Seabulk sees offshore uptick
Seabulk International, Inc. (Nasdaq: SBLK) today reported net income for the three months ended June 30, 2004 of $2.7 million or $0.12 per fully diluted share on revenue of $87.2 million. Included in the quarter's results was a gain of approximately $2.0 million or $0.08 per diluted share on the sale of three offshore vessels. In the year-earlier period, the company had net income of $2.7 million or $0.11 per fully diluted share on revenue of $79.9 million. The year-earlier results included a gain of approximately $0.4 million or $0.02 per diluted share on the sale of vessels.
Operating income was $12.5 million in the current period versus $12.4 million a year ago.
"The second quarter saw an improvement in our offshore business, which posted an operating profit for the first time since the third quarter of last year, and continued strong results in our tanker segment, which benefited from the addition of two modern foreign-flag vessels," commented Chairman and Chief Executive Officer Gerhard E. Kurz. "Our third business, towing, also posted solid results. The revenue gain year-over-year was driven by our tanker business, which had 12 vessels operating in the current quarter versus ten a year ago. Income from operations would have been higher were it not for the drydocking of one of our tankers and unscheduled maintenance costs for certain of our offshore vessels. We are encouraged by recent signs of life in the offshore Gulf of Mexico market, where utilization of our vessels-- though not quite at the level of a year ago-- is up from the first three months of this year."
"Going forward," noted Kurz, "we continue to look for opportunities to grow the Company and enhance shareholder value by, for example, selling older vessels and buying newer ones. In the quarter just ended, this resulted in the expansion of our tanker fleet and the ordering of two new offshore vessels for our West African operation. Given the recent growth in world energy demand, particularly in the United States and China, along with expanding economic activity, the outlook for all three of our businesses for the second half of 2004 appears quite favorable."
For the six months ended June 30, 2004, Seabulk reported net income of $8.4 million or $0.35 per fully diluted share (including a gain on vessel sales of $2.0 million or $0.08 per diluted share) on revenue of $169.7 million. In the year-earlier period, the company had net income of $4.2 million or $0.18 per diluted share (including a gain on vessel sales of $1.2 million or $0.05 per diluted share) on revenue of $157.2 million. Operating income of $22.9 million in the 2004 period was down slightly from $23.2 million in the first six months of 2003 due in part to higher operating costs and drydocking expense.
Results of Operations
Revenue from Seabulk Offshore, the company's largest business with a fleet of 113 offshore energy support vessels, totaled $41.2 million or 47% of total company revenue in the second quarter of 2004, up from $39.2 million in the year-ago quarter.
Operating income was $3.4 million (including a gain of approximately $2.0 million from vessel sales) versus $2.2 million (including a gain of $0.5 million from vessel sales) in the year-earlier quarter.
In the Gulf of Mexico, where utilization improved, the company narrowed its losses from the first quarter of 2004. In West Africa, which accounts for more than half of Seabulk Offshore's revenue, day rates improved over the first quarter of 2004 and the year-ago quarter, while utilization remained strong. The Middle East, benefiting from robust activity, had an exceptional quarter with both day rates and utilization ahead of the previous quarter and the year-ago period. (See the accompanying tables for a complete breakdown of average day rates and utilization by region for the Company's offshore fleet in the quarter ended June 30, 2004.)
Revenue from Seabulk Tankers, the company's fleet of 10 Jones Act and two recently acquired foreign-flag product carriers, rose to $36.4 million or 42% of total company revenue. In the year-earlier quarter, when the tanker fleet numbered ten vessels, revenue was $31.8 million. Operating income of $10.7 million in the current quarter was down from $12.0 million in the year- earlier period as a result of higher depreciation charges and the drydocking of the Seabulk Magnachem (there were no drydockings in the 2003 quarter).
All of the company's product tankers are currently employed under long-term time charters or contracts of affreightment.
There are two drydockings scheduled for the third quarter of 2004.
Seabulk Towing, which operates a fleet of 26 tugs in seven southeastern ports and the offshore Gulf of Mexico, had revenue of $9.8 million in the quarter or 11% of total company revenue, up from $9.0 million in the year- earlier period. Operating income totaled $1.5 million versus $1.2 million in the second quarter of 2003.
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