GulfMark Offshore, Inc. (GLF)
Q2 2008 Earnings Call Transcript
July 29, 2008 9:00 am ET
Bruce Streeter – President and CEO
Ed Guthrie – EVP, Finance and CFO
David Butters – Chairman
Sonny Randhawa – Bank of America Securities
Pierre Connor – Capital One South
David Smith – JP Morgan
Victor Marchon – RBC Capital Markets
Judson Bailey – Jefferies & Co.
Stewart Glickman – Standard & Poor’s
Previous Statements by GLF
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Good morning everyone and thank you for attending GulfMark second quarter results conference call. As in our normal fashion, we’ll start with Ed Guthrie who will go through the financial parts of the corporate response and then I will come in with some remarks about the future of the company. Obviously, today is a very exciting, interesting day for us that we’ve finished a good quarter and we’ve acquired Rigdon Offshore and moving ahead in a very strong marketplace.
And with that, I’ll turn it over to Ed.
Thank you, Bruce. I’ll first of all provide the normal forward-looking statement that 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. Therefore the forward-looking statements on this conference call should not be regarded as representations that projected outcomes can or will be achieved.
As we indicated in our press release that was released this morning before the market opened, we reported record results for both the second quarter and the first half the best results in the company's history. The quarter was characterized by strength in the Southeast Asia and Americas region, while drydocks and repositionings in the North Sea and Southeast Asia did have a somewhat dampening effect on the overall revenue side.
We had indicated, Bruce had indicated in an earlier call that the revenues could be off as much as $3 million to $3.5 million from where the analysts had predicted the quarter. In fact, this was the case. As drydock days increased over our (inaudible) and the modifications in one vessel for Brazil and two DP2 conversions adversely affected our total revenues. Most importantly, we closed on the Rigdon transaction on the 1st of July.
What I’d like to do now is follow the usual format where we compare back to the previous quarter as we always do to give the listeners the perspective on the sequential changes, which we believe is the most meaningful to understand where the business is going and what the current trends are.
Our revenue for the quarter $81.9 million, down slightly $1.5 million. As noted in our press release, Southeast Asia added $4 million on higher day rates despite lower utilization. There are three major reasons for that. There was a $2.1 million increase in revenue from the new boats that delivered, the Apache and the Kiowa had full quarter of revenue. And there was $3 million that was an increase from vessel that was transferred from the North Sea region into the Southeast Asia region.
Lower utilization due to the positioning of one vessel for a longer-term contract and a DP conversion on another combined for a loss – combined loss of 73 days during the quarter. So the result of which is that even though we had those two later factors, we still added some $4 million from that region. The Americas region was also up $1.7 million in revenue due to $2.5 million from a vessel that was transferred into the region from North Sea, the Highland Piper that went to work for Petrobras.
In addition to that, there were 84 drydock days in the Americas region on two vessels, which accounted for a loss of some point – almost $1 million. In the North Sea, a lot of them has been made about lower day rates in the North Sea. Actually if you look through the detail of the numbers, in our case, that really wasn’t as much of a factor. Although revenue was sequentially some $7 million, transfer of the vessel that I just mentioned before, the one that went from the North Sea to Brazil, actually decreased the revenue quarter-over-quarter by $1.8 million.
The utilization on two of our large anchor handlers that one which was converted to DP2 conversion and the other one, which was positioned to await the start of the West Africa term contract accounted for almost $5 million in the lost revenue for that particular quarter. The mix effect from utilization increases on our other vessels, as you know, the utilization was actually higher in the North Sea than in the previous quarter, and day rate decreases nearly offset one another. So it was really those two factors that contributed to the reduction in the North Sea revenue and not necessarily spot day rates.
Bruce will talk more about the sector day rates a little bit. Our operating costs were up some $2.3 million and that was due primarily to a full quarter effect of new vessels that actually were in operation. An accrual for the retroactive waging settlement, once that’s arrived at in Brazil and $0.5 million of bareboat fees for the vessel that was sold, which we in turn chartered back and we were on a management fee on to the completion of this initial contract.