Cal Dive International, Inc. reported a second quarter 2012 loss of $5.7 million, or $0.06 per diluted share. This compares to a loss of $5.0 million, or $0.05 per diluted share for second quarter 2011. The results for second quarter 2012 included an effective tax benefit rate of 38%, compared to a higher effective tax benefit rate of 66% for the second quarter 2011 which provided an increased tax benefit of $0.04 per diluted share for 2011.
The operating results for the second quarter of 2012 reflect the negative impact from Tropical Storm Debby that moved through the Gulf of Mexico during the latter half of June and idled over half of the Company’s active fleet during this time. Notwithstanding this impact, operating loss improved $3.3 million compared to the second quarter of 2011, and EBITDA improved by $3.4 million for second quarter 2012 to $10.7 million compared to $7.3 million for second quarter 2011. While there were offsetting factors, the improvements were primarily due to a significant reduction in overhead costs from the Company’s cost reduction measures implemented in 2011.
Quinn Hébert, Chairman, President and Chief Executive Officer of Cal Dive, stated, “We were pleased that we experienced higher utilization during the second quarter 2012 compared to the same period of 2011 as the Gulf of Mexico demand for our services continues to slowly recover. Unfortunately, Tropical Storm Debby negatively impacted the financial benefit we would have realized from the increased activity in June. Specifically, lump sum price contracts were significantly impacted by the storm’s interruption. Looking forward into the third quarter, we expect strong utilization levels domestically and that most of our assets that are available to work will be busy. However, pricing remains very competitive and it is uncertain when we will start to see pricing increase. We remain focused on maintaining our market share in the Gulf of Mexico to allow for strong utilization coupled with continued excellent project execution.
“We remain busy internationally. In Mexico, we have $34 million of revenue remaining in 2012 on our existing contracts and we are actively bidding more work to commence this year. Additionally, we were very pleased with our recent announcement of our alliance with Fugro TSM and our joint charter of the Toisa Paladin. We believe this alliance and such a high class asset will help grow our presence in Australia and provide enhanced opportunities in other parts of the world. Finally, we commenced our first project in West Africa in July and continue to bid for more work in the region.”
Mr. Hébert continued, “We also recently completed a convertible debt offering and used the net proceeds of approximately $83 million to repay a significant portion of our existing term loan. We believe replacing a significant portion of our secured debt with unsecured debt that will be excluded from the leverage ratio covenant of our credit agreement provides us with the long-term financial flexibility and liquidity needed to operate and grow the Company, while maintaining a relatively low cash interest rate on our debt.”
- Backlog: Contracted backlog was $238 million as of June 30, 2012, of which 71% is expected to be performed in 2012. This compares to backlog of $178 million at December 31, 2011 and $176 million at June 30, 2011. The backlog as of June 30, 2012 excludes work for the recently announced Toisa Paladin charter for the fourth quarter.
- Revenues: Second quarter 2012 revenues decreased by $3.7 million to $120.3 million as compared to second quarter 2011. The decrease is primarily due to the impact of Tropical Storm Debby, which idled more than half of the Company’s active vessels during the latter half of June as the storm moved through the Gulf of Mexico.
- Gross Profit: Second quarter 2012 gross profit decreased by $1.5 million to $0.2 million as compared to second quarter 2011. The decrease in profit is primarily due to the same reasons as the revenues decrease discussed above partially offset by lower costs.
- SG&A: Second quarter 2012 SG&A decreased by $4.0 million, or 24%, to $12.8 million as compared to second quarter 2011. The decrease is primarily due to various cost reduction measures implemented by the Company in response to the lower levels of business activity over the last 18 months. As a percentage of revenues, SG&A was 11% for the second quarter 2012 compared to 14% for the second quarter 2011.
- Net Interest Expense: Second quarter 2012 net interest expense increased by $1.0 million to $3.3 million as compared to second quarter 2011, primarily due to higher interest rate margins under the Company’s credit facility and higher average outstanding balances under its revolving credit facility.
- Income Tax: The effective tax benefit rate for the second quarter 2012 was 38.4% compared to 66.2% for the second quarter 2011. The tax benefit rate for 2012 reflects the mix of pre-tax profit between U.S. and international jurisdictions with varying statutory rates. The high tax benefit rate in 2011 was primarily due to a one time change in the management structure of certain foreign operations.
- Balance Sheet: Debt consisted of $131.8 million under a term loan and $27.0 million outstanding under a revolving credit facility, and cash and cash equivalents were $10.1 million, for a net debt position of $148.7 million as of June 30, 2012, compared to net debt positions of $134.4 million at December 31, 2011 and $182.7 million at June 30, 2011. The increase in net debt from December 31, 2011 is primarily due to customary, seasonal working capital needs.
Press Release, August 02, 2012; Image: Cal Dive