Constellation Oil Services (COSH) Q2 2024 earnings summary

Executive summary

• Net operating revenue for the six months ended June 30, 2024 was $288.1 million, up 2.5% year-over-year, with Petrobras accounting for 81% of total revenues.

• Revenue rose 2.6% year-over-year to $144.3 million in 2Q24, driven by higher fleet uptime and improved day rates from new contracts.

• Gross profit declined to $11.9 million from $32.2 million year-over-year, with a net loss of $3.8 million versus a profit of $7.3 million in the prior year.

• Adjusted net loss narrowed to $4.6 million in 2Q24 from $8.1 million in 2Q23; adjusted EBITDA increased to $56.8 million with a 39.4% margin.

• Major asset sales included the Olinda Star drilling unit for $8.1 million and the divestment of all onshore drilling rigs.

Financial highlights

• Net operating revenue: $288.1 million (up from $281.0 million year-over-year).

• Gross profit: $11.9 million (down from $32.2 million year-over-year).

• Net loss: $3.8 million (compared to net profit of $7.3 million year-over-year).

• Cash and cash equivalents: $63.0 million as of June 30, 2024 (down from $87.9 million at year-end 2023).

• Capex rose 72.3% year-over-year to $49.9 million in 1S24.

Outlook and guidance

• Management expects a multi-year recovery in the offshore drilling segment, supported by rising oil prices and increased E&P investments.

• Contract backlog was $1.1 billion as of June 30, 2024, down from $1.5 billion at year-end 2023.

• Strategic review underway, considering recapitalization and refinancing options; potential post-recapitalization gross debt target of $600–650 million and cash around $100 million.