Subsea 7 S.A.

Welcome, everyone. With me on the call today are John Evans, our CEO, Mark Foley, our CFO, and Stuart Fitzgerald, CEO of Seaway7. 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. Now I'll turn the call over to John.

Thank you, and good afternoon, everyone. I'm joined here today from Copenhagen, where Stuart and I are attending Wind Europe. I will start with a summary of the quarter before passing over to Mark to cover the financial results in more detail. Turning to slide three, the first quarter of 2023 was very much in line with our expectations, and we have reaffirmed our outlook for the full year. The quarter was, as usual, impacted by seasonality in the Northern Hemisphere, and this was compounded by an activity mix skewed to lower margin contracts, one in 2020. Our guidance for the full year is unchanged, with a weighting to the second half, as we have previously flagged. After a strong year for order intake in 2022, we've continued to grow the backlog in the first quarter, with a book to bill of 1.5 times. Bidding activity remains high, and pricing and contract terms continue to improve, supporting our view of a return to a through-cycle range of EBITDA margins between 15% and 20%. Turning to slide 4 for an update on the progress of our largest projects in the first quarter. In Turkey, the fast-tracked Sakarya project reached a 96% progress, up from 89% in Q4, and first gas was achieved last week. In Senegal, Sangamar reached 77% completion, as Semvega, Semseas, and Sem Sisters continued pipeline, whilst in Angola, Semborealis worked all quarter on SLGC before transiting to Saudi Arabia. In Brazil, Sempacific was active on the Bacalao project, and at Mero 3, we received the first line pipe shipment in Rio, and mobilized our new chartered heavy construction vessel, Boca Subsea. In renewables, cable activities were completed on the Hlandseekoe Zoet in the Netherlands. Foundation installation activity was reduced in the first quarter due to the winter conditions in the North Sea, but towards the end of the quarter, we restarted activity as planned on Sea Green and Dogger Bank A and B. In mid-April, we installed the final jacket at Seagreen and the cable A due for completion with Seaway Amory in Q2. Turning to slide 5, order intake in the first quarter was $1.9 billion, including new awards of $1.2 billion and escalation of $0.7 billion. Our book-to-bill was one and a half times resulting in a backlog of $9.7 billion. Revenue visibility continues to improve. Our backlog for the current year is 27% higher than the equivalent last year, whilst our firm workload for 2024 is up 16% since the last quarter. And now I'll pass you over to Mark to run through the financial results.

Thank you, John, and good afternoon, everyone. I'll begin the financial performance review with some details of group and business unit performance in the quarter before returning to the group cash flow and financial guidance for 2023. Slide six summarizes the group's first quarter performance. As John has already discussed, we delivered solid order intake and backlog growth driven by new awards of $1.2 billion. and escalations of $700 million, which this quarter mainly comprised variation offers. Revenue increased modestly to $1.2 billion compared to the first quarter of 2022 as we continue to execute large projects in subsea and fixed offshore wind. Adjusted EBITDA of $107 million was up 24% compared with the prior year And the margin increased 140 basis points to 8.6% from 7.2%. As previously communicated, margin is expected to expand in the latter part of the year as the weighting of contracts in the portfolio, one at the cycle low, further diminishes. And backlog continues to be replenished with margin accretive order intake. Net finance costs were $8 million, primarily reflecting higher interest rates on borrowings. Despite a loss before taxes, there was a $3 million taxation charge due to the jurisdictional profitability mix and the impact of irrecoverable withholding taxes. This resulted in a net loss of $29 million in the quarter. I'll now discuss the drivers for the group performance in the next few slides. Slide seven presents the key metrics for subsea and conventional. Order intake was $1.3 billion, equating to a book-to-bill of 1.3 times, resulting in backlog growth of 4% to $8.4 billion. Key contract awards included Agogo in Angola, and Irtar and Vapanda in Norway. Revenue was $1.1 billion, up 18% year-on-year, reflecting good progress on Sakaria, Sangomar, and SLGC, as well as our other large EPCI projects. In the UK, against a backdrop of fiscal uncertainty, our fleet of diving support vessels had reduced utilization due to the postponement of activities by clients. Adjusted EBITDA was $97 million, with a margin of 9.1%, up 74 basis points from the prior year. This reflects a continued solid operational performance on projects one that reduced margins during the downturn. Selected renewables performance metrics are shown in slide eight. Order intake was around $540 million, equating to a book-to-bill of 3.3 times, resulting in backlog growth of 46%, to $1.2 billion. The notable new award in the period was the high long cable contract in Taiwan. Revenue was $160 million, down sharply year on year, reflecting the phasing of the Sea Green project. Adjusted EBITDA was $6 million, broadly flat year on year, resulting in an adjusted EBITDA margin of 3.8%. This performance was impacted by normal seasonality in the Northern Hemisphere with planned downtime on the foundation installation activities at Seagreen and Dogger Bank A&D. Projects outside of the North Sea, including New England and Taiwan, made a good contribution to adjusted EBITDA in the quarter. Slide 9 shows the cash flow waterfall for the first quarter. Net cash used in operating activities was $127 million, which included the expected and previously communicated build in working capital. This build is temporary in nature and is expected to unwind later this year and into 2024. Net cash used in investing activities was $86 million, mainly attributable to purchases of property, plant and equipment, including vessel dry docks and upgrades. Free cash flow in the period was a negative $219 million. Net cash generated from financing activities was $256 million. This included utilizing the remaining $300 million of the $500 million UK export finance facility entered into in 2021. The two-year availability period of this facility expired in February. There were also lease liability payments of $31 million, including principal and interest, mainly related to chartered vessels. At the end of the quarter, cash and cash equivalents was $686 million, and net debt was $419 million. This included lease liabilities of $456 million which increased $199 million from the year end position due to two new vessel charters, Boca Subsea and CEM Stingray, and the extension of three existing vessel charters, namely Grant Candies, Norman Subsea, and Seven Viking. These vessels have been chartered to meet the workload in Norway, Brazil, and the Gulf of Mexico. The group had a liquidity of $1.4 billion at the end of the quarter, which included $700 million of committed, unutilised borrowing facilities. To conclude, slide 10 shows our guidance for the full year. Guidance for all elements remains unchanged. We continue to expect revenue and adjusted EBITDA to be higher than 2022. while net operating income is still expected to be in line with last year. There is also no change to our expectation for capital expenditure for the year. As announced in March, we will pay approximately $110 million in dividends. That payment will be made tomorrow, the 28th of April, and the dividend represents four NOCs per share, including one NOC per share of regular dividend. I will now pass you back to John.