Houston-based GulfMark Offshore Inc. announced second-quarter earnings today that topped earnings estimates. The company, which operates a fleet of 71 offshore service vessels including 30 in North America, said it exceeded expectations for revenue and operating expense reductions in the second quarter.
For the second quarter ended June 30, revenue was $74.5 million and the net loss was $8.2 million, or 33 cents a share. Included in the results are workforce redundancy charges of six cents a share. The quarterly loss before this special item was 27 cents a share, topping analysts estimates by 20 cents.
“Downturns are unpredictable. You have to be ready to reposition yourself quickly and adjust to unforeseen events. We have acted decisively in adjusting our cost structure and capital structure,” Quintin Kneen, president and CEO, told analysts today during the company’s earnings call. “These actions coupled with our operational efficiencies have allowed us to build our cash position and is propelling GulfMark nicely through this downturn.”
The company’s consolidated revenue was at the high end of its guidance and operating costs came in well below guidance, which positioned GulfMark to improve positive quarterly cash flow from operations. The company’s expense reduction initiatives have continued to yield better than anticipated savings. GulfMark not expects to see about $60 million in annual direct operating expense savings, $25 million over its previous goal of about $35 million.
“We continue to take all of the steps to position us to remain cash flow positive each quarter of this downturn,” Kneen said. “I don't foresee GulfMark having to modify its capital structure in any additional way to push through this downturn, and me and this management team will take every step to protect stockholder value on the way. We've got this. It's just another downturn.”
Consolidated revenue for the second quarter was $74.5 million, compared with $89.1 million in the first quarter. Consolidated revenue fell due to a 9% sequential decrease in average day rates to $16,428 from $17,961 in the previous quarter, while utilization fell to 69% from 77% in the first quarter. The consolidated operating loss was $4.2 million, compared with $600,000 in the first quarter. Excluding special items in both quarters, consolidated operating income sequentially declined to a loss of $2.7 million from a loss of $0.2 million in the first quarter, due to lower revenue offset by lower operating and general and administrative costs.
Second-quarter revenue for the Americas region was $26.9 million, compared with $35.6 million in the previous quarter. Average day rates decreased 9% from the prior quarter due to continued softening in the market. Utilization decreased 12% to 55% from 67% in the first quarter, due to the continued softness in the spot market and the effect of stacking several vessels in the U.S. Gulf of Mexico. Utilization in the Americas, exclusive of stacked vessels, was 76% during the second quarter. GulfMark currently has six vessels stacked in the Americas.
“We are in constant discussions with our suppliers. We're also reducing the prices they charge us as everyone in the offshore supply chain responds to the cost pressures,” Kneen said. “We will continue to adjust our cost structures to reflect the current and anticipated activity level of the business to ensure we are operating safely, efficiently, and in a manner that maximizes cash flow. I've been pleased with our results thus far in reducing costs, and I fully expect we will demonstrate continued cost reductions throughout the second half of 2015.”
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