Subsea 7 S.A. Announces Second Quarter and Half Year 2024 Results
Luxembourg – 25 July 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 second
quarter and first half of 2024 which ended 30 June 2024.
Second quarter highlights
- Adjusted EBITDA of
$292 million, up 80% on the prior year period, equating to a margin
of 17%.
- Order intake of $4.0
billion, equivalent to a book-to-bill ratio of 2.3 times, resulted
in a record backlog of $12.5 billion. Of this, $3.3 billion is due
to be executed in the remainder of 2024, $4.9 billion in 2025 and
$4.3 billion in 2026 and beyond.
- Full year 2024
guidance increased. Revenue expected to be in a range from $6.5 to
$6.8 billion (from $6.0 to $6.5 billion) while Adjusted EBITDA is
expected to be between $1,000 and $1,050 million (from $950 to
$1,000 million).
- High tendering
activity supports management’s confidence in the outlook for order
intake and margin expansion. Full Year 2025 Adjusted EBITDA margin
is expected to be within an 18 to 20% range, continuing to improve,
exceeding 20% in full year 2026.
|
Second Quarter |
Half Year |
For the period (in $ millions, except Adjusted EBITDA margin and
per share data) |
Q2 2024
Unaudited |
Q2 2023
Unaudited |
1H 2024
Unaudited |
1H 2023
Unaudited |
Revenue |
1,739 |
1,518 |
3,134 |
2,764 |
Adjusted
EBITDA(a) |
292 |
162 |
454 |
268 |
Adjusted EBITDA
margin(a) |
17% |
11% |
15% |
10% |
Net operating
income/(loss) |
137 |
1 |
157 |
(14) |
Net
income/(loss) |
63 |
14 |
92 |
(15) |
|
|
|
|
|
Earnings per share –
in $ per share |
|
|
|
|
Basic |
0.20 |
0.06 |
0.29 |
(0.01) |
Diluted(b) |
0.20 |
0.06 |
0.29 |
(0.01) |
|
|
|
|
|
At (in $ millions) |
|
|
30 June 2024
Unaudited |
31 Mar 2024
Unaudited |
Backlog(a) |
|
|
12,544 |
10,429 |
Book-to-bill
ratio(a) |
|
|
2.3x |
0.9x |
Cash and cash
equivalents |
|
|
290 |
604 |
Borrowings |
|
|
(783) |
(814) |
Net debt excluding
lease liabilities(a) |
|
|
(494) |
(211) |
Net debt including lease liabilities(a) |
|
|
(1,027) |
(782) |
(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 achieved several milestones in the
second quarter of 2024 that support management’s confidence in the
outlook for the Group.
First, our confidence in the future is
underpinned by the strength of our delivery in the second quarter.
Adjusted EBITDA of $292 million – equating to a margin of 17%
– was driven by operational performance from both our project teams
executing major contracts, and by our offshore crews delivering
high utilisation and efficiency of our global enabler vessels.
Second, our order intake continues to extend
visibility for the coming years. A record intake of $4.0 billion in
the second quarter increased our backlog to $12.5 billion,
including the renewal of long-term contracts for four PLSVs in
Brazil. We see good demand for capacity stretching to the end of
the decade, with major new prospects continuing to replenish our
bidding pipeline.
Finally, the quality of the backlog continued to
improve in the second quarter, underpinning our outlook for
Adjusted EBITDA margins within a range of 18 to 20% in 2025 and in
excess of 20% in full year 2026. This improving embedded
profitability gives us confidence in the outlook for strong cash
generation and supports our commitment to shareholder returns of at
least $1 billion in 2024 to 2027.
With the right teams and assets in place, we are
confident that the Group’s differentiated, value accretive
solutions and collaborative client relationships position us to
deliver strong financial performance in the coming years.
Second quarter operational highlights
During the second quarter, good progress was
made in Subsea and Conventional on our major projects. For
Yggdrasil, we completed the rigid pipelay fabrication at the Vigra
spoolbase in Norway, while fabrication of the pipeline bundles
continued at the Wick spoolbase in Scotland. In Brazil, we
commenced stalk fabrication for Mero 4 at the Ubu spoolbase, and at
the Bintan spoolbase in Indonesia we completed the fabrication and
loadout of pipeline for Barossa.
During the quarter utilisation of our subsea
global enabler vessels was very high. Seven Borealis
completed its pipelay scope for the Gas to Energy project in Guyana
while, in Brazil, Seven Vega completed the main pipelay
scope for Bacalhau before mobilising for Mero 3. In Australia,
Seven Oceans completed its scope for Scarborough as well
as, on 2 July, its second offshore campaign for Barossa. In Norway,
Seven Navica completed offshore activities for the
Northern Lights carbon capture project.
In Renewables, utilisation of our key
installation vessels was high including Seaway Strashnov
and Seaway Alfa Lift at Dogger Bank B, and Seaway
Aimery at Moray West, both in the UK. Seaway Ventus
completed its inaugural turbine installation scope for Gode
Wind 3 in Germany and commenced Borkum Riffgrund 3 in the UK.
Seaway Phoenix continued activities in Taiwan for Zhong
Neng and Yunlin, and Seaway Moxie transited to Taiwan to
support the Yunlin project.
Second quarter financial review
Revenue of $1.7 billion increased 15% compared to the prior year
period. Adjusted EBITDA of $292 million equated to an Adjusted
EBITDA margin of 17%, up from 11% in Q2 2023. This was driven by a
strong performance in Subsea and Conventional, reflecting high
utilisation of the global enabler vessels as well as good progress
in engineering and procurement activities.
After depreciation and amortisation of $156
million, net operating income was $137 million, compared to net
operating income of $1 million in the prior year period. Net
finance costs of $24 million, a net foreign exchange loss of $8
million, and taxation of $41 million, resulted in net income
for the quarter of $63 million compared with $14 million in the
prior year period.
Net cash generated from operating activities in
the second quarter was $187 million, including a modest $12 million
increase in net working capital. Net cash used in investing
activities was $202 million mainly comprising the final payment of
$153 million relating to our investment in OneSubsea. Net cash used
in financing activities was $213 million including dividend
payments of $82 million, share repurchases of $19 million and lease
payments of $55 million. Restricted cash increased by $83 million
related to the purchase of a vessel, to be renamed Seven
Merlin (formerly African Inspiration), which was
completed in July 2024. Overall, cash and cash equivalents
decreased by $314 million to $290 million at 30 June
2024. This resulted in net debt of $494 million excluding lease
liabilities, or $1,027 million including lease liabilities of $533
million.
Second quarter order intake was $4.0 billion
comprising new awards of $3.8 billion and escalations of $0.2
billion resulting in a
book-to-bill ratio of 2.3 times. Backlog at the end of June was
$12.5 billion, of which $3.3 billion is expected to be executed in
2024, $4.9 billion in 2025 and $4.3 billion in 2026 and
beyond.
Guidance
Revenue expected to be in a range from $6.5 to
$6.8 billion (previously $6.0 to $6.5 billion) while Adjusted
EBITDA is expected to be between $1,000 and $1,050 million
(previously $950 to $1,000 million).
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. We expect the margin to continue to improve,
exceeding 20% in full year 2026.
Conference Call Information
Date: 25 July 2024
Time: 12:00 UK Time, 13:00 CET
Access the webcast at subsea7.com or
https://edge.media-server.com/mmc/p/af8ir6ef/
Register for the conference call
https://register.vevent.com/register/BI3b41ee08345f486b8d18c074b312bd5e
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 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;
(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
July 2024 08:00 CET.
- SUBC 2Q24 Earnings Release
- SUBC 2Q24 Earnings Presentation
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