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. And 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 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. And now I'll turn the call over to John.

Thank you, Catherine, and good morning, everyone. I will start with a summary of the third quarter before passing over to Mark for more details of the financial results. Turning to slide three, Subsea 7 delivered third-quarter adjusted EBITDA of $321 million, a margin of 18%, up from 13% last year. We're on track to meet full-year EBITDA guidance, which we have revised upwards for the second time this year, and we have introduced new guidance for 2025 that implies continued growth in EBITDA, supported by a firm backlog of high-quality contracts. We remain confident in the longer-term outlook based on a robust tender pipeline and positive conversations with our clients. Against this optimistic backdrop and with the prospect of strong cash generation, we're committed to returning at least $1 billion in the four years from 2024 to 2027. Turning to slide four, after an exceptional second quarter, order intake in the third quarter was 0.6 of a billion dollars Overall, our order intake for the first nine months of this year was a healthy $5.9 billion. Slide 5 shows details of our backlog. At the beginning of the third quarter, we had a group backlog of $11.3 billion, of which $1.8 billion is due to be executed in the fourth quarter, and $5.3 billion in 2025. We have good visibility on the years ahead, including high utilization of our major subsidy vessels in the remainder of 2024, 2025 and into 2026. In renewables, the backlog is roughly flat as we remain selective in our tendering approach to support future margins and returns. And now I'll pass over to Mark to run through the financial results.

Thank you, John, and good morning, everyone. I'll begin with some details of group and business unit performance in the quarter. before turning to the group cash flow and financial guidance of 2024 and 2025. Slide six summarizes the group's third quarter results. Revenue was $1.8 billion, up 16% compared to the third quarter of 2023, driven by strong performances in both business units as major projects made good progress. Adjusted EBITDA of $321 million was up 59% compared with the prior year, and their margin increased by over 450 basis points to 18%. After depreciation and amortization of $158 million, net finance costs $20 million, and taxation of $70 million, net income was $98 million, compared with $36 million in the prior year period. I will now discuss the drivers of the group's performance in the next few slides. Slide seven presents the key metrics for subsea and conventional. Revenue was $1.4 billion, up 12% year on year, reflecting good progress on Nero 3 in Brazil, Yggdrasil in Norway, and the Gas to Energy project in Guyana. Adjusted EBITDA was $252 million, equating to a margin of 17.5%, an increase of 330 basis points from the prior year. This result reflects the continued evolution of the backlog mix towards higher quality contracts, as well as a $10 million net income contribution from one subsea. Net operating income was $127 million, compared to $76 million in the same quarter last year. Selected renewables performance metrics are shown in slide eight. Revenue was $376 million, up 40% year on year, reflecting good progress at Dogger Bank B in the UK, as well as projects in the US and Taiwan. Adjusted EBITDA was $62 million, double that in the prior year, equating to a margin of 16.4%. This was driven by very high asset utilization, with all seven vessels executing work in the quarter. Slide 9 shows the cash waterfall for the third quarter. Net cash generated by operating activities was $270 million, which included a minor movement in working capital. Capital expenditure was $132 million, including $83 million relating to the acquisition of Seven Mellon. Net cash used in financing activities was $78 million, which included share repurchases of $20 million and lease payments of $60 million. At the end of the quarter, cash and cash equivalents increased by $150 million, to $440 million. Net debt was $857 million, including lease liabilities, $495 million. The group had liquidity of $1.1 billion at the end of the quarter. As of today, the company had returned approximately $250 million to shareholders this year, composed of $80 million of share repurchases and approximately $170 million of dividends. To conclude, slide 10 shows our guidance for the full year. In 2024, we expect revenue to be at the upper end of the range from $6.5 to $6.8 billion, with adjusted EBITDA of $1025 to $1075 million. For 2025, we anticipate revenue to be between $6.8 and $7.2 billion, with an adjusted EBITDA margin ranging from 18% to 20%. Capital expenditure in the year is expected to be between $360 and $380 million. Finally, in 2026, we continue to expect an adjusted EBITDA margin of over 20%.