Subsea 7 — Earnings Release 2023

Feb 29, 2024

Subsea 7 S.A. Announces Fourth Quarter and Full Year 2023 Results

Subsea 7 S.A. Announces Fourth Quarter and Full Year 2023 Results

Luxembourg - 29 February 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 fourth quarter and full year which ended 31 December

2023. Unless otherwise stated the comparative period is the full year which

ended 31 December 2022.

Fourth quarter and full year highlights

* At least $1 billion of shareholder returns over four years through a

combination of dividends and share repurchases

* Full year Adjusted EBITDA of $714 million, up 28% year-on-year, equating to

a margin of 12%

* Fourth quarter Adjusted EBITDA of $245 million, a margin of 15%, up 45% on

the prior year period

* Full year order intake of $7.4 billion resulted in a book-to-bill of 1.2

times and continued backlog growth to $10.6 billion

* Full year 2024 guidance reconfirmed: Adjusted EBITDA expected to be within a

range from $950 million to $1.0 billion

Fourth Quarter Full Year

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For the period (in $ millions, except Q4 2023 Q4 2022 2023 2022

Adjusted EBITDA margin and per share data) Unaudited Unaudited Audited Audited

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Revenue 1,631 1,291 5,974 5,136

Adjusted EBITDA((a)) 245 169 714 559

Adjusted EBITDA margin((a)) 15% 13% 12% 11%

Net operating income 55 109 105 149

Net (loss)/income (11) 27 10 36

Earnings per share - in $ per share

Basic (0.06) 0.10 0.05 0.20

Diluted((b)) (0.06) 0.09 0.05 0.19

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2023 2022

At (in $ millions) 31 Dec 31 Dec

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Backlog((a))     10,587 9,008

Book-to-bill ratio((a))     1.2x 1.4x

Cash and cash equivalents     751 646

Borrowings     (845) (356)

Net (debt)/cash excluding lease

liabilities((a)) (94) 290

Net (debt)/cash including lease

liabilities((a)) (552) 33

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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 closed 2023 with a strong operational performance in the fourth quarter,

resulting in Adjusted EBITDA of $714 million for the year, up 28% on the prior

year. After another year of active tendering, the Group secured $7.4 billion of

high quality contract awards, taking our backlog to $10.6 billion, a year end

level last seen in 2013. With $5.7 billion of firm work for execution in the

coming year, the Group has excellent visibility on 2024, and we expect to

deliver Adjusted EBITDA growth of at least 33%. Confidence in the Group's

outlook for cash generation in 2024 and beyond, combined with a sharp reduction

in capital expenditure following the completion of our two newbuild wind

vessels, supports the Board's recommendation for shareholder returns totalling

at least $1 billion over the next four years. This extends Subsea7's track

record of shareholder returns since 2011 to $3 billion and underscores the

commitment of both management and the Board to strong capital stewardship.

Fourth quarter operational highlights

During the fourth quarter, Subsea7 made good progress on its portfolio of Subsea

and Conventional projects. In Australia, where environmental permits for both

Scarborough and Barossa have been obtained by our clients, we completed the

fabrication of pipeline stalks at the Bintan spoolbase and Seven Oceans and

Seven Oceanic commenced offshore operations. In Türkiye, we ramped up activity

for Sakarya Phase 2a with the commencement of procurement. In Brazil, we

progressed engineering on the combined Mero 3&4 while, on Bacalhau, Seven Vega,

Seven Pacific and Seven Cruzeiro installed pipelines and umbilicals.

With the North Sea winter off-season underway for the offshore wind industry,

Seaway Strashnov was deployed to the Sanha Lean Gas subsea project in Angola,

and Seaway Aimery and Seaway Moxie underwent scheduled maintenance in the

Netherlands. Seaway Alfa Lift continued to install transition pieces at Dogger

Bank A. In Taiwan, Seaway Phoenix continued cable lay activities at Changfang

and Xidao and, at Yunlin, one export cable and four inner-array cables were

installed by Maersk Connector. The newbuild Seaway Ventus began its transit from

the yard in China to Europe.

Fourth quarter financial review

Revenue of $1.6 billion increased 26% compared to the prior year period.

Adjusted EBITDA of $245 million equated to an Adjusted EBITDA margin of 15%, up

from 13% in Q4 2022. This reflected the third consecutive quarter of double-

digit margins in Renewables and a strong performance in Subsea and Conventional

across our portfolio of projects.

Depreciation and amortisation charges were $142 million. In addition, we

recognised a net impairment charge of $48 million, including $74 million of

impairment charges, relating to i) Seaway Alfa Lift monopile installation

equipment, owing to a contractual dispute in relation to which Subsea7 intends

to use all legal resources available to reach a satisfactory outcome, and ii) a

loss on Seaway Yudin disposal. These were partly offset by impairment reversals

of $26 million. Net operating income was $55 million compared to $109 million in

the prior year period. Net finance costs of $18 million and a net foreign

exchange loss of $28 million, resulted in net loss for the quarter of $11

million compared with net income of $27 million in the prior year period.

Net cash generated from operating activities in the fourth quarter was $529

million, including a better than expected $306 million improvement in net

working capital, equating to a cash conversion of 2.2 times. Net cash used in

investing activities was $374 million mainly related to the final payments for

Seaway Ventus and the first instalment of $153 million for the Group's

investment in OneSubsea. Net cash generated from financing activities was $62

million with net proceeds from borrowings of $119 million partly offset by lease

payments of $42 million. Overall, cash and cash equivalents increased by

$221 million to $751 million at 31 December 2023 and net debt was $552 million,

including lease liabilities of $458 million.

Fourth quarter order intake was $1.2 billion comprising new awards of $0.6

billion and escalations of $0.6 billion resulting in a book-to-bill ratio of

0.8 times. Backlog at the end of December was $10.6 billion, of which $5.7

billion is expected to be executed in 2024, $3.8 billion in 2025 and $1.1

billion in 2026 and beyond.

Commitment to shareholder returns

Reflecting its confidence in the outlook and the expected financial performance

of Subsea7, the Board of Directors proposes that the Company returns at least $1

billion to shareholders over four years, from 2024 to 2027.

At the Annual General Meeting on 2 May 2024, the Board of Directors will propose

that shareholders approve a cash dividend of NOK 6.00 per share, equating to

approximately $170 million, payable in two equal instalments in May and November

2024. The Company's dividend policy will be revised to reflect an increase in

the regular dividend to NOK 6.00 from NOK 1.00 per share to be paid in two equal

instalments.

The Company has also committed to repurchase approximately $80 million of its

own shares in 2024, resulting in shareholder returns of approximately

$250 million.

Outlook

We anticipate that revenue in 2024 will be 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. Our expectation for capital expenditure in 2024 has

increased slightly to $300-320 million (from $280-300 million) driven by spend

deferred from 2023 into 2024. As the mix of activity continues to shift to

projects won in a favourable environment, our Adjusted EBITDA margin is expected

to be within an 18-20% range in full year 2025.

Longer term, we continue to see a positive outlook for demand for our Subsea and

Conventional business, supported by a tender pipeline of $21 billion. As a

source of reliable energy, the hydrocarbon industry is likely to remain a key

contributor to global production under plausible ranges of energy transition

scenarios. We are confident that our focus on the deepwater subsea market, with

attractive economics, will enable us to maximise the return on the significant

historical investments made in our modern subsea fleet.

In Renewables, last year's project delays and cancellations put many countries'

clean energy ambitions under pressure and prompted a swift response in countries

such as the UK and US, with positive indications for our tender pipeline in

2024. While the growth trajectory for the offshore wind market may not be smooth

it is certainly clear that long-term demand is set to significantly exceed the

current fleet capacity of the industry. With a strong focus on achieving an

equitable risk-return balance, we believe our offshore wind business will

deliver sustainable value creation for shareholders.

Conference Call Information

Date: 29 February 2024

Time: 11:00 UK Time, 12:00 CET

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

or https://edge.media-server.com/mmc/p/n24x2p3g/

Register for the conference call at

https://register.vevent.com/register/BI0cebba0bd6bc487695d2e8a1c4b53bd8

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; (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 29 February 2024 08:00 CET.