Constellation Oil Services (COSH) Q1 2025 earnings summary

Executive summary

• Achieved $44 million adjusted EBITDA in Q1 2025 with a 36% margin and 97% fleet uptime, reflecting strong operational performance and cost control.

• Net operating revenues were $122 million, down 15% year-over-year, mainly due to lower fleet utilization and BRL depreciation.

• Contract backlog surged 60% year-over-year to $2.1 billion, with over $1.3 billion in new contracts/extensions since June 2024.

• Net loss widened to $24 million from $2 million loss in Q1 2024, driven by lower EBITDA, higher depreciation, and increased tax expenses.

• Fleet uptime improved to 97% from 94% year-over-year.

Financial highlights

• Adjusted EBITDA was $44 million (36% margin), down from $52 million in Q1 2024, primarily due to 86 fewer utilization days.

• Net debt increased to $477 million as of Q1 2025.

• Contract drilling expenses dropped 18% year-over-year to $71 million; G&A expenses rose 5% to $7 million due to one-off contingencies.

• Cash and equivalents stable at $181 million; cash flows from operations were $33 million in Q1 2025.

• CapEx increased to $46 million, mainly for Alpha Star's contract transition.

Outlook and guidance

• 2025 adjusted EBITDA guidance raised by $10 million to $170–$190 million, reflecting recent contract extensions and improved fleet utilization.

• FY 2025 revenue guidance: $550–570 million; capex for 2025 expected at ~$150 million.

• Fleet 100% contracted for 2025, with focus on adding backlog to Atlantic Star and Gold Star.

• Proactive cost management and FX hedging (BRL 532 million) implemented to secure margins and cost predictability.

• Backlog of $2.1 billion provides strong revenue visibility through 2029.