Subsea 7 S.a. · OSL:SUBC
Subsea 7 — Q2 2020 Earnings Presentation
32 slides from Subsea 7's earnings presentation, Jul 29, 2020
Slide 1: Second Quarter 2020 Earnings Presentation
Second Quarter 2020 Earnings Presentation 29 July 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: Second Quarter 2020
Second Quarter 2020 John Evans, CEO Ricardo Rosa, CFO • Highlights • Financial performance • Strategy • Outlook • Q&A 3 © Subsea 7 - 2020 subsea7.com
Slide 4: Macro environment stabilising
Macro environment stabilising Covid-19 Oil Price Impact • Continued delivery of projects despite • Tendering activity remains low Covid-19 restrictions • Rescheduling by clients continues • Covid-19 management processes – Improved visibility on projects well-established deferred from 2020 to 2021 –
Slide 5: Q2 2020 results
Q2 2020 results FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Revenue $754 million • Active fleet utilisation: 71% • Adjusted negative EBITDA $9 million • PLSVs achieved good utilisation, after restructuring charge of $104 excluding downtime due to Covid-19 million • Good activity in Norway and the
Slide 6: Q2 2020 operational spotlight
Q2 2020 operational spotlight Mad Dog II (GoM) Johan Castberg (Norway) Arran (UK) Virginia Coastal (US) PLSVs Life of Field Triton Knoll (UK) Middle East 6 © Subsea 7 - 2020 subsea7.com
Slide 7: Backlog at June 2020
Backlog at 30 June 2020 Backlog of $7.0 billion • $2.0 billion awarded in Q2 • Book-to-bill: – 2.7x in the quarter 2022+ SURF and $1.5bn 2020 Conventional • Seven awards announced $2.1bn $4.3bn in Q2: – Seagreen (UK) 2021 Renewables & – HKZ (Netherlands) $3.4bn Heavy Lifting – Kaskasi (Germany) $2.2
Slide 8: Q2 2020 income statement summary
Q2 2020 income statement summary Three months ended 30 June 2020 30 June 2019 In $ millions, unless otherwise indicated Unaudited Unaudited Revenue 754 958 Net operating (loss)/income excluding goodwill impairment (352) 45 Impairment of goodwill (578) - Net operating (loss)/income(1) (930) 45 (Loss)
Slide 9: Q2 2020 income statement – expense breakdown
Q2 2020 income statement – expense breakdown Three months ended 30 June 2020 Restructuring Reported Underlying $ millions Charge Operating expenses (1,031) (86) (945) Administrative expense (70) (14) (56) Share of net loss of associates and joint ventures (5) (4) (1) Total (104) • $104 million charg
Slide 10: Cost reduction programme on track
Cost reduction programme on track • Annualised operating cash cost savings of $400 million by Q2 2021 re-confirmed • Net reduction of up to 10 vessels by Q2 2021 – Reduction of 2 chartered vessels: Skandi Acergy and Paul Candies – 2 owned vessels stacked: Seven Antares and Seven Inagha • 3,000 workf
Slide 11: Cost reduction plan - fleet management
Cost reduction plan - fleet management Q2 2020 end Q2 2021 Additions - Seven Vega (Q3 2020) Stacked, owned vessels Seven Antares(1) Up to 5 more to Seven Inagha(1) be stacked Released, chartered vessels Skandi Acergy Up to 2 more to Paul Candies be released Active fleet at quarter end 28 22 (1) Owne
Slide 12: Q2 2020 supplementary details
Q2 2020 supplementary details Three months ended 30 June 2020 30 June 2019 In $ millions Unaudited Unaudited Administrative expenses (70) (61) Share of net loss of associates and joint ventures (5) (3) Depreciation, amortisation and mobilisation (113) (126) Impairment of property, plant and equipmen
Slide 13: Q2 2020 business unit performance
Q2 2020 business unit performance Revenue Net Operating (Loss)/Income (excluding impairment charges) $754m $958m ($19m) $45m $49m $66m Renewables & Heavy Lifting $66m $62m Life of Field $60m SURF & Conventional $842m $625m $6m $6m ($10m) ($3m) ($26m) Q2 2020 Q2 2019 Q2 2020 Q2 2019 (1) Q2 2020 NOL e
Slide 14: Q2 2020 cash flow
Q2 2020 cash flow $m 235 (33) (26) (6) (5) (6) 483 340 (9) (7) Cash at EBITDA Tax paid Net increase in Capex Lease payments Repayment of Interest paid Other Cash at 1 April 2020 operating borrowings 30 June 2020 liabilities • Net debt (including lease liabilities of $292m) of $30 million at 30 June
Slide 15: Full year 2020
Full year 2020 • Significant degree of uncertainty remains, including the potential impact of a new wave of Covid-19 cases on both our activities and the macro environment • Revenue expected to be broadly in line with 2019 levels – Delayed FIDs and postponed awards - Scarborough and other significan
Slide 16: Strategy: unchanged
Strategy: unchanged Subsea field of the future: Energy transition: systems and delivery proactive participation • Early engagement and partnerships • Oil and gas • System innovation and enabling • Renewables Products • Integrated SPS and SURF • Digital delivery of projects and services 16 © Subsea 7
Slide 17: Renewables: record quarterly new awards
Renewables: record quarterly new awards • Activity levels remain robust despite uncertainty in the macro environment • Record quarterly new awards of $1.7 billion • Installation contracts covering ~70% of 425 foundations awarded to date in 2020 • Projects in all strategic geographies – Northern Euro
Slide 18: Renewables: Seagreen award
Renewables: Seagreen award • 1.1 GW development located off the east coast of Scotland in water depths of up to 60 metres • Seaway 7 responsible for EPCI of – 114 foundations – 330 km of inner-array cables • Contract value: approximately $1.4 billion • Leveraging experience in managing large, comple
Slide 19: Renewables: Hollandse Kust Zuid award
Renewables: Hollandse Kust Zuid award • 1.5 GW development located off the coast of the Netherlands in water depths of up to 27m • Seaway 7 responsible for T&I of – 140 foundations – 325 km of inner-array cables • Contract value: $150-300 million • First subsidy-free project in the Netherlands • Fou
Slide 20: Outlook
Outlook Canada and USA Europe • CIP Vineyard (w) • RWE Sofia (w) • Ørsted US Projects (w) • Iberdrola East Anglia Hub (w) • Shell & EDF-RE Atlantic Shores (w) • Red Rock Inch Cape (w) • Shell & EDF-RE Mayflower (w) • EDPR Moray West (w) • Equinor Empire (w) • Shell Ormen Lange Ph3 (i,f) • Shell Coli
Slide 21: Summary
Summary • Strong cash flow in Q2 despite challenging conditions • Robust balance sheet with excellent access to liquidity • Leader in Energy Transition – Strong momentum in Renewables leveraging a ten-year track record • SURF and Conventional backlog projects deferred but not cancelled • Cost reduct
Slide 22: © Subsea 7 - 2020 subsea7.com
22 © Subsea 7 - 2020 subsea7.com
Slide 23: Appendix
Appendix Major project progression Track Record Fleet Financial summaries 23 © Subsea 7 - 2020 subsea7.com
Slide 24: Major project progression
Major project progression • Continuing projects >$100m between 5% and 95% complete as at 30 June 2020 excluding PLSV and Life of Field day-rate contracts Sonamet (Angola) Snorre Expansion (Norway) Announced Nova (Norway) size of Ærfugl (Norway) Arran (UK) project 3 PDMs (Saudi Arabia) Major Manuel (
Slide 25: Track record
• Beatrice wind farm, BOWL • Borkum II, Trianel • Seagreen, SWEL • Shearwater, Shell • Aasta Hansteen, Statoil • Buzzard ph. 2, Nexen • Maria, Wintershall • Culzean, Maersk • IRM Services, Equinor • Alligin, BP • IRM Services, BP • Penguins, Shell • Snorre, Equinor • Al-Khalij, Total • SCIRM, BP • H
Slide 26: Fleet - active vessels at end Q2 '20
Fleet - 28 active vessels at end Q2 ’20 Under Construction: Seven Vega Long-term charter from a vessel- owning joint venture Stacked Chartered from a third party Seven Antares and Seven Inagha are owned by Subsea 7’s Nigerian joint venture 26 © Subsea 7 - 2020 subsea7.com
Slide 27: Q2 2020 segmental analysis
Q2 2020 segmental analysis For the three months ended 30 June 2020 Renewables & In $ millions (unaudited) SURF & Conventional Life of Field Heavy Lifting Corporate TOTAL Revenue 625 62 66 - 754 Net operating loss excluding goodwill (189) (8) (26) (130) (352) impairment charges Impairment of goodwill
Slide 28: Q2 2020 reconciliation of Adjusted EBITDA
Q2 2020 reconciliation of Adjusted EBITDA Net operating (loss)/income to Adjusted EBITDA Three Months Ended 30 June 2020 Three Months Ended 30 June 2019 Unaudited Unaudited For the period (in $millions) Net operating (loss)/income (930) 45 Depreciation, amortisation and mobilisation 113 126 Impairme
Slide 29: Q2 2020 reconciliation of Adjusted EBITDA
Q2 2020 reconciliation of Adjusted EBITDA Net (loss)/income to Adjusted EBITDA Three Months Ended 30 June 2020 Three Months Ended 30 June 2019 For the period (in $millions) Unaudited Unaudited Net (loss)/income (922) 24 Depreciation, amortisation and mobilisation 113 126 Impairment of goodwill 578 –
Slide 30: Q2 2020 summary balance sheet
Q2 2020 summary balance sheet 30 June 2020 31 Dec 2019 30 June 2020 31 Dec 2019 Unaudited Audited Unaudited Audited In $ millions In $ millions Assets Equity & Liabilities Total equity 4,344 5,363 Non-current assets Non-current liabilities Goodwill 106 705 Non-current portion of borrowings 197 209 P
Slide 31: Q2 2020 changes in cash and cash equivalents
Q2 2020 changes in cash and cash equivalents $millions Cash and cash equivalents at 1 April 2020 340 Net cash generated from operating activities 219 Includes a net increase in operating liabilities of $235 million Net cash flow used in investing activities (36) Includes capital expenditures of $33m
Slide 32: Contact: Investor Relations
Contact: Investor Relations Email: ir@subsea7.com Direct Line +44 20 8210 5568 Website www.subsea7.com 32 © Subsea 7 - 2020 subsea7.com