Eneti Inc. reported its results for the three months ended December 31, 2022.
The Company also announced that on February 9, 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.
The Company’s results for the three and twelve months ended December 31, 2022 include the impact of Seajacks International Limited’s (“Seajacks”) earnings, which was acquired on August 12, 2021. Since the completion of the acquisition, the operations of the Company are primarily those of Seajacks as the Company completed its exit from the dry bulk sector of the shipping industry in July 2021.
Results for the Three and Twelve Months Ended December 31, 2022 and 2021
• For the fourth quarter of 2022, the Company’s GAAP net income was $11.8 million, or $0.32 per diluted share.
• Total revenues for the fourth quarter of 2022 were $46.6 million, compared to $21.3 million for the same period in 2021. Fourth quarter 2022 revenues primarily consisted of revenues generated by the Seajacks Scylla and Seajacks Zaratan, both of which completed their respective projects providing transportation and installation services for an offshore wind farm project in Taiwan and work on the Akita project. The Seajacks Scylla is currently en route to Europe for its next project, which is expected to commence in March 2023 and Seajacks Zaratan is expected to begin its next project in June 2023.
• Vessel operating costs, including fuel costs and catering, and project costs are driven by vessel utilization rates. Mobilization, fuel and catering costs are typically recharged to clients but reported gross in both revenues and vessel operating costs.
• For the fourth quarter of 2021, the Company’s GAAP net loss was $34.1 million, or $1.21 per diluted share, including a loss of approximately $12.3 million and cash dividend income of $0.2 million, or $0.43 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.; and approximately $1.5 million, or $0.05 per diluted share, in acquisition integration costs of Seajacks.
• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the fourth quarter of 2022 was $20.9 million and EBITDA for the fourth quarter of 2021 was a loss of $23.9 million (see Non-GAAP Financial Measures below).
• For the twelve months of 2022, the Company’s GAAP net income was $104.9 million, or $2.74 per diluted share including a gain of approximately $54.9 million and cash dividend income of $0.6 million, or $1.45 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.
• Total revenues for the twelve months of 2022 were $199.3 million compared to $144.0 million for the same period in 2021. The twelve months 2022 revenues were generated primarily by the Seajacks Scylla, which provided transportation and installation services for an offshore wind farm project in Taiwan throughout 2022 and the Seajacks Zaratan which worked on the Akita project from the second quarter of 2022 through year end. Higher utilization rates on all three of the NG2500Xs since the start of the second quarter of 2022, as well as a consultancy engagement have also contributed to revenues during 2022.
• For the twelve months of 2021, the Company’s GAAP net income was $20.2 million, or $1.24 per diluted share, including: a gain on bargain purchase of Seajacks of $57.4 million, or $3.53 per diluted share; transaction costs of approximately $49.6 million, or $3.04 per diluted share related to the acquisition of Seajacks; a gain on vessels sold of approximately $22.7 million, or $1.40 per diluted share; the write-off of $7.2 million, or $0.44 per diluted share, of deferred financing costs on repaid credit facilities related to certain vessels that have been sold; and a gain of approximately $3.5 million and cash dividend income of $0.9 million, or $0.27 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.
• EBITDA for the twelve months of 2022 was $140.3 million and EBITDA for the twelve months of 2021 was $59.6 million (see Non-GAAP Financial Measures below).
Liquidity
As of February 3, 2023, the Company had approximately $129.0 million in cash and cash equivalents, of which $1.9 million was 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 vessels are expected to be delivered in the fourth quarter of 2024 and second quarter of 2025. The estimated future payment dates and amounts are as follows (1) (dollars in thousands):
Award of New Contracts
During the fourth quarter of 2022, 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 NG2500-class vessels that will generate between approximately $5.7 million and $7.1 million of revenue in 2023, (ii) negotiated additional extensions for another NG2500-class vessel which have generated an additional €2.9 million over the fourth quarter of 2022 and first quarter of 2023, and (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.
During the fourth quarter of 2022, Seajacks UK Limited also signed a contract with an undisclosed client to transport and install turbines for a project commencing in the first half of 2025. The contract will be performed by the Company’s first of two NG16000X WTIVs currently under construction at Daewoo Shipbuilding and Marine Engineering in Korea. The vessel, to be named “Nessie”, will be delivered by the shipyard during the fourth quarter of 2024. Inclusive of mobilization beginning early in the first quarter of 2025, the engagement is expected to be between 226 and 276 days and generate approximately €60 million to €73 million of net revenue after forecasted project costs.
Debt Overview
The Company’s outstanding debt balances, gross of unamortized deferred financing costs as of December 31, 2022 and February 3, 2023, are as follows (dollars in thousands):
The Company has undrawn availability under a $75.0 Million Revolving Loans tranche of the above-mentioned $175.0 Million Credit Facility.
Performance Bonds
As of February 3, 2023, performance bonds were issued on behalf of the Company for $1.9 million, which was cash collateralized.
Quarterly Cash Dividend
In the fourth quarter of 2022, the Board of Directors declared, and the Company paid, a quarterly cash dividend of $0.01 per share totaling approximately $0.4 million.
On February 9, 2023, the Board of Directors declared a quarterly cash dividend of $0.01 per share, payable on or about March 15, 2023, to all shareholders of record as of March 1, 2023. As of February 9, 2023, there were 38,446,394 common shares outstanding.
COVID-19
Since the beginning of the calendar year 2020, the ongoing outbreak of the novel coronavirus (COVID-19) that originated in China in December 2019 and that has spread to most developed nations of the world has resulted in numerous actions taken by governments and governmental agencies in an attempt to mitigate the spread of the virus. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial and commodities markets. Although by 2021, many of these measures were relaxed, we cannot predict whether and to what degree emergency public health and other measures will be reinstituted in the event of any resurgence in the COVID-19 virus or any variants thereof. If the COVID-19 pandemic continues on a prolonged basis or becomes more severe, the adverse impact on the global economy may continue and our operations and cash flows may be negatively impacted. The COVID-19 outbreak continues to rapidly evolve, with periods of improvement followed by periods of higher infection rates, along with the development of new disease variants, such as the Delta and Omicron variants, in various geographical areas throughout the world. As a result, the extent to which COVID-19 will impact the Company’s results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.
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.
