Eneti Inc. (NYSE: NETI) (“Eneti” or the “Company”), today reported
its results for the three months ended March 31, 2023.
The Company also announced that on
April 27, 2023 its board of directors (the “Board of
Directors”) declared a quarterly cash dividend of $0.01 per share
on the Company’s common shares.
Results for the Three Months
Ended March 31, 2023
and 2022
- For the
first quarter of 2023, the Company’s GAAP net loss was $17.6
million, or $0.48 per diluted share.
- Total revenues for the first quarter of 2023 were $13.8
million, compared to $22.4 million for the same period in 2022.
First quarter 2023 revenues consisted of revenues generated by the
Seajacks Scylla, which began work at an offshore wind farm project
in the Netherlands, as well as the NG2500Xs which performed
maintenance on offshore gas production platforms and wind turbine
gear maintenance and consulting revenue. Seajacks Zaratan is
expected to begin its next project in June 2023.
- Vessel operating costs were driven by fuel costs and catering
(which are typically recharged to clients and presented on a gross
basis in both revenue and vessel operating costs), as well as
maintenance, which is typically incurred while vessels are
off-hire.
- For the first quarter of 2022, the Company’s GAAP net income
was $4.2 million, or $0.11 per diluted share, including a gain of
approximately $18.5 million and cash dividend income of $0.2
million, or $0.48 per diluted share, from the Company’s equity
investment in Scorpio Tankers Inc.
- Earnings
before interest, taxes, depreciation and amortization (“EBITDA”)
for the first quarter of 2023 was a loss of $10.3 million and
EBITDA for the first quarter of 2022 was $14.2 million (see
Non-GAAP Financial Measures below).
Liquidity
As of April 21, 2023, the Company had
approximately $112.2 million in cash and cash equivalents and $2.1
million in restricted cash.
Newbuildings
The Company is currently under contract with
Daewoo Shipbuilding and Marine Engineering (“DSME”) for the
construction of two next-generation offshore wind turbine
installation vessels (“WTIV”). The aggregate contract price is
approximately $654.8 million, of which $98.5 million has been paid.
The WTIVs are expected to be delivered in the fourth quarter of
2024 and second quarter of 2025, respectively. The estimated future
payment dates and amounts are as follows (1) (dollars in
thousands):
|
DSME1 |
|
DSME2 |
Q2 2023 |
$ |
— |
|
|
$ |
32,441 |
|
Q3 2023 |
|
33,036 |
|
|
|
— |
|
Q4 2023 |
|
33,036 |
|
|
|
— |
|
Q1 2024 |
|
— |
|
|
|
— |
|
Q2 2024 |
|
— |
|
|
|
32,441 |
|
Q3 2024 |
|
— |
|
|
|
32,441 |
|
Q4 2024 |
|
198,217 |
|
|
|
— |
|
Q1 2025 |
|
— |
|
|
|
— |
|
Q2 2025 |
|
— |
|
|
|
194,644 |
|
Total |
$ |
264,289 |
|
|
$ |
291,967 |
|
(1) These are estimates only and are subject to
change as construction progresses.
Award of New Contracts
During the first quarter of 2023, Seajacks UK Limited, a
wholly-owned subsidiary of the Company, (i) signed two new
contracts in NW Europe for between 75 and 102 days of employment
for one of its NG2500X-class vessels that is expected to generate
between approximately $5.7 million and $7.1 million of revenue in
2023, (ii) negotiated additional extensions for another
NG2500X-class vessel which have generated an additional €2.9
million over the fourth quarter of 2022 and first quarter of 2023,
(iii) extended an existing contract for its NG14000X-class vessel
which has generated an additional €2.6 million of revenue during
the first quarter of 2023 and (iv) signed a contract in NW Europe
for between 41 and 53 days of employment for one of its
NG2500X-class vessels that is expected to generate between
approximately $3.3 million and $4.1 million of revenue in 2023.
Intention to Enter into Joint Venture for Offshore Wind
Foundation Installation
In April 2023, Eneti entered into a non-binding memorandum of
understanding indicating its intention to form a joint venture
company with Transocean Ltd. (“Transocean”) that will engage in
offshore wind foundation installation activities.
The establishment and operation of the joint venture is subject
to the negotiation and execution of definitive agreements which are
expected to provide for (i) the conversion of at least two
Transocean vessels into floating offshore wind foundation
installation platforms, (ii) expertise and operational personnel to
be provided by both Eneti and Transocean, and (iii) the right but
not the obligation for each of Transocean and Eneti to invest in
the joint venture with additional partners. The vessels, once
converted, would be capable of carrying and installing up to six
3,500-ton, 12-meter diameter monopile foundations with
state-of-the-art safety and efficiency.
Debt Overview
The Company’s outstanding debt balances, gross of unamortized
deferred financing costs as of March 31, 2023 and
April 21, 2023, are as follows (dollars in thousands):
|
|
As of March 31,2023 |
|
As of April 21,2023 |
Credit
Facility |
|
Amount Outstanding |
$175.0 Million Credit Facility |
|
$ |
62,500 |
|
|
$ |
62,500 |
|
Total |
|
$ |
62,500 |
|
|
$ |
62,500 |
|
The Company has undrawn availability under a
$75.0 Million Revolving Loans of the above-mentioned $175.0 Million
Credit Facility.
Performance Bonds
As of April 21, 2023, performance bonds were issued on
behalf of the Company for $1.9 million, which was cash
collateralized.
Quarterly Cash Dividend
In the first quarter of 2023, the Board of
Directors declared, and the Company paid, a quarterly cash dividend
of $0.01 per share totaling approximately $0.4 million.
On April 27, 2023, the Board of Directors
declared a quarterly cash dividend of $0.01 per share, payable on
or about May 31, 2023, to all shareholders of record as of May 10,
2023. As of April 27, 2023, there were 38,647,119 common shares
outstanding.
Conflict in Ukraine
As a result of the conflict between Russia and
Ukraine which commenced in February 2022, the United States, the
European Union, and others have announced unprecedented levels of
sanctions and other measures against Russia and certain Russian
entities and nationals. The ongoing conflict has disrupted supply
chains and caused instability and significant volatility in the
global economy. Much uncertainty remains regarding the global
impact of the conflict in Ukraine and it is possible that such
instability, uncertainty and resulting volatility could
significantly increase our costs and adversely affect our business.
These uncertainties could also adversely affect our ability to
obtain additional financing or, if we are able to obtain additional
financing, to do so on terms favorable to us. We will continue to
monitor the situation to assess whether the conflict could have any
material impact on our operations or financial performance.
Eneti Inc. and SubsidiariesCondensed Consolidated
Statements of Operations(Amounts in thousands, except per share
data) |
|
|
Unaudited |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
Revenue |
$ |
13,816 |
|
|
$ |
22,438 |
|
Operating
expenses: |
|
|
|
Vessel operating and project costs |
|
18,890 |
|
|
|
18,051 |
|
Vessel depreciation |
|
5,988 |
|
|
|
6,233 |
|
General and administrative expenses |
|
8,302 |
|
|
|
10,016 |
|
Total operating
expenses |
|
33,180 |
|
|
|
34,300 |
|
Operating
loss |
|
(19,364 |
) |
|
|
(11,862 |
) |
Other income
(expense): |
|
|
|
Interest income |
|
896 |
|
|
|
— |
|
Income from equity investments |
|
— |
|
|
|
18,685 |
|
Foreign exchange income (loss) |
|
1,031 |
|
|
|
(390 |
) |
Financial expense, net |
|
(175 |
) |
|
|
(1,274 |
) |
Total other income,
net |
|
1,752 |
|
|
|
17,021 |
|
(Loss) income before
income tax provision |
|
(17,612 |
) |
|
|
5,159 |
|
Income tax expense |
|
6 |
|
|
|
1,009 |
|
Net (loss)
income |
$ |
(17,618 |
) |
|
$ |
4,150 |
|
|
|
|
|
(Loss) earnings per
share: |
|
|
|
Basic |
$ |
(0.48 |
) |
|
$ |
0.11 |
|
Diluted |
$ |
(0.48 |
) |
|
$ |
0.11 |
|
|
|
|
|
Basic weighted average number
of common shares outstanding |
|
36,599 |
|
|
|
38,797 |
|
Diluted weighted average
number of common shares outstanding |
|
36,599 |
|
|
|
38,817 |
|
|
|
|
|
Eneti Inc. and SubsidiariesCondensed Consolidated Balance
Sheets (Dollars in thousands) |
|
|
Unaudited |
|
March 31, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
117,847 |
|
|
$ |
119,958 |
|
Restricted cash |
|
2,120 |
|
|
|
7,269 |
|
Accounts receivable |
|
17,403 |
|
|
|
35,776 |
|
Inventories |
|
4,883 |
|
|
|
5,795 |
|
Prepaid expenses and other current assets |
|
10,371 |
|
|
|
4,740 |
|
Contract fulfillment costs |
|
1,530 |
|
|
|
634 |
|
Total current assets |
|
154,154 |
|
|
|
174,172 |
|
Non-current assets |
|
|
|
Vessels, net |
|
515,484 |
|
|
|
521,331 |
|
Vessels under construction |
|
114,028 |
|
|
|
110,969 |
|
Intangible assets |
|
4,518 |
|
|
|
4,518 |
|
Other assets |
|
3,361 |
|
|
|
3,514 |
|
Total non-current assets |
|
637,391 |
|
|
|
640,332 |
|
Total
assets |
$ |
791,545 |
|
|
$ |
814,504 |
|
|
|
|
|
Liabilities and shareholders’
equity |
|
|
|
Current liabilities |
|
|
|
Bank loans, net |
$ |
12,047 |
|
|
$ |
12,039 |
|
Contract liabilities |
|
7,594 |
|
|
|
6,706 |
|
Corporate income tax payable |
|
2,695 |
|
|
|
2,637 |
|
Accounts payable and accrued expenses |
|
18,789 |
|
|
|
23,629 |
|
Total current liabilities |
|
41,125 |
|
|
|
45,011 |
|
Non-current liabilities |
|
|
|
Bank loans, net |
|
49,231 |
|
|
|
52,253 |
|
Other liabilities |
|
1,817 |
|
|
|
1,926 |
|
Total non-current
liabilities |
|
51,048 |
|
|
|
54,179 |
|
Total liabilities |
|
92,173 |
|
|
|
99,190 |
|
Shareholders’ equity |
|
|
|
Preferred shares, $0.01 par value per share; 50,000,000 shares
authorized; no shares issued or outstanding |
|
— |
|
|
|
— |
|
Common shares, $0.01 par value per share; authorized 81,875,000
shares as of December 31, 2022 and 2021; outstanding 38,647,119
shares and 38,446,394 shares as of March 31, 2023 and December 31,
2022, respectively |
|
1,136 |
|
|
|
1,134 |
|
Paid-in capital |
|
2,065,842 |
|
|
|
2,064,168 |
|
Common shares held in treasury, at cost; 2,328,179 shares at March
31, 2023 and December 31, 2022 |
|
(17,669 |
) |
|
|
(17,669 |
) |
Accumulated deficit |
|
(1,349,937 |
) |
|
|
(1,332,319 |
) |
Total shareholders’
equity |
|
699,372 |
|
|
|
715,314 |
|
Total liabilities and
shareholders’ equity |
$ |
791,545 |
|
|
$ |
814,504 |
|
Eneti Inc. and SubsidiariesCondensed Consolidated
Statements of Cash Flows (unaudited)(Amounts in
thousands) |
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Operating
activities |
|
|
|
Net (loss) income |
$ |
(17,618 |
) |
|
$ |
4,150 |
|
Adjustment to
reconcile net (loss) income to net cash provided by |
|
|
|
operating activities: |
|
|
|
Restricted share amortization |
|
2,051 |
|
|
|
1,549 |
|
Vessel depreciation |
|
5,988 |
|
|
|
6,233 |
|
Amortization of deferred financing costs |
|
204 |
|
|
|
— |
|
Net (gains) on investments |
|
— |
|
|
|
(18,470 |
) |
Dividend income from equity investment |
|
— |
|
|
|
(215 |
) |
Drydocking expenditure |
|
— |
|
|
|
(504 |
) |
Changes in operating
assets and liabilities: |
|
|
|
Decrease (increase) in accounts receivable |
|
18,372 |
|
|
|
(14,026 |
) |
Decrease in inventories |
|
912 |
|
|
|
581 |
|
Increase in prepaid expenses and other assets |
|
(6,468 |
) |
|
|
(1,985 |
) |
(Decrease) increase in accounts payable and accrued expenses |
|
(4,059 |
) |
|
|
6,702 |
|
Increase (decrease) in taxes payable |
|
58 |
|
|
|
(1,161 |
) |
Net cash used in
operating activities |
|
(560 |
) |
|
|
(17,146 |
) |
Investing
activities |
|
|
|
Dividend income from equity investment |
|
— |
|
|
|
215 |
|
Payments on vessels under construction and other fixed assets |
|
(3,200 |
) |
|
|
(17,448 |
) |
Net cash used in
investing activities |
|
(3,200 |
) |
|
|
(17,233 |
) |
Financing
activities |
|
|
|
Proceeds from issuance of long-term debt |
|
— |
|
|
|
25,000 |
|
Repayments of long-term debt |
|
(3,125 |
) |
|
|
(87,650 |
) |
Debt issuance costs paid |
|
— |
|
|
|
(2,700 |
) |
Dividends paid |
|
(375 |
) |
|
|
(392 |
) |
Net cash used in
financing activities |
|
(3,500 |
) |
|
|
(65,742 |
) |
Decrease in cash and cash
equivalents and restricted cash |
|
(7,260 |
) |
|
|
(100,121 |
) |
Cash and cash equivalents and
restricted cash, beginning of period |
|
127,227 |
|
|
|
153,977 |
|
Cash and cash
equivalents and restricted cash, end of period |
$ |
119,967 |
|
|
$ |
53,856 |
|
Conference Call on Results:
A conference call to discuss the Company’s
results will be held at 10:30 AM Eastern Daylight Time / 4:30 PM
Central European Summer Time on April 27, 2023. Those wishing to
listen to the call should dial 1 (877) 513-1694 (U.S.) or 1 (412)
902-4269 (International) at least 15 minutes prior to the start of
the call to ensure connection. The information provided on the
teleconference is only accurate at the time of the conference call,
and the Company will take no responsibility for providing updated
information.
There will also be a simultaneous live webcast over the
internet, through the Eneti Inc. website www.eneti-inc.com.
Participants to the live webcast should register on the website
approximately 15 minutes prior to the start of the webcast.
Webcast
URL: https://edge.media-server.com/mmc/p/7dbtnegm
About Eneti Inc.
Eneti Inc. is a leading provider of installation
and maintenance vessels to the offshore wind sector and has
invested in the next generation of wind turbine installation
vessels. The Company is listed on the New York Stock Exchange under
the ticker symbol NETI. Additional information about the Company is
available on the Company’s website: www.eneti-inc.com, which is not
a part of this press release.
Non-GAAP Financial Measures
To supplement the Company’s financial
information presented in accordance with accounting principles
generally accepted in the U.S. (“GAAP”) management uses certain
“non-GAAP financial measures” as such term is defined in Regulation
G promulgated by the U.S. Securities and Exchange Commission (the
“SEC”). Generally, a non-GAAP financial measure is a numerical
measure of a company’s operating performance, financial position or
cash flows that excludes or includes amounts that are included in,
or excluded from, the most directly comparable measure calculated
and presented in accordance with GAAP. Management believes the
presentation of these measures provides investors with greater
transparency and supplemental data relating to the Company’s
financial condition and results of operations, and therefore a more
complete understanding of factors affecting its business than GAAP
measures alone. In addition, management believes the
presentation of these matters is useful to investors for
period-to-period comparison of results as the items may reflect
certain unique and/or non-operating items such as asset sales,
write-offs, contract termination costs or items outside of
management’s control.
Earnings before interest, taxes, depreciation
and amortization (“EBITDA”) is a non-GAAP financial measure that
the Company believes provide investors with a means of evaluating
and understanding how the Company’s management evaluates the
Company’s operating performance. This non-GAAP financial measure
should not be considered in isolation from, as substitutes for, nor
superior to financial measures prepared in accordance with GAAP.
Please see below for reconciliation of EBITDA.
EBITDA (unaudited)
|
Three Months Ended March 31, |
In thousands |
|
2023 |
|
|
|
2022 |
|
Net (loss) income |
$ |
(17,618 |
) |
|
$ |
4,150 |
|
Add Back: |
|
|
|
Net interest (income) expense |
|
(926 |
) |
|
|
1,274 |
|
Depreciation and amortization(1) |
|
8,243 |
|
|
|
7,783 |
|
Income tax expense |
|
6 |
|
|
|
1,009 |
|
EBITDA |
$ |
(10,295 |
) |
|
|
14,216 |
|
(1) Includes depreciation, amortization of deferred financing
costs and restricted share amortization.
Forward-Looking
Statements
Matters discussed in this press release may constitute
forward-looking statements. The Private Securities Litigation
Reform Act of 1995 provides safe harbor protections for
forward-looking statements in order to encourage companies to
provide prospective information about their business.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements, which are other than
statements of historical facts. The Company desires to take
advantage of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and is including this cautionary
statement in connection with this safe harbor legislation. The
words “believe,” “anticipate,” “intend,” “estimate,” “forecast,”
“project,” “plan,” “potential,” “may,” “should,” “expect,”
“pending” and similar expressions identify forward-looking
statements. We undertake no obligation, and specifically decline
any obligation, except as required by law, to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
The forward-looking statements in this press release are based
upon various assumptions, many of which are based, in turn, upon
further assumptions, including without limitation, our management’s
examination of historical operating trends, data contained in our
records and other data available from third parties. Although we
believe that these assumptions were reasonable when made, because
these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible
to predict and are beyond our control, we cannot assure you that we
will achieve or accomplish these expectations, beliefs or
projections.
In addition to these important factors, other important factors
that, in our view, could cause actual results to differ materially
from those discussed in the forward-looking statements include the
failure of counterparties to fully perform their contracts with us,
the strength of world economies and currencies, general market
conditions, including fluctuations in charter rates and asset
values, changes in demand for Wind Turbine Installation Vessel
(“WTIV”) capacity, the continuing impacts of the ongoing novel
coronavirus (COVID-19) pandemic, including its effects on demand
for WTIVs and the installation of offshore windfarms, changes in
our operating expenses, including fuel costs, drydocking and
insurance costs, the market for our WTIVs, availability of
financing and refinancing, counterparty performance, ability to
obtain financing and the availability of capital resources
(including for capital expenditures) and comply with covenants in
such financing arrangements, planned capital expenditures, our
ability to successfully identify, consummate, integrate and realize
the expected benefits from acquisitions and changes to our business
strategy, fluctuations in the value of our investments, changes in
governmental rules and regulations or actions taken by regulatory
authorities, potential liability from pending or future litigation,
general domestic and international political conditions, including
conditions resulting from the ongoing conflict between Russia and
Ukraine, potential disruption due to accidents or political events,
vessel breakdowns and instances of off-hires and other factors.
Please see our filings with the Securities and Exchange
Commission for a more complete discussion of these and other risks
and uncertainties.
Contact Information:
Eneti Inc.James Doyle – Head of Corporate
Development & Investor RelationsTel: +1 646-432-1678Email:
Investor.Relations@Eneti-inc.comhttps://www.eneti-inc.com
Eneti (NYSE:NETI)
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