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Hornbeck Offshore Announces Third Quarter 2004 Results
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Diluted earnings per share were $0.15 Net income grew 50% to $3.3 million NEW ORLEANS, Nov. 4 /PRNewswire-FirstCall/ -- Hornbeck Offshore Services, Inc. (NYSE: HOS) announced today its results for the third quarter ended September 30, 2004. Third quarter revenues increased 16.7% to $32.9 million compared to $28.2 million for the third quarter of 2003. Of the $4.7 million increase, $1.0 million was due to an increase in the average number of vessels in the Company's offshore supply vessel ("OSV") fleet from 19.9 in the third quarter 2003 to 23 in the third quarter of 2004, and $3.7 million was due to an increase in demand for the Company's vessels. Operating income was $9.2 million, or 28.0% of revenues, for the third quarter of 2004 compared to $8.3 million, or 29.3% of revenues, for the same quarter in 2003. Higher than expected OSV dayrates and utilization contributed to an increase in EBITDA to $15.4 million, or 17.7% over the third quarter of 2003, above Hornbeck's guidance range of $13.0 to $14.5 million. For additional information regarding EBITDA, please see more discussion on this subject later in this release. Third quarter 2004 net income grew 50% to $3.3 million, or $0.15 per diluted share, well above the Company's diluted EPS guidance range of $0.06 to $0.11. This compares to net income of $2.2 million, or $0.15 per diluted share, for the third quarter of 2003. The average number of diluted shares outstanding increased 46% to 21.4 million in the third quarter of 2004 from 14.7 million in the third quarter of 2003, primarily as a result of the Company's March 2004 initial public stock offering. Todd Hornbeck, the Company's President and CEO, stated, "Throughout the third quarter we have seen consistent strengthening in our OSV segment. As our customers devote increasingly more capital to drilling opportunities in the Gulf of Mexico, we are seeing demand for our new generation OSVs starting to outpace supply, which has led to full practical utilization and higher dayrates." OSV Segment. Revenues from the OSV segment were $20.2 million for the third quarter of 2004, an increase of 16.1% from $17.4 million for the same period in 2003. The net increase in segment revenues is due to the quarter-over-quarter average increase of three OSVs. Hornbeck's utilization rate was 93.2% for the three months ended September 30, 2004, which was higher than the 88.7% achieved in the same period of 2003. The average OSV dayrate in the third quarter of 2004 was $10,096 compared to $10,411 in the same period of 2003, primarily due to a portfolio mix change in the average vessel size following the acquisition of six 220' class OSVs in mid-2003. On a sequential basis, third quarter 2004 business trends showed solid improvement with average fleet utilization increasing 9.4%, from 83.8% to 93.2%, with average dayrates improving 4.7%, or $454 per day, over the second quarter of 2004. Tug and Tank Barge Segment. Tug and tank barge segment revenues for the third quarter of 2004 were up 16.6% over the same period in 2003 to $12.7 million, although operating income declined by $0.2 million to $1.5 million. The third quarter 2004 operating margin of 12.1% was flat with the sequential quarter, and down from 15.9% in the year-ago quarter, primarily due to increased costs related to insurance, training, repair and maintenance, and drydocking amortization expense related to vessels recertified during the trailing twelve months. Utilization in the tug and tank barge segment increased to 76.0% from 67.7% in last year's third quarter and average dayrates grew from $10,788 to $11,151 during the same period. This was primarily driven by a boost in gasoline and diesel movements required to restock unusually low inventory levels in the northeastern U.S., which had been depleted by the summer driving season. Hornbeck added, "We have begun to see some reduction in tank barge capacity in the northeast as OPA 90 gets ready to take effect and vessels that are scheduled to retire at the end of the year leave the market early to avoid recertification costs. In addition, we plan to accelerate the drydocking of one tug and one tank barge between now and the end of the year to position these vessels for the busier winter season." Year To Date Results Revenues for the first nine months of 2004 increased 15.8% to $94.5 million compared to $81.6 million for the third quarter of 2003. Operating income was $25.7 million, or 27.2% of revenues, for the nine months of 2004 compared to $27.3 million, or 33.4% of revenues, for the same period in 2003. Net income for the first nine months of 2004 was $7.6 million, or $0.39 per diluted share, compared to net income of $9.1 million, or $0.69 per diluted share, for the first nine months of 2003. The average number of diluted shares outstanding during the first nine months of 2004 increased 47% to 19.4 million from 13.2 million in the first nine months of 2003, primarily as a result of the Company's recent initial public stock offering. Construction Program Update Hornbeck continued, "In November 2003, we commenced our fourth new vessel construction program, the first such program for our tug and tank barge segment. Since then, we have contracted with shipyards for the construction of five double-hulled tank barges. These vessels are being built based on a proprietary design developed by our in-house engineering team. In June 2004, we purchased and retrofitted two ocean-going tugs to complement the vessels under construction. These two tugs will be placed into service during the fourth quarter. The primary purpose of our tank barge newbuild and retrofit program is to address our need to replace three of our existing single-hulled tank barges that are required under OPA 90 to be retired from service prior to January 1, 2005. Prior to the allocation of construction period interest, we expect to incur construction, acquisition and retrofit costs of approximately $105 million for the five tank barges and two tugs, of which about $35 million has been incurred through September 30, 2004. We expect to incur the remaining balance of $70 million as follows: $24 million during the fourth quarter of 2004 and $46 million in 2005. The timing of the incurrence of these costs is subject to change among periods based on the achievement of shipyard milestones. However, the amounts are not expected to change materially in the aggregate. Not included in these figures are the costs of one or two additional higher horsepower tugs that we anticipate possibly purchasing sometime between now and the end of 2005. "Our first two announced double-hulled tank barges that were scheduled to be delivered by the end of 2004 are now expected to be in service between February and April 2005. Our contractual liquidated damages under the shipyard contracts for these two vessels are expected to allow us to receive a reduction in the cost of the vessels. However, we anticipate that this short- term reduction in planned tank barge capacity, coupled with year-end OPA 90 retirements, could put additional pressure on supply during already seasonally high market demands. We expect to take delivery of the remaining three tank barges near the end of 2005." Outlook The following statements are based on Hornbeck's current expectations. These statements are forward-looking and actual results may differ materially. These statements do not include the potential impact of any business combinations, divestitures, financings or additional newbuilds that may be completed after the date of this news release. The Company expects EBITDA for the fourth quarter of 2004 to be in the range of $15.5 million to $17.0 million. As EBITDA is a non-GAAP financial measure, a reconciliation to net income for these figures can be found in the table below. Earnings per diluted share for the fourth quarter of 2004 are expected to be in the range of $0.13 to $0.17. Recognizing its actual results for the first nine months of 2004 and the improved outlook for the balance of the year, the Company now expects total EBITDA for the full calendar year to be in the range of approximately $58 million to $59.5 million, up from the previously revised guidance range of $53 million to $56 million as reported on Hornbeck's last conference call. Diluted earnings per share guidance for the full year 2004 is now expected to be $0.52 to $0.57, up from a previously reported range of $0.34 to $0.44. However, provided that the recently announced tender offer for, and refinancing of, the $175 million 10 5/8% senior notes is completed prior to December 31, 2004, the Company's fourth quarter and annual 2004 results would be impacted by a loss on early extinguishment of debt comprised of a bond redemption premium and the write-off of unamortized original issue discount and deferred financing costs related to the repurchase of the 10 5/8% senior notes.
Hornbeck Offshore 2004 Guidance and Projected EBITDA Reconciliation
Fourth Quarter Full-Year Full-Year
2004 2004 2004
Revised Previous
EBITDA $15.5 to $58 to $53 to
$17 million $59.5 million $56 million
Depreciation and
amortization $6.3 million $23.3 million $23.5 million
Interest expense $4.5 million $18.4 million $18.5 million
Income tax expense $1.8 to $6.1 to $4.1 to
$2.3 million $6.7 million $5.2 million
Income tax rate 37.5% 37.5% 37.5%
Net income $2.9 to $10.2 to $6.9 to
$3.9 million $11.1 million $8.8 million
Weighted average
diluted shares
outstanding 21.4 million 19.9 million 19.9 million
Earnings per diluted
share $0.13 to $0.17 $0.52 to $0.57 $0.34 to $0.44
Conference Call The Company will hold a conference call to discuss its third quarter 2004 financial results and recent developments at 10:00 a.m. Eastern (9:00 a.m. Central) today, November 4, 2004. To participate in the call, dial (303) 262- 2131 and ask for the Hornbeck Offshore call at least 10 minutes prior to the start time, or access it live over the Internet by logging onto the web at http://www.hornbeckoffshore.com , on the "IR Home" page of the "Investors" section of the Company's website. To listen to the live call on the web, please visit the web site at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live web cast, an archive will be available shortly after the call for a period of 30 days on the "IR Home" page under the "Investors" section of the Company's website. Additionally, a telephonic replay will be available through November 11, 2004, and may be accessed by calling (303) 590-3000 and using the pass code 11011932. Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore supply vessels primarily in the U.S. Gulf of Mexico and select international markets, and is a leading transporter of petroleum products through its fleet of ocean-going tugs and tank barges primarily in the northeastern U.S. and in Puerto Rico. Hornbeck Offshore currently owns and operates a fleet of 55 vessels, with 5 additional vessels under construction. For more information, please visit the Company's website at http://www.hornbeckoffshore.com under the captions, "News" and "Investors." Forward-Looking Statements and Regulation G Reconciliation This press release contains forward-looking statements in which Hornbeck Offshore 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 and projections about future events. Accuracy of the assumptions, expectations and projections depend on events that change over time and are thus susceptible to change based on actual experience and new developments. Although the Company believes that the assumptions, expectations and projections reflected in these forward-looking statements are reasonable based on the information known to the Company today, the Company can give no assurance that the assumptions, expectations and projections will prove to be correct. The Company cautions readers that it undertakes no obligation to update or publicly release any revisions to the forward-looking statements in this press release hereafter to reflect the occurrence of any events or circumstances or any changes in its assumptions, expectations and projections, except to the extent required by applicable law. Additionally, important factors that might cause future results to differ from these assumptions, expectations and projections include industry risks, oil and natural gas prices, economic and political risks, weather related risks, regulatory risks, and other factors described in the Company's most recent Annual Report on Form 10-K and other filings filed with the Securities and Exchange Commission. This press release also contains the non-GAAP financial measure of Earnings (net income) before Interest, Taxes, Depreciation, and Amortization, or EBITDA. Reconciliations of this financial measure to the most directly comparable GAAP financial measure are provided in this press release. Management's opinion regarding the usefulness of such measures to investors and a description of the ways in which management uses such measures can be found in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(in thousands, except Other Operating and Per Share Data)
Three Months Ended
September 30, June 30, September 30,
2004 2004 2003
Statement of Operations (unaudited):
Revenues $32,892 $30,288 $28,215
Operating expenses 14,066 13,696 12,182
Depreciation and amortization 6,050 5,620 4,816
General and administrative expenses 3,537 3,332 2,941
Total operating expenses 23,653 22,648 19,939
Operating income 9,239 7,640 8,276
Interest expense (4,089) (4,656) (4,804)
Interest income 107 68 25
Other income (expense), net 1 28 4 (10)
Income before income taxes 5,285 3,056 3,487
Income tax expense (1,982) (1,126) (1,328)
Net income $3,303 $1,930 $2,159
Basic earnings per share of common
stock $0.16 $0.09 $0.15
Diluted earnings per share of common
stock $0.15 $0.09 $0.15
Weighted average basic shares
outstanding 2 20,802 20,752 14,403
Weighted average diluted shares
outstanding 2 21,383 21,388 14,678
Other Operating Data (unaudited):
Offshore Supply Vessels:
Average number 23.0 23.0 19.9
Average utilization rate 3 93.2% 83.8% 88.7%
Average dayrate 4 $10,096 $9,642 $10,411
Tugs and Tank Barges:
Average number of tank barges 16.0 16.0 16.0
Average fleet
capacity (barrels) 1,156,330 1,156,330 1,156,330
Average barge size (barrels) 72,271 72,271 72,271
Average utilization rate 3 76.0% 79.9% 67.7%
Average dayrate 5 $11,151 $10,842 $10,788
Nine Months Ended
September 30, September 30,
2004 2003
Statement of Operations (unaudited):
Revenues $94,526 $81,572
Operating expenses 42,113 33,232
Depreciation and amortization 16,876 12,433
General and administrative expenses 9,829 8,654
Total operating expenses 68,818 54,319
Operating income 25,708 27,253
Interest expense (13,890) (13,378)
Interest income 213 141
Other income (expense), net(1) 24 697
Income before income taxes 12,055 14,713
Income tax expense (4,482) (5,591)
Net income $7,573 $9,122
Basic earnings per share of common
stock $0.40 $0.70
Diluted earnings per share of common
stock $0.39 $0.69
Weighted average basic shares
outstanding(2) 18,834 13,016
Weighted average diluted shares
outstanding(2) 19,386 13,283
Other Operating Data (unaudited):
Offshore Supply Vessels:
Average number 22.8 15.8
Average utilization rate(3) 85.2% 90.0%
Average dayrate(4) $9,864 $11,460
Tugs and Tank Barges:
Average number of tank barges 16.0 15.9
Average fleet capacity (barrels) 1,156,330 1,141,308
Average barge size (barrels) 72,271 72,019
Average utilization rate(3) 82.3% 72.8%
Average dayrate(5) $11,278 $11,125
As of As of
September 30, December 31,
2004 2003
Balance Sheet Data (unaudited):
Cash and cash equivalents $17,503 $12,899
Working capital 31,349 17,698
Property, plant and equipment, net 346,974 316,715
Total assets 405,656 365,242
Total long-term debt 172,963 172,677
Stockholders' equity 192,893 112,395
Nine Months Ended
September 30, September 30,
2004 2003
Cash Flow Data (unaudited):
Cash provided by operating activities $14,626 $11,484
Cash used in investing activities (43,222) (91,382)
Cash provided by financing activities 33,184 70,132
(1) Represents other income and expenses, including gains or losses on
disposition of assets, foreign currency exchange gains or losses and
minority interests in income or loss from unconsolidated entities.
(2) On March 31, 2004, the Company issued an additional 6,000,000 shares
of common stock pursuant to its IPO, which resulted in 20,647,814
basic shares outstanding on the close of business on March 31, 2004.
An additional 126,400 basic shares were issued in the IPO by the
Company on April 28, 2004.
(3) Utilization rates are average rates based on a 365-day year. Vessels
are considered utilized when they are generating revenues.
(4) Average dayrates represent average revenue per day, which includes
charter hire and brokerage revenue, based on the number of days during
the period that the offshore supply vessels generated revenue.
(5) Average dayrates represent average revenue per day, including time
charters, brokerage revenue, revenues generated on a per-barrel-
transported basis, demurrage, shipdocking and fuel surcharge revenue,
based on the number of days during the period that the tank barges
generated revenue. For purposes of brokerage arrangements, this
calculation excludes that portion of revenue that is equal to the cost
paid by customers of in-chartering third party equipment.
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data
(in thousands, except Other Operating and Per Share Data)
Three Months Ended Nine Months Ended
September June September September September
30, 30, 30, 30, 30,
2004 2004 2003 2004 2003
Other Financial
Data (unaudited):
Offshore Supply Vessels:
Revenues $20,231 $17,354 $17,355 $53,149 $45,123
Operating income $7,704 $6,106 $6,544 $18,603 $18,791
Operating margin 38.1% 35.2% 37.7% 35.0% 41.6%
Net income $2,810 $1,574 $1,708 $4,735 $5,131
Plus:
Interest expense 3,316 3,778 3,791 11,243 10,572
Income tax expense 1,681 876 1,052 2,802 3,145
Depreciation and amortization 3,320 3,273 2,620 9,511 6,546
EBITDA(6) $11,127 $9,501 $9,171 $28,291 $25,394
Tugs and Tank Barges:
Revenues $12,661 $12,934 $10,860 $41,377 $36,449
Operating income $1,535 $1,534 $1,732 $7,105 $8,462
Operating margin 12.1% 11.9% 15.9% 17.2% 23.2%
Net income $493 $356 $451 $2,838 $3,991
Plus:
Interest expense 773 878 1,013 2,647 2,806
Income tax expense 301 250 276 1,680 2,446
Depreciation and amortization 2,730 2,347 2,196 7,365 5,887
EBITDA(6) $4,297 $3,831 $3,936 $14,530 $15,130
Total:
Revenues $32,892 $30,288 $28,215 $94,526 $81,572
Operating income $9,239 $7,640 $8,276 $25,708 $27,253
Operating margin 28.1% 25.2% 29.3% 27.2% 33.4%
Net income $3,303 $1,930 $2,159 $7,573 $9,122
Plus:
Interest expense 4,089 4,656 4,804 13,890 13,378
Income tax expense 1,982 1,126 1,328 4,482 5,591
Depreciation and amortization 6,050 5,620 4,816 16,876 12,433
EBITDA(6) $15,424 $13,332 $13,107 $42,821 $40,524
(6) The Securities and Exchange Commission (SEC) has adopted rules
regulating the use of non-GAAP financial measures, such as EBITDA, in
filings with the SEC, disclosures and press releases. These rules
require non-GAAP financial measures to be presented with and
reconciled to the most nearly comparable financial measure calculated
and presented in accordance with GAAP.
EBITDA consists of earnings (net income) before interest expense,
provision for income taxes, depreciation and amortization. This term,
as we define it, may not be comparable to similarly titled measures
employed by other companies and is not a measure of performance
calculated in accordance with generally accepted accounting principles
in the United States, or GAAP. EBITDA should not be considered in
isolation or as a substitute for operating income, net income or loss,
cash flows provided by operating, investing and financing activities,
or other income or cash flow statement data prepared in accordance
with GAAP.
Refer to the Company's Annual Report on Form 10-K most recently filed
with the SEC, a copy of which is available on the "SEC Filings" page
under the "Investors" section of the Company's website for a
description of how management uses, and why we believe that investors
use, EBITDA in evaluating the Company's operating performance.
Contacts: Todd Hornbeck, CEO
Ken Dennard, Managing Partner SOURCE Hornbeck Offshore Services, Inc. Web site: http://www.hornbeckoffshore.com |