Eneti Inc.

Hello, and welcome to the Annette Inc. First Quarter 2023 Conference Call. I would now like to turn this call over to James Doyle, Head of Corporate Development and Investor Relations. Please, go ahead, sir.

Thank you for joining us today. Welcome to the Annette Inc. First Quarter 2023 Earnings Conference Call. On the call with me are Emanuele Oro, Chief Executive Officer, Robert Bugbee, President, Cameron Mackey, Chief Operating Officer, Hugh Baker, Chief Financial Officer, Sebastian Brook, Chief Operating Officer of CJEX. Earlier today, we issued our first quarter earnings press release, which is available on our website at nettyinc.com. The information discussed on this call is based on information as of today, April 27, 2023, and may contain forward-looking statements that involve risk and uncertainty. Actual results and events may differ materially from those set forth in such statements. For discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release issued today as well as Annette Inc.' 's SEC filings, which are available at annetteinc.com and sec.gov. Call participants are advised that the audio of this conference call is being broadcast live on the Internet and is also being recorded for playback purposes. The archive of the webcast will be made available on the investor relations page of our website for approximately 14 days. We will be giving a short presentation today. The presentation is available at NNE.com and on the Investor Relations page under Reports and Presentations. The slides will also be available on the webcast. After the presentation, we will go to Q&A. Now, I'd like to turn the call over and introduce our Chief Executive Officer, Emmanuel Alora.

Thank you, James, and welcome, and thank you for joining us today to all. In the first quarter, the company generated $13.8 million of revenue and a loss of $17.6 million. Our business is seasonal, and we optimized the seasonality in the first quarter to perform necessary maintenance of the fleet ahead of what's going to be a busy reminder of the year. Looking forward, revenue is expected to increase throughout the year as our vessels begin employment on several contracts. Our two largest assets, Scylla and Zaraton, are contracted for the remainder of the year, and there is availability for additional employment on the NG2500s, which we're currently working on. We are now starting to actively market for sale the NG2500s, whilst we are benefiting from higher day rates on these assets. Until now, We had openly said that we thought these were non-core assets to our fleets. More or less a year into this statement, the market has favorably developed, both on the rate and utilization side. And as I just mentioned, we have decided to actively market the vessels for sale going forward. The outlook for WCID is continuously strengthened, and we are optimistic about the opportunities for the existing fleets, as well as the immediate ones. Significant demand for offshore wind and constraints in the WTI supply create tremendous potential for increasing day rates, increasing cash flows, and increasing returns. We have announced last week our MOU with Transocean to engage in offshore wind foundation installation services. This potential venture combines an active experience through CJEX of installing over 500 foundation components in Europe and in Asia. Together, we transitioned 300-plus rig years of experience in offshore drilling and conversions. There is no equity requirement from ENETI, and we are excited about working with a best-in-class operator and owner in the offshore industry. Much of the progress we are making has yet to be realized, but it will benefit the company in the coming years. and we are excited to capitalize on these opportunities and the good news ahead, as well as our role in the transition to a cleaner and more sustainable future. Thank you all for your support, and I will now turn the call to Sebastian. Sebastian, please. Thank you, Emanuele. Slide seven, please. Just to introduce myself, I'm Sebastian Burt, the COO and one of the founders of CJAX. which has been installing wind turbines for top-tier clients since 2009. And we're the operating platform of Enetti. And we're responsible for operating and contracting the fleet of five Sea Jack vessels that are currently on the water and the two next-generation new-build installation vessels, which are scheduled for delivery in the second half of 2024 and the first half of 2025, respectively. We've been building backlog over the past two years, and you can see from the chart on the bottom left, We've not only been successful in building backlogs, but also in increasing revenue through extensions of contracts beyond their original contractual duration. It was a very busy 2022 for Seagate, so we've used any idle time in Q1 to perform necessary maintenance on the fleet and to mobilize and reposition equipment for our contractual commitments in 2023. During the first quarter, Cilla transited from Asia to Europe, and after undergoing maintenance and preparation for her contract with Van Orde, is now on hire. As of today, she's installed three wind turbines at Herlandi Coast West Wind Farm. During the first quarter, Zaratan completed maintenance at ST Marine in Singapore and finalized mobilization for the themed turbine installation campaign at the Yunlin Wind Farm located offshore Taiwan. All three MG2500s will begin work in this quarter. The buyer finished current wind contracts and performing hookup and commissioning services of an offshore wind substation for a leading developer in Northwest Europe, Cracking is currently on contract performing repairs and maintenance at an offshore wind farm offshore France, and Hydra is facilitating decommissioning of oil and gas infrastructure in the southern North Sea. There are also numerous conversations with clients that could lead to additional employment in 2023. If you recall a few years ago, there were six vessels similar to the or the NG2500 class operating in the North Sea, but today there are only four, which has affected the reduction in supply by a third. We were optimistic that rates and utilization for these vessels would increase, and I'm pleased to report that they have. With regards to the NG2500 demand, we're seeing increased demand in all areas, all core markets, as the smaller turbines approach 10 years in the water and require increasing levels of maintenance. The number of substations requiring hookup, commissioning, and maintenance in the North Sea continues to increase in line with installed capacity, and the energy crisis has prompted utilities and operators to maintain the critical gas infrastructure in the region. Slide eight, please. Offshore wind is a growth industry, and while analysts may have differing views on exactly what the growth rate is, they are all agreed that growth is robust and any revisions to forecasts tend to be up rather than flat or down. This will lead to increasing demand for our insulation vessels and create a favorable rate environment for our services. While the turbine installation work is a critical part of the offshore wind supply chain, it represents a relatively small portion of the overall cost for developers, around 2% of the total spend. So we do not believe that increases in vessel rates will jeopardize the overall viability of wind farms. Slide nine, please. As you can see from the graph, the WTIB market is forecasted to be undersupplied through the end of the decade. These fundamentals will provide opportunities not only to Annette and Siren, but also for Zilla and Zaratan. Annette's new building, Siren and Annette, are scheduled to deliver in the second half of 2024 and first half of 2025 respectively. We had previously announced the initial employment contract for Annette, which is expected to be between 226 and 276 days. and generate approximately 60 to 73 million of net revenue after forecasted project costs. This would equate to a day rate of €260,000 per day after project costs, which reflects the value, capability, and flexibility that our next-generation new vital assets provide our customers. We've not yet announced a contract for Siren, but continue to work towards securing her maiden contract. For these new buildings, we continue to focus on finding the right contracts and high-capital vessels that will enable us to generate the most attractive returns for our shareholders. Contracting activity is high, and we continue to see high levels of interest across our fleet. We work across all geographies, with inquiries running from 2024 to the end of the decade, as clients look to secure capacity early in a market that is predicted to have a shortage of vessels as we move into the second half of this decade. We're in advanced discussions with clients about future work and are looking forward to announcing these to the market once finalized. With that, I'm going to hand over to James Doyle.