Conrad Industries reports fourth quarter 2002 resultsNews // March 28, 2003
For the twelve months ended December 31, 2002, the Company reported a net loss of $4,000 and earnings per diluted share were $0.00 before a cumulative effect of a change in accounting principle compared to net income of $1.0 million and earnings per diluted share of $0.14 for the same period of 2001.
Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards Board No. 142, ("SFAS No. 142"), "Goodwill and Other Intangibles Assets," which resulted in a $4.5 million non-cash charge for the impairment of goodwill, which was recorded as a cumulative effect of change in accounting principle for the six months ended June 30, 2002. The recording of this non-cash charge for the impairment of goodwill resulted in a net loss of $4.5 million ($0.62 diluted EPS) for the twelve months ended December 31, 2002.
Net income for the twelve months ended December 31, 2002 was impacted by the write-off of approximately $350,000 of deferred acquisition costs ($220,500 after tax or $0.03 per diluted share) as the result of the termination of the proposed Swiftships acquisition. Net income for the twelve months ended December 31, 2001 was affected by a non-recurring executive compensation expense of $2.6 million ($1.6 million after tax or $0.23 per diluted share) which resulted from agreements entered into by the company with its former President and CEO and former CFO.
Revenues for the three months ended December 31, 2002 were $10.6 million compared to $9.9 million for the fourth quarter of 2001. Revenues for the twelve months ended December 31, 2002 were $41.0 million compared to $46.9 million for the same period of the prior year. The company's backlog, excluding unexercised options, was $36.2 million at December 31, 2002, compared to $10.4 million at December 31, 2001.
Gross profit was $457,000 (4.3% of revenue) for the three months ended December 31, 2002 compared to gross profit of $1.4 million (13.8% of revenue) for the fourth quarter of 2001. Gross profit was $5.4 million (13.1% of revenue) for the twelve months ended December 31, 2002, compared to gross profit of $9.9 million (21.1% of revenue) for the twelve months of 2001.
Vessel construction segment revenue for the fourth quarter of 2002 was $8.5 million with a gross profit margin of 2.3% compared to vessel construction revenue and gross profit margin in the fourth quarter of 2001 of $7.9 million and 16.7%, respectively.Vessel construction segment revenue decreased 8.3% and gross profit decreased $2.9 million for 2002 compared to 2001. Vessel construction production hours for 2002 decreased by 21.6% compared to 2001. The decrease in production hours is primarily attributable to decreased offshore oil and gas activity.
Kenneth G. "Jerry" Myers, Jr., Conrad's President and CEO commented, "The fourth quarter was negatively impacted by performance on a commercial project for four vessels. Complexities in the fabrication of the hull structures have made prior learning curve assumptions less achievable. The first vessel of the project has now been delivered, the second vessel will be delivered before the end of the first quarter and the final two vessels will be delivered before the end of the second quarter of 2003.
"We continue to see strong bid activity in the vessel construction segment of our business. During the fourth quarter of 2002, the company achieved a record backlog. In addition, we are currently in discussions and negotiations with various customers fornew vessel construction projects and remain cautiously optimistic that some of these projects will be added to our backlog in the near future. The record backlog has enabled the company to be selective in an extremely competitive environment."
Repair segment revenue for the twelve months ended December 31, 2002 decreased 23.2% and gross profit decreased 53.4% as compared to repair segment revenue and gross profit in 2001. Repair segment revenue and gross profit for the fourth quarter of 2002 increased 1.6% and 316.1%, respectively, compared to the fourth quarter of 2001. The repair segment had a 28.5% and 11.9% decrease in production hours compared to the twelve and three months ended December 31, 2001, respectively.
Myers added: "The repair segment continues to be difficult due to the continued decreased activity in the offshore oil and gas markets. There continues to be little to no visibility at this time into the repair market. However, we are hopeful that repairproduction hours for 2003 will improve to more historical levels."