, Inc. reported a net loss of $5 million and loss per diluted share of $0.68 for the three months ended December 31, 2003 compared to a net loss of $499,000 and loss per diluted share of $0.07 for the fourth quarter of 2002. For the 12 months ended December 31, 2003, it reported a net loss of $6.8 million and loss per diluted share of $0.94 compared to net loss before a cumulative effect of a change in accounting principle of $4,000 and earnings before a cumulative effect of a change in accounting principle per diluted share of $0.00 in 2002.
Revenues for the three months ended December 31, 2003 were $6.9 million compared to $10.6 million for the fourth quarter of 2002. Revenues for the twelve months ended December 31, 2003 were $33.4 million compared to $41 million for the prior year. The company’s backlog was $43.6 million at December 31, 2003, as compared to $36.2 million at December 31, 2002. It recorded a gross loss of $82,000 (-1.2% of revenue) for the three months ended December 31, 2003 as compared to gross profit of $457,000 (4.3% of revenue) for the fourth quarter of 2002. Gross profit was $659,000 (2.0% of revenue) for the 12 months ended December 31, 2003, as compared to gross profit of $5.4 million (13.1% of revenue) for the 12 months of 2002.
Vessel construction segment revenue for the current quarter increased 7% as compared to vessel construction revenue for the third quarter of 2003 and decreased 43.8% as compared to the fourth quarter of 2002. Vessel construction segment revenue for 2003 decreased 26.7% compared to the prior year. Vessel construction hours for the fourth quarter and twelve months of 2003 decreased 47.1% and 20.4%, respectively, when compared to the same periods in 2002. The decrease in revenue in 2003 is primarily a result of decreases in production hours attributable to decreased oil and gas activity as well as changes in the estimates at completion associated with the concurrent delivery of three separate vessels.
Kenneth G. “Jerry” Myers, Jr., Conrad’s President and CEO said, “The vessel construction segment of our business was difficult during 2003 and resulted in a lower base of business when compared with 2002. The low volume provided a lower base for overhead absorption and adversely impacted profitability in 2003. In addition, we have now completed and delivered all four of the vessels for a commercial project which because of cost overruns negatively impacted our results for the first three quarters of the year.
Further, the company has taken several actions in order to adapt to these market conditions. During the third quarter of 2003, the company implemented an aggressive cost reduction plan, designed to achieve approximately $1 million in savings on an annualized basis. We continue to analyze all of our operations, processes and procedures to improve efficiencies and identify further cost savings opportunities. In addition, as evidenced by the composition of our existing backlog, we are seeking vessel construction projects that reduce our dependence upon the energy market. We are beginning to see increased bid activity in the vessel construction segment of our business. During the fourth quarter of 2003, the company’s backlog exceeded $45 million - a record level for the company. With a significant portion of our backlog transitioning from design to production, we have a firm base for overhead absorption and therefore anticipate new construction revenues and gross profits to improve in 2004.”
Repair segment revenue for the 12 months ended December 31, 2003, increased 6.3% while gross profit decreased 56.4% as compared to repair segment revenue and gross profit in 2002. Repair segment revenue for the fourth quarter of 2003 was essentially the same as the fourth quarter of 2002 while gross profit for the fourth quarter of 2003 decreased 105.8% compared to the same period of 2002. Current year repair segment operations reflect the increased costs associated with the additional deepwater capacity that has not generated to date significant increased utilization.
Mr. Myers added, “The repair segment in 2003 was difficult due to the continued decreased activity in the offshore oil and gas markets. Recently, we have seen an increase in repair and conversion activity and are hopeful that it is more than just seasonal workload patterns; however, there continues to be little visibility at this time into the repair market due to the short-term nature of this work. Our deepwater facility in Amelia, La., commenced operations in February 2003, and has opened up some new repair markets. We now have our four largest drydocks at the facility.” During 2003, the Company completed the financing for the previously announced expansion into the aluminum marine fabrication, repair and construction business and began the development of the new facility. This expansion includes a 37,500 square foot two bay building, six overhead cranes and a 300 ton travel lift.
Mr. Myers commented further, “Our new aluminum facility is substantially completed. During the fourth quarter, we were awarded our first aluminum vessel construction contract
and commenced operations in both repair and new construction. We continue to receive indications of interest in our expanded aluminum capabilities.”