Press Release
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Hornbeck Offshore Announces Second Quarter 2009 Results
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COVINGTON, La.,
-- Two additional DP-2 new gen OSV newbuilds were placed in service in
late
Second quarter 2009 revenues decreased 6.3% to Upstream Segment. Revenues from the Upstream segment were Downstream Segment. Revenues from the Downstream segment of General and Administrative ("G&A"). G&A expenses of Depreciation and Amortization. Depreciation and amortization expense was
First Half 2009 Results Revenues for the first six months of 2009 increased 2.8% to Future Outlook Based on the key assumptions outlined below and in the attached data tables, the following statements reflect management's current expectations regarding future earnings and certain events. These statements are forward-looking and actual results may differ materially. Other than as expressly stated, these statements do not include the potential impact of any future capital transactions, such as vessel acquisitions, divestitures, unexpected vessel repairs and shipyard delays, business combinations, financings and unannounced newbuild programs that may be commenced after the date of this disclosure. For additional information concerning forward-looking statements, please see the note at the end of this news release. Recent Developments Upstream Contract Coverage Continues to Grow. The Company has recently
been awarded multi-year contracts for seven vessels in Latin America and the
Downstream Asset and Goodwill Impairment. Effective Accounting for Convertible Senior Notes. In accordance with the required
change in method of accounting for convertible debt instruments issued by the
Financial Accounting Standards Board (FASB), effective Earnings Outlook Revised Annual 2009 Guidance. In recognition of its actual results for
the first six months of 2009 and its revised outlook on market conditions for
the remainder of the 2009 guidance period, the Company now expects total
EBITDA for the full-year 2009 to range between Key Assumptions. The Company's forward earnings guidance, outlined above
and in the attached data tables, assumes that current Upstream and Downstream
market conditions remain constant. Fleetwide average new generation OSV
dayrates are anticipated to remain in the The Company's full-year 2009 Upstream guidance includes a partial-year contribution from additional vessels to be delivered under its MPSV program and its fourth OSV newbuild program in accordance with the estimated newbuild delivery expectations discussed below. None of the Company's remaining six conventional OSVs, all of which are now stacked, are expected to contribute any operating results for the remainder of the fiscal 2009 guidance period. The 2009 Downstream guidance reflects an operating fleet comprised solely of nine double-hulled tank barges and nine ocean-going tugs for the remainder of the 2009 guidance period. Due to recent cost cutting measures, the Company expects that cash
operating expenses per vessel-day in fiscal 2009 for its active fleet will be
less than fiscal 2008 levels, excluding contract-related costs recoverable
through higher dayrates or other revenue. The Company is also mitigating the
adverse impact of revenue decreases on its operating margins by stacking
underutilized vessels, which should result in significant additional operating
cost savings and lower the Company's operating risk profile. G&A expenses are
expected to be in the range of 9% to 10% of revenues for the remainder of the
2009 guidance period. The projected annual stock-based compensation expense,
depreciation, amortization and net interest expense that underpin the
Company's diluted EPS guidance for the full-year 2009 are included in the
attached data tables. Projected quarterly stock-based compensation expense,
depreciation, amortization and net interest expense for the quarter ending
Capital Expenditures Outlook Update on Maintenance Capital Expenditures. Please refer to the attached
data table for a summary, by period, of historical and projected data for each
of the following three major categories of maintenance capital expenditures:
(i) deferred drydocking charges; (ii) other vessel capital improvements and
(iii) non-vessel related capital expenditures. The Company expects total
maintenance capital expenditures for the full-year 2009 to be approximately
Update on MPSV Program. The Company's MPSV program consists of the
conversion of two U.S.-flagged coastwise sulfur tankers at domestic shipyards
into 370 class DP-2 new generation MPSVs and the construction of two T-22
class DP-3 new generation MPSV newbuilds in foreign shipyards. The first two
vessels under this program, the T-22 class DP-3 MPSV, HOS Achiever, and the
converted DP-2 MPSV, HOS Centerline, were placed in service in Update on OSV Newbuild Program #4. The Company's fourth OSV newbuild
program consists of vessel construction contracts with three domestic
shipyards to build six 240 ED class OSVs, nine 250 EDF class OSVs and one 290
class OSV, respectively. Eleven of these 16 new generation DP-2 OSVs have
been awarded customer contracts prior to their shipyard delivery. Nine OSVs
have been placed in service under this program on various dates since
3Q2009E 4Q2009E 1Q2010E 2Q2010E 3Q2010E 4Q2010E
Estimated
In-Service
Dates:
240 ED class OSVs - 2 - - - -
250 EDF class OSVs - 1 2 1 1 -
- 3 2 1 1 -
Based on the above schedule of projected vessel in-service dates, the
Company expects to own and operate 47 and 51 new generation OSVs as of
Please refer to the attached data tables for a summary, by period, of historical and projected data for each of the contracted growth initiatives outlined above. All of the above capital costs and delivery date estimates for contracted growth initiatives are based on the latest available information and are subject to change. All of the figures set forth above represent expected cash outlays and do not include the allocation of construction period interest. Update on Liquidity. The Company believes that its current working
capital, available capacity under its existing revolving credit facility and
projected cash flows from operations for the fiscal years 2009 and 2010 will
be sufficient to meet its anticipated operating needs, as well as the total
remaining cash requirements under its MPSV and OSV newbuild programs of
approximately Conference Call The Company will hold a conference call to discuss its second quarter 2009
financial results and recent developments at Attached Data Tables The Company has posted an electronic version of the following three pages of data tables, which are downloadable in Microsoft Excel format, on the "IR Home" page of the "Investors" section of the Hornbeck Offshore website for the convenience of analysts and investors. Forward-Looking Statements This Press Release contains "forward-looking statements," as contemplated
by the Private Securities Litigation Reform Act of 1995, in which the Company
discusses factors it believes may affect its performance in the future.
Forward-looking statements are all statements other than historical facts,
such as statements regarding assumptions, expectations, beliefs and
projections about future events or conditions. You can generally identify
forward-looking statements by the appearance in such a statement of words like
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"forecast," "intend," "may," "might," "plan," "potential," "predict,"
"project," "should" or "will" or other comparable words or the negative of
such words. The accuracy of the Company's assumptions, expectations, beliefs
and projections depend on events or conditions that change over time and are
thus susceptible to change based on actual experience, new developments and
known and unknown risks. The Company gives no assurance that the
forward-looking statements will prove to be correct and does not undertake any
duty to update them. The Company's actual future results might differ from
the forward-looking statements made in this Press Release for a variety of
reasons, which include: the Company's inability to successfully or timely
complete its various vessel construction and conversion programs, especially
its MPSV program, which involves the construction and integration of highly
complex vessels and systems; changes in its vessel construction and conversion
budgets; less than anticipated success in marketing and operating its MPSVs,
which are a class of vessels that the Company does not have a long history of
owning or operating; the inability of our MPSVs to perform the services for
which they were designed; further weakening of demand for the Company's
services; inability to effectively curtail operating expenses from stacked
vessels; the potential for valuation impairment charges; the inability to sell
or otherwise dispose of non-core assets on acceptable terms; unplanned
customer suspensions, cancellations, rate reductions or non-renewals of vessel
charters or failures to finalize commitments to charter vessels; an adverse
ruling in the Superior Achiever adversary proceeding; industry risks; further
reductions in capital spending budgets by customers; further decline in oil
and natural gas prices; increases in operating costs; the inability to
accurately predict vessel utilization levels and dayrates; less than
anticipated subsea infrastructure demand activity in the U.S. Gulf of Regulation G Reconciliation This press release also contains references to the non-GAAP financial
measures of earnings, or net income, before interest, income taxes,
depreciation and amortization, or EBITDA, and Adjusted EBITDA. The Company
views EBITDA and Adjusted EBITDA primarily as liquidity measures and,
therefore, believes that the GAAP financial measure most directly comparable
to such measures is cash flows provided by operating activities.
Reconciliations of EBITDA and Adjusted EBITDA to cash flows provided by
operating activities are provided in the table below. Management's opinion
regarding the usefulness of EBITDA to investors and a description of the ways
in which management uses such measure can be found in the Company's most
recent Annual Report on Form 10-K filed with the
Contacts: Todd Hornbeck, CEO
Jim Harp, CFO
Hornbeck Offshore Services
985-727-6802
Ken Dennard, Managing Partner
DRG&E / 713-529-6600
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(in thousands, except Other Operating and Per Share Data)
Statement of Operations (unaudited):
Three Months Ended Six Months Ended
-------------------------- ------------------
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Revenues $97,909 $109,647 $104,473 $207,556 $201,993
Costs and expenses:
Operating expenses 40,879 40,571 43,299 81,450 83,094
Depreciation and
amortization 44,312 15,148 13,008 59,460 25,196
General and
administrative
expenses 7,676 8,762 9,414 16,438 17,992
----- ----- ----- ------ ------
92,867 64,481 65,721 157,348 126,282
------ ------ ------ ------- -------
Gain (loss) on
sale of assets (4) 245 2,001 241 2,001
-- --- ----- --- -----
Operating income 5,038 45,411 40,753 50,449 77,712
Other income (expense):
Interest income 47 139 235 186 1,227
Interest expense (4,267) (2,731) (1,527) (6,998) (4,073)
Other income, net(1) (9) (240) 62 (249) 75
-- ---- -- ---- --
(4,229) (2,832) (1,230) (7,061) (2,771)
------ ------ ------ ------ ------
Income before
income taxes 809 42,579 39,523 43,388 74,941
Income tax expense 610 15,478 14,276 16,088 27,065
--- ------ ------ ------ ------
Net income $199 $27,101 $25,247 $27,300 $47,876
==== ======= ======= ======= =======
Basic earnings per
share of
common stock $0.01 $1.04 $0.98 $1.05 $1.86
===== ===== ===== ===== =====
Diluted earnings
per share of
common stock $0.01 $1.01 $0.93 $1.01 $1.77
===== ===== ===== ===== =====
Weighted average
basic shares
outstanding 25,995 25,942 25,827 25,968 25,805
====== ====== ====== ====== ======
Weighted average
diluted shares
outstanding (2) 27,065 26,803 27,157 26,927 27,049
====== ====== ====== ====== ======
Other Operating Data (unaudited):
Three Months Ended Six Months Ended
---------- ------------------ ----------------
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Offshore Supply Vessels:
Average number of
new generation
OSVs(3) 42.1 40.6 35.6 41.3 35.3
Average new
generation fleet
capacity
(deadweight)(3) 103,162 96,869 82,682 100,015 81,793
Average new
generation vessel
capacity
(deadweight) 2,452 2,389 2,320 2,420 2,316
Average new
generation
utilization rate(4) 83.6% 93.0% 96.6% 88.2% 94.4%
Effective new
generation
utilization
rate(5) 86.6% 93.0% 96.6% 89.7% 94.4%
Average new
generation
dayrate(6) $21,330 $23,085 $22,168 $22,233 21,613
Effective
dayrate(7) $17,832 $21,469 $21,414 $19,610 $20,403
Tugs and Tank Barges:
TTB Consolidated:
Average number of
tank barges(8) 19.8 20.0 21.0 19.9 20.6
Average fleet
capacity
(barrels)(8) 1,616,014 1,633,412 1,745,256 1,624,713 720,707
Average barge
size (barrels) 81,430 81,671 83,107 81,550 83,272
Average
utilization
rate(4) 44.3% 56.7% 61.3% 50.5% 73.2%
Effective
utilization rate(5) 70.7% 81.0% 72.1% 76.1% 79.2%
Average dayrate(9) $17,784 $18,695 $21,789 $18,295 $20,222
Effective
dayrate(7) $7,878 $10,600 $13,357 $9,239 $14,803
Double-hulled
tank barges:
Average
utilization
rate(4) 67.2% 80.0% 93.6% 73.5% 92.4%
Average dayrate(9) $19,810 $20,406 $22,449 $20,132 $22,134
Effective
dayrate(7) $13,312 $16,325 $21,012 $14,797 $20,452
Single-hulled
tank barges:
Average
utilization
rate(4) 25.2% 37.6% 37.0% 31.4% 59.4%
Effective
utilization rate(5) 80.1% 82.7% 50.2% 81.6% 68.4%
Average
dayrate(9) $13,302 $15,710 $20,491 $14,745 $18,044
Effective
Dayrate(7) $3,352 $5,907 $7,582 $4,630 $10,718
Balance Sheet Data (unaudited):
As of As of
June 30, December 31,
2009 2008
---- ----
Cash and cash equivalents $21,754 $20,216
Working capital 73,195 66,069
Property, plant and equipment, net 1,513,339 1,405,340
Total assets 1,682,379 1,595,743
Total long-term debt 683,496 618,519
Stockholders' equity 768,401 736,900
Cash Flow Data (unaudited):
Six Months Ended
----------------
June 30, June 30,
2009 2008
---- ----
Cash provided by operating activities $94,747 $99,159
Cash used in investing activities (154,460) (295,598)
Cash provided by financing activities 61,234 41,587
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data
(in thousands, except Financial Ratios)
Other Financial Data (unaudited):
Three Months Ended Six Months Ended
----------------------------- ----------------
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Offshore Supply
Vessels:
---------------
Revenues $83,699 $90,576 $78,974 $174,275 $146,426
Operating income $33,379 $44,152 $38,766 $77,531 $67,796
Operating margin 39.9% 48.7% 49.1% 44.5% 46.3%
Components of
EBITDA 10
Net income $18,882 $26,660 $24,256 $45,542 $42,165
Interest
expense, net 3,446 2,026 856 5,472 1,868
Income tax
expense 11,042 15,226 13,714 26,268 23,835
Depreciation 8,718 7,314 5,329 16,032 10,061
Amortization 4,219 3,186 2,882 7,405 5,388
----- ----- ----- ----- -----
EBITDA(10) $46,307 $54,412 $47,037 $100,719 $83,317
======= ======= ======= ======== =======
Adjustments to EBITDA
Stock-based
compensation
expense $1,647 $2,038 $1,565 $3,685 $3,190
Interest income 39 125 167 164 819
-- --- --- --- ---
Adjusted
EBITDA(10) $47,993 $56,575 $48,769 $104,568 $87,326
======= ======= ======= ======== =======
EBITDA(10)
Reconciliation to
GAAP:
EBITDA(10) $46,307 $54,412 $47,037 $100,719 $83,317
Cash paid for
deferred
drydocking
charges (7,103) (4,379) (2,228) (11,482) (5,202)
Cash paid for
interest (9,709) (476) (7,734) (10,185) (7,767)
Cash paid for
taxes (1,376) (7,600) (105) (8,976) (1,680)
Changes in
working capital 1,397 14,016 860 15,413 16,699
Stock-based
compensation
expense 1,647 2,038 1,565 3,685 3,190
Changes in
other, net (352) (119) (1,873) (471) (1,632)
---- ---- ------ ---- ------
Net cash
provided by
operating
activities $30,811 $57,892 $37,522 $88,703 $86,925
======= ======= ======= ======= =======
Tugs and Tank Barges:
---------------------
Revenues $14,210 $19,071 $25,499 $33,281 $55,567
Operating income
(loss) $(28,341) $1,259 $1,987 $(27,082) $9,916
Operating margin (199.4%) 6.6% 7.8% (81.4%) 17.8%
Components of
EBITDA(10)
Net income $(18,683) $441 $991 $(18,242) $5,711
Interest
expense, net 774 566 436 1,340 978
Income tax
expense (10,432) 252 562 (10,180) 3,230
Depreciation 27,456 2,831 2,961 30,287 5,691
Amortization 3,919 1,817 1,836 5,736 4,056
----- ----- ----- ----- -----
EBITDA(10) $3,034 $5,907 $6,786 $8,941 $19,666
====== ====== ====== ====== =======
Adjustments to EBITDA
Stock-based
compensation
expense $372 $619 $1,071 $991 $2,415
Interest income 8 14 68 22 408
- -- -- -- ---
Adjusted
EBITDA(10) $3,414 $6,540 $7,925 $9,954 $22,489
====== ====== ====== ====== =======
EBITDA(10)
Reconciliation to
GAAP:
EBITDA(10) $3,034 $5,907 $6,786 $8,941 $19,666
Cash paid for
deferred
drydocking
charges (577) (574) (3,114) (1,151) (4,208)
Cash paid for
interest (2,152) (114) (3,723) (2,266) (3,740)
Cash paid for
taxes - (4,765) (47) (4,765) (1,757)
Changes in
working capital 3,866 644 240 4,510 (232)
Stock-based
compensation
expense 372 619 1,071 991 2,415
Changes in
other, net (225) 9 264 (216) 90
---- - --- ---- --
Net cash
provided by
operating
activities $4,318 $1,726 $1,477 $6,044 $12,234
====== ====== ====== ====== =======
Consolidated:
-------------
Revenues $97,909 $109,647 $104,473 $207,556 $201,993
Operating income $5,038 $45,411 $40,753 $50,449 $77,712
Operating margin 5.1% 41.4% 39.0% 24.3% 38.5%
Components of
EBITDA(10)
Net income $199 $27,101 $25,247 $27,300 $47,876
Interest
expense, net 4,220 2,592 1,292 6,812 2,846
Income tax
expense 610 15,478 14,276 16,088 27,065
Depreciation 36,174 10,145 8,290 46,319 15,752
Amortization 8,138 5,003 4,718 13,141 9,444
----- ----- ----- ------ -----
EBITDA(10) $49,341 $60,319 $53,823 $109,660 $102,983
======= ======= ======= ======== ========
Adjustments to
EBITDA
Stock-based
compensation
expense $2,019 $2,657 $2,636 $4,676 $5,605
Interest income 47 139 235 186 1,227
-- --- --- --- -----
Adjusted
EBITDA(10) $51,407 $63,115 $56,694 $114,522 $109,815
======= ======= ======= ======== ========
EBITDA(10)
Reconciliation to
GAAP:
EBITDA(10) $49,341 $60,319 $53,823 $109,660 $102,983
Cash paid for
deferred
drydocking
charges (7,680) (4,953) (5,342) (12,633) (9,410)
Cash paid for
interest (11,861) (590) (11,457) (12,451) (11,507)
Cash paid for
taxes (1,376) (12,365) (152) (13,741) (3,437)
Changes in
working capital 5,263 14,660 1,100 19,923 16,467
Stock-based
compensation
expense 2,019 2,657 2,636 4,676 5,605
Changes in
other, net (577) (110) (1,609) (687) (1,542)
---- ---- ------ ---- ------
Net cash
provided by
operating
activities $35,129 $59,618 $38,999 $94,747 $99,159
======= ======= ======= ======= =======
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data
(in millions, except Per Share and Historical Data)
Forward Earnings Guidance and Projected EBITDA Reconciliation:
(Unaudited)
2009 Guidance Full-Year 2009 Pro Forma Run-
Updated Rate
Estimate Estimate 11
----------- -----------
Low High Low High
--- ---- --- ----
Components of Projected
EBITDA(10)
Adjusted EBITDA(10) $209.8 $229.8 $291.2 $410.8
Interest income 0.3 0.3 0.3 0.3
Stock-based compensation expense 9.5 9.5 9.5 9.5
--- --- --- ---
EBITDA(10) $200.0 $220.0 $281.4 $401.0
Depreciation 70.6 70.6 59.5 59.5
Amortization 22.7 22.7 31.5 31.5
Interest expense, net:
Interest expense 27.5 27.5 25.1 25.1
Incremental non-cash OID
interest expense(12) 10.1 10.1 10.1 10.1
Capitalized interest (18.4) (18.4) - -
Interest income (0.3) (0.3) (0.3) (0.3)
---- ---- ---- ----
Total interest expense, net 18.9 18.9 34.9 34.9
Income tax expense 32.6 40.0 57.7 102.1
Income tax rate 37.1% 37.1% 37.1% 37.1%
Net income $55.2 $67.8 $97.8 $173.0
Weighted average diluted shares
outstanding(13) 27.2 27.2 27.2 27.2
Diluted earnings per share, as
reported $2.03 $2.49 $3.60 $6.36
Downstream impairment charge
per share 0.62 0.62 - -
Incremental non-cash OID interest
expense per share(12) 0.11 0.11 0.23 0.23
---- ---- ---- ----
Diluted earnings per share, as
Adjusted(14) $2.76 $3.22 $3.83 $6.59
Projected EBITDA(10) Reconciliation
to GAAP:
EBITDA(10) $200.0 $220.0 $281.4 $401.0
Cash paid for deferred drydocking
charges (18.0) (18.0) (28.2) (28.2)
Cash paid for interest (25.3) (25.3) (22.8) (22.8)
Cash paid for taxes (16.5) (16.5) (16.5) (16.5)
Changes in working capital(15) 17.7 3.2 (17.5) (24.0)
Stock-based compensation expense 9.5 9.5 9.5 9.5
Changes in other, net(15) (1.9) (1.9) (1.9) (1.9)
---- ---- ---- ----
Cash flows provided by operating
activities $165.5 $171.0 $204.0 $317.1
====== ====== ====== ======
Capital Expenditures Data (unaudited)(16):
Historical Data (in thousands):
Three Months Ended Six Months Ended
-------------------------- ----------------
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Maintenance Capital
Expenditures:
Deferred
drydocking
charges $7,680 $4,953 $5,342 $12,633 $9,410
Other vessel
capital
improvements 762 1,784 6,038 2,546 14,053
Non-vessel related
capital
expenditures 256 2,774 364 3,030 22,522
--- ----- --- ----- ------
$8,698 $9,511 $11,744 $18,209 $45,985
====== ====== ======= ======= =======
Growth Capital
Expenditures:
MPSV program $18,718 $33,355 $43,108 $52,073 $151,021
TTB newbuild
program #2 - - 3,351 - 7,186
OSV newbuild
program #4 45,691 40,534 53,697 86,225 88,940
------ ------ ------ ------ ------
$64,409 $73,889 $100,156 $138,298 $247,147
======= ======= ======== ======== ========
Forecasted Data:
1Q2009A 2Q2009A 3Q2009E 4Q2009E 2009E
------- ------- ------- ------- -----
Maintenance Capital
Expenditures:
Deferred drydocking charges $5.0 $7.7 $3.6 $1.7 $18.0
Other vessel
capital improvements 1.8 0.7 0.3 0.1 2.9
Non-vessel related
capital expenditures 2.8 0.2 0.8 1.2 5.0
--- --- --- --- ---
$9.6 $8.6 $4.7 $3.0 $25.9
==== ==== ==== ==== =====
Growth Capital Expenditures:
MPSV program $33.4 $18.7 $30.0 $7.3 $89.4
OSV newbuild program #4 40.5 45.7 36.2 22.0 144.4
---- ---- ---- ---- -----
$73.9 $64.4 $66.2 $29.3 $233.8
===== ===== ===== ===== ======
Full Construction Cycle Data:
Pre-2009A 2009E 2010E Total
--------- ----- ----- -----
Growth Capital Expenditures:
MPSV program $385.6 $89.4 $- $475.0
OSV newbuild program #4 271.4 144.4 34.2 450.0
----- ----- ---- -----
$657.0 $233.8 $34.2 $925.0
====== ====== ===== ======
1 Represents other income and expenses, including gains or losses
related to foreign currency exchange and minority interests in income
or loss from unconsolidated entities.
2 Stock options representing rights to acquire 201 and 430 shares of
common stock for the three months ended
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