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Cal Dive International, Inc. (DVR)
Q1 2013 Earnings Call
May 2, 2013 10:00 am ET
Quinn Hebert – Chairman, President and Chief Executive Officer
Brent D. Smith – Executive Vice President, Chief Financial Officer, Treasurer
John R. Abadie Jr. – Executive Vice President and Chief Operating Officer
Lisa Manget Buchanan – Chief Administrative Officer, General Counsel, Secretary
Martin Malloy – Johnson Rice & Co.
Previous Statements by DVR
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And now, I would like to turn the conference over to Mr. Quinn Hebert, Chairman, President, and Chief Executive Officer. Please proceed, sir.
Okay, good morning, everyone. Welcome to Cal Dive’s first quarter 2013 earnings call. This morning, joining me is Brent Smith, our Chief Financial Officer; John Abadie, our Chief Operating Officer; and Lisa Buchanan, our General Counsel.
To follow along on this morning’s call, our presentation could be filed on our website, which is at www.caldive.com and it can be found under the Investor Relations hot button. If you go to slide two, our General Counsel has some forward-looking cautionary statement remarks.
Lisa Manget Buchanan
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 their most directly comparable GAAP financial measures, we refer you to our earnings press release and the presentation slides for this call.
Quinn J. Hebert
Okay. Slide three is our agenda where I’ll do some opening remarks, and then I’ll turn the call over to Brent to look into the financials in a little bit more detail. And then we’ll have a Q&A session.
Slide four, our first quarter 2013, the results reflect a significant improvement over last year’s first quarter. The primary drivers for this year’s first quarter financial improvement include strong utilization of the Uncle John in the Gulf of Mexico and the charter of our DSV the Kestrel in Mexico and also the results of our cost saving initiatives that we implemented in the second half of last year. These improvements were partially offset by three items.
We incurred a loss on our complex lump sum job in Australia and we have taken steps to make sure this isn’t repeated in the future. We also had lower than expected utilization on the Texas and West Africa due to changes in the clients’ project plans, and then we had a deterioration of the domestic diving fleet results caused by low seasonal client demand, which negatively impacted overall pricing.
In general for the first quarter, our overall international results were strong as we double the international revenues from a year ago and international revenues made up about 73% of our total revenues for the quarter. Although, we did incur a disappointing lump sum project loss in Australia, we did nonetheless experienced overall strong diving activity for our Australian business unit.
Additionally, two of the three new 4-point DSVs in Australia are fixed on long-term charters that should keep them busy for the remainder of this year. In West Africa, we completed a diving project for a major international contractor and in Mexico, we wrapped up one pipelay project and were awarded as we announced earlier a large $63 million construction projects that are utilized three of our vessels. This project is called the (inaudible) project. It involves the installation of about 12 kilometers of 8 inch pipe plus about a 4 kilometer small diameter pipeline branch system and also involves associated top side hookup work with pipelines and platforms.
This project in Mexico is expected to start offshore construction in the third quarter this year, and then wrapped up by the end of the fourth quarter this year. In April 2013, we also continued our asset sale initiative to divest non-core non-strategic assets. We closed on the sale of certain diving equipment for about $1.7 million in proceeds and we also divested a Louisiana shore-based facility for approximately $6.1 million in proceeds. We paid down a term loan with the combined $7.8 million of proceeds, leaving a $33.7 million term loan balance at April 30.
Looking forward, we expect the Gulf of Mexico to remain a competitive diving construction market with continued pricing pressure in the second quarter. We got off to a slower start in April due to worse than expected seasonal weather. Additionally, we had two key assets completing drydocks in April, the constitution, which is a 4-point SED vessel and the Pacific, which is our large derrick barge in the Gulf of Mexico. Also, we have two additional assets, the Texas a DPSAT diving support vessel and the Lone Star, a pipelay barge going into drydock in May and June of this quarter prior to mobilizing for the backlog work in Mexico.