Seacor Holdings 1Q Results

Monday, April 27, 2009

Seacor Holdings Inc. announced net income attributable to its stockholders for the first quarter ended March 31, 2009 of $53 million, or $2.36 per diluted share, on operating revenues of $399.5 million.
For the quarter ended March 31, 2008, net income attributable to SEACOR Holdings Inc. was $36.6 million, or $1.50 per diluted share, on operating revenues of $354.5 million.

For the preceding quarter ended December 31, 2008, net income attributable to Seacor Holdings Inc. was $70.5 million, or $3.11 per diluted share, on operating revenues of $454.9 million. Comparison of results for the first quarter ended March 31, 2009 with the preceding quarter ended December 31, 2008 is included in the discussion below.

Offshore Marine Services - Operating income in the first quarter was $76.5 million on operating revenues of $164.8 million compared with operating income of $97.2 million on operating revenues of $186 million in the preceding quarter. First quarter results included $14.4 million in gains on asset dispositions compared with $34.2 million in gains in the preceding quarter. Excluding the impact of gains on asset dispositions, operating income was $1 million lower in the first quarter.

Overall operating revenues were $21.2 million lower in the first quarter primarily due to net fleet dispositions, a shorter quarter, a reduction in rig moving activity in the U.S. Gulf of Mexico and lower overall utilization primarily due to cold-stacking eighteen vessels in the U.S. Gulf of Mexico. The number of days available for charter in the first quarter decreased by 919, or 6%. Overall utilization decreased from 87.5% to 80.9% and overall average day rates increased to $12,777 per day from $12,402 per day in the preceding quarter.

Operating expenses were $14.6 million lower in the first quarter primarily due to net fleet dispositions, the impact of cold-stacking vessels, reduced regulatory drydocking and mobilization activity and lower insurance expense. Administrative and general expenses were lower primarily due to cost reductions following the restructuring of the international group and a reduction in the provision for doubtful accounts following the collection of outstanding receivable balances.

Marine Transportation Services - Operating income in the first quarter was $0.6 million on operating revenues of $26.5 million compared with operating income of $2.1 million on operating revenues of $28.8 million in the preceding quarter.

The reduction in operating income was primarily due to 24 days of out-of-service time during the first quarter for the Seabulk Energy while undergoing a regulatory drydocking. Operating income improved for the Seabulk Pride, which worked the entire first quarter following its return to service on October 21, 2008 after undergoing a regulatory drydocking. In addition, fuel expenses were lower due to a reduction in spot market activity and lower prices.

Inland River Services - Operating income in the first quarter was $12.9 million on operating revenues of $37 million compared with operating income of $20.4 million on operating revenues of $44 million in the preceding quarter. First quarter results included $2.3 million in gains on asset dispositions compared with $4.1 million in gains in the preceding quarter.

Excluding the impact of gains on asset dispositions, operating income was $5.6 million lower in the first quarter primarily due to weaker demand for non-grain shipments. Operating income improved for towboats and liquid tank barges primarily due to the addition of new equipment.

Aviation Services - Operating income in the first quarter was $6.3 million on operating revenues of $59.4 million compared with an operating loss of $3.2 million on operating revenues of $57.6 million in the preceding quarter.

The improvement in operating income was primarily due to increased activity in the U.S. Gulf of Mexico and a decrease in operating expenses due to lower fuel prices, the timing of repairs and maintenance and a reduction in hurricane related clean-up activities. In addition, operating results improved in the air medical services business. Administrative and general expenses were lower primarily due to a reduction in the provision for doubtful accounts following the recovery of a receivable balance from a major Alaska-based customer and depreciation was lower as certain assets acquired in a 2004 acquisition reached the end of their depreciable lives.

Environmental Services - Operating income in the first quarter was $1.2 million on operating revenues of $34.2 million compared with operating income of $5.5 million on operating revenues of $45.4 million in the preceding quarter. The decrease in operating income was primarily due to a reduction in emergency response activity.

Commodity Trading - Operating income in the first quarter was $0.8 million on operating revenues of $64.5 million compared with an operating loss of $3.8 million on operating revenues of $79.9 million in the preceding quarter. Operating results in the first quarter were improved due to lower insurance expenses and lower wage and benefit costs.

Harbor and Offshore Towing Services - Operating income in the first quarter was $1.7 million on operating revenues of $16.3 million compared with operating income of $2.4 million on operating revenues of $16.8 million in the preceding quarter. The decrease in operating results was primarily due to generally lower activity levels.

Interest Income - Interest income was $1 million in the first quarter compared with $2.6 million in the preceding quarter. The decrease was primarily due to lower interest rates.

Interest Expense - Interest expense was $14.3 million in the first quarter compared with $15.3 million in the preceding quarter. The decrease in interest expense was primarily due to the Company's first quarter purchases of $16.9 million in principal amount of its Senior Notes and Convertible Debentures partially offset by its drawdown of $25 million on its unsecured revolving credit facility, resulting in a lower overall interest rate. The impact of adopting FSP APB 14-1, as described below, was an additional $2.1 million of pre-tax, non-cash interest expense in the first quarter and an additional $2 million of pre-tax, non-cash interest expense in the preceding quarter.

Debt Extinguishment - During the first quarter, the Company recorded gains of $1.4 million on the purchases of $16.9 million in principal amount of its Senior Notes and Convertible Debentures compared with gains of $6.3 million on the purchases of $101.8 million in principal amount of its Senior Notes in the preceding quarter. The gains resulted from the purchase of these notes at average prices below par and the recognition of unamortized net premiums.

Marketable Securities - Marketable security losses were $4 million in the first quarter compared with losses of $0.5 million in the preceding quarter.

Derivatives - Derivative gains were $3.6 million in the first quarter compared with losses of $4.5 million in the preceding quarter. The gains in the first quarter were primarily due to gains on equity index and option positions and commodity futures contracts.

Foreign Currencies - Foreign currency gains were $0.7 million in the first quarter compared with losses of $4.4 million in the preceding quarter. Losses in the preceding quarter were primarily due to the strengthening of the U.S. dollar versus the pound sterling.

Equity in Earnings of 50% or Less Owned Companies - Equity in earnings from joint ventures was $3.5 million in the first quarter compared with equity in earnings of $4 million in the preceding quarter.

Capital Commitments - The company's unfunded capital commitments as of March 31, 2009, consisted primarily of offshore marine vessels, helicopters, ocean liquid tank barges and inland river towboats and totaled $124.6 million, of which $87.0 million is payable during 2009 and the balance payable through 2010. Of the total unfunded capital commitments, $22.9 million may be terminated without further liability other than the payment of liquidated damages of $3.1 million in the aggregate. Subsequent to the end of the quarter, the company committed to purchase additional equipment for $8.0 million. As of March 31, 2009, the company held balances of cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and title XI reserve funds totaling $749.2 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 entity's 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 retained earnings as of December 31, 2008 to $1.403 billion from $1.422 billion. Previously reported diluted earnings per common share remained unchanged.

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