HOUSTON, Oct. 27, 2009 (GLOBE NEWSWIRE) -- GulfMark Offshore, Inc. (NYSE:GLF) today announced results of operations for the three and nine months ended September 30, 2009.
As previously announced, we initiated a restructuring that we expect to complete in the first quarter of 2010 that is intended to help preserve the Company's status as a U.S. citizen under certain U.S. maritime and vessel documentation laws by, among other things, limiting the percentage of outstanding shares of Company common stock that may be owned or controlled in the aggregate by non-U.S. citizens. More information on this reorganization is available in the Form S-4 document filed with the Securities and Exchange Commission on October 21, 2009.
In addition, during the fourth quarter we executed a credit approved term sheet related to refinancing $200.0 million of our outstanding indebtedness that otherwise would be maturing on June 30, 2010. Our expectation is to complete this refinancing in the fourth quarter.
Results of Operations
Net income for the third quarter was $12.7 million, or $0.50 per diluted share, reflecting weaker margins in the Americas and the North Sea, increased dry dock activity ahead of the previously identified plan, higher than normal professional fees and a higher revised tax rate.
Revenue for the third quarter of 2009 was $90.8 million, a decrease of 27% over the same period in the prior year. Operating income, excluding special items, was $19.8 million in the third quarter of 2009, a decrease of 61% over the same period in 2008. The decrease was due to lower operating performance in the Americas, where operating margins decreased to 4% from 33% in the prior year, and to lower operating performance in the North Sea, where operating margins reduced to 28%. The Southeast Asia region continues to perform very well, with operating margins of 69% in the third quarter, essentially flat with the prior year quarter.
Dry dock expense was approximately $1.4 million higher than expected for the quarter, partially due to accelerating dry docks originally envisioned for future periods. We are expecting that full year dry dock expense will be $16.5 million, which is down from the $19.0 million we were originally expecting for the full year 2009. Year to date dry dock expense is $11.3 million and dry dock expense for the fourth quarter is still anticipated to be approximately $5.0 million.
During the third quarter we had approximately $0.9 million of professional fees related to the ongoing effort to recover the loss we recognized in the first quarter related to the shipyard bankruptcy and also to the Jones Act restructuring we announced last week. We expect those fees to be elevated in the fourth quarter as well.
Operating income for the third quarter of 2009, excluding special items, decreased $18.4 million, or 48%, compared to the second quarter of 2009. Utilization in the Americas decreased operating income by $8.8 million, and utilization in the North Sea decreased operating income by $4.7 million. Operating income was also impacted by a sequential quarterly increase of $3.8 million in dry dock expense.
Revenue for the first nine months of 2009 increased 5% over the same period in the prior year to $304.2 million, a combination of an increase from the acquisition of GulfMark Americas offset by a decrease in activity levels in the Americas and in the North Sea. Net income before special items was $80.0 million, or $3.16 per diluted share for the nine month period ended September 30, 2009.
Commentary
Commenting on the period, Bruce Streeter, President & CEO, stated, "We have undergone a period where activity in two of our key operating areas, the North Sea and the Gulf of Mexico, was weaker in comparison to earlier periods. Other locations have held up reasonably well. Recent indications of a bottoming in jack-up demand, improved post hurricane season activity in the U.S. Gulf, and potential budgets based on higher oil prices are all suggestive of potential improvements in demand going forward. During this quarter when activity was reduced we exceeded our anticipated dry dock plan, including accomplishing one docking originally scheduled for early next year that now will not interfere with future contract arrangements. Our administrative costs this quarter were higher than normal reflecting legal fees in connection with developing a comprehensive plan and structure to ensure continuation of the company's rights and privileges under the Jones Act and related to claims and the ongoing effort to recover the loss from the shipyard bankruptcy we announced in the first quarter.
"During the first half of next year we will add three additional vessels. One is a very large PSV of a similar design to the one delivering in Norway in November and the remaining two are medium sized anchor handlers being built in Poland. These two boats were ordered to augment the highly successful group of medium sized anchor handlers we built at Keppel in Singapore, and as you can see from our results in Southeast Asia the market for this type of vessel is still strong. Although their potential usage is worldwide we are currently looking at potential contracts already developing in West Africa.
"Thus while we expect a difficult fourth quarter, we are adjusting to changes in market demand and attempting to position ourselves appropriately for the future market as it develops. We have a strong balance sheet and with the expected completion of the refinancing will have no debt maturities through 2012, and we feel that we are well positioned to take advantage of opportunities that will certainly develop in the marketplace."
Liquidity and Capital Commitments
Cash flow from operations totaled $47.5 million for the three months ended September 30, 2009, compared to $51.9 million for the same period in 2008. Estimated cash commitments for the remainder of 2009 for the new build program total approximately $48.0 million and are expected to be funded from cash on hand. Cash on hand at quarter end was $198.1 million and we have $95.0 million available under our $175.0 million revolving credit facility. Total debt at September 30, 2009 was $463.5 million, and net of cash on hand that amount is $265.4 million. Of the total debt balance, $223.8 million matures on June 30, 2010, although we have executed a credit approved term sheet to refinance $200.0 million of this debt that we expect to complete later in the fourth quarter. Consequently, we have reclassified a portion of that balance to long-term debt.
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. Eastern on Wednesday, October 28, 2009. Those interested in participating in the conference call should call 877-417-7351 (international callers should use 574-941-7302) ten minutes in advance of the start time and ask for the GulfMark Third 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 35930914. 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 our website at www.GulfMark.com. A transcript of the call will be furnished to the SEC on Form 8-K as soon as practicable.
GulfMark Offshore, Inc. provides marine transportation services to the energy industry through a fleet of offshore support vessels serving every major offshore energy market throughout 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 the Company 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 Company's filings with the SEC, including the registration statement and the Company's Form 10-K for the year ended December 31, 2008. Consequently, the forward-looking statements contained herein should not be regarded as representations that the projected outcomes can or will be achieved.
Reconciliation of Non-GAAP Measures
--------------------------------------------------------------------
Nine Months Ended September 30, 2009
--------------------------------------
Tax Provision
Operating Benefit Net Diluted
Income (Provision) Income EPS
--------------------------------------
(in millions, except per share data)
Before Special Items $ 101.1 $ (5.2) $ 80.0 $ 3.16
Impairment Charge $ (46.2) $ 17.0 $ (29.2) $ (1.15)
Gains on Disposal of Vessels 5.5 -- 5.5 0.22
Foreign Tax Benefit, Net -- 5.5 5.5 0.22
---------------------------------------
$ (40.7) $ 22.5 $ (18.2) $ (0.72)
U.S. GAAP $ 60.4 $ 17.3 $ 61.8 $ 2.44
=======================================
Statement of
Operations
(unaudited)
-------------------
(in thousands,
except per share Three Months Ended
data) ------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2009 2009 2009 2008 2008
-------- -------- -------- -------- --------
Revenue $ 90,764 $104,656 $108,795 $121,883 $124,616
Direct operating
expenses 39,508 39,132 40,482 39,833 46,482
Drydock expense 6,398 2,642 2,238 1,493 3,504
General and
administrative
expenses 11,556 11,565 10,540 10,923 11,123
Depreciation and
amortization expense 13,533 13,146 12,370 12,574 13,463
(Gain) loss on sale
of assets 4 (869) (4,632) (16,054) (2,347)
Impairment charge -- -- 46,247 -- --
-------- -------- -------- -------- --------
Operating Income 19,765 39,040 1,550 73,114 52,391
Interest expense (5,146) (4,946) (5,137) (7,023) (5,151)
Interest income 128 76 60 469 385
Foreign currency
gain (loss) and
other 532 790 (2,206) (714) 2,278
-------- -------- -------- -------- --------
Income before income
taxes 15,279 34,960 (5,733) 65,846 49,903
Income tax benefit
(provision) (2,577) (37) 19,954 (6,526) (4,484)
-------- -------- -------- -------- --------
Net Income $ 12,702 $ 34,923 $ 14,221 $ 59,320 $ 45,419
======== ======== ======== ======== ========
Earnings per share:
Basic $ 0.50 $ 1.39 $ 0.57 $ 2.39 $ 1.83
Diluted $ 0.50 $ 1.38 $ 0.56 $ 2.35 $ 1.78
Weighted average
common shares 25,235 25,132 24,978 24,867 24,865
Weighted average
diluted common
shares 25,485 25,362 25,190 25,195 25,445
Operating Statistics Three Months Ended
-------------------- ------------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2009 2009 2009 2008 2008
-------- -------- -------- -------- --------
Revenue by Region
(000's)
-----------------
North Sea based
fleet $ 40,722 $ 46,324 $ 43,911 $ 52,995 $ 59,169
Southeast Asia based
fleet 19,114 19,517 17,669 20,354 21,094
Americas based
fleet 30,928 38,815 47,215 48,534 44,353
Rates Per Day Worked
--------------------
North Sea based
fleet $ 20,171 $ 21,199 $ 21,073 $ 21,176 $ 23,449
Southeast Asia based
fleet 21,180 21,201 20,699 19,928 18,844
Americas based fleet 16,894 15,704 17,302 17,090 16,815
Overall Utilization
-------------------
North Sea based
fleet 90.5% 93.1% 84.5% 96.8% 94.1%
Southeast Asia based
fleet 85.8% 93.8% 87.2% 99.2% 97.2%
Americas based fleet 57.3% 79.9% 92.9% 95.7% 93.9%
Average Owned/
Chartered Vessels
------------------
North Sea based
fleet 24.0 25.0 25.9 26.3 27.0
Southeast Asia based
fleet 11.7 11.0 11.2 11.3 12.8
Americas based fleet 35.8 34.8 33.2 32.7 31.0
-------- -------- -------- -------- --------
Total 71.5 70.8 70.3 70.3 70.8
======== ======== ======== ======== ========
Drydock Days
------------
North Sea based
fleet 65 16 46 29 28
Southeast Asia based
fleet 25 29 26 -- 5
Americas based fleet 110 48 -- -- 55
-------- -------- -------- -------- --------
Total 200 93 72 29 88
Expenditures
(000's) $ 6,398 $ 2,642 $ 2,238 $ 1,493 $ 3,504
======== ======== ======== ======== ========
At October 14, 2009 At October 24, 2008
------------------- -------------------
2009(1) 2010(2) 2008(1) 2009(2)
-------- -------- -------- --------
Forward Contract Cover(1)
-------------------------
North Sea based fleet 77% 55% 96% 65%
Southeast Asia based fleet 82% 54% 81% 51%
Americas based fleet 48% 26% 92% 53%
-------- -------- -------- --------
Total 64% 41% 90% 57%
======== ======== ======== ========
(1)Forward contract cover represents number of days vessels are under
contract or option by customers for the remaining quarter(s) of the
current year divided by total remaining days vessels are available
for charter hire for the same period.
(2)Represents full calendar year.
Statement of Operations (unaudited) Nine Months Ended
----------------------------------- ------------------------------
September 30, September 30,
2009 2008
-------------- --------------
Revenue $ 304,215 $ 289,857
Direct operating expenses 119,122 104,092
Drydock expense 11,278 9,826
General and administrative expenses 33,661 29,321
Depreciation and amortization expense 39,049 31,726
Gain on sale of assets (5,497) (18,757)
Impairment Charge 46,247 --
-------------- --------------
Operating Income 60,355 133,649
Interest expense (15,229) (7,268)
Interest income 264 977
Foreign currency gain (loss) and other (884) 2,323
-------------- --------------
Income before income taxes 44,506 129,681
Income tax benefit (provision) 17,340 (5,217)
-------------- --------------
Net Income $ 61,846 $ 124,464
============== ==============
Earnings per share:
Basic $ 2.46 $ 5.33
Diluted $ 2.44 $ 5.19
Weighted average common shares 25,116 23,358
Weighted average diluted common shares 25,343 23,994
Operating Statistics Nine Months Ended
-------------------- ------------------------------
September 30, September 30,
2009 2008
-------------- --------------
Revenue by Region (000's)
-------------------------
North Sea based fleet $ 130,957 $ 173,129
Southeast Asia based fleet 56,300 57,497
Americas based fleet 116,958 59,231
Rates Per Day Worked
--------------------
North Sea based fleet $ 20,820 $ 23,389
Southeast Asia based fleet 21,033 17,602
Americas based fleet 16,605 16,164
Overall Utilization
-------------------
North Sea based fleet 89.3% 93.9%
Southeast Asia based fleet 88.9% 93.2%
Americas based fleet 76.2% 91.7%
Average Owned/Chartered Vessels
-------------------------------
North Sea based fleet 25.0 27.4
Southeast Asia based fleet 11.3 13.5
Americas based fleet 34.6 14.8
-------------- --------------
Total 70.9 55.7
============== ==============
Drydock Days
------------
North Sea based fleet 140 124
Southeast Asia based fleet 80 39
Americas based fleet 157 177
-------------- --------------
Total 377 340
============== ==============
Expenditures (000's) $ 11,278 $ 9,826
============== ==============
Vessel Count by Reporting Segment
----------------------------------
North Southeast
Sea Asia Americas Total
------- ------- ------- -------
Owned Vessels as of July 26, 2009 25 12 36 73
------- ------- ------- -------
Newbuild Deliveries -- -- -- --
Asset held for sale (1) -- -- (1)
Intersegment Transfers -- -- -- --
------- ------- ------- -------
Owned Vessels as of October 27, 2009 24 12 36 72
Managed Vessels 16 2 1 19
------- ------- ------- -------
Total Fleet as of October 27, 2009 40 14 37 91
======= ======= ======= =======
Balance Sheet Data As of As of
(unaudited) ($000) September 30, 2009 December 31, 2008
------------------ ------------------ ------------------
Cash and cash equivalents $ 198,103 $ 100,761
Working capital 188,572 138,006
Vessel and equipment, net 1,132,951 1,035,436
Construction in progress 44,904 134,077
Total assets 1,661,668 1,556,967
Long term debt (1) 414,677 462,941
Shareholders' equity 991,185 854,843
(1) Short-term portion of long-term debt included in working capital
------------------ ------------------
Cash Flow Data (unaudited) Nine Months Ended Nine Months Ended
($000) September 30, 2009 September 30, 2008
-------------------------- ------------------ ------------------
Cash flow from operating
activities $ 138,672 $ 128,515
Cash flow used in investing
activities (31,518) (190,770)
Cash flows (used in) provided
by financing activities (17,195) 62,126