SEACOR results back in black

JULY 31, 2013 — SEACOR Holdings Inc. (NYSE: CKH) Executive Chairman Charles Fabrikant may be feeling a little more cheerful. After a red ink previous quarter that had him saying “we’re very unhappy,” SEACOR reported results for its second quarter ended June 30, 2013 that saw it record net income of $19.3 million, or $0.91 per diluted share. For the six months ended June 30,  net income attributable to SEACOR Holdings Inc. was $8.4 million, or $0.42 per diluted share.

Highlights for the Quarter

Offshore Marine Services – Operating income was $18.3 million on operating revenues of $138.7 million compared with operating income of $5.2 million on operating revenues of $124.0 million in the preceding quarter.

In the U.S. Gulf of Mexico, operating revenues were $2.3 million higher in the second quarter. Time charter revenues for the company’s liftboat fleet were $5.4 million higher primarily due to the seasonal upturn in activity levels. Time charter revenues for the company’s anchor handling towing supply vessels were $6.4 million lower primarily due to increased out-of-service days for drydockings. Time charter revenues for other vessel classes were $2.9 million higher primarily due to improved utilization and higher day rates for the company’s supply vessels. Utilization in the U.S. Gulf of Mexico was 78.6% compared with 73.7% in the preceding quarter and average day rates increased from $15,119 per day to $15,267 per day. As of June 30, 2013, the company had no vessels cold-stacked in the U.S. Gulf of Mexico.

In International regions, excluding the contribution of the wind farm utility vessels, operating revenues were $11.0 million higher in the second quarter. In Mexico, Central and South America, time charter revenues were $5.5 million higher primarily due to the commencement of contracts for three vessels mobilized from the U.S. Gulf of Mexico and were $3.3 million higher primarily due to reduced drydocking activity and improved spot market conditions in Brazil. In Asia, time charter revenues were $1.9 million higher due to the commencement of a term charter in Sakhalin. In other international regions, time charter revenues were lower primarily due to increased drydocking activity in West Africa. Utilization was 85.0% compared with 83.2% in the preceding quarter and average day rates increased from $10,942 per day to $12,177 per day.

Operating expenses were $7.6 million higher in the second quarter primarily due to vessels mobilizing between geographic regions, a general increase in activity levels and increased drydocking expenses. During the second quarter, drydocking costs were $14.8 million compared with $11.2 million in the preceding quarter. The number of out-of-service days attributable to drydockings was 994 days compared with 645 days in the preceding quarter.

In the second quarter, the total number of days available for charter for the company’s fleet, excluding wind farm utility vessels, decreased by 70 days, or 1% primarily due to net fleet dispositions. Overall utilization, excluding wind farm utility vessels, increased from 79.0% to 82.0% and overall average day rates, excluding wind farm utility vessels, increased by 6% from $12,878 per day to $13,588 per day. Time charter operating data by vessel class is presented in the table included herein.

During the second quarter, the company sold six offshore support vessels and other equipment for net proceeds of $14.7 million and gains of $7.9 million. During the preceding quarter, the company sold two offshore support vessels and other equipment for net proceeds of $60.6 million and gains of $2.3 million.

During the second quarter, the company acquired a 100% controlling interest in its C-Lift joint venture through the acquisition of its partner’s 50% interest and recognized a $4.2 million gain, net of tax, included in equity in earnings of 50% or less owned companies upon marking its investment to fair value.

Inland River Services – Operating income was $5.5 million on operating revenues of $47.4 million compared with operating income of $3.3 million on operating revenues of $50.1 million in the preceding quarter. Second quarter results included $4.3 million of gains on asset dispositions compared with $0.7 million in gains in the preceding quarter. Operating results for the pooled hopper barge fleet were lower in the second quarter primarily due to difficult river operating conditions combined with continuing weak demand for barge freight. Operating results for the company’s fleeting operation improved primarily due to the impact of the opening of the Upper Mississippi and increased traffic through the Port of St. Louis. Operating results for the company’s terminal operations improved primarily due to higher throughput volumes of crude oil at the company’s Gateway terminal in Sauget, Illinois.

Shipping Services – Operating income was $4.6 million on operating revenues of $48.1 million compared with operating income of $3.8 million on operating revenues of $46.5 million in the preceding quarter. Operating results for petroleum transportation were $2.2 million lower in the second quarter primarily due to more days out-of-service for drydocking and higher drydocking expenses partially offset by an increase in time charter rates for two U.S.-flag product tankers. Operating results for harbor towing and bunkering were $2.7 million higher in the second quarter primarily due to an impairment charge of $3.0 million for two harbor tugs in the preceding quarter. Operating results for short-sea and liner transportation were $0.7 million higher primarily due to increased cargo shipping demand. Equity in losses were lower in the second quarter primarily due to improved results from the company’s Jones Act liner transportation joint venture.

Ethanol and Industrial Alcohol – Ethanol and Industrial Alcohol reported segment profit of $0.5 million on operating revenues of $61.4 million compared with a segment loss of $3.3 million on operating revenues of $32.8 million in the preceding quarter. The improvement in segment profit was primarily due to higher fuel ethanol margins.

Capital Commitments – As of June 30, 2013, the company’s unfunded capital commitments were $150.1 million and included: 17 offshore support vessels for $128.2 million; two inland river tank barges for $2.9 million; five inland river towboats for $10.9 million; one U.S.-flag harbor tug for $1.6 million; and other equipment and improvements for $6.5 million. Of these commitments, $55.6 million is payable during 2013 with the balance payable through 2015. These unfunded capital commitments exclude $139.4 million related to two Liquefied Petroleum Gas tankers (Very Large Gas Carriers, otherwise known as “VLGC’s”) that the company’s Shipping Services business segment committed to construct during the second quarter. Subsequent to June 30, 2013, the company contributed $42.1 million in net cash and other consideration valued a $14.9 million that included certain progress payments made toward the construction of the two VLGC’s, the construction contracts for the VLGC’s and the related options to construct additional VLGC’s to Dorian LPG Ltd. in exchange for a noncontrolling ownership interest.

As of June 30, 2013, the company held balances of cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and Title XI reserve funds totaling $589.2 million.