SUBSEA 7 S.A. Luxembourg – 25 April 2024 – Subsea 7 S.A. (Oslo Børs: SUBC, ADR: SUBCY, ISIN: LU0075646355, the Company) announced today results of Subsea7 Group (the Group, Subsea7) for the first quarter which ended 31 March 2024.
First quarter highlights
- Adjusted EBITDA of $162 million, up 52% on the prior year period, equating to a margin of 12%
- Backlog remains robust at $10.4 billion, of which $4.8 billion to be executed in the remainder of 2024
- High tendering activity supports management’s confidence in the outlook for order intake and margin expansion
- Full year 2024 guidance reconfirmed: Adjusted EBITDA expected to be within a range from $950 million to $1.0 billion
| Three Months Ended | ||||
| For the period (in $ millions, except Adjusted EBITDA margin and per share data) | 31 Mar 2024 Unaudited | 31 Mar 2023 Unaudited | ||
| Revenue | 1,395 | 1,246 | ||
| Adjusted EBITDA(a) | 162 | 107 | ||
| Adjusted EBITDA margin(a) | 12% | 9% | ||
| Net operating income/(loss) | 20 | (15) | ||
| Net income/(loss) | 29 | (29) | ||
| Earnings per share – in $ per share | ||||
| Basic | 0.09 | (0.07) | ||
| Diluted(b) | 0.09 | (0.07) | ||
| At (in $ millions) | 31 Mar 2024 Unaudited | 31 Dec 2023 Unaudited | ||
| Backlog(a) | 10,429 | 10,587 | ||
| Book-to-bill ratio(a) | 0.9x | 1.2x | ||
| Cash and cash equivalents | 604 | 751 | ||
| Borrowings | (814) | (845) | ||
| Net debt excluding lease liabilities(a) | (211) | (94) | ||
| Net debt including lease liabilities(a) | (782) | (552) | ||
(a) For explanations and reconciliations of Adjusted EBITDA, Adjusted EBITDA margin, Backlog, Book-to-bill ratio and Net debt refer to the ‘Alternative Performance Measures’ section of the Condensed Consolidated Financial Statements.
(b) For the explanation and a reconciliation of diluted earnings per share refer to Note 7 ‘Earnings per share’ to the Condensed Consolidated Financial Statements.
John Evans, Chief Executive Officer, said:
Subsea7 delivered a strong operational and financial performance in the first quarter with Adjusted EBITDA of $162 million – up 52% on the prior year – and the Group is on track to achieve its full year objectives. Our backlog remained robust at $10.4 billion, giving us clear visibility on the remainder of 2024 and 2025. Tendering activity is high in both the subsea and offshore wind sectors, and we are confident that the Group’s differentiated, value accretive solutions and strong, collaborative client relationships position us well to grow the backlog with high-quality contracts at improved margins.
First quarter operational highlights
During the first quarter we experienced normal seasonality due to winter conditions in parts of the Northern Hemisphere, while activity in the Southern Hemisphere was high. Subsea activity continued on the Bacalhau development in Brazil, with the installation of rigid risers and flowlines by Seven Vega, while Seven Pacific and Seven Cruzeiro installed umbilicals and other subsea structures. Early offshore activities commenced for Mero 3 with the installation of the FPSO mooring system. In Senegal, Seven Seas and Seven Sisters completed their final scopes for the Sangomar project, installing risers and umbilicals and hooking up the floating production unit. In Saudi Arabia, Seven Borealis completed its pipelay scope at Marjan 2 before transiting to Guyana. In Australia, Seven Oceans began installation activities at Scarborough and Seven Oceanic began installation activities at Barossa. Activity in offshore wind included cable lay at Yunlin and Zhong Neng in Taiwan while, in the UK, Seaway Alfa Lift continued installation of transition pieces at Dogger Bank A in the UK. In March, Seaway Aimery began cable lay at Moray West.
First quarter financial review
Revenue of $1.4 billion increased 12% compared to the prior year period. Adjusted EBITDA of $162 million equated to an Adjusted EBITDA margin of 12%, up from 9% in Q1 2023. This reflected a strong performance in Subsea and Conventional across our portfolio of projects, partly offset by heightened seasonality in the Renewables business unit.
Depreciation and amortisation charges were $142 million. Net operating income was $20 million compared to net operating loss of $15 million in the prior year period. Net finance costs of $14 million, a net foreign exchange gain of $49 million, and a tax charge of $26 million, resulted in net income for the quarter of $29 million compared with net loss of $29 million in the prior year period.
Net cash used in operating activities in the first quarter was $13 million, including a $157 million increase in working capital relating to the timing of milestones on major projects. Net cash used in investing activities was $17 million while net cash used in financing activities was $118 million including lease payments of $49 million. Overall, cash and cash equivalents decreased by $147 million to $604 million at 31 March 2024. Net debt was $782 million, including lease liabilities of $572 million, up from $458 million at 31 December 2023, reflecting the addition of two new vessel charters and the extension of one existing vessel charter.
First quarter order intake was $1.3 billion comprising new awards of $0.8 billion and escalations of $0.5 billion resulting in a book-to-bill ratio of 0.9 times. Backlog at the end of March was $10.4 billion, of which $4.8 billion is expected to be executed in 2024, $4.1 billion in 2025 and $1.5 billion in 2026 and beyond.
Outlook
For full year 2024 we continue to expect revenue between $6.0 billion and $6.5 billion, while Adjusted EBITDA is expected to be within a range from $950 million to $1.0 billion.
In full year 2025, as the mix of activity continues to shift to projects won in a more favourable environment, our Adjusted EBITDA margin is expected to be within an 18 to 20% range. Bidding for subsea and offshore wind work remains very active and we continue to engage early with clients to help them realise their development plans which now extend beyond 2026.
Conference Call Information
Date: 25 April 2024
Time: 12:00 UK Time, 13:00 CET
Access the webcast at subsea7.com or https://edge.media-server.com/mmc/p/sir64zas/
Register for the conference call https://register.vevent.com/register/BI2a40990619354ae5ac59087faaa9cff6
For further information, please contact:
Katherine Tonks
Head of Investor Relations
Email: ir@subsea7.com
Telephone: +44 20 8210 5568
Special Note Regarding Forward-Looking Statements
This document may contain ‘forward-looking statements’ (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 ‘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 Management’ 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) 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 Fourth 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; (xvii) global availability at scale and commercially viability of suitable alternative vessel fuels; and, (xviii) 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 document. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act.
This stock exchange release was published by Katherine Tonks, Investor Relations, Subsea7, on 25 April 2024 08:00 CET.
Attachments
- SUBC 1Q24 Earnings Release
- SUBC 1Q24 Earnings Presentation
