Hermitage Offshore Services Ltd., ("Hermitage Offshore" or the
"Company") announces its financial results for the three and nine
months ended September 30, 2019.
As further described below, a reverse asset
acquisition resulted in a change in the basis of accounting for the
Company in April 2019. As a result, the financial information
presented for the three and nine months ended September 30, 2019
and 2018 is not directly comparable.
Results for the three months ended
September 30, 2019 and 2018
For the three months ended September 30, 2019,
the Company’s net loss was $5.6 million, or $0.28 basic and diluted
loss per share (based on 20,162,112 weighted average shares
outstanding). The Company recorded a $1.0 million loss on
financial instruments (as described below under the caption "DVB
Credit Facility") during the three months ended September 30,
2019. Excluding the loss on financial instruments, the
Company’s adjusted net loss (see Non-GAAP Measures section below),
was $4.7 million, or $0.23 basic and diluted loss per share.
For the three months ended September 30, 2018
(Predecessor, as defined below) the Company’s net loss was $8.4
million, or $1.36 basic and diluted loss per share (based on
6,198,685 weighted average shares outstanding).
Results for the nine months ended
September 30, 2019 and 2018
For the nine months ended September 30, 2019
(combined Predecessor and Successor, which are defined below), the
Company’s combined net loss was $16.8 million or $1.11 basic and
diluted loss per share (based on 15,170,048 combined weighted
average shares outstanding). The Company recorded a $1.5
million loss on financial instruments (as described below under the
caption "DVB Credit Facility") during the nine months ended
September 30, 2019. Excluding the loss on financial
instruments, the Company’s combined adjusted net loss (see Non-GAAP
Measures section below), was $15.4 million, or $1.01 basic and
diluted loss per share.
For the nine months ended September 30, 2018
(Predecessor, as defined below), the Company’s net loss was $28.0
million, or $4.51 basic and diluted loss per share (based on
6,198,685 weighted average shares outstanding).
Share and per share results included herein have
been retroactively adjusted to reflect the one-for-ten reverse
stock split of the Company's common shares, which took effect on
January 28, 2019. There are 22,518,206 common shares
outstanding as of the date of this press release.
Summary of third quarter of 2019 and
other recent events
- Entered into a one year term charter contract for Hermit Power
at approximately $13,400 per day (using the GBP/USD exchange rate
as of November 13, 2019). This charter is scheduled to
commence immediately following the expiration of Hermit Power's
current term contract in early December 2019.
- Agreed to extend the deadline under the DVB Supplemental
Agreement (as defined below) to unwind the sale of the Company’s
two anchor handling tug supply vessels (the “AHTS vessels”) from
October 31, 2019 to November 22, 2019 subject to certain terms and
conditions contained in the DVB Supplemental Agreement, and expects
to be able to further extend the deadline until November 30,
2019. This agreement is described below, and the Company will
disclose further updates as negotiations are finalized.
- During the third quarter of 2019, the Company’s average daily
rates and utilization were as follows: º The Company’s PSVs (as
defined below, operating in the North Sea) earned average dayrates
of $11,013 per on-hire day with an average utilization rate of
91.4% of the available days, resulting in an average effective
dayrate of $10,071 per available day during the third quarter of
2019. No vessels were in lay-up during the third quarter of
2019.º The Company’s AHTS vessels (operating in West Africa),
which are included in the Company's results from operations from
the Transaction date (as defined below), earned average dayrates of
$7,379 per on-hire day with an average utilization of 54.9% of the
available days, resulting in an average effective dayrate of $4,050
per available day during the third quarter of 2019. Both AHTS
vessels were in drydock for their class required special surveys
for an aggregate of 53 days during the third quarter of 2019.
Offhire days for drydock are considered part of the available days
when calculating average effective dayrates.º The Company’s
Crew Boats (as defined below, operating in West Africa), which are
included in the Company's results from operations from the
Transaction date, earned average dayrates of $2,412 per on-hire day
with an average utilization of 29.2% of the available days,
resulting in an average effective dayrate of $703 per available day
during the third quarter of 2019.
- The Company’s average effective dayrates that have been fixed
thus far in the fourth quarter of 2019 are as follows:º The
Company’s PSVs (operating in the North Sea) - earned average
effective dayrates of approximately $9,500 for 83% of the available
days. Four of the Company's PSVs are expected to have special
surveys and/or engine overhauls during the fourth quarter of 2019.
These special surveys and engine overhauls are scheduled to
occur in November and December 2019 and the aggregate costs are
expected to be approximately $2.0 million (for all four
vessels). The four vessels are expected to be offhire for an
aggregate of approximately 60 days during the fourth quarter of
2019. º The Company’s AHTS vessels (operating in West Africa)
- earned average effective dayrates of approximately $8,000 for 70%
of the available days.º The Company’s Crew Boats (operating in
West Africa) - earned average effective dayrates of approximately
$1,100 for 75% of the available days.
- In October 2019, the Company issued an additional 2,356,108
common shares under its previously disclosed Equity Line of Credit
for approximately $1.06 per share and aggregate net proceeds of
$2.5 million. There remains $3.5 million of available drawdowns
under this Equity Line of Credit as of the date of this press
release.
Resignation of Mr. David M.
Workman
Effective as of November 13, 2019, Mr. David M.
Workman has resigned from the Company’s Board of Directors.
The Company has not yet filled the vacancy on the Board of
Directors created by Mr. Workman’s resignation.
Fleet list and employment
update
Set forth below is the Company's fleet list
along with an update on the long-term employment of each vessel as
of the date of this press release. For purposes of the below
table, only contracts with periods of three months or greater have
been disclosed.
|
Vessel Name |
Vessel Type |
Built |
Employment |
Term contract rate per day(USD) (1) |
Contract begin date |
Contract end date |
Underlying contract denomination |
|
|
|
|
|
|
|
|
|
|
PSV |
|
|
|
|
|
|
|
1 |
Hermit Fighter |
PSV |
2012 |
Term Contract |
$ |
12,267 |
|
13-Aug-19 |
01-Dec-19 |
GBP |
2 |
NAO Prosper |
PSV |
2012 |
Spot |
|
|
|
|
3 |
Hermit Power |
PSV |
2013 |
Term Contract (2) |
$ |
9,584 |
|
07-Dec-18 |
07-Dec-19 |
GBP |
4 |
Hermit Thunder |
PSV |
2013 |
Term Contract |
$ |
10,606 |
|
02-Jun-19 |
02-Jun-20 |
GBP |
5 |
NAO Guardian |
PSV |
2013 |
Term Contract |
$ |
11,117 |
|
15-Sep-19 |
31-Mar-20 |
GBP |
6 |
Hermit Protector |
PSV |
2013 |
Spot |
|
|
|
|
7 |
Hermit Viking |
PSV |
2015 |
Term Contract (3) |
$ |
10,542 |
|
13-Dec-18 |
13-Dec-20 |
GBP |
8 |
NAO Storm |
PSV |
2015 |
Term Contract |
$ |
13,189 |
|
31-Aug-19 |
28-Feb-20 |
NOK |
9 |
Hermit Galaxy |
PSV |
2016 |
Term Contract |
$ |
10,159 |
|
01-Apr-19 |
31-Jan-20 |
GBP |
10 |
Hermit Horizon |
PSV |
2016 |
Spot |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AHTS |
|
|
|
|
|
|
|
11 |
Hermit Brilliance |
AHTS |
2009 |
Term Contract (4) |
$ |
9,000 |
|
01-Jan-16 |
31-Dec-19 |
USD |
12 |
Hermit Baron |
AHTS |
2009 |
Spot |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crewboats |
|
|
|
|
|
|
|
13 |
Petrocraft 1605-1 |
Crew Boat |
2012 |
Term Contract (5) |
$ |
2,400 |
|
20-Sep-19 |
18-Jan-21 |
USD |
14 |
Petrocraft 1605-2 |
Crew Boat |
2012 |
Spot |
|
|
|
|
15 |
Petrocraft 1605-3 |
Crew Boat |
2012 |
Spot |
|
|
|
|
16 |
Petrocraft 1605-5 |
Crew Boat |
2013 |
Spot |
|
|
|
|
17 |
Petrocraft 1605-6 |
Crew Boat |
2013 |
Term Contract |
$ |
2,500 |
|
21-Oct-19 |
21-Jan-20 |
USD |
18 |
Petrocraft 2005-1 |
Crew Boat |
2015 |
Spot |
|
|
|
|
19 |
Petrocraft 2005-2 |
Crew Boat |
2015 |
Spot |
|
|
|
|
20 |
Petrocraft 1905-1 |
Crew Boat |
2019 |
Term Contract |
$ |
2,400 |
|
04-Mar-19 |
18-Jan-21 |
USD |
21 |
Petrocraft 1905-2 |
Crew Boat |
2019 |
Term Contract |
$ |
2,400 |
|
04-Mar-19 |
18-Jan-21 |
USD |
22 |
Petrocraft 1905-3 |
Crew Boat |
2019 |
Term Contract |
$ |
2,400 |
|
04-Mar-19 |
18-Jan-21 |
USD |
23 |
Petrocraft 1905-4 |
Crew Boat |
2019 |
Term Contract |
$ |
2,400 |
|
04-Mar-19 |
18-Jan-21 |
USD |
(1) Contracts denominated
in GBP and NOK have been converted using spot rates in effect as of
November 13, 2019.
(2) This vessel is scheduled to commence a
one-year term charter contract at approximately $13,400 per day
(using the GBP/USD exchange rate in effect as of November 13, 2019)
immediately following the expiration of its current contract.
(3) The dayrate on this contract increases
to approximately $11,100 in December 2019 (using the GBP/USD
exchange rate in effect as of November 13, 2019).
(4) The Company has an option to extend
this charter for an additional year at $9,000 per day.
(5) This vessel is currently offhire for
repairs. The offhire period in the fourth quarter of 2019 is
expected to be approximately 30 days.
Liquidity
As of November 13, 2019, the Company had $12.3
million in cash and cash equivalents. There is $3.5 million
of additional drawdown capacity available under the Company’s
previously announced Equity Line of Credit as of the date of this
press release.
Drydock and capital expenditure
update
The Company made approximately $2.4 million in
drydock payments during the three months ended September 30, 2019,
which primarily related to the special survey costs on both AHTS
vessels. The Company also made approximately $0.6 million in
drydock payments for these vessels during the three months ended
June 30, 2019. The aggregate cost for both drydocks was
approximately $3.6 million of which, approximately $0.2 million
remains outstanding, as of the date of this press release.
Four of the Company's PSVs are expected to have
special surveys and/or engine overhauls during the fourth quarter
of 2019. These special surveys and engine overhauls are
scheduled to occur in November and December 2019 and the aggregate
costs are expected to be approximately $2.0 million (for all four
vessels). The four vessels are expected to be offhire for an
aggregate of approximately 60 days during the fourth quarter of
2019.
Debt
The following table sets forth the principal
balance of the Company’s debt outstanding:
|
As of |
In thousands of U.S.
dollars |
September 30, 2019 |
November 13, 2019 |
Initial Credit Facility |
$ |
132,905 |
|
$ |
132,905 |
|
DVB Credit Facility |
9,000 |
|
9,000 |
|
|
$ |
141,905 |
|
$ |
141,905 |
|
Waiver Extension of Initial Credit Facility
In April 2019, the lenders under the Company’s
term loan facility with DNB Bank ASA and Skandinaviska Enskilda
Banken AB (publ), (the “Initial Credit Facility”) agreed to extend
the waivers of certain financial covenants with which the Company
was not in compliance until January 31, 2020. Moreover, the
Company received a written commitment from the lenders under its
Initial Credit Facility, upon the satisfaction of certain
conditions precedent by the Company, including the requirement to
raise a minimum of an additional $15.0 million of equity before
January 31, 2020, to a new $132.9 million term loan facility with a
maturity of December 6, 2023 to refinance the Initial Credit
Facility, which has an outstanding balance of $132.9 million as of
the date of this press release.
The new $132.9 million term loan is expected to
(i) be collateralized by the 10 PSVs that currently collateralize
the Initial Credit Facility in addition to the Crew Boats acquired
from Scorpio Offshore Holding Inc. ("SOHI"), (ii) bear interest at
LIBOR plus a margin 3.50% (which is subject to reduction if the
Company meets certain Net Debt to EBITDA thresholds) and (iii) be
repayable in equal, semi-annual installments of $7.5 million
beginning in December 2021 with a balloon payment due upon the
maturity date of December 6, 2023. This new credit facility
is also expected to contain the following financial covenants:
- Cash and cash equivalents shall at all times be equal to the
greater of (i) $12,500,000 and (ii) $750,000 per vessel above 2,500
DWT.
- Current assets shall at all times exceed current liabilities
less the current portion of long-term liabilities.
- The ratio of net debt to total capitalization shall be no
greater than 0.60 to 1.00.
Acquisition of assets from SOHI and
reverse acquisition accounting treatment
In April 2019, the Company acquired 13 vessels
consisting of two AHTS vessels and 11 crew boats (the "Crew Boats")
from SOHI, a related party affiliate, in exchange for 8,126,219
common shares. As part of this acquisition, the Company
assumed the aggregate outstanding indebtedness of $9.0 million
under a term loan facility with DVB Bank SE, Nordic Branch, or the
DVB Credit Facility, relating to the two AHTS vessels. A
summary of the DVB Credit Facility is set forth below. The
assets acquired in this transaction are collectively referred to as
the "SOHI Assets", and the transactions to acquire the SOHI Assets,
and assumption of the related indebtedness, are referred to as the
"Transaction".
As a result of the Transaction, SOHI and its
affiliated entities (collectively referred to as "Scorpio"), which
are part of the Scorpio group of companies, obtained a controlling
voting interest in the Company. Accordingly, under the
relevant accounting guidance, Scorpio has been identified as the
accounting acquirer of the Company, and the Transaction is
considered to be a reverse acquisition. Moreover, the Company
has determined that the Transaction constitutes a reverse
acquisition of assets rather than a reverse business
combination. The implications of this determination can be
summarized as follows:
- The SOHI Assets of Scorpio, as the accounting acquirer, were
recorded at their historical carrying values.
- The theoretical cost of the reverse acquisition was determined
based on the price of the Company’s common shares on the date of
the Transaction and was allocated to the Company's pre-Transaction
assets and liabilities on a relative fair value basis.
- Given the difference between the fair value and the carrying
value of the Company’s shareholders' equity on the date of the
Transaction, the application of purchase accounting resulted in a
reduction in the carrying value of Vessels (on the consolidated
balance sheet) of $21.0 million and a reduction in shareholders'
equity of $22.9 million as compared to historical amounts. In
addition, a liability of $1.5 million was recognized to reflect the
fair value of the difference between expected long-term charter
rates and contractual rates under existing customer
arrangements.
- Under the applicable accounting guidance, a reverse asset
acquisition results in a change in the basis of accounting on the
Transaction date. As a result, the financial information
presented herein for the three and nine months ended September 30,
2019 and 2018 is not directly comparable.
Since it has been determined that the
Transaction constitutes an acquisition of assets, the historical
financial information prior to the date of the Transaction
presented herein (and in future reports and filings) will continue
to reflect that of the Company prior to the Transaction rather than
that of the SOHI Assets as would be required in a business
combination. Management believes that the historical
financial information of the Company prior to the Transaction is
more relevant to investors than the historical financial
information of the SOHI Assets due to the relative size of the
Company's 10 platform supply vessels (the "PSVs") compared to the
SOHI Assets and that the value and operating results of the PSVs
are expected to be the ultimate driver of the Company's business in
future periods. The results from the operations and cash
flows of the SOHI Assets are included only in the Company's
financial information from the Transaction date.
Accordingly, the Company's pre-Transaction
financial information is presented for periods as of and for the
three and nine month periods ended September 30, 2018
(Predecessor). In presenting financial information for 2019,
the Company has combined pre-Transaction financial information for
the periods from January 1, 2019 to April 8, 2019 (Predecessor)
with post-Transaction financial information for the period from
April 9, 2019 to September 30, 2019 (Successor) in the year to date
amounts, without applying pro-forma adjustments.
Additionally, combined share information has been calculated based
upon the weighted average days outstanding from the issuance
date. The combined year to date financial information for
2019 will differ from what will be presented under U.S. GAAP in the
Company's annual consolidated financial statements which will
present Predecessor and Successor information separately. See
the Non-GAAP Measures section below for a table showing separate
Predecessor and Successor financial information for 2019 and their
combination for 2019 statement of income or loss information.
DVB Credit Facility
As part of the Transaction, the Company assumed
the aggregate outstanding indebtedness of $9.0 million under the
DVB Credit Facility relating to the AHTS vessels. The DVB
Credit Facility was supplemented on April 10, 2019, (the "DVB
Supplemental Agreement"), as part of this Transaction.
Under the terms of the DVB Supplemental
Agreement, DVB had the right, but not the obligation, to unwind the
acquisition of the AHTS vessels if a minimum of $15.0 million of
additional equity is not raised by October 31, 2019.
This deadline has been extended to November 22, 2019, subject to
certain terms and conditions contained in the DVB Supplemental
Agreement, and the Company expects to be able to further extend the
deadline until November 30, 2019.
Under this scenario, the shares in the vessel
owning subsidiaries for the AHTS vessels (which include the related
net working capital and outstanding indebtedness under the DVB
Credit Facility) would be exchanged for the shares of the Company
that were previously issued as consideration for the purchase of
the AHTS vessels on the date of the unwinding.
This provision has been accounted for as a
freestanding financial instrument as of September 30, 2019, the
value of which was estimated to be a liability of $1.5 million at
that date. This liability was measured by estimating the loss
that the Company would incur upon such an unwinding, using the
price of the Company's common shares as of September 30, 2019, and
multiplying that loss by a probability estimate of such an event
occurring. Accordingly, the Company recorded a loss on
financial instruments (within Other financial expense, net, on the
Company's Statement of Income or Loss) of $1.0 million and $1.5
million for the three and nine months ended September 30, 2019.
Hermitage Offshore Services Ltd. and
Subsidiaries
Condensed Consolidated Statements of
Income or Loss
(unaudited)
|
|
Three months ended |
|
Nine months ended |
|
|
September 30, 2019* (Successor) |
|
September 30, 2018** (Predecessor) |
|
September 30, 2019* (Predecessor and
Successor) |
|
September 30, 2018** (Predecessor) |
Amounts in thousands of
USD |
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter revenue - PSVs |
|
$ |
10,080 |
|
|
$ |
6,280 |
|
|
$ |
25,160 |
|
|
$ |
14,485 |
|
Charter revenue - AHTS
vessels |
|
958 |
|
|
— |
|
|
2,020 |
|
|
— |
|
Charter revenue - Crew
Boats |
|
712 |
|
|
— |
|
|
1,843 |
|
|
— |
|
Total charter
revenue |
|
11,750 |
|
|
6,280 |
|
|
29,023 |
|
|
14,485 |
|
|
|
|
|
|
|
|
|
|
Vessel operating expenses |
|
(9,498 |
) |
|
(6,648 |
) |
|
(24,448 |
) |
|
(19,172 |
) |
Voyage expenses |
|
(570 |
) |
|
(439 |
) |
|
(1,387 |
) |
|
(1,628 |
) |
General and administrative
expenses |
|
(1,040 |
) |
|
(947 |
) |
|
(3,599 |
) |
|
(3,028 |
) |
Depreciation |
|
(3,065 |
) |
|
(4,227 |
) |
|
(7,751 |
) |
|
(12,866 |
) |
Total operating
expenses |
|
(14,173 |
) |
|
(12,261 |
) |
|
(37,185 |
) |
|
(36,694 |
) |
Operating
loss |
|
(2,423 |
) |
|
(5,981 |
) |
|
(8,162 |
) |
|
(22,209 |
) |
|
|
|
|
|
|
|
|
|
Interest income |
|
— |
|
|
35 |
|
|
48 |
|
|
185 |
|
Interest expense |
|
(2,200 |
) |
|
(2,421 |
) |
|
(6,952 |
) |
|
(5,708 |
) |
Other financial expense,
net |
|
(1,017 |
) |
|
(40 |
) |
|
(1,767 |
) |
|
(255 |
) |
Total other
costs |
|
(3,217 |
) |
|
(2,426 |
) |
|
(8,671 |
) |
|
(5,778 |
) |
Income taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Net loss |
|
$ |
(5,640 |
) |
|
$ |
(8,407 |
) |
|
$ |
(16,833 |
) |
|
$ |
(27,987 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted loss per
share |
|
(0.28 |
) |
|
(1.36 |
) |
|
(1.11 |
) |
|
(4.51 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted weighted
average number of common shares outstanding |
|
20,162,112 |
|
|
6,198,685 |
|
|
15,170,048 |
|
|
6,198,685 |
|
|
|
|
|
|
|
|
|
|
* Reflects the financial results of the Company
including the periods both prior to (relating to a fleet of 10
PSVs) and subsequent to the Transaction date of April 8, 2019
(relating to a fleet of 10 PSVs, two AHTS vessels and 11 Crew
Boats). Under U.S. GAAP, the basis of accounting changed as a
result of the Transaction since it was accounted for as a reverse
acquisition of assets. Accordingly, the periods prior to and
subsequent to the Transaction should be presented separately.
The above table combines these periods in 2019 as the Company
believes that the combined presentation provides investors and
other users of the Company’s financial statements, such as its
lenders, with a means of evaluating and understanding how the
Company's management evaluates the Company's operating
performance. Combined share information has been calculated
based upon the weighted average days outstanding from the issuance
date. See Non-GAAP Measures section below for the presentation of
each of these periods separately and reconciliation to the above
table.
** Reflects the financial results of the Company
(relating to a fleet of 10 PSVs) for the historical periods prior
to the Transaction.
Hermitage Offshore Services Ltd. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(unaudited)
|
|
As of: |
|
|
September 30, 2019 (Successor) |
|
December 31, 2018 (Predecessor) |
Amounts in thousands of
USD |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,220 |
|
|
$ |
8,446 |
|
Accounts receivable, net |
|
9,182 |
|
|
2,602 |
|
Prepaid expenses |
|
397 |
|
|
755 |
|
Inventory |
|
1,787 |
|
|
1,181 |
|
Other current assets |
|
109 |
|
|
1,176 |
|
Total current
assets |
|
18,695 |
|
|
14,160 |
|
Vessels, net |
|
178,482 |
|
|
176,914 |
|
Total non-current
assets |
|
178,482 |
|
|
176,914 |
|
Total
assets |
|
$ |
197,177 |
|
|
$ |
191,074 |
|
|
|
|
|
|
Accounts payable |
|
$ |
3,329 |
|
|
$ |
843 |
|
Accounts payable, related
party |
|
244 |
|
|
492 |
|
Other current liabilities |
|
4,183 |
|
|
3,147 |
|
Current debt |
|
141,905 |
|
|
— |
|
Total current
liabilities |
|
149,661 |
|
|
4,482 |
|
Non-current debt |
|
— |
|
|
132,457 |
|
Other long-term
liabilities |
|
94 |
|
|
71 |
|
Total non-current
liabilities |
|
94 |
|
|
132,528 |
|
Shareholders' equity |
|
47,422 |
|
|
54,064 |
|
Total liabilities and
shareholders' equity |
|
$ |
197,177 |
|
|
$ |
191,074 |
|
In Q3 2019, shareholders' equity for the Successor period was
adjusted primarily to align the accounting policies of the SOHI
Assets (vessels) to the Company for periods prior to the
Transaction date.
Hermitage Offshore Services Ltd. and
Subsidiaries
Other operating data for the three and
nine months ended September 30, 2019 and 2018
(unaudited)
|
For the three months ended September 30, |
|
For the nine months ended September 30, |
|
2019 (Successor) |
2018 (Predecessor) |
|
2019 (Predecessor and Successor) |
2018 (Predecessor) |
|
|
|
|
|
|
Adjusted EBITDA (1) |
$ |
186 |
|
$ |
(1,754 |
) |
|
$ |
(1,238 |
) |
$ |
(9,343 |
) |
|
|
|
|
|
|
PSVs |
|
|
|
|
|
Average dayrates per on-hire
day (2) |
$ |
11,013 |
|
$ |
11,622 |
|
|
$ |
11,155 |
|
$ |
10,367 |
|
Utilization rate % (3) |
91.4 |
% |
60.7 |
% |
|
85.9 |
% |
54.5 |
% |
Effective dayrates (4) |
10,071 |
|
7,055 |
|
|
9,581 |
|
5,647 |
|
|
|
|
|
|
|
Vessel operating expenses per
day (5) |
7,628 |
|
7,227 |
|
|
7,260 |
|
7,023 |
|
|
|
|
|
|
|
Average number of active
vessels |
10.0 |
|
9.0 |
|
|
8.9 |
|
8.3 |
|
Average number of vessels in
layup |
— |
|
1.0 |
|
|
1.1 |
|
1.7 |
|
Average number of vessels |
10.0 |
|
10.0 |
|
|
10.0 |
|
10.0 |
|
|
|
|
|
|
|
AHTS vessels |
|
|
|
|
|
Average dayrates per on-hire
day (2) |
7,379 |
|
N/A* |
|
|
8,286 |
|
N/A* |
|
Utilization rate % (3) |
54.9 |
% |
N/A* |
|
|
59.8 |
% |
N/A* |
|
Effective dayrates (4) |
4,050 |
|
N/A* |
|
|
4,952 |
|
N/A* |
|
|
|
|
|
|
|
Vessel operating expenses per
day (5) |
6,399 |
|
N/A* |
|
|
6,482 |
|
N/A* |
|
|
|
|
|
|
|
Average number of active
vessels |
2.0 |
|
N/A* |
|
|
2.0 |
|
N/A* |
|
Average number of vessels in
layup |
— |
|
N/A* |
|
|
— |
|
N/A* |
|
Average number of vessels |
2.0 |
|
N/A* |
|
|
2.0 |
|
N/A* |
|
|
|
|
|
|
|
Crew Boats |
|
|
|
|
|
Average dayrates per on-hire
day (2) |
2,412 |
|
N/A* |
|
|
2,539 |
|
N/A* |
|
Utilization rate % (3) |
29.2 |
% |
N/A* |
|
|
37.5 |
% |
N/A* |
|
Effective dayrates (4) |
703 |
|
N/A* |
|
|
952 |
|
N/A* |
|
|
|
|
|
|
|
Vessel operating expenses per
day (5) |
1,303 |
|
N/A* |
|
|
1,231 |
|
N/A* |
|
|
|
|
|
|
|
Average number of vessels |
11.0 |
|
N/A* |
|
|
11.0 |
|
N/A* |
|
* The other operating data for these vessels is
presented from the Transaction date. Therefore, operating
results for these vessels is not presented for the three and nine
months ended September 30, 2018.
(1) |
See Non-GAAP Measures section below. |
(2) |
Average dayrates are calculated by subtracting voyage expenses,
including bunkers and port charges, from charter revenue and
dividing the net amount (net charter revenue) by the number of
on-hire days in the period. On-hire days are the number of
available days less the number of days the vessel is offhire.
Available days are the number of calendar days in a period less the
number of days the vessel is laid-up. |
(3) |
Utilization rates are determined by the dividing the number of
on-hire days by the total number of available days (including
offhire days and unutilized days) in the period. |
(4) |
Effective dayrates represent the average day rate multiplied by the
utilization rate for the respective period. |
(5) |
Vessel operating costs per day represent vessel operating costs
divided by the number of operating days during the period.
Operating days are the total number of days (including offhire days
and days in layup) in a period. Vessel operating expenses are
lower while a vessel is in lay-up. There were no vessels in
lay-up during the three months ended September 30, 2019.
There was an aggregate of 304 days, which certain PSVs were in
lay-up during the nine months ended September 30, 2019. There
were an aggregate of 92 days and 453 days, which certain PSVs were
in lay-up during the three and nine months ended September 30,
2018, respectively. |
|
|
About the Company
Hermitage Offshore Services Ltd. is an offshore
support vessel company that owns 23 vessels consisting of 10
platform supply vessels, or PSVs, two anchor handling tug supply
vessels, or AHTS vessels, and 11 crew boats. The Company’s
vessels primarily operate in the North Sea or the West Coast of
Africa. Additional information about the Company is available
at the Company's website www.hermitage-offshore.com, which is not a
part of this press release.
Non-GAAP Measures
This press release presents the Company's
results of operations on a combined basis for the periods prior to
and subsequent to the reverse acquisition involving the AHTS
vessels and Crew Boats acquired from SOHI. This press release
also describes net charter revenue and adjusted EBITDA. The
presentation of results of operations on a combined basis for the
periods prior to and subsequent to the reverse acquisition, net
charter revenue and adjusted EBITDA are not measures prepared in
accordance with U.S. GAAP ("Non-GAAP" measures). The Non-GAAP
measures are presented in this press release as we believe that
they provide investors and other users of the Company’s financial
statements, such as its lenders, with a means of evaluating and
understanding how the Company's management evaluates the Company's
operating performance. These Non-GAAP measures should not be
considered in isolation from, as substitutes for, or superior to
financial measures prepared in accordance with U.S. GAAP.
The Company believes that the presentation of
net charter revenue and adjusted EBITDA are useful to investors or
other users of its financial statements, such as its lenders,
because they facilitate the comparability and the evaluation of
companies in the Company’s industry. In addition, the Company
believes that net charter revenue and adjusted EBITDA are useful in
evaluating its operating performance compared to that of other
companies in the Company’s industry. The Company’s definitions of
net charter revenue and adjusted EBITDA may not be the same as
reported by other companies in the offshore support vessel industry
or other industries.
Statement of income or loss prior to and
subsequent to the Transaction
|
|
Predecessor |
|
Successor |
|
Predecessor and Successor |
Amounts in thousands of
USD |
|
January 1 - April 8, 2019 |
|
April 9 - September 30, 2019 |
|
Nine months ended September 30, 2019 |
|
|
|
|
|
|
|
Charter revenue - PSVs |
|
5,258 |
|
|
19,902 |
|
|
25,160 |
|
Charter revenue - AHTS
vessels |
|
— |
|
|
2,020 |
|
|
2,020 |
|
Charter revenue - Crew
Boats |
|
— |
|
|
1,843 |
|
|
1,843 |
|
Total charter
revenue |
|
5,258 |
|
|
23,765 |
|
|
29,023 |
|
|
|
|
|
|
|
|
Vessel operating expenses |
|
(6,536 |
) |
|
(17,912 |
) |
|
(24,448 |
) |
Voyage expenses |
|
(399 |
) |
|
(988 |
) |
|
(1,387 |
) |
General and administrative
expenses |
|
(1,269 |
) |
|
(2,330 |
) |
|
(3,599 |
) |
Depreciation |
|
(2,205 |
) |
|
(5,546 |
) |
|
(7,751 |
) |
Total operating
expenses |
|
(10,409 |
) |
|
(26,776 |
) |
|
(37,185 |
) |
Operating
loss |
|
(5,151 |
) |
|
(3,011 |
) |
|
(8,162 |
) |
|
|
|
|
|
|
|
Interest income |
|
21 |
|
|
27 |
|
|
48 |
|
Interest expense |
|
(2,555 |
) |
|
(4,397 |
) |
|
(6,952 |
) |
Other financial expense,
net |
|
32 |
|
|
(1,799 |
) |
|
(1,767 |
) |
Total other
costs |
|
(2,502 |
) |
|
(6,169 |
) |
|
(8,671 |
) |
Income taxes |
|
— |
|
|
— |
|
|
— |
|
Net loss |
|
(7,653 |
) |
|
(9,180 |
) |
|
(16,833 |
) |
The above table reflects the financial results
of the Company both prior to (relating to a fleet of 10 PSVs) and
subsequent to the Transaction date of April 8, 2019 (relating to a
fleet of 10 PSVs, two AHTS vessels and 11 Crew Boats). Under
U.S. GAAP, the basis of accounting changed as a result of the
Transaction since it was accounted for as a reverse acquisition of
assets. Accordingly the periods prior to and subsequent to
the Transaction should be presented separately. The above
table displays both the Predecessor and Successor periods in
addition to the combined periods in 2019. The Company
believes that the combined presentation provides investors and
other users of the Company’s financial statements, such as its
lenders, with a means of evaluating and understanding how the
Company's management evaluates the Company's operating
performance.
Reconciliation of Net Loss to Adjusted Net
Loss
|
|
For the three months ended September 30, 2019 |
|
|
|
|
|
Per share |
|
Per share |
|
In thousands of
U.S. dollars except per share and share data |
Amount |
basic |
|
diluted |
|
Net loss |
|
(5,640 |
) |
|
(0.28 |
) |
|
(0.28 |
) |
|
Adjustment: |
|
|
|
|
|
|
|
Loss on financial
instruments |
|
984 |
|
|
0.05 |
|
|
0.05 |
|
|
Adjusted net
loss |
|
(4,656 |
) |
|
(0.23 |
) |
|
(0.23 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2019 |
|
|
|
|
|
Per share |
|
Per share |
|
In thousands of
U.S. dollars except per share and share data |
Amount |
basic |
|
diluted |
|
Net loss |
|
(16,833 |
) |
|
(1.11 |
) |
|
(1.11 |
) |
|
Adjustment: |
|
|
|
|
|
|
|
Loss on financial
instruments |
|
1,453 |
|
|
0.10 |
|
|
0.10 |
|
|
Adjusted net
loss |
|
(15,380 |
) |
|
(1.01 |
) |
|
(1.01 |
) |
|
Reconciliation of Net Loss to Adjusted
EBITDA
|
|
For the three months ended September 30, |
|
For the nine months ended September 30, |
|
|
2019 (Successor) |
|
2018 (Predecessor) |
|
2019 (Predecessor and Successor) |
|
2018 (Predecessor) |
Amounts in thousands of
USD |
|
|
Net Loss |
|
(5,640 |
) |
|
(8,407 |
) |
|
(16,833 |
) |
|
(27,987 |
) |
Interest Income |
|
— |
|
|
(35 |
) |
|
(48 |
) |
|
(185 |
) |
Interest Expense |
|
2,200 |
|
|
2,421 |
|
|
6,952 |
|
|
5,708 |
|
Other Financial (Income)
Expense |
|
1,017 |
|
|
40 |
|
|
1,767 |
|
|
255 |
|
Amortization of acquired time
charters |
|
(456 |
) |
|
— |
|
|
(827 |
) |
|
— |
|
Depreciation |
|
3,065 |
|
|
4,227 |
|
|
7,751 |
|
|
12,866 |
|
Adjusted
EBITDA |
|
186 |
|
|
(1,754 |
) |
|
(1,238 |
) |
|
(9,343 |
) |
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
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," "expect," "anticipate," "estimate," "intend,"
"plan," "target," "project," "likely," "may," "will," "would,"
"could" and similar expressions identify forward‐looking
statements.
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, management’s examination of historical operating
trends, data contained in the Company’s records and other data
available from third parties. Although management believes 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 the Company’s control, there can be no assurance that the
Company will achieve or accomplish these expectations, beliefs or
projections. The Company undertakes no obligation, and specifically
declines 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.
Important factors that, in the Company’s view,
could cause actual results to differ materially from those
discussed in the forward-looking statements include the strength of
world economies and currencies, general market conditions,
including fluctuations in charter rates and vessel values, changes
in demand in the offshore support vessel (OSV) market, changes in
charter hire rates and vessel values, demand in OSVs, the Company’s
operating expenses, including bunker prices, dry docking and
insurance costs, governmental rules and regulations or actions
taken by regulatory authorities as well as potential liability from
pending or future litigation, general domestic and international
political conditions, potential disruption of shipping routes due
to accidents or political events, the availability of financing and
refinancing, vessel breakdowns and instances of off-hire and other
important factors described from time to time in the reports filed
by the Company with the Securities and Exchange Commission.
Contacts:
Hermitage Offshore Services Ltd.+ 377 9798 5717 (Monaco)+ 1 646
432 3315 (New York)Web-site: www.hermitage-offshore.com
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