Gulf Marine Services Share Discussion Threads

[gen_romer] 25/8/2023 13:39

8p about to be breached with volumes much thinner this month

[xxx] 10/8/2023 15:52

You are correct, both EBITDA is increasing, and if you look at the cash flow statement, back out the one off costs and add revenue by say 7%, you can see the deleveraging in process...

[blusteradjuster] 03/8/2023 08:23

Have the numbers been crunched anywhere? From the finals:




"Adjusted EBITDA US$ 71.5million"

"Net bank debt reduced to US$ 315.8 million (2021: US$ 371.3 million). Net leverage ratio reduced to 4.4 times (2021: 5.8 times)."


Debt:EBITDA falling below 4:1 is good news but is that as a result of a shift in nominator, denominator or both?



Gulf Marine Services (GMS), a renowned provider of self-propelled and self-elevating support vessels for the offshore oil, gas, and renewables sectors, is delighted to announce that PIK has stopped to accrue as of the second quarter, as a result of net leverage dropping below 4:1.

This means that moving forward, the cost of funds will decrease by 340 bps.


The finals stated:

During the year, the interest rates on the loan went up from 3% at end of 2021 to 7.7% at the end of 2022 (being 3% plus LIBOR) and as LIBOR increased from 0.2% to 4.7%. For 2023, the interest rates will go up to 4.0% + LIBOR and a PIK margin of 2.5% will apply for as long as leverage remains above 4.0 times EBITDA.


So it's not obvious (to me) exactly what this means for debt-servicing/repayment this year.

Obviously it's a positive and any downshift in LIBOR would add to the tailwinds.

[nchanning] 02/8/2023 12:25

Remember this fleet of boats cost a billion dollars to build ( before the recent inflationary episode ) . Ok a brand new fleet might command slightly higher day rates but who's going to want to build new assets in a cyclical , arguably declining industry in a higher interest world without getting ~150 USD Ebitda on that billion dollar investment . So supply should keep gradually shrinking as old boats are decommissioned and world oil demand continues to edge up every year

[wigwammer] 02/8/2023 09:44

I agree hpcg. Deleveraging is a tangible sign that things are developing favourably for GMS shareholders. And the highly material rally in the shares simply reflects that tangible progress. A big fat catalyst might get us there a bit faster, but a patient investor is likely to do very nicely here anyway.

[hpcg] 02/8/2023 09:28

'just a deleveraging story' - there is no just about it. Payment of debt from generated cash is a transfer of enterprise value from debt to equity. The first stage of recovery of an over-leveraged company is the removal of the discount for the risk of the company going under, then the removal of the discount for an additional fund raise. IMO we've only just seen that. If you look at the discount to a net book value which is north of $250mn then the business is priced for the current performance to be anomalous. Small company discounts and cyclicality, discounts are always justified here, but not to this degree. Even at 15p the discount would be huge if the current degree of backlog is maintained. Thus the price will march forward again on any news of contract extensions.

[wigwammer] 02/8/2023 07:44

The 60%+ rally was hard to predict for you, gen romer, but not so much for others.. yes - it is likely being driven by the deleveraging story, a process that has been evident for some time. Just needed some patience (no need for the type of catalyst you stated was required)... ATB

[gen_romer] 02/8/2023 06:49

Hard to predict a rally without legs
Never said this wont rally,and i think this is easily worth 15p,but for it to go there,needs major buying which needs trigger other than 'deep value'.for sure the last RNS helped showing that they can deleverage.

[wigwammer] 01/8/2023 20:03

Hmm.. the buying spree you entirely failed to predict :)

[gen_romer] 01/8/2023 13:10

and the shopping spree appears to be over....

[richtea2517] 26/7/2023 17:02

Ya jinxed it ; )

[catsick] 26/7/2023 08:16

Up every day at the moment, who said we needed any other catalyst than extreme value, even at 15p it's still cheap....

[hpcg] 21/7/2023 09:00

Nice to see an 8 handle on trades today. Still huge upside so buyers are having to work hard. I've not been tempted at all to lighten my position. I can see 15p a year out. Sooner if they keep the backlog north of $300mn.

[richtea2517] 18/7/2023 15:15

Nice. Yes. I think the company have weathered substantial downturn and all things being well should see some value unlocked in the next year or so.

[baddeal] 18/7/2023 09:37

With ebitda say70-75 then imo should see 20p within 2 yrs providing order book stays strong as delevearging drives move in EV from debt holders to shareholders.

[wigwammer] 18/7/2023 09:21

Well the current book value is around 21p a share, and it is almost purely tangible. Obviously that figure keeps rising each time a fall in net debt is reported. Need to do some adjustment for warrants and dilution, but it's not far off that... Not a perfect measure at all, but gives you some idea of replacement value. Last I heard there has been little pick up in the supply of these assets, and there is a lengthy build time. So as long as the oil price remains buoyant GMS have a sizeable and cash generative asset with a decent moat and a long asset life (around 35 years re depreciation)... I suspect also they are achieving some tangible level of diversification away from the oil market, given the demand from renewables and so on... I'm not selling any yet.... ATB

[richtea2517] 18/7/2023 09:08

Where is fair value gents. I've got quite a few of these and had to pretty patient. I'm interested in 20p ;)

[blusteradjuster] 18/7/2023 07:54

Virtuous circle, right there.

[hpcg] 18/7/2023 07:45

Well that is tangible progress. The good thing about progressive deleveraging is it accelerates. Another step along the road.

[richtea2517] 17/7/2023 11:23

Where does the breakout go from here?

[wigwammer] 15/7/2023 09:17

And he's not the only one to get it wrong, trident5. Because you questioned whether patience here would help... yet here we are, a little more than a month later, and patience is being nicely rewarded..... I understand your frustration having sold your shares near the lows, but no one to blame but yourself... ATB

[wigwammer] 15/7/2023 09:12

His point very clearly was that a catalyst was required to push the shares to even 6p... but here we are, with the shares above 6p and without a catalyst... work it through :)

[trident5] 14/7/2023 23:53

I think his point was that a significant price move needs a catalyst - this has just risen by about 2p. In % terms that's a big lift off the low, but neither here nor there compared to the price several years ago - "a blip on the price graph. Now shut up.

[wigwammer] 14/7/2023 20:41

"No dearth of fundamentals to be long this....alas that does not count or is not enough to push this to even 6p,let alone 10 or 20p of fair value?"...... the fundamentals have been enough to push GMS beyond 6p.... You objectively got it wrong... why can't you admit it ?

[gen_romer] 14/7/2023 15:07

Clearly you don't get it....this 40pct move that you talk about is a blip on the price graph