NETI - Earnings call transcript Q1 2022

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Operator

Hello, and welcome to the Eneti Incorporated First Quarter 2022 Conference Call. I would now like to turn the call over to James Doyle, Head of Corporate Development and Investor Relations. Please go ahead, sir.

James Doyle

Thank you for joining us today. Welcome to the Eneti, Inc. conference earnings XXXX quarter call. first

Sebastian with On risk which XX, forth we call Executive Hugh issued Emanuele and Officer is Officer; from Chief our statements first press information are as Robert on our eneti-inc.com. the website based Baker, Seajacks. Bugbee, forward-looking release, today, and Financial Officer; available results call Officer; The Operating on Actual statements. President; Lauro, those contain today, Chief uncertainty. Operating information XXXX May earnings me events is Cameron Earlier Chief Brooke, that quarter materially Chief of may discussed involve in on this differ and of may Mackey, such set

conference you in well which broadcast be our statement made advised should playback review approximately For the sec.gov. discussion SEC the of for will purposes. webcast Eneti eneti-inc.com a call for the and the days. today, participants audio as press Call Relations page the Investor uncertainties, is disclosure release as issued the An recorded XX available at the of filings, Inc's are of these are and live Internet earnings available is being forward-looking that being website this archive also and of on on risks

available page will giving Reports be Presentations. webcast. under the Relations eneti-inc.com and presentation also a the today. short on The slides After We go Investor be we to on will at presentation is the available The Q&A. presentation, will

introduce to Executive I'd Emanuele our Officer, Chief like Lauro. Now,

Emanuele Lauro

to backlog and on million added time Good our to of last spoke, $XX XXXX, today. backlog we've contract From XXXX, for grow. additional James. Thanks we afternoon your and morning, revenue November options. XXXX you, Since Thank Energy largest These in almost employment generate Renewable existing including by for fleet projects backlog Siemens with continues nearly between The $XX contracted for in second Gamesa our $XX Taiwan XXXX. XXXX. million. a XXXX our and million $XXX the increased have Zaratan million and WTIV, This includes for contract everyone. we for will

are giving for XXXX, So the company Zaratan necessary and Scylla now the both visibility. contracted the

announced contracts significantly increasing of vessels. XXXXs In the for several our we class smaller addition, have our utilization NG

COVID working operating have the a of reduce operating a We cost where contracts. of diligently biggest by imposed our negatively Asian that to preparation of and expenses, of to constraints costs of vessels, for which assets our are eases. will COVID-XX, increased and currently result impacted and efficiency our some restrictions we expect fronts, do number both governments, has costs as smaller in decline are class our these specifically as improves ships due COVID On the positioning reactivation working.

will As we costs just as efficiency do the mentioned, decline eases. COVID expect and improves that

(ph), this for last we of shareholders company's his look in Board interacting the forward agreement thank, and personally more months Peter an a to Mr. next sail to rate quarter effective the run him as capacity I Board remainder indicated cease party million shareholder the In it X.X that his to the X.X with will has G&A realistic On INCJ and looking of between to do sell fashion contribution costs feel the Peter, has of million declined to Our to from that in over as Niklai, Designee XXXX note, one with INCJ conjunction months. common in our (ph) shares year. the the to come. valued today. a several is company I orderly be quarter resigned is a of and another the Board today. INCJ shareholders a like would August for from the dated XX, to

at XXX facility sheet. of LIBOR multicurrency points green draw financing a X% plus new expect revolving a to we our term of rate from the on our million credit Seajacks This $XXX will this run basis end front, loan balance the complete cost interest and week. reduce to the repositioning On and the

hear during has will installed megawatts we the generating renewable on by year Brooke Sebastian front, the operational this X,XXX XX and a of company pace install energy. but minute a from slides in so year-toXdate end turbines the the XXX over to turbines, per On is of far year,

transition outlook through to do offshore the we do -- role in of going and you. are the So James to on our and Doyle, would Sebastian excited now about sustainable the turn and future. like you Thank more are James, walk to some for Brooks I which a we remain our cleaner call to wind mute? the slide.

James Doyle

presentation. you're to I'm starting the go and Sebastian, could Slide If Sebastien going to will please be we start. X here.

Sebastian Brooke

James. you, Thank

As contracts its Emanuele on of account vessels. into all since and our new by Eneti said, has This backlog for revenue $XX has increase million February, driven been increased taking XXXX several by XXXX options. the

November. Seajacks to XXXX of generate from million Zaratan and to amendment through the is a the $XX.X additional in from now was and signed and contracted revenue. Farm have expected at Noshiro an Japan we to April expected $XX.X million in for $XX.X and contracted XXXX in Wind Firstly, total million (ph) April November an Offshore from April generate June Akita originally revenue through through

the quarter in at Zaratan signed to $XX.X turbines the million to generate second installed of utilize Siemens to and which project Offshore $XX start in Yunlin This in to Secondly, Taiwan. expected we the is were Wind XXXX, a million. have XXXX Gamesa contract with Farm

and install turbines. done she XX a XXXX, to NG for which to of and based the of not in Zaratan which arrived Seajacks XXXX to Gamesa Yunlin X.X for turbines the Zaratan we job should is it Zaratan then head Siemens with on megawatt months respective Gamesa, mobilizing where will has in work to spite this, challenges any XXXX. is Taiwan contracted Seajacks revenue such company Thirdly, or of contracted we of the and Hydra, report please. in We Europe a global and jobs safe chain, of securing three Scylla the the positive each NG In currently complete to in adds XXXXs, shore-based XX XXXX to pipeline that and Siemens Noshiro Van Orsted's is Changhua The Taiwan report mobilize two did the work And contracts to in February, Changhua signed mobilize November to to she without the Greater to Seajacks have XXXX. in from operate our megawatt of managed supply minimum contract is on year. next of importantly installation and significant the on scheduled Akita (ph) work, APAC XXXX Scylla and year, its three of keep Offshore to in to occupied a now Wind from After go Farm. and for Scylla Oord. Farm, last manner. start a Offshore In the completed of the and including to to continue will team with great revenue disruption. QX contract also this XXXX XXXX and contract Greater any Seajacks able slide, to We're (ph) turbines year employment scheduled all themselves where I'm three project Europe, with crews XXXX happy inefficient existing organization Scylla to happy contract conduct its this be largest continue installation an regards Offshore Wind Farm, NG commence news their WTIVs fleet, has in pipeline. Wind The the

the and we continue wind, the through as increase and is across the of services rate tendering see for and views in XXXX. at industry the particularly the U.S. This growth grow wind most to Europe offshore offshore APAC, reflected in that is the will involved of part One XX% of high decade continue is multiple a macro demand the expected interesting offshore through of end wind activity of to beyond. annual the growth compounded to supports regions outlook

tighten subdued, supply the implies continues years. remained relatively that has the the bright future which to increase, for and the While offshore continue demand in is that market will wind additional coming to

years plus our Thanks, at up QX demand new two or growth well among for XXXX light develop set of will capable builds, the added that rates. attractive will for which and we’re for believe contract We and taking and of we especially are recently which activity the ’XX, we've been the that XX James. turbine. early about increasingly planned are construction in best XXXX, with them forecasted to so regards under how really note have ahead, remain ‘XX future, we While coverage very the and are that and able at still do pricing pleased megawatt delivery the most the optimistic we to the fact with increasing

James Doyle

please. XX, Slide Sebastian. Thanks,

upcoming First to revenue for getting ready million was stands million but options. the $XXX $XX increase contracts elevated $XX the contracted million of from higher NG expenses Zaratan the and COVID. largely XXXX fourth XXXXs quarter, expenses result million, employment a additional still in including and NG (ph) decreased crewing annual The $XX.X the we've travel the to Daily contracts. last to million, this on due remain and Compared of now to quarter and increased million XXXXs. at as and revenue vessel costs $XXX to XXXX our EBITDA an by $X.X quarter. the Operating was contract the Scylla with amendment due on vessels for Zaratan, increased operating

contracts. the addition incurred additional their of idle two NG costs year and of ahead were In last XXXX vessels

daily project the and updated earnings last Similar expect is Scylla recommend to per and and a costs. the the the the day day We XX,XXX second revenue quarter COVID XXXXs improve for NG we the and but quarter, using best by OpEx way quarter. to simplify a to Zaratan as estimated for these this feel transparency we've cost costs and of of decline and eases, for $XX,XXX

looking I I to in forward us, of the certainly please. materialization all XX, Side are but quarters. contracts the of speak think upcoming for we

of inherited million $XXX balance the loan – new completes the facility Our by Seajacks. from sheet restructuring

will facility backlog after two in new we to will drawdown which debt the to the draw outstanding only on unrealized Tankers balance the debt payments sheet. vessels $XX building right, and expect year, as facility. this We vessels new on as credit CapEx delivery. bottom continue our company's gain it Scorpio increasing facility, be can remaining on and expected the week, our upon the million we by see the contractual loan repay will The the in well expected To strengthen this

We contract Slide type. its and new and to XX that leading of value. investment the financed installation be turbine listed on our at builds highlights. company is vessels the wind And U.S. their XX% expect only

company the has developed an the its base on Europe, have team asset global United experienced $XXX contractual in options. management backlog States increased operations existing almost November, We by with million Asia. and our including and platform Since

In addition, WTIVs two XXXX. XXXX our Zaratan we Scylla have and largest contracted, for and

returns high Demand the wind outlook wind generation as specification attractive suppliers to is relatively company offshore wind allow next subdued. two Our install for offer and remained where significant. turbines. offshore increase newbuilds The for

company transition to Q&A. future role more the like to about sustainable With turn now cleaner would excited a in are of I We and to the and that, over the our future. it

Operator

[Operator Your question Greg from with James. you, of comes Lewis Thank Instructions] BTIG. the first line

Your line is open.

Greg Lewis

out, builds market assets Hi. how you asked the of some in and should to a move it's contracting timing those Good or the how potentially, even around provide that whether we could here? contract and (ph). of of appetite forward new years more as couple if afternoon, could in thinking is still terms from and the you. a be maybe are maybe evolving kind Realizing do you customers for of about Thank Yeah. color that everyone LOI the we maybe firm

Emanuele Lauro

Yeah. can answer I that. Sure.

in of for optimize to a and of it's safe see supply to has year-on-year vessels, kind limited are is our us for that the definitely the give to there of to economics. is, timing, looking to ‘XX we With it's assets. agreements very The is clients what for and considerably the being we're as regards job And right said, feeling ‘XX, years. vessels that project particular really I those tendering growth reservation capable we actively that you. even looking to assets. kind we get because to these increased think guidance allows to That of right the result what have on that difficult continue are find activity a say demand secure place into as these that,

soon from other they we can't still can that understand specific than they've project from I you the run So their definitely give or side through a the is more the guidance the procurement better client than teams. side that, got secure client as -- feeling there to just capacity

Greg Lewis

want North on the having of a Sea couple where merchants several it in kind Speakers]. challenges that more in what oil like on to and -- interesting Sea years do that was And understand contracted the activity. Is fronts. the for the I you for like seems a ’XX, in more price was the market just constructive seems is XXXX. strengthening multi-year of to of they're of did becoming that. all potential Thank contract to to It was Sea, take then, on really Great. back But assets a North ‘XX scarcity customer see we I'm increasing after, and Okay. willing maritime that really that's of think the it for function environment North touch kind [Multiple the multiple trying vessel

Sebastian Brooke

number trajectory changed. There say were I'd yes, a the But of [indiscernible]

can I in produce There that and turbines day increased across are to the gas. is and they rate, think some to continue a just requirements. lot infrastructure, of utilization are maintenance in board wanting installed offshore that people wind, maintenance. say that's these, need as goes fact that's so the activity you in There people, these the older rightly there in capacity that's reflected upgrade their reflected of that getting are they there are reflected like

on So, there. obviously gas the increased and and also demand there's side oil

across level most commit basic way, ours, to is, able look classes of are multiple the a of for kind sure. of would to asset beginning are is advance. utilization years work up a just improving the rates included for So headed I of And get people in in number it very to months, the at from be kind baseline mass

Greg Lewis

or XXXX. Zaratan, to use I'm one $X.X amendment around but that something about of is or said, And you life as million should other that? on Does kind not, sure, I that sum revenue if did want realize Is we line that contract question. of Great. touch think that in on kind we then, Okay. that amortize congratulations over on payment color How on we amendment any not of the on just and the that recognition. the a lump a get delivered? it as that

James Doyle

it's expecting Well, be invoiced Greg, I we're mean obviously revenue this you're we invoicing and recognize amortize, during sorry when quarter. to we

the quarters. to results future expect see will you So that coming into in

Greg Lewis

the sum. But the mean, of I [indiscernible]. if life more -- that that's either lump over we Okay. a sum lump contract? amortize A of we court realize it the over

James Doyle

Yes.

Greg Lewis

Okay. Perfect. Thank you.

Operator

comes our you. next line the Clarksons. of Thank with And question from Turner Holm

open. line Your is

Turner Holm

in does a of working lot there what Hey, the that how up and I contract just there could more wanted a Is or clean to is that rate new Congratulations new XXXX? afternoon. you're like gentlemen. costs color. on provide of to to kind any good relative project wanted and in but that on if contract look rate on see XXXX, morning Zaratan. follow Good you in

Sebastian Brooke

James?

James Doyle

not we the We've are include rate for publicly yet, out the quarter does can, later project those what separately And date. haven't disclosed costs. sure. broken we quarters. those at by Yeah, upcoming Turner, a but

Turner Holm

Okay. similar mean, or XXXX to have you directionally, Yeah. I it or is higher what in lower?

James Doyle

looks project the share. lower it dedicated than Directionally, to

Sebastian Brooke

Okay.

to said, that. As there a I nuance is

nuance Sorry, is to Turner, to just there that. interrupt,

multiple have this Akita are in the of fairly T&I talking cost contracts you is build-ups time for the the contract. there as where kind where We’re about contingency charter straightforward more Noshiro

Turner Holm

over next little discussions Round the it. the bit then conclude going new Okay. UK, to is months. X, of expected contracts build the Thanks, Sebastian. to In the up just for couple a sometime And which CFD Got there's follow forward. potential on

being is there of sort be UK and Seajacks I type July think when discussed? contracts of aspects early those for if Is the beneficial any what's work being awarded? base to that could

Sebastian Brooke

where or Yes. on compared time and two tighter kind There's content focus actually three that were years an with local around definitely getting to are ago. increased rules the of they

increased procurement obviously larger speeds, enable systems. running Each still would on commitments. and those that. to their UK only it make projects that different of we are at benefit It really So focus will based -- have would installation they as from procurement projects will there's contractor the certain

beyond more but termination really be reservation having start go probably fees, I So the specific that. and can't fee than

Turner Holm

potential this But sounds later maybe of contracts. that's year like project Okay. those different it bit by little for is project, some But fair.

Sebastian Brooke

Yeah.

Turner Holm

would of repeat I Okay. think newbuild thoughts shape type about, one And if just then that basically what those what for trying months? of just been all get is up to then you're two have for going ships to replacement you an cost, changed, guess any value and every one wonder, that you today, the have I recent the Thanks. last going I might if in me just look and have that prices how quick and that orders have like would indication for

Sebastian Brooke

XX% we're XX% price Turner, to which vessels. those at the Cameron ordered anecdotally, we up looking on at

Turner Holm

it, suspect sir. I Yeah,

Okay. appreciate much. All Thanks so it. right. I

Operator

our Burke And next Instructions] [Operator Liam B. you. from line question comes of Thank the Riley. with

open. Your is line

Liam Burke

Thank you.

On the XXXX contract do from in fit that? one difficult but end the I to gap, beginning to Is logistics of ’XX. guess it to the it or make of a another got project in moving Zaratan, roughly another possible you’ve of the

Sebastian Brooke

complicated the So logistics one question of from it's are good for contract moving the to sure. other

to project we the we Zaratan possible and we of think not may but to three back be forward from to mobilize. I are because kind and won't or look two bring it going the other be --maybe forward at may it anchor is a on demobilized months, bringing one that it it's have -- on options going end, I Akita baseline we and that, how be rather there so work, equally project, secured like of to be

end, is on front multiple option to not but an the extend So months. there

Liam Burke

Great. like ‘XX NG Leviathan what these to shorter-term on you've gauge, been with Thank the you. looks are contracts Hydra? in looks will like but XXXX start good XXXX, in market -- it's it similar tough the off And XXXXs, doing looking understanding it the to it's a to is get the and crack

Sebastian Brooke

Yeah. there I a board. like there's said the mean and across activity, lot is activity I of

the markets, capacity are the at the production Those definitely increasing, involved individual to we're and that from seeing of So maintenance got side. trying activity look are you but installed interested you've if and enhance those on the and of oil platforms. very maintaining to running. that are offshore obviously their and infrastructure They're are the very that additional gas finding equally supply secure in and kind up keeping ways markets focused

I'd say there across increased yes, XXXX. So, is on board the activity the

Just were question. There an you if Zaratan is also, but is going operating there contract look back could transit to period also it paid front that built also bit for, at a how already the period, is are for period there the that -- on and up, just there's that extend and paid mobilization a extend more. end were it a bit so does

Liam Burke

you Thank Great. very much.

Operator

this Thank Emmanuel remarks. to turn concludes question-and-answer call back to session. like you. for our the I now And would any

Emanuele Lauro

do any closing forward for soon. look everybody time your good a day. thanking from apart to We speaking have and not remarks, Have to you

Operator

today's Thank participating. for call. you Thank you. this And concludes conference

You may now disconnect.

Eneti (NETI) 12 May 222022 Q1 Earnings call transcript