Superior Offshore 2Q07 Numbers Down
Superior Offshore International, Inc. (Nasdaq:DEEP), a leading provider of subsea construction and commercial diving services to the oil and gas industry, reported preliminary results for the second quarter and six months ended June 30, 2007.
Superior Offshore reported total revenues of $41.9 million for the second quarter of 2007, compared with revenues of $60.6 million in the prior year's second quarter. The Company reported a net loss of $10.8 million, or $0.50 per share, in the second quarter of 2007, compared with net income of $12.1 million, or $0.82 per diluted share, in the second quarter of 2006.
EBITDA (earnings before interest, income taxes and depreciation and amortization), which is a non-GAAP financial measure, was a negative $11.7 million in the second quarter of 2007, compared with a positive $19.5 million in the second quarter of 2006
Second quarter 2007 revenues were impacted by the continued dry-docking and significant upgrades to the Company's dynamically positioned (DP) Superior Endeavour as previously disclosed in the Company's first quarter 10-Q. The Endeavour is currently projected to return to service by the end of August. Four-point surface diving vessel utilization and dayrates were significantly lower in the second quarter of 2007 as compared to the second quarter of 2006 because of decreased demand in the Gulf of Mexico.
Net results for the latest quarter included a $3.9 million pretax charge, or $0.18 per share, for the early extinguishment of debt. Compared with the year-ago quarter, net results were also impacted by expenses related to the Company's initial public offering, the relocation of its corporate headquarters to Houston and various costs related to being a public company, including Sarbanes-Oxley compliance and stock-based compensation expenses.
In the third quarter of 2007, the Company has placed into service the Gulmar Condor, chartered two additional DP II vessels in response to increased demand for deep water vessels and placed into service one anchored subsea construction barge. The Seamec III, the Gulmar Condor and the Crossmar 14 have been deployed in Trinidad.
"Over the past few months, we have been transforming Superior Offshore from a shallow water Gulf of Mexico contractor into an international and deepwater subsea construction and services company," said James J. Mermis, Superior Offshore's president and chief executive officer. "While second quarter results were clearly disappointing, these changes have created strong opportunities for revenue and margin growth.
"We expect a strong finish to 2007, based on our current book of business, approximately two-thirds of which is international and deepwater work and non-hurricane related," said Mermis. "We now have the largest backlog of work the Company has ever had, which solidifies our commitment to international and deepwater work outside the U.S. Gulf of Mexico.
"In Trinidad, where we began working in June under the largest contract in our history, the customer is contracting the Seamec III, the Gulmar Condor and the Crossmar 14. The Gulmar Falcon is scheduled to return to work in September, and our client in Trinidad has taken a first right of refusal on her. Given the scope of work on these Trinidad projects and interest expressed from other E&P companies in Trinidad, we expect to establish a permanent presence in the region to serve ongoing demand," Mermis said.
"We are also in the process of establishing an office in the United Arab Emirates and a subsidiary in Qatar. We are also focusing on business development in West Africa and the Middle East to leverage our existing client relationships as well as our South African-based subsidiary's marketing and operational platform in these highly opportunistic areas."
For the six months ended June 30, 2007, Superior Offshore International reported a loss of $4.6 million, or $0.25 per share, on revenues of $96.2 million. First half 2007 results also were impacted by the $0.21 per share charge for early extinguishment of debt. This compares with net income of $24.0 million, or $1.62 per diluted share, on revenues of $110.0 million for the first six months of 2006.
2007 Revenue Outlook
Based on our current estimates, the timing of project work and current market conditions, we project that full-year 2007 revenue will range between $265 million and $285 million. These projections constitute forward-looking statements and are subject to substantial risks and uncertainties. Actual future results could differ materially from these projections as a result of a number of factors, including, but not limited to, possible shipyard delays, project delays and adverse weather conditions in the Gulf of Mexico as well as the other factors described in the prospectus for our initial public offering.
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