Magseis Fairfield ASA Q2 2019 27 th August 2019 The leading provider of OBN seismic solutions
Disclaimer This presentation (the “ Presentation ") has been prepared by Magseis Fairfield ASA (the The Company makes no representation or warranty, expressed or implied, as to the “ Company ” or “ Magseis Fairfield ”). 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. 2 Source: Magseis Fairfield
• The undisputed leader in the Ocean Bottom Seismic market • Magseis - flexible and automated proprietary acquisition technology • Fairfield - long time market leader and industry innovator • WGP - unique mobile source technology • Global leader in a USD 1bn+ market • Largest nodal pool in the market – ability to scale • Global reach - diverse customer base in all major basins • Asset light business model • Flexible cost structure • Rig up / rig down on vessels of choice 3 Source: Magseis Fairfield
Highlights Q2 2019 • Revenue of USD 132m - EBITDA of USD 26m including non-cash costs of USD 9m • Net profit of USD 12m Financial performance • High margins on MASS I node system sales • Soft but improving margins in Data Acquisition • Large and early delivery of 3 rd System sales shipment of MASS I nodes Operational • Active Data Acquisition quarter - limited by node capacity and vessel transit/yard stay Performance and • Healthy performance in Reservoir Monitoring/Source Execution • Speeding up integration – operations merged into global business unit • Full capacity utilization in Q3 but uncertain project timing in Q4 Outlook • Uncertain project timing increases risk for full-year revenue and EBITDA guidance • Continued positive outlook - increasing pipeline for 2020 and beyond 4 Source: Magseis Fairfield
AGENDA Introduction Financials, Backlog and Market Outlook Operations Summary, Outlook and Q&A Appendix 5
Key financial figures Key figures, USD million EBITDA to Net Cash Flow from Operations (CFFO) – main items (USDm) 40 Profit and loss Q2 2019 Q2 2018 YTD 2019 YTD 2018 FY 2018 Revenues 131.6 19.7 251.0 44.3 136.5 35 Cost of sales 87.2 10.1 175.5 19.8 86.8 EBITDA 25.5 5.2 41.6 15.6 23.0 30 EBIT 11.4 1.0 8.6 7.6 3.1 Net profit (loss) 11.9 -0.5 5.4 5.1 -2.8 25 20 Financial position Total assets 585 163 527 15 Total liabilities 244 26 194 Total equity 340 137 334 10 Equity ratio 58.2 % 84.1 % 63.3 % 5 Cash flow 0 Net cash flow from operating activities 32.1 3.2 30.2 -3.0 13.7 EBITDA Non-cash Change in Net Other CFFO costs MASS I Working adjustments node sales Capital to CFFO, net • Depreciation & amortization of USD 14.2m in Q2, down from USD 18.7m in Q1 • Amortization period for PPA technology assets revised from 5y to 10y 6 Source: Magseis Fairfield
Q2 P&L – Revenue and EBITDA increasing USDm • Solid revenue and margins from System sales 140 • Successful early delivery of third batch of MASS I nodes in 132 120 June • Low contribution from Z-node sales/leases in Q2 – building 100 inventory for deliveries in H2 92 80 • Healthy performance in Reservoir Monitoring/ Source • Soft but improving margins in Data Acquisition 60 • All available nodes either in transit or in production on 40 surveys in GoM, Middle East and the North Sea 40 9 • Margins affected by the Artemis Athene transit and yard stay 9 20 26 (USD 2.8m) 16 9 • Recognized loss on receivable after customer settlement on 0 Revenue EBITDA Revenue EBITDA Revenue EBITDA 2018-contract (USD 1.6) Magseis Fairfield MASS I node sales Other EBITDA included non-cash costs of ~USD 9.3m, related to sale of existing MASS I node sales 7 Source: Magseis Fairfield
Sale of MASS I nodes and modular handling systems • Successful and efficient execution generating very strong project economics • Third batch delivered in June, ahead of schedule • Main part of fourth and final batch delivered in August • Only a limited number of nodes left for shipment in September • Reduced margins on the Q3 deliveries • Higher share of new nodes and close-out costs 8 Source: Magseis Fairfield
Data acquisition set for higher volumes and improved margins in Q3 – uncertain project timing for Q4 • Higher project margins compared to the first half Data acquisition crew utilization overview for 2019 Q1 Q2 Q3 Q4 • Less transition/mobilization costs and one-off 1 2 3 4 5 6 7 8 9 10 11 12 items compared to the first half MASS I Crew 1 MASS I Crew 2 Nodes sold MASS I Crew 3 • Higher capacity utilization – current crews fully Z700 Crew 1 & 2 ZXPLR Crew 1 booked for Q3 ZXPLR Crew 2 Building inventory of ZXPLR nodes MASS III Crew 1 Building inventory of MASS III nodes • Uncertain timing of project start-ups for Q4 Source Crews Storage Storage • Available capacity of 5 survey months in Q4 Contracted Available • 3 ongoing addressable tenders/proposals with start in Transit/Mobilization Q4 for a total 11 survey months • Increasing uncertainty puts guidance levels at risk • Revenue guidance of USD 500m and EBITDA of USD 100m will depend on Q4 capacity utilization and margins 9 Source: Magseis Fairfield
2019 Order backlog Total backlog of USD 274 million, whereof USD 202 million for execution in 2019 500 453 453 -9 +9 388 400 2019 backlog 330 202 300 200 1H revenue 100 251 Q1 revenue 0 2019 backlog per Nov 2018 2019 backlog per Q4 report 2019 backlog and revenue per Deferral to 2020 New orders/ increased scope 2019 backlog and revenue per Q1 report Q2 report 10 Source: Magseis Fairfield
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