Luxembourg - 28 April 2022 - Subsea 7 S.A. (the Group) (Oslo BĂžrs: SUBC, ADR:
SUBCY, ISIN: LU0075646355) announced today results for the first quarter which
ended 31 March 2022.
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First quarter highlights
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Revenue up 20% year-on-year to $1.2 billion
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Adjusted EBITDA of $86 million
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Order intake of $1.2 billion, equating to a book-to-bill of 1.0 times
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Backlog of $7.3 billion, of which 14% is in Renewables, with $3.2 billion to
be executed in 2022
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Cash and cash equivalents of $500 million and net debt (including lease
liabilities) of $98 million
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Floating wind strategy progresses with Ărsted acquisition of 80% stake in
Salamander development
Three Months Ended
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For the period (in $ millions, except Adjusted 31 Mar 2022 31 Mar 2021
EBITDA margin and per share data) Unaudited Unaudited
Revenue 1,194 996
Adjusted EBITDA((a)) 86 102
Adjusted EBITDA margin((a)) 7% 10%
Net operating loss (31) (9)
Net (loss)/income (12) 1
Earnings per share - in $ per share
Basic (0.05) 0.01
Diluted((b)) (0.05) 0.01
31 Mar 2022 31 Dec 2021
At (in $ millions) Unaudited Audited
Backlog((c)) 7,295 7,212
Book-to-bill ratio - year-to-date((c)) 1.0 1.2
Cash and cash equivalents 500 598
Borrowings (379) (422)
Net cash excluding lease liabilities((d)) 121 176
Net debt including lease liabilities((d)) (98) (55)
(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-to-date. Comparative
figure is for the full year ended 31 December 2021.
(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:
In the first quarter of 2022, Subsea 7 delivered revenue and EBITDA in line with
managementâs expectations and guidance for the full year is unchanged. Our
backlog remains stable at $7.3 billion, implying high visibility on revenue for
the remainder of the year. Tendering activity remains high and we are
collaborating with our clients and supply chain partners to navigate the
bottlenecks in the global supply chain. The risk to our awarded projects is
reduced through back-to-back contracts and index-linked mechanisms with our
suppliers. Overall, we believe the long-term outlook remains positive for both
the subsea and offshore wind industries with several large awards to the market
expected in the remainder of 2022.
Operational highlights
In line with the guidance given by management last quarter, our vessel activity
in the first quarter included planned maintenance and dry docking, equivalent to
around 250 days of downtime. Nevertheless, active vessel utilisation was 72% in
the first quarter, compared with 66% in the prior year period, and is expected
to improve over the course of the year as the level of dry docking normalises.
In the first quarter the Subsea and Conventional business unit made good
progress on our portfolio of projects. In the Gulf of Mexico, Seven Navica,
Seven Oceans and Seven Oceanic were active on the Kingâs Quay project, which is
substantially complete, while Seven Arctic continued offshore activities for Mad
Dog 2. In Africa, Seven Borealis and Seven Pacific completed our work scope on
the Jubilee project, while good progress was made on the fabrication scope for
the Sanha Lean Gas project. In Norway, Seven Vega experienced several weeks of
standby time due to adverse weather but completed its pipelay scope for Johan
Sverdrup Phase 2 with support from Seven Falcon. In Saudi Arabia, Seven Champion
was fully utilised during the quarter on the 28 Jackets project (CPRO 48 and
49). Engineering and fabrication activities continued on the Bacalhau, Mero-3
and Barossa projects, while in Turkey, the first vessels began mobilising for
seabed preparation work for the Sakarya project.
In the Renewables business unit we continued work on the Seagreen project and
laid inner-array cables associated with the first 21 jackets. In Taiwan, we
commenced operations on our remaining scope of the Formosa 2 project, but the
pace of execution remained slower than expected due to operational challenges
and the impact of Covid-19 restrictions. Towards the end of the quarter, Seaway
Strashnov installed the foundations for the Kaskasi project, offshore Germany.
First quarter financial review
First quarter revenue of $1.2 billion increased by 20% compared to the prior
year period, reflecting strong growth in the Subsea and Conventional business
unit. Adjusted EBITDA of $86 million was in line with the prior year period
after adjusting for an $18 million restructuring credit recognised in Q1 2021.
During the quarter there was a high level of planned vessel maintenance and dry
docking. A net operating loss of $31 million was recognised, which included
depreciation and amortisation charges of $117 million. The net loss for the
quarter was $12 million, after a tax credit of $15 million and other gains and
losses of $7 million, including net foreign exchange gains of $2 million.
Net cash generated from operations was $39 million including a $38 million
adverse movement in net working capital that reflects the timing of milestones
on certain large EPCI projects. Net cash used in investing activities was $51
million. Net cash used in financing activities was $90 million which included
$37 million repayment of Seaway 7 ASAâs Revolving Credit Facility and $21
million of share repurchases. Overall, cash and cash equivalents decreased by
$98 million from 31 December 2021 to $500 million with net debt of $98 million,
including lease liabilities of $219 million.
Order intake
Order intake was $1.2 billion comprising new awards of $630 million and
escalations of approximately $530 million, resulting in a book-to-bill ratio of
1.0. Backlog at the end of March 2022 was $7.3 billion, of which $3.2 billion is
expected to be executed during the remainder of 2022.
Outlook for full year 2022
We continue to 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. Tendering in both the subsea and fixed offshore wind markets remains high
and the underlying pricing environment continues to gradually improve. We are
establishing new mechanisms for supply chain pricing to enable contract awards
to occur in a volatile environment for raw material prices and we are confident
that our strong pipeline of prospects will translate into new orders during the
remainder of the year.
Conference Call Information
Date: 28 April 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/ckwxo8tt
Register for the conference call at
http://emea.directeventreg.com/registration/5236026
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.
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
