Millennium Offshore Services S h ldi LLCSuperholdings,...
Transcript of Millennium Offshore Services S h ldi LLCSuperholdings,...
Millennium Offshore Services S h ldi LLCSuperholdings, LLCThird Quarter 2013 Results Conference Call
November 26, 2013
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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
identif s ch for ard looking statements S ch statements are made on the basis of ass mptions and e pectations thatidentify 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, 2012. You are
therefore cautioned against relying on any of these forward looking statements Except as required by law or regulation thetherefore 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.
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MOS Strategic Highlights
A leading jack‐up ASV 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 jack‐up ASVs solutions versus floating solutions
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Large backlog resulting in significant visibility into future revenues
Strong relationships with high‐quality customers resulting in significant repeat
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Strong relationships with high‐quality customers resulting in significant repeat business and exercise of customer extension options
Resilient EBITDA margins and strong free cash flow generation
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Diverse, well‐maintained, certified and valuable fleet
Market‐leading health and safety track‐record
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Experienced management team with significant sector expertise3
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MOS Active ASV Fleet Overview
MOS Frontier Burj Ahmed Trident One Marinia Leen Deema
ASV Conversion Dates 20142 20113 1993 2000¹ 1986 1999 1990
Self‐Propelled No No No Yes No Yes No
Current Location UAE Australia / Timor Egypt UAE Qatar UAE UAE
Water Depth (ft) 300 350 300 180 151 131 190
Max Passenger Capacity
290236
(Upgradable to 500)300 126
240(Upgradable to 280)
150430
(Upgradable to 500)
Number of Cranes /Number of Cranes / Max Crane Lift (MT)
3 / 200 3 / 200 3 / 110 2 / 64 2 / 110 2 / 37 3/ 200
DNV Certified / Last 5‐Year Special Survey Date
NA Yes / Jan‐2012 Yes / Dec‐2010 Yes / Jul‐2009 Yes / Mar‐2010 Yes / Jun‐2013 Yes / Feb‐2010
Key Feature • Large 290 person capacity with
• Deepest water‐depth jack‐up
• Only one of two ASVs in the
• Purpose‐built accommodation /
• One of only 3 jack‐up ASVs in
• Self‐propelledwith NOC / IOC JV
• Largest passenger capacity ASV in p y
2014 design accommodation facilities and man riding crane capability
ASV globally MENA region capable of accommodating 300+ POB (the other is Deema)
work‐over platform and self‐propelled
the MENA4
region capable of accommodating 240+ POB (others are Ahmed and Deema)
since 2008 with customer extension options until 2016
the MENA and Asia‐Pacific regions
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1. Originally built as an ASV.2. Acquired decommissioned jack-up rig in 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.
• Significant capital invested to upgrade fleet and tailor ASV specifications to better meet customer demands
Recent Developments
MOS Frontier – MOS’ 7th ASV UnitAs previously reported, in furtherance of its business plan to expand its fleet and operating capabilities in Asia-Pacific and the
Middle East / North Africa Regions, MOS on August 28, 2013 signed a contract to purchase a 300’ Letourneau 116 Cantilever
jack-up rig from an offshore drilling company for $25 million. The new ASV will be named the MOS Frontier and owned by the
MOS Frontier MOS 7 ASV Unit
Company’s newly formed Marshall Islands entity “MOS Frontier LLC” which is a 100% subsidiary of MOS Superholdings LLC.
The Company has been progressing discussions with various parties concerning charter contracts for the MOS Frontier upon
completion of the retrofit work and the Company expects to have a contract finalized in the near-term. As part of those
negotiations the Company has received a non binding letter of intent from a multi national oil and gas company for the charter ofnegotiations, the Company has received a non-binding letter of intent from a multi-national oil and gas company for the charter of
the new unit in the Asia Pacific region.
MOS believes the accommodation unit design will be well-suited for either the Asia-Pacific or Middle East / North Africa markets.
The Company has signed a conversion contract with a preferred shipyard for turn-key work during September 2013. MOS isp y g p py y g p
funding the acquisition and conversion of the unit with cash on hand, cash flow from operations and short-term shipyard
financing secured solely by the vessel and improvements. The Company remains focused on maintaining financial flexibility and
a responsibly capitalized balance sheet.
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Recent Developments
Following the previously reported Letter of Intent received from an EPIC contractor for a charter of ASV Deema,
on June 18, 2013, the Company has updated the signed the charter contract extending the fixed term from 100
ASV Deema Contract Extension
days to 120 days and increasing the extension options from 60 days to 90 days, with Hyundai Heavy Industries
for a project in Qatar. The Deema completed its previous charter with a national oil company (“NOC”) in Qatar
on July 2, 2013. The newly awarded charter with Hyundai Heavy Industries currently has a fixed term end date
in February 2014 with contract extension options from February 2014 through to May 2014.
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Third Quarter 2013 Results Summary
Q3 2012 Q3 2013Q Q
Number of active ASVs in the fleet at quarter end (1) 6 6
Fleet utilization 92% 85%
Revenue $31.6m $31.7m
Gross Profit $18.3m $17.9m
% Gross Profit Margin 58% 57%% Gross Profit Margin 58% 57%
Net Income $13.7m $8.6m
% Net Income Margin 43% 27%
EBITDA (2) $21.7m $21.5m
% EBITDA Margin 69% 68%
Source MOS Superholdings LLC September 30 2013 reviewed financial statements
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Source: MOS Superholdings, LLC September 30, 2013 reviewed financial statements,(1) The number of active ASVs in the fleet at the end of Q3 2013, excluded the MOS Frontier which was under conversion and thus not active as of quarter end.(2) EBITDA is defined as net profit for the applicable period before finance costs, income tax expense, unrealized gain/loss on fair valuation of interest rate swap, equity
settled C‐grant expense and depreciation of property and equipment.
Third Quarter 2013 Balance Sheet SummaryUS$ Millions December 31, 2012 September 30, 2013ASSETSNon–current assets (Property & equipment) $222.8 $245.3
Current assets
Inventories $3.2 $3.8
Trade and other receivables $19.7 $34.6
$ $Bank balances and cash $19.5 $22.6
Total current assets $42.4 $61.1
Total assets $265.2 $306.3
Equity and Liabilities
EquityEquity
Capital contribution $96.7 $40.9
Retained earnings $102.7 $32.4
Total equity $199.4 $73.3
Provision for employees’ end of service indemnity $0.4 $0.6p y y
Senior secured notes ‐ $214.8
Derivative financial instrument $0.3 ‐
Total non‐current liabilities $0.7 $215.3
Current liabilities
Other financial liabilities $17.4 ‐
Bank borrowings $26.3 ‐
Due to a related party $7.9 $0.8
Trade and other payables $13.5 $16.9
T t l t li biliti $65 1 $17 7
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Total current liabilities $65.1 $17.7
Total liabilities $65.9 $233.0
Total equity and liabilities $265.2 $306.3Source: MOS Superholdings, LLC 2012 audited financial statements and September 30, 2013 reviewed financial statements
Debt Offering Overview & Liquidity Profile
Debt US$ Million
Senior Secured Notes Due 2018 225.0
Total Debt 225 0
• MOS issued $225 million in Senior Secured Notes in February 2013 that effectively termed its capital Total Debt 225.0structure and provides flexibility for future growth.
• On February 25 2013 MOS enteredLiquidity US$ Million
Bank Balances & Cash (9/30/2013) 22.6
Open Revolver Capacity 15.0
• On February 25, 2013, MOS entered into a new $15 million super senior revolving credit facility with ABN AMRO Bank N.V.
Total Liquidity 37.6
9Source: MOS Superholdings, LLC September 30, 2013 reviewed financial statements
Contract & Backlog Overview
Contract Coverage by Active ASV
ASV Customer Country 2012A 2013E² 2014E 2015E• Backlog totalled $239.1 million as
Burj
Australia / Timor
of September 30, 2013.
• Over $2.27 billion worth of expressions of interest, requests for quotation and invitations to tender received since 1st Jan
Ahmed
Egypt
Trident One
UAE
2012 across the MENA, Asia‐Pacific and European regions.
Backlog Outlook ($m)
Trident One
Marinia
Qatar
NOC / IOC July
$34
$65
$122
$82
Leen
NOC / IOC JV
UAE
D
Qatar
July 2016
$36
$87
$17
$65
Q4 2013 2014 2015 +Customer Extension OptionFixed Term Contract
$36
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Deema
Fixed Term Contract Customer Extension Option
Note: Contracts subject to varying early cancellation provisions.
Q i & AQuestions & Answers
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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 includingIn this presentation the Company presents certain financial measures and ratios, including EBITDA and other operating data, includingbacklog 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 ofinterest rate swap, equity settled C-grant expense and depreciation of property and equipment. For purposes of the Company’s calculation ofEBITDA, the Company does not have amortization of intangible assets in the periods being presented. EBITDA margin is defined as EBITDAdivided by revenue. The Company presents EBITDA because it believes that (i) it is a useful indicator of the Company’s ability to incur anddivided by revenue. The Company presents EBITDA because it believes that (i) it is a useful indicator of the Company s ability to incur andservice the Company’s indebtedness, (ii) it and similar measures are widely used in the Company’s industry as useful indicators orsupplemental measures of operating performance and (iii) it can assist certain investors, security analysts and other interested parties inevaluating 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 oroperating profit margin or other comparable IFRS metrics, as a measure of operating performance, or of cash flow from operating activities asa measure of liquidity. The Company’s presentation of EBITDA has limitations as an analytical tool, and you should not consider it inisolation, or as a substitute for analysis of the Company’s results reported under IFRS. In particular, you should not consider EBITDA as analternative 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 othermeasure of performance under generally accepted accounting principles. The limitations of EBITDA as an analytical tool include: (i) EBITDAand 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 thesignificant 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 inthe future and EBITDA does not reflect any cash requirements that would be required for such replacements; and (v) some of the exceptionalitems that the Company eliminates in calculating EBITDA reflect cash payments that were made, or will be made in the future. Because theCompany’s definition of EBITDA may differ from those used by other companies and industries, the company’s presentation of this metricsp y y y p , p y pmay not be comparable to other similarly titled measures used by other companies.
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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 toBacklog and fleet utilization rate are not measurements of financial performance under IFRS and should not be considered as alternatives toother indicators of our operating performance, cash flows or any other measure of performance derived in accordance with IFRS. TheCompany’s management believe that the presentation of backlog and fleet utilization rate is helpful to investors as a measure of thecompany’s historical operating performance and ability to service debt, and also, in the case of backlog, as an indication of the Company’sfuture 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 thefollowing for each ASV:
(charter day rate x remaining days contracted)(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 thosecontracts. The customer extension options do not represent guaranteed commitments from the Company’s customers, but they do representa contractual arrangement with the Company, and the Company believes those arrangements provide a reasonable indication of its futureactivity. The Company’s contracts can be terminated by its customers generally without penalty at notice periods typically ranging from 30 to60 days, although some notice periods have been significantly shorter and one current contract has a notice period of 180 days, which canaffect 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 ofwhich 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.
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