Investor Presentation Investor Presentation Fourth Quarter 2013 Fourth Quarter 2013 0 Exhibit 99.1 |
Corporate Information 1 Keith Mosing Chairman, President and CEO John Walker Vice President, International Operations John Sinders Senior Vice President, Finance and Investor Relations Mark Margavio Vice President and CFO Thomas Dunavant Investor Relations Manager Ph: (713) 358-7343 thomas.dunavant@franksintl.com Frank’s International N.V. 10260 Westheimer, Suite 700 Houston, TX 77042 www.franksintl.com Disclaimer This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include statements, estimates and projections regarding the Company’s future business strategy and prospects for growth, cash flows and liquidity, financial strategy, budget, projections and operating results, the amount, nature and timing of capital expenditures, the availability and terms of capital, the level of activity in the oil and gas industry, volatility of oil and gas prices, unique risks associated with offshore operations, political, economic and regulatory uncertainties in international operations, the ability to develop new technologies and products, the ability to protect intellectual property rights, the ability to employ and retain skilled and qualified workers, the level of competition in the Company’s industry and other guidance. These statements are based on certain assumptions made by the Company based on management’s experience, expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of performance. Although the Company believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the factors discussed or referenced in the “Risk Factors” section of the Company’s prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 9, 2013 and its subsequent filings with the SEC. Accordingly, you should not place undue reliance on any of the Company’s forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law, and we caution you not to rely on them unduly. This presentation includes the non-GAAP financial measures of Adjusted EBITDA and Adjusted EBITDA margin, which may be used periodically by management when discussing the Company’s financial results with investors and analysts. Adjusted EBITDA and Adjusted EBITDA margin are presented because management believes these metrics provide additional information relative to the performance of the Company’s business. These metrics are commonly employed by financial analysts and investors to evaluate the operating and financial performance of the Company from period to period and to compare it with the performance of other publicly traded companies within the industry. You should not consider Adjusted EBITDA and Adjusted EBITDA margin in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Because Adjusted EBITDA and Adjusted EBITDA margin may be defined differently by other companies in the Company’s industry, the Company’s presentation of Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. For a reconciliation of each to the nearest comparable measure in accordance with GAAP, please see the Appendix. |
Outline 2 FI Overview Industry Update – Rig Counts FI Business Segments Services US Land Offshore (US and International) Tubular Sales Financial Update |
Frank’s: A Leading Global Provider of Tubular Services Tubular Services Critical to Drilling and Completion Frank’s is a Market Leader Frank’s Financial Results Demonstrate Value $3.3 bn market growing at ~13% / year (1) Key to successful and safe well completion Requires specialized equipment and capabilities – especially offshore Minimizes costly rig time when performed efficiently and properly #1 or #2 market share in all major oil and gas markets (1) 69% of revenue generated offshore Proprietary equipment – 104 patents granted and 37 currently pending (U.S.) Global footprint with blue chip customer base Reputation earned over eight decades $1,056 mm of revenue in 2012 (3) $447 mm of 2012 Adjusted EBITDA (2) – 42% Adjusted EBITDA margin (2) Less than $1mm debt 1% annualized dividend yield 3 1) “Casing & Tubing Running Market” analysis prepared by Spears & Associates, May 2013. 2) Adjusted EBITDA is a non-GAAP financial measure. See reconciliation of net income to adjusted EBITDA included in the appendix. 3) Not Adjusted for Discontinued Operations. Frank’s Unique Set of Capabilities Focused Provider of Tubular Services Innovate Well Solutions Deeper Wells/Deeper Water Depth Hostile Environments Remote Geographies |
Strong Position in Deep Water Markets Frank’s Offshore Exposure (% of Total Revenue) Typical Industry Casing Costs per Well (2) Frank’s Offshore Exposure By Segment (3) 1) Per IHS. 2) “Casing & Tubing Running Market” analysis prepared by Spears & Associates, May 2013. 3) 2012 revenue by segment. Opportunity for continued growth in offshore drilling with more than 60% of deep water reserves currently in appraisal, developing or discovery status (1) $467 mm International Services $423 mm U.S. Services $166 mm Pipe and Products 4 |
Focused Provider of Tubular Services Structural String Conductor String Surface Casing Intermediate Casing Liner Strings Production Liner and Tie Back String 7” x 9 7/8” @ 19,000’ Rig Floor 75’ 36” @ 5,000’ 28” @ 6,000’ 22” @ 8,000’ 18” @ 9,000’ 16” @ 12,000’ 13 5/8” @ 13,000’ 11 7/8” @ 17,000’ 9 7/8” @ 18,000’ Proper well construction helps ensure well integrity, safety and productivity 5 Onshore Well Offshore Well |
Cobra – Completion Control Line Manipulating System Solutions – Frank’s Proprietary Tools Fluid Grip Automated Tong 1250 Ton Landing String Handling Tools Clamp Type Elevator Specialized Tools Provide Unique Solutions Over 100 patents issued and 37 patents pending Automated Tong Cassette System FX-350 Top Drive Casing Running Tool Challenge Onshore Offshore Horizontal drilling Longer laterals Automated rigs Deeper water Deeper wells Very heavy casing and landing strings Dual mast rigs, automated rig floor Corrosion-resistant alloy tubulars Downhole instruments and valves with control cables 6 |
Deepest Completed Well Casing and landing string installation for the Chevron Northwood well in the U.S. Gulf of Mexico, to a total depth of 31,866 feet in a water depth of 6,000 feet (2013) 7 |
Greatest Hook Load Broke our own record for greatest hook load recorded at 1,140 tons while lifting 24,500 feet of combined casing and landing string for Shell’s Stones development in the U.S. Gulf of Mexico (2012) 8 |
Hostile Environment Selected for BP’s Shah Deniz Project, an ongoing multiple well project offshore of Azerbaijan due to its ability to provide “zero marking” handling of corrosion-resistant alloy tubulars (2006 – present) 9 |
Well Integrity Provided all tubular services for the relief well drilled by BP to contain the Macondo well in the U.S. Gulf of Mexico (2010) 10 |
Outline 11 FI Overview Industry Update – Rig Counts FI Business Segments Services US Land Offshore (US and International) Tubular Sales Financial Update |
Worldwide Offshore Rig Count Continues to Increase Total Semi-Submersible and Drillship count increasing 8% in 2014 Anticipated Newbuilds 2014 – 27 Drillships and 6 Semi-Submersibles Gulf of Mexico rig activity increasing with 8 newbuilds – all Drillships 2015 – 17 Drillships and 7 Semi-Submersibles 12 Source: ISI, RigLogix Note: Rig count is average for 4 quarter th 270 285 307 326 29 30 32 34 0 50 100 150 200 250 300 350 400 2012 2013 2014e 2015e Contracted Not Contracted 299 315 339 360 |
US Land Rig Count Decreasing 13 Overall US Land rig count has decreased with a decline in gas rigs Horizontal drilling has steadily increase from 2011 to 2013, averaging 62.4% of rigs Overall well count has remained flat at 9,175 for 3Q13 Source: Baker Hughes IR |
Outline 14 FI Overview Industry Update – Rig Counts FI Business Segments Services US Land Offshore (US and International) Tubular Sales Financial Update |
US Land Segment 15 Competitive environment - Increased pricing pressure Recent revenue decline – focused on maintaining margins More complex well architecture in oil basins creates opportunity for FI FI has ability to relocate crews and equipment to areas of demand |
Offshore (Gulf of Mexico and International) 16 Increasing deep and ultra-deep rig count Deep and Ultra-Deep water drilling increases well complexity FI has high market share in deep and ultra-deep water Opportunity for FI to growth geographically YTD Revenue growth in US Offshore and International markets |
Tubular Sales Segment (Formerly Pipe & Products) 17 Specialize in large OD pipe for conductor casing and TLP tendons Manufacture a range of connectors for large OD pipe (20”–36”+) 80 acre Port of Iberia facility |
Global Footprint Provides Access to Attractive Markets Frank’s U.S. Operations Frank’s International Operations 18 Over 90 sales and support offices in 60 countries Operations in nearly all major markets |
Outline 19 FI Overview Industry Update – Rig Counts FI Business Segments Services US Land Offshore (US and International) Tubular Sales Financial Update |
Financial & Investment Highlights Attractive End-Markets Driven by Continued Oil & Gas Exploration and Development Global Market Leader Focused Service Provider with Unique Engineering Capabilities and Favorable Reputation Strong Position in Deep Water Offshore Markets Historically Maintenance CapEx has averaged 5-7% of revenue Strong Free Cash Flow Generation Supports Dividend 20 |
3 Quarter and YTD Highlights Growth in US Offshore offset by decline in US Land $8 million in bad debt expense relating to Latin America $40 million YTD increase in Tubular Sales deferred revenue 21 Sep 30, Sep 30, 2013 Q/Q Y/Y 2013 Y/Y Revenue from External Customers International Services 121,680 $ 0.7% 5.0% 353,041 $ 4.0% U.S. Services 108,126 -6.5% -3.7% 321,295 1.8% Tubular Sales 40,296 -28.7% 5.3% 121,314 11.1% Total 270,102 $ -7.8% 1.4% 795,650 $ 4.1% Segment Adjusted EBITDA: International Services 48,752 $ -10.4% -12.9% 153,134 $ -7.7% U.S. Services 47,215 -20.6% -17.4% 149,494 0.2% Tubular Sales 5,338 -62.0% 116.6% 25,893 61.3% Corporate and other (33) - - 3 - Total 101,272 $ -21.0% -12.4% 328,524 $ -0.8% EBITDA margin International Services 40.1% 43.4% U.S. Services 43.7% 46.5% Tubular Sales 13.2% 21.3% Total 37.5% 41.3% Three Months Ended Nine Months Ended rd |
Increasing Well Complexity Driving Financial Results Numerous Domestic Acquisitions Accelerated International Expansion Financial Crisis / GOM Moratorium Increasing Well Complexity 1) Adjusted EBITDA is a non-GAAP financial measure. See reconciliation of net income to adjusted EBITDA included in the appendix. 2) Not Adjusted for Discontinued Operations. 22 |
$1,510 $1,425 $1,340 $1,243 $1,075 $875 $3,050 $2,800 $2,475 $2,074 $1,725 $1,600 $4,560 $4,225 $3,815 $2,800 $2,475 $3,317 $0 $1,000 $2,000 $3,000 $4,000 $5,000 2010 2011 2012 2013E 2014E 2015E Onshore Offshore $2,175 $2,025 $1,765 $1,600 $1,275 $1,050 $2,385 $2,200 $2,050 $1,717 $1,525 $1,425 $4,560 $4,225 $3,815 $2,800 $2,475 $3,317 $0 $1,000 $2,000 $3,000 $4,000 $5,000 2010 2011 2012 2013E 2014E 2015E North America International Tubular Services: A Growing Market Worldwide Source: “Casing & Tubing Running Market” analysis prepared by Spears & Associates, May 2013. Tubular Services Market By Geography Tubular Services Market by Location 23 ($mm) ($mm) |
Attractive End Markets Driven by Energy Growth and Development Projected Global Energy Demand Global Offshore Equipment & Service Market Source: IEA Energy Outlook 2012. DW Rigs - 5 Largest Offshore Drillers Global Oilfield Equipment & Service Market Source: “Casing & Tubing Running Market” analysis prepared by Spears & Associates, May 2013. Source: “Casing & Tubing Running Market” analysis prepared by Spears & Associates, May 2013. Source: “Casing & Tubing Running Market” analysis prepared by Spears & Associates, May 2013. 24 |
Questions? 25 |