Oslo – 2 March 2023 – Seaway 7 ASA (the Group or Seaway7) (Euronext Growth: SEAW7) announces today results for the fourth quarter and full year which ended 31 December 2022. Unless otherwise stated the comparative period is the full year which ended 31 December 2021.
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• Revenues of $1,119 million.
• Adjusted EBITDA of $40 million equating to a margin of 4%
• Completion of HKZ foundations, Formosa 2 pin piles and Hornsea 2 cables scopes
• Fabrication, long-haul transportation and majority of jacket installation scope complete on Seagreen
• Backlog of $844 million with the addition of two inner array cable projects and escalations on existing contracts. Fourth quarter 2022 new order intake was $441 million.
• $650 million of committed support arranged in the fourth quarter including a $200 million fully underwritten rights issue.
• Continuing progress on the two newbuild vessels Seaway Alfa Lift and Seaway Ventus.
Subsequent events
• Seaway7 and Saipem signed a commercial collaboration agreement for joint tendering and execution of target projects within fixed offshore wind.
• The Group signed a large contract for the installation of inner array grid and export cables on the Hai Long Offshore Wind project in Taiwan with operations commencing in 2023.
For the period (in $ Fourth Quarter Full Year
millions, except
Adjusted EBITDA margin Q4 2022 Q4 2021 2022 2021
and per share data) Unaudited Unaudited Audited Audited
Revenue 218 326 1,119 1,260
Adjusted EBITDA(a) 21 30 40 24
Adjusted EBITDA margin(a) 10% 9% 4% 2%
Net operating (loss)/income (2) 8 (50) (39)
Net loss (5) 7 (81) (63)
Earnings per share – in $ per share - restated (b)
Basic (0.01) 0.01 (0.14) (0.16)
Diluted(b) (0.01) 0.01 (0.14) (0.16)
2022 2021
At (in $ millions) 31 Dec 31 Dec
Backlog(a) 844 1,238
Book-to-bill ratio – year-to-date(a) 0.6 0.3
Cash and cash equivalents 9 22
Borrowings (38) (101)
Net debt excluding lease liabilities(a) (29) (79)
Net debt including lease liabilities(a) (130) (106)
(a) For explanations and reconciliations of Adjusted EBITDA, Adjusted EBITDA margin, Backlog, Book-to-bill ratio and Net cash/(debt) refer to the ‘Alternative Performance Measures’ section of the Condensed Consolidated Financial Statements.
(b) The weighted average number of shares utilised in the earnings per share calculation has been restated for each period presented following the rights issue undertaken by the Group. For further information and for the explanation and a reconciliation of diluted earnings per share refer to Note 7 ‘Earnings per share’ to the Condensed Consolidated Financial Statements.
Stuart Fitzgerald, Chief Executive Officer, said:
During 2022, Seaway7 delivered a high volume of offshore work. As a result of the efforts and dedication of our colleagues, Seaway7’s work across eight operational projects has directly realised around 2.9 GW of additional renewable energy, capable of powering more than 3 million homes. In total, the Group delivered the installation of 189 cables, 130 monopiles foundations, 107 jacket foundations, 128 pin pile foundations, 61 EPC fabrication of foundations and performed 25 heavy transportation voyages. The installation of more than 100 monopiles in dynamic positioning mode using the Seaway Strashnov, strengthens the Group’s track record in fixed offshore wind projects and our position as one of the market leaders.
Seaway7 generated Adjusted EBITDA of $40 million for the full year 2022, equating to a margin of approximately 4%. Margins showed gradual improvement year-on-year but remained well below expectations due to challenges on certain projects in the North Sea and Taiwan.
In recent years the offshore fixed wind contracting industry has seen a rapid evolution in project and equipment sizes, expansion into new geographies, and generally onerous contracting and commercial terms. The result has been, that despite many examples of strong delivery across individual projects, the overall financial performance of Seaway7 and a number of its peer companies has shown inadequate returns on the capital being deployed.
Seaway7 did not perform as expected during 2022. The problems encountered originated from the combination with OHT ASA linked primarily from issues with the construction of Seaway Alfa Lift. Specifically, the design and fabrication of the mission equipment led to an overrun on the vessel construction schedule and budget with a knock-on impact on Dogger Bank A&B, for which a provision was taken in 2022. This development contributed, among other factors, to the Group being unable to realise its initial objective to increase the free float of Seaway7, and necessitated recapitalising Seaway7 through a combination of debt and equity rights issue
Despite this, and supported by a favourable long term market outlook and the learnings of recent executed projects, the service industry is now pushing towards a more sustainable risk-reward balance and we have been driving this process through our bidding over the last 12 months.
At the end of the fourth quarter of 2022, the Group recognized sizeable contracts in its backlog relating to the He Dreiht project and the transport and installation of inner array cables on an offshore wind farm project in the US. In addition, Seaway7 added several HTV voyages and project escalations. At 31 December 2022, backlog was $844 million with a net order intake during the year of $723 million, equivalent to a book-to-bill ratio of 0.6x. This excludes the pre-backlog positions for Seagreen 1A and East Anglia THREE, which remain subject to the clients’ Final Investment Decision.
During 2022, Seaway7 announced a $650 million committed financing package to fund the business through to the delivery of the two new build vessels. The Capex funding included committed loan facilities of $450 million and a fully underwritten $200 million rights issue which was completed in November 2022.
Fourth quarter operational review
The Seagreen project in the UK continued to progress well. Of the 114 foundation jackets, all have been fabricated and delivered to the UK. The final foundation jacket was delivered on the 18th of December 2022, completing the long-haul transportation scope of the project which involved 23 safely performed heavy transportation voyages over a two-year time span. By 31 December 2022, a total of 93 foundation jackets had been installed and the associated inner array cable installation had completed more than 50% of the scope.
In the fourth quarter, Seaway Strashnov installed 6 foundations for the Dogger Bank A&B project in the UK bringing the total foundations installed on the project to 17 as at the end of 2022. This was before Seaway Strashnov departed for a planned winter break and maintenance stop which will continue through first quarter 2023. Due to Seaway Alfa Lift’s delivery delay, Seaway Strashnov, in combination with a third-party vessel designed to install transition pieces, will be deployed on the project for the full 2023 campaign.
Seaway Aimery and Seaway Moxie continued working on the Hollandse Kust Zuid project inner array cables installation in the fourth quarter. By the end of the fourth quarter, Seaway7 installed all 140 cables and continued with test & termination works. Seaway Phoenix continued working on the Seagreen project in the UK. The Group signed a lease commitment to extend the charter of the Maersk Connector cable lay vessel, to work in Taiwan on Seaway7’s cable lay project portfolio over the next three years.
The heavy transportation fleet has continued to operate in the spot market. The Group has seen a consistently high number of requests for transportation projects, with approximately 900 received during 2022 which underpins the high vessel utilisation rate in the fleet. The fleet has delivered improved returns and maintained high utilisation throughout the year 2022.
During the fourth quarter 2022, the utilisation of the active fleet was 72%, compared to 90% in the third quarter 2022. This reflects lower utilisation on heavy lift vessels during winter months offset to some degree by high utilisation of the heavy transportation and cable lay fleet.
For the newbuild foundation installation vessel, Seaway Alfa Lift, the structural welding repair of the Liebherr crane A-frame was completed late 2022. Commissioning of the crane is ongoing and the vessel is anticipated to leave the yard before mid-year 2023. The mission equipment for the upending and lowering of monopiles is still the critical path to the vessel’s readiness for monopile operations, and main elements of this equipment commenced transport from China at the end of 2022. The mission equipment will be completed and commissioned in Europe under a revised execution plan activated during Q3 2022 aimed at improving the robustness of the overall schedule and cost of the build project.
Seaway Ventus was launched on 9 January 2023 and vessel outfitting continues. The last leg sections are under construction of which 7 out of 12 have been installed onboard. The Gusto crane reached construction completion and the slewing platform and A-frame have been installed onboard. The crane boom installation is ongoing with completion scheduled for March 2023 and first two engines were started, and commission and testing are ramping up. The vessel is on course for delivery during Q3 2023 from the yard in China with current first committed project being end of the first quarter 2024.
Fourth quarter financial review
Fourth quarter revenue of $218 million compared to revenue of $326 million in the prior year period. The Adjusted EBITDA margin of 10% improved by 1% compared to the fourth quarter of 2021. After depreciation and amortisation of $22 million, the Group recorded a net operating loss of $2 million. Net loss for the quarter was $5 million after other gains and losses of $11 million negative and a tax benefit of $8 million.
During the quarter, net cash used in operating activities was $16 million, mainly driven by unfavourable movements in working capital of $21 million. Capital expenditure was $11 million and mainly related to Seaway Alfa Lift and dry docks. Net cash generated from financing activities of $28 million included receipt of $199 million by the fully underwritten rights issue in November 2022, $7 million payment of interest and $7 million payment of lease liabilities. Cash and cash equivalents were $9 million as at Q4 2022.
In the fourth quarter, the Group recognised new awards of $202 million and escalations of $239 million, resulting in a year-to-date book-to-bill ratio of 0.6x. Backlog at 31 December 2022 was $0.8 billion, of which $367 million of the backlog is expected to be executed in 2023 and $477 million in 2024 and thereafter. Not included in the aforementioned backlog is preferred contractor positions and contract awards, which have been formally announced to the market, but remain subject to Client Final Investment Decision.
Outlook
We continue to see strong bidding activity and our clients are already seeking to secure capacity for 2026 and beyond. Against this demand backdrop, we see tight supply across all our activities.
To complement our strategic positioning, we have entered a commercial agreement with Saipem building on the strong collaboration and delivery seen on the Seagreen project for SSE and its Joint Venture partners. The agreement is for joint tendering and execution of certain target projects within fixed offshore wind and will leverage both Groups’ capabilities in project management and engineering, jacket fabrication, as well as key enabling assets. The collaboration is expected to focus on larger integrated or EPCI projects, where these combined capabilities and assets will enable improved project economics, more robust delivery, and reduced overall risk. As projects become larger and more complex, water depth and foundation sizes increase, and supply chains become increasing global, the collaboration will offer a unique value offering for certain project profiles and client buying strategies.
With tender levels remaining high, our confidence in the demand for Seaway7 services going forward is strong. Looking forward to 2023 Seaway7 anticipates reduced revenues compared to 2022, but with a higher absolute and percentage Adjusted EBITDA margin. Capex in 2023 is anticipated to be $470 million driven primarily by the Seaway Alfa Lift and Seaway Ventus newbuilds with the expected Seaway Alfa Lift payments at year-end 2022 now moved for payment to 2023.
Beyond 2023 Seaway7 expects material growth in Adjusted EBITDA delivery from the business, driven by additional fleet capacity with both the Seaway Alfa Lift and Seaway Ventus operational, as well as work secured under favourable market conditions, with improved and appropriate risk-reward profiles. Achieving acceptable risk-reward profiles in new work being added to the Seaway7 backlog has been the primary focus of our tendering efforts through 2022.
We anticipate that the existing and future Seaway7 asset base, enabled by one of the industry’s leading project management capabilities and track records, will be well positioned to deliver significant earnings growth in the medium and longer term.
Special Note Regarding Forward-Looking Statements
Forward-Looking Statements: This announcement may contain ‘forward-looking statements’. These statements relate to our current expectations, beliefs, intentions, assumptions or strategies regarding the future and are subject to known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements may be identified by the use of words such as ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘future’, ‘goal’, ‘intend’, ‘likely’ ‘may’, ‘plan’, ‘project’, ‘seek’, ‘should’, ‘strategy’ ‘will’, and similar expressions. The principal risks which could affect future operations of the Group are described in the ‘Risk’ section of the Group’s Annual Report. Factors that may cause actual and future results and trends to differ materially from our forward-looking statements include (but are not limited to): (i) our ability to deliver fixed-price projects in accordance with client expectations and within the parameters of our bids, and to avoid cost overruns; (ii) our ability to collect receivables, negotiate variation orders and collect the related revenue; (iii) our ability to recover costs on significant projects;(iv) unanticipated delays or cancellation of projects included in our backlog; (v) competition and price fluctuations in the markets and businesses in which we operate; (vi) the loss of, or deterioration in our relationship with, any significant clients; (vii) the outcome of legal proceedings or governmental inquiries; (viii) uncertainties inherent in operating internationally, including economic, political and social instability, boycotts or embargoes, labour unrest, changes in foreign governmental regulations, corruption and currency fluctuations; (ix) the effects of a pandemic or epidemic or a natural disaster; (x) changes in, or our failure to comply with, applicable laws and regulations (including regulatory measures addressing climate change); (xi) operating hazards, including spills, environmental damage, personal or property damage and business interruptions caused by adverse weather; (xii) equipment or mechanical failures, which could increase costs, impair revenue and result in penalties for failure to meet project completion requirements; (xiii) the timely delivery of vessels on order and the timely completion of ship conversion programmes; (xiv) our ability to keep pace with technological changes and the impact of potential information technology, cyber security or data security breaches; and (xv) the effectiveness of our disclosure controls and procedures and internal control over financial reporting. Many of these factors are beyond our ability to control or predict. Given these uncertainties, you should not place undue reliance on the forward-looking statements. Each forward-looking statement speaks only as of the date of this announcement. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Webcast and conference call information:
Date: 02 March 2023
Time: 14:30 CET
Please join the webcast through:
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The webcast will also be available through Seaway7 website
Results, Reports & Publications - Seaway 7
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For further information, please contact:
Mark Hodgkinson
ir@seaway7.com
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