MMA Offshore increases FY24 earnings guidance amid Cyan takeover bid

Marine and subsea solutions company MMA Offshore (ASX: MRM) has been up and up, providing positive earnings guidance while negotiating a takeover. 

Its earnings visibility and performance across the second half have continued to improve. The Company’s FY24 financials follow a solid FY23, which also saw a stronger-than-expected second half. 

MMA Offshore secured several positive project completions and negotiated payments. It received the payout of unused contracted maintenance days and the negotiated recovery from clients of previously expensed costs. It also witnessed the turnaround of a project scope that had been forecast to underperform following contractual negotiations significantly, and the near completion of a critical subsea project which outperformed its high case forecast due to efficient execution and cost management. 

The current trading environment, combined with the above payments, is expected to result in the last quarter of this financial year outperforming the forecast factored into MMA’s previous earnings guidance.

For FY24, MMA forecasts underlying EBITDA of $146 to $149 million and underlying EBIT of $96 to $99 million. 

MMA Offshore is an Australia-based provider of marine and subsea services globally. The Company provides vessels, subsea and project services to the offshore energy, renewables, and wider maritime industries.

MMA’s contract profile for FY25 continues to remain materially unchanged. The business is focusing on building its backlog of contracted work for FY25 and securing longer-term contract positions to improve the overall stability of earnings for the coming years. 

This update comes as MMA Offshore navigates a takeover. 

In March 2024, the Company entered into a binding Scheme Implementation Deed with Singapore-based Cyan MMA for Cyan’s proposed acquisition of 100% of the shares in MMA. The Scheme Consideration values MMA equity on a fully diluted basis at approximately $1.03 billion.

The Scheme Consideration of $2.60 per MMA share represents an 11% premium to the recent trading price of MMA shares, which has increased significantly over the last twelve months.

At the time of the announcement, MMA Chairman Ian Macliver noted, “There has been increased interest in MMA as our strategy to diversify our operations and deleverage the business, together with our improved earnings, has seen the share price rise more than 80% over the past five months.”

Cyan plans to retain MMA’s workforce and use and grow MMA’s expertise, assets and operating model to expand further into offshore wind support services. At the same time, it will continue to provide a comprehensive suite of marine and subsea services to its existing clients in the offshore energy and wider maritime industries.

The MMA directors are unanimously recommending that MMA shareholders vote in favour of this takeover bid in the absence of a superior proposal, subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of MMA shareholders.

MMA shareholders will have an opportunity to vote on the Scheme at the Scheme Meeting, which is anticipated to be held in late June to mid-July 2024.

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Alinda Gupta

Alinda is a Business Reporter for The Sentiment

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