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]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $333.4 million, a decrease of approximately 3% from $345.1 million in Q4 2024 [33] - Gross margin was 50.1%, slightly down from 50.4% in Q4 2024, marking two consecutive quarters above 50% [34] - Free cash flow generated was about $94.7 million, down from $107 million in Q4 2024 [40] - Net income for the quarter was $42.7 million, or $0.83 per share [33] Business Line Data and Key Metrics Changes - Average day rates increased to $22,303, up from the previous quarter [34] - Active utilization improved from 77.7% in Q4 2024 to 78.4% in Q1 2025 [34] - Day rates in the Americas improved by 8% and in the Middle East by almost 5% [38] Market Data and Key Metrics Changes - The Brazilian OSV market has strengthened significantly, while the U.K. North Sea and Mexico markets face demand-side challenges [24][26] - The Middle East, Africa, and Southeast Asia have seen steady improvements in demand [24] - The overall OSV market remains above historical averages despite economic uncertainties [25] Company Strategy and Development Direction - The company views share repurchase programs as a mechanism to return capital to shareholders and take advantage of market inefficiencies [9] - M&A remains a cornerstone of growth strategy, with a focus on unlevered returns and near-term free cash flow generation [10] - The company is optimistic about the long-term fundamentals of the offshore industry despite current economic uncertainties [45] Management's Comments on Operating Environment and Future Outlook - Management noted that the uncertainty regarding global growth is high, but they are familiar with navigating such situations [12] - The outlook for 2025 aligns with prior expectations, with signs of strength in intermediate to long-term plans for customers [14] - Management remains cautious but optimistic about the potential for increased offshore activity in 2026 and beyond [14] Other Important Information - The company has no immediate need to refinance existing debt due to low leverage and no near-term maturities [19] - The company is actively monitoring the debt capital markets for potential refinancing opportunities [19] - The company expects to incur approximately $113 million in drydock costs for the year [41] Q&A Session Summary Question: What is the outlook for offshore activity in 2026 and 2027? - Management indicated that conversations with customers remain positive, with no changes to plans observed [51][53] Question: How does the company expect to benefit from assets moving out of the North Sea? - Management expects to benefit from tightening supply in the North Sea due to vessels moving to Brazil [57] Question: What is the guidance for Q2 revenue and margins? - Guidance for Q2 indicates a revenue decline of about 5% sequentially with gross margins expected at 44% [90] Question: How does the company decide whether to stack a vessel? - The decision involves various factors including rate thresholds, visibility metrics, and region-specific considerations [87] Question: What is the timeline for tenders? - The timeline for tenders varies by customer, with some taking three to six months to finalize [93]