August 4, 2005
Record second quarter for Hornbeck
Hornbeck Offshore Services, Inc. (NYSE: HOS) has announced record results for the second quarter ended June 30, 2005.
Second quarter revenues increased $10.8 million, or 35.6 percent, to $41.1 million compared to $30.3 million for the second quarter of 2004. Operating income was $13.8 million, or 33.6 percent of revenues, compared to $7.6 million, or 25.1 percent of revenues, for the same quarter in 2004.
These increases were driven primarily by continued strengthening in OSV market conditions in the U.S. Gulf of Mexico.
Net income for the quarter increased 400 percent to $7.7 million, or $0.36 per diluted share, compared to net income for the second quarter of 2004. The increase included an after-tax gain on the sale of assets of $0.7 million from the disposition of one recently retired OPA 90 single-hulled tank barge, the Energy 9801, and one offshore tug, the Yabucoa Service.
Significantly higher dayrates and utilization in the OSV segment contributed to a 61.7 percent increase in EBITDA to $21.5 million over the second quarter of 2004, which exceeded the company's guidance range of $18 to $20 million for the second quarter of 2005.
First Half Results
Revenues for the first six months of 2005 increased 28.2 percent to $79.0 million compared to $61.6 million for the same period in 2004. Operating income was $26.3 million, or 33.3 percent of revenues, for the six months of 2005 compared to $16.5 million, or 26.8 percent of revenues, for the same period in 2004. Net income for the first six months of 2005 increased over 300% to $13.0 million, or $0.61 per diluted share, compared to net income of $4.3 million, or $0.23 per diluted share, for the first six months of 2004.
First half results were positively impacted by the addition of two foreign-flagged anchor-handling towing supply (AHTS) vessels that were acquired in 2005 and one fast supply vessel that was acquired in April 2004. Net income for the first six months of 2005 included a $1.7 million ($1.1 million after tax or $0.05 per share) loss on early extinguishment of debt related to the January 2005 redemption of the non-tendered 10.625% senior notes that were still outstanding as of December 31, 2004.
EVP and CFO Jim Harp said: "We have again upwardly revised our annual 2005 and 2006 guidance ranges to reflect our actual results for the second quarter of 2005 and currently expected fleet complement through 2006, as well as our latest market outlook based on current visibility in each of our business segments. We are increasingly more comfortable that the robust market conditions we are experiencing in the Gulf of Mexico will continue through 2006, and possibly beyond. We are also optimistic that the supply-demand equation affecting our northeastern U.S. barge operations will remain favorable for the foreseeable future. Our 2006 guidance includes a full-year contribution from all five of our newbuild tank barges, but does not reflect any contribution from the multipurpose supply vessel (MPSV) conversion program that we announced last quarter. For guidance purposes, we do not expect to place the two 370 class MPSVs into service until the first quarter of 2007, at which time we expect them to contribute, in the aggregate, incremental full-year diluted EPS in the range of $0.25 to $0.35."
The company expects EBITDA for the third quarter of 2005 to range between $22.0 million and $24.0 million.The Company expects diluted earnings per share for the third quarter of 2005 to range between $0.34 and $0.40.
The company now expects total EBITDA for the full year 2005 to range between $85.0 million and $90.0 million and diluted earnings per share is now expected to range between $1.34 and $1.49, excluding the loss on early extinguishment of debt incurred during the first quarter of 2005.
The company now expects total EBITDA for the full year 2006 to range between $100.0 million and $110.0 million and diluted earnings per share is now expected to range between $1.60 and $1.89.
The guidance reflects management's belief that current favorable OSV market conditions will continue through the remainder of 2005 and all of 2006. Average OSV dayrates are expected to remain at or above $13,000 and average fleetwide utilization is expected to remain in the mid-90 percent range throughout the 2005 and 2006 guidance periods. While fleetwide average OSV dayrates have recently exceeded historical peak levels of roughly $12,700, the company has assumed for guidance purposes a gradual increase in effective OSV dayrates for the balance of 2005 from current levels, while holding 2006 constant with expected 2005 year-end levels.
The company expects year-over-year increases of approximately 10 percent in its aggregate operating and G&A expenses for both 2005 and 2006.
Tank Barge Newbuild Program Update
On July 10, 2005, the Energy 11103, the second double-hulled tank barge, and first of three 110,000-barrel units, to be built under the company's current newbuild program, was delivered and, upon its mobilization to the northeastern United States from the shipyard, immediately commenced service under a fixed two-year time charter with a major oil company. The remaining three double-hulled tank barges currently under construction are still expected to be delivered during the fourth quarter 2005.
Rationalization of Tug & Tank Barge Fleet.
During the second quarter of 2005, the Company sold one inactive single-hulled tank barge, the Energy 9801, and one offshore tug, the Yabucoa Service. Gross proceeds from the sale of the two vessels were $2.0 million, which resulted in an aggregate pre-tax gain of $1.1 million. The disposition of the Energy 9801, which was retired from service pursuant to OPA 90 in December 2004, was an unexpected windfall for the company and eliminated further stacking costs that would have otherwise been incurred. The sale of the tug was part of the Company's on-going efforts to rationalize its tug fleet to better position itself to power the larger barges now under construction. In addition, the company recently signed an agreement to purchase two additional 6,000 horsepower tugs, which it expects to retrofit and place in service during the fourth quarter of this year as the newbuild tank barges are delivered from the shipyard. The estimated aggregate cost to purchase and retrofit these two additional higher horsepower tugs is approximately $16.0 million.