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Cal Dive International, Inc. (DVR)
Q3 2010 Earnings Conference Call
October 29, 2010 10 AM ET
Quinn Hebert – President and CEO
Lisa Buchanan – EVP, General Counsel, Secretary
Brent Smith – CFO, EVP, VP - Finance, Treasurer
Scott Naughton – EVP and COO
Jim Rollyson – Raymond James
Roger Reed – Natixis
Previous Statements by DVR
» Cal Dive International, Inc. Q2 2010 Earnings Call Transcript
» Cal Dive International, Inc. Q1 2010 Earnings Call Transcript
» Cal Dive International, Inc. Q4 2008 Earnings Call Transcript
Thank you. Good morning everyone and welcome to Cal Dive’s third quarter 2010 earnings call. With me this morning is Scotty Naughton, our Chief Operating Officer, Lisa Buchanan, our General Council and Brent Smith, our Chief Financial Officer.
To follow along with us this morning you can obtain our presentation at our website which is located at www.caldive.com under the investor relations hot button. If you turn to slide two, Lisa has a message for us.
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 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. On slide three is our normal agenda. I’ll review the quarter, then Brent will get into the details on our financial results, and then we’ll have Q&A.
Turning to slide four, today we’re reporting third quarter 2010 net income of $19.1 million or $0.21 per share, which excludes a $302.5 million non-cash impairment charge that’s related to goodwill for idle construction barges. Brent will explain those impairment charges in greater detail later in the call.
For the third quarter we also generated $50 million in EBITDA. With the relatively slow start to the year, we kicked into high gear in this quarter with overall fleet effective utilization at about 69%. Our financial results for the quarter did not reach last year’s third quarter levels for the following reasons.
We had, last year we had three large new construction projects in China and Mexico and the northeast U.S. that went well, were completed and did not recur this year. This year we also had reduced day rates in the Gulf of Mexico as we’re coming out of two soft quarters at the beginning of this year. We also had one DP DSV in the Gulf that was down due to mechanical downtime and then overseas, we had reduced activity levels due to market conditions.
These items were partially offset by the increased offshore activity levels from the BP well blow out in the Gulf of Mexico where we had three barges and two utility vessels plus a significant number of third party assets on day rate charter. All of these assets were focused on spill response efforts.
Sequentially though, our third quarter 2010 was much better than the second quarter of 2010 as the expected seasonality led to much better financial results for the third quarter, and this happens typically year in and year out.
Overall, from an operational point of view, in the third quarter this year, our women and men executed our projects very safely and very well offshore, and we’re pleased with these results in what’s a tough operating environment.
With the drilling moratorium in place for the entire quarter, which negatively impacted deep water and shallow water permits across the board, we did have less new construction activity in the Gulf of Mexico as you would expect, and this is reflected in our lower construction barge utilization rates across the board, but, we did have strong levels of RM work and salvage work.
Internationally, we faced different headwinds with increased competition and clients insisting on tougher terms and conditions which negatively impacted activity levels. Two DSC’s that are overseas did work during the quarter in China, the Black Sea in Oman, but we did not win a project for the Sea Horizon, which is our large combination direct lay barge.
The revenue split for the third quarter between international and the U.S. business was 84% in the U.S. and 16% overseas revenues.
Turning to slide five, we’ll talk a little bit about our backlog. We have a $233 million backlog at the end of the third quarter which we feel is a healthy number, given that we burned off some of the second quarter backlog in the third quarter 2010.
If you compare the third quarter backlog to 2009, with this year’s third quarter backlog, the 2010 backlog amounted to about 10% ahead of the 2009 number at the same time last year. In our present backlog, about 43% of the backlog involves U.S. based projects and about 57% are overseas projects.