NETI - Earnings call transcript Q2 2022

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Operator

Good day and welcome to the Eneti Inc.

Second Quarter 2022 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. James Doyle, Head of Corporate Development and Investor Relations. sir. ahead, go Please

James Doyle

joining Welcome for Inc. the us you to today. Eneti Thank

Quarter Call. Earnings Second Conference XXXX

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

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

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

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

Emanuele Lauro

million results a Since contracted million our gain we've turbine to second profitable number everyone. Scorpio as $XX the installation vessel investment In Eneti's an excludes This almost morning our Tankers. XXXX. good And excess quarterly and Thank wind you, James. to afternoon $XX increased additional of by unrealized million million. in and generated and $XX the quarter, results Welcome second net first XXXX for income. XXXX of $XXX the of revenue company backlog company. November, in is quarter This and in

the the from With in balance a contracted strengthens these the sheet. conservatively fleet and flow fully cash levered third contracts generation second further quarter,

of value this vessels. addition, excludes potential the includes sale NGXXXX and assets, the which noncore In

are As Korea construction far plan. as our to the proceeding according in newbuildings concerned, is

risk In addition, we a from will consistent including energy financial existing reducing which more both energy fully leads terms of our is vessels, important. Renewable High prices comparable and be several have us critical energy. attractive underwritten proposal, received facilities. underinvestment that to in believe about illustrate global institutions with proposals [indiscernible] to will global newbuilding creating secure emissions. aligned the energy and security we financing

market expand our capitalize positioned expect high assets are to contracting We of us built Korea. the which to wind on and new in leaving are to well accelerate, and specifications they to offshore being markets existing currently

We and about the now in presentation. through Sebastian? wind the James to and excited will cleaner go a our are a more let I offshore and transition sustainable future. Sebastian outlook brief for role

Sebastian Brooke

everyone. morning, Emanuele. Thank Good you,

since by XXXX contracted and did we Emanuele, any last Eneti million have by $XXX in XXXX. taking its revenue about contracted and not has through revenue November, for Scylla any of year, ] or all for by mentioned account increased revenue As November In into XXXX Zaratan NGXXXXs [ options. XXXX, backlog the the

previously major to with complete decommissioning in wind the she'll on to this announced the is mobilizing of to year; third worth work this Europe, positive in our Hydra on noting able X It's this, year. respective work Sea. where February, contract project this the Sea, installing complete performing And Ørsted, substation Sea, and NGXXXXs. be QX regards wind with a for are this for the XXXX in progress employed Zaratan XX the mobilize contracted in news maintenance Changhua to and she at operate regards very the is has in to North which importantly, making North currently we're the high-profile perform of will currently the Southern to Southern offshore all Greater largest And year, XXXX; services employment to to for middle platforms continue safe she's most start Seajacks' that their Greater vessels spite has Akita Taiwan She's its wind Kraken QX currently Southern announced Scylla which contract with Scylla on in in from disclosed, efficient fleet themselves that manner. existing please. an head scheduled pipeline X.X-megawatt in of of fleet. minimal start the North done such offshore and WTIVs, the OEM a to continue The the previously securing executing will pipeline to farm. work then Zaratan project contract After for happy supply offshore to to APAC job Slide and in Taiwan its she's Noshiro global the NGXXXXs, organization jobs conduct contract where Zaratan, and farm, on now of challenges arrived is to work of Leviathan a With is and, its working is campaign disruption. continuing to of the the currently chain is Oord. where commence Changhua company is to X-megawatt shore-based in the announced be installing of Siemens Van X, X August. great turbines. maintenance team an Seajacks of a in significant of work through good currently crews expected in the to at mobilizing As Seajacks for previously Gamesa report and accommodation a quarter. Yunlin all previously Scylla In then turbines.

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

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

demand; XXXX, attractive with with ahead, We taking secured X have very XX-plus-megawatt 'XX so QX develop growth light them construction, the been the I'll years we're coverage that, pleased in will that pricing best 'XX which we planned with up of remain and we rates. to hand fact or which that increasing well we've newbuilds, are to XXXX able the still future, under about contract will among the are the that believe at the the James. we turbines. activity delivery back regards And of of for forecasted in how set While for and our most capable and optimistic the do especially note are and to increasingly and

James Doyle

XX, Slide Sebastian. please. you, Thank

million, quarter. First was [$XX.X quarter million] $XX.X increase from of revenue an the first

and costs. decreased OpEx as increased vessel expectations of excluding We first in addition in for the net the Zaratan a part $XX,XXX of on was quarter Daily Seajacks in expenses and Scylla extension professionalism, time costs brought our team and on options. Zaratan Scylla year, unrealized the travel in the declared Zaratan gains. recognized to reimbursable as in but quarter, million for and generated the such as of with Eneti. its higher we In recommend addition, the and operating has million, claims per [optional profitable using second payments last came related pleased customers. additional NGXXXXs NGXXXXs daily Revenue ahead acquisition to $XX,XXX year well day and the with company to costs at quarter. from projects COVID-related income of $XX.X as announced contract commitment higher the to and the $XX.X of second and the revenue this are including stands days] previous half day to $XX.X on due crewing completed Seajacks; expertise the The now contracted in At the XXXX, third NGXXXXs fuel million; for the fuel

plans Next by week, required file issued related to Eneti. shares expect acquisition the sellers not shares future in Slide the their as have S-X please. regarding we do of to an related to the XX, of Seajacks to We the any information remaining documentation. sellers

million $XXX of new sheet. Seajacks the the restructuring completed balance facility Our loan

and redeemable ING a notes. on sheet the new our During continues repaid and increased cash contractual facility, strengthen. we flow new credit the drew facility backlog, the loan to Through company's balance the facility growing quarter, and

and well have on we confident that from vessels bottom the on you delivery. newbuilding our received our upon financial drawdown the year the current underwritten our institutions As the to see will X as fully CapEx related right, newbuilds To proposal feel mentioned, similar secure terms facility. payments Emanuele expected can the attractive credit we to expected by as vessels

I XX% We value. contracted With Robert to of to financed turn be their newbuilds would expect Bugbee. to over that, it at the like

Robert Bugbee

at at It's the very morning, can Thanks out Good that this. point your to newbuildings. here. a cash much And interest. couple things and everybody. can that we of on of the we like cetera. we Hi. could actual contracts just expected to going market And terms the X good for get look look I'd afternoon, of the Daewoo et flows, in demand ultimately opportunity the growing at look the we're obviously

in prepared you've And when we've look -- cash that actual a and under price. read, values would that company net we it to itself situation as think, a liquidity where the have be we we EBITDA range assets sell way a the of not Another that $XX, leverage asset much we've have of balance through the between got And not a the lot actual itself or got now and and of enormous this anywhere in there's an discrepancy and seen, that management -- -- analysts at value is has to I but $XX. tend the between sheet necessarily share sheet the have [steel] all. things whether $XX at able is is lot balance the flow a to

like that please. And point to we'd out. questions, up like just just with open I'd that, to So for

Operator

BTIG. Our from question Greg [Operator Instructions] will Lewis come first with

Greg Lewis

them. on vessels, given viewed us directly aren't to I has NGX but about guess -- and I don't from I that. you the a how of you're did the -- thinking I'm Robert, assets, announcement directly mentioned around I realize about provide curious little touch that impacts a also as the kind if that could color you guess bit want but market NAV comment, developed how derivative that perspective, oil absolutely they just gas some

talk Just to those kind guess, helpful. of of about monetize to would that Any as noncore around kind them. look the be classify color I decision and,

Robert Bugbee

you like take would Cameron, to one?

Cameron Mackey

It's Sure. last significantly over and not is for overnight. spread. between Greg. the vessels there's that such on be have but that we're evaluating back the employment expect back stages we a but and gas-related happen something longer-term has inbound report to employment and we in business revert in increased we this either We also a work, Thanks, price tightened to early months, or a of longer-term bit don't Robert Obviously the can and early currently are just for those to have and out a what assets, to conditions which selling position market would and when try putting discrepancy sale, of to as capture fair seeing in a share oil I the say. which inquiry what earn the several the stages and so for employment process mentioned, of

Greg Lewis

Okay, great, okay.

-- okay, is okay. this [indiscernible], So so it's

recently pretty have to be vessels contracts for always is for wait out-years alike always there's And that one to of analysts catalysts. see are is that activity some in for guess of out And developing? could we're investors being give newbuilds I some any I looking think, could under contracting you going provide be think little I -- that newbuilds it's of the a construction. we Any of in in or that contracted? then Could kind color been bit around Eneti people kind there the us, some it's market So waiting potential -- you overview more are for of of how other thoughts market and drivers when whether -- around year. clearly are would their helpful.

Hugh Baker

you want Sebastian? want me do [Or take to [Do you take to this]? that],

Sebastian Brooke

yes. -- [indiscernible]

towards are and of and you delivery far the we year supply to year. does to a so going 'XX, kind of there that's announce that of when With really wouldn't through of timing be are down when announced their time to -- not on just remains that that to get say indication market; a that projects that what of give is the may high, And in that clients which processes to tightening shows contracts that contracts our think of say of newbuildings it, kind an have continues of I into give the this it in fact an a move the seeing awarded the and as would about concern on trying the our shown on number announcement, available that through to regards frame be is a I on the contracts close. prior a being we but focused expect being there's and out are I you. to time expecting the that we to most expect up, some think kind of to signed these I'm clients of kind vessels on our beginning so that -- of beginning by announced. material processes are of but -- procurement our end 'XX number next contract, obviously we activity of make when I delivery we

Operator

Ben Nolan The Stifel. question will next come from with

Ben Nolan

the the where on reclassification a between you believe XXXXs. that the the you you to questions believe shares discrepancy follow Robert, value could going And that valued there's said maybe of respect to I Greg's by what little if and market currently with bit Maybe are to had that versus a be. where being

able are your were to And there would then like as thinking? redeploy that or First lastly, shares to into? if entirely, that something of Or thinking look to same fair part that all, you that part it, is are be other here think you vessels that that, be call of I sell base might don't things an STNG assets. it of asset available? the that is other ordering capital arbitrage-related to know,

Robert Bugbee

last to are time since. you that NETI very, NETI. moment -- need the a to investment. that we sell And no ourselves one ultimately as NETI that think have. have STNG could quite very think I can Or And the you continued -- an are to redeployment. any opportunity immediate costs us they I you are course, shares liquid. we we incredible STNG It's could be insiders -- the continue The you believe STNG we taken reported liquidity. the obviously will we'll There's buy and first. of but last quite mathematically -- week. available, to And of the -- shares that strong. -- requirement just STNG then that immediate think STNG shares take inside there's the long It sure market high. stronger move is don't And quite cash the at selling proving the buy opportunity that, any can isn't say, reason. and I'm well, no not It's percentages of for that

So isn't you high. but low, where volume is that the have situation the stock trading a actual

increasingly NGXXXXs forward things like carbons going to a necessarily I to going get want be not investors it in So isn't going we -- idea to believe and you're ]. it's company see think necessarily renewable want actual NETI to that of The a the that doing going that is way. to company [ fully looking you're get

that, we've We've that then gulf, develop. structurally, opportunities. benefit the And the yes, And gulf, in be like would areas both growth -- forward we other offshore. going that after for the gulf, East as offshore, well. think I so seen hope now U.S. the a And will gulf Middle seen

good So to time it would this represent a -- tightening, is market and possibly sell. could quite so

that. real as simple in as the company as would I it's you think think I well. And worth establish

that So waiting. rather it's more than

but said, an fix the could than the like catalyst for NGXXXXs themselves having is Daewoo a sure the has the that as rather -- to a ships, sale Sebastian investor to opportune become you're X of As that not catalyst, when quite before time. a moment wait

Ben Nolan

color, You my I to then that's And that bit: question, Okay, a talked X about switch appreciate for Robert. financing just helpful. little the on second gears XX% newbuilds.

have First, of that is sense impact firmly make does would that it ] you wait basis? of meaningfully capital? or about do does financing, until are [indiscernible] availability contracts, that place? on you uncontracted thinking [ the costs -- Because it assume an in And debt when something financings to or

Hugh Baker

Ben, it's question. a good very

are we reliant in not is on a firstly, think, finance I that process place. a running contract

are are nature of employed, expecting in that certainly And employed. the expecting but is not lenders the it's obviously employment We set specific vessels the be be and to the vessels to not stone.

the I -- expect proposals and specific under lifetime, proposals employed at do finance. seriously. require their looking the have that long-term some during and those are those the obviously we're vessels XX%, contracts. don't very period be proposals around And we've think to we that the of need to received been they're for money make vessels They

of credit comfortable has within a that I place. our going take certainly timing, Sebastian by employment. -- of to agency, -- the is indicated it's a And expect timing, the vessels terms that year in time, we -- financing probably in get the to that will -- expectation of that ECA, certainly, the export vessels In terms we're think put have and

Operator

Turner come Holm Clarksons. with The next question will from

Turner Holm

has bit us the here. few Cameron profitable first would to delivery are on maybe to the a of kind some financial on be little where you on construction progress that all on I color struggles, in the give times? wanted Any I a -- of update and yard check Congratulations more the Could newbuilds, I you but terms wanted for just in a guess had an on quarter. just question color the newbuilds? and great.

Cameron Mackey

Thanks, What labor to tankers, subcontractors; concerned they has shipbuilding of types have their business but a not Turner. competitors, all. so fair highly Not awash stability in much Asian the yard we at experienced, their combination profitable course, conventional I'm combination, say containers one -- report for uncertainty the about aren't whole with some of are sure it's their troubles. from to ship orders that disputes some had like financial financial well-publicized obviously, of complex, and actually they are chief about their like some

more the we much And progress are are some on We aligned so being of And also our highly a to projects, the schedule so with vessels, certain, oil all, a they ability feel higher focused and processes; the conventional of major shipbuilding gas status. and in on-budget and and confident as first planned. on conveniently separation the of from clients the vessels on-time in and alongside the actually and progress, we bespoke take docs quite specialized deliver vessels. these yard far, offshore

Turner Holm

Okay, good.

is say, you bidding still most potential recent ships the going outlook just contracting that until but projects wherever -- recent So most And for couple the against, just orders up these for on on out. go late to type based been quarters, contracts, that looking perhaps guess, tenders I for we've the now, bidding at a up the years time everything build we've the were Sebastian, guess, imagine around XXXX I I are delivery the dynamics execution to into plan. of let's guess, I that that to does frame then pretty Maybe now XXXX? relevant newbuilds, is there you're book Kind I how how balance seems into And supply-demand for to of that or period XXXX at of given offshore sort times. for time least probably looking that it's seen, the of fixed? order kind projects like shaping are in the look period, newbuilds

Sebastian Brooke

Yes.

you're I right. think --

to time for supply those basically that the increase run out I think, earlier on has projects. side, supply

in I the paces. it's think, different regions of multiple materializing kind side, on at demand

require that the Europe. you some projects obviously are in additional there, some Pacific. looking projects at had we've but So Asia vessels announcements also in There start

there's kind extension, there, markets ] [ so from have Turner. regional local on of we've human side, that over supply there region-by-region the that a but opportunities that As benefited -- a to that from that there on by newbuilds, seen hub, the you for are And look Zaratan basis. limited obviously I the at very think has

region, of very could I requirements different those Pacific so each coming be developed, positive there think in think demand. obviously well in dynamics projects. the a each out that are dynamics We're for region, the more the I U.S. as Asia obviously yard positioned well. are and of actually Pacific, out coming are limited equally Europe in And Asia

not through end the So the just on but of supply decade. see stacking people mean don't through it's matters. up market that side, -- I moment. we the and And And is in to tightening. even of doesn't really even on bidding to platform, 'XX continue that kind the to there we're are it the at there operating right grow like have stuff the sound -- the build. are They

I make based supply, sense? them be relatively of muted. dynamics of supply. the could limited have yes, major think just dynamics but on Did that positive hubs, and each own stronger each in their So And

Turner Holm

NGXXXXs, looking circle quick then back the at or the real the balance sale process I for And ongoing just to the could sale sheet. if potential process just

$XXX us You scale of some are terms these little a newbuilds. all value on sense the give vessels, excluding in million what in the you you PP&E over $XXX of vessels, a have so little million of Can have asset balance about sheet? over those on of that, NGXXXXs

Hugh Baker

I'm I'm able do so Turner, break values the to that. individual sort afraid not we I'm the afraid don't of book of down assets,

Robert Bugbee

sure. to. think be it yes, don't good not I we sure I'm not -- that -- us I'm for would would I'm not also

ourselves. there let's don't a that got to think a start against to, And moving prices to around. changing, ] [ market I say, that's that out we price are bid want You've put would

Turner Holm

mean, And look the a at course. you it in just I simpler market... maybe way. I'll Of if ask

Robert Bugbee

able And to themselves be that [indiscernible]. a would Clarksons I'm range. provide fairly sure

Turner Holm

just mean, Sure, relative cap but I say okay. I that potential guess very mean, is to simply, it's it today, maybe is any the significant? I just market to -- sale guess, fair I

Robert Bugbee

[indiscernible] That's that's [indiscernible] what huge to are . partly what X -- NGXXXXs Any renewals is the simple trying And et basis. a of you've well, that I as confident industry EBITDA cetera. we regular significant we've Tankers and is that for based the to et over will earlier, strong but was cetera, stock market are sitting insiders what the very to here, come, the in -- the we're got improving, why we're in the I'm stock actually the supply The with explaining Emanuele that saying assets know Scorpio assets in it's continued I multiples buy demand related dislocation. off terms significant. is that Sebastian to is explain that very, on a saying, fairly saying that It's ourselves, are that conventionally was or future earnings, time.

come, So those NAV with own not a has financial such that meantime, if company ratios investment might, in the will our see that lot to you of is spread say, a very, unusually a a -- a underpinning company but would company wide issues, very normally what's, has liquidity. let's

Operator

FBR. Burke Liam B. will question next Riley come The with from

Liam Burke

get that is you claim? you revenue then some realize had the the is something in future and this we XXXX. in on where You work can NGXXXXs an will expect additional there Is anomaly? from the from Or normal, quarter pass-through additional or claims some or

Hugh Baker

can. win And And et contracts is Liam, they -- the win sort certainly as a business as and trend, rebilling, those not pretty but they're various I we've individually is not not this evolve obviously I quarter contractual time. items -- there repeatable, they're different It reported I are in they're -- is over And durations have answer I enjoy and think revenue. repeatable that and that unusual. longer mean, we can is as it we cetera, we're so of normal. we seeing and straightforward contracts, that what

Liam Burke

increased especially at began lot move on offshore And outlook you you wind turbine wind Great. of installation, demand Or and has increased the think Since the Europe's A to longer-term commitment on in the with the wind you the how for do happened, has disruption change? gas offshore of coal. supply Europe, do that natural offshore look or to decreased? turbines. use

Sebastian Brooke

that? very revisions I'll just the so commitment that, about established kind one stab would macro strengthening. regular the over actually, each gigawatts industries X fairly where is few to of I of wind say read that countries you on Europe. capacity. in go it's just There's And I the say, a Can real take of time up a basis a X the time, at republished, they're an X in announcing want offshore they additional next or years, market

I So further. strengthens positive, I think think disruptions, the recent trend was anyway, the and with it then

Operator

Mr. to turn ahead. over Lauro question-and-answer remarks. would the our conference concludes any to go like Emanuele back closing for session. This Please I

Emanuele Lauro

much, ] soon. with this to all to closing [ We forward taking very you we the again remarks you at today. be And any look do operator. for speaking so stage, Thank thanks to not have time us

Operator

now concluded. you today's attending presentation. has conference for The Thank

disconnect. now may You

Eneti (NETI) 4 Aug 222022 Q2 Earnings call transcript