SEACOR Marine Holdings Inc.: Form 10-Q for the period ended Jun 30, 2025

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters and involve significant known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Certain of these risks, uncertainties and other important factors are discussed in the Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s 2024 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q. However, it should be understood that it is not possible to identify or predict all such risks, uncertainties and factors, and others may arise from time to time. All of these forward-looking statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” and similar expressions are intended to identify forward-looking statements. Forward looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. It is advisable, however, to consult any further disclosures the Company makes on related subjects in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the United States Securities and Exchange Commission.

The following Management’s Discussion and Analysis (the “MD&A”) is intended to help the reader understand the Company’s financial condition and results of operations. The MD&A is provided as a supplement to and should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the 2024 Annual Report.

Overview

The Company provides global marine and support transportation services to offshore energy facilities worldwide. As of June 30, 2025, the Company operated a diverse fleet of 49 support vessels, of which 47 were owned and two were managed on behalf of unaffiliated third parties. The primary users of the Company’s services are major integrated national and international oil companies, independent oil and natural gas exploration and production companies, oil field service and construction companies, as well as offshore wind farm operators and offshore wind farm installation and maintenance companies.

The Company operates and manages a diverse fleet of offshore support vessels that (i) deliver cargo and personnel to offshore installations, including offshore wind farms, (ii) assist offshore operations for production and storage facilities, (iii) provide construction, well work-over, offshore wind farm installation and decommissioning support and (iv) carry and launch equipment used underwater in drilling and well installation, maintenance, inspection and repair. Additionally, the Company’s vessels provide emergency response services and accommodations for technicians and specialists.

The Company operates its fleet in four principal geographic regions: the United States (“U.S.”), primarily Gulf of America; Africa and Europe; the Middle East and Asia; and Latin America, primarily in Mexico and Guyana. The Company’s vessels are highly mobile and regularly and routinely move between countries within a geographic region. In addition, the Company’s vessels are redeployed among geographic regions, subject to flag restrictions, as changes in market conditions dictate.

Significant items affecting our results of operations

The number and type of vessels operated, their rates per day worked and their utilization levels are the key determinants of the Company’s operating results and cash flows. Unless a vessel is cold-stacked, there is little reduction in daily running costs for the vessels and, consequently, operating margins are most sensitive to changes in rates per day worked and utilization. The Company manages its fleet utilizing a global network of shore side support, administrative and finance personnel.

Offshore oil and natural gas market conditions are highly volatile. Oil prices experienced unprecedented volatility during 2020 due to the COVID-19 pandemic and the related effects on the global economy, with the price per barrel going negative for a short period of time. Oil prices steadily increased since the lows hit at the beginning of the COVID-19 pandemic and hit a multi-year high of $122 per barrel during 2022 primarily as a result of the conflict between Russia and Ukraine as well as the related economic sanctions and economic uncertainty but subsequently decreased to pre-conflict levels. During the six months ended June 30, 2025, WTI oil prices reached a high of $81 per barrel and a low of $57 per barrel, ending the period at $65 per barrel.

While the Company has experienced difficult market conditions over the past few years due to low and volatile oil and natural gas prices and the focus of oil and natural gas producing companies on cost and capital spending budget reductions, the increases since the lows experienced during the COVID-19 pandemic in oil and natural gas prices has led to an increase in utilization, day rates and customer inquiries about potential new charters.

The Company closely monitors the availability of vessels in the offshore support vessel market as the utilization and day rates of the Company’s fleet is dependent on the supply and demand dynamics for its vessels. For example, low oil and natural gas prices and a corresponding decline in offshore exploration may reduce demand for the Company’s vessels and in the past such declines have forced many operators in the industry to restructure, liquidate assets or consolidate with other operators. Additionally, the delivery of newly built offshore support vessels to the industry-wide fleet has in the past contributed to an oversupply of vessels in the market, thereby further decreasing the demand for the Company’s existing offshore support vessel fleet. A combination of low customer exploration and drilling activity levels, and excess supply of offshore support vessels whether from laid up fleets or newly built vessels could, in isolation or together, have a material adverse effect on the Company’s business, financial position, results of operations, cash flows and growth prospects. Alternatively, increasing activity levels and a stable supply of offshore support vessels could support higher utilization and day rates and improved financial performance of the Company’s business.

Certain macro drivers somewhat independent of oil and natural gas prices may support the Company’s business, including: (i) underspending by oil and natural gas producers over the last five to ten years leading to pent up demand for maintenance and growth capital expenditures; (ii) improved extraction technologies; and (iii) the need for offshore wind farm support as the industry grows. While the Company expects that alternative forms of energy will continue to develop and add to the world’s energy mix, especially as certain governments, supranational groups, institutional investors, and various other parties focus on climate change causes and concerns, the Company believes that for the foreseeable future demand for gasoline and oil will be sustained, as will demand for electricity from natural gas. Some alternative forms of energy such as offshore wind farms support some of the Company’s operations and the Company expects such support to increase as development of these forms of renewable energy expands.

The Company adheres to a strategy of cold-stacking vessels (removing from active service) during periods of weak utilization in order to reduce the daily running costs of operating the fleet, primarily personnel, repairs and maintenance costs, as well as to defer some drydocking costs into future periods. The Company considers various factors in determining which vessels to cold-stack, including upcoming dates for regulatory vessel inspections and related docking requirements. The Company may maintain class certification on certain cold-stacked vessels, thereby incurring some drydocking costs while cold-stacked. Cold-stacked vessels are returned to active service when market conditions improve, or management anticipates improvement, typically leading to increased costs for drydocking, personnel, repair and maintenance in the periods immediately preceding the vessels’ return to active service. Depending on market conditions, vessels with similar characteristics and capabilities may be rotated between active service and cold-stack. On an ongoing basis, the Company reviews its cold-stacked vessels to determine if any should be designated as retired and removed from service based on the vessel’s physical condition, the expected costs to reactivate and restore class certification, if any, and its viability to operate within current and projected market conditions. As of June 30, 2025, three of the Company’s 47 owned vessels were cold-stacked worldwide.

Recent Developments

Securities Repurchase

On April 4, 2025, SEACOR Marine purchased from certain funds affiliated with Carlyle (the “Carlyle Investors”), 1,355,761 shares of Common Stock, at $4.90 per share, and warrants to purchase 1,280,195 shares of Common Stock at an exercise price of $0.01 per share, at $4.89 per warrant, representing approximately 9.1% of the outstanding shares of Common Stock assuming the full exercise of the warrants (the “Securities Repurchase”). The aggregate purchase price was approximately $12.9 million, with the per share and warrant price negotiated based on a trailing volume weighted average price. After giving effect to the Securities Repurchase, the Company no longer has any warrants to purchase Common Stock outstanding. The Company used net proceeds from a vessel sale to complete the Securities Repurchase.

Vessel Sales

On April 24, 2025, the Company completed the sale of one FSV built in 2009 for total proceeds of $4.6 million and a gain of approximately $3.0 million. Of these sale proceeds, approximately $3.8 million was designated to make future payments on the construction of two PSVs and deposited in a restricted account.

On April 7, 2025, the Company completed the sale of two 201 foot, DP-2 PSVs built in 2014 for total proceeds of $28.8 million and a gain of $16.1 million. Of these sale proceeds, approximately $12.9 million was used to complete the Securities Repurchase described above, and approximately $10.9 million was designated to make future payments on the construction of two PSVs and deposited in a restricted account.

On December 10, 2024, the Company completed the sale of two AHTS for total proceeds of $22.5 million and a gain of $15.6 million. This sale marked the Company’s exit from the AHTS asset class and a portion of the proceeds were used to partially fund the contract price for the newbuild PSVs described below. As of June 30, 2025, the Company managed one sold AHTS on behalf of the new owners. On April 12, 2025, the Company handed over the management of one of the two sold AHTS to the new owners. On July 2, 2025, the Company handed over the management of the second of the two sold AHTS to the new owners.

Debt Refinancing, Maturity Extension and Newbuild Orders

On November 27, 2024, SEACOR Marine, as parent guarantor, SEACOR Marine Foreign Holdings Inc. (“SMFH”), as borrower, and certain other wholly-owned subsidiaries of SEACOR Marine, as subsidiary guarantors, entered into a credit agreement providing for a senior secured term loan of up to $391.0 million (the “2024 SMFH Credit Facility” and such agreement, the “2024 SMFH Credit Agreement”) with an affiliate of EnTrust Global, as lender, Kroll Agency Services Limited, as facility agent, and Kroll Trustee Services Limited, as security trustee.

The 2024 SMFH Credit Facility is divided into two tranches, Tranche A consists of up to $350.0 million and Tranche B consists of up to $41.0 million. Tranche A has been fully drawn with the proceeds used to, among other things, refinance $328.7 million of principal indebtedness under multiple debt facilities, including $203.7 million of secured indebtedness and $125.0 million of unsecured indebtedness due in 2026, inclusive of $35.0 million of convertible debt. $32.8 million of Tranche B remained undrawn as of June 30, 2025 with the proceeds available solely to finance up to 50% of the payments to Fujian Mawei Shipbuilding Ltd. with respect to the shipbuilding contracts for the construction of two PSVs with a contract price of $41.0 million per vessel. The remainder of the purchase price of the vessels will be paid through asset sale proceeds and cash on hand. The PSVs are each 4,650 tons deadweight with a 1,000 square meter deck area and equipped with medium speed diesel engines and an integrated battery energy storage system for higher fuel efficiency and lower running costs. The PSVs are expected to be delivered in the fourth quarter of 2026 and the first quarter of 2027, respectively. The 2024 SMFH Credit Facility matures in December 2029.

At the Market Program

On February 7, 2025, SEACOR Marine entered into an at-the-market offering program (“ATM Program”) pursuant to a sales agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Sales Agent”), relating to the issuance and sale from time to time by SEACOR Marine, as principal or through the Sales Agent, of shares of Common Stock having an aggregate gross sales price of up to $25.0 million (the “ATM Shares”). The sale of the ATM Shares if any, under the Sales Agreement may be made in ordinary brokers’ transactions, to or through a market maker, on or through the NYSE, the existing trading market for the Common Stock, or any other market venue where the Common Stock may be traded, in the over-the-counter market, in privately negotiated transactions, or through a combination of any such methods of sale. The Sales Agent may also sell the ATM Shares by any other method permitted by law. Upon the execution and effectiveness of the Sales Agreement, the at-the-market offering program entered into with the Sales Agent in November of 2023 was terminated. No sales have been made under the Sales Agreement since it was entered into.

Consolidated Results of Operations

The sections below provide an analysis of the Company’s results of operations for the three and six months (“Current Year Quarter” and “Current Year Six Months”) ended June 30, 2025 compared with the three and six months (“Prior Year Quarter” and “Prior Year Six Months”) ended June 30, 2024. Except as otherwise noted, there have been no material changes since the end of the Company’s fiscal year ended December 31, 2024, in the Company’s results of operations. For the periods indicated, the Company’s consolidated results of operations were as follows (in thousands, except statistics):

Direct Vessel Profit. Direct vessel profit (defined as operating revenues less operating expenses excluding leased-in equipment, “DVP”) is the Company’s measure of segment profitability. DVP is a critical financial measure used by the Company to analyze and compare the operating performance of its regions, without regard to financing decisions (depreciation and interest expense for owned vessels vs. lease expense for leased-in vessels). See “Note 11. Segment Information” in the unaudited consolidated financial statements included in Part I. Item 1. “Financial Statements” elsewhere in this Quarterly Report on Form 10-Q.

The following tables summarize the operating results and property and equipment for the Company’s reportable segments for the periods indicated (in thousands, except statistics):

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(1) Total Assets by region does not include corporate assets of $49.4 million as of June 30, 2025.

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(1) Total Assets by region does not include corporate assets of $40.8 million as of June 30, 2024.

For additional information, the following tables summarize the worldwide operating results and property and equipment for each of the Company’s vessel classes for the periods indicated (in thousands, except statistics):

(1) Anchor handling towing supply vessel (“AHTS”).

(2) Fast support vessel (“FSV”).

(3) Platform support vessel (“PSV”).

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Fleet Counts. The Company’s fleet count as of June 30, 2025 and December 31, 2024 was as follows:

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Operating Income (Loss)

United States, primarily Gulf of America. For the three and six months ended June 30, 2025 and 2024 the Company’s time charter statistics and direct vessel loss in the U.S. were as follows (in thousands, except statistics):

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Charter revenues were $4.5 million higher in the Current Year Quarter compared with the Prior Year Quarter. Charter revenues were $5.7 million higher due to the repositioning of four vessels into the region subsequent to the Prior Year Quarter and $0.5 million lower due to the disposition of two vessels subsequent to the Prior Year Quarter. Charter revenues were $0.7 million lower for the vessels included in the results of this region in both comparative periods (as applicable to each region, the “Regional Core Fleet”), which consists of seven vessels, due to lower average day rates of $22,658 in the Current Year Quarter compared to $23,380 in the Prior Year Quarter and lower utilization of 45% in the Current Year Quarter compared to 48% in the Prior Year Quarter. Other marine services were $0.7 million higher primarily due to higher catering revenues. As of June 30, 2025, the Company had three of 11 owned vessels (three FSVs) cold-stacked in this region compared with one of ten vessels (one liftboat) as of June 30, 2024.

Direct Operating Expenses. Direct operating expenses were $2.4 million higher in the Current Year Quarter compared with the Prior Year Quarter. Direct operating expenses were $4.9 million higher due to the repositioning of vessels between geographic regions offset by $1.5 million lower direct operating expenses for the Regional Core Fleet primarily due to the timing of drydocking and repair expenditures and $1.0 million lower due to net asset dispositions.

Current Year Six Months compared with Prior Year Six Months

Operating Revenues. Charter revenues were $4.3 million higher in the Current Year Six Months compared with the Prior Year Six Months. Charter revenues were $8.8 million higher due to the repositioning of four vessels into the region subsequent to the Prior Year Six Months. Charter revenues were $3.8 million lower for the Regional Core Fleet, which consists of seven vessels, due to lower average day rates of $20,861 in the Current Year Six Months compared to $25,983 in the Prior Year Six Months, and lower utilization of 38% in the Current Year Six Months compared to 42% in the Prior Year Six Months. Charter revenues were $0.7 million lower due to the disposition of two vessels subsequent to the Prior Year Six Months.

Direct Operating Expenses. Direct operating expenses were $3.3 million higher in the Current Year Six Months compared with the Prior Year Six Months. Direct operating expenses were $8.8 million higher due to the repositioning of vessels between geographic regions offset by $3.1 million lower direct operating expenses for the Regional Core Fleet primarily due to the timing of certain drydocking and repair expenditures and $2.4 million lower due to net asset dispositions.

Africa and Europe. For the three and six months ended June 30, 2025 and 2024 the Company’s time charter statistics and direct vessel profit in Africa and Europe were as follows (in thousands, except statistics):

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Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Charter revenues were $2.5 million lower in the Current Year Quarter compared with the Prior Year Quarter. Charter revenues were $1.0 million lower due to the disposition of three vessels subsequent to the Prior Year Quarter and $0.7 million lower due to the repositioning of one vessel out of the region subsequent to the Prior Year Quarter. Charter revenues were $0.8 million lower for the Regional Core Fleet, which consists of 18 vessels, primarily due to lower average day rates of $19,157 in the Current Year Quarter compared to $19,582 in the Prior Year Quarter and lower utilization of 78% in the Current Year Quarter compared to 81% in the Prior Year Quarter. As of June 30, 2025, the Company had no vessels cold-stacked in this region compared with one of 22 owned and leased-in vessels (one AHTS) as of June 30, 2024.

Direct Operating Expenses. Direct operating expenses were $1.9 million higher in the Current Year Quarter compared with the Prior Year Quarter. Direct operating expenses were $3.6 million higher for the Regional Core Fleet primarily due to the timing of certain drydocking and repair expenditures, $1.5 million lower due to net asset dispositions and $0.2 million lower due to the repositioning of vessels between geographic regions.

Current Year Six Months compared with Prior Year Six Months

Operating Revenues. Charter revenues were $2.2 million lower in the Current Year Six Months compared with the Prior Year Six Months. Charter revenues were $2.8 million lower due to the disposition of three vessels subsequent to the Prior Year Six Months. Charter revenues were $1.0 million lower for the Regional Core Fleet, which consists of 17 vessels, primarily due to lower utilization of 74% in the Current Year Six Months compared to 79% in the Prior Year Six Months offset by higher average day rates of $18,409 in the Current Year Six Months compared to $18,284 in the Prior Year Six Months. Charter revenues were $1.6 million higher due to the repositioning of two vessels into the region subsequent to the Prior Year Six Months. Other marine services were $0.5 million higher primarily due to higher mobilization revenues.

Direct Operating Expenses. Direct operating expenses were $3.0 million higher in the Current Year Six Months compared with the Prior Year Six Months. Direct operating expenses were $5.3 million higher for the Regional Core Fleet primarily due to the timing of certain drydocking and repair expenditures, $0.5 million higher due to the repositioning of vessels between geographic regions and $2.8 million lower due to net asset dispositions.

Middle East and Asia. For the three and six months ended June 30, 2025 and 2024 the Company’s time charter statistics and direct vessel (loss) profit in the Middle East and Asia were as follows (in thousands, except statistics):

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Charter revenues were $5.7 million lower in the Current Year Quarter compared with the Prior Year Quarter. Charter revenues were $3.5 million lower for the Regional Core Fleet, which consists of 11 vessels, due to lower utilization of 79% in the Current Year Quarter compared to 81% in the Prior Year Quarter and lower average day rates of $15,698 in the Current Year Quarter compared to $19,535 in the Prior Year Quarter. Charter revenues were $2.3 million lower due to the disposition of three vessels subsequent to the Prior Year Quarter and $0.1 million higher due to the repositioning of one vessel into the region subsequent to the Prior Year Quarter. As of June 30, 2025 and 2024, the Company had no vessels cold-stacked in this region.

Direct Operating Expenses. Direct operating expenses were $0.1 million higher in the Current Year Quarter compared with the Prior Year Quarter. Direct operating expenses were $1.9 million higher for the Regional Core Fleet primarily due to the timing of certain drydocking and repair expenditures, $0.6 million higher due to the repositioning of vessels between geographic regions and $2.4 million lower due to net asset dispositions.

Current Year Six Months compared with Prior Year Six Months

Operating Revenues. Charter revenues were $6.5 million lower in the Current Year Six Months compared with the Prior Year Six Months. Charter revenues were $3.3 million lower due to the disposition of three vessels subsequent to the Prior Year Six Months and $0.5 million lower due to the repositioning of one vessel out of the region subsequent to the Prior Year Six Months. Charter revenues were $2.7 million lower for the Regional Core Fleet, which consists of 11 vessels, due to lower average day rates of $16,935 in the Current Year Six Months compared to $20,079 in the Prior Year Six Months offset by higher utilization of 79% in the Current Year Six Months compared to 73% in the Prior Year Six Months.

Direct Operating Expenses. Direct operating expenses were $1.9 million lower in the Current Year Six Months compared with the Prior Year Six Months. Direct operating expenses were $3.7 million lower due to net asset dispositions, $0.4 million lower due to the repositioning of vessels between geographic regions and $2.2 million higher for the Regional Core Fleet primarily due to the timing of certain drydocking and repair expenditures.

Latin America (Brazil, Mexico, Central and South America). For the three and six months ended June 30, 2025 and 2024 the Company’s time charter statistics and direct vessel profit in Latin America were as follows (in thousands, except statistics):

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Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Charter revenues were $3.8 million lower in the Current Year Quarter compared with the Prior Year Quarter. Charter revenues were $6.6 million lower due to the repositioning of three vessels out of the region subsequent to the Prior Year Quarter. Charter revenues were $2.8 million higher for the Regional Core Fleet, which consists of six vessels, primarily due to higher utilization of 66% in the Current Year Quarter compared to 60% in the Prior Year Quarter and higher average day rates of $23,764 in the Current Year Quarter compared to $18,820 in the Prior Year Quarter. Other marine services were $1.8 million lower primarily due to lower mobilization and catering revenues. As of June 30, 2025 and 2024, the Company had no vessels cold-stacked in this region.

Direct Operating Expenses. Direct operating expenses were $4.5 million lower in the Current Year Quarter compared with the Prior Year Quarter. Direct operating expenses were $2.9 million lower due to the repositioning of vessels between geographic regions and $1.6 million lower for the Regional Core Fleet primarily due to the timing of certain drydocking and repair expenditures.

Current Year Six Months compared with Prior Year Six Months

Operating Revenues. Charter revenues were $10.1 million lower in the Current Year Six Months compared with the Prior Year Six Months. Charter revenues were $15.4 million lower due to the repositioning of four vessels out of the region subsequent to the Prior Year Six Months. Charter revenues were $5.3 million higher for the Regional Core Fleet, which consists of six vessels, primarily due to higher utilization of 68% in the Current Year Six Months compared to 62% in the Prior Year Six Months and higher average day rates of $23,210 in the Current Year Six Months compared to $18,786 in the Prior Year Six Months. Other marine services were $2.0 million lower primarily due to lower mobilization and catering revenues.

Direct Operating Expenses. Direct operating expenses were $10.6 million lower in the Current Year Six Months compared with the Prior Year Six Months. Direct operating expenses were $7.6 million lower due to the repositioning of vessels between geographic regions and $3.0 million lower for the Regional Core Fleet primarily due to the timing of certain drydocking and repair expenditures.

Other Operating Expenses

Lease Expense. Leased-in equipment expense for the Current Year Quarter and Current Year Six Months was $0.2 million lower and $0.3 million lower compared to the Prior Year Quarter and Prior Year Six Months due to having no leased-in vessels in the Current Year Quarter and Current Year Six Months compared to one in the Prior Year Quarter and Prior Year Six Months.

Administrative and general. Administrative and general expenses for the Current Year Quarter and Current Year Six Months were $1.1 million higher and $0.7 million higher compared to the Prior Year Quarter and Prior Year Six Months due to increases in professional fees and increases in wages and benefits expenses offset by decreases in allowance for credit losses.

Depreciation and amortization. Depreciation and amortization expense for the Current Year Quarter and Current Year Six Months were $0.8 million lower and $0.9 million lower compared to the Prior Year Quarter and Prior Year Six Months due to net fleet changes.

Gains (Losses) on Asset Dispositions and Impairments, Net. During the Current Year Quarter, the Company sold one FSV and two PSVs, previously classified as held for sale, and other equipment not previously classified as such for net cash proceeds of $31.6 million, after transaction costs, and a gain of $19.2 million. During the Prior Year Quarter, the Company sold other equipment for net cash proceeds of $0.1 million, after transaction costs, and a de minimis gain.

During the Current Year Six Months, the Company sold one FSV and two PSVs, previously classified as held for sale, as well as one liftboat and other equipment not previously classified as such for net cash proceeds of $40.1 million, after transaction costs, and a gain of $25.0 million. During the Prior Year Six Months, the Company sold other equipment for net cash proceeds of $0.1 million, after transaction costs, and a de minimis gain.

Other Income (Expense), Net

For the three and six months ended June 30, 2025 and 2024, the Company’s other income (expense) was as follows (in thousands):

Interest income. Interest income was lower for the Current Year Quarter and Current Year Six Months compared with the Prior Year Quarter and Prior Year Six Months due to reduced cash balances held in interest bearing accounts.

Interest expense. Interest expense was lower in the Current Year Quarter and Current Year Six Months compared with the Prior Year Quarter and Prior Year Six Months primarily due to a lower interest rate on the 2024 SMFH Credit Facility (which bears interest at a fixed rate of 10.30% per annum), which was entered into on November 27, 2024 compared to the 2023 SMFH Credit Facility (which bore interest at a fixed rate of 11.75% per annum), which was entered into on September 8, 2023.

Derivative gains (losses), net. Net derivative gains for the Current Year Quarter compared with the Prior Year Quarter was nearly flat. Net derivative gains for the Current Year Six Months compared with net derivative losses for the Prior Year Six Months were due to the weakening of the U.S. dollar in relation to the Norwegian Kroner for an open forward currency exchange contract, which is denominated in Norwegian Kroner.

Foreign currency (losses), net. Net foreign currency losses for the Current Year Quarter and Current Year Six Months compared with the Prior Year Quarter and Prior Year Six Months increased primarily due to the weakening of the U.S. dollar in relation to the pound sterling.

Income Tax Expense

During the six months ended June 30, 2025, the Company’s effective income tax rate of 17.1% was primarily due to foreign taxes paid that are not creditable against U.S. income taxes.

Equity in Earnings of 50% or Less Owned Companies

Equity in earnings of 50% or less owned companies for the Current Year Quarter compared with the Prior Year Quarter were $0.7 million lower and earnings for the Current Year Six Months compared with the Prior Year Six Months were $1.2 million higher due to the following changes in equity earnings (losses) (in thousands):

Liquidity and Capital Resources

General

The Company’s ongoing liquidity requirements arise primarily from working capital needs, capital commitments and its obligations to service outstanding debt and comply with covenants under its debt facilities. The Company may use its liquidity to fund capital expenditures, make acquisitions or to make other investments. Sources of liquidity are cash balances, cash flows from operations and sales under the Company’s ATM Program, which has approximately $25.0 million of remaining sales capacity as of June 30, 2025. From time to time, the Company may secure additional liquidity through asset sales or the issuance of debt, shares of Common Stock or common stock of its subsidiaries, preferred stock or a combination thereof.

As of June 30, 2025 and June 30, 2024, the Company held balances of cash, cash equivalents and restricted cash totaling $51.6 million and $42.9 million, respectively.

As of June 30, 2025, the Company had outstanding debt of $341.0 million, net of debt discount and issue costs. The Company’s contractual long-term debt maturities as of June 30, 2025, are as follows (in thousands):

As of June 30, 2025, the Company had unfunded capital commitments of $65.1 million consisting of $59.3 million in respect of the construction of two PSVs, $2.3 million in respect of four hybrid battery power systems and $3.5 million for miscellaneous vessel equipment. Of the unfunded capital commitments, $13.1 million is payable during 2025, $33.4 million is payable during 2026 and the remainder is payable during 2027. In accordance with the terms of the 2024 SMFH Credit Facility, previously described in the 2024 Annual Report, $18.0 million of the proceeds from the sale of two AHTS was designated to make payments on the construction of two PSVs. In addition, during the second quarter of 2025, $3.8 million of the proceeds from the sale of one FSV and $10.9 million of the proceeds from the sale of two PSVs were also designated to make payments on the construction of the two PSVs. As of June 30, 2025, $16.5 million remained in a restricted account as a result of these transactions. Additionally, the 2024 SMFH Credit Facility includes a dedicated $41.0 million tranche that may be used to pay up to 50% of the purchase price of these vessels. $8.2 million of this tranche was drawn as of June 30, 2025.

Summary of Cash Flows

The following is a summary of the Company’s cash flows for the six months ended June 30, 2025 and 2024 (in thousands):

Operating Activities

Cash flows used in operating activities was $13.5 million in the Current Year Six Months, a decrease of $5.9 million compared to $19.4 million in the Prior Year Six Months due to changes in working capital and a decrease in days worked primarily due to net fleet changes. The components of cash flows provided by and/or used in operating activities during the Current Year Six Months and Prior Year Six Months were as follows (in thousands):

(1) During the Current Year Six Months capitalized interest paid and included in the purchase of property and equipment was $0.8 million. During the Prior Year Six Months, the Company paid no capitalized interest.

For a detailed discussion of the Company’s financial results for the reported periods, see “Consolidated Results of Operations” included above. Changes in operating assets and liabilities before interest and income taxes are the result of the Company’s working capital requirements.

Investing Activities

During the Current Year Six Months, net cash provided by investing activities was $9.1 million, primarily as a result of the following:

• capital expenditures were $31.0 million; and
• the Company sold one FSV and two PSVs, previously classified as held for sale, as well as one liftboat and other equipment not previously classified as such for net cash proceeds of $40.1 million, after transaction costs, and a gain of $25.0 million.

During the Prior Year Six Months, net cash provided by investing activities was $4.0 million, primarily as a result of the following:

• capital expenditures were $4.1 million; and
• the Company sold other equipment for net cash proceeds of $0.1 million, after transaction costs, and a de minimis gain.

Financing Activities

During the Current Year Six Months, net cash used in financing activities was $20.1 million, primarily as a result of the following:

• the Company made scheduled payments on long-term debt and other obligations of $12.5 million;
• the Company received proceeds from the issuance of long-term debt of $7.7 million;
• the Company made payments for the repurchase of common stock of $7.1 million;
• the Company made payments for the repurchase of warrants of $6.7 million; and
• the Company made payments on tax withholdings for restricted stock vesting of $1.5 million.

During the Prior Year Six Months, net cash used in financing activities was $17.9 million primarily as a result of the following:

• the Company made scheduled payments on long-term debt and other obligations of $14.1 million;
• the Company received $0.1 million proceeds from the exercise of stock options; and
• the Company made payments on tax withholdings for restricted stock vesting of $3.9 million.

Short and Long-Term Liquidity Requirements

The Company believes that a combination of cash balances on hand, cash generated from operating activities and access to the credit and capital markets, including the $25.0 million in remaining sales capacity under the ATM Program, will provide sufficient liquidity to meet its obligations, including to support its capital expenditures, working capital needs, debt service requirements and covenant compliance over the short to long term. With respect to capital expenditures related to the construction of two PSVs, up to $32.8 million remains available under Tranche B of the 2024 SMFH Credit Facility as of June 30, 2025. The Company continually evaluates possible acquisitions and dispositions of certain businesses and assets. The Company’s sources of liquidity may be impacted by the general condition of the markets in which it operates and the broader economy as a whole, which may limit its access to or the availability of the credit and capital markets on acceptable terms. Management continuously monitors the Company’s liquidity and compliance with covenants in its credit facilities.

Debt Securities and Credit Agreements

For a discussion of the Company’s debt securities and credit agreements, see “Note 4. Long-Term Debt” in the unaudited consolidated financial statements included in Part I. Item 1. “Financial Statements” elsewhere in this Quarterly Report on Form 10-Q and in “Note 5. Long-Term Debt” in the Company’s audited consolidated financial statements included in its 2024 Annual Report. There have been no material changes to the Company’s long-term debt during the period.

Future Cash Requirements

For a discussion of the Company’s future cash requirements, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” in the Company’s 2024 Annual Report. There has been no material change in the Company’s future cash requirements since our fiscal year ended December 31, 2024, except as described in “Results of Operations - Liquidity and Capital Resources” in this Quarterly Report on Form 10-Q.

Contingencies

For a discussion of the Company’s contingencies, see “Note 10. Commitments and Contingencies” in the unaudited consolidated financial statements included in Part I. Item 1. “Financial Statements” elsewhere in this Quarterly Report on Form 10-Q.

For a discussion of the Company’s exposure to market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk” included in the Company’s 2024 Annual Report. There has been no material change in the Company’s exposure to market risk during the six months ended June 30, 2025.

Evaluation of Disclosure Controls and Procedures

With the participation of the Company’s principal executive officer and principal financial officer, management evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of June 30, 2025. Based on their evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2025 to provide reasonable assurance that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission’s (“SEC”) rules and forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

The Company’s disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosures. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those internal control systems determined to be effective can provide only a level of reasonable assurance with respect to financial statement preparation and presentation.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Current Year Quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

For a discussion of the Company’s risk factors, refer to “Risk Factors” included in the Company’s 2024 Annual Report. There have been no material changes in the Company’s risk factors during the Current Year Quarter.