November 6, 2003
Hornbeck announces increased revenues and a barge construction program
Hornbeck Offshore Services, Inc. today announced a newbuilding program for its wholly-owned subsidiary, Hornbeck Offshore Transportation, LLC. It has signed definitive agreements with two shipyards for two double-hulled tank barges for delivery in December 2004 and is currently evaluating its plans with respect to a third tank barge. Hornbeck has also secured fixed-price options from one of the shipyards to construct up to a total of three additional double-hulled tank barges for delivery after 2004.
Hornbeck made the annopuncement after it announced today that revenues for the quarter ended September 30, 2003 increased 26.5 percent to $28.2 million compared to $22.3 million for the same quarter in 2002. Operating income was $8.3 million or 29.4 percent of revenues for the third quarter of 2003, compared to $7.2 million or 32.3 percent of revenues for the same quarter in 2002. Third quarter 2003 net income was $2.2 million compared to $2.0 million for the third quarter of 2002.
The $5.9 million net increase in third quarter 2003 revenue over the prior year quarter was comprised primarily of incremental revenue from these newly constructed and acquired vessels. This increase was offset, in part, by a decrease in the average dayrate of the company's other OSVs, primarily the 200-ft class, due to soft market conditions in the Gulf of Mexico, as well as certain charges related to the integration of the six recently acquired 220-ft vessels into the fleet during the third quarter of 2003.
Operating costs and depreciation expense increased by a combined $4.5 million, primarily related to the incremental quarter-over-quarter effect of the increase in the OSV fleet size. Net income was also impacted by higher net interest expense in the third quarter of 2003 related to borrowings under the company's revolving credit facility, compared to the 2002 quarter when the revolver was undrawn.
Todd Hornbeck, President and CEO, stated, "Despite continued weak market conditions in the U.S. Gulf of Mexico, we were able to produce yet another quarter of solid financial results. We achieved these results primarily due to increased capacity in our OSV fleet, and geographic diversification and a high degree of contract coverage in both of our business segments."
On September 17, 2003, Hornbeck took delivery of the HOS Greystone, the Company's third 240 ED class OSV. The HOS Greystone, which was delivered two weeks early by the shipyard, is currently working under a spot market time charter with a large independent oil and gas company to support its deepwater operations in the Gulf of Mexico. Change of Address.
On September 29, 2003, Hornbeck completed the previously announced move of its corporate headquarters from Mandeville, Louisiana into approximately 24,000 square feet of office space, in nearby Covington, Louisiana.
The Company's new mailing address is 103 Northpark Boulevard, Suite 300, Covington, Louisiana, 70433; and it's telephone number, (985) 727-2000, remains unchanged.
Double-Hulled Tank Barge Newbuild Program.
This is the company's fourth newbuild program since its inception six years ago - the first three were for the construction of a total of 17 new generation OSVs that were built to the company's proprietary in-house designs.
The company has signed definitive agreements with two shipyards for the first two double-hulled tank barges for delivery in December 2004 and is currently evaluating its plans with respect to a third tank barge.
Hornbeck has also secured fixed-price options from one of the shipyards to construct up to a total of three additional double-hulled tank barges for delivery after 2004.
Hornbeck Offshore Transportation currently operates a fleet of 12 ocean-going tugs and 16 ocean-going tank barges, one of which is double-hulled.
Three of its existing tank barges are scheduled to be retired under the Oil Pollution Act of 1990 ("OPA '90") by January 1, 2005.
Expansion of Revolving Credit Facility.
On September 30, 2003, in anticipation of its plans to undertake the first phase of construction under its double-hulled tank barge newbuild program, Hornbeck expanded the borrowing capacity under its revolving credit facility from $50.0 million to $60.0 million, while adding a fourth bank, DVB Bank AG, to its lending group.
The company's board has approved construction and retrofit costs for the first three tank barges of the newbuild program of up to $42.0 million, before allocation of construction period interest, which is expected to be funded by current cash, projected free cash flow from operations and available borrowing capacity.
As of September 30, 2003, the company had cash of $12.5 million and a balance of $46.9 million outstanding under its $60.0 million revolving credit facility.
Todd M. Hornbeck, the company's President and Chief Executive Officer commented, "The primary purpose of this tank barge newbuild and retrofit program is to address our need to replace three single-hulled tank barges that are required by OPA '90 to be retired from service by January 1, 2005."
Carl Annessa, the company's Vice President and Chief Operating Officer commented, "The newbuild program that we announced today is based on a proprietary new design that we have developed to replace and expand our existing fleet of ocean-going tank barges. We specifically designed these vessels to maximize transit speed, improve cargo through-put rates and enhance crew safety features."