ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) below presents the Company’s operating results for each of the three years in the period ended December 31, 2025, and its financial condition as of December 31, 2025 and 2024. Certain statements in this MD&A constitute forward-looking statements. See “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K.
The following MD&A is intended to help the reader understand the results of operations and financial condition of the Company. The MD&A is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and related notes included in Part IV of this Annual Report on Form 10-K and incorporated herein by reference.
Overv iew
The Company provides global marine and support transportation services to offshore energy facilities worldwide. As of December 31, 2025, the Company operated a fleet of 44 support vessels, of which all were owned. 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.
Recent Dev elopments
Cost Reduction Measures
During the fourth quarter of 2025, the Company initiated certain cost reduction measures to better align its operating expenses with the current state of the offshore marine industry, in general, and its business, in particular. These measures include a reduction of workforce, reorganization of the management structure and streamlining of operations. For the year ended December 31, 2025, the Company incurred one-time charges totaling $1.2 million related to severance charges arising from a reduction in workforce resulting in a decrease in annualized wages and benefits expenses of at least $3.9 million. Management continues to focus on optimizing the cost structure and regional footprint of the business to help maintain the Company’s competitiveness in the industry, improve its operating leverage and position itself to take advantage of market opportunities.
Vessel Sales
On December 19, 2025, the Company completed the sale of one 201 foot, DP-2 PSV built in 2013 for total proceeds of $13.4 million and a gain of approximately $8.1 million. Approximately $11.0 million of these sale proceeds were designated to make future payments on the construction of two PSVs and deposited in a restricted account.
On September 29, 2025, the Company completed the sale of the U.S. flag liftboat LB Jill and the U.S. flag liftboat LB Robert (together, the “Liftboat Sales”) for total proceeds of $76.0 million. In addition, concurrently with the closing of the Liftboat Sales, the Company sold certain uninstalled vessel equipment for total proceeds of $1.0 million (the “Equipment Sale”). After deducting transaction costs and expenses, the Company received net cash proceeds of $74.7 million and recognized a gain of $30.5 million for the Liftboat Sales and the Equipment Sale. None of the sale proceeds from the Liftboat Sales and the Equipment Sale are encumbered by the Company’s 2024 SMFH Credit Facility or required to be used to repay such facility.
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. Approximately $3.8 million of these sale proceeds were 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. Approximately $12.9 million of these sale proceeds were used to complete the Securities Repurchase (as defined below), and approximately $10.9 million was designated to make future payments on the construction of two PSVs and deposited in a restricted account.
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.
Trends Affecting the Of fshore Marine Business
Oil and Natural Gas Prices
The market for offshore oil and natural gas drilling has historically been cyclical. Demand for offshore support vessels is highly correlated to the price of oil and natural gas as those prices significantly impact the Company’s customers’ exploration and drilling activity levels. Oil and natural gas prices tend to fluctuate based on many factors, including global economic activity, levels of reserves and production activity. Price levels for oil and natural gas have and will continue to influence demand for offshore marine services. In addition to the price of oil and natural gas, the availability of acreage, local tax incentives or disincentives in significant oil and natural gas producing regions, drilling moratoriums and other regulatory actions, and requirements for maintaining interests in leases affect activity in the offshore oil and natural gas industry. Factors that influence the level of offshore exploration and drilling activities include:
expectations as to future oil and natural gas commodity prices;
customer assessments of offshore drilling prospects compared with land-based opportunities, including newer or unconventional opportunities such as shale;
expectations as to the future demand for oil and natural gas in the context of plans for the transition to non-hydrocarbon based sources of energy;
customer assessments of cost, geological opportunity and political stability in host countries;
worldwide demand for oil and natural gas;
the ability or willingness of OPEC to set and maintain production levels and pricing;
military conflicts and terrorism in oil producing regions, including the Middle East, Venezuela and Russia;
the level of oil and natural gas production by non-OPEC countries;
transitions to and demand for non-hydrocarbon based energy sources and uncertainty related to national and supranational attitudes towards energy transition;
the relative exchange rates for the U.S. dollar; and
various U.S. and international government policies regarding exploration and development of oil and natural gas reserves, which have been becoming increasingly unpredictable in recent years.
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 2025, WTI oil prices reached a high of $81 per barrel and a low of $55 per barrel, ending the year at $57 per barrel.
While the Company has experienced difficult market conditions over the past few years due to volatile oil and natural gas prices and the focus of oil and natural gas producing companies on cost and capital discipline, 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 new projects.
Vessel Supply Dynamics and Other Industry Drivers
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 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 natural gas, particularly in the context of expanded power generation demand worldwide. 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 to the extent that 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 drydocking 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 December 31, 2025, one of the Company’s 44 owned vessels was cold-stacked worldwide. In addition, the Company had two vessels classified as held for sale as of December 31, 2025.
Inflation
The Company’s operations expose it to the effects of inflation. Inflation has become a significant factor in the world economy post-pandemic and has led to an increased interest rate environment as well as inflationary pressures on the Company’s operations, including but not limited to increased labor, repairs and maintenance, transportation and insurance costs. The Company’s borrowing is on a fixed rate basis and therefore interest rate fluctuations no longer affect the interest costs reflected in the Company’s financial results.
Certain Components of Revenues and Expenses
The Company operates its fleet in four principal geographic regions: the U.S., primarily in the Gulf of America; Africa and Europe; the Middle East and Asia; and Latin America, primarily in Guyana and Mexico. 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. 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.
Time charter statistics are the key performance indicators for the Company’s time charter revenues. The rate per day worked is the ratio of total time charter revenues to the aggregate number of days worked. Utilization is the ratio of aggregate number of days worked to total available days for all vessels available for time charter. Unless vessels have been retired and removed from service, available days represents the total calendar days for which vessels available for time charter were owned or leased-in by the Company, whether marketed, under repair, cold-stacked or otherwise out-of-service.
Operating Revenues. The Company generates revenues by providing services to customers primarily pursuant to two different types of contractual arrangements: time charters and bareboat charters. Under a time charter, the Company provides a vessel to a customer and is responsible for all operating expenses, typically excluding fuel. Under a bareboat charter, the Company provides a vessel to a customer and the customer assumes responsibility for all operating expenses and all risks of operation. Vessel charters may range from several days to several years.
Direct Operating Expenses. The aggregate cost of operating the Company’s fleet depends primarily on the size and asset mix of the fleet. The Company’s direct operating costs and expenses, other than leased-in equipment expense, are grouped into the following categories:
personnel (primarily wages, benefits, payroll taxes, savings plans, training and travel for marine personnel);
repairs and maintenance (primarily routine repairs and maintenance and main engine overhauls that are performed in accordance with planned maintenance programs);
drydocking (primarily the cost of regulatory drydockings performed in accordance with applicable regulations);
insurance and loss reserves (primarily the cost of Hull and Machinery and Protection and Indemnity insurance premiums and loss deductibles);
fuel, lubes and supplies; and
other (brokers’ commissions, communication costs, expenses incurred in mobilizing vessels between geographic regions, third party ship management fees, freight expenses, customs and importation duties and other).
The Company expenses drydocking, engine overhaul and vessel mobilization costs as incurred. If a disproportionate number of drydockings, overhauls or mobilizations are undertaken in a particular fiscal year or quarter, operating expenses may vary significantly when compared with the prior year or prior quarter.
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 segments, without regard to financing decisions (depreciation and interest expense for owned vessels vs. lease expense for leased-in vessels). See “Note 16. Major Customers and Segment Information” in the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Leased-in Equipment. In addition to the Company’s owned fleet, it operated one leased-in vessel from a lessor under a bareboat charter arrangement that expired during 2024. This vessel was previously owned and subject to a sale and leaseback transaction with the lessor.
Impairments. When reviewing its fleet for impairment, the Company groups vessels with similar operating and marketing characteristics, including cold-stacked vessels expected to return to active service, into vessel classes. All other vessels, including vessels retired and removed from service, are evaluated for impairment on a vessel by vessel basis.
During 2025, the Company did not record impairment charges on any owned vessels. During 2024, the Company recorded impairment charges of $3.7 million for other equipment. During 2023, the Company recorded impairment charges of $0.7 million for one leased-in AHTS. Estimated fair values for the Company’s owned vessels are established by independent appraisers and other market data such as recent sales of similar vessels. For information regarding the Company’s vessel fair value measurement determinations, see “Note 8. Fair Value Measurements” in the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For vessel classes and individual vessels with indicators of impairment, but which were not impaired as of December 31, 2025, the Company has assessed that their estimated fair value exceeds their current carrying values. Fair value determination is primarily accomplished by obtaining independent valuations of vessel or vessel classes from qualified third party appraisers and other market data such as recent sales of similar vessels. As markets change, the impact of vessel impairments will be evaluated.
Consolidated Resul ts of Operations
For the years ended December 31, the Company’s consolidated results of operations were as follows (in thousands, except statistics):
Time Charter Statistics:
Average Rates Per Day
Fleet Utilization
Fleet Available Days
Operating revenues:
Time charter
Bareboat charter
Other marine services
Costs and Expenses:
Operating:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Lease expense
Administrative and general
Depreciation and amortization
Gains on Asset Dispositions and Impairments, Net
Operating Income (Loss)
Other Expense, Net
Loss Before Income Tax Expense (Benefit) and Equity in Earnings of 50% or Less Owned Companies
Income Tax Expense (Benefit)
Loss Before Equity in Earnings of 50% or Less Owned Companies
Equity in Earnings of 50% or Less Owned Companies
Net Loss
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):
United States
(primarily Gulf
of America)
Africa and Europe
Middle East
and Asia
Latin
America
Total
For the year ended December 31, 2025
Time Charter Statistics:
Average Rates Per Day
Fleet Utilization
Fleet Available Days
Operating Revenues:
Time charter
Bareboat charter
Other marine services
Direct Costs and Expenses:
Operating:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Direct Vessel (Loss) Profit
Other Costs and Expenses:
Lease expense
Administrative and general
Depreciation and amortization
Gains on asset dispositions and impairments, net
Operating income
As of December 31, 2025
Property and Equipment:
Historical cost
Accumulated depreciation
Total Assets (1)
Total Assets exclude $90.0 million of corporate assets.
United States
(primarily Gulf
of America)
Africa and Europe
Middle East
and Asia
Latin
America
Total
For the year ended December 31, 2024
Time Charter Statistics:
Average Rates Per Day
Fleet Utilization
Fleet Available Days
Operating Revenues:
Time charter
Bareboat charter
Other marine services
Direct Costs and Expenses:
Operating:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Direct Vessel (Loss) Profit
Other Costs and Expenses:
Lease expense
Administrative and general
Depreciation and amortization
Gains on asset dispositions and impairments, net
Operating loss
As of December 31, 2024
Property and Equipment:
Historical cost
Accumulated depreciation
Total Assets (1)
Total Assets exclude $73.6 million of corporate assets.
United States
(primarily Gulf
of America)
Africa and Europe
Middle East
and Asia
Latin
America
Total
For the year ended December 31, 2023
Time Charter Statistics:
Average Rates Per Day
Fleet Utilization
Fleet Available Days
Operating Revenues:
Time charter
Bareboat charter
Other marine services
Direct Costs and Expenses:
Operating:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Direct Vessel Profit
Other Costs and Expenses:
Lease expense
Administrative and general
Depreciation and amortization
Gains on asset dispositions and impairments, net
Operating income
As of December 31, 2023
Property and Equipment:
Historical cost
Accumulated depreciation
Total Assets (1)
Total Assets exclude $71.3 million of corporate assets.
The following tables summarize the world-wide operating results and property and equipment for each of the Company’s vessel classes for the periods indicated (in thousands, except statistics):
AHTS
FSV
PSV
Liftboats
Other
Activity
Total
For the year ended December 31, 2025
Time Charter Statistics:
Average Rates Per Day
Fleet Utilization
Fleet Available Days
Operating Revenues:
Time charter
Bareboat charter
Other marine services
Direct Costs and Expenses:
Operating:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Other Costs and Expenses:
Lease expense
Administrative and general
Depreciation and amortization
Gains on asset dispositions and impairments, net
Operating income
As of December 31, 2025
Property and Equipment:
Historical cost
Accumulated depreciation
AHTS
FSV
PSV
Liftboats
Other
Activity
Total
For the year ended December 31, 2024
Time Charter Statistics:
Average Rates Per Day
Fleet Utilization
Fleet Available Days
Operating Revenues:
Time charter
Bareboat charter
Other marine services
Direct Costs and Expenses:
Operating:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Other Costs and Expenses:
Lease expense
Administrative and general
Depreciation and amortization
Gains on asset dispositions and impairments, net
Operating loss
As of December 31, 2024
Property and Equipment:
Historical cost
Accumulated depreciation
AHTS
FSV
PSV
Liftboats
Other
Activity
Total
For the year ended December 31, 2023
Time Charter Statistics:
Average Rates Per Day
Fleet Utilization
Fleet Available Days
Operating Revenues:
Time charter
Bareboat charter
Other marine services
Direct Costs and Expenses:
Operating:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Other Costs and Expenses:
Lease expense
Administrative and general
Depreciation and amortization
Gains on asset dispositions and impairments, net
Operating income
As of December 31, 2023
Property and Equipment:
Historical cost
Accumulated depreciation
Operating Income (Loss)
United States, primarily Gulf of America. For the years ended December 31, the Company’s direct vessel (loss) profit in the U.S. was as follows (in thousands, except statistics):
Time Charter Statistics:
Rates Per Day Worked:
AHTS
FSV
PSV
Liftboats
Overall
Utilization:
AHTS
FSV
PSV
Liftboats
Overall
Available Days:
AHTS
FSV
PSV
Liftboats
Overall
Operating revenues:
Time charter
Other marine services
Direct operating expenses:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Direct Vessel (Loss) Profit
2025 compared with 2024
Operating Revenues. Charter revenues were $1.4 million higher in 2025 compared with 2024. Charter revenues were $7.9 million higher due to the repositioning of two vessels into the region subsequent to 2024. Charter revenues were $4.4 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 six vessels, due to lower utilization of 44% in 2025 compared to 49% in 2024 offset by higher average day rates of $25,065 in 2025 compared to $24,428 in 2024. Charter revenues were $2.1 million lower due to net asset dispositions. Other marine services were $0.9 million lower primarily due to lower management fees. As of December 31, 2025, the Company had one of seven owned vessels (one FSV) cold-stacked in this region compared with two of 10 vessels as of December 31, 2024.
Direct Operating Expenses. Direct operating expenses were $5.5 million lower in 2025 compared with 2024. Direct operating expenses were $12.8 million lower for the Regional Core Fleet primarily due to the timing of drydocking and repair expenditures and $4.3 million lower due to net asset dispositions. Direct operating expenses were $11.6 million higher due to the repositioning of vessels between geographic regions.
2024 compared with 2023
Operating Revenues. Charter revenues were $9.9 million lower in 2024 compared with 2023. Charter revenues were $16.9 million lower due to the repositioning of vessels between geographic regions, as such repositioned vessels had 58 days worked at an average day rate of $60,628 in 2024 compared to 515 days worked at an average day rate of $39,741 in 2023, as well as $0.7 million lower due to the disposition of one vessel in the third quarter of 2023. Charter revenues were $7.7 million higher 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 nine vessels, due to higher utilization of 81% for one liftboat with a higher than average day rate of $49,914, partially offset by lower utilization of 35% for the remainder of the vessels. Other marine services were $13.9 million lower primarily due to non-recurring business interruption insurance revenue recorded in 2023 and lower mobilization revenues and management fees in 2024. As of December 31, 2024, the Company had two of 10 owned vessels (one liftboat and one FSV) cold-stacked in this region compared with two of 11 vessels as of December 31, 2023.
Direct Operating Expenses. Direct operating expenses were $4.1 million higher in 2024 compared with 2023. Direct operating expenses were $10.2 million higher for the Regional Core Fleet primarily due to the timing of drydocking and repair expenditures, $3.3 million lower due to the repositioning of vessels between geographic regions and $2.8 million lower due to net asset dispositions.
Africa and Europe. For the years ended December 31, the Company’s direct vessel profit in Africa and Europe was as follows (in thousands, except statistics):
Time Charter Statistics:
Rates Per Day Worked:
AHTS
FSV
PSV
Overall
Utilization:
AHTS
FSV
PSV
Overall
Available Days:
AHTS
FSV
PSV
Overall
Operating revenues:
Time charter
Other marine services
Direct operating expenses:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Direct Vessel Profit
2025 compared with 2024
Operating Revenues. Charter revenues were $9.4 million lower in 2025 compared with 2024. Charter revenues were $5.5 million lower for the Regional Core Fleet, which consists of 17 vessels, due to lower utilization of 76% in 2025 compared to 80% in 2024 and lower average day rates of $17,966 in 2025 compared to $18,403 in 2024. Charter revenues were $4.4 million lower due to the disposition of two vessels subsequent to 2024. Charter revenues were $0.5 million higher due to the repositioning of one vessel into the region subsequent to 2024. Other marine services were $2.3 million lower primarily due to lower mobilization revenues. As of December 31, 2025 and 2024, the Company had no vessels cold-stacked in this region.
Direct Operating Expenses. Direct operating expenses were $1.7 million higher in 2025 compared with 2024. Direct operating expenses were $6.0 million higher for the Regional Core Fleet primarily due to the timing of repair expenditures and $0.8 million higher due to the repositioning of vessels between geographic regions and $5.1 million lower due to net asset dispositions.
2024 compared with 2023
Operating Revenues. Charter revenues were $11.7 million higher in 2024 compared with 2023. Charter revenues were $12.0 million higher due to the repositioning of three vessels into the region in 2024, $1.2 million higher for the Regional Core Fleet, which consists of 18 vessels, due to higher average day rates of $17,033 in 2024 compared to $14,733 in 2023, substantially offset by lower utilization of 79% in 2024 compared to 89% in 2023 and $1.5 million lower due to the disposition of one vessel in 2024. Other marine services were $2.7 million higher primarily due to higher mobilization revenues. As of December 31, 2024, the Company had no vessels cold-stacked in this region compared with one of 19 vessels that was classified as held for sale as of December 31, 2023.
Direct Operating Expenses. Direct operating expenses were $10.8 million higher in 2024 compared with 2023. Direct operating expenses were $11.3 million higher due to the repositioning of vessels between geographic regions, $0.4 million higher for the Regional Core Fleet primarily due to the timing of repair expenditures and $0.9 million lower due to net asset dispositions.
Middle East and Asia. For the years ended December 31, the Company’s direct vessel profit in the Middle East and Asia was as follows (in thousands, except statistics):
Time Charter Statistics:
Rates Per Day Worked:
AHTS
FSV
PSV
Liftboats
Overall
Utilization:
AHTS
FSV
PSV
Liftboats
Overall
Available Days:
AHTS
FSV
PSV
Liftboats
Overall
Operating revenues:
Time charter
Other marine services
Direct operating expenses:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Direct Vessel Profit
2025 compared with 2024
Operating Revenues . Charter revenues were $15.7 million lower in 2025 compared with 2024. Charter revenues were $8.9 million lower for the Regional Core Fleet, which consists of 11 vessels, due to lower average day rates of $17,459 in 2025 compared to $19,473 in 2024 and lower utilization of 75% in 2025 compared to 78% in 2024. Charter revenues were $7.5 million lower due to the disposition of three vessels subsequent to 2024 and $0.7 million higher due to the repositioning of one vessel into the region. Other marine services were $0.4 million lower primarily due to lower catering revenues. As of December 31, 2025 and 2024, the Company had no vessels cold-stacked in this region.
Direct Operating Expenses. Direct operating expenses were $0.9 million higher in 2025 compared with 2024. Direct operating expenses were $5.5 million higher for the Regional Core Fleet primarily due to the timing of drydocking and repair expenditures and $2.2 million higher due to the repositioning of vessels between geographic regions. Direct operating expenses were $6.8 million lower due to net asset dispositions.
2024 compared with 2023
Operating Revenues . Charter revenues were $3.9 million higher in 2024 compared with 2023. Charter revenues were $9.5 million higher for the Regional Core Fleet, which consists of 14 vessels, due to higher average day rates of $17,356 in 2024 compared to $15,871 in 2023, and an increase in fleet utilization from 74% in 2023 to 79% in 2024. Charter revenues were $3.5 million lower due to the disposition of one vessel in 2023 and $2.1 million lower due to the repositioning of one vessel out of the region. Other marine services were $2.4 million lower primarily due to non-recurring business interruption insurance revenue recorded in 2023. As of December 31, 2024 and 2023, the Company had no vessels cold-stacked in this region.
Direct Operating Expenses. Direct operating expenses were $12.8 million higher in 2024 compared with 2023. Direct operating expenses were $15.3 million higher for the Regional Core Fleet primarily due to the timing of drydocking and repair expenditures and insurance reimbursements related to expenses in prior periods, $1.6 million lower due to net asset dispositions and $0.9 million lower due to the repositioning of vessels between geographic regions.
Latin America. For the years ended December 31, the Company’s direct vessel profit in Latin America was as follows (in thousands, except statistics):
Time Charter Statistics:
Rates Per Day Worked:
FSV
PSV
Liftboats
Overall
Utilization:
FSV
PSV
Liftboats
Overall
Available Days:
FSV
PSV
Liftboats
Overall
Operating revenues:
Time charter
Bareboat charter
Other marine services
Direct operating expenses:
Personnel
Repairs and maintenance
Drydocking
Insurance and loss reserves
Fuel, lubes and supplies
Other
Direct Vessel Profit
2025 compared with 2024
Operating Revenues. Charter revenues were $13.5 million lower in 2025 compared with 2024. Charter revenues were $21.8 million lower due to the repositioning of two vessels out of the region subsequent to 2024. Charter revenues were $8.3 million higher for the Regional Core Fleet, which consists of six vessels, primarily due to higher utilization of 68% in 2025 compared to 63% in 2024 and higher average day rates of $22,475 in 2025 compared to $19,388 in 2024. Other marine services were $2.8 million lower in 2025 compared with 2024 primarily due to lower catering revenues. As of December 31, 2025 and 2024, the Company had no vessels cold-stacked in this region.
Direct Operating Expenses. Direct operating expenses were $12.6 million lower in 2025 compared with 2024. Direct operating expenses were $9.0 million lower due to the repositioning of vessels between geographic regions and $3.6 million lower for the Regional Core Fleet primarily due to the timing of certain drydocking and repair expenditures.
2024 compared with 2023
Operating Revenues. Charter revenues were $2.8 million lower in 2024 compared with 2023. Charter revenues were $3.5 million lower due to the repositioning of five vessels out of the region, partially offset by the repositioning of two vessels into the region and $0.7 million higher for the Regional Core Fleet, which consists of eight vessels, primarily due to higher average day rates of $21,468 in 2024 compared to $18,455 in 2023, substantially offset by lower utilization of 63% in 2024 compared to 85% in 2023. Other marine services were $2.5 million higher in 2024 compared with 2023 primarily due to higher catering revenues. As of December 31, 2024 and 2023, the Company had no vessels cold-stacked in this region.
Direct Operating Expenses. Direct operating expenses were $9.9 million higher in 2024 compared with 2023. Direct operating expenses were $8.0 million higher for the Regional Core Fleet primarily due to the timing of certain drydocking and repair expenditures and $1.9 million higher due to the repositioning of vessels between geographic regions.
Other Operating Expenses
Lease expense. Leased-in equipment expenses were $0.5 million lower compared with 2024 primarily due to having no leased-in vessels in 2025 compared to one in 2024. Leased-in equipment expenses were $1.1 million lower for 2024 compared with 2023 primarily due to having one leased-in vessel in 2024 compared to two in 2023.
Administrative and general. Administrative and general expenses were $2.8 million higher in 2025 compared with 2024 primarily due to increases in professional fees of $2.8 million and increases in wages and benefits expenses of $0.7 million partially offset by decreases in allowance for credit losses of $0.8 million. Administrative and general expenses were $4.5 million lower in 2024 compared with 2023 primarily due to decreases in allowance for credit losses of $3.3 million and decreases in professional fees of $1.4 million partially offset by increases in wages and benefits expenses of $0.4 million.
Depreciation and amortization. Depreciation and amortization expenses were $4.6 million lower in 2025 compared with 2024 and $2.2 million lower in 2024 compared with 2023 primarily due to net fleet changes.
Gains (Losses) on Asset Dispositions and Impairments, Net. During 2025, the Company sold one FSV and two PSVs, previously classified as held for sale, as well as one PSV, three liftboats and other equipment not previously classified as held for sale for net cash proceeds of $129.2 million, after transaction costs, and a gain of $63.4 million.
During 2024, the Company sold one AHTS, previously classified as held for sale, two AHTS, not previously classified as held for sale, and other equipment for net cash proceeds of $24.9 million, after transaction costs, and a gain of $17.2 million. In addition, the Company recognized impairment charges of $3.7 million for other equipment designated for a construction project that was indefinitely deferred and will no longer be completed.
During 2023, the Company sold one liftboat, classified as held for sale, three liftboats and one specialty vessel, previously removed from service, one FSV and other equipment, previously classified as held for sale, as well as other equipment not previously classified as held for sale, for net cash proceeds of $44.7 million, after transaction costs, and a gain of $21.1 million. In addition, the Company recognized impairment charges of $0.7 million for one AHTS to adjust for indicative future cash flows and the cost to return the vessel to its owner.
Other Income (Expense), Net
For the years ended December 31, the Company’s other income (expense) was as follows (in thousands):
Other Income (Expense):
Interest income
Interest expense
Losses on debt extinguishment
Derivative gains (losses), net
Foreign currency losses, net
Gains on insurance claim settlement
Other, net
Interest Income. Interest income was nearly flat in 2025 compared with 2024 and in 2024 compared with 2023.
Interest expense. Interest expense was lower in 2025 compared to 2024 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. Interest expense was higher in 2024 compared to 2023 primarily due to a higher interest rate on the 2023 SMFH Credit Facility (which bore interest at a fixed rate of 11.75%) compared to the debt retired by the facility, which was entered into on September 8, 2023.
Losses on debt extinguishment. Loss on debt extinguishment was $31.9 million in 2024 due to the payoff of multiple credit facilities with the proceeds from the 2024 SMFH Credit Facility. Loss on debt extinguishment was $2.0 million in 2023 due to the payoff of the $130.0 million loan facility with a syndicate of lenders administered by DNB Bank ASA, dated September 26, 2018 (as amended from time to time, the “2018 SMFH Credit Facility”) for the 2023 SMFH Credit Facility.
Derivative gains (losses), net. Net derivative gains in 2025 compared with net derivative losses in 2024 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. As of December 31, 2025, the Company had no outstanding foreign exchange contract. Net derivative losses in 2024 compared with net derivative gains in 2023 were due to the strengthening 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 in 2025 compared with 2024 increased due to the weakening of the U.S. dollar in relation to the pound sterling. Net foreign currency losses in 2024 compared with 2023 decreased due to the strengthening of the U.S. dollar in relation to the pound sterling.
Gains on insurance claim settlement. Gains on insurance claim settlement in 2025 were due to the Company entering into insurance claim settlements for a total of $12.1 million, of which $4.6 million was in excess of an insurance claim receivable of $7.5 million previously deferred with respect to the liftboat LB Robert.
Income Tax Expense
For the year ending December 31, 2025, the Company’s effective income tax rate of 55.1% was primarily due to foreign taxes paid that are not creditable against U.S. income taxes and foreign losses for which there is no benefit in the U.S. for income tax purposes.
For the year ending December 31, 2024, the Company’s effective income tax rate of (3.1)% was primarily due to foreign taxes paid that are not creditable against U.S. income taxes and foreign losses for which there is no benefit in the U.S. for income tax purposes.
For the year ending December 31, 2023, the Company’s effective income tax rate of 216.2% was primarily due to foreign withholding taxes.
Equity in Earnings (Losses) of 50% or Less Owned Companies, Net of Tax
For the years ended December 31, the Company’s equity in earnings operations of 50% or less owned companies, net of tax, was as follows (in thousands):
SEACOR Marine Arabia
Other
2025 compared with 2024
SEACOR Marine Arabia. The decrease in equity earnings in 2025 from SEACOR Marine Arabia was due to decreased utilization.
2024 compared with 2023
SEACOR Marine Arabia. The decrease in equity earnings in 2024 from SEACOR Marine Arabia was due to decreased utilization.
Liquidity and Ca pital 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 2024 SMFH Credit Facility. 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 at-the-market offering program entered into on February 7, 2025 (the “ATM Program”), which has approximately $25.0 million of remaining sales capacity as of December 31, 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 December 31, 2025, the Company had unfunded capital commitments of $49.6 million consisting of $46.5 million in respect of the construction of two PSVs, $1.7 million in respect of two hybrid battery power systems and $1.4 million for miscellaneous vessel equipment. Of the unfunded capital commitments, $31.6 million is payable during 2026 and $18.0 million is payable during 2027. In accordance with the terms of the 2024 SMFH Credit Facility, $18.0 million of the proceeds from the sale of two AHTS in the fourth quarter of 2024 was designated to make payments on the construction of the 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. During the fourth quarter of 2025, $11.0 million of the proceeds from the sale of one PSV was also designated to make payments on the construction of the two PSVs. As of December 31, 2025, $23.5 million remained in a restricted account designated to make payments on the construction of the two PSVs. 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. $16.4 million of this tranche was drawn as of December 31, 2025, with the remaining $24.6 million of this tranche remaining undrawn and available.
As of December 31, 2025, the Company had outstanding debt of $334.6 million, net of debt discount and issuance costs. The Company’s contractual long-term debt maturities as of December 31, 2025 are as follows (in thousands):
Actual
Years subsequent to 2030
As of December 31, 2025 and December 31, 2024, the Company held balances of cash, cash equivalents and restricted cash totaling $93.1 million and $76.1 million, respectively.
For the years ended December 31, the following is a summary of the Company’s cash flows (in thousands):
Cash flows provided by or (used in):
Operating Activities
Investing Activities
Financing Activities
Effects of Exchange Rate Changes on Cash, Restricted Cash and Cash Equivalents
Net Change in Cash, Restricted Cash and Cash Equivalents
Operating Activities
Cash flows used in operating activities was $36.4 million in 2025, an increase of $26.1 million compared to $10.3 million in 2024, due to changes in working capital and one-time insurance claim settlements offset by a decrease in days worked primarily due to net fleet changes. For the years ended December 31, the components of cash flows (used in) provided by operating activities were as follows (in thousands):
DVP:
United States, primarily Gulf of America
Africa and Europe
Middle East and Asia
Latin America
Operating, leased-in equipment
Administrative and general (excluding provisions for bad debts and
amortization of share awards)
Gains on insurance claim settlement
Other, net (excluding non-cash losses)
Dividends received from 50% or less owned companies
Changes in operating assets and liabilities before interest and income taxes
Cash settlements on derivative transactions, net
Interest paid, excluding capitalized interest (1)
Interest received
Income taxes paid, net
Total cash flows (used in) provided by operating activities
During 2025, capitalized interest paid and included in the purchase of property and equipment was $2.4 million. During 2024 and 2023, 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 2025, net cash provided by investing activities was $80.4 million primarily as a result of the following:
capital expenditures were $48.8 million; and
the Company sold one FSV and two PSVs, previously classified as held for sale, as well as one PSV, three liftboats and other equipment not previously classified as held for sale for net cash proceeds of $129.2 million, after transaction costs, and a gain of $63.4 million.
During 2024, net cash provided by investing activities was $17.6 million primarily as a result of the following:
capital expenditures were $7.3 million; and
the Company sold one AHTS, previously classified as held for sale, two AHTS, not previously classified as held for sale, and other equipment for net cash proceeds of $24.9 million, after transaction costs, and a gain of $17.2 million.
During 2023, net cash provided by investing activities was $49.1 million primarily as a result of the following:
capital expenditures were $10.6 million;
the Company sold one liftboat, classified as held for sale, three liftboats and one specialty vessel, previously removed from service, one FSV and other equipment, previously classified as held for sale, as well as other equipment not previously classified as held for sale, for net cash proceeds of $44.7 million, after transaction costs, and a gain of $21.1 million; and
the Company received $15.0 million of principal payments under that certain MexMar Third A&R Facility Agreement, dated September 29, 2022.
Financing Activities
During 2025, net cash used in financing activities was $27.1 million primarily as a result of the following:
The Company made scheduled payments on long-term debt and other obligations of $27.5 million;
the Company received proceeds from the issuance of long-term debt of $15.8 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;
the Company made payments on tax withholdings for restricted stock vesting of $1.6 million.
During 2024, net cash used in financing activities was $15.3 million primarily as a result of the following:
The Company made scheduled payments on long-term debt and other obligations of $24.3 million;
the Company made payments for debt extinguishment of $328.7 million;
the Company made payments for debt extinguishment costs of $3.7 million;
the Company received proceeds from the issuance of long-term debt of $345.2 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.
During 2023, net cash used in financing activities was $17.0 million primarily as a result of the following:
The Company made scheduled payments on long-term debt and other obligations of $29.2 million;
the Company made payments for debt extinguishment of $131.6 million;
the Company made payments for debt extinguishment costs of $1.8 million;
the Company received proceeds from the issuance of long-term debt of $148.5 million;
the Company made payments on finance leases of $0.5 million;
the Company made payments on tax withholdings for restricted stock vesting of $2.4 million; and
the Company received net proceeds of less than $0.1 million from the issuance and sale of Common Stock through the Prior ATM Program.
Short and Long-Term Liquidity Requirements and Outlook
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 capacity under the ATM Program, will provide sufficient liquidity to meet its obligations, including to support its capital expenditures program, 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 $24.6 million remains available under Tranche B of the 2024 SMFH Credit Facility and $23.5 million of proceeds from vessel sales remained in a restricted account designated for these capital expenditures as of December 31, 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 2024 SMFH Credit Facility.
Future Cash Requirements
The Company’s primary future cash requirements will be to fund operations, debt service, capital expenditures, employee retirement benefit plans, and lease payment obligations. In addition, the Company may use cash in the future to make strategic acquisitions or investments. Specifically, the Company expects its primary cash requirements for fiscal year 2026 to be as follows:
Debt service — We expect to make principal and interest payments of approximately $64.2 million during fiscal year 2026 under our currently outstanding debt facilities based on interest rates at year end.
Capital expenditures — At this time, we expect capital expenditures of approximately $31.6 million for the construction of two PSVs, the installation of hybrid battery power systems and other capital expenditures.
Employee retirement benefit plans — We estimate we will make payments under our retirement benefit plans of approximately $1.8 million during fiscal year 2026.
Lease payments — We expect to make lease payments of approximately $0.5 million for our operating and finance leases during fiscal year 2026 under our effective leases as of December 31, 2025.
In addition to the matters identified above, in the ordinary course of business, the Company may be involved in litigation, claims, government inquiries, investigations and proceedings relating to commercial, employment, environmental and regulatory matters. An unfavorable resolution in this or other matters could have a material adverse effect on the Company's future cash requirements.
Debt Securities and Credit Agreements
For a discussion of the Company’s debt securities and credit agreements, see “Note 5. Long-Term Debt” in the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Conting encies
MNOPF and MNRPF . Certain of the Company’s subsidiaries are participating employers in two industry-wide, multi-employer, defined benefit pension funds in the U.K.: the MNOPF and the MNRPF.
The Company’s participation in the MNOPF began with the acquisition of the Stirling group of companies (the “Stirling Group”) in 2001 and relates to certain officers employed between 1978 and 2002 by the Stirling Group and/or its predecessors. The Company’s participation in the MNRPF also began with the acquisition of the Stirling Group in 2001 and relates to ratings employed by the Stirling Group and/or its predecessors through today. Both of these plans are in deficit positions and, depending upon the results of future actuarial valuations, it is possible that the plans could experience funding deficits that will require the Company to recognize payroll related operating expenses in the periods invoices are received. As of December 31, 2025, all invoices received related to MNOPF and MNRPF have been settled in full.
On October 19, 2021, the Company was informed by the MNRPF that two issues had been identified during a review of the MNRPF by the applicable trustee that would potentially give rise to material additional liabilities for the MNRPF. On November 23, 2023, the trustee advised that following the tri-annual valuation, $1.5 million (£1.2 million) of the potential cumulative funding deficit of the MNRPF was allocated to the Company as a participating employer, including the additional liabilities mentioned above. During 2023, the Company recognized payroll related operating expenses of $1.5 million (£1.2 million) for its allocated share of the potential cumulative funding deficit, which the Company anticipated being invoiced for during 2024 and 2025. On April 30, 2024, the Company was informed by the MNRPF that the Company’s allocated share of the potential cumulative funding deficit may be reduced due to changes in valuation assumptions, and on July 5, 2024, the Company was informed by the MNRPF that the Company’s final deficit share amount was $0.4 million (£0.3 million) and the Company recognized a reduction in the payroll related operating expenses of $1.2 million (£0.9 million) to reflect the decreased deficit share amount. All invoices were settled in full in October 2024.
On November 6, 2024, the Company was informed by the MNOPF that no further contributions from participating employers were required based on the results of the 2024 valuation.
Other. In the normal course of its business, the Company becomes involved in various other litigation matters including, among others, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its financial statements related thereto where appropriate. It is possible that a change in the Company’s estimates of that exposure could occur, but the Company does not expect such changes in estimated costs would have a material effect on the Company’s consolidated financial position, results of operations or cash flows.
Related Party Transactions
For a discussion of the Company’s transactions with related parties, see “Note 14. Related Party Transactions” in the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Critical Accounting P olicies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates and those differences may be material. For a summary of the Company’s accounting policies, see “Note 1. Nature of Operations and Accounting Policies” in the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, which should be read in conjunction with this MD&A. Management considers an accounting estimate to be critical if it is important to the Company’s financial condition or results of operations and requires the Company to make subjective or complex judgments or estimates about matters that are uncertain. The Company believes the following critical accounting policies are the ones that require significant judgments and estimates to prepare its consolidated financial statements. There are other items within our consolidated financial statements that require estimation and judgment, but they are not deemed critical as defined above.
Trade and Other Receivables and Allowance for Credit Losses. Customers are primarily major integrated national, international oil companies, large independent oil and natural gas exploration and production companies and established wind farm construction companies. Customers are granted credit on a short-term basis and the related credit risks are minimal. Other receivables consist primarily of operating expenses the Company incurs in relation to vessels it manages for other entities, as well as insurance and income tax receivables. The Company routinely reviews its receivables and makes provisions for expected credit losses utilizing the Current Expected Credit Losses model (“CECL”). The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. However, those provisions are estimates and actual results may materially differ from those estimates. After collection efforts have been exhausted, trade receivables that are deemed uncollectible are removed from both accounts receivable and the allowance for credit losses.
Property and Equipment. Equipment, stated at cost, is depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is based upon a newly built asset being placed into service and represents the time period beyond which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older vessels that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of the asset’s remaining useful life, typically the period until the next survey or certification date. As of December 31, 2025, the estimated useful life of the Company’s new offshore support vessels was 20 years.
Equipment maintenance and repair costs and the costs of routine overhauls, drydockings and inspections performed on vessels and equipment are charged to operating expense as incurred. Expenditures that extend the useful life or improve the marketing and commercial characteristics of equipment as well as major renewals and improvements to other properties are capitalized.
Certain interest costs incurred during the construction of equipment are capitalized as part of the assets’ carrying values and are amortized over such assets’ estimated useful lives.
Income Taxes. Deferred income tax assets and liabilities have been provided in recognition of the income tax effect attributable to the book and tax basis differences of assets and liabilities reported in the accompanying consolidated financial statements. Deferred tax assets or liabilities are provided using the enacted tax rates expected to apply to taxable income in the periods in which they are expected to be settled or realized. Interest and penalties relating to uncertain tax positions are recognized in interest expense and administrative and general, respectively, in the accompanying consolidated statements of income (loss). The Company records a valuation allowance to reduce its deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Global Intangible Low Taxed Income (“GILTI”) regime effectively imposes a minimum tax on worldwide foreign earnings and subjects U.S. shareholders of controlled foreign corporations (“CFCs”) to current taxation on certain income earned through a CFC. The Company has made the policy election to record any liability associated with GILTI in the period in which it is incurred.
In the normal course of business, the Company may be subject to challenges from tax authorities regarding the amount of taxes due for the Company. These challenges may alter the timing or amount of taxable income or deductions. As part of the calculation of income tax expense, the Company determines whether the benefits of its tax positions are at least more likely than not of being sustained based on the technical merits of the tax position. For tax positions that are more likely than not of being sustained, the Company accrues the largest amount of the tax benefit that is more likely than not of being sustained. Such accruals require management to make estimates and judgments with respect to the ultimate outcome of its tax benefits and actual results could vary materially from these estimates.
The Company is subject to federal and state income tax and foreign withholding tax audits from time to time that could result in proposed assessments. Management believes that the Company has appropriately accounted for income and withholding taxes for tax periods that are within the statutory period of limitations not previously audited and that are potentially open for examination by the taxing authorities. The Company cannot predict with certainty how any audits would be resolved and whether the Company will be required to make additional tax payments, which may include penalties and interest. Depending on the jurisdiction, the Company is subject to examination for up to the preceding eight years.
Impairment of Long-Lived Assets. The Company performs an impairment analysis of long-lived assets used in operations when indicators of impairment are present. These indicators may include a significant decrease in the market price of a long-lived asset or asset group, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition, or a current period operating or cash flow loss combined with a history of operating or cash flow losses or a forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group. If the carrying values of the assets are not recoverable, as determined by their estimated future undiscounted cash flows, the estimated fair value of the assets or asset groups are compared to their current carrying values and impairment charges are recorded if the carrying value exceeds fair value.
Impairment of 50% or Less Owned Companies. Investments in 50% or less owned companies are reviewed periodically to assess whether there is an other-than-temporary decline in the carrying value of the investment. In its evaluation, the Company considers, among other items, recent and expected financial performance and returns, impairments recorded by the investee and the capital structure of the investee. When the Company determines the estimated fair value of an investment is below carrying value and the decline is other-than-temporary, the investment is written down to its estimated fair value. Actual results may vary from the Company’s estimates due to the uncertainty regarding projected financial performance, the severity and expected duration of declines in value, and the available liquidity in the capital markets to support the continuing operations of the investee, among other factors. Although the Company believes its assumptions and estimates are reasonable, the investee’s actual performance compared with the estimates could produce different results and lead to additional impairment charges in future periods.
ITEM 7A. Quantitative and Qualitat ive Disclosures about Market Risk
Foreign Currency Exchange Risk
With respect to the Company’s international business, the Company is exposed to foreign currency exchange rate fluctuations and exchange rate risks on charter hire contracts and operational expenses denominated in foreign currencies. To minimize the financial impact of these items, the Company attempts to contract its services in U.S. dollars. In addition, the Company attempts to minimize the financial impact of these risks by matching the currency of the Company’s operating expenses with the currency of the revenue streams when considered appropriate. The Company generally does not hedge against any foreign currency rate fluctuations associated with foreign currency contracts that arise in the normal course of business, which exposes the Company to the risk of exchange rate losses.
On occasion, the Company does, however, enter into forward currency exchange, option and future contracts with respect to various foreign currencies that are not designated as fair value hedges in connection with non-ordinary course transactions. These contracts enable the Company to buy currencies in the future at fixed exchange rates, which could offset possible consequences of changes in foreign exchange rates with respect to the Company’s international business. While the Company’s amount of exposure to revenue generated in floating rate foreign currencies is minimal, if the Company had significant foreign exchange transactions exposure, we may consider foreign currency hedging contracts.
Interest Rate Risk
The Company’s outstanding debt consists of a fixed interest rate instrument and the Company no longer has any variable interest rate instruments. As a result, the Company’s results of operations are generally not affected by interest rate fluctuations but the Company may not be able to take advantage of a decrease in prevailing rates.
ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA
The consolidated financial statements and related notes are included in Part IV of this Annual Report on Form 10-K and incorporated herein by reference.
