Magseis ASA Q3 2018 30 th October 2018 Transformative technology deal
Disclaimer This presentation (the “ Presentation ") has been prepared by Magseis ASA (the The Company makes no representation or warranty, expressed or implied, as to the “ Company ” or “ Magseis ”). accuracy, reliability or completeness of the Presentation, and neither the Company nor any of its directors, officers or employees shall be liable to you or to any other party for The Presentation contains forward-looking information and statements relating to the any losses incurred as a result of your or their use of, or reliance on, any information business, financial performance and results of the Company and/or industry and contained in the Presentation. markets in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, This Presentation does not constitute or form part of, and is not prepared or made in sometimes identified by the words “aims”, “anticipates”, “believes”, “estimates”, connection with, an offer or invitation to sell, or any solicitation of any offer to “expects”, “foresees”, “intends”, “plans”, “predicts”, “projects”, “targets”, and similar subscribe for or purchase any securities, and nothing contained herein shall form the expressions. Any forward-looking statements and other information contained in this basis of any contract or commitment whatsoever. No reliance may be placed for any Presentation, including assumptions, opinions and views of the Company or cited from purpose whatsoever on the information contained in this Presentation or on its third party sources are solely opinions and forecasts based on the current completeness, accuracy or fairness. The information in this Presentation is subject to expectations, estimates and projections of the Company or assumptions based on verification, completion and change. The contents of this Presentation have not been information currently available to the Company, which are subject to risks, independently verified. The Company’s securities have not been and will not be uncertainties and other factors that may cause actual events to differ materially from registered under the United States Securities Act of 1933, as amended (the “ US any anticipated development. 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 Important factors may lead to actual profits, results and developments deviating Act. This Presentation should not form the basis of any investment decision. substantially from what has been expressed or implied in such statements. Although the Company believes that its expectations and the Presentation are based upon The Presentation speaks and reflects prevailing conditions and views as of the date of reasonable assumptions, it can give no assurance that those expectations will be this presentation. It may be subject to corrections and change at any time without achieved or that the actual results will be as set out in the Presentation. The Company notice except as required by law. The delivery of this Presentation or any further assumes no obligation, except as required by law, to update any forward-looking discussions of the Company with any recipient shall not, under any circumstances, statements or to conform these forward-looking statements to its actual results. 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. Source: Magseis
AGENDA Introduction Financials Market development and operations Summary 3
Highlights Q3 2018 • Revenue of USD 16.0m and EBITDA of USD -0.5m Financial Performance • Net cash flow from operations USD 7.6m • Scaling from one to three crews in operation Operational Performance • Delay in South East Asia due to permit issues • Sale of 17.000 nodes and 4 handling systems to Chinese BGP Offshore Technology • Establish a technology division capitalising on Magseis’ technological excellence • Record Backlog of USD 215 million Further growth, backlog • Confirmed guidance of expected revenue for 2018 of USD 100m (timing risk) and outlook and issue revenue guidance for 2019 of USD 190m-210m 4 Source: Magseis
Corporate snapshot Develop and operate proprietary Geophysical company founded in technology to be applied in seismic 2009 with first operation in 2013 acquisition operations $ Headquarter in Oslo, Norway with OSE:MSEIS offices in Stockholm, Singapore and Market Cap USD~160 million Houston Revenue Guidance 2018: USD 100m ~200 employees of which ~50% Node Pool: 14 000 MASS I offshore 5 Source: Magseis
AGENDA Introduction Financials Market development and operations Summary 6
Q3 2018 results - Comprehensive income • Revenue • Deferred 1 month of revenue to Q418 due to delay YTD2018 Q3 2018 % Q3 2017 % (unaudited) % FY 2017 % In USD thousands (unaudited) (unaudited) (audited in South East Asia for permit issues • 1 month transit between jobs in Red Sea 15 996 28 650 60 279 73 877 Revenue • Start up in July on Northern Europe job that is still 11 084 11 590 30 890 35 701 Cost of sales ongoing, which will positively impact revenue 581 494 1 812 2 002 Research and development SG&A and other expenses 4 862 2 643 12 545 10 039 • Cost of sales & SG&A EBITDA -531 - 13 923 48.6 15 032 24.9 26 136 35.4 • 3 parallel operations in Q318 with capitalised 3 940 4 962 11 505 15 148 Depreciation mobilisation in South East Asia Amortisation 191 116 573 463 • Scaling up organisation and offshore crew 0 0 0 233 • SG&A increase due to corporate activities Impairment EBIT -4 662 - 8 845 30.9 2 954 4.9 10 292 13.9 • Depreciation 290 -1 309 1 792 397 Net finance costs • Depreciation capitalised for mobilisation in South EBT -4 952 10 154 1 162 9 895 East Asia Tax 997 493 1 984 3 199 -5 949 - 9 660 33.7 -822 6 696 9.1 Net income • Finance Total comprehensive income -5 949 9 660 -822 6 696 • Treasury activities initiated in Q2 yielding results • Unrealised net exchange loss of USD 0.2m in Q318 • Tax • Witholding tax in Saudi Arabia 7 Source: Magseis
Q3 2018 results - Balance sheet • Equipment YTD 2018 YTD 2017 YE 2017 In USD thousands • Continue to invest in nodes and handling (unaudited) (unaudited) (audited) 101 140 64 234 74 416 Equipment and other intangibles systems 0 0 0 Multi-client library 33 504 45 427 29 776 Cash and cash equivalents • Other current assets 15 743 16 394 9 137 Trade receivables • Mobilisation of USD 3.1m Stock (fuel and batteries) 3 720 908 1 752 5 370 2 964 8 469 Other current assets 159 477 129 927 123,549 TOTAL ASSETS • Equity ratio of 82.3% • In compliance with all covenants 545 438 438 Share capital 178 508 141 486 141,486 Share premium Retained earnings and other reserves -47 761 -37 149 -46,884 • Liabilities 131 292 104 775 95 040 TOTAL EQUITY • Senior debt from Export Credit Norway and 0 181 0 Obligation under finance lease Innovation Norway of USD 6.3m @ 4.15% Other non-current financial liabilities 11 771 13 482 13 049 interest (split non-current USD 4.4m and 11 771 13 662 13 049 TOTAL NON-CURRENT LIABILITIES USD 1.9m current) • Shell Deep Water R&D funding: Trade payables 6 408 4 965 6 010 889 721 1 111 Current tax liability USD 7.3m (contingent liability) 9 116 5 804 8 338 Other current liabilities TOTAL CURRENT LIABILITIES 16 414 11 490 15 460 28 185 25 152 28 509 TOTAL LIABILITIES 159 477 129 927 123 549 TOTAL EQUITY AND LIABILITIES 8 Source: Magseis
Q3 2018 results - Cash flow Q3 2018 Q3 2017 YTD 2018 FY 2017 In USD thousands (unaudited) (unaudited) (unaudited) (audited) Earnings before tax -4 952 10 154 1 162 9 895 • Cash flow from operations Depr, Amor, Impair 4 012 4 959 11 727 15 405 • Positive working capital adjustments as (non cash-effect) Depr, Amor, Impair expected -617 -1 056 -1 319 -2 850 (cash-effect) Net working capital adjustments 9 165 7 128 -6 960 1 708 • Cash flow to investments Net cash flow from operating 7 609 21 185 4 609 24 157 activities • Disciplined CAPEX spend for equipment Net cash flow from investing • Cash flow to financing -9 204 -8 796 -35 052 -44 557 activities • Down-payment of debt USD 1.1m Net cash flow from financing • Cash position -1 069 -619 34 171 31 201 activities • Robust cash position of USD 33.5m Net change in cash and cash equivalents -2 664 11 770 3 728 10 801 Cash balance at the beginning of the period 36 168 33 657 29 776 18 974 Cash balance at period end 33 504 45 427 33 504 29 776 9 Source: Magseis
KEY FIGU KE GURES Q3 Q3 2018 $ MILLION REVENUE EBITDA 16.0 -0.5 28.7 $ MILLION $ MILLION 16.0 13.9 NET PROFIT CASH BALANCE -5.9 33.5 -0.5 $ MILLION $ MILLION EBITDA REVENUE EBITDA REVENUE Q3 Q3 Q3 Q3 2017 2017 2018 2018 10 Source: Magseis
KEY FIGURES YTD Q3 Q3 2018 $ MILLION 69.1 REVENUE EBITDA 60.3 15.0 60.3 $ MILLION $ MILLION 30.7 NET PROFIT CASH BALANCE -0.8 33.5 15.0 $ MILLION $ MILLION EBITDA REVENUE EBITDA REVENUE YTD YTD YTD YTD 2017 2017 2018 2018 11 Source: Magseis
AGENDA Introduction Financials Market development and operations Summary 12
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