Business context and reporting period
SEACOR Marine Holdings Inc. filed this Form 10-K for the fiscal year ended December 31, 2020. The company provides offshore marine transportation and support services to energy and wind-farm customers through owned, leased, joint-venture and managed vessels. Unless noted, annual results below are for continuing operations; the Windcat crew-transfer-vessel business was classified as discontinued operations and held for sale at year-end.
Financial performance and position
| Metric | 2020 | 2019 |
|---|---|---|
| Operating revenues, continuing operations | $141.8 million | $174.5 million |
| Operating loss | $(71.6) million | $(54.3) million |
| Loss from continuing operations | $(83.3) million | $(91.0) million |
| Net loss attributable to SEACOR Marine | $(78.9) million | $(92.8) million |
| Loss per share from continuing operations | $(3.20) | $(3.62) |
| Cash used in operating activities | $(29.7) million | $1.7 million provided |
| Capital expenditures | $20.8 million | $44.8 million |
| Cash, cash equivalents and restricted cash at year-end | $36.0 million | $84.5 million |
| Total debt principal shown in contractual maturity schedule | $521.9 million | Not stated on a directly comparable basis here |
Revenue declined 18.7%. Average time-charter rate per day worked rose to $10,905 from $10,369, but fleet utilization fell to 55% from 60%. Direct vessel profit, a company-defined non-GAAP measure, declined to $50.7 million from $64.9 million, and represented about 35.7% of continuing revenue versus 37.2% in 2019. Interest expense was $30.7 million, up from $29.0 million. The company recorded $18.8 million of impairment charges and net asset-disposition losses, versus $6.5 million in 2019.
For the fourth quarter, revenue was $36.0 million versus $42.5 million in fourth-quarter 2019. Operating loss widened to $16.9 million from $10.6 million, and loss from continuing operations widened to $38.9 million from $19.4 million. Net loss attributable to SEACOR Marine was $38.8 million, compared with $20.5 million.
At December 31, cash and restricted cash of $36.0 million was only modestly above the $35.0 million minimum-cash covenant disclosed for the primary credit facility. The company reported $472.9 million of debt carrying value before separately classified held-for-sale debt; its contractual debt maturity schedule totals $521.9 million of principal, including $32.4 million due in 2021 and $245.0 million in 2023. Management reported compliance with debt covenants at year-end.
Material changes versus prior period
- Revenue, utilization and direct vessel profit fell year over year, while the operating loss increased, reflecting the weak offshore-services market and lower activity.
- Operating cash flow swung from a $1.7 million inflow to a $29.7 million outflow. Working-capital movements included a $30.2 million increase in receivables and an $18.3 million decrease in accounts payable and accrued liabilities.
- Debt principal rose from $405.1 million at year-end 2019 to $521.9 million at year-end 2020, in part following the acquisition of the remaining interest in SEACOSCO, renamed SEACOR Offshore Delta, and assumption of financing associated with its vessels.
- The company acquired the remaining 50% of SEACOSCO in June 2020 for $28.2 million, with most of the purchase price deferred, and acquired the remaining 28% minority interest in Falcon Global Holdings using 900,000 common shares.
- The company completed the sale of the Windcat CTV business on January 12, 2021, for net cash proceeds of approximately $42.6 million; the buyer also assumed about £20.4 million of related debt. The company reported an approximately $22.8 million gain on the sale in January 2021.
Outlook, risks, contingencies and unusual items
Management said the pandemic and low, volatile oil prices adversely affected demand and increased operating costs, but believed available liquidity, Windcat sale proceeds and anticipated CARES Act tax refunds would support obligations for the foreseeable future. No specific revenue, earnings or utilization guidance was provided. Management cited potential support from deferred maintenance and capital spending by energy producers and growth in offshore wind, while warning that any recovery could be delayed.
The company expected approximately $31.2 million of tax refunds under the CARES Act, subject to IRS processing. About $23.1 million was not restricted under the tax-refund agreement; approximately $8.1 million was designated to satisfy obligations still guaranteed by former parent SEACOR Holdings. The IRS had experienced processing delays.
Key risks include continued oil-and-gas market weakness, vessel oversupply, fixed operating costs, cold-stacked fleet reactivation costs, and customer concentration: Saudi Aramco-related revenues and Exxon Mobil represented 21% and 17% of 2020 continuing revenue, respectively, and the ten largest customers represented about 76%. Foreign operations generated 89% of continuing revenue. Other exposures include debt maturities and covenant headroom, foreign-exchange and interest-rate risk, environmental and maritime regulation, and Jones Act citizenship restrictions.
Contingencies include a Brazilian tax-deficiency claim with a potential levy of approximately R$18.1 million (about $3.5 million at year-end exchange rates); the company disputed the claim. UK multi-employer pension plans may require additional contributions following future actuarial valuations. Management said ordinary-course litigation was not expected to have a material adverse effect. The company reported $18.8 million in 2020 vessel and asset impairment charges. Its auditors issued an unqualified opinion on the financial statements; management concluded disclosure controls and internal control over financial reporting were effective as of year-end.
Important facts for investors to verify
- Confirm the timing and actual receipt of the expected CARES Act tax refunds, and the restrictions on their use.
- Review debt instruments, covenant definitions, minimum-cash requirements and the concentration of principal maturities in 2023–2024.
- Track utilization, charter rates, cold-stacked vessel reactivation costs and any additional impairment charges.
- Assess whether customer concentration, especially Saudi Aramco-related and Exxon Mobil business, changes materially.
- Check subsequent filings for the realized Windcat sale proceeds and gain, and the effect of the CTV business disposal on ongoing revenue and liquidity.
- Reconcile the selected-financial-data table’s 2020 net operating revenue figure of $141.1 million with the audited statement’s continuing-operations revenue of $141.8 million; the filing text does not clearly explain the difference.