AMSC : Q4 2023 Quarterly Report

AMSC ASA

Fourth Quarter 2023 Report

Fourth Quarter 2023 report

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Fourth quarter 2023 Report

Lysaker, 27 February 2024, AMSC ASA ("AMSC" or the "Company") announces results for the fourth quarter and twelve months ending 31 December 2023.

HIGHLIGHTS

• On 18th October the sale of American Tanker Holding Company ("ATHC") was successfully closed. The transaction comprised all of AMSC's Jones Act business including the 10 tankers and corresponding bareboat charters, debt and corporate structure.
• In conjunction with the closing of the sale of ATHC, AMSC distributed USD 170 million in an additional dividend to shareholders on 1st November.
• On 23rd October, AMSC announced an agreement with Solstad Shipholding AS to participate in an overall refinancing by contributing the CSV Normand Maximus in return for shares in the new company Solstad Maritime Holding AS ("SMH"). Subsequent to year-end, the refinancing was completed on 16th January 2024, and AMSC currently owns 21.1% of SMH.
• On 20th November, an Extraordinary General Meeting ("EGM") in AMSC approved Q3 and Q4 2023 dividends of USD 0.05 per share for each quarter. The Q3 dividend was paid on 7th December and the Q4 dividend is expected to be paid on or about 15th March 2024. Dividends will be classified as return of paid in capital.

AMSC CEO, Pål Lothe Magnussen comments, "During Q4 we were pleased to conclude the sale of our Jones Act business and pay a substantial additional dividend to our shareholders. Over the past 10 years we have distributed USD 414 million in dividends equivalent to NOK 60.2 per share. We have made 40 consecutive quarterly dividend payments and the additional dividend during Q4 set a final mark for a long lasting and successful investment in the Jones Act tanker market. Looking forward, we are excited about our ownership stake in Solstad Maritime and exposure to the offshore industry. AMSC endeavors to continue to make attractive quarterly distributions and continue to look for attractive investment opportunities in the maritime space."

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MAIN EVENTS DURING AND SUBSEQUENT TO THE FOURTH QUARTER

• Sale of 100% of the shares in ATHC: Gross proceeds from the transaction are USD 249.3 million, divided between consideration for the shares in ATHC and repayment of a shareholder loan, reflecting an enterprise value of ATHC of USD 746.7 million. The net profit from the transaction was USD 125 million, recognized in the income statement in Q4 2023. See note 6 for further information.
• Sale of 100% of the shares in OSL1: On 16 January 2024, the refinancing of Solstad Shipholding AS was successfully completed in accordance with previously communicated terms outlined in the stock exchange announcement by Solstad Offshore ASA dated 23 October 2023. AMSC contributed 100% of the shares in Offshore Leasing I AS (OSL1), which owns the CSV Normand Maximus with corresponding bareboat contract and secured bank debt, against shares in SMH which was established in connection with the refinancing. AMSC's contribution to SMH is valued at NOK 1,000 million, based on an enterprise value of OSL1 of USD 177.5 million as of 31 December 2023 with net debt of USD 86.5 million.
  AMSC will recognize a gain on sale in Q1 2024 of approximately USD 34.6 million. Following this transaction, AMSC holds approximately 21.1% of the shares and votes in SMH and a cash balance of about USD 58 million. The SMH shareholding will be diluted following completion of the announced NOK 750 million additional share offering, expected to be completed during Q2 2024. OSL1 is classified as discontinued operations and held for sale in the Group's interim financial statements for Q4 2023.
• Operating profit from continuing operations: Operating loss from continuing operations was USD 2.5 million in Q4 2023 compared to USD 0.4 million loss in Q4 2022.
• Debt prepayments: During October 2023, USD 47.7 million was repaid on the bank debt related to the Normand Maximus. The entire Tranche B was fully repaid during 2023.
• Dividends: On 19 October 2023, the Board authorized an additional dividend payment of USD 2.366 (NOK 26.19) per share to the shareholders on record as of 25 October 2023. The dividend was paid on 1 November 2023 and was classified as a regular dividend.
  On 20 November 2023, the EGM of AMSC ASA approved dividends for Q3 2023 and Q4 2023, to be paid in December 2023 and March 2024, respectively, based on the Board's proposal of a total of USD 0.10 per share, payable as follows:
• • USD 0.05 (NOK 0.5362) per share to the shareholders on record as of 29 November 2023. The shares in AMSC were traded ex-dividend from 28 November 2023 and the dividend was paid on 7 December 2023. The dividend is classified as a return of paid in capital.
  • USD 0.05 per share to the shareholders on record as of 7 March 2024. The shares in AMSC will be traded ex-dividend from and including 6 March 2024 and will be paid on or about 15 March 2024.

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The Company's policy with respect to dividends is driven by the Board's commitment to return value to its shareholders while also prudently managing its balance sheet and maintaining financial flexibility to pursue growth and diversification opportunities. Dividend payments depend on, among other things, performance of existing investments and will be considered in conjunction with the Company's financial position, debt covenants, capital requirements, and market conditions going forward.

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FOURTH QUARTER FINANCIAL REVIEW

Condensed Income Statement

		unaudited
	Q4	Q4	Full year
Amounts in USD million (except share and per share information)	2023	2022	2023	2022
Leasing revenues	-	-	-	-
Operating profit/(loss) before depreciation - EBITDA	(2.5)	(0.4)	(5.4)	(3.2)
Operating profit/(loss) - EBIT	(2.5)	(0.4)	(5.4)	(3.2)
Gain on investments	-	0.4	-	0.4
Net financial income	1.2	0.2	1.4	0.2
Net foreign exchange gain/(loss)	(0.7)	2.6	(1.5)	(0.1)
Profit/(loss) before income tax	(1.9)	2.8	(5.6)	(2.7)
Income tax (expense)/benefit	0.4	-	(0.4)	-
Non-cash income tax (expense) / benefit	(5.2)	(3.3)	(5.2)	(4.9)
Profit/(loss) for the period from continuing operations	(6.7)	(0.5)	(11.1)	(7.6)
Profit for the period from discontinued operations	139.5	2.0	154.1	26.3
Net Profit/(loss) for the period	132.8	1.5	143.0	18.7
Average number of common shares	71 863 838	71 300 177	71 863 838	63 458 841
Basic and diluted earnings per share from continuing operations	(0.09)	(0.01)	(0.16)	(0.12)
Basic and diluted earnings per share from discontinued operations	1.94	0.03	2.14	0.41
Basic and diluted earnings per share from total operations	1.85	0.02	1.99	0.29

Fourth quarter results

With effect from the fourth quarter 2023, OSL1 is classified as held for sale and discontinued operations with comparative figures for the income statement re-presented. ATHC was classified as a disposal group held for sale in the third quarter, and in the fourth quarter it is disposed and not included in the assets and liabilities held for sale. The continuing operations consist solely of AMSC ASA. See note 6 for more information.

AMSC's leasing revenues from continued operations for Q4 2023 were zero (zero in Q4 2022) due to leasing activities being classified as discontinued operations. EBITDA was negative USD 2.5 million in Q4 2023 and negative USD 0.4 million in Q4 2022. Operating loss was USD 2.5 million in Q4 2023 and USD 0.4 million in Q4 2022.

Net financial income for Q4 2023 was USD 1.2 million and USD 0.2 million in Q4 2022. Net foreign exchange loss for Q4 2023 was USD 0.7 million (profit of USD 2.6 million in Q4 2022), relating to revaluation of NOK balances into USD functional currency.

AMSC had a net loss before tax from continuing operations for Q4 2023 of USD 1.9 million compared to a net profit before tax from continuing operations of USD 2.8 million in Q4 2022. Non-cash income tax expense was USD 5.2 million in Q4 2023 (negative USD 3.3 million in Q4 2022). Income tax benefit was USD 0.4 million in Q4 2023, compared to zero in Q4 2022. Net loss from continuing operations for Q4 2023 was USD 6.7 million compared to loss of USD 0.5 million in Q4 2022. Profit from discontinued operations for Q4 2023 was USD 139.5 million compared to USD 2.0 million for Q4 2022. The book gain on the sale of ATHC during Q4 2023 was USD 125 million. Net profit was USD 132.8 million for Q4 2023 compared to USD 1.5 million in Q4 2022.

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Full year results

AMSC's leasing revenues for the twelve months of 2023 were zero (zero in the same period 2022) due to leasing activities being classified as discontinued operations during the periods. EBITDA was negative USD 5.4 million in the full year 2023, compared to negative USD 3.2 million in the full year 2022. EBIT was negative USD 5.4 million in the twelve months ending 31 December 2023 (negative USD 3.2 million in the same period of 2022).

Net financial income for the full year 2023 was USD 1.4 million (USD 0.2 million in the full year 2022). AMSC recognized a net foreign exchange loss of USD 1.5 million during the full year 2023 (USD 0.1 million loss during the full year 2022).

AMSC had a net loss before tax from continuing operations for the twelve months ending 31 December 2023 of USD 5.6 million (loss of USD 2.7 million for the twelve months ending 31 December 2022). Non-cash income tax expense was negative USD 5.2 million in 2023 (negative USD 4.9 million in 2022). Net loss for the twelve months ending 31 December 2023 from continuing operations was USD 11.1 million compared to net loss of USD 7.6 million for the twelve months ending 31 December 2022. Profit from discontinued operations for the twelve months ending 31 December 2023 was USD 154.1 million (USD 26.3 million for the same period 2022). Net profit was USD 143.0 million in 2023 compared to USD 18.7 million in 2022.

Condensed Statement of Financial Position

	Unaudited
	31-Dec	31-Dec
Amounts in USD million	2023	2022 *
Vessels	-	750.8
Deferred tax assets	-	2.9
Interest-bearing long term receivables (DPO)	-	7.2
Other non current assets	-	0.3
Derivative financial assets	-	4.7
Trade and other receivables	0.7	12.9
Cash held for specified uses	-	5.0
Cash and cash equivalents	42.2	45.5
Assets classified as held for sale	148.9	-
Total assets	191.8	829.3
Total equity	118.1	175.0
Deferred tax liabilities	-	18.8
Interest-bearing long term debt	-	555.3
Interest-bearing short term debt	-	78.0
Trade and other payables	0.9	2.3
Liabilities directly associated with assets classified as held for sale	72.8	-
Total equity and liabilities	191.8	829.3

*) Derived from audited financial statements

The change in vessels, other assets and liabilities from 31 December 2022 reflects the sale of ATHC with related vessels, other assets and liabilities and reclassification of assets held for sale for the twelve months ending 31 December 2023.

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During October there was an additional dividend payout in conjunction with the closing of the sale of the Jones Act business where USD 170 million was distributed, which reflects a significant portion of the change in equity from 31 December 2022.

During 2023, DPO relating to the Normand Maximus contract was fully repaid totaling USD 27.5 million, offset by charter hire deferral of USD 20.2 million plus USD 1.1 million in accrued interest. The outstanding DPO relating to the Jones Act business of USD 11.2 million was sold during Q4 2023. See note 11 to the condensed consolidated financial statements for additional information on the DPO.

Interest bearing debt of USD 633.2 million as of 31 December 2022 related to the businesses sold or held for sale during 2023. AMSC was in compliance with all of its debt covenants as of 31 December 2023.

Outlook

AMSC has gone through a transformational 2023 with an exit from the Jones Act business and, subsequent to year end, contribution of 100% of the shares in OSL1 for a consideration of 21.1% of the shares in SMH, which will be further diluted post the announced SMH equity raise. AMSC aims to continue to grow through accretive transactions and is focused on distributing attractive dividends to its shareholders.

The offshore oil services market has over the last few years seen a recovery after the oil price collapse in 2014. The recovery is driven by increased offshore exploration and production (E&P) capex by oil companies which leads to increased demand for various offshore oil services such as seismic studies, drilling (exploration), greenfield and brownfield oil field expansion (construction and development) and production units such as FPSOs. In parallel, most oil services sectors have seen a lack of new investments since the oil price collapse and through natural attrition of older tonnage leaving the market.

Through the investment in SMH, we believe we can benefit from years of underinvestment in the sector. The activity level in the global offshore industry during 2023 was high and is expected to continue in 2024. Both offshore oil and offshore wind segments are busy, leading to high utilization and periods with shortage of vessels.

Risks

Currently, the risks facing AMSC principally relate to the operational and financial performance of SMH, which is our only investments at the moment.

AMSC's activities also expose the Company to a variety of other financial risks, including but not limited to currency and liquidity risk.

Historically, the risks facing AMSC have typically been related to the operational and financial performance of its charterers, agreements, refinancing risk, and interest rate risk when owning vessels on direct leases to maritime counterparts. As AMSC is continuing to explore various investment opportunities, we may be exposed to these types of risks again in the future.

For further details of AMSC's risks, refer to the 2022 Annual Report.

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	Lysaker, 26 February 2024
	The Board of Directors and President / CEO
	AMSC ASA
Annette Malm Justad	Peter D. Knudsen
Chairperson	Director
Frank O. Reite	Pål Magnussen
Director	President / CEO

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AMSC ASA GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE

FOURTH QUARTER AND TWELVE MONTHS OF 2023

			unaudited
		Q4	Q4	Full year
Amounts in USD million (except share and per share information)	Note	2023	2022	2023	2022
Leasing revenues		-	-	-	-
Operating expenses		(2.5)	(0.4)	(5.4)	(3.2)
Operating profit/(loss) before depreciation - EBITDA		(2.5)	(0.4)	(5.4)	(3.2)
Depreciation & amortization		-	-	-	-
Operating profit/(loss) - EBIT		(2.5)	(0.4)	(5.4)	(3.2)
Gain on investments		-	0.4	-	0.4
Net financial income		1.2	0.2	1.4	0.2
Net foreign exchange gain/(loss)		(0.7)	2.6	(1.5)	(0.1)
Profit before income tax		(1.9)	2.8	(5.6)	(2.7)
Income tax (expense) / benefit	7	0.4	-	(0.4)	-
Non-cash income tax (expense) / benefit	7	(5.2)	(3.3)	(5.2)	(4.9)
Profit/(loss) for the period from continuing operations		(6.7)	(0.5)	(11.1)	(7.6)
Profit for the period from discontinued operations	6	139.5	2.0	154.1	26.3
Profit/(loss) for the period		132.8	1.5	143.0	18.7
Average number of common shares	8	71 863 838	71 300 177	71 863 838	63 458 841
Basic and diluted earnings per share from continuing operations		(0.09)	(0.01)	(0.16)	(0.12)
Basic and diluted earnings per share from discontinued operations		1.94	0.03	2.14	0.41
Basic and diluted earnings per share from total operations		1.85	0.02	1.99	0.29
CONDENSED STATEMENT OF CHANGES IN COMPREHENSIVE INCOME
			unaudited
		Q4	Q4	Full year
Amounts in USD million		2023	2022	2023	2022
Net income/(loss) for the period		132.8	1.5	143.0	18.7
Other comprehensive income for the period, net of tax		-	-	-	-
Total comprehensive income/(loss) for the period		132.8	1.5	143.0	18.7

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CONDENSED STATEMENT OF FINANCIAL POSITION

		Unaudited
		31-Dec	31-Dec
Amounts in USD million	Note	2023	2022 *
Assets
Non-current assets
Vessels		-	750.8
Deferred tax assets	7	-	2.9
Interest-bearing long term receivables (DPO)	11	-	7.2
Other long term assets		-	0.3
Derivative financial assets		-	4.7
Total non-current assets		-	765.9
Current assets
Trade and other receivables		0.7	12.9
Cash held for specified uses		-	5.0
Cash and cash equivalents		42.2	45.5
		42.9	63.4
Assets classified as held for sale	6	148.9	-
Total current assets		191.8	63.4
Total assets		191.8	829.3
Equity and liabilities
Total equity		118.1	175.0
Non-current liabilities
Bond payable	9	-	220.0
Other interest-bearing loans	9	-	341.4
Capitalized fees	9	-	(6.1)
Deferred tax liability	7	-	18.8
Total non-current liabilities		-	574.1
Current liabilities
Interest-bearingshort-term debt	9	-	78.0
Trade and other payables		0.9	2.3
		0.9	80.2
Liabilities directly associated with assets classified as held for sale	6	72.8	-
Total current liabilities		73.8	80.2
Total liabilities		73.8	654.3
Total equity and liabilities		191.8	829.3
*) Derived from audited financial statements

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