SEACOR Marine Holdings Inc. — FY 2022 Form 10-K
Reporting period: Year ended December 31, 2022; comparisons are primarily with FY 2021. This is an annual filing, not a standalone fourth-quarter report. The company operates offshore support vessels serving oil and gas, offshore wind, construction, and related marine markets. Results exclude the Windcat crew-transfer business, sold in January 2021.
Financial performance and position
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Operating revenue | $217.3 million | $170.9 million |
| Average time-charter rate per day | $12,673 | $11,712 |
| Fleet utilization | 75% | 66% |
| Direct vessel profit (DVP) | $45.3 million | $43.5 million |
| Operating loss | $54.0 million | $37.1 million |
| Net income (loss) | $(71.6) million | $33.1 million |
| Cash from operating activities | $(14.6) million | $9.3 million |
- Revenue increased about 27%, supported by higher rates and utilization, fleet additions and vessel repositioning. Operating costs rose faster: operating expenses were $172.0 million, up from $127.4 million. DVP margin was approximately 20.9%, versus 25.5% in 2021.
- The FY 2022 net loss includes a $29.7 million interest expense and $8.6 million income-tax expense. FY 2021 net income benefited materially from a $62.0 million debt-extinguishment gain, $22.9 million of discontinued-operations income, and other items.
- Cash, cash equivalents and restricted cash totaled $43.0 million at year-end, including $40.0 million of cash and cash equivalents and $3.1 million restricted. Current assets were $132.6 million and current liabilities $121.4 million.
- Year-end debt principal was $363.8 million; its balance-sheet carrying amount, net of discounts and issuance costs, was $321.6 million. Contractual principal maturities include $61.5 million in 2023 and $66.7 million in 2024. Management forecast approximately $85.9 million of 2023 principal and interest payments.
- Net investing cash flow was positive $57.8 million, largely from $66.0 million received in the joint-venture transaction, partly offset by $28.8 million used to acquire MexMar loans. Financing cash outflow was $41.4 million, including $38.2 million of debt payments.
Material changes and transactions
- In September 2022, the company sold its interests in MexMar and OVH for $66.0 million cash, acquired full ownership of SEACOR Marlin LLC and its PSV, and received a hybrid battery system. It ceased operating joint-ventured vessels. The transaction reduced the fleet from 81 vessels at year-end 2021 to 60 at year-end 2022; fleet and geographic comparisons therefore reflect significant changes in scope and asset mix.
- In October 2022, the company exchanged all $125.0 million of convertible notes due 2023 for $90.0 million of 8.0%/9.5% PIK-toggle notes and $35.0 million of 4.25% convertible notes, both due 2026. The exchange extended maturities but includes higher-cost PIK interest options and potential share dilution.
- The MexMar loan acquired in the transaction had a $15.0 million balance at year-end and was scheduled for repayment by September 30, 2023. Collection is an important liquidity consideration.
Outlook, risks and unusual items
- Management said cash on hand, operating cash flow, note collections and potential capital-market access should provide sufficient liquidity over the short to medium term. No specific revenue or earnings guidance is provided.
- For 2023, management estimated $1.7 million of capital spending for a PSV hybrid battery system, $1.3 million of retirement-plan payments and $3.5 million of lease payments. Year-end unfunded commitments included $2.5 million for miscellaneous vessel equipment; a further $9.3 million of FSV orders was indefinitely deferred.
- The company reported compliance with debt covenants at year-end. Its SMFH facility requires minimum cash and cash equivalents equal to the greater of $35.0 million or 7.5% of total debt; the covenant calculation was $62.1 million, including a permitted receivables component. A March 2023 amendment extended the 1.50:1.00 interest-coverage requirement through June 30, 2023; a 2.00:1.00 threshold applies thereafter.
- Major risks include oil-and-gas spending and commodity-price volatility, vessel oversupply and rate pressure, high fixed operating costs, inflation and rising interest expense, foreign-market and currency exposure, customer concentration, and refinancing and covenant risk. ExxonMobil and SEACOR Marine Arabia accounted for 18% and 14% of continuing-operations revenue, respectively; the ten largest customers represented 63%.
- The 2021 SEACOR Power liftboat capsizing caused fatalities and the vessel’s constructive total loss. The NTSB attributed the capsizing to severe thunderstorm winds exceeding operating limits. Nearly all injury and death claims for which the company has financial exposure were resolved, but remaining claims, the pending USCG investigation and potential reputational or insurance effects remain relevant.
- Other contingencies include possible additional assessments from underfunded UK multi-employer pension plans and a Brazilian tax-deficiency notice with a potential levy of approximately $4.0 million at the stated exchange rate. The company says outcomes and exposure remain uncertain.
- The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded controls were effective. The auditor identified vessel-asset impairment assessment as a critical audit matter.
Important facts for investors to verify
- Progress and timing of the $15.0 million MexMar note collection, and whether proceeds are available for general liquidity.
- Ability to meet 2023 debt maturities and forecast debt service, covenant tests and subsequent interest-coverage requirements.
- Whether improved utilization and charter rates can offset higher personnel, maintenance, drydocking, fuel and financing costs.
- Final resolution, insurance recoveries and any remaining liabilities or operating consequences related to the SEACOR Power incident.
- Potential pension-plan assessments and the outcome of the Brazilian tax proceeding.