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Solstad Offshore delivered stable financial results in Q1 2025, with adjusted EBITDA reaching $30 million and revenue remaining consistent with the previous quarter. According to InvestingPro data, the company has maintained profitability over the last twelve months, though its stock shows notable price volatility. Despite a slight dip in stock price, the company maintains a positive market outlook, driven by strong demand in offshore services, particularly in Brazil.
Key Takeaways
- Adjusted EBITDA for Q1 2025 was $30 million, with stable revenue.
- Fleet utilization stood at 93%, with high activity in Brazil and the North Sea.
- Solstad Offshore plans to initiate dividend payments in Q3 2025.
- Strategic investment in Omega Subsea to expand ROV fleet.
Company Performance
Solstad Offshore reported a steady performance in the first quarter of 2025, maintaining stable revenue levels compared to the previous quarter. InvestingPro analysis indicates that while the company’s short-term obligations currently exceed its liquid assets, analysts predict profitability for the current year. The company’s operational presence in Brazil and the North Sea contributed to a fleet utilization rate of 93%. Solstad’s strategic investments, such as the 36% stake in Omega Subsea, aim to enhance its competitive position by expanding its ROV fleet.
Financial Highlights
- Adjusted EBITDA: $30 million
- Booked equity: $311 million
- Adjusted debt reduced by approximately $100 million
- Debt-to-Adjusted EBITDA ratio: Less than 1x
Market Reaction
Solstad Offshore’s stock price experienced a 1.3% decline following the earnings release, with the last close value at $38.55. The stock’s performance reflects cautious investor sentiment despite the company’s stable financial results and positive market outlook.
Outlook & Guidance
Solstad Offshore projects full-year 2025 EBITDA to range between $120 million and $150 million, with operational EBITDA expected between $60 million and $70 million. While InvestingPro data shows the company currently does not pay dividends, the planned initiation of dividend payments in Q3 2025 marks a significant shift in shareholder returns policy. The company anticipates the listing of Solstad Maritime on May 16th. For deeper insights into Solstad Offshore’s financial health and growth potential, investors can access comprehensive Pro Research Reports, available exclusively on InvestingPro.
Executive Commentary
CEO Lars Perlo Solstad highlighted the strong demand for offshore services, saying, "Despite the global political turmoil, we continue to see strong demand for our services." He also emphasized the importance of the Brazilian market, stating, "Brazil is continuing to be very busy and it’s extremely important to have a strong presence."
Risks and Challenges
- Potential fluctuations in global demand for offshore services.
- Geopolitical uncertainties affecting market stability.
- Competitive pressures in the North Sea spot market.
- Dependence on successful integration of strategic investments like Omega Subsea.
Solstad Offshore remains optimistic about its future prospects, supported by strategic investments and a robust operational presence in key markets. The company continues to focus on maintaining its competitive edge through innovation and market expansion.
Full transcript - Solstad Offsho (SOFF) Q1 2025:
Lars Perlo Solstad, CEO, Solstad Offshore: Good morning, everyone, and welcome to the First Quarter Presentation for Solstad Offshore. The presentation will be held by CFO, Jettel Ramsda and myself Lars Perlo Solstad. As Solstad Maritime has its own reporting now, The format of this Sulster Offshore Presentation will be slightly different than earlier. But to start with the conclusion of the presentation, it has been a solid quarter with high utilization and with a still positive market outlook. A quick look at the disclaimer before we move on to business updates and some of the highlights for the first quarter.
As mentioned, it has been an eventful quarter where we completed the investment in about 36% of the shares in Omega Subsea, which we announced in December. This is a strategic investment for Sulzer Offshore and it will be instrumental for the development of the service segment that we are building up in the company. Just as important, Solstad Maritime, where Solstad Offshore holds 27.3% has applied for listing at Euronext Oslo Burst and first day of trading is expected to be on or about sixteenth May. And that will then be under the ticker SUMA. This shareholding represents a significant part of the Solstad Offshore market cap and it will be interesting to see how the market and the investors will receive the listing of Solstad Maritime.
And as most of you already have seen, we have changed our reporting currency from Norwegian kroner to U. S. Dollar from first January this year. And we believe that this gives a better picture of the company accounts as we have a large portion of our revenue in U. S.
Dollars, the same as for the cost. And we also have our debt in U. S. Dollars. On the fleet, the utilization was high in the quarter 93%, which reflects a market with high activity.
And we have achieved an adjusted EBITDA of $30,000,000 in the quarter, which is slightly lower than first quarter last year. But keep in mind that last quarter that first quarter in 2024 also partly included or included Solstad Maritime for part of the quarter. So like for like, the result in the quarter has improved. On dividends, Solstad Offshore will receive about $9,500,000 in dividend from Solstad Maritime for first quarter. And this plan for Solstad Offshore is to start paying dividends from third quarter this year.
And that will be based on the third quarter numbers this year. On the guiding, we are on track to meet the previous guiding for the full year and we will come back to this on a later slide. After quarter end, we have reported some new contracts. Norman Torquesa was reported yesterday, one of our Brazilian built anchor handlers. We extended present contract for nine months, keeping her fully booked until start of a new four year contract from first quarter twenty twenty six, bringing the firm period up to first quarter two thousand and thirty.
We have also announced or Solsad Maritime has announced three contracts also for four years each also in Brazil, and they will be operated through the Solsad Offshore Brazilian setup from commencement of those contracts. So this shows also the strength of the Brazilian market and it also shows the importance of a company like Solstad to be present and in a very important market as the Brazilian. Just to give you a quick reminder of the company fleet and activity. The fleet consists of wholly owned and partly owned vessels as well as vessels from the Solstad Margatim fleet operated in Brazil under lease arrangements. In total that is 15 vessels.
And that number will increase as the contracts that I mentioned earlier comes into effect in early next year. One of the vessels that Solstad Offshore controls is the large CSV Normand Maximus. Presently the vessel is on a bareboat contract from Solstad Maritime to Solstad Offshore and then again on an onward time charter contract with Saipem with a significant EBITDA contribution to Solstad Offshore. Solstad Offshore also has an option to purchase the vessel in 2027 for US125 million dollars which in today’s market is well in the money. The majority of the activity in Solstad Offshore is in Brazil and that’s and we also have an operational office in Brazil and about 700 employees in the company, Softail Offshore in total.
And the majority of employees are on board the vessels. As seen to the left here about 75% and looking back to the previous years, about 75% of the EBITDA in 2024 came from the CSV segment, but also the Anchor Handling segment and more and more the Service segment are also contributing nicely. If we take a closer look at financial highlights for the quarter and keep in mind that part of the first quarter as I mentioned included Solstad Maritime. It is fair to say that Solstad Offshore continues its positive development. We are building a strong balance sheet and we now have a booked equity of $311,000,000 The adjusted debt has been reduced with about $100,000,000 bringing the adjusted debt over adjusted EBITDA down to a factor less than one.
Revenue and EBITDA are stable while backlog is slightly reduced, but this excludes the four year contract on Normand Toquesa that I just mentioned and that was announced yesterday. And it also excludes the Solstad Maritime vessels operate that operates via Solstad Offshore in Brazil. So all in all, this has been a solid quarter for us. Chetel, then you will say a few more words about the numbers.
Jettel Ramsda, CFO, Solstad Offshore: Thank you, Lars. And when we get to this slide, we will look further into the debt structure of the company and hopefully to make it clearer how the debt side of the balance sheet is built up. If we start with Sulstar Brasil, we have BNS interest bearing debt of $56,000,000 financing for Brazilian built vessels in the company, maturity between twenty six million and ’31 The Brazilian vessels are performing better than planned, and the debt is currently being paid down faster than scheduled, mainly through cash sweep mechanism. On Solstad Offshore ESA, the interest bearing debt of the bank loan of $100,000,000 that was established when we refinanced SOF in connection with the Maximus residual claim settlement. That is a five year amortization profile with a three year tenure.
If we subtract the cash on hand cash on hand, the net interest bearing debt before leases is $107,000,000 This is the reason why we name it adjusted net interest bearing debt. And then also important to go through the two large components on the right hand side, which is the financial leases. The normal maximum lease of $168,000,000 consists of $68,000,000 of leasing obligation through the firm bareboat period. In addition, Sofas purchase option of $125,000,000 and the present value of this purchase option is included of the value of 100,000,000 in this overview. The second lease consists of the bareboat charters from Sulsta Maritime for the Brazilian vessels that are being utilized through Sulstar Offshore’s Brazilian setup.
And at the moment, that is 98. But as Lars mentioned in his presentation, this number will increase based on the new contracts for the three sourced Amaurotene vessels that was announced earlier this week. So this is a number that will go up and down. It’s also worth mentioning that these contracts are back to back with contracts with external clients. And the exposure for SOF for this depth is very limited.
Sof is also being compensated for utilizing its Brazilian setup. Then if we go to Sulsta Offshore backlog, as you can see, Sulsta Offshore has a firm backlog for its own vessels of $190,000,000 And also, if you include the Sulzer Maritime vessels, there is additional $265,000,000 of backlog combined $446,000,000 in total for Solstad Offshore. For 2025, most of the vessel days has been booked. And now also with Turchesa coming in, it limited exposure for the remainder of the year. Most of the Solstad Offshore backlog has been added since the market upturn started and limited legacy contracts in the backlog.
Then you will mention a little bit about the financial investment loss.
Lars Perlo Solstad, CEO, Solstad Offshore: Yes. And as you are aware of the we have some major ownership in several associated companies and joint ventures. And the three mentioned here Solstad Maritime, Norman Installer SA, NESA and Omega Subsea has a combined book value of $244,000,000 So it’s a significant part of the Solstad Offshore value. Then if we take a look at the Solstad Maritime first, the ownership is 27.3%. The company owns 32 high end CSVs and anchor handlers.
And as already mentioned, the company will be listed on or about May 16. Will receive Solstad Offshore will receive about $9,500,000 in dividend for the first quarter and Solstad Maritime has also announced that the intention of paying the majority of the free cash flow as dividend on a quarterly basis going forward. Million dollars of Solstad Maritime’s net result is included in Solstad Offshore’s result as investment in associates. NESA is a joint venture between SBM Offshore and Solstad Offshore and the company owns the specialized CSV Norman installer. That vessel is specialized for moving installations and are trading in the let’s say in the global moving installation market.
The vessel is under a frame agreement with SBM until 02/1930, securing a minimum of two ten days of utilization per year. The company is in a net cash position, but had a $2,200,000 negative result in first quarter as the vessel was between projects. It came off around year end twenty twenty four and it started on the next project March. So the vessel will contribute positively going forward and is fully booked for the remainder of 2025. Omega Subsea is owned about 36% by Solstad Offshore and is the owner and operator of ROVs and survey services.
The company has 12 ROVs in operations and have just ordered 12 more ROV systems and has options for further systems beyond that. Omega Subsea has Solstad Offshore and Solstad Maritime as their main clients, but has recently also signed a contract with an undisclosed ship owner for four ROVs on long term contracts from ’26. And Solstad Offshore’s part of the Omega result in the first quarter is $1,300,000 And then, Chetel, I hand it over to you again to say a few more words about the numbers.
Jettel Ramsda, CFO, Solstad Offshore: Yes. Thank you, Lars. Then we will as one of the largest investment in SOF, we will go through also a little bit of the Solstad Martim first quarter numbers. Utilization for the vessels in the quarter was 80%. Spot market in the North Sea for anchor handlers has been a little bit slow in the quarter with overall utilization of 6289% for the CSV fleet.
Revenues in first quarter was 145,000,000 compared to $120,000,000 same quarter last year. EBITDA adjusted of $82,000,000 compared to $52,000,000 same quarter last year. Net result of $48,000,000 in first quarter twenty five compared to $60,000,000 same quarter last year. And the main driver for the difference compared to last year was unrealized currency gain in 2024. Firm backlog of $814,000,000 1 hundred and 16 million dollars was added in the quarter and backlog inclusive options at $1,500,000,000 Booked equity of $82,000,000 compared to $545,000,000 same quarter last year.
This gives an equity ratio of 47% at the end of first quarter this year. The adjusted net interest bearing debt in the financials are $575,000,000 down from $788,000,000 last year, implying that we have a leverage ratio of 1.8 times Solstad. Cash position of $195,000,000 And the company will distribute approximately $35,000,000 to its shareholders, whereof $9,500,000 of those will be paid to Solstad Offshore. Then we will also give a short listing update on Solstad Maritime. So as previously communicated, Solstad Maritime will list on our slow bursts on or about May 16 this year.
There will be set up investor calls and they will be announced on Solstadtmar team ticker SUMA on news web. There will be no offering of shares in connection with listing. However, our MSA will distribute shares in Sulstad Maritime to its shareholder, representing approximately 19.6% of the company shares. The free float of shares in Solstad Maritime after distribution will be approximately 21%. Aker Capital and Solstad Shipholding, Solstad, which is a Solstad Offshore subsidiary, will be the largest shareholders with holdings of approximately 51.827.3% respectively.
DNB Carnegie will act as global coordinator with Danske Bank and Sberbanken Market as joint lead managers. Then if we look a little bit on financial guiding for Solstad Offshore for 2025, we have an EBITDA adjusted guiding $120,000,000 to $150,000,000 And also here, we try to split it between the operational EBITDA, which is we have a guiding of 60,000,000 to $70,000,000 for the year, which of EUR 16,000,000 was around in first quarter twenty twenty five. And then the financial investments result from associated companies and joint ventures of 60,000,000 to $80,000,000 where we had $14,000,000 already earned so far this year. We are on track to meet guidance for the full year. And then on dividends, Sulst Offshore intends to start paying dividend based on the third quarter results.
So with that, I give the word to you a lot better to summarize.
Lars Perlo Solstad, CEO, Solstad Offshore: Thank you, gentlemen. To summarize the presentation, I would say that despite the global political turmoil, we continue to see strong demand for our services. And to this point, we have not had any signals of lower activity or postponement of projects from our clients. We continue to see high tender and award activity, especially in Brazil. And we also continue to see a high utilization on the fleet.
We find it very interesting to participate in the growth of Omega Subsea, where 12 ROVs or will soon be operation on Solstad vessels. And as mentioned, 12 more ROVs are ordered and this company will be very central in the development of Solstad Services segment going forward. And finally, Solstad Maritime, as mentioned a few times already, will be listed Osloberg Sixteen May in accordance with earlier announced timeline. And we look forward to see how the company will be received by investors. So this concludes our presentation.
Thank you for listening in. And I guess we have a few questions, gentlemen.
Jettel Ramsda, CFO, Solstad Offshore: Yes. That is true. Let’s start with the first one. Two of the biggest vessels in the fleet, Nomad Navigator and Nomad Sentinel, are listed as available from this week. Can you say something about the plans there?
And of course, this is a source of mountain vessels.
Lars Perlo Solstad, CEO, Solstad Offshore: Yes. Are both source of maritime vessels. But still, I can the Norman Navigator is just about to complete its main classing, will be available within the next week. Has been fixed on a new contract starting around first June for three, four months. So but at a decent rate, I would say.
The Norman Sentinel is coming off present contract in these days and will then start around first June on our main class and will be available for the market early July. At the moment, not fixed on any new contract, but we have a few processes going on. So too concerned.
Jettel Ramsda, CFO, Solstad Offshore: Then next question, the eight mentioned ROEs being designated to Solstad via Omega Subsea, Are those meant for just CSVs? Or also could it be options for anchor handlers also for anchor handlers going to Brazil this winter?
Lars Perlo Solstad, CEO, Solstad Offshore: We have some flexibility there. So how we’re going utilize those ROVs and on which vessels, we have not decided on that yet. But we have committed to those eight and that will make a lot of sense for us to put them on some of our own vessels and we will do so. But which vessels remains to be seen.
Jettel Ramsda, CFO, Solstad Offshore: Thank you. And then we have a question. There has been several analysts reporting some signs of lower activity in the sub sea offshore space in 2025 and onwards. How will this affect Solstad’s view on the market?
Lars Perlo Solstad, CEO, Solstad Offshore: I mean, we continue to have a positive market view. We have we see that our clients have high activity. We experience a strong interest for our vessels. I can’t say that we have had any negative signals, as I also mentioned in the presentation, from our clients at this point. So we continue to have a positive market outlook going forward.
Jettel Ramsda, CFO, Solstad Offshore: Then you mentioned that there will be dividends from Solstad Maritime. Do we expect also to have dividends from other investments in Solstad Offshore for ’25 like in ESA or Omega subsea?
Lars Perlo Solstad, CEO, Solstad Offshore: I think the that could happen, of course. But I think the especially from Omega subsea, they will also use their cash flow to finance the growth. On Nisa, that company will come up for refinancing in ’26 or ’27. But as I mentioned, we are in a net cash position. So we are there’s a very strong balance sheet.
So what’s going to happen on the dividend side there is something we have to come back to. But the main let’s say, the main portion of the dividend that is received from Solstad Offshore will be from Solstad Maritime.
Jettel Ramsda, CFO, Solstad Offshore: And then a little bit more of dividend. How much dividend do we plan to distribute in sort of offshore?
Lars Perlo Solstad, CEO, Solstad Offshore: I think that is something we have to come back to when on the third quarter numbers. We will then we will be more specific on the size of the amounts.
Jettel Ramsda, CFO, Solstad Offshore: Yes, that makes sense. Is there a possibility that Solstad Offshore and Solstad Smaller team will merge sometimes in the future?
Lars Perlo Solstad, CEO, Solstad Offshore: Well, now we have we’re going list Sorgstad Maritime as we have promised. We’re going to do that next week. We will then have two separate listed companies and there are no other plans than that. What the future will bring, who knows? But at the moment, we will have two separate listed companies.
Jettel Ramsda, CFO, Solstad Offshore: Brazil is a hot spot to be at the moment. Are we expecting more contracts in Brazil in the coming period?
Lars Perlo Solstad, CEO, Solstad Offshore: Well, the ongoing award process from Petrobras has not been completed yet. So it might happen. We don’t know yet. We have announced four contracts combined maritime and offshore already. So yes, who knows.
But we will see that more of our vessels will be in Brazil for projects going forward. We already have at least two of our subsea vessels are going to Brazil for project later this year and also into 2026. So Brazil is continuing to be very busy and it’s for a company like us, it’s extremely important to have a strong presence in Brazil and to have a strong organization, to have the operational licenses and to be able to participate strongly in the Brazilian market is going to be very important also for going forward.
Jettel Ramsda, CFO, Solstad Offshore: Thank you, Lars. And for the investment that Omega subsea are now doing in the 12 new ROVs announced, will that require equity contribution from the owners?
Lars Perlo Solstad, CEO, Solstad Offshore: No. So they manage to finance the new investment based on their own balance sheet and on their own earnings.
Jettel Ramsda, CFO, Solstad Offshore: Thank you. Can you update give an update on tender activity and the commercial side of Australia for the activity that we have there?
Lars Perlo Solstad, CEO, Solstad Offshore: Yes. Australia is for us, it’s at the moment, it’s four anchor analysts, four large anchor analysts working on, say, short term contracts or but they are what we have seen is that there are quite a few tenders in the market for but not for the not for the duration of years, but it’s more like ninety days there, thirty days there, sixty days there that enables us to keep a decent utilization on the fleet. If we are not able to do that, we will not keep the vessel in the Australian market and we will work somewhere else. But at the moment, we are able to keep a good utilization on the fleet there.
Jettel Ramsda, CFO, Solstad Offshore: And then we have two more questions. What is the plan for Norman Mermaid after she comes out of docking.
Lars Perlo Solstad, CEO, Solstad Offshore: So another Solstadt Maritime vessel. We are mobilizing mobilizing Norman Norman now with two ROVs. So she will be have a fully integrated service solution on board, including survey and so on. And she is doing our main classing at the moment, will be available in June. And we are working on some prospects.
And the plan is to win one of those and keep the vessel working on a decent utilization and with a nice EBITDA contribution. So that is the plan.
Jettel Ramsda, CFO, Solstad Offshore: And then the last question for today. Are we planning on utilizing the strong second hand market to sell some of our CSVs during the year?
Lars Perlo Solstad, CEO, Solstad Offshore: No. We don’t have I mean, we own and operate vessels. We have a nice fleet. We have good earnings on the vessels. And we don’t have any plan to sell a vessel.
If a ridiculous offer comes on the table, we have, of course, to consider it, but that’s not the plan.
Jettel Ramsda, CFO, Solstad Offshore: Okay. That was the last question.
Lars Perlo Solstad, CEO, Solstad Offshore: Okay. So thank you for listening in, and have a nice day.
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