Earnings call transcript: Sea1 Offshore Q3 2025 sees stable revenue, strong EBITDA

Sea1 Offshore Inc. reported its financial results for the third quarter of 2025, with revenue reaching $63.4 million and a strong EBITDA margin of 54%, translating to $34.2 million. The company achieved a net profit of $12.2 million. Despite these solid figures, Sea1 Offshore’s stock saw a modest increase of 0.5%, closing at $20.00, as investors weighed the company’s performance against broader market trends.

Key Takeaways

• Sea1 Offshore reported a strong EBITDA margin of 54%.
• Fleet utilization stood at an impressive 93%.
• The company is constructing four new vessels optimized for multiple market segments.
• Contract backlog reached $743 million, with robust subsea fleet contributions.
• Sea1 Offshore is applying for a transfer to Euronext Growth.

Company Performance

Sea1 Offshore demonstrated resilience in Q3 2025, maintaining high operational activity and achieving substantial profitability. The company’s fleet utilization rate of 93% underscores its efficient operations, even as the North Sea anchor handler market showed weakness earlier in the quarter. Sea1 Offshore’s strategic focus on modern, low-emission vessels positions it well for the evolving energy landscape.

Financial Highlights

• Revenue: $63.4 million
• EBITDA: $34.2 million (54% margin)
• Net Profit: $12.2 million
• Book Equity Ratio: 52%
• Net Interest-Bearing Debt: $197 million
• Cash Position: $113 million

Outlook & Guidance

Looking ahead, Sea1 Offshore is optimistic about securing 2-5 year contracts for its new builds, which are expected to be finalized in 2026. The company anticipates a strengthening market in the latter half of 2026, particularly for construction support vessels. However, there is potential for increased debt due to the ongoing vessel construction projects.

Executive Commentary

CEO Bernt Omdal highlighted the company’s robust performance, stating, "Another strong quarter with high operational activity, excellent HSEQ performance." He emphasized the advanced capabilities of the new vessels, noting, "Our new buildings are high-end, sophisticated vessels with 250-ton cranes." Omdal also expressed confidence in the company’s strategic flexibility, saying, "We are keeping all doors open" regarding future opportunities.

Risks and Challenges

• Market Volatility: Potential investment deferrals due to fluctuating oil prices.
• Debt Levels: Possible increase in debt as new vessel construction progresses.
• Competition: Intense competition in the offshore energy support sector.
• Regulatory Environment: Changes in environmental regulations could impact operations.
• Economic Conditions: Broader economic downturns could affect demand for offshore services.

Sea1 Offshore’s Q3 2025 results reflect a well-managed company with a clear strategic direction, balancing current performance with future growth opportunities. The market’s tempered reaction suggests cautious optimism as investors await further developments in the company’s strategic initiatives and market conditions.

Full transcript - Sea1 Offshore Inc (SEA1) Q3 2025:

Bernt Omdal, CEO, Sea1 Offshore: Good morning and welcome to Sea1 Offshore’s presentation of our third-quarter results. My name is Bernt Omdal, and I am the CEO of the company. Joining me today is our CFO, Vidar Jerstad. Together, we will guide you through the key highlights of our quarterly performance. Sea1 Offshore’s third-quarter report was published earlier today, prior to market opening. In this presentation, we will summarize the main points from the report and refer to the accompanying presentation materials. Following the presentation, we will open the floor for questions. During the third quarter, Sea1 Offshore operated 16 fully-owned vessels, with an additional four vessels currently under construction. All operating vessels delivered a positive EBITDA margin. We had a revenue of $63 million and an EBITDA of $34 million, representing a margin of 54%. Our book equity ratio was 52%, and our net interest-bearing debt was $197 million.

It’s noteworthy that these results were achieved with fewer vessels in operation compared to the same quarter last year. Some operational highlights: we maintained safe and efficient operations across all regions, reflecting our strong commitment to safety throughout the organization. Our fleet utilization for the quarter was 93%, excluding one vessel that was in layup and has since been sold. We are pleased to welcome two new board members, Mr. Otto Molk Johansen and Mr. Rune Magnus Lundetre, who have joined as directors following the resignation of previous board members. Following an extraordinary general meeting held in September, the company has applied for a transfer from Oslo Børs to Euronext Growth, and we are currently awaiting approval for the same. We have recently secured a new contract for the PSV Sea1 Atlas in Brazil. The contract has a duration of three years, with an additional six-month option period.

Commencement is scheduled to take place in the first quarter of 2026. I will now hand over to Vidar Jerstad, who will provide further details on our financial performance for the third quarter.

Vidar Jerstad, CFO, Sea1 Offshore: When reviewing the financial results for 2025 versus 2024, keep in mind several key changes. In July 2024, nine vessels were sold, and the number of shares entitled to company profits was reduced by 35%. Sea1 Spearfish was sold in May 2025, and the 47-year-old scientific core drilling vessel has been placed in layup since the start of the fourth quarter of 2024. However, let’s take a look at the income statement. For the third quarter, the company reported revenue of $63.4 million. Operating expenses were $22.8 million, while administrative expenses were $6.4 million. EBITDA for the quarter ended at $34.2 million. This is down from $45.1 million in the same quarter last year. However, adjusted for the vessel sold and the scientific core drilling vessel in layup, this represents an increase of $2 million. Depreciation on ships in the third quarter was $12.4 million.

This leaves us with an operating profit of $21.8 million. Net financial items were negative by $7.4 million, which includes a currency loss of $1.5 million. However, a currency gain of $1.6 million is recognized under the auto comprehensive income, resulting in a net marginal positive currency effect on equity. Profit before taxes ended at $14.4 million. Taxes for the period amounted to $2.1 million, of which $1.8 million is due to non-recurring items. Net profit after taxes ended at $12.2 million. This slide represents the operating margin for our four main segments. The left side displays results for the third quarter, while the right-hand side shows year-to-date figures. All numbers are before G&A expenses and include only vessels owned at the beginning of this year.

On our second quarter report, we noted that the outlook for the anchor handling vessels in the North Sea was uncertain in the near future. Now, we know that this quarter, the anchor handling segment performed below the same quarter last year. However, the year-to-date results for the anchor handling vessels remain consistent with last year’s figures. The subsea segment’s margin declined because of the layup of the scientific core drilling vessel and that Sea1 Spearfish was sold in mid-May. When adjusting for these changes, the subsea segment has achieved an operating margin increase of more than 20% in the third quarter and year-to-date. This slide outlines Sea1 Offshore’s financial position. Since a dividend payment of $94 million in January, the company has continued to demonstrate robust performance and has now reached a book equity ratio of 52%.

Gross interest-bearing debt amounts to $310 million, and net interest-bearing debt is $197 million. Additionally, the company has access to further liquidity through an ongoing revolving credit facility of $100 million set up in January. Now, the cash flow so far in 2025. We started the year with $68 million in cash. We have received $114 million from operations. We have paid net interest of $5 million. We have invested $52 million in vessels, of which $23 million is in new builds. We have reduced debt by $29 million. We received $130 million from the sale of Sea1 Spearfish, and we have paid dividend of $94 million. Some other changes of $2 million in negative, we ended up with $113 million in cash. Bernt.

Bernt Omdal, CEO, Sea1 Offshore: As of today, Sea1 Offshore holds a firm contract backlog of $743 million, with an additional $599 million in options. Our subsea fleet accounts for 79% of the total backlog. For the remainder of 2025, we have a firm backlog of approximately $48 million. For 2025, we have full contract coverage for both our PSV and subsea fleet. Looking ahead to 2026, we maintain 100% coverage for these segments and approximately 50% coverage for our anchor handlers. We continue to see increasing activity in term tenders and are optimistic about securing additional long-term contracts. Our OSV fleet currently consists of 15 owned vessels, with four offshore energy support vessels under construction and seven vessels under our technical and commercial management. We have two well-intervention vessels, two PSVs, one offshore construction vessel, two fast crew vessels, and two oil spill recovery vessels.

We have, as mentioned, four offshore energy support vessels under construction. We have six anchor handlers, and we manage seven anchor handlers on behalf of Viking Supply Ships, giving us operational control over 13 anchor handlers. This slide outlines our global footprint, including both owned and managed vessels. Our international presence is a key factor in maintaining high fleet utilization. We continue to strategically reposition vessels to regions where we can operate safely at sustainable conditions. Contracts in the anchor handler segment are typically shorter in duration. In Australia, we have Sea1 Sapphire, Sea1 Aquamarine, Sea1 Emerald, and Andreas Viking. They are all on term contracts. In Canada, we have the Avalon Sea remaining in operation there, and the rest of the anchor handlers are operating in the North Sea. Sea1 Dorado is on a firm contract in Brazil, and the same goes for Sea1 Helix and Sea1 Helix II.

They are both on long-term contracts in Brazil. We have our two PSVs, Sea1 Atlas and Sea1 Giant. They are both on term contracts in Brazil. The two oil spill recovery vessels and the two fast crew vessels are still on long-term contract. As previously mentioned, we have a strong contract coverage both for the current and upcoming years. A few comments to the market. The North Sea anchor handler market remained weak through most of the third quarter due to project delays and early contract termination of semi-sub rigs in the UK sector. Average monthly rates in July and August were significantly below previous years. In September, market conditions improved as vessel departures helped rebalance supply and demand. However, low activity in the UK sector remains a concern in the near term.

Globally, the anchor handling tug supply vessels market is expected to strengthen in the second half of 2026, with more campaigns anticipated. For construction support vessels, long-term demand remains robust, driven by a record subsea backlog from conventional EPCs. However, short-term activity has declined in several key regions, and the downward trend in oil price may lead to deferred investments and spending into early 2026. To summarize, another strong quarter with high operational activity, excellent HSEQ performance, our new billing program progressing as planned. We have a solid financial position, a robust backlog with quality clients, and a positive long-term market outlook. That was the end of the presentation, and we will now open the floor for questions.

Okay, so we have received some questions in the chat function. One of them is, when do you expect contracts on the new buildings? This is a work in progress, and we expect and hope that we will secure contracts next year, 2026. There is another question about the same topic, our new builds. What type of contracts can we expect? We are pragmatic, but typically we will be targeting two to five-year contracts. There is a question with regards to our anchor handlers operating in Asia-Pacific. Can you please update on the firm length on each of the anchor handler term contracts? It seems like the three vessels operating on the reconciliation contract will stay there for another 11 months. There is a question regarding the anchor handler, Ben Viking, that Viking Supply Ships recently bought. Should we account for the Ben Viking in the profit sharing pool?

That is a vessel with a lower specification than the vessels that are currently operating in the revenue sharing agreement. This vessel will not be part of that specific revenue sharing agreement. There is another question regarding Viking Supply Ships vessels regarding crane installation. Will this affect your anchor handling earnings? When a vessel is technical or fire, it does not impact the revenue sharing agreement. Of course, there will be no income on the Viking vessel. There are some more questions regarding the new buildings. How are your new builds compared to other new buildings? Our new buildings are high-end, sophisticated vessels with 250-ton cranes. They are modern vessels optimized for efficient operation with low fuel consumption and low emission. The vessels are based on ST245 design and will have capabilities to serve both oil and gas and the renewable market. There is a question about our debt level.

Our debt level is modest, and that is correct. We have a gross interest-bearing debt of $310 million, net interest-bearing debt of $197 million, and we have a cash position of $113 million. In addition to that, we have a revolving credit facility of $100 million. That is modest. However, we are building four new vessels, and we will increase the debt level based on that, of course. What I can say is that is work under progress. We are keeping all doors open, and we experience good appetite for lenders to increase their Sea1 exposure. There is a question again about Viking Supply Ships. Will you merge with Viking Supply Ships? Such questions we cannot comment on. There are some questions regarding Euronext Growth.

On the 26th of September, we held an EGM, which approved an application for the change of stock exchange listing from Oslo Børs to Euronext Growth, which is considered a more aligned listing for the company. As it is today, the status of the process is that an application has been submitted, and it’s being considered by Oslo Børs.

There is also a question regarding the revenue sharing agreement. The revenue sharing agreement is, in reality, an operating margin sharing agreement where the total margin will be distributed based on the number of vessels or actually the number of vessel days these vessels have been available. In the third quarter, all large anchor handling tug supply vessels owned by the parties were included in the revenue sharing agreement. The revenue sharing agreement supports efficient operations of the total fleet and enhances the company’s ability to position the fleet and utilize opportunities. Good operation of a larger fleet generates positive effects and economies of scale.

If there are any further questions, please let us know. It seems like there are no further questions, so we will—oh, there is one more. Sorry. What is the outlook for Avalon Sea? She will continue for another four months offshore Canada. That is what we have on hand. What will happen after that, we are a bit unsure, but there is more work in the pipeline, so we hope we will succeed with that as well. The three anchor handling tug supply vessels working in Australia, we have already commented on. There are some more questions there, but we expect this contract to end late 2026. All right, there’s no more questions. Thank you all for joining. We are wishing you a good weekend. Thank you.

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