Good morning, everyone, and welcome to OceanPact's second quarter of 2024 earnings call. All participants will be on a listen-only mode during the presentation. Later, we will hold a question and answer session when further instructions will be provided. This conference is being recorded, and the replay will be available at the company's website at ri.oceanpact.com. The slide deck is also available at the company's investor relations website, as well as the CVM website at www.gov.br/cvm. Before proceeding, we would like to mention that the forward-looking statements that may be made during this conference call relating to the company's business prospects and forecasts are predictions based on the management's current expectations. These expectations are highly dependent on changes due to macroeconomic conditions, market risks, and other factors.
With us today are Mr. Flavio Andrade, CEO, Haroldo Solberg, Vice President and General Executive of the Vessel Segment, Adriano Ranieri, Executive of the Services Segment, and Eduardo Toledo, CFO and IRO. They will first comment on OceanPact's 2Q 2024 performance, and later, they will be available to take your questions. I will now turn the conference over to Mr. Andrade. Mr. Andrade, you may now begin.
Good morning, everybody, and thank you for your interest in our company. I am very glad to be here once again, talking to all of you, participants of the market. I can tell you right now that the market is living up to our expectations. In the second quarter 2024, we got extensions for our RSV contracts. Those are the vessels that operate ROVs. So we extended those contracts for another year with an increase in daily rates, which is very good.
It is not that common, but it shows that the market is improving. Now in July, in the third quarter, we signed a contract for PSV Rubi with a daily rate that is 10% higher than that vessel's sister, Ilha de Santana, which had been signed four months prior. So that is another fact that shows that the market conditions are living up to our expectations. In the second quarter, we also had our investor day. For those of you who could be here, I am sure that it was a great experience as it was for us. Also, at Institutional Investor, I would like to thank you for choosing our investor day as the best investor day and also our ESG program as the best one. We were very proud of that result.
In the third quarter of 2024, we finished our debênture issuance, which had a lower rate than the previous ones, which also reflect the positive assessment of the credit market about us. Now let us move on to the highlights of the quarter on the next slide. As I said, we had those three contract extensions with an increase by 33% in the daily rates. Our revenue came to BRL 378 million, a 9% year-on-year growth.
Our EBITDA came to BRL 136 million. When it comes to sustainability and innovation, an interesting topic for sure, we had a contract signed for research development and innovation so that we can develop new technologies for the reforestation of mangroves. We already had a project to measure carbon captured by mangroves, and now we have another project to restore mangroves. We are going to give you more details about that later. Now, I'd like to turn the conference over to Haroldo to talk about the vessel segment.
Thank you very much, Flavio. Good morning, everybody. I would like to talk about the main operating highlights in Q2 2024 in the vessel segment. Looking at the 2024 map, you can see that we finished the second quarter with a 76% utilization rate, and the main highlights were two vessels with a period without any contract. They are in yellow on the map. The first one is Jim O'Brien, because we are now in the middle of the finish of one contract and the beginning of the other one. We also have Rubi, who's waiting and being mobilized. We also had two vessels being mobilized for our contracts with Petrobras.
The first one is Jim O'Brien, with the contract starting in June, and Ilha de Santana, which started mobilization in the beginning of this quarter. We also had three vessels in docking, and they can be seen in blue on the map. These events of mobilization and docking, they are very simple, and they can be concentrated in certain periods. Also, we had five vessels with occasional downtime for maintenance, and they are in pink on the map. Parcel das Paredes, Ilha de São Sebastião, Macaé, Ilha de Santana, and Ilha das Flechas. Those maintenance processes are normal. They are everyday processes that we have to conduct on these vessels, and we work continuously to decrease the number of days of downtime. Although the utilization rate was one percentage point below the guidance, our guidance for 2024 as a whole is still 81% in utilization rate.
Now let's take a look at the details of our utilization rate, which was 76% on average in the second quarter. You can see that the days without any contract had an impact of three percentage points, and the same thing for mobilization, docking seven percentage points. Downtime accounted to 11 percentage points, and nine of those came from downtime of vessels. You can see also that our occupancy rate or the days of utilization dropped by 12% quarter-on-quarter and 13% year-on-year due to a lower utilization rate. At the same time, the average daily rate increased, going from BRL 128 in 2023 to BRL 145 in 2024. Now let's take a look at the result of the vessel segment in the second quarter of 2024.
First, there was a one-off event in the beginning of the quarter, which was the write-down of the provisions of UP, and we reverted those provisions, and that had a positive impact of BRL 23 million in our EBITDA. Another highlight was the finish of our process with Reach Subsea, which generated a revenue of BRL 6 million in Q2 2024. This partnership started early 2023. It was a very successful partnership that yielded two projects, one with Shearwater and the other one with Equinor. On the left-hand side, you can see that our net revenue, excluding Reach Subsea partnership, was BRL 231 million. Our margin, our EBITDA margin, was 32%, excluding contingencies. Excluding contingencies, our adjusted EBITDA would have been BRL 52 million with a 22% margin. Now I'll turn it over to Ranieri to talk about the service segment.
Hello. Good morning, Haroldo. Now let's talk about the service segment broken down in its three units. The first one is subsea and Geociências, and the second one is the one that uses vessels for the services. This quarter was again very strong in our segment, with a net revenue exceeding BRL 100 million. This net revenue was driven by our subsea department, mainly for three factors: a low downtime, including our vessels and ROVs. We had a high productivity and a high availability in our customer portfolio.
We didn't have any commercial downtime in the Austral Abrolhos vessel, which is the one that we have allocated in service contracts. Now let's take a look at the oil spill response segment. Our net revenue was in line at BRL 30 million as expected. Consulting and logistical services and innovation, in that department, we had an increase reaching BRL 17 million in net revenue.
Let's go to the next slide, please. With that, we can see the consolidated results for the service segment, with almost BRL 150 million in net revenue, a 30% increase year-on-year. Our EBITDA came to BRL 62 million with a 42% margin. Indeed, the second quarter was very strong, pretty much in line with the first quarter due to our good operation and also our good customer portfolio. Now I'd like to turn it over to Eduardo.
Thank you, Adriano. Good morning, everybody. It is a pleasure to join you here once more to talk about the 2Q 2024 result. Let's take a look at the consolidated results. The service segment performance that was just presented and the reversal of the provisions that we created when we acquired UP that Haroldo mentioned. Those two factors offset the lower utilization rate that we had this quarter.
So much so that we were able to have an EBITDA level that was very similar to 1Q 2024. Also, looking at the consolidated numbers and on the year-on-year comparison, you can see that our revenue grew by 9% and our EBITDA grew by 13%. Now let's go to the next slide. Now let's take a look at our costs. There was an increase in our costs, and that is basically due to the fact that when we have construction works, we transfer costs to CapEx. That's why that happened. That's why the costs were lower this quarter. Our G&A is pretty much in line with the previous quarter, and our consolidated CapEx came to BRL 93 million, which is significant due to dockings and mobilizations that Haroldo mentioned. Next slide, please. Now our financial position. We finished the quarter with BRL 313 million in our cash, a significant increase.
We had BNDES fundraising, and that comes from the trade fund, and that allowed us to have a healthy cash position. Our net debt was at BRL 920 million, in line with the previous quarter. Our net debt over EBITDA was 1.73x , and our covenants are at 2.5x . So our current position is very comfortable and appropriate. Now I'll turn it over to Flavio.
Thank you. Now let's talk about our backlog and the new contracts. Our backlog is very robust at BRL 2.8 billion. The additions are those contracts that I mentioned a few times already, the extensions for Parcel do Badejo, Parcel das Paredes, and Parcel dos Meros. We should highlight here that we are very happy to spend, quote-unquote, "the old backlog" and increase our backlog with new contracts at higher daily rates. We are going to give you more details about the coming bids.
Now, sustainability and innovation. I believe that the main highlight here is the contract for the maritime space planning. What is that? Brazil has made the decision, like many other countries around the world, Brazil decided to have a maritime or a sea space planning, showing who is going to exploit each area of the ocean to avoid conflicts. For example, oil, mining, and tourism. How is this going to work? We were hired in a consortium with EnvironPact and the Getulio Vargas Foundation, and the BNDES is going to spearhead this process. We were chosen to do this in the southeast region of Brazil. That is very good news. Another highlight is the education partners project. We are now sponsoring a public school that is in our community.
Now, let's move to the closing remarks. As I said, the market is living up to our expectations. There are some bids ongoing and some will come, for example, for OSRVs, because few vessels met Petrobras' needs. It is probably going to issue another bid in September or October, and we are ready to participate in those bids. There are other important bids, for example, for Petrobras Colombia and decommissioning bids. Speaking of that, we won the bid for the decommissioning of Congro. We prepared a very robust proposal for that project, and that project is in the contract phase right now. There is also a bid for the construction of up to two new PSVs. That bid was postponed, but there are many questions, many uncertainties. We have our own questions, and Petrobras is addressing those questions.
They just issued a circular letter addressing some of those questions, but there are still many questions that have not been addressed yet. Now let's talk about our fleet. We have addressed mostly all contracts for vessels that are expiring in 2024. We landed new deals, or we extended the existing ones with significant daily rate increases, and our strategy remains the same. We continue to be selective in our contracts. We are doing the math, and we are analyzing if the projects have a good fit with our targets for the long run. We want them, of course, to bring good results. We know that the investments in changing vessels require selectivity on our side, and we are very disciplined in those calculations. That's it on our side. That's it for the presentation. We are ready to take your questions.
Okay. So we will now begin the Q&A session. To ask a question, use the Q&A icon at the bottom of your Zoom screen. If you wish to participate by audio, simply request permission to ask a question and your microphone will be activated later when your name is called. You can also submit your question in writing. To do so, just type your question in the Q&A field. The first question comes from Eric de Mello with Itaú BBA.
Hello, everybody, can you all hear me?
Yes, we can . Go ahead.
Thank you very much for taking my questions and congratulate Flavio, Haroldo, and Eduardo for the great result. We would like to address two points with you. The first is about services.
Your performance in the first quarter and the second quarter was remarkable. You had an issue with productivity in Austral Abrolhos, and we can see that you were able to hold a pretty good level in the second quarter. What can we expect for the service segment in the second half of the year? If you could give us more details about the third quarter, that would be very helpful. My second question, piggybacking on what Flavio said in the end of the presentation about the bids for the new vessels. I would like to understand what the competitive landscape is like in those bids.
One of our biggest discussions here on our side is that the player that win those bids, are they going to have an advantage compared to the others because these vessels are going to be a bit older than the rest of the industry? Those are my questions. Thank you.
Thank you. I'll address the first question, and then Flavio can answer your second question. Well, about services, Eric. Indeed, we had two strong quarters, as Adriano showed in his part of the presentation. I believe that there was a confluence of good factors. For the third quarter, we are expecting more modest result for services. One of the geo vessels is in docking right now, and that has a significant impact, of course, but there are also a positive circumstances that happened in the first quarter. For the fourth quarter, we believe that our performance will go back to a very strong level. For the third quarter, we're going to see some fluctuations, but I'm sure that we are at a much better level than we were last year. That is certain.
Okay. So now let me address your question about the new vessels. I'm going to make some comments, and then I'll ask Haroldo to jump in. But talking about the competition, as you asked. You asked if the winner is going to have an advantage or an edge over the competitors. I would say the answer is no, or maybe if it is the case, that advantage would be very little. Today in Brazil, there are 430 vessels in operation.
If this program is fully conducted, and they say they need around 40 vessels, so it's less than 10% of the existing fleet, and the demand is growing. And we imagine that the delivery time is not going to be so short because there are very few shipyards that are able to do that, as Haroldo will comment, and very few companies that have the ability to support this project, such a big project.
Although there are funds from the trade fund, but they also need to have the project approved by the BNDES or Caixa Econômica Federal, so the companies that will build those ships, they're not going to have an advantage. Not to mention the fact that they're going to have a long contract for those vessels. The market will still need vessels, and the daily rate peaks will maybe continue to happen. And if you have a 12-year contract, you might have a good business in your hands, but it's going to be a different business. Different from our case. We bought vessels when we were at the trough of the price curve, and we are going to be able to take advantage of the peak in a daily rate. But Haroldo, can you talk about our efforts to participate in this bid?
Okay. First, let's talk about the bid for the building of the new vessels, the new PSVs. Over the past few days, Petrobras postponed the bid from August 16th to September 13th, and now it is allowing for contracts up to 12 years in term. And usually there was a limitation of four vessels, now they are allowing six vessels. And we have been talking to a number of ship builders, we've visited shipyards, and we looked at the automation, the engines and all of that. So we are taking all of that into account. And we are also conducting the financial assessment, including the issue that Flavio mentioned about the daily rate. So we are analyzing the situation for the bids that will happen next month.
Now, about the other bids that do not involve building new ships, there are bids for PSVs, AHTS, RSVs, and now there is an expectation that we are going to have a bid for up to six OSRVs. So we believe that Petrobras is going to issue a bid for RSVs and also for PSVs. And when it comes to the age of vessels, we don't have any problems about that. That's not an issue when it comes to our participation in those bids. So those are the opportunities that we see going forward with Petrobras. Thank you.
If you wish to ask a question, please click the Q&A button at the bottom of your screen, and you can write your question in the Q&A field, or you can also ask to have your microphone enabled. The next question comes from Leandro Neto with Bradesco BBI. Please go ahead.
Hello, good morning, everybody. I have a question that is very similar to the previous question about your expectations for the next Petrobras bids. Do you think you are going to land those deals?
Thank you, Leandro. Well, as Haroldo mentioned, and as I mentioned myself, we were declassified, unqualified actually for excessive price. Actually, only two companies offered prices that were within Petrobras budget. Most companies presented prices in excess of that range, and I think that Petrobras now recalculated its budget. When they issue the bids for RSVs, which Petrobras needs very much, so much so that they extended a contract with us. That extension was actually a result of the auction of results that were not meeting their demand. Since the auctions were not able to meet their budget, they needed to extend the existing contracts that they had for RSVs.
That's what we expect is going to happen. For the other bid that we have been participating for PSVs, for example, the daily rates are going up. In the case of Rubi, for example, in a matter of four months, the daily rates went up by more than 10%, going from BRL 42 to BRL 47 in a simple PSV. So I think that we are going to make headway in our participation in those bids. Just as a complement, we are still participating in five bids for PSVs, OSRVs, and AHTSs. The contracts that are maturing in 2024, you can see on the map in light green. We are going to have contracts finishing for Loreto and Martin Vaz.
So those bids in which we are participating, I believe that we still have a lot of room, and I think that we are going to have contracts for those vessels next year. Now, about the daily rates, over the past 12 months, we had 13 vessels with contracts being extended with the customers such as Petrobras and other clients. The daily rates increased by 41% over the last 12 months.
Okay. So let's go to the next question coming from [Leonardo Scarlato]. He submitted his question in writing. I'm going to read it out loud. Good morning. I would like to understand the FX effect and your result. Your contracts are signed in dollars and the revenues of the segment fluctuate periodically according to the FX rate. Is that correct?
Well, usually what happens is that we have a freedom with the clients, including Petrobras. Petrobras give us the freedom to use the exchange rate that we believe to be appropriate, and we use that freedom to hedge 20% of our revenue in dollars. So 20% of our revenues are in dollars, and those 20% fluctuate according to the dollar FX rate. That is a hedge that we have for our dollar expenses. Most of our debt is in dollars as well.
Our CapEx, part of our CapEx is also in dollars, including imported equipment. So that is a natural hedge that we have to cover our needs for CapEx costs and financial needs as well.
Again, if you would like to ask a question, please click the Q&A button at the bottom of your screen and submit your question, or alternatively, you can request us to unmute your microphone. We have a question submitted in writing. When it comes to margins, consolidated and by segment, what level are you expecting for the second half of the year?
Well, instead of talking about margins, let's talk about EBITDA. I think that's a better context. About the third quarter, as I said when I was answering Eric's question, we expect the services segment to have a lower result because one of the Geociências vessels is in docking right now, and the first two periods were very strong. However, the vessel segment should make progress in comparison with the second quarter. Our expectation for 3Q 2024 is in line with the second quarter, excluding the reversals of the provisions. If you exclude that, the second quarter and third quarter results should be in line.
Now for the fourth quarter, our expectation is to see a very significant strong result because services will be delivering a new level of results as it's been delivering this year. We are going to have the vessels with a higher daily rate, as Haroldo showed you in our vessel map in the beginning of his presentation. The second half of the year, we will have a very strong result.
Now the next question comes from [Nicolas Costa]. He's going to ask his question on the microphone.
Hello, can you all hear me?
Yes, please go ahead.
Okay. When we look at some bids and we look at the prices, we can see that your prices are above the competition, and that's why you were disqualified due to excessive prices.
I would like to know if that's maybe a competitive advantage that you're not capturing, or maybe you believe that you are well-positioned to participate in those bids despite that.
Thank you, [Nicolas]. Well, most bids in this phase right now, Petrobras is hiring a lot of vessels. It's not really a bid in which the lowest price will get it. This is not just one vessel that we're talking about. It's not like the services segment in which there is going to be only one winner, and you have to do your best to have the lowest price. What we do in this case is to have a fair price. We also need to know the competition.
In some cases, we know that some player might have a vessel that is ready to get the contract because they might have a similar contract already in place, or maybe because they are nervous about having vessels that are not operating. Some foreign companies might have country managers that want to keep their fleet 100% utilized, and they are more keen to lower prices. In some other cases, we don't know what they do. What we do know is our calculation. We do the math very rigorously, considering the investment necessary for that bid specifically, and also the market value for that specific vessel, and that's why we calculate our prices.
You asked if the ones offering a lower price have an advantage. The costs are actually very similar. For example, the workforce wage, which is a significant component of the cost, those costs are very similar because there are agreements with the unions. Also maintenance costs, good maintenance costs are very similar. Some companies might not be conducting maintenance process as appropriately as they should, but I don't want to get into that. So the cost structure is very similar across competitors. That might be WACC or interest rates differences, but that does not give an advantage to those offering lower prices. Because sometimes, Petrobras will have 10 vessels from different competitors, and those who offer a lower price will get that lower price for the vessels that they offered. So that's how it works. I don't know if Eduardo would like to complement my answer.
No. I think that's that. That's right. We are always considering the market value of each vessel.
I just wanted to emphasize that because it doesn't really matter if you bought a vessel for a good price in the past because the contract is going to need to give you a profit. Otherwise, it makes sense to just sell the vessel. So it is our fiduciary duty to address that issue with that approach.
We have another question submitted in writing. Can you give us more details about the Congro contract? Is it a relevant contract?
It is a very important contract, and the amounts are public, but it is one of the decommissioning stages for the Congro field buoy. Periodically, Petrobras has to remove old facilities from the fields that they are going to decommission. So they have a commitment with the environmental agencies to remove all these structures that they have in those areas, and those amounts are public.
The amounts are about BRL 90 million. So it is a significant amount, and it requires a number of ROV and a number of vessels, which we can offer. The material that is removed from the sea is a department where EnvironPact is a leading company, so we have a lot of knowledge in-house that allows us to execute those services very well. I'm sure that other similar services in bigger projects will come in the future. It is a service that we conducted in the past with ROVs, removing scrap material from the bottom of the sea, and this would be a significant contract for us with a significant amount.
We have another question coming from [Leonardo Scarlato] in writing. Still about Petrobras bid for the new vessels. It seems to me that they are going to require a daily rate that is much above the current ones. Do you believe that Petrobras understands and is aware of that?
Thank you for the question. Well, I think so. I believe that the contracting party knows because the vessel that they are specifying in the bid is very modern with a big shaving for consumption, so it is a more economical vessel. There's a significant nationalization element. So they specify that we can use funds from the Merchant Marine Fund to build the ships here in Brazil. So I believe that they know that the daily rates will be much higher than the current ones. There is a factor here that is connected to the previous question. When the new vessel daily rates go up, the daily rates of similar vessels also go up.
There's an example for last year. The OSRVs, the oil recovery vessels that we had in contract, Jim O'Brien and Fernando de Noronha, the newer ones, have very similar rates as the older ones because the older ones were modernized and they execute the same service. I think that when we do have those new vessels, they are going to pull the daily rates up for all similar vessels.
We don't have any more questions, so this concludes the Q&A session for today. I would like to turn it over to Eduardo for his closing remarks.
Thank you very much for your participation. I think that we were able to give you some color about the third quarter and the fourth quarter when we answered your questions. Flavio mentioned in the beginning our debênture issuance. I'm going to give you more details about that because it is important for us. We were able to obtain a significant rate decrease. We were able to get a very good amount in comparison to our book value, which shows the interest that people have in our company, and it also helps making OceanPact better known in the market.
Of course, there's a lot to be done in that arena still. Working with debt in the capital market helped in that process. It was a very good movement. We are very happy with the results from our debênture issuance, and I just wanted to mention that. Now I'll turn it over to Flavio for his closing remarks.
Thank you, Eduardo. I think that I've made plenty of comments for today. I'd just like to thank you for your interest and your attention to everything that we do here at the company, and I would like to thank our team. We're only able to do what we do because we have a strong team on our side, helping our clients and their needs. That's it on my side. Thank you very much.
This concludes OceanPact's conference for today. Thank you very much for your participation. Have a good one. Bye-bye.