The SeaBird Group reported consolidated revenues of US $55.6 million for the second quarter of 2008, compared to US $17.2 million for Q2 2007. Eight vessels were in operation with an average vessel utilization of around 87%. Earnings before interest, taxes, depreciation and amortization (EBITDA) were US $21.5 million for
Substantial increases in costs, mainly due to having three more vessels in operations than in the comparable quarter of 2007, high operating costs for four vessels operating in India and general cost inflation in the industry, were more than offset by the substantial increase in revenues. SeaBird had selling, general and
Earnings before interest and taxes (EBIT) were USD 14.5 million for the second quarter of 2008 compared to a loss of USD 2.3 million for Q2 2007. Depreciation increased to USD 7.0 million, up from USD 3.5 million for Q2 2007, as three vessels were added subsequent to Q2 2007.
Interest expenses increased from US $1.1 million in Q2 2007 to US $3.2 million in Q2 2008. Interest expenses are reduced with capitalized interest cost on capital work in process of US $1.9 million for Q2 2008 and US $2.2 million for Q2 2007. Adjusted for this, the increase of interest expenditures are in line with the increase of net interest bearing debt from US $120.5 million by the end of Q2 2007 to US $210 million by the end of Q2 2008. Net income for Q2 2008 was US $11.4 million, compared to a net loss of US $3.1 million for Q2 2007.
Revenues for the six months ended June 30, 2008 were US $93.3 million which is 131% higher than the comparable period of 2007 and close to the full year revenues for 2007 of US $95.8 million. EBITDA for the
Interest expenses increased from US $2.3 million in the first six months of 2007 to US $7.7 million in the comparable period in 2008, while other financial items, net increased from close to zero for the first six months of 2007 to an expense of US $6.7 million for the first six months of 2008. Unrealized foreign exchange losses on Norwegian kroner bond loans of NOK 600 million constituted US $6.9 million of other financial items, net. This loss was mainly recognized in Q1 2008, while the USD strengthened marginally against the NOK through Q2 2008 resulting in a marginal unrealized foreign exchange gain for the quarter. Net income was US $3.4 million, compared to US $1.9 million for the first six months of 2007.
The weak USD has in general had a negative impact on both operating expenses and on the capital expenditures related to the investments in the Hugin Explorer, nodes and related equipment, as a substantial part of costs and investments have been committed in other currencies than USD.
LIQUIDITY AND FINANCING
At June 30, 2008, cash and cash equivalents amounted to US $8.9 million, compared to US $11.6 million at the end of 2007 and US $28.2 million at the end of Q1 2008. Net cash flow from operating activities for the quarter was US $22.6 million, compared to USD 2.0 million for Q2 2007. Net cash flow from operating activities for the first six months of 2008 was US $38.1 million, compared to US $21.2 million for the first six months of 2007. Capital expenditures for the quarter were US $24.9 million and US $50.8 million for the first six months of 2008. Borrowings were reduced with a net of US $16.3 million for the quarter, mainly caused by repayment of short term credit facilities of US $15 million during the quarter. These facilities can be drawn again and was an unused liquidity reserve at the end of the quarter. Net interest bearing debt was US $210 million at the end of Q2 2008 compared to US $213 million at the end of 2007 and USD 207 million at the end of Q1 2008.
Based on the current business plan, the peak liquidity need is projected to be throughout the third quarter of 2008. As described above, at June 30, 2008, SeaBird had a cash balance of US $8.9 million and undrawn short term credit facilities of US $15 million. SeaBird has successfully re-negotiated repayment schedules for short and long term loans constituting around US $90 million to better align the repayment schedule with our projected cash flow from operations.
However, should a significant shortfall in cash flow from operations materialize, we would have to re-negotiate the repayment schedule or find alternative forms of financing. As part of the amendment of these loan agreements, the company has agreed to certain margin increases.
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