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GulfMark Offshore Announces Second Quarter 2011 Operating Results

July 21, 2011

HOUSTON, July 21, 2011 /PRNewswire/ — GulfMark Offshore, Inc. (NYSE: GLF) today reported net income of $13.3 million, or $0.51 per diluted share, on revenues of $96.9 million for the quarter ended June 30, 2011.

Bruce Streeter, President and CEO, commented, “Overall this has been an outstanding quarter and we are proud of what our employees accomplished. Although all of us would like to see more activity in the Gulf of Mexico, as we indicated on last quarter’s earnings conference call, we continue to see encouraging short- and long-term trends in all of our regions. Despite limited offshore drilling permits in the U.S. Gulf of Mexico, utilization in the Americas is up as we begin to see the benefit of repositioning a significant portion of our U.S. flagged vessels to Trinidad and Brazil. In our other regions of the world, we have concentrated on building our term contract position and have taken advantage of strengthening markets. Direct operating expense has been higher during the first half of 2011, in part because we repositioned vessels to achieve better overall operating profitability, but as a result we incurred higher than estimated operating costs in locations such as Brazil. On a consolidated basis, profitability increased meaningfully during the quarter and the Company’s long-term outlook continues to improve. New jack-ups, semi-submersibles and drillship orders, combined with strong crude oil prices, support our optimistic view that customers will increasingly demand technologically advanced offshore support vessels in the future.”

Consolidated Second Quarter Results

Consolidated revenue for the second quarter of 2011 was $96.9 million, an increase of 19%, or $15.6 million, from the first quarter. Consolidated operating income was $20.4 million, up $16.1 million from the first quarter amount of $4.3 million. The higher sequential quarterly operating income was principally driven by higher revenue. Direct operating expenses were up on a sequential quarterly basis; however, these increases were largely offset by sequentially lower drydock expense.

Regional Results

During the second quarter, the average day rate in the North Sea region was up 13% and utilization was up 7 percentage points, resulting in an overall increase in revenue of $8.4 million over the first quarter. The increase in revenue reflects the seasonal strength we customarily see in the warmer North Sea months, combined with a tightening in the market for offshore supply vessels as other market participants relocated vessels to regions outside of the North Sea.

Revenue for the Americas region was $37.4 million, an increase of 23%, or $7.0 million, from the first quarter. The increase in revenue was attributable to a gain of 13 percentage points in utilization, to 84% for the quarter, although the average day rate in the region was flat in comparison. The low level of drilling activity in the U.S. Gulf of Mexico continues to negatively impact the potential revenue of the Americas region, although during the second quarter of 2011 revenue for the U.S. Gulf of Mexico subregion was up $1.9 million over the prior quarter. For vessels operating in the U.S. Gulf of Mexico, utilization increased to 69% during the second quarter.

Revenue for the Southeast Asia region was $15.7 million for the second quarter of 2011, a slight increase over the first quarter. Utilization and day rates were both consistent with the first quarter of 2011.

Consolidated Operating Expenses

Direct operating expenses for the second quarter were $46.9 million, 6% above the first quarter amount as well as the Company’s anticipated 2011 quarterly run rate. The increase relates to higher levels of maintenance activity and personnel costs in the Americas region. The Company expects direct operating expenses for the remainder of 2011 to be approximately $45.5 million per quarter. Consolidated drydock expense was $3.7 million in the second quarter. The Company continues to expect full year 2011 drydock expense to be approximately $17.0 million. Consolidated general and administrative expenses were $10.9 million for the second quarter, a decrease from the first quarter amount, but consistent with the Company’s anticipated average quarterly run rate for 2011 of $11.5 million per quarter.

Liquidity, Capital Commitments and Contract Cover

Cash flow from operations totaled $20.0 million in the second quarter of 2011. Cash on hand at June 30, 2011 was $113.9 million, and as of that date $10.0 million had been drawn on the Company’s $175.0 million revolving credit facility. Total debt at June 30, 2011 was $319.8 million, and debt, net of cash on hand, was $205.9 million. Quarterly principal amortization on the term-loan facility is $8.3 million. Capital expenditures during the second quarter totaled $3.4 million, and there are currently no capital commitments related to the construction or purchase of vessels. Total capital expenditures for all of 2011 pertaining to the improvement and enhancement of existing vessels are forecasted to be $11.0 million. Total backlog of contracted revenue is $705.8 million.

Outlook

CEO Bruce Streeter commented on the outlook for the Company, stating, “We continue to look to the future with increasing optimism. The second quarter’s results help confirm our belief in an improving market for our vessels over the near term. These improvements reinforce our commitment to prepare the Company to take advantage of market opportunities in the likely event the industry begins to experience an extended up cycle period. In addition, as we look at our fleet position and our balance sheet strength, we believe we can safely increase our position to take advantage of improving markets around the world. International vessel demand and operations continue to perform well. The pace of new construction rig orders continues to be very strong, and we intend to position GulfMark to be ready to service these next generation rigs with a growing fleet of technologically advanced offshore support vessels.”

Conference Call/Webcast 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 Friday, July 22, 2011. To participate in the teleconference, investors in the U.S. should dial 1-877-317-6789 at least 10 minutes before the start time and reference GulfMark. Canada-based callers should dial 1-866-605-3852, and international callers outside of North America should dial 1-412-317-6789. The webcast of the conference call also can be accessed by visiting the company’s website, www.gulfmark.com. An audio file of the earnings conference call will be available on the company’s website approximately two hours after the end of the call.

GulfMark Offshore, Inc. provides marine transportation services to the energy industry through a fleet of offshore support vessels serving major offshore energy markets 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 risks, 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, 2010. 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
    --------------------------                ------------------
    (in thousands, except per          June                        June
     share data)                        30,      March 31,          30,
                                        2011           2011          2010
                                        ----           ----          ----

    Revenue                          $96,911        $81,289       $92,782
    Direct operating expenses         46,908         44,318        42,658
    Drydock expense                    3,683          6,524         6,159
    General and administrative
     expenses                         10,910         11,423        11,456
    Depreciation and
     amortization expense             14,982         14,675        13,977
    (Gain) loss on sale of
     assets                                -             10           106
    Impairment charge                      -              -        97,665
                                         ---            ---        ------
    Operating Income (Loss)           20,428          4,339       (79,239)

    Interest expense                 (5,630)         (5,727)       (5,062)
    Interest income                      119             67            37
    Foreign currency gain (loss)
     and other                            73            (58)       (1,020)
                                         ---            ---        ------
    Income before income taxes        14,990         (1,379)      (85,284)
    Income tax benefit
     (provision)                     (1,699)            212        (5,447)
                                      ------            ---        ------
    Net Income (Loss)                $13,291        $(1,167)     $(90,731)
                                     =======        =======      ========

    Diluted earnings (loss) per
     share                             $0.51         $(0.05)       $(3.55)
    Weighted average diluted
     common shares                    25,949         25,679        25,546

    Other Data
    ----------
    Revenue by Region (000's)
        North Sea                    $43,836        $35,399       $37,217
        Southeast Asia                15,678         15,535        16,841
        Americas                      37,397         30,355        38,724

    Rates Per Day Worked
        North Sea                    $20,014        $17,789       $16,478
        Southeast Asia                15,228         15,248        16,817
        Americas                      14,217         14,194        13,486

    Overall Utilization
        North Sea                       94.1%          87.1%         95.1%
        Southeast Asia                  83.0%          83.2%         92.8%
        Americas                        84.3%          70.5%         91.7%

    Average Owned Vessels
        North Sea                       25.0           25.0          25.2
        Southeast Asia                  14.0           14.0          12.1
        Americas                        35.0           35.0          35.3
                                        ----           ----          ----
           Total                        74.0           74.0          72.6
                                        ====                         ====

    Drydock Days
        North Sea                         46             71            34
        Southeast Asia                    42             11            61
        Americas                          40            109            38
                                         ---            ---           ---
           Total                         128            191           132
                                         ===            ===           ===

        Drydock Expenditures (000's)  $3,683         $6,524        $6,159
                                      ======         ======        ======


    Operating Data (unaudited)              Six Months Ended
    --------------------------              ----------------
    (in thousands, except per               June           June
     share data)                             30,            30,
                                              2011           2010
                                              ----           ----

    Revenue                               $178,200       $177,433
    Direct operating expenses               91,225         85,727
    Drydock expense                         10,207         13,123
    General and administrative
     expenses                               22,333         23,187
    Depreciation and
     amortization expense                   29,658         27,952
    (Gain) loss on sale of
     assets                                     10            106
    Impairment charge                            -         97,665
                                               ---         ------
    Operating Income (Loss)                 24,767        (70,327)

    Interest expense                       (11,357)       (10,051)
    Interest income                            184            142
    Foreign currency gain (loss)
     and other                                  17            761
                                               ---            ---
    Income before income taxes              13,611        (79,475)
    Income tax benefit
     (provision)                            (1,487)        10,287
                                            ------         ------
    Net Income (Loss)                      $12,124       $(69,188)
                                           =======       ========

    Diluted earnings (loss) per
     share                                   $0.46         $(2.72)
    Weighted average diluted
     common shares                          25,885         25,470

    Other Data
    ----------
    Revenue by Region (000's)
        North Sea                          $79,235        $72,492
        Southeast Asia                      31,213         32,668
        Americas                            67,752         72,273

    Rates Per Day Worked
        North Sea                          $18,951        $16,621
        Southeast Asia                      15,238         17,387
        Americas                            14,207         13,428

    Overall Utilization
        North Sea                             90.6%          94.5%
        Southeast Asia                        83.1%          88.0%
        Americas                              77.4%          85.7%

    Average Owned Vessels
        North Sea                             25.0           24.8
        Southeast Asia                        14.0           12.1
        Americas                              35.0           35.7
                                              ----           ----
           Total                              74.0           72.5
                                              ====           ====

    Drydock Days
        North Sea                              117             84
        Southeast Asia                          54            122
        Americas                               148            132
                                               ---            ---
           Total                               319            337
                                               ===            ===

        Drydock Expenditures (000's)       $10,207        $13,123
                                           =======        =======


    Summary Financial Data
     (unaudited)                                Three Months Ended
    ----------------------                      ------------------
    (dollars in thousands)          June 30,        March 31,      June 30,
                                          2011            2011          2010
                                          ----            ----          ----
    Balance Sheet Data
    ------------------
      Cash and cash equivalents       $113,943        $105,516       $49,794
      Working capital                  131,738         117,106        58,459
      Vessel and equipment, net      1,187,292       1,193,407     1,165,956
      Construction in progress           3,869           3,018        30,215
      Total assets                   1,505,107       1,485,458     1,413,231
      Long-term debt (1)               286,463         294,779       309,728
      Stockholders' equity             987,155         965,135       871,924
    (1) Current portion of long-
     term debt included in working
     capital.

    Cash Flow Data
    --------------
      Cash flow from operating
       activities                      $20,001          $5,041       $17,448
      Cash flow used in investing
       activities                       (3,412)         (1,522)       (7,116)
      Cash flow (used in) from
       financing activities             (8,210)          2,793        (7,787)

    Forward Contract Cover -
     Remainder of Current Calendar
     Year
    ------------------------------
        North Sea                           79%                           75%
        Southeast Asia                      56%                           73%
        Americas                            64%                           46%
                                           ---                           ---
           Total                            68%                           61%
                                           ===                           ===

    Forward Contract Cover -Next
     Full Calendar Year
    ----------------------------
        North Sea                           60%                           45%
        Southeast Asia                      23%                           43%
        Americas                            29%                           36%
                                           ---                           ---
           Total                            38%                           40%
                                           ===                           ===

    Vessel Count by Reporting
     Segment
    -------------------------
                                                     Southeast
                                     North Sea          Asia        Americas
                                     ---------       ---------      --------
    Owned Vessels as of April 25,
     2011                                   25              14            35
                                           ---             ---           ---
        Newbuild Deliveries                  -               -             -
        Sales & Dispositions                 -               -             -
    Owned Vessels as of July 21,
     2011                                   25              14            35
        Managed Vessels                     14               1             -
    Total Fleet as of July 21, 2011         39              15            35
                                           ===             ===           ===


    Summary Financial Data
     (unaudited)                              Six Months Ended
    ----------------------                    ----------------
    (dollars in thousands)               June 30,       June 30,
                                              2011           2010
                                              ----           ----
    Balance Sheet Data
    ------------------
      Cash and cash equivalents           $113,943        $49,794
      Working capital                      131,738         58,459
      Vessel and equipment, net          1,187,292      1,165,956
      Construction in progress               3,869         30,215
      Total assets                       1,505,107      1,413,231
      Long-term debt (1)                   286,463        309,728
      Stockholders' equity                 987,155        871,924
    (1) Current portion of long-
     term debt included in working
     capital.

    Cash Flow Data
    --------------
      Cash flow from operating
       activities                          $25,042        $39,383
      Cash flow used in investing
       activities                           (4,934)       (62,289)
      Cash flow (used in) from
       financing activities                 (5,417)       (17,229)

    Forward Contract Cover -
     Remainder of Current Calendar
     Year
    ------------------------------
        North Sea
        Southeast Asia
        Americas
           Total

    Forward Contract Cover -Next
     Full Calendar Year
    ----------------------------
        North Sea
        Southeast Asia
        Americas
           Total

    Vessel Count by Reporting
     Segment
    -------------------------
                                            Total
                                            -----
    Owned Vessels as of April 25,
     2011                                       74
                                               ---
        Newbuild Deliveries                      -
        Sales & Dispositions                     -
    Owned Vessels as of July 21,
     2011                                       74
        Managed Vessels                         15
    Total Fleet as of July 21, 2011             89
                                               ===

SOURCE GulfMark Offshore, Inc.


Source: newswire



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