Earnings Call: Q1 2021

Apr 29, 2021

Welcome, everybody. With me on the call today are John Evans, our CEO and Riccardo Roessler, our CFO. The results press release is available to download on our website along with the presentation slides that we'll be referring to during today's call. May I remind you that this call includes forward looking statements that reflect our current views and are subject to Risks, Uncertainties and Assumptions. Similar wording is included in our press release. I'll now turn you over to John. Thank you, Catherine, and good afternoon, everyone. I will start with highlights from the Q1 before passing over to Ricardo to cover the financial results. Turning to slide 4. Subsea 7 delivered solid revenue and EBITDA growth in the Q1 and made progress on its strategic objectives. Revenues improved 33% year on year to $1,000,000,000 driven by both Renewables and Subsea and Conventional, while our EBITDA margin improved slightly to 10%. At the end of the quarter, our balance sheet remained strong with $527,000,000 of cash and equivalents and net cash of $74,000,000 We announced 2 exciting projects this quarter. First, our entry to the carbon capture market with the award that's part of the Northern Lights project And a second, the new joint venture in floating wind. Turning to slide 5 and our operational highlights. During the Q1, we completed the Zinnia project and restarted work on the Barossa project. 7 Eagle finished our scope of work on the West Barracuda work in Australia and equipment fabrication continued for the Sangamo project in Senegal. In the U. K, 7 Atlantic executed our scope of work on the Pierce project Oyston, the Gulf of Mexico, SeveNavica, Pegasus, Oceans and Pacific continued offshore activities on Itchakil and Mad Dog 2. The PLSVs achieved good utilization despite the challenges of COVID-nineteen in Brazil. In Saudi Arabia, Sem Champion recommenced installation of the 28 jackets and 3 gas PDM projects and preparations continued for Berri Zuluf. After our hiatus in offshore activity in Saudi Arabia during 2020, We expect the CEM Champion to be busy throughout 2021. The Renewables business unit continued to make good progress in the fabrication of jackets And in array cables for Seagreen, but Seaway Udin remained on standby for most of the quarter due to weather in Taiwan, while Seaway Aimery and Seaway Moxie were in transit to Europe for Hornsea 2. As we flagged in the last quarter, We experienced a seasonal swing in vessel utilization this quarter with several of our global enablers in transit. Senvega also incurred downtime for repairs after storm damage and only returned to full operation in mid April. The delay in executing B. P. Manuel has had a knock on effect on the San Vega's other projects, But these have largely been accommodated through the reallocation of work to our other pipe lay vessels. Turning to slide 6. We ended the Q1 with a backlog of $6,000,000,000 up 6% from the Q1 last year and broadly in line with the year end 2020 position. During the quarter, we announced the award of SLGC in Angola and Northern Lights in Norway, as well as an order for an unnamed project within Subsea and Conventional. Including unannounced awards and escalations, we achieved a book to bill ratio of 0.8 times, a good outcome for a relatively quiet quarter. We have good visibility on revenue for the remainder of 2021 with $3,400,000,000 still to be executed, Voice our 2022 backlog of $1,600,000,000 is in line with the equivalent level reported at the same point in 2020 2019. And now I'll pass over to Ricardo to run through the financial results in more detail. Thank you, John, and good afternoon, everyone. Slide 7 shows our income statement highlights. 1st quarter revenue was $1,000,000,000 33 percent higher than the prior year period, reflecting higher levels of activity in both the Subsea and Conventional and Renewables business units. Adjusted EBITDA of $102,000,000 after incurring net costs associated with COVID-nineteen of approximately $9,000,000 was up 50% year on year. This resulted in an adjusted EBITDA margin of 10%, A modest improvement on the prior year period margin of 9%. Net income was $1,000,000 equivalent to diluted earnings per share of $0.01 Turning to slide 8 for additional details of the income statement. Administrative expenses improved by $7,000,000 against the prior year, reflecting progress in the implementation of our cost reduction plan. Depreciation and amortization decreased by $6,000,000 compared to the same period last year, reflecting the impact of reduced vessel lease commitments. The net operating loss of $9,000,000 in the Q1 included $69,000,000 in net COVID costs And a credit of $18,000,000 mainly related to downward revisions to the restructuring costs of the group's resizing program. Finally, other gains and losses of $16,000,000 included net foreign currency gains of $9,000,000 On Slide 9, we summarize the performance of our 3 business units. The Subsea and Conventional business unit, which encompasses all our activities in oil and gas generated $735,000,000 of revenue in the Q1, 10% higher than the prior year period, mainly due to higher activity in the Gulf of Mexico, Brazil and Saudi Arabia. As John mentioned, Four vessels were active on offshore phases of projects in the Gulf of Mexico. While we had good utilization of the PLSVs in Brazil and the quarter benefited from higher activity on 3 of our contracts in Saudi Arabia. We also recorded some progress on the Lingxue project in China as 7 Borealis mobilized to the region. Renewables revenue was $241,000,000 a near fourfold increase compared the prior year, mainly driven by the ramp up in activity related to the Sea Green project. Our corporate business unit, which now includes Exodus and Spore Subsea, our autonomous subsidiaries, which provide specializing engineering services, generated $20,000,000 in revenue. Subsea and Conventional recorded a $7,000,000 net operating loss in the quarter compared to a loss of $28,000,000 in the Q1 of 2020, reflecting increased conventional activity in Saudi Arabia and the completion of the Zinnia project. This was partly offset by high levels of transit time for the Global Enabler vessels. The net operating loss of our Renewables business unit was $20,000,000 in line with the Q1 of 2020. Progress on Seagreen continued as planned, but was offset by bad weather affecting Seaway Yudin in Taiwan, Seaway Strashnov undergoing maintenance in Shipyard and the transit of both Seaway Aimery and Seaway Moxie to the North Sea. In the Corporate Business Unit, net operating income of $18,000,000 reflected the $18,000,000 credit relating to the resizing program I mentioned when discussing the previous slide. Slide 10 shows our cash flow waterfall chart for the quarter. Net cash generated from operating activities was $71,000,000 despite a $25,000,000 adverse movement in working capital, driven by a combination of reduced operating liabilities and a minor increase in operating receivables. There has been no deterioration at this juncture in client payments. Our capital expenditure was $24,000,000 including payments related to the conversion of Seaway Phoenix, dry docking costs associated with the 7 Falcon and continued investment in the Group's digitalization program. At the end of the quarter, we had $527,000,000 in cash and cash equivalents, an increase of $15,000,000 from the end of 2020. Our net cash position improved to $74,000,000 including lease liabilities of $251,000,000 Our capital allocation strategy remains unchanged, and you are familiar with our 3 priorities: reinvesting in the business, protecting the balance sheet and returning excess cash to shareholders. After approval from our shareholders at our EGM held on the 14th April, the Board reaffirmed its commitment to returning excess cash to shareholders by extending the authorization to repurchase shares until April 2023. $190,000,000 of the current $200,000,000 program is outstanding. To conclude, Slide 12 shows our guidance for the full year. Guidance for 2021 remains largely unchanged since the last update in February. Subject to the impact of COVID-nineteen, we continue to anticipate revenue and adjusted EBITDA to be above 2020 levels with positive net income. Net operating income. The financial impact of COVID-nineteen, including the rate of recoveries from clients, remains very difficult to predict. The operational challenges have not diminished since 2020, and it is possible that going forward, the quarterly charge could revert to levels reported in Q2 and Q3 last year. We have made a minor adjustment to our guided tax charge range, which has been revised upward $10,000,000 mainly to reflect increased tax burdens in certain jurisdictions. I'll now pass you back to John. Thank you, Ricardo. On slide 13, we revisit the summary of our 2 pronged strategy, comprising Subsea Field of the Future, Systems and Delivery and a proactive participation in the energy transition. Today, we'll take a closer look at the progress we've made in the Q1 in Emerging Energy and in Renewables. Turning to slide 14. We were very pleased to win our 1st carbon capture award during the quarter, a part of Equinor's Northern Lights project in Norway. Subsea 7 will be responsible for the engineering, fabrication And installation of a pipeline running 100 kilometers from shore to the offshore field with carbon dioxide emitted by cement and waste to energy operations will be permanently sequestrated. The project plans have an initial capacity of up to 1 point 5,000,000 tons of CO2 per year and it will be operational in 2024. The carbon capture market is to grow significantly in the coming years as governments increase their targets to cut CO2 emissions and we are well placed to seize the opportunities that this will bring. Moving to slide 15 and the latest progress in our renewable strategy. During the quarter, we announced a new joint venture with Simply Blue Energy for the Salamander floating offshore wind project in Scotland. Subsea 7 has taken a minority stake in its pre commercial 200 Megawatt project and will bring to the joint venture Its expertise in delivering offshore energy projects and its knowledge of the Scottish supply chain. Simply Blue Energy will bring its floating wind development from the previous slide. Exodus has been supporting the project from inception and we'll continue to work with the project to deliver the concept and readiness for acquiring a lease from Crown Estate Scotland. This is our 3rd involvement in a protein wind project at the Highwind Scotland and Highwind Tampa and will help ensure that Subsea 7 develops a strong position from which to capture a share of this promising long term growth market. On slide 16, we have a view of the outlook for prospects in the coming 12 months. The level of tendering activity has improved during the quarter, Although it remains focused on the 3 key regions with advantaged economics Brazil, Gulf of Mexico and Norway. The number of prospects in Brazil has increased with Mero 3, Mero 4, Buzios 6, Buzios 7 and Buzios 8, BMC 33, Gato D'Amato and Lapa Southwest, all expected to be bid in the next year. In addition, we expect to tender for the various packages of Petrobras' Rigid riser replacement program, whilst our tender for the PLSV contracts has already been submitted. We continue to expect the conversion of our FEED contract on Bacalhau to full Epic by mid year subject to FID by the client. In Norway, we've increased the size of our early engagement team to handle the high levels of FEED work. We anticipate that this will lead tenders for EPC contracts in 2022 as clients take advantage of the government's tax incentives for new developments. The prospects include a portfolio of projects for Aker BP for which we are the preferred supplier. In other areas of the world, the prospects remain patchy, but we have seen some slight improvement in Saudi Arabia. Having restarted offshore activities there, new prospects such as Zulu have emerged. In Renewables, We're seeing good long term opportunities in Europe and Asia and the tendering for projects in the U. S. Market is now active. We anticipate these to be awarded to the industry from late 2021 onwards. To conclude, we'll turn to slide 17. After the 1st 3 months of the year, Subsea 7 remains in a strong position with a robust backlog of $6,000,000,000 and net cash on the balance sheet. The number of prospects in the oil and gas market is picking up in key regions, improving the outlook for offshore activity from late 2023 onwards. In the interim period, our cost reduction plan is designed to optimize our fleet utilization. We're also actively pursuing a number of offshore wind prospects including those in the U. S. Overall, our strategy to be a market leading Diversified Energy Services Company leaves us well positioned to capture a recovery in the oil and gas market and in parallel We'll continue to build on our strong position in the high growth fixed and floating wind markets as well as the carbon capture market. And now we'll be happy to take your questions. Thank you. We'll now begin the question and answer session. We are taking our first question from the line of Michael Alsford at Citi. Hi there. Good afternoon. Thanks for taking my questions. I've got a couple, if I could, please. Just firstly, on vessel utilization. Clearly, you commented on the fact that there was a number of vessels that were in transit And there was a couple of operational issues. Could you talk a little bit more about how you see vessel utilization trending in the coming quarters? And Maybe a little bit more elaboration on what you're doing from the cost side to reduce, I guess, the fleet and manage the utilization given while you're waiting for the Award inflow to come through and more activity, I guess, in 2023. And then secondly, just on the treatment of the €18,000,000 credit in 1Q. Could you just talk a little bit more about exactly what that relates to? Thank you. Thank you, Michael. I'll take the first and I'll ask Ricardo to take the $18,000,000 credit question. As we mentioned, a lot of our global enablers were in transit during the quarter to themselves for this year's campaigns, but we do expect the utilization to pick up in quarter 2 and quarter 3. As we also mentioned, the Vega had to do some repairs in the Q1. So we've reallocated some of its project activities onto some of our other realers. So again, we are seeing a higher level of utilization on the real pipeline vessels this year as well. So I think as we normally see Q1 relatively quiet. It's picking up as we expect. We're pretty clear we've got all the work we need to do this year. It's now about liquidating the work that we have this year. But we do see though that the lack of awards in 2020 early 2021 will need to mean that we will continue to have to reshape the fleet going into 2023. So at the end of the season, we'll again shape the fleet to get it to be the right size and scale into 2022 and into 2023. And then as I mentioned, we expect to see these awards that will be in the market in Q2 and Q3 and Q4 this year, leading to quite significant Taking the work in mid-twenty 20 3 onwards. And I'll ask Ricardo to talk about the makeup of the $18,000,000 credit. Good afternoon, Michael. Consistent with our approach in 2020, we have commented on all adjustments to the restructuring reserve, which we took in Q2 last year. And we have always commented on those adjustments within the interim management reports that support the press release. In Q1, we benefited from 2 adjustments to the reserves. The first was a downward revision to our redundancy costs So after assessing reassessing our resource needs, something we've been doing every quarter, and that was about $4,000,000 And the second item was The unexpected payment of a client receivable that has been outstanding for several years and that was approximately $14,000,000 I hope that clarifies. That helps. Thanks, Ricardo, and thanks, John. We're taking our next question from the line of Frederik Lunden at Carnegie. Yes. Hi. I was wondering if you could comment on how we see 2022 shaping up. Obviously, backlog coverage has improved, But just still the question of how incoming orders will sort of impact utilization next year. You alluded to May 23, yes, more the best case. Yes. I think thank you, Frederic. For us, and I made it in my prepared comments that as we stand today, we've got €1,900,000,000 for 2022, And we had not $1,900,000,000 of work on the books at this time last year and the year before, although the ratio between renewables and Subsea and Conventional is slightly different. So I think for us, we expect to see that we will be building backlog during this year, but a lot of that backlog will be for work that will go offshore. Bacalhau is a 2023 project offshore. We would expect Scarborough, which is a 2023 2024 project, Barossa, which we've just taken back through FID with our client and is on our books now will be also Late 2023, 2024. So the reason we're flexing our fleet is just to get the size right for 2022 And then be ready then to expand it back out again as we pick up in 2023. So I think our backlog coverage overall will be in a good place at the end of the year and we don't see any real change. And as I talked in outlook, we can see quite an acceleration of a number of prospects in Brazil. And we see that Norway will also be pushing ahead. So we expect to see backlog building up and let's see how 2022 plays out in the next few quarters. Okay. Thank you. We're now taking our next Question from the line of Amy Wong at UBS. Hi, good afternoon. A couple of questions from me, please. The first one is just Bigger picture. On your higher tendering levels that you're seeing, particularly in your oil and gas business, what are you seeing in in terms of competitive behavior, how many number of competitors are tendering for these projects and help us understand how that compares to maybe like the pre are pandemic levels. Thank you. Thank you, Amy. I think what we're seeing is that Certainly, the flow of opportunities in Brazil is growing, which is a very positive sign. I read the list of all the bids that we expect to see in the next 12 months. And in our discussions with Petrobras, there's another group of projects To come behind those as well. As you know in Brazil, it's an opening tendering type environment, but we would expect to see our usual suspects on those bids. But these are major, major projects. AMERO 3 and AMERO 4 are pretty much identical in size. So each of these projects will soak 6 to 8 months of a pipe layer up on each one. So we're quite excited by what we're seeing. The other thing that's very interesting there is a riser replacement Which the market wasn't aware of, which has come out already, this quarter, which is to replace some flexibles, which are failing With steel rises and there's more than one of those packages due to be bid over the next 2 years. So we do expect See on the PLSV renewal came out quicker than most of us saw. So I think we will see Brazil and it will be Ourselves and the usual two suspects in that list. In terms of Norway, we feel in a strong position in Norway. We're the market leader in Norway for that work. We're in good dialogues with our main clients in Norway. And as I mentioned in my prepared remarks, Aker BP have a very ambitious slate of projects that they would like to try to get sanctioned by the end of 2022. And again, we're part of the alliance that does all the Iker BP's work. So again, we're feeling strong, well positioned on those. And the last area we do well is the Gulf of Mexico. In the last few years, we've done over 50% of the work in the Gulf of Mexico in the surf world and we're feeling very Strong there as well. So for us what's been very good for us is that the recovery in the markets are areas that we feel strong about And we're very well positioned in. So we remain optimistic that we will always get our fair share of the market there. And this bodes well for late 2023, 2024 and 2025. And it's really just trying to work out how all this will fit together is on our minds at this stage. We haven't priced we priced Mero 3 that's in the market today. The PLSVs are priced. So we'll see how The market reacts and who wins the different packages associated with that. We'll see then the other packages such as Buzios 7 and the riser package going in And then a series of other bids going in, in Brazil. Norway is slightly different. Most clients are doing early engagement work to optimize the Fields, the designs, the layouts, the cost efficiency of those projects, we'd expect those to go to sanction in 2022. That's very good color. Thank you very much for that. A quick follow-up, if I may. Going back to your corporate division, There's the $18,000,000 credit in there. My question is, if you disregard the credit, I mean, it still suggests that their corporate division was breakeven in quarter and that compares to a normal underlying like usually like mid to high single digit corporate loss or expense in that division. So could we read that as improvement in your exit in the 4 Subsea businesses? Or how should we for that breakeven underlying results. Amy, I'll ask Ricardo to answer that. Hello, Amy. As you know, we've reorganized our business units such that Exodus and 4th at Sea are now included in the corporate business unit. And These autonomous subsidiaries are inherently profitable and do make a contribution. But I would I warn you that the corporate activities will also include restructuring Provisions and adjustments as and when they occur, potentially including impairments, as well as differentials between Allocated costs and underlying costs of our corporate overhead. So please don't assume that the Profitability or lack of it within corporate is attributable to the 2 subsidiaries. They're just a part of a bigger equation. And Amy, just to pick up on as Ricardo said, the reason we put them into corporate is that those two divisions work equally across So our energy transition renewables business and our oil and gas business, they're both growing. They're both expanding. We're both hiring people in both areas. And they provide some fantastic insights into how these markets are developing. As I mentioned in my prepared remarks, The Salamander project and our discussions with Simply Blue started through work that Exos had done for that developer. So again, these are very good profitable businesses for us and we expect quite a bit of growth in those sectors over the next few years. Thank you very much for that. We are taking our next question from the line of Nick Konstantakis, Edexam. Hi, guys, and thanks for taking my questions. A few if I could, please. Starting with the PLSVs, we've seen the different categories and different rates paid there. It's kind of a complicated process. Could you just explain to us If you had any more discussion with Petrobras, how many vessels they look from each category? Or I guess to Got that. Good to the question. What will be your expectations of how many vessels would you keep in the country in the future? Secondly, on CCS and congrats on the Northern Line Awards. I was wondering if you have any addressable market estimates for us, considering the growth that we're seeing there. And if I can squeeze the last one through, apologies if you have talked about this before, but around Salamander and the equity stake, Is that something you would like to keep doing going forward? Do you think it brings something in terms of you securing some work? And would you be looking to farm down before the start up of a project once it's derisked? Thank you. I'll take Salamander first and then I'll answer your other two questions. Yes, the intention is that there will be a farm dam on that before it sanctions in 2025. It goes for its CFD in 2025. For us, it's again about it's a new sector. It's a new area for the industry. It's also to work with a developer such as Simply Blue, which have a successful track record on their other projects in floating wind To understand the economic dynamics and the development dynamics that come there, some of the elements like concept selection, which will come later, to understand the moving parts of the business because if we intend to grow in that business understanding that, but the aim would be that there would be a farm down in that before it finally sanctions. In carbon capture and storage, I think it's early days, But we were doing the review internally earlier this week on the U. K. Government's plans for carbon capture. And you can see, for example, the U. K, which is one of the more proactive governments Moving ahead with carbon capture plans. There are regional plans around Humberside, Teesside, the Northwest and South Wales for government to spend money on reducing carbon emissions there. There are projects around that area, Which will need an infrastructure offshore similar to a Northern Lights type project. So what we're interested in is our view Nick is The world will go that way. More carbon will be captured. More carbon will be sequestrated offshore. So we don't have a fixed market in mind. But being a first mover and involved in these projects and just you're in the ecosystem with the carbon capture technology It's fitted onshore. You're working with the clients on the reservoir and everything offshore and you're part of that system Is what this is about for us at this point to become knowledgeable and a relevant provider of services there. But it's been fascinating to look at the U. K. Market and How that fits together. So again, market size will be developed. Lastly, on the PLSVs, you're right to say the bid is complex. You tried bidding it. It was complex, but we did it. And I think that it's fair to say that Petrobras have not declared how many shifts they want in each Category, there are 5 categories as you know public opening and we know where our ships are in each of those categories. We're very comfortable with our bids and we expect the Petrobras over the next 6 to 8 weeks will make their decisions. We'd expect the reward either late Q2 or early Q3 on that. So that's all I can say at this point. Thank you. We are taking our next question from the line of Vlad Sergievskiy at Bank of America. Yes. Hi, gentlemen. Thanks for taking my questions. First one on the order intake. Dollars 0.89 book to 1,000,000,000 Q1, You are pointing to increasing tendering activity for the rest of the year. Is it feasible to achieve onetime book to bill robust for this year? So that's the first one. And the second one on wind profitability. A bit of a setback in Q1 compared to the second half of last year. In light of that, are you still expected to make progress this year in the direction of your 10% margin target for wind? Thank you. Thank you, Vlad. And 2 very good questions. Renewables in Q1 was really about the fact That most of our assets weren't working in Q1 in renewables. Our 2 cable layers were offloading cables in Taiwan, Which we couldn't install because of access issues, which we discussed to the market before. And then returning to Europe to be ready for Hornsea 2. The Yudin stood by on weather. We're now working in a weather window, which we haven't contracted with originally, and we're in discussions with our clients on that. Ourselves and most of the other contractors did very little work in Taiwan through a very rough winter there. And lastly then the Oleg was on maintenance. So really the draw the drag in that period was really about the 4 assets Not getting much recoveries. Seagreen though has gone very well and continues to do well and is profitable. We'd expect We'll be back on Hornsey. In fact this week we start on Hornsey. So our ships will be laying cables and they're pretty well full for the rest of the year. We're seeing the weather start to come down. So we expect Yudin to be working in Taiwan for a part of this year. And then the Oleg will start its Haynes in Europe quite soon. So we do expect this on Seagreen, we expect to make progress on the 1st offshore phase on Seagreen will be the back end of this year. So we do expect us to make progress along that path that we talked about on our Investor Day in September. Book to bill, in terms of book to bill, as we've mentioned, we would expect to see projects where we are already nominated as Preferred bidder hopefully turn to sanction this year such as Bacalhau and Scarborough. We would also expect To see some of these awards in Brazil such as the PLSVs and some of the Buzios Olmero portfolio turn to backlog for ourselves. So we'd expect to get a reasonable share of that this year. The main question is really the timing of the big American awards. These are very, very large projects in the U. S. With quite some ambitious time lines. Whether some of those will be awarded early Q1 next year or the back end of this year is on our minds at this point. So at the moment directionally we're heading towards where we want to be for the year. It'll just be how those big renewables projects in the U. S. Land and get sanctioned. Thanks very much, John. And if I can squeeze another quick one here. You mentioned Some small delay on this is Med Dog project. Would you be able to give us color on the financial impact of this one in Q1? And whether there was any financial effect, Silaneo will enter Q2 as well or not. Thank you. Yes. Sorry, just to correct you, Ibad, it's BP Manuel, which is a project that we had the issue with the Vega on because we had to do the repairs on the Vega post the storm damage. So that's been delayed. We've reallocated the delayed work to our other reelers as I mentioned in my prepared remarks. And we plan that around this year. So I don't believe there's a significant impact on that. There is Some logistics issues that we have in terms of pulling that together. But we're working now And all the pipe players are doing the jobs as we plan them for the year of the month. Super. Thanks very much. We're taking our next question from the line of Mark Wilson at Jefferies. All right. Thank you for taking my question. I'd just like to ask on the book and turn side of the awards in 1Q, Very strong book and turn additions for revenue this year, about $400,000,000 And given you did about $1,000,000,000 We've got 3.4 for the rest of the year. And given your comments on projects you're viewing like Bacalhau and in Brazil, One would imagine the chance of adding additional book and turn of about that amount through 2021 is quite likely. So I'm just wondering about the Revenue guidance staying at higher than 2020 when you arguably got visibility on Quite significantly higher than that, certainly, if we assume some more book in turn. I think, Mark, the way we look at it, We're reasonably okay for this year. We're comfortable that we've got the work to liquidate this year. Any of the new work that will come in We'll probably not have a material impact on this year other than the projects we know that are going to be in such as Bacalhau and Scarborough that we Back to be in this year. So I think that in terms all of this is for execution in later years. So we don't expect I see this year really pushing up much higher than this. But I think it's the speed at which The Brazil projects may get turned into awards is the only thing that's not clear to us at the moment, I think. It's caught us a little bit as an industry on the hop with the amount of bids coming out, But we're not planning on that at this stage. Okay. Thanks. And so then on the back of that John, just maybe explain what was Specific about 1Q awards that so much of it falls in 2021, but the rest of the year is less likely to? That's a good question, I think. Not clear to me, sorry. Could we have the question again? Sorry. Well, in your answer there, you seem to suggest that awards in the rest of the year shouldn't Really changed your revenue backlog for this year. But the 1Q awards, about half of that actually Is falling as 21 revenue. So I'm just wondering why those 1Q awards were so short cycle Quite a large part, but the rest of the year, what you win, but you won't see a decent short cycle revenue addition to this year. Yes. There's one project in there where we're buying some long lead materials, which go through our books this year. So there's some material to be ordered on those which have an impact on this year. All right. Very clear. Thank you very much. There are no further questions from the line. Please continue. Well, thank you very much. We appreciate you joining. We know it's a very busy day today with many companies reporting, but thank you very much for your continued interest in Subsea 7 and your Very probing questions. Hopefully, we've answered them. If there's any further questions, please let Catherine know and we'll try to give you an update on Q2. So we look forward to talking to you then. Thanks a lot.