Financial Data and Key Metrics Changes - Q3 2025 revenue reached $341.1 million, slightly above expectations, driven by higher average day rates and improved utilization [4][32] - Gross margin for Q3 was 48%, exceeding guidance by 200 basis points, although it decreased from 50% in Q2 [4][33] - Free cash flow generated in Q3 was $83 million, bringing total free cash flow for the first nine months of 2025 to nearly $275 million [5][37] - Net loss for Q3 was $806,000, impacted by a $27.1 million charge for early debt extinguishment [32] Business Line Data and Key Metrics Changes - Production support, comprising roughly 50% of operations, remains steady and is supported by current commodity prices [10] - EPCI and offshore construction segments are seeing increased demand, with backlog converting into vessel demand [12][36] - Average day rates for Q3 were $22,798, a 2% decrease from Q2, while utilization improved from 76.4% to 78.5% [32][33] Market Data and Key Metrics Changes - The offshore vessel market is expected to see a recovery in drilling activity towards the end of 2026, with increasing demand for offshore projects [9][10] - Day rates in Europe faced pressure, particularly in the U.K., while the Middle East saw strengthening demand and day rates [25][28] - In the Americas, day rates and utilization improved, particularly in the Caribbean and Brazil, despite potential short-term headwinds for Petrobras [28][29] Company Strategy and Development Direction - The company is focused on capital allocation, with a $500 million share repurchase authorization in place, but did not repurchase shares in the last quarter due to competing priorities [7][16] - M&A opportunities are being explored, with a willingness to add leverage if cash flows allow for quick deleveraging [8][17] - The company aims to maintain a strong balance sheet while being opportunistic with share repurchases and M&A [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term outlook for the offshore vessel industry, citing structural growth and limited new-build investment [14][15] - The company anticipates a steady demand for production support and expects drilling activity to pick up in 2026 and beyond [10][12] - Management acknowledged short-term headwinds but remains confident in the fundamentals of the business and the ability to generate free cash flow [31] Other Important Information - The company successfully refinanced its debt, resulting in a more favorable debt structure with no payments due until 2030 [38][39] - Dry dock costs for 2025 are projected to be $105 million, with an increase to $124 million expected in 2026 [39][40] - The company is also planning capital expenditures of approximately $30 million for 2025, with a projection of $36 million for 2026 [40] Q&A Session Summary Question: Thoughts on the production support market and pricing leverage - Management expects production support to grow and believes that increased activity in FPSOs and EPCI will help regain pricing leverage sooner than previously anticipated [45] Question: Insights on capital allocation and M&A opportunities - Management confirmed that the lack of share repurchases indicates potential M&A opportunities being explored, but specific details could not be disclosed due to non-public information [47] Question: Guidance for 2026 and regional exposure - Management provided guidance for 2026, indicating confidence in achieving at least the same performance as 2025, with Africa and Asia having more exposure to open capacity [54][56] Question: Confidence in customer plans and offshore activity - Management noted that customers have a better understanding of the market dynamics and are more confident in their plans for the next 12 months compared to the previous year [66] Question: Duration of contracts signed and market conditions - The average duration of contracts signed was seven months, reflecting current market conditions and a strategy to maintain utilization while preparing for a market uplift in 2026 [70] Question: New build fleet and attrition expectations - Management highlighted that new build activity is subdued, and attrition rates are expected to outpace new supply, maintaining a favorable market position [75]

Financial Data and Key Metrics Changes - Q3 2025 revenue reached $341.1 million, slightly above expectations, driven by higher average day rates and improved utilization [4][32] - Gross margin for Q3 was 48%, exceeding guidance by 200 basis points, although it decreased from 50% in Q2 [4][33] - Free cash flow generated in Q3 was $83 million, bringing total free cash flow for the first nine months of 2025 to nearly $275 million [5][37] - Net loss for Q3 was $806,000, impacted by a $27.1 million charge related to early debt extinguishment [32] Business Line Data and Key Metrics Changes - Production support, comprising roughly 50% of operations, remains steady and is supported by current commodity prices [10] - EPCI and offshore construction segments are seeing increased demand, with backlog converting into vessel demand [12][36] - Average day rates for Q3 were $22,798, a 2% decrease from Q2, while utilization improved from 76.4% to 78.5% [32][33] Market Data and Key Metrics Changes - The offshore vessel market is expected to see a recovery in drilling activity towards the end of 2026, with increasing demand for offshore projects [9][10] - Day rates in Europe faced pressure, particularly in the U.K., while the Middle East saw strengthening demand and day rates [25][28] - The Americas experienced improvements in day rates and utilization, particularly in the Caribbean and Brazil [28] Company Strategy and Development Direction - The company is focused on capital allocation, with a $500 million share repurchase authorization in place, but did not repurchase shares in the last quarter due to competing priorities [7][16] - M&A opportunities are being explored, with the company open to leveraging its balance sheet for strategic acquisitions [8][17] - The long-term outlook for the offshore vessel industry remains positive, with expectations of tight vessel supply supporting pricing power [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term fundamentals of the offshore vessel market, despite short-term headwinds [31] - There is confidence in the recovery of drilling activity, with expectations for increased demand in 2026 and beyond [10][24] - The company is well-positioned to generate free cash flow and drive shareholder value through strategic capital deployment [6][41] Other Important Information - The company successfully refinanced its debt, resulting in a more favorable capital structure with no payments due until 2030 [38] - Dry dock costs for 2025 are projected to be $105 million, with a slight decrease from previous estimates [39] - Capital expenditures for 2025 are expected to be around $30 million, down from earlier forecasts [40] Q&A Session Summary Question: Market outlook for 2026 and pricing leverage - Management expects a quicker recovery in pricing due to increased activity in FPSOs and EPCI, alongside vessel attrition [45] Question: Capital allocation strategy - The lack of share repurchases suggests potential M&A opportunities are being pursued, although specific details were not disclosed [46][47] Question: Guidance for 2026 and regional exposure - Guidance was provided earlier due to increased confidence, with Africa and Asia having more exposure to open capacity [51][56] Question: Customer confidence in energy policy - Customers appear more confident in their plans and are starting to move forward with projects, indicating a positive outlook [64][66] Question: Contract duration and market conditions - The average duration of contracts signed reflects current market conditions, aiming to maintain utilization while avoiding overcommitment [68][70] Question: New build fleet and attrition expectations - The current new build activity is limited, and attrition is expected to outpace new supply, maintaining a favorable market position [74][75] Question: Preference for asset types in M&A - The company prefers large PSVs and medium to large anchor handlers for potential acquisitions, focusing on the Americas [79]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $341.1 million, exceeding expectations due to higher average day rates and better utilization, with a gross margin of 48%, which was 200 basis points better than guidance [7][34] - Free cash flow generated in Q3 was $83 million, bringing total free cash flow for the first nine months of 2025 to nearly $275 million [8] - The company ended Q3 with a net debt to EBITDA ratio of 0.4 times, indicating a strong leverage position [18] Business Line Data and Key Metrics Changes - Production support, comprising roughly 50% of the business, remains steady, supported by current commodity prices and the deployment of FPSO units [12] - The EPCI and offshore construction segment is seeing an increase in demand, with backlog converting into vessel demand expected to strengthen in 2026 and 2027 [13] - Average day rates for Q3 were $22,798, which was 2% lower than Q2, while active utilization increased from 76.4% to 78.5% [34] Market Data and Key Metrics Changes - The offshore vessel market is expected to see a recovery in drilling activity towards the end of 2026, with a projected increase in capital expenditures to address hydrocarbon supply deficits [11] - In Europe, day rates faced pressure, particularly in the UK, but utilization improved across the region [26] - The Middle East saw strengthening vessel demand and day rates, driven by EPCI contractors [28] Company Strategy and Development Direction - The company is focused on capital allocation, with a $500 million share repurchase authorization in place, but did not repurchase shares in the last quarter due to competing priorities [8][9] - The strategy includes potential M&A opportunities, with a willingness to add leverage if cash flows allow for quick deleveraging [10][19] - The company remains optimistic about the long-term outlook for the offshore vessel industry and aims to deploy capital effectively to drive shareholder value [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the offshore vessel market's recovery, anticipating an uptick in drilling activity in 2026 and beyond [11][25] - The company noted that macro uncertainties and supply chain bottlenecks have impacted near-term drilling activity but expects a return to stronger demand [11] - Management highlighted the importance of maintaining utilization and day rates in the face of potential softness in the drilling market [14] Other Important Information - The company successfully refinanced its debt, resulting in a charge of $27.1 million related to early extinguishment of debt [41] - Drydock costs for 2025 are projected to be $105 million, with an increase to $124 million expected for 2026 [42][44] - The company is optimistic about the potential recovery in the offshore market, particularly in regions like Africa and the Americas [29][30] Q&A Session Summary Question: Thoughts on the production support market and rig levels needed for pricing leverage - Management expects pricing leverage to return sooner due to increasing activity in FPSOs and EPCI, along with vessel attrition over the past two years [49][50] Question: Insights on capital allocation and M&A opportunities - Management acknowledged having material nonpublic information during the quarter, which influenced the decision not to repurchase shares [52] Question: Guidance for 2026 and regional exposure - Management provided guidance for 2026, indicating confidence in achieving at least the same performance as 2025, with Africa and Asia having more exposure to open capacity [58][59] Question: Impact of maintenance on utilization and revenue expectations - Management indicated that the revenue for 2026 is expected to be fairly even throughout the year, with potential upside if drilling activity strengthens [90]