Petrofac Limited · OTC:POFCY
Petrofac — H1 2023 Earnings Presentation
27 slides from Petrofac's earnings presentation, Aug 10, 2023
Slide 1: Half Year Results 2023
Half Year Results 2023 10 August 2023 Tinrhert gas development, Algeria
Slide 2: Important notice
Important notice This document has been prepared by Petrofac Limited (the Company) solely for Certain statements in this presentation are forward looking statements. Words use at presentations held in connection with its Half Year Results 2023 on 10 such as "expect", "believe", "plan", "will", "coul
Slide 3: Agenda
Agenda • H1 2023 overview • Financial results • Operational performance and outlook • Summary - key messages • Q&A Petrofac Half Year Results 2023 3
Slide 4: H1 2023 delivered a platform for the recovery
H1 2023 delivered a platform for the recovery Contract awards underpin the path forward Major increase in A diverse pipeline across Building on our existing Group backlog to our core markets and talent base through US$6.6 billion (+94%) target geographies active recruitment Focus on unlocking Managi
Slide 5: Financial Performance
Financial Performance Afonso Reis e Sousa CFO Petrofac Half Year Results 2023 5
Slide 6: H1 2023 results summary
H1 2023 results summary Revenue EBIT 1 Backlog Pipeline 3 Net debt 4 US$1,207m US$(96)m US$6.6bn US$60bn US$584m H1 2022 2 : US$1,247m H1 2022 2 : US$52m Dec 2022 : US$3.4bn Dec 2022: US$51bn Dec 2022: US$349m • Lower levels of • One-off write • Strong order intake • Majority in core • Free cash out
Slide 7: Engineering & Construction
Engineering & Construction Strong order intake in the first half; near tripling of E&C backlog • Significant awards in core geographies US$m and markets (except as otherwise stated) H1 2023 H1 2022 (restated)2 EBIT margin1,2 • Revenue down 32% Revenue 469 692 EBITDA 1 (117) 10 – Lower activity acros
Slide 8: Asset Solutions
Asset Solutions Strong order intake and revenue growth • Revenue up by 34% US$m (except as H1 2023 H1 2022 EBIT Margin1 – Strong order intake in the current and otherwise stated) prior year Revenue 679 508 Contract • EBIT margin of 2.1% EBITDA 1 19 38 portfolio – Margin second half weighted EBIT1 14
Slide 9: Integrated Energy Services
Integrated Energy Services Continued strong performance, in line with guidance • Revenue up 13% year-on-year US$m (except as H1 2023 H1 2022 EBITDA – Higher production otherwise stated) US$m Revenue 63 56 • EBITDA increased by 9% to US$48 million EBITDA1 48 44 13 Other Price – First half weighted EB
Slide 10: Liquidity update
Liquidity update Expected near-term collections providing route to broadly neutral full year FCF Gross liquidity 1 • Full year free cash flow: return to broadly neutral full US$ million year cash flow expected 511 506 • Near-term collections: to come from: 81 56 – Cash advances on recent awards 253
Slide 11: Guidance for FY 2023
Guidance for FY 2023 E&C • H2 2023 secured revenue: US$0.5 billion • FY 2023 underlying EBIT loss of approximately 10%, before the impact of the US$67 million of write-downs AS • H2 2023 secured revenue: US$0.7 billion • FY 2023: EBIT lower than 2022 (absolute $ value) IES • Net production: marginal
Slide 12: Operational performance
Operational performance Tareq Kawash CEO Turkstream Petrofac Half Year Results 2023 12
Slide 13: HSE: Leading sustainable practices
HSE: Leading sustainable practices Driving a culture of health and safety through employee engagement Our 01 02 03 04 05 strategic pillars: Leadership Employee Contractor Training Compliance engagement Management • Night-time driving ban Driving incidents H1 2023 64 • Digital technology implemented:
Slide 14: ESG: Accelerating the energy transition
ESG: Accelerating the energy transition Enabling our customers in their journey towards a low-carbon future • Building carbon neutral 2GW offshore platforms – TenneT multi-year, six-platform framework agreement – Expanding offshore-wind capacity in the Dutch-German North Sea • Enabling a low-carbon
Slide 15: E&C: HY 2023 operational performance
E&C: HY 2023 operational performance Significant progress on the key priorities Backlog Growth Assuring delivery Legacy contracts Nearly tripled Ramping up for execution Continued progress • Europe: six-contract framework with • TenneT: early works in Q1 on first • Close out: addressing challenges o
Slide 16: E&C: Major progress in rebuilding backlog
E&C: Major progress in rebuilding backlog Winning work in our core geographies and in new energies TenneT STEP Polymers ADNOC Multi-year, six-platform Framework Petrochemical EPC contract in Algeria, EPC contract at ADNOC Gas Agreement to expand offshore wind building on Petrofac’s 25-year track Pro
Slide 17: Asset Solutions: HY 2023 operational performance
Asset Solutions: HY 2023 operational performance Strong performance, book-to-bill of 1.4x, growing revenue Protecting Geographic Integrated the core expansion services • Maintain 40% market share in UK • Leveraging UK centre of excellence • Increase differentiation • 80% renewal rate on O&M contract
Slide 18: Outlook
Outlook Petrofac Half Year Results 2023 18
Slide 19: Themes driving backlog growth and prospects
Themes driving backlog growth and prospects We have an extensive track record in helping clients access additional energy sources Healthy pipeline1 of $60bn scheduled for award Increased capex spend expected in core MENA E&C Pipeline1 Asset Solutions Pipeline1 regions on hydrocarbon projects 9% 5% 7
Slide 20: Summary – key messages
Summary – key messages Major backlog growth – the platform for our recovery Close out legacy projects Unlock working capital Increase customer focus Selective bidding for quality backlog growth Deliver medium-term strategy1 1. Group revenue of US$4bn-US$5bn, including c.US$1bn from new energies, wit
Slide 21: Appendix
Appendix Turkstream Petrofac Half Year Results 2023 21
Slide 22: Business performance results
Business performance results 1 US$m H1 2023 H1 2022 Change (restated) 4 Revenue 1,207 1,247 (3)% EBITDA 2 (54) 87 >(100)% EBITDA margin (4.5)% 7.0% (11.5)ppts EBIT 3 (96) 52 >(100)% EBIT margin (8.0)% 4.2% (12.2)ppts Net finance expense (59) (43) (37)% Income tax (expense)/credit (12) 1 >(100)% 1. B
Slide 23: Segmental performance
Segmental performance H1 2023 revenue by business unit H1 2023 revenue by geography 5% 39% Engineering & Construction 13% 31% United Kingdom 56% Asset Solutions 11% Thailand 3% 5% Integrated Energy Services 3% 31% 9% Malaysia 39% 4% 8% Algeria $1.2bn 6% $1.2bn 7% Lithuania 6% United States of Americ
Slide 24: Working capital
Working capital Movement in working capital (US$m) Jun 2023 Dec 2022 Cash flow Contract assets and inventories 1,290 1,346 57 Trade and other receivables 788 739 (50) Restricted cash 111 111 - Trade and other payables (876) (865) 12 Accrued contract expenses (741) (759) (17) Contract liabilities (71
Slide 25: Working capital
Working capital Delayed commercial settlements and lower activity drove an increase in DSO Cash Conversion Cycle 1 Days 247 238 229 186 159 54 37 16 16 (10) DPO DSO Net working capital days (169) (170) (201) (193) (213) 2 2019 2020 2021 3 2022 HY 2023 1. Cash Conversion Cycle = DSO – DPO 2. Adjusted
Slide 26: Working capital – DSO analysis
Working capital – DSO analysis Longer billing cycles and commercial settlements driving an increase in DSO DSO analysis Days 3 HY 2023 DSO Analysis days 19 3 75 40 247 days 44 Non-Billable Billable / Billed 66 Trade receivables WIP billing cycle Non-billable WIP 3 AVOs 2 1 2 Retentions Accrued incom
Slide 27: Working capital – DPO analysis
Working capital – DPO analysis DPO analysis Days HY 2023 DPO analysis Days 24 Billable 19 71 Non-billable ACE1 193 ACE1 Other payables Accrued days expenses 40 Trade payables 39 Trade payables Other payables Billable ACE1 Accrued expenses Non-billable ACE1 2022 HY 2023 1. ACE is accrued contract exp