• Fourth-Quarter Adjusted EBITDA: $315 million.
• Full-Year Adjusted EBITDA: $1,090 million, up 50 basis points.
• Full-Year Revenue: $6.8 billion, up 14% compared to 2023.
• Full-Year Margin: Increased by nearly 400 basis points to 16%.
• Net Income: $217 million, compared with $10 million in the prior year.
• Order Intake: $8.2 billion for the full year, up 10% year on year.
• Backlog: $11.2 billion at year-end.
• Subsea and Conventional Revenue: $5.5 billion, up 12% year on year.
• Subsea and Conventional Adjusted EBITDA: $897 million, margin of 16.3%.
• Renewables Revenue: $1.2 billion, up 29% year on year.
• Renewables Adjusted EBITDA: $185 million, margin of 15%.
• Net Cash from Operating Activities: $931 million.
• Capital Expenditure: $349 million.
• Net Debt: $602 million, including lease liabilities.
• Liquidity: $1.3 billion at year-end.
• Proposed Dividend: $350 million, up 40% from the previous year.

• Warning! GuruFocus has detected 4 Warning Sign with ACGYF.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Subsea 7 SA (ACGYF) reported a strong fourth-quarter adjusted EBITDA of $315 million, contributing to a full-year EBITDA of $1,090 million, marking a 50 basis point increase.
• The company achieved a robust order intake of $8.2 billion for the full year, up 10% year on year, with a book-to-bill ratio of 1.2 times.
• Subsea 7 SA (ACGYF) has a high-quality project backlog of $11.2 billion, providing over 80% revenue visibility for 2025.
• The Board proposes a 40% increase in dividends, equating to $350 million, reflecting confidence in future performance.
• The company has shown significant growth in its renewables segment, with a 29% increase in revenue year on year and an improved EBITDA margin of 15%.

Negative Points

• The effective tax rate remains high at 41%, impacting net income.
• Net cash used in financing activities was $680 million, contributing to a decrease in cash and cash equivalents by $176 million.
• The company faces increased depreciation costs in 2025, projected between $700 million and $720 million, up from $645 million in 2024.
• There is a notable increase in planned maintenance days for vessels in the first quarter of 2025, expected to be around 600 days, which could impact operational efficiency.
• Subsea 7 SA (ACGYF) reported a net foreign exchange loss of $69 million in Q4, adding volatility to financial results.

Q & A Highlights

Q: How should we interpret the strong offshore wind margin in Q4, and is it sustainable for future quarters? A: John Evans, CEO, explained that while some quarters may show different margins due to project completion or contingency releases, the company expects to maintain a consistent 14% to 16% EBITDA range in offshore wind. They are confident in surpassing this range in 2025.

Q: What is the reason for the increased depreciation level in 2025 compared to 2024? A: Mark Foley, CFO, stated that the increase in depreciation to between $700 million and $720 million is due to the Skandi Acergy lease and the addition of Seaway Merlin to the fleet, along with capital investments in other vessels.

Q: Can you elaborate on the net foreign exchange loss of $69 million in Q4 and its implications for future quarters? A: Mark Foley, CFO, explained that the loss was driven by embedded derivatives in contracts, which are non-cash and will reverse in future periods. The volatility was due to the strengthening of the US dollar against other currencies.

Q: How is Subsea 7's strategy evolving in Brazil, especially with the Buzios 11 tender and potential changes in Petrobras' tendering strategy? A: John Evans, CEO, noted strong competition for Buzios 11 and mentioned Petrobras' interest in introducing a rigid steel pipeline model. Subsea 7 is open to various contracting models and remains confident in the volume of work from Petrobras.

Q: What are the major contributors to the improvement in renewables margins, and has the market stabilized? A: Mark Foley, CFO, attributed the improvement to better contracts and execution. The market has stabilized, and Subsea 7 has moved into a backlog with a strong focus on acceptable risk conditions and better pricing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.