Sea1 Offshore

Good day everyone and welcome to the review and presentation of our results for the third quarter. My name is Bernd Tomdahl and I'm the CEO of the company. I'm joined by our CFO, Vida Jasta, and together we will take you through this presentation. CM Offshore's report for the third quarter 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 a financial report. And at the end of the presentation, we will open up for questions. Looking at the highlights for the quarter, we had 27 vessels in operation and all vessels delivered a positive EBITDA margin. We had close to 86 million in revenue. and we delivered 41.5 million in EBITDA. This is equivalent to 48% EBITDA margin. Our cash position was close to $100 million at the end of the quarter and our book equity ratio was 42%. We continued 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 third quarter was 87%. This number is excluding vessels in layup. We had two vessels in layup at the end of the quarter. We signed a medium term contract for two of our ranker handlers, CM Aquamarine and CM Amethyst. And we also got in place an extension for the sister vessel, CM2 Pass, ensuring continued operation well into the fourth quarter next year. CM Dorado was also awarded a contract extension, securing utilization until mid next year. Vidar Jasta will now give some more details regarding the results for the third quarter. Vidar.

Thank you, Bernd. CM Offshore's third quarter report is yet another report confirming that we are in a positive market trend. The company had 85.6 million in revenue for the quarter. That's up from 73.7 million same quarter last year. Operating expenses ended at 39 million, up from 34.4 million. G&A expenses was unchanged at 5.1 million. Operating margin for the quarter was 41.5 million, up from 34.1 million. Depreciation was 17.4 million. There were no impairments or any reversal of impairments in the quarter. Net financial items ended negative by 11.8 million and is affected negatively by a net currency loss of 5.3 million. However, note that positive currency effects of 3.7 million is reported under the comprehensive income. Net profit before and after taxes is 12.3 million. And after adjusting for minority shareholders, we ended up at 13.4 million. This slide shows operating margin distributed on segments. The figures are before G&A expenses. Due to common markets in the anchor handling segment compared to last year, the segment experienced reduced margin of 3 million. Despite this, increase in total margin before G&A was 7.3 million. And in the graph to the right, that represents year-to-date figures and shows a total increase in operating margin of 41%. of $41 million or 41%. After G&A expenses, operating margin is up 50% year to date. And let us take a look at the balance sheet. The book equity of the company has been growing steadily every single quarter since the successful restructuring two and a half years ago. The company has now $424 million in book equity, Debt figure represent a book equity ratio of 42%. Gross interest bearing debt is 505 million. Net interest bearing debt is 405 million. CM Offshore's financial position is good and it will continue to improve. CM Offshore is an attractive and solid business partner. And now the cash flow for the last nine months. We started 2023 by having $95 million in cash. We have generated $105 million in cash from operations. We have paid $50 million in interest. We have invested $22 million in the vessels, and we have repaid debt of $66 million. And we have now $100 million in our accounts. Note that CM Offshore's capacity for repaying debt is good. And now the contract backlog. At the end of first quarter, the backlog amount is 368 million with quality counterparties. The subsidy segment consists of seven vessels and dominate with 70% of the backlog. Over six PSVs has 13% of the backlog and over nine anchor handling vessels are also represented by 13% of the backlog. Over fast crew and oil spill recovery vessels has 4% of the backlog. On this slide, you see firm contracts and options in green and vacant vessel capacity in blue. The anchor handling vessels represent the largest exposure to the market, implicating market risk and market opportunities going forward. However, we now see the backlog for anchor handling vessels building up a bit. Under the current long-term trend of improving markets, and continued focus on energy security, we believe the available capacity going forward in general represent an attractive earnings potential. Back to you Bert.

All right, moving on. Our fleet consists of 27 own vessels as listed on this slide. And in addition, we have three vessels under our management. There's no major changes to fleet composition, so we will not spend more time on this slide. The company has a good global footprint, which is important for the utilization of the fleet. We will continue to move vessels around the world where we can perform safe operation with sustainable conditions. For the anchor handler segment, there are mainly shorter contracts and campaigns. and currently we have CM Opal, CM Pearl, CM Emerald and CM Ruby all trading in the North Sea spot market. CM Sapphire, CM Amethyst, CM Topaz and CM Aquamarine are trading in Asia. And we have the Avalon Sea on a term contract in Canada. The construction vessels, there we have the CM Barracuda in the North Sea And CM Spearfish is on a firm contract currently operating in West Coast of Africa. And the CM Stingray is operating in the North Sea on a long-term contract. And CM Dorado is on a firm contract in Brazil. And then we have the two well intervention vessels also working in Brazil. We have a fleet of six PSVs. Most of them are on long-term contract. In Australia, we have CM Tima and CM Pilot. In Brazil, we have CM Atlas and CM Giant. And CM Pride is on a long-term contract in the North Sea. And CM Symphony is also in the North Sea, but she's trading in the spot market. For our smaller Brazilian fleet, We still have the two oil spill vessels, CM-Maragogi and CM-Maratisis, on term contracts with Petrobras. And we have two vessels in layup, that is the fast screw vessels, CM-Pendotiba and CM-Peata. And then we have the core drilling vessel, Geodes Resolution. She is continuing working around the globe on a term contract. As shown on previous slides, we have a good contract coverage for this year. At the same time, it's important to have vessels available in an improving market to increase the potential of earnings. Moving on. The third quarter was strong in most regions and for most segments, but the anchor handler segments remains challenging. The North Sea sport market has been strong for the PSVs with good rates throughout the quarter. The anchor handler segment did not experience the increased summer activity that was expected. That resulted in low utilization and reduced day rates for the North Sea tonnage. Southeast Asia and Australia saw increased activity, but we struggled with few and short campaigns. This has resulted in low utilization for anchor handlers. The OSV fleet had full utilization throughout the quarter at high day rates. Most segments are experiencing an increased number of multi-year contracts hitting the market. That's signaling that charters are positioning themselves for future projects. The expected increase in activity for all segments indicates good market prospects for our high-end fleet. So to summarize, we deliver a strong quarter with high activity. We continued improving our financial position. We still deliver first-class operation with an excellent HSEQ performance. We have a strong backlog with quality clients and we have a positive long term market outlook in all segments. We will now open up for questions.

All right.

We are then ready to take any questions that you might have, please. Hello.

Can you hear me?

Yes.

Yes. Good afternoon and congratulations on another strong quarter. This is Ina Golicchia from Friendly Securities. And I have a couple of questions. The first one will be given, let's say, there's no strong performance on the acre handler side. I was wondering how do you see the North Sea, but also Southeast Asia in the fourth quarter? You mentioned fewer and shorter campaigns. What do you expect in terms of campaigns there, if those campaigns will just be postponed or cancelled altogether? So if you can just comment a little bit on the anchor handling side, being the segment on which we have more spot exposure. Thank you.

Well, the spot exposure we have today is in the North Sea. We don't see any campaigns coming up in the fourth quarter in the North Sea. When it comes to Southeast Asia, we have more or less full coverage for our fleet down there. The day rates in the North Sea, it's hard to predict. We have seen some really good features, but again, utilization is also an important measurement or an important factor here. So we see the data rates are steadily creeping up. So we are in a way positive, but again, no campaigns scheduled for the North Sea to our knowledge.

I understand. And as you fixed two anchor handlers at mid-term, for contract mid-term duration, I was wondering if you might be open to do a similar exercise also for other anchor handlers in order to have a bit more visibility in terms of revenues.

If there is well-paid contracts, we are there to grab them.

Thank you. And my last question would be if you could give us a bit more of color in terms of the refinancing that and say the balloon payment that is coming to you next year.

Yes, the board and the management have high attention on the debt bullet maturing in December 2024. But note that the company has a very good capacity for debt repayment. and we are very comfortable with the situation and the position we are in today. And we have a very positive outlook with regards to handling the debt bill.

Thank you.

Any other questions, please? Remember to unmute. Okay, so if there is no further question, we will then end this session. And we thank you all for attending. Thank you.