Luxembourg - 3 March 2022 - Subsea 7 S.A. (the Group) (Oslo BĂžrs: SUBC, ADR:
SUBCY, ISIN: LU0075646355) announced today results for the fourth quarter and
full year which ended 31 December 2021. Unless otherwise stated the comparative
âŠ
Vis bĂžrsmeldingen
period is the full year which ended 31 December 2020.
Fourth Quarter and Full Year 2021 highlights
- Adjusted EBITDA of $143 million in the fourth quarter, equating to a margin
of 10%
- Adjusted EBITDA of $521 million in the full year after incurring net costs
of approximately $27 million relating to Covid-19, equating to a margin of
10%
- Net cash generated from operations of $227 million in the quarter and $293
million in the full year
- Net debt at year end of $55 million, including lease liabilities of $231
million
- Resilient backlog of $7.2 billion, up 16% year-on-year, with $4.3 billion
expected to be executed in 2022
- The Board has decided to adopt a regular dividend policy
- The Board has approved a $100 million return to shareholders in 2022,
comprising a regular dividend of NOK 1.00 per share, to be recommended for
shareholder approval at the AGM, and share repurchases of approximately $70
million
- Both the regular dividend policy and returns to shareholders mark the
Boardâs confidence in the financial position and outlook for the Group
Fourth Quarter Full Year
For the period (in $
millions, except Adjusted
EBITDA margin and per 2021 2020
share data) Q4 2021 Unaudited Q4 2020 Unaudited Audited Audited
Revenue 1,365 1,014 5,010 3,466
Adjusted EBITDA((a)) 143 165 521 337
Adjusted EBITDA
margin((a)) 10% 16% 10% 10%
Net operating
income/(loss) excluding
goodwill impairment
charges 31 (35) 72 (428)
Goodwill impairment
charges - (27) - (605)
Net operating
income/(loss) 31 (62) 72 (1,034)
Net income/(loss) 4 (103) 36 (1,105)
Earnings per share - in $
per share
Basic (0.01) (0.35) 0.11 (3.67)
Diluted((b)) (0.01) (0.35) 0.11 (3.67)
2021 2020
At (in $ millions) 31 Dec 31 Dec
Backlog((c)) 7,212 6,214
Book-to-bill ratio - full
year((c)) 1.2 1.3
Cash and cash equivalents 598 512
Borrowings (422) (209)
Net cash excluding lease
liabilities((d)) 176 303
Net (debt)/cash including
lease liabilities((d)) (55) 49
(a) For explanations and reconciliations of Adjusted EBITDA and Adjusted EBITDA
margin refer to Note 8 âAdjusted EBITDA and Adjusted EBITDA marginâ to the
Condensed Consolidated Financial Statements.
(b) For the explanation and a reconciliation of diluted earnings per share refer
to Note 7 âEarnings per shareâ to the Condensed Consolidated Financial
Statements.
(c) Backlog is a non-IFRS measure and is unaudited. Book-to-bill ratio
represents total order intake, (excluding amounts related to business
combinations), divided by revenue recognised in the year.
(d) Net cash/(debt) is a non-IFRS measure and is defined as cash and cash
equivalents less borrowings.
John Evans, Chief Executive Officer, said:
Subsea 7 delivered a solid operational and financial performance in 2021
supported by an improving market, and enabled by work practices that have been
adapted to the ongoing challenges posed by the Covid-19 pandemic. Our Subsea and
Conventional business experienced an increase in activities associated with the
early stages of a recovery in the oil and gas industry, including a sharp upturn
in tendering activity and greater demand for our engineering services. Our
Renewables business, which proved somewhat more resilient during the global
economic downturn of 2020, continued to make progress although issues largely
related to Covid-19 delayed certain projects in Taiwan. During the year, a new
challenge emerged as global supply chains tightened across many industries.
Subsea 7 continued to mitigate the majority of its exposure through a variety of
mechanisms including back-to-back supplier contracts and index-linked pricing.
During 2021 we made good progress in our two-fold strategy. Our focus on the
subsea field of the future played a significant role in the successful outcome
of many recent tenders in the Subsea and Conventional business unit. In
2021, 60% of our contract awards by value featured early engagement, 62%
included integrated solutions and 64% leveraged our Carbon Estimator. These
statistics support our view that by working closely with our clients from
concept through to commissioning we can deliver optimised subsea solutions that
maximise clientsâ returns, while reducing emissions. Our Subsea Integration
Alliance with OneSubsea(Âź) continued to lead the integrated SURF-SPS market,
with a 76% share by value since January 2020.
In energy transition, we made significant progress in both the established
renewables market and emerging energy sectors. The formation of Seaway 7 ASA
created a market leader in fixed offshore wind with a comprehensive fleet and
experienced management team. Our strategy in emerging energies was reinforced in
2021 through a step up in our participation in floating wind, with the creation
of the Salamander floating wind joint venture and the acquisition of a majority
holding in Nautilus Floating Solutions. We also succeeded in winning our first
carbon capture contract, for the Northern Lights project in Norway.
Enhancing our policy of shareholder returns
2021 saw the capital requirements of our two business units diverge, with Subsea
and Conventional entering a phase characterised by low reinvestment, while
Renewables increased its commitment to new build installation capacity ahead of
the anticipated growth in the fixed offshore wind market.
Listing the Renewables business as Seaway 7 ASA allows us to clearly identify an
independent funding strategy for this growth business. It also enables us to
establish a policy regarding the allocation of free cash flow from the Subsea
and Conventional business unit.
At the AGM on 12 April 2022, the Board will propose that the Groupâs commitment
to returning capital to shareholders is reaffirmed by formalising the dividend
policy of Subsea 7. The Board recognises the merits of establishing a regular
dividend at this point in the evolution of the Group and recommends that
shareholders approve a regular, annual dividend of NOK 1.00 per share,
equivalent to $33 million. The return of excess cash in the form of a special
dividend or share repurchase will continue to be assessed by the Board annually.
In 2022, reflecting the current valuation of Subsea 7 shares, the Group intends
to distribute approximately $70 million through share repurchases.
Full year 2021
In the full year 2021, Group revenue increased 45% to $5.0 billion. Revenue from
the Subsea and Conventional business unit increased 33% but the Adjusted EBITDA
margin fell to 13%, from 15% in 2020, reflecting the shift in mix toward
earlier-stage activities. Revenue in Renewables doubled as activity on the
Seagreen project increased, but margins remained low due to challenges in
Taiwan. Overall, the Groupâs EBITDA increased 55% to $521 million due to lower
net direct costs associated with the Covid-19 pandemic and the reversal of some
restructuring provisions. The Adjusted EBITDA margin was 10%, broadly in line
with the prior year. After taxation of $64 million, equating to an effective tax
rate of 64%, net income for the year was $36 million, an improvement from a loss
of $1.1 billion in 2020 that included goodwill impairment charges of $605
million and impairment charges related to property, plant and equipment, right-
of-use assets and intangible assets of $323 million.
During the year, net cash generated from operations was $293 million despite a
$202 million build in working capital due to higher activity in regions with
less favourable payment terms as well as the timing of milestone payments on
certain projects. Capital expenditure was low relative to prior years at $167
million, following delivery of Seven Vega in 2020 and the low maintenance
requirements of our young Subsea and Conventional fleet. Including the
utilisation of $200 million from our UK Export Finance facility, cash and cash
equivalents increased by $86 million during the year to $598 million, and net
debt (including lease liabilities) at year end was $55 million.
Following the recovery in tendering activity, new order intake was strong in
2021 at $6.1 billion, up 38% compared with the prior year. Significant news
orders included Bacalhau and Mero-3 in Brazil, and the fast-track development of
the Sakarya gas field in Turkey. These were supplemented by the conversion to
full EPCI of the Scarborough project in Australia, and several awards in Norway
where tax incentives are beginning to yield higher activity. Furthermore, in
Brazil we were awarded new three-year contracts for three of our pipelay support
vessels, enhancing long-term revenue visibility.
Fourth quarter 2021 operational review
In the fourth quarter, the Subsea and Conventional business unit made good
operational progress in the engineering and procurement phases of the SLGC,
Sangomar, Barossa, Bacalhau and Sakarya projects. As we entered the winter
season in the northern hemisphere, utilisation of the active fleet was 87%, down
from 94% in the third quarter but up slightly from 82% in the prior year period.
Seven Vega, Seven Oceans, Seven Oceanic and Seven Falcon continued offshore
activities on Johan Sverdrup 2 in Norway and operations on Ărfugl Phase 2 were
completed. In the Gulf of Mexico, Seven Arctic, Seven Borealis, Seven Navica and
Seven Seas were active on Kingâs Quay, Jack St Malo 4 and Colibri, and our scope
on the Manuel project was completed. Seven Champion continued to work throughout
the quarter in Saudi Arabia on the Berri-Zuluf (CRPO 36/37) and 28 Jackets (CRPO
47) projects. In Brazil, there were high levels of utilisation of the four PLSVs
under long-term contracts with Petrobras.
In the Renewables business unit, Seaway Strashnov worked on the Hollandse Kust
Zuid project in the Netherlands, while Seaway Aimery and Seaway Moxie were
active on the Hornsea II and Seagreen projects in the UK. During the quarter, we
commenced a charter of Maersk Connector to install inner-array cables on the
Seagreen project. By year end, 10 of Seagreenâs 114 foundations had been
installed, with a further 11 installed in January 2022.
Fourth quarter 2021 financial review
Fourth quarter revenue of $1.4 billion increased by 35% compared to the prior
year period, reflecting higher activity in both Subsea and Conventional and
Renewables. Adjusted EBITDA of $143 million was down from $165 million in the
prior year quarter which benefited from favourable discrete items. In addition,
the results of the Renewables business unit include costs recognised in relation
to a project in Taiwan whose economic interest was retained by Subsea 7 S.A.,
although it is being executed by Seaway 7 ASA. All other fixed offshore wind
projects were transferred to Seaway 7 ASA on 1 October 2021.
After depreciation and amortisation charges of $113 million, the Group delivered
net operating income of $31 million. Net income for the quarter was $4 million,
after taxation of $16 million equating to an effective tax rate of 81%.
During the quarter, net cash generated from operating activities was $227
million which included $101 million improvement in net working capital,
reflecting a partial reversal of the third quarter build up driven by project
milestones as expected. Capital expenditure was $86 million, including
investment in the Renewables fleet following the business combination with OHT
ASA. The Group also repurchased 2.7 million shares for $21 million. Net debt at
the year end was $55 million, including lease liabilities of $231 million, an
improvement from $99 million at the end of the third quarter. During the
quarter, Subsea 7 utilised $200 million of its $500 million UK Export Finance
facility and at year end the Group held cash and cash equivalents of $598
million. At year end, the Group had liquidity of $1.6 billion with $956 million
undrawn borrowing facilities.
In the fourth quarter, Subsea 7 booked new awards of $1.4 billion and
escalations of approximately $400 million, resulting in a book-to-bill ratio of
1.3. The backlog at the end of December 2021 was $7.2 billion of which $4.3
billion is expected to be executed during 2022, $2.0 billion in 2023 and $0.9
billion in 2024 and thereafter.
Outlook
In 2022, we expect that revenue will be broadly in line with 2021 and that
Adjusted EBITDA and net operating income will be in line with or better than
2021. We firmly believe that the market recovery is underway, supported by high
levels of tendering in both business units, and with signs of improving pricing
and payment terms for new awards. We are confident that our strong pipeline of
prospects will translate into new orders during the coming year.
Conference Call Information
Date: 3 March 2022
Time: 12:00 UK Time
Access the webcast at subsea7.com (https://edge.media-server.com/mmc/p/sdhad4b2)
or https://edge.media-server.com/mmc/p/7645zya4
Register for the conference call at
http://emea.directeventreg.com/registration/1049589
Advance registration is required.
For further information, please contact:
Katherine Tonks
Head of Investor Relations
Email: katherine.tonks@subsea7.com (mailto:katherine.tonks@subsea7.com)
Telephone: +44 20 8210 5568
Special Note Regarding Forward-Looking Statements
Certain statements made in this announcement may contain âforward-looking
statementsâ (within the meaning of the safe harbour provisions of the U.S.
Private Securities Litigation Reform Act of 1995). 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 âanticipateâ, âbelieveâ, âestimateâ, âexpectâ,
âfutureâ, âgoalâ, âintendâ, âlikelyâ âmayâ, âplanâ, âprojectâ, âseekâ, âshouldâ,
âstrategyâ âwillâ, and similar expressions. The principal risks which could
affect future operations of the Group are described in the âRisk Managementâ
section of the Groupâs Annual Report and Consolidated Financial Statements for
the year ended 31 December 2020. 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) capital expenditure by oil and gas
companies, which is affected by fluctuations in the price of, and demand for,
crude oil and natural gas; (v) unanticipated delays or cancellation of projects
included in our backlog; (vi) competition and price fluctuations in the markets
and businesses in which we operate; (vii) the loss of, or deterioration in our
relationship with, any significant clients; (viii) the outcome of legal
proceedings or governmental inquiries; (ix) 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; (x) the effects of a pandemic or epidemic
or a natural disaster; (xi) liability to third parties for the failure of our
joint venture partners to fulfil their obligations; (xii) changes in, or our
failure to comply with, applicable laws and regulations (including regulatory
measures addressing climate change); (xiii) operating hazards, including spills,
environmental damage, personal or property damage and business interruptions
caused by adverse weather; (xiv) equipment or mechanical failures, which could
increase costs, impair revenue and result in penalties for failure to meet
project completion requirements; (xv) the timely delivery of vessels on order
and the timely completion of ship conversion programmes; (xvi) our ability to
keep pace with technological changes and the impact of potential information
technology, cyber security or data security breaches; and (xvii) 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.
Kilde
