GulfMark Offshore has announced results of operations for the third quarter and nine months ended September 30, 2008. Third quarter highlights include:
3rd Quarter 2008 Compared to 3rd Quarter 2007
Revenue of $124.6 million for the third quarter of 2008 was $49.9 million, or 66.8%, above the same period in 2007. Operating income of $50.0 million in the third quarter of 2008, before gains on vessel sales, increased $20.3 million, or 68.6%, over the prior period in 2007. Net income for the third quarter of 2008, also excluding gains on vessel sales, established a new record of $1.69 per diluted share, when compared to the previous record of $1.59 per diluted share, excluding gains on vessel sales, established in the third quarter of 2006.
The acquisition of Rigdon Marine Corporation ("Rigdon'') was completed on July 1, 2008 and during the third quarter contributed $34.8 million, or 46.6%, of the revenue increase while internal growth across the other operating segments provided $15.1 million, or 20.2% of the increase. Operating income contribution from the Rigdon acquisition was $14.1 million, or 47.7%, of the increase over the previous year. Strong operating results from virtually all of the operating segments, excluding the Rigdon contribution, provided an increase of $6.2 million, or 20.9%, in operating income when compared to the third quarter of 2007.
3rd Quarter 2008 Compared to 2nd Quarter 2008
Revenue for the third quarter increased $42.7 million, or 52.2%, over the second quarter of 2008. As referenced above, the Rigdon acquisition provided $34.8 million, or 42.5%, of the revenue increase, quarter over quarter, while internal growth provided $7.9 million, or 9.7% of the quarterly increase. Operating income, excluding gains on vessel sales, for the third quarter was $19.6 million, or 64.5%, above the previous quarter in 2008 with $14.1 million, or 46.5%, attributable to the Rigdon acquisition and internal growth responsible for $5.5 million, or 18.0%. Overall, a 3.1% increase was realized in the operating income margin, before gains on vessel sales, in the third quarter when compared to the second quarter of 2008.
Bruce Streeter, President and CEO, commented, "We are very pleased with our third quarter accomplishments. The Rigdon acquisition is providing us with strong incremental improvement in the Americas region and is exceeding our initial estimates. More importantly, all of our operations demonstrated solid revenue and operating income growth during the quarter.
"As reported earlier, we relocated the Sea Kiowa during the quarter from Southeast Asia to Brazil in the Americas region where we now have a total of six vessels. During the third quarter we also took delivery of three new vessels: the AHTS Sea Choctaw, the PSV Knockout, and the crew boat Albacore. In addition, we disposed of two vessels in the third quarter: the Sem Valiant, a small AHTS built in 1981 and the Sea Eagle, a small AHTS built in 1976. Subsequent to the third quarter, we took delivery of the Mako, a 181 foot fast supply vessel, and sold the North Fortune, a large PSV built in 1983, for approximately $19 million.
"Our fleet now comprises 93 vessels, 70 of which are owned vessels with an average age of less than 8 years. We have one of the youngest fleets of our publicly traded peer group and our upcoming deliveries of another 12 vessels through 2010 will provide our customers with one of the safest, most advanced, and youngest fleets available.
"Our new build program is generally on track; however, we have revised the delivery date estimates due to delays in delivery of key equipment components on two vessels, the Sea Cherokee and the Sea Comanche. Both of these vessels had been scheduled to be delivered in the fourth quarter of 2008 and we are now expecting them to be delivered during the first quarter of 2009.
"We are in a period of volatile and uncertain economic conditions and must be prepared to face market conditions as they develop. We have not seen a decrease in activity in the areas where we operate; however, our strategy of establishing a significant forward contract position, a diversification of our operating areas and a broad client base, we believe will minimize any near term impact if a decrease in oil and gas expenditures were to occur. Furthermore, the young age and technical qualifications of our fleet should allow us to do well as new deepwater offshore rigs are delivered and activity develops over the next several years.''
Liquidity and Capital Commitments
Cash flow from operations totaled $128.5 million for the nine months ended September 30, 2008, compared to $86.2 million for the same period in 2007. Cash from operations plus cash on hand were used to fund approximately $93.1 million in capital expenditures, primarily related to the new build program. Estimated cash commitments for the fourth quarter of 2008 for the new build program are approximately $21.3 million and are expected to be funded from cash on hand.
On July 1, 2008, we closed the Rigdon acquisition, utilizing $152.6 million of our cash on hand at the end of the second quarter and assuming approximately $268.9 million of existing Rigdon debt. During the quarter, we reduced this indebtedness by approximately $89.8 million.
Liquidity at quarter-end was $174.7 million, consisting of $84.7 million of working capital and $90.0 million available under the $175.0 revolving credit facility. Total debt at September 30, 2008 was $487.4 million, comprised of $159.6 million for the 7.75% Senior Notes due 2014, $85.0 million outstanding under our revolving credit facility, and $242.8 under the debt assumed through the Rigdon acquisition.
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