Subsea 7 SA ((SUBCY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Subsea 7 SA painted a generally positive picture, with the company showcasing a record backlog and significant EBITDA growth. The sentiment was buoyed by strong project execution and improved financial guidance. However, challenges in the Renewables segment and financial setbacks, such as foreign exchange losses and working capital movement, were also highlighted.
Record Backlog and Order Intake
Subsea 7 reported a record backlog nearing $14 billion, with an impressive order intake of $3.8 billion in the third quarter. This achievement resulted in a book-to-bill ratio of 2.1x for the quarter, indicating strong demand and future revenue potential.
Significant EBITDA Growth
The company experienced a notable increase in adjusted EBITDA, reaching $407 million, which marks a 27% year-on-year growth. This was accompanied by an expanded margin of 22%, underscoring the effectiveness of their project execution and high vessel utilization.
Positive Financial Guidance
Subsea 7 refined its financial guidance for 2025, projecting revenue between $6.9 billion and $7.1 billion, with an increased EBITDA margin of 20% to 21%. For 2026, the company expects revenue to range from $7 billion to $7.4 billion, with an EBITDA margin of approximately 22%.
Technological Advancements
The deployment of the 4insight software significantly enhanced project delivery efficiency, adding 35 days of operation to the Seven Vega and improving efficiency by over 10%.
Renewables Revenue Decline
Subsea 7 faced a decline in renewables revenue, which fell to $302 million in Q3, a 19% reduction compared to the previous year. This was primarily due to lower activity levels in Taiwan.
Net Foreign Exchange Losses
The company reported net foreign exchange losses amounting to $38 million, attributed to noncash embedded derivatives, impacting the overall financial performance.
Working Capital Movement
An unfavorable movement in working capital of $82 million was recorded during the third quarter, presenting a financial challenge for Subsea 7.
Forward-Looking Guidance
Looking ahead, Subsea 7 anticipates continued strong financial performance. The company revised its 2025 guidance, narrowing the revenue forecast to between $6.9 billion and $7.1 billion, with an increased adjusted EBITDA margin range of 20%-21%. For 2026, revenue is expected to be between $7 billion and $7.4 billion, with an EBITDA margin of approximately 22%, supported by a robust tendering pipeline and over 80% revenue visibility.
In summary, Subsea 7’s earnings call reflected a positive outlook, driven by record backlog and significant EBITDA growth. While challenges in the Renewables segment and financial setbacks were noted, the company’s robust financial guidance and technological advancements provide a promising outlook for the future.