Quantcast

GulfMark Offshore Announces Fourth Quarter and Full Year 2010 Operating Results

February 23, 2011

HOUSTON, Feb. 23, 2011 /PRNewswire/ — GulfMark Offshore, Inc. (NYSE: GLF) today announced the results of operations for the three- and twelve-month periods ended December 31, 2010. For the three months ended December 31, 2010, revenue was $87.9 million, and net income for the same period was $15.2 million, or $0.59 per diluted share. For the twelve months ended December 31, 2010, consolidated revenue was $359.8 million, and earnings per share before special items was $1.86.

During the first nine months of 2010, the company recognized income tax expense of $4.2 million, or $0.16 per diluted share, related to U.S. tax exceptions that expired at the end of 2009. In December 2010 these expired tax laws were reinstated through 2011 as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Accordingly, in the fourth quarter the company recorded a tax benefit for the reversal of the aforementioned income tax expense.

Results of Operations for the Fourth Quarter

Consolidated revenue for the fourth quarter of 2010 was $87.9 million, a decrease of 7%, or $6.6 million, from the third quarter of 2010. Consolidated operating income was $17.7 million, down 15%, or $3.0 million, from the amount before special items reported in the third quarter. The lower sequential quarterly results reflect the reduction in activity levels in the U.S. Gulf of Mexico and a slightly lower contribution from Southeast Asia, partially offset by improved utilization in the North Sea and the completion of the majority of the annual drydock plan in earlier quarters.

Revenue and average day rates in the North Sea region during the fourth quarter were down slightly compared to the third quarter principally due to the sale of the North Traveller, which contributed revenue of $1.8 million during the third quarter prior to its sale. Overall utilization in the North Sea region was up 2% from the previous quarter due to stronger activity in the U.K. sector during the fourth quarter.

The Americas region continued to be impacted by the regulatory delays and uncertainty resulting from the Macondo incident. Revenue decreased $4.3 million during the quarter, or 11%, compared to the previous quarter. Average day rates declined by approximately 7% and overall regional utilization was 73%, down from 76% in the third quarter. The Company has 28 U.S. flagged vessels, and as of December 31, 2010, 16 of these vessels were in the U.S. Gulf of Mexico market. Utilization for these 16 vessels was 55% during the fourth quarter compared to 83% in the previous quarter, when vessels were supporting the oil spill cleanup effort. Subsequent to December 31, the Company has relocated two more vessels out of the U.S. Gulf of Mexico on term charters.

Revenue for the fourth quarter in the Southeast Asia region was $16.0 million, a decrease of $1.9 million, or 11%, from the third quarter. The completion of two long-term contracts and a short delay in the startup of a new term contract contributed to the decrease. In addition, a general oversupply of vessels in the geographic region is contributing to the downward pressure on utilization and average day rates. However, overall regional profitability continues to be very strong, with operating income margin during the fourth quarter still exceeding 60%.

Consolidated drydock expense was approximately $1.8 million in the fourth quarter, resulting in a full-year 2010 drydock expense of $22.2 million. Consolidated direct operating expense for the fourth quarter was $43.2 million, consistent with the direct operating expense amount for the third quarter of $43.1 million before the third quarter capitalization of mobilization costs of $1.4 million. Consolidated general and administrative expense was $10.6 million for the fourth quarter, a slight increase from the third quarter amount but lower than the full-year quarterly average of $11.0 million.

Results of Operations for the Year

Consolidated revenue for the year was $359.8 million, a decrease of $29.1 million, or 7%, from the prior year. Consolidated operating income for the year before special items was $66.0 million, a decrease of $44.3 million, or 40%, from the prior year. The decrease in operating income was the result of the decline in revenue combined with higher annual drydock and depreciation expenses during 2010. Earnings per diluted share before special items was $1.86, a decrease of $1.43 from the prior year amount of $3.29. A reconciliation of amounts before special items to their reported amounts under U.S. GAAP is included in the tables below.

Commentary

Bruce Streeter, President and CEO, commented, “We are pleased with the result of the quarter which, given the events in 2010, came out much better than we anticipated. The completion of oil spill cleanup support requirements, the extended moratorium, official and de facto, the lack of issuance of permits and the uncertainty of timing have all led to, and are having a negative impact on the U.S. Gulf of Mexico results. While conscious of maintaining our ability to respond to potential increases in activity, we have continued to use work outside of U.S. waters to offset some of the impact from the lack of permits. As mentioned previously, at quarter end we had 16 vessels in U.S. waters with about half of them employed. We have added two additional contracts outside of the region and are likely to return one vessel to the U.S. Gulf of Mexico for drydocking, although that vessel may go on to work internationally in the near future. Our outlook for the U.S. Gulf of Mexico does not anticipate any increase in activity during the first quarter from the limited levels we experienced at the end of the fourth quarter.

“International operations continue to perform well. The mix of equipment and geographic locations, which we have always highlighted as our core strength, provided the underlying support for these results. The North Sea, as happened a year ago, saw weakness above what could be expected from average historical seasonality levels. We were fortunate to have secured stronger contract coverage than we did a year ago and we were able to increase utilization to 94% despite a very weak spot market. The average day rate in the region declined slightly, but that was based on the mix of equipment and spot rates. The overall trend continued to reflect gradual improvement in term rates. In Southeast Asia, we are conscious of the high level of vessel supply and it is certainly a factor. Our operating margin slipped slightly but still stayed above 60%. Utilization and average day rates were lower. Contract rollovers and a regulatory change in one of the countries we are working in caused a delay in the on-hire of new contracts which contributed to the reduction in utilization. The two vessels that were delivered into the region in the previous quarter had limited use, but both have now completed their first jobs, and we expect their contribution to increase as 2011 progresses.”

Mr. Streeter continued, “Throughout this economic downturn we have remained optimistic about the future, based on what we perceive to be positive fundamentals for sophisticated offshore drilling throughout the world, which we see reflected in a strong and resilient price for oil. We continue to feel confident that deepwater drilling in the U.S. Gulf of Mexico will resume once the domestic industry is provided regulatory clarity and transparency in the application and approval of drilling permits. Our international diversification enables us to rebalance our geographic fleet concentrations to take advantage of increased drilling activity in other parts of the world. The recent increase in orders for new construction deepwater semi-submersibles, drill ships and high spec jack-ups bodes well for the segments of the industry our fleet supports.”

Liquidity, Capital Commitments and Contract Cover

Cash flow from operations totaled $34.2 million in the fourth quarter and $91.6 million for the full year of 2010. Cash on hand at December 31, 2010, was $97.2 million, and as of that date the $175.0 million revolving credit facility was undrawn. Total debt at December 31, 2010, was $326.4 million, and debt, net of cash on hand, was $229.2 million. Quarterly principal amortization on the term-loan facility is $8.3 million. There are currently no capital commitments related to the construction or purchase of vessels, and capital expenditures for all of 2011 pertaining to the improvement and enhancement of existing vessels are anticipated to be less than $15.0 million. Total backlog of contracted revenue is $705.9 million.

Conference Call Information

GulfMark will conduct a conference call to discuss the Company’s earnings with analysts, investors and other interested parties at 9:00 a.m. Eastern time on Thursday, February 24, 2011. Those interested in participating should call 877-317-6789 (international callers use 412-317-6789) 10 minutes in advance of the start time and refer to the GulfMark Fourth Quarter Earnings conference call. A telephonic replay of the conference call will be available for six days, starting approximately two hours after the completion of the call; the replay can be accessed by dialing 877-344-7529 (international callers should use 412-317-0088) and entering conference # 448323. The conference call will also be available via audio webcast and podcast download, accessible 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 industry market in the world.


    Contact:    Quintin V. Kneen
                Executive Vice President &
                Chief Financial Officer
    E-mail:     Quintin.Kneen@GulfMark.com
                (713) 963-9522

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: the price of oil and gas and its 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, 2009. Consequently, the forward-looking statements contained herein should not be regarded as representations that the projected outcomes can or will be achieved.

    Operating Data (unaudited)
    --------------------------
                                            Three Months Ended
                                            ------------------
    (dollars in thousands, except                   September  December
     per share data)                 December 31,       30,       31,
                                              2010        2010      2009
                                              ----        ----      ----

    Revenue                                $87,854     $94,479   $84,655
    Direct operating expenses               43,182      41,729    47,060
    Drydock expense                          1,817       7,242     4,418
    General and administrative
     expenses                               10,606      10,236    10,039
    Depreciation and amortization
     expense                                14,515      14,492    13,996
    (Gain) loss on sale of assets                -      (5,201)      (55)
    Impairment charge                            -           -         -
                                               ---         ---       ---
    Operating Income (Loss)                 17,734      25,981     9,197

    Interest expense                        (5,835)     (5,807)   (5,052)
    Interest income                            246         597       113
    Foreign currency gain (loss)
     and other                                (284)       (603)     (268)
                                              ----        ----      ----
    Income (loss) before income
     taxes                                  11,861      20,168     3,990
    Income tax benefit
     (provision)                             3,375        (961)  (15,253)
                                             -----        ----   -------
    Net Income (Loss)                      $15,236     $19,207  $(11,263)
                                           =======     =======  ========

    Diluted earnings (loss) per
     share                                   $0.59       $0.75    $(0.45)
    Weighted average diluted
     common shares                          25,819      25,737    25,253

    Other Data
    ----------
    Revenue by Region
        North Sea                          $37,908     $38,340   $34,458
        Southeast Asia                      15,998      17,867    20,243
        Americas                            33,948      38,272    29,954

    Rates Per Day Worked
        North Sea                          $17,046     $17,637   $17,173
        Southeast Asia                      16,209      16,841    20,105
        Americas                            14,674      15,830    14,395

    Overall Utilization
        North Sea                             93.5%       91.6%     87.2%
        Southeast Asia                        78.5%       85.2%     93.1%
        Americas                              73.0%       76.0%     64.8%

    Average Owned Vessels
        North Sea                             25.0        25.7      24.4
        Southeast Asia                        14.0        13.9      12.0
        Americas                              35.0        35.0      36.0
                                              ----        ----      ----
           Total                              74.0        74.6      72.4
                                              ====        ====      ====

    Drydock Days
        North Sea                               19          62        30
        Southeast Asia                          20          17         -
        Americas                                21         109        63
                                               ---         ---       ---
           Total                                60         189        93
                                               ===         ===       ===

        Drydock Expenditures (000's)        $1,817      $7,242    $4,418
                                            ======      ======    ======


                                            Twelve Months Ended
                                            -------------------
    (dollars in thousands,              December
     except per share data)                31,         December 31,
                                             2010              2009
                                             ----              ----

    Revenue                              $359,766          $388,871
    Direct operating expenses             170,638           166,183
    Drydock expense                        22,182            15,696
    General and administrative
     expenses                              44,029            43,700
    Depreciation and
     amortization expense                  56,959            53,044
    (Gain) loss on sale of
     assets                                (5,095)           (5,552)
    Impairment charge                      97,665            46,247
                                           ------            ------
    Operating Income (Loss)               (26,612)           69,553

    Interest expense                      (21,693)          (20,281)
    Interest income                           985               377
    Foreign currency gain (loss)
     and other                               (126)           (1,153)
                                             ----            ------
    Income (loss) before income
     taxes                                (47,446)           48,496
    Income tax benefit
     (provision)                           12,701             2,087
                                           ------             -----
    Net Income (Loss)                    $(34,745)          $50,583
                                         ========           =======

    Diluted earnings (loss) per
     share                                 $(1.36)            $1.99
    Weighted average diluted
     common shares                         25,519            25,446

    Other Data
    ----------
    Revenue by Region
        North Sea                        $148,740          $165,415
        Southeast Asia                     66,533            76,544
        Americas                          144,493           146,912

    Rates Per Day Worked
        North Sea                         $16,985           $19,930
        Southeast Asia                     16,943            20,780
        Americas                           14,281            16,098

    Overall Utilization
        North Sea                            93.5%             88.8%
        Southeast Asia                       84.7%             90.0%
        Americas                             80.1%             73.3%

    Average Owned Vessels
        North Sea                            25.1              24.8
        Southeast Asia                       13.0              11.5
        Americas                             35.3              35.0
                                             ----              ----
           Total                             73.4              71.3
                                             ====              ====

    Drydock Days
        North Sea                             164               169
        Southeast Asia                        159                80
        Americas                              262               221
                                              ---               ---
           Total                              585               470
                                              ===               ===

        Drydock Expenditures (000's)      $22,182           $15,696
                                          =======           =======

    Summary Financial Data (unaudited)
    ----------------------------------
                                             Three Months Ended
                                             ------------------
    (dollars in thousands, except per     December   September  December
     share data)                             31,         30,       31,
                                               2010        2010      2009
                                               ----        ----      ----
    Balance Sheet Data
    ------------------
      Cash and cash equivalents             $97,195     $87,941   $92,079
      Working capital                       101,501      98,296    88,041
      Vessels, equipment and other fixed
       assets, net                        1,191,280   1,202,595 1,164,067
      Construction in progress                2,920       3,422    40,349
      Total assets                        1,464,450   1,474,588 1,565,659
      Long-term debt (1)                    293,095     311,412   326,361
      Shareholders' equity                  945,957     927,583   987,468
    (1) Current portion of long-term debt
     included in working capital.

    Cash Flow Data
    --------------
      Cash flow from operating activities   $34,214     $17,977   $32,373
      Cash flow from (used in) investing
       activities                            (7,987)     16,419   (36,681)
      Cash flow from (used in) financing
       activities                           (17,443)      1,835  (103,055)

    Forward Contract Cover                     2011                  2010
    ----------------------                     ----                  ----
        North Sea                                75%                   73%
        Southeast Asia                           50%                   71%
        Americas                                 56%                   44%
                                                ---                   ---
           Total                                 61%                   58%
                                                ===                   ===

    Forward Contract Cover                     2012                  2011
    ----------------------                     ----                  ----
        North Sea                                55%                   37%
        Southeast Asia                           23%                   31%
        Americas                                 29%                   14%
                                                ---                   ---
           Total                                 37%                   25%
                                                ===                   ===


                                                      Twelve Months Ended
                                                      -------------------
                                                      December     December
    (dollars in thousands, except per share data)        31,          31,
                                                           2010         2009
                                                           ----         ----
    Balance Sheet Data
    ------------------
      Cash and cash equivalents                         $97,195      $92,079
      Working capital                                   101,501       88,041
      Vessels, equipment and other fixed assets, net  1,191,280    1,164,067
      Construction in progress                            2,920       40,349
      Total assets                                    1,464,450    1,565,659
      Long-term debt (1)                                293,095      326,361
      Shareholders' equity                              945,957      987,468
    (1) Current portion of long-term debt included in
     working capital.

    Cash Flow Data
    --------------
      Cash flow from operating activities               $91,574     $171,045
      Cash flow from (used in) investing activities     (53,857)     (68,199)
      Cash flow from (used in) financing activities     (32,837)    (120,250)

    Forward Contract Cover
    ----------------------
        North Sea
        Southeast Asia
        Americas
           Total

    Forward Contract Cover
    ----------------------
        North Sea
        Southeast Asia
        Americas
           Total

    Reconciliation of Non-GAAP Measures: Year Ended December 31, 2010
    -----------------------------------------------------------------
    (dollars in millions,
     except per share     Operating
     data)                  Income   Tax Provision Net Income   Diluted EPS
                          ---------  ------------- ----------   -----------
                                         Benefit
                                      (Provision)
                                     ------------
    Before Special Items      $66.0           $2.3       $47.4        $1.86
                              -----           ----       -----        -----
    Impairment Charge         (97.7)             -       (97.7)       (3.83)
    Gain on Sale of
     Vessel                     5.1              -         5.1         0.20
    Tax Adjustments               -           10.4        10.4         0.41
                                ---           ----        ----         ----
    U.S. GAAP                $(26.6)         $12.7      $(34.8)      $(1.36)
                             ======          =====      ======       ======

    Reconciliation of Non-GAAP Measures: Year Ended December 31, 2009
    -----------------------------------------------------------------
    (dollars in
     millions, except
     per share data)  Operating   Tax Provision  Net Income   Diluted EPS
                      ---------   -------------  ----------   -----------
                                      Benefit
                        Income     (Provision)
                        ------    ------------
    Before Special
     Items                $110.2          $(5.3)       $83.8        $3.29
                          ------          -----        -----        -----
    Impairment Charge      (46.2)          17.0        (29.2)       (1.15)
    Gain on Sale of
     Vessel                  5.6              -          5.6         0.22
    Tax Adjustments            -           (9.6)        (9.6)       (0.38)
                             ---           ----         ----        -----
    U.S. GAAP              $69.6           $2.1        $50.6        $1.99
                           =====           ====        =====        =====


    Vessel Count by Reporting
     Segment
    -------------------------
                                    North  Southeast
                                      Sea     Asia   Americas Total
    Owned Vessels as of October 26,
     2010                               25        14       35     74
                                       ---       ---      ---    ---
        Newbuild Deliveries              0         0        0      0
        Sales & Dispositions             0         0        0      0
                                                                 ---
    Owned Vessels as of February
     23, 2011                           25        14       35     74
        Managed Vessels                 12         1        1     14
    Total Fleet as of February 23,
     2011                               37        15       36     88
                                       ===       ===      ===    ===

SOURCE GulfMark Offshore, Inc.


Source: newswire



comments powered by Disqus