Subsea 7 — Earnings Release 2023

Nov 16, 2023

Subsea 7 S.A. Announces Third Quarter 2023 Results

Subsea 7 S.A. Announces Third Quarter 2023 Results

Luxembourg - 16 November 2023 - Subsea 7 S.A. (Oslo Børs: SUBC, ADR: SUBCY,

ISIN: LU0075646355, the Company) 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

Third Quarter Nine Months Ended

------------------------------------------------------

For the period (in $

millions, except

Adjusted EBITDA margin Q3 2023 Q3 2022 30 Sep 2023 30 Sep 2022

and per share data) Unaudited Unaudited Unaudited Unaudited

-------------------------------------------------------------------------------

Revenue 1,578 1,404 4,342 3,845

Adjusted EBITDA((a)) 201 171 470 391

Adjusted EBITDA

margin((a)) 13% 12% 11% 10%

Net operating income 64 53 50 40

Net income 36 - 21 10

Earnings per share - in

$ per share

Basic 0.11 0.01 0.11 0.10

Diluted((b)) 0.11 0.01 0.11 0.10

-------------------------------------------------------------------------------

30 Sep 2023 30 June 2023

At (in $ millions) Unaudited Unaudited

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Backlog((a))     10,794 10,363

Book-to-bill ratio((a))     1.3x 1.4x

Cash and cash

equivalents 530 398

Borrowings     (726) (760)

Net debt excluding lease

liabilities((a)) (196) (363)

Net debt including lease

liabilities((a)) (606) (805)

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(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 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 non-linear 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-to-bill 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.

Outlook

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.

Conference Call Information

Date: 16 November 2023

Time: 12:00 UK Time, 13:00 CET

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

or edge.media-server.com/mmc/p/zawi5mv6/ (https://edge.media-

server.com/mmc/p/zawi5mv6/)

Register for the conference call at

https://register.vevent.com/register/BI27406ccbe6134b6c875efd57a1191e4a

For further information, please contact:

Katherine Tonks

Head of Investor Relations

Email: ir@subsea7.com (mailto: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 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; 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 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 16 November 2023 at 08:00 CET.