Subsea 7 S.A.

Welcome everyone and thank you for joining us. 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 slides that we'll be using during today's call. Please note that some of the information discussed on the call today will include forward-looking statements that reflect our current views. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in our annual report or in today's quarterly 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 quarter before passing over to Mark to cover the financial results in more detail. Turning to slide three. Subsea 7 reported satisfactory results for the second quarter, including a good operational performance from subsea and conventional, and strong results in renewables. Momentum in order intake continued with $2.2 billion of workbook this quarter, increasing our backlog to $10.4 billion. Tendering activities remain high, and we're seeing a continued improvement in pricing. Overall, we're on track to meet adjusted EBITDA consensus for 2023, and remain confident in our longer-term expectation to return to a margin range of 15% to 20%. For an update on key projects in the quarter, in Senegal, Sangamar reached 84% completion, as SemSys and SemSisters continue to install umbilicals and other subsea hardware. In Brazil, SemVega and SemPacific were active on Bacalao projects, Procurement continued at Mero 3, and engineering is underway on Bougios 8. In Saudi Arabia, SEM Borealis completed two jacket installations for the Marjan 2 project, which reached 43% completion. And in Norway, we were very active, with five vessels working on eight fields for five different clients, including the Northern Lights CCUS project. In renewables, cable activities were completed for the Seagreen project in July, and this $1.4 billion project has now been successfully concluded. We made good progress on the Dogger Bank A and our other offshore wind scopes. Turning to slide five, order intake in the second quarter was $2.2 billion, including new awards of $1.5 billion and escalations of $0.7 billion. Our book to bill was 1.4 times. Overall, our group backlog increased to $10.4 billion, giving us a high degree of visibility on both the remainder of this year and next year. Both business units delivered strong backlog growth. Our subsea order book increased 25% year-on-year to $8.7 billion, including $3.6 billion to be executed in 2024. up 29% from the equivalent position in June 2022. Our renewables order book has doubled year-on-year to $1.7 billion, of which $650 million is due to be executed in 2024. And now I'll pass over to Mark to run through the financial results.

Thank you, John, and good afternoon, everyone. I will 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 seven summarizes the group's second quarter and first half performance in the context of the prior three years. Revenue in the second quarter increased 22% to $1.5 billion compared to the second quarter of 2022 as we continue to execute large projects and sub-sea and fixed offshore wind. Adjusted EBITDA of $162 million was up 21% compared with the prior year, and the margin remained broadly flat at 10.7%. As previously communicated, the margin is expected to expand in the latter part of the year as the proportion of contracts in the portfolio, one at the cycle low, further diminishes and backlog continues to be replenished with margin accretive order intake. Net income was $14 million after net finance costs of $8 million and net foreign exchange gain of $59 million driven by movements in non-cash embedded derivatives and an effective tax rate of 73%, which was elevated by 22 percentage points due to the non-tax deductibility of non-core vessel impairments. I will now discuss the drivers for the group's performance in the next few slides. Slide eight presents the key metrics for subsea and convention. Revenue in the second quarter was $1.2 billion, up 23% year-on-year, reflecting good progress on Sangomar, Bacalao, and Marjan II, as well as our other EPCI projects. Adjusted EBITDA was $121 million, with a margin of 10.3%, up 120 basis points sequentially, but down on last year due to a mixed shift towards contracts won in the challenging environment of 2020 and 2021. A net operating loss of $10 million for subsea and conventional includes a $23 million impairment of non-core shallow water assets in Nigeria, a market we have now exited. The performance of the renewables business unit is summarized on slide nine. Revenue in the second quarter was $309 million, up 19% year-on-year, reflecting high activity on Seagreen, Holland's Equus South, and projects in Taiwan. Adjusted EBITDA was $34 million, resulting in an adjusted EBITDA margin of 11.1%, driven by strong operational performance across our portfolio projects. This marks a return to double-digit margins in the new renewables business, year. Slide 10 shows the cash flow waterfall for the second quarter. Net cash used in operating activities was $31 million which included an expected building working capital of $176 million. This build is temporary in nature and is expected to begin unwinding later this year. Net cash used in investing activities was $201 million mainly attributable to milestone payments for the new-build wind vessel, Seaway Alphalift. As a result of this investment in the business, free cash flow in the period was negative $228 million. Net cash used in financing activities was $60 million. This included our $112 million dividend payment, which equated to $4 per share, which is notably higher than the $1 per share regular dividend. lease liability payments of $48 million, including principal and interest, mainly related to chartered vessels. These financing cash outflows were offset by $111 million of net proceeds from borrowings, which included a modest drawdown on our revolving credit facility. At the end of the quarter, cash and cash equivalents was $398 million, and net debt was $805 million. This included lease liabilities of $442 million. The group had liquidity of approximately $1 billion at 30th June and is at an advanced stage of negotiation to secure additional core debt funding of $450 million. This funding will be a Seaway 7 facility for use in the renewable sector and will primarily finance Seaway Alpha Lift and Seaway Ventus vessel buildings. To conclude, slide 11 shows our guidance for the full year. 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. Guidance for taxation has increased to between $70 and $80 million, resulting from a shift in forecast profitability towards higher tax jurisdictions, the impact of recoverable withholding taxes, and tax non-deductible impairment charges. There is no change to our expectation for capital expenditure for the year. I will now pass you back to John.