Subsea 7 S.A. Announces First Quarter 2024 Results
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 2024Unaudited |
31 Mar 2023Unaudited |
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 2024Unaudited |
31 Dec 2023Unaudited |
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 reviewRevenue 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
2024Time: 12:00 UK Time, 13:00 CETAccess
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 TonksHead of
Investor RelationsEmail:
ir@subsea7.comTelephone: +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.
- SUBC 1Q24 Earnings Release
- SUBC 1Q24 Earnings Presentation
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