GulfMark Offshore Reports Fifth Consecutive Record Quarter
GulfMark Offshore reported record revenue, operating income, net income and cash flow from operations for both the second quarter and first half of 2007.
For the three months ended June 30, 2007, revenues grew 27% over the prior year to $74.3 million. Net income rose to $29.5 million, or $1.27 per diluted share, excluding a gain of $1.2 million or $0.05 per diluted share from a vessel sale. This net income represented an increase of 126% above the results of the comparable quarter in 2006 and was led by higher day rates in all regions.
For the six months ended June 30, 2007, revenue increased 32% over the prior year to $140.0 million. Net income was $48.8 million, or $2.12 per diluted share, excluding gains of $6.3 million or $0.27 per diluted share from vessel sales. The 153% increase in net income for the first six months was the direct result of additions to the fleet as well as day rate increases of 38% in both the North Sea and Southeast Asia.
Operating income of $32.6 million for the second quarter of 2007, excluding the gain from vessel sales, was the second highest in company history, exceeded only by the third quarter of 2006. It represents a 74% improvement over the prior year quarter and a 46% increase over the first quarter of 2007. For the first six months of 2007, operating income was $55.0 million, excluding the gain from vessel sales, and exceeded the prior year period by $26.0 million, or a 90% increase year over year.
Bruce Streeter, President and CEO, commented: "We are very pleased to have continued the positive trend in revenue and earnings this quarter. The improvement over last quarter is a result of higher day rates, the contribution from the newest addition to the fleet, the Highland Prestige and continued strong utilization in all regions. Our North Sea operation has captured attractive day rates on short-term charters, particularly with several large PSV's we strategically moved into the short-term market. In addition, we are seeing a number of longer-term charter opportunities with strong day rates in all of our markets. The three additional new build vessels to be delivered over the last two quarters of 2007 are scheduled to go on-hire upon delivery under contracts at attractive day rates. The term market continues to remain solid in the North Sea, thus providing the potential for vessels to obtain improved day rates as they come up for renewal. The Southeast Asia market demand for newer, more technologically advanced vessels remains an important factor in the region, which should be reflected in our average day rates over the second half of 2007.
The future growth of the company is keyed to the deliveries of new vessels into segments of our markets where we see high utilization and improving day rates. In keeping with our strategy of maintaining a modern fleet, we have completed the sale of two vessels in the first half of 2007 and have entered into sales agreements to sell two additional 1981 vintage small anchor-handlers from our SE Asia fleet, the Sea Explorer and the Sem Valiant. Gains on the sale of these two vessels should be recognized in the third quarter and fourth quarter of 2007, with closing scheduled after completion of their current contracts. The timing of these dispositions coincides well with the delivery of two new mid-size vessels anticipated in the second half of 2007 and contracted at day rates well above the current average in the region."
Liquidity and New Build Commitment
Cash flow from operations totaled $56.4 million for the six months ended June 30, 2007, compared to $29.4 million for the same period in 2006. Liquidity at quarter-end was $278.1 million consisting of working capital of $103.1 million, including $69.5 million in cash, and the entire $175.0 million available under the revolving credit facility. Total debt at June 30, 2007 was $159.5 million, comprised solely of the 7.75% senior notes due 2014. Cash from operations plus cash on hand have been used to fund $80.7 million in capital expenditures during the first six months of 2007, primarily related to the new build program. Remaining commitments for 2007 under the new build program of $83.4 million are also expected to be funded from cash flow from operations and available cash.