Hornbeck Offshore Services completed the sale of three supply vessels to the U.S. Navy, helping boost profits in the first quarter even as low oil prices put pressure on revenues.
In February, the Navy agreed to buy three supply boats from Hornbeck with an option to purchase a fourth. The Navy also agreed to contract Hornbeck to operate the boats. Together, the contracts are worth $132 million.
For the first quarter Hornbeck Offshore Services reported revenue of $134.6 million. That was down $2 million, or 1.4% from the first quarter of last year and down 16% from the fourth quarter due to soft spot market conditions as well as the fact the company stacked several vessels due to lack of work.
The company said operating expenses fell 10.5% year over year to $61.4 million for the first quarter, down from $68.6 million. Hornbeck Offshore expects to have operating expenses in the range of $60 million to $65 million in the second quarter.
However, despite the weaker revenue, Hornbeck's earnings were stronger than expected. Excluding gains on asset sales the company made to the U.S. Navy, Hornbeck earned $15.2 million, or $0.42 per share.
Not only was that $0.14 per share better than analysts expected, but it exceeded the $0.32 per share in earnings the company delivered in the first quarter of 2014. Lower costs really drove the better than expected profitability as Hornbeck's operating expenses declined 10.5% and its general and administrative expenses fell from 10% of revenue in the first quarter of last year to just 8.8% in the first quarter of 2015.
Hornbeck, based in Covington, owns and operates supply vessels that support oil and gas drilling
in the Gulf of Mexico. The company also provides support to Navy submarine fleets off the U.S. coast.