Morning, and welcome to OceanPact's fourth quarter of 2023 earnings call. All participants will be on a listen-only mode during the presentation. Later, we will hold a Q&A 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 that will be used in the presentation is also available at the company's investor relations website, as well as in the CVM website. Before proceeding, I 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 macroeconomic conditions, market risks, and other factors. With us today are Mr. Flavio Andrade, CEO. Haroldo Solberg, Vice President. Eduardo de Toledo, CFO and IRO. Adriano Ranieri, Chief Executive Service Officer. They will first comment on OceanPact's 4Q 2023 performance, and also the performance for the full year of 2023. Later, they will be available to take your questions. I will now turn the floor over to Mr. Andrade. You may proceed, sir.
Good morning, everybody. Thank you very much for attending our conference call once again. In this call, we are going to address the fourth quarter of 2023 and the full year of 2023. We are very happy to confirm the solid results that we posted throughout the year 2023. BRL 1.65 billion in revenue, and 20% of that came from services. Our EBITDA exceeded BRL 100 million in all four quarters of 2023. This was a great year.
Also the fact that we acquired EnvironPact, our consultancy arm. If you remember, in previous years, we had a very successful joint venture with them, but then our U.S. partner was acquired, so we bought the rest of the stake of our consultancy arm, and that was very successful. The expedition to the state of Amapá, which I joined myself so that we understood the issues relating to the equatorial margin in the services business, put us in a very differentiated position in terms of getting to know more the ocean environment.
We also participated in COP 28, but you are going to see more details of that later on in the presentation. So let's move ahead and talk about the highlights for 2023. As I said, there was an increase of 37% in our net revenue, reaching BRL 1.65 billion. Our EBITDA came to BRL 522 million, almost twice as much as 2022, and a net profit of BRL 73 million in the year. Now I would like to turn it over to Haroldo to address the vessel segment, and I'll be right back.
Thank you very much, Flavio. Good morning, everybody. I'm going to talk about the main operating results in the quarter in the vessel segment. Starting with our utilization rate. In the fourth quarter of 2023, we had 80% utilization rate in line with the previous quarter. Also in 4Q 2023, we had two vessels being mobilized, Anna Brolios, Manuel Luis, as you can see in orange on the map. We also had Barcelo de Borgoline docked, and we had some occasional downtime for maintenance in three RSVs, and also one AHTS that you can see in pink, which was also in downtown for maintenance.
We finished the year with 87%, 1 percentage point above our guidance and 5 percentage points above our actual results in 2022. Two main factors drove this variation year-on-year. The first one is the high level of contracts for the entire fleet across the year, and also a high concentration of mobilizations under contracts. Still about 4Q 2023, we are going to break down our utilization rate of 89%. On the left-hand side, you can see that operational downtime affected only 2.7%, the lowest level in the year. Operational downtime reached 8.5% because of the operations that I mentioned previously. On the right-hand side, you can see that the net daily rate reached BRL 168 million, 18% more year-on-year. What drove that result was mainly the new contracts and renewals with higher daily rates.
Lastly, we finished the quarter with 1,009,880 days of utilization. A little bit below last year because of small vessels that were affected in late 2022. Let's talk about the result of the vessel segment. I am going to exclude from our revenue the partnership with Reach, which is a third-party vessel operation. In 4Q 2023, we reached BRL 316 million in net revenue, and our EBITDA margin was 27%.
The adjusted EBITDA came to BRL 86 million, and our net revenue was BRL 1,166 million, and our EBITDA for the full year was BRL 334 million with a 29% EBITDA margin. Year-on-year, we had a 28% increase in our net revenue, and 61% more in our EBITDA. Let's take a look at our planned map for 2024. This is our projected utilization rate, which is 81%, due to the new dockings and new refits. We are going to have nine mobilizations over the year, five in PSVs or RSVs. We should highlight that the new contracts will create a significant increase in daily rates. I would like to turn it over to our Service Executive Officer, Adriano Ranieri, to address the other results.
Thank you very much, Haroldo, and good morning, everybody. Now I'm going to show you the results of the service segment. 4Q 2023, in comparison with 4Q 2022, was pretty much in line. We reached BRL 27 million in EBITDA with a 3% growth year-on-year. If we compare the full year 2023 against 2022, we can see a significant increase in our EBITDA, exceeding BRL 100 million in EBITDA with a growth of 83%. Our EBITDA margin was 30%. Let's go to the next slide, please. This is to give you more color on the segment.
It was one of the biggest growth avenues for us, especially the oil spill unit, driven by new contracts for equipment lease, but also for simulations and training programs. BRL 11 million came from our consultancy arm, as Flavio mentioned before, and BRL 5 million came from a better portfolio in the geoscience's unit. Also, I would like to highlight the fact that all service units had a positive growth in 2023. I would like to turn it over to Eduardo.
Thank you very much. Good morning, everybody. It is a pleasure to join you once again in our call to talk about OceanPact's 4Q 2023 performance. Overall, we had a very good quarter that exceeded our expectations, as we indicated in our 3Q 2023 earnings call. Let's start with the consolidated figures. Revenue increased by 28% year-on-year. If we consider the full year of 2023 and the full year of 2022, that increase came to 36%. If we exclude the Reach partnership, the revenue increase came to 10%. That evolution is very much in line with our EBITDA growth year-on-year, which was also 10%.
Considering the full year 2023 and 2022, our EBITDA almost doubled, going from BRL 263 million to BRL 522 million. Even if we exclude the effect of the sales of part of our debt judgments, still that growth was very significant of 65% year-on-year. Next slide, please. Now let's talk about OpEx. Also, if we exclude the Reach partnership, the increase was 80%, considering in the fourth quarter of 2023 and 2022, and 10% considering the full years. In terms of G&A growth, that growth was significant, especially if we compare 4Q 2023 against 2022.
There are some main factors here. First, the acquisition of EnvironPact, and EnvironPact's figures were not consolidated in our numbers before because we only had 50% stake in the company. The second reason is the bonus and profit-sharing provision. If you remember, our performance last year was beyond our expectations, but this year we exceeded our goals, so the bonus provision was adjusted accordingly. Now let's take a look at our consolidated CapEx. In 4Q 2023, we posted BRL 65 million, and I would like to highlight the acquisition of a new ROV for a new contract that we landed.
If we look at the full year, we reached BRL 313 million and we bought two Rochedo vessels, São Pedro and São Paulo. Now let's talk about our financial performance. We finished the year at BRL 264 million in cash, pretty much in line with our cash in 3Q 2023. In terms of bank debt and leverage, we finished the year with BRL 874 million in debt, almost exactly the same as in 4Q 2022. Since our EBITDA increased so much, our net debt to EBITDA ratio went down from 2.9 x to 1.6 x. Now, I would like to turn it back to Flavio to continue our presentation.
Thank you very much, Eduardo, Haroldo, and Adriano. Here you can see some details about our backlog. We added BRL 798 million in new contracts in 4Q 2023. Naturally, this number does not include the OSRVs and PSV bids in which we have a very good position, but we have not signed those contracts yet. The highlight here is the mooring line inspection contract with Petrobras, which is a very good one and in which we are going to have productivity gains under our control.
These are service contracts that we believe in, and Petrobras has announced interest in increasing the number of such contracts. Instead of paying just daily rates for the ROVs, Petrobras would pay per productivity as well, or per number of systems that are inspected or inspection reports. Another highlight here is the BRL 63 million coming from Opal, which is a vessel that had its contract extended with an increase in the daily rates.
This might happen again when Petrobras decides to extend the contracts instead of having a new bid. They will know in that case that the daily rates are not what they should be. That could be positive for our mutual interests. We are not going to have any downtime in those vessels. We're not going to have to invest any additional CapEx, but on the other side, the daily rates would be improved.
We finished the year with BRL 2.296 billion in backlog. Let's talk about sustainability and innovation. We should remember that sustainability is our business. This is where we started, and this is what we are working on still. We are improving our structure to reflect that and also to support our work in that segment. That's why we want to have a governance sustainability structure.
We also participated in COP 28 in the Blue Pavilion. It was a great experience. We talked about the science and sustainability for oceans, and these are such important subjects that I think it is related to the highlight on the right-hand side of the screen, which is the first contract for OceanPact Digital, which we signed in December 2023. What is OceanPact Digital? If you attended OceanPact Day last year, you saw some spoilers about what that system would be.
This is a web-based system where we store data about oceans, including environmental data and also sensitivity of the coast. We map the sea structures. We also have weather data and data about the currents measured in real time. It's many types of data that will be organized and structured, and each client will be able to choose which type of data they want to use. We have already five contracts for this product, and I think this product is such a great one that it will drive our ability to acquire more and more data. It will also help us use this data better and better. For sure, I believe that we have new horizons to explore. This is a very scalable system.
With the investment that we placed on this batch, we will be able to sell this product to many clients, and I'm sure that we are going to talk about this subject many times over in our coming calls. These are our closing remarks before we move to the Q&A session. First, the market. The FPSOs are increasing in number. We have already three contracts and 22 in total by 2029. Also, the increase of oil production in Brazil is already here.
We know that the production will increase, and that will drive the demand for vessels and services as well. We don't have any news of new vessels being built. Equinor created a new vessel that is driven by ammonia, but it is an experimental pilot, if you will. We have new promising emerging markets, for example, Guyana, Namibia, and maybe in the equatorial margin.
I believe that all of those new markets would add to the actual reality that we already have, which is in the Santos and Campos Basin, in which we are going to need FPSOs, and we are not going to have any additional vessels being built. We said that since 2016, many vessels became scrap. They were useless. As Haroldo said many times, we have a huge number of contracts that will expire in 2024 and 2025. All of those contracts have daily rates that need to be adjusted. When they expire, we are going to have new bids, and the daily rates will increase significantly. Alternatively, there is the possibility that the current contracts will be extended, and the daily rates will also be adjusted upwards.
We are not going to have any gaps in the operation. Also, we are not going to have to invest any additional CapEx. That is our strategy. We want to be selective in our contracts. We also want to factor in the opportunity costs for our vessels. We know that the amounts are going up for the vessels. We do not have any secondhand vessels available in the market to acquire as we did in 2020 and 2021.
That is not the case anymore. The vessels have increased in price. Now we have a contrary demand from the market. People ask us if we want to sell our vessels. Every single week, we are contacted by someone who wants to buy our vessels. We are in a very good position, and we have to be cautious in our work to price our assets accordingly. That is it on our side. We are here to take any questions you might have. Thank you.
We will now begin the Q&A session. To ask a question, please click the Q&A icon at the bottom of your screen. If you wish to have your microphone enabled to ask your question, please request so in the Q&A field, and we are going to activate your microphone later when your name is called. You may also submit your question in writing. If you wish to do so, please type in your question in the Q&A field. The first question comes from Monique Greco with Itaú BBA.
Hello, good morning. Thank you very much for taking our questions. I have three questions, if you allow me. The first one is, as contracts expire and you need to mobilize vessels, it is natural that the utilization rate goes down, and you published guidance for 2024 utilization rate in 2024. I would like to know if you can give us any color about what the utilization rate should be in 2025. Also, if you could share with us some expectations about CapEx for 2024 and 2025, that would be great, considering the mobilizations and dockings that are necessary for you to execute the contracts.
The third question is a follow-up on what Flavio said in terms of the vessel market heating up. You said that you are contacted all the time to sell your vessels, and you also said that there are no vessels available to be acquired. Do you think that that movement is more concentrated in a specific type of vessel, or has that affected all types of vessels that you have? Thank you very much.
Thank you, Monique. Your questions are great, actually. I will try to start with the third one because this is the point that I mentioned last in the presentation. Well, we have been contacted about ROVs and RSVs with cranes, and we receive questions about that all the time, but also PSVs. ROVs and RSV and PSVs, they have been the subject of questions by many operators, and the amounts are interesting, the prices are interesting. We believe that the daily rates will also increase in the same rate, which is a good reason for us to continue to operate and invest in our fleet. Now, as for your question about 2024 and 2025 CapEx and also the mobilizations, I would like Eduardo to address those questions.
Thank you very much, Monique, for your question. You asked about CapEx, and that is also related to the first question that you asked. I will give the floor to Haroldo to complement the answer about the first question. So as far as CapEx goes, considering the volume of mobilizations in 2024 and 2025, and there are many contracts that will expire in 2025 too, our perspective is that the CapEx volume will be in line with the 2023 CapEx level. We should remember that we acquired two vessels in 2023. In our forecast for the CapEx to be in line with 2023, we are not including the acquisition of new vessels.
However, we will have a high level of mobilization, so we will have to prepare the vessels for the new contract. So one thing will compensate for the other. So our expectations are for our CapEx to remain in line with the 2023 level. Now, utilization rate. We have fewer contracts for 2025 than 2024. So that could lead us to believe that the utilization rate will be higher in 2024. However, in 2025, some very significant contracts will expire for vessels and ROVs as well. So that obviously will give us a better utilization rate, but some contracts will expire. Some significant ones will expire, especially for ROVs. Now, Haroldo, would you like to complement?
Well, that is basically it, as you mentioned, Eduardo. As we saw for 2024, we are going to have more mobilizations than we did in 2023, which will impact our utilization rate. We have good visibility for 2025, obviously not so clearly as for 2024. But we should not have such a great impact on the utilization rate as we are going to have in 2024. But we are going to have more mobilizations in comparison with 2023. So I think 2025 will be right in the middle between the levels for 2023 and 2024.
Thank you very much. That was very clear.
We have another question from Gustavo Sadka from Bradesco BBI.
Good morning, Flavio, Haroldo, everybody. My first question is about cash generation. This quarter, you had a very strong cash generation with a positive contribution in working capital. Can you comment a little bit more about the effects on working capital and what can we expect going forward? Also, I remember that the company had disclosed the calculation for the daily rates as of that time when you published those details. Can you update that calculation considering the current daily rates?
Okay, thank you for your question. The first one is cash generation, is about cash generation. Indeed, Q3 2023 was very positive with significant working capital contribution. But I think it was driven by one-off situation, isolated situations. There are some recurring effects as well, but mostly they are one-off situations. We had some vessels that had to go or undergo maintenance, or they entered into new contracts and that had an impact on working capital and also taxes. We have to file all documents and also fulfill our tax obligations to use our tax credits.
And that happens typically in the first quarter of the year, and in the second quarter, we start using those credits, and that also consumes working capital. Those are one-off situations. As for recurring effects, we have new contracts with Petrobras, which have more typical payment terms. In the past, Petrobras had longer payment terms, but now it is more in line with the rest of the market, and that has a more permanent effect or a benefit.
But that was mainly driven by one-off situations. For the first and second quarters of 2024, you can expect investment in working capital as our revenue goes back to the normal levels. And also there are some effects related to labor issues. Last year, we negotiated with the maritime workers, and that negotiation was finished only in December. So the wage updates will be paid in January and February.
Also, we had the bonus and profit-sharing provision. We are going to start paying in the second quarter of the year. And also the taxes. We are going to pay some of those taxes in the first and second quarters of the year, and we are going to use the credits in the second half of the year. So that's what you are going to see in terms of working capital. The second question was related to EBITDA. Please, can you repeat the second question?
Yes, I would like to know the EBITDA calculation considering the new daily rates.
Well, we are going to calculate those numbers and disclose them in June on OceanPact Day. Certainly, it is going to be higher than the previous number, but we don't have any figures to disclose right now. We are going to redo the math, and of course, there are so many bids undergoing right now. And until June, we are going to see a completion in those negotiations and therefore we are going to be able to provide you with a clearer vision and projection.
Now we have a question that was submitted in writing. Considering the increase in daily rates in new contracts, how much should we expect in percentage terms?
Well, thank you very much for submitting that question. Well, if we consider that the existing contracts will be extended for another year, we should expect the increases to be around 25%-30% if we continue the operation without any interruptions. For the new bids, that is going to vary. It will depend on how old the contract is and how much the daily rate should be updated. It could be 50%, for example, in the OSRVs, and it could be even 100% in the case of RSVs. That's what you should expect. Thank you very much.
Now we have a question from Frederico Nobre, from Warren.
Thank you very much for taking my question. Good morning, everybody. My question is related to your debt, the company's debt. In 2023, as you mentioned in the presentation, the company would need to go through a deleverage process with an increase in EBITDA, and you delivered on that. And we can see the reflection of that in the increase in your numbers. And this quarter, we also had a repayment of debt, and we can see that your operating cash generation was related also to financial operations. I would like to know more about what you are expecting for your capital structure for 2024 and 2025, and how do you think you are going to use that cash, considering that the profitability level of the company will continue.
Thank you very much for your question, Frederico. Well, overall, I believe that we are going to see a decrease in our net debt. It is going to be a gradual decrease, not a sharp one, especially in 2024 and 2025. As I said earlier, those are years in which we are going to see a number of vessels with contracts expiring. We are going to see significant mobilization and CapEx in these two years, as I mentioned when I answered the previous question. Because of that, our net debt is going to go down gradually.
But in any case, EBITDA will continue to grow, obviously not in the same pace as in 2023 in comparison with 2022, because for the next two years, our fleet is going to remain stable. But because of increased daily rates, we are going to see also an increase in EBITDA. So for 2024 and 2025, we are going to see a decrease in net debt and an increase in EBITDA. Our free cash flow is going to be stronger. We can pay dividends, decrease our net debt, and other possibilities. I think a range of possibilities will open up for us, but it is too early to say what is going to happen in 2026. But for sure, we are going to see a significant cash generation if things continue in the same path.
Thank you very much.
We have another question submitted in writing from Carlos Barros. Considering the contracts that are expiring, I would like to ask about the term of contracts for vessels that will not be used because they are going to need to wait until the new contracts are assigned after the bid. What I mean to ask here is basically how long should we expect to wait until we have the completion of a new bidding process?
Well, since we do not have new vessels in the market, and since Petrobras cannot even get the number of vessels that they want, what happens is that the vessels with contracts that are expiring, they are going to be renewed. The contracts will be extended. Since the bidding process was not finished in the deadline that they needed, what happens is that Petrobras decided to extend the existing contract. So our vessels will not going to be docked because the contract expired.
It is docked after we win a new contract, and usually we have to adjust some things in the vessel, and it takes some time. Usually, Petrobras requests some adjustments and that requires CapEx and time as well. But in the example that you provided in your question, that is not the case. Another important piece of information is that this process can take up to one year. For example, Petrobras announces the bid, and then they postpone it three or four times. So it takes four months for us to actually get the bidding process started, and then another three years to get the result and another two months to sign the contract. So, it takes roughly one year, and that is why they are now starting bidding processes for vessels that they will receive only in 2025.
Again, if you would like to ask questions, please use the Q&A icon at the bottom of your screen and let us know if you would like to enable your microphone to ask your question. Alternatively, you can submit your question in writing by typing your question in the Q&A field. We have another question in writing from an anonymous attendee, and the question is, I would like to know more about your expectations for the lawsuits against Petrobras. Can we expect to receive a judgment in the first half of the year? We have another two questions from anonymous attendees, but let's start with the first one, and then I'll mention the other two.
Okay, thank you. Well, for the first half of the year, I'm sure that we are not going to have any of those lawsuits being judged. What we expect to see is the lawsuits for UP Coral and UP Turquoise. We expect those lawsuits to be resolved by the Superior Court of Justice, and the UP Coral lawsuit actually became final and unappealable, but Petrobras tried to appeal, and we have to wait to see what's going to happen.
For the other one, Petrobras also appealed to the full bench of the Superior Court of Justice, and we are going to hear a decision about those two subjects, the UP Coral and UP Turquoise lawsuits. Both decisions became final and unappealable. They are at the very same stage in the procedure. What the attorneys told us in the past is that once the decision becomes final and unappealable, we have the right to execute the lawsuit, and that should take up until two years, but it can also take shorter than that. But that's what our attorneys told us.
Yes, exactly, Eduardo. Precedents tell us that the Superior Court of Justice will say that this is a contractual dispute, so this should be resolved at the appellate court level and not at the Superior Court of Justice level. That's our expectation. We believe that the courts will follow the precedents that we have so far.
Now we have two questions submitted in writing. The first one is about the M&A environment in the sector. Are there vessels available for acquisition today, and whose vessels are they? Do you have any update about the Parcel dos Meros vessel and also vessels that are laid up?
Well, there are vessels for acquisition today, of course, but we have to consider the prices. Prices have gone up drastically, and I think that I mentioned this before, Parcel dos Reis used to be called Larissa. We bought it for $18 million, but we have received offers of $40 million for that vessel. So prices have increased. It's not an easy task to find good vessels available for purchase. The good ones are extremely expensive right now.
As for the M&A environment, while we are always paying attention to it, we can see some movements going on. We can see some companies buying almost the entire fleet of other companies. So, I think that there are movements going on, but as the market sees daily rates go up, the companies that had a high leverage rate and their equity is close to nothing in terms of value, well, that might be advantageous for them. That's probably what's driving those movements.
As for your second question, we do not have any updates to give you about Parcel dos Meros and our two PSVs that are laid up. But we are paying attention to opportunities that may arise. Parcel dos Meros has its own issues with our Norwegian partner, and at the same time, we are studying new opportunities. It could be a purchase, or it could be a lease, but it all depends on what is going to happen between the negotiations between them and their creditors, their banks.
We have another question submitted in writing. What should we expect in terms of the normal EBITDA level for the service and vessel segments?
Thank you very much for that question. Well, when it comes to services, I believe that this year our EBITDA margin was 30%, which I believe is a very solid margin. There are so many good things going on in this segment, so I cannot say really how this is going to evolve going forward. We saw a recent movement in terms of bringing all service business units under the same person, under Adriano, and I think it is going to depend on how we can cross-sell the services.
There are many positive factors that are going to impact our margin. 30% is our current level, but I think that we could make progress on it. Let us see what is going to happen, but now we have Adriano leading this segment, and we should expect good things. When it comes to the vessel segment, coincidentally, we have a margin that is at 28%, 29%, 30%, at the same level as the service segment. I think that is the current level, and I think there is an upward trend here.
As we mentioned in our OceanPact Day event last year, if we use the same calculation for the current situation, the current daily rates, that margin will naturally go up. So it would not be unthinkable to imagine that we could reach 40% margins in this market, in the dynamics that Flavio explained to you. So I think that going forward, we should reach levels as high as those at 40%.
This concludes the Q&A session. I would like to turn it back to the company's executives for his closing remarks. Thank you.
Thank you very much, Doris. I would like to turn it over to Eduardo for his closing remarks that have become a tradition already in our calls.
Well, first, we always try to give you some color on the current quarter. And since this quarter, we have already evolved. We are three months in the quarter already in March, so we can see a clear picture about what the first quarter 2024 has been. And I can tell you that it has been a solid quarter, especially considering the service contracts. We have a great portfolio for some of them with a good productivity, as Flavio mentioned, and we have great news on that side of the business.
So great indeed that our expectations are exceeding the best quarter that we have had so far in operational terms, which was 3Q 2023. Obviously, we should not reach the level that we had in 2Q 2023 in terms of EBITDA, because we had the partial sale of the judgments. But we believe that we should come right in the middle of the results in 2Q and 3Q, exceeding 3Q 2023 in terms of EBITDA.
This is what I would like to tell you about the current quarter, 1Q 2024. For the rest of the year, for the rest of the quarters, we believe that we are going to reach the market consensus, and the positive environment will continue and will bring opportunities that we have not mapped out yet. We are going to have, or we might have good surprises as we had in the previous quarters. This is just to give you more color about the current quarter, 1Q 2024, and the rest of the year of 2024.
Thank you very much, Eduardo. As I wrote in the results release, the fact that vessels and services are so strong is very positive for us, and that is also what is driving the good opportunities that Eduardo mentioned. We are very happy about the results, very optimistic. We are going to continue to work as hard as we can. Thank you once again for your interest in our company. See you next time. Bye-bye.
This concludes OceanPact's earnings call for today. Thank you very much for your participation. Have a good day.