COVINGTON, La., Aug. 3,
2016 /PRNewswire/ -- Hornbeck Offshore Services, Inc.
(NYSE:HOS) announced today results for the second quarter ended
June 30, 2016. Following is an
executive summary for this period and the Company's future
outlook:
- 2Q2016 diluted EPS was $(0.57), an incremental loss of $0.36 from 1Q2016 diluted EPS of $(0.21)
- 2Q2016 revenues were $53.7
million, a decrease of $23.1
million, or 30%, from 1Q2016 revenues of $76.8 million
- 2Q2016 EBITDA was $6.9
million, a decrease of $21.3
million, or 76%, from 1Q2016 EBITDA of $28.2 million
- 2Q2016 operating loss was (40)% of revenues, down from
1Q2016 operating loss of (1)%
- 2Q2016 average new gen OSV dayrates were $26,642, an increase of $2,041, or 8%, from the sequential
quarter
- 2Q2016 utilization of the Company's new gen OSV fleet was
24%, down from 35% sequentially
- 2Q2016 effective utilization of the Company's active new gen
OSVs was 74%, down from 77% sequentially
- 2Q2016 effective new gen OSV dayrates were $6,367, a decrease of $2,268, or 26%, from the sequential
quarter
- Total cash of $225 million
with only $79 million of growth capex
remaining to be funded under the 24-vessel newbuild
program
- Company reached agreement with shipyard to postpone delivery
of final two MPSVs and push $43
million of growth capex into 2018
- By the end of September 2016,
the Company now expects to have stacked a total of 48 new gen OSVs,
up from 46 since last reported
- Annualized cash opex and G&A savings due to proactive
cost containment measures are now $210
million, up from $185
million
- On July 29, 2016, the Company
amended its revolving credit facility generally applicable
commencing with 3Q2016
The Company recorded a net loss for the second quarter of 2016
of $(20.6) million, or $(0.57) per diluted share, compared to net income
of $19.2 million, or $0.53 per diluted share, for the year-ago
quarter; and a net loss of $(7.5)
million, or $(0.21) per
diluted share, for the first quarter of 2016. Diluted common
shares for the second quarter of 2016 were 36.2 million compared to
36.3 million and 36.1 for the second quarter of 2015 and the first
quarter of 2016, respectively. GAAP requires the use of basic
shares outstanding for diluted EPS when reporting a net loss.
EBITDA for the second quarter of 2016 was $6.9 million compared to $66.3 million in the second quarter of 2015 and
$28.2 million in the first quarter of
2016. For additional information regarding EBITDA as a
non-GAAP financial measure, please see Note 10 to the accompanying
data tables.
Revenues. Revenues were $53.7 million for the second quarter of 2016, a
decrease of $82.7 million, or 60.6%,
from $136.4 million for the second
quarter of 2015; and a decrease of $23.1
million, or 30.1%, from $76.8
million for the first quarter of 2016. The
year-over-year decrease in revenues was primarily due to soft
market conditions worldwide, which led to the Company's decision to
stack 31 incremental OSVs on various dates since March 2015. As of June 30, 2016, the Company had 44 OSVs stacked.
For the three months ended June 30,
2016, the Company had an average of 41.9 vessels stacked
compared to 17.6 vessels stacked in the prior-year quarter and 33.7
vessels in the sequential quarter. The year-over-year
decrease in revenue was partially offset by $4.5 million in revenue earned from the full or
partial-period contribution of four vessels that were placed in
service since March 2015 under the
Company's fifth OSV newbuild program. Operating loss was
$(21.5) million, or (40.1)% of
revenues, for the second quarter of 2016, compared to operating
income of $39.4 million, or 28.8% of
revenues, for the prior-year quarter; and operating loss of
$(0.8) million, or (1.0)% of
revenues, for the first quarter of 2016. Average new
generation OSV dayrates for the second quarter of 2016 were
$26,642 compared to $28,178 for the same period in 2015 and
$24,601 for the first quarter of
2016. New generation OSV utilization was 23.9% for the second
quarter of 2016 compared to 56.2% for the year-ago quarter and
35.1% for the sequential quarter. Excluding stacked vessel
days, the Company's new generation OSV effective utilization was
73.8%, 79.9% and 77.4% for the same periods, respectively.
The year-over-year decrease in utilization is primarily due to soft
market conditions for high-spec OSVs operating in the GoM and the
incremental vessels that were stacked. Utilization-adjusted,
or effective, new generation OSV dayrates for the second quarter of
2016 were $6,367 compared to
$15,836 for the same period in 2015
and $8,635 for the first quarter of
2016.
Operating Expenses. Operating
expenses were $34.3 million for the
second quarter of 2016, a decrease of $23.2
million, or 40.3%, from $57.5
million for the second quarter of 2015; and a decrease of
$6.1 million, or 15.1%, from
$40.4 million for the first quarter
of 2016. The year-over-year decrease in operating expenses
was primarily due to vessels that the Company removed from its
active fleet count through its stacking strategy since March 2015, which resulted in a substantial
reduction in mariner headcount, mariner pay cuts and reductions in
other operating expenses. This decrease was partially offset
by $3.3 million of operating costs
related to the full or partial-period contribution from newbuilds
added to the Company's fleet since March 2015.
General and Administrative ("G&A").
G&A expenses of $12.4
million for the second quarter of 2016 were 23.1% of
revenues compared to $13.1 million,
or 9.6% of revenues, for the second quarter of 2015; and
$8.7 million, or 11.3% of revenues,
for the first quarter of 2016. The year-over-year decrease in
G&A expenses was primarily attributable to lower shoreside
compensation expense. Shoreside compensation expense was lower due
to workforce reductions that were implemented in late 2015 and
during the first half of 2016, as well as lower short-term
incentive compensation expense. This favorable variance was
partially offset by a $1.0 million
increase in bad debt reserves. The sequential increase in
G&A expenses was primarily attributable to an incremental
$1.1 million in bad debt reserves,
offset in part by $0.6 million of
lower short-term incentive compensation expense related to the 2016
plan year. In addition, the first quarter of 2016 was
favorably impacted by $2.0 million of
lower long-term stock-based incentive compensation expense and
$1.1 million of lower short-term
incentive compensation expense related to the 2015 plan year.
After adjusting for these reconciling items, G&A expenses for
the first two quarters of 2016 were comparable at $11.8 million and $11.9
million, respectively.
Depreciation and Amortization. Depreciation and
amortization expense was $28.5
million for the second quarter of 2016, or $2.0 million higher than the year-ago quarter and
in line with the sequential quarter. Depreciation increased
by $2.5 million over the year-ago
quarter primarily due to the contribution of four HOSMAX vessels
that were placed in service since March
2015. The depreciation increase was partially offset
by a decrease in amortization expense of $0.5 million, which was mainly driven lower by
postponed recertifications for certain of the Company's stacked
OSVs. Depreciation expense is expected to increase from
current levels as the vessels under the Company's current newbuild
program are placed in service. Amortization expense is
expected to decrease as the result of the deferral of regulatory
recertification activities for vessels that have been stacked.
Interest Expense. Interest expense was
$11.0 million during the second
quarter of 2016, or $1.1 million
higher than the prior-year quarter. The increase was
primarily due to the Company capitalizing a lower percentage of
interest compared to the prior-year period driven by a lower
average construction work-in-progress balance under the Company's
newbuild program. The Company recorded $5.1 million of capitalized construction period
interest, or roughly 32% of its total interest costs, for the
second quarter of 2016 compared to $6.1
million, or roughly 38% of its total interest costs, for the
year-ago quarter.
Six Month Results
Revenue for the first six months of 2016 decreased 51.9% to
$130.5 million compared to
$271.1 million for the same period in
2015. Operating loss was $(22.3)
million, or (17.1)% of revenues, for the first six months of
2016 compared to operating income of $106.3
million, or 39.2% of revenues, for the prior-year
period. Net income for the first six months of 2016 decreased
$83.2 million to a net loss of
$(28.1) million, or $(0.78) per diluted share, compared to net income
of $55.1 million, or $1.52 per diluted share, for the first six months
of 2015. EBITDA for the first six months of 2016 decreased
78.2% to $35.1 million compared to
$161.1 million for the first six
months of 2015. The Company recorded a $33.1 million ($20.7
million after tax and $0.57
per diluted share) pre-tax gain on sale of assets during the first
six months of 2015. This gain resulted from the February 2015 sale of three 250EDF class OSVs
previously chartered to the U.S. Navy. Excluding the impact
of such gain on sale of assets, operating income, net income,
diluted EPS and EBITDA for the first six months of 2015 would have
been $73.2 million, $34.4 million, $0.95 per share and $128.0
million, respectively. The year-over-year decrease in
vessel revenues primarily resulted from soft market conditions in
the GoM, which led to the Company's decision to stack 39 OSVs on
various dates from December 2014
through June 30, 2016. For the
six months ended June 30, 2016, the
Company had an average of 37.8 vessels stacked compared to 13.5
vessels stacked in the prior-year period. The decrease in revenue
was partially offset by $11.6 million
in revenue earned from the full or partial-period contribution of
six vessels that were placed in-service under the Company's fifth
OSV newbuild program since December 2014.
Recent Developments
Revolving Credit Facility Amendment.
On July 29, 2016, the Company amended
its existing revolving credit facility as discussed below.
The amended facility provides continued access to a reduced level
of standby liquidity for working capital and general corporate
purposes, including acquisitions, newbuild and conversion programs
and other capital expenditures. The borrowing base was
reduced from $300 million to
$200 million. The unused
commitment fee was increased to 50 basis points for all pricing
levels. The LIBOR spread for funded borrowings was increased by 25
basis points for all pricing levels, resulting in a new range of
L+225 to L+325. The minimum collateral-to-loan value ratio under
the amended facility was restored to its prior level of 200% of the
borrowing base, which had been reduced to 150% of the borrowing
base when the facility was amended and extended in February
2015. Accordingly, the number of vessels pledged as
collateral was increased from 10 OSVs valued in excess of
$450 million to 12 OSVs valued in
excess of $400 million. None of
the Company's remaining assets have been granted as security.
The amended credit facility reduces the minimum interest coverage
ratio from 3.00x to 1.00x with step-ups to 1.25x in the third
quarter of 2018 and 1.50x in the first quarter of 2019 and delays
the step-down in the total debt-to-capitalization ratio from 55% to
50% by six quarters to the third quarter of 2018. The Company
has the option of making a one-time election to suspend the
interest coverage ratio for a holiday period of no more than four
quarters, ending no later than the fourth quarter of 2017, with a
single permitted rescission. If the Company elects to
exercise the interest coverage holiday, then the borrowing base
will be capped at $75 million during
the period of the holiday and the LIBOR spreads for funded
borrowings will be increased by an additional 50 basis points
during and after the holiday. The Company's amended revolving
credit facility also limits the Company's cash balance to
$50 million at any time the facility
is drawn, increases the minimum liquidity (cash and revolver
availability) level required for prepayment of the Company's 2019
convertible senior notes, 2020 senior notes, and 2021 senior notes
from $100 million to $150 million, and increases the minimum liquidity
level required to permit a merger, formation or acquisition of a
subsidiary or an investment (other than certain permitted
investments) from $20 million to
$100 million. However, the
foregoing is only a summary of some of the more significant
amendments, is not necessarily complete, and is qualified by the
full text of the First Amendment to the Second Amended and Restated
Credit Agreement, which will be included as an exhibit to the
Company's Current Report on Form 8-K related to this matter dated
July 29, 2016, expected to be filed
on or about August 4, 2016. The
Company was in compliance with all of the covenants of its existing
revolving credit facility for the quarter ended June 30, 2016 and through the date of the First
Amendment, and remains in compliance thereafter. Such
Amendment was effective July 29,
2016, but is generally applicable commencing with the
quarter ending September 30,
2016. As of June 30, 2016 and
August 3, 2016, there were no amounts
drawn under the Company's revolving credit facility.
Future Outlook
Based on the key assumptions outlined below and in the attached
data tables, the following statements reflect management's current
expectations regarding future operating results and certain events
during the Company's guidance period as set forth on pages 12 and
13. These statements are forward-looking and actual results
may differ materially given the volatility inherent in the
Company's industry. Other than as expressly stated, these
statements do not include the potential impact of any significant
further decline in commodity prices for oil and natural gas; any
additional future repositioning voyages; unexpected vessel repairs
or shipyard delays; or future capital transactions, such as vessel
acquisitions, modifications or divestitures, business combinations,
possible additional share repurchases or financings that may be
commenced after the date of this disclosure. Additional
cautionary information concerning forward-looking statements can be
found on page 9 of this news release.
Forward Guidance
The Company's forward guidance for selected operating and
financial data, outlined below and in the attached data tables,
reflects the current state of depressed commodity prices and
planned decreases in the capital spending budgets of its
customers.
Vessel Counts. As of
June 30, 2016, the Company's fleet
consisted of 62 new generation OSVs and six MPSVs. The
forecasted vessel counts presented in this press release reflect
the anticipated fiscal 2016 and 2018 MPSV newbuild deliveries
discussed below. With an average of 42.5 new generation OSVs
projected to be stacked during fiscal 2016, the Company's active
fleet for 2016 is expected to be comprised of an average of 19.4
new generation OSVs and 6.7 MPSVs. With an assumed average of
48.0 new generation OSVs projected to be stacked during fiscal
2017, the Company's active fleet for 2017 is expected to be
comprised of an average of 14.0 new generation OSVs and 8.0
MPSVs.
Operating Expenses. Aggregate
cash operating expenses are projected to be in the range of
$30.0 million to $35.0 million for
the third quarter of 2016, and $135.0
million to $145.0 million for the full-year 2016.
Reflected in the cash opex guidance range above are the
anticipated results of several cost containment measures initiated
by the Company due to prevailing market conditions, including,
among other actions, the stacking of 48 new generation OSVs,
including eight 300 class OSVs, on various dates since October 1, 2014, as well as company-wide
headcount reductions and across-the-board pay-cuts for shoreside
and vessel personnel. Since the end of the quarter, the
Company has stacked one 300 class OSV and plans to stack three
additional OSVs, including one 300 class OSV, during the third
quarter of 2016 and may choose to stack additional vessels as
market conditions warrant. The cash operating expense
estimate above is exclusive of any additional repositioning
expenses the Company may incur in connection with the potential
relocation of more of its vessels into international markets or
back to the GoM, and any customer-required cost-of-sales related to
future contract fixtures that are typically recovered through
higher dayrates.
G&A Expenses. G&A
expenses are expected to be in the approximate range of
$10.0 million to $12.0 million for
the third quarter of 2016, and $40.0 million
to $43.0 million for the full-year 2016.
Other Financial Data. Quarterly
depreciation, amortization, net interest expense, cash income
taxes, cash interest expense, weighted-average basic shares
outstanding and weighted-average diluted shares outstanding for the
third quarter of 2016 are projected to be $23.6 million, $4.2
million, $13.9 million,
$0.5 million, $13.8 million, 36.3 million and 37.3 million,
respectively. Guidance for depreciation, amortization, net
interest expense, cash income taxes and cash interest expense for
the full fiscal years 2016 and 2017 is provided on page 13 of this
press release. The Company's annual effective tax rate is
expected to be roughly 35.0% for fiscal 2016 and 34.5% for fiscal
2017.
Capital Expenditures Outlook
Update on OSV Newbuild Program #5. The
Company also announced today that it has reached an agreement with
the shipyard to postpone the delivery of the final two MPSVs to be
delivered under this program to the first and second quarters of
2018 without any additional cost to the Company. In addition,
the payment terms for the remainder of the contract were adjusted
to shift $43.3 million of
construction milestone draws from the remainder of 2016 and 2017
into 2018. The Company's fifth OSV newbuild program consists
of four 300 class OSVs, five 310 class OSVs, ten 320 class OSVs,
three 310 class MPSVs and two 400 class MPSVs. As of
August 3, 2016, the Company has
placed 20 vessels in-service under this program. The four
remaining vessels under this 24-vessel domestic newbuild program
are currently expected to be delivered in accordance with the table
below:
|
2016
|
2017
|
2018
|
Total
|
|
3Q
|
|
4Q
|
|
1Q
|
|
2Q
|
|
3Q
|
|
4Q
|
|
1Q
|
|
2Q
|
|
3Q
|
|
4Q
|
|
|
Estimated
In-Service Dates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
310 class
MPSVs
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
400 class
MPSVs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Total
Newbuilds
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
4
|
|
The Company owns 62 new generation OSVs, including two newbuilds
delivered in the first quarter of 2016. These vessel
deliveries result in an average new generation OSV fleet complement
of 61.9 and 62.0 vessels for the fiscal years 2016 and 2017, of
which 42.5 and 48.0 vessels are projected to be stacked,
respectively. Based on the above schedule of projected vessel
in-service dates, the Company expects to own and operate eight,
eight and ten MPSVs as of December 31,
2016, 2017 and 2018, respectively. These vessel
additions result in a projected average MPSV fleet complement of
6.7, 8.0, 9.4 and 10.0 vessels for the fiscal years 2016, 2017,
2018 and 2019, respectively. The aggregate cost of the
Company's fifth OSV newbuild program, excluding construction period
interest, is expected to be approximately $1,335.0 million, of which $67.7 million, $22.3
million and $43.3 million are
expected to be incurred in the full fiscal years 2016, 2017 and
2018, respectively. From the inception of this program
through June 30, 2016, the Company
has incurred $1,256.2 million, or
94.1%, of total expected project costs, including $25.0 million that was spent during the second
quarter of 2016. The Company expects to incur newbuild
project costs of $9.2 million during
the third quarter of 2016.
Update on Maintenance Capital Expenditures.
Please refer to the attached data table on page 12 of
this press release for a summary, by period and by vessel type, of
historical and projected data for drydock downtime (in days) and
maintenance capital expenditures for each of the quarterly and/or
annual periods presented for the fiscal years 2015, 2016 and 2017.
Maintenance capital expenditures, which are recurring in
nature, primarily include regulatory drydocking charges incurred
for the recertification of vessels and other vessel capital
improvements that extend or maintain a vessel's economic useful
life. The Company expects that its maintenance capital
expenditures for its fleet of vessels will be approximately
$10.8 million and $7.7 million for the full fiscal years 2016 and
2017, respectively. These cash outlays are expected to be incurred
over approximately 211 and 120 days of aggregate commercial
downtime in 2016 and 2017, respectively, during which the vessels
will not earn revenue.
Update on Other Capital Expenditures. Please
refer to the attached data tables on page 12 of this press release
for a summary, by period, of historical and projected data for
other capital expenditures, for each of the quarterly and/or annual
periods presented for the fiscal years 2015, 2016 and 2017.
Other capital expenditures, which are generally
non-recurring, are comprised of the following: (i)
commercial-related vessel improvements, such as the addition of
cranes, ROVs, helidecks, living quarters and other specialized
vessel equipment, or the modification of vessel capacities or
capabilities, such as DP upgrades and mid-body extensions, which
costs are typically included in and offset, in whole or in part, by
higher dayrates charged to customers, and the speculative
relocation of vessels from one geographic market to another; and
(ii) non-vessel related capital expenditures, including costs
related to the Company's shore-based facilities, leasehold
improvements and other corporate expenditures, such as information
technology or office furniture and equipment. The Company
expects miscellaneous incremental commercial-related vessel
improvements and non-vessel capital expenditures to be
approximately $16.0 million and
$1.0 million, respectively, for the
full fiscal years 2016 and 2017, respectively. These cash
outlays are expected to be incurred over approximately 248 days of
aggregate commercial downtime in 2016, during which the vessels
will not earn revenue.
Liquidity Outlook
As of June 30, 2016, the Company
had a cash balance of $224.5 million
and an undrawn $300.0 million
revolving credit facility. On July 29,
2016, the Company amended the terms of its existing
revolving credit facility. Among the amended terms, the
borrowing base was reduced from $300
million to $200 million.
The Company projects that, even with the current depressed
operating levels, cash generated from operations together with cash
on hand should be sufficient to fund its operations and commitments
at least through the end of its current guidance period without
drawing on its revolving credit facility. The Company has
three tranches of funded unsecured debt outstanding that mature in
fiscal years 2019, 2020 and 2021, respectively. The Company
anticipates addressing each of these tranches of debt well in
advance of their respective maturities, either by refinancing or
otherwise retiring such debt. While the Company has an
authorized share repurchase program, it will continue to prioritize
its usage of cash appropriate to the current market cycle and its
longer term commitments.
Conference Call
The Company will hold a conference call to discuss its second
quarter 2016 financial results and recent developments at
10:00 a.m. Eastern (9:00 a.m. Central) tomorrow, August 4, 2016. To participate in the call, dial
(412) 902-0030 and ask for the Hornbeck Offshore call at least 10
minutes prior to the start time. To access it live over the
Internet, please log onto the web at
http://www.hornbeckoffshore.com, on the "Investors" homepage of the
Company's website at least fifteen minutes early to register,
download and install any necessary audio software. Please
call the Company's investor relations firm, Dennard-Lascar, at
(713) 529-6600 to be added to its e-mail distribution list for
future Hornbeck Offshore news releases. An archived version of the
web cast will be available shortly after the call for a period of
60 days on the "Investors" homepage of the Company's website.
Additionally, a telephonic replay will be available through
August 11, 2016, and may be accessed
by calling (201) 612-7415 and using the pass code 13640302#.
Attached Data Tables
The Company has posted an electronic version of the following
four pages of data tables, which are downloadable in Microsoft
Excel™ format, on the "Investors" homepage of the Hornbeck Offshore
website for the convenience of analysts and investors.
In addition, the Company uses its website as a means of
disclosing material non-public information and for complying with
disclosure obligations under SEC Regulation FD. Such disclosures
will be included on the Company's website under the heading
"Investors." Accordingly, investors should monitor that portion of
the Company's website, in addition to following the Company's press
releases, SEC filings, public conference calls and webcasts.
Hornbeck Offshore Services, Inc. is a leading provider of
technologically advanced, new generation offshore service vessels
primarily in the Gulf of Mexico
and Latin America. Hornbeck
Offshore currently owns a fleet of 68 vessels primarily serving the
energy industry and has four additional ultra high-spec Upstream
vessels under construction for delivery through 2018.
Forward-Looking Statements
This Press Release contains "forward-looking statements," as
contemplated by the Private Securities Litigation Reform Act of
1995, in which the Company discusses factors it believes may affect
its performance in the future. Forward-looking statements are all
statements other than historical facts, such as statements
regarding assumptions, expectations, beliefs and projections about
future events or conditions. You can generally identify
forward-looking statements by the appearance in such a statement of
words like "anticipate," "believe," "continue," "could,"
"estimate," "expect," "forecast," "intend," "may," "might," "plan,"
"potential," "predict," "project," "remain," "should," "will," or
other comparable words or the negative of such words. The accuracy
of the Company's assumptions, expectations, beliefs and projections
depends on events or conditions that change over time and are thus
susceptible to change based on actual experience, new developments
and known and unknown risks. The Company gives no assurance that
the forward-looking statements will prove to be correct and does
not undertake any duty to update them. The Company's actual future
results might differ from the forward-looking statements made in
this Press Release for a variety of reasons, including sustained or
further declines in oil and natural gas prices; a sustained
weakening of demand for the Company's services; unplanned customer
suspensions, cancellations, rate reductions or non-renewals of
vessel charters, vessel management contracts or failures to
finalize commitments to charter or manage vessels; sustained or
further reductions in capital spending budgets by customers; the
inability to accurately predict vessel utilization levels and
dayrates; fewer than anticipated deepwater and ultra-deepwater
drilling units operating in the GoM or other regions where the
Company operates; the effect of inconsistency by the United States government in the pace of
issuing drilling permits and plan approvals in the GoM or other
drilling regions; the Company's inability to successfully complete
the remainder of its current vessel newbuild program on-time and
on-budget, which involves the construction and integration of
highly complex vessels and systems; the inability to successfully
market the vessels that the Company owns, is constructing or might
acquire; the government's cancellation or non-renewal of the
management, operations and maintenance ("O&M") contracts for
vessels; an oil spill or other significant event in the United States or another offshore drilling
region that could have a broad impact on deepwater and other
offshore energy exploration and production activities, such as the
suspension of activities or significant regulatory responses; the
imposition of laws or regulations that result in reduced
exploration and production activities or that increase the
Company's operating costs or operating requirements; environmental
litigation that impacts customer plans or projects; disputes with
customers; bureaucratic, administrative or operating barriers that
delay vessels in foreign markets from going on-hire or result in
contractual penalties or deductions imposed by foreign customers;
industry risks; the impact stemming from the reduction of
Petrobras' announced plans for or administrative barriers to
exploration and production activities in Brazil; recent disruption in Mexican offshore
activities; age or other restrictions imposed on our vessels by
customers; unanticipated difficulty in effectively competing in or
operating in international markets; less than anticipated subsea
infrastructure and field development demand in the GoM and other
markets affecting our MPSVs; sustained vessel over capacity in the
markets in which the Company competes; economic and geopolitical
risks; weather-related risks; upon a return to improved operating
conditions, the shortage of or the inability to attract and retain
qualified personnel, when needed, including vessel personnel for
active vessels or vessels the Company may reactivate; any success
in unionizing the Company's U.S. fleet personnel; regulatory risks;
the repeal or administrative weakening of the Jones Act or changes
in the interpretation of the Jones Act related to the U.S.
citizenship qualification; drydocking delays and cost overruns and
related risks; vessel accidents, pollution incidents, or other
events resulting in lost revenue, fines, penalties or other
expenses that are unrecoverable from insurance policies or other
third parties; unexpected litigation and insurance expenses; or
fluctuations in foreign currency valuations compared to the U.S.
dollar and risks associated with expanded foreign operations, such
as non-compliance with or the unanticipated effect of tax laws,
customs laws, immigration laws, or other legislation that result in
higher than anticipated tax rates or other costs; the inability to
repatriate foreign-sourced earnings and profits; or the inability
of the Company to refinance or otherwise retire funded debt
obligations that come due in 2019, 2020 and 2021. In addition, the
Company's future results may be impacted by adverse economic
conditions, such as inflation, deflation, or lack of liquidity in
the capital markets, that may negatively affect it or parties with
whom it does business resulting in their non-payment or inability
to perform obligations owed to the Company, such as the failure of
customers to fulfill their contractual obligations or the failure
by individual banks to provide funding under the Company's credit
agreement, if required. Further, the Company can give no
assurance regarding when and to what extent it will effect share
repurchases. Should one or more of the foregoing risks or
uncertainties materialize in a way that negatively impacts the
Company, or should the Company's underlying assumptions prove
incorrect, the Company's actual results may vary materially from
those anticipated in its forward-looking statements, and its
business, financial condition and results of operations could be
materially and adversely affected and, if sufficiently severe,
could result in noncompliance with certain covenants of the
Company's recently amended and currently undrawn revolving credit
facility. Additional factors that you should consider are set forth
in detail in the "Risk Factors" section of the Company's most
recent Annual Report on Form 10-K as well as other filings the
Company has made and will make with the Securities and Exchange
Commission which, after their filing, can be found on the Company's
website www.hornbeckoffshore.com.
Regulation G Reconciliation
This Press Release also contains references to the non-GAAP
financial measures of earnings, or net income, before interest,
income taxes, depreciation and amortization, or EBITDA, and
Adjusted EBITDA. The Company views EBITDA and Adjusted EBITDA
primarily as liquidity measures and, therefore, believes that the
GAAP financial measure most directly comparable to such measure is
cash flows provided by operating activities. Reconciliations of
EBITDA and Adjusted EBITDA to cash flows provided by operating
activities are provided in the table below. Management's opinion
regarding the usefulness of EBITDA to investors and a description
of the ways in which management uses such measure can be found in
the Company's most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission, as well as in Note 10 to the
attached data tables.
Contacts:
|
Todd Hornbeck,
CEO
|
|
Jim Harp,
CFO
|
|
Hornbeck Offshore
Services
|
|
985-727-6802
|
|
|
|
Ken Dennard, Managing
Partner
|
|
Dennard-Lascar /
713-529-6600
|
Hornbeck Offshore
Services, Inc. and Subsidiaries
|
|
Unaudited
Consolidated Statements of Operations
|
|
(in thousands,
except Other Operating and Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of
Operations (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
53,673
|
|
$
76,820
|
|
$ 136,446
|
|
$ 130,493
|
|
$ 271,070
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
34,330
|
|
40,429
|
|
57,542
|
|
74,759
|
|
118,962
|
|
|
|
Depreciation and amortization
|
28,474
|
|
28,452
|
|
26,486
|
|
56,926
|
|
53,956
|
|
|
|
General and administrative expenses
|
12,379
|
|
8,674
|
|
13,063
|
|
21,053
|
|
24,955
|
|
|
|
|
75,183
|
|
77,555
|
|
97,091
|
|
152,738
|
|
197,873
|
|
|
|
Gain
(loss) on sale of assets
|
-
|
|
(45)
|
|
-
|
|
(45)
|
|
33,056
|
|
|
|
Operating income (loss)
|
(21,510)
|
|
(780)
|
|
39,355
|
|
(22,290)
|
|
106,253
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
386
|
|
377
|
|
393
|
|
763
|
|
607
|
|
|
|
Interest expense
|
(11,004)
|
|
(11,064)
|
|
(9,921)
|
|
(22,068)
|
|
(20,183)
|
|
|
|
Other income (expense), net 1
|
(48)
|
|
504
|
|
482
|
|
456
|
|
922
|
|
|
|
|
(10,666)
|
|
(10,183)
|
|
(9,046)
|
|
(20,849)
|
|
(18,654)
|
|
|
|
Income (loss) before
income taxes
|
(32,176)
|
|
(10,963)
|
|
30,309
|
|
(43,139)
|
|
87,599
|
|
|
|
Income tax expense
(benefit)
|
(11,590)
|
|
(3,449)
|
|
11,094
|
|
(15,039)
|
|
32,531
|
|
|
|
Net income
(loss)
|
$
(20,586)
|
|
$
(7,514)
|
|
$
19,215
|
|
$
(28,100)
|
|
$
55,068
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per common share
|
$
(0.57)
|
|
$
(0.21)
|
|
$
0.54
|
|
$
(0.78)
|
|
$
1.54
|
|
|
|
Diluted earnings
(loss) per common share
|
$
(0.57)
|
|
$
(0.21)
|
|
$
0.53
|
|
$
(0.78)
|
|
$
1.52
|
|
|
|
Weighted average
basic shares outstanding
|
36,191
|
|
36,085
|
|
35,706
|
|
36,138
|
|
35,668
|
|
|
|
Weighted average
diluted shares outstanding 2
|
36,191
|
|
36,085
|
|
36,253
|
|
36,138
|
|
36,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating
Data (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
Offshore Supply
Vessels:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of new
generation OSVs 3
|
62.0
|
|
61.6
|
|
59.2
|
|
61.8
|
|
60.3
|
|
|
|
Average number of active new
generation OSVs 4
|
20.1
|
|
27.9
|
|
41.6
|
|
24.0
|
|
46.8
|
|
|
|
Average new generation OSV
fleet capacity (deadweight) 3
|
221,629
|
|
219,398
|
|
202,172
|
|
220,514
|
|
205,333
|
|
|
|
Average new generation OSV
capacity (deadweight)
|
3,575
|
|
3,561
|
|
3,413
|
|
3,568
|
|
3,404
|
|
|
|
Average new generation
utilization rate 5
|
23.9%
|
|
35.1%
|
|
56.2%
|
|
29.5%
|
|
60.5%
|
|
|
|
Effective new generation
utilization rate 6
|
73.8%
|
|
77.4%
|
|
79.9%
|
|
75.9%
|
|
78.1%
|
|
|
|
Average new generation
dayrate 7
|
$
26,642
|
|
$
24,601
|
|
$
28,178
|
|
$
25,431
|
|
$
27,381
|
|
|
|
Effective dayrate
8
|
$
6,367
|
|
$
8,635
|
|
$
15,836
|
|
$
7,502
|
|
$
16,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
June 30,
|
|
As of
December 31,
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$ 224,525
|
|
$
259,801
|
|
|
|
|
|
|
|
|
|
Working
capital
|
234,306
|
|
278,491
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
2,615,243
|
|
2,574,661
|
|
|
|
|
|
|
|
|
|
Total
assets
|
2,941,232
|
|
2,984,416
|
|
|
|
|
|
|
|
|
|
Total long-term
debt
|
1,076,915
|
|
1,070,281
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
1,440,106
|
|
1,446,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Data
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by
operating activities
|
$
42,246
|
|
$
134,749
|
|
|
|
|
|
|
|
|
|
Cash used in
investing activities
|
(79,378)
|
|
(56,182)
|
|
|
|
|
|
|
|
|
|
Cash provided by
(used in) financing activities
|
727
|
|
(31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hornbeck Offshore
Services, Inc. and Subsidiaries
|
Unaudited Other
Financial Data
|
(in thousands,
except Financial Ratios)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial
Data (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel
revenues
|
$
45,284
|
|
$
68,216
|
|
$ 128,071
|
|
$
113,500
|
|
$ 258,247
|
|
|
Non-vessel revenues
9
|
8,389
|
|
8,604
|
|
8,375
|
|
16,993
|
|
12,823
|
|
|
Total
revenues
|
$
53,673
|
|
$
76,820
|
|
$ 136,446
|
|
$
130,493
|
|
$ 271,070
|
|
|
Operating income
(loss)
|
$
(21,510)
|
|
$
(780)
|
|
$
39,355
|
|
$
(22,290)
|
|
$ 106,253
|
|
|
Operating margin
(deficit)
|
(40.1%)
|
|
(1.0%)
|
|
28.8%
|
|
(17.1%)
|
|
39.2%
|
|
|
Components
of EBITDA 10
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
(20,586)
|
|
$
(7,514)
|
|
$
19,215
|
|
$
(28,100)
|
|
$
55,068
|
|
|
Interest
expense, net
|
10,618
|
|
10,687
|
|
9,528
|
|
21,305
|
|
19,576
|
|
|
Income tax
expense (benefit)
|
(11,590)
|
|
(3,449)
|
|
11,094
|
|
(15,039)
|
|
32,531
|
|
|
Depreciation
|
22,658
|
|
22,173
|
|
20,172
|
|
44,831
|
|
40,156
|
|
|
Amortization
|
5,816
|
|
6,279
|
|
6,314
|
|
12,095
|
|
13,800
|
|
|
EBITDA
10
|
$
6,916
|
|
$
28,176
|
|
$
66,323
|
|
$
35,092
|
|
$ 161,131
|
|
|
Adjustments
to EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
3,044
|
|
1,172
|
|
2,802
|
|
4,216
|
|
4,774
|
|
|
Interest
income
|
386
|
|
377
|
|
393
|
|
763
|
|
607
|
|
|
Adjusted
EBITDA 10
|
$
10,346
|
|
$
29,725
|
|
$
69,518
|
|
$
40,071
|
|
$ 166,512
|
|
|
EBITDA
10 Reconciliation to GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
10
|
$
6,916
|
|
$
28,176
|
|
$
66,323
|
|
$
35,092
|
|
$ 161,131
|
|
|
Cash paid for
deferred drydocking charges
|
(1,110)
|
|
(1,207)
|
|
(3,756)
|
|
(2,317)
|
|
(6,309)
|
|
|
Cash paid for
interest
|
(11,300)
|
|
(13,787)
|
|
(11,240)
|
|
(25,087)
|
|
(25,272)
|
|
|
Cash paid for
taxes
|
(490)
|
|
(1,752)
|
|
(511)
|
|
(2,242)
|
|
(1,884)
|
|
|
Changes in
working capital
|
4,976
|
|
26,709
|
|
19,953
|
|
31,685
|
|
36,285
|
|
|
Stock-based
compensation expense
|
3,044
|
|
1,172
|
|
2,802
|
|
4,216
|
|
4,774
|
|
|
(Gain) loss on
sale of assets
|
-
|
|
45
|
|
-
|
|
45
|
|
(33,056)
|
|
|
Changes in
other, net
|
957
|
|
(103)
|
|
(260)
|
|
854
|
|
(920)
|
|
|
Net cash
provided by operating activities
|
$
2,993
|
|
$
39,253
|
|
$
73,311
|
|
$
42,246
|
|
$ 134,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hornbeck Offshore
Services, Inc. and Subsidiaries
|
Unaudited Other
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures and Drydock Downtime Data (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
Drydock
Downtime:
|
|
|
|
|
|
|
|
|
|
|
|
|
New-Generation
OSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing drydock activities
|
1.0
|
|
2.0
|
|
4.0
|
|
3.0
|
|
6.0
|
|
|
|
Commercial
downtime (in days)
|
84
|
|
63
|
|
104
|
|
147
|
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing drydock activities
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
Commercial
downtime (in days)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial-related
Downtime11:
|
|
|
|
|
|
|
|
|
|
|
|
|
New-Generation
OSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing commercial-related downtime
|
1.0
|
|
-
|
|
-
|
|
1.0
|
|
1.0
|
|
|
|
Commercial
downtime (in days)
|
27
|
|
-
|
|
86
|
|
27
|
|
266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing commercial-related downtime
|
1.0
|
|
1.0
|
|
-
|
|
2.0
|
|
-
|
|
|
|
Commercial
downtime (in days)
|
52
|
|
149
|
|
-
|
|
201
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance and
Other Capital Expenditures (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
Capital Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
drydocking charges
|
$
1,110
|
|
$
1,207
|
|
$
3,756
|
|
$
2,317
|
|
$
6,309
|
|
|
|
Other vessel
capital improvements
|
2,154
|
|
3,519
|
|
1,820
|
|
5,673
|
|
4,070
|
|
|
|
|
3,264
|
|
4,726
|
|
5,576
|
|
7,990
|
|
10,379
|
|
|
|
Other Capital
Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial-related vessel improvements
|
4,056
|
|
6,829
|
|
12,583
|
|
10,885
|
|
32,175
|
|
|
|
Non-vessel
related capital expenditures
|
9
|
|
266
|
|
10,217
|
|
275
|
|
14,605
|
|
|
|
|
4,065
|
|
7,095
|
|
22,800
|
|
11,160
|
|
46,780
|
|
|
|
|
$
7,329
|
|
$
11,821
|
|
$
28,376
|
|
$
19,150
|
|
$
57,159
|
|
|
|
Growth Capital
Expenditures (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
OSV newbuild
program #5
|
$
25,027
|
|
$
29,507
|
|
$
61,554
|
|
$
54,534
|
|
$ 109,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forecasted
Data12:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q
2016A
|
|
2Q
2016A
|
|
3Q
2016E
|
|
4Q
2016E
|
|
2016E
|
|
2017E
|
|
Drydock
Downtime:
|
|
|
|
|
|
|
|
|
|
|
|
|
New-Generation
OSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing drydock activities
|
2.0
|
|
1.0
|
|
-
|
|
1.0
|
|
4.0
|
|
5.0
|
|
Commercial
downtime (in days)
|
63
|
|
84
|
|
28
|
|
10
|
|
185
|
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing drydock activities
|
-
|
|
-
|
|
-
|
|
1.0
|
|
1.0
|
|
2.0
|
|
Commercial
downtime (in days)
|
-
|
|
-
|
|
-
|
|
26
|
|
26
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial-related
Downtime11:
|
|
|
|
|
|
|
|
|
|
|
|
|
New-Generation
OSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing commercial-related downtime
|
-
|
|
1.0
|
|
-
|
|
-
|
|
1.0
|
|
-
|
|
Commercial
downtime (in days)
|
-
|
|
27
|
|
-
|
|
-
|
|
27
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing commercial-related downtime
|
1.0
|
|
1.0
|
|
1.0
|
|
-
|
|
3.0
|
|
-
|
|
Commercial
downtime (in days)
|
149
|
|
52
|
|
20
|
|
-
|
|
221
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance and
Other Capital Expenditures (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
Capital Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
drydocking charges
|
$
1.2
|
|
$
1.1
|
|
$
1.3
|
|
$
0.9
|
|
$
4.5
|
|
$
6.8
|
|
Other vessel
capital improvements
|
3.5
|
|
2.2
|
|
0.5
|
|
0.1
|
|
6.3
|
|
0.9
|
|
|
4.7
|
|
3.3
|
|
1.8
|
|
1.0
|
|
10.8
|
|
7.7
|
|
Other Capital
Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial-related vessel improvements
|
6.8
|
|
4.1
|
|
4.5
|
|
0.1
|
|
15.5
|
|
-
|
|
Non-vessel
related capital expenditures
|
0.3
|
|
-
|
|
0.1
|
|
0.1
|
|
0.5
|
|
1.0
|
|
|
7.1
|
|
4.1
|
|
4.6
|
|
0.2
|
|
16.0
|
|
1.0
|
|
|
$
11.8
|
|
$
7.4
|
|
$
6.4
|
|
$
1.2
|
|
$
26.8
|
|
$
8.7
|
|
Growth Capital
Expenditures (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
OSV newbuild
program #5
|
$
29.5
|
|
$
25.0
|
|
$
9.2
|
|
$
4.0
|
|
$
67.7
|
|
$
22.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hornbeck Offshore
Services, Inc. and Subsidiaries
|
Unaudited Other
Fleet and Financial Data
|
(in millions,
except Average Vessels, Contract Backlog and Tax
Rate)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Guidance
of Selected Data (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q
2016E
|
|
Full-Year
2016E
|
|
Full-Year
2017E
|
|
|
|
|
|
|
|
|
Avg
Vessels
|
|
Avg
Vessels
|
|
Avg
Vessels
|
|
|
|
|
|
|
|
Fleet Data (as of
3-Aug-2016):
|
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
|
|
New generation OSVs -
Active
|
15.8
|
|
19.4
|
|
14.0
|
|
|
|
|
|
|
|
New generation OSVs -
Stacked 13
|
46.2
|
|
42.5
|
|
48.0
|
|
|
|
|
|
|
|
New generation OSVs -
Total
|
62.0
|
|
61.9
|
|
62.0
|
|
|
|
|
|
|
|
New generation
MPSVs
|
6.8
|
|
6.7
|
|
8.0
|
|
|
|
|
|
|
|
Total Upstream
|
68.8
|
|
68.6
|
|
70.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q 2016E
Range
|
|
Full-Year
2016E Range
|
|
|
|
|
|
Cost
Data:
|
Low14
|
|
High
14
|
|
Low14
|
|
High
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
30.0
|
|
$
35.0
|
|
$
135.0
|
|
$
145.0
|
|
|
|
|
|
General and administrative
expenses
|
$
10.0
|
|
$
12.0
|
|
$
40.0
|
|
$
43.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q
2016A
|
|
2Q
2016A
|
|
3Q
2016E
|
|
4Q
2016E
|
|
2016E
|
|
2017E
|
|
Other Financial
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
$
22.2
|
|
$
22.7
|
|
$
23.6
|
|
$
24.4
|
|
$
92.9
|
|
$
97.1
|
|
Amortization
|
6.3
|
|
5.8
|
|
4.2
|
|
3.8
|
|
20.1
|
|
11.2
|
|
Interest
expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
$
13.5
|
|
$
13.5
|
|
$
13.5
|
|
$
13.5
|
|
$
54.0
|
|
$
54.0
|
|
Write-off of
unamortized revolver issuance costs
|
-
|
|
-
|
|
0.9
|
|
-
|
|
0.9
|
|
-
|
|
Incremental
non-cash OID interest expense 15
|
2.6
|
|
2.6
|
|
2.6
|
|
2.7
|
|
10.5
|
|
11.1
|
|
Capitalized
interest
|
(5.0)
|
|
(5.1)
|
|
(2.9)
|
|
(2.0)
|
|
(15.0)
|
|
(8.8)
|
|
Interest
income
|
(0.4)
|
|
(0.4)
|
|
(0.2)
|
|
(0.2)
|
|
(1.2)
|
|
(0.5)
|
|
Total interest
expense, net
|
$
10.7
|
|
$
10.6
|
|
$
13.9
|
|
$
14.0
|
|
$
49.2
|
|
$
55.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
rate
|
31.5%
|
|
36.0%
|
|
35.0%
|
|
35.0%
|
|
35.0%
|
|
34.5%
|
|
Cash income
taxes
|
$
1.8
|
|
$
0.5
|
|
$
0.5
|
|
$
0.5
|
|
$
3.3
|
|
$
1.8
|
|
Cash interest
expense
|
13.8
|
|
11.3
|
|
13.8
|
|
11.3
|
|
50.2
|
|
50.2
|
|
Weighted
average basic shares outstanding
|
36.1
|
|
36.2
|
|
36.3
|
|
36.3
|
|
36.2
|
|
36.8
|
|
Weighted
average diluted shares outstanding 16
|
36.8
|
|
37.2
|
|
37.3
|
|
37.3
|
|
37.2
|
|
37.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Represents other
income and expenses, including equity in income from investments
and foreign currency transaction gains or losses.
|
|
|
2
|
Due to net losses for
the three and six months ended June 30, 2016 and the three months
ended March 31, 2016, the Company excluded the dilutive effect of
equity awards representing the rights to acquire 992, 966 and 939
shares of common stock, respectively, because the effect was
anti-dilutive. Stock options representing rights to acquire
326 and 332 shares of common stock for the three and six months
ended June 30, 2015 were excluded from the calculation of diluted
earnings per share, because the effect was antidilutive after
considering the exercise price of the options in comparison to the
average market price, proceeds from exercise, taxes and related
unamortized compensation. As of June 30, 2016, March 31,
2016, and June 30, 2015, the 1.500% convertible senior notes were
not dilutive, as the average price of the Company's stock was less
than the effective conversion price of $68.53 for such
notes.
|
|
|
3
|
The Company owned 62
new generation OSVs as of June 30, 2016. Excluded from this
data are six MPSVs owned and operated by the
Company.
|
|
|
4
|
In response to weak
market conditions, the Company elected to stack certain of its new
generation OSVs on various dates since October 1, 2014.
Active new generation OSVs represent vessels that are immediately
available for service during each respective period.
|
|
|
5
|
Average utilization
rates are average rates based on a 365-day year. Vessels are
considered utilized when they are generating revenues.
|
|
|
6
|
Effective utilization
rate is based on a denominator comprised only of vessel-days
available for service by the active fleet, which excludes the
impact of stacked vessel days.
|
|
|
7
|
Average new
generation OSV dayrates represent average revenue per day, which
includes charter hire, crewing services, and net brokerage
revenues, based on the number of days during the period that the
OSVs generated revenues.
|
|
|
8
|
Effective dayrate
represents the average dayrate multiplied by the utilization rate
for the respective period.
|
|
|
9
|
Represents revenues
from shore-based operations, vessel-management services, including
from the O&M contract with the U.S. Navy, and ancillary
equipment rentals, including from ROVs.
|
|
|
10
|
Non-GAAP Financial
Measure
|
|
|
|
The Company discloses
and discusses EBITDA as a non-GAAP financial measure in its public
releases, including quarterly earnings releases, investor
conference calls and other filings with the Securities and Exchange
Commission. The Company defines EBITDA as earnings (net
income) before interest, income taxes, depreciation and
amortization. The Company's measure of EBITDA may not be
comparable to similarly titled measures presented by other
companies. Other companies may calculate EBITDA differently
than the Company, which may limit its usefulness as a comparative
measure.
|
|
|
|
The Company views
EBITDA primarily as a liquidity measure and, as such, believes that
the GAAP financial measure most directly comparable to it is cash
flows provided by operating activities. Because EBITDA is not
a measure of financial performance calculated in accordance with
GAAP, it should not be considered in isolation or as a substitute
for operating income, net income or loss, cash flows provided by
operating, investing and financing activities, or other income or
cash flow statement data prepared in accordance with
GAAP.
|
|
|
|
EBITDA is widely used
by investors and other users of the Company's financial statements
as a supplemental financial measure that, when viewed with GAAP
results and the accompanying reconciliations, the Company believes
provides additional information that is useful to gain an
understanding of the factors and trends affecting its ability to
service debt, pay deferred taxes and fund drydocking charges and
other maintenance capital expenditures. The Company also
believes the disclosure of EBITDA helps investors meaningfully
evaluate and compare its cash flow generating capacity from quarter
to quarter and year to year.
|
|
|
|
EBITDA is also a
financial metric used by management (i) as a supplemental internal
measure for planning and forecasting overall expectations and for
evaluating actual results against such expectations; (ii) as a
significant criteria for annual incentive cash bonuses paid to the
Company's executive officers and other shore-based employees; (iii)
to compare to the EBITDA of other companies when evaluating
potential acquisitions; and (iv) to assess the Company's ability to
service existing fixed charges and incur additional
indebtedness.
|
|
|
|
In addition, the
Company also makes certain adjustments, as applicable, to EBITDA
for losses on early extinguishment of debt, stock-based
compensation expense and interest income, or Adjusted EBITDA, to
internally evaluate its performance based on the computation of
ratios used in certain financial covenants of its credit agreements
with various lenders. The Company believes that these ratios
can be material components of financial covenants and, when
applicable, failure to comply with such covenants could result in
the acceleration of indebtedness or the imposition of restrictions
on the Company's financial flexibility.
|
|
|
|
Set forth below are
the material limitations associated with using EBITDA as a non-GAAP
financial measure compared to cash flows provided by operating
activities.
|
|
|
|
|
•
|
EBITDA does not
reflect the future capital expenditure requirements that may be
necessary to replace the Company's existing vessels as a result of
normal wear and tear,
|
|
|
|
|
•
|
EBITDA does not
reflect the interest, future principal payments and other
financing-related charges necessary to service the debt that the
Company has incurred in acquiring and constructing its
vessels,
|
|
|
|
|
•
|
EBITDA does not
reflect the deferred income taxes that the Company will eventually
have to pay once it is no longer in an overall tax net operating
loss position, as applicable, and
|
|
|
|
|
•
|
EBITDA does not
reflect changes in the Company's net working capital
position.
|
|
|
|
Management
compensates for the above-described limitations in using EBITDA as
a non-GAAP financial measure by only using EBITDA to supplement the
Company's GAAP results.
|
|
|
11
|
Commercial-related
Downtime results from commercial-related vessel improvements, such
as the addition of cranes, ROVs, helidecks, living quarters and
other specialized vessel equipment; the modification of vessel
capacities or capabilities, such as DP upgrades and mid-body
extensions, which costs are typically included in and offset, in
whole or in part, by higher dayrates charged to customers; and the
speculative relocation of vessels from one geographic market to
another.
|
|
|
12
|
The capital
expenditure amounts included in this table are anticipated cash
outlays before the allocation of construction period interest, as
applicable.
|
|
|
13
|
As of August 3, 2016,
the Company's inactive fleet of 45 new generation OSVs that were
"stacked" was comprised of the following: eleven 200 class OSVs,
twenty-four 240 class OSVs, three 265 class OSVs and seven 300
class OSVs. In addition, the Company plans to stack two 240
class OSVs and one 300 class OSV during the third quarter of
2016.
|
|
|
14
|
The "low" and "high"
ends of the guidance ranges set forth in this table are not
intended to cover unexpected variations from currently anticipated
market conditions. These ranges provide only a reasonable
deviation from the conditions that are expected to
occur.
|
|
|
15
|
Represents
incremental imputed non-cash OID interest expense required by
accounting standards pertaining to the Company's 1.500% convertible
senior notes due 2019.
|
|
|
16
|
Projected
weighted-average diluted shares do not reflect any potential
dilution resulting from the Company's 1.500% convertible senior
notes. Warrants related to the Company's 1.500% convertible
senior notes become dilutive when the average price of the
Company's stock exceeds the effective conversion price for such
notes of $68.53.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hornbeck-offshore-announces-second-quarter-2016-results-300308794.html
SOURCE Hornbeck Offshore Services, Inc.