capacity ASV in the MENA and Asia-Pacific regions 1. Originally built as an ASV. 2. Acquired jackup rig in August 2013 and currently being converted to an ASV. 3. Acquired Burj in 2011 and converted to ASV during the year. 4. Excluding ASVs operating in Iran. 4
Recent Developments MOS Frontier & Burj Update As reported in the 2013 Annual Report, on January 15, 2014, we signed a contract with ConocoPhillips to enter into a one year fixed term with six 60-day extension options charter. The expected contract start date is August, 2014, following the completion of the MOS Frontier shipyard conversion. Following a period of parallel running and transition between the MOS Frontier and Burj with ConocoPhillips we expect the Burj to end its current charter with ConocoPhillips during the fourth quarter of 2014, with the higher POB capacity MOS Frontier continuing to serve the project accommodation requirements thereafter. We are currently working on a number of opportunities for the Burj commencing in 2015. 5
Recent Developments New Business Deema / Contract Extension On January 14, 2014, Hyundai Heavy Industries formally and simultaneously exercised two 30-day extension options under its current contract for Deema, extending the fixed term of the contract from February 2014 to April 2014 and requested two further additional 30-day extension options under the contract through to July 2014. Hyundai Heavy Industries have subsequently exercised the three existing 30-day options under the current Deema charter, extending the fixed term of the contract from April 2014 to July 2014. On April 30, 2014, Hyundai Heavy Industries have requested two further additional 30-day extension options under the contract through to August 30, 2014 which have been accepted. 6
Recent Developments New Business Deema / EPIC Contractor On January 15, 2014, we received a signed Letter of Intent from an Engineering Procurement Installation Commissioning (EPIC) contractor in respect of Deema, for a 76-day fixed term charter with four 15-day extension options. We previously reported that the anticipated start date of the charter was for September 2014, with extension options through to January 2015. However, due to a required change in client field logistics, the charter start date is now expected to be for June 2015 and on May 18, 2014 MOS signed the contract with the EPIC contractor for the revised charter. The charter contract duration remains unchanged and for a 76 day fixed term charter with four 15-day extension options at the later anticipated start date of June 2015 through to October 2015. New Business Deema / NOC As previously reported in the 2013 Annual Report, on February 3, 2014, we received a fax of award from an NOC in respect of Deema, for a 70-day fixed term contract in Qatar. The anticipated charter has a start date of March 2015 with a fixed term through to May 2015. 7
First Quarter 2014 Results Summary Q1 2013 Q1 2014 Number of active ASVs in the fleet at quarter end (1) 6 6 Fleet utilization 88% 100% Revenue $31.1m $38.5m Gross Profit $17.0m $24.4m % Gross Profit Margin 54.7% 63.4% Net Income $10.5m $13.6m % Net Income Margin 33.8% 35.3% EBITDA (3) $20.3m $26.9m % EBITDA Margin 65.3% 69.8% Source: MOS Superholdings, LLC March 31, 2014 reviewed financial statements, (1) The number of active ASVs in the fleet at the end of Q1 2014, excluded the MOS Frontier which was under conversion and thus not active as of quarter end. (2) Fleet utilization for Q1 2014 excludes the MOS Frontier which was under conversion for the duration of the period. (3) EBITDA is defined as net profit for the applicable period before finance costs, income tax expense, unrealized gain/loss on fair valuation of interest rate swap, equity settled C-grant expense, depreciation of property and equipment, amortization and other income / expense related to realized and unrealized exchange gain / loss, gain / loss on sale of assets and deposit income. 8
First Quarter 2014 Balance Sheet Summary US$ Millions December 31, 2013 March 31, 2014 ASSETS Non current assets (Property & equipment) $252.3 $289.4 Current assets Inventories $4.0 $4.1 Trade and other receivables $33.5 $27.1 Bank balances and cash $32.9 $26.1 Total current assets $70.5 $57.4 Total assets $322.8 $346.7 Equity and Liabilities Equity Capital contribution $40.9 $40.9 Retained earnings $45.6 $59.2 Total equity $86.5 $100.0 Provision for employees end of service indemnity $0.4 $0.6 Senior secured notes $214.7 $215.2 Derivative financial instrument - - Total non-current liabilities $215.1 $215.8 Current liabilities Trade and other payables $21.2 $30.9 Total liabilities $236.3 $246.7 Total equity and liabilities $322.8 $346.7 Source: MOS Superholdings, LLC 2013 audited financial statements and March 31, 2014 reviewed financial statements 9
Debt Offering Overview & Liquidity Profile Debt US$ Million Senior Secured Notes Due 2018 225.0 Total Debt 225.0 MOS issued $225 million in Senior Secured Notes in February 2013 that effectively termed its capital structure and provides flexibility for future growth. Liquidity US$ Million Bank Balances & Cash (3/31/2014) 26.1 Open Revolver Capacity 15.0 Untapped $15 million super senior revolving credit facility with ABN AMRO Bank N.V. Total Liquidity 41.1 Source: MOS Superholdings, LLC March 31, 2014 reviewed financial statements 10
Backlog Overview Total Backlog of $248.2 million. First Quarter 2014 In 3 months $2.05 billion worth of expressions of interest, requests for quotation and invitations to tender received across the MENA, Asia-Pacific and European / North Sea regions. $248.2 $65.5 $118.6 $17.3 $101.3 Note: Contracts subject to varying early cancellation provisions. $88.0 $18.3 $69.6 $41.6 $29.9 $11.7 $182.7 9M 2014 2015 2016 TOTAL Customer Extension Option Fixed Term Contract 11
Contract Overview Contract Coverage by ASV ASV Current Customer 2014E 2015E 2016E Australia / Timor Burj Qatar Deema Australia / Timor Frontier Marinia 2013A Egypt Ahmed Leen Current Country NOC / IOC JV New to Fleet. Conversion in progress. UAE Qatar UAE Trident One Fixed Contract Note: Contracts subject to varying early cancellation provisions. Extension Options Letter of Intent 12
Questions & Answers 13
Appendix I - Use of Non-IFRS Financial Measures In this presentation the Company presents certain financial measures and ratios, including EBITDA and other operating data, including backlog and fleet utilization rate, that are not presented in accordance with IFRS and which are not IFRS measures. EBITDA is defined as net profit for the applicable period before finance costs, income tax expense, unrealized gain/loss on fair valuation of interest rate swap, equity settled C-grant expense, depreciation of property and equipment, and other income / expense related to realized and unrealized exchange gain / loss, gain / loss on sale of assets and deposit income. For purposes of the Company s calculation of EBITDA, the Company does not have amortization of intangible assets in the periods being presented. EBITDA margin is defined as EBITDA divided by revenue. The Company presents EBITDA because it believes that (i) it is a useful indicator of the Company s ability to incur and service the Company s indebtedness, (ii) it and similar measures are widely used in the Company s industry as useful indicators or supplemental measures of operating performance and (iii) it can assist certain investors, security analysts and other interested parties in evaluating the Company s operations and performance. EBITDA is not recognized terms under IFRS. Accordingly, it should not be used as indicator of, or alternative to, revenue, operating profit or operating profit margin or other comparable IFRS metrics, as a measure of operating performance, or of cash flow from operating activities as a measure of liquidity. The Company s presentation of EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of the Company s results reported under IFRS. In particular, you should not consider EBITDA as an alternative to: (a) operating profit or profit for the period (as determined in accordance with IFRS) as a measure of our operating performance; (b) cash flows from operating, investing and financing activities as a measure of the Company s ability to meet its cash needs; or (c) any other measure of performance under generally accepted accounting principles. The limitations of EBITDA as an analytical tool include: (i) EBITDA and does not reflect the company s cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) EBITDA does not reflect changes in, or cash requirements for the Company s working capital needs; (iii) EBITDA does not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on the Company s debts; (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often need to be replaced in the future and EBITDA does not reflect any cash requirements that would be required for such replacements; and (v) some of the exceptional items that the Company eliminates in calculating EBITDA reflect cash payments that were made, or will be made in the future. Because the Company s definition of EBITDA may differ from those used by other companies and industries, the company s presentation of this metrics may not be comparable to other similarly titled measures used by other companies. 14
Appendix I - Use of Non-IFRS Financial Measures Backlog and fleet utilization rate are not measurements of financial performance under IFRS and should not be considered as alternatives to other indicators of our operating performance, cash flows or any other measure of performance derived in accordance with IFRS. The Company s management believe that the presentation of backlog and fleet utilization rate is helpful to investors as a measure of the company s historical operating performance and ability to service debt, and also, in the case of backlog, as an indication of the Company s future revenue. Backlog The Company considers backlog to be a key performance indicator of its business because it gives an indication of future revenue. The Company s contracts normally include two types of terms, (i) a fixed term during which the customer commits to use the ASV and (ii) customer extension options that are exercisable at the discretion of the customer. The Company calculates backlog as the sum of the following for each ASV: (charter day rate x remaining days contracted) + ((estimated average PoB x daily messing rate) x remaining days contracted) + contracted remaining mobilization and demobilization fees The Company calculates backlog for both the fixed terms of its current contracts and the customer extension options set out in those contracts. The customer extension options do not represent guaranteed commitments from the Company s customers, but they do represent a contractual arrangement with the Company, and the Company believes those arrangements provide a reasonable indication of its future activity. The Company s contracts can be terminated by its customers generally without penalty at notice periods typically ranging from 30 to 60 days, although some notice periods have been significantly shorter and one current contract has a notice period of 180 days, which can affect the usefulness of backlog as an indicator of future revenue. Fleet Utilization Rate Fleet utilization rate is defined as the percentage of days of the year that an ASV is under contract and in respect of which a customer is paying a day rate for rental of the ASV. Fleet utilization rate is the average of the utilization rates for each of our ASVs. 15