GulfMark continues to slash costsCompany News // March 1, 2016
GulfMark Offshore says it is continuing to reduce costs, generate positive cashflow and sell older vessels in order to pay down its revolving credit facility.
In a statement about the company's fourth quarter operating results, GulfMark's President and CEO, Quintin Kneen, said: "Our company continues to generate positive cashflow, sell older assets and reduce debt in a tough market. We again generated substantial cashflow during the quarter and used that cash to fully repay our revolving credit facilities.
"We continued to high-grade our fleet with the sale of our last vessel that was more than 20 years old, and we used the proceeds to repurchase some of our bonds at a substantial discount, which further reduced our debt. Since the beginning of the downturn, we have been proactive in reducing costs to provide us with sufficient liquidity while decreasing our overall debt. With the recent amendments to our revolving credit facilities, we project strong liquidity for the foreseeable future. We will continue to be innovative and forward-looking in our cost and liability management as we lead the company through this downturn.
“We continue to benefit from managing our capital expenditure requirements and high-grading our fleet. We successfully deferred approximately US$22 million of committed capital expenditures into early 2017. We sold three of our older vessels during the year, which decreased the average age of our fleet by about a year. We are optimistic that we can sell as many vessels in 2016 as we did in 2015 by continuing our successful vessel disposition programme.
“Our franchise position in the North Sea continues to outperform in this environment. As expected, our overall utilization fell during the fourth quarter due to normal seasonality. Importantly, our marketed utilization improved to 97 per cent from 94 per cent in the previous quarter, and our fourth-quarter day rate increased due to occasional tightening in the spot market caused by fewer overall active vessels. In addition, we reactivated two stacked vessels subsequent to year-end, which is a sign that the market is finding a bottom and allocating existing work to higher quality tonnage and companies.
“Overall, consolidated revenue was on the high-end of our guidance, and our operating costs came in at the low-end of our guidance, which demonstrates our continuing ability to reduce operating costs. In 2015, we reduced our full-year direct operating expenses by approximately US$70 million while improving safety metrics, and we should further reduce direct operating expenses by about the same amount in 2016. We continue to accomplish this while maintaining our overall commitment to our customers, safety and reliability.”
In the fourth quarter the company generated cash from operations of US$18.1 million. It reduced direct operating expenses by 28 per cent compared with the previous quarter. It is forecasting an additional decrease in direct operating expenses of approximately 20 per cent from the fourth quarter 2015 to the first quarter of 2016. The company reduced general and administrative expenses by 7 per cent compared to the previous quarter and amended its revolving credit facilities, providing what it described as "substantial covenant relief" through mid-2017 and continuing covenant relief thereafter. GulfMark said it will have fully repaid revolving credit facilities by the end of 2016. Its current liquidity is aproximately US$200 million.
The company has also deferred capital expenditures of approximately US$22 million until 2017 by postponing the delivery of one of three remaining vessels it has under construction and plans to significantly curtail unprofitable operations in Brazil.