Earnings call transcript: Eidesvik Offshore Q2 2025 sees steady growth

Eidesvik Offshore ASA reported a 7% increase in revenue for the second quarter of 2025, reaching 198.5 million NOK, driven by non-main class renewals. Despite this growth, the company’s EBITDA declined to 76.4 million NOK from 82.5 million NOK in the same period last year, primarily due to increased personnel expenses. The company’s stock remained stable, closing at 13.4 NOK, with no change in the trading session. According to InvestingPro analysis, the company currently appears fairly valued, with a "GOOD" overall Financial Health Score of 2.76 out of 5.

Key Takeaways

• Revenue increased by 7% year-over-year, reaching 198.5 million NOK.
• EBITDA decreased due to rising personnel costs.
• Strong balance sheet with a 62% equity percentage.
• High fleet utilization with a 100% contract coverage.
• Positive outlook in the subsea and renewable markets.

Company Performance

Eidesvik Offshore’s performance in Q2 2025 showed resilience in a challenging market environment. The company managed to increase its revenue by 7% compared to the previous year, despite a drop in EBITDA. The company maintained a strong balance sheet with a high equity percentage and a net interest-bearing debt to adjusted EBITDA ratio of 1.5, indicating a solid financial footing.

Financial Highlights

• Revenue: 198.5 million NOK, up 7% year-over-year.
• EBITDA: 76.4 million NOK, down from 82.5 million NOK in Q2 2024.
• Net Interest Bearing Debt: 525 million NOK.
• Cash Balance: 305 million NOK.
• Equity Percentage: 62%.

Outlook & Guidance

Eidesvik Offshore remains optimistic about its future prospects. The company has two subsea newbuild vessels under construction, with delivery expected in Q1/Q2 2026 and Q1/Q2 2027. These vessels are designed with emission reduction capabilities, aligning with the company’s commitment to sustainability. The company also anticipates steady oil demand growth through 2026 and sees a positive outlook for the platform supply vessel market from 2025 to 2028.

Executive Commentary

CEO Helga Cottgrove highlighted the company’s confidence in securing new activities despite geopolitical uncertainties. She noted, "Despite ongoing geopolitical uncertainties, oil demand continues to be steady and is expected to grow into 2026." Cottgrove also emphasized the company’s strong position, stating, "Our fleet, in combination with our organization, is well-positioned to continue this work."

Risks and Challenges

• Increasing personnel expenses impacting EBITDA.
• Uncertainties in the geopolitical landscape affecting oil demand.
• Potential challenges in securing long-term contracts for newbuild vessels.
• Market volatility in the renewable sector due to project cancellations.
• Dependence on the North Sea market, where activity is expected to remain flat in 2025.

Q&A

During the earnings call, analysts questioned the potential for quarterly dividends, with the company stating it would depend on board authorization. Concerns were also raised about platform supply vessels rolling off term contracts, to which the company responded with a positive market outlook and attractive vessel capabilities. Additionally, there was a discussion about remaining options at the shipyard, with the company indicating that an option would only be triggered with a long-term customer contract.

Full transcript - Eidesvik Offshore ASA (EIOF) Q2 2025:

Helga Cottgrove, CEO, APESFIC Offshore ASA: Good morning, everybody, and welcome to APESFIC Offshore ASA’s q two twenty twenty five presentation. Attending this webcast from our end is our CFO, Lars Tukteland Engelsen and myself, CEO, Helga Cottgrove. We will address any questions submitted during the webcast at the end of the presentation. Our cash balance is 305,000,000, down from 396,000,000 at year end due to the new build investments where we’re financing the equity portion with cash on hand. In April, we were pleased to announce the declaration of the remaining option for 2026 from Subsea seven for the vessel seven beacon.

In addition, 2027 was added as a firm period and 2028 as a further option. 2027 and 2028 rates on the contract reflects the improvement in the market. We continue to progress on our two subsea newbuild vessels. The first of them are scheduled to be delivered in the intersection between Q1 and Q2 next year and the second at a similar time in 2027. As a subsequent event to this quarter, the board of directors have decided to distribute a dividend of NOK 0.30 per share.

Total fleet utilization for the quarter was close to 98%. In the supply segment, utilization was 96% due to a scheduled repair or nit increase. For subsea and offshore renewables, utilization was close to a 100% for the quarter. We’re happy to report that we’ve continued a good trend this year with no LTIs. However, we continue to see an uptick in first aid incidents, hence continued focus is needed to to turn this trend around.

Our contract backlog is now 3,400,000,000.0. This includes our share of the JV with Subsea seven. Renewable backlog continued to be steady, and we see interest in vessels that are capable of operating in both the Subsea and the renewable market. It makes sense to consider this when evaluating investments. This also creates opportunity for increased utilization.

Our total contract coverage is, at the moment, 100%. We currently have available capacity within the PSV space from q one or from q one next year, alternatively q four this year, depending a bit on, some outstanding options. And we are actively exploring new opportunities for vessels that will be available. We’re confident in our capability in securing new activity. Our vessels are attractive in size, and we had a strong record in technical utilization and operational competence.

We also look forward to continue working with our customers and focusing on emission reduction. Our fleet, in combination with our organization, is well positioned to continue this work. Despite ongoing geopolitical uncertainties, demand oil demand continue to be steady and also expected to grow into 2026. Some of the major oil companies have signaled modest reduction in CapEx for ’25 and ’26, but leading EPC contractors continue to report record strong backlogs and tendering activity in the subsea segment. Demand for platform supply vessels in the North Sea increased in q two, a comp accompanied by rise in day rates.

However, overall activity is somewhat subdued. Activity is expected to remain flat through ’25 with an uptick anticipated in ’26 and ’27. An uptick in operators securing offshore drilling rigs is noted. This is in line with the expectation of increased activity levels in ’26, ’27, and into ’28 as the major operators maintain their intention to address production decline. Within subsea and renewables, sheet furnace with available vessels continued to announce new fixtures, with the Brazilian market accounting for a significant share.

Subsea activity is expected to remain high, and the current backlog is driving demand for suitable vessel tonnage. In the renewable market, the underlying market remains resilient despite some project cancellation. Then over to Lars for the financials.

Lars Tukteland Engelsen, CFO, APESFIC Offshore ASA: Thank you, Helga. Please note all numbers are in Norwegian kroner. Revenue in the second quarter twenty twenty five was 198,500,000.0 compared to 197,800,000.0 in the ’24. Adjusted for other income in the quarter in 2024, revenue increased about 7% quarter on quarter, mainly due to non main class renewals in this quarter and hence a positive effect on utilisation versus one main class renewal in Q2 twenty twenty four. EBITDA was 76,400,000.0 compared to 82,500,000.0 in the same quarter in 2024.

Adjusted for other income in q two twenty four, the adjusted EBITDA for that quarter was 70,700,000.0. Personnel expenses in the quarter increased compared to the same quarter in 2024, mainly due to general salary adjustments, but also due to need for use of expensive temporary personnel. Compared to the first quarter twenty twenty five, freight revenue was on the same level in the second quarter. EBITDA increased by 4,200,000 due to a decrease in both personnel costs and in other operating costs. Joint ventures had a loss of 700,000.0 compared to a profit of 3,200,000.0 in Q2 twenty twenty four.

The 2024 numbers are affected by insurance proceeds received in second quarter twenty twenty four. The result of the JV is also affected by the same personal cost increase as already mentioned. Operating result was 29,100,000.0 in the quarter compared to 41,200,000.0 in the same quarter in 2024. Adjusted for other income, operating result for q two twenty four was 29,400,000.0. Net financial items improved from minus 2,000,000 to 900,000.0 quarter on quarter.

Reduced financial expenses for Q2 twenty five versus Q2 twenty four are mainly due to increase in capitalized borrowing costs on the new bills according to IAS ’23. In addition, a positive currency effect mainly related to loan in US dollar resulted in ADJO of 2,300,000.0 in the quarter compared to a Disagio of 1,100,000.0 in the same quarter in 2024. Pretax result in q two twenty twenty five was 30,100,000.0 compared to 39,200,000.0 in the second quarter twenty twenty four. If we take a look at our segments on the next page, we see in our supply segment revenue quarter on quarter had an increase to 105,500,000 compared to 96,800,000.0 in Q2 twenty four. This is mainly due to higher utilization.

EBITDA increased from 36,200,000.0 to 40,500,000.0 in the segment. The EBITDA margin increased from 37% to 38%. Utilization was 96% in q two twenty five and ninety two percent in q two twenty four. We own six vessels in this segment and, in addition, have management of two. For subsea and renewables, revenue had a minor increase from 103,100,000.0 to 104,000,000 quarter on quarter.

These numbers include our consolidated numbers plus 50% of revenue from the vessel seven EK. EBITDA decreased from 56,800,000.0 to 52,300,000.0. EBITDA margin is 50%, which is a decrease from 55% in Q2 twenty twenty four. This decrease is mainly due to received and served insurance proceeds in the second quarter twenty twenty four in the JV. The utilization was solid 100% compared to 99% in Q2 twenty four.

We hold the apology of four vessels in the segment and have one under management. All vessels in these segments are in one countries. On the next slide, we see that our fixed assets have increased from year end 2024, mainly due to the investment in the second newbuild vessel, which is currently being built at the Sifiniar in Turkey. Both newbuilds are treated as asset under construction. Our equity percentage is 62%, the same as at year end.

This reflects our solid balance sheet. Net interest bearing debt by the end of the quarter was $525,000,000 compared to $499,000,000 at year end last year. The increase is mainly due to payment of yard installment on the second newbuild. Net interest bearing debt over adjusted EBITDA the last twelve months is 1.5. We are seeing a decrease in cash flow from operating activities for the 2025 compared to the same period in 2024 from 200,000,000 to 114,000,000.

This is mainly driven by movement in the working capital. On the investment side, spending is mainly due to the investment in the second newbuild. Cash flow from finance is mainly due to payment of installments and interest offset by contribution from other interest in the second new bill. Cash balance at the end of the period is $3.00 5,000,000, and 64,000,000 of this is restricted. And now back to Helga for closing remarks.

Helga Cottgrove, CEO, APESFIC Offshore ASA: Thank you, Lars. As a summary, we are highlighting the following. As always, strong utilization. We’re having PSVs coming off legacy contracts in a long term positive market together with new builds coming into a strong subsea market. We’re noticing an increased opportunity for vessels in adjacent markets.

We have no main class renewals in ’25 and one in ’26, and we have proceeded with a dividend distribution. Then over to q and a.

Moderator/Operator: Thank you, Helga. We have received so far three questions. First, Lars, will there be quarterly dividends going forward?

Lars Tukteland Engelsen, CFO, APESFIC Offshore ASA: Well, this is up to the board of directors. They have an authorization to give up to NOK point 0.5 per share until the next, annual general meeting. With the dividend announced today, the remaining authorization is NOK 0.20 per share. Thank you, Lars.

Moderator/Operator: One for you, Helga. Are you concerned about the PSV rolling off term contracts the next quarters?

Helga Cottgrove, CEO, APESFIC Offshore ASA: I think that, you know, the market for for for PSVs is looking positive for twenty twenty five, twenty twenty six into ’28. Also, all our PSVs are of an attractive size, and they also have capabilities like batteries and LNG for emission reduction. So we we’re positive in in the our ability to renew contracts.

Moderator/Operator: Thank you. The last one we have is how many options are left at Sefine Sugar? Heather? Correct.

Helga Cottgrove, CEO, APESFIC Offshore ASA: We have we have one option left at at the yard, and we continue to explore opportunities, but we will not trigger the option unless we have, as before, unless we have a contract with a customer long term contract with a customer.

Moderator/Operator: Thank you, Ebrahim.

Helga Cottgrove, CEO, APESFIC Offshore ASA: And that concludes our q two conference call. Thank you everybody for joining. Wish you all a nice day.

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