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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024 or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission file number 1-37966

SEACOR Marine Holdings Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

47-2564547

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification No.)

 

 

12121 Wickchester Lane, Suite 500, Houston, TX

 

77079

(Address of Principal Executive Offices)

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (346) 980-1700

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

SMHI

New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The total number of shares of common stock, par value $.01 per share (“Common Stock”), outstanding as of April 26, 2024 was 27,602,032. The registrant has no other class of common stock outstanding.

 


 

SEACOR MARINE HOLDINGS INC.

Table of Contents

 

Part I.

 

Financial Information

 

1

 

 

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

1

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

 

1

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income (Loss) for the Three Months Ended March 31, 2024 and 2023

 

2

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2024 and 2023

 

3

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2024 and 2023

 

4

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023

 

5

 

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

6

 

 

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

 

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

35

 

 

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

35

 

 

 

 

 

 

Part II.

 

Other Information

 

36

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

36

 

 

 

 

 

 

 

 

Item 1A.

Risk Factors

 

36

 

 

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

36

 

 

 

 

 

 

 

 

Item 3.

Default Upon Senior Securities

 

36

 

 

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

36

 

 

 

 

 

 

 

 

Item 5.

Other Information

 

36

 

 

 

 

 

 

 

 

Item 6.

Exhibits

 

37

 

i


 

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

 

March 31, 2024

 

 

December 31, 2023

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,593

 

 

$

67,455

 

Restricted cash

 

 

2,566

 

 

 

16,676

 

Receivables:

 

 

 

 

 

 

Trade, net of allowance for credit loss of $4,546 and $4,543 as of March 31, 2024 and December 31, 2023, respectively

 

 

58,272

 

 

 

63,728

 

Other

 

 

12,210

 

 

 

11,049

 

Tax receivable

 

 

983

 

 

 

983

 

Inventories

 

 

2,516

 

 

 

1,609

 

Prepaid expenses and other

 

 

3,425

 

 

 

2,686

 

Assets held for sale

 

 

500

 

 

 

500

 

Total current assets

 

 

140,065

 

 

 

164,686

 

Property and Equipment:

 

 

 

 

 

 

Historical cost

 

 

919,139

 

 

 

918,823

 

Accumulated depreciation

 

 

(337,001

)

 

 

(324,141

)

 

 

582,138

 

 

 

594,682

 

Construction in progress

 

 

13,410

 

 

 

10,362

 

Net property and equipment

 

 

595,548

 

 

 

605,044

 

Right-of-use asset - operating leases

 

 

3,988

 

 

 

4,291

 

Right-of-use asset - finance leases

 

 

29

 

 

 

37

 

Investments, at equity, and advances to 50% or less owned companies

 

 

3,122

 

 

 

4,125

 

Other assets

 

 

2,094

 

 

 

2,153

 

Total assets

 

$

744,846

 

 

$

780,336

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Current portion of operating lease liabilities

 

$

1,285

 

 

$

1,591

 

Current portion of finance lease liabilities

 

 

33

 

 

 

35

 

Current portion of long-term debt

 

 

28,605

 

 

 

28,365

 

Accounts payable

 

 

23,453

 

 

 

27,562

 

Accrued wages and benefits

 

 

3,133

 

 

 

5,083

 

Accrued interest

 

 

3,876

 

 

 

1,850

 

Unearned revenue

 

 

2,057

 

 

 

687

 

Accrued capital, repair, and maintenance expenditures

 

 

3,402

 

 

 

2,471

 

Accrued insurance deductibles and premiums

 

 

2,636

 

 

 

3,189

 

Derivatives

 

 

99

 

 

 

 

Other current liabilities

 

 

5,864

 

 

 

6,253

 

Total current liabilities

 

 

74,443

 

 

 

77,086

 

Long-term operating lease liabilities

 

 

3,390

 

 

 

3,529

 

Long-term finance lease liabilities

 

 

 

 

 

6

 

Long-term debt

 

 

281,989

 

 

 

287,544

 

Deferred income taxes

 

 

33,873

 

 

 

35,718

 

Deferred gains and other liabilities

 

 

2,285

 

 

 

2,229

 

Total liabilities

 

 

395,980

 

 

 

406,112

 

Equity:

 

 

 

 

 

 

SEACOR Marine Holdings Inc. stockholders’ equity:

 

 

 

 

 

 

Common stock, $.01 par value, 60,000,000 shares authorized; 28,395,684 and 27,665,792 shares issued as of March 31, 2024 and December 31, 2023, respectively

 

 

286

 

 

 

280

 

Additional paid-in capital

 

 

474,433

 

 

 

472,692

 

Accumulated deficit

 

 

(125,609

)

 

 

(102,425

)

Shares held in treasury of 793,652 and 418,014 as of March 31, 2024 and December 31, 2023, respectively, at cost

 

 

(8,071

)

 

 

(4,221

)

Accumulated other comprehensive income, net of tax

 

 

7,506

 

 

 

7,577

 

 

 

348,545

 

 

 

373,903

 

Noncontrolling interests in subsidiaries

 

 

321

 

 

 

321

 

Total equity

 

 

348,866

 

 

 

374,224

 

Total liabilities and equity

 

$

744,846

 

 

$

780,336

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

 

1


 

SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except share data)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating Revenues

 

$

62,770

 

 

$

61,209

 

Costs and Expenses:

 

 

 

 

 

 

Operating

 

 

48,099

 

 

 

38,509

 

Administrative and general

 

 

11,917

 

 

 

11,632

 

Lease expense

 

 

481

 

 

 

720

 

Depreciation and amortization

 

 

12,882

 

 

 

13,762

 

 

 

73,379

 

 

 

64,623

 

(Losses) Gains on Asset Dispositions and Impairments, Net

 

 

(1

)

 

 

3,599

 

Operating (Loss) Income

 

 

(10,610

)

 

 

185

 

Other Income (Expense):

 

 

 

 

 

 

Interest income

 

 

593

 

 

 

460

 

Interest expense

 

 

(10,309

)

 

 

(8,788

)

Derivative losses, net

 

 

(543

)

 

 

 

Foreign currency losses, net

 

 

(80

)

 

 

(825

)

Other, net

 

 

(95

)

 

 

 

 

 

(10,434

)

 

 

(9,153

)

Loss Before Income Tax Expense and Equity in (Losses) Earnings of 50% or Less Owned Companies

 

 

(21,044

)

 

 

(8,968

)

Income Tax Expense

 

 

925

 

 

 

1,157

 

Loss Before Equity in (Losses) Earnings of 50% or Less Owned Companies

 

 

(21,969

)

 

 

(10,125

)

Equity in (Losses) Earnings of 50% or Less Owned Companies

 

 

(1,100

)

 

 

536

 

Net Loss

 

$

(23,069

)

 

$

(9,589

)

 

 

 

 

 

 

Net Loss Per Share:

 

 

 

 

 

 

Basic

 

$

(0.84

)

 

$

(0.36

)

Diluted

 

 

(0.84

)

 

 

(0.36

)

Weighted Average Common Stock and Warrants Outstanding:

 

 

 

 

 

 

Basic

 

 

27,343,604

 

 

 

26,822,391

 

Diluted

 

 

27,343,604

 

 

 

26,822,391

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

 

2


 

SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Net Loss

 

$

(23,069

)

 

$

(9,589

)

Other Comprehensive (Loss) Income:

 

 

 

 

 

 

Foreign currency translation (losses) gains

 

 

(71

)

 

 

668

 

Derivative gains on cash flow hedges

 

 

 

 

 

14

 

Reclassification of derivative gains on cash flow hedges to interest expense

 

 

 

 

 

(166

)

 

 

(71

)

 

 

516

 

Income Tax Expense

 

 

 

 

 

 

 

 

(71

)

 

 

516

 

Comprehensive Loss

 

$

(23,140

)

 

$

(9,073

)

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

 

3


 

SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands, except share data)

 

 

 

Shares of
Common
Stock
Outstanding

 

 

Common
Stock

 

 

Additional
Paid-In
Capital

 

 

Shares
Held in
Treasury

 

 

Treasury
Stock

 

 

Accumulated Deficit

 

 

Accumulated
Other
Comprehensive
Income

 

 

Non-
Controlling
Interests In
Subsidiaries

 

 

Total
Equity

 

For the Three Months Ended March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

27,184,778

 

 

$

280

 

 

$

472,692

 

 

 

481,014

 

 

$

(4,221

)

 

$

(102,425

)

 

$

7,577

 

 

$

321

 

 

$

374,224

 

Restricted stock grants

 

 

563,271

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Amortization of share awards

 

 

 

 

 

 

 

 

1,639

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,639

 

Exercise of options

 

 

9,166

 

 

 

 

 

 

102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

102

 

Restricted stock vesting

 

 

(251,333

)

 

 

 

 

 

 

 

 

251,333

 

 

 

(3,081

)

 

 

 

 

 

 

 

 

 

 

 

(3,081

)

Performance restricted stock vesting

 

 

96,150

 

 

 

 

 

 

 

 

 

61,305

 

 

 

(769

)

 

 

 

 

 

 

 

 

 

 

 

(769

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,069

)

 

 

 

 

 

 

 

 

(23,069

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(115

)

 

 

(71

)

 

 

 

 

 

(186

)

March 31, 2024

 

 

27,602,032

 

 

$

286

 

 

$

474,433

 

 

 

793,652

 

 

$

(8,071

)

 

$

(125,609

)

 

$

7,506

 

 

$

321

 

 

$

348,866

 

 

 

 

Shares of
Common
Stock
Outstanding

 

 

Common
Stock

 

 

Additional
Paid-In
Capital

 

 

Shares
Held in
Treasury

 

 

Treasury
Stock

 

 

Accumulated Deficit

 

 

Accumulated
Other
Comprehensive
Income

 

 

Non-
Controlling
Interests In
Subsidiaries

 

 

Total
Equity

 

For the Three Months Ended March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

 

 

26,702,161

 

 

$

272

 

 

$

466,669

 

 

 

248,638

 

 

$

(1,852

)

 

$

(93,111

)

 

$

6,847

 

 

$

321

 

 

$

379,146

 

Restricted stock grants

 

 

520,396

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Amortization of share awards

 

 

 

 

 

 

 

 

1,221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,221

 

Exercise of options

 

 

834

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Exercise of warrants

 

 

117,394

 

 

 

1

 

 

 

 

 

 

121

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock vesting

 

 

(220,207

)

 

 

 

 

 

 

 

 

220,207

 

 

 

(2,266

)

 

 

 

 

 

 

 

 

 

 

 

(2,266

)

Forfeiture of employee share awards

 

 

(15,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,589

)

 

 

 

 

 

 

 

 

(9,589

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

516

 

 

 

 

 

 

516

 

March 31, 2023

 

 

27,105,578

 

 

$

279

 

 

$

467,896

 

 

 

468,966

 

 

$

(4,119

)

 

$

(102,700

)

 

$

7,363

 

 

$

321

 

 

$

369,040

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

 

4


 

SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net Loss

 

$

(23,069

)

 

$

(9,589

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

12,882

 

 

 

13,762

 

Deferred financing costs amortization

 

 

295

 

 

 

418

 

Stock-based compensation expense

 

 

1,645

 

 

 

1,227

 

Debt discount amortization

 

 

1,926

 

 

 

1,558

 

Allowance for credit losses

 

 

3

 

 

 

(104

)

Loss (gain) from equipment sales, retirements or impairments

 

 

1

 

 

 

(3,599

)

Derivative losses

 

 

543

 

 

 

 

Interest on finance leases

 

 

 

 

 

72

 

Settlements on derivative transactions, net

 

 

164

 

 

 

154

 

Currency losses

 

 

80

 

 

 

825

 

Deferred income taxes

 

 

(1,845

)

 

 

(1,659

)

Equity losses (earnings)

 

 

1,100

 

 

 

(536

)

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

Accounts receivables

 

 

4,291

 

 

 

(9,857

)

Other assets

 

 

(1,290

)

 

 

45

 

Accounts payable and accrued liabilities

 

 

(3,895

)

 

 

6,731

 

Net cash used in operating activities

 

 

(7,169

)

 

 

(552

)

Cash Flows from Investing Activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,416

)

 

 

(470

)

Proceeds from disposition of property and equipment

 

 

 

 

 

7,611

 

Principal payments on notes due from others

 

 

 

 

 

5,000

 

Net cash (used in) provided by investing activities

 

 

(3,416

)

 

 

12,141

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

Payments on long-term debt

 

 

(7,530

)

 

 

(8,608

)

Payments on finance leases

 

 

(9

)

 

 

(114

)

Proceeds from exercise of stock options

 

 

 

 

 

6

 

Tax withholdings on restricted stock vesting

 

 

(3,850

)

 

 

(2,266

)

Net cash used in financing activities

 

 

(11,389

)

 

 

(10,982

)

Effects of Exchange Rate Changes on Cash, Restricted Cash and Cash Equivalents

 

 

2

 

 

 

 

Net Change in Cash, Restricted Cash and Cash Equivalents

 

 

(21,972

)

 

 

607

 

Cash, Restricted Cash and Cash Equivalents, Beginning of Period

 

 

84,131

 

 

 

43,045

 

Cash, Restricted Cash and Cash Equivalents, End of Period

 

$

62,159

 

 

$

43,652

 

Supplemental disclosures:

 

 

 

 

 

 

Cash paid for interest, excluding capitalized interest

 

$

6,062

 

 

$

5,955

 

Income taxes paid, net

 

 

 

 

 

446

 

Noncash Investing and Financing Activities:

 

 

 

 

 

 

Increase in capital expenditures in accounts payable and accrued liabilities

 

 

133

 

 

 

51

 

Recognition of a new right-of-use asset - operating leases

 

 

 

 

 

196

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

 

5


 

SEACOR MARINE HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.
BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated financial statements include the accounts of SEACOR Marine Holdings Inc. and its consolidated subsidiaries (the “Company”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the unaudited condensed consolidated financial statements for the periods indicated. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”).

Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the “Company” refers to SEACOR Marine Holdings Inc. and its consolidated subsidiaries, and any reference in this Quarterly Report on Form 10-Q to “SEACOR Marine” refers to SEACOR Marine Holdings Inc. without its consolidated subsidiaries.

Recently Issued Accounting Standards.

On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities to disclose information about their effective tax rate reconciliation and information on income taxes paid. The guidance is effective for fiscal years beginning after December 15, 2024. While early adoption is permitted, the Company has determined it will not early adopt the standard. The Company has not yet determined the impact that the adoption of the standard will have on the Company’s consolidated financial position, results of operations and disclosures.

On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within the fiscal years beginning after December 15, 2024. While early adoption is permitted, the Company has determined it will not early adopt the standard. The Company has not yet determined the impact that the adoption of the standard will have on the Company’s consolidated financial position, results of operations and disclosures.

On October 9, 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the United States Securities and Exchange Commission’s (“SEC”) Disclosure Update and Simplification Initiative, which amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. The effective date is contingent on when the SEC removes the related disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited. The Company does not believe the adoption of the standard will have a material effect on the disclosures included herein.

 

6


 

Accounting Policies.

Basis of Consolidation. The consolidated financial statements include the accounts of SEACOR Marine and its controlled subsidiaries. Control is generally deemed to exist if the Company has greater than 50% of the voting rights of a subsidiary. All significant intercompany accounts and transactions are eliminated in the combination and consolidation.

Noncontrolling interests in consolidated subsidiaries are included in the consolidated balance sheets as a separate component of equity. The Company reports consolidated net income (loss) inclusive of both the Company’s and the noncontrolling interests’ share, as well as the amounts of consolidated net income (loss) attributable to each of the Company and the noncontrolling interests. If a subsidiary is deconsolidated upon a change in control, any retained noncontrolling equity investment in the former controlled subsidiary is measured at fair value and a gain or loss is recognized in net income (loss) based on such fair value. If a subsidiary is consolidated upon the business acquisition of controlling interests by the Company, any previous noncontrolled equity investment in the subsidiary is measured at fair value and a gain or loss is recognized in net income (loss) based on such fair value.

The Company employs the equity method of accounting for investments in 50% or less owned companies that it does not control but has the ability to exercise significant influence over the operating and financial policies of the business venture. Significant influence is generally deemed to exist if the Company has between 20% and 50% of the voting rights of a business venture but may exist when the Company’s ownership percentage is less than 20%. In certain circumstances, the Company may have an economic interest in excess of 50% but may not control and consolidate the business venture. Conversely, the Company may have an economic interest less than 50% but may control and consolidate the business venture. The Company reports its investments in and advances to these business ventures in the accompanying consolidated balance sheets as investments, at equity, and advances to 50% or less owned companies. The Company reports its share of earnings from investments in 50% or less owned companies in the accompanying consolidated statements of income (loss) as equity in earnings of 50% or less owned companies, net of tax.

Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current period presentation.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S.”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates and those differences may be material.

Revenue Recognition. Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services to its customers. The Company recognizes revenue, net of sales taxes, based on its estimates of the consideration the Company expects to receive. Costs to obtain or fulfill a contract are expensed as incurred.

The Company earns revenue primarily from the time charter and bareboat charter of vessels to customers. Since the Company charges customers based upon daily rates of hire, vessel revenues are recognized on a daily basis throughout the contract period. Under a time charter, the Company provides a vessel to a customer and is responsible for all operating expenses, typically excluding fuel. Under a bareboat charter, the Company provides a vessel to a customer and the customer assumes responsibility for all operating expenses and assumes all risks of operation. In the U.S. Gulf of Mexico, time charter durations and rates are typically established in the context of master service agreements that govern the terms and conditions of the charter.

 

7


 

In the Company’s operating areas, contracts or charters vary in length from several days to multi-year periods. Many of the Company’s contracts and charters include cancellation clauses without early termination penalties. As a result of cancellations, options and frequent renewals, the stated duration of charters may not correlate with the length of time the vessel is contracted for to provide services to a particular customer.

The Company contracts with various customers to carry out management services for vessels as agents for and on behalf of ship owners. These services include crew management, technical management, commercial management, insurance arrangements, sale and purchase of vessels, provisions and bunkering. As the manager of the vessels, the Company undertakes to use its best endeavors to provide the agreed management services as agents for and on behalf of the owners in accordance with sound ship management practice and to protect and promote the interest of the owners in all matters relating to the provision of services thereunder. The Company also contracts with various customers to carry out management services regarding engineering for vessel construction and vessel conversions. The vast majority of the ship management agreements span one to three years and are typically billed on a monthly basis. The Company transfers control of the service to the customer and satisfies its performance obligation over the term of the contract, and therefore recognizes revenue over the term of the contract while related costs are expensed as incurred.

Revenue that does not meet these criteria is deferred until the criteria is met and is considered a contract liability and is recognized as such. Contract liabilities, which are included in unearned revenue in the accompanying consolidated balance sheets, as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

 

 

2024

 

 

2023

 

Balance at beginning of period

 

$

687

 

 

$

2,333

 

Unearned revenues during the period

 

 

2,785

 

 

 

6,501

 

Revenues recognized during the period

 

 

(1,415

)

 

 

(8,147

)

Balance at end of period

 

$

2,057

 

 

$

687

 

As of March 31, 2024 and December 31, 2023, the Company had unearned revenue of $2.1 million and $0.7 million, respectively, primarily related to mobilization of vessels.

Direct Operating Expenses. Direct operating costs and expenses, other than leased-in equipment expense, consist primarily of costs and expenses such as: personnel; repairs and maintenance; drydocking; insurance and loss reserves; fuel, lubes and supplies; and other expenses, which include costs such as brokers’ commissions, communication costs, expenses incurred in mobilizing vessels between geographic regions, third party ship management fees, freight expenses, and customs and importation duties. Direct operating costs are expensed as incurred.

Cash and Cash Equivalents. The Company considers all highly liquid investments, with an original maturity of three months or less from the date purchased, to be cash equivalents.

Restricted Cash. Restricted cash primarily relates to banking facility requirements.

Trade and Other Receivables and Allowance for Credit Losses. Customers are primarily major integrated national, international oil companies, large independent oil and natural gas exploration and production companies and established wind farm construction companies. Customers are granted credit on a short-term basis and the related credit risks are minimal. Other receivables consist primarily of operating expenses the Company incurs in relation to vessels it manages for other entities, as well as insurance and income tax receivables. The Company routinely reviews its receivables and makes provisions for expected credit losses utilizing the Current Expected Credit Losses model (“CECL”). The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. However, those provisions are estimates and actual results may materially differ from those estimates.

 

8


 

After collection efforts have been exhausted, trade receivables that are deemed uncollectible are removed from both accounts receivable and the allowance for credit losses.

Property and Equipment. Equipment, stated at cost, is depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is based upon a newly built asset being placed into service and represents the time period beyond which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older vessels that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of the asset’s remaining useful life, typically the period until the next survey or certification date. As of March 31, 2024, the estimated useful life of the Company’s new offshore support vessels was 20 years.

Equipment maintenance and repair costs and the costs of routine overhauls, drydockings and inspections performed on vessels and equipment are charged to operating expense as incurred. Expenditures that extend the useful life or improve the marketing and commercial characteristics of equipment as well as major renewals and improvements to other properties are capitalized.

Certain interest costs incurred during the construction of equipment are capitalized as part of the assets’ carrying values and are amortized over such assets’ estimated useful lives. There was no capitalized interest recognized during the three months ended March 31, 2024 and 2023.

Assets Held for Sale. As of March 31, 2024, one anchor handling towing supply vessel (“AHTS”) previously included in the Africa and Europe segment, with a carrying value of $0.5 million, was classified as assets held for sale as the Company expects to sell the vessel within one year.

Impairment of Long-Lived Assets. The Company performs an impairment analysis of long-lived assets used in operations when indicators of impairment are present. These indicators may include a significant decrease in the market price of a long-lived asset or asset group, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition, or a current period operating or cash flow loss combined with a history of operating or cash flow losses or a forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group. If the carrying values of the assets are not recoverable, as determined by their estimated future undiscounted cash flows, the estimated fair value of the assets or asset groups are compared to their current carrying values and impairment charges are recorded if the carrying value exceeds fair value.

During the three months ended March 31, 2024 and 2023, the Company did not record impairment charges on any owned or leased-in vessels. Impairment charges are included in gains (losses) on asset dispositions and impairments in the accompanying consolidated statements of income (loss). Estimated fair values for the Company owned vessels were established by independent appraisers based on researched market information, replacement cost information and other data.

For vessel classes and individual vessels with indicators of impairment as of March 31, 2024, the Company estimated that their future undiscounted cash flows exceeded their current carrying values. However, the Company’s estimates of future undiscounted cash flows are highly subjective as utilization and rates per day worked are uncertain, especially in light of the continued volatility in commodity prices as well as the timing and cost of reactivating cold-stacked vessels. If market conditions decline, changes in the Company’s expectations on future cash flows may result in recognizing additional impairment charges related to its long-lived assets in future periods. For any vessel or vessel class that has indicators of impairment and is deemed not recoverable through future operations, the Company determines the fair value of the vessel or vessel class. If the fair value determination is less than the carrying value of the vessel or vessel class, an impairment is recognized to reduce

 

9


 

the carrying value to fair value. Fair value determination is primarily accomplished by obtaining independent valuations of vessel or vessel classes from qualified third-party appraisers.

Impairment of 50% or Less Owned Companies. Investments in 50% or less owned companies are reviewed periodically to assess whether there is an other-than-temporary decline in the carrying value of the investment. In its evaluation, the Company considers, among other items, recent and expected financial performance and returns, impairments recorded by the investee and the capital structure of the investee. When the Company determines the estimated fair value of an investment is below carrying value and the decline is other-than-temporary, the investment is written down to its estimated fair value. Actual results may vary from the Company’s estimates due to the uncertainty regarding projected financial performance, the severity and expected duration of declines in value and the available liquidity in the capital markets to support the continuing operations of the investee, among other factors. Although the Company believes its assumptions and estimates are reasonable, the investee’s actual performance compared with the estimates could produce different results and lead to additional impairment charges in future periods. During the three months ended March 31, 2024 and 2023, the Company did not recognize any impairment charges related to its 50% or less owned companies.

Income Taxes. During the three months ended March 31, 2024, the Company’s effective income tax rate of 4.4% was primarily due to foreign taxes paid that are not creditable against U.S. income taxes and foreign losses for which there is no benefit for U.S. income tax purposes.

Accumulated Other Comprehensive Income (Loss). The components of accumulated other comprehensive income were as follows (in thousands):

 

 

SEACOR Marine Holdings Inc.
Stockholders’ Equity

 

 

 

Foreign
Currency
Translation
Adjustments

 

 

Derivative
Gains (Losses) on
Cash Flow
Hedges, net

 

 

Total Other
Comprehensive
Income

 

December 31, 2023

 

$

7,577

 

 

$

 

 

$

7,577

 

Other comprehensive loss

 

 

(71

)

 

 

 

 

 

(71

)

Balance as of March 31, 2024

 

$

7,506

 

 

$

 

 

$

7,506

 

Earnings (Loss) Per Share. Basic earnings/loss per share of Common Stock of SEACOR Marine is computed based on the weighted average number of shares of Common Stock and warrants to purchase Common Stock at an exercise price of $0.01 per share (“Warrants”) issued and outstanding during the relevant periods. The Warrants are included in the basic earnings/loss per share of Common Stock because the shares issuable upon exercise of the Warrants are issuable for de minimis cash consideration and therefore not anti-dilutive. Diluted earnings/loss per share of Common Stock is computed based on the weighted average number of shares of Common Stock and Warrants issued and outstanding plus the effect of other potentially dilutive securities through the application of the treasury stock method and the if-converted method that assumes all shares of Common Stock have been issued and outstanding during the relevant periods pursuant to the conversion of the New Convertible Notes unless anti-dilutive.

For the three months ended March 31, 2024 and 2023, diluted loss per share of Common Stock excluded 2,978,724 shares of Common Stock issuable upon conversion of the New Convertible Notes as the effect of their inclusion in the computation would be anti-dilutive.

In addition, for the three months ended March 31, 2024 and 2023 diluted loss per share of Common Stock excluded 1,378,797 and 1,672,932 shares of restricted stock, respectively, and 1,016,865 and 1,026,031 shares of Common Stock, respectively, issuable upon exercise of outstanding stock options, as the effect of their inclusion in the computation would be anti-dilutive.

 

10


 

2.
EQUIPMENT ACQUISITIONS AND DISPOSITIONS

During the three months ended March 31, 2024, capital expenditures were $3.4 million and there were no equipment deliveries and no vessel sales. During the three months ended March 31, 2023, the Company sold three liftboats and other equipment, previously classified as held for sale, as well as other equipment not previously classified as such, for net cash proceeds of $7.6 million, after transaction costs, and a gain of $2.6 million.

3.
INVESTMENTS, AT EQUITY AND ADVANCES TO 50% OR LESS OWNED COMPANIES

Investments, at equity, and advances to 50% or less owned companies as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

 

 

Ownership

 

 

2024

 

 

2023

 

Seabulk Angola

 

 

49.0

%

 

$

974

 

 

$

1,668

 

SEACOR Marine Arabia

 

 

45.0

%

 

 

2,078

 

 

 

2,385

 

Other

 

20.0% - 50.0%

 

 

 

70

 

 

 

72

 

 

 

 

 

 

$

3,122

 

 

$

4,125

 

 

4.
LONG-TERM DEBT

The Company’s long-term debt obligations as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

 

 

March 31, 2024

 

 

December 31, 2023

 

Guaranteed Notes

 

$

90,000

 

 

$

90,000

 

New Convertible Notes

 

 

35,000

 

 

 

35,000

 

2023 SMFH Credit Facility

 

 

115,900

 

 

 

118,950

 

Sea-Cat Crewzer III Term Loan Facility

 

 

12,990

 

 

 

14,227

 

SEACOR Delta Shipyard Financing

 

 

66,424

 

 

 

68,647

 

SEACOR Alpine Credit Facility

 

 

25,180

 

 

 

26,200

 

Total principal due for long-term debt

 

 

345,494

 

 

 

353,024

 

Current portion due within one year

 

 

(28,605

)

 

 

(28,365

)

Unamortized debt discount

 

 

(30,959

)

 

 

(32,885

)

Deferred financing costs

 

 

(3,941

)

 

 

(4,230

)

Long-term debt, less current portion

 

$

281,989

 

 

$

287,544

 

As of March 31, 2024, the Company was in compliance with all debt covenants and lender requirements.

Letters of Credit. As of March 31, 2024, the Company had outstanding letters of credit of $0.4 million securing lease obligations, labor and performance guaranties.

5.
LEASES

As of March 31, 2024, the Company leased-in one AHTS and certain facilities and other equipment. The leases typically contain purchase and renewal options or rights of first refusal with respect to the sale or lease of the equipment. As of March 31, 2024, the remaining lease term of the vessel had a duration of six months. The lease terms of certain facilities and other equipment had a duration ranging from 11 to 273 months.

 

11


 

As of March 31, 2024, future minimum payments for leases for the remainder of 2024 and the years ended December 31, noted below, were as follows (in thousands):

 

 

Operating Leases

 

 

Finance Leases

 

Remainder of 2024

 

$

1,332

 

 

$

27

 

2025

 

 

746

 

 

 

6

 

2026

 

 

459

 

 

 

 

2027

 

 

400