GMS, a leading provider of advanced self-propelled, self-elevating support vessels serving the offshore oil, gas and renewables industries, is pleased to announce its interim results for the six months period ended 30 June 2024 (H1 2024).

Overview

 

H1 2022

H1 2023

H1 2024

H1 2024 versus

 

US$ m

US$ m

US$ m

H1 2023 change

Revenue

66.4

74.3

80.7

9%

Gross profit

27.4

34.8

38.8

11%

Adjusted EBITDA1

37.3

44.3

47.7

8%

Net profit

13.1

8.7

7.4

-15%

Net Leverage Ratio1

4.56:1

3.75:1

2.62:1

-30%

H1 Financial and Operational Highlights:
Net leverage ratio1 on 30 June 2024 improved to 2.62:1 (31 December 2023: 3.05:1). Net bank debt1 lowered by US$ 28.8 million to US$ 238.5 million (31 December 2023: US$ 267.3 million) as the Group continues its focus on deleveraging. In addition to its contractual obligations, the Group made an additional payment of US$ 5.0 million in debt reduction. Further measures were taken to minimise interest charges.

The Group achieved revenue of US$ 80.7 million for the first half of 2024, reflecting an increase of 9% compared to US$ 74.3 million in H1 2023. The increase in revenue was attributed to improvements in fleet average day rates to $32.4k (H1 2023: US$ 30.4k) This was largely driven by higher demand for our S-Class vessels. The increase was partially offset by a decrease in fleet average utilization from 93% in H1 2023 to 91% in H1 2024. This decrease was largely attributed to necessary planned downtime for the maintenance and drydocking of various S-Class and K-Class vessels.

Gross profit margin improved to 48% (H1 2023: 47%). 

Adjusted EBITDA increased by 8% reaching US$ 47.7 million (H1 2023: US$ 44.3 million) driven by the increase in revenue. Adjusted EBITDA margin remained at 59%.

Group’s net profit for the first half of 2024 decreased by 15% to US$ 7.4 million (H1 2023: US$ 8.7 million). Despite the growth in revenue and reduction in finance costs, net profit reduced as a consequence of the impact of fair value of warrants with the increased share price, increase in tax expense and general administrative expenses.

Finance expenses decreased to US$ 12.3 million (H1 2023: US$ 17.5 million), driven by the cessation of 250 basis points (bps) Profit-In-Kind (PIK) interest, reduction of margin rate by 90 bps, and a further reduction in margin by 10 bps. The first two reductions were due to achieving a net leverage ratio below 4:1 as of 31 March 2023, and the third reduction was achieved upon reaching a net leverage ratio below 3:1 as of 31 March 2024.

Fair value of the warrants at 30 June 2024 amounted to US$ 11.3 million (31 December 2023: US$ 14.3 million) representing 53.4 million warrants (31 December 2023: 87.6 million warrants). The reduction in the number of outstanding warrants is due to their partial exercise/settlement during H1 2024 resulting in issue of 53.5 million ordinary shares. The fair value of the warrants exercised amounting to US$ 10.4 million was reclassified from liability to equity. Further, the impact of changes in the fair value of the warrants increased to US$ 7.5 million during H1 2024 (H1 2023: US$ 0.7 million), primarily due to increase in the Group’s share price and partially offset by a decrease in number of outstanding warrants.

The basic earnings per share for the period decreased to US$ 0.68, as compared to US$ 0.82 in the first half of 2023. Further, the diluted earnings per share for the period decreased to US$ 0.63 compared to US$ 0.82 in the first half of 2023. Had the warrants not been exercised (resulting in issue of additional shares during the period), basic loss per share and diluted loss per share would have been US$ 0.02 and US$ 0.02 respectively.
 
1 This represents an Adjusted Performance Measure (APM) as defined in the Glossary which is included in Note 24 to the interim consolidated Financial Statements.
 
Outlook:

Adjusted EBITDA guidance for 2024 remains in the range of US$ 92 - 100 million.

Demand in the market remains strong due to a combination of high market activity and limited vessel availability. An estimated 18-21 new vessels are expected to be operational in the next 2 to 3 years. We expect market growth and retirement of aged assets from 2025-2027 to absorb the supply increase.

Secured backlog was US$ 426.8 million on 30 June 2024 (30 June 2023: US$ 301.4 million), which reflects the additional contract awards announced over the last 12 months, offset by the revenue recognised.

Contract awards announced in H1 2024 have a combined total charter period of 14.3 years (H1 2023: 2.4 years) which underscores the ongoing strength in demand for our vessels across the various markets in which we operate. The Group is currently working on potential new contracts to further improve the inventory and address the backlog.
 
Mansour Al Alami, Executive Chairman, GMS said:
"We remain committed to our strategy of deleveraging, prioritizing the shift of value from lenders to shareholders, and are on course to meet our 2024 adjusted EBITDA guidance. This progress has been bolstered by higher day rates and disciplined performance in the first half of the year. Despite ongoing challenges such as operational disruptions, inflation, and elevated borrowing costs, we are actively managing these risks and are confident in our ability to further navigate the Company towards continued success."