GulfMark Offshore, Inc. (GLF)

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GulfMark Offshore, Inc. (GLF)

F4Q08 Earnings Call

February 23, 2009 9:00 am ET


David Butters – Chairman of the Board

Ed Guthrie – Executive Vice President & CFO

Quintin Kneen – Chief Financial Officer, Senior Vice President - Finance and Administration

Bruce Streeter – President, Chief Executive Officer, Director


James West – Barclays Capital

Michael Ainge – TIAA-CREF

Pierre Conner – Capital One Southcoast

Brad Cragin – Eastbrook Capital



(Operator Instructions) I would like to welcome everyone to the GulfMark Offshore Fourth Quarter Earnings Conference Call. It is my pleasure to turn the conference over the Chairman of the Board, Mr. David Butters.

David Butters

Welcome everyone to GulfMark Offshore’s Fourth Quarter 2008 Earnings Conference Call. This morning I hope we can dispel some of the fear and uncertainty surrounding the markets in general and the offshore supply market in particular. Our fourth quarter results, as you know, have been good, if not great and we have a fair degree of confidence of the results that we will be showing for the full year 2009.

To that end we have this morning Ed Guthrie and Quintin Kneen who will cover the financial aspects of our performance in the fourth quarter and Bruce Streeter will then come on and talk about the markets in general and our performance and outlook.

Ed, why don’t you take it from here.

Ed Guthrie

First of all I’d like to dispense with the formalities of the forward looking statement. This conference call will include comments which are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors. These risks are more fully disclosed in our filings with the SEC. The forward looking statements by myself, Quintin, Bruce and David on this conference call should not therefore be regarded as representations that the projected outcomes can or will be achieved.

Having dispensed with the formalities one of the things we normally focus on is sequential quarter to quarter performance but I think there are a few things that we need to point out with respect to the year before we get into the normal analysis. We did achieve record EPS of $7.56 for the year that’s excluding our vessel sales that amounted to $6.13 way above our previous record earnings per share.

Despite the divestiture of five older vessels throughout 2008 the owned fleet grew 51% in the year from 47 vessels to 71 vessels through the addition of seven new build deliveries and the 22 Gulf of Mexico vessels acquired at mid year. The recent acquisition at mid year provided approximately one third of the operating income in the second half of the year and is to continue to provide solid results.

Moving on to the quarter, as we indicated in the press release, several records were established in the fourth quarter. Again, earnings per share of $2.35 or $1.72 excluding our vessel sales were achieved. Utilization in the quarter in both the North Sea of 96.8% and Southeast Asia of 99.2% established new records in part due to lower drydock activity but primarily due to solid contract color resulting from turned contracts.

The operating margin in the fourth quarter of 47% exceeded all previous quarters in the year despite a slight fall off in revenue. Comparisons of the fourth quarter of 2008 to the same quarter of 2007 are highlighted in the press release and will be further detailed in our 10-K which will be filed later this week.

With that I’ll then compare the results revenue for the quarter was down slightly $2.7 million or 2.2%. As noted in the press release the Americas region was up some $4.2 million or 9.4% while both the North Sea and Southeast Asia were down a combined $6.9 million with most of the decrease coming from the North Sea. The Americas was up due primarily to the added new vessels that were delivered in the quarter and higher utilization.

The North Sea decrease was the result of a number of factors. The day rates were actually higher in the quarter in the currencies in which they were earned, before the impact of FX. The dollar strengthened as we indicated against both the Pound and the Kroner and the result would have been approximately a day rate of $25,600 before currency effects versus $21,200 roughly after currency effects. The result of that decrease was about $9 million which was directly attributable to the currency, the strengthening of the dollar versus the pound and the kroner.

Utilization actually improved to record levels and contributed $4 million of increased revenue primarily as a result of both of the anchor handlers that went to West Africa attaining virtually 100% utilization in the fourth quarter versus much lower utilization in the third quarter. The balance of the fall off in the North Sea revenue was due to lost revenue from the sale of the vessel that occurred early in the quarter.

Southeast Asia was down just slightly $0.7 million to $20.4 million in revenue. The primary reason there was a loss in revenue from the sale of one vessel in the quarter and the full impact of a vessel that was sold in the third quarter, partially offsetting were the impacts of higher day rates and improved utilization. Bruce will talk more later about sector day rates in his portion of the presentation.

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