Cal Dive Exits 2008 with Solid Financial Results
Cal Dive International has reported 2008 annual net income of $109.5 million, or $1.05 per diluted share compared to $105.6 million and $1.24 per diluted share for the same period of 2007. The increase in net income is primarily due to the profits generated by assets acquired from Horizon Offshore in December 2007. The increase was partially offset by lower vessel utilization as a result of the harsh weather conditions in the Gulf of Mexico that extended into May of 2008.
Cal Dive also reported fourth quarter 2008 net income of $46.1 million, or $.44 per diluted share compared to $26.4 million and $.30 per diluted share for the same period of 2007. The increase in net income is due to the profit contributions from acquired assets and increased demand for inspection and repair work due to the impact of hurricanes Gustav and Ike.
Quinn Hebert, President and Chief Executive Officer of Cal Dive, stated, "We finished the year strong with record third and fourth quarter financial results. We had solid utilization across the fleet during good weather months and experienced higher than expected utilization in the fourth quarter as a result of hurricanes Gustav and Ike. While those were positive drivers this year, our biggest success has been the integrated projects we've executed utilizing various combinations of construction barges and diving services to meet our customers' needs on both new construction and salvage projects. The integration of our December 2007 Horizon Offshore acquisition has gone well, as reflected in our financial results.
"Looking ahead, based on the macroeconomic drivers for our industry, including reduced global demand for hydrocarbons and lower oil and natural gas prices, we expect 2009 to be a challenging year as our customers reduce capital spending, particularly on new construction projects. At the same time we expect to continue to perform repair and salvage projects on damaged infrastructure following the 2008 hurricanes which will partially offset expected declines in new construction projects. We have a disciplined cost structure at Cal Dive and we are well positioned to operate our business through this cycle just as we have during past market downturns. As we are expecting reduced offshore activity levels in 2009, we will focus on tightly controlling operating costs, conservatively managing our capital dollars and executing offshore projects successfully."
- Backlog: Contracted backlog was $350.0 million as of December 31, 2008 compared to a backlog of $175.0 million at December 31, 2007 and $506.0 million at September 30, 2008.
- Revenues: Annual 2008 revenues increased by $233.3 million to $856.9 million as compared to the full year 2007, due to revenue contributions from the Horizon assets acquired in late 2007. This increase was partially offset by increased weather downtime during the first five months of 2008. Fourth quarter 2008 revenues increased by $99.5 million to $261.7 million as compared to the fourth quarter of 2007 due to the Horizon assets and increased hurricane repair work as a result of hurricanes Gustav and Ike.
- Gross Profit: Annual 2008 gross profit increased by $26.6 million to $254.0 million as compared to the full year 2007, and fourth quarter 2008 gross profit increased by $35.6 million to $89.5 million as compared to the fourth quarter of 2007. The increase was due to the same reasons cited above but partially offset by increased depreciation and amortization expense.
- SG&A: Annual 2008 SG&A increased by $26.1 million over the full year 2007, primarily due to the acquisition of Horizon (including approximately $3.5 million of non-cash amortization of related intangible assets), increased employee benefit costs and increased information technology costs. Fourth quarter 2008 SG&A increased by $5.1 million over the fourth quarter of 2007 for the same reasons. As a percentage of revenue, SG&A was 8.7% for the full year 2008 compared to 7.8% for 2007. Excluding the non-cash amortization, SG&A was 8.3% of revenue for 2008.
- Net Interest Expense: Annual 2008 net interest expense increased by $12.0 million, and fourth quarter net interest expense increased by $2.2 million, over the full year and fourth quarter 2007, due to the term loan borrowings incurred in late 2007 in connection with the acquisition of Horizon.
- Income Tax Expense: The effective tax rate for the full year 2008 was 30.4% compared to 35.2% for 2007. The effective tax rate for the fourth quarter of 2008 was 28.6% compared to 33.0% for the fourth quarter of 2007. The rate decrease is primarily due to an increased percentage of income being earned in foreign jurisdictions.
- Balance Sheet: Total debt was $315.0 million and cash and cash equivalents were $60.6 million for a net debt position of $254.4 million as of December 31, 2008 compared to a net debt position of $313.7 at December 31, 2007 and $312.1 million at September 30, 2008. Following the recent stock repurchase, the net debt position was $320.1 million as of January 28, 2009.
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