Subsea 7 S.A.

Welcome, everyone. With me on the call today are John Evans, our CEO, and Mark Foley, our CFO. The results press release is available to download on our website, along with the presentation slides we are 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 found in our press release. I'll now turn the call over to John.

Catherine, thank you, and good morning, everyone. I will start with a summary of the second quarter of 2022 before passing over to Mark to cover the financial results. Turning to slide three. In the second quarter, Subsea 7 delivered a strong performance, subsea and conventional, whilst renewables was in line with expectations we communicated in June. Both our core markets improved during the quarter, In sub-C, the industry supply chain challenges stabilized and tenders progressed, resulting in an order intake of $2 billion and a book-to-bill of 2.1. In offshore wind, pricing and risk allocation have improved for recent tenders, and we are preferred suppliers for projects worth over $1 billion. Turning to slide four, in the second quarter, we continued our sustainability strategy on the Severn Oceanic. We are happy with the performance of the biofuels and are working with suppliers to evaluate how such fuels can be deployed at scale on a global basis. Turning to slide five, and an update on our largest contracts. In Turkey, the Fast Track Sakarya project has reached 50% progress. Most of the procurement is complete and deliveries to Turkey are on track. Shallow water pipe lay commenced in the quarter. In Brazil, we continue to manage fabrication for the Bacalhau project, and we are preparing for offshore operations starting later this year. At Merrow 3, procurement has commenced. Additionally, our vessels were busy in the Gulf of Mexico on projects including Anchor, Jack St. Marlow, Mad Dog 2, and Vito. In renewables, we had installed 30 foundations and 21 cables for the Seagreen project by the end of June. Of the 114 jackets, 94 have been delivered to the UK and the remaining 20 are currently signed off and ready for loadout from China. We remain on track to complete the work later this year. We also made progress installing cables at our second floating wind project, Hybrid Tampa. Turning to slide six, and I'll give you an update on the renewables contracts that we discussed in our trading update in June. Both Formosa 2 and Holanzi Kuzut have made good progress against our revised schedule. To date, 90% of the installation scope of Formosa 2 and 67% of Holanzi Kuzut is complete, and they are on track to hand over to our clients in August and September as planned. As we announced in June, Seawaste Rational will be completing the summer campaign of Dogger Bank A and B in 2023, replacing the Alphalift. The increased installation time and extra costs associated with using the Seawaste Rational were reflected in June's guidance. Next, turning to slide seven. Last quarter, we outlined our strategies for managing supply chain challenges related to raw material inflation. In the past few months, pricing has stabilised, albeit at a higher level, and a normal tendering process has resumed. Our strategy, taking back well before 2022, has been to protect our margins through back-to-back contracts, index-linked pricing and escalation mechanisms. Wage inflation is also something that we are monitoring closely and have factored into our bids. Throughout this period, our strong collaboration and early engagement with both clients and our supply chain have enabled us to navigate these challenges and continue to successfully tender, win and execute projects. Turning to slide eight and the subsea integration alliance. During Q2, we were very pleased to extend our relationship with Schlumberger for another seven years. As you know, the Alliance has been the cornerstone of our strategy to offer integrated projects in subsea, and thanks to a strong commitment from both sides, it has proven a success. With major awards in Australia, Brazil, Senegal and Turkey, as well as tiebacks in Norway and the Gulf of Mexico, Our integrated backlog stands at around $2 billion today. We get very positive feedback from clients on this model of contracting, and this is reflected in our served tender pipeline, of which 50% relates to integrated projects. The Alliance has delivered an impressive performance through one of the industry's most challenging periods, and we look forward to reinforcing this success as the market improves. And now I'll pass you over to Mark to run through the financial results.

Thank you, John, and good morning, everyone. I will begin the financial results review with some details of group performance in the second quarter before turning to the business units. Slide 9 summarizes the strong backlog position in the second quarter. Order intake was $2.1 billion, equating to a book-to-bill of 1.6 times. And backlog at the end of the quarter was $7.8 billion, the highest level since 2014. Order intake included new awards of $1.7 billion, including the Busios 8 project in Brazil, the CLAW3 project in Angola, and the Topper and Barleymore projects in the Gulf of Mexico. These four new awards are attributable to the subsea and conventional business unit. In renewables, it was announced that Seaway 7 was a preferred supplier of the East Anglia 3 and the Seagreen 1A projects. These two projects have a combined value of over $1 billion, but will not be recognized in backlog until final contractual terms have been agreed and final investment decisions have been secured. Escalations of approximately $400 million comprising variation orders and contractual price escalations across several projects were largely offset by changes in foreign exchange rates, mostly due to the weakening of the Norwegian kroner and the Brazilian real against the US dollar. This had an adverse impact of approximately $300 million on backlog. $2.5 billion in backlog is expected to be executed over the remainder of the year, and $3 billion in 2023. Coming to slide 10 and the headline results of the group, revenue was $1.2 billion, broadly flat year-on-year, as we continued to execute our large EPCI projects in both subscene conventional and renewables. Adjusted EBITDA of $134 million was up 48% compared with the prior year period, and the margin increased to 10.7% from 7.5%. I'll discuss the drivers of this change at the business unit level on the next few slides. Slide 11 presents the key metrics for subsea and conventional. Author intake was $2 billion, equating to a book-to-bill of 2.1 times, resulting in a strong backlog of $7 billion. Revenue was $1 billion, up 11%, reflecting good progress on the Fast Track Sakaria project, as well as our other large PCI projects. Adjusted EBITDA was $171 million, with a margin of 17.7%, up from the 10.5 percent in the second quarter 2021. this higher profitability reflects strong operational performance and benefited from projects completing in the gulf of mexico and saudi arabia during the quarter selected renewables performance metrics are shown in slide 12. Our intake in renewables was light at $49 million, taking the backlog to $800 million. As John and I have mentioned, during the quarter, we were awarded preferred supplier status on several projects, and these should build the backlog over the next six months. Revenue from renewables was $260 million, down 17%. mainly reflecting the phasing of activity on the Seagreen project. The Seagreen, Holland's Acous South and Chang Fang and Zirao projects made notable revenue contributions in the quarter. The adjusted EBITDA loss was $49 million, reflecting charges of $28 million and $34 million in relation to the Holland's Acous South and Formosa 2 projects respectively. Excluding these two charges, the adjusted EBITDA margin was 5%. Slide 13 shows the cash flow waterfall for the second quarter. Net cash generated from operating activities was $94 million, including a $63 million bill in working capital. Cash conversion, measuring the conversion of adjusted EBITDA to adjusted operating cash was 88%. Net cash used in investing activities was $50 million, mainly attributable to purchases of property, plant and equipment associated with vessel dry docks and upgrades. Free cash flow in the period was $42 million. Net cash used in financing activities was $72 million. This included $32 million of dividends paid in May $27 million of lease payments, mainly related to chart investments, and $4 million relating to the share repurchase program. At the end of the quarter, cash and cash equivalents was $464 million, and net debt was $88 million, which included lease liabilities of $184 million. The group's liquidity was $1.5 billion, which included $1 million of committed undrawn borrowing facilities. In June, the group entered into a $700 million multi-currency revolving credit and guarantee facility with a five-year tenor. The facility is available in a combination of guarantees up to a limit of $200 million and cash drawings or in full for cash drawings. At the same time, the group's previous $656 million multi-currency revolving credit and guarantee facility was cancelled. Lastly, in March, as part of our commitment to shareholder returns, we announced the share repurchase program of approximately $70 million. As of market closing yesterday, $45 million, or 64% of the $70 million, has been utilized to repurchase 5.6 million shares at an average price not 75.4 per share. Subsea 7 holds 10 million shares, or 3.3% of its issued share capital as treasury shares. To conclude the financial review, slide 14 shows our expectations for the full year. As we announced in June, revenue and adjusted EBITDA are expected to be broadly in line with 2021, while net operating income is expected to be lower than 2021. We have updated our guidance regarding taxation to be between $50 and $60 million, adjusted upwards from between $35 and $45 million. The revision is driven by an increased level of activity and high attached There have been no other changes to the financial guidance since the first quarter 2022 presentation. I will now pass you back to John.