Cal Dive International, Inc. reported a net loss for fiscal 2010 of $315.8 million and $3.47 per diluted share. This compares to net income of $76.6 million and $.81 per diluted share for fiscal 2009. The 2010 net loss includes $302.5 million ($3.32 per diluted share) in non-cash impairment charges related to goodwill and four idle construction barges recorded during the third quarter.
Excluding the impairment charges, the Company recorded a non-GAAP net loss of $13.3 million, or $.15 per diluted share for the year. Aside from the non-cash impairment charges, the net loss is primarily due to a decrease in new construction services worldwide and a decrease in demand for hurricane repair work in the US Gulf of Mexico. In addition, the Company experienced lower day rates across the diving fleet during 2010. Work relating to cleanup efforts for the oil spill as a result of the Macondo well blowout partially offset the decline.
Cal Dive also reported a fourth quarter 2010 net loss of $2.4 million, or $.03 per diluted share compared to net income of $2.8 million, or $.03 per diluted share for the fourth quarter 2009. The fourth quarter 2010 net loss includes $2.8 million ($.03 per diluted share) in non-cash tax expense related to a tax valuation allowance recorded due to the uncertainty of future tax benefit related to certain foreign net operating losses. Excluding the valuation allowance, the Company recorded non-GAAP net income for the fourth quarter 2010 of $0.4 million, or break-even earnings per diluted share. In addition to the valuation allowance, the net loss for the fourth quarter is primarily due to the fact that the Company completed several large construction projects during the fourth quarter of 2009, which did not reoccur in 2010.
Quinn Hébert, President and Chief Executive Officer of Cal Dive, stated, “Our fourth quarter activity levels were fairly consistent with the prior year’s fourth quarter with solid activity until winter weather set in and customers closed down spending for the year. The quarter brought a close to a very challenging year. The industry endured an unprecedented offshore incident with the Macondo well blowout that had a significant negative impact on the way our customers conduct business in the US Gulf of Mexico. Permitting activity was virtually shut down in this region following the blowout. This, coupled with a reduced volume of hurricane repair work, greatly affected our profitability in 2010. Internationally, we did not secure a project in Mexico in 2010 as we did in 2009 and our Southeast Asia operations also experienced significantly lower activity levels, especially during the first half of the year, highlighting an increasingly competitive market with new capacity coming into service.
While we are disappointed in our financial results for 2010, we are very proud of the project execution and safety achieved by our men and women offshore, which is critical in a tough market like this. We have also continued to manage our balance sheet conservatively to ensure adequate liquidity and financial flexibility for growth opportunities. We finished 2010 with no borrowings under our $300 million revolving credit facility and approximately $141 million in net debt.
Moving forward to 2011, we expect activity levels to slowly recover in the US Gulf of Mexico as operators adjust to the new requirements and regulations related to drilling activity. While permitting activity is still relatively slow in the region, it has shown signs of improving, which is a positive development. In addition, we expect to remain busy with inspection, repair, and maintenance work as well as decommissioning and salvage work during the good weather months. While the timing and financial impact from the recently issued regulation related to “idle iron” is still uncertain, we do expect this to have a positive impact on our activity levels over the long term. Internationally, 2011 is off to a good start with our recent project award in Mexico. We continue to be busy in Australia with diving related work and are excited about the market opportunities in that region. While the long term outlook and related bidding activity remains strong in the Southeast Asia market, it is still very competitive with new capacity coming online, especially in the new construction market. We are actively evaluating growth opportunities and other ways to better compete in that area.”
Source:Cal Dive, March 3, 2011;