HOUSTON, July 29, 2008 (PRIME NEWSWIRE) -- GulfMark Offshore, Inc. (NYSE:GLF) today announced earnings per share of $2.00 for the second quarter and $3.40 for the first half of 2008. Highlights include:
* Highest Quarterly and First Half Earnings Per Share in Company
History
* Acquired Rigdon Marine on July 1st Immediately Adding 19
Deepwater Gulf of Mexico Vessels
* Southeast Asia Sequential Quarterly Revenue Growth of 24%
and 139% Over Prior Year
* Americas Revenue Growth of 25% in 2nd Quarter vs. 1st Quarter
and 40% Year Over Year
* Proactive Drydocking Increases Revenue and Profit Potential
for Second Half of 2008
Financial Review
Revenues for the quarter of $81.9 million increased $7.6 million over the same period in the prior year principally due to increased day rates in our Southeast Asia and Americas regions. Net income for the second quarter was $46.8 million, or $2.00 per diluted share, including a gain of $16.4 million from the sale of two vessels, representing a 52% increase over the prior year level.
Revenues for the first six months of 2008 increased 18.2% over the same period in the prior year to $165.2 million resulting from higher revenues from all regions. Net income was $79.0 million, or $3.40 per diluted share, including the gains on the vessel sales, which represents a 43.5% increase in net income compared to the same period in the previous year.
Compared to the first quarter this year revenues decreased $1.4 million, or 1.7%, as a result of the strategic positioning of several vessels to earn higher revenues in future quarters, increased drydock days and lower revenue in the North Sea, partially offset by improved revenue from Southeast Asia and the Americas. Net income increased $14.5 million compared to the first quarter of 2008 due primarily to the gain on vessel sales.
Commentary
Bruce Streeter, President and CEO, commented: "Although concluded on the first day of the third quarter, the major accomplishment of the second quarter was obviously our coming to an agreement and subsequently closing the Rigdon Marine acquisition. As we've previously noted, we believe this immediate entry into a leading position in the U.S. Gulf comes at a time when the current and forward looking fundamentals of that market are very favorable. Day rates in this region are moving up and a recent report suggested that supply vessel utilization hit 100% in the month of June.
"With regards to the second quarter results, several areas deserve to be pointed out. First is the tremendous growth in the Southeast Asia region. Since the beginning of 2007 we have sold six older vessels operating in this region and have taken delivery of five new builds, the most recent being the Sea Choctaw in mid-July this year which has already started work on a one-year plus options charter in Vietnam. The combination of our vessel renewal initiative and the strengthening of day rates in the region have more than doubled this region's revenue and operating profits year over year. During the second quarter, we substituted the Sea Kiowa for the Sea Apache and have completed the modifications required for its initial two-year charter with Petrobras. The Sea Kiowa is currently underway to Brazil and is due to go on-hire late in the third quarter.
"The second area relates to our positioning for future quarters and the impact on the current quarter. As I noted on the conference call on July 8th, we took steps during the second quarter that, while negatively impacting revenue this quarter, improves our position as it relates to revenue and earnings in future quarters. We incurred a total of 156 drydock days in the quarter versus the 110 estimated, resulting in lost revenue of approximately $3 million and a 3.5% reduction in overall fleet utilization. The advantage to the remainder of the year is we have now completed the majority of our planned drydocks for the year, 12 out of 18, and accomplished two dynamic positioning (DP) conversions. Also, as we've discussed, two of our large North Sea based anchor handlers are due to begin term contracts in West Africa by mid-August. One of these vessels mobilized to a North Sea shipyard to undergo a DP conversion while completing its drydock, thus ensuring 100% availability once it begins its contract, but adversely affecting 2nd quarter revenues.
"Lastly, we completed the sale of two older vessels during the quarter, the Sea Diligent, a 1981-built anchor handler, and the North Crusader, a 1984-built anchor handler. As has been the case in all of our vessel sales, we sold both of them at a profitable level, generating a gain of $16.4 million on sales proceeds of $21.4 million. Also, early in the third quarter we completed the sale of the Sem Valiant, another 1981-built anchor handler, for an estimated $0.9 million profit. These sales are part of our continued fleet evaluation and renewal initiative, and in the case of the North Crusader, resulted in an addition to our managed fleet.
"Overall we are very satisfied with the achievements of the quarter and year to date. In comparing average vessel day rates mid-year compared to the previous year, we are pleased to note increases in each region. Reports indicate that our regions should continue to benefit from strong demand both in the near future and the longer-term as potential continues to develop in areas such as Brazil, the deepwater Gulf of Mexico, West Africa and Southeast Asia. The addition of Rigdon Marine, with its 22 vessels currently operating and 6 under construction, comes at optimal time coupled with the 11 remaining GulfMark new builds set to deliver over the next two years. We've significantly strengthened and diversified our operating base for the remainder of 2008 and are well positioned to continue to increasing shareholder value over the long-term."
Liquidity and Capital Commitments
Cash flow from operations totaled $76.6 million for the six months ended June 30, 2008, compared to $56.4 million for the same period in 2007. Cash from operations plus cash on hand were used to fund approximately $62.9 million in capital expenditures primarily related to the new build program. Estimated remaining cash commitments for 2008 under the new build program, including the new build program of Rigdon Marine, are approximately $51.7 million and are expected to be funded from a combination of cash flow from operations, available cash, and borrowings under the credit facilities assumed in the Rigdon Marine acquisition.
Liquidity at quarter-end was $295.5 million, consisting of $261.4 million of working capital and $34.1 million available under the $175.0 revolving credit facility. The working capital balance included $214.7 million of cash that included a $140 million draw on our revolver that was done in anticipation of our July 1 closing of the Rigdon Marine acquisition. Total debt at June 30, 2008 was $300.5 million, comprised of $159.6 million for the 7.75% senior notes due 2014 and $140.9 million on the revolver.
On July 1, 2008, we closed the Rigdon acquisition, utilizing $150 million of our cash on hand at the end of the quarter and assumed approximately $269 million of existing Rigdon debt and $26 million of working capital. Concurrent with the closing of the acquisition, we repaid $33 million of acquired construction loans. Upon completing the transaction our total outstanding indebtedness increased to approximately $536 million.
Conference Call Information
GulfMark will conduct a conference call to discuss the earnings with analysts, investors and other interested parties at 9:00 a.m. EDT/8:00 a.m. CDT on Tuesday, July 29, 2008. Those interested in participating in the conference call should call 877-381-5943 (international callers should use 706-679-4543) five minutes in advance of the start time and ask for the GulfMark Second Quarter Earnings conference call. A telephonic replay of the conference call will be available for four days, starting approximately 2 hours after the completion of the call, and can be accessed by dialing 800-642-1687 (international callers should use 706-645-9291) and entering access code 55764122. The conference call will also be available via audio webcast and available for podcast download and can be accessed from the Investor Relations section of GulfMark's website at www.gulfmark.com or by visiting www.investorcalendar.com. The webcast will be available for replay until October 29, 2008. A transcript of the call will be filed with the SEC on Form 8-K as soon as available.
GulfMark Offshore, Inc. provides marine transportation services to the energy industry through a fleet of ninety (90) offshore support vessels that serve every major offshore energy industry market in the world.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve known and unknown risk, uncertainties and other factors. Among the factors that could cause actual results to differ materially are: price of oil and gas and their effect on industry conditions; industry volatility; fluctuations in the size of the offshore marine vessel fleet in areas where GulfMark operates; changes in competitive factors; delay or cost overruns on construction projects and other material factors that are described from time to time in the GulfMark's filings with the SEC, including its Form 10-K for the year ended December 31, 2007. Consequently, the forward-looking statements contained herein should not be regarded as representations that the projected outcomes can or will be achieved.
Statement of Operations
(unaudited)
----------------------- Three Months Ended
-------------------------------------
June 30, March 31, June 30,
2008 2008 2007
-------- -------- --------
Revenue $ 81,893 $ 83,348 $ 74,341
Direct operating expenses 29,912 27,698 24,688
Drydock expense 2,630 3,692 1,012
General and administrative
expenses 9,421 8,777 8,584
Depreciation and
amortization expense 9,515 8,748 7,425
Gain on sale of assets (16,407) (3) (1,249)
-------- -------- --------
Operating Income 46,822 34,436 33,881
Interest expense (935) (1,182) (2,038)
Interest income 296 296 845
Foreign currency gain
(loss) and other 195 (150) 190
-------- -------- --------
Income before income taxes 46,378 33,400 32,878
Income tax benefit (provision) 403 (1,136) (2,157)
-------- -------- --------
Net Income $ 46,781 $ 32,264 $ 30,721
======== ======== ========
Earnings per share:
Basic $ 2.06 $ 1.43 $ 1.37
Diluted $ 2.00 $ 1.40 $ 1.32
Weighted average common shares 22,661 22,543 22,443
Weighted average diluted
common shares 23,334 23,116 23,187
Operating Statistics
--------------------
Three Months Ended
-------------------------------------
June 30, March 31, June 30,
2008 2008 2007
-------- -------- --------
Revenue by Region (000's)
-------------------------
North Sea based fleet $ 53,452 $ 60,508 $ 59,997
Southeast Asia based fleet 20,175 16,228 8,459
Americas based fleet 8,266 6,612 5,885
Rates Per Day Worked
--------------------
North Sea based fleet $ 21,766 $ 24,974 $ 23,788
Southeast Asia based fleet 17,992 14,335 8,373
Americas based fleet 15,854 13,062 11,364
Overall Utilization
-------------------
North Sea based fleet 95.3% 92.4% 92.6%
Southeast Asia based fleet 86.6% 96.8% 90.6%
Americas based fleet 85.5% 88.0% 97.2%
Average Owned/Chartered
Vessels
-----------------------
North Sea based fleet 27.0 28.3 29.3
Southeast Asia based fleet 14.8 13.0 12.5
Americas based fleet 7.0 6.3 6.0
-------- -------- --------
Total 48.8 47.6 47.8
======== ======== ========
Drydock Days
------------
North Sea based fleet 51 45 12
Southeast Asia based fleet 21 13 38
Americas based fleet 84 37 --
-------- -------- --------
Total 156 95 50
======== ======== ========
Expenditures (000's) $ 2,360 $ 3,692 $ 1,012
======== ======== ========
At July 22, At June 30,
2008 2007
------------------- ------------------
2008(2) 2009(3) 2007(2) 2008(3)
-------- -------- -------- --------
Forward Contract Cover(1)
-------------------------
North Sea based fleet 90% 56% 81% 69%
Southeast Asia based fleet 98% 69% 64% 18%
Americas based fleet 88% 44% 100% 88%
-------- -------- -------- --------
Total 90% 53% 79% 58%
-------- -------- -------- --------
(1) Forward contract cover represents number of days vessels are
under contract or option by customers divided by total
calendar days vessels are available for charter hire and
includes the newly acquired Rigdon fleet effective July 1, 2008.
(2) Represents six months (7/1-12/31).
(3) Represents full year (1/1-12/31).
Statement of Operations (unaudited)
-----------------------------------
Six Months Ended
--------------------------
June 30, June 30,
2008 2007
--------- ---------
Revenue $ 165,241 $ 139,854
Direct operating expenses 57,610 49,602
Drydock expense 6,322 5,471
General and administrative expenses 18,198 15,217
Depreciation and amortization expense 18,263 14,532
Gain on sale of assets (16,410) (6,262)
--------- ---------
Operating Income 81,258 61,294
Interest expense (2,117) (4,650)
Interest income 592 1,871
Foreign currency gain (loss) and other 45 88
--------- ---------
Income before income taxes 79,778 58,603
Income tax benefit (provision) (733) (3,529)
--------- ---------
Net Income $ 79,045 $ 55,074
========= =========
Earnings per share:
Basic $ 3.50 $ 2.46
Diluted $ 3.40 $ 2.39
Weighted average common shares 22,602 22,368
Weighted average diluted common shares 23,240 23,071
Operating Statistics
--------------------
Six Months Ended
--------------------------
June 30, June 30,
2008 2007
--------- ---------
Revenue by Region (000's)
-------------------------
North Sea based fleet $ 113,960 $ 111,665
Southeast Asia based fleet 36,403 17,163
Americas based fleet 14,878 11,026
Rates Per Day Worked
--------------------
North Sea based fleet $ 23,384 $ 22,554
Southeast Asia based fleet 16,179 8,616
Americas based fleet 14,507 11,041
Overall Utilization
-------------------
North Sea based fleet 93.8% 91.3%
Southeast Asia based fleet 91.3% 91.8%
Americas based fleet 86.7% 94.2%
Average Owned/Chartered Vessels
-------------------------------
North Sea based fleet 27.7 29.2
Southeast Asia based fleet 13.9 12.3
Americas based fleet 6.7 6.0
--------- ---------
Total 48.3 47.5
========= =========
Drydock Days
------------
North Sea based fleet 96 87
Southeast Asia based fleet 34 64
Americas based fleet 122 30
--------- ---------
Total 252 181
========= =========
Expenditures (000's) $ 6,322 $ 5,471
========= =========
Balance Sheet Data As of As of
(unaudited) ($000) June 30, 2008 Dec. 31, 2007
------------------- -------------- -------------
Cash and cash equivalents $ 214,668 $ 40,119
Working capital 261,418 83,556
Vessel and equipment, net 693,241 641,333
Construction in progress 116,244 112,667
Total assets 1,175,101 934,012
Long term debt 300,518 159,558
Shareholders' equity 773,057 676,091
-------------- -------------
Six Months Six Months
Cash Flow Data (unaudited) Ended Ended
($000) June 30, 2008 June 30, 2007
--------------------------- -------------- -------------
Cash flow from operating activities $ 76,646 $ 56,442
Cash flow used in investing
activities (41,872) (72,572)
Cash flow used in financing
activities 140,565 141