Cal Dive International, Inc. reported a second quarter 2011 net loss of $5.0 million, or $.05 per diluted share compared to a net loss of $11.0 million, or $.12 per diluted share for the second quarter 2010.
The net loss improved by $6.0 million due to increased profitability as a result of a construction project in the Bahamas, increased diving related work in Australia, and an increased tax benefit due to a combination of changes in the management structure and pricing agreements related to certain foreign subsidiaries. This was partially offset by reduced activity and lower margins in the US Gulf of Mexico due to a slower than expected recovery in permitting activity and continued uncertainty in the region as compared to the same period in 2010 due to oil spill cleanup efforts following the Macondo well blowout.
Quinn Hébert, Chairman, President and Chief Executive Officer of Cal Dive, stated, “As expected, our financial results improved from the first quarter although they are still at a disappointing level. Our results continue to reflect the challenging market conditions in the Gulf of Mexico as a result of the slow permitting process stemming from the Macondo spill. Although the permitting process is recovering, it has been slower than expected and since many of our services lag behind new drilling activity, it will continue to have a negative impact on our activity levels in the Gulf of Mexico for the remainder of 2011. While we expect the upcoming third quarter to be the most active of the year, we expect our financial results to be lower than our strong third quarter of 2010 because of the higher activity levels and higher margins we experienced in the prior year associated with the oil spill cleanup efforts following the Macondo well blowout.
Internationally, we completed our large construction project in the Bahamas and the pipelay portion of our Mexico project during the second quarter. Our diving related work on the Gorgon project in Australia also contributed to the second quarter results and we expect this to increase starting in the third quarter as the project commences a more active phase. Markets in the Southeast Asia region continue to be highly competitive and we are actively bidding on projects there as well as exploring opportunities elsewhere. We continue to evaluate our cost structure and have implemented additional cost saving measures that will benefit the company moving forward.”
- Backlog: Contracted backlog was $176.1 million as of June 30, 2011 compared to backlog of $191.5 million at December 31, 2010 and $302 million at June 30, 2010.
- Revenues: Second quarter 2011 revenues remained relatively flat at approximately $124.0 million as compared to $124.2 million generated during the second quarter 2010. The revenues from the construction projects in the Bahamas and Mexico and diving related work in Australia were offset by reduced revenues from the Gulf of Mexico as a result of the slower than expected recovery in permitting activity and continued uncertainty in the region as compared to the same period in 2010 due to oil spill cleanup efforts following the Macondo well blowout. Effective utilization for the Company’s saturation diving vessels decreased from 62% to 60%, surface diving vessels decreased from 61% to 46% and construction barges increased from 25% to 27%, from the second quarter of 2010 to the second quarter of 2011, respectively.
- Gross Profit: Second quarter 2011 gross profit decreased by $5.8 million to a gross profit of $1.7 million as compared to a gross profit of $7.5 million in the second quarter 2010. The decrease in gross profit is primarily due to reduced activity and lower margins in the Gulf of Mexico in the 2011 period due to slower than expected recovery in permitting activity and continued uncertainty in the region as compared to the same period in 2010 due to oil spill cleanup efforts following the Macondo well blowout. The decrease was partially offset by gross profit generated by the construction project in the Bahamas and diving related work in Australia.
- SG&A: Second quarter 2011 selling and administrative expenses increased by $1.3 million to $16.9 million as compared to the second quarter 2010. The increase included $1.1 million of one-time severance and restructuring costs in our Southeast Asia region. As a percentage of revenue, SG&A was 14% for the second quarter 2011 and 13% for the second quarter 2010.
- Provision for Doubtful Accounts: A $2.2 million reversal of provision for doubtful accounts during the three months ended June 30, 2011 represents a collection of a receivable previously reserved as bad debt on a West Africa project.
- Net Interest Expense: Second quarter 2011 net interest expense increased by $0.5 million to $2.3 million as compared to the second quarter 2010, primarily due to increased amortization of deferred finance costs relating to the renewal of the credit facility.
- Income Tax Expense: The effective tax benefit rate for the second quarter 2011 was 66.1% compared to the effective tax expense rate of 11.4% for the second quarter of 2010. The higher effective tax benefit rate for the second quarter 2011 results in a higher tax benefit realized on the pre-tax loss incurred. The increase in the tax benefit was primarily due to a combination of changes in (i) the management structure of certain foreign operations and (ii) pricing agreements between the US and certain foreign subsidiaries.
- Balance Sheet: Debt consisted of $150.0 million under our term loan and $34.3 million outstanding under our $300 million revolving credit facility. Cash and cash equivalents were $1.6 million, for a net debt position of $182.7 million as of June 30, 2011, compared to net debt positions of $140.8 million at December 31, 2010 and $197.8 million at June 30, 2010.
Source: Cal Dive, August 03, 2011;