Luxembourg - 28 July 2022 - Subsea 7 S.A. (the Group) (Oslo BĂžrs: SUBC, ADR:
âŠ
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SUBCY, ISIN: LU0075646355) announced today results for the second quarter and
first half of 2022 which ended 30 June 2022.
Second quarter highlights
- Adjusted EBITDA of $134 million, up 48% year-on-year, resulting in a margin
of 11%
- Order intake of $2.1 billion, equating to a book-to-bill of 1.6 times
- Backlog of $7.8 billion, of which 10% is in Renewables, with $2.5 billion to
be executed in 2022
- Cash and cash equivalents of $464 million and net debt (including lease
liabilities) of $88 million
- Renewal of Subsea Integration Alliance for a further seven years
Second Quarter Half Year
For the period (in $
millions, except
Adjusted EBITDA margin Q2 2022 Q2 2021 1H 2022 1H 2021
and per share data) Unaudited Unaudited Unaudited Unaudited
Revenue 1,247 1,198 2,441 2,194
Adjusted EBITDA((a)) 134 90 220 193
Adjusted EBITDA
margin((a)) 11% 8% 9% 9%
Net operating
income/(loss) 18 (28) (13) (37)
Net income/(loss) 22 (13) 10 (12)
Earnings per share -
in $ per share
Basic 0.14 (0.04) 0.09 (0.03)
Diluted((b)) 0.14 (0.04) 0.09 (0.03)
30 Jun 2022 31 Mar 2022
At (in $ millions) Unaudited Unaudited
Backlog((c)) 7,796 7,295
Book-to-bill
ratio((c)) 1.6 1.0
Cash and cash
equivalents 464 500
Borrowings (368) (379)
Net cash excluding
lease liabilities((d)) 96 121
Net debt including
lease liabilities((d)) (88) (98)
(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. Book-to-bill ratio represents total order
intake divided by revenue recognised in the second quarter. Comparative figure
is for the quarter ended 31 March 2022.
(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 second quarter of 2022, Subsea 7 delivered a strong performance in Subsea
and Conventional, while the Renewables business unit performed in line with
Juneâs trading update. Since the first quarter, the industryâs challenges
relating to the supply chain and raw material price inflation have stabilised,
allowing a number of projects to proceed. Order intake in the quarter was robust
at $2.1 billion resulting in growth in our backlog to $7.8 billion. In addition,
our pre-backlog (subject to FID((1))) was over $1 billion, reflecting offshore
wind projects in the UK that we expect to convert to firm awards by early 2023.
Both our core markets - subsea and offshore fixed wind - continue to improve,
with positive momentum in pricing and risk allocation. During the quarter, we
extended the Subsea Integration Alliance with Schlumberger for a further seven
years. Subsea Integration Alliance has become a market leader in integrated SPS-
SURF projects and we look forward to further growth. Overall, Subsea 7 is well-
positioned to benefit from these positive market dynamics, and to deliver on a
strategy that combines capital returns and growth over the long term.
Operational highlights
In the second quarter the Subsea and Conventional business unit made good
progress on its portfolio, with projects completing in the Gulf of Mexico and
Saudi Arabia. Activity remained high in the Gulf of Mexico, with Seven Arctic,
Seven Navica, Seven Oceans and Seven Vega active on Anchor, Jack St Malo 4, Mad
Dog 2, and Vito. In northern Europe, Seven Oceans worked on the Johan Sverdrup
Phase 2, Balmoral and Pierce fields. Procurement neared completion for the fast-
tracked Sakarya integrated project in Turkey, and the shallow water section of
pipelay commenced.
In the Renewables business unit, foundation installation and cable lay work
continued, as planned, on the Seagreen project in the UK. At the end of the
quarter, 30 of 114 foundations and 21 cables had been installed. In Taiwan,
Seaway Yudin worked on the Formosa 2 project while, in the Netherlands, Seaway
Strashnov, Seaway Aimery and Seaway Moxie worked on the Hollandse Kust Zuid
project. Both Formosa 2 and Hollandse Kust Zuid progressed in accordance with
the execution plan announced in June, and they remain on track for completion in
August and September, respectively.
Second quarter financial review
Second quarter revenue of $1.2 billion increased by 4% compared to the prior
year period, reflecting growth in Subsea and Conventional offset by lower
revenues in Renewables primarily driven by the phasing of the Seagreen project.
Adjusted EBITDA of $134 million was up 48% year-on-year driven by a strong
margin in Subsea and Conventional, partly offset by losses in Renewables. Net
operating income was $18 million after depreciation and amortisation charges of
$116 million. Net income for the quarter was $22 million, after taxation of $36
million and favourable other gains and losses of $47 million, including net
foreign exchange gains of $44 million.
Net cash generated from operations was $94 million including a $63 million
adverse movement in net working capital. Net cash used in investing activities
was $50 million, including $52 million related to purchases of property, plant
and equipment. Net cash used in financing activities was $72 million which
included dividends of $32 million. Overall, cash and cash equivalents decreased
by $36 million from 31 March 2022 to $464 million with net debt of $88 million,
including lease liabilities of $184 million. As communicated in the Seaway 7
trading update in June 2022, progress on Seaway Alfa Lift build has encountered
delays. The root cause of the delays in the delivery of the vessel is due to the
status of the mission equipment, engineering and procurement. These conditions,
attributable to OHT ASA, were present on 1 October 2021, the date of the
business combination, as a result, the adverse financial impact has been
accounted for as an adjustment to the transactionâs purchase price allocation.
Order intake
Order intake was $2.1 billion comprising new awards of $1.7 billion, escalations
of approximately $400 million, and adverse foreign exchange movements of
approximately $300 million, resulting in a book-to-bill ratio of 1.6 in the
quarter. Backlog at the end of June was $7.8 billion, of which $2.5 billion is
expected to be executed during the remainder of 2022.
Outlook for full year 2022
We continue to expect that revenue and Adjusted EBITDA will be broadly in line
with 2021. Tendering in the subsea market remains high and the pricing
environment continues to improve. In fixed offshore wind, contract pricing and
risk allocation have improved and should contribute to robust long-term margins
and returns.
(()(1)()) Final investment decision by the clients
Conference Call Information
Date: 28 July 2022
Time: 11:00 UK Time
Access the webcast at subsea7.com (https://edge.media-server.com/mmc/p/sdhad4b2)
or https://edge.media-server.com/mmc/p/5qxr3swf
Register for the conference call at
Conference Registration
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.
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