Press Release
Gulf Marine Services PLC - TRADING UPDATE
Gulf Marine Services (LSE: GMS), the leading provider of advanced self-propelled self-elevating support vessels (SESVs) serving the offshore oil, gas and renewable energy sectors, provides the following trading update for the period 16 May 2017 to 1 August 2017.
Overall the Group is continuing to see good levels of tender activity and is progressing a number of opportunities, but is encountering some delays in contract awards and commencement dates.
Discussions with a client regarding two new contracts for SESVs in the MENA region are well advanced and the Group is anticipating that these will be finalised shortly. The contracts, which are currently expected to commence at the end of Q1 2018, are for a Large Class vessel with a charter period of eight months (including options) and a MidSize Class vessel with a charter period of eight months (including options).
A contract extension has been confirmed for one of the Group’s MidSize Class vessels currently operating in the MENA region, the extension period is for five months (including options) to the end of 2017. A contract extension to the end of Q1 2018 has also been agreed for a Small Class vessel in the MENA region. As scheduled, a Large Class vessel has commenced a previously announced 18month charter (including options) in Europe.
A Large Class vessel, operating in Europe, will complete a twoyear firm charter period at the end of Q3 2017. Two additional 12month extension options are unlikely to be exercised by the client. This vessel will be utilised on a previously announced longterm contract for a renewable energy client in Europe commencing in Q2 2018.
Financial Position
The Group’s operational update on 16 May 2017 noted that the actual timing of contract awards is dependent on its clients’ operational requirements. As certain potential contract awards and commencement dates have been delayed, the Group is now expecting 2017 EBITDA to be US$ 58.0 million 68.0 million, (equivalent to an EBITDA margin above 50%), with this guidance subject to the precise timing of contract awards. The Group continues to generate positive operating cash flows, with net debt anticipated to be US$ 360.0 million 370.0 million at the end of 2017. Net income in 2017 is expected to be US$ 1.0 million US$ 10.0 million.
The Group is in constructive dialogue with its banking syndicate on appropriate covenant amendments following the deferment of potential contract awards and the Board remains confident of the banks’ continued support. A further announcement will be made once negotiations have been finalised.
Duncan Anderson, Chief Executive Officer of GMS, said:
“Demand for our Large Class and MidSize Class vessels is good, with the strategic reshaping of our fleet through our new build programme investment in these larger vessels proving prescient. While we are seeing good levels of tender activity in Europe and parts of the Middle East, these are taking longer to convert into contracts than has been typically the norm. The precise timing of contract awards is inevitably subject to our clients’ own operational requirements, and in the current environment can be delayed as a consequence of a protracted tender evaluation and award process.
“Discussions are progressing with a number of clients about our cantilever innovation, reinforcing our view that the cantilever has the potential to deliver significant cost efficiencies in a broader range of work scopes for our SESVs.
“GMS has an exceptional fleet of advanced SESVs and our flexibility makes us very attractive for clients seeking safe and highly costeffective offshore support solutions. We are confident we have the right business model and strategy in place to ensure we are in the best possible position to secure new contracts as the market environment improves.”