Eneti Inc. reported its results for the three months ended March 31, 2022.
The Company also announced that on May 12, 2022 its 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 months ended March 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 Months Ended March 31, 2022 and 2021
For the first quarter of 2022, the Company’s GAAP net income was $4.2 million, or $0.11 per diluted share, including a gain of approximately $18.5 million and cash dividend income of $0.2 million, or $0.48 per diluted share, from the Company’s equity investment in Scorpio Tankers Inc.
Total revenues for the first quarter of 2022 were $22.4 million, compared to $59.8 million for the same period in 2021. First quarter 2022 revenues consisted primarily of revenues generated by the Seajacks Scylla which was continuing its transportation and installation services for an offshore wind farm project in China and the Seajacks Hydra’s maintenance on an offshore gas production platform in the North Sea and consultancy revenue.
Vessel operating costs and project costs increased in the first quarter due to additional maintenance for the NG 2500s in preparation for employment contracts and higher project costs. Operating expenses for the Seajacks Scylla and Seajacks Zaratan decreased from the fourth quarter but remain elevated due increased crew and transportation costs as a result of COVID-19.
For the first quarter of 2021, the Company’s GAAP net income was $41.9 million, or $3.84 per diluted share. Those results included a gain subsequent to an increase in fair value less costs to sell of approximately $15.5 million, or $1.43 per diluted share, taken related to the Company’s exit from the dry bulk industry (the gain was primarily the result of an increase in the fair value of common shares of Star Bulk Carriers Corp. (“Star Bulk”) (NASDAQ: SBLK) and Eagle Bulk Shipping Inc. (“Eagle”) (NASDAQ: EGLE) received or, at the time, to be received as a portion of the compensation for the purchase of certain of our vessels), as well as, the write-off of $3.7 million, or $0.34 per diluted share, of deferred financing costs on repaid credit facilities related to vessels that have been sold; and a non-cash gain of approximately $15.8 million and cash dividend income of $0.2 million, or $1.47 per diluted share, from the Company’s equity investments (primarily Scorpio Tankers Inc.).
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the first quarter of 2022 was $14.2 million and EBITDA for the first quarter of 2021 was $52.0 million (see Non-GAAP Financial Measures below).
Liquidity
As of May 6, 2022, the Company had approximately $47.7 million of unrestricted cash and $8.9 million of restricted cash. The Company also continues to hold approximately 2.16 million common shares of Scorpio Tankers Inc. (NYSE: STNG).
Contracts Awarded
In May 2022, Seajacks UK Limited, a wholly-owned subsidiary of the Company, signed a contract with Siemens Gamesa Renewable Energy for the Seajacks Zaratan to provide transportation and installation of wind turbines for the Yunlin Offshore Wind Farm in Taiwan. The contract starts in the second quarter of 2023 and has a duration of between 153 and 184 days and is expected to generate approximately $32.0 million to $36.3 million of revenue.
In April 2022, Seajacks UK Limited signed an amendment to an existing contract in place with the developers of the Akita and Noshiro Offshore Wind Farm to extend the existing period of service for which the Seajacks Zaratan is providing transportation and installation of wind turbines. The amendment compensates Seajacks for the adjusted timetable caused by a delay in the start date, generating an additional $18.5 million of revenue. The initial contract is for a period of 96 days, is now expected to begin in July 2022 and is expected to generate $36.6 million of revenue, plus the additional $18.5 million. The amendment will see Seajacks Zaratan contracted through to the end of November 2022.
In April 2022, Seajacks UK Limited signed a contract with a UK-based utility for one of its NG2500X-class vessels to support offshore wind farm substation commissioning in the UK sector of the North Sea for a period of 90-120 days in each of 2023, 2024, and 2025. In aggregate, over the three years, this contract is expected to generate up to $20.5 million of revenue.
In March 2022, Seajacks UK Limited signed a contract with a global original equipment manufacturer for wind turbine operation and maintenance in NW Europe for one of its NG2500X-class vessels. The contract, which has a duration of between 90 and 180 days, is expected to generate approximately $3.85 million to $7.45 million of revenue in the second and third quarters of 2022.
Newbuildings
The Company is currently under contract with Daewoo Shipbuilding and Marine Engineering for the construction of two next-generation offshore wind turbine installation vessels (“WTIV”). The aggregate contract price is approximately $654.8 million, of which $49.2 million has been paid. The vessels are expected to be delivered in the third quarter of 2024 and second quarter of 2025.
Source: Eneti
