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Subsea 7 S.A. Announces Third Quarter 2023 Results

Subsea 7 S.A. Announces Third Quarter 2023 Results


Subsea 7 S.A. announced today results of Subsea7 Group (the Group, Subsea7) for the third quarter which ended 30 September 2023.

Third quarter highlights

  • Third quarter Adjusted EBITDA of $201 million, a margin of 13%
  • Free cash flow of $223 million, resulting in an increase in cash and cash equivalents to $530 million
  • Net debt including lease liabilities $606 million, down from $805 million in the second quarter
  • Order intake of $2.1 billion resulted in a book-to-bill of 1.3 times and continued backlog growth to $10.8 billion
  • Backlog for execution in 2024 of $4.8 billion, up 51% on the equivalent position a year ago, with $3.2 billion for 2025
  • Recent awards and high levels of ongoing tendering activity support a return of Adjusted EBITDA margins to a range of 15-20%, reaching towards the upper end of the range in 2025
  • Full year 2023 guidance reconfirmed. In 2024, we anticipate that revenue will be between $6.0 and $6.5 billion, while Adjusted EBITDA is expected to be within a range from $950 million to $1.0 billion

John Evans, Chief Executive Officer, said:

Subsea7 reported solid third quarter results in line with management’s expectations and the Group is on-track to meet guidance for the full year 2023. During the quarter, good operational progress was made on key projects in both Subsea and Conventional, and Renewables, including early activity on the backlog of higher-margin contracts. As these contracts mature, we are confident that Adjusted EBITDA margins will return to a range of 15-20%, reaching towards the upper end of the range for the full year 2025.

Tendering activity in both subsea and offshore wind remains at high levels, extending our visibility beyond 2025 and supporting our view of a sustained upcycle into the latter part of the decade.

In Q3, the Renewables business unit delivered a double-digit Adjusted EBITDA margin for the second consecutive quarter by stabilising execution and high-grading new orders to rebalance risk and return. While the offshore wind industry continues its nonlinear growth trajectory, we are confident that we have the right approach to sustain this improved level of performance.

On 2 October, the OneSubsea joint venture between Subsea7, SLB and Aker Solutions completed and, simultaneously, Subsea Integration Alliance between Subsea7 and OneSubsea was extended to 2033. The joint venture and Alliance leverage our combined market-leading assets, services and technologies to reinforce our ability to deliver greater efficiencies to clients, enabling them to unlock lower-carbon subsea reserves. During the quarter, the Alliance signed an agreement with BP for integrated subsea developments, working in a collaboration that will create value for BP, Subsea7 and OneSubsea, through enhanced visibility and optimised delivery.

Operational highlights

During the third quarter, Subsea7 made good progress on its major Subsea and Conventional projects. In Norway, for the large Yggdrasil project, activity was focused on design engineering, while offshore activities continued on Hanz, Hasselmus, Heimdal, Kobra East Gekko, Ormen Lange, Northern Lights and Tyrving utilising Seven Oceans, Seven Oceanic, Seven Falcon and Seven Navica. In Brazil Seven Vega and Seven Pacific were active offshore on the Bacalhau project and good progress was made on Mero 3, where we installed torpedo piles and fabrication works at Ubu commenced. In Senegal, Seven Seas installed structures at Sangomar while, in Angola, onshore fabrication for the CLOV 3 project continued. In Saudi Arabia, Seven Borealis completed the first campaign for the Marjan 2 project and in Indonesia, fabrication of pipe stalks began at the Bintan spoolbase for the Scarborough and Barossa projects in Australia.

In Renewables, activity was high in the UK where Seaway Strashnov completed the installation of monopiles for Dogger Bank A. In October, Seaway Alfa Lift commenced mobilisation for the installation of the transition pieces. Elsewhere, Seaway Phoenix continued cable lay at the Changfang and Xidao project in Taiwan and our newbuild foundation and turbine installation vessel, Seaway Ventus, underwent sea trials in China ahead of yard delivery in the fourth quarter.

Third quarter financial review

Revenue of $1.6 billion increased 12% compared to the prior year period. Adjusted EBITDA of $201 million equated to an Adjusted EBITDA margin of 13%, slightly ahead of the prior year period. This reflected the continued improved profitability in Renewables and a good performance in Subsea and Conventional. After a depreciation and amortisation charge of $137 million, net operating income increased to $64 million from $53 million in the prior year period. After net finance costs of $12 million, and a net foreign exchange loss of $7 million, net income for the quarter was $36 million compared to breakeven in the third quarter of 2022.

Net cash generated from operating activities was $289 million including an $88 million improvement in net working capital. Net cash used in investing activities was $61 million mainly related to payments for Seaway Ventus. Net cash used in financing activities was $94 million including lease payments of $45 million and repayment of borrowings of $31 million. Overall, cash and cash equivalents increased by $132 million from 30 June 2023 to $530 million at 30 September 2023. Net debt at the end of the third quarter was $606 million including lease liabilities of $410 million.

Third quarter order intake was $2.1 billion comprising new awards of $1.4 billion and escalations of $0.7 billion resulting in a book-tobill ratio of 1.3 times. Backlog at the end of September was $10.8 billion, of which $1.7 billion is expected to be executed in the fourth quarter of 2023, $4.8 billion in 2024 and $3.2 billion in 2025.


We continue to expect revenue and Adjusted EBITDA in 2023 to be higher than 2022. In 2024, we anticipate that revenue will be between $6.0 and $6.5 billion, while Adjusted EBITDA is expected to be within a range from $950 million to $1.0 billion. We expect capital expenditure to reduce to between $280 and $320 million. We therefore anticipate a sharp increase in free cash flow generation in 2024 which will enable us to extend our decade-long track record of shareholder returns. As pricing and contract terms continue to improve, Adjusted EBITDA margins should increase within a range of 15-20%, reaching towards the upper end of the range for the full year 2025.

With a tight subsea vessel market in 2024 and 2025, we are now tendering work for major EPCI projects with offshore activity in 2026 and beyond. We see sustained capital expenditure by clients in the subsea market, where the carbon intensity of resources and extraction method is lower than the global hydrocarbon average. A positive outlook for demand, combined with stability in the competitive landscape and the absence of newbuild global enabler pipelay vessels should ensure we generate an appropriate return on the substantial capital already invested in our subsea fleet.

In offshore wind, our foundation and cable lay installation vessels are near-fully utilised on world class projects through 2024 and 2025. Despite the recent uncertainty in the regulatory and fiscal environments in the UK and US markets, demand for our services is strong, including in the Netherlands, Germany and Poland. With a focus on balancing risk and returns, we believe our offshore wind business will deliver sustainable value creation for shareholders for the long term.

Overall, through strong positions in lower-carbon oil and gas, as well as offshore wind, Subsea7 is well-placed to deliver the energy the world needs for today and tomorrow.

Read the latest issue of the OGV Energy magazine HERE

Published: 16-11-2023

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