Luxembourg - 2 March 2023 - Subsea 7 S.A. (Oslo Børs: SUBC, ADR: SUBCY, ISIN:
LU0075646355, the Company) announced today results of Subsea7 Group (the Group,
Subsea7) for the fourth quarter and full year which ended 31 December 2022.
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Unless otherwise stated the comparative period is the full year which ended 31
December 2021.
Full year highlights
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Full year Adjusted EBITDA of $559 million resulting in a margin of 11%
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Highest order intake since 2013 at over $7 billion
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Backlog of $9.0 billion, of which $4.2 billion to be executed in 2023 and
$3.0 billion in 2024
-
Cash and cash equivalents of $646 million and net cash of $33 million
including lease liabilities
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High tendering activity with continued momentum in pricing
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Recent awards and ongoing bids underpin managementâs confidence in the
outlook, including a return of Adjusted EBITDA margins to through-cycle
levels of 15-20% over the coming four years
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Reflecting the Boardâs confidence in the outlook for Subsea7, it will
propose for approval by shareholders at Aprilâs AGM a dividend of NOK 4.00
per share, including the NOK 1.00 per share regular dividend
Fourth Quarter Full Year
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For the period (in $
millions, except Adjusted
EBITDA margin and per share Q4 2022 Q4 2021 2022 2021
data) Unaudited Unaudited Audited Audited
Revenue 1,291 1,365 5,136 5,010
Adjusted EBITDA((a)) 169 143 559 521
Adjusted EBITDA margin((a)) 13% 10% 11% 10%
Net operating income 108 31 149 72
Net income 27 4 36 36
Earnings per share - in $
per share
Basic 0.10 (0.01) 0.20 0.11
Diluted((b)) 0.09 (0.01) 0.19 0.11
2022 2021
At (in $ millions) 31 Dec 31 Dec
Backlog(()(a)()) 9,008 7,212
Book-to-bill ratio - full
year(()(a)()) 1.4x 1.2x
Cash and cash equivalents 646 598
Borrowings (356) (422)
Net cash excluding lease
liabilities(()(a)()) 290 176
Net cash/(debt) including
lease liabilities(()(a)()) 33 (55)
(a) For explanations and reconciliations of Adjusted EBITDA, Adjusted EBITDA
margin, Backlog, Book-to-bill ratio and Net cash/(debt) refer to the
âAlternative Performance Measuresâ section of 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.
John Evans, Chief Executive Officer, said:
2022 was a year of strong momentum for Subsea7 as the recovery in our subsea
market gathered pace. The cumulative impact of years of underinvestment by the
oil and gas industry combined with a new urgency for energy security supported a
resurgence in demand for our services. The increase in tendering and early
engineering activity that we were experiencing twelve months ago translated into
strong order intake over the course of 2022, driving a rapid tightening of
vessel availability and an improvement in new project margins. Total order
intake for the year was over $7 billion - the highest since 2013 - with a
backlog of over $9 billion. This resulted in high revenue visibility for 2024
and beyond.
Our success in subsea in 2022 has been underpinned by our long-held strategy of
early engagement, and collaboration and partnerships. In the fourth quarter we
booked new orders in Norway totalling $1.8 billion as a result of our subsea
alliance with Aker BP and Aker Solutions. This partnership enabled us to engage
early in the field development process, optimising design solutions and
enhancing field economics to unlock these developments. During 2022 we also
reinforced our relationship with SLB with the agreement to invest in its new
subsea hardware joint venture with Aker Solutions. The joint venture will become
our new partner in Subsea Integration Alliance and our investment will
strengthen this partnership as well as offering strong returns on a standalone
basis.
Our energy transition strategy includes carbon capture, floating wind and
hydrogen, and in 2022, we prepared for the pipelay on our first CCUS project at
Northern Lights in Norway, and executed our third floating wind project at
Hywind Tampen. We also successfully engaged Ărsted as a strategic investor in
our Salamander floating wind project with Simply Blue Energy, and we joined a
consortium of companies working on the design of the Gray Whale 3 floating wind
project in South Korea. In hydrogen, we formed an alliance with OneSea to
develop solutions for offshore green hydrogen and we advanced our evaluation of
this potentially significant market.
Within Renewables, Seaway7 did not perform as we had expected during 2022. The
problems encountered originated from the combination with OHT ASA primarily
linked to 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. Among other factors, this development
contributed 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.
Seaway7âs two leading-edge new build vessels are expected to be delivered
towards the end of 2023 and will ensure that it remains a market leader in the
high growth fixed offshore wind market. While order inflow was subdued in 2022,
our pre-backlog of over $1 billion, combined with a tendering pipeline of over
$7 billion, gives us confidence in the future for this important part of our
energy transition strategy.
Overall, Subsea7 delivered a good financial and operational performance in
2022, while making important progress on several aspects of our strategy, and we
are well-placed to deliver growth, both near and longer term.
Operational highlights - good progress on major projects
During 2022 the Subsea and Conventional business unit made good progress in
engineering and procurement activities on several large projects including Mero
3 and Bacalhau in Brazil, Marjan 2 in Saudi Arabia, Sanha Lean Gas in Angola and
Scarborough in Australia, while offshore activities continued on the major,
fast-track Sakarya project in Turkey. Our global enabler vessels were active on
several projects in the Gulf of Mexico including Jack St Malo, Kingâs Quay, Mad
Dog 2, TOPR and Vito, as well as Jubilee in Ghana, Johan Sverdrup Phase 2 in
Norway, Sangomar in Senegal and 28 Jackets in Saudi Arabia. The vessels also
executed the Hywind Tampen floating wind development in Norway.
In the Renewables business unit, good progress was made on the Seagreen project
in the UK, which neared completion. By year-end, a total of 93 foundation
jackets had been installed and more than 50% of the associated inner-array
cables. The challenging Formosa 2 project in Taiwan and monopile scope of the
Hollandse Kust Zuid project in the Netherlands were completed. Installation
activity at Dogger Bank A&B in the UK progressed as planned. We also
successfully executed the inner-array cable lay scopes of Hornsea 2 in the UK
and Hollandse Kust Zuid. In total we supported the installation of 2.9GW
renewable energy during the year.
Fourth quarter financial review - a strong finish to the year
Revenue of $1.3 billion declined 5% compared to the prior year period reflecting
modest growth of 3% in Subsea and Conventional, offset by a 33% decline in
Renewables, due to the phasing of the Seagreen project. Adjusted EBITDA of $169
million equated to an Adjusted EBITDA margin of 13.1%, up from 10.5% in Q4
2021. After depreciation and amortisation charges of $117 million and net
impairment reversals of $57 million, primarily related to property, plant and
equipment, net operating income increased to $109 million. Net income for the
quarter increased to $27 million from $4 million in the prior year, despite a
$28 million net foreign currency loss and a $52 million taxation, which equates
to an effective tax rate of 66%.
Net cash generated from operations was $143 million including a $36 million
beneficial movement in net working capital. Net cash used in investing
activities was $42 million while net cash generated by financing activities was
$11 million which included the $55 million positive net impact of the equity
rights issue of $200 million by Seaway 7 ASA. Overall, cash and cash equivalents
increased by $113 million from 30 September 2022 to $646 million at year end.
Fourth quarter order intake was $3.0 billion comprising new awards of $2.3
billion, escalations of $0.6 billion, and a beneficial foreign exchange movement
of approximately $0.2 billion, resulting in a book-to-bill ratio of 2.3x.
Full year financial review - solid overall performance
Revenue of $5.1 billion increased by 3% compared to the prior year reflecting
6% growth in Subsea and Conventional, offset by an 11% reduction in Renewables.
Adjusted EBITDA of $559 million equates to an Adjusted EBITDA margin of 10.9%,
slightly higher than 10.4% in 2021. After depreciation and amortisation charges
of $468 million, net operating income increased to $149 million from $72 million
in 2021. After a tax charge of $100 million, equating to an effective tax rate
of 73%, net income was flat year-on-year at $36 million.
Net cash generated from operations was $486 million including a $28 million
favourable movement in net working capital. Net cash used in investing
activities was $220 million, including $231 million related to purchases of
property, plant and equipment. Net cash used in financing activities was $211
million, which included $55 million positive net impact related to Seaway7âs
equity rights issue. Overall, cash and cash equivalents increased by $48 million
during the year with closing net cash of $33 million, including lease
liabilities of $257 million.
Full year order intake was $7.1 billion comprising new awards of $5.3 billion,
escalations of $1.8 billion, and adverse foreign exchange movements of $0.2
billion, resulting in a book-to-bill ratio of 1.4x. Backlog at the end of
December was $9.0 billion, of which $4.2 billion is expected to be executed in
2023 and $3.0 billion in 2024.
Continued commitment to return capital to shareholders
The Board will propose a NOK 4.00 per share dividend, equivalent to
approximately $110 million, at the AGM on 18 April 2023. At arriving at this
proposal, the Board took into consideration the financial performance and
prospects of the Group, the NOK 1.00 regular dividend policy commitment and the
status of the 2022 share repurchase programme.
Outlook - continued backlog growth and improving project margins
We expect revenue and Adjusted EBITDA in 2023 to be higher than 2022, with a
weighting towards the second half of the year.
The outlook for both traditional and new energy is robust supported by a vast
portfolio of potential developments in both subsea and offshore wind with
attractive economics, all of which will be necessary if the industry is to meet
the demand for global energy and provide energy security in Europe. Subsea7 is
well positioned to address both markets, with a large and capable fleet of
modern vessels. Availability of installation capacity for subsea and offshore
fixed wind markets continues to tighten for 2024 and 2025, and we are now
tendering projects for 2026 and beyond. Pricing and contract terms improved
during 2022 and recent awards, as well as ongoing tenders, support our view that
long-term Adjusted EBITDA margins should trend back to a through-cycle range of
15-20% over the long term.
Conference Call Information
Date: 2 March 2023
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/unwkh4rt
Register for the conference call at
Conference Registration
(Conference Registration)c
(Conference Registration)
For further information, please contact:
Katherine Tonks
Head of Investor Relations
Email: ir@subsea7.com (mailto:ir@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
