HOUSTON, Feb. 28, 2007 (PRIME NEWSWIRE) -- Horizon Offshore, Inc. (Nasdaq:HOFF) today reported fourth quarter and full year 2006 results.
Summary of Results
(Unaudited)
(In thousands, except per share data and percentages)
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
-------------------------------------------------
Contract revenues $ 116,671 $ 124,389 $ 547,289 $ 325,044
Gross profit 30,442 24,064 147,249 56,764
Margin 26.1% 19.3% 26.9% 17.5%
Operating income 22,816 15,585 109,824 21,870
Net income (loss) 13,803 (30,925) 67,010 (71,056)
Diluted earnings
(loss) per share 0.43 (2.87) 2.14 (16.09)
Adjusted EBITDA 32,187 24,638 132,030 50,696
2006 FOURTH QUARTER HIGHLIGHTS
* Gross profit increased 27% from 2005 to $30.4 million and
gross margin was 26.1% of 2006 fourth quarter revenues
* Operating income increased 46% from 2005, and Adjusted
EBITDA increased 31% from 2005
* Diluted earnings per share were $0.43 for 2006 compared to
a diluted loss per share of $(2.87) for 2005
The Company's revenues for the fourth quarter of 2006 compared to the last quarter of 2005 decreased; however, strong pricing and vessel utilization in the U.S. Gulf of Mexico and the Company's performance on its second major contract as part of the Ku-Maloob-Zaap project for Pemex improved gross margin, gross profit and operating income for the fourth quarter of 2006. The revenues and gross profit from domestic operations reflect stable marine construction activity in the U. S. Gulf of Mexico. In Latin America, the Company substantially completed one project for Pemex in the fourth quarter of 2006 and expects to complete its second project for Pemex during the second quarter of 2007. The Company's revenues in West Africa decreased for the fourth quarter of 2006 compared to 2005, and the Company recorded additional losses in this geographic segment due to additional costs incurred to complete the West Africa Gas Pipeline project. The Company's Southeast Asia geographic segment generated strong results for the fourth quarter of 2006 due to a significant time charter of its combination barge, the Sea Horizon.
Net income for the fourth quarter of 2006 was $13.8 million, or $0.43 per diluted share, compared with a net loss of $(30.9) million, or $(2.87) per diluted share, for the fourth quarter of 2005. The net loss for the fourth quarter of 2005 included non-cash charges of $40.0 million in connection with the Company's recapitalization plan completed during 2005.
The Company's operating results for the fourth quarter of 2006 reflect continued strong demand for offshore exploration, development and construction activity in the U.S. Gulf of Mexico that began during the second half of 2005 compared to the past few years.
2006 FISCAL YEAR HIGHLIGHTS
* Revenues increased 68% from 2005 to $547.3 million in 2006
* Gross profit increased 159% from 2005 to $147.2 million and
gross margin was 26.9% of 2006 revenues
* Operating income increased 402% from 2005, and Adjusted
EBITDA increased 160% from 2005
* Diluted earnings per share were $2.14 for 2006, which meets
the Company's earnings guidance for 2006 previously provided,
compared to a diluted loss per share of $(16.09) for 2005
* Cash flows from operations for 2006 were $52.1 million
compared to $(2.3) million for 2005
The Company's strong performance in 2006 resulted in record revenues, gross profit, operating income and net income and record Adjusted EBITDA which included a pre-tax reduction of $18.5 million related to the reserve for the remaining carrying value of the Company's 2002 and 2003 Pemex EPC 64 claims. The Company's domestic and Latin America geographic segments reported strong operating results for 2006. Capacity constraints due to the high demand for marine construction services because of the hurricane-related repair and salvage work in the U.S. Gulf of Mexico generated improved pricing and vessel utilization during 2006. The Company's strong results for its domestic and Latin America geographic segments were partially offset by losses in its West Africa geographic segment. The Company's operations in Southeast Asia also provided strong results for 2006 due to the time charter of the Sea Horizon during the second half of 2006. The Company expects to work this vessel on time charter for most of 2007.
Operating income of $109.8 million reflects the Company's strong operating results for 2006 and includes a $14.3 million gain on insurance settlement for claims related to the Gulf Horizon and an $(18.5) million reserve for the remaining carrying value of the Pemex EPC 64 claims.
Net income for 2006 was $67.0 million, or $2.14 per diluted share, compared to a net loss of $(71.1) million, or $(16.09) per diluted share. The net loss for 2005 included non-cash charges of $63.1 million related to the completion of the Company's recapitalization plan during 2005.
"Horizon is proud of its record setting performance in 2006. We remain well-positioned for continued success in what we believe will be a strong market for our services both domestically and internationally in 2007," said David W. Sharp, President and Chief Executive Officer of Horizon Offshore, Inc. "We expect that the demand for marine construction services will support solid utilization and margin levels during 2007. The market has returned to more traditional seasonality and stable pricing levels, when compared to the record levels of demand, pricing and utilization in the U.S. Gulf of Mexico that we experienced during 2006."
Conference Call
As previously announced, the Company will host a conference call at 2:00 p.m. Central Time (3:00 p.m. Eastern Time) on Thursday, March 1, 2007.
The call will be accessible to the public by telephone or web cast. To participate by telephone, dial 877-502-9273 (US/Canada) or 913-981-5582 (International) ten minutes before the call begins and ask for the Horizon conference call using the conference identification number 4376573. A telephonic replay will also be available after the conclusion of the call until Wednesday, March 7, 2007. To access the telephonic replay, dial 888-203-1112 (US/Canada) or 719-457-0820 (International) using the conference identification number 4376573.
Investors will also have the opportunity to listen to the conference call over the Internet at http://www.horizonoffshore.com/inc/Presentations.asp?year=. Please go to the web site 15 minutes early to register to listen to the live call and to download and install any necessary software. For those who cannot listen to the live broadcast, a replay will be available through the Company's website at the link above.
About Horizon Offshore, Inc.
Horizon and its subsidiaries provide marine construction services for the offshore oil and gas and energy industries. The Company's fleet is used to perform a wide range of marine construction activities, including installation and repair of marine pipelines to transport oil and gas and other sub sea production systems, and the installation and abandonment of production platforms.
The Horizon Offshore logo is available at http://media.primezone.com/prs/single/?pkgid=760
Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Reform Act of 1995, which represent the Company's expectations and beliefs concerning future events that involve risks and uncertainties which could cause actual results to differ materially from those currently anticipated. All statements other than statements of historical facts included in this release are forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include the factors described from time to time in the Company's filings with the Securities and Exchange Commission. Consequently, all of the forward-looking statements made in this press release are qualified by these and other factors, risks, and uncertainties.
Actual events, circumstances, effects and results may be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Consequently, the forward-looking statements often identified with words like "should," "expects," "believes," "anticipates," "may," "could," etc., contained herein should not be regarded as representations by Horizon or any other person that the projected outcomes can or will be achieved.
Horizon Offshore, Inc.
Consolidated Statements of Operations and Financial Data
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
-----------------------------------------------
Contract revenues $116,671 $124,389 $547,289 $325,044
Cost of contract
revenues 86,229 100,325 400,040 268,280
-------- -------- -------- --------
Gross profit 30,442 24,064 147,249 56,764
Selling, general
and administrative
expenses 7,526 8,479 33,167 30,922
Gain on insurance
settlement -- -- (14,300) --
Reserve for claims
and receivables -- -- 18,458 1,711
Impairment of
property and
equipment 100 -- 100 --
Impairment loss on
assets held for
sale -- -- -- 2,261
-------- -------- -------- --------
Operating income 22,816 15,585 109,824 21,870
Other:
Interest expense (3,218) (45,065) (13,989) (67,572)
Interest income 1,281 257 2,967 777
Loss on debt
extinguishment -- -- (2,402) (23,138)
Other income
(expense), net (333) 69 25 53
-------- -------- -------- --------
Net income (loss)
before income
taxes 20,546 (29,154) 96,425 (68,010)
Income tax provision 6,743 1,771 29,415 3,046
-------- -------- -------- --------
Net income (loss) $ 13,803 $(30,925) $ 67,010 $(71,056)
======== ======== ======== ========
Earnings (loss) per
share:
Net income (loss) per
share - basic $ 0.43 $ (2.87) $ 2.18 $ (16.09)
======== ======== ======== ========
Net income (loss) per
share - diluted $ 0.43 $ (2.87) $ 2.14 $ (16.09)
======== ======== ======== ========
Weighted average
shares used in
computing earnings
(loss) per share:
Basic 31,831,781 10,771,034 30,711,698 4,417,341
Diluted 32,395,258 10,771,034 31,263,470 4,417,341
Non-GAAP Financial
Data:
Adjusted EBITDA (1) $ 32,187 $ 24,638 $132,030 $ 50,696
Adjusted EBITDA calculation
is as follows:
Net income (loss) $ 13,803 $(30,925) $ 67,010 $(71,056)
Income tax provision 6,743 1,771 29,415 3,046
Net interest expense 1,937 44,808 11,022 66,795
Depreciation and
amortization 7,296 7,258 27,397 21,661
Stock-based
compensation 2,308 1,042 8,984 4,167
Loss on debt
extinguishment -- -- 2,402 23,138
Gain on insurance
settlement -- -- (14,300) --
Non-cash impairments 100 684 100 2,945
-------- -------- -------- --------
Adjusted EBITDA $ 32,187 $ 24,638 $132,030 $ 50,696
1) Horizon calculates Adjusted EBITDA (adjusted earnings before
interest, taxes, depreciation and amortization) as net income
or loss excluding income taxes, net interest expense,
depreciation and amortization, and adjusted for stock-based
compensation, loss on debt extinguishment, gain on insurance
settlement and non-cash impairments. Adjusted EBITDA is not
calculated in accordance with Generally Accepted Accounting
Principles (GAAP), but is a non-GAAP measure that is derived
from items in Horizon's GAAP financials and is used as a
measure of operational performance. Management references
this non-GAAP financial measure frequently in its
decision-making because it provides supplemental information
that facilitates internal comparisons to historical operating
performance of prior periods and external comparisons to
competitors' historical operating performance. Horizon also
has aligned the disclosure of Adjusted EBITDA with the
financial covenants in its material credit agreements with
various lenders, which include ratios requiring a
determination of EBITDA, as defined. Adjusted EBITDA is a
material component of the financial covenants in Horizon's
credit agreements and non-compliance with the covenants could
result in the acceleration of indebtedness. Horizon believes
Adjusted EBITDA is a commonly applied measurement of financial
performance by investors. Horizon believes Adjusted EBITDA is
useful to investors because it gives a measure of operational
performance without taking into account items that Horizon
does not believe relate directly to operations or that are
subject to variations that are not caused by operational
performance. This non-GAAP measure is not intended to be a
substitute for GAAP measures, and investors are advised to
review this non-GAAP measure in conjunction with GAAP
information provided by Horizon. Adjusted EBITDA should not
be construed as a substitute for income from operations, net
income (loss) or cash flows from operating activities (all
determined in accordance with GAAP) for the purpose of
analyzing Horizon's operating performance, financial position
and cash flows. Horizon's computation of Adjusted EBITDA may
not be comparable to similar titled measures of other
companies. A reconciliation of this non-GAAP measure to
Horizon's net income (loss) is included.
Horizon Offshore, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
December 31,
2006 2005
----------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 96,890 $ 42,960
Restricted cash 9,325 4,055
Accounts receivable --
Contract receivables 72,231 43,423
Costs in excess of
billings, net 112,836 90,229
Income tax receivable 5,040 --
Other 2,773 1,209
Other current assets 8,140 6,622
--------- ---------
Total current assets 307,235 188,498
PROPERTY AND EQUIPMENT, net 197,409 186,416
RESTRICTED CASH -- 7,967
OTHER ASSETS 18,375 19,840
--------- ---------
$ 523,019 $ 402,721
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 15,160 $ 15,474
Accrued liabilities 8,130 6,617
Accrued job costs 56,782 56,085
Billings in excess of costs 2,632 7,386
Current maturities of
long-term debt 14,813 26,130
Current taxes payable 5,195 2,687
--------- ---------
Total current liabilities 102,712 114,379
LONG-TERM DEBT, net of
current maturities 85,495 27,340
RELATED PARTY TERM DEBT -- 63,794
SUBORDINATED NOTES 13,904 12,845
OTHER LIABILITIES 924 877
DEFERRED INCOME TAXES 22,649 --
--------- ---------
Total liabilities 225,684 219,235
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.00001 par
value, 5,000,000 shares authorized,
none issued and outstanding -- --
Common stock, $0.00001 par value,
100,000,000 shares authorized,
32,395,258 shares issued and
outanding and 30,384,871
shares issued, respectively -- --
Deferred compensation -- (8,333)
Additional paid-in capital 419,392 382,239
Accumulated deficit (121,766) (188,776)
Treasury stock, none and
10,031 shares, respectively -- (1,644)
Accumulated other
comprehensive loss (291) --
--------- ---------
Total stockholders' equity 297,335 183,486
--------- ---------
$ 523,019 $ 402,721
========= =========