GulfMark's $1.40 EPS Sets New Benchmark for 1st Quarter Earnings
GulfMark Offshore, Inc. announced first quarter 2008 earnings of $1.40 per diluted share, surpassing results for any first quarter in the company's history and setting a new benchmark for the future. Highlights for the record period include:
--1st quarter 2008 EPS of $1.40 represented a 67% increase over the 2007 comparable quarter of $0.84.
--Revenues of $83.3 million for the 1st quarter 2008 grew 27% over the prior year 1st quarter.
--Operating income of $34.4 million, before asset sale gains, improved 54% over the 1st quarter of 2007.
--SE Asia day rates climbed to $14,335 in the 1st quarter of 2008, 66% over the comparable 2007 quarter.
--Two new build vessels delivered on schedule during the quarter and started term contracts shortly thereafter.
Commenting on the results, Bruce Streeter, President and CEO, said, "We are extremely pleased to start the year with a record setting quarter. Generally, we expect seasonal weakness in the first quarter when lower demand coupled with our efforts to maximize the number of dry-docks accomplished during the quarter tend to reduce quarterly earnings levels. The North Sea short term market did display some normal seasonality. The positive developments in the supply vessel markets outside of the North Sea, however, and the evolving impact of our newly delivered vessels are responsible for our earnings growth year-over-year. This change from 2007 to 2008 is most dramatic in Southeast Asia where growth came largely from vessels previously delivered in 2007 and the partial contribution from one of the two vessels delivered in 2008. The second ship delivered in late March 2008 and, we are pleased to say, has started its initial job. Continued growth in the future is expected from a combination of the improved fleet size and profile in Southeast Asia, a continued strong market in the North Sea and the potential in other locations, notably Brazil.
"We continue to see reports indicating growth in E&P companies' budgets for 2008 and that trend is unlikely to change as oil prices continue to climb to record levels. We have also noted a number of long-term contracts for high specification drilling units extending well into the next decade. This factor recently led an industry analyst to conclude that the current global drilling cycle will continue for another five to seven years, clearly indicating an expectation for future growth in the demand for our services.
"We previously had indicated our intentions to mobilize two additional vessels to Brazil. The first of these vessels, the Highland Piper, was mobilized and modifications completed during the first quarter, thus allowing that vessel to start a multi-year contract with Petrobras in early April. The second vessel, the Sea Apache, after modifications, will mobilize to Brazil from Southeast Asia during the second or third quarter of this year to also work for Petrobras. Demand in Brazil is very interesting as the recent information release on the Carioca field, and several recent drilling rig extensions and contracts for new rigs, following closely after the earlier confirmations of the Tupi and Jupiter discoveries. Brazil will be an area of focus and demand growth as these large accumulations of oil and gas are brought to market and we are pleased to be able to expand our presence their ahead of this demand.
"Regarding our new build program, in addition to the Sea Apache and Sea Kiowa that delivered in the first quarter, ten additional vessels of four different designs are under construction. These designs have been incorporated in the new build program to take advantage of the requirements for various vessel type demands in the future. The final three vessels of the Keppel project in Singapore are scheduled for delivery within 2008 while the other seven vessels are scheduled to deliver in late 2009 and during 2010.
"In summary, our marketing strategy continues to pay dividends, as we shifted vessels to short-term work, including project work in West Africa, which reduced the impact of the North Sea seasonality. We also took advantage of this period to complete seven of the scheduled seventeen dry-docks planned for this year. Overall, the various markets we operate in, or will operate in, continue to show strength and improving fundamentals. The addition of the new construction vessels joining our fleet at a time when we are experiencing strong market expansion, robust demand and forward indicators of larger capital investments in the industry are all signs of the potential we see to increase shareholder value over the long-term."
Liquidity and Capital Commitments
Cash flow from operations totaled $23.0 million for the three months ended March 31, 2008, compared to $24.9 million for the same period in 2007. Liquidity at quarter-end was $252.7 million consisting of working capital of $77.7 million, including $16.2 million in cash, and the entire $175.0 million available under the revolving credit facility. Total debt at March 31, 2008 was $159.6 million, comprised solely of the 7.75% senior notes due 2014. Capital expenditures during the first quarter were $47.8 million, primarily related to the new build program, and were funded from cash on-hand and from operations supplemented by a short duration drawdown of $12.0 million under the revolving credit facility, which was repaid in full prior to quarter-end. Remaining cash commitments for 2008 under the new build program, comprising the ten vessels under construction, are approximately $55.1 million, and are expected to be funded from cash flow from operations and available cash.