Seacor Marine Announces Second Quarter Results And To Implement Aggressive Cost Cutting
Today results for the second quarter that ended June 30, 2019, has been announced by SEACOR Marine Holdings (the “Company” or “SEACOR Marine”), a leading provider of marine and support transportation services to offshore oil and natural gas and windfarm facilities worldwide.
Second-quarter highlights include:
There is a 6% increase in total operating revenues as compared with the second quarter of 2018, primarily due to a 10% increase in utilization. A 7% increase in on hire days despite an 8% decrease in the number of available days as a result of asset sales during the last twelve months, compared with the second quarter of 2018 Operating loss decreased by $4.5 million to $16.5 million compared with $21.0 million in the second quarter of 2018 is reflected by improved utilization.
Consolidated direct vessel profit (“DVP”)(1) for the second quarter of 2019 increased by $6.1 million, or 41%, to $20.8 million from $14.7 million in the second quarter of 2018. Primary drivers of the increase were current quarter increases in revenues, along with a decrease in labor costs compared to the second quarter of 2018 due to a $1.2 million foreign pension adjustment in 2018, $1.0 million reduction in drydocking and a $1.7 million reduction in other major repairs.
Wind energy support revenues for the second quarter of 2019 increased by $3.3 million to $9.8 million from $6.5 million in the second quarter of 2018, a 52% increase, and DVP for this activity increased by $2.0 million to $4.7 million from $2.7 million in the second quarter of 2018, a 76% increase. This growth included both organic improvement in utilization and average day rates for our crew transfer vessel (“CTV”) fleet and the commencement of a multi-year contract in Europe for one liftboat.
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Start-up expenses incurred by both Brazilian focused joint venture and Chinese new construction platform supply vessel (“PSV”) joint venture, resulted in $5.6 million in losses from 50% or less owned companies. These joint ventures incurred drydocking and/or mobilization expenses for a total of eight vessels, all of which are expected to begin work and contribute positively to the Company’s results in the third quarter.
The Company initiated cost reduction initiatives aimed at better aligning its operating expenses with its view of current and prospective market conditions following the end of the quarter. The workforce, reorganization of the management structure, and closure and/or consolidation of certain facilities in the U.S. Gulf of Mexico, Middle East, and Europe are included in cost reduction measures. It is being expected that upon completion of these initiatives, it will realize annualized recurring administrative and general savings of at least $8.0 million, representing approximately 17% of the Company’s total administrative and general expense over the last twelve months. The Company anticipates that the initiatives will impact all of its reportable segments and expects the bulk of the initiatives to be completed by the second quarter of 2020. In third-quarter of 2019 these initiatives will result in a one-time restructuring charge.
Chief Executive Officer John Gellert commented on SEACOR Marine’s second-quarter results:
“Our fleet continued to experience an upward trend in utilization and day rates, reflecting consistent improvement for assets since the offshore cycle trough in the first quarter of 2017. Activity levels in the U.S. Gulf of Mexico remain tepid as customer demand is highly sensitive to oil and gas prices. Tendering activity, especially in international markets served by our asset portfolio, points to continuing recovery. Unfortunately, the pace of the recovery is slower than we had hoped, leading us to implement our aggressive cost-cutting initiative.
“Our investments in wind energy support are paying off and continue to develop attractive growth opportunities. Notable highlights from the second quarter were the commencement of a 30-month contract in Europe for our largest and most capable liftboat, increased activity of our CTVs in Europe, and new tendering activity in the U.S. for Jones Act-compliant assets in anticipation of significant offshore windfarm installations off the East Coast.”
“We are focused on returning to profit and generating cash, while remaining vigilant in positioning ourselves to take advantage of opportunities in any market conditions. We have proactively reassessed our cost structure and regional footprint and initiated efforts to optimize both. I am confident that these efforts, and our continued emphasis on core assets, regions and services with the highest potential for improved margins, allow us to chart our own path to profitability without depending on a full market recovery in oil and gas services.”
A net loss attributable to SEACOR Marine was $28.4 million ($1.21 per basic and diluted share), and operating loss was $16.5 million for the second quarter of 2019. Net loss attributable to SEACOR Marine for the second quarter of 2018 was $25.0 million ($1.19 per basic and diluted share) and operating loss was $21.0 million.