August 15, 2001
AMCV sees improvement for second half Hawaii operations
American Classic Voyages Co's revenues for the second quarter were $78.1 million, an increase of $17.3 million, or 28 percent, over the second quarter of 2000. But net loss was $7.7 million, or $0.36 per basic and diluted share, as compared to net income of $1.3 million, or $0.06 per basic and diluted share, in the second quarter of 2000. And the company gave only limited information on rumored problems with its newbuilding program at Northrop Grumman's Ingalls Shipbuilding.
AMCV CEO Phil Calian said second quarter results reflected "continued pressure on yields as a result of a weak economic environment, particularly in Hawaii." However, after "aggressive sales and marketing actions in the past several months" AMCV is seeing marked occupancy improvement for the second half of the year in Hawaii."
Advance bookings for the Independence and Patriot indicate occupancy levels of 104 percent in the third quarter and 88 percent in the fourth quarter, with yields for the second half of the year 10 percent to 15 percent higher than in the second quarter. As a result, AMCV now expects yields at American Hawaii Cruises in the $115 to $120 range for the full year 2001, versus previous guidance of $100 to $115; yields at United States Lines are expected to be in the range of $135 to $140 for the full year 2001.
AMCV's 2002 Hawaii advance group bookings are running 60 percent higher than advance group bookings at this time last year for 2001, and that group fare per diems are up 40 percent year-over-year.
"While difficult to increase our yields amidst the general economic downturn, we are encouraged by our progress in developing a strong 2002 group base for Hawaii," Calian said.
The company said it expects yields on its Delta Queen river boats and coastal vessel of between $195 and $205 for the full year 2001.
Revenues for the six months ended June 30, 2001 were $142.3 million, a 40 percent increase over the prior year period, primarily attributable to an increase in capacity from the December 2000 introduction of the Patriot. Net loss for the first six months of 2001 was $20.4 million, or $0.97 per basic and diluted share, as compared to a net loss of $5.1 million, or $0.25 per basic and diluted share, during the first six months of 2000. The second quarter and six month results for 2001 include an unrealized after-tax gain of $2.2 million, or $0.10 per share, for the periodic revaluation of the company's stock appreciation units.
The company expects its EBITDA in the second half of this year to break-even, excluding relocation costs. The company attributes the anticipated improvement in second half performance to increased revenues and reduced selling, general and administrative expenses from its cost control program implemented in June.
AMCV stated that discussions with Northrop Grumman/Ingalls Shipbuilding regarding issues affecting construction of two 1,900 passenger cruise ships, known as Project America, were continuing. "We and Northrop Grumman are focused on understanding and resolving the issues and we will provide a more detailed update when appropriate," Calian said.
Speculation about the status of the cruise ships has been mounting since a July 11 letter from Sen. John McCain, R-Ariz., to President Bush asserted that Ingalls is as much as 18 months behind schedule. McClain made the assertion as part of his ongoing campaign against the Title XI program. McCain said the Ingalls-ACV project, which is guaranteed through the Title XI program, could cost taxpayers more than $1 billion if it "does not turn around very soon."
The most recent reported Northrop Grumman statement on the cruise ship project is that the first ship is "41 percent complete," if the total design and physical construction are taken into account.
McCain may have another ax to grind where cruise ship construction is concerned.Earlier this year, when he was still Chairman of the Senate Committee on Commerce, Science, and Transportation, introduced the United States Cruise Vessel Act, S. 127, Senators Kay Bailey Hutchison (R-TX), Max Cleland (D-GA), and Frank Murkowski (R-AK) are original cosponsors. S. 127 is identical to a bill that passed the Senate Commerce Committee on June 15, 2000.
Introducing S.127, McClain said his efforts last year year were "blocked by the special interests of a group of shipbuilders who dominate the market for large U.S.-built cruise ships."
The U.S. Cruise Vessel Act seeks to allow U.S. owned, but foreign built cruise vessels to enter the domestic market for a limited time if the operators agree to build replacement vessels in the United States.
New president and CEO at Conrad
Conrad Industries, Inc. has announced the appointment of Kenneth G. "Jerry" Myers, Jr. as president and CEO, effective August 27.
Myers has spent the past 21 years with Avondale Industries, most recently, as VP in charge of managing Avondale's largest shipbuilding program.
While at Avondale, Myers has also held positions including Chief Information Officer, Vice President - Business Review, in charge of government program accounting, where he managed over $10 billion in government contracts, Assistant Vice President responsible for mergers and acquisitions, and Assistant Controller.
John P. Conrad, Co-Chairman of the Board said, "Jerry is a highly skilled, seasoned executive with an impressive range of experience in every facet of shipyard management, including manufacturing, design, contract management, procurement, estimating, marketing, information technology and finance. We believe he is uniquely suited to lead our company through its next phase of strategic growth and beyond."
Conrad Industries is "in discussions" with current CEO William H. Hidalgo "regarding the terms of his future relationship with and/or severance from the company."
"We are grateful for Bill's outstanding contributions in taking Conrad from a private company to the growing public company it is today," said John P. Conrad.
Conrad Industries, Inc. reported second quarter net income of $976,000 and earnings per diluted share of $0.14 compared to net income of $576,000 and earnings per diluted share of $0.08 for the three months ended June 30, 2000. The company had net income of $1.9 million and earnings per diluted share of $0.27 for the six months ended June 30, 2001 compared to net income of $1.4 million and earnings per diluted share of $0.19 for the six months ended June 30, 2000.
Revenues for the three months ended June 30, 2001 were $12.2 million compared to $8.6 million for the three months ended June 30, 2000. Revenues for the six months ended June 30, 2001 were $24.1 million compared to $18.5 million for the six months ended June 30, 2000. The Company's backlog was $10.9 million at June 30, 2001 as compared to $18.8 million at June 30, 2000.
Gross profit was $2.9 million (24.1% of revenue) for the three months ended June 30, 2001 as compared to gross profit of $2.3 million (26.5% of revenue) for the three months ended June 30, 2000. Gross profit was $5.7 million (23.7% of revenue) for the six months ended June 30, 2001 as compared to gross profit of $4.8 million (26.0% of revenue) for the six months ended June 30, 2000.
John P. Conrad stated, "Our operating results for the 2nd quarter are very similar to our operating results for the 1st quarter. We are continuing to manage our backlog to take advantage of favorable pricing trends and have added $8 million to our backlog since June 30, 2001. This does not include the previously disclosed potential purchase by the U.S. Army of three additional ST Tugs. These tugs have been authorized and appropriated by Congress for approximately $7.5 million, and we remain optimistic that this project will be added to our backlog before fiscal year end."
"We continue to move forward with the development of the 52 acres of land located in Amelia, Louisiana and the expansion of our new construction facilities in Morgan City," added Conrad. "We expect to be able to utilize this expanded capacity in both repair and conversion and vessel construction during the latter part of this year."