SEACOR benefits from CARES Act tax breaks

Charles Fabrikant: “Our diversified services dampened, and, hopefully, will continue to mitigate for us the severe economic fallout of COVID-19 on the economy” (Image: SEACOR)

While SEACOR Holdings Inc. (NYSE:CKH) saw first quarter income fall, it reports that all of its services have been deemed essential — and looks to have gotten a significant boost from tax benefits resulting from passage of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act).

The company reported results for the first quarter ended March 31, 2020 that included a fall in net income to $1.5 million, compared to $7.7 million in the equivalent quarter last year. The current quarter included a $12.7 million ($0.64 per diluted share) income tax benefit as a result of the CARES Act). It also included net foreign currency losses of $3.6 million ($0.18 per diluted share) primarily due to the depreciation of the Colombian peso relative to the U.S. dollar.

Operating loss for the quarter was $0.1 million compared with operating income of $19.0 million for the 2019 first quarter. “Cash earnings” for the quarter were $17.1 million compared with $26.7 million for the 2019 first quarter.

“I am quite pleased with our first quarter results,” said Charles Fabrikant, Executive Chairman. “The primary cause for the large swing in cash earnings relates to performing periodic, heavy maintenance for some of our vessels and a falloff in revenues related to Witt-O’Brien’s engagement in the U.S. Virgin Islands.”

He noted that, as a result of the passage of the CARES Act, the company can carry back net operating tax losses from 2019 to recoup $32 million of cash. “This will boost SEACOR’s already strong levels of liquidity,” he noted,

Fabrikant said that the company is taking enhanced precautions in response to the unprecedented challenges of COVID-19.

“We look to local, state and federal directives and follow best practices,” he noted.

Fabrikant said the COVID-19 pandemic had had a limited impact on first quarter financial performance.

“Our diversified services dampened, and, hopefully, will continue to mitigate for us the severe economic fallout of COVID-19 on the economy. SEA-Vista, our Jones Act tanker business, benefits from charters that extend through the first quarter of 2021 and beyond. SCF’s barges continue to move grain on the inland waterways and its terminals transfer agricultural and industrial essentials. Our Granite City, Illinois based oil storage facility is fully utilized for the first time in many months. Our harbor tugs continue docking ships with inbound goods and exports.

“Two of our service lines, SEACOR Island Lines, our liner and logistics support for the Bahamas and Caribbean, and Waterman Steamship, our Government Services group, have in the recent weeks experienced weaker demand. The Bahamas, like the U.S., has a ‘shelter in place’ order in effect and in April the U.S. military instituted a moratorium on movements of cargo handled by vessels such as ours.”

CAPITAL COMMITMENTS

The company’s capital commitments as of March 31, 2020 were $61.0 million and included four U.S.-flag harbor tugs, the company’s interest in two foreign-flag rail ferries, six inland river dry-cargo barges, two inland river towboats, other equipment and vessel and terminal improvements. Subsequent to March 31, 2020, the company committed to purchase other property and equipment for $1.1 million.

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