HORNBECK OFFSHORE SERVICES, INC. COVINGTON, La., Nov. 1, 2017 /PRNewswire/ -- Hornbeck Offshore Services, Inc. (NYSE:HOS) announced today results for the third quarter ended September 30, 2017. Following is an executive summary for this period and the Company's future outlook:
-- 3Q2017 diluted EPS was $(0.51), an improvement of $0.02, or 4%, from
2Q2017 diluted EPS of $(0.53)
-- 3Q2017 net loss was $(19.0) million, an improvement of $0.5 million, or
3%, from 2Q2017 net loss of $(19.5) million
-- 3Q2017 EBITDA was $10.6 million, a decrease of $1.6 million, or 13%,
from 2Q2017 EBITDA of $12.2 million
-- 3Q2017 average new gen OSV dayrates were $18,483, a sequential increase
of $1,281, or 7%
-- 3Q2017 effective new gen OSV dayrates were $4,861, a sequential increase
of $1,025, or 27%
-- 3Q2017 utilization of the Company's new gen OSV fleet was 26%, up from
22% sequentially
-- 3Q2017 effective utilization of the Company's active new gen OSVs was
86%, up from 67% sequentially
-- The Company currently has 43 OSVs stacked and expects to have a total of
45 OSVs stacked by the end of 4Q2017
-- Quarter-end cash was $113 million, down from $125 million sequentially,
with $66 million of newbuild growth capex remaining to be funded
-- 3Q2017 total liquidity (cash and credit availability) of $317 million
represents a decrease of $12 million, or 4%, from 2Q2017
The Company recorded a net loss for the third quarter of 2017 of $(19.0) million, or $(0.51) per diluted share, compared to $(16.5) million, or $(0.45) per diluted share, for the year-ago quarter; and $(19.5) million, or $(0.53) per diluted share, for the second quarter of 2017. Included in the Company's second quarter 2017 results is a $15.5 million ($10.5 million after-tax or $0.29 per diluted share) net gain on early extinguishment of debt resulting from the repurchase of a portion of the Company's 1.500% Convertible Senior Notes due 2019 and 5.875% Senior Notes due 2020, offset in part by the write-off of certain related deal costs, unamortized financing costs and original issue discount. Excluding the impact of such net gain on early extinguishment of debt, net loss and diluted EPS for the second quarter of 2017 would have been $(30.0) million and $(0.82) per share, respectively. After adjusting for these reconciling items included in the second quarter of 2017, the third quarter net loss and diluted EPS would have been $11.0 million and $0.31 per share higher than the sequential quarter, respectively. Diluted common shares for the third quarter of 2017 were 37.0 million compared to 36.3 million and 36.8 million for the third quarter of 2016 and the second quarter of 2017, respectively. GAAP requires the use of basic shares outstanding for diluted EPS when reporting a net loss. EBITDA for the third quarter of 2017 was $10.6 million compared to $15.2 million for the third quarter of 2016 and $12.2 million for the second quarter of 2017. Excluding the net gain on early extinguishment of debt in the second quarter of 2017, sequential EBITDA would have been $(3.3) million. For additional information regarding EBITDA as a non-GAAP financial measure, please see Note 10 to the accompanying data tables.
Revenues. Revenues were $53.7 million for the third quarter of 2017, an increase of $1.8 million, or 3.5%, from $51.9 million for the third quarter of 2016; and an increase of $16.3 million, or 43.6%, from $37.4 million for the second quarter of 2017. The year-over-year increase in revenues was primarily due to improved market conditions for the Company's MPSVs, partially offset by weak market conditions worldwide and the repricing or stacking of four OSVs, which concluded long-term contracts that were working at dayrates above current market levels. The sequential increase in revenues was primarily attributable to higher average dayrates for our MPSV fleet and seasonally higher utilization across the Company's active fleet of OSVs in the GoM. As of September 30, 2017, the Company had 44 OSVs stacked. For the three months ended September 30, 2017, the Company had an average of 43.0 vessels stacked compared to 44.1 vessels stacked in the prior-year quarter and 42.5 vessels stacked in the sequential quarter. Operating loss was $(16.7) million, or (31.1)% of revenues, for the third quarter of 2017 compared to an operating loss of $(14.4) million, or (27.8)% of revenues, for the prior-year quarter; and an operating loss of $(31.3) million, or (83.7)% of revenues, for the second quarter of 2017. Average new generation OSV dayrates for the third quarter of 2017 were $18,483 compared to $25,639 for the same period in 2016 and $17,202 for the second quarter of 2017. New generation OSV utilization was 26.3% for the third quarter of 2017 compared to 22.0% for the year-ago quarter and 22.3% for the sequential quarter. Excluding stacked vessel days, the Company's new generation OSV effective utilization was 85.8%, 76.3% and 66.6% for the same periods, respectively. Utilization-adjusted, or effective, new generation OSV dayrates for the third quarter of 2017 were $4,861 compared to $5,641 for the same period in 2016 and $3,836 for the second quarter of 2017.
Operating Expenses. Operating expenses were $30.1 million for the third quarter of 2017, an increase of $0.7 million, or 2.4%, from $29.4 million for the third quarter of 2016; and a decrease of $1.3 million, or 4.1%, from $31.4 million for the second quarter of 2017. The year-over-year increase in operating expenses was primarily due to a higher average number of active vessels in the Company's fleet. The sequential decrease in operating expenses was primarily due to lower maintenance and repair expenses.
General and Administrative ("G&A"). G&A expense was $12.9 million for the third quarter of 2017 compared to $9.0 million for the third quarter of 2016; and $9.4 million for the second quarter of 2017. The year-over-year increase in G&A expense was primarily attributable to higher professional fees related to the Company's on-going liability management activities, short-term incentive compensation, long-term incentive compensation and bad debt expense. The sequential increase in G&A expense was primarily due to an increase in fees associated with the Company's on-going liability management activities and higher long-term incentive compensation expense. Long-term incentive compensation was higher than the prior-year period and sequential quarter due to a "mark to market" adjustment on cash-settled awards to reflect the increase in the Company's stock price during the three months ended September 30, 2017.
Depreciation and Amortization. Depreciation and amortization expense was $27.2 million for the third quarter of 2017, or $0.9 million and $0.8 million lower than the year-ago quarter and sequential quarter, respectively. Depreciation increased by $1.2 million over the year-ago quarter primarily due to the addition of two vessels that were placed in service under the Company's fifth OSV newbuild program since June 30, 2016. The depreciation increase was more than offset by a decrease in amortization expense of $2.1 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 $12.0 million during the third quarter of 2017, or $0.9 million lower than the prior-year quarter. The decrease was primarily due to the write-off of fees associated with the amendment to the Company's revolving credit facility during the year-ago period and lower interest expense associated with the debt exchange and termination of the then-existing credit facility that was completed during the sequential quarter. These favorable differences were partially offset by a decrease in capitalized interest during the three months ended September 30, 2017. The Company recorded $2.7 million of capitalized construction period interest, or roughly 18% of its total interest costs, for the third quarter of 2017 compared to $4.2 million, or roughly 25% of its total interest costs, for the year-ago quarter.
Nine Month Results
Revenue for the first nine months of 2017 decreased 25.9% to $135.2 million compared to $182.4 million for the same period in 2016. Operating loss was $(74.5) million, or (55.1)% of revenues, for the first nine months of 2017 compared to an operating loss of $(36.7) million, or (20.1)% of revenues, for the prior-year period. Net loss for the first nine months of 2017 increased $21.7 million to a net loss of $(66.3) million, or $(1.80) per diluted share, compared to a net loss of $(44.6) million, or $(1.23) per diluted share, for the first nine months of 2016. EBITDA for the first nine months of 2017 decreased 51.5% to $24.4 million compared to $50.3 million for the first nine months of 2016. Included in the Company's results for the nine months ended September 30, 2017 are revenues of $9.4 million for a vessel redelivery fee and $3.8 million of additional bad debt expense in the first quarter of 2017 and a $15.5 million net gain on early extinguishment of debt in the second quarter of 2017. Excluding the impact of these reconciling items, net loss, diluted EPS and EBITDA for the first nine months of 2017 would have been $(80.7) million, $(2.19) per share and $3.3 million, respectively. The year-over-year decrease in vessel revenues primarily resulted from soft market conditions in the GoM, which led to the Company's decision to stack an average of 3.5 incremental vessels on various dates from December 2015 through September 30, 2017. For the nine months ended September 30, 2017, the Company had an average of 43.4 vessels stacked compared to 39.9 vessels stacked in the prior-year period.
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 the 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 September 30, 2017, the Company's fleet of owned vessels 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 43.2 new generation OSVs and 0.8 MPSVs projected to be stacked during fiscal 2017, the Company's active fleet for 2017 is expected to be comprised of an average of 18.8 new generation OSVs and 7.2 MPSVs. With an assumed average of 45.0 new generation OSVs and no MPSVs projected to be stacked during fiscal 2018, the Company's active fleet for 2018 is expected to be comprised of an average of 17.0 new generation OSVs and 8.6 MPSVs.
Operating Expenses.Aggregate cash operating expenses are projected to be in the range of $30.0 million to $35.0 million for the fourth quarter of 2017, and $119.4 million to $124.4 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 since the fourth quarter of 2014 due to prevailing market conditions, including, among other actions, the stacking of new generation OSVs and MPSVs on various dates from October 1, 2014 through September 30, 2017, as well as company-wide headcount reductions and across-the-board pay-cuts for shoreside and vessel personnel. Since the end of the third quarter of 2017, the Company has activated one 240 class OSV. Additionally, the Company plans to stack two 240 class OSVs during the remainder of the fourth 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 $11.0 million to $13.0 million for the fourth quarter of 2017, and $47.6 million to $49.6 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 fourth quarter of 2017 are projected to be $24.7 million, $2.2 million, $12.0 million, $(10.1) million, $12.6 million, 37.0 million and 37.9 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 32.0% and 34.0% for fiscal 2017 and fiscal 2018, respectively.
Capital Expenditures Outlook
Update on OSV Newbuild Program #5. The two remaining vessels under the Company's nearly completed 24-vessel domestic newbuild program, which are 400 class MPSVs, are currently expected to be delivered in the third and fourth quarters of 2018, respectively.
The Company owns 62 new generation OSVs and eight MPSVs as of September 30, 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, 8.6 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 $10.3 million and $60.7 million are expected to be incurred in the full fiscal years 2017 and 2018, respectively. From the inception of this program through September 30, 2017, the Company has incurred $1,269.5 million, or 95.1%, of total expected project costs, including $2.6 million that was spent during the third quarter of 2017. The Company expects to incur newbuild project costs of $4.8 million during the fourth 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 $10.5 million and $16.1 million for the full fiscal years 2017 and 2018, respectively. These cash outlays are expected to be incurred over approximately 243 and 217 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 $3.3 million and $1.2 million, respectively, for the full fiscal years 2017 and 2018, respectively. These cash outlays are expected to be incurred over approximately 36 days of aggregate commercial downtime in 2017, during which the vessels will not earn revenue.
Liquidity Outlook
As of September 30, 2017, the Company's total liquidity (cash and credit availability) was $316.5 million, comprised of $112.8 million of cash and $203.7 million of availability under the First-Lien Credit Facility, which represents a decrease of $12.0 million, or 4%, from the end of the second quarter. The Company projects that, even with the currently depressed operating levels, cash generated from operations together with cash on hand and availability under the First-Lien Credit Facility should be sufficient to fund its operations and commitments through at least December 31, 2019. However, absent a significant recovery of market conditions such that cash flow from operations were to increase materially from projected levels and/or further management of its funded debt obligations, the Company does not currently expect to have sufficient liquidity to repay the full amount of its 5.875% Senior Notes and 5.000% Senior Notes as they mature in fiscal years 2020 and 2021, respectively. 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 third quarter 2017 financial results and recent developments at 10:00 a.m. Eastern (9:00 a.m. Central) tomorrow, November 2, 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 November 16, 2017, and may be accessed by calling (201) 612-7415 and using the pass code 13671917#.
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 in the U.S. and worldwide; 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; disruption in the timing and/or extent of 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; 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 certain 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 lenders to provide funding under the Company's New Credit Facility, if and when 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 existing indebtedness. 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 Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Revenues $53,666 $37,426 $51,927 $135,171 $182,420
Costs and expenses:
Operating expenses 30,082 31,368 29,375 89,385 104,134
Depreciation and
amortization 27,155 27,945 28,047 83,501 84,973
General and
administrative
expenses 12,899 9,432 9,031 36,573 30,084
70,136 68,745 66,453 209,459 219,191
------ ------ ------ ------- -------
Gain (loss) on sale of
assets (197) 1 81 (178) 36
---- --- --- ---- ---
Operating loss (16,667) (31,318) (14,445) (74,466) (36,735)
Other income (expense):
Gain on early
extinguishment of
debt - 15,478 - 15,478 -
Interest income 447 464 401 1,312 1,164
Interest expense (11,956) (13,429) (12,820) (39,194) (34,888)
Other income
(expense), net (1) 106 54 1,592 (163) 2,048
--- --- ----- ---- -----
(11,403) 2,567 (10,827) (22,567) (31,676)
------- ----- ------- ------- -------
Loss before income
taxes (28,070) (28,751) (25,272) (97,033) (68,411)
Income tax benefit (9,120) (9,262) (8,769) (30,696) (23,808)
Net loss $(18,950) $(19,489) $(16,503) $(66,337) $(44,603)
======== ======== ======== ======== ========
Earnings per share
Basic loss per common
share $(0.51) $(0.53) $(0.45) $(1.80) $(1.23)
====== ====== ====== ====== ======
Diluted loss per
common share $(0.51) $(0.53) $(0.45) $(1.80) $(1.23)
====== ====== ====== ====== ======
Weighted average basic
shares outstanding 37,013 36,769 36,338 36,794 36,205
====== ====== ====== ====== ======
Weighted average
diluted shares
outstanding (2) 37,013 36,769 36,338 36,794 36,205
====== ====== ====== ====== ======
Other Operating Data (unaudited):
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Offshore Supply Vessels:
Average number of new
generation OSVs (3) 62.0 62.0 62.0 62.0 61.9
Average number of
active new generation
OSVs 4 19.0 20.7 17.9 19.6 22.0
Average new generation
OSV fleet capacity
(deadweight) (3) 220,172 220,172 221,629 220,172 220,885
Average new generation
OSV capacity
(deadweight) 3,551 3,551 3,575 3,551 3,570
Average new generation
utilization rate 5 26.3% 22.3% 22.0% 22.8% 27.0%
Effective new
generation
utilization rate 6 85.8% 66.6% 76.3% 71.9% 76.0%
Average new generation
dayrate 7 $18,483 $17,202 $25,639 $20,709 $25,488
Effective dayrate 8 $4,861 $3,836 $5,641 $4,722 $6,882
Balance Sheet Data (unaudited):
As of As of
September 30, December 31,
2017 2016
---- ----
Cash and cash
equivalents $112,836 $217,027
Working capital 127,454 225,412
Property, plant and
equipment, net 2,522,042 2,578,388
Total assets 2,721,188 2,878,275
Total long-term debt 1,014,031 1,083,710
Stockholders' equity 1,345,681 1,402,996
Cash Flow Data (unaudited):
Nine Months Ended
-----------------
September 30, September 30,
2017 2016
---- ----
Cash provided by (used
in) operating
activities $(29,203) $57,161
Cash used in investing
activities (15,096) (91,812)
Cash used in financing
activities (59,661) (820)
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data
(in thousands, except Financial Ratios)
Other Financial Data (unaudited):
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Vessel revenues $45,637 $29,339 $43,670 $110,825 $157,170
Non-vessel revenues 9 8,029 8,087 8,257 24,346 25,250
Total revenues $53,666 $37,426 $51,927 $135,171 $182,420
======= ======= ======= ======== ========
Operating loss $(16,667) $(31,318) $(14,445) $(74,466) $(36,735)
Operating deficit (31.1%) (83.7%) (27.8%) (55.1%) (20.1%)
Components of EBITDA 10
Net loss $(18,950) $(19,489) $(16,503) $(66,337) $(44,603)
Interest expense, net 11,509 12,965 12,419 37,882 33,724
Income tax benefit (9,120) (9,262) (8,769) (30,696) (23,808)
Depreciation 24,682 24,679 23,467 74,038 68,298
Amortization 2,473 3,266 4,580 9,463 16,675
EBITDA 10 $10,594 $12,159 $15,194 $24,350 $50,286
======= ======= ======= ======= =======
Adjustments to EBITDA
Stock-based
compensation expense $2,726 $972 $2,341 $5,740 $6,557
Interest income 447 464 401 1,312 1,164
Adjusted EBITDA 10 $13,767 $13,595 $17,936 $31,402 $58,007
======= ======= ======= ======= =======
EBITDA 10 Reconciliation to GAAP:
EBITDA 10 $10,594 $12,159 $15,194 $24,350 $50,286
Cash paid for deferred
drydocking charges (995) (2,826) (897) (6,950) (3,214)
Cash paid for interest (13,829) (12,443) (13,784) (40,028) (38,871)
Cash paid for taxes (334) (361) (446) (1,044) (2,688)
Changes in working
capital (3,336) (2,813) 13,711 97 45,396
Stock-based
compensation expense 2,726 972 2,341 5,740 6,557
Gain on early
extinguishment of debt - (15,478) - (15,478) -
(Gain) loss on sale of
assets 197 (1) (81) 178 (36)
Changes in other, net (100) 284 (1,573) 3,932 (719)
Net cash provided by
(used in) operating
activities $(5,077) $(20,507) $14,465 $(29,203) $56,711
======= ======== ======= ======== =======
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data
Capital Expenditures and Drydock Downtime Data (unaudited):
Historical Data:
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, June 30, September 30, September 30, September 30,
2017 2017 2016 2017 2016
---- ---- ---- ---- ----
Drydock Downtime:
New-Generation OSVs
Number of vessels commencing drydock activities 2.0 5.0 - 9.0 3.0
Commercial downtime (in days) 2 68 - 131 147
MPSVs
Number of vessels commencing drydock activities - 2.0 - 4.0 -
Commercial downtime (in days) - 29 - 48 -
Commercial-related Downtime11:
New-Generation OSVs
Number of vessels commencing commercial-related downtime - - - - 1.0
Commercial downtime (in days) - - 43 - 70
MPSVs
Number of vessels commencing commercial-related downtime - - - - 2.0
Commercial downtime (in days) - - - - 201
Maintenance and Other Capital Expenditures (in thousands):
Maintenance Capital Expenditures:
Deferred drydocking charges $995 $2,826 $897 $6,950 $3,214
Other vessel capital improvements 654 183 (401) 940 5,272
1,649 3,009 496 7,890 8,486
----- ----- --- ----- -----
Other Capital Expenditures:
Commercial-related vessel improvements 160 141 2,549 359 13,434
Non-vessel related capital expenditures 920 418 139 1,468 414
1,080 559 2,688 1,827 13,848
----- --- ----- ----- ------
$2,729 $3,568 $3,184 $9,717 $22,334
====== ====== ====== ====== =======
Growth Capital Expenditures (in thousands):
OSV newbuild program #5 $2,585 $1,618 $6,818 $5,505 $61,352
====== ====== ====== ====== =======
Forecasted Data12:
1Q 2017A 2Q 2017A 3Q 2017A 4Q 2017E 2017E 2018E
-------- -------- -------- -------- ----- -----
Drydock Downtime:
New-Generation OSVs
Number of vessels commencing drydock activities 2.0 5.0 2.0 3.0 12.0 7.0
Commercial downtime (in days) 61 68 2 64 195 175
MPSVs
Number of vessels commencing drydock activities 2.0 2.0 - - 4.0 1.0
Commercial downtime (in days) 19 29 - - 48 42
Commercial-related Downtime11:
New-Generation OSVs
Number of vessels commencing commercial-related downtime - - - 1.0 1.0 -
Commercial downtime (in days) - - - 36 36 -
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 $2.9 $1.0 $2.2 $9.2 $12.7
Other vessel capital improvements 0.1 0.2 0.6 0.4 1.3 3.4
3.2 3.1 1.6 2.6 10.5 16.1
--- --- --- --- ---- ----
Other Capital Expenditures:
Commercial-related vessel improvements 0.1 0.1 0.2 1.4 1.8 0.2
Non-vessel related capital expenditures 0.1 0.4 0.9 0.1 1.5 1.0
0.2 0.5 1.1 1.5 3.3 1.2
--- --- --- --- --- ---
$3.4 $3.6 $2.7 $4.1 $13.8 $17.3
==== ==== ==== ==== ===== =====
Growth Capital Expenditures (in millions):
OSV newbuild program #5 $1.3 $1.6 $2.6 $4.8 $10.3 $60.7
==== ==== ==== ==== ===== =====
Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Fleet and Financial Data
(in millions, except Average Vessels and Tax Rate)
Forward Guidance of Selected Data (unaudited):
4Q 2017E Full-Year 2017E Full-Year 2018E
Avg Vessels Avg Vessels Avg Vessels
----------- ----------- -----------
Fleet Data (as of 1-Nov-2017):
New generation OSVs -
Active 17.5 18.8 17.0
New generation OSVs -
Stacked 13 44.5 43.2 45.0
New generation OSVs -
Total 62.0 62.0 62.0
New generation MPSVs -
Active 8.0 7.2 8.6
New generation MPSVs -
Stacked - 0.8 -
--- --- ---
New generation MPSVs -
Total 8.0 8.0 8.6
Total 70.0 70.0 70.6
==== ==== ====
4Q 2017E Range Full-Year 2017E Range
-------------- ---------------------
Cost Data: Low14 High 14 Low14 High 14
----- ------- ----- -------
Operating expenses $30.0 $35.0 $119.4 $124.4
General and
administrative expenses $11.0 $13.0 $47.6 $49.6
1Q 2017A 2Q 2017A 3Q 2017A 4Q 2017E 2017E 2018E
-------- -------- -------- -------- ----- -----
Other Financial Data:
Depreciation $24.7 $24.7 $24.7 $24.7 $98.8 $99.1
Amortization 3.7 3.3 2.5 2.2 11.7 8.8
Interest expense, net:
Interest expense 15 $13.5 $13.6 $14.6 $14.6 $56.3 $64.3
Incremental non-cash
OID interest expense 16 2.7 2.5 0.9 0.9 7.0 4.0
Amortization of deferred
gain 17 - (0.2) (0.9) (0.8) (1.9) (3.2)
Capitalized interest (2.4) (2.5) (2.7) (2.4) (10.0) (10.1)
Interest income (0.4) (0.5) (0.4) (0.3) (1.6) (1.0)
Total interest expense,
net $13.4 $12.9 $11.5 $12.0 $49.8 $54.0
Income tax rate 30.6% 32.2% 32.5% 35.0% 32.5% 34.0%
Cash paid for (refunds
of) income taxes $0.3 $0.4 $0.3 $(10.1) $(9.1) $1.4
Cash paid for interest
15 13.8 12.4 13.8 12.6 52.6 58.8
Weighted average basic
shares outstanding 36.6 36.8 37.0 37.0 36.9 37.5
Weighted average diluted
shares outstanding 18 37.4 37.6 37.8 37.9 37.7 38.2
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 and nine
months ended
September 30,
2017, the three
and nine months
ended September
30, 2016 and
the three
months ended
June 30, 2017,
the Company
excluded the
dilutive effect
of equity
awards
representing
the rights to
acquire 990,
988, 988, 974
and 992 shares
of common
stock,
respectively,
because the
effect was
anti-dilutive.
As of
September 30,
2017, June 30,
2017, and
September 30,
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 September
30, 2017.
Excluded from
this data are
eight MPSVs
owned by the
Company and
four non-owned
vessels
operated by the
Company for the
U.S. Navy.
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
related to non-
owned vessels,
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 EBITDA
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 has
also
historically
made certain
adjustments, as
applicable, to
EBITDA for
losses (gains)
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
such ratios
can, at times,
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 November
1, 2017, the
Company's
inactive fleet
of 43 new
generation OSVs
that were
"stacked" was
comprised of
the following:
twelve 200
class OSVs,
twenty-four
240 class OSVs,
three 265 class
OSVs and four
300 class OSVs.
In addition,
the Company
plans to stack
two 240 class
OSVs during the
fourth quarter
of 2017.
14 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.
15 Interest on the
Company's
First-Lien
Credit Facility
is variable
based on
changes in
LIBOR, or the
London
Interbank
Offered Rate.
The guidance
included in
this press
release is
based on
industry
estimates of
LIBOR in future
periods as of
November 1,
2017. Actual
results may
differ from
this estimate.
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 Represents the
non-cash
recognition of
the $20.7
million gain on
the debt-for-
debt exchange
associated with
the Company's
First-Lien
Credit
Facility, which
is being
deferred and
amortized
prospectively
as a yield
adjustment to
interest
expense as
required by
GAAP under debt
modification
accounting.
18 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.
View original content:http://www.prnewswire.com/news-releases/hornbeck-offshore-announces-third-quarter-2017-results-300547873.html
SOURCE Hornbeck Offshore Services, Inc.
