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Cal Dive International, Inc. (DVR)

Q3 2008 Earnings Call Transcript

October 30, 2008, 12:00 pm ET


Quinn Hebert – President and CEO

Lisa Buchanan – EVP, General Counsel and Secretary

Kregg Lunsford – EVP, CFO and Treasurer

Scott Naughton – EVP and COO


Jim Rollyson – Raymond James

Roger Read – Natixis Bleichroeder

Stephen Gengaro – Jefferies & Company

Joe Gibney – Capital One Southcoast



Good day, ladies and gentlemen, and welcome to the third quarter 2008 Cal Dive International Earnings Call. My name is Amy; I will be your coordinator for today. (Operator instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Quinn Hebert, President and Chief Executive Officer. Please proceed sir.

Quinn Hebert

Thank you good morning everyone, welcome to Cal Dive’s third quarter 2008 phone call. Last night, we issued a press release and an 8-K and our presentation, to get access to those documents, please go to our Web site at

With me today are Kregg Lunsford, our Chief Financial Officer; Scott Naughton, our Chief Operating Officer; Lisa Buchanan, our General Counsel; and Brent Smith, our Director of Investor Relations and Finance.

You could turn to slide 2, Lisa has an important message.

Lisa Buchanan

Thank you Quinn. This conference call includes forward-looking statements, particularly with respect to any statements that we make regarding our earnings expectations. The forward-looking statements made during this call are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially due to a variety of factors. For information concerning factors that could cause our actual results to differ, we refer you to the risk factors described in our Form 10-K on file with the Securities and Exchange Commission. This call also includes certain non-GAAP financial measures. For reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures, we refer you to our earnings press release and the presentation slides for this call.

Quinn Hebert

Okay if you turn to slide three, our outline today will be I will give some opening remarks, touch on our outlook. Kregg Lunsford will walk us through our financial statements for the third quarter and then we will open up the phone lines for questions.

Slide four, the third quarter results really represented strong operational performance by all the men and women at Cal Dive across the board, both in the US and internationally. Except for the last few weeks of the quarter that were impacted by the hurricanes which I will address in a few moments, our third quarter results really reflect the capabilities of our integrated fleet to perform in a more customary typical market conditions. We had good solid demand from our customer base in the US and overseas and we were very pleased with the revenue, gross profit, and EBITDA levels we generated. For the quarter, we successfully performed projects in nine different countries in the key areas we targeted for expansion internationally which include the Mediterranean, the Middle East, India, Australia and South East Asia. As an update on the Horizon Cal Dive acquisition, the integration is coming along according to plan. We acquired Horizon you might recall in December of 2007. Our integration efforts are combining the Horizon and Cal Dive assets and employee populations over the past nine months. They are starting to pay off and you can see that in our financial results.

As our third quarter is rocking and rolling along in July and August, then we had a couple of big events that hit the market. As we all know by now the equity and credit markets and the corresponding impact of the macro environment hit us and almost simultaneously we had the two hurricanes, Monday September 1, 2008 Hurricane Gustav made landfall in a little bitty town in South Louisiana called Cocodrie and then 12 days later Hurricane Ike made landfall in Galveston, Ontario on September 13. I will address the hurricane impact first and then we will talk about the impact of the present economic environment on Cal Dive and what we at least at this point see what is going on with our client base.

If you go to slide five, before we talk about the hurricanes in detail, I just want to give you a little bit of background. I have said this before and I will say it again, at Cal Dive we really take no pleasure in the damage, destruction, life interruptions these hurricanes bring on. We had a number of employees, and family, and friends, and clients suffer terrible tragedies associated with these hurricanes. Honestly, our hearts go out to these families. It is not an easy time for many people. But frankly, as a marine contractor in this business, one of the things we do is fix and repair things that break offshore and salvage things that cannot be repaired. It is just what we do and we feel like we do those things pretty well.

Cal Dive after the hurricanes, all floors of our operation bases in Texas and Louisiana were damaged and took on water but we had implemented our emergency plans. We evacuated all 26 ships in the Gulf, all the men and women offshore without incident and we were back offshore within 48 hours after each hurricane. We had a number of (inaudible) how quickly we responded to their needs safely. Our response really is a testament to the commitment to client service and offshore performance that is part of the Cal Dive culture and really also a testament to the character of the men and women at Cal Dive to place the company’s interest ahead of their own families’ interest. I want to take this opportunity to thank our men and women for their dedication to the company. All of our bases as an update are operational and fully functioning.

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