Solstad Offshore FY2015 earnings review

Solstad Offshore the Norwegian offshore vessel contractor, amidst a major debt restructuring, as it repaid its NOK 700m senior unsecured FRN’s due on 25 February 2016. Furthermore, as per the company’s 4Q15 earnings presentations, Solstad had successfully refinanced 65% and 75% of its mortgage debt maturing 2016 and 2017.  In addition to this, Solstsad was undergoing refinancing discussions for the reminder 35% and 25% of its mortgage debt, while debt under joint-ventures was progressing as scheduled. Furthermore, the company’s earnings presentation also stated that, the financing of its CSV ship Normand Maximus was progressing as planned. As earlier in end-FY14 Solstad’s management had stated that the ship was due for commissioning in June 2016 with USD 340m payment due.



As of 31 December 2015, Solstad’s net debt increased to NOK 10.8bn as compared to NOK 10.3bn, which may have been due to appreciation of USD against the Norwegian Krone. As company’s debt exposure comprised of 50% USD, 41% NOK and 9% GBP. This coupled with 9.4% YoY decline in EBITDA led net leverage to increase to 6.93x at end-FY15 versus 5.99x at end-FY14.

Solstad reported a 4.6% YoY decline in revenue to NOK 3.7bn, largely due to decline in contributions from its anchor-handling (AHTS) and platform-supply (PSV) segments. Moreover, lower contractual demands for AHTS and PSV vessels led Soldstad to put nine vessels in lay-ups (5 AHT’s & 4 PSV’s), which lowered segmental revenue by 30.7% YoY and 19.9% YoY respectively.  On the other hand, construction service vessels (CSV) continued to be a bright spot and a main driver for growth, as in FY15 CSV revenues increased 16.6% YoY to NOK 2.4bn largely driven by existing back-log’s.


Aforementioned decline in revenue, coupled with an impairment charge of NOK 1.3bn recorded during the period and 2.9% YoY increase in personnel expense led EBITDA to decline 9.4% YoY to NOK 1.6bn. This led operating cash flow to decline 42.5% YoY to NOK 870m. FCF stood at NOK 742m as compared to a cash burn of NOK 900m, on account of lower capex in FY15. Capex was higher in FY14 due delivery of two large CSV’s in June and July 2014.

Fleet review: As of 22 February 2016, Solstad’s fleet consisted of 44 vessels: 19 CVS (1 new built), 15 AHTS and 9 PSV. During FY15, the company had 13 vessels in lay-ups. Furthermore, these vessels had a firm contract coverage of NOK 2.8bn representing 41% available days for 2016. Contract coverage including options stood at NOK 3.2bn representing 48% available days in 2016. As of 31 December 2015, Solstad’s fleet value based on broker valuation stood at NOK 19bn as compared to NOK 20bn at end-FY14.




Source: Solstad Offshore, Rsquaredanalytics


Categories: European Earnings

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