GulfMark Expands Global Operations, Exits 2008 with Record Profits
GulfMark Offshore reported its results of operations for the fourth quarter and twelve months ended December 31, 2008. Highlights for those periods include:
- Quarterly Operating Income Margin of 47% (60% Including Vessel Sales)
- Quarterly Diluted EPS of $2.35 ($1.72 Excluding Vessel Sales)
- Annual Diluted EPS of $7.56
- Quarterly Utilization in the North Sea (96.8%) and Southeast Asia (99.2%)
- Contract Cover for 2009 at 65% and 34% for 2010
4th Quarter 2008 Compared to 4th Quarter 2007
Revenue for the fourth quarter of 2008 was $121.9 million, an increase of 33% over the same period in the prior year. Operating income was $57.1 million in the fourth quarter of 2008, before gains on vessel sales, an increase of 53% over the prior period in 2007. Net income for the fourth quarter of 2008, also excluding gains on vessel sales, was $1.72 per diluted share. GulfMark Americas operations, formerly Rigdon Marine, which was acquired on July 1, 2008, contributed revenue of $37.2 million during the fourth quarter and operating income of $16.0 million. The ongoing rejuvenation of the Southeast Asia fleet, and its resulting improvement in earnings capacity drove the remaining increase in operating income of $3.7 million along with additional improvements in the Americas, offset by foreign currency movements in the North Sea.
4th Quarter 2008 Compared to 3rd Quarter 2008
Operating income, excluding gains on vessel sales, increased $7.0 million, or 14%, sequentially even though revenue declined over the same period by $2.7 million, or 2%. All regions delivered increased operating margins driven primarily by the Americas, which had improved utilization and reduced drydock expense. The North Sea had a strong improvement in utilization but the impact was largely offset by adverse foreign currency movements, while Southeast Asia's increase in operating margin was driven by a significant reduction in operating expenses for the quarter.
Fiscal Year 2008 Compared to Fiscal Year 2007
Revenue for 2008 was $411.7 million, an increase of 35% compared to $306.0 million in fiscal year 2007. Operating income, excluding gains on sale of assets, increased by 41% to $172.0 million as compared to the prior year of $122.1 million. Net income was $183.8 million, an increase of 86% compared to $99.0 million in fiscal year 2007. Annual diluted EPS was $7.56, an increase of 76% over the prior year. Excluding gains on sale of assets, annual EPS increased by 63% to $6.13 per diluted share compared to the prior year of $3.76 per diluted share.
"2008 has been a year of growth and development for GulfMark," commented Bruce Streeter, President and CEO. "The company took significant steps over the past twelve months to increase its global footprint through the addition of the 22 vessel Gulf of Mexico fleet provided through the Rigdon Marine acquisition. We have further refined and upgraded our fleet in 2008 with the addition of seven new build vessels and the sale of five older vessels. As demonstrated through our positive annual results, our ongoing vision to grow a modern fleet through acquisitions and new vessel construction, as well as diligently expand into profitable markets, improved our 2008 earnings and positions us for stronger growth in the future.
"As mentioned in the third quarter earnings release, GulfMark sold the North Fortune, a PSV built in 1983 and took delivery of the Mako, an FSV, in October. In February, the company took delivery of the Swordfish, a crew boat based in the Gulf of Mexico. GulfMark is scheduled to take delivery of six new vessels in 2009 and another six in 2010. The company's next delivery is the Sea Cherokee, an AHTS, scheduled for March 2009, which will be on a long term contract based in Southeast Asia.
"While current market conditions are uncertain, we are confident in our ability to navigate this more challenging environment. GulfMark's financial position is solid and we remain focused on our long term strategy and the potential opportunities that unstable markets often provide. Our liquidity is stronger than it has ever been and our young, modern, technologically advanced fleet already has 65% contract cover for 2009."
Liquidity and Capital Commitments
Cash flow from operations totaled $205.2 million for the twelve months ended December 31, 2008, compared to $128.6 million for the same period in 2007. The company made significant investments in 2008, including $108.6 million in capital expenditures, primarily related to the new build program and $121.6 million related to the acquisition of Rigdon Marine. Estimated cash commitments for 2009 for the new build program are approximately $111.0 million and are expected to be funded from cash on hand and cash flow from operations.
Liquidity at quarter-end was $228.8 million, consisting of $138.0 million of working capital and $90.8 million available under the company's $175.0 revolving credit facility. Total debt at December 31, 2008 was $481.9 million and cash on hand was $100.8 million.