Cal Dive International, Inc. (DVR)
Q1 2010 Earnings Call Transcript
April 29, 2010 11:00 am ET
Quinn Hébert – Chairman, President and CEO
Bruce Koch – EVP, CFO and Treasurer
Scotty Naughton – EVP and COO
Lisa Buchanan – EVP, General Counsel and Secretary
Jim Rollyson – Raymond James
Roger Read – Natixis
Joe Gibney – Capital One Southcoast
Terese Fabian – Sidoti
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I would now like to turn the presentation over to your host for today’s conference, Mr. Quinn Hébert, President and Chief Executive Officer. Please proceed.
Thank you, operator. Good morning, everyone and welcome to Cal Dive’s first quarter 2010 earnings call. With me this morning, Bruce Koch, our Chief Financial Officer; Scotty Naughton, our Chief Operating Officer; Lisa Buchanan, our General Counsel; and Brent Smith, our Vice President of Finance.
To follow along in our presentation this morning, the presentation can be found at our website at www.caldive.com under the Investor Relations hot button. If you turn to slide two, our General Counsel has some opening remarks.
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 the 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.
Okay. If you turn to slide three, our outline this morning, I'll say some remarks on the quarter and review the backlog. Then Bruce Koch, our Chief Financial Officer, will review the 2010 first quarter financial results in a little bit more detail. And then we will open up the phone line to Q&A.
Turning to slide four, a summary of the first quarter results. I'm very disappointed in our first quarter 2009 – 2010 results rather. The results don't reflect the hard work and dedication of our men and women, both onshore and offshore. Frankly, the first quarter in any given year is typically slower than the other three quarters due to seasonal and winter weather factors. And the first quarter of 2010 has been one of the slowest quarters we've experienced in many years.
The spot market in the Gulf of Mexico changes quickly as that's the nature of the market. Nonetheless, although we are faced with a market that's sometimes difficult to decipher, frankly we should do better. We attribute the lack of activity, especially in the Gulf of Mexico in the first quarter to a number of factors including the lag effect of decreased offshore drilling in '09, a reduction in hurricane repair work as compared to the highest levels we experienced in the first quarter of '09, and our customers' general uncertainty about the economy and regarding North American market gas prices.
As a result of these factors, among others, our vessel utilization and day rates were significantly reduced in the first quarter. For example, our saturation diving vessels and our construction barges, the assets that generate the lion's share of our profitability, experienced a strong decline in effective utilization levels and when they did work, they worked at lower day rates.
Internationally, the Sea Horizon, our combination derrick/lay barge is in a scheduled drydock and we managed one small project offshore for one of our DSVs. By comparison, in the first quarter of '09, we had two major projects offshore last year in India and Libya.
In the face of these tough market conditions, we are focused on cost control, tendering, customer service, and solid safe project execution, things that we can control. We have an experienced management team, we've gone through this type of market before, and we know how to maneuver in this market.
If you turn to slide five, I'll give you a little bit of color on our backlog. We have $191 million in backlog at the end of first quarter, which is a small improvement over the backlog of $183 million at the end of last year. We are especially pleased with having won a portion of Chevron's Gorgon project offshore Australia. We will be working as a subcontractor to provide diving support services in the shallow water portion of this project. The majority of this project is to be performed in the fourth quarter of 2010. Of this $191 million backlog, about 80% involve the U.S.-based projects and 20% are international projects. The majority of the backlog is salvage, decommissioning work, and IMR work.
We have about $1.8 billion in total bids outstanding. Over last year, our total bids outstanding levels hovered around $1.2 billion to $1.9 billion range. So we are about where we would expect to be at this point. Most of these projects we are bidding on are scheduled to go offshore in the middle of 2010 and beyond. Since the close of the quarter, we've added a number of projects totaling about $42 million to our backlog. As evidenced by these recent awards, we remain active in our bidding levels.