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 risk and uncertainties that may cause actual results or trends to differ from our forecast. For more information, please refer to the risk factors discussed in Subsea 7's 2022 annual report or in today's quarterly press release. I'll now turn the call over to John.

Thank you, Catherine, and good morning 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 delivered fourth quarter adjusted EBITDA of $245 million, up 45% year on year, and with a margin of 15%, an increase of 200 basis points. In 2023, we grew the backlog 18% to $10.6 billion, adding high quality projects with an attractive risk and reward that give us good visibility on significant margin expansion in the years ahead. quarter mark the strategic milestone for subsea and conventional with the completion of the one subsea joint venture with SLB and Acre Solutions. Our combined strengths, innovations and global reach enable us to accelerate innovation and to support our customers in their continued drive to enhance subsea performance. In renewables, we strengthen our fleet with the addition of Seaway Alphalift and in early 2024, Seaway Ventus. adding new capabilities and capacity to reinforce our position as a tier one player in the high growth offshore wind market. With a solid backlog, active tendering pipeline, and strong market position in both oil and gas and offshore wind, we're excited for the future. This confidence is shared by the board and is reflected in the commitment to shareholder returns, totaling at least $1 billion over four years from 2024 to 2027. Turning to slide four, order intake in the fourth quarter was $1.2 billion, split equally between new awards and escalations. This gives us an order intake for the full year of $7.4 billion, a book to bill of 1.2 times. Momentum continued in our backlog, and at year end, we had $10.6 billion of firm work, the highest year end since 2013. Slide 6 shows the backlog by business units. With $4.7 billion for work for sub-seam conventional in 2024 and $1 billion for renewables, we have very high visibility of the year ahead. And with that, I'll pass over to Mark to run through the financial results.

Thank you, John. Good morning and good afternoon, everyone. I'll begin the financial performance review with some details of group and business unit performance in the fourth quarter. before commenting on the group cash flow and concluding with financial guidance for 2024. Slide seven summarizes the group's fourth quarter performance in the context of the full year and prior three years. Revenue in the fourth quarter increased 26% to $1.6 billion compared to the fourth quarter 2022, mainly driven by increased activity in subsea and conventional Adjusted EBITDA of $245 million was 45% higher compared with the prior year quarter and the margin improved to 15%. In the fourth quarter, depreciation and amortization amounts of $142 million were recognized, as well as a net impairment charge of $48 million, which I will discuss in the following slides. After net finance costs of $80 million, other losses of $28 million driven by movements in non-cash embedded derivatives and a tax charge of $20 million, the resulting net loss for the fourth quarter was $11 million. The fourth quarter results contributed to the strong growth in revenue, adjusted EBITDA and margin in 2023. I will now run through the drivers for the group's performance in the next few slides. Slide eight presents the key metrics for sub-SEAN conventional. Revenue in the fourth quarter was $1.4 billion, up 33% year-on-year, reflecting progress on Bacalao and Mero 3 and 4 in Brazil, as well as Sakeria Scopes in Turkey, and early-stage activity on Yggdrasil in Norway. Adjusted EBITDA was $212 million, equating to a margin of 15.2%, a 150 basis points expansion on the same quarter last year. This includes an $8 million share of net income from our one subsea investment, as well as reflecting the continued shift of activity towards contracts awarded in an improved pricing environment. Net operating income in subsea and conventional was $128 million. The performance of the renewables business unit is summarized on slide nine. Revenue in the fourth quarter was $218 million flat year on year, reflecting the phasing of major projects and as a result of an increased focus to ensure the right balance between risk and rewards and tendering. Adjusted EBITDA was $31 million, resulting in an adjusted EBITDA margin of 14.2%. marking the third consecutive quarter of double-digit margins. This has been achieved as a result of improved execution, as well as the aforementioned further selective approach to tendering. We believe this margin level is sustainable in full year 2024, although in Q1 it is expected to be lower, reflecting seasonality in the northern hemisphere and a higher level of planned vessel maintenance. In the fourth quarter, we recognized impairments of $73 million. These mainly relate to Seaway Altalift's monopile installation equipment owing to a contract dispute, as well as the impairment of Seaway UDIN prior to sale in early 2024. Slide 10 shows the cash flow waterfall for the fourth quarter. Net cash flow from operating activities was $528 million, which included a better than expected favorable working capital movement of $306 million. Net cash used in investing activities was $374 million, mainly relating to final payments for the new build wind vessel, Seaway Ventus, and the first of two $153 million installments related to our investment in One Subsea. Pre-cash flow in the quarter was strong at $303 million, together with a sharp improvement in cash conversion at 2.2 times. Both metrics benefited from the significant working capital in line. Net cash flow from financing activities was $62 million. This included net proceeds from borrowings of $119 million, partially offset by lease liability payments of $41 million, mainly related to charter vessels. Cash and cash equivalents increased of $751 million, and net debt was $552 million. This included lease liabilities of $458 million. The group had liquidity of $1.6 billion at the 31st of December, which included around $860 million of committed undrawing borrowing facilities. To conclude, slide 11 shows our guidance for the full year 2024. In 2024, we continue to expect revenue to be in a range of between $6 and $6.5 billion, where we also continue to expect adjusted EBITDA to be between $950 million and $1 billion. Our expectation for capital expenditure in 2024 has increased slightly to $300 to $320 million due to amounts deferred from last year. This range is still broadly half the 2023 capital expenditure income. In terms of the first quarter, I would like to take the opportunity to remind you that this quarter exhibits seasonality, seasonally lower activity in the Northern Hemisphere, as well as customarily corresponds with higher levels of planned vessel maintenance. 28 vessels of planned maintenance in Q1, which cumulatively exceeds 400 days. This level is broadly similar to the same quarter of last year. I will now pass you back to John.