Subsea 7 SA ((SUBCY)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Subsea 7 SA reflected a robust financial performance, highlighting significant growth in revenue and backlog, particularly within the renewables segment. Despite some challenges related to cash flow and operating losses in renewables, the company emphasized strong client relationships and strategic alliances as key strengths. The overall outlook remains positive, with maintained guidance and a strong pipeline of projects.
Strong Financial Performance
Subsea 7 delivered an impressive Q1 adjusted EBITDA of $236 million, representing a 46% growth year-on-year with a margin of 15%. The company’s revenue reached $1.5 billion, marking a 10% increase compared to the same quarter last year. This strong financial performance underscores the company’s ability to generate substantial growth in a competitive market.
Increased Backlog and Visibility
The company reported a backlog for execution in the remainder of 2025 at $4.8 billion, providing over 80% visibility for the year. With total firm orders valued at $10.8 billion, Subsea 7 has established a solid foundation for future revenue, ensuring continued stability and growth.
Renewables Segment Growth
The renewables segment saw significant growth, with revenue in Q1 reaching $245 million, up 37% year-on-year. The adjusted EBITDA margin for this segment increased from 1% to 10%, driven by activities in Taiwan and early works on East Anglia THREE in the UK. This growth highlights the company’s strategic focus on expanding its renewables footprint.
Maintained Financial Guidance
Subsea 7 has maintained its financial guidance for the full year 2025, with plans to distribute approximately $350 million in dividends to shareholders. This decision reflects confidence in achieving the outlined targets and sustaining shareholder value.
Positive Client Relationships and Alliances
The Subsea Integration Alliance with BP and other clients continues to bring value, with new project awards and a robust tendering pipeline indicating high levels of client engagement. These relationships are crucial for the company’s ongoing success and expansion.
Decreased Cash and Liquidity
The company experienced a decrease in cash and cash equivalents by $116 million to $459 million. Net cash used in financing activities was $106 million, including lease liability payments and repayment of borrowings, reflecting a cautious approach to managing financial resources.
Net Debt Increase
Subsea 7 reported a net debt of $632 million, including lease liabilities of $400 million, equating to a net debt to the last 12 months adjusted EBITDA of 0.5 times. This increase in net debt highlights the company’s investment in future growth and operational capabilities.
Operating Loss in Renewables
Despite improvements, the renewables segment faced a net operating loss of $5 million, which is an improvement compared to a $24 million loss in the same quarter of the previous year. This reduction in losses indicates progress in addressing challenges within the segment.
Forward-Looking Guidance
Subsea 7’s forward-looking guidance remains optimistic, with expectations to meet the outlined targets for 2025. The company reported strong operational performance in the first quarter, with an adjusted EBITDA of $236 million and a revenue increase to $1.5 billion. The backlog for the year stands at $4.8 billion, providing substantial visibility. With a robust cash flow and a liquidity position of $1.2 billion, Subsea 7 is well-positioned to achieve its financial goals, including planned dividends of approximately $350 million to shareholders.
In summary, Subsea 7’s earnings call highlighted a positive sentiment with strong financial performance and significant growth in key areas, particularly renewables. The company maintains a solid outlook with continued client engagement and strategic alliances, despite some challenges in cash flow and operating losses. The maintained financial guidance and robust project pipeline underscore confidence in future growth and stability.