12 May 2020
Q1 2020 12 May 2020 Highlights COVID-19: Primary concern is the - - PowerPoint PPT Presentation
Q1 2020 12 May 2020 Highlights COVID-19: Primary concern is the - - PowerPoint PPT Presentation
Q1 2020 12 May 2020 Highlights COVID-19: Primary concern is the safety and welfare of employees and their families (zero cases so far) Operations Total Recordable Case Frequency (TRCF) for the quarter was 1.27, an improvement from the
Highlights
Operations
- COVID-19: Primary concern is the safety and welfare of employees and their families (zero cases so far)
- Total Recordable Case Frequency (TRCF) for the quarter was 1.27, an improvement from the previous quarter
- Sustained operation and delivery on existing backlog – no interruptions in Q1 2020
Cost and capex measures
- SG&A cost reduction of ~60% compared to FY 2019
- Capex reduction of ~80% compared to FY 2019, excluding MC investments
Balance sheet and liquidity
- Refinanced debt in Q1 2020 by converting term loan to USD 30 million RCF with new covenants
- Completed private placement in Q1 2020 of USD 28 million
Backlog
- Backlog increased to USD 169 million
- Z100 node sale and deepwater acquisition project in Mexico
Managing the new market reality
- Focus on the safety and security of our people
- Securing new contracts remains #1 priority
- Strengthened capital adequacy and liquidity in Q1 to provide a buffer to operate in the new market
- Protect and preserve cash position to ensure solid entry in to 2021
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Revenue EBITDA
Q1 2020 financials
3
Revenue of USD 53.3 million EBITDA of USD 5.8 million
Q1 2020 figures
54% equity ratio Cash balance of USD 65.8 million Financial position
Flawless execution in the GoM delivers a step up in margins Equipment lease and Rentals continues to deliver good margins Reduced SG&A burden Good fall through to EBITDA
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Restructuring and new organization is starting to deliver results in Q1
Revenue
USD million 92 90 40 44 132 134 74 53
20 40 60 80 100 120 140 160Q2'19 Q3'19 Q4'19 Q1'20 Revenue MASS node sales 26 9
- 24
6
- 25
- 5
Q2'19 Q3'19 Q4'19 Q1'20
EBITDA
USD million
5
No interruption from COVID-19 so far
- ZXPLR crew continued operations in the GoM
deepwater
- In the Caspian Sea, operations for the MASS Micro
undershoot project was completed
- The MASS I system and node lease in Malaysia,
which began in Q4 was completed in Q1
- The Z700 node on a rope crew completed the
transit from the Middle East to the North Sea
- Mobilizing for the Multi-client project in the UK sector
- The reservoir monitoring and source team began
remobilizing and preparing for activities in the second quarter
Uninterrupted operations and delivery on existing backlog
Global presence in all major offshore basins
Current offices Recent and current
- perations
USD 57.4m in backlog added in Q1 2020:
- Equipment sale of Z100-nodes to an existing client
in Asia
- Awarded deepwater OBN adding on backlog for
ZXPLR crew, commencing in Q3 2020 No signed contracts have been cancelled at this time Tenders are being cancelled or postponed Discussions still ongoing for remaining opportunities Current backlog sufficient to support operations in 2020 with current cash position 6
Working closely with clients to secure potential new projects
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Backlog
USD million 125 133 43 32 165 169 31 Dec 2019 31 Mar 2020 2020 2021 and beyond 2%
Multi-client
Magseis Fairfield crew activity outlook
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Q1 2020 Q2 2020 Q3 2020 Q4 2020 Crew Jan Feb March April May June July Aug Sept Oct Nov Dec MASS I Crew 1 Z700 Crew 1 Z700 Crew 2 ZXPLR Crew 1 ZXPLR Crew 2 MASS III Crew 1 Continued qualification of MASS III nodes RM Source Crew 1 RM Source Crew 2 RM Source Crew 3 Deepwater ROV Source contract Rentals Available Transit/Mobilization/ Storage
Proactively manage a lower revenue scenario
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Fixed Cash cost based on low case revenue scenario
- Reduced from 155m in FY 2019 to 40m for FY 2020.
Strategy to Preserve and Protect our cash position for a good entry in to 2021
FY 2019 FY 2020E
Fixed cash cost base – SG&A and capex
USD million, excluding CoS and Multi-Client investments
155m 40m
Financials
Revenue
USD million
Lower revenue in first quarter 2019
- Fewer crews in operations – more in transit
and storage
- Large node sale contract completed in Q3’19
ZXPLR crew in Gulf of Mexico operated successfully throughout the quarter Nodes rental of MASS 1 crew in Malaysia and sale of Z100 nodes
Gross profit of USD 12.3m
- Gross margin of 23%
- Healthy margins on active projects
- Idle crews and transits negatively affect CoS
Revenue and gross profit
10 92 92 90 28 40 44 119.5 131.5 134.2 74.4 53.3
20 40 60 80 100 120 140 160Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Revenue MASS node sales
Note: Restated figures for Q1 and Q2 2019
SG&A
Significantly lower cost level of USD 6.5m
- Positively affected by ~USD 4m reversal of
provisions
Restructuring program and cost measures progressing as planned
- Full effect from the initial restructuring
program from H2 2020
- Additional measures announced in April,
including headcount reductions, temporary layoffs/furlough and other cost reductions
Revised SG&A estimate of USD ~25 million for FY 2020
- >60% reduction from 2019
11 12.9 13.1 11.4 10.5 6.5 1.6 6.9 7.4 4.0
- 5.0
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 SG&A Special items
SG&A
USD million
Q2’19 special item: USD 1.6m reflecting settlement of 2018 outstanding receivable Q3’19 special items: USD 3.0m reflecting change of management and co-location in Norway, and USD 3.9m write-off of R&D/WIP projects Q4’19 special items: USD 3.1m severance pay and lay-off, USD 3.5m other restructuring costs and USD 0.7m from write-off of R&D/WIP projects
R&D is included in SG&A figures
Note: Restated figures for Q1 and Q2 2019
EBITDA development
Reported EBITDA of USD 5.8m in the first quarter of 2020
- EBITDA margin of 11%
- High-margin node sale contract throughout
2019 ended in Q3’19
5.0 11.0 6.8
- 5.6
5.8 11.0 16.0 9.3
- 5.6
- 1.6
- 6.9
- 18.0
- 25
- 15
- 5
5 15 25 35 45 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Special items MASS node sales EBITDA excl. MASS node sales and special items
Note: Restated figures for Q1 and Q2 2019
EBITDA split
USD million 10.4 25.5 9.2
- 23.6
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Key figures (unaudited)
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Note: Restated figures for Q1 and Q2 2019
USD million Q1 2020 Q1 2019 FY 2019 Profit and loss Revenues 53.3 119.5 459.6 Cost of sales (41.0) (96.2) (374.3) Gross Profit 12.3 23.3 85.3 SG&A and R&D (6.5) (12.9) (63.8) EBITDA 5.8 10.4 21.5 Of which: special items affecting EBITDA
- (5.6)
(32.1) EBITDA margin (%) 11% 9% 5% Depreciation (11.8) (15.4) (56.7) Amortization (2.2) (2.4) (8.9) Impairments
- (106.2)
EBIT (8.1) (7.4) (150.4) Net financial items (3.5) (2.1) 7.0 Net profit/(loss) before tax (11.6) (9.5) (143.4) Net profit/(loss) (12.0) (11.2) (151.5) Other key figures Net cash from operating activities 10.5 9.9 144.7 Net cash used in investing activities (16.1) (16.6) (112.6) Net cash used in financing activities 19.7 (11.4) (46.8) Total assets 365 582 357 Equity ratio 54% 55% 52% Cash and cash equivalents 65.8 50.0 53.4 Net interest-bearing debt/(cash) (33.2) 2.5 (20.9)
Operating loss (EBIT) of USD 8.1 million Net loss of USD 12.0 million High cash balance and negative NIBD following recent equity raise and early cash preservation efforts The company will seek potential governmental support programs to improve the financial situation
- Both the U.S. and Norway have announced such
programs
Cash flow development
Positive cash flow from operating activities Investments in multi-client library, nodes and handling systems
- Multi-client library of USD 7.1m
Positive financing cash flow from equity raise, partly offset by lease payments and interest paid Total increase in cash and cash equivalents of USD 12.3m in Q1
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Cash flow in quarter
USD million
- n cash balance
49 42 29
- 35
- 45
- 50
- 40
- 30
- 20
- 10
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20
Net working capital development
15
Net working capital change
USD million
Net working capital
USD million
- 35
- 45
- 50
- 40
- 30
- 20
- 10
Trade payables Other Inventory NWC Q4 2019 Trade Receivable NWC Q1 2020
Note: Restated figures for Q1 and Q2 2019
Significantly lower capex level compared to previous quarters
- Majority of Q1 capex relates to new parts for
the MASS III node program
- The program has now been postponed due to
the increased market uncertainty – flexibility retained to restart in case of market rebound
Revised capex level of ~USD 15 million for 2020 (excluding Multi-Client)
- >80% reduction from 2019
- Only previously committed capex remains
- Sufficient inventory to support expected
business activity level
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Capex by quarter
USD million (excluding MC investments)
Note: Restated figures for Q1 and Q2 2019
17 26 29 19 9
5 10 15 20 25 30 35 40 45 50Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 91 15
10 20 30 40 50 60 70 80 90 1002019 2020E
Annual Capex
USDm (excluding MC inv.)
Further reduction of capex levels
Balance sheet
Strengthened balance sheet in Q1’20
- Completed private placement with gross
proceeds of USD 28 million
- Refinanced debt into new USD 30 million* RCF
with more lenient covenant structure
Impairment test performed for Q1'20 in light
- f Covid-19 and reduced oil price
- Test implies no impairment
In compliance with all loan covenants, with equity ratio of 54%
17
Note: Restated figures for Q1 and Q2 2019 *RCF was refinanced with a current balance of USD 33 million, of which USD 3 million is scheduled to be paid in June 2020
Assets Equity and liabilities
USD million 322 185 199 69 31 42 191 141 124 582 357 365 Q1 19 Q4 19 Q1 20
Current liabilities Non-current liabilities Total equity
81 178 172 172 76 65 72 197 66 56 50 53 66 582 357 365 Q1 19 Q4 19 Q1 20
Goodwill PPE Other intangibles Other current Cash
Note (1): Includes R&D costs
~65 ~35 ~25 ~90 ~35 ~15 FY 2019 FY 2020E FY 2020E
Fixed cash cost base and capex plans (excludes CoS)
USD million
Aligning cash spending to lower revenue scenario
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Taken steps to operate in a new market environment Lowering SG&A and capex by ~USD 115 million in 2020
1. Announced debt service, SG&A and capex cut of ~USD 100 million relative to FY19 at the Q4’19 presentation 2. COVID-19 and oil price drop has created a new market environment 3. Adapted and adjusted to even lower SG&A and capex base for 2020
SG&A1 Capex ~155 ~40 At Q1 2020 report At Q4 2019 report ~70
Outlook and Strategy
Focus on existing fields and reserves
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Client focus in a new market reality: Cash and value creation
Magseis Fairfield offering
Focus on existing fields and reserves
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Client focus in a new market reality: Cash and value creation
Magseis Fairfield offering
OBN data quality will be more important than ever
- Imaging: Well placement and production management
- Repeatability and flexibility
Magseis Fairfield cost and efficiency driven by
- Lean organization with experienced people
- Technology differentiation and asset light model
Positioning Magseis Fairfield
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Restructuring Debt refinancing Equity raise
- Conversion of
term loan to RCF
- New covenants
- Debt refinancing
- New
Management
- Reorganized
manufacturing
- SG&A and CAPEX
reductions
- Rebuilding
backlog
- Strengthen
balance sheet
- Secured
refinancing of bank debt
- Provide a stronger
position in new market reality
New Management New Board Members
Carel Hooijkaas CEO Mark Ivin CFO
Managing a new market reality
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Organizational structure Sales and Operations Cash cost reduction Protect and Preserve
- Align organization and operations to lower activity level
- Ensure solid governance, operational control and financial management
- Focus on safe, efficient and reliable project execution of existing backlog
- Securing new contracts remains top priority
- Reducing YoY Cash Cost by 75%
- Protect and preserve cash position for a good entry in to 2021
Appendix
USD thousands Note Q1 2020 (unaudited) Q1 2019 (unaudited) Full Year 2019 (audited) Revenue and other income Revenue and other income
3 53 282 119 502 459 625
Operating expenses Cost of sales
(40 976) (96 182) (374 308)
Selling, general and administrative costs and R&D costs
(6 486) (12 883) (63 812)
Depreciation
5,6 (11 804) (15 411) (56 686)
Amortization
7 (2 156) (2 428) (8 960)
Impairment
5,7,12
- (106 245)
Total operating expenses
(61 422) (126 904) (610 011)
Operating Profit/(Loss)
(8 139) (7 403) (150 386)
Financial income and expenses Finance income
905 1 058 14 394
Finance costs
(4 368) (3 177) (7 373)
Net finance income/(expenses)
4 (3 463) (2 119) 7 021
Net Profit/(Loss) Before Tax
(11 603) (9 522) (143 365)
Income tax expense
13 (425) (1 642) (8 176)
Net Profit/(Loss)
(12 028) (11 164) (151 541)
Basic earnings/(loss) per share (USD) attributable to the ordinary equity
(0.06) (0.06) (0.82)
Diluted earnings/(loss) per share (USD) attributable to the ordinary equity
(0.06) (0.06) (0.82)
Other comprehensive income Other comprehensive income
- Total comprehensive income/(loss) for the period
(12 028) (11 164) (151 541)
Income statement
(unaudited)
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Source: Magseis Fairfield
USD thousands Note Q1 2020 (unaudited) Q1 2019 (unaudited) Full Year 2019 (audited) Non-current assets Goodwill 7,12
- 81 131
- Property, Plant and Equipment
5,6,12 171 844 177 782 172 091 Multi-client library 7,12 7 475
- Other intangible assets
7,12 64 035 76 062 65 406 Total non-current assets 243 354 334 975 237 496 Current assets Cash and cash equivalents 65 751 50 006 53 432 Trade receivables 32 676 88 688 24 353 Inventories 9 505 39 577 18 928 Other current assets 14 171 69 215 22 310 Total current assets 122 103 247 486 119 021 Total assets 365 457 582 461 356 518 Equity Shareholders' equity Share capital 8 1 578 1 166 1 167 Share premium 8 407 969 382 155 382 148 Other equity (210 434) (60 896) (198 721) Total equity attributable to equity holders of the Company 199 113 322 425 184 594 Non-current liabilities Obligation under finance lease 9 29 262 32 067 15 824 Interest bearing liabilities 6 8 897 17 863 10 707 Non-interest-bearing liabilities 4 000 19 445 4 263 Total non-current liabilities 42 160 69 375 30 794 Current liabilities Trade payables 32 666 66 971 29 003 Current tax payable 13 6 500 2 828 7 895 Current portion of interest-bearing liabilities 9 3 333 20 474 16 667 Current portion of obligation under finance leases 6 13 207 18 417 16 195 Other current liabilities 68 479 81 973 71 369 Total current liabilities 124 185 190 663 141 129 Total liabilities 166 345 260 038 171 923 Total equity and liabilities 365 457 582 461 356 518
Balance sheet
(unaudited)
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Source: Magseis Fairfield
USD thousands Note Q1 2020 (unaudited) Q1 2019 (unaudited) Full Year 2019 (audited) Cash flows from operating activities Profit / (loss) before tax (11 603) (9 522) (143 365) Income tax and withholding tax paid 13 (425) (456) (4 332) Depreciation, amortization and impairment 5,6,7,12 13 959 17 840 171 891 Share-based payments expense 388 13 2 540 Finance expense 4 4 368 2 574 7 373 Finance income 4 (905) (289) (14 394) Cost of sales of nodes
- 6 599
29 058 Other non-cash effects
- 5 600
- (Increase) / decrease in other current assets
6 219 (47 641) 91 961 Increase / (decrease) in other current liabilities (1 500) 35 208 4 007 Net cash from operating activities 10 503 9 928 144 740 Cash flows from investing activities Interest received 4 83 286 735 Investment in Multi-Client library 7 (7 099)
- Investment in other intangibles
7 (785)
- Aquisition of equipment
5 (8 348) (16 932) (91 204) Investment in subsidiaries
- (22 170)
Net cash used in investing activities (16 149) (16 645) (112 639) Cash flows from financing activities Downpayments of interest-bearing liabilities 9
- (9 600)
(22 374) Payment of finance lease obligation 6 (5 004)
- (18 775)
Net proceeds from issue of share capital 8 25 820 3 (2) Interest paid 4 (1 109) (1 790) (5 629) Net cash from financing activities 19 708 (11 387) (46 780) Net change in cash and cash equivalents 14 063 (18 104) (14 678) Currency effects on cash and cash equivalents (1 743)
- Cash and cash equivalents at period start
53 432 68 110 68 110 Cash and cash equivalents at period end 65 751 50 006 53 432
Cash flow
(unaudited)
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Source: Magseis Fairfield
Q1 2019 Q4 2019 Q1 2020 Condition Debt covenants Leverage X
- < 1.0x
Liquidity USDm
- > 15.0
Equity Ratio %
- > 50%
In compliance with all covenants at Q1 end Revised covenants as from Q2 2020:
- Leverage: Net interest-bearing debt / EBITDA LTM pre
IFRS 16 < 1.25x
- Equity Ratio: Total Equity / Total Assets > 50%
- Minimum Liquidity replaced with Clean down
mechanism
Covenant update
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Leverage: Net interest-bearing debt / EBITDA LTM Liquidity: Cash and cash equiv. excl. restricted cash Equity Ratio: Total Equity / Total Assets Note: Restated figures for Q1 2019
Overview of largest owners
Rank Investor Number of shares (m) % of total Type Country 1 FAIRFIELD MS LLC 48.3 18.1 % COMP USA 2 MORGAN STANLEY & CO. LLC 38.5 14.4 % COMP USA 3 AS CLIPPER 11.3 4.2 % COMP NOR 4 U.S. BANK NATIONAL ASSOCIATION 10.9 4.1 % NOM USA 5 DB LONDON (INV. SERV.) NOMINEES LT 8.5 3.2 % NOM GBR 6 WESTCON GROUP AS 8.2 3.1 % COMP NOR 7 ANFAR INVEST AS 7.4 2.8 % COMP NOR 8 KAS BANK N.V. 7.2 2.7 % NOM NLD 9 VERDIPAPIRFONDET KLP AKSJENORGE 6.4 2.4 % COMP NOR 10 STRAWBERRY CAPITAL AS 6.4 2.4 % COMP NOR 11 GEO INNOVA AS 5.8 2.2 % COMP NOR 12 KOMMUNAL LANDSPENSJONSKASSE 4.0 1.5 % COMP NOR 13 MERRILL LYNCH PROF. CLEARING CORP. 3.9 1.5 % NOM USA 14 REDBACK AS 3.6 1.3 % COMP NOR 15 BARRUS CAPITAL AS 3.3 1.2 % COMP NOR 16 JPMORGAN CHASE BANK, N.A., LONDON 3.1 1.1 % NOM GBR 17 SEB CMU/SECFIN POOLED ACCOUNT 2.7 1.0 % COMP SWE 18 VERDIPAPIRFONDET NORDEA NORGE VERD 2.5 0.9 % COMP NOR 19 VERDIPAPIRFONDET PARETO INVESTMENT 2.3 0.9 % COMP NOR 20 SKANDINAVISKA ENSKILDA BANKEN AB 2.3 0.8 % NOM LUX Total number owned by top 20 186.4 68 % Total number of shares 266.8 100 %
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Note: As per 11 May 2020
This presentation (the “Presentation") has been prepared by Magseis Fairfield ASA (the “Company” or “Magseis Fairfield”). The Presentation contains forward-looking information and statements relating to the business, financial performance and results of the Company and/or industry and markets in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “aims”, “anticipates”, “believes”, “estimates”, “expects”, “foresees”, “intends”, “plans”, “predicts”, “projects”, “targets”, and similar expressions. Any forward-looking statements and other information contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts based on the current expectations, estimates and projections of the Company or assumptions based on information currently available to the Company, which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although the Company believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to its actual results. The Company makes no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither the Company nor any
- f its directors, officers or employees shall be liable to you or to any other party for any
losses incurred as a result of your or their use of, or reliance on, any information contained in the Presentation. This Presentation does not constitute or form part of, and is not prepared or made in connection with, an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or on its completeness, accuracy or fairness. The information in this Presentation is subject to verification, completion and change. The contents of this Presentation have not been independently
- verified. The Company’s securities have not been and will not be registered under the
United States Securities Act of 1933, as amended (the “US Securities Act”), and are offered and sold only outside the United States in accordance with an exemption from registration provided by Regulation S under the US Securities Act. This Presentation should not form the basis of any investment decision. The Presentation speaks and reflects prevailing conditions and views as of the date of this
- presentation. It may be subject to corrections and change at any time without notice
except as required by law. The delivery of this Presentation or any further discussions of the Company with any recipient shall not, under any circumstances, create any implication that the Company assumes any obligation to update or correct the information herein, nor any implication that there has been no change in the affairs of the Company since such date.
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Disclaimer
Source: Magseis Fairfield