Polarcus Tests Market, Improves Earnings
Polarcus Limited today announced the release of its second quarter 2014 financial statements in which it reported revenue rose 13% sequentially and 5% YoY to $137.6 million while. The company highlighted EBITDA of $49.9 million and EBIT of $23.8 million, a net profit increase to $9.2 million, from 6.3 million in Q2 2013, net cash flow from operations of $45.6 million, a strong Multi-Client prefunding of 92% and 30% reduced financing costs YoY with improved maturity profile.
Polarcus recorded higher revenue per vessel and improved margins in Q2 2014 compared to Q1 2014, as the quarter saw an end to the downward trend in margins recorded sequentially over the previous two quarters. The improved revenue is driven by higher contract utilization and operational efficiency, the company said. Multi-Client sales of existing data library remained elusive due to delayed client purchasing decisions, however subsequent to the quarter end a $6.3 million sale was booked originating from the second tranche of the U.K. 27th licensing round.
A continued competitive market environment combined with increased uncertainty on Multi-Client sales, leads the company to reduce its full year EBITDA guidance to approximately $200 million.
Polarcus Naila returned to operation after a propulsion upgrade which increased her towing and streamer capacity to match the capability of the company's four high performance A-class vessels. The vessel now operates with a significantly improved cost base as well as improved earnings potential through the improved towing capability. $20 million financing relating to the propulsion and productivity enhancement was received post quarter end.
The company said it has continued to improve its financial position by extending its debt maturity profile and reducing its financing costs through issuing a NOK 350 million bond. The new bond carries a lower effective interest rate than the old debt the funds were used to refinance. The transactions were finalized post quarter end.
Commenting on the results, Rolf Rønningen, CEO Polarcus, said, "The company has successfully delivered improved margins in the quarter despite a testing market that has seen tendering levels flat year-on-year and Multi-Client late sales delayed. The competitive market environment meanwhile has had an impact on backlog, however we remain fully focused on improving margins and increasing visibility on future Contract activity. We are also now well advanced on building a strong, well-funded, multi-client project pipeline."