Constellation Oil Services (COSH) Q3 2024 earnings summary

Executive summary

• Awarded two new contracts with Petrobras totaling about $1 billion and a new contract with Lone Star and Brava Energia, strengthening backlog and operational visibility.

• Achieved 98% fleet uptime in Q3 2024, a 500bps year-over-year improvement, and ranked first in Petrobras Offshore Driller Ranking.

• Net profit reached $2.5 million in 3Q24, reversing a net loss of $12.0 million in 3Q23.

• Significant recapitalization and merger events expected to deleverage the company and convert debt to equity by year-end 2024.

• Operations focus on offshore drilling rigs, with a fleet contracted mainly to Petrobras and other major oil companies.

Financial highlights

• 9M 2024 revenues reached $424M, maintaining the same level as 9M 2023 despite one less rig in the fleet.

• Adjusted EBITDA for 9M 2024 was $171M, up 7% year-over-year; cash flows from operating activities totaled $152M, a 59% increase.

• Adjusted EBITDA margin for Q3 2024 was 45.7%, up from 35.1% in Q3 2023.

• Net operating revenue for 3Q24 was $135.4 million, down 4.5% year-over-year due to maintenance and asset scrapping.

• Net loss for nine months: $(1.3)M, improved from $(4.8)M loss in 2023.

Outlook and guidance

• FY 2024 revenue guidance is $550–570M, driven by higher day rates and offset by Olinda Star decommissioning.

• FY 2024 adjusted EBITDA guidance is $185–195M; strategic recapitalization to reduce debt to $650M by Q4 2024.

• Fleet 100% contracted for 2024, with 97% uptime YTD (+400bps YoY) and strong prospects for additional backlog.

• New contracts with Petrobras and Brava Energia extend fleet utilization into 2028, supporting revenue visibility.

• Recapitalization and merger expected to deleverage gross debt to $650 million post-liquidity event, anticipated mid-December 2024.