Hornbeck Announces 1Q 2013 Results
Hornbeck Offshore Services, Inc. announced results for the first quarter ended March 31, 2013.
Following are highlights for this period and the Company's future outlook:
• Record quarterly revenue of $147.5 million for 1Q2013 was up 23% from the year-ago quarter and 11% sequentially
• 1Q2013 operating income of $47.4 million increased 66% from the year-ago quarter and 46% sequentially
• 1Q2013 bond refinancing resulted in a loss on early extinguishment of debt of $24.3 million ($0.42 per diluted share)
• Excluding such loss on early extinguishment of debt, 1Q2013 diluted EPS would increase from $0.17 to $0.59 per share
• Excluding such loss on early extinguishment of debt, 1Q2013 EBITDA would increase from $45.8 million to $70.1 million
• 1Q2013 utilization of the 51-vessel new gen OSV fleet was 87%, up from 81% a year-ago and 84% sequentially
• 1Q2013 high-spec OSV utilization was 99%, up from 87% a year-ago and 96% sequentially
• 1Q2013 MPSV utilization was 95%, up from 88% a year ago and 81% sequentially
• Contract backlog for new gen OSV vessel-days is currently at 54% and 24% for the remainder of 2013 and fiscal 2014
• Contract backlog for MPSV vessel-days is currently at 77% and 31% for the remainder of 2013 and fiscal 2014
• 1Q2013 EBITDA for the Downstream fleet was $7.0 million, up 71% from comparable 1Q2012 EBITDA of $4.1 million
• 1Q2013 Downstream utilization was 96% compared to 85% and 99% in 1Q2012 and 4Q2012, respectively
• The Company plans to build two additional Jones Act HOSMAX 310 class MPSVs in lieu of two additional 320 class OSVs
• OSV Newbuild Program #5 is now comprised of twenty HOSMAX class OSVs and four HOSMAX class MPSVs
First quarter 2013 revenues increased 23.0% to $147.5 million compared to $120.0 million for the first quarter of 2012 and increased 10.7% compared to $133.2 million for the fourth quarter of 2012. Operating income was $47.4 million, or 32.1% of revenues, for the first quarter of 2013 compared to $28.6 million, or 23.8% of revenues, for the prior-year quarter; and $32.5 million, or 24.4% of revenues, for the fourth quarter of 2012. The Company recorded net income for the first quarter of 2013 of $6.2 million, or $0.17 per diluted share, compared to net income of $6.3 million, or $0.18 per diluted share, for the year-ago quarter; and net income of $11.3 million, or $0.31 per diluted share, for the fourth quarter of 2012. Diluted common shares for the first quarter of 2013 were 36.3 million compared to 36.0 million for the first quarter of 2012 and 36.1 million for the fourth quarter of 2012. First quarter 2013 EBITDA increased 2.7% to $45.8 million compared to $44.6 million for the first quarter of 2012 and decreased 16.9% compared to $55.1 million for the fourth quarter of 2012. However, the Company recorded a $24.3 million ($15.2 million after-tax or $0.42 per diluted share) loss on early extinguishment of debt during the first quarter 2013. This loss resulted from the refinancing of the Company's 8.000% senior notes due 2017 with new 5.000% senior notes due 2021. Excluding the impact of such loss on early extinguishment of debt, EBITDA, net income and diluted EPS for the first quarter of 2013 would have been $70.1 million, $21.4 million and $0.59 per share, respectively. Likewise, the Company recorded a $5.2 million ($3.2 million after-tax or $0.09 per diluted share) loss on early extinguishment of debt during the first quarter 2012. This loss resulted from the refinancing of the Company's 6.125% senior notes due 2014 with new 5.875% senior notes due 2020. Excluding the impact of such loss on early extinguishment of debt, EBITDA, net income and diluted EPS for the first quarter of 2012 would have been $49.8 million, $9.5 million and $0.27 per share, respectively. The $15.0 million sequential increase in recurring EBITDA is primarily attributable to (i) an $8.4 million increase in MPSV revenues mainly due to higher effective dayrates from the two MPSVs operating in the spot market, (ii) a $4.6 million increase in OSV revenue resulting from high-spec OSVs re-pricing at current spot market dayrates, and (iii) a $1.9 million decrease in Upstream operating expenses mostly due to lower cost of sales and maintenance and repair costs. For additional information regarding EBITDA as a non-GAAP financial measure, please see Note 10 to the accompanying data tables.
Upstream Segment
Revenues from the Upstream segment were $132.5 million for the first quarter of 2013, an increase of $24.6 million, or 22.8%, from $107.9 million for the first quarter of 2012; and an increase of $13.9 million, or 11.7%, from $118.6 million for the fourth quarter of 2012. The year-over-year increase in Upstream revenues primarily resulted from higher utilization and dayrates due to stronger demand for the Company's MPSVs and high-spec OSVs. Upstream operating income was $43.9 million, or 33.1% of revenues, for the first quarter of 2013 compared to $28.3 million, or 26.2% of revenues, for the prior-year quarter; and $29.7 million, or 25.0% of revenues, for the fourth quarter of 2012. Average new generation OSV dayrates for the first quarter of 2013 were $25,142 compared to $22,419 for the same period in 2012 and $24,024 for the fourth quarter of 2012. New generation OSV utilization was 86.7% for the first quarter of 2013 compared to 81.1% for the year-ago quarter and 84.0% for the sequential quarter. The Company's high-spec OSVs achieved an average utilization of 98.5% for the first quarter of 2013, while maintaining leading-edge spot dayrates in the $38,000 to $45,000 range. After adjusting for 20 days of first quarter downtime for regulatory drydockings, the Company's commercially available high-spec OSV fleet achieved an effective utilization of 99.5%.
Downstream Segment
Revenues from the Downstream segment of $15.0 million for the first quarter of 2013 increased by $2.9 million, or 24.0%, compared to $12.1 million for the same period in 2012, and were in-line with the sequential quarter. The year-over-year revenue increase was largely due to improved market conditions in the GoM and in the Northeast. The Company's double-hulled tank barge average dayrates were $19,338 for the first quarter of 2013 compared to $17,271 for the same period in 2012 and $17,694 for the sequential quarter. Utilization for the double-hulled tank barge fleet was 95.7% for the first quarter of 2013 compared to 85.4% for the year-ago quarter and 99.3% for the sequential quarter. The sequential quarter decrease in utilization was primarily due to 32 incremental days out-of-service for regulatory drydocking during the first quarter of 2013. Effective, or utilization-adjusted, dayrates for the Company's double-hulled tank barges were $18,506 for the first quarter of 2013, which is $3,757, or 25.5%, higher than the prior-year quarter effective dayrates. During April 2013, the Company sold two of its five stacked, lower-horsepower tugs.
General and Administrative ("G&A")
G&A expenses of $13.9 million for the first quarter of 2013 were 9.4% of revenues compared to $11.1 million, or 9.3% of revenues, for the first quarter of 2012. The increase in G&A expenses was primarily attributable to higher shoreside incentive compensation expense. The Company allocated 93% of its first quarter 2013 G&A expenses to the Upstream segment and 7% to the Downstream segment.
Depreciation and Amortization
Depreciation and amortization expense was $22.9 million for the first quarter of 2013, or $1.9 million higher than the prior-year quarter. This increase is primarily due to higher shipyard costs for vessel regulatory drydockings. Depreciation and amortization expense is expected to continue to increase from current levels as the vessels under the Company's current newbuild and conversion programs are placed in service and when any newly constructed vessels undergo their initial 30-month and 60-month recertifications.
Interest Expense
Interest expense decreased $0.2 million during the first quarter of 2013 compared to the same period in 2012, primarily due to an increase in capitalized interest cost related to the Company's fifth OSV newbuild program, which commenced during the fourth quarter of 2011. The Company recorded $6.0 million of capitalized construction period interest, or roughly 30% of its total interest costs, for the first quarter of 2013 compared to having capitalized $1.5 million, or roughly 10% of its total interest costs, for the prior-year quarter.
Loss on Early Extinguishment of Debt
On March 14, 2013, the Company commenced a cash tender offer for all $250.0 million in aggregate principal amount of its 8.000% senior notes due 2017. Senior notes that were tendered as of March 27, 2013 represented approximately $234.7 million, or 94% of such notes outstanding. The remaining $15.3 million, or 6%, of the Company's 8.000% senior notes will be redeemed on May 13, 2013. A loss on early extinguishment of debt of approximately $24.3 million ($15.2 million after-tax or $0.42 per diluted share) was recorded during the first quarter of 2013, which includes the tender offer costs, and an allocable portion of the write-off of unamortized financing costs, original issue discount and the bond redemption premium. An additional loss on early extinguishment of debt of approximately $1.5 million ($0.9 million after-tax or $0.03 per diluted share) will be recorded during the second quarter of 2013 for those costs allocable to the remaining $15.3 million of the Company's 8.000% senior notes that will be redeemed during the second quarter of 2013.
Full results can be viewed here.
