MONACO, Aug. 03, 2022 (GLOBE NEWSWIRE) — Eneti Inc. (NYSE: NETI) (“Eneti” or the “Company”), today reported its results for the three months ended June 30, 2022.
The Company also announced that on August 3, 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 and six months ended June 30, 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 and Six Months Ended June 30, 2022 and 2021
As of July 29, 2022, the Company had approximately $45.3 million of unrestricted cash and $14.5 million of restricted cash. The Company also continues to hold approximately 2.16 million common shares of Scorpio Tankers Inc. (NYSE: STNG).
The Company is currently under contract with Daewoo Shipbuilding and Marine Engineering (“DSME”) for the construction of two next-generation offshore wind turbine installation vessels (“WTIV”). The aggregate contract price is approximately $654.8 million, of which $65.4 million has been paid. The vessels are expected to be delivered in the third quarter of 2024 and second quarter of 2025. The estimated future payment dates and amounts are as follows (1) (dollars in thousands):
|Q3 2022 (2)||$||—||$||—|
(1) These are estimates only and are subject to change as construction progresses.
(2) Relates to payments expected to be made from August 4, 2022 to September 30, 2022.
The Company has identified the NG 2500Xs as non-core assets and is initiating a process through which it determines how to best monetize these assets.
The Company’s outstanding debt balances, gross of unamortized deferred financing costs as of June 30, 2022 and July 29, 2022, are as follows (dollars in thousands):
|As of June 30, 2022||As of July 29, 2022|
|Credit Facility||Amount Outstanding|
|$175.0 Million Credit Facility||$||71,875||$||71,875|
$175.0 Million Credit Facility
In May 2022, the Company closed the previously announced $175.0 Million Credit Facility and drew down the entire $75.0 million term loan and approximately $30.0 million under the revolving loans. The $30.0 million under the revolving loans was subsequently repaid in June 2022.
Approximately $16.2 million of performance bonds were issued under the letter of credits available under this facility.
Simultaneous to the drawdown in May 2022, the Company repaid the amounts outstanding under the $60.0 Million ING Revolving Credit Facility and the $70.7 Million Redeemable Notes.
$60.0 Million ING Revolving Credit Facility
In May 2022, the Company repaid the $25.0 million outstanding and cash collateralized the performance bonds issued under this facility and terminated this facility.
$70.7 Million Redeemable Notes
In May 2022, the Company repaid the $53.0 million outstanding and terminated this facility.
As of July 29, 2022, performance bonds were issued on behalf of the Company for $16.2 million, under the $175.0 Million Credit Facility, and approximately $14.5 million, which was cash collateralized.
Quarterly Cash Dividend
In the second quarter of 2022, the Company’s Board of Directors declared, and the Company paid, a quarterly cash dividend of $0.01 per share totaling approximately $0.4 million.
On August 3, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.01 per share, payable on or about September 15, 2022, to all shareholders of record as of August 19, 2022. As of August 3, 2022, 40,738,704 common shares were outstanding.
Since the beginning of the calendar year 2020, the ongoing outbreak of the novel coronavirus (COVID-19) that originated in China in December 2019 and that has spread to most developed nations of the world has resulted in numerous actions taken by governments and governmental agencies in an attempt to mitigate the spread of the virus. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial and commodities markets. Although by 2021, many of these measures were relaxed, we cannot predict whether and to what degree emergency public health and other measures will be reinstituted in the event of any resurgence in the COVID-19 virus or any variants thereof. If the COVID-19 pandemic continues on a prolonged basis or becomes more severe, the adverse impact on the global economy may continue and our operations and cash flows may be negatively impacted. The COVID-19 outbreak continues to rapidly evolve, with periods of improvement followed by periods of higher infection rates, along with the development of new disease variants, such as the Delta and Omicron variants, in various geographical areas throughout the world. As a result, the extent to which COVID-19 will impact the Company’s results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.
Conflict in Ukraine
As a result of the conflict between Russia and Ukraine which commenced in February 2022, the United States, the European Union, and others have announced unprecedented levels of sanctions and other measures against Russia and certain Russian entities and nationals. The ongoing conflict has disrupted supply chains and caused instability and significant volatility in the global economy. Much uncertainty remains regarding the global impact of the conflict in Ukraine and it is possible that such instability, uncertainty and resulting volatility could significantly increase our costs and adversely affect our business. These uncertainties could also adversely affect our ability to obtain additional financing or, if we are able to obtain additional financing, to do so on terms favorable to us. We will continue to monitor the situation to assess whether the conflict could have any material impact on our operations or financial performance.
|Three Months Ended June 30,||Six Months Ended June 30,|
|Vessel operating and project costs||18,800||8,240||36,852||23,850|
|General and administrative expenses||11,041||5,134||21,056||12,719|
|Gain on vessels sold||—||(6,452||)||—||(21,984||)|
|Total operating expenses||36,067||32,790||70,368||58,513|
|Other income (expense):|
|Income from equity investments||28,512||13,246||47,197||29,217|
|Foreign exchange (loss) income||(1,931||)||(68||)||(2,321||)||3|
|Financial expense, net||(679||)||(5,057||)||(1,952||)||(13,350||)|
|Total other income, net||25,914||8,152||42,935||15,909|
|Income before income tax provision||51,129||13,013||56,287||54,876|
|Income tax benefit||(1,599||)||—||(589||)||—|
|Earnings per share:|
|Basic weighted average number of common shares outstanding||38,825||10,626||38,811||10,628|
|Diluted weighted average number of common shares outstanding||38,844||10,921||38,827||10,907|
|June 30, 2022||December 31, 2021|
|Cash and cash equivalents||$||26,038||$||153,977|
|Prepaid expenses and other current assets||5,798||4,769|
|Contract fulfillment costs||8,505||3,835|
|Total current assets||112,625||190,030|
|Vessels under construction||71,629||36,054|
|Total non-current assets||687,460||617,243|
|Liabilities and shareholders’ equity|
|Bank loans, net||$||11,975||$||87,650|
|Corporate income tax payable||1,300||4,058|
|Accounts payable and accrued expenses||21,473||27,180|
|Total current liabilities||57,827||131,163|
|Bank loans, net||58,275||—|
|Total non-current liabilities||62,124||55,766|
|Preferred shares, $0.01 par value per share; 50,000,000 shares authorized; no shares issued or outstanding||—||—|
|Common shares, $0.01 par value per share; authorized 81,875,000 shares as of June 30, 2022 and December 31, 2021; outstanding 40,738,704 shares and 39,741,204 shares as of June 30, 2022 and December 31, 2021, respectively||1,134||1,124|
|Common shares held in treasury, at cost; 35,869 shares at June 30, 2022 and December 31, 2021||(717||)||(717||)|
|Total shareholders’ equity||680,134||620,344|
|Total liabilities and shareholders’ equity||$||800,085||$||807,273|
|Six Months Ended June 30,|
|Adjustment to reconcile net income to net cash (used in) provided by|
|Restricted share amortization||3,713||3,526|
|Amortization of deferred financing costs||132||652|
|Write-off of deferred financing costs||—||7,028|
|Loss (gain) on asset disposal / vessels sold||896||(19,598||)|
|Net unrealized gains on investments||(46,767||)||(28,786||)|
|Dividend income on equity investment||(431||)||(431||)|
|Changes in operating assets and liabilities:|
|(Decrease) increase in accounts receivable||(30,580||)||8,614|
|Decrease in inventories||753||—|
|(Increase) decrease in prepaid expenses and other assets||(4,687||)||24,610|
|Increase (decrease) in accounts payable and accrued expenses||6,195||(27,163||)|
|Decrease in taxes payable||(2,758||)||—|
|Net cash (used in) provided by operating activities||(4,702||)||19,885|
|Sale of equity investment||—||63,377|
|Dividend income on equity investment||431||431|
|Proceeds from sale of assets held for sale||—||482,039|
|Payments on vessels under construction||(35,836||)||(9,311||)|
|Net cash (used in) provided by investing activities||(35,405||)||536,536|
|Proceeds from issuance of long-term debt||130,000||—|
|Repayments of long-term debt||(198,790||)||(367,105||)|
|Common shares repurchased||—||(1,407||)|
|Debt issuance costs paid||(3,235||)||—|
|Net cash used in financing activities||(72,824||)||(369,636||)|
|(Decrease) increase in cash and cash equivalents||(112,931||)||186,785|
|Cash and cash equivalents, beginning of period||153,977||84,002|
|Cash and cash equivalents and restricted cash, end of period||$||41,046||$||270,787|
Conference Call on Results:
A conference call to discuss the Company’s results will be held at 11:00 AM Eastern Daylight Time / 5:00 PM Central European Summer Time on August 3, 2022. Those wishing to listen to the call should dial 1 (877) 513-1694 (U.S.) or 1 (412) 902-4269 (International) at least 10 minutes prior to the start of the call to ensure connection. The conference participant passcode is 10169504. The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.
There will also be a simultaneous live webcast over the internet, through the Eneti Inc. website www.eneti-inc.com. Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.
Webcast URL: https://edge.media-server.com/mmc/p/tbt2xx5p
About Eneti Inc.
Eneti Inc. is a leading provider of installation and maintenance vessels to the offshore wind sector and has invested in the next generation of wind turbine installation vessels. The Company is listed on the New York Stock Exchange under the ticker symbol NETI. Additional information about the Company is available on the Company’s website: www.eneti-inc.com, which is not a part of this press release.
Non-GAAP Financial Measures
To supplement the Company’s financial information presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”) management uses certain “non-GAAP financial measures” as such term is defined in Regulation G promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in, or excluded from, the most directly comparable measure calculated and presented in accordance with GAAP. Management believes the presentation of these measures provides investors with greater transparency and supplemental data relating to the Company’s financial condition and results of operations, and therefore a more complete understanding of factors affecting its business than GAAP measures alone. In addition, management believes the presentation of these matters is useful to investors for period-to-period comparison of results as the items may reflect certain unique and/or non-operating items such as asset sales, write-offs, contract termination costs or items outside of management’s control.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is a non-GAAP financial measure that the Company believes provide investors with a means of evaluating and understanding how the Company’s management evaluates the Company’s operating performance. This non-GAAP financial measure should not be considered in isolation from, as substitutes for, nor superior to financial measures prepared in accordance with GAAP. Please see below for reconciliation of EBITDA.
|Three Months Ended June 30,||Six Months Ended June 30,|
|Net interest expense||535||1,574||1,809||5,630|
|Depreciation and amortization (1)||8,523||5,087||16,305||11,206|
|Income tax benefit||(1,599||)||—||(589||)||—|
(1) Includes depreciation, amortization of deferred financing costs and restricted share amortization.
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements. We undertake no obligation, and specifically decline any obligation, except as required by law, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and asset values, changes in demand for Wind Turbine Installation Vessel (“WTIV”) capacity, the length and severity of the ongoing novel coronavirus (COVID-19) outbreak, including its effects on demand for WTIVs and the installation of offshore windfarms, changes in our operating expenses, including fuel costs, drydocking and insurance costs, the market for our WTIVs, availability of financing and refinancing, counterparty performance, ability to obtain financing and the availability of capital resources (including for capital expenditures) and comply with covenants in such financing arrangements, planned capital expenditures, our ability to successfully identify, consummate, integrate and realize the expected benefits from acquisitions and changes to our business strategy, fluctuations in the value of our investments, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption due to accidents or political events, vessel breakdowns and instances of off-hires and other factors.
Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.