SEACOR Marine Holdings Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Financial statement amounts below are in millions of dollars unless stated otherwise. The company provides offshore support vessel and marine services across four regions; at quarter-end it operated 59 vessels, including two managed for third parties.
Financial performance
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $66.9 | $54.0 | $126.9 | $99.6 |
| Operating income (loss) | $2.9 | ($15.5) | $3.1 | ($32.7) |
| Net loss attributable to SEACOR Marine | ($4.6) | ($19.1) | ($14.2) | ($34.0) |
| Loss per share, diluted | ($0.17) | ($0.72) | ($0.52) | ($1.28) |
| Interest expense | $8.7 | $7.0 | $17.5 | $13.6 |
- Q2 revenue rose about 24% year over year, supported by stronger charter rates and activity in several regions. Average day rate was $15,250, versus $12,149; fleet utilization was 78%, versus 77%.
- Operating costs fell to $36.3 million in Q2 from $44.1 million, with lower repairs, drydocking, and other costs. Administrative and general expense increased $3.5 million, primarily due to higher credit-loss provisions and salaries and benefits.
- For the first half, the company recorded $3.9 million of net gains on asset dispositions and impairments, including a $2.9 million gain on vessel and equipment sales. No vessel impairment was recorded in the first half of 2023.
- Operating cash flow was $3.3 million for the first half, compared with cash used of $5.1 million in 2022. Receivables and other working-capital movements used cash; increased rates and utilization supported operating cash flow.
- Investing activities provided $17.5 million, including $8.0 million of equipment-sale proceeds and $10.0 million of principal collected on the MexMar note. Financing activities used $20.4 million.
Balance sheet, debt, and liquidity
- At June 30, cash and cash equivalents were $40.8 million; restricted cash was $2.8 million. Total assets were $784.2 million and equity was $366.9 million.
- Total debt principal was $346.9 million, including $64.0 million classified as current. Debt carrying value, net of unamortized discounts and financing costs, was $307.9 million. Cash, cash equivalents, and restricted cash totaled $43.5 million.
- In June, the company drew a $28.0 million secured facility at a fixed 10.25% rate, maturing in June 2028, to refinance Alpine vessel shipyard financing. The facility includes financial covenants, a parent guaranty, and restrictions on certain distributions and investments. The company reported compliance with debt covenants and lender requirements at quarter-end.
- Contractual debt principal maturities include $35.5 million for the remainder of 2023, $54.4 million in 2024, and $166.7 million in 2026. Management said cash, operating cash flow, note collections, and potential market access should provide sufficient liquidity, while noting that credit-market conditions could limit access on acceptable terms.
- The company expected to collect the remaining $5.0 million MexMar note in the following quarter. Unfunded capital commitments were $1.7 million; a further $9.3 million of orders for an FSV had been indefinitely deferred.
Changes, outlook, and principal risks
- Revenue improvement reflected higher day rates and utilization, as well as vessel repositioning between regions. Africa and Europe, Middle East and Asia, and Latin America reported higher first-half charter revenue than the prior-year period. The U.S. region remained loss-making at the direct-vessel level.
- Management cited volatile oil and gas markets, customer spending, vessel oversupply, and the timing and cost of reactivating cold-stacked vessels as factors that can affect rates, utilization, margins, and asset values. One owned or leased-in vessel was cold-stacked at quarter-end. Management provided no specific numerical earnings or revenue guidance in the filing.
- The SEACOR Power capsizing resulted in fatalities and the vessel’s constructive total loss. The NTSB and Coast Guard attributed the capsizing to loss of stability after severe thunderstorm winds exceeded operating limits. Nearly all injury and death claims for which the company has financial exposure had been resolved; remaining claims were described as subject to contractual indemnity or insurance. Management noted uncertainty about reputational and business effects.
- A Brazilian tax-deficiency matter carries a stated potential levy of R$22.2 million (about $4.6 million at the stated exchange rate); the company is contesting the matter and the outcome is uncertain. The filing also discusses potential future assessments related to U.K. multi-employer pension plans.
- Other items affecting comparability include increased interest expense, foreign-currency losses in 2023 versus gains in 2022, and lower first-half equity-method earnings following the company’s 2022 transactions involving MexMar and Offshore Vessel Holdings.
Most important facts for investors to verify
- Upcoming debt maturities, covenant headroom, and the cash-flow impact of the $28.0 million Alpine facility’s 10.25% interest rate.
- Whether stronger charter rates and utilization persist, especially in the U.S. region, and whether repositioning costs or fleet supply affect results.
- Collection of the remaining MexMar note and continued management of working capital, including trade receivables and credit-loss provisions.
- Insurance coverage, remaining claims, and any further financial or reputational effects related to the SEACOR Power incident.
- Developments in the Brazilian tax appeal and U.K. pension-fund reviews, as well as any change in deferred vessel orders or capital commitments.