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 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, Catherine, and good afternoon, everyone. I will start with a summary of the third quarter of 2022 before handing over to Mark to cover the financial results. Turning to slide three, in the third quarter, Subsea 7 delivered a robust performance in subsea and conventional, whilst our performance in renewables stabilized. We announced an important transaction We also announced an equity raise and new lending facilities for Seaway 7. Turning to slide 4, in the third quarter, we continue to make progress in decarbonizing our fleet with a commitment to convert the 7 Arctic to hybrid power. Conversion will take place at the time of the vessel's class survey next year and will reduce our CO2 emissions by around 5,000 tons per annum. Turn to slide 5 for the customary update on our largest projects. In Turkey, the Fast Track Sakarya project has reached 73% progress, up from 50% at Q2. The main shallow water umbilical scope was completed during the quarter, and the seven arctic sailed into the Bostra Straits, commencing installation activities in Q4. Sangamar reached 64% complete with the spooling of the pipelines at our base in Vigra, Norway, and mobilization of the CERN Vega and CERN Oceans to Senegal, followed by pipeline activities in the field. In Brazil, we continue to manage fabrication of the CRA pipeline for the Bacalao project, and we are preparing the Ubu spool base to commence welding operations. At Mero 3, procurement continued. Our vessels were also busy on Topra project in Trinidad and Tobago, on the Cobra East Gecko project in Norway, and on Equinor's Northern Lights carbon capture project. In renewables, we have installed 65 foundations and 43 cables for the Sea Green project by the end of September. All 114 jackets have been dispatched to the UK from yards in China and the Middle East, and we remain on track to complete the work around the year end. Finally, we commenced offshore activities on Dogger Bank A and B with the Seaway Strachanov and reached 29% completion at the end of September. The vessel will leave the field for the winter season as planned and will return in 2023 to continue the offshore phase. Turning to slide six, in Q3, we rolled out Make Possible, A way of simplifying how we communicate our strategy to our stakeholders, both internally and externally. Our strategy continues to be built around our foundation of our six values. Wherever we operate and whichever sector of the energy landscape, these are the six principles that guide us. On the right, we have the key enabling elements that make our strategy possible. namely early engagement, collaboration, integrated services, sustainable delivery, digital solutions, and enabling product. These apply across all the sectors in which we operate, whether we are addressing surf, wind, CCUS, or hydrogen. Ultimately, our ambition is to support our clients by delivering energy transition solutions of a lower cost, a lower carbon, oil and gas, and the growth of renewables and emerging energy. Turning to slide eight on our joint venture with Schlumberger and Acker Solutions. The Subsea Integration Alliance has been the cornerstone of our integrated offering in Subsea and has been a great success with $4 billion of awards net to Subsea 7 since January 2020. In September, we announced that Subsea 7 will be investing $306.5 million for a 10% stake in a new joint venture that will combine Schlumberger's OneSubsea and AccuSolutions' Subsea operations into one new co. Our payment will be made in two equal installments post the completion of the deal in the second half of 2023 and in 2024. The joint venture will become Subsea 7's new partner in the Subsea Integration Alliance, replacing Schlumberger. So what does this mean for Subsea 7? First and foremost, the aim of the transaction is to strengthen our long-term position in the Subsea market. We do this with a view to both the near-term opportunities that will result from the current upcycle, as well as the longer-term of the energy transition. The transaction is part of the strategic jigsaw that will keep Subsea 7 at the forefront of the industry and ensure we maximize value creation and ultimately free cash flow generation for our shareholders. By acquiring a 10% stake in the joint venture, Subsea 7 will be cementing its relationship with our partners in the SIA. We will take one of the six seats We will also become part owner of an umbilical manufacturer, a key element in our supply chain. And of course, we will receive a dividend from the new code. Turning to slide 10, and the funding of Seaway 7. In recent weeks, a $200 million equity raise has been completed, as well as the finalization of debt of $650 million. This is sufficient to cover the upcoming CAPEX commitment related to Seaway 7's new build program as well as minor vessel upgrades and dry docks. It leaves Seaway 7 fully funded and the two state-of-the-art offshore installation vessels due for delivery by the end of 2023. Reflecting the strong outlook for offshore wind and reaffirming our belief that Seaway 7 shares are materially undervalued, Subsea 7 subscribed to 72% of the equity raised, maintaining our shareholding. This was mirrored by the two other large major shareholders in Seaway 7, Songer Offshore and Lotus Marine. The two steps in Subsea and wind together strengthen our position across the energy landscape at a time when demand for both traditional and new energy resources continues to grow. I'll hand over to Mark to now run through the financial results.

Thank you John and good afternoon everyone. I'll begin the financial results review with some details of group performance in the third quarter before turning to the business units. Slide 11 summarizes the backlog position at the end of the third quarter. Order intake was one billion dollars bringing the year-to-date book-to-bill to 1.1 times, resulting in a group backlog at the end of the quarter of $7.1 billion. All of their intake included $600 million of new awards, including Gas to Energy in Guyana, Trail and Cleaner in Norway, and the Moray West Offshore Wind Project in the UK. The renewables backlog of $600 million excludes projects for which Seaway 7 has been selected as a preferred bidder. Escalations of approximately $400 million comprising variation offers and contractual price escalations across several projects were partially offset by unfavorable foreign sterling and the euro against the dollar of approximately $200 million. $1.3 billion in backlog is expected to be executed in the fourth quarter and $3.2 billion in 2023. Coming to slide 12 and the headline results for the group. Revenue was $1.4 billion, broadly flat year on year, as we continue to execute our large EPCI project in both subsea and conventional and renewables. Adjusted EBITDA of $171 million was down 7% compared with the prior year period, and the margin decreased to 12.2% from 12.8% reflecting the high level of contract closeouts in the prior year quarter. Other gains and losses was negative $23 million, driven in part by non-cash embedded derivative foreign exchange movements. This, together with a high effective tax rate, due to a shift in operational profitability towards high tax jurisdictions, and the impact of irrecoverable withholding taxes, combined to impact net income break even in the quarter. I will now discuss the drivers for the group results in the next few slides. Slide 13 presents the key metrics for sub-CN convention. Order intake was $700 million, equating to a third quarter book to bill of 0.7 times, resulting in a slight sequential dip in backlog to $6.5 billion. Revenue was $1 billion, broadly flying year-on-year, reflecting good progress on the Fast Track to a Career project, as well as our other large EPCI projects. Adjusted EBITDA was $142 million, with a margin of 14.3%, down from the 15% in the third quarter of 2021. This reflects a continued strong underlying a lower contribution from project closeouts year on year. Selected renewable performance metrics are shown in slide 14. Order intake in renewables was around $200 million, taking the backlog to $600 million. As I mentioned earlier, Seaway 7 has been awarded preferred supplier status on several projects, and these should rebuild the backlog over the coming months. Revenue from renewables was $374 million, flat year-on-year, reflecting continued high activity on the Seagreen project. During the quarter, Formosa 2 and the foundation scope of Hull and Zaku South were completed. Adjusted EBITDA was $21 million, up slightly year-on-year, resulting in an adjusted EBITDA margin of 5.5%. Slide 15 shows the cash flow waterfall for the third quarter. Net cash generated from operating activities was $210 million, including an $87 million improvement in working capital. Year to date, the build in working capital has been just $9 million as a result of projects refacing into 2023, notably procurement related to Mero 3 and Marjan 2, as well as management's further efforts to optimise cash. Cash conversion, measuring the conversion of adjusted EBITDA into adjusted operating cash, was 1.4 times. Net cash used in financing activities was $76 million, mainly attributable to purchases of property, plant and equipment associated with vessel dry docks and upgrades. Pre-cash flow in the period was $131 million. Net cash used in financing activities was $60 million. This included $27 million of lease liability payments, mainly related to charter vessels, and $21 million of share repurchases. At the end of the quarter, cash and cash equivalents was $533 million. a net debt was $33 million, which included lease liabilities of $204 million. The group's liquidity includes $1 billion of committed undrawn borrowing facilities. In March, as part of our commitment to return excess cash to shareholders, we announced our share repurchase programme of approximately $70 million. As of market closing yesterday, $45 million, had been utilised. To conclude the financial review, slide 16 shows our expectations for the full year 2022, as well as some preliminary guidance for 2023. Consistent with our update in July, revenue and adjusted EBITDA in 2022 are expected to be broadly in line with 2021. We now also expect net operating income to be broadly in line with 2021. We have updated our guidance regarding taxation. We expect taxation to be between 80 and $90 million, adjusted upwards from between 50 and $60 million. The revision is driven by a shift in forecast profitability towards higher tax jurisdictions, together with an increase in forecast withholding taxes. In some instances, these withholding taxes will be recoverable under the contractual terms with our clients. There have been no other changes to the financial guidance since the second quarter 2022 earnings presentation. Turning to our preliminary guidance for 2023, we expect revenue and adjusted EBITDA to be higher than 2022, and we are comfortable with the current We expect group capital expenditure to be within a range from $480 to $500 million, including $310 to $330 million associated with . I will now pass you back to John.