May 8, 2003
Conrad announces first quarter results
The company reported a net loss of $321,000 and loss per diluted share of $0.04 for the three months ended March 31, 2003. compared to net income before a cumulative effect of a change in accounting principle of $458,000 and earnings per diluted share of $0.06 for the first quarter of 2002. Effective January 1, 2002, Conrad adopted Statement of Financial Accounting Standards Board No. 142, ("SFAS No. 142"), "Goodwill and Other Intangibles Assets," which resulted in a $4.5 million non-cash charge for the impairment of goodwill, which was recorded as a cumulative effect of change in accounting principle. The recording of this non-cash charge resulted in a net loss of $4.0 million ($0.56 diluted EPS) for the first three months of 2002.
The company's backlog, excluding unexercised options, was $31.8 million at March 31, 2003, as compared to $36.2 million at December 31, 2002.
Vessel construction segment revenue for the first quarter increased $47,000, or 0.7%, while gross profit decreased $1.1 million, or 83.1%, as compared to vessel construction revenue and gross profit in the first quarter of 2002.
Vessel construction segment revenue for the current quarter decreased 20.4% while gross profit increased 13.6% compared to the fourth quarter of 2002. Vessel construction production hours for the first quarter of 2003 decreased by 0.4% compared to the same period in 2002 and 20.5% compared to the fourth quarter of 2002.
The decrease in revenue in the current period compared to the fourth quarter of 2002 is primarily a result of a decrease in production hours attributable to decreased offshore oil and gas activity.
President and CEO Kenneth G. "Jerry" Myers, Jr., commented:"The vessel construction segment of our business continues to be negatively impacted by performance on a commercial project for four vessels. The first two vessels of the project have now been delivered, the third vessel will be delivered in the next two weeks and the final vessel will be delivered before the end of the second quarter. In addition, the margins were negatively impacted by increases in the estimated costs of completion of other vessels related to operational inefficiencies resulting from the concurrent delivery of three separate vessels."
"Bid activity has slowed in the vessel construction segment of our business," noted Myers. "However, our backlog has enabled us to be selective in an extremely competitive environment. During the first quarter of 2003, we were awarded contracts totaling $3.0 million. These contracts include a 55-foot crane barge for the Army Corps of Engineers and a 174-foot platform barge for a Mississippi Gulf Coast casino. In addition, during April 2003, the US Army awarded Conrad a $2.7 million contract for an additional ST Tug. We are excited about the potential of this backlog on latter 2003 results."
Repair segment revenue decreased $158,000, or 4.1% and gross profit decreased $169,000, or 22.3% as compared to repair segment revenue and gross profit in the first quarter of 2002. Repair segment revenue and gross profit increased 76.3% and 128.3%, respectively, compared to the fourth quarter of 2002. The repair segment had a 13.1% decrease in production hours compared to the first quarter of 2002 and a increase of 70.8% compared to the fourth quarter of 2002.
"The repair segment continues to be difficult due to the continued decreased activity in the offshore oil and gas markets," commented Myers. "We have seen an increase in repair and conversion activity and are hopeful that it is more than just normal seasonal workload patterns; however, there continues to be little to no visibility at this time into the repair market. We are excited about the opportunities that our newest facility in Amelia, Louisiana provides. The facility was opened in February, 2003, and has opened up some markets for the company from which we have historically been limited from participating. We have moved three of our dry docks to the facility and intend to move a fourth dry dock in the second quarter of 2003."
Conrad Industries, Inc., established in 1948 and headquartered in Morgan City, Louisiana designs, builds and overhauls tugboats, ferries, liftboats, barges, offshore support vessels and other steel and aluminum products for both the commercial and government markets. The company provides both repair and new construction services at its four shipyards located in southern Louisiana and Texas.