Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — Investor Presentation (July 2014)
38 slides from Cmb.tech Nv's investor presentation, Jul 23, 2014
Slide 1: Investor Presentation
Investor Presentation July 2014
Slide 2: Forward looking statements
Forward looking statements Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events
Slide 3: Euronav at a glance
Euronav at a glance Fleet ● Large in-the-water crude oil tanker operator (55 modern tankers, $1.6Bn+ Market Cap) ● Vertically integrated operator with no related party transactions, no hidden fees or commissions ● More than 70% of fleet exposed to the spot market allowing for strong cash generation
Slide 4: Agenda
Agenda ● Industry overview ● Company overview ● Financial overview ● Conclusion 3
Slide 5: Industry overview
EURO The ocean is our environment Industry overview
Slide 6: A. Demand shifting to non-OECD
A. Demand shifting to non-OECD Global oil demand is growing … … and increasingly moving to non-OECD countries (mb/day) (mb/day) (mb/day) 25.0 120.0 60.0 100.0 55.0 20.0 50.0 80.0 15.0 45.0 OECD demand 60.0 Non-OECD demand 40.0 overtaking OECD 10.0 40.0 demand 35.0 5.0 20.0 30.0 0.0 0.0 25.0 1990 199
Slide 7: B. Far East oil imports driving positive ton-mile demand growth
B. Far East oil imports driving positive ton-mile demand growth Crude traffic generally moving East Miles moved per ton transported to China(a) Europe US Gulf Mid East Arabian Gulf 5,500 TM Asia Mid East-Europe West Africa 9,650 TM South America 11,500 TM Refinery expansion in Middle East and Asia T
Slide 8: B. U.S. shale oil and potential U.S export – A positive for tankers
B. U.S. shale oil and potential U.S export A positive for tankers Rising US production reducing crude imports and US crude export applications and approvals (to 25th spurring exports February 2014 plus estimate) 14.0 140 Crude supply sources (mb/d) 12.0 120 10.0 No of applications 100 8.0 80 6.0 6
Slide 9: B. Overall impact is more ton miles
B. Overall impact is more ton miles • Indirect benefit – LR2/Aframax will export condensate but positive knock on effect for VLCC, Suezmax • Heavy crude imports remain intact – Middle East to USA Heavy crude unchanged since 2005 & to remain • Displacement drives further increase in ton miles – Latam
Slide 10: C. Global VLCC and Suezmax fleet supply dynamics
C. Global VLCC and Suezmax fleet supply dynamics VLCC Suezmax 80 World Fleet 1 Jan 2014 = 615 Vessels 8% 50 World Fleet 1 Jan 2014 = 471 Vessels 10% 7% 60 40 8% 6% 30 40 5% 45 45 6% 62 42 53 54 20 39 49 4% No. of vessels 20 31 35 27 14 10 4% 3% 12 6 15 6 0 -3 7 2% 4 -16 0 -24 -21 -18 -21 -22 -7 -7 -
Slide 11: What does A-B-C mean? Two stage rocket – super cycle coming
What does A-B-C mean? Two stage rocket – super cycle coming 80 CYCLICAL RECOVERY – 2014 – 2016 60 Stage Negative fleet growth for first time since 2003 40 No. of vessels 62 53 54 1 drives restricted supply 20 49 31 14 35 12 6 0 -3 -16 -21 -21 -22 Non-OECD demand drives 2-3m bpd growth -20 -29 -47 -2
Slide 12: D. Freight – High volatility & price inelasticity
D. Freight – High volatility & price inelasticity Daily average tankers freight rate over 10 years 250000 200000 150000 Average TCE 2004-2008 = $71,000 per day USD/DAY 100000 50000 Notional Break Even 0 jan/04 jan/05 jan/06 jan/07 jan/08 jan/09 jan/10 jan/11 jan/12 jan/13 jan/14 jul/04 jul/05 jul/06
Slide 13: E. Cyclical play
E. Cyclical play Stock Price Performance(a) vs. VLCC Rates(b) and Asset Values (Indexed Rates and Asset Values) (Indexed Stock Price Performance) 250% 500% 200% 400% 150% 300% 100% 200% 50% 100% 0% 0% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 YTD Spot Rates 1-Year TC Newbuild Price 5-Y
Slide 14: E. Cyclical play – Asset values
E. Cyclical play – Asset values VLCC Suezmax 180 ($mm) Newbuild 5 Year Old ($mm) Newbuild 5 Year Old 15 VLCCs 10 yr avg 115 96 10 yr avg 71 66 acquired 160 5 yr avg 100 72 5 yr avg 62 51 140 1 yr avg 93 61 1 yr avg 59 43 4 VLCCs Current 101 74 Current 65 50 acquired 120 (mm USD) 100 80 60 40 20 0 19
Slide 15: Cyclical play followed by structural expansion
Cyclical play followed by structural expansion A Demand – Emerging markets driving expansion B Ton-miles – structural changes in refining already driving multiplier effect C Supply – Lowest Order Book to Fleet Ratio since 1997 D Volatility – freight cost does not stop crude price moves E Cyclical pl
Slide 16: Company overview
Company overview
Slide 17: A fully transparent operating platform
A fully transparent operating platform ● Long established player (started 1989) ● Large in-the-water crude oil tanker operator (Pro forma: 55 modern tankers, $1.6Bn+ Market Cap) ● Vertically integrated with no related party transactions, no hidden fees or hidden commissions ● More than 70% of the fl
Slide 18: Long established player
Long established player Acquisition – 15 VLCC 55 vessels 2014 13.9mm dwt Delivery of FSO Asia and FSO Africa 2005 - Acquisition – 4 2014 April: Merger with 16 VLCC Vessels with Tanklog 2009 2008 Added 5 Suez & 3 Tankers VLCC newbuilds Started doing 2005 International business under the TI Asia & TI
Slide 19: Spot exposure
Spot exposure Chartering strategy overview Overview of the Tankers International (“TI”) Pool ● Chartering strategy seeks to maximize returns through optimal mix of spot and fixed charters ● Euronav has deliberately positioned itself toward more spot exposure at this stage of the cycle ● Look to oppo
Slide 20: Strong and strategic relationships with high quality charterers
Strong and strategic relationships with high quality charterers Selected customer relationships Many customers been repeatedly served by us for more than 20 years Source: Company filings and website 19
Slide 21: Euronav has consistently outperformed charter indices
Euronav has consistently outperformed charter indices VLCC Suezmax Average TCE Average TCE over over 22 years* years (TI) (TI) Average Average TCE over TCE over 2 years* 2 years (spot)(spot) TI Euronav Index 2010 blt. Index 2010 blt. Index 20.127 2000 blt. 15,573 17,866 Index 12,403 2000 blt. 19.006
Slide 22: FSO – Offshore market – Opportunistic capability
FSO – Offshore market – Opportunistic capability Conversion Floating storage and offloading units (“FSOs”) market overview ● In 2008, Euronav undertook conversions of 2 ULCC into the largest FSOs in the world ● Fixed income Service contract delivering USD 52 million EBITDA annually until 2017 ● Life
Slide 23: Acquisition Strategy – Strategic consolidation at attractive prices
Acquisition Strategy – Strategic consolidation at attractive prices ● We aim to selectively buy and sell vessels at attractive prices to consolidate and strengthen our operating platform ● Focus on cash flow potential and ultimate returns on invested capital in each investment decision NIOC Teekay C
Slide 24: Proven track record of acquisitions/disposals
Proven track record of acquisitions/disposals Sale of 15 vessels 4 vessels Bourgogne from Maersk from Maersk 180 Sale of Sale of Sale of Pacific 4 VLCCs Luxembourg Savoie Lagoon 160 Sale of Sale of Antarctica Sale of TI Namur 140 16 vessels Sale of Guardian Sale of from Tanklog Algarve Olympia merge
Slide 25: Our fleet is enhanced with recent VLCC acquisitions
Our fleet is enhanced with recent VLCC acquisitions Acquisition 1 - 15 VLCCs Transaction rationale ● In January 2014, we agreed to acquire 15 VLCCs from ● Enables Euronav to capitalize on potential near-term Maersk Tankers for $980mm from Maersk Tankers improvements in tanker charter rates – Avera
Slide 26: Financial overview
EURO The ocean is our environment Financial overview
Slide 27: Earnings and dividends track record and well positioned for future
Earnings and dividends track record and well positioned for future Historical earnings and dividends ($mm) ($ / day) 700 657 100,000 90,000 600 80,000 500 70,000 432 402 60,000 400 372 344 50,000 303 300 260 237 40,000 209 218 187 195 30,000 200 176 128 138 118 121 20,000 104 101 101 100 57 65 20 10
Slide 28: Powerful cash generation potential
Powerful cash generation potential • 2015 spot days exposure = 19,600 days • Each $5,000 uplift in rates in VLCC and Suezmax improves EBITDA and Net Revenue by $98M Pro forma fleet earnings sensitivity Euronav well positioned Pro-forma earnings capability • Breakeven (including debt service) VLCC TC
Slide 29: First half financial highlights
First half financial highlights 1H 2014 operating environment ● Q1 was first positive earnings quarter since the beginning of the global financial crisis on the back of continued strong tanker demand, less tanker capacity and a meaningfully higher rate environment ● Q2 was dominated with one of the
Slide 30: Strong balance sheet position
Strong balance sheet position Capitalization Liquidity ($mm) Actual As adjusted ($mm) As of Dec. 31, 2013 June 30, 2014 July 23, 2014 Cash $74 $274 Cash $175 Secured debt $847 $874 Undrawn credit facilities Senior notes $0 $207 - Undrawn credit facility $126 Convertible bonds $126 $23 - Undrawn Revo
Slide 31: Conclusion
EURO The ocean is our environment Conclusion
Slide 32: Experienced, proven management team
Experienced, proven management team Proven growth track record with strong access to capital Bank debt Convertible Bond issuance Equity 2003 raised bond issuance issuance 2014 10 vessels 55 vessels $4,928 M $275 M $235 M $625 M 3.0 mm dwt 13.9mm dwt 363% increase in on-water capacity (dwt) Paddy Rog
Slide 33: Euronav – well positioned for the coming cyclical upswing
Euronav – well positioned for the coming cyclical upswing A pure play tanker company with a sustainable business model Best in class operating platform Re-capitalised balance sheet - positioned to act as industry consolidator Experienced management team with a proven track record of growth Current s
Slide 34: Appendix
EURO The ocean is our environment Appendix
Slide 35: Tankers International Pool App – providing transparency
Tankers International Pool App – providing transparency Trade – AG = Arabian Gulf USG = US Gulf WAF = West Africa RS = Red Sea FE = Far East UKCM = Europe WS = Worldscale – The New Worldwide Tanker Nominal Freight Scale is a catalogue of theoretical freight rates expressed as USD per ton for most of
Slide 36: Summary of equity capital structure changes 2013-14
Summary of equity capital structure changes 2013-14 Date Description New share capital Number of shares 14-Jul-14 Capital increase of approx. USD 125M USD 142,440,546.45 131,050,666 22-Apr-14 Conversion of convertible bonds USD 130,966,225.15 120,493,858 10-Mar-14 Conversion of convertible bonds USD
Slide 37: VLCC rate calendar
VLCC rate calendar VLCC Earnings M-o-M Change in Weekly VLCC Earnings 50% 40% 20% LA -_ = 10 11 12 B 14 15 16 17A8 19 20 21 22 23 \ 25.26 of 28 29 3 31 32 33 34 35 36 Bf, 38 BO 40 41 42 43 44 45 46 47 48 49 50 51 52 -10% -20% -30% Historically, VLCC earnings have rebounded beginning in week 38 Metho
Slide 38: Suezmax rate calendar
Suezmax rate calendar Suezmax Earnings M M Change in Weekly Suezmax Earnings 40% 30% 20% 10% 6 7 8Y9 10 11 12 1414 15 16 17fi8 19 20 21 23 24 25 27 28 29 30 3932 33 34 35 36 37, 3,39 HO 41 42 43 44 45 46 47 48 49 50 51 52 -10% -20% -30% Historically, Suezmax rates have rebounded beginning in week 39