HORNBECK OFFSHORE SERVICES, INC. COVINGTON, La., May 3, 2017 /PRNewswire/ -- Hornbeck Offshore Services, Inc. (NYSE:HOS) announced today results for the first quarter ended March 31, 2017. Following is an executive summary for this period and the Company's future outlook:
-- 1Q2017 diluted EPS was $(0.76), a decrease of $0.23, or 43%, from 4Q2016
diluted EPS of $(0.53)
-- 1Q2017 net loss was $(27.9) million, a decrease of $8.7 million from
4Q2016 net loss of $(19.2) million
-- 1Q2017 EBITDA was $1.6 million, a slight increase from 4Q2016 EBITDA of
$1.1 million
-- 1Q2017 revenues include a redelivery fee of $9.4 million related to the
completion of a long-term OSV contract
-- 1Q2017 G&A expense includes $3.8 million of additional bad debt reserve
related to a former customer's bankruptcy proceedings
-- Excluding these two items, adjusted 1Q2017 diluted EPS and net loss were
$(0.87) and $(31.7) million, respectively
-- Excluding these two items, adjusted 1Q2017 EBITDA was $(3.9) million, a
decrease of $5.0 million from 4Q2016 EBITDA of $1.1 million
-- Excluding the redelivery fee, 1Q2017 average new gen OSV dayrates were
$19,221, a decrease of $4,991, or 21%, sequentially
-- Excluding the redelivery fee, 1Q2017 effective new gen OSV dayrates were
$3,787, a decrease of $1,055, or 22%, sequentially
-- 1Q2017 utilization of the Company's new gen OSV fleet was 20%, in-line
with the sequential quarter
-- 1Q2017 effective utilization of the Company's active new gen OSVs was
68%, down from 75% sequentially
-- The Company has exercised the interest coverage holiday permitted by the
revolving credit facility capping the borrowing base at $75 million
-- The Company currently has 41 OSVs and two MPSVs stacked and expects to
have 46 OSVs and two MPSVs stacked by end of 3Q17
-- Quarter-end cash was $209 million with only $70 million of growth capex
remaining to be funded under the 24-vessel newbuild program
The Company recorded a net loss for the first quarter of 2017 of $(27.9) million, or $(0.76) per diluted share, compared to a net loss of $(7.5) million, or $(0.21) per diluted share, for the year-ago quarter; and a net loss of $(19.2) million, or $(0.53) per diluted share, for the fourth quarter of 2016. Included in the Company's first quarter 2017 results is a $9.4 million redelivery fee related to the completion of a long-term contract for one of the Company's OSVs. Also included in the Company's first quarter 2017 results is a $3.8 million increase in G&A expense resulting from additional bad debt reserves due to an unfavorable ruling in recent bankruptcy proceedings related to a receivable from a former customer. Excluding the net impact of these two items, net loss and diluted EPS for the first quarter of 2017 would have been $(31.7) million, and $(0.87) per share, respectively. Diluted common shares for the first quarter of 2017 were 36.6 million compared to 36.1 million and 36.4 million for the first quarter of 2016 and the fourth quarter of 2016, respectively. GAAP requires the use of basic shares outstanding for diluted EPS when reporting a net loss. EBITDA for the first quarter of 2017 was $1.6 million compared to $28.2 million for the first quarter of 2016 and $1.1 million for the fourth quarter of 2016. Excluding the net impact of the two items discussed above, first quarter 2017 EBITDA would have been $(3.9) million. For additional information regarding EBITDA as a non-GAAP financial measure, please see Note 10 to the accompanying data tables.
Revenues. Revenues were $44.1 million for the first quarter of 2017, a decrease of $32.7 million, or 42.6%, from $76.8 million for the first quarter of 2016; and an increase of $2.2 million, or 5.3%, from $41.9 million for the fourth quarter of 2016. The year-over-year decrease in revenues was primarily due to weak market conditions worldwide, which led to the Company's decision to stack 18 incremental vessels on various dates since December 31, 2015. The sequential increase was primarily attributable to the redelivery fee mentioned above. Excluding this fee, adjusted revenue was $34.7 million, a decrease of $42.1 million, or 54.8% from the prior-year quarter and a decrease of $7.2 million, or 17.2% from the sequential quarter. As of March 31, 2017, the Company had 44 OSVs and two MPSVs stacked. For the three months ended March 31, 2017, the Company had an average of 45.9 vessels stacked compared to 33.7 vessels stacked in the prior-year quarter and 46.5 vessels stacked in the sequential quarter. Operating loss was $(26.5) million, or (60.1)% of revenues, for the first quarter of 2017 compared to operating loss of $(0.8) million, or (1.0)% of revenues, for the prior-year quarter; and operating loss of $(27.5) million, or (65.6)% of revenues, for the fourth quarter of 2016. Excluding the net impact of the two items discussed above, first quarter 2017 operating loss would have been $(32.0) million, or (92.3)% of adjusted revenues. Average new generation OSV dayrates for the first quarter of 2017 were $27,767 compared to $24,601 for the same period in 2016 and $24,212 for the fourth quarter of 2016. Excluding the impact of the redelivery fee, average new generation OSV dayrates would have been $19,221 for the first quarter of 2017. New generation OSV utilization was 19.7% for the first quarter of 2017 compared to 35.1% for the year-ago quarter and 20.0% for the sequential quarter. The year-over-year decrease in utilization is primarily due to weak market conditions for high-spec OSVs operating in the GoM and the incremental vessels that were stacked. Excluding stacked vessel days, the Company's new generation OSV effective utilization was 67.5%, 77.4% and 74.5% for the same periods, respectively. Utilization-adjusted, or effective, new generation OSV dayrates for the first quarter of 2017 were $5,470 compared to $8,635 for the same period in 2016 and $4,842 for the fourth quarter of 2016. Excluding the impact of the redelivery fee, utilization-adjusted, or effective, new generation OSV dayrates for the first quarter of 2017 would have been $3,787.
Operating Expenses. Operating expenses were $27.9 million for the first quarter of 2017, a decrease of $12.5 million, or 30.9%, from $40.4 million for the first quarter of 2016; and an increase of $0.4 million, or 1.5%, from $27.5 million for the fourth quarter of 2016. The year-over-year decrease in operating expenses was primarily due to vessels that the Company removed from its active fleet count through its stacking strategy since December 31, 2015, which resulted in a substantial reduction in mariner headcount, mariner pay cuts and reductions in other operating expenses.
General and Administrative ("G&A"). G&A expense was $14.2 million for the first quarter of 2017 compared to $8.7 million for the first quarter of 2016; and $13.3 million for the fourth quarter of 2016. The year-over-year increase in G&A expense was primarily attributable to the $3.8 million of additional bad debt reserves previously mentioned and, to a lesser extent, $1.0 million of higher short-term incentive compensation expense and $0.8 million of long-term incentive compensation expense. These unfavorable variances were partially offset by $1.0 million of lower shoreside compensation expense due to workforce reductions that were implemented during fiscal 2016. In addition, the first quarter of 2016 was favorably impacted by $2.0 million of lower long-term stock-based incentive compensation expense and $1.1 million of lower short-term incentive compensation expense. After adjusting for these reconciling items, G&A expense for the first quarter of 2017 and the first quarter of 2016 were comparable at $11.4 million and $11.8 million, respectively.
Depreciation and Amortization. Depreciation and amortization expense was $28.4 million for the first quarter of 2017, or $0.1 million and $0.2 million lower than the year-ago quarter and sequential quarter, respectively. Depreciation increased by $2.5 million over the year-ago quarter primarily due to the contribution of four vessels that were placed in service under the Company's fifth OSV newbuild program since December 31, 2015. The depreciation increase was offset by a decrease in amortization expense of $2.6 million, which was mainly driven by postponed recertifications for certain of the Company's stacked OSVs. Amortization expense is expected to decrease further in the near term as a result of the deferral of regulatory recertification activities for vessels that have been stacked. The Company expects amortization expense to increase temporarily whenever market conditions warrant reactivation of currently stacked vessels, which will then require the Company to drydock such vessels, and thereafter to revert back to historical levels.
Interest Expense. Interest expense was $13.8 million during the first quarter of 2017, or $2.7 million higher than the prior-year quarter. The increase was primarily due to the Company capitalizing a lower percentage of interest compared to the prior-year period driven by a lower average construction work-in-progress balance under the Company's nearly completed newbuild program. The Company recorded $2.4 million of capitalized construction period interest, or roughly 15% of its total interest costs, for the first quarter of 2017 compared to $5.0 million, or roughly 31% of its total interest costs, for the year-ago quarter.
Income Taxes. The Company's income tax benefit rate for the first quarter of 2017 was 30.6%. This was below the Company's historical tax rate due to the adoption of a new accounting standard effective January 1, 2017, which requires the tax impact of stock-based compensation arrangements to be recorded as a discrete item within the provision for income taxes, whereas it was previously recorded in additional paid-in capital. This standard will cause volatility in the Company's effective tax rates in the periods when outstanding stock options are exercised or restricted stock awards vest.
Future Outlook
Based on the key assumptions outlined below and in the attached data tables, the following statements reflect management's current expectations regarding future operating results and certain events during the Company's guidance period as set forth on pages 11 and 12 of this press release. These statements are forward-looking and actual results may differ materially, particularly given the volatility inherent in, and currently depressed conditions of, the Company's industry. Other than as expressly stated, these statements do not include the potential impact of any significant further decline in commodity prices for oil and natural gas; any additional future repositioning voyages; any additional stacking or reactivation of vessels; unexpected vessel repairs or shipyard delays; or future capital transactions, such as vessel acquisitions, modifications or divestitures, business combinations, possible share or note repurchases or financings that may be commenced after the date of this disclosure. Additional cautionary information concerning forward-looking statements can be found on page 8 of this news release.
Forward Guidance
The Company's forward guidance for selected operating and financial data, outlined below and in the attached data tables, reflects the current state of depressed commodity prices and planned decreases in the capital spending budgets of its customers.
Vessel Counts. As of March 31, 2017, the Company's fleet consisted of 62 new generation OSVs and eight MPSVs. The forecasted vessel counts presented in this press release reflect the two MPSV newbuilds expected to be delivered during fiscal 2018, as discussed below. With an average of 44.8 new generation OSVs and 1.9 MPSVs projected to be stacked during fiscal 2017, the Company's active fleet for 2017 is expected to be comprised of an average of 17.2 new generation OSVs and 6.1 MPSVs. With an assumed average of 46.0 new generation OSVs and 2.0 MPSVs projected to be stacked during fiscal 2018, the Company's active fleet for 2018 is expected to be comprised of an average of 16.0 new generation OSVs and 7.3 MPSVs.
Operating Expenses.Aggregate cash operating expenses are projected to be in the range of $30.0 million to $35.0 million for the second quarter of 2017, and $115.0 million to $130.0 million for the full-year 2017. Reflected in the cash opex guidance ranges above are the anticipated continuing results of several cost containment measures initiated by the Company in 2015 and 2016 due to prevailing market conditions, including, among other actions, the stacking of 46 new generation OSVs, including five 300 class OSVs, and two MPSVs on various dates from October 1, 2014 through March 31, 2017, as well as company-wide headcount reductions and across-the-board pay-cuts for shoreside and vessel personnel. The Company plans to stack four OSVs during the second quarter of 2017 and one additional OSV during the third quarter of 2017. The Company may choose to stack or reactivate additional vessels as market conditions warrant. The cash operating expense estimate above is exclusive of any additional repositioning expenses the Company may incur in connection with the potential relocation of more of its vessels into international markets or back to the GoM, and any customer-required cost-of-sales related to future contract fixtures that are typically recovered through higher dayrates.
G&A Expense.G&A expense is expected to be in the approximate range of $10.5 million to $11.5 million for the second quarter of 2017, and $45.0 million to $50.0 million for the full-year 2017. This full-year G&A range includes the $3.8 million of additional bad debt reserve recorded during the first quarter of 2017.
Other Financial Data.Quarterly depreciation, amortization, net interest expense, cash income taxes, cash interest expense, weighted-average basic shares outstanding and weighted-average diluted shares outstanding for the second quarter of 2017 are projected to be $24.7 million, $3.6 million, $13.8 million, $0.3 million, $11.3 million, 36.8 million and 37.6 million, respectively. As a reminder, please note that GAAP requires the use of basic shares outstanding for diluted EPS when reporting a net loss. Guidance for depreciation, amortization, net interest expense, cash income taxes and cash interest expense for the full fiscal years 2017 and 2018 is provided on page 12 of this press release. The Company's annual effective tax rate is expected to be between 34.0% and 35.0% for fiscal 2017 and between 36.0% and 38.0% for fiscal 2018.
Capital Expenditures Outlook
Update on OSV Newbuild Program #5. The Company's fifth OSV newbuild program consists of four 300 class OSVs, five 310 class OSVs, ten 320 class OSVs, three 310 class MPSVs and two 400 class MPSVs. As of May 3, 2017, the Company has placed 22 vessels in service under this program. The two remaining vessels under this 24-vessel domestic newbuild program, which are 400 class MPSVs, are currently expected to be delivered in the first and third quarters of 2018, respectively.
The Company owns 62 new generation OSVs and eight MPSVs as of March 31, 2017. Based on the projected MPSV in-service dates, the Company expects to own eight and ten MPSVs as of December 31, 2017 and 2018, respectively. These vessel additions result in a projected average MPSV fleet complement of 8.0, 9.3 and 10.0 vessels for the fiscal years 2017, 2018 and 2019, respectively. The aggregate cost of the Company's fifth OSV newbuild program, excluding construction period interest, is expected to be approximately $1,335.0 million, of which $26.1 million and $44.9 million are expected to be incurred in the full fiscal years 2017 and 2018, respectively. From the inception of this program through March 31, 2017, the Company has incurred $1,265.3 million, or 94.8%, of total expected project costs, including $1.3 million that was spent during the first quarter of 2017. The Company expects to incur newbuild project costs of $4.6 million during the second quarter of 2017.
Update on Maintenance Capital Expenditures. Please refer to the attached data table on page 11 of this press release for a summary, by period and by vessel type, of historical and projected data for drydock downtime (in days) and maintenance capital expenditures for each of the quarterly and/or annual periods presented for the fiscal years 2016, 2017 and 2018. Maintenance capital expenditures, which are recurring in nature, primarily include regulatory drydocking charges incurred for the recertification of vessels and other vessel capital improvements that extend or maintain a vessel's economic useful life. The Company expects that its maintenance capital expenditures for its fleet of vessels will be approximately $9.3 million and $14.5 million for the full fiscal years 2017 and 2018, respectively. These cash outlays are expected to be incurred over approximately 206 and 228 days of aggregate commercial downtime in 2017 and 2018, respectively, during which the vessels will not earn revenue.
Update on Other Capital Expenditures. Please refer to the attached data tables on page 11 of this press release for a summary, by period, of historical and projected data for other capital expenditures, for each of the quarterly and/or annual periods presented for the fiscal years 2016, 2017 and 2018. Other capital expenditures, which are generally non-recurring, are comprised of the following: (i) commercial-related vessel improvements, such as the addition of cranes, ROVs, helidecks, living quarters and other specialized vessel equipment, or the modification of vessel capacities or capabilities, such as DP upgrades and mid-body extensions, which costs are typically included in and offset, in whole or in part, by higher dayrates charged to customers; and (ii) non-vessel related capital expenditures, including costs related to the Company's shore-based facilities, leasehold improvements and other corporate expenditures, such as information technology or office furniture and equipment. The Company expects miscellaneous incremental commercial-related vessel improvements and non-vessel capital expenditures to be approximately $1.2 million and $1.0 million, respectively, for the full fiscal years 2017 and 2018, respectively.
Liquidity Outlook
As of March 31, 2017, the Company had a cash balance of $209.1 million. Based on the Company's results for the trailing four quarters, including the first quarter of 2017, the Company designated the interest coverage holiday permitted by the revolving credit facility to commence, effective April 27, 2017, for the four-quarter period ending December 31, 2017, unless rescinded sooner. As a result, the borrowing base will be capped at $75 million during the period of the holiday and the LIBOR spreads for funded borrowings will be increased by an additional 50 basis points during and after the holiday. While the Company remains in compliance with all covenants under the undrawn facility, its ability to access the full, currently applicable, $75 million borrowing base is subject to an anti-cash hoarding provision that, pro forma for deployment of the use of proceeds, limits the Company's cash balance to $50 million at any time the facility is drawn. The Company projects that, even with the currently depressed operating levels, cash generated from operations together with cash on hand should be sufficient to fund its operations and commitments at least through the end of its current guidance period ending December 31, 2018. However, absent a significant recovery of market conditions such that cash flow from operations were to increase materially from projected levels, the Company does not currently expect to have sufficient liquidity to repay the full amount of its three tranches of funded unsecured debt outstanding as they mature in fiscal years 2019, 2020 and 2021, respectively, without refinancing part or all of such debt. Refinancing in the current climate is not likely to be achievable on terms that are in-line with the Company's historic cost of debt capital. The Company remains fully cognizant of the challenges currently facing the offshore oil and gas industry and continues to review its capital structure and assess its strategic options.
Conference Call
The Company will hold a conference call to discuss its first quarter 2017 financial results and recent developments at 10:00 a.m. Eastern (9:00 a.m. Central) tomorrow, May 4, 2017. To participate in the call, dial (412) 902-0030 and ask for the Hornbeck Offshore call at least 10 minutes prior to the start time. To access it live over the Internet, please log onto the web at http://www.hornbeckoffshore.com, on the "Investors" homepage of the Company's website at least fifteen minutes early to register, download and install any necessary audio software. Please call the Company's investor relations firm, Dennard-Lascar, at (713) 529-6600 to be added to its e-mail distribution list for future Hornbeck Offshore news releases. An archived version of the web cast will be available shortly after the call for a period of 60 days on the "Investors" homepage of the Company's website. Additionally, a telephonic replay will be available through May 18, 2017, and may be accessed by calling (201) 612-7415 and using the pass code 13659859#.
Attached Data Tables
The Company has posted an electronic version of the following four pages of data tables, which are downloadable in Microsoft Excel(TM) format, on the "Investors" homepage of the Hornbeck Offshore website for the convenience of analysts and investors.
In addition, the Company uses its website as a means of disclosing material non-public information and for complying with disclosure obligations under SEC Regulation FD. Such disclosures will be included on the Company's website under the heading "Investors." Accordingly, investors should monitor that portion of the Company's website, in addition to following the Company's press releases, SEC filings, public conference calls and webcasts.
Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore service vessels primarily in the Gulf of Mexico and Latin America. Hornbeck Offshore currently owns a fleet of 70 vessels primarily serving the energy industry and has two additional ultra high-spec Upstream vessels under construction for delivery in 2018.
Forward-Looking Statements
This Press Release contains "forward-looking statements," as contemplated by the Private Securities Litigation Reform Act of 1995, in which the Company discusses factors it believes may affect its performance in the future. Forward-looking statements are all statements other than historical facts, such as statements regarding assumptions, expectations, beliefs and projections about future events or conditions. You can generally identify forward-looking statements by the appearance in such a statement of words like "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "might," "plan," "potential," "predict," "project," "remain," "should," "will," or other comparable words or the negative of such words. The accuracy of the Company's assumptions, expectations, beliefs and projections depends on events or conditions that change over time and are thus susceptible to change based on actual experience, new developments and known and unknown risks. The Company gives no assurance that the forward-looking statements will prove to be correct and does not undertake any duty to update them. The Company's actual future results might differ from the forward-looking statements made in this Press Release for a variety of reasons, including sustained low or further declines in oil and natural gas prices; continued weakness in demand for the Company's services through and beyond the maturity of any of the Company's long-term debt; unplanned customer suspensions, cancellations, rate reductions or non-renewals of vessel charters or vessel management contracts or failures to finalize commitments to charter or manage vessels; sustained or further reductions in capital spending budgets by customers; the inability to accurately predict vessel utilization levels and dayrates; fewer than anticipated deepwater and ultra-deepwater drilling units operating in the GoM or other regions where the Company operates; the effect of inconsistency by the United States government in the pace of issuing drilling permits and plan approvals in the GoM or other drilling regions; the Company's inability to successfully complete the remainder of its current vessel newbuild program on-time and on-budget, which involves the construction and integration of highly complex vessels and systems; the inability to successfully market the vessels that the Company owns, is constructing or might acquire; the government's cancellation or non-renewal of the management, operations and maintenance contracts for vessels; an oil spill or other significant event in the United States or another offshore drilling region that could have a broad impact on deepwater and other offshore energy exploration and production activities, such as the suspension of activities or significant regulatory responses; the imposition of laws or regulations that result in reduced exploration and production activities or that increase the Company's operating costs or operating requirements; environmental litigation that impacts customer plans or projects; disputes with customers; bureaucratic, administrative or operating barriers that delay vessels in foreign markets from going on-hire or result in contractual penalties or deductions imposed by foreign customers; the impact stemming from the reduction of Petrobras' announced plans for or administrative barriers to exploration and production activities in Brazil; recent disruption in Mexican offshore activities; age or other restrictions imposed on our vessels by customers; unanticipated difficulty in effectively competing in or operating in international markets; less than anticipated subsea infrastructure and field development demand in the GoM and other markets affecting our MPSVs; sustained vessel over-capacity for existing demand levels in the markets in which the Company competes; economic and geopolitical risks; weather-related risks; upon a return to improved operating conditions, the shortage of or the inability to attract and retain qualified personnel, when needed, including vessel personnel for active vessels or vessels the Company may reactivate or acquire; any success in unionizing the Company's U.S. fleet personnel; regulatory risks; the repeal or administrative weakening of the Jones Act or adverse changes in the interpretation of the Jones Act related to the U.S. citizenship qualification; drydocking delays and cost overruns and related risks; vessel accidents, pollution incidents, or other events resulting in lost revenue, fines, penalties or other expenses that are unrecoverable from insurance policies or other third parties; unexpected litigation and insurance expenses; other industry risks; fluctuations in foreign currency valuations compared to the U.S. dollar and risks associated with expanded foreign operations, such as non-compliance with or the unanticipated effect of tax laws, customs laws, immigration laws, or other legislation that result in higher than anticipated tax rates or other costs; the inability to repatriate foreign-sourced earnings and profits; or the inability of the Company to refinance or otherwise retire funded debt obligations that come due in 2019, 2020 and 2021. In addition, the Company's future results may be impacted by adverse economic conditions, such as inflation, deflation, or lack of liquidity in the capital markets, that may negatively affect it or parties with whom it does business resulting in their non-payment or inability to perform obligations owed to the Company, such as the failure of customers to fulfill their contractual obligations or the failure by individual banks to provide funding under the Company's credit agreement, if required. Further, the Company can give no assurance regarding when and to what extent it will effect common stock or note repurchases. Should one or more of the foregoing risks or uncertainties materialize in a way that negatively impacts the Company, or should the Company's underlying assumptions prove incorrect, the Company's actual results may vary materially from those anticipated in its forward-looking statements, and its business, financial condition and results of operations could be materially and adversely affected and, if sufficiently severe, could result in noncompliance with certain covenants of the Company's currently undrawn revolving credit facility. Additional factors that you should consider are set forth in detail in the "Risk Factors" section of the Company's most recent Annual Report on Form 10-K as well as other filings the Company has made and will make with the Securities and Exchange Commission which, after their filing, can be found on the Company's website www.hornbeckoffshore.com.
Regulation G Reconciliation
This Press Release also contains references to the non-GAAP financial measures of earnings, or net income, before interest, income taxes, depreciation and amortization, or EBITDA, and Adjusted EBITDA. The Company views EBITDA and Adjusted EBITDA primarily as liquidity measures and, therefore, believes that the GAAP financial measure most directly comparable to such measure is cash flows provided by operating activities. Reconciliations of EBITDA and Adjusted EBITDA to cash flows provided by operating activities are provided in the table below. Management's opinion regarding the usefulness of EBITDA to investors and a description of the ways in which management uses such measure can be found in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as in Note 10 to the attached data tables.
Contacts: Todd Hornbeck, CEO
Jim Harp, CFO
Hornbeck Offshore Services
985-727-6802
Ken Dennard, Managing Partner
Dennard-Lascar / 713-529-6600
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(in thousands, except Other Operating and Per Share Data)
Statement of Operations (unaudited):
Three Months Ended
------------------
March 31, December 31, March 31,
2017 2016 2016
---- ---- ----
Revenues $44,079 $41,879 $76,820
Costs and expenses:
Operating expenses 27,935 27,524 40,429
Depreciation and
amortization 28,401 28,583 28,452
General and
administrative
expenses 14,242 13,274 8,674
70,578 69,381 77,555
------ ------ ------
Gain (loss) on
sale of assets 18 18 (45)
--- --- ---
Operating loss (26,481) (27,484) (780)
Other income (expense):
Interest income 401 326 377
Interest expense (13,809) (13,787) (11,064)
Other income
(expense), net
(1) (323) 4 504
---- --- ---
(13,731) (13,457) (10,183)
------- ------- -------
Loss before income
taxes (40,212) (40,941) (10,963)
Income tax benefit (12,314) (21,698) (3,449)
Net loss $(27,898) $(19,243) $(7,514)
======== ======== =======
Earnings per share
Basic loss per
common share $(0.76) $(0.53) $(0.21)
====== ====== ======
Diluted loss per
common share $(0.76) $(0.53) $(0.21)
====== ====== ======
Weighted average
basic shares
outstanding 36,596 36,375 36,085
====== ====== ======
Weighted average
diluted shares
outstanding (2) 36,596 36,375 36,085
====== ====== ======
Other Operating Data (unaudited):
Three Months Ended
------------------
March 31, December 31, March 31,
2017 2016 2016
---- ---- ----
Offshore
Supply
Vessels:
Average
number
of
new
generation
OSVs
(3) 62.0 62.0 61.6
Average
number
of
active
new
generation
OSVs
4 18.1 16.7 27.9
Average
new
generation
OSV
fleet
capacity
(deadweight)
(3) 220,030 219,389 219,398
Average
new
generation
OSV
capacity
(deadweight) 3,549 3,539 3,561
Average
new
generation
utilization
rate
5 19.7% 20.0% 35.1%
Effective
new
generation
utilization
rate
6 67.5% 74.5% 77.4%
Average
new
generation
dayrate
7 $27,767 $24,212 $24,601
Effective
dayrate
8 $5,470 $4,842 $8,635
Balance Sheet Data (unaudited):
As of As of
March 31, December 31,
2017 2016
---- ----
Cash and cash equivalents $209,061 $217,027
Working capital 210,357 225,412
Property, plant and equipment,
net 2,560,426 2,578,388
Total assets 2,845,894 2,878,275
Total long-term debt 1,087,164 1,083,710
Stockholders' equity 1,381,617 1,402,996
Cash Flow Data (unaudited):
Three Months Ended
------------------
March 31, March 31,
2017 2016
---- ----
Cash provided by (used in)
operating activities $(3,619) $39,703
Cash used in investing
activities (3,547) (43,854)
Cash used in financing
activities (573) (450)
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data
(in thousands, except Financial Ratios)
Other Financial Data (unaudited):
Three Months Ended
------------------
March 31, December 31, March 31,
2017 2016 2016
---- ---- ----
Vessel revenues $35,849 $33,266 $68,216
Non-vessel revenues 9 8,230 8,613 8,604
Total revenues $44,079 $41,879 $76,820
======= ======= =======
Operating loss $(26,481) $(27,484) $(780)
Operating deficit (60.1%) (65.6%) (1.0%)
Components of EBITDA 10
Net loss $(27,898) $(19,243) $(7,514)
Interest expense, net 13,408 13,461 10,687
Income tax benefit (12,314) (21,698) (3,449)
Depreciation 24,677 24,773 22,173
Amortization 3,724 3,810 6,279
EBITDA 10 $1,597 $1,103 $28,176
====== ====== =======
Adjustments to EBITDA
Stock-based
compensation expense 2,042 3,426 1,172
Interest income 401 326 377
Adjusted EBITDA 10 $4,040 $4,855 $29,725
====== ====== =======
EBITDA 10 Reconciliation to GAAP:
EBITDA 10 $1,597 $1,103 $28,176
Cash paid for deferred
drydocking charges (3,129) (764) (1,207)
Cash paid for interest (13,756) (11,281) (13,787)
Cash paid for taxes (349) (1,044) (1,752)
Changes in working
capital 6,246 4,955 27,159
Stock-based
compensation expense 2,042 3,426 1,172
(Gain) loss on sale of
assets (18) (18) 45
Changes in other, net 3,748 (38) (103)
Net cash provided by
(used in) operating
activities $(3,619) $(3,661) $39,703
======= ======= =======
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data
Capital Expenditures and Drydock Downtime Data
(unaudited):
Historical Data:
Three Months Ended
------------------
March 31, December 31, March 31,
2017 2016 2016
---- ---- ----
Drydock Downtime:
New-Generation OSVs
Number of vessels
commencing drydock
activities 2.0 1.0 2.0
Commercial downtime
(in days) 61 22 63
MPSVs
Number of vessels
commencing drydock
activities 2.0 1.0 -
Commercial downtime
(in days) 19 26 -
Commercial-related Downtime11:
New-Generation OSVs
Number of vessels
commencing
commercial-related
downtime - 1.0 -
Commercial downtime
(in days) - 36 -
MPSVs
Number of vessels
commencing
commercial-related
downtime - 1.0 1.0
Commercial downtime
(in days) - 40 149
Maintenance and Other Capital Expenditures (in
thousands):
Maintenance Capital Expenditures:
Deferred drydocking
charges $3,129 $764 $1,207
Other vessel capital
improvements 103 67 3,519
3,232 831 4,726
----- --- -----
Other Capital Expenditures:
Commercial-related
vessel improvements 58 1,916 6,829
Non-vessel related
capital expenditures 130 155 266
188 2,071 7,095
--- ----- -----
$3,420 $2,902 $11,821
====== ====== =======
Growth Capital Expenditures (in thousands):
OSV newbuild program
#5 $1,302 $1,091 $29,507
====== ====== =======
Forecasted Data12:
1Q 2017A 2Q 2017E 3Q 2017E 4Q 2017E 2017E 2018E
-------- -------- -------- -------- ----- -----
Drydock Downtime:
New-Generation OSVs
Number of vessels
commencing drydock
activities 2.0 2.0 3.0 3.0 10.0 10.0
Commercial downtime
(in days) 61 25 43 33 162 228
MPSVs
Number of vessels
commencing drydock
activities 2.0 - - - 2.0 -
Commercial downtime
(in days) 19 25 - - 44 -
Commercial-related
Downtime11:
New-Generation OSVs
Number of vessels
commencing
commercial-related
downtime - - - - - -
Commercial downtime
(in days) - - - - - -
MPSVs
Number of vessels
commencing
commercial-related
downtime - - - - - -
Commercial downtime
(in days) - - - - - -
Maintenance and Other
Capital Expenditures
(in millions):
Maintenance Capital
Expenditures:
Deferred drydocking
charges $3.1 $3.1 $1.4 $0.8 $8.4 $13.9
Other vessel capital
improvements 0.1 0.5 0.2 0.1 0.9 0.6
3.2 3.6 1.6 0.9 9.3 14.5
--- --- --- --- --- ----
Other Capital
Expenditures:
Commercial-related
vessel improvements 0.1 0.2 - - 0.3 -
Non-vessel related
capital expenditures 0.1 0.5 0.2 0.1 0.9 1.0
0.2 0.7 0.2 0.1 1.2 1.0
--- --- --- --- --- ---
$3.4 $4.3 $1.8 $1.0 $10.5 $15.5
==== ==== ==== ==== ===== =====
Growth Capital
Expenditures (in
millions):
OSV newbuild program
#5 $1.3 $4.6 $9.7 $10.5 $26.1 $44.9
-------------------- ==== ==== ==== ===== ===== =====
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Fleet and Financial Data
(in millions, except Average Vessels, Contract Backlog and Tax Rate)
Forward Guidance of Selected Data (unaudited):
2Q 2017E Full-Year 2017E Full-Year 2018E
Avg Vessels Avg Vessels Avg Vessels
----------- ----------- -----------
Fleet Data (as of 3-May-2017):
New generation
OSVs -Active 18.9 17.2 16.0
New generation
OSVs -Stacked
13 43.1 44.8 46.0
New generation
OSVs -Total 62.0 62.0 62.0
New generation
MPSVs -Active 6.2 6.1 7.3
New generation
MPSVs -Stacked
14 1.8 1.9 2.0
--- --- ---
New generation
MPSVs -Total 8.0 8.0 9.3
Total 70.0 70.0 71.3
==== ==== ====
2Q 2017E Range Full-Year 2017E Range
-------------- ---------------------
Cost Data: Low15 High 15 Low15 High 15
----- ------- ----- -------
Operating expenses $30.0 $35.0 $115.0 $130.0
General and
administrative
expenses $10.5 $11.5 $45.0 $50.0
1Q 2017A 2Q 2017E 3Q 2017E 4Q 2017E 2017E 2018E
-------- -------- -------- -------- ----- -----
Other Financial
Data:
Depreciation $24.7 $24.7 $24.7 $24.6 $98.7 $102.2
Amortization 3.7 3.6 2.7 2.3 12.3 9.1
Interest expense,
net:
Interest expense $13.5 $13.5 $13.5 $13.5 $54.0 $54.0
Incremental non-
cash OID interest
expense 16 2.7 2.8 2.8 2.8 11.1 11.8
Capitalized interest (2.4) (2.3) (2.4) (2.6) (9.7) (4.6)
Interest income (0.4) (0.2) (0.2) (0.2) (1.0) (0.5)
Total interest
expense, net $13.4 $13.8 $13.7 $13.5 $54.4 $60.7
Income tax rate 30.6% 35.0% 35.0% 35.0% 34.0% 37.0%
Cash income taxes $0.3 $0.3 $0.3 $0.3 $1.2 $2.1
Cash interest
expense 13.8 11.3 13.8 11.3 50.2 50.2
Weighted average
basic shares
outstanding 36.6 36.8 37.0 37.0 36.8 37.5
Weighted average
diluted shares
outstanding 17 37.4 37.6 37.8 37.8 37.7 38.3
(1) Represents
other income
and expenses,
including
equity in
income from
investments
and foreign
currency
transaction
gains or
losses.
(2) Due to net
losses for the
three months
ended March
31, 2017,
December 31,
2016, and
March 31,
2016, the
Company
excluded the
dilutive
effect of
equity awards
representing
the rights to
acquire 978,
981 and 939
shares of
common stock,
respectively,
because the
effect was
anti-
dilutive. As
of March 31,
2017, December
31, 2016, and
March 31,
2016, the
1.500%
convertible
senior notes
were not
dilutive, as
the average
price of the
Company's
stock was less
than the
effective
conversion
price of
$68.53 for
such notes.
(3) The Company
owned 62 new
generation
OSVs as of
March 31,
2017.
Excluded from
this data are
eight MPSVs
owned by the
Company.
4 In response to
weak market
conditions,
the Company
elected to
stack certain
of its new
generation
OSVs on
various dates
since October
1, 2014.
Active new
generation
OSVs represent
vessels that
are
immediately
available for
service during
each
respective
period.
5 Average
utilization
rates are
based on a
365-day year
for all active
and stacked
vessels.
Vessels are
considered
utilized when
they are
generating
revenues.
6 Effective
utilization
rate is based
on a
denominator
comprised only
of vessel-
days available
for service by
the active
fleet, which
excludes the
impact of
stacked vessel
days.
7 Average new
generation OSV
dayrates
represent
average
revenue per
day, which
includes
charter hire,
crewing
services, and
net brokerage
revenues,
based on the
number of days
during the
period that
the OSVs
generated
revenues.
8 Effective
dayrate
represents the
average
dayrate
multiplied by
the average
new generation
utilization
rate for the
respective
period.
9 Represents
revenues from
shore-based
operations,
vessel-
management
services,
including from
the O&M
contract with
the U.S. Navy,
and ancillary
equipment
rentals,
including from
ROVs.
10 Non-GAAP
Financial
Measure
The Company
discloses and
discusses
EBITDA as a
non-GAAP
financial
measure in its
public
releases,
including
quarterly
earnings
releases,
investor
conference
calls and
other filings
with the
Securities and
Exchange
Commission.
The Company
defines EBITDA
as earnings
(net income)
before
interest,
income taxes,
depreciation
and
amortization.
The Company's
measure of
EBITDA may not
be comparable
to similarly
titled
measures
presented by
other
companies.
Other
companies may
calculate
EBITDA
differently
than the
Company, which
may limit its
usefulness as
a comparative
measure.
The Company
views EBITDA
primarily as a
liquidity
measure and,
as such,
believes that
the GAAP
financial
measure most
directly
comparable to
it is cash
flows provided
by operating
activities.
Because EBITDA
is not a
measure of
financial
performance
calculated in
accordance
with GAAP, it
should not be
considered in
isolation or
as a
substitute for
operating
income, net
income or
loss, cash
flows provided
by operating,
investing and
financing
activities, or
other income
or cash flow
statement data
prepared in
accordance
with GAAP.
EBITDA is
widely used by
investors and
other users of
the Company's
financial
statements as
a supplemental
financial
measure that,
when viewed
with GAAP
results and
the
accompanying
reconciliations,
the Company
believes
provides
additional
information
that is useful
to gain an
understanding
of the factors
and trends
affecting its
ability to
service debt,
pay deferred
taxes and fund
drydocking
charges and
other
maintenance
capital
expenditures.
The Company
also believes
the disclosure
of EBITDA
helps
investors
meaningfully
evaluate and
compare its
cash flow
generating
capacity from
quarter to
quarter and
year to year.
EBITDA is also
a financial
metric used by
management (i)
as a
supplemental
internal
measure for
planning and
forecasting
overall
expectations
and for
evaluating
actual results
against such
expectations;
(ii) as a
significant
criteria for
annual
incentive cash
bonuses paid
to the
Company's
executive
officers and
other shore-
based
employees;
(iii) to
compare to the
EBITDA of
other
companies when
evaluating
potential
acquisitions;
and (iv) to
assess the
Company's
ability to
service
existing fixed
charges and
incur
additional
indebtedness.
In addition,
the Company
also makes
certain
adjustments,
as applicable,
to EBITDA for
losses on
early
extinguishment
of debt,
stock-based
compensation
expense and
interest
income, or
Adjusted
EBITDA, to
internally
evaluate its
performance
based on the
computation of
ratios used in
certain
financial
covenants of
its credit
agreements
with various
lenders. The
Company
believes that
these ratios
can be
material
components of
financial
covenants and,
when
applicable,
failure to
comply with
such covenants
could result
in the
acceleration
of
indebtedness
or the
imposition of
restrictions
on the
Company's
financial
flexibility.
Set forth below
are the
material
limitations
associated
with using
EBITDA as a
non-GAAP
financial
measure
compared to
cash flows
provided by
operating
activities.
--EBITDA does not reflect the
future capital expenditure
requirements that may be
necessary to replace the
Company's existing vessels as
a result of normal wear and
tear,
-- EBITDA does not reflect the
interest, future principal
payments and other financing-
related charges necessary to
service the debt that the
Company has incurred in
acquiring and constructing its
vessels,
-- EBITDA does not reflect the
deferred income taxes that the
Company will eventually have
to pay once it is no longer in
an overall tax net operating
loss position, as applicable,
and
-- EBITDA does not reflect
changes in the Company's net
working capital position.
Management
compensates
for the above-
described
limitations in
using EBITDA
as a non-GAAP
financial
measure by
only using
EBITDA to
supplement the
Company's GAAP
results.
11 Commercial-
related
Downtime
results from
commercial-
related vessel
improvements,
such as the
addition of
cranes, ROVs,
helidecks,
living
quarters and
other
specialized
vessel
equipment; the
modification
of vessel
capacities or
capabilities,
such as DP
upgrades and
mid-body
extensions,
which costs
are typically
included in
and offset, in
whole or in
part, by
higher
dayrates
charged to
customers; and
the
speculative
relocation of
vessels from
one geographic
market to
another.
12 The capital
expenditure
amounts
included in
this table are
anticipated
cash outlays
before the
allocation of
construction
period
interest, as
applicable.
13 As of May 3,
2017, the
Company's
inactive fleet
of 41 new
generation
OSVs that were
"stacked" was
comprised of
the following:
eleven 200
class OSVs,
twenty-two
240 class
OSVs, three
265 class OSVs
and five 300
class OSVs.
In addition,
the Company
plans to stack
four 240 class
OSVs during
the second
quarter of
2017 and one
additional 200
class OSV
during the
third quarter
of 2017.
14 As of May 3,
2017, the
Company's
inactive fleet
of two new
generation
MPSVs that
were "stacked"
was comprised
of the
following: one
300 class MPSV
and one 430
class MPSV.
15 The "low" and
"high" ends of
the guidance
ranges set
forth in this
table are not
intended to
cover
unexpected
variations
from currently
anticipated
market
conditions.
These ranges
provide only a
reasonable
deviation from
the conditions
that are
expected to
occur.
16 Represents
incremental
imputed non-
cash OID
interest
expense
required by
accounting
standards
pertaining to
the Company's
1.500%
convertible
senior notes
due 2019.
17 Projected
weighted-
average
diluted shares
do not reflect
any potential
dilution
resulting from
the Company's
1.500%
convertible
senior notes.
Warrants
related to the
Company's
1.500%
convertible
senior notes
become
dilutive when
the average
price of the
Company's
stock exceeds
the effective
conversion
price for such
notes of
$68.53.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/hornbeck-offshore-announces-first-quarter-2017-results-300450987.html
SOURCE Hornbeck Offshore Services, Inc.
