1999 FIRST QUARTER REPORT |
May 4, 1999 |
To Our Shareholders:
The difference between night and day is an apt characterization of market conditions in the Gulf of Mexico in the first quarter of 1999 versus 1998. A year ago, customers concerned about equipment availability accelerated projects into the first quarter and were willing to pay premium rates, particularly for dynamically positioned vessels. This year our customer base has been frozen by low commodity prices and merger activity. During April, however, the doom and gloom environment changed 180° as oil prices moved above $18 a barrel and natural gas traded at $2.25/mcf. These rapidly changing conditions have triggered a high level of interest in the Cal Dive story. During April, Merrill Lynch and Howard Weil initiated research coverage and CDI appeared at the Howard Weil Energy Conference. Morgan Stanley issued an extensive research report on the offshore construction industry, "Play Deep", and listed CDI as one of their three top energy picks (along with Baker Hughes and Halliburton). Morgan Stanley also sponsored a West Coast road show which highlighted their estimates that Deepwater exploration and development spending would increase from $11 billion in 1998 to $19 billion by the year 2001. As a $500 million market cap company, Cal Dive does not need to capture a whole lot of that incremental $8 billion a year to grow significantly.
Financial Highlights
While a long way from the record first quarter of 1998, $2.1 million of earnings generated in the trough of 1999 still represents the second best Q1 in Cal Dive history.
First Quarter |
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1999 |
1998 |
Decrease |
|
Revenues | $26,006,000 |
$33,157,000 |
22% |
Net Income | 2,087,000 |
5,243,000 |
60% |
Diluted Earnings Per Share | 0.14 |
0.35 |
60% |
Operational Highlights
- Deepwater: The company performed six projects during the first quarter in water depths beyond 1,000 feet, the most significant for Amerada Hess at Penn State and Baldpate. Work for Exxon included coring in 4,800 fsw in preparation for the major installation project which CDI will perform at Diana in the second half of the year. The Diana project and an increasingly firm backlog of activity for the Uncle John resulted in our moving portions of the re-engining process scheduled for Q3 to May and deferring installation of the new engines until Q1 of the year 2000.
Field |
Customer |
Description |
Depth (fsw) |
Diana |
Exxon |
Coring in advance of July construction project |
4,856 |
Troika |
BP/Amoco |
Tighten flange connection on rigid jumper |
1,800 |
Penn State |
Amerada Hess |
Lay 20,500 foot wellhead control umbilical |
1,641 |
Baldpate |
Amerada Hess |
Tie Penn State production into compliant tower |
1,641 |
Pompano |
BP/Amoco |
Change out two control pods |
1,500 |
Zinc |
Exxon |
Change out control pod |
1,500 |
Respectfully submitted,
Owen E. Kratz Chairman Chief Executive Officer |
Martin R.
Ferron |
S. James Nelson,
Jr. |
CAL DIVE INTERNATIONAL, INC. |
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Comparative Consolidated Statements of Operations |
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Three Months Ended March 31, |
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(000's omitted, except per share data) |
1999 |
1998 |
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Net Revenues |
$26,006 |
$33,157 |
|||||||
Cost of Sales |
20,749 |
22,594 |
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Gross Profit |
5,257 |
10,563 |
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Selling and Administrative |
2,573 |
2,840 |
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Equity in Earnings of Aquatica, Inc. |
100 |
133 |
|||||||
Interest (Income), net & Other |
(448) |
(209) |
|||||||
Income Before Income Taxes |
3,232 |
8,065 |
|||||||
Income Tax Provision |
1,145 |
2,822 |
|||||||
Net Income |
$2,087 |
$5,243 |
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Other Financial Data: |
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EBITDA (1) |
$5,544 |
$9,839 |
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Weighted Avg. Shares Outstanding: |
|||||||||
Basic |
14,617 |
14,535 |
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Diluted |
14,995 |
14,999 |
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Earnings Per Common Share: |
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Basic |
$0.14 |
$0.36 |
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Diluted |
$0.14 |
$0.35 |
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(1) |
The Company calculates EBITDA as earnings before net interest expense, taxes, depreciation and amortization. EBITDA is a |
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supplemental financial measurement used by the Company and investors in the marine construction industry in the evaluation |
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of its business. |
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Comparative Consolidated Balance Sheets |
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ASSETS |
LIABILITIES & SHAREHOLDERS' EQUITY |
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(000'S omitted) |
March 31, 1999 |
Dec. 31, 1998 |
March 31, 1999 |
Dec. 31, 1998 |
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Current Assets: |
Current Liabilities: |
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Cash and cash equivalents |
$39,584 |
$32,843 |
Accounts payable |
$18,285 |
$15,949 |
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Accounts receivable |
26,437 |
31,053 |
Accrued liabilities |
6,805 |
10,020 |
||||
Other current assets |
12,932 |
9,190 |
Income tax payable |
1,971 |
1,201 |
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Total Current Assets |
78,953 |
73,086 |
Total Current Liabilities |
27,061 |
27,170 |
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Net Property & Equipment |
88,869 |
79,159 |
Long-Term Debt |
0 |
0 |
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Restricted Cash Deposits |
2,475 |
2,408 |
Deferred Income Taxes |
13,539 |
13,539 |
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Investment in Aquatica, Inc. |
7,756 |
7,656 |
Decommissioning Liabilities |
24,637 |
9,883 |
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Other Assets |
3,430 |
1,926 |
Shareholders' Equity |
116,246 |
113,643 |
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Total Assets |
$181,483 |
$164,235 |
Total Liabilities & Equity |
$181,483 |
$164,235 |
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This report and press release include certain statements that may be deemed "forward looking statements" under applicable law. Forward looking statements are not statements of historical fact and such statements are not guarantees of future performance or events and involve risks and assumptions that could cause actual results to vary materially from those predicted, including among other things, unexpected delays and operational issues associated with turnkey projects, the price of crude oil and natural gas, weather conditions in offshore markets, change in site conditions, and capital expenditures by customers. The Company strongly encourages readers to note that some or all of the assumptions upon which such forward looking statements are based are beyond the Company's ability to control or estimate precisely and may in some cases be subject to rapid and material change. |