Subsea 7 — Earnings Release 2021

Mar 3, 2022

Subsea 7 S.A. Announces Fourth Quarter and Full Year 2021 Results

Subsea 7 S.A. Announces Fourth Quarter and Full Year 2021 Results

Luxembourg - 3 March 2022 - Subsea 7 S.A. (the Group) (Oslo Børs: SUBC, ADR:

SUBCY, ISIN: LU0075646355) announced today results for the fourth quarter and

full year which ended 31 December 2021. Unless otherwise stated the comparative

period is the full year which ended 31 December 2020.

Fourth Quarter and Full Year 2021 highlights

* Adjusted EBITDA of $143 million in the fourth quarter, equating to a margin

of 10%

* Adjusted EBITDA of $521 million in the full year after incurring net costs

of approximately $27 million relating to Covid-19, equating to a margin of

10%

* Net cash generated from operations of $227 million in the quarter and $293

million in the full year

* Net debt at year end of $55 million, including lease liabilities of $231

million

* Resilient backlog of $7.2 billion, up 16% year-on-year, with $4.3 billion

expected to be executed in 2022

* The Board has decided to adopt a regular dividend policy

* The Board has approved a $100 million return to shareholders in 2022,

comprising a regular dividend of NOK 1.00 per share, to be recommended for

shareholder approval at the AGM, and share repurchases of approximately $70

million

* Both the regular dividend policy and returns to shareholders mark the

Board's confidence in the financial position and outlook for the Group

Fourth Quarter Full Year

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For the period (in $

millions, except Adjusted

EBITDA margin and per 2021 2020

share data) Q4 2021 Unaudited Q4 2020 Unaudited Audited  Audited

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Revenue 1,365 1,014 5,010 3,466

Adjusted EBITDA((a)) 143 165 521 337

Adjusted EBITDA

margin((a)) 10% 16% 10% 10%

Net operating

income/(loss) excluding

goodwill impairment

charges 31 (35) 72 (428)

Goodwill impairment

charges - (27) - (605)

Net operating

income/(loss) 31 (62) 72 (1,034)

Net income/(loss) 4 (103) 36 (1,105)

Earnings per share - in $

per share

Basic (0.01) (0.35) 0.11 (3.67)

Diluted((b)) (0.01) (0.35) 0.11 (3.67)

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2021 2020

At (in $ millions)     31 Dec 31 Dec

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Backlog((c))     7,212 6,214

Book-to-bill ratio - full

year((c))     1.2 1.3

Cash and cash equivalents     598 512

Borrowings     (422) (209)

Net cash excluding lease

liabilities((d))     176 303

Net (debt)/cash including

lease liabilities((d))     (55) 49

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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 and is unaudited. Book-to-bill ratio

represents total order intake, (excluding amounts related to business

combinations), divided by revenue recognised in the year.

(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:

Subsea 7 delivered a solid operational and financial performance in 2021

supported by an improving market, and enabled by work practices that have been

adapted to the ongoing challenges posed by the Covid-19 pandemic. Our Subsea and

Conventional business experienced an increase in activities associated with the

early stages of a recovery in the oil and gas industry, including a sharp upturn

in tendering activity and greater demand for our engineering services. Our

Renewables business, which proved somewhat more resilient during the global

economic downturn of 2020, continued to make progress although issues largely

related to Covid-19 delayed certain projects in Taiwan. During the year, a new

challenge emerged as global supply chains tightened across many industries.

Subsea 7 continued to mitigate the majority of its exposure through a variety of

mechanisms including back-to-back supplier contracts and index-linked pricing.

During 2021 we made good progress in our two-fold strategy. Our focus on the

subsea field of the future played a significant role in the successful outcome

of many recent tenders in the Subsea and Conventional business unit. In

2021, 60% of our contract awards by value featured early engagement, 62%

included integrated solutions and 64% leveraged our Carbon Estimator. These

statistics support our view that by working closely with our clients from

concept through to commissioning we can deliver optimised subsea solutions that

maximise clients' returns, while reducing emissions. Our Subsea Integration

Alliance with OneSubsea(®) continued to lead the integrated SURF-SPS market,

with a 76% share by value since January 2020.

In energy transition, we made significant progress in both the established

renewables market and emerging energy sectors. The formation of Seaway 7 ASA

created a market leader in fixed offshore wind with a comprehensive fleet and

experienced management team. Our strategy in emerging energies was reinforced in

2021 through a step up in our participation in floating wind, with the creation

of the Salamander floating wind joint venture and the acquisition of a majority

holding in Nautilus Floating Solutions. We also succeeded in winning our first

carbon capture contract, for the Northern Lights project in Norway.

Enhancing our policy of shareholder returns

2021 saw the capital requirements of our two business units diverge, with Subsea

and Conventional entering a phase characterised by low reinvestment, while

Renewables increased its commitment to new build installation capacity ahead of

the anticipated growth in the fixed offshore wind market.

Listing the Renewables business as Seaway 7 ASA allows us to clearly identify an

independent funding strategy for this growth business. It also enables us to

establish a policy regarding the allocation of free cash flow from the Subsea

and Conventional business unit.

At the AGM on 12 April 2022, the Board will propose that the Group's commitment

to returning capital to shareholders is reaffirmed by formalising the dividend

policy of Subsea 7. The Board recognises the merits of establishing a regular

dividend at this point in the evolution of the Group and recommends that

shareholders approve a regular, annual dividend of NOK 1.00 per share,

equivalent to $33 million. The return of excess cash in the form of a special

dividend or share repurchase will continue to be assessed by the Board annually.

In 2022, reflecting the current valuation of Subsea 7 shares, the Group intends

to distribute approximately $70 million through share repurchases.

Full year 2021

In the full year 2021, Group revenue increased 45% to $5.0 billion. Revenue from

the Subsea and Conventional business unit increased 33% but the Adjusted EBITDA

margin fell to 13%, from 15% in 2020, reflecting the shift in mix toward

earlier-stage activities. Revenue in Renewables doubled as activity on the

Seagreen project increased, but margins remained low due to challenges in

Taiwan. Overall, the Group's EBITDA increased 55% to $521 million due to lower

net direct costs associated with the Covid-19 pandemic and the reversal of some

restructuring provisions. The Adjusted EBITDA margin was 10%, broadly in line

with the prior year. After taxation of $64 million, equating to an effective tax

rate of 64%, net income for the year was $36 million, an improvement from a loss

of $1.1 billion in 2020 that included goodwill impairment charges of $605

million and impairment charges related to property, plant and equipment, right-

of-use assets and intangible assets of $323 million.

During the year, net cash generated from operations was $293 million despite a

$202 million build in working capital due to higher activity in regions with

less favourable payment terms as well as the timing of milestone payments on

certain projects. Capital expenditure was low relative to prior years at $167

million, following delivery of Seven Vega in 2020 and the low maintenance

requirements of our young Subsea and Conventional fleet. Including the

utilisation of $200 million from our UK Export Finance facility, cash and cash

equivalents increased by $86 million during the year to $598 million, and net

debt (including lease liabilities) at year end was $55 million.

Following the recovery in tendering activity, new order intake was strong in

2021 at $6.1 billion, up 38% compared with the prior year. Significant news

orders included Bacalhau and Mero-3 in Brazil, and the fast-track development of

the Sakarya gas field in Turkey. These were supplemented by the conversion to

full EPCI of the Scarborough project in Australia, and several awards in Norway

where tax incentives are beginning to yield higher activity. Furthermore, in

Brazil we were awarded new three-year contracts for three of our pipelay support

vessels, enhancing long-term revenue visibility.

Fourth quarter 2021 operational review

In the fourth quarter, the Subsea and Conventional business unit made good

operational progress in the engineering and procurement phases of the SLGC,

Sangomar, Barossa, Bacalhau and Sakarya projects. As we entered the winter

season in the northern hemisphere, utilisation of the active fleet was 87%, down

from 94% in the third quarter but up slightly from 82% in the prior year period.

Seven Vega, Seven Oceans, Seven Oceanic and Seven Falcon continued offshore

activities on Johan Sverdrup 2 in Norway and operations on Ærfugl Phase 2 were

completed. In the Gulf of Mexico, Seven Arctic, Seven Borealis, Seven Navica and

Seven Seas were active on King's Quay, Jack St Malo 4 and Colibri, and our scope

on the Manuel project was completed. Seven Champion continued to work throughout

the quarter in Saudi Arabia on the Berri-Zuluf (CRPO 36/37) and 28 Jackets (CRPO

47) projects. In Brazil, there were high levels of utilisation of the four PLSVs

under long-term contracts with Petrobras.

In the Renewables business unit, Seaway Strashnov worked on the Hollandse Kust

Zuid project in the Netherlands, while Seaway Aimery and Seaway Moxie were

active on the Hornsea II and Seagreen projects in the UK. During the quarter, we

commenced a charter of Maersk Connector to install inner-array cables on the

Seagreen project. By year end, 10 of Seagreen's 114 foundations had been

installed, with a further 11 installed in January 2022.

Fourth quarter 2021 financial review

Fourth quarter revenue of $1.4 billion increased by 35% compared to the prior

year period, reflecting higher activity in both Subsea and Conventional and

Renewables. Adjusted EBITDA of $143 million was down from $165 million in the

prior year quarter which benefited from favourable discrete items. In addition,

the results of the Renewables business unit include costs recognised in relation

to a project in Taiwan whose economic interest was retained by Subsea 7 S.A.,

although it is being executed by Seaway 7 ASA. All other fixed offshore wind

projects were transferred to Seaway 7 ASA on 1 October 2021.

After depreciation and amortisation charges of $113 million, the Group delivered

net operating income of $31 million. Net income for the quarter was $4 million,

after taxation of $16 million equating to an effective tax rate of 81%.

During the quarter, net cash generated from operating activities was $227

million which included $101 million improvement in net working capital,

reflecting a partial reversal of the third quarter build up driven by project

milestones as expected. Capital expenditure was $86 million, including

investment in the Renewables fleet following the business combination with OHT

ASA. The Group also repurchased 2.7 million shares for $21 million. Net debt at

the year end was $55 million, including lease liabilities of $231 million, an

improvement from $99 million at the end of the third quarter. During the

quarter, Subsea 7 utilised $200 million of its $500 million UK Export Finance

facility and at year end the Group held cash and cash equivalents of $598

million. At year end, the Group had liquidity of $1.6 billion with $956 million

undrawn borrowing facilities.

In the fourth quarter, Subsea 7 booked new awards of $1.4 billion and

escalations of approximately $400 million, resulting in a book-to-bill ratio of

1.3. The backlog at the end of December 2021 was $7.2 billion of which $4.3

billion is expected to be executed during 2022, $2.0 billion in 2023 and $0.9

billion in 2024 and thereafter.

Outlook

In 2022, we expect that revenue will be broadly in line with 2021 and that

Adjusted EBITDA and net operating income will be in line with or better than

2021. We firmly believe that the market recovery is underway, supported by high

levels of tendering in both business units, and with signs of improving pricing

and payment terms for new awards. We are confident that our strong pipeline of

prospects will translate into new orders during the coming year.

Conference Call Information

Date: 3 March 2022

Time: 12:00 UK Time

Access the webcast at subsea7.com (https://edge.media-server.com/mmc/p/sdhad4b2)

or https://edge.media-server.com/mmc/p/7645zya4

Register for the conference call at

http://emea.directeventreg.com/registration/1049589

Advance registration is required.

For further information, please contact:

Katherine Tonks

Head of Investor Relations

Email: katherine.tonks@subsea7.com (mailto:katherine.tonks@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 for

the year ended 31 December 2020. 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.