GulfMark Offshore unveils latest results - long term fundamentals are good says companyNews // July 23, 2014
GulfMark Offshore has announced results for the three and six month periods ended June 30, 2014.
For the second quarter ended June 30, 2014, revenue was US$131.4 million, and net income was US$14.2 million, or US$0.54 per diluted share. The quarterly results include two special items, and earnings before these special items were US$0.91 per diluted share.
Quintin Kneen, President and CEO, said: "Strong performance in the Gulf of Mexico and our increasing vessel count drove us to our highest-ever total quarterly revenue, and are keeping us on pace for our first full year revenue in excess of US$500 million. Even so, activity levels in the North Sea and Southeast Asia this quarter were lower than we anticipated, and we had a couple of special items that impacted our overall results.
"Our consolidated average day rate improved 5 per cent over our first quarter average, a strong sequential quarterly movement. Utilization also increased over the first quarter but came in about 1.5 percentage points lower than we anticipated. As a result, revenues for the quarter came in towards the lower end of our guidance.
"The Americas region performed above our expectations during the quarter and achieved 92 per cent utilization. The US Gulf of Mexico, in particular, delivered strong results. We are exceptionally pleased with the increased activity, which included utilization of 90 per cent during the quarter. We achieved this utilization despite investing 5 per cent of vessel availability in drydock and vessel enhancements and having several vessel contracts rollover during the quarter.
"This increase in utilization for the Gulf of Mexico gives us confidence that this market will strengthen during the second half of the year and into next year. Elsewhere in the Americas, Brazil continued to improve operational efficiency, achieving 95 per cent utilization during the quarter, and Mexico continued its strong performance, achieving a utilization rate of 97 per cent.
"Day rates in the North Sea improved nicely, about 5 per cent on a sequential quarterly basis, but utilization decreased to just under 89 per cent, which was lower than we anticipated after such a strong start to 2014. The biggest drop was in Norway, where we saw utilization in the first four months of 2014 average an unprecedented 99 per cent before reverting to just over 90 per cent in June.
"Lower than anticipated demand and a delay in planned vessel departures in the region drove the decrease. Notwithstanding the relative softness we experienced in the second quarter, we believe that the outlook is positive for the North Sea over the next 18 months, as the projected increase in working rigs in the region is expected to outpace the increase in working vessels over the coming quarters.
"Our Southeast Asia fleet, as we expected, earned an average rate just above US$15,000 per day for the quarter; however, our quarterly utilization decreased to 81 per cent. Activity levels in Vietnam have decreased during the quarter and the area as a whole experienced more political uncertainty than usual, which impacted our utilization in the region. This market may continue to be a bit softer in the second half of 2014, but we expect the long-term fundamentals to continue to improve.
"During the quarter we reevaluated our parts inventory and as a result recognized an impairment of the value on several propulsion units that we have been holding for several years. In addition, we had a North Sea customer shut down operations, and we recorded a bad debt expense for their outstanding accounts receivable balance.
"We had held our annual revenue guidance steady after a slightly softer first quarter with the expectation that the second and third quarters would be stronger than we initially expected. Despite improvements in the Americas during the second quarter, the other factors I mentioned earlier are leading us to revise our annual revenue guidance to be between US$510 and US$525 million for the full year and between US$130 and US$135 million for the third quarter.
"The long-term fundamentals of our industry remain solid, and we will continue to make strategic fleet investments and divestitures that create long-term value for our stockholders. Our employees are some of the most respected mariners in the world, and with our shore-based staff we are committed to satisfying the intensifying customer demand for safe, efficient, reliable, high-specification vessels."