GMS swings to a 2017 loss as day rates shrink

Gulf Marine Services (GMS) swung to a loss in 2017 in what it called was a challenging market environment due to pressure on day rates on vessels.

It made a net loss of US$18.2 million, compared to a $29.4 million in the year-ago period.

The loss for the year includes a non-cash impairment charge of US$ 7.3 million in H1, and the expensing of US$ 15.6 million of costs relating to the debt modification, GMS said in a statement.

"I am pleased with how GMS has navigated the prolonged industry downturn, although the challenging market conditions are clearly reflected in our results being lower for the year,” said Duncan Anderson, CEO of GMS. “We maintained our EBITDA margin at over 50 per cent and it is encouraging to have achieved above 70 per cent utilisation for the year for our large and mid-size class vessels when average deployment rates in our industry are so low at present.”

Anderson said that the GMS SESV fleet is one of the youngest in the industry, which has helped the company to continue to win work in the current environment where clients are able to exercise a preference for modern tonnage.

Utilisation of the core self-elevating support vessels fleet was 61 per cent in 2017, with large class and mid-size vessels both above 70 per cent and small class vessels at 53 per cent.

During 2017, GMS said it won three new long-term contracts, with a total charter period in excess of six years and two eight-month charters were also secured. It also won a long-term contract extension in early 2018 for an additional 16 months (including option periods).

GMS sold two non-core assets and saw the return of a leased vessel to its owner.

The vessels company has a secured backlog of $160.6 million, with options, as of March 1, 2018.

Meanwhile, GMS was making progress in diversifying operational footprint and reducing dependency on a single geography, Anderson said, adding that he expects this process to continue.

“Looking ahead to 2018, the group expects to continue to benefit from its reputation for providing best-in-class SESV operations within our sector.  Our expertise, combined with supplying our clients with bespoke solutions that can help them realise meaningful cost efficiencies in their own operations, makes us well-placed to capitalise on a market recovery," Anderson said.

GMS said it made good progress in reducing total bank debt at the year-end to $372.8 million. Due to this priority, the company will not give out any dividends to shareholders for 2017.