SEACOR Announces 3Q Results
For the quarter ended September 30, 2007, net income was $70.3 million, or $2.66 per diluted share, on operating revenues of $359.9 million. For the nine months ended September 30, 2007, net income was $173.7 million, or $6.44 per diluted share, on operating revenues of $996.1 million.
Net income for the preceding quarter ended June 30, 2008 was $38.4 million, or $1.57 per diluted share, on operating revenues of $409.0 million. Comparison of results for the third quarter ended September 30, 2008 with the preceding quarter ended June 30, 2008 is included in the discussion below.
Highlights for the Quarter:
Offshore Marine Services -- Operating income in the third quarter was $84.5 million on operating revenues of $196.9 million compared with operating income of $51.5 million on operating revenues of $171.2 million in the preceding quarter. Third quarter results included $13.5 million in gains on asset dispositions compared with $14.4 million in gains in the preceding quarter.
Excluding the impact of gains on asset dispositions, operating income in the third quarter was $33.8 million higher than in the preceding quarter. The improvement was primarily due to an increase in time charter revenues, particularly in the U.S. Gulf of Mexico where the Company's large AHTS vessels completed their regulatory repair and upgrade program during the quarter. Out-of-service time for these vessels was 26 days in the third quarter compared with 168 days in the preceding quarter. Operating revenues were also higher in where vessels, having completed mobilizations, commenced new charters. Overall operating expenses were lower primarily as a result of reduced regulatory drydocking and mobilization activity and lower insurance expense. Administrative and general expenses were lower primarily due to a reduction in international staff severance expenses, partially offset by higher expenses related to hurricane disruption in the U.S. Gulf of Mexico.
The number of days available for charter in the third quarter decreased by 735, or 4.5%, primarily as a result of a net reduction in fleet count. Overall utilization increased from 80.5% to 87.7% and overall average day rates were higher at $13,161 per day compared with $12,182 per day in the preceding quarter.
One new towing supply vessel was delivered during the third quarter.
Marine Transportation Services -- Marine Transportation Services reported an operating loss in the third quarter of $4.3 million on operating revenues of $27.5 million compared with operating income of $2.4 million on operating revenues of $28.8 million in the preceding quarter.
Operating results were impacted by 117 days of out-of-service time during the third quarter for two vessels undergoing regulatory drydockings in resulting in a combined operating loss of $7.4 million. The Seabulk Arctic returned to service on October 7, 2008 and the Seabulk Pride returned to service on October 21, 2008.
Services -- Operating income in the third quarter was $11.6 million on operating revenues of $36.5 million compared with operating income of $7.5 million on operating revenues of $33.3 million in the preceding quarter. Third quarter results included $4.1 million in gains on asset dispositions compared with $1.5 million in gains in the preceding quarter.
Excluding the impact of gains on asset dispositions, operating income was $1.4 million higher in the third quarter. The improvement was primarily due to higher freight rates and increased activity on the lower in support of the beginning of the grain harvest. Operating expenses were generally in line with the increased activity levels but were also affected by higher maintenance and repair costs for towboats and liquid tank barges.
Aviation Services -- Operating income in the third quarter was $10.1 million on operating revenues of $73.5 million compared with operating income of $6.7 million on operating revenues of $63.8 million in the preceding quarter. Third quarter results included $1.3 million in gains on asset dispositions compared with $3.2 million in gains in the preceding quarter.
Excluding the impact of gains on asset dispositions, operating income was $5.2 million higher in the third quarter. The improvement in operating income was primarily due to additional contracts in the U.S. Gulf of Mexico, incremental activity generated from Hurricanes Gustav and Ike, and seasonal flightseeing, firefighting and mineral exploration activities in . Operating expenses were generally in line with the increased activity levels but were also affected by higher maintenance costs due to the timing of component and fleet repair and maintenance, higher expenses related to hurricane disruption in the U.S. Gulf of Mexico and higher depreciation on newly acquired assets.
Environmental Services -- Operating income in the third quarter was $4.3 million on operating revenues of $42.2 million compared with operating income of $1.7 million on operating revenues of $38.0 million in the preceding quarter. The improvement in operating income was largely due to an increase in response service activity related to Hurricane Gustav.
Commodity Trading -- SEACOR's commodity trading group currently focuses on renewable fuels and rice. Operating income in the third quarter was $5.2 million on operating revenues of $44.3 million compared with operating income of $6.8 million on operating revenues of $55.4 million in the preceding quarter. Operating income from renewable fuel and rice product sales were lower in the third quarter partially offset by higher freight and rental revenues.
Harbor and Offshore Towing Services -- Operating income in the third quarter was $3.1 million on operating revenues of $19.5 million compared with operating income of $3.1 million on operating revenues of $19.9 million in the preceding quarter.
Interest Income -- Interest income was $4.3 million in the third quarter compared with $5.4 million in the preceding quarter. The decrease was primarily due to lower invested cash balances partially offset by higher interest income on the Company's bond investments.
Interest Expense -- Interest expense was $14.4 million in the third quarter compared with $12.7 million in the prior quarter. The increase was primarily due to lower capitalized interest, higher interest expense on capital lease obligations and interest on foreign tax settlements.
Derivatives -- Derivative losses were $8.4 million in the third quarter compared with losses of $7.1 million in the preceding quarter. The losses in the third quarter were primarily due to losses on foreign currency forward exchange, option and future contracts partially offset by gains on equity index and options.
Foreign Currencies -- Foreign currency losses were $6.7 million in the third quarter compared with gains of $0.6 million in the preceding quarter. The losses in the third quarter were primarily due to the strengthening of the U.S. dollar versus the pound sterling.
Marketable Securities -- Marketable security gains were $36.0 million in the third quarter compared with gains of $0.4 million in the preceding quarter. In addition, the Company reported other comprehensive losses relating to its available-for-sale marketable securities of $2.1 million, net of tax, in stockholders' equity during the third quarter.
Equity in Earnings of 50% or Less Owned Companies -- Equity in earnings from joint ventures was $2.2 million in the third quarter compared with equity in earnings of $1.3 million in the preceding quarter. The increase was primarily due to an overall improvement in the operating results of the Company's Offshore Marine Services' joint ventures. This increase was partially offset by a $1.3 million loss, net of tax, recognized by the Company resulting from an impairment charge on prime broker exposure recorded in one of its Inland River Services' joint ventures.
Stock and Debt Repurchases -- During the third quarter, the Company purchased 1,166,000 shares of its common stock at an average price of $83.43 per share. At the end of the quarter, 19,975,727 shares of SEACOR's common stock remained outstanding.
Capital Commitments -- The Company's unfunded capital commitments as of September 30, 2008, consisted primarily of offshore marine vessels, helicopters, inland river barges and inland river towboats and totaled $276.2 million, of which $114.2 million is payable during the remainder of 2008 and the balance payable through 2010. Of the total unfunded capital commitments, $35.1 million may be terminated without further liability other than the payment of liquidated damages of $3.4 million in the aggregate. As of September 30, 2008, the Company held balances of cash, cash equivalents, restricted cash, available-for-sale marketable securities, construction reserve funds and title XI reserve funds totaling $688.3 million.
