Subsea 7 S.A.

Welcome, everybody. With me on the call today are John Evans, our CEO, and Ricardo Rosa, our CFO. The results press release is available to download on our website, along with the presentation slides that we'll be referring to during today's call. May I remind you that this call includes forward-looking statements that reflect our current views and are subject to risks, uncertainties, and assumptions. Similar wording is also included in our press release. I'll now turn the call over to John.

Thank you and good afternoon, everyone. I will start with highlights from the third quarter before passing over to Ricardo to cover the financial results. Turning to slide three, revenues improved 53% year on year to $1.45 billion, and our adjusted EBITDA margin increased to 13% from 12% in the same quarter last year, giving us an EBITDA of $185 million, This was the result of high activity in both subsea and conventional and renewables, as well as the benefit of client settlements. Although we had a relatively high build-up in working capital during the quarter, our cash balance was $300 million at the quarter end, and our net debt, including lease liabilities, was $99 million. During the third quarter, we had a very high fleet utilization of 94%, up from 84% in the prior year, with an active summer season offshore Norway and in the Gulf of Mexico. Our engineering and procurement teams were also busy on the recent major EPCI awards. Finally, since the second quarter, we've made good progress in delivering our strategy with an increased interest in floating wind through the acquisition of a majority holding in Nautilus, the completion of our combination with OHT to create Seaway 7 ASA, and the announcement of our net zero targets. Turn to slide four and our operational highlights. Although the challenges posed by COVID remain significant, Subsea 7 made good progress during the third quarter on several projects. The engineering and procurement phase of back allow is well underway, as well as on SLGC, Sangamar, and Barossa. In the Gulf of Mexico, we towed the giant FPU for the Mad Dog 2 project to its off-load location and installed gas export infrastructure and rigid and flexible jumpers. In Norway, vessel activity was high, with the Sam Vega, Sam Oceans, and Sam Navica all active on the Johan Sveadrup 2. Sanvega also installed the electrically heat-traced flowlines on Erfugl 2. In Australia, the offshore phase of Julimar 2 was completed by the Seven Oceans and the Seven Oceanic before the vessels began the return journey to Norway. During the quarter, we announced the award of Sakuraya project in Turkey, for which engineering and procurement has commenced. And also the quarter end, we announced new contracts for three of our PLSVs in Brazil, which I'll talk a little more about shortly. In renewables, Seaway Strachanov installed monopile foundations on Hlanzi Kuzut. Seaway Amory, Moxie, and Seamer Esperanza all worked on Horn Z2. And the Seagreen project achieved an important milestone with the installation of the first jackets. Turning to slide five, we had another good quarter for new orders, resulting in a book-to-bill ratio of one. This followed strong order intake in the second quarter and gives us a book-to-bill ratio for the first nine months of the year of 1.1. The largest award this quarter was Saccaria at over $750 million, but we booked several smaller contracts in Norway as the high level of engineering work we've discussed in previous quarters began to yield EPCI work. We've presented here the backlog at the 1st of October, so we can show the addition of OHT and give you some extra details of the backlog by year for each business unit. Overall, we have good visibility on revenue for the remainder of 2021. with $1.2 billion still to be executed in subsea and conventional, and $0.3 billion in renewables. For 2022, our backlog is in line with that at the equivalent point last year. And now I'll pass over to Ricardo to run through the financial results in more detail.

Thank you, John, and good afternoon, everyone. Slide six shows our income statement highlights. Third quarter revenue of almost $1.5 billion reflected higher levels of activity in both the subsea and conventional and renewables business units, underpinned by good progress in executing major EPCI contracts. Adjusted EBITDA of $185 million after incurring net direct costs associated with COVID-19 of approximately $9 million was up 63% from the prior year quarter. The adjusted EBITDA margin was 13% compared with 12% last year. This improvement largely reflects higher margins in subsea and conventional and renewables due to high vessel utilization in both business units, as well as the benefit of client settlements. The net income for the quarter was $45 million, equivalent to earnings per share of 15 cents, in contrast to a loss of $43 million in the prior year. Turning to slide 7 for additional details of the income statement. Administrative expenses increased by $15 million against the prior year, mainly reflecting an increase in tendering costs. The depreciation and amortization charge was stable at $107 million compared to the prior year quarter, as the impact of the new-built 7 Vega and upgraded 7 Phoenix joining the active fleet was offset by reduced leased vessel costs. The net operating income of $78 million in the third quarter included a credit of $8 million associated with a downward revision to the cost of the group's resizing program. This relates to the continued improvement in the outlook for the subsea sector and associated resource needs. The $29 million increase in the tax charge compared with the third quarter 2020 reflected the improvement in income before tax combined with irrecoverable withholding taxes in certain jurisdictions. On slide eight, we summarize the performance of our operating business units. The subsea and conventional business unit generated slightly more than $1 billion of revenue in the third quarter, 59% higher than the prior year period, including significant contributions from Bacalhau, Sacaria, and several projects in the Gulf of Mexico. Renewables revenue was $377 million, up 40% compared with the prior year, reflecting a higher contribution from Seagreen, Offshore Scotland, as well as the commencement of the Haalandseekust Zoet project, Offshore Netherlands. We recorded $19 million in revenue in corporate, representing the contributions from Exodus and Force of Sea, our autonomous subsidiaries. Subsea and conventional recorded net operating income of $70 million in the quarter compared to $15 million in the third quarter 2020. This reflected increased project activity and high utilization of the subsea fleet in the Gulf of Mexico, Norway, and Brazil. The renewables business unit moved from a break-even position in the third quarter of 2020 to net operating income of $5 million in 2021. Good progress in the offshore phase of the projects I've just mentioned was diluted by the impact of delays in executing work in Taiwan, as has been highlighted in our commentary on the results of the second quarter this year. Slide nine shows our cash flow waterfall chart for the quarter. Net cash used in operating activities was $20 million after incurring a $230 million adverse movement in net working capital. This adverse movement resulted from the timing of milestone payments in the Gulf of Mexico, the protracted invoice approval process in the Middle East, and delays to progress of renewables projects in Taiwan. Although we are expecting an improvement in the net working capital position in the fourth quarter, looking ahead to 2022, we expect the group's investment in working capital to increase as we execute large EPCI projects with adverse payment terms, particularly in the Middle East and Brazil. We have, nevertheless, the necessary resources or sources of liquidity to address the working capital needs of these projects and will draw on them if required. Capital expenditure was $24 million, $10 million lower than the prior quarter, and lease payments made were $22 million. At the quarter end, we had $300 million in cash and cash equivalents, a reduction of $90 million since the end of June. Our net debt position increased, but remains a modest $99 million, including lease liabilities of $208 million. To conclude, Slide 10 shows our guidance for the full year. We have, with a relatively high level of visibility on the remainder of the year, our guidance for 2021 is largely unchanged. We expect revenues to remain at an elevated level in the fourth quarter as we make progress in the procurement phase for certain major EPCI projects. Our fourth quarter EBITDA margin will reflect the normal seasonal impact of vessel utilization, particularly in the northern hemisphere. We continue to anticipate revenue and adjusted EBITDA to be above 2020 levels with positive net income. Our capex expectation for 2021 has been revised upward by $20 million to between $140 million and $160 million after including shipyard expenditures of Seaway 7's new build vessel program. Turning to 2022, we expect a modest decline in revenue year on year while adjusted EBITDA is anticipated to be broadly in line with 2021. Capital expenditure for the group in 2022 is expected to fall within the range of $420 million to $440 million, mainly driven by Seaway 7's construction commitments for the Alphalift and the VIN 1. CapEx relating to the subsea and conventional business is forecast at $140 million to $160 million, marginally higher than 2021, driven by enhancements to certain PLSVs prior to the start of their new contracts. I will now pass you back to John.