Horizon Offshore Reports Third Quarter Results
Horizon Offshore, Inc. (Other OTC: HOFF.PK) reported net income for the quarter ended September 30, 2005 of $3.1 million, or $0.005 per share-diluted. This compares with a net loss of $(23.1) million, or $(0.72) per share-diluted, for the third quarter of 2004. For the third quarter of 2005, gross profit was $21.0 million (22.6% of contract revenues) on revenues of $92.8 million, compared to gross profit of $15.9 million (16.8% of contract revenues) on revenues of $94.6 million for the third quarter of 2004. The calculated EBITDA was $20.0 million for the quarter ended September 30, 2005, compared to $13.1 million for the third quarter of 2004.
The Company reported a net loss of $(40.1) million, or $(0.71) per share-diluted for the nine months ended September 30, 2005 compared to a net loss of $(50.0) million, or $(1.64) per share-diluted for the nine months ended September 30, 2004. Gross profit was $32.7 million (16.3% of contract revenues) on revenues of $200.7 million for the nine months ended September 30, 2005, compared to gross profit of $14.8 million (8.1% of contract revenues) on revenues of $182.0 million for the first nine months of 2004. The calculated EBITDA was $26.1 million for the nine months ended September 30, 2005 compared to $8.8 million for the nine months ended September 30, 2004.
The net loss before income taxes for the nine months ended September 30, 2005 includes charges of $21.9 million for loss on debt extinguishment related to the completion of the major steps of the Company's recapitalization plan, which reflects the write-off of the unamortized portion of the deferred loan fees and debt discount related to the Subordinated Notes exchanged for equity during the second quarter of 2005.
The improvement in the Company's operating results is primarily attributable to its domestic operations. The improvement in competitive market conditions and pricing levels in the U.S. Gulf of Mexico are reflected in the significant increase in the Company's gross profit. Oil and gas companies operating on the U.S. continental shelf in the Gulf of Mexico have increased their capital expenditures in response to the higher energy prices. Additionally, the Company's domestic revenues have increased as a result of the demand for its services and offshore construction activity, including repair work due to Hurricane Ivan (September 2004).
The Company also expects an increase in demand for its services due to damage caused by Hurricane Katrina (August 2005) and Hurricane Rita (September 2005), which caused substantially more damage to pipelines and structures in the U.S. Gulf of Mexico than Hurricane Ivan. The Company has worked with oil and gas companies operating in the U.S. Gulf of Mexico as these companies assessed the damage to offshore platforms and pipelines caused by Hurricanes Katrina and Rita. Given the effect of the substantial damage from Hurricanes Katrina and Rita, it is anticipated that the Company's vessel utilization and repair and salvage work in the U.S. Gulf of Mexico will remain at significantly higher levels for 2005 and into 2006.
"We expect our contract pricing and profit margins to remain
at higher levels for the remainder of this year and into
2006 due to the demand for new construction projects and
the unprecedented hurricane related repair and salvage work.
We have successfully capitalized on opportunities in the
Gulf of Mexico, West Africa and offshore Mexico and currently
have a substantial backlog of work in these geographic areas,"
said David W. Sharp, President and Chief Executive Officer.
"As market conditions have improved, we have remained focused
on returning our company to profitability, and our 2005
EBITDA will be at a record level in our operating history."
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