Seacor Holdings Q2 Results

Friday, July 24, 2009

Seacor Holdings Inc. (NYSE: CKH) announced net income attributable to its stockholders for the second quarter ended June 30, 2009 of $42.3 million, or $1.91 per diluted share, on operating revenues of $389.2 million. For the six months ended June 30, 2009, net income attributable to SEACOR Holdings Inc. was $95.3 million, or $4.27 per diluted share, on operating revenues of $788.7 million.

For the quarter ended June 30, 2008, net income attributable to SEACOR Holdings Inc. was $37.1 million, or $1.57 per diluted share, on operating revenues of $409.0 million. For the six months ended June 30, 2008, net income attributable to SEACOR Holdings Inc. was $73.7 million, or $3.06 per diluted share, on operating revenues of $763.4 million. See explanation below on the retrospective application of FSP APB 14-1.

For the preceding quarter ended March 31, 2009, net income attributable to SEACOR Holdings Inc. was $53.0 million, or $2.36 per diluted share, on operating revenues of $399.5 million. Comparison of results for the second quarter ended June 30, 2009 with the preceding quarter ended March 31, 2009 is included in the discussion below.

Offshore Marine Services -- Operating income in the second quarter was $40.5 million on operating revenues of $146.5 million compared with operating income of $76.5 million on operating revenues of $164.8 million in the preceding quarter. Second quarter results included $0.4 million in gains on asset dispositions compared with $14.4 million in gains in the preceding quarter. Excluding the impact of gains on asset dispositions, operating income was $21.9 million lower in the second quarter.

Overall operating revenues were $18.3 million lower in the second quarter primarily due to a reduction in rig moving activity in the U.S. Gulf of Mexico and lower overall utilization primarily due to cold-stacking additional vessels. As of June 30, 2009, 23 vessels were cold-stacked, all in the U.S. Gulf of Mexico. In addition, as of June 30, 2009, $10.9 million of vessel charter hire billed to three customers has been deferred due to uncertainty of collection. The Company will recognize the amounts as operating revenues if and when collection is reasonably assured. Overall operating expenses were $2.8 million higher in the second quarter primarily due to increased regulatory drydocking and maintenance costs, higher insurance costs and higher brokered vessel activity in the Middle East. These increases were partially offset by reductions in operating expenses due to the effect of cold-stacking vessels and lower mobilization costs.

The number of days available for charter in the second quarter decreased by 224, or 1.6%. Overall utilization decreased from 80.9% to 75.0% and overall average day rates decreased by 5.8% from $12,777 per day to $12,030 per day.

Marine Transportation Services -- Operating income in the second quarter was $3.4 million on operating revenues of $24.1 million compared with operating income of $0.6 million on operating revenues of $26.5 million in the preceding quarter.

The increase in operating income was primarily due to the Seabulk Energy returning to service after completing a regulatory drydocking on February 22, 2009.

Inland River Services -- Operating income in the second quarter was $5.7 million on operating revenues of $30.2 million compared with operating income of $12.9 million on operating revenues of $37.0 million in the preceding quarter. Second quarter results included $0.4 million in gains on asset dispositions compared with $2.3 million in gains in the preceding quarter.

Excluding the impact of gains on asset dispositions, operating income was $5.3 million lower in the second quarter primarily due to weaker demand for non-grain shipments.

Aviation Services -- Operating income in the second quarter was $4.6 million on operating revenues of $57.7 million compared with operating income of $6.3 million on operating revenues of $59.4 million in the preceding quarter. Second quarter results included $1.1 million in net losses on asset dispositions and impairments.

Excluding the impact of asset dispositions and impairments, operating income was $0.5 million lower in the second quarter. The start of seasonal activity in Alaska and collection of insurance proceeds related to damage incurred in hurricanes Gustav and Ike were partially offset by reduced activity in the U.S. Gulf of Mexico. Administrative and general expenses were higher due to a recovery in the preceding quarter of a receivable balance from a major Alaska-based customer. Depreciation expense increased as new assets were placed in service.

Environmental Services -- Operating income in the second quarter was $1.8 million on operating revenues of $33.2 million compared with operating income of $1.2 million on operating revenues of $34.2 million in the preceding quarter.

Commodity Trading -- Operating income in the second quarter was $3.2 million on operating revenues of $85.9 million compared with operating income of $0.8 million on operating revenues of $64.5 million in the preceding quarter. Operating results in the second quarter were positively impacted by higher sales volumes at improved margins, partially offset by higher insurance expenses and bonus accruals.

Harbor and Offshore Towing Services -- Operating income in the second quarter was $3.2 million on operating revenues of $16.2 million compared with operating income of $1.7 million on operating revenues of $16.3 million in the preceding quarter. Operating results improved primarily due to gains on asset dispositions and lower drydocking costs as a result of the completion of several drydockings in the previous quarter.

Interest Income -- Interest income was $0.6 million in the second quarter compared with $1.0 million in the preceding quarter.

Interest Expense -- Interest expense was $14.1 million in the second quarter compared with $14.3 million in the preceding quarter. The decrease was primarily due to the Company's second quarter purchases of $45.1 million in principal amount of certain of its Senior Notes and Convertible Debentures partially offset by lower capitalized interest.

Debt Extinguishment -- During the second quarter, the Company recorded losses of $0.1 million on the purchases of $45.1 million in principal amount of certain of its Senior Notes and Convertible Debentures compared with gains of $1.4 million on the purchases of $16.9 million in principal amount of certain of its Senior Notes and Convertible Debentures in the preceding quarter.

Marketable Securities -- Marketable security gains were $11.8 million in the second quarter compared with losses of $4.0 million in the preceding quarter.

Derivatives -- Derivative gains were $3.8 million in the second quarter compared with gains of $3.6 million in the preceding quarter.

Foreign Currencies -- Foreign currency gains were $6.8 million in the second quarter compared with gains of $0.7 million in the preceding quarter. Second quarter gains were primarily due to a weakening of the U.S. dollar against foreign currencies underlying certain of the Company's cash positions and intercompany notes receivable.

Equity in Earnings of 50% or Less Owned Companies -- Equity in earnings from joint ventures was $3.5 million in the second quarter, the same as in the preceding quarter.

Capital Commitments -- The Company's unfunded capital commitments as of June 30, 2009 consisted primarily of offshore marine vessels, helicopters, ocean liquid tank barges and inland river towboats and totaled $117.4 million, of which $48.1 million is payable during 2009 and the balance payable through 2011. Of the total unfunded capital commitments, $20.9 million may be terminated without further liability other than the payment of liquidated damages of $3.0 million in the aggregate. As of June 30, 2009, the Company held balances of cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and title XI reserve funds totaling $749.4 million.

FSP APB 14-1 -- Effective January 1, 2009, the Company adopted Financial Accounting Standards Board Staff Position, Accounting Principles Board 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) ("FSP APB 14-1"). FSP APB 14-1 requires issuers of convertible debt to account separately for the liability and equity components in a manner that reflects the issuers' non-convertible debt borrowing rate. The resulting debt discount is amortized over the period the debt is expected to be outstanding as additional non-cash interest expense. Upon adopting FSP APB 14-1, the Company recorded the impact on a retrospective basis for all relevant periods and adjusted previously reported equity as of December 31, 2008 by increasing additional paid-in capital $33.9 million and reducing retained earnings $18.9 million. Previously reported diluted earnings per common share remained unchanged.

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