Eneti Inc. First Quarter 2023 Earnings Presentation - April 27, 2023
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Eneti Inc. First Quarter 2023 Earnings Presentation April 27, 2023
Disclaimer
This presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect Eneti Inc.’s (“Eneti’s”) current views with respect to future events and financial performance. The words “believe,” “anticipate,” “intend,”
“estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect” and similar expressions identify forward-looking statements. The forward-looking statements in this
presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical
operating trends, data contained in Eneti’s records and other data available from third parties. Although Eneti believes that these assumptions were reasonable when made, because
these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond Eneti’s control, Eneti cannot assure
you that it will achieve or accomplish these expectations, beliefs, projections or future financial performance.
Risks and uncertainties include, but are not limited to, the failure of counterparties to fully perform their contracts with Eneti, the strength of world economies and currencies, general
market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the WTIV markets, changes in Eneti’s operating expenses, including bunker prices,
drydocking and insurance costs, the fuel efficiency of our vessels, the market for Eneti's vessels, availability of financing and refinancing, charter counterparty performance, ability to
obtain financing and comply with covenants in such financing arrangements, changes in governmental and environmental rules and regulations or actions taken by regulatory authorities
including those that may limit the commercial useful lives of wind turbine installation vessels, potential liability from pending or future litigation, general domestic and international
political conditions, potential disruption of shipping routes due to accidents or political events, changes in demand for wind turbine installation vessels, and other important factors
described from time to time in the reports Eneti files with, or furnishes to, the Securities and Exchange Commission, or the Commission, and the New York Stock Exchange, or NYSE.
Eneti undertakes no obligation to update or revise any forward-looking statements. These forward-looking statements are not guarantees of Eneti's future performance, and actual
results and future developments may vary materially from those projected in the forward-looking statements.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”), earnings before interest and taxes (“EBIT”), adjusted net income and related per share amounts, as well as
adjusted EBITDA, adjusted EBIT and TCE Revenue are non-GAAP performance measures that the Company believes provide investors with a means of evaluating and understanding how
the Company’s management evaluates the Company’s operating performance. These non-GAAP financial measures should not be considered in isolation from, as substitutes for, nor
superior to financial measures prepared in accordance with GAAP.
Unless otherwise indicated, information contained in this presentation concerning Eneti’s industry and the market in which it operates and expects to operate, including its general
expectations about its industry, market position, market opportunity and market size, is based on data from various sources including internal data and estimates as well as third party
sources widely available to the public such as independent industry publications, government publications, reports by market research firms or other published independent sources.
Internal data and estimates are based upon this information as well as information obtained from trade and business organizations and other contacts in the markets in which Eneti
operates and management’s understanding of industry conditions. This information, data and estimates involve a number of assumptions and limitations, are subject to risks and
uncertainties, and are subject to change based on various factors, including those discussed above. You are cautioned not to give undue weight to such information, data and estimates.
While Eneti believes the market and industry information included in this presentation to be generally reliable, it has not independently verified any third-party information or verified
that more recent information is not available.
2
Agenda
1. Q1-2023 Highlights
2. Commercial & Market Update
3. Financial Highlights
4. Conclusion
5. Q&A
31. Q1-2023 Highlights
Q1 2023 Highlights
Q1-23 Highlights Commercial Contracts & Updates
Q1-23 Financial Results Existing Fleet
• Revenue: $13.8 million • Signed a contract in NW Europe for
between 41 and 53 days of employment for
• EBITDA: -$10.3 million(1) one of its NG2500-class vessels that will
generate between approximately $3.3
• Net Income: -$17.6 million
million and $4.1 million of revenue in 2023
• Net Debt: -$57.5 million (2)
Signed MOU with Transocean
• Dividend of $0.01 per share
• Signed a non-binding MOU with intention
to form a joint venture company that will
engage in offshore wind foundation
installation activities.
• The establishment of the JV would provide
the conversion of up to two vessels into
floating offshore wind foundation
installation platforms
1) Please see the explanation of Non-GAAP Measures in Company’s earnings release
2) Includes $2.1 million of restricted cash
52. Commercial & Market Update
Revenue Backlog & Project Pipeline
Realized Revenue & Backlog for 2022-2023 at Different Times Completed & Future Projects as of April 27, 2023
($USD millions)
2022
Q1-22A Q2-22A Q3-22A Q4-22A Q1-23A Firm Backlog Option Backlog
Vessel J F M A M J J A S O N D
Scylla
Zaratan
$321.0
$312.2 Leviathan
$10.5
$10.3 Kraken
$283.0
$272.3 $273.0 Hydra
$17.4
$27.3 $18.0 $97.3
$102.4
2023
$192.9 $112.8 $13.8
$12.2 Vessel J F M A M J J A S O N D
$46.6 $46.6
$171.4 Scylla
Zaratan
$222.6 Leviathan
$104.3 $69.2 $69.2 $69.2
Kraken
$180.7 Hydra
104.3 $61.2 $61.2 $61.2 $61.2 Excludes contracts under discussion for 2023
Firm Period
$22.4 $22.4 $22.4 $22.4 $22.4 Optional Period
Transit
As of Nov As of Feb As of May As of Aug As of Nov 2, As of Feb As of April
11,2021 23,2022 12,2022 3,2022 2022 9,2023 27, 2023
Some contracts are denominated in foreign currency and the USD being presented may therefore change. Revenue backlog excludes project costs and contracts under discussion.
7Small but Critical Cost in a High Growth Industry
Offshore Windfarm Capex
39%
12%
9%
7%
5% 4% 4% 4% 4% 4%
3% 2% 2%
1%
0%
Turbine Foundation Contingency Offshore Development Array Cable Export Cable Export Cable Foundation Offshore Onshore Turbine Array Cable Construction Other
Supply Supply & Substation to FID Installation Supply Installation Installation Substation Connection Installation Supply phase
Construction Supply Installation insurance
Management
Turbine installation only accounts for ~2% of the offshore wind farm capex, yet is critical to first power
Source: 4C Offshore April 2023
8Vessel Demand to Outpace Capable Supply
WTIV Demand vs Supply of 12MW+ Capable Vessels
Demand (# of vessels)
35 Under 10 MW Demand 10-12 MW Demand 12-14 MW Demand 15 MW+ Demand Foundation Demand 12MW+ Supply
30
25
20
15
10
5
0
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Source: 4C Offshore April 2023
Figures include two foundation vessels under construction and exclude Chinese projects/vessels
93. Financial Highlights
Revenue, Operating Expenses & Project Costs by Quarter
Revenue & Operating Expenses (1) Revenue by Quarter (Excl Project Costs) (1)
($USD millions) Revenue Opex & Project Costs ($USD millions)
Firm Options
$80.0
$69.2 $50.0
$61.2
$40.7
$60.0 $40.0 $35.7 $1.8
$46.6
$1.8 $31.3
$40.0 $30.0
$6.9
$22.0 $20.5 $20.0
$18.8 $18.9 $38.9
$20.0 $13.8 $13.8 $34.0
$24.4
$10.0
$13.8
$0.0
Q2-22 Q3-22 Q4-22 Q1-23 $0.0
Q1-23 Q2-23 Q3-23 Q4-23
Quarterly Vessel Operating Expenses (Excl Project Costs) Estimated Project Costs by Quarter (1)
($/day) Q2-22 Q3-22 Q4-22 Q1-23 ($USD millions)
$80,000 $6.0
$66,950
$4.7
$59,085 $59,370
$60,000 $55,511 $4.0
$46,147 $4.0
$3.0
$36,615 $37,422
$40,000
$30,134
$25,996 $26,394 $27,700
$22,634 $1.9
$2.0
$20,000
$0
$0.0
Scylla Zaratan NG 2500's
Q1-23A Q2-23E Q3-23E Q4-23E
1) Some contracts are denominated in foreign currency and the USD being presented may therefore change. Revenue and project costs are estimates and subject to change based on project timing.
11Newbuilding Program Capex & Debt Finance
Newbuild Capex & Expected Debt Finance Newbuild Capex Schedule
($USD millions) ($USD millions)
Contract Price Completed Payments Remaining Payments Expected Debt Finance Nessie Siren
$231
$32
$98.5 $195
$654.8 $436.0
$556.3 $198 $195
$66
$120.3
$32 $32
Contract Price Completed Payments Remaining NB Expected NB Remaining NB 1H-23 2H-23 1H-24 2H-24 1H-25
Payments Financing at Delivery Payments Net of NB
(1) Financing
1) Company has received an underwritten proposal from two institutions for a $436 million term loan facility to finance approximately 65% of the purchase cost of the Company’s two WTIV newbuilds.
12First Newbuild Employment Contract & Potential EBITDA Generation
Contract Awarded on First Newbuild Vessel Potential EBITDA Generation Per Newbuild Vessel (1)
• In December 2022, the Company signed a contract with an ($USD millions)
$76.7
undisclosed client to transport and install turbines for a project
$70.4
in the first half of 2025
$64.2
• The contract will be performed by the Company’s first $58.0
newbuild vessel, to be named “Nessie”, which will be
$51.8
delivered in the fourth quarter of 2024
• The engagement is expected to be between 226 and 276
days and generate approximately €60 million to €73
million of net revenue after forecasted project costs
• The second newbuilding vessel, to be named “Siren”, is
expected to delivered in the second quarter of 2025 and
is in discussion for its first employment contract
• The average contract price per newbuilding vessel is
$327.4 million
$220,000 $240,000 $260,000 $280,000 $300,000
Charter Rate ($/day)
1) Assumes 365 days per year, $45,000 per day in vessel operating expenses and 85% utilization for revenue days.
134. Conclusion
Investment Highlights
The Only U.S.-Listed
Developed Global Experienced
Company Focused on
Platform (Europe, Asia Management Team with
Installing the Next
and U.S.) Designed for Customer Relationships
Generation of Wind
Scale & Growth that Matter
Turbines
Limited Availability of
Increasing Demand & High Specification WTIVs creates a
Higher Rate Outlook for Newbuilds on Order Favorable
Existing Asset Base with Attractive Returns Supply/Demand
Imbalance
155. Q&A
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