Hercules Offshore Announces First Quarter 2013 Results PR Newswire HOUSTON, April 25, 2013 HOUSTON, April 25, 2013 /PRNewswire/ -- Hercules Offshore, Inc. (Nasdaq: HERO) today reported net income of $35.2 million, or $0.22 per diluted share, on revenue of $205.3 million for the first quarter 2013, compared with a net loss of $38.3 million, or $0.28 per diluted share, on revenue of $143.3 million for the first quarter 2012. First quarter 2013 results include a non-cash tax gain of $37.7 million, or $0.24 per diluted share, relating to the Seahawk acquisition which was completed in April 2011. John T. Rynd, Chief Executive Officer and President of Hercules Offshore stated, "Market conditions in the U.S. Gulf of Mexico remain strong, as dayrates continue to trend higher and contract backlog stays near record levels. Our first rig reactivation, the Hercules 209, is nearing completion, and we are assessing market demand for a second reactivation. Internationally, we continue to add scale and upgrade our global fleet. We recently commenced operations on the Hercules 266 under its long term contract, and closed on the acquisitions of the Hercules 267 (formerly Ben Avon) and the White Shark (formerly Titan 2). These acquisitions demonstrate our ability to successfully deploy capital toward high return opportunities, while de-risking the investments with assets that have strong long term demand prospects and through long term contracts. We continue to look for acquisition opportunities to enhance our international footprint and high-grade our asset base." Offshore Revenue generated from Domestic Offshore for the first quarter 2013 increased by approximately 47.1% to $121.1 million from $82.3 million in the first quarter 2012 bolstered by higher dayrates and improved utilization. Average revenue per rig per day increased by approximately 39.8% to $78,240 in the first quarter 2013 from $55,961 in the comparable 2012 period. Utilization increased to 95.6% in the first quarter 2013 from 89.8% in the first quarter 2012, due to less shipyard downtime primarily on the Hercules 214 related to regulatory survey requirements. Operating expenses increased to $61.1 million in the first quarter 2013 compared to $59.9 million in the first quarter 2012, primarily due to higher labor costs. Domestic Offshore generated operating income of $39.5 million in the first quarter 2013 compared to operating income of $1.8 million in the first quarter 2012. International Offshore generated revenue of $31.8 million in the first quarter 2013 as compared to $18.0 million in the first quarter 2012. Average revenue per rig per day for the first quarter 2013 increased to $118,119 from $73,069 in the first quarter 2012, primarily due to higher rebillable items and the absence of Platform Rig 3, which was previously contracted at a below fleet average rate and sold in August 2012. Utilization increased to 59.8% from 38.8% due to the recommencement of operations for the Hercules 208, Hercules 261 and Hercules 262, as these rigs incurred downtime for contract preparation work during the first quarter 2012, partially offset by greater downtime on the Hercules 260, as it underwent repairs and regulatory survey requirements during the first quarter 2013. Operating expenses for the first quarter 2013 increased to $31.9 million from $24.1 million in the respective 2012 period. First quarter 2013 operating expenses include approximately $5.7 million for repairs for the spudcan damage on the Hercules 260. International Offshore recorded an operating loss of $12.2 million in the first quarter 2013 compared to an operating loss of $20.8 million in the prior year period. Inland Inland revenue during the first quarter 2013 of $4.3 million was flat with first quarter 2012 levels, as higher dayrates were offset by lower utilization. First quarter 2013 average revenue per rig per day increased by 8.2% to $34,236 from $31,628 in the first quarter 2012, while utilization declined to 47.0% compared to 50.2% in the prior year period. Operating expenses decreased to $4.6 million in the first quarter 2013 compared to $5.7 million in the first quarter 2012. Gains from asset sales reduced operating expenses by $1.9 million in the first quarter 2013. Inland recorded an operating loss of $3.5 million in the first quarter 2013 compared to an operating loss of $4.6 million in the respective prior year period. Liftboats Domestic Liftboats revenue increased to $14.8 million in the first quarter 2013 from $10.4 million in the first quarter 2012. Average revenue per liftboat per day increased by 16.0% to $9,015 in the first quarter 2013 from $7,773 in the first quarter 2012, with pricing gains achieved on all active vessel classes. Utilization increased to 60.7% in the first quarter 2013 from 43.4% in the comparable 2012 period. First quarter 2013 operating expenses were $10.7 million compared to first quarter 2012 operating expenses of $8.5 million. Operating expenses during the first quarter 2012 benefitted from an insurance gain of $1.8 million. Domestic Liftboats recorded an operating loss of $99,000 in the first quarter 2013 compared to an operating loss of $2.3 million in the first quarter 2012. International Liftboats revenue increased to $33.3 million in the first quarter 2013 from $28.2 million in the prior year period. Average revenue per liftboat per day decreased slightly to $22,970 in the first quarter 2013 from $23,452 in the first quarter 2012, while utilization increased to 72.1% from 65.5% in the same periods, respectively, on increased activity levels in West Africa. Operating expenses during the first quarter 2013 were $22.3 million, which include a $2.6 million write-down of a cold stacked vessel in West Africa, compared to $13.1 million in the first quarter 2012, which benefitted from an insurance gain of $1.6 million. The increase in operating expenses was primarily driven by higher labor and repair and maintenance costs. International Liftboats recorded operating income of $5.2 million in the first quarter 2013 compared to operating income of $8.6 million in the first quarter 2012. Income Tax First quarter 2013 results include a non-cash tax gain of $37.7 million relating to the Seahawk acquisition which was completed in April 2011. Initially, the Seahawk acquisition was recorded assuming that the transaction would be characterized as a purchase of assets for income tax purposes. However, in the first quarter 2013, certain distributions were made to Seahawk's former equity holders, that, taken together with other aspects of the acquisition, changed the tax treatment and caused this acquisition to be characterized as a reorganization for tax purposes. Therefore, for tax purposes, we recorded a carryover basis in the former Seahawk assets and other tax attributes which, based on the Company's current tax position, produced additional deferred tax assets. Non-GAAP Certain non-GAAP performance measures and corresponding reconciliations to GAAP financial measures for the Company have been provided for meaningful comparisons between current results and prior operating periods. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. In order to fully assess the financial operating results, management believes that the adjusted net income (loss) figures included in this release are appropriate measures of the continuing and normal operations of the Company. However, these measures should be considered in addition to, and not as a substitute for, or superior to, net income (loss), operating income (loss), cash flows from operations, or other measures of financial performance prepared in accordance with GAAP. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the table that follows the financial statements. Please see the attached Reconciliation of GAAP to Non-GAAP Financial Measures for a complete description of the adjustments made to Operating Loss, Net Income (Loss) and Diluted Income (Loss) per Share. Conference Call Information Hercules Offshore will conduct a conference call at 10:00 a.m. CDT (11:00 a.m. EDT) on April 25, 2013, to discuss its first quarter 2013 financial results. To participate in the call, dial 877-280-4958 (domestic) or 857-244-7315 (international) and reference access code 60388722 approximately 10 minutes prior to the start of the call. The conference call will also be broadcast live via the Internet at http://www.herculesoffshore.com. A replay of the conference call will be available by telephone on April 25, 2013, beginning at 12:00 p.m. CDT (1:00 p.m. EDT), through May 3, 2013. The phone number for the conference call replay is 888-286-8010 (domestic) or 617-801-6888 (international) with access code 77899979. Additionally, the recorded conference call will be accessible through our website at http://www.herculesoffshore.com for 7 days after the conference call. Additional Information Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 38 jackup rigs, 13 barge rigs and 64 liftboats. The Company offers a range of services to oil and gas producers to meet their needs during drilling, well service, platform inspection, maintenance, and decommissioning operations in several key shallow water provinces around the world. Hercules Offshore currently holds 32.1% of share capital in Discovery Offshore S.A., a pure play, ultra-high specification jackup rig company. For more information, please visit our website at http://www.herculesoffshore.com. The news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to a number of risks, uncertainties and assumptions, including the factors described in Hercules Offshore's most recent periodic reports and other documents filed with the Securities and Exchange Commission, which are available free of charge at the SEC's website at http://www.sec.govor the Company's website at http://www.herculesoffshore.com. Hercules Offshore cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements. HERCULES OFFSHORE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) March 31, December 31, 2013 2012 (Unaudited) ASSETS Current Assets: Cash and Cash Equivalents $ 169,415 $ 259,193 Restricted Cash 2,027 2,027 Accounts Receivable, Net 159,227 167,936 Prepaids 8,696 16,135 Current Deferred Tax Asset - 21,125 Other 28,044 12,191 367,409 478,607 Property and Equipment, Net 1,560,747 1,462,755 Equity Investment 37,905 38,191 Other Assets, Net 36,018 37,077 $ 2,002,079 $ 2,016,630 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short-term Debt and Current Portion of $ 67,812 $ 67,054 Long-term Debt Accounts Payable 72,366 58,615 Accrued Liabilities 69,436 82,781 Interest Payable 36,267 17,367 Insurance Notes Payable - 9,123 Other Current Liabilities 22,711 26,483 268,592 261,423 Long-term Debt, Net of Current Portion 798,234 798,013 Deferred Income Taxes - 56,821 Other Liabilities 15,670 17,611 Commitments and Contingencies Stockholders' Equity 919,583 882,762 $ 2,002,079 $ 2,016,630 HERCULES OFFSHORE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended March 31, 2013 2012 Revenue $ $ 205,327 143,319 Costs and Expenses: Operating Expenses 130,637 111,237 Depreciation and Amortization 40,815 42,978 General and Administrative 19,781 17,674 191,233 171,889 Operating Income (Loss) 14,094 (28,570) Other Income (Expense): Interest Expense (18,488) (19,669) Other, Net 196 1,009 Loss Before Income Taxes (4,198) (47,230) Income Tax Benefit 39,360 8,888 Net Income (Loss) $ $ 35,162 (38,342) Earnings (Loss) Per Share: Basic $ $ 0.22 (0.28) Diluted $ $ 0.22 (0.28) Weighted Average Shares Outstanding: Basic 158,931 139,208 Diluted 161,125 139,208 HERCULES OFFSHORE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended March 31, 2013 2012 Cash Flows from Operating Activities: Net Income (Loss) $ 35,162 $ (38,342) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization 40,815 42,978 Stock-Based Compensation Expense 2,737 1,487 Deferred Income Taxes (36,616) (16,872) Amortization of Deferred Financing Fees 723 993 Amortization of Original Issue Discount 979 1,183 Gain on Insurance Settlement - (3,400) Other 245 (28) Net Change in Operating Assets and Liabilities 4,634 10,105 Net Cash Provided by (Used in) Operating 48,679 (1,896) Activities Cash Flows from Investing Activities: Acquisition of Assets (97,000) (40,000) Additions of Property and Equipment (41,890) (16,573) Deferred Drydocking Expenditures (3,083) (3,213) Insurance Proceeds Received - 13,139 Other 2,748 (316) Net Cash Used in Investing Activities (139,225) (46,963) Cash Flows from Financing Activities: Long-term Debt Repayments - (17,571) Common Stock Issuance - 97,102 Other 768 34 Net Cash Provided by Financing Activities 768 79,565 Net Increase (Decrease) in Cash and Cash (89,778) 30,706 Equivalents Cash and Cash Equivalents at Beginning of Period 259,193 134,351 Cash and Cash Equivalents at End of Period $ 169,415 $ 165,057 HERCULES OFFSHORE, INC. AND SUBSIDIARIES SELECTED FINANCIAL AND OPERATING DATA (Dollars in thousands, except per day amounts) (Unaudited) Three Months Ended March 31, 2013 2012 Domestic Offshore: Number of rigs (as of end of period) 29 36 Revenue $ $ 121,115 82,318 Operating expenses 61,146 59,871 Depreciation and amortization expense 18,953 18,018 General and administrative expenses 1,565 2,652 $ $ Operating income 39,451 1,777 International Offshore: Number of rigs (as of end of period) 9 10 $ $ Revenue 18,048 31,774 Operating expenses 31,911 24,127 Depreciation and amortization expense 10,020 12,341 General and administrative expenses 2,012 2,429 $ $ Operating loss (20,849) (12,169) Inland: Number of barges (as of end of period) 13 17 $ $ Revenue 4,348 4,333 Operating expenses 4,563 5,679 Depreciation and amortization expense 3,110 3,209 General and administrative expenses 165 43 $ $ Operating loss (3,490) (4,598) Domestic Liftboats: Number of liftboats (as of end of period) 39 40 $ $ Revenue 10,431 14,784 Operating expenses 10,725 8,480 Depreciation and amortization expense 3,658 3,787 General and administrative expenses 500 486 $ $ Operating loss (99) (2,322) International Liftboats: Number of liftboats (as of end of period) 25 23 $ $ Revenue 28,189 33,306 Operating expenses 22,292 13,080 Depreciation and amortization expense 4,352 4,990 General and administrative expenses 1,510 1,550 $ $ Operating income 5,152 8,569 Total Company: Revenue $ $ 205,327 143,319 Operating expenses 130,637 111,237 Depreciation and amortization expense 40,815 42,978 General and administrative expenses 19,781 17,674 Operating income (loss) 14,094 (28,570) Interest expense (18,488) (19,669) Other, net 196 1,009 Loss before income taxes (4,198) (47,230) Income tax benefit 39,360 8,888 $ $ Net income (loss) (38,342) 35,162 HERCULES OFFSHORE, INC. AND SUBSIDIARIES SELECTED FINANCIAL AND OPERATING DATA - (Continued) (Dollars in thousands, except per day amounts) (Unaudited) Three Months Ended March 31, 2013 Average Average Operating Available Utilization Revenue Operating Days Days (1) per Expense Day (2) per Day (3) Domestic Offshore 1,548 1,620 95.6% $ $ 78,240 37,744 International Offshore 269 450 59.8% 118,119 70,913 Inland 127 270 47.0% 34,236 16,900 Domestic Liftboats 1,640 2,703 60.7% 9,015 3,968 International 1,450 2,011 72.1% 22,970 11,085 Liftboats Three Months Ended March 31, 2012 Average Average Operating Available Utilization Revenue Operating Days Days (1) per Expense Day (2) per Day (3) Domestic Offshore 1,471 1,638 89.8% $ $ 55,961 36,551 International Offshore 247 637 38.8% 73,069 37,876 Inland 137 273 50.2% 31,628 20,802 Domestic Liftboats 1,342 3,094 43.4% 7,773 2,741 International 1,202 1,836 65.5% 23,452 7,124 Liftboats Utilization is defined as the total number of days our rigs or liftboats, as applicable, were under contract, known as operating days, in the period as a percentage of the total number of available days in the period. Days (1) during which our rigs and liftboats were undergoing major refurbishments, upgrades or construction, and days during which our rigs and liftboats are cold stacked, are not counted as available days. Days during which our liftboats are in the shipyard undergoing drydocking or inspection are considered available days for the purposes of calculating utilization. Average revenue per rig or liftboat per day is defined as revenue earned (2) by our rigs or liftboats, as applicable, in the period divided by the total number of operating days for our rigs or liftboats, as applicable, in the period. Average operating expense per rig or liftboat per day is defined as operating expenses, excluding depreciation and amortization, incurred by our rigs or liftboats, as applicable, in the period divided by the total number of available days in the period. We use available days to calculate average operating expense per rig or liftboat per day rather (3) than operating days, which are used to calculate average revenue per rig or liftboat per day, because we incur operating expenses on our rigs and liftboats even when they are not under contract and earning a dayrate. In addition, the operating expenses we incur on our rigs and liftboats per day when they are not under contract are typically lower than the per day expenses we incur when they are under contract. Hercules Offshore, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) (In thousands, except per share data) We report our financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that certain non-GAAPperformance measures and ratios may provide users of this financial information additional meaningful comparisons between current results and results in prioroperating periods. Non-GAAP financial measures we may present from time to time are operating income, net income or diluted earningsper share excluding certain charges or amounts. These adjusted income amounts are not a measure of financial performance under GAAP. Accordingly, theyshould not be considered as a substitute for operating income, net income, earnings per share or other income data prepared in accordance with GAAP. See the table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended March 31, 2013. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance withGAAP. The non-GAAP measures included in this press release have been reconciled to the nearest GAAP measure in the following table: Three Months Ended March 31, 2013 Operating Income: GAAP Operating Income $ 14,094 Adjustment - Non-GAAP Operating $ Income 14,094 Other Expense: GAAP Other Expense $ (18,292) Adjustment - Non-GAAP Other Expense $ (18,292) Benefit for Income Taxes: GAAP Benefit for Income Taxes $ 39,360 Tax Adjustment (37,729) (a) Non-GAAP Benefit for Income Taxes $ 1,631 Net Income (Loss): GAAP Net Income $ 35,162 Total Adjustment (37,729) Non-GAAP Net Loss $ (2,567) Diluted Earnings (Loss) per Share: $ GAAP Diluted Earnings per Share 0.22 Adjustment per Share (0.24) $ Non-GAAP Diluted Loss per Share (0.02) This amount represents a tax benefit recognized of $37.7 million related (a) to the change in characterization of the Seahawk acquisition for tax purposes from a purchase of assets to a reorganization. SOURCE Hercules Offshore, Inc. Website: http://www.herculesoffshore.com Contact: Son P. Vann, CFA, Vice President Investor Relations and Planning, Hercules Offshore, Inc., 713-350-8508
Hercules Offshore Announces First Quarter 2013 Results
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