GulfMark Offshore Inc. Reports Operating Results (10-Q)
Gulfmark Offshore Inc. has a market cap of $793.3 million; its shares were traded at around $30.3 with a P/E ratio of 13.4 and P/S ratio of 2.1. Gulfmark Offshore Inc. had an annual average earning growth of 14.5% over the past 10 years. GuruFocus rated Gulfmark Offshore Inc. the business predictability rank of 3-star.GLF is in the portfolios of Michael Price of MFP Investors LLC, Kenneth Fisher of Fisher Asset Management, LLC.
Highlight of Business Operations: Revenues in the North Sea region decreased by $9.1 million, or 19.7%, to $37.2 million in the second quarter of 2010 compared to the same period of 2009. This decrease was a result of a combination of currency effects and the decrease in day rates from $21,199 to $16,478, which contributed $7.6 million to the decrease in revenue. This is offset by the increase in capacity of $2.0 million resulting primarily from the delivery of two new vessels, one in the fourth quarter of 2009 and one in the first quarter of 2010. Even though utilization increased from 93.1% in the second quarter of 2009 to 95.1% in the current quarter, revenue decreased by $3.5 million reflecting the negative effects of the mix of days worked associated with lower day rate vessels. Operating income decreased $13.4 million compared to the prior year quarter, due to the decrease in revenue and higher operating expenses. Drydock expense increased by $0.8 million due to approximately 18 more drydock days. Depreciation expense increased mainly due to the new vessel additions. General and administrative expense in the second quarter of 2010 was $2.7 million compared to $2.5 million in the prior year quarter.
Revenues for our Southeast Asia based fleet decreased by $2.7 million, or 13.7%, to $16.8 million in the second quarter of 2010. The decrease was primarily attributable to the decrease in day rates from $21,201 in the second quarter of 2009 to $16,817 in the current year quarter which, coupled with currency effects, reduced revenue by $4.6 million. Capacity increased revenue by $2.8 million as a result of the addition of one new vessel in the third quarter of 2009. Utilization for the second quarter of 2010 decreased from 93.8% to 92.8% in 2010 reducing revenue by $0.9 million. Operating income for Southeast Asia was $10.0 million in the second quarter of 2010 compared to $14.7 million in the same 2009 quarter. The decrease is due mainly to the decrease in revenue coupled with an increase in drydock cost. Drydock costs increased by $1.1 million as a result of 32 more drydock days in the second quarter of 2010 than in 2009.
The Americas region revenues for the second quarter of 2010 was basically unchanged compared to the second quarter of 2009. Utilization increased from 80.2% in the second quarter of 2009 to 91.7% in the current year quarter contributing $3.3 million to revenue. Day rates decreased from $15,637 in the second quarter of 2009 to $13,486 in the current year quarter, negatively impacting revenue by $3.6 million. Two vessels added to our capacity in the second half of 2009 increased revenue by $0.3 million. Operating loss was $92.5 million in the second quarter of 2010 compared to operating income of $8.4 million in the second quarter of 2009. The 2010 operating loss includes a $97.7 million charge related to the impairment of goodwill. Absent this charge, the region generated operating income of $5.2 million. The decrease in
Revenue for our Southeast Asia based fleet decreased by $4.5 million, or 12.1%, from $37.2 million in the first six months of 2009 to $32.7 million in the same 2010 period. The decrease was primarily attributable to a decrease in day rates and utilization, offset by an increase in fleet size as a result of the addition of one vessel subsequent to the second quarter of 2009. Day rates decreased from $20,959 in 2009 to $17,387 in 2010, which coupled with foreign currency effects, contributed $7.2 million to the decrease in revenue. The increase in fleet size contributed $6.2 million to revenue. Utilization decreased from 90.5% in 2009 to 88.5% in 2010, reducing revenue by $3.5 million. Operating income decreased $9.8 million from $28.8 million in 2009 to $19.0 million this year. The decrease resulted from the lower revenues, increased in drydock costs resulting from an additional 66 drydock days and a decrease on gain on sale of assets.
Our Americas region revenue decreased $13.8 million, from $86.0 million in 2009 to $72.3 million in 2010. Utilization decreased from 86.4% to 85.7% resulting in a $1.4 million decrease in revenues. Capacity increased revenue by $1.4 million, as we added three new vessels in the last half of 2009 offset by the sale of one vessel in the second quarter of 2010. A decrease in day rates from $16,503 in 2009 to $13,428 in 2010, coupled with currency fluctuations, decreased revenue by $13.8 million. We experienced an operating loss in the first six months of 2010 totaling $91.8 million due primarily to a $97.7 million goodwill impairment charge. Absent the charge, the region would have reported operating income of $5.8 million. We also recorded impairment of vessels under construction totaling $46.2 million in the first six months of 2009. Absent that charge, 2009 operating income would have been $27.9 million. Excluding the impairment charges, our operating income decreased by $22.1 million. This is the result of decreased revenue and increased operating costs, due to the increase in vessels, and higher drydock costs. Drydock costs increased $4.5 million as we experienced 84 more drydock days than in 2009.
Net working capital at June 30, 2010, was $58.5 million. Cash on hand at June 30, 2010 totaled $49.8 million. For the three months ended June 30, 2010, net cash provided by operating activities was $17.4 million, cash used in investing activities was $7.1 million and cash used in financing activities was $7.8 million. The $97.7 million goodwill impairment did not affect our cash flows, liquidity or debt covenant compliance. Total debt at June 30, 2010 was $343.1 million, and debt net of cash on hand was $293.3 million. At June 30, 2010 we did not have any amount drawn under our $175.0 million revolving credit facility. In July 2010, we borrowed $51.0 million on the facility for working capital purposes. While we have no remaining capital commitments under our new build program, we will continue to pursue capital projects that allow us to maintain and improve our fleet value, mix and earnings capacity.
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