SEACOR Q4 Results

Monday, February 22, 2010

SEACOR Holdings Inc. (NYSE: CKH) announced its results for the fourth quarter of 2009. Net income attributable to SEACOR Holdings Inc. for the quarter ended December 31, 2009 was $22.2 million, or $1.04 per diluted share, on operating revenues of $476.5 million.

During the fourth quarter, the Company called and settled all of its outstanding 2.875% Convertible Senior Debentures due 2024 resulting in a debt extinguishment loss of $6.1 million, net of tax, or $0.26 per diluted share. For the preceding quarter ended September 30, 2009, net income attributable to SEACOR Holdings Inc. was $26.3 million, or $1.23 per diluted share, on operating revenues of $446.1 million.

For the twelve months ended December 31, 2009, net income attributable to SEACOR Holdings Inc. was $143.8 million, or $6.57 per diluted share, on operating revenues of $1,711.3 million.

For the 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. For the twelve months ended December 31, 2008, net income attributable to SEACOR Holdings Inc. was $218.5 million, or $9.25 per diluted share, on operating revenues of $1,656.0 million. Previously reported 2008 results were retrospectively adjusted to reflect the adoption of new accounting rules established by the Financial Accounting Standards Board (FASB) related to the Company's convertible debt.

Highlights for the Quarter
Offshore Marine Services -- Operating income in the fourth quarter was $26.3 million on operating revenues of $121.2 million compared with operating income of $30.0 million on operating revenues of $129.8 million in the preceding quarter. Fourth quarter results included $3.8 million in gains on asset dispositions compared with $3.9 million in gains in the preceding quarter. Excluding the impact of gains on asset dispositions, operating income was $3.7 million lower in the fourth quarter.

Overall operating revenues were $8.6 million lower in the fourth quarter primarily due to reductions in third party brokered vessel activity, bareboat charter revenues and revenues from other marine services. Time charter revenues were $3.9 million higher in the U.S. Gulf of Mexico, primarily due to an increase in rig moving activity, but were $3.7 million lower in all other geographic regions, primarily due to lower utilization. As of December 31, 2009, the Company had 19 vessels cold-stacked in the U.S. Gulf of Mexico compared with 26 as of September 30, 2009. During the fourth quarter, six additional vessels were cold-stacked, eleven vessels were returned to leasing companies at the conclusion of their lease terms, and two vessels were returned to service. As of December 31, 2009, $14.9 million of vessel charter hire billed to three customers has been deferred due to uncertainty of collection. The Company's policy is to recognize the deferred amounts as operating revenues if and when collection is reasonably assured. Overall operating expenses were $4.8 million lower in the fourth quarter primarily due to decreased regulatory drydocking and maintenance costs and reduced vessel brokerage activity.

The number of days available for charter in the fourth quarter decreased by 342, or 2.5%. Overall utilization increased from 67.4% to 68.0% and overall average day rates, based on time charter revenues recognized, increased by 1.8% from $11,880 per day to $12,093 per day.

Marine Transportation Services -- Operating income in the fourth quarter was $0.9 million on operating revenues of $20.5 million compared with operating income of $1.4 million on operating revenues of $21.7 million in the preceding quarter. The decrease in operating income was primarily due to the temporary lay-up of one of the Company's tankers for the entire fourth quarter and a lower margin contract for one tanker trading in the spot market.

Inland River Services -- Operating income in the fourth quarter was $15.9 million on operating revenues of $53.6 million compared with operating income of $7.8 million on operating revenues of $34.3 million in the preceding quarter. Fourth quarter results included $1.2 million in gains on asset dispositions compared with $0.8 million in gains in the preceding quarter.

Excluding the impact of gains on asset dispositions, operating income was $7.7 million higher in the fourth quarter, primarily due to higher freight rates and increased freight loadings as a result of seasonal harvest activity.

Aviation Services -- Operating income in the fourth quarter was $8.1 million on operating revenues of $54.3 million compared with operating income of $10.3 million on operating revenues of $64.3 million in the preceding quarter. Fourth quarter results include $0.3 million in net gains on asset dispositions and impairments compared with $1.1 million of gains in the preceding quarter.
Excluding the impact of asset dispositions and impairments, operating income was $1.5 million lower in the fourth quarter, primarily due to a reduction in contract activity to support drilling in the U.S. Gulf of Mexico and the end of seasonal activity in Alaska. The impact of these factors was partially offset by the receipt of insurance proceeds related to damages sustained in hurricanes Gustav and Ike.

Environmental Services -- Operating income in the fourth quarter was $3.5 million on operating revenues of $44.5 million compared with operating income of $2.7 million on operating revenues of $33.8 million in the preceding quarter. The improvement in operating income was primarily due to increased emergency response services activities, partially offset by reduced remediation services activities.

Commodity Trading and Logistics -- Commodity Trading and Logistics reported a segment loss in the fourth quarter of $0.4 million on operating revenues of $171.4 million compared with a segment loss of $2.0 million on operating revenues of $150.9 million in the preceding quarter.

Harbor and Offshore Towing Services -- Operating income in the fourth quarter was $0.1 million on operating revenues of $16.2 million compared with operating income of $2.0 million on operating revenues of $15.6 million in the preceding quarter. The reduction in operating income was primarily due to higher regulatory docking, repair and fuel costs.

Debt Extinguishment -- During the fourth quarter, the Company recorded losses of $9.7 million, primarily on the call and settlement of $246.2 million, in principal amount, of its 2.875% Convertible Debentures.

Marketable Securities -- Marketable security gains were $9.3 million in the fourth quarter compared with gains of $6.9 million in the preceding quarter.

Income Taxes -- During the fourth quarter, the Company's effective income tax rate was 44.9%, primarily due to increased deferred tax liabilities resulting from higher state income tax apportionment factors and the timing of non-deductible compensation payments.

Capital Commitments -- The Company's unfunded capital commitments as of December 31, 2009 consisted primarily of offshore support vessels, helicopters and inland river dry cargo barges and totaled $96.2 million, of which $88.3 million is payable during 2010 and the balance payable in 2011. Of the total unfunded capital commitments, $0.8 million may be terminated without further liability. As of December 31, 2009, the Company held balances of cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and title XI reserve funds totaling $857.8 million.

Convertible Debt -- Effective January 1, 2009, the Company adopted new accounting rules established by the FASB related to its convertible debt that requires the Company to account separately for the liability and equity components in a manner that reflects the Company'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 adoption of the new accounting rules, the Company recorded the impact on a retrospective basis for all periods presented 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.

Stock Repurchases and Convertible Debt Settlements -- During the fourth quarter, the Company called and settled all of its outstanding 2.875% Convertible Senior Debentures due 2024, as noted above. Holders of $213.5 million, in principal amount, elected to convert their debentures pursuant to a conversion right and the Company elected to settle this conversion by issuing 2,918,977 shares of common stock and a nominal cash payment for fractional shares. The remaining $32.7 million, in principal amount, was redeemed in cash at a redemption price of 100.82% of the principal amount, or $33.0 million. In addition, during the fourth quarter, the Company purchased 606,576 shares of its common stock at an average price of $75.55 per share. At the end of the quarter, 22,504,441 shares of SEACOR's common stock were outstanding on a fully diluted basis (basic shares of 22,274,820 plus 229,621 shares for dilutive share awards) compared with 23,506,689 shares at the end of the preceding quarter (basic shares of 19,888,216 plus 252,468 shares for dilutive share awards plus 3,366,005 shares that had been reserved for issuance pursuant to the Company's Convertible Debentures).

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