Subsea 7 — Earnings Release 2022

Nov 17, 2022

Subsea 7 S.A. Announces Third Quarter 2022 Results

Subsea 7 S.A. Announces Third Quarter 2022 Results

Luxembourg - 17 November 2022 - Subsea 7 S.A. (the Group) (Oslo Børs: SUBC, ADR:

SUBCY, ISIN: LU0075646355) announced today results for the third quarter which

ended 30 September 2022.

Third quarter highlights

* Adjusted EBITDA of $171 million resulting in a margin of 12%

* Backlog of $7.1 billion, of which $1.3 billion to be executed in Q4 2022 and

$3.2 billion in 2023

* Cash and cash equivalents of $533 million and net debt (including lease

liabilities) of $33 million

* Agreement to form a joint venture with SLB and Aker Solutions

* Extension of Subsea Integration Alliance agreement until 2033 on completion

of the joint venture transaction

* Post quarter end, $650 million increase in liquidity for Seaway7 through an

equity rights issue and new debt facilities that leaves its new-build

programme fully funded

Third Quarter Nine Months Ended

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For the period (in $

millions, except

Adjusted EBITDA margin Q3 2022 Q3 2021 30 Sep 2022 30 Sep 2021

and per share data) Unaudited Unaudited Unaudited Unaudited

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Revenue 1,404 1,451 3,845 3,645

Adjusted EBITDA((a)) 171 185 391 378

Adjusted EBITDA

margin((a)) 12% 13% 10% 10%

Net operating income 53 78 40 41

Net income - 45 10 33

Earnings per share -

in $ per share

Basic 0.01 0.15 0.10 0.12

Diluted((b)) 0.01 0.15 0.10 0.12

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30 Sep 2022 30 Jun 2022

At (in $ millions) Unaudited Unaudited

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Backlog((c))     7,123 7,796

Book-to-bill

ratio((c)) 0.7 1.6

Cash and cash

equivalents 533 464

Borrowings     (362) (368)

Net cash excluding

lease liabilities((d)) 171 96

Net debt including

lease liabilities((d)) (33) (88)

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(a) For explanations and reconciliations of Adjusted EBITDA and Adjusted EBITDA

margin refer to Note 8 'Adjusted EBITDA and Adjusted EBITDA margin' to 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.

(c) Backlog is a non-IFRS measure. Book-to-bill ratio represents total order

intake divided by revenue recognised in the third quarter. Comparative figure is

for the quarter ended 30 June 2022.

(d) Net cash/(debt) is a non-IFRS measure and is defined as cash and cash

equivalents less borrowings.

John Evans, Chief Executive Officer, said:

In the third quarter of 2022, Subsea7 delivered a strong performance in Subsea

and Conventional while performance in Renewables stabilised. During the quarter

an agreement to form a new joint venture was announced, involving the

combination by SLB and Aker Solutions of their subsea hardware operations, and

the acquisition by Subsea7 of a 10% interest in the new company for $306.5

million. The joint venture will replace SLB in Subsea Integration Alliance and

our investment will strengthen the relationship with our partners. In addition,

we expect an attractive return on investment on a standalone basis. The Subsea

Integration Alliance agreement will be extended to 2033 on completion of the

transaction.

In September, we announced a funding plan for our fixed offshore wind business,

Seaway7. A combination of $200 million raised through the issuance of equity and

$450 million of debt facilities leaves the business and its new-build vessel

programme fully funded. Reflecting its strong outlook and reaffirming our belief

that Seaway7's shares are materially undervalued, Subsea 7 S.A. subscribed to

72.4% of the equity issue to maintain its shareholding. This was mirrored by the

other major shareholders, Songa Offshore and Lotus Marine.

Together these steps strengthen our position across the energy landscape as

demand for both traditional and new energy resources continues to grow.

Operational highlights

In the third quarter the Subsea and Conventional business unit made good

progress in engineering and procurement activities on the Mero 3 and Marjan 2

projects in Brazil and Saudi Arabia respectively. Our global enabler vessels

were active on projects including Sakarya in Turkey, Sangomar in Senegal and the

Hywind Tampen floating wind development in Norway.

In the Renewables business unit, the fleet achieved high utilisation including

the completion of monopile installation activities on Hollandse Kust Zuid (HKZ)

in the Netherlands and Formosa 2 in Taiwan, in line with our Q2 projections. Our

cable lay vessels were fully utilised on Seagreen in the UK, and on HKZ.

Third quarter financial review

Revenue of $1.4 billion was broadly flat compared to the prior year period

reflecting robust levels of activity in both the Subsea and Conventional, and

Renewables business units. Adjusted EBITDA of $171 million equates to an

Adjusted EBITDA margin of 12.2%, down from 12.8% in Q3 2021, which benefited

from a greater number of project close-outs. After depreciation and amortisation

charges of $117 million, net operating income declined to $53 million. Net

income for the quarter declined to breakeven from $45 million in the prior year,

partly due to net foreign exchange losses of $25 million compared with a gain of

$27 million in the prior year quarter, recognised within other gains and losses.

Net cash generated from operations was $210 million including an $87 million

beneficial movement in net working capital. Net cash used in investing

activities was $76 million, including $73 million related to purchases of

property, plant and equipment. Net cash used in financing activities was $60

million which included share repurchases of $21 million. Overall, cash and cash

equivalents increased by $69 million from 30 June 2022 to $533 million with net

debt of $33 million, including lease liabilities of $204 million.

Third quarter order intake was $1.0 billion comprising new awards of $0.6

billion, escalations of $0.4 billion, and adverse foreign exchange movements of

$0.2 billion, resulting in a book-to-bill ratio of 0.7. Backlog at the end of

September was $7.1 billion, of which $1.3 billion is expected to be executed

during the fourth quarter of 2022 and $3.2 billion in 2023.

Outlook

We continue to expect that revenue and Adjusted EBITDA in 2022 will be broadly

in line with 2021. We anticipate that revenue and Adjusted EBITDA in 2023 will

be higher than 2022, with a weighting towards the second half.

The long-term outlook for both traditional and new energy is robust supported,

in part, by the increased focus of European countries on energy security. After

a prolonged period of underinvestment by the oil and gas industry, we see a

gradual and durable improvement in demand for our subsea services. At the same

time we expect limited new-build vessel capacity to enter our pipelay market.

Demand for our fixed offshore wind services continues to increase underpinned by

society's push for lower carbon energy sources.

Subsea7 is well positioned to address both markets, with a large and capable

fleet of young vessels. Availability of installation capacity for subsea and

offshore fixed wind markets is already tight for 2024, and tightening for 2025,

resulting in improved risk profiles, payment terms and margins relating to

contracts recently awarded and under negotiation. Meanwhile, bidding activity

remains high, with a tender pipeline of around $16 billion in subsea, up 20% on

the prior year, and $7 billion in fixed offshore wind.

Conference Call Information

Date: 17 November 2022

Time: 12:00 UK Time

Access the webcast at www. (http://www.subsea7.com)subsea7.com

(http://www.subsea7.com)

For further information, please contact:

Katherine Tonks

Head of Investor Relations

Email: ir (mailto:ir@subsea7.com)@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 '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 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.