OceanPact Serviços Marítimos S.A. (OPCT3) Q2 FY2025 Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to OceanPact's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] This conference is being recorded, and the replay will be available at the company's website, ri.oceanpact.com. The slide deck is also available at the company's Investor Relations website as well as the CVM website, www.geov.br/cvm. Before proceeding, we would like to mention that the forward-looking statements that may be made during this conference call relating to the company's business prospects and forecasts are predictions based on the management's current expectations. These expectations are highly dependent on macroeconomic conditions, market risks and other factors. With us today are Mr. Flavio Andrade, our CEO; Haroldo Solberg, VP and Chief Vessel Officer; Adriano Ranieri, Head of the Service segment; and Eduardo de Toledo, CFO and IRO. The executives will first make their comments on OceanPact's performance in the second quarter. And later, they'll be available to answer any questions that may be asked. I'd like now to turn the floor over to Mr. Andrade. Mr. Andrade, please, you may begin, sir.

Thank you, Doris. Good morning. Thank you, everyone, for joining us for another conference call to discuss our earnings. We'll be focusing on the second quarter 2025 now. And as I mentioned in the press release, we've got some good news that actually took place after we closed the second quarter, but that we have been looking forward to. So RSVs, those stations, there was a bid that was opened in September last year. So finally, that bid was concluded. And we have signed one of the contracts. We're signing the other 3 contracts. So there are 4 new RSVs in new contracts in this bid. There's over 50% increase and AHTS was also qualified in the AHTS station and the contract will be signed soon. We also had the environment monitoring contract. That is also something we had been waiting for a while too. That's a substantial contract over BRL 700 million for OceanPact Geosciences and the decommissioning contract for an international IOC. And that's also a contract that we were awarded. And in our next earnings conference call, that is going to be quite easy to be seen in our backlog. We also issued our seventh debenture lot that we're going to be using to pay the fourth, and it was issued at the rate of CDI base interest rate plus 2%. And that is thanks to a substantial demand that we had. Demand was very high for our debentures. All right. So let's look at the highlights. We had 84% utilization rate this quarter. And the guidance for the full year is 82%. The daily rate rose to 177,000. That is a 22% increase year-on-year. Our net revenue was BRL 107 million in the quarter. That is a 34% increase year-on-year. And our EBITDA was BRL 139 million. That's a 22% rise year-on-year. I'd now like to ask Haroldo to talk about the highlights in the Vessel segment.

Thank you, Flavio. Good morning, everyone. Let's take a look at the main operating highlights in the vessel segment in the second quarter 2025. Let's start with our utilization rate. So it was 84% for the second quarter. And in this period, we had, as the chart shows, we had Parcel dos Meros and Ilha de Sao Sebastiao being docked. We had Parcel das Paredes, Parcel do Badejo, Ilha de Sao Sebastiao, [indiscernible], Rochedo de Sao Paulo in maintenance. And Ilha do Mosqueiro was mobilized to Petrobras. Our estimate is that our utilization rate will be 82% for 2025. It's a bit higher than the previous guidance. And this is due to the utilization rate with the new RSV contracts with Petrobras. Let's delve into our utilization rate. Again, it was 84% in the second quarter. We can see to the left that days without contract had a 0% impact. Mobilization had a 4% impact and docking 3%. Operating downtime was 9%. We had, as we saw in the previous graph, some maintenance services provided. To the right, we can see the days utilized and average net daily rate. We went from 1,585 to 1,763. It's a 22% rise. That is the daily rate. So it's a 22% increase, and that is mainly due to events that took place in 2024, new contracts with PSVs and ORSVs. And the increase in the day rates in Parcel dos Meros and Parcel do Badejo with RSV. Now let's look at the results in the vessel segment. To the left, we see that the net revenue was BRL 114 million in the second quarter. That's a 36% in a like-for-like basis, removing the -- or excluding the partnership with [indiscernible]. That's a 36% increase year-on-year. And to the right, we see our EBITDA. It climbed 59% year-on-year. It's now 82%. And the margin climbed from 22% to 26%. And that is also thanks to the daily rate increase and the increase in the utilization rates, as we already explained. I'll now turn the floor to Adriano. He is the Head of the Services Department.

Thank you, Haroldo. Good morning, everyone. Let's take a look at the Service segment and our results in the second quarter 2025. We had an increase in revenue year-on-year in every business unit. In Subsea and Geoscience, our revenue was BRL 127 million. That's a 26% rise driven mainly thanks to the high demand in Geoscience services. Oil spill response had a BRL 37 million revenue. It's a 24% rise year-on-year. And that is thanks to a short-term contract to plan and implement an emergency response base on a coast. And consulting and other units had EUR 33 million in revenue. It's a 91% rise that is driven by the increased demand in the consulting department and decommissioning of the Congro Boia. Our segment revenue was BRL 197 million, and our EBITDA was BRL 57 million and a 29% margin. Last year, we established a good portfolio with good subsea possibilities. And I give the floor to Toledo.

Thank you, Adriano, and good morning, everyone. It's a pleasure to be here with you speaking about our second quarter 2025 results. Let's start with our consolidated net revenue. We had BRL 108 million in the quarter. That's a 34% rise year-on-year. As for our consolidated EBITDA, we had BRL 139 million. That's a 22% rise like-for-like, and that is in line with our expectations for the quarter. As for costs, like-for-like, we had a 40% increase. That's a substantial rise. A substantial part of that is due to Parcel dos Meros. We have been talking about it. We spoke about it in the last earnings call. Meros has now a charter with a less than a year contract. So the accounting has to change according to the IFRS 16. So the chartering is accounted for as a cost and that wasn't like that before, and that's why we see the difference. Our consolidated G&A was BRL 58 million in the quarter. There are 2 important factors I'd like to mention here. One is the long-term compensation plan, the long-term incentive plan that is adjusted every quarter as per the stock and share prices and the stock and share had an improved price in the -- in July that had an impact on ILP. And we have been working to grow our business with new businesses as well. And a lot, as we have said, has been using this R&D programs. And that doesn't really have much of a margin. R&D pays for our costs. And we understand it helps in the development of these new areas, but that impacts the indicator. But again, it leads to better options in the future. As for CapEx, basically on the same level as last year. We had an increase in the growth in modernization shares. Let's look at our financial figures. We ended the quarter at BRL 209 million in our cash position. The proceeds from the debentures issue is only going to be accounted for the end of July. So it can't be seen here yet. Our bank debt and leverage is at BRL 1.2 billion, and our net debt to EBITDA is at the same level as well. I'll now give the floor back to Flavio so that he can continue the presentation.

Thank you, Eduardo. I already talked about the backlog in my initial remarks, but we have a EUR 3 billion backlog. The backlog was consumed naturally this quarter with a few adds, and these are going to be seen in the next quarter with the RSV in IHTS and environmental monitoring and decommissioning contracts that I mentioned at the start. In sustainability and innovation, well, we published our sustainability report for 2024. It is a highly detailed report. It really gives a lot of information on everything we've been doing. And we also published an executive report. It's a 25-page report, a summary. So I really recommend you take a read. These reports look really good, and this summarized executive report is really easy to read. And in innovation, we have a new project with [indiscernible] using the resources from research development and innovation as Eduardo just mentioned or Toledo just mentioned. And this is a project in the Santos Bay using numerical modeling, AI and oceanographic data. So every one of our vessels is basically one sensor with specific devices that we have in the [indiscernible] fields to support this project. Market updates. I think I've covered basically everything here. So we have signed the contract with Parcel das Paredes, Parcel do Bandolim, [indiscernible] and Parcel das Timbebas. They are getting their final signatures in Petrobras. The increase in the rates for these vessels was over 50%, 82% in vessels and some of it in services with a smaller increase, but that amounts to this over 50% increase. In AHTS [indiscernible], we had an over 70% increase. And this will, of course, translate into much better margins. I talked about environmental monitoring already. And what is ongoing is bids to charter PSVs. There is a bid for the oil recovery or oil spill recovery vessel, the OSRV and one bid for decommissioning of mooring lines that is planned for October. So the market continues to operate normally with the regular demands that we have been expecting, and that's it, and we're available to take your questions. Thank you very much.

[Operator Instructions] Our first question is going to come in audio from Vicente Falanga, Bradesco BBI.

I've got 2 questions. Congratulations on the -- to the management, first of all. And can you talk a little bit about the debentures issue, the cost and if there is more work in [indiscernible] management to be done in the coming months? And what can we expect when it comes to the company's EBITDA in the second half of the year? There's a lot in yellow in the chart in the graph you show, so the mobilization. So what can we expect for the third and fourth quarter results?

Vicente, thank you for your questions. First, the debentures. We had more expensive debentures up to the fourth batch, the fourth lot. So the spread was CDI plus 5% or 5.75% even. And these have come to an end. Now with the seventh issue, we bought back the fourth. That was the last one on this level. As of the fifth debenture lot, we are below 3%. The fifth was CDI base rate plus 2.75% and then the sixth to CDI plus 2.5% and now CDI plus 2%. So there is a decrease in the rate, but it's not as marked from 5 to this level. So this reduces the management time. We may have another lot issued. It could be bilateral as well. As we have this preparation and -- this preparation with vessels and many of the contracts that we have had success in have to do with the preparation. So we may have lower volumes. So it could be a small lot or it could be a bilateral one. So this is the possibilities we're considering to fund this cycle. This is a very positive one that we're going through. As for your second question, the second half of the year, well, the third quarter should have very strong results. That is mainly due to the high utilization rates. And there are 3 important elements leveraging this result. Ilha de [indiscernible] and its new contract we had a substantial increase in the day rate. And this is the first quarter that we're going to have it in operation. It started last quarter, but only for 2 weeks, only 15 days, and now we're going to have it for the full quarter. So this is an important factor to this increase in EBITDA levels. The second element stems from Parcel das Paredes and Parcel dos Meros. These 2 vessels, they have been performing really well in the contracts in this quarter. These are shorter-term contracts when it comes to Petrobras contracts comparing to [indiscernible], for example. But as we -- as they are shorter contracts, they have better income, better profit. So having said that, our third quarter should be the best in our history and best ever. It should even surpass the second quarter 2023, the one that we had the legal cases that had to do with the OP requirement as well. So without an extraordinary factor, a nonrecurring factor like that one, we should surpass that EBITDA level. So that's the third quarter. The fourth quarter normally goes -- we normally have the utilization rate going down in the fourth quarter, and it goes down because of this positive reason. Flavio mentioned the new contracts as well. And we have Ilha do Mosqueiro. These are good spot contracts. So the fourth quarter should be better than the first and second quarters, even though we have lower utilization rates. So this is what we expect for the year. So we're very optimistic about our second half of the year.

[Operator Instructions] We have another question from Eric Mello from Itau BBA.

I've got 2 questions as well. The first one has to do with Ilha do Mosqueiro as well. This is one of the contracts that started a month earlier than expected. And looking at the second half of this year and the start of the next year, there's a lot of mobilization going on. So I'd like to hear from you how you're preparing for these new contracts. Could we have additional contracts to these? And the visibility in the first half of the year, I mean, can you talk a little bit about the utilization rates for the next year as well for the first half of 2026?

Thank you, Eric. The mobilizations that we have this year in the last quarter, these 4 RSVs, these are vessels that were already working for Petrobras and some of them still are working for Petrobras. So they have had substantial upgrades made to be fitting for Petrobras. They all operate at 3,000 meters -- they can all operate 3,000 meters deep. There are more modern sensors from [indiscernible], for example, different spaces that you may need for one thing or another. So these are changes that cost time and CapEx, but they don't lead to the same challenges that we faced when we had to go for a vessel that was in layup in a different country that had never worked -- that had never worked for Petrobras and that had to be upgraded. So we don't expect any delays in mobilization for that reason. As for the mobilization rates for the future, I don't know if Haroldo or Eduardo would like to take that question.

Well, the works, that's right. These are simpler works, [indiscernible], smaller changes. These past months, we've been planning these works carefully, looking at the scope, the maintenance that needs to be done, and they're going to be going into operation in 2026. And just piggybacking on the utilization rate matter. In the first half or in the first quarter next year, it should be between the third and fourth quarters this year, a value between the 2. Most of these works are going to be taking place this year. So there is some of the works is going to be taking place next year, but we expect to have a level between the third and fourth quarter of this year. So next year, we'll have these new contracts with the new daily rates. So we expect to have a strong quarter and the new daily rates should recur in the coming years. So it's looking positive for next year. And the first quarter is ramping up with the effects from these works, but smaller than the fourth quarter this year.

We have a question in writing from Thiago Souza. What is the commercial strategy for AHTS Rochedo Sao Pedro?

We expect or we understand that the AHTS that we had now, the request that we had now is not exactly ours because our vessels are still under contract. So we brought forward Rochedo de Sao Paulo into a new contract. Rochedo Sao Pedro is probably going to have their contract extended with Petrobras, hopefully with an improvement in our rates. That hasn't been negotiated yet, but that is our expectation. Petrobras needs this vessel, and we would very much like to renew the contract with them. We have discussed that with them already, but we do not have any concrete results to present yet.

[Operator Instructions] We have a question in writing from Edward [indiscernible] Richardson. We're going to read it in Portuguese. Congratulations on a great quarter. I would like to ask for some general market color. We have seen that Petrobras delayed several tenders. The one that caught my attention was the big 16 vessel PSV tender delayed from May until August. Now that tender has been reduced from 16 to 12 PSVs. Is there a reason for these repeated delays? Is it becoming hard for Petrobras to find enough available high-quality tonnage? Or are there any other factors that may be affecting the decision to push back these tender deadlines? Any other comments on the evolution of the Brazilian PSV in AHTS markets would be very much appreciated.

Thank you, Edward, for your questions. You always ask interesting questions, Edward. Thank you. In this case, this behavior from Petrobras is quite normal. It is a state-owned company, right? It's a government company, but it's also a listed company. So there are many, many internal rules in Petrobras. And there are many systems regarding procurement and new contracts, vendors. So it's normal for Petrobras to put off requests and make changes. And they often have more than one tender at the same time, even for PSVs. So this is not unusual. And there's no specific reason for it. Petrobras needs the vessels. I believe Petrobras has been able to get the vessels they need. Of course, the supply has been tighter in the market of late, but Petrobras has found the vessels they need. And Petrobras has many tenders for PSVs. And we see that after the crisis, the PSV prices got back to the market levels faster than RSVs. RSVs are only getting to normal market prices now. So the subsea RSV vessels have one tender a year or one every 1.5 years and PSVs have 3 tenders a year, maybe 4 oil recovery vessels as well. So they move faster whenever you need rates to be adjusted. So it's faster than RSV subsea vessels. So we don't understand any specific -- there be any specific reasons for this delay. It's quite normal. And any other comments on the evolution of the Brazilian PSV HTS markets? We had already made a comment about that. The FPSOs for Petrobras is putting pressure on Petrobras. They need vessels to go along with their growth that is already hired in areas that call for advance in planning. So they're planning the PSOs with more time in advance than the vessels. And that's why there are so many processes taking place at the same time. But we don't see anything unusual about it. And again, thank you very much for your questions.

We have another question in writing. It's an anonymous attendee. The question is the -- around an update for [indiscernible].

Well, the [indiscernible] process, Petrobras appealed in the Supreme Court, the same way there was for Turquoises. The same group is going to be making the decision there, the same team of judges. And we don't have a date for the decision yet. The speaker of this group had a democratic decision rejecting the appeal from Petrobras. Petrobras appealed requesting that a group of judges take the decision instead of a democratic decision. We're still waiting for the date when that's going to take place now.

Another question in writing. From JPMorgan from Rodolfo Angele. I'd like to talk about the company's future strategy. The company thesis is quite simple right now. The growth is coming in with new pricing of the fleet with higher daily rates. But in the past, OceanPact also grew and that it acquired companies and vessels. What are we to expect in the future? Do you expect new mergers and acquisitions in the future? Does that make sense? Or are the assets too expensive at this point?

Thank you, Rodolfo, for your question. Thinking about vessels, yes, the price of the assets has really gone up as a result of the increasing the daily rates as well. So our strategy that we've been executing at this point is that one. We've been surfing the repricing of the fleet we bought in the past when prices were far lower. We need to do that efficiently. We need to seize the opportunities as we have seized using our own ROVs in every subsea vessel RSVs. We acquired 2 new ones last year. We're going to add ROVs to our own RSVs this year as well, and that has been yielding good results. We also have services. The services account for 40% of our EBITDA. And there are interesting opportunities there. We mentioned the environmental monitoring contract, for example, that's a good opportunity, decommissioning contract and all of the range of services we provide. That coupled with innovation, of course. As Eduardo said, we have research development and innovation projects where we do not have any immediate profit, but we develop important technologies such as the autonomous vessels, the ROVs that can be operated remotely from land. So instead of having people -- 40 people on a vessel. In the middle of the sea, we can have fewer people there and the ROV operators will be able to carry out the same works with the new low-latency Internet. But as for your merger and acquisition question, well, that will always make sense if there is a good price, if there is a good opportunity to acquire a vessel or a company where we can have a positive negotiation that will complement our fleet and our ambitions efficiently and that we in the market understand to be a good deal. So we're always keeping an eye open. We haven't spotted any good opportunities in that sense for now. But of course, we'll keep a weather eye keeping our eye out on that, and that's it.

We have a question from Frederico [indiscernible]. Congratulations on your results and on the new contracts. I've got 2 questions. The first has to do with the company's CapEx. What are your expectations for CapEx until the end of 2026? And what are the possibilities to allocate capital in the future? My second question has to do with the company mix in the future when it comes to the share between services and vessels.

All right. Let me start with the CapEx question. We have 2 years, 2025 and 2026 as important years to renew contracts for our high-spec vessels, RSVs, HCSs. And as Flavio mentioned, we are adding ROVs to our vessels. And in the past, we had third-party ROVs. So we expect these years to have higher CapEx levels in '25 and '26. And then we should go back to normal levels in 2027. As for the mix, vessels should get a bigger share, especially due to the repricing of the contracts. Higher daily rates will make sure that the share of vessels increases. But that should be temporary because services has a bigger increase from a structural perspective. It calls for less CapEx. We can grow more organically without further investments. But at first, we'll see the vessel share growing.

We have a question from Rodrigo Fonseca from [indiscernible].

Can you talk a little bit about the commercial strategy for [indiscernible] that has a mobilization planned in the third quarter.

[indiscernible] should continue with the same operating profile, PSV and oil recovery.

Normally working with independent or international companies or what we've been calling junior oils. We can't give you a lot of details in the commercial strategy there because there are competitors listening to us here. But just for general understanding and for modeling, the operating profile that we've had in the past should continue in the future. There are no further questions right now.

Please bear with us for a couple of further questions will be sent to us. No further questions were sent to us. So I'll give the floor back to Eduardo for his final remarks.

Thank you, Doris. Basically, I would just like to stress some of the points that we already made. We are always open whenever we speak to the market so that we can keep you updated on what's going on. Again, we expect the third quarter to be very positive considering everything that we already mentioned during the call. The fourth quarter should be better than the first and the second quarter, but of course, it should be lower than the third quarter because we start the mobilization of the vessels. And the first quarter next year, we expect results to grow because there is less time spent in mobilization. Most of it takes place in the fourth quarter. And we'll also have the new daily rates that will be in force as of the start of the operations of the vessels. So that's basically what I had to say. And I'd like to give the floor to Flavio for his final remarks.

Well, thank you, everyone. I haven't got any further remarks to make. I think what Eduardo said already makes perfect sense. We'll continue to work hard. We'll continue to deliver on what we promised to deliver. And this question around the mix between vessels and services. Again, vessels will grow because of the highly daily rates, but services will also continue to grow. We see the decommissioning contract is an example of that, and there are further opportunities that we are keeping an eye on that we will keep a fierce competition between the 2 business units. Yes. So thank you very much for joining, and we'll talk to you in the next call.

This is the end of the second quarter 2025 OceanPact Earnings Call. Thank you very much for joining, and have a good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]