The Company sustained damage to certain of its oil and gas production facilities in Hurricanes Katrina and Rita. The Company estimates total repair and inspection costs resulting from the hurricanes will range from $5 million to $8 million, net of insurance reimbursement. These costs, and any related insurance reimbursements, will be recorded as incurred over the next year.
Summary of Results (in thousands, except per share amounts and percentages) Third Qtr Second Qtr Nine Months 2005 2004 2005 2005 2004 Revenues $209,338 $131,987 $166,531 $535,444 $380,403 Gross Profit 82,928 45,726 52,419 187,220 118,883 40% 35% 32% 35% 31% Net Income 42,671 22,794 26,027 94,108 54,647 20% 17% 16% 18% 14% Diluted Earnings Per Share 1.05 0.59 0.65 2.34 1.41
Owen Kratz, Chairman and Chief Executive Officer of Cal Dive, stated, "The two hurricanes that occurred during the quarter severely tested the resilience of our people and I am very pleased to report that they passed with flying colors.
"Due to the strength of our business model, we produced another record quarter for both earnings and cash flow despite deferring around 12 cents per share of income related to delayed production revenues. It was particularly satisfying to see the Marine Contracting division have such a strong quarter even though the incremental benefit from hurricane related work did not start until late in the period.
"The outlook for Q4 is for the Marine Contracting division to perform well again, especially with the introduction of several of the recently acquired assets, offsetting income deferrals resulting from hurricane related shut-ins for both the Oil and Gas division and the Production Facilities division. Based on this outlook we expect 2005 earnings to fall in the range of $3.15 - $3.35 per hare."
Financial Highlights * Revenues: The $77.4 million increase in year-over-year third quarter revenues was driven primarily by significant improvements in Marine Contracting revenues due to much better market conditions, particularly in both deepwater and shelf subsea construction. * Margins: 40% was five points better than the year-ago quarter due to a significant increase in Marine Contracting margins driven by improved market conditions. * SG&A: $15.9 million increased $5.0 million from the same period a year ago due primarily to additional incentive compensation accruals as a result of improved profitability. This level of SG&A was 8% of third quarter revenues, consistent with the year ago level. * Equity in Earnings: $3.7 million reflects primarily our share of Deepwater Gateway, L.L.C.'s earnings for the quarter. This reflects only a $600,000 increase from the second quarter as the anticipated ramp up with K2 coming online at the Marco Polo facility was offset by downtime caused by the hurricanes. * Balance Sheet: During the third quarter, the Company acquired seven vessels from Torch Offshore, including the Midnight Express for $85.4 million. Total debt as of September 30, 2005 was $443 million. This represents 42% debt to book capitalization and with $316 million of EBITDA for the twelve months ended September 30, 2005, this represents 1.4 times trailing twelve month EBITDA. In addition, the Company had $150 million of unrestricted cash as of September 30, 2005. Most of these funds will be utilized for the previously announced acquisition of certain assets of Stolt Offshore, which the DOJ cleared last month.
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