Subsea 7’s Third Quarter 2021 Results
Subsea 7 S.A. announced results for the third quarter which ended 30 September 2021.
Third quarter highlights
• Third quarter 2021 revenue up 53% year-on-year to $1.45 billion
• Adjusted EBITDA of $185 million equating to a margin of 12.8%
• Cash and cash equivalents of $300 million, and net debt including lease liabilities of $99 million at quarter end
• Order intake of $1.4 billion, equating to a book-to-bill ratio of 1.0, resulting in a backlog of $6.7 billion
• Completion on 1 October of the combination with OHT ASA to create Seaway 7 ASA (Oslo Børs: SEAWY7)
• At 1 October, following the combination, the backlog was $6.9 billion of which 19% in Renewables
Third quarter financial review
Third quarter revenue of $1.45 billion increased by 53% compared to the prior year period, reflecting significantly higher activity in both Subsea and Conventional and Renewables. Adjusted EBITDA of $185 million was up from $114 million in the prior year quarter. The improvement reflects an increased level of engineering and procurement on major projects, combined with high vessel utilisation and some client settlements. After deducting net direct costs related to the Covid-19 pandemic of $9 million (compared with $20 million in the third quarter of 2020) the underlying Adjusted EBITDA margin increased slightly to 12.8% from 12.0%. After depreciation and amortisation of $107 million, the Group recorded net operating income of $78 million. Net income for the quarter was $45 million, after a tax charge of $61 million equating to an effective tax rate of 58%.
During the quarter, the net cash outflow from operating activities was $20 million after a $230 million adverse movement in net working capital that largely related to timing of milestone payments in the Gulf of Mexico, the protracted invoice approval process in the Middle East and delays to the progress of Renewables projects in Taiwan. Capital expenditure was relatively low at $24 million excluding business acquisition costs that amounted to a net $7 million. Overall, cash and cash equivalents decreased by $90 million since 30 June 2021 to $300 million and the Group ended the quarter with net debt of $99 million, including lease liabilities of $208 million.
In the third quarter, Subsea 7 booked new orders of approximately $1.3 billion and escalations of approximately $100 million, resulting in a book-to-bill ratio of 1.0. The backlog at the end of September 2021 was $6.7 billion. Following the completion of the combination with OHT ASA to create Seaway 7 ASA at 1 October, the backlog was $6.9 billion of which $1.4 billion is expected to be executed during the remainder of 2021, $3.5 billion in 2022 and $1.8 billion in 2023 and thereafter.
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