July 29, 2008
Gulfmark Offshore reports record earnings
GulfMark Offshore, Inc. (NYSE:GLF) today announced its highest ever quarterly and first half earnings per share at $2.00 for the second quarter and $3.40 for the first half of 2008.
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 the 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, 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.
Revenues decreased $1.4 million, or 1.7% compared to the first quarter this year, 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.
Bruce Streeter, President and CEO, said the major accomplishment of the second quarter was the company's Rigdon Marine acquisition. "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," he said. "Day rates in this region are moving up and a recent report suggested that supply vessel utilization hit 100% in the month of June."
Turning to the Southeast Asia region, Mr. Streeter said that the combination of Gulfmark's 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.
Looking at positioning for future quarters, Mr. Streeter said the company 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."
"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." he noted. "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, the company closed the Rigdon acquisition, utilizing $150 million of 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, the company repaid $33 million of acquired construction loans. Upon completing the transaction total outstanding indebtedness increased to approximately $536 million.