Subsea 7 S.a. · OSL:SUBC
Subsea 7 — Q3 2020 Earnings Presentation
28 slides from Subsea 7's earnings presentation, Nov 12, 2020
Slide 1: Third Quarter 2020 Earnings Presentation
Third Quarter 2020 Earnings Presentation 12 November 2020 1 © Subsea 7 - 2020 subsea7.com
Slide 2: Forward-looking statements
Forward-looking statements This document may contain ‘forward-looking statements’ (within the meaning of the safe harbour provisions of the U.S. Private Securities Litigation Reform Act of 1995). These statements relate to our current expectations, beliefs, intentions, assumptions or strategies rega
Slide 3: Third quarter 2020
Third quarter 2020 John Evans, CEO Ricardo Rosa, CFO • Highlights • Financial performance • Outlook • Q&A 3 © Subsea 7 - 2020 subsea7.com
Slide 4: Third quarter 2020 results
Third quarter 2020 results FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Revenue $947 million • Active fleet vessel utilisation: 84% • Adjusted EBITDA $114 million • High PLSV and Life of Field utilisation • Adjusted EBITDA margin 12% • Fabrication commenced for Seagreen ‒ After incurring net Covid-
Slide 5: Operational highlights
Operational highlights Snorre (Norway) Arran (UK) Mad Dog II (GoM) Zinia (Angola) Formosa II (Taiwan) Seagreen (UK) Life of Field PLSVs (Brazil) 5 © Subsea 7 - 2020 subsea7.com
Slide 6: Third quarter 2020 backlog
Third quarter 2020 backlog Backlog of $6.8 billion, as at 30 September 2020 • $0.7 billion order intake in Q3 2020 – $150 million new orders $1.2bn SURF and – $500 million escalations 2022 Renewables Conventional $2.0bn $2.1bn $4.6bn including PLSV extensions SURF & Conventional • 0.7x book-to-bill
Slide 7: Q3 2020 income statement summary
Q3 2020 income statement summary Three months ended 30 September 2020 30 September 2019 In $ millions, unless otherwise indicated Unaudited Unaudited Revenue 947 951 Net operating income 7 59 (Loss)/income before taxes (11) 71 Taxation (32) (28) Net (loss)/income (43) 42 Adjusted EBITDA(1) 114 181 A
Slide 8: Q3 2020 supplementary details
Q3 2020 supplementary details Three months ended 30 September 2020 30 September 2019 In $ millions Unaudited Unaudited Administrative expenses (47) (73) Share of net loss of associates and joint ventures (1) (3) Depreciation, amortisation and mobilisation (107) (122) Net operating income 7 59 Net fi
Slide 9: Cost reduction programme - update
Cost reduction programme - update • Annualised operating cash cost savings of $400 million by the end of 2021 – Timing driven by project phasing • Net reduction of up to 10 vessels by the end of 2021. To date: – Reduction of 2 chartered vessels: Skandi Acergy and Paul Candies – 2 owned vessels stack
Slide 10: Q3 2020 business unit performance
Q3 2020 business unit performance Revenue Net operating income $947m $951m $7m $59m 1000 80 900 $55m $70m 70 SURF & Conventional 800 $269m $6m 60 Life of Field 700 $65m 50 Renewables & Heavy 600 Lifting 500 40 400 $826m 30 $62m 300 $613m 20 200 $0m 10 100 $11m 0 0$3m $(8)m Q3 2020 Q3 2019 -10 Q3 202
Slide 11: Q3 2020 cash flow
Q3 2020 cash flow $m Cash EBITDA (1) Change in Tax Capex Repayment of Lease Other Cash 30 June net operating borrowings payments 30 Sept liabilities • Net cash (excluding lease liabilities) of $326 million at 30 September 2020 (1) After incurring $20 million net costs associated with Covid-19 11 © S
Slide 12: Priorities for cash
Priorities for cash Invest in the business • Strategy for use of cash is unchanged • Given the uncertain environment, a Maintain investment healthy balance sheet is a priority grade profile • Disciplined approach to reinvestment • Return of excess cash to shareholders when conditions permit Return t
Slide 13: Financial guidance
Financial guidance 2020 Guidance Revenue Broadly in line with 2019 Adjusted EBITDA (1) Broadly in line with current market expectations Administrative expense $230 million - $240 million Net finance cost $15 million - $20 million Depreciation and Amortisation $440 million - $460 million Full year ef
Slide 14: Strategic focus areas
Strategic focus areas Subsea Field of the Future: Energy Transition: Systems and Delivery Proactive Participation • Early engagement and partnerships • Oil and gas – lower carbon developments • Systems innovation and enabling products • Renewables – offshore wind • Integrated SPS and SURF • Emerging
Slide 15: Subsea field of the future – systems and delivery
Subsea field of the future – systems and delivery Systems innovation and enabling products – Seven Vega • Cost effective installation of complex rigid flowlines – Including pipe-in-pipe, EHTF, mechanically- lined pipe – Up to 3,000m water depth • Industry step change in reeling capability: – Larger
Slide 16: Energy transition - renewables
Energy transition - renewables Seven Phoenix conversion to renewables cable lay • Approximately $25 million to convert Seven Phoenix to cable lay: – Hull suited to cable lay – Fitting a new cable lay system – Modernising remaining equipment – Relatively low cost and fast conversion – 15-year design
Slide 17: Outlook
Outlook Europe Canada and USA • RWE Sofia (w) • CIP Vineyard (w) • Iberdrola East Anglia Hub (w) • Ørsted US Projects (w) • Red Rock Inch Cape (w) • SURF and Conventional • Shell & EDPR Mayflower (w) • EDPR Moray West (w) • Equinor Empire (w) • Shell Jackdaw – Greater activity in Gulf of • Dominion
Slide 18: Summary: well-positioned across energy markets
Summary: well-positioned across energy markets • Resilient backlog of $6.8 billion, with $3.6 billion for execution in 2021 – Diversified exposure to oil, gas and wind markets • High free cash flow generation in challenging conditions • Strong balance sheet, providing financial stability and flexibi
Slide 19: © Subsea 7 - 2020 subsea7.com
19 © Subsea 7 - 2020 subsea7.com
Slide 20: Appendix
Appendix Major project progression Track Record Fleet Financial summaries 20 © Subsea 7 - 2020 subsea7.com
Slide 21: Major project progression
Major project progression • Continuing projects >$100m between 5% and 95% complete as at 30 September 2020 excluding PLSV and Life of Field day-rate contracts Sonamet (Angola) Ærfugl (Norway) Nova (Norway) Announced Arran (UK) size of project Manuel (USA) Jubilee Turret Remediation (Africa) 3PDMs (S
Slide 22: Track record
• Beatrice wind farm, BOWL • Borkum II, Trianel • Seagreen, SWEL • Shearwater, Shell • Aasta Hansteen, Statoil • Buzzard ph. 2, • Maria, Wintershall CNOOC • IRM Services, Equinor • Culzean, Maersk • Alligin, BP • IRM Services, BP • Penguins, Shell • Al-Khalij, Total • Snorre, Equinor • Hasbah, in co
Slide 23: Fleet - active vessels at end Q3 '20
Fleet - 28 active vessels at end Q3 ’20 Under construction Long-term charter from a vessel- owning joint venture Stacked Chartered from a third party Under conversion to cable lay Seven Antares and Seven Inagha are owned by Subsea 7’s Nigerian joint venture 23 © Subsea 7 - 2020 subsea7.com
Slide 24: Segmental analysis
Segmental analysis For the three months ended 30 September 2020 Renewables & In $ millions (Unaudited) SURF & Conventional Life of Field Heavy Lifting Corporate TOTAL Revenue 613 65 269 - 947 Net operating income/(loss) 3 11 - (8) 7 Finance income 1 Other gains and losses (15) Finance costs (4) Loss
Slide 25: Summary balance sheet
Summary balance sheet 30 September 30 September 31 Dec 2019 31 Dec 2019 2020 2020 Audited Audited In $ millions Unaudited In $ millions Unaudited Assets Equity & Liabilities Non-current assets Total equity 4,321 5,363 Goodwill 108 705 Non-current liabilities Property, plant and equipment 4,063 4,422
Slide 26: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA Net operating income to Adjusted EBITDA Three Months Ended 30 Sept 2020 Three Months Ended 30 Sept 2019 For the period (in $millions) Unaudited Unaudited Net operating income 7 59 Depreciation, amortisation and mobilisation 107 122 Adjusted EBITDA 114 181 Revenue 94
Slide 27: Summary of third quarter 2020 cash flows
Summary of third quarter 2020 cash flows $ millions Cash and cash equivalents at 1 July 2020 483 Net cash generated from operating activities 122 Includes net increase in operating liabilities of $36 million Net cash flow used in investing activities (19) Includes capital expenditure of $20m Net cas
Slide 28: © Subsea 7 - 2020 subsea7.com
28 © Subsea 7 - 2020 subsea7.com