Earnings call transcript: Eidesvik Offshore sees revenue rise, strong vessel demand in Q1 2025

Eidesvik Offshore ASA reported a robust first quarter for 2025, with revenue reaching NOK 198.8 million, marking an 11% increase year-over-year. The company achieved its highest revenue and EBITDA since 2017, driven by almost full fleet utilization and a strong balance sheet. The stock saw a modest increase of 2%, reflecting positive investor sentiment. According to InvestingPro data, the company’s market capitalization stands at $89.07 million, with a healthy P/E ratio of 11.28, suggesting reasonable valuation levels based on current earnings. The company is focused on future growth, with new vessel contracts and a positive outlook for the Norwegian North Sea market.

Key Takeaways

• Revenue increased by 11% year-over-year in Q1 2025.
• EBITDA reached NOK 72 million, with a margin improvement to 36%.
• The company maintains a strong competitive position with high fleet utilization.
• No immediate plans for dividends, prioritizing investment opportunities.
• Demand for vessels is at the highest level since 2009.

Company Performance

Eidesvik Offshore’s Q1 2025 performance indicates a significant improvement compared to the same period last year. The company’s revenue growth was primarily driven by increased utilization across its fleet, with both subsea and offshore renewables segments achieving full utilization. This positive trend is aligned with broader industry growth, despite geopolitical uncertainties and potential reductions in upstream spending by major oil service providers.

Financial Highlights

• Revenue: NOK 198.8 million (up 11% YoY)
• EBITDA: NOK 72 million (up from NOK 64 million in Q1 2024)
• EBITDA Margin: 36% (up from 35% in Q1 2024)
• Profit after taxes: NOK 29.3 million (up from NOK 11.3 million in Q1 2024)
• Equity ratio: 62%

Outlook & Guidance

Looking ahead, Eidesvik Offshore plans to focus on safety and explore new investment opportunities. The company expects increased demand in the Norwegian North Sea, driven by high vessel demand. However, it has no immediate plans for dividend distribution, opting instead to allocate resources towards attractive investment opportunities. InvestingPro analysis reveals strong financial health indicators, with a current ratio of 1.79 indicating solid liquidity position. The company has demonstrated consistent growth with an 8.57% revenue increase over the last twelve months. Get access to 6 more exclusive InvestingPro Tips and comprehensive financial analysis through the Pro Research Report.

Executive Commentary

CEO Helga Kothroy emphasized the company’s strong utilization rates and market position, stating, "We have unstopposed utilization." She also noted the positive market conditions, saying, "The market is in steady improvement," and highlighted the high demand for vessels, which is at its peak since 2009.

Risks and Challenges

• Geopolitical uncertainties could impact economic stability.
• Potential reductions in upstream spending by major oil service providers.
• Offshore renewable market facing some headwinds.
• Dependence on high fleet utilization to maintain financial performance.

The company’s strategic focus on modernizing its fleet and maintaining high utilization rates positions it well to navigate these challenges and capitalize on market opportunities.

Full transcript - Eidesvik Offshore ASA (EIOF) Q1 2025:

Helga Kothroy, CEO, DuPont: Good morning, everybody, and welcome to a to speak offshore ourselves q one presentation. Attending this webcast from our end is our CFO, Lars Dufblan Englison, and myself, CEO, Helga Kothroy. We will address any questions submitted during the webcast at the end of the presentation. We kindly ask you to take note of the text on this disclaimer slide. We have freight revenues of NOK hundred and 99,000,000 in the quarter.

This is up 11% from the hundred and 93,000,000 for the same period last year and up from q four’s hundred and ’80 ’7 million. Our EBITDA was 72,000,000 compared to 64,000,000 in q one twenty four. The EBITDA margin was 36% compared to 35 in q one twenty four. The increase is due to increased utilization quarter on quarter. The revenue and EBITDA are also our highest since 2017.

Lars will provide further details on the financials. Consolidated backlog is close to GBP 3,600,000,000.0, an increase of close to GBP 800,000,000 from year end and also from Q1 last year. Our balance sheet continued to be very sound with an equity ratio of sixty two percent and 570,000,000 in net interest bearing debt. Net interest bearing debt has increased due to the progress of our two two new builds. Our cash balance is 285,000,000, down from 396,000,000 due to the new build investments where we are financing the equity portion with cash on hand.

The new builds are progressing well and are currently scheduled to be delivered on time. As you are aware, we contracted a new build subsea vessel with full IMR capabilities in 2024, which is scheduled to for delivery early in ’26. In this quarter, we contracted an equivalent vessel at the Sefini yard in Turkey. The vessel is zoned together with Argilas, our partner also in the first newbuild, and Reach subsea, where Aegisweg and Agawas owns two thirds of an entity controlled by Aegisweg. Upon completion, the vessel will go straight onto a charter for Reach subsea.

In April, as a subsequent event to the quarter, we were pleased to announce the declaration of the remaining option, from Subsea seven for the vessel seven beacon. In addition, 2027 was added as firm and 2028 as a further option. 2027 and 2028 rates in the contract reflect the improvement in the market. Total fleet utilization for the quarter was close to 100%. In the supply segment, utilization was 100 and the same for subsea and offshore renewables.

We had no scheduled dockings in the quarter and had no class renewals for the rest of the year. We’re happy to report that we’ve had no LTIs so far this years this year. We continue our high focus on safety and explore different ways of ensuring that safety is at the forefront of everybody’s mind. We’ve noticed an uptick in first aid incident recently, confirming the need for continued focus. Our contract backlog is now 3,600,000,000.0.

This includes our share of the JV with Subsea seven. The increase in backlog is due to the new vessel currently being built and the renewal of the contract on seven b t. Renewable backlog is fairly steady around in in its thirties. We continue to see interest in vessels that are capable of operating in both these markets. Hence, it makes sense to consider this when evaluating investments.

This also creates opportunity for increased utilization. Our total contract coverage continues to be high, but now reflecting replacement of several legacy contracts. And further contracts will continue to be rolling off going forward, creating new opportunities. Although the global offshore, activity continue to be positive, geopolitical movements not seen in recent history creates an uncertain picture for the global economy, which makes it difficult to predict movements going forward. Large integrated oil free service providers have in their QMAR reports indicated a reduction in upstream spending from 24 to 25, more so for onshore than offshore.

The major EPC suppliers are currently remaining positive within the subsea market. The developments in the oil price will be a key indicator for activity going forward in regards to potential cut in spending from the E and P companies. The supply vessel demand in the North Sea remained flat into q one, driven by seasonal demand and level activity. Demand is expected to increase in the coming months in the Norwegian sector of the North Sea when the new projects are now requiring drilling and rig activity is increasing. The major EPC contractors continue to see record backlog within the subsea space.

The quarter saw continued high activity in vessel fixtures at improved rates. Demand for vessels is at an all time high since 02/2009. This is also reflected in sales and purchase transactions on secondhand tonnage. Long term demand is still expected to be positive when new vessels will have an advantage over older tonnage. The current order book for new builds is not expected to make a huge impact on forecasted utilization.

The offshore renewable market has experienced some headwinds lately, but is currently still expected to move at a steady volume. Then over to Lars for the financials.

Lars Dufblan Englison, CFO, DuPont: Thank you, Helga. Please note all numbers are in Norwegian kroner. Revenue in first quarter twenty twenty five was 198,800,000.0 compared to 183,400,000.0 in first quarter twenty twenty four. Adjusted for other income in the quarter in 2024, revenue increased about 11% quarter on quarter, mainly due to non main class renewable in this quarter and hence a positive effect on the utilisation versus one major main class renewal in Q1 twenty four. EBITDA was CAD72.2 million compared to CAD67.4 million in the same quarter in 2024.

Adjusted for other income in Q1 twenty twenty four, the adjusted EBITDA for that quarter was CAD63.5 million. Personnel expenses in the quarter increased compared to same quarter in ’24 due to general salary adjustments and increased use of expensive temporary personnel due to high sick leave. For other operating expenses, price hikes, in particular from original equipment manufacturer suppliers, are continuing affecting technical costs and also docking when relevant. Compared to fourth quarter twenty twenty four, the main driver for the increase in both freight revenue and EBITDA is the low utilization in Q4 due to the two main class renewals in the quarter. Joint ventures had a loss of £2,000,000 compared to a loss of £1,600,000 in Q1 twenty twenty four.

The increase in loss is due to the same comments as already mentioned. Operating result was 22,500,000.0 in the quarter compared to 23,700,000.0 in the same quarter in 2024. Adjusted for other income, operating result for Q1 twenty twenty four was 19,800,000.0. Net financial items improved from minus 12,500,000.0 to plus 6,800,000.0 quarter on quarter. Reduced financial expenses for Q1 twenty twenty five versus Q1 twenty twenty four are mainly due to capitalized borrowing cost on the new builds according to IAS twenty three.

In addition, a positive currency effect mainly related to loans in US dollar and euro resulted in audio of 11 point 4 million in the quarter compared to a Disagio of 6,800,000.0 in the same quarter in 2024. Profit after taxes in Q1 was 29,300,000.0 compared to 11,300,000.0 in first 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 $108,500,000 compared to $105,000,000 in Q1 twenty twenty four. This is mainly due to some rate adjustments. Increase in OpEx affected the EBITDA, which decreased from $43,000,000 to $39,700,000 in the segment.

The EBITDA margin decreased from 41% to 37%. The utilization was solid 100% in both q one twenty five and q one twenty four. We own six vessels in this segment, and in addition, we have management of two. All our vessels are on long term contracts. For subsea and renewables, revenue increased from 86,200,000.0 to 102,300,000.0 quarter on quarter.

These numbers include our consolidated numbers plus 50% of revenue from the vessel seven BT. EBITDA increased from $35,000,000 to $47,000,000 EBITDA margin is 46%, which is an increase from 41% in Q1 twenty four. The increased revenue and EBITDA in this segment quarter on quarter are mainly due to the improved utilization. Utilization was 100% compared to 89 in Q1 twenty four, where subsea gain was in for its twenty five year main class renewal in q one twenty four. We only or partly own four vessels in the segment and have one under management.

All vessels in this segment are on long contracts. 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 Safin Yal in Turkey. Both new builds are treated as assets 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 $570,000,000 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 or adjusted EBITDA in the last twelve months is 1.7. We are seeing a decrease in cash flow from operating activities for the quarter from NOK75.1 million to NOK41.9 million quarter on quarter. This is mainly driven by movement in working capital.

On the investment side, spending is mainly due to 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 newbuild. Cash balance at the end of the period is about $285,000,000, and 63,000,000 of this is restricted. And now back to Helga for closing remarks.

Helga Kothroy, CEO, DuPont: Thank you, Lars. DuPont can be summed up as the following. We have unstopposed utilization. This is the eight six trademark. Start we’re starting to see vessels coming off legacy contracts.

We’re making good progress on new builds being delivered into a strong market. The market is in steady improvement, and we are well positioned for improved cash flow generation. Then over to the q and a.

Lars Dufblan Englison, CFO, DuPont: Currently, I received two questions. The first one is, are there any dividends planned for 01/25? I can comment, short on that. There are no planned dividends as of today. It is a priority for the use of free cash flow is, attractive investment opportunities.

If there are non such opportunities, then dividends will be considered. Thank you, Hiraj. Second question is, what rate was achieved on July?

Helga Kothroy, CEO, DuPont: Yeah. We can’t share the specific rates on the vessel, but what I can say is that it is a substantial improvement compared to the existing rate.

Lars Dufblan Englison, CFO, DuPont: Thank you, Hugo. That concludes the q and a.

Helga Kothroy, CEO, DuPont: And then I’d just like to say thank you to everybody for joining our q one conference call. We wish you all a nice day.

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