HOUSTON, April 20, 2015 (GLOBE NEWSWIRE) -- GulfMark Offshore, Inc. (NYSE:GLF) today announced its results of operations for the three-month period ended March 31, 2015. For the first quarter ended March 31, 2015, revenue was $89.1 million, and net loss was $5.1 million, or $0.21 per diluted share. Included in the quarterly results is one special item that totals $0.01 per diluted share. Quarterly loss before this special item was $0.20 per diluted share.
Quintin Kneen, President and CEO, commented, "As anticipated, we saw the cyclical downturn affect day rates and utilization across all of our regions during the first quarter. Fortunately, we also saw the benefits of cost reductions, and our results exceeded expectations. Overall, revenue approached the high end of our guidance, and direct operating expenses neared the low end of our guidance range. Reductions to salaries and adjustments to incentive compensation contributed to lower our general and administrative expenses to below the low end of our guidance range.
"At this point in the cycle, our primary focus is on improving operational efficiencies. We decreased total direct operating expenses by almost 12% from the prior quarter. Direct operating expenses are down almost 18% from its peak in the third quarter of 2014, and our objective is to reduce direct operating expenses by an additional 15% from its current level by the end of the third quarter. We have decreased ongoing general and administrative expenses by 27% over the same period. For the next quarter, we anticipate that general and administrative expenses will be approximately $12 million.
"While commodity prices have recently begun to recover, we continue to believe that the headwinds facing our industry are more about vessel oversupply than decreased demand. As such, we are working to adjust our cost structure to advance our competitive position in an oversupplied industry. We have cut our general and administrative expenses and direct operating expenses, and we will continue to implement profit-maximizing strategies throughout the business.
"It is still too early to predict the beginning of the next upturn. Looking forward, we expect revenue in the second quarter to be between $70 and $75 million. We expect fleet-wide utilization to be approximately 70% for the second quarter, and we expect our global average day rate for the second quarter to decrease by approximately 10% sequentially. Due to the quickly changing dynamics of the industry, we are only providing revenue guidance for the upcoming quarter.
"Importantly, we see opportunity in this industry downturn. By reducing our ongoing cost structure while increasing the variable nature of those costs, we believe that we will improve our profitability throughout the industry cycle. As this year progresses, we are rethinking procurement and labor strategies to help meet those goals. As new vessels continue to deliver into the global market, the fundamentals of our industry will become increasingly challenging. We are continuing to create and generate efficiencies that will improve our performance and meet these new challenges. We are confident that we are taking the steps necessary to enable us to profit from the upturn when it arrives."
Consolidated First-Quarter Results
Consolidated revenue for the first quarter of 2015 was $89.1 million, compared with $116.1 million in the fourth quarter. Consolidated revenue fell due to a 14% sequential decrease in average day rate to $17,961 from $20,939 in the previous quarter, while utilization fell to 77% from 83% in the fourth quarter. Consolidated operating loss was $0.6 million. Excluding special items in both quarters, consolidated operating income sequentially declined to a loss of $0.2 million from income of $16.1 million in the fourth quarter, due to lower revenue offset by lower operating and general and administrative costs.
This quarter includes one special item for a total of $0.3 million net of tax ($0.01 per diluted share). It relates to severance and exit costs in the North Sea and Americas regions as a result of adjustments to the workforce.
Regional Results for the First Quarter
In the North Sea region, first-quarter revenue was $40.2 million, compared with $52.6 million in the fourth quarter. This is a decrease of $12.4 million, or 24%. The average day rate fell to $18,353 from $21,655 in the fourth quarter and utilization weakened by 3 percentage points during the same period. The lower day rate, utilization, and fewer vessel operating days, coupled with a stronger dollar, contributed to the decrease in revenue.
Revenue in the Southeast Asia region was $13.3 million, compared with $15.1 million in the fourth quarter. The change in revenue was due primarily to a decline in average day rate of 6%, to $13,880 from $14,827 in the fourth quarter, offset by a 2 percentage point utilization improvement.
First-quarter revenue for the Americas region was $35.6 million, compared with $48.4 million in the previous quarter. Average day rate decreased 15% from the prior quarter due to the softening in the market. Utilization decreased 12 percentage points to 67% from 79% in the fourth quarter due to a weaker-than-expected spot market and the effect of warm-stacking several vessels in the U.S. Gulf of Mexico. Our utilization in the Americas, exclusive of warm-stacked vessels, was 80% during the first quarter.
Consolidated Operating Expenses for the First Quarter
Direct operating expenses for the first quarter were $51.2 million, a decrease of $6.8 million, or 12%, from the fourth quarter. The decrease was due mainly to lower crew salaries due to warm-stacking in the Americas and cost-cutting measures implemented in the quarter. Drydock expense in the first quarter was $9.0 million, on the low end of our previous guidance. General and administrative expense was $11.0 million for the first quarter, about $1 million lower than the low end of our guided quarterly run rate. Tax benefit during the quarter was $4.2 million, within the guided range.
Liquidity and Capital Commitments
Cash provided by operating activities totaled $2.6 million in the first quarter. Cash on hand at March 31, 2015, was $59.8 million, and $60.0 million was drawn on the revolving credit facilities. Total debt at March 31, 2015, was $560.7 million, and debt net of cash was $500.9 million.
Net capital expenditures during the first quarter totaled $7.2 million, which included $1.5 million of payments on the construction of new vessels and $6.4 million for vessel enhancements and other capital expenditures, offset by proceeds from one vessel sale of $0.7 million. As of March 31, 2015, the Company had approximately $75.0 million of remaining capital commitments related to the construction of three vessels. Anticipated progress payments over the next two calendar years are as follows: $32.0 million in 2015 and $43.0 million in 2016. The Company expects to fund these commitments from cash on hand, cash generated by operations, and borrowings under the revolving credit facilities.
Conference Call/Webcast Information
GulfMark will conduct a conference call to discuss earnings with analysts, investors and other interested parties at 9:00 a.m. Eastern Time on Tuesday, April 21, 2015. To participate in the teleconference, investors in the U.S. should dial 1-888-317-6003 at least 10 minutes before the start time and when prompted, enter the conference passcode 1335944. Canada-based callers should dial 1-866-284-3684, and international callers outside of North America should dial 1-412-317-6061. The webcast of the conference call also can be accessed by visiting our 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.
Certain statements and information in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could" or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues are based on our forecasts for our existing operations. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the price of oil and gas and its effect on offshore drilling, vessel utilization and day rates; industry volatility; fluctuations in the size of the offshore marine vessel fleet in areas where the Company operates; changes in competitive factors; delays 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 Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Consequently, the forward-looking statements contained herein should not be regarded as representations that the projected outcomes can or will be achieved. These forward-looking statements speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
| Operating Data (unaudited) | Three Months Ended | ||
| (dollars in thousands, except per share data) | March 31, | December 31, | March 31, |
| 2015 | 2014 | 2014 | |
| Revenue | $ 89,092 | $ 116,118 | $ 119,600 |
| Direct operating expenses | 51,225 | 57,991 | 56,299 |
| Drydock expense | 8,973 | 8,591 | 7,211 |
| General and administrative expenses | 10,964 | 15,815 | 14,489 |
| Depreciation and amortization expense | 18,488 | 18,607 | 18,357 |
| Impairment charge | -- | 1,536 | -- |
| (Gain) loss on sale of assets | -- | (7,162) | -- |
| Operating Income (Loss) | (558) | 20,740 | 23,244 |
| Interest expense | (8,158) | (7,330) | (6,740) |
| Interest income | 44 | 228 | 15 |
| Foreign currency gain (loss) and other | (673) | (649) | 936 |
| Income (loss) before income taxes | (9,345) | 12,989 | 17,455 |
| Income tax benefit (provision) | 4,219 | (5,713) | (898) |
| Net Income (Loss) | $ (5,126) | $ 7,276 | $ 16,557 |
| Diluted earnings (loss) per share | $ (0.21) | $ 0.29 | $ 0.63 |
| Weighted average diluted common shares | 24,603 | 25,230 | 26,359 |
| Other Data | |||
| Revenue by Region (000's) | |||
| North Sea | $ 40,200 | $ 52,595 | $ 52,623 |
| Southeast Asia | 13,329 | 15,088 | 18,304 |
| Americas | 35,563 | 48,435 | 48,673 |
| Total | $ 89,092 | $ 116,118 | $ 119,600 |
| Average Day Rates | |||
| North Sea | $ 18,353 | $ 21,655 | $ 22,123 |
| Southeast Asia | 13,880 | 14,827 | 15,312 |
| Americas | 19,724 | 23,124 | 22,496 |
| Total | $ 17,961 | $ 20,939 | $ 20,802 |
| Overall Utilization | |||
| North Sea | 83.1% | 86.4% | 90.4% |
| Southeast Asia | 85.0% | 82.8% | 86.2% |
| Americas | 67.4% | 78.9% | 86.4% |
| Total | 76.9% | 82.8% | 88.0% |
| Average Owned Vessels | |||
| North Sea | 29.2 | 30.6 | 29.1 |
| Southeast Asia | 13.0 | 13.6 | 16.0 |
| Americas | 29.9 | 29.0 | 28.0 |
| Total | 72.1 | 73.3 | 73.1 |
| Drydock Days | |||
| North Sea | 62 | 55 | 72 |
| Southeast Asia | 9 | 7 | 29 |
| Americas | 134 | 118 | 86 |
| Total | 205 | 180 | 187 |
| Drydock Expenditures (000's) | $ 8,973 | $ 8,591 | $ 7,211 |
| Summary Financial Data (unaudited) | As of, or Three Months Ended | ||||
| (dollars in thousands, except per share data) | March 31, | December 31, | March 31, | ||
| 2015 | 2014 | 2014 | |||
| Balance Sheet Data | |||||
| Cash and cash equivalents | $ 59,847 | $ 50,785 | $ 25,705 | ||
| Working capital | 115,057 | 99,318 | 101,638 | ||
| Vessels, equipment and other fixed assets, net | 1,351,164 | 1,356,839 | 1,440,958 | ||
| Construction in progress | 88,300 | 127,722 | 139,334 | ||
| Total assets | 1,663,373 | 1,716,355 | 1,829,754 | ||
| Long-term debt | 560,700 | 544,732 | 551,760 | ||
| Shareholders' equity | 923,182 | 968,753 | 1,082,287 | ||
| Cash Flow Data | |||||
| Cash provided by operating activities | $ 2,558 | $ 48,536 | $ 17,649 | ||
| Cash flow provided by (used in) investing activities | (7,220) | 998 | (96,117) | ||
| Cash flow provided by (used in) financing activities | 15,116 | (29,396) | 43,509 | ||
| Contract Cover | As of April 20, 2015 | As of April 21, 2014 | |||
| 2015 | 2016 | 2014 | 2015 | ||
| Region: | Vessel Days | Vessel Days | Vessel Days | Vessel Days | |
| North Sea | 59% | 27% | 66% | 31% | |
| Southeast Asia | 55% | 19% | 37% | 2% | |
| Americas | 29% | 10% | 47% | 19% | |
| Overall Fleet | 46% | 18% | 53% | 20% | |
| Reconciliation of Non-GAAP Measures: Three Months Ended March 31, 2015 | |||||
|
(dollars in millions, except per share data) |
Operating Income (Loss) |
Other Expense |
Tax Benefit |
Net Income (Loss) |
Diluted EPS |
| Before Special Items | $ (0.2) | $ (8.8) | $ 4.2 | $ (4.8) | $ (0.20) |
| Severance and Exit Costs | 0.3 | -- | -- | 0.3 | 0.01 |
| U.S. GAAP | $ (0.6) | $ (8.8) | $ 4.2 | $ (5.1) | $ (0.21) |
| Reconciliation of Non-GAAP Measures: Three Months Ended March 31, 2014 | |||||
|
(dollars in millions, except per share data) |
Operating Income |
Other Expense |
Tax Provision |
Net Income |
Diluted EPS |
| Before Special Items | $ 23.2 | $ (5.8) | $ (0.9) | $ 16.6 | $ 0.63 |
| No Special Items | -- | -- | -- | -- | -- |
| U.S. GAAP | $ 23.2 | $ (5.8) | $ (0.9) | $ 16.6 | $ 0.63 |
| Vessel Count by Reporting Segment | |||||
| North Sea | Southeast Asia | Americas | Total | ||
| Owned Vessels as of February 16, 2015 | 29 | 13 | 30 | 72 | |
| Newbuild Deliveries/Additions | -- | -- | -- | -- | |
| Sales & Dispositions | -- | -- | -- | -- | |
| Intercompany Relocations | -- | -- | -- | -- | |
| Owned Vessels as of April 20, 2015 | 29 | 13 | 30 | 72 | |
| Managed Vessels | 3 | -- | -- | 3 | |
| Total Fleet as of April 20, 2015 | 32 | 13 | 30 | 75 | |