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8-K - FORM 8-K - GULFMARK OFFSHORE INC | h80024e8vk.htm |
Exhibit 99.1
GulfMark
OFFSHORE
OFFSHORE
GulfMark Offshore Announces
Fourth Quarter and Full Year 2010 Operating Results
Fourth Quarter and Full Year 2010 Operating Results
HOUSTON, February 23, 2011 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.
GulfMark Offshore, Inc.
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February 23, 2011
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February 23, 2011
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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
GulfMark Offshore, Inc.
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February 23, 2011
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February 23, 2011
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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 Companys 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.
Press Release
February 23, 2011
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February 23, 2011
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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 Companys filings with the SEC,
including the registration statement and the Companys 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.
GulfMark Offshore,
Inc.
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February 23, 2011
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Three Months Ended | Twelve Months Ended | |||||||||||||||||||
Operating Data (unaudited) | December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||
(dollars in thousands, except per share data) | 2010 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||
Revenue |
$ | 87,854 | $ | 94,479 | $ | 84,655 | $ | 359,766 | $ | 388,871 | ||||||||||
Direct operating expenses |
43,182 | 41,729 | 47,060 | 170,638 | 166,183 | |||||||||||||||
Drydock expense |
1,817 | 7,242 | 4,418 | 22,182 | 15,696 | |||||||||||||||
General and administrative expenses |
10,606 | 10,236 | 10,039 | 44,029 | 43,700 | |||||||||||||||
Depreciation and amortization expense |
14,515 | 14,492 | 13,996 | 56,959 | 53,044 | |||||||||||||||
(Gain) loss on sale of assets |
| (5,201 | ) | (55 | ) | (5,095 | ) | (5,552 | ) | |||||||||||
Impairment charge |
| | | 97,665 | 46,247 | |||||||||||||||
Operating Income (Loss) |
17,734 | 25,981 | 9,197 | (26,612 | ) | 69,553 | ||||||||||||||
Interest expense |
(5,835 | ) | (5,807 | ) | (5,052 | ) | (21,693 | ) | (20,281 | ) | ||||||||||
Interest income |
246 | 597 | 113 | 985 | 377 | |||||||||||||||
Foreign currency gain (loss) and other |
(284 | ) | (603 | ) | (268 | ) | (126 | ) | (1,153 | ) | ||||||||||
Income (loss) before income taxes |
11,861 | 20,168 | 3,990 | (47,446 | ) | 48,496 | ||||||||||||||
Income tax benefit (provision) |
3,375 | (961 | ) | (15,253 | ) | 12,701 | 2,087 | |||||||||||||
Net Income (Loss) |
$ | 15,236 | $ | 19,207 | $ | (11,263 | ) | $ | (34,745 | ) | $ | 50,583 | ||||||||
Diluted earnings (loss) per share |
$ | 0.59 | $ | 0.75 | $ | (0.45 | ) | $ | (1.36 | ) | $ | 1.99 | ||||||||
Weighted average diluted common shares |
25,819 | 25,737 | 25,253 | 25,519 | 25,446 | |||||||||||||||
Other Data |
||||||||||||||||||||
Revenue by Region |
||||||||||||||||||||
North Sea |
$ | 37,908 | $ | 38,340 | $ | 34,458 | $ | 148,740 | $ | 165,415 | ||||||||||
Southeast Asia |
15,998 | 17,867 | 20,243 | 66,533 | 76,544 | |||||||||||||||
Americas |
33,948 | 38,272 | 29,954 | 144,493 | 146,912 | |||||||||||||||
Rates Per Day Worked |
||||||||||||||||||||
North Sea |
$ | 17,046 | $ | 17,637 | $ | 17,173 | $ | 16,985 | $ | 19,930 | ||||||||||
Southeast Asia |
16,209 | 16,841 | 20,105 | 16,943 | 20,780 | |||||||||||||||
Americas |
14,674 | 15,830 | 14,395 | 14,281 | 16,098 | |||||||||||||||
Overall Utilization |
||||||||||||||||||||
North Sea |
93.5 | % | 91.6 | % | 87.2 | % | 93.5 | % | 88.8 | % | ||||||||||
Southeast Asia |
78.5 | % | 85.2 | % | 93.1 | % | 84.7 | % | 90.0 | % | ||||||||||
Americas |
73.0 | % | 76.0 | % | 64.8 | % | 80.1 | % | 73.3 | % | ||||||||||
Average Owned Vessels |
||||||||||||||||||||
North Sea |
25.0 | 25.7 | 24.4 | 25.1 | 24.8 | |||||||||||||||
Southeast Asia |
14.0 | 13.9 | 12.0 | 13.0 | 11.5 | |||||||||||||||
Americas |
35.0 | 35.0 | 36.0 | 35.3 | 35.0 | |||||||||||||||
Total |
74.0 | 74.6 | 72.4 | 73.4 | 71.3 | |||||||||||||||
Drydock Days |
||||||||||||||||||||
North Sea |
19 | 62 | 30 | 164 | 169 | |||||||||||||||
Southeast Asia |
20 | 17 | | 159 | 80 | |||||||||||||||
Americas |
21 | 109 | 63 | 262 | 221 | |||||||||||||||
Total |
60 | 189 | 93 | 585 | 470 | |||||||||||||||
Drydock Expenditures (000s) |
$ | 1,817 | $ | 7,242 | $ | 4,418 | $ | 22,182 | $ | 15,696 | ||||||||||
GulfMark Offshore, Inc.
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February 23, 2011
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Three Months Ended | Twelve Months Ended | |||||||||||||||||||
Summary Financial Data (unaudited) | December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||
(dollars in thousands, except per share data) | 2010 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||
Balance Sheet Data |
||||||||||||||||||||
Cash and cash equivalents |
$ | 97,195 | $ | 87,941 | $ | 92,079 | $ | 97,195 | $ | 92,079 | ||||||||||
Working capital |
101,501 | 98,296 | 88,041 | 101,501 | 88,041 | |||||||||||||||
Vessels, equipment and other fixed assets, net |
1,191,280 | 1,202,595 | 1,164,067 | 1,191,280 | 1,164,067 | |||||||||||||||
Construction in progress |
2,920 | 3,422 | 40,349 | 2,920 | 40,349 | |||||||||||||||
Total assets |
1,464,450 | 1,474,588 | 1,565,659 | 1,464,450 | 1,565,659 | |||||||||||||||
Long-term debt (1) |
293,095 | 311,412 | 326,361 | 293,095 | 326,361 | |||||||||||||||
Shareholders equity |
945,957 | 927,583 | 987,468 | 945,957 | 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 | $ | 91,574 | $ | 171,045 | ||||||||||
Cash flow from (used in) investing activities |
(7,987 | ) | 16,419 | (36,681 | ) | (53,857 | ) | (68,199 | ) | |||||||||||
Cash flow from (used in) financing activities |
(17,443 | ) | 1,835 | (103,055 | ) | (32,837 | ) | (120,250 | ) | |||||||||||
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 | % | ||||||||||||||||
Tax Provision | ||||||||||||||||
Reconciliation of Non-GAAP Measures: Year Ended December 31, 2010 | Operating | Benefit | ||||||||||||||
(dollars in millions, except per share data) | Income | (Provision) | Net Income | Diluted EPS | ||||||||||||
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 | ) | |||||
Tax Provision | ||||||||||||||||
Reconciliation of Non-GAAP Measures: Year Ended December 31, 2009 | Operating | Benefit | ||||||||||||||
(dollars in millions, except per share data) | Income | (Provision) | Net Income | Diluted EPS | ||||||||||||
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 | ||||||||
GulfMark Offshore, Inc.
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February 23, 2011
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February 23, 2011
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Southeast | ||||||||||||||||
Vessel Count by Reporting Segment | North 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 | ||||||||||||