APRIL 30, 2013 — "We are very unhappy with our results for both this quarter and the fourth quarter of 2012," said Charles Fabrikant, Executive Chairman of the Board, as SEACOR Holdings Inc. (NYSE: CKH) reported results for its first quarter that included a net loss for the quarter of $10.9 million, or $0.55 per diluted share.
Mr. Fabrikant, said the disappointing results resulted primarily because of four factors: a large seasonal swing in revenues and expenses that negatively impacted SEACOR's lift boat business; reduced barge activity levels for its inland group's dry cargo fleet; an impairment charge for two harbor tugs; and poor results from its ethanol investment.
"We believe the outlook for offshore activity in the U.S. Gulf of Mexico is positive, however," he said, "and we are also evaluating various paths to return our ethanol operation to profitability."
HIGHLIGHTS FOR THE QUARTER
Offshore Marine Services
Operating income was $5.2 million on operating revenues of $124.0 million compared with operating income of $19.3 million on operating revenues of $141.1 million in the preceding quarter.
In the U.S. Gulf of Mexico, operating revenues were $2.5 million lower in the first quarter. Time charter revenues for the company's liftboat fleet were $8.2 million lower primarily due to the seasonal downturn for that fleet. The decrease was partially offset by increased time charter revenues of $5.5 million for the company's anchor handling towing supply vessels primarily due to increased utilization in support of platform supply activities. The number of out of service days attributable to drydockings increased by 292, or 230 percent, during the first quarter. Utilization was 73.7 percent compared with 77.1 percent in the preceding quarter and average day rates increased from $14,404 to $15,119 per day. As of March 31, 2013, the company had one vessel cold-stacked in the U.S. Gulf of Mexico.
In International regions, excluding the contribution of the wind farm utility vessels, operating revenues were $13.2 million lower in the first quarter. In Mexico, Central and South America, time charter revenues were $5.6 million lower, primarily due to an increase in out-of-service days attributable to drydocking activity and weak spot market conditions in Brazil. In Asia, time charter revenues were $5.1 million lower, primarily due to the sale of a vessel to one of the company's joint ventures and lower utilization following the conclusion of a term charter for a vessel operating in Sakhalin. Time charter revenues were lower in other geographical regions primarily due to weaker market conditions and the weakening of the pound sterling against the U.S. dollar. Utilization was 83.2 percent compared with 88.9 percent in the preceding quarter and average day rates decreased from $12,372 per day to $10,942 per day.
Operating expenses were $1.4 million lower in the first quarter. Personnel expenses and the cost of fuel, lubes and supplies were lower consistent with reduced utilization levels and fewer days in the quarter. These reductions were partially offset by higher drydocking expenses primarily due to an extensive drydocking program during the seasonal downturn of the liftboat fleet. During the first quarter, drydocking costs were $11.2 million compared with $7.3 million in the preceding quarter. The number of out-of-service days attributable to drydockings was 645 days compared with 323 days in the preceding quarter.
Administration and general expenses were $4.6 million lower in the first quarter primarily due to additional compensation expenses incurred during the preceding quarter arising from the acceleration of restricted stock awards originally scheduled to vest in 2013 and 2014.
In the first quarter, the total number of days available for charter for the company's fleet, excluding wind farm utility vessels, decreased by 408 days, or 4 percent primarily due to fewer days in the quarter. Overall utilization, excluding wind farm utility vessels, decreased from 83.0 percent to 79.0 percent and overall average day rates, excluding wind farm utility vessels, decreased by 3 percent from $13,306 per day to $12,878 per day. Time charter operating data by vessel class is presented in the table included herein.
Inland River Services
Operating income was $3.3 million on operating revenues of $50.1 million compared with operating income of $8.9 million on operating revenues of $66.5 million in the preceding quarter. First quarter results included $0.7 million of gains on asset dispositions compared with $1.4 million in gains in the preceding quarter. Operating results for the pooled hopper barge fleet were lower in the first quarter primarily due to weak demand for barge freight as a consequence of lower grain exports resulting in idling a portion of the fleet. United States grain exports are not currently competitive in the global market.
Operating income was $3.8 million on operating revenues of $46.5 million compared with operating income of $5.7 million on operating revenues of $46.3 million in the preceding quarter. Operating results for petroleum transportation were $3.1 million higher in the first quarter primarily due to less out-of-service time and lower drydocking expenses. Operating results for harbor towing and bunkering were $5.4 million lower in the first quarter primarily due to higher repairs and maintenance and drydocking expenses, and an impairment charge of $3.0 million for two harbor tugs. Operating results for short-sea and liner transportation were $0.4 million higher primarily due to improved operational efficiencies and lower repairs and maintenance expenses. Equity in losses in both quarters were primarily attributable to losses in the company's Jones Act liner transportation joint venture.
Ethanol and Industrial Alcohol
Ethanol and Industrial Alcohol reported a segment loss of $3.3 million on operating revenues of $32.8 million compared with a segment loss of $2.2 million on operating revenues of $42.3 million in the preceding quarter. Operating results in both quarters were negatively impacted by higher corn prices.
Other reported a segment profit of $2.4 million during the first quarter primarily due to a gain on the sale of real property. In the preceding quarter, segment loss included equity in losses of $9.2 million primarily due to the one-time recognition of deferred tax liabilities on the deconsolidation of non-deductible goodwill upon the contribution of O'Brien's Response Management Inc. in exchange for an equity interest in Witt O'Brien's LLC.
As of March 31, 2013, the company's unfunded capital commitments were $151.8 million and included: 14 offshore support vessels for $106.1 million; seven inland river tank barges for $15.0 million; five inland river towboats for $12.7 million; four harbor tugs for $7.4 million; and other equipment and improvements for $8.0 million. In addition, the company notified a lessor of its intent to purchase two harbor tugs currently operating under capital leases for $2.6 million. Of these commitments, $97.8 million is payable during 2013 with the balance payable through 2015. Subsequent to March 31, 2013, the company committed to purchase additional equipment for $49.7 million.
As of March 31, 2013, the company held balances of cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and Title XI reserve funds totaling $557.2 million.