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Hornbeck Offshore Announces Fourth Quarter 2012 Results



           Hornbeck Offshore Announces Fourth Quarter 2012 Results

Expands OSV Newbuild Program #5 by Four Vessels, including New Class of Jones
Act MPSVs

Initiates Selected Line-Item Guidance for Fiscal 2013 and Fiscal 2014

PR Newswire

COVINGTON, La., Feb. 6, 2013

COVINGTON, La., Feb. 6, 2013 /PRNewswire/ -- Hornbeck Offshore Services, Inc.
(NYSE:HOS) announced today results for the fourth quarter ended December 31,
2012.  Following are highlights for this period and the Company's future
outlook:

  o 4Q2012 diluted EPS of $0.31 was $0.11, or 55% higher than 3Q2012
  o 4Q2012 EBITDA of $55.1 million increased $7.0 million, or 15% over 3Q2012
  o Leading-edge spot dayrates for 240 class and 265 class DP-2 OSVs are now
    in the $38,000 to $42,000 range
  o 4Q2012 utilization for the Company's high-spec OSVs was 96% compared to
    94% in both 4Q2011 and 3Q2012
  o Contract backlog for new gen OSV vessel-days currently at 49% and 15% for
    2013 and 2014
  o Contract backlog for MPSV vessel-days currently at 77% and 31% for 2013
    and 2014
  o 4Q2012 EBITDA for the Downstream fleet was $6.2 million, up from $3.9
    million, or 59% over 4Q2011
  o 4Q2012 utilization for the Downstream fleet was 99% up from 87% in 4Q2011
    and 93% in 3Q2012
  o Contract backlog for Downstream vessel-days currently at 47% for 2013
  o The Company announced plans to increase its OSV Newbuild Program #5 by
    four vessels to a total of 24
  o HOS intends to ultimately build up to eight Jones Act-qualified MPSVs as a
    subset of its growing OSV newbuild program
  o The Company's  first two new Jones Act MPSV commitments will be based on
    the HOSMAX 310 design
  o Currently evaluating whether to exercise next two options for additional
    HOSMAX 320 OSVs or build additional MPSVs
  o OSV Newbuild Program #5 and 200 Class OSV Retrofit Program remain in-line
    with prior cost and delivery date guidance

Fourth quarter 2012 revenues increased 8.6% to $133.2 million compared to
$122.7 million for the fourth quarter of 2011 and increased 4.1% compared to
$127.9 million for the third quarter of 2012.  Operating income was $32.5
million, or 24.4% of revenues, for the fourth quarter of 2012 compared to
$35.8 million, or 29.2% of revenues, for the prior-year quarter; and $26.3
million, or 20.6% of revenues, for the third quarter of 2012.  The Company
recorded net income for the fourth quarter of 2012 of $11.3 million, or $0.31
per diluted share, compared to a net income of $14.2 million, or $0.45 per
diluted share, for the year-ago quarter; and net income of $7.4 million, or
$0.20 per diluted share, for the third quarter of 2012.  Diluted common shares
for the fourth quarter of 2012 were 36.1 million compared to 31.8 million for
the fourth quarter of 2011 and 36.1 million for the third quarter of 2012. 
Diluted common shares increased as a result of the Company's November 2011
equity offering. 

Fourth quarter 2012 EBITDA decreased 2.8% to $55.1 million compared to $56.7
million for the fourth quarter of 2011 but increased 14.6% compared to $48.1
million for the third quarter of 2012. For a reconciliation of EBITDA to the
nearest comparable GAAP financial measure and for additional information
regarding EBITDA as a non-GAAP financial measure, please see the accompanying
data tables, including Note 11. 

Upstream Segment.  Revenues from the Upstream segment were $118.6 million for
the fourth quarter of 2012, an increase of $9.0 million, or 8.2%, from $109.6
million for the fourth quarter of 2011; and an increase of $3.5 million, or
3.0%, from $115.1 million for the third quarter of 2012.  Higher Upstream
revenues for the fourth quarter of 2012 compared to the same period in 2011
primarily resulted from increased demand for the Company's high-spec OSVs. 
Upstream operating income was $29.7 million, or 25.0% of revenues, for the
fourth quarter of 2012 compared to $35.3 million, or 32.2% of revenues, for
the prior-year quarter; and $24.5 million, or 21.3% of revenues, for the third
quarter of 2012.  Average new generation OSV dayrates for the fourth quarter
of 2012 were $24,024 compared to $21,863 for the same period in 2011 and
$23,990 for the third quarter of 2012.  New generation OSV utilization was
84.0% for the fourth quarter of 2012 compared to 83.5% for the year-ago
quarter and 79.5% for the sequential quarter.  The Company had an average of
1.4 stacked new generation OSVs during the fourth quarter of 2012 compared to
quarterly averages of 5.2 stacked vessels during the year-ago quarter and 2.1
stacked vessels during the sequential quarter.  Effective new generation OSV
utilization for the Company's active fleet, which excludes the impact of
stacked vessels, was 86.4% for the fourth quarter of 2012 compared to 93.0%
for the year-ago quarter and 82.9% for the sequential quarter. However, in
contrast, the Company's high-spec OSVs achieved an average utilization of
95.6% for the fourth quarter of 2012, while maintaining leading-edge spot
dayrates in the $38,000 to $42,000 range. After adjusting for 71 days of
fourth quarter downtime for regulatory drydockings, the Company's commercially
available high-spec OSV fleet achieved an effective utilization of 98.8%.    

Downstream Segment.  Revenues from the Downstream segment of $14.6 million for
the fourth quarter of 2012 increased by $1.5 million, or 11.5%, compared to
$13.1 million for the same period in 2011, and were higher than the sequential
quarter by $1.7 million, or 13.2%.  The Company's double-hulled tank barge
average dayrates were $17,694 for the fourth quarter of 2012 compared to
$18,176 for the same period in 2011 and $16,626 for the sequential quarter. 
The sequential increase in dayrates was primarily driven by improved market
conditions in the GoM and Puerto Rico.  Utilization for the double-hulled tank
barge fleet was 99.3% for the fourth quarter of 2012 compared to 87.3% for the
year-ago quarter and 93.4% for the sequential quarter.  The increase in
utilization over the prior-year quarter is primarily due to increased demand
for the Company's tugs and tank barges driven by the activity in the Eagle
Ford Shale and a tight market for clean petroleum product capacity in the
Northeast U.S.  Effective, or utilization-adjusted, dayrates for the Company's
double-hulled tank barges were $17,570 for the fourth quarter of 2012, which
is $1,702, or 10.7%, higher than effective dayrates for the prior-year
quarter; and $2,041 or 13.1%, higher than effective dayrates for the third
quarter of 2012.    

Operating Expenses.   Operating expenses for the fourth quarter of 2012 were
$65.6 million compared to $58.4 million and $67.2 million for the fourth
quarter of 2011 and the third quarter of 2012, respectively.  The decrease in
operating expenses compared to the sequential quarter is primarily the result
of the remobilization of four new generation OSVs from Brazil to the GoM
during the third quarter of 2012.  The Company's fourth-quarter 2012 operating
expenses were $58.2 million and $7.4 million for its Upstream and Downstream
segments, respectively. 

General and Administrative ("G&A").   G&A expenses of $12.3 million for the
fourth quarter of 2012 were 9.2% of revenues compared to $8.0 million, or 6.5%
of revenues, for the fourth quarter of 2011; and $12.9 million, or 10.1% of
revenues, for the third quarter of 2012.  The year-over-year increase in G&A
is a result of having higher shoreside incentive compensation expenses, fleet
recruiting and training expenses and bad debt reserves related to a customer
bankruptcy proceeding initiated in August 2012.  The Company allocated 92% of
its fourth quarter 2012 G&A expenses to the Upstream segment and 8% to the
Downstream segment.

Depreciation and Amortization.  Depreciation and amortization expense was
$22.7 million for the fourth quarter of 2012, or $2.2 million higher than the
prior-year quarter.  This increase is primarily due to higher costs for vessel
regulatory drydockings and incremental amortization expense related to the
vessels that were previously stacked and required recertification prior to
being re-activated. Depreciation and amortization expense is expected to
increase from current levels when the remaining stacked vessel is recertified
and activated, and when any newly constructed vessels are delivered or undergo
their initial 30-month and 60-month recertifications.

Interest Expense.  Interest expense increased $0.2 million during the fourth
quarter of 2012 compared to the same period in 2011.  Interest expense
increased over the prior-year quarter due to incremental interest expense of
$3.5 million related to the issuance of $300.0 million of aggregate principle
amount of 1.500% convertible senior notes on August 13, 2012.  This increase
was partially offset by an increase in capitalized interest related to the
Company's fifth OSV newbuild program, which commenced during the fourth
quarter of 2011.  The Company recorded $4.7 million of capitalized
construction period interest, or roughly 24% of its total interest costs, for
the fourth quarter of 2012 compared to having $0.4 million of capitalized
interest, or 2.6% of total interest costs for the prior-year quarter.

Annual 2012 Results
Revenues for 2012 increased 34.4% to $512.7 million compared to $381.6 million
for 2011.  Operating income was $121.3 million, or 23.7% of revenues, for 2012
compared to $55.0 million, or 14.4% of revenues, for the prior-year.  Net
income for 2012 increased by $39.6 million to net income of $37.0 million, or
$1.03 per diluted share, compared to a net loss of ($2.6 million), or ($0.09)
per diluted share, for 2011. EBITDA for 2012 increased 48.4% to $203.3 million
compared to $137.0 million for 2011.  The year-over-year increase in revenues
primarily resulted from increased demand for the Company's high-spec OSVs and
MPSVs and the full-year contribution from four 240 class OSVs that mobilized
to Brazil during 2011.  In addition, the Company had an average of 2.7 stacked
new generation OSVs during 2012 compared to an average of 9.2 stacked vessels
during 2011.  The Company's net income for 2012 included a $0.3 million ($0.2
million after-tax or $0.01 per diluted share) gain on the sales of one older,
lower-horsepower tug, ancillary equipment and certain non-vessel shoreside
support assets for net cash proceeds of $4.3 million. The Company's net income
for 2011 included a $1.5 million ($1.1 million after-tax, or $0.04 per diluted
share) gain on the sales of the Company's last four remaining single-hulled
tank barges and two ROVs for net cash proceeds of $11.3 million.  The
Company's net income for 2012 included a $6.0 million ($3.7 million after-tax,
or $0.11 per diluted share) loss on early extinguishment of debt related to
the refinancing of the Company's 6.125% senior notes due 2014 in March 2012
compared to no such expense in 2011.

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.  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 additional future
long-term contract repositioning voyages; unexpected vessel repairs or
shipyard delays; or future capital transactions, such as vessel acquisitions
or divestitures, business combinations, financings or the unannounced
expansion of existing newbuild programs that may be commenced after the date
of this disclosure.  Additional cautionary information concerning
forward-looking statements can be found on page 10 of this news release.

Forward Guidance

Vessel Counts.  As of December 31, 2012, excluding six inactive non-core
vessels, the Company's operating fleet consisted of 51 new  generation OSVs,
four MPSVs, nine double-hulled tank barges and nine ocean-going tugs.  The
Company's active Upstream Fleet for fiscal 2013 is expected to be comprised of
an average of 52.0 new generation OSVs and four MPSVs.  These active new
generation OSVs are comprised of an average of 19.3 "term" vessels that are
currently chartered on long-term contracts and an average of 32.7 "spot"
vessels that are currently operating or being offered for service under
short-term charters.  About 47% of these short-term charters are for DP-1 OSVs
for which the Company has recently observed bifurcated market conditions in
the GoM due to increased customer preference for high-spec OSVs since the
Macondo incident.  As of December 31, 2012, the Company had one DP-1 new
generation OSV stacked, which is expected to remain inactive until there is
sustainable demand for such vessel.  The Company's active Downstream fleet for
fiscal 2013 is expected to consist of nine double-hulled tank barges and
nine-ocean going tugs. 

Contract Backlog.  The Company's forward contract coverage for its 51-vessel
fleet of new generation OSVs for the fiscal years ending 2013 and 2014 is
currently 49% and 15%, respectively.  The Company's forward contract coverage
for its four MPSVs for the fiscal years ending 2013 and 2014 is currently 77%
and 31%, respectively.  The Company's forward contract coverage for its
nine-vessel fleet of double-hulled tank barges for the fiscal year ending 2013
is currently 47%.  These contract backlog percentages are based on available
vessel-days for the guidance periods, not estimated revenue.

Effective Dayrates.  Effective, or utilization-adjusted, new generation OSV
dayrates for the Company's projected average of 19.3 active "term" OSVs are
expected to be in the $19,000 to $20,000 range for the full-year 2013.  This
range does not reflect the incremental impact of any revenue expected to be
derived in fiscal 2013 from the Company's "spot" or "stacked" OSVs.  The
Company does not provide annual guidance regarding the effective dayrates
anticipated for its "spot" new generation OSVs due to the wide range of
potential outcomes of its current domestic and international bidding activity
for such vessels.  Improved market conditions have allowed the Company to
recently increase leading-edge spot dayrates for its 240/265 class DP-2 OSVs
to the $38,000 to $42,000 range, up from $30,000 to $36,000 range last
quarter.  Whether these rates can be sustained will depend on a variety of
factors, including the future pace of permitting in the GoM.  Effective
dayrates for the Company's nine double-hulled tank barges are projected to be
in the range of $17,500 to $18,500 for the full-year 2013. 

Operating Expenses.  Aggregate cash operating expenses for the Company's
Upstream segment are projected to be in the range of $62 million to $65
million for the first quarter of 2013, and $253 million to $263 million for
fiscal 2013.  This annual guidance range includes roughly $4 million of total
out-of-pocket costs related to the remobilization of four 240 class OSVs out
of Brazil, not counting lost revenue during 120 days of aggregate commercial
downtime (30 days per vessel), during the period of June through early August
2013. The cash operating expense estimate above is exclusive of any additional
repositioning expenses the Company may incur that are not recoverable through
charter hire in connection with the potential relocation of more of its
current spot and/or stacked vessels into international markets or back to the
GoM; or any customer-required cost-of-sales related to future contract
fixtures that are typically recovered through higher dayrates. Aggregate cash
operating expenses for the Company's Downstream segment are projected to be in
the range of $7.0 million to $9.0 million for the first quarter of 2013, and
$27 million to $29 million for fiscal 2013. 

G&A Expenses.  General and administrative expenses are expected to be in the
approximate range of $12.5 million to $13.5 million for the first quarter of
2013, and $53 million to $55 million for the full-year 2013, commensurate with
the Company's on-going fleet growth and international expansion.  The Company
expects to remain within the historical range of G&A-to-revenue margins of its
publicly traded domestic OSV peer group.

Other Financial Data.  The projected annual depreciation, amortization, net
interest expense, cash income taxes, cash interest expense and
weighted-average diluted shares outstanding for the full-year 2013 are
expected to be $62.8 million, $36.9 million, $43.4 million, $1.8 million,
$53.1 million, and 36.4 million, respectively.  Projected quarterly guidance
for depreciation, amortization, net interest expense, cash income taxes and
cash interest expense for each of the four quarters of fiscal 2013 and for the
full-year 2014 is provided on page 14 of this press release.  The Company's
annual effective tax rate is expected to be in the range of 36% to 38%
throughout fiscal 2013 and fiscal 2014. 

Capital Expenditures Outlook

Update on Maintenance Capital Expenditures.  Please refer to the attached data
tables on page 13 of this press release for a summary, by period and by vessel
class, 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 2011, 2012, 2013 and 2014.  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 a vessel's economic useful
life.  The Company expects that its maintenance capital expenditures for its
company-wide fleet of vessels will be approximately $60.2 million and $55.9
million for the full-years 2013 and 2014, respectively.      

Update on Other Capital Expenditures.  Please refer to the attached data
tables on page 13  of this press release for a summary, by period, of
historical and projected data for other capital expenditures, including the
200 Class OSV Retrofit Program described below, for each of the quarterly
and/or annual periods presented for the fiscal years 2011, 2012, 2013 and
2014.  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 and other specialized vessel equipment, or the
modification of vessel capacities or capabilities, such as DP upgrades,
mid-body extensions or vapor-recovery systems, which costs are typically
included in and offset, in whole or in part, by higher dayrates charged to
customers; 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.  In addition to the OSV retrofit program outlined
below, the Company expects miscellaneous incremental commercial-related vessel
improvements and non-vessel capital expenditures to be approximately $8.0
million for each of the full-years 2013 and 2014.

200 Class OSV Retrofit Program.  In September 2012, the Company awarded a
contract for the upgrading and stretching of six of the Company's Super 200
class DP-1 OSVs, converting them into 240 class DP-2 OSVs.  The project costs
for these discretionary vessel modifications are expected to be approximately
$50.0 million, in the aggregate ($8.3 million each), and the Company expects
to incur approximately 762 vessel-days of aggregate commercial downtime for
the six vessels (127 vessel-days each), as follows:

                           3Q2012  4Q2012  1Q2013 2Q2013 3Q2013 4Q2013  Total
200 Class OSV Retrofit
Program:
Estimated cash outlays (in $   2.2 $   0.1 $ 11.9 $ 12.5 $ 13.4 $   9.9 $ 50.0
millions)
Estimated commercial       -       21      182    187    200    172     762
downtime (in days)

 

The contractor will utilize two of its shipyards on concurrent paths to
minimize the duration of the total project.  The first two vessels arrived at
the shipyard in December 2012 and the current schedule projects re-deliveries
of one vessel in April, one in May, two in August and two in December of
2013. 

Expansion of OSV Newbuild Program #5, including New Class of Jones Act MPSVs. 
The Company announced today the expansion of its fifth OSV newbuild program by
four vessels, as well as its intentions to ultimately build up to eight Jones
Act-qualified MPSVs as a subset of its growing OSV newbuild program to service
the subsea construction and IRM market that is expected to expand
significantly in the GoM beginning in 2015.  The first two vessel commitments
to be reconfigured as a new class of domestic MPSVs will be based upon the
HOSMAX 310 vessel design, with expected delivery in the second and third
quarters of 2015.  These new U.S.-flagged, Jones Act-qualified MPSVs will
include an IMO Special Purpose Ship ("SPS") code-ready class notation, a
250-ton heave-compensated knuckle-boom crane, helideck, moonpool and
accommodations for 73 persons, and will be suitable for two work-class ROVs.
 With respect to the other two vessels announced today, the Company is
currently evaluating various alternatives and is in the process of finalizing
its plans to either exercise its next two options to build additional HOSMAX
320 OSVs for delivery in the first and second quarters of 2015; or (in lieu of
building those vessels) construct additional new Jones Act-qualified MPSVs. 
Assuming the Company opts to build two additional HOSMAX 320 class OSVs, the
aggregate incremental cost of the four additional vessels announced today will
be approximately $260.0 million (roughly $85.0 million per MPSV and $45.0
million per OSV), before construction period interest; and will expand the
Company's on-going newbuild program to a total of 24 vessels.  The Company's
fifth OSV newbuild program would then be comprised of four 300 class OSVs, six
310 class OSVs, twelve 320 class OSVs and two 310 class MPSVs.  The 22 DP-2
high-spec OSVs and two Jones Act-qualified MPSVs currently planned and/or
committed under this domestic newbuild program are expected to be delivered in
accordance with the table below: 

                  2Q   3Q   4Q   1Q   2Q   3Q   4Q   1Q   2Q   3Q
                                                                    Total
                  2013 2013 2013 2014 2014 2014 2014 2015 2015 2015
Estimated

In-Service Dates:
300 class OSVs    1    1    1    1    -    -    -    -    -    -    4
310 class OSVs    -    -    -    1    1    1    2    1    -    -    6
320 class OSVs    -    -    2    2    3    1    1    2    1    -    12
Total OSVs        1    1    3    4    4    2    3    3    1    -    22
310 class MPSVs   -    -    -    -    -    -    -    -    1    1    2
Total Newbuilds   1    1    3    4    4    2    3    3    2    1    24

Based on the above schedule of projected vessel in-service dates, the Company
expects to own and operate 56, 69 and 73 new generation OSVs as of December
31, 2013, 2014 and 2015, respectively. These vessel additions result in a
projected average new generation OSV fleet complement of 52.2, 63.0 and 72.5
vessels for the fiscal years 2013, 2014 and 2015, respectively.  As described
in the above schedule of projected vessel in-service dates, the Company
expects to own and operate four, four and six MPSVs as of December 31, 2013,
2014 and 2015, respectively.  These vessel additions result in a projected
average MPSV fleet complement of 4.0, 4.0 and 4.8 vessels for the fiscal years
2013, 2014 and 2015, respectively.  Assuming the Company builds two MPSVs and
two new OSVs, the aggregate cost of the Company's fifth OSV newbuild program,
excluding construction period interest, is expected to be approximately
$1,160.0 million, of which $498.8 million, $327.6 million and $59.0 million is
expected to be incurred in 2013, 2014 and 2015, respectively.  From the
inception of this program through December 31, 2012, the Company has incurred
$274.6 million, or 23.7%, of total expected project costs, including $87.5
million that was spent during the fourth quarter of 2012. 

Liquidity Outlook

As of December 31, 2012, the Company had a cash balance of $576.7 million and
an undrawn $300 million revolving credit facility. Together with cash on-hand
and available capacity under its currently undrawn $300 million revolving
credit facility, and based on the key assumptions outlined in this earnings
release, the Company also expects to generate sufficient cash flow from
operations to cover all of its growth capital expenditures for the first 24
HOSMAX vessels under construction, all of the capital costs related to its
six-vessel 200 class OSV retrofit program, the planned retirement of its
1.625% convertible notes in November 2013, and all of its annually recurring
cash debt service, maintenance capital expenditures and cash income taxes for
the fiscal year ending 2013 and for the full duration of the currently planned
or committed 24-vessel HOSMAX newbuild program.

Conference Call
The Company will hold a conference call to discuss its fourth quarter 2012
financial results and recent developments at 10:00 a.m. Eastern (9:00 a.m.
Central) tomorrow, February 7, 2013.  To participate in the call, dial (480)
629-9835 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 "IR Home" page of the "Investors"
section 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, DRG&L, 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 "IR Home" page under the "Investors" section of the
Company's website.  Additionally, a telephonic replay will be available
through February 14, 2013, and may be accessed by calling (303) 590-3030 and
using the pass code 4594721#. 

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 "IR
Home" page of the "Investors" section of the Hornbeck Offshore website for the
convenience of analysts and investors.

Hornbeck Offshore Services, Inc. is a leading provider of technologically
advanced, new generation offshore supply vessels primarily in the U.S. Gulf of
Mexico and Latin America, and is a leading short-haul transporter of petroleum
products through its coastwise fleet of ocean-going tugs and tank barges
primarily in the northeastern U.S. and the U.S. Gulf of Mexico.  Hornbeck
Offshore currently owns a fleet of 79 vessels primarily serving the energy
industry and has 24 additional high-spec Upstream vessels planned or under
construction for delivery through 2015.

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," or "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 the effect of inconsistency by the
United States government in the pace of issuing drilling permits and plan
approvals in the GoM; the Company's inability to successfully complete its
fifth OSV newbuild program and its 200 class OSV retrofit program on-time and
on-budget, which involves the construction, conversion and integration of
highly complex vessels and systems; the inability to successfully market the
vessels that the Company owns, is constructing or might acquire; 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, including any such laws
or regulations that may yet arise as a result of the Deepwater Horizon
incident or the resulting drilling moratoria and regulatory reforms, as well
as the outcome of pending litigation brought by environmental groups
challenging exploration plans approved by the Department of Interior; less
than anticipated success in marketing and operating the Company's MPSVs;
bureaucratic, administrative or operating barriers that delay vessels
chartered in foreign markets from going on-hire or result in contractual
penalties or deductions imposed by foreign customers; renewed weakening of
demand for the Company's services; unplanned customer suspensions,
cancellations, rate reductions or non-renewals of vessel charters or failures
to finalize commitments to charter vessels; the impact of planned sequester of
federal spending pursuant to the Budget Control Act of 2013; industry risks;
reductions in capital spending budgets by customers; a material reduction of
Petrobras' announced plans for or administrative barriers to exploration and
production activities in Brazil; declines in oil and natural gas prices;
further increases in operating costs; the inability to accurately predict
vessel utilization levels and dayrates; unanticipated difficulty in
effectively competing in or operating in international markets; less than
anticipated subsea infrastructure demand activity in the GoM and other
markets; the level of fleet additions by the Company and its competitors that
could result in over capacity in markets in which the Company competes;
economic and political risks; weather-related risks; the shortage of or
inability to attract and retain qualified personnel, including vessel
personnel for active, unstacked and newly constructed vessels; regulatory
risks; the repeal or administrative weakening of the Jones Act, including any
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 or pollution incidents resulting in lost revenue or expenses that
are unrecoverable from insurance policies or other third parties; unexpected
litigation and insurance expenses; 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 or the inability to
repatriate foreign-sourced earnings and profits. 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. 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. 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 11 to the
attached data tables.

Contacts: Todd Hornbeck, CEO
          Jim Harp, CFO
          Hornbeck Offshore Services
          985-727-6802
          Ken Dennard, Managing Partner
          DRG&L / 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                   Twelve Months Ended
                   December     September    December   December   December
                   31,          30,          31,        31,        31,
                   2012         2012         2011       2012       2011
Revenues           $            $            $          $          $      
                   133,181       127,939     122,716    512,738    381,627
Costs and
expenses:
         Operating 65,574       67,159       58,421     255,398    211,201
expenses
        
Depreciation and   22,719       21,812       20,508     87,808     81,587
amortization
         General
and administrative 12,349       12,943       7,957      48,499     35,363
expenses
                   100,642      101,914      86,886     391,705    328,151
         Gain
(loss) on sale of  10           267          4          274        1,539
assets
         Operating 32,549       26,292       35,834     121,307    55,015
income
Other income
(expense):
         Loss on
early              -            -            -          (6,048)
extinguishment of
debt
         Interest  629          524          254        2,167      829
income
         Interest  (14,898)     (14,697)     (14,673)   (57,869)   (59,649)
expense
         Other     (138)        (5)          384        186        442
income, net^1
                   (14,407)     (14,178)     (14,035)   (61,564)   (58,378)
Income (loss)
before income      18,142       12,114       21,799     59,743     (3,363)
taxes
Income tax expense 6,847        4,713        7,558      22,726     (802)
(benefit)
Net income (loss)  $            $            $          $          $        
                   11,295        7,401       14,241     37,017     (2,561)
Basic earnings     $            $            $          $          $        
(loss) per share    0.32          0.21          0.46       1.05      (0.09)
of common stock
Diluted earnings   $            $            $          $          $        
(loss) per share    0.31          0.20          0.45       1.03      (0.09)
of common stock
Weighted average
basic shares       35,413       35,384       30,954     35,311     27,876
outstanding
Weighted average
diluted shares     36,129       36,130       31,806     36,080     27,876
outstanding^2
Other Operating Data
(unaudited):
                   Three Months Ended                   Twelve Months Ended
                   December     September    December   December   December
                   31,          30,          31,        31,        31,
                   2012         2012         2011       2012       2011
Offshore Supply
Vessels:
     Average
number of new      51.0         51.0         51.0       51.0       51.0
generation OSVs^3
     Average
number of active   49.6         48.9         45.8       48.3       41.8
new generation
OSVs^4
     Average new
generation fleet   128,190      128,190      128,190    128,190    128,190
capacity
(deadweight)^3
     Average new
generation vessel  2,514        2,514        2,514      2,514      2,514
capacity
(deadweight)
     Average new
generation         84.0%        79.5%        83.5%      83.2%      71.5%
utilization rate^5
     Effective new
generation         86.4%        82.9%        93.0%      87.8%      87.2%
utilization rate^6
     Average new   $            $            $          $          $        
generation         24,024        23,990      21,863     23,445     21,121
dayrate^7
     Effective     $            $            $          $          $        
dayrate^8          20,180        19,072      18,256     19,506     15,102
Tugs and Tank
Barges:
     Average
number of          9.0          9.0          9.0        9.0        9.0
double-hulled tank
barges^9
     Average
double-hulled      884,621      884,621      884,621    884,621    884,621
fleet capacity
(barrels)^9
     Average
double-hulled      98,291       98,291       98,291     98,291     98,291
barge size
(barrels)
     Average
double-hulled      99.3%        93.4%        87.3%      88.2%      88.1%
utilization rate^5
     Average       $            $            $          $          $        
double-hulled      17,694        16,626      18,176     17,012     17,557
dayrate^10
     Effective     $            $            $          $          $        
dayrate^8          17,570        15,529      15,868     15,005     15,468
Balance Sheet Data (unaudited):
                   As of        As of
                   December     December
                   31,          31,
                   2012         2011
Cash and cash      $            $      
equivalents        576,678       356,849
Working capital    388,004      401,216
Property, plant    1,812,110    1,605,785
and equipment, net
Total assets       2,631,731    2,136,346
Total short-term   238,907      -
debt
Total long-term    850,530      770,648
debt
Stockholders'      1,165,845    1,072,988
equity
Cash Flow Data (unaudited):
                   Twelve Months Ended
                   December     December
                   31,          31,
                   2012         2011
Cash provided by   $            $        
operating          145,440       65,651
activities
Cash used in
investing          (259,777)    (62,299)
activities
Cash provided by
financing          334,345      226,914
activities

 

Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data
(in thousands, except Financial Ratios)
Other Financial
Data (unaudited):
                   Three Months Ended                   Twelve Months Ended
                   December    September     December   December   December
                   31,         30,           31,        31,        31,
                   2012        2012          2011       2012       2011
UPSTREAM:
Vessel revenues    $           $             $          $          $      
                   117,636     114,051       108,509    458,925    326,769
Non-vessel         995         1,036         1,069      4,384      4,067
revenues
Total revenues     $           $             $          $          $      
                   118,631     115,087       109,578    463,309    330,836
Operating income   $           $             $          $          $        
                   29,727      24,488        35,306     118,037    53,868
Operating margin   25.1%       21.3%         32.2%      25.5%      16.3%
  Components of
EBITDA^11
  Net income       $           $             $          $          $        
                   10,399       7,097        14,671     39,403          159
  Interest         12,886      12,863        13,203     50,604     53,890
expense, net
  Income tax       6,304       4,520         7,815      24,178     50
expense
  Depreciation     13,000      13,000        13,077     52,005     52,453
  Amortization     6,383       5,289         4,023      21,670     15,457
  EBITDA^11        $           $             $          $          $      
                   48,972      42,769        52,789     187,860    122,009
  Adjustments to
EBITDA
  Loss on early    $           $             $          $          $        
extinguishment of           -          -            -     4,037           -
debt
  Stock-based
compensation       2,456       3,365         782        9,814      5,824
expense
  Interest income  625         521           247        2,148      796
  Adjusted         $           $             $          $          $      
EBITDA^11          52,053      46,655        53,818     203,859    128,629
 EBITDA^11 
Reconciliation to
GAAP:
  EBITDA^11        $           $             $          $          $      
                   48,972      42,769        52,789     187,860    122,009
  Cash paid for
deferred           (11,506)    (11,422)      (3,210)    (39,211)   (16,832)
drydocking charges
  Cash paid for    $           (9,029)       (9,856)    (33,580)   (38,115)
interest            (8,563)
  Cash paid for    (368)       (235)         (439)      (1,332)    (1,257)
taxes
  Changes in       146         18,907        1,081      5,886      (15,397)
working capital
  Stock-based
compensation       2,456       3,365         782        9,814      5,824
expense
  Loss on early
extinguishment of  -           -             -          4,037      -
debt
  Changes in       151         1,552         (979)      2,137      (443)
other, net
  Net cash
provided by        $           $             $          $          $        
operating          31,288      45,907        40,168     135,611    55,789
activities
DOWNSTREAM:
Revenues           $           $             $          $          $        
                   14,550      12,852        13,138     49,429     50,791
Operating income   2,822       1,804         528        3,270      1,147
Operating margin   19.4%       14.0%         4.0%       6.6%       2.3%
  Components of
EBITDA^11
  Net income       $           $             $          $          $        
(loss)                  896        304           (430)   (2,386)    (2,720)
  Interest         1,383       1,310         1,216      5,098      4,930
expense, net
  Income tax       543         193           (257)      (1,452)    (852)
expense (benefit)
  Depreciation     2,105       2,124         2,124      8,477      8,507
  Amortization     1,231       1,399         1,284      5,656      5,170
  EBITDA^11        $           $             $          $          $        
                     6,158      5,330          3,937    15,393     15,035
  Adjustments to
EBITDA
  Loss on early    $           $             $          $          $        
extinguishment of         -          -              -     2,011           -
debt
  Stock-based
compensation       271         364           89         1,077      701
expense
  Interest income  4           3             7          19         33
  Adjusted         $           $             $          $          $        
EBITDA^11            6,433      5,697          4,033    18,500     15,769
 EBITDA^11 
Reconciliation to
GAAP:
  EBITDA^11        $           $             $          $          $        
                     6,158      5,330          3,937    15,393     15,035
  Cash paid for
deferred           (272)       (1,278)       (16)       (5,012)    (2,872)
drydocking charges
  Cash paid for    (1,279)     (1,349)       (1,474)    (5,017)    (5,696)
interest
  Cash paid for    -           -             -          -          (15)
taxes
  Changes in       (550)       1,638         3,871      2,013      3,286
working capital
  Stock-based
compensation       271         364           89         1,077      701
expense
  Loss on early
extinguishment of  -           -           - -          2,011      -
debt
  Changes in       (43)        (592)         (10)       (636)      (577)
other, net
  Net cash
provided by        $           $             $          $          $        
operating            4,285      4,113          6,397      9,829      9,862
activities
CONSOLIDATED:
Revenues           $           $             $          $          $      
                   133,181     127,939       122,716    512,738    381,627
Operating income   32,549      26,292        35,834     121,307    55,015
Operating margin   24.4%       20.6%         29.2%      23.7%      14.4%
  Components of
EBITDA^11
  Net income       $           $             14,241     $          $        
(loss)             11,295       7,401                   37,017      (2,561)
  Interest         14,269      14,173        14,419     55,702     58,820
expense, net
  Income tax       6,847       4,713         7,558      22,726     (802)
expense (benefit)
  Depreciation     15,105      15,124        15,201     60,482     60,960
  Amortization     7,614       6,688         5,307      27,326     20,627
  EBITDA^11        $           $             $          $          $      
                   55,130      48,099        56,726     203,253    137,044
  Adjustments to
EBITDA
  Loss on early    $           $             $          $          $        
extinguishment of         -          -              -     6,048           -
debt
  Stock-based
compensation       2,727       3,729         871        10,891     6,525
expense
  Interest income  629         524           254        2,167      829
  Adjusted         $           $             $          $          $      
EBITDA^11          58,486      52,352        57,851     222,359    144,398
 EBITDA^11 
Reconciliation to
GAAP:
  EBITDA^11        $           $             $          $          $      
                   55,130      48,099        56,726     203,253    137,044
  Cash paid for
deferred           (11,778)    (12,700)      (3,226)    (44,223)   (19,704)
drydocking charges
  Cash paid for    (9,842)     (10,378)      (11,330)   (38,597)   (43,811)
interest
  Cash paid for    (368)       (235)         (439)      (1,332)    (1,272)
taxes
  Changes in       (404)       20,545        4,952      7,899      (12,111)
working capital
  Stock-based
compensation       2,727       3,729         871        10,891     6,525
expense
  Loss on early
extinguishment of  -           -             -          6,048      -
debt
  Changes in       108         960           (989)      1,501      (1,020)
other, net
  Net cash
provided by        $           $             $          $          $        
operating          35,573      50,020        46,565     145,440    65,651
activities

 

Hornbeck Offshore Services, Inc. and Subsidiaries
Unaudited Other Financial Data 
Capital Expenditures and
Drydock Downtime Data
(unaudited):
Historical
Data^(12):
                    Three Months Ended              Twelve Months
                                                    Ended
                    December   September  December  December  December
                    31,        30,        31,       31,       31,
                    2012       2012       2011      2012      2011
Drydock Downtime:
New-Generation OSVs
  Number of vessels
commencing drydock  5.0        8.0        5.0       26.0      19.0
activities
  Commercial        122        238        161       661       530
downtime (in days)
MPSVs
  Number of vessels
commencing drydock  1.0        -          -         2.0       1.0
activities
  Commercial        14         -          -         51        31
downtime (in days)
Double-Hulled Tank
Barges
  Number of vessels
commencing drydock  -          -          1.0       2.0       3.0
activities
  Commercial        -          -          12        66        61
downtime (in days)
Tugs
  Number of vessels
commencing drydock  -          -          1.0       4.0       3.0
activities
  Commercial        -          3          1         111       81
downtime (in days)
Maintenance and Other Capital
Expenditures (in thousands):
Maintenance Capital
Expenditures:
  Deferred          $          $          $         $         $      
drydocking charges  11,778       12,700               44,223    19,704
                                          3,226
  Other vessel
capital             1,061      1,120      2,823     9,523     10,989
improvements
                    12,839     13,820     6,049     53,746    30,693
Other Capital
Expenditures:
  200 class OSV     45         2,244      -         2,289     -
retrofit program
 
Commercial-related  463        2,980      3,619     5,829     18,039
vessel improvements
  Non-vessel
related capital     649        1,607      447       3,250     1,829
expenditures
                    1,157      6,831      447       11,368    19,868
                    $          $          $         $         $      
                    13,996       20,651               65,114    50,561
                                          6,496
Growth Capital
Expenditures:
 OSV newbuild       $          $          $         $         $      
program #5          87,518       66,636     42,380  232,164     42,380
Forecasted
Data^(12):
                    1Q 2013E   2Q 2013E   3Q 2013E  4Q 2013E  2013E     2014E
Drydock Downtime:
New-Generation OSVs
  Number of vessels
commencing drydock  4.0        5.0        7.0       4.0       20.0      23.0
activities
  Commercial        91         182        184       105       562       622
downtime (in days)
MPSVs
  Number of vessels
commencing drydock  -          -          1.0       1.0       2.0       2.0
activities
  Commercial        -          -          12        68        80        60
downtime (in days)
Double-Hulled Tank
Barges
  Number of vessels
commencing drydock  2.0        -          2.0       2.0       6.0       3.0
activities
  Commercial        74         20         33        89        216       105
downtime (in days)
Tugs
  Number of vessels
commencing drydock  3.0        -          -         1.0       4.0       4.0
activities
  Commercial        86         14         -         31        131       120
downtime (in days)
Maintenance and
Other Capital
Expenditures (in
millions):
Maintenance Capital
Expenditures:
  Deferred          $          $          $         $         $         $
drydocking charges       9.3        14.2                                 51.9
                                           9.1      19.9      52.5
  Other vessel
capital             1.4        2.3        1.2       2.8       7.7       4.0
improvements
                    10.7       16.5       10.3      22.7      60.2      55.9
Other Capital
Expenditures:
  200 class OSV     11.9       12.5       13.4      9.9       47.7      -
retrofit program
 
Commercial-related  -          1.2        2.8       -         4.0       4.0
vessel improvements
  Non-vessel
related capital     2.4        1.1        0.4       0.1       4.0       4.0
expenditures
                    14.3       14.8       16.6      10.0      55.7      8.0
                    $          $          $         $         $         $
                        25.0        31.3                                 63.9
                                          26.9      32.7      115.9
Growth Capital
Expenditures:
  OSV newbuild      $          $          $         $         $         $
program #5            124.7       138.0                                 327.6
                                          121.1     115.0     498.8

 

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):
                  1Q       1Q 2013E  Full-Year  Full-Year  Full-Year  Full-Year
                  2013E              2013E      2013E      2014E      2014E
                  Avg      Contract  Avg        Contract   Avg        Contract
                  Vessels  Backlog   Vessels    Backlog    Vessels    Backlog
Fleet Data (as of
6-Feb-2013):
Upstream
     New
generation OSVs - 24.0     100%      19.3       99%        11.0       83%
Term^13
     New
generation OSVs - 26.0     57%       32.7       19%        52.0       0%
Spot^14
     New
generation OSVs - 1.0      0%        0.2        0%         -          0%
Stacked^15
     New
generation OSVs - 51.0     76%       52.2       49%        63.0       15%
Total
     New          4.0      97%       4.0        77%        4.0        31%
generation MPSVs
     Total        55.0               56.2                  67.0
Upstream
Downstream
    
Double-hulled     9.0      79%       9.0        47%        9.0        1%
tank barges
                   1Q 2013E Range     Full-Year 2013E
                                     Range 
Cost Data:        Low^16   High^16   Low^16     High^16
  Operating
Expenses:
                  $        $         $          $        
     Upstream       62.0                 253.0       
                             65.0                263.0
     Downstream   7.0      9.0       27.0       29.0
                  $        $         $          $        
     Consolidated   69.0                 280.0       
                             74.0                292.0
  General and     $        $         $          $        
administrative      12.5                               
expenses                     13.5    53.0       55.0
                  1Q       2Q 2013E  3Q 2013E   4Q 2013E   2013E      2014E
                  2013E
Other Financial
Data:
                  $        $         $          $          $          $        
  Depreciation      15.1                                                     
                             15.3    15.8       16.6       62.8       77.8
  Amortization    8.1      9.1       9.5        10.2       36.9       51.4
  Interest
expense, net:
  Interest        $        $         $          $          $          $        
expense             14.3                                                     
                             14.3    14.3       14.5       57.4       59.0
  Incremental
non-cash OID      5.7      5.8       5.9        3.7        21.1       10.5
interest
expense^17
  Capitalized     (6.2)    (8.5)     (10.0)     (9.1)      (33.8)     (27.3)
interest
  Interest income (0.5)    (0.4)     (0.3)      (0.1)      (1.3)      (0.3)
  Total interest  $        $         $          $          $          $        
expense, net        13.3                                                     
                             11.2     9.9       9.0        43.4       41.9
  Income tax rate 37.0%    37.0%     37.0%      37.0%      37.0%      37.0%
  Cash income     $        $         $          $          $          $        
taxes                 0.6                                                      
                               0.4    0.4       0.4         1.8       5.7
  Cash interest   13.0     13.4      12.6       14.1       53.1       55.6
expense 
  Weighted
average diluted   36.4     36.4      36.4       36.4       36.4       36.7
shares
outstanding^18

 

^1    Represents other income and expenses, including equity in income from
investments and foreign currency transaction gains or losses.

^2    Stock options representing rights to acquire 67 and 302 shares of common
stock for the three months ended December 31, 2012 and December 31, 2011,
respectively, were excluded from the calculation of diluted earnings per
share, because the effect was anti-dilutive. For the three months ended
September 30, 2012, the Company had no anti-dilutive stock options.    For the
year ended December 31, 2012, the Company had no anti-dilutive stock options.
Due to a net loss for the twelve months ended December 31, 2011, the Company
excluded the dilutive effect of equity awards representing the rights to
acquire 1,209 shares of common stock, because the effect was anti-dilutive. As
of December 31, 2012, September 30, 2012, and December 31, 2011, the 1.625%
convertible senior notes were not dilutive, as the average price of the
Company's stock was less than the effective conversion price of $62.59 for
such notes.  As of December 31, 2012 and September 30, 2012, 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 51 new generation OSVs as of December 31, 2012. 
Excluded from this data is one stacked conventional OSV that the Company
considers to be a non-core asset.  Also excluded from this data are four 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 in 2009 and 2010.  Due to
improved market conditions, the Company had re-activated all but one of its
new generation OSVs as of December 31, 2012. With the re-activation of 220
class vessels in January 2012, March 2012, July 2012 and November 2012, the
Company had one DP-1 new generation OSV stacked as of December 31, 2012, which
is expected to remain inactive until there is sustainable demand for such
vessel. 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    The Company owned and operated nine double-hulled tank barges as of
December 31, 2012.  Excluded from this data are 14 ocean-going tugs owned by
the Company, five of which were stacked and marketed for sale as of December
31, 2012.

^10  Average dayrates represent average revenue per day, including time
charters, brokerage revenue, revenues generated on a per-barrel-transported
basis, demurrage, shipdocking and fuel surcharge revenue, based on the number
of days during the period that the tank barges generated revenue. For purposes
of brokerage arrangements, this calculation excludes that portion of revenue
that is equal to the cost paid by customers of in-chartering third party
equipment.

^11  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, FAS 123R stock-based
compensation expense and interest income, or Adjusted EBITDA, to compute
ratios used in certain financial covenants of its credit agreements with
various lenders and bond investors. The Company believes that these ratios are
material components of such financial covenants and 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.

  o 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,
  o 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,
  o 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
  o 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.

^12  The capital expenditure amounts included in this table are cash outlays
before the allocation of construction period interest, as applicable.

^13  As of February 6, 2013, the Company's active fleet of 24 new generation
OSVs that were committed to "term" contracts (time charters of one year or
longer in duration) was comprised of the following fleet mix: eight 200 class
OSVs, fifteen 240 class OSVs and one 300 class OSV.

^14  As of February 6, 2013, the Company's active fleet of 26 new generation
OSVs that were available for "spot" contracts (time charters of less than one
year in duration) or additional "term" contracts was comprised of the
following fleet mix: twelve 200 class OSVs, ten 240 class OSVs and four 265
class OSVs. 

^15  As of February 6, 2013, the Company's inactive fleet of one new
generation OSV that was "stacked" is a 200 class OSV.

^16  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.

^17  Non-cash OID interest expense primarily related to the adoption of new
accounting standards pertaining to the Company's convertible senior notes
effective January 1, 2009. 

^18  Projected weighted-average diluted shares do not reflect any potential
dilution resulting from the Company's 1.500% or 1.625% convertible senior
notes.  The Company's 1.500% convertible senior notes and 1.625% 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 and $62.59,
respectively. 

SOURCE Hornbeck Offshore Services, Inc.

Website: http://www.hornbeckoffshore.com
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