Press Release
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Hornbeck Offshore Announces Third Quarter 2009 Results
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-- 2009 earnings guidance lowered to reflect 2009 YTD actual results and
prevailing market conditions
-- Contract backlog for new generation OSV vessel-days at 61% for 4Q 2009
and 40% for 2010
-- Vessel-stacking and fleet rationalization strategy saves
Third quarter 2009 revenues decreased 17.4% 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 Interest Expense. Interest expense increased Nine Month Results Revenues for the first nine months of 2009 decreased 4.3% 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 Revolving Credit Facility. On Accounting for Convertible Senior Notes. In accordance with the required change in method of accounting for convertible debt instruments issued by the Sale of Non-Core Assets. In Earnings Outlook Revised Annual 2009 Guidance. In recognition of its actual results for the first nine months of 2009 and its revised outlook on prevailing 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 three 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. The Company's Downstream segment is projected to contribute 2009 EBITDA in the range of 8% to 10% of the mid-point of the revised company-wide fiscal 2009 guidance range. 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 8% 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 The HOS Centerline, the Company's first 370 class MPSV, continues to operate in offshore supply and industrial service on a spot basis in the GoM. This vessel required 10 days of downtime during the third quarter and is expected to incur 40 days of downtime during the fourth quarter to complete final documentation activities related to additional certifications. The HOS Centerline has now received class notations under Subchapter L (offshore supply vessel), Subchapter I (industrial vessel), Subchapter D (tank vessel) and Subchapter O (bulk dangerous cargo vessel) of applicable laws, becoming the first vessel to achieve all four notations in U.S. history, and more importantly, the only vessel with this type of flexibility and capability in the world. The HOS Strongline, the sister vessel to the HOS Centerline, is expected to receive these same notations. 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. Eleven OSVs have been added to the Company's Upstream fleet under this program on various dates since
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 recently amended 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, debt service and 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 third 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: a continued downturn in the exploration and production activities by the Company's customers, particularly in the GoM, 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 the Company's 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. 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 measure 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:
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 Nine Months Ended
------------------ -----------------
September June September September September
30, 2009 30, 2009 30, 2008 30, 2009 30, 2008
-------- -------- -------- -------- --------
Revenues $ 90,086 $97,909 $109,060 $297,642 $311,053
Costs and expenses:
Operating expenses 39,741 40,879 41,270 121,191 124,363
Depreciation and
amortization 16,514 44,312 12,842 75,974 38,040
General and
administrative
expenses 6,864 7,676 8,726 23,302 26,718
------ ------ ------ ------- -------
63,119 92,867 62,838 220,467 189,121
------ ------ ------ ------- -------
Gain (loss) on sale
of assets 105 (4) 6,401 346 8,402
------ ------ ------ ------- -------
Operating income 27,072 5,038 52,623 77,521 130,334
Other income
(expense):
Interest income 179 47 142 365 1,370
Interest expense (5,586) (4,267) (1,393) (12,584) (5,466)
Other income, net(1) (14) (9) 67 (263) 141
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(5,421) (4,229) (1,184) (12,482) (3,955)
Income before income
taxes 21,651 809 51,439 65,039 126,379
Income tax expense 7,877 610 18,157 23,965 45,222
------ ------ ------ ------- -------
Net income $ 13,774 $ 199 $ 33,282 $ 41,074 $ 81,157
====== ====== ====== ======= =======
Basic earnings per
share of common
stock $ 0.53 $0.01 $ 1.29 $ 1.58 $ 3.14
====== ====== ====== ======= =======
Diluted earnings
per share of common
stock $ 0.51 $0.01 $ 1.23 $ 1.52 $ 3.00
====== ====== ====== ======= =======
Weighted average
basic shares
outstanding 26,100 25,995 25,867 26,013 25,825
====== ====== ====== ======= =======
Weighted average
diluted shares
outstanding(2) 27,036 27,065 27,089 26,955 27,062
====== ====== ====== ======= =======
Other Operating Data (unaudited):
Three Months Ended Nine Months Ended
------------------ -----------------
September June September September September
30, 2009 30, 2009 30, 2008 30, 2009 30, 2008
-------- -------- -------- -------- --------
Offshore Supply Vessels:
Average number of
new generation
OSVs(3) 44.0 42.1 36.8 42.2 35.8
Average new
generation
fleet capacity
(deadweight)(3) 108,640 103,162 85,885 102,890 83,157
Average new
generation vessel
capacity
(deadweight) 2,469 2,452 2,333 2,436 2,321
Average new
generation
utilization rate(4) 71.9% 83.6% 96.1% 82.5% 95.0%
Effective new
generation
utilization rate(5) 83.2% 86.6% 96.1% 87.6% 95.0%
Average new
generation
dayrate(6) $ 20,915 $21,330 $ 23,884 $ 21,829 $ 22,411
Effective dayrate(7) $ 15,038 $17,832 $ 22,953 $ 18,009 $ 21,290
Tugs and Tank Barges:
Average number of
double-hulled tank
barges(8) 9.0 9.0 9.0 9.0 8.8
Average double-hulled
fleet capacity
(barrels)(8) 884,621 884,621 884,621 884,621 868,255
Average double-hulled
barge size (barrels) 98,291 98,291 98,291 98,291 99,002
Average double-hulled
utilization rate(4) 67.6% 67.2% 80.2% 71.5% 88.2%
Average double-hulled
dayrate(9) $ 28,503 $19,810 $ 22,642 $ 22,797 $ 22,294
Effective dayrate(7) $ 19,268 $13,312 $ 18,159 $ 16,300 $ 19,663
Balance Sheet Data (unaudited):
As of As of
September 30, December 31,
2009 2008
---- ----
Cash and cash equivalents $ 61,891 $20,216
Working capital 106,455 66,069
Property, plant and equipment, net 1,563,202 1,405,340
Total assets 1,766,132 1,595,743
Total long-term debt 743,913 618,519
Stockholders' equity 784,634 736,900
Cash Flow Data (unaudited):
Nine Months Ended
-----------------
September 30, September 30,
2009 2008
---- ----
Cash provided by operating activities $142,613 $150,631
Cash used in investing activities (214,802) (414,503)
Cash provided by financing activities 113,856 111,638
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data
(in thousands, except Financial Ratios)
Other Financial Data (unaudited):
Three Months Ended Nine Months Ended
------------------ -----------------
September June September September September
30, 2009 30, 2009 30, 2008 30, 2009 30, 2008
-------- -------- -------- -------- --------
Offshore Supply
Vessels:
Revenues $73,710 $83,699 $88,015 $247,985 $ 234,441
Operating income $23,840 $33,379 $51,339 $101,372 $ 119,134
Operating margin 32.3% 39.9% 58.3% 40.9% 50.8%
Components of
EBITDA(10)
Net income $12,225 $18,882 $32,717 $57,767 $ 74,881
Interest expense,
net 4,611 3,446 839 10,083 2,706
Income tax expense 6,991 11,042 17,850 33,259 41,685
Depreciation 8,955 8,718 5,466 24,987 15,527
Amortization 4,183 4,219 2,629 11,588 8,018
------- ------- ------- -------- -------
EBITDA(10) $36,965 $46,307 $59,501 $137,684 $ 142,817
======= ======= ======= ======== =======
Adjustments to
EBITDA
Stock-based
compensation
expense $ 1,519 $ 1,647 $ 2,019 $ 5,204 $ 6,140
Interest income 169 39 106 333 926
------- ------- ------- -------- -------
Adjusted
EBITDA(10) $38,653 $47,993 $61,626 $143,221 $ 149,883
======= ======= ======= ======== =======
EBITDA(10)
Reconciliation to
GAAP:
EBITDA(10) $36,965 $46,307 $59,501 $137,684 $ 142,817
Cash paid for
deferred
drydocking
charges (2,302) (7,103) (5,070) (13,784) (10,272)
Cash paid for
interest (379) (9,709) (594) (10,564) (8,361)
Cash paid for
taxes (1,738) (1,376) (659) (10,714) (2,339)
Changes in working
capital 8,093 1,397 (8,423) 23,506 8,276
Stock-based
compensation
expense 1,519 1,647 2,019 5,204 6,140
Changes in other,
net (185) (352) (6,760) (656) (8,392)
------- ------- ------- -------- -------
Net cash provided
by operating
activities $41,973 $30,811 $40,014 $130,676 $ 127,869
======= ======= ======= ======== =======
Tugs and Tank Barges:
Revenues $16,376 $14,210 $21,045 $49,657 $ 76,612
Operating income
(loss) $ 3,232 $(28,341) $ 1,284 $(23,851) $ 11,200
Operating margin 19.7% (199.4%) 6.1% (48.0%) 14.6%
Components of
EBITDA(10)
Net income $ 1,549 $(18,683) $ 565 $(16,693) $ 6,276
Interest expense,
net 796 774 412 2,136 1,390
Income tax
expense 886 (10,432) 307 (9,294) 3,537
Depreciation 2,136 27,456 2,997 32,423 8,688
Amortization 1,240 3,919 1,750 6,976 5,807
------- ------- ------- -------- -------
EBITDA(10) $ 6,607 $ 3,034 $ 6,031 $15,548 $ 25,698
======= ======= ======= ======== =======
Adjustments to
EBITDA
Stock-based
compensation
expense $ 389 $ 372 $ 809 $ 1,380 $ 2,293
Interest income 10 8 36 32 444
------- ------- ------- -------- -------
Adjusted
EBITDA(10) $ 7,006 $ 3,414 $ 6,876 $16,960 $ 28,435
======= ======= ======= ======== =======
EBITDA(10)
Reconciliation
to GAAP:
EBITDA(10) $ 6,607 $ 3,034 $ 6,031 $15,548 $ 25,698
Cash paid for
deferred
drydocking charges (104) (577) (341) (1,255) (4,549)
Cash paid for
interest (84) (2,152) (323) (2,350) (4,063)
Cash paid for taxes (41) - - (4,806) (1,757)
Changes in
working capital (837) 3,866 5,401 3,673 5,169
Stock-based
compensation
expense 389 372 809 1,380 2,293
Changes in other,
net (37) (225) (119) (253) (29)
------- ------- ------- -------- -------
Net cash provided
by operating
activities $ 5,893 $ 4,318 $11,458 $11,937 $ 22,762
======= ======= ======= ======== =======
Consolidated:
Revenues $90,086 $97,909 $109,060 $297,642 $ 311,053
Operating income $27,072 $ 5,038 $52,623 $77,521 $ 130,334
Operating margin 30.1% 5.1% 48.3% 26.0% 41.9%
Components of
EBITDA(10)
Net income $13,774 $ 199 $33,282 $41,074 $ 81,157
Interest expense,
net 5,407 4,220 1,251 12,219 4,096
Income tax
expense 7,877 610 18,157 23,965 45,222
Depreciation 11,091 36,174 8,463 57,410 24,215
Amortization 5,423 8,138 4,379 18,564 13,825
------- ------- ------- -------- -------
EBITDA(10) $43,572 $49,341 $65,532 $153,232 $ 168,515
======= ======= ======= ======== =======
Adjustments to
EBITDA
Stock-based
compensation
expense $ 1,908 $ 2,019 $ 2,828 $ 6,584 $ 8,433
Interest income 179 47 142 365 1,370
------- ------- ------- -------- -------
Adjusted
EBITDA(10) $45,659 $51,407 $68,502 $160,181 $ 178,318
======= ======= ======= ======== =======
EBITDA(10)
Reconciliation
to GAAP:
EBITDA(10) $43,572 $49,341 $65,532 $153,232 $ 168,515
Cash paid for
deferred
drydocking
charges (2,406) (7,680) (5,411) (15,039) (14,821)
Cash paid
for interest (463) (11,861) (917) (12,914) (12,424)
Cash paid
for taxes (1,779) (1,376) (659) (15,520) (4,096)
Changes in
working capital 7,256 5,263 (3,022) 27,179 13,445
Stock-based
compensation
expense 1,908 2,019 2,828 6,584 8,433
Changes in
other, net (222) (577) (6,879) (909) (8,421)
------- ------- ------- -------- -------
Net cash provided
by operating
activities $47,866 $35,129 $51,472 $142,613 $ 150,631
======= ======= ======= ======== =======
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-Rate
Updated Estimate Estimate(11)
---------------- ------------------
Low High Low High
---------------- ------------------
Components of Projected
EBITDA(10)
Adjusted EBITDA(10) $ 194.4 $ 209.4 $ 274.3 $ 410.8
Interest income 0.5 0.5 0.9 0.9
Stock-based compensation
expense 8.9 8.9 8.9 8.9
------ ------ ------ ------
EBITDA(10) $ 185.0 $ 200.0 $ 264.5 $ 401.0
Depreciation 69.9 69.9 59.5 59.5
Amortization 23.2 23.2 31.5 31.5
Interest expense, net:
Interest expense 34.8 34.8 48.3 48.3
Incremental non-cash OID
interest expense(12) 10.1 10.1 10.1 10.1
Capitalized interest (22.6) (22.6) - -
Interest income (0.5) (0.5) (0.9) (0.9)
------ ------ ------ ------
Total interest expense, net 21.8 21.8 57.5 57.5
Income tax expense 25.9 31.4 42.8 93.2
Income tax rate 36.9% 36.9% 36.9% 36.9%
Net income $ 44.2 $ 53.7 $ 73.2 $ 159.3
Weighted average diluted
shares outstanding(13) 27.2 27.2 27.2 27.2
Diluted earnings per share,
as reported $ 1.63 $ 1.97 $ 2.69 $ 5.86
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) $ 2.36 $ 2.70 $ 2.92 $ 6.09
Projected EBITDA(10)
Reconciliation to GAAP:
EBITDA(10) $ 185.0 $ 200.0 $ 264.5 $ 401.0
Cash paid for deferred
drydocking charges (21.6) (21.6) (22.2) (22.2)
Cash paid for interest (24.5) (24.5) (43.8) (43.8)
Cash paid for taxes (16.1) (16.1) (16.1) (16.1)
Changes in working capital(15) 46.7 21.8 11.7 5.0
Stock-based compensation expense 8.9 8.9 8.9 8.9
Changes in other, net(15) (1.1) (1.1) (1.1) (1.1)
------ ------ ------ ------
Cash flows provided by
operating activities $ 177.3 $ 167.4 $ 201.9 $ 331.7
====== ====== ====== ======
Capital Expenditures Data (unaudited)(16):
Historical Data (in thousands):
Three Months Ended Nine Months Ended
------------------ -----------------
September June September September September
30, 2009 30, 2009 30, 2008 30, 2009 30, 2008
-------- -------- -------- -------- --------
Forecasted Data:
1Q2009A 2Q2009A 3Q2009A 4Q2009E 2009E
------- ------- ------- ------- -----
Full Construction Cycle Data:
Pre-2009A 2009E 2010E Total
--------- ----- ----- -----
Growth Capital Expenditures:
MPSV program $ 385.6 $ 93.2 $ 1.2 $ 480.0
OSV newbuild program #4 271.4 140.7 32.9 445.0
$ 657.0 $ 233.9 $ 34.1 $ 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 199 and 201 shares of
common stock for the three months ended
SOURCE Todd Hornbeck, CEO, or Jim Harp, CFO, both of Hornbeck Offshore Services, +1-985-727-6802; or Ken Dennard, Managing Partner of DRG&E, +1-713-529-6600, for Hornbeck Offshore Services |