Sea1 Offshore

Good day, everyone, and welcome to the review and presentation of our results for the third quarter 2022. My name is Vant Omdahl and I'm the CEO of the company. I'm joined by our CFO, Vidar Gjertstad, and together we will take you through this presentation. CM Offshore's report for the third quarter 2022 was released prior to the market opening today. In this presentation, we will cover the main highlights of the report and we will refer to the presentation issued together with the financial report. At the end of the presentation, we will open up for questions. Looking at the highlights for the quarter, We had 28 vessels in operation and all vessels delivered a positive EBITDA margin. We had US dollars 73.7 million in revenue and we delivered 34.1 million US dollars in EBITDA, which is equivalent to 46% EBITDA margin. Our cash position was US dollars 89 million at the end of the quarter. And our book equity ratio was 35%. We continue to deliver safe and efficient operations in all regions. This is a result of high focus on safety at all levels in the company. The utilization of the fleet in the third quarter was 93%, excluding vessels in layup. We had three vessels in layup at the end of the quarter. We have been awarded some long-term contracts in the third quarter. The CM Stingray was awarded a three-year contract with Subsea 7. and the anchor handle Avalon Sea was extended by 18 months in Canada ensuring utilization well into second quarter of 2020. We also got a new contract in place for the oil spill recovery vessel CM Maragogi with a duration of three years. First of two options was also declared for the PSV, CM Atlas and CM Giant. Both vessels are no firm until June 2023. The mentioned vessels are operating in Brazil. And for the anchor handler, the CM Opal, Equinor declared three-month options with commencement in September this year. He also recently received a notification of a final and favorable decision of a Brazilian court in a lawsuit filed against Petrobras. This case is related to late delivery of the vessel CM Maratizes from back in 2016. The penalty charge has been accrued for in previous year's accounts and will not have any impact on the profit and loss account for 2022. The unfavorable decision of the court amounts to a cash payment equivalent to around 8 million US dollars. My colleague Vidar Jasta will now give some details regarding the results for the third quarter.

Thank you, Bound.

In the third quarter, CM Offshore generated $73.7 million in revenue and achieved an operating margin of $34.1 million. Both figures represent a decent uplift from the same quarter last year. Depreciation was $16.6 million. There were no impairments or any reversal of impairments in the quarter. Operating profit ended therefore at $17.5 million. Interest rate expenses were $6.2 million, and net financial items ended negative by $7.7 million. Net profit before taxes were $9.9 million, and after taxes, $10.2 million. After adjusting for minority shareholders in one of our subsidiaries, we end up at $9.9 million. This slide shows operating margin before G&A and distributed on segments. The OSCV and well intervention vessels had an operating margin in the third quarter of $19 million. The PSVs generated $3.6 million in margin last quarter. This figure confirms for second quarter in a row that the drop in margin for the PSVs in the first quarter were transitory. Anchor handling vessels had an operating margin of $8.5 million, a considerable increase in margin compared to same quarter last year and also year to date. Other vessels generated $8.2 million. A quick look at the balance sheet shows that book equity of the company is continuing to grow quarter by quarter. The company now has $356 million in equity, and the book equity ratio is 35%. Gross interest-bearing debt is 579 million, net interest-bearing debt 490 million. CM Offshore's financial position is good, and it continues to improve. CM Offshore is an attractive and solid business partner, not only from a commercial and operational perspective, but also from a financial perspective. And now, the year-to-date cash flow shows the following. We started this year with $92 million in cash. We have generated $69 million in cash from operations. We have paid net interest of $11 million. We have invested in the vessels $20 million. We have repaid debt of $40 million. and end the third quarter with $89 million in our accounts. Note that the first half year was very capex intensive and not representative for the second half of the year. Out of the 20 million in capex in this figure, 19 million relate to first half year and only 1 million to the third quarter. And let's take a look at the contract backlog. At the end of third quarter of 2022, the backlog amount is $462 million. This is a net increase of $51 million from previous quarter end. The OECVs and well intervention vessels dominate with 64% of the backlog. Our anchor handling vessels are represented by only 1%. In this slide, you see firm contracts and options in green and vacant vessel days in blue. Especially the short backlog in the anchor handling vessels represent a large degree of exposure to the markets, implicating market risk and market opportunities going forward. However, under the current trend of improving markets and continued focus on energy security, We believe the available capacity going forward in general represent an attractive earnings potential.