Cal Dive International, Inc. (DVR)
Q4 2012 Earnings Conference Call
February 28, 2013 10:00 a.m. ET
Quinn Hébert – Chairman, President & CEO
Brent Smith – CFO
John Abadie – COO
Lisa Buchanan – General Counsel
Marshall Adkins – Raymond James
Joseph Gibney – Capital One
Jase Scott – Johnson Rice & Company
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I’d now like to turn the call over to Mr. Quinn Hébert, Chairman, President and CEO. Please proceed.
Okay. Good morning, everyone. Welcome to Cal Dive’s Fourth Quarter and Full-Year 2012 Earnings Call. Brent Smith, our Chief Financial Officer is with me together with John Abadie, our Chief Operating Officer; and Lisa Buchanan, our General Counsel. To follow along in our presentation, it can be found at our website at www.caldive.com to go into the Investor Relations hot button. You can follow along with this.
Let’s go to slide two for message from our General Council, Lisa.
Thanks, 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 a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures, we refer you to our earnings press release and the presentation slides for this call.
Okay. On slide three is our agenda for today’s call. I’ll go with some remarks and then Brent will review our detailed financial statements, and then we’ll go to the Q&A section. On slide four, for the fourth quarter of 2012, we recorded our best quarterly operating results for 2012. Internationally, we’ve generated strong operating results, primarily in four geographic areas. In Mexico, we wrapped up a large pipelay project where we worked as the product contract to PMX. Also in Mexico, we provided diving support and burial services to other contractors on a subcontractor basis. In general, we consider 2012 to be a real successful year for us in Mexico.
In West Africa, we had 100% utilization of our diving support vessel to Texas and we had solid operational performance for the fourth quarter. In Australia, we had strong diving activity levels as our winter is their similar work season, but the activity was low on a relative basis compared to the fourth quarter 2011 due to the completion of the work on Chevron’s Gorgon project, in early 2012.
In Asia, both the Sea Horizon and our combination derrick/lay barge and Toisa Paladin, our diving support vessel that we jointly charter with Fugro were very busy for most of the quarter. Overall, this is the first year in the company’s history that international revenues have exceeded domestic revenues, which is a real good barometer for our geographic diversification efforts.
Domestically, the Gulf of Mexico working season held up fairly well during the fourth quarter, where we were well into the early part of December and the Uncle John worked the entire first quarter on a number of the subsidy projects. The rest of our Gulf of Mexico fleet had solid utilization, but the vessel rates remain compressed, primarily due to the competitive forces.
Operationally, we ended the year up with our best of safety record and the history beating even last year’s record safety year, with the lowest incident rate in the history of the company and a significant reduction in both the frequency and severity of incidence, this accomplishment is a strong testament to the hard work and intelligence of our onshore and offshore men and women, who work for our clients everyday offshore.
Taking a little bit more high level overall, the March of 2012 obviously presented us number of challenges and frankly we’re not pleased with our 2012 financial results. Facing with this kind of a tough market, we’ve taken a number of actions to place the company in a better position for 2013. For example, we should see the full financial benefit of cost restructuring efforts in 2013 to provide financial flexibility and liquidity. We also paid down a secured debt by $108 million from two sources. First, by replacing secured term debt, but unsecured term debt is only the secured debt is included in our key financial debt covenants. And then secondly, a paying down term debt with approximately $23 million of proceeds from non-strategic asset sales throughout the year.
We’ve also further focused on diversifying our revenue base geographically and we’ve been successful in entering new business lines such as light well intervention work on the Uncle John, our large multi-service and semi-submersible. Now, we wrapped up 2012 and we’re confident, we’re headed into an improving domestic market and continued international activity. If you look at slide five, we have about a $172 million backlog at the end of the fourth quarter 2012 compared to the backlog of $178 million a year ago.