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Exhibit 99.1


 

GulfMark Offshore Announces

Second Quarter 2014 Operating Results

 

 

HOUSTON, July 21, 2014 — GulfMark Offshore, Inc. (NYSE: GLF) today announced its results of operations for the three- and six-month periods ended June 30, 2014. For the second quarter ended June 30, 2014, revenue was $131.4 million, and net income was $14.2 million, or $0.54 per diluted share. The quarterly results include two special items, and earnings before these special items were $0.91 per diluted share.

 

Quintin Kneen, President and CEO, commented, “Strong performance in the U.S. Gulf of Mexico and our increasing vessel count drove us to our highest-ever total quarterly revenue, and are keeping us on pace for our first full year revenue in excess of $500 million. Still, activity levels in the North Sea and Southeast Asia this quarter were lower than we anticipated, and we had a couple of special items that impacted our overall results.

 

“Our consolidated average day rate improved 5% over our first quarter average, a strong sequential quarterly movement. Utilization also increased over the first quarter but came in about 1.5 percentage points lower than we anticipated. As a result, revenues for the quarter came in towards the lower end of our guidance.

 

“The Americas region performed above our expectations during the quarter and achieved 92% utilization. The U.S. Gulf of Mexico, in particular, delivered strong results. We are exceptionally pleased with the increased activity, which included utilization of 90% during the quarter. We achieved this utilization despite investing 5% of vessel availability in drydock and vessel enhancements and having several vessel contracts rollover during the quarter. This increase in utilization for the U.S. Gulf of Mexico gives us confidence that this market will strengthen during the second half of the year and into next year. Elsewhere in the Americas, Brazil continued to improve operational efficiency, achieving 95% utilization during the quarter, and Mexico continued its strong performance, achieving a utilization rate of 97%.

 

“Day rates in the North Sea improved nicely, about 5% on a sequential quarterly basis, but utilization decreased to just under 89%, which was lower than we anticipated after such a strong start to 2014. The biggest drop was in Norway, where we saw utilization in the first four months of 2014 average an unprecedented 99% before reverting to just over 90% in June. Lower than anticipated demand and a delay in planned vessel departures in the region drove the decrease. Notwithstanding the relative softness we experienced in the second quarter, we believe that the outlook is positive for the North Sea over the next 18 months, as the projected increase in working rigs in the region is expected to outpace the increase in working vessels over the coming quarters.

   

 
 

 

 

GulfMark Offshore, Inc.

Press Release

July 21, 2014

Page 2

 

“Our Southeast Asia fleet, as we expected, earned an average rate just above $15,000 per day for the quarter; however, our quarterly utilization decreased to 81%. Activity levels in Vietnam have decreased during the quarter and the area as a whole experienced more political uncertainty than usual, which impacted our utilization in the region. This market may continue to be a bit softer in the second half of 2014, but we expect the long-term fundamentals to continue to improve.

 

“During the quarter we reevaluated our parts inventory and as a result recognized an impairment of the value on several propulsion units that we have been holding for several years. In addition, we had a North Sea customer shut down operations, and we recorded a bad debt expense for their outstanding accounts receivable balance.

 

“We had held our annual revenue guidance steady after a slightly softer first quarter with the expectation that the second and third quarters would be stronger than we initially expected. Despite improvements in the Americas during the second quarter, the other factors I mentioned earlier are leading us to revise our annual revenue guidance to be between $510 and $525 million for the full year and between $130 and $135 million for the third quarter.

 

“The long-term fundamentals of our industry remain solid, and we will continue to make strategic fleet investments and divestitures that create long-term value for our stockholders. Our employees are some of the most respected mariners in the world, and with our shore-based staff we are committed to satisfying the intensifying customer demand for safe, efficient, reliable, high-specification vessels.”

   

Consolidated Second-Quarter Results

 

Consolidated revenue for the second quarter of 2014 was $131.4 million, an increase of 10%, or $11.8 million, from the first quarter of 2014. The sequential increase in quarterly revenue was largely the result of the increase in average day rate, which increased from $20,802 in the first quarter to $21,673 in the second quarter, combined with an average vessel count which increased by more than two vessels during the current quarter. Consolidated operating income was $22.9 million, down $0.4 million from the first quarter amount. The sequential decrease was due mainly to the two non-recurring charges, a non-cash charge of $7.5 million (or $0.28 per diluted share) for an impairment on the value of aging spare parts inventory, and a $2.4 million charge (or $0.09 per diluted share) related to an allowance for an uncollectible receivable.

 

Regional Results for the Second Quarter

 

In the North Sea region, second quarter revenue was $58.3 million, an increase of $5.6 million, or 11%, from the first quarter. The average day rate increased from $22,123 in the first quarter to $23,271 in the current quarter. Utilization decreased by 2 percentage points compared to the first quarter. The full quarter impact of our new-build vessel deliveries and vessel acquisition in the first quarter contributed to the increase in the region.

 

 
 

 

 

GulfMark Offshore, Inc.

Press Release

July 21, 2014

Page 3

 

Revenue in the Southeast Asia region was $17.4 million, a decrease of approximately $0.9 million, or 5%, from the first quarter amount. The decrease in revenue was due to a 6 percentage point decrease in utilization, while the average day rate remained steady quarter over quarter.

 

Second quarter revenue for the Americas region was $55.7 million, an increase of $7.0 million or 14% from the previous quarter. The average day rate increased 4% from the prior quarter due to the addition of a high specification new-build vessel and the completion of one additional vessel in our enhancement program. Utilization increased 6 percentage points, from 86% in the first quarter to 92% in the current quarter. During the quarter we had 48 fewer drydock days compared to the previous quarter, which helped contribute to the utilization increase.

 

Consolidated Operating Expenses for the Second Quarter

 

Direct operating expenses for the second quarter, excluding the impairment charge of $7.5 million, were $59.7 million, an increase of $3.4 million, or 6%, from the first quarter. The increase was due mainly to the effects of the new vessel deliveries as well as some increases in repairs and maintenance. Drydock expense in the second quarter was $4.7 million, $0.8 million less than our previous guidance of $5.5 million. General and administrative expense was $17.4 million for the second quarter, above our anticipated 2014 quarterly run rate, due mainly to the $2.4 million bad debt charge in the North Sea.

 

Liquidity and Capital Commitments

 

Cash provided by operating activities totaled $31.8 million in the second quarter of 2014. Cash on hand at June 30, 2014, was $25.9 million, and approximately $45.0 million was drawn on the revolving credit facilities. Total debt at June 30, 2014, was $545.7 million, and debt net of cash was $519.8 million.

 

Capital expenditures during the second quarter totaled $20.5 million, which included $14.6 million of payments on the construction of new vessels and $5.9 million for vessel enhancements and other capital expenditures. As of June 30, 2014, the Company had approximately $95.5 million of remaining capital commitments related to the construction of four vessels. Anticipated progress payments over the next two calendar years are as follows: $35.0 million in 2014 and $60.5 million in 2015. The Company expects to fund these commitments from cash on hand, cash generated by operations, and borrowings under the revolving credit facilities.

 

Conference Call/Webcast Information

 

GulfMark will conduct a conference call to discuss earnings with analysts, investors and other interested parties at 9:00 a.m. eastern time on Tuesday, July 22, 2014. To participate in the teleconference, investors in the U.S. should dial 1-888-317-6003 at least 10 minutes before the start time and when prompted, enter the conference passcode 7134856. Canada-based callers should dial 1-866-284-3684, and international callers outside of North America should dial 1-412-317-6061. The webcast of the conference call also can be accessed by visiting our website, www.gulfmark.com. An audio file of the earnings conference call will be available on the Company’s website approximately two hours after the end of the call.

 

 
 

 

 

GulfMark Offshore, Inc.

Press Release

July 21, 2014

Page 4

 

GulfMark Offshore, Inc. provides marine transportation services to the energy industry through a fleet of offshore support vessels serving major offshore energy markets in the world.

 

 

Contact:

Michael Newman

 

Investor Relations

E-mail:

Michael.Newman@GulfMark.com

 

(713) 963-9522

 

 

 

Certain statements and information in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues are based on our forecasts for our existing operations. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the price of oil and gas and its effect on offshore drilling, vessel utilization and day rates; industry volatility; fluctuations in the size of the offshore marine vessel fleet in areas where the Company operates; changes in competitive factors; delays or cost overruns on construction projects, and other material factors that are described from time to time in the Company’s filings with the SEC, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Consequently, the forward-looking statements contained herein should not be regarded as representations that the projected outcomes can or will be achieved. These forward-looking statements speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

 

 
 

 

 

GulfMark Offshore, Inc.

Press Release

July 21, 2014

Page 5

 

Operating Data (unaudited)

 

Three Months Ended

   

Six Months Ended

 

(in thousands, except per share data)

 

June 30,

   

March 31,

   

June 30,

   

June 30,

   

June 30,

 
   

2014

   

2014

   

2013

   

2014

   

2013

 
                                         

Revenue

  $ 131,365     $ 119,600     $ 111,348     $ 250,965     $ 208,236  

Direct operating expenses

    59,724       56,299       53,352       116,023       106,489  

Drydock expense

    4,685       7,211       9,174       11,896       17,734  

General and administrative expenses

    17,403       14,489       16,745       31,892       27,695  

Depreciation and amortization expense

    19,204       18,357       15,025       37,561       30,195  

Impairment charge

    7,459       -       -       7,459       -  

(Gain) loss on sale of assets

    -       -       126       -       126  

Operating Income

    22,890       23,244       16,926       46,134       25,997  
                                         

Interest expense

    (7,422 )     (6,740 )     (5,262 )     (14,162 )     (11,643 )

Interest income

    15       15       38       30       95  

Foreign currency gain (loss) and other

    578       936       (949 )     1,514       (436 )

Income before income taxes

    16,061       17,455       10,753       33,516       14,013  

Income tax benefit (provision)

    (1,862 )     (898 )     (897 )     (2,760 )     (1,286 )

Net Income (Loss)

  $ 14,199     $ 16,557     $ 9,856     $ 30,756     $ 12,727  
                                         

Diluted earnings (loss) per share

  $ 0.54     $ 0.63     $ 0.38     $ 1.17     $ 0.49  

Weighted average diluted common shares

    26,433       26,359       26,128       26,396       26,089  
                                         

Other Data

                                       

Revenue by Region (000's)

                                       

North Sea

  $ 58,254     $ 52,623     $ 42,703     $ 110,877     $ 83,325  

Southeast Asia

    17,431       18,304       16,636       35,735       26,374  

Americas

    55,680       48,673       52,009       104,353       98,537  

Total

  $ 131,365     $ 119,600     $ 111,348     $ 250,965     $ 208,236  
                                         

Rates Per Day Worked

                                       

North Sea

  $ 23,271     $ 22,123     $ 20,974     $ 22,712     $ 20,452  

Southeast Asia

    15,277       15,312       14,784       15,295       14,381  

Americas

    23,371       22,496       21,527       22,954       20,961  

Total

  $ 21,763     $ 20,802     $ 19,932     $ 21,294     $ 19,604  
                                         

Overall Utilization

                                       

North Sea

    88.5 %     90.4 %     88.5 %     89.4 %     89.2 %

Southeast Asia

    80.6 %     86.2 %     79.7 %     83.4 %     65.1 %

Americas

    91.8 %     86.4 %     92.1 %     89.2 %     90.1 %

Total

    88.1 %     88.0 %     88.0 %     88.0 %     84.1 %
                                         

Average Owned Vessels

                                       

North Sea

    31.0       29.1       25.0       30.1       25.0  

Southeast Asia

    16.0       16.0       16.0       16.0       16.0  

Americas

    28.7       28.0       29.0       28.3       29.0  

Total

    75.7       73.1       70.0       74.4       70.0  
                                         

Drydock Days

                                       

North Sea

    24       72       86       96       125  

Southeast Asia

    37       29       120       66       210  

Americas

    38       86       78       124       206  

Total

    99       187       284       286       541  
                                         

Drydock Expenditures (000's)

  $ 4,685     $ 7,211     $ 9,174     $ 11,896     $ 17,734  

 

 
 

 

 

GulfMark Offshore, Inc.

Press Release

July 21, 2014

Page 6

 

Summary Financial Data (unaudited)

 

As of, or Three Months Ended

   

As of, or Six Months Ended

 

(dollars in thousands)

 

June 30,

   

March 31,

   

June 30,

   

June 30,

   

June 30,

 
   

2014

   

2014

   

2013

   

2014

   

2013

 

Balance Sheet Data

                                       

Cash and cash equivalents

  $ 25,940     $ 25,705     $ 72,701     $ 25,940     $ 72,701  

Working capital

    114,386       101,638       151,305       114,386       151,305  

Vessel and equipment, net

    1,480,110       1,440,958       1,091,529       1,480,110       1,091,529  

Construction in progress

    115,234       139,334       258,157       115,234       258,157  

Total assets

    1,853,987       1,829,754       1,684,967       1,853,987       1,684,967  

Long-term debt

    545,747       551,760       500,933       545,747       500,933  

Stockholders’ equity

    1,099,852       1,082,287       978,112       1,099,852       978,112  
                                         

Cash Flow Data

                                       

Cash flow from operating activities

  $ 31,832     $ 17,649     $ 18,368     $ 49,481     $ 12,211  

Cash flow used in investing activities

    (20,454 )     (96,117 )     (58,224 )     (116,571 )     (95,549 )

Cash flow (used in) from financing activities

    (11,363 )     43,509       (6,292 )     32,146       (26,630 )
                                         

Forward Contract Cover - Remainder of Current Calendar Year

                         

North Sea

    67 %             67 %                

Southeast Asia

    22 %             35 %                

Americas

    56 %             63 %                

Total

    53 %             61 %                
                                         

Forward Contract Cover - Next Full Calendar Year

                                 

North Sea

    31 %             49 %                

Southeast Asia

    3 %             9 %                

Americas

    20 %             34 %                

Total

    21 %             35 %                

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Measures: Six Months Ended June 30, 2014

 

(dollars in millions, except per share data)

 

Operating Income

   

Other Expense

   

Tax (Provision) Benefit

   

Net Income

(Loss)

   

Diluted EPS

 

Before Special Items

  $ 56.0     $ (12.6 )   $ (2.8 )   $ 40.7     $ 1.55  

Loss on Sale of Assets

    -       -       -       -       -  

Bad Debt Charge

    2.4       -       -       2.4       0.09  

Inventory Impairment

    7.5       -       -       7.5       0.28  

U.S. GAAP

  $ 46.1     $ (12.6 )   $ (2.8 )   $ 30.8     $ 1.17  
                                         

Reconciliation of Non-GAAP Measures: Six Months Ended June 30, 2013

 

(dollars in millions, except per share data)

 

Operating Income

   

Other Expense

   

Tax (Provision) Benefit

   

Net Income

(Loss)

   

Diluted EPS

 

Before Special Items

  $ 28.5     $ (12.0 )   $ (0.5 )   $ 14.4     $ 0.55  

Loss on Sale of Assets

    0.1       -       -       0.1       0.00  

Previous CEO Retirement Compensation

    2.4       -       0.8       1.6       0.06  

U.S. GAAP

  $ 26.0     $ (12.0 )   $ (1.3 )   $ 12.7     $ 0.49  

  

 
 

 

 

GulfMark Offshore, Inc.

Press Release

July 21, 2014

Page 7

 

Vessel Count by Reporting Segment

               
   

North Sea

 

Southeast Asia

 

Americas

 

Total

Owned Vessels as of April 21, 2014

 

31

 

16

 

28

 

75

Newbuild Deliveries/Additions

 

0

 

0

 

1

 

1

Sales & Dispositions

 

0

 

(1)

 

0

 

(1)

Owned Vessels as of July 21, 2014

 

31

 

15

 

29

 

75

Managed Vessels

 

4

 

0

 

0

 

4

Total Fleet as of July 21, 2014

 

35

 

15

 

29

 

79