Conrad Industries, Inc. reported a net loss
of $499,000 and loss per diluted share of $0.07 for the three months ended December 31, 2002 compared to
a net loss of $151,000 and loss per diluted share of $0.02 for the fourth quarter of 2001. 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 noncash
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,
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 for new 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.
Mr. 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 repair production hours for 2003 will improve to more historical
We are pleased to announce that the development of the 52 acres of property in Amelia as a repair and
conversion facility is now complete. The Company has moved its two largest drydocks to the facility and
has begun work on its first deep draft vessel. The new facility allows the Company to handle vessels with
deeper drafts than the Company has historically been able to service and therefore opens up a market niche
from which the Company has historically been limited from participating. We have already received
several inquiries relating to the opening of this facility and are excited about the opportunities this
investment provides Conrad.”
Conrad Industries, Inc., established in 1948 and headquartered in Morgan City, Louisiana designs, builds
and overhauls tugboats, ferries, liftboats, barges, offshore support vessels and other steel and aluminum
products for both the commercial and government markets. The company provides both repair and new
construction services at its four shipyards located in southern Louisiana and Texas.