Hornbeck Offshore Announces Second Quarter 2014 Results

           Hornbeck Offshore Announces Second Quarter 2014 Results

PR Newswire

COVINGTON, La., July 30, 2014

COVINGTON, La., July 30, 2014 /PRNewswire/ --Hornbeck Offshore Services, Inc.
(NYSE:HOS) announced today results for the second quarter ended June 30, 2014.
Following are highlights for this period and the Company's future outlook:

  o2Q2014 Upstream revenue and EBITDA set new quarterly highs on the strength
    of fleet growth and record MPSV dayrates
  o2Q2014 Upstream revenue of $171.1 million increased $34.5 million, or 25%,
    over 1Q2014
  o2Q2014 Upstream diluted EPS of $0.85 increased $0.54, or 174%, over 1Q2014
  o2Q2014 Upstream EBITDA of $84.3 million increased $30.0 million, or 55%,
    over 1Q2014
  o2Q2014 utilization of the 56-vessel new gen OSV fleet was 86% compared to
    88% a year-ago and 75% sequentially
  o2Q2014 high-spec OSV effective utilization was 90% compared to 98% a
    year-ago and 76% sequentially
  o2Q2014 MPSV effective utilization was 100% compared to 99% a year-ago and
    85% sequentially
  oFirst nine HOSMAX OSVs have been placed in-service with three more
    newbuild deliveries expected by the end of 3Q2014
  oOSV Newbuild Program #5 remains 98% on-time and on-budget
  oHOS Achiever now contracted to provide flotel services to a major oil
    company in the GoM through 3Q2015
  oContract backlog for new gen OSV vessel-days is currently at 61% and 25%
    for 2H2014 and fiscal 2015, respectively
  oContract backlog for MPSV vessel-days is currently at 69% and 20% for
    2H2014 and fiscal 2015, respectively
  oCompany remains optimistic about a gradual GoM market improvement over the
    remainder of 2014 and into 2015

The Company recorded consolidated net income for the second quarter of 2014 of
$31.2 million, or $0.85 per diluted share, compared to net income of $23.8
million, or $0.65 per diluted share, for the year-ago quarter; and net income
of $11.8 million, or $0.32 per diluted share, for the first quarter of 2014.
Excluding the impact of a second quarter 2013 loss on early extinguishment of
debt, consolidated net income for the year-ago period would have been $24.7
million, or $0.67 per diluted share. Diluted common shares for the second
quarter of 2014 were 36.8 million compared to 36.5 million for the second
quarter of 2013 and 36.7 million for the first quarter of 2014. EBITDA from
consolidated operations for the second quarter of 2014 was $84.4 million
compared to $74.8 million in the second quarter of 2013 and $55.0 million in
the first quarter of 2014. Excluding the impact of a second quarter 2013 loss
on early extinguishment of debt, EBITDA from consolidated operations for the
year-ago period would have been $76.3 million. For additional information
regarding EBITDA as a non-GAAP financial measure, please see Note 7 to the
accompanying data tables. The historical results for the Downstream segment,
which was sold in August 2013, have been presented as discontinued operations
for all periods in this press release and the accompanying data tables.

Continuing Operations

The Company's income from continuing operations for the second quarter of 2014
was $31.2 million, or $0.85 per diluted share, compared to $20.3 million, or
$0.55 per diluted share, for the year-ago quarter; and $11.4 million, or $0.31
per diluted share, for the first quarter of 2014. Second quarter 2014 EBITDA
from continuing operations increased 27.7% to $84.3 million compared to $66.0
million for the second quarter of 2013 and increased 55.2% compared to $54.3
million for the first quarter of 2014. Excluding the impact of a second
quarter 2013 loss on early extinguishment of debt, income and EBITDA from
continuing operations for the year-ago period would have been $21.2 million
and $67.5 million, respectively. 

Revenues. Revenues were $171.1 million for the second quarter of 2014, an
increase of $33.3 million, or 24.2%, from $137.8 million for the second
quarter of 2013; and an increase of $34.5 million, or 25.3%, from $136.6
million for the first quarter of 2014. The year-over-year increase in Upstream
revenues was primarily due to the full or partial-period contribution of 13
vessels that were placed in-service under the Company's fifth OSV newbuild
program or redelivered under the 200 class OSV retrofit program since June
2013, as well as improved spot market conditions for the Company's MPSV
fleet. The newly constructed and recently retrofitted vessels accounted for a
$29.2 million year-over-year increase in revenues. The remainder of the
revenue increase resulted from record average dayrates posted by the Company's
four MPSVs at 100% utilization, partially offset by a decrease in effective
dayrates from the Company's OSVs that were in-service during each of the
quarters ended June 30, 2014 and 2013, due to transitory soft market
conditions in the spot market since the third quarter of 2013. Operating
income was $56.8 million, or 33.2% of revenues, for the second quarter of 2014
compared to $46.4 million, or 33.7% of revenues, for the prior-year quarter;
and $25.0 million, or 18.3% of revenues, for the first quarter of 2014.
Average new generation OSV dayrates for the second quarter of 2014 were
$27,565 compared to $26,079 for the same period in 2013 and $26,237 for the
first quarter of 2014. New generation OSV utilization was 85.7% for the second
quarter of 2014 compared to 88.3% for the year-ago quarter and 75.3% for the
sequential quarter. The year-over-year decrease in utilization is primarily
due to 74 incremental vessel-days out-of-service for regulatory
recertification during the second quarter of 2014 compared to the prior-year
period, along with transitory softness for high-spec OSVs operating in the GoM
spot market. The Company's high-spec OSVs achieved an average utilization of
86.5% for the second quarter of 2014. After adjusting for 157 days of second
quarter 2014 downtime for regulatory drydockings, the Company's commercially
available high-spec OSV fleet achieved an effective utilization of 89.7%.

Operating Expenses. Operating expenses were $71.4 million for the second
quarter of 2014, an increase of $12.7 million, or 21.6%, from $58.7 million
for the second quarter of 2013; and an increase of $2.8 million, or 4.1%, from
$68.6 million for the first quarter of 2014. The year-over-year increase in
operating expenses is primarily due to an increase in the number of active
vessels in the Company's fleet during 2014 compared to 2013. The operating
cost increase was comprised of a $12.9 million increase from newly constructed
vessels and upgraded vessels placed in-service under the Company's 200 class
OSV retrofit program since June 2013 and a $1.2 million increase from the
Company's four MPSVs, offset in part by a $1.5 million decrease from the rest
of the fleet.

General and Administrative ("G&A"). G&A expenses of $15.5 million for the
second quarter of 2014 were 9.1% of revenues compared to $13.3 million, or
9.7% of revenues, for the second quarter of 2013. The increase in G&A expenses
was primarily attributable to the growth of the shoreside support team related
to the Company's on-going newbuild program and expanding international
operations.

Depreciation and Amortization. Depreciation and amortization expense was $27.5
million for the second quarter of 2014, or $6.6 million higher than the
prior-year quarter. Depreciation was $2.9 million higher due to the
contribution of seven newbuild OSVs that were placed in-service on various
dates since June 2013, as well as the higher cost basis of six upgraded
vessels redelivered to the Company under its 200 class OSV retrofit program.
The increase in amortization expense is primarily due to incremental
amortization recorded for the accelerated regulatory drydocking of seven
vessels, as well as a higher per-vessel average in shipyard costs for vessel
regulatory drydockings given the shift in fleet mix to a higher percentage of
much larger high-spec vessels. Depreciation and amortization expense is
expected to continue to increase from current levels as the vessels under the
Company's current newbuild program are placed in-service and when any newly
constructed vessels undergo their initial 30-month and 60-month
recertifications.

Interest Expense. Interest expense decreased $6.2 million, or 47.0%, during
the second quarter of 2014 compared to the same period in 2013, primarily due
to lower interest expense resulting from the November 2013 retirement of the
Company's 1.625% convertible senior notes due 2026. The Company recorded $9.0
million of capitalized construction period interest, or roughly 56% of its
total interest costs, for the second quarter of 2014 compared to having
capitalized $7.4 million, or roughly 36% of its total interest costs, for the
year-ago quarter.

Six Months Results From Continuing Operations

Revenue from continuing operations for the first six months increased 13.8% to
$307.7 million compared to $270.3 million for the same period in 2013.
Operating income from continuing operations was $81.8 million, or 26.6% of
revenues, for the first six months in 2014 compared to $90.3 million, or 33.4%
of revenues, for the prior-year period. Income from continuing operations for
the first six months of 2014 increased $18.4 million to $42.6 million, or
$1.16 per diluted share, compared to $24.2 million, or $0.66 per diluted
share, for the first six months of 2013. EBITDA from continuing operations for
the first half of 2014 increased 32.3% to $138.7 million compared to $104.8
million for the first half of 2013. However, the Company recorded a $25.8
million ($16.1 million after-tax or $0.44 per diluted share) loss on early
extinguishment of debt during the first six months of 2013. This loss
resulted from the refinancing of the Company's 8.000% senior notes due 2017
with new 5.000% senior notes due 2021. Excluding the impact of such loss on
early extinguishment of debt, EBITDA from continuing operations, income from
continuing operations and diluted EPS from continuing operations for the first
six months of 2013 would have been $130.6 million, $40.3 million and $1.10 per
share, respectively. The year-over-year increase in revenues from continuing
operations primarily resulted from the full or partial-period contribution of
13 vessels that were placed in-service under the Company's fifth OSV newbuild
program or returned to service under the Company's 200 class OSV retrofit
program since June 2013 and, to a lesser extent, an increase in revenues from
the MPSV fleet. The Company's net income for the first six months of 2013
included an aggregate $1.6 million ($1.0 million after-tax, or $0.03 per
diluted share) gain on the sale of non-core assets.

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 from continuing operations 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 9 of this news release.

Forward Guidance for Continuing Operations

Vessel Counts. As of June 30, 2014, excluding two inactive non-core vessels
and two HOSMAX OSV newbuild deliveries that occurred in July 2014, the
Company's operating fleet consisted of 56 new generation OSVs and four MPSVs.
The forecasted Upstream vessel counts presented in this press release reflect
the anticipated fiscal 2014 OSV and MPSV newbuild deliveries discussed below.
The Company's active Upstream fleet for fiscal years 2014 and 2015 is expected
to be comprised of an average of 58.0 and 67.6 new generation OSVs,
respectively. For fiscal 2014, the active new generation OSVs are comprised of
an average of 27.3 "term" vessels that are currently chartered on long-term
contracts and an average of 30.7 "spot" vessels that are currently operating
or being offered for service under short-term charters. The Company expects to
operate an average of 4.3 MPSVs in fiscal 2014 and 5.3 in fiscal 2015.

Contract Coverage.The Company's forward contract coverage for its current
and projected fleet of active new generation OSVs for the remainder of fiscal
year 2014 and for fiscal 2015 is currently 61% and 25%, respectively. The
Company's forward contract coverage for its current and projected fleet of
MPSVs for the remainder of fiscal year 2014 and for fiscal 2015 is currently
69% and 20%, respectively. 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 27.3 active "term" OSVs are
expected to be in the $23,000 to $24,000 range for the full-year 2014. This
range does not reflect the incremental impact of any revenue expected to be
derived in fiscal 2014 from the Company's "spot" OSVs. The Company does not
provide annual guidance regarding the effective dayrates anticipated for its
"spot" new generation OSVs or for any of its MPSVs due to the wide range of
potential outcomes of its current domestic and international bidding activity
for such vessels. As an example, in the second quarter of 2014, the Company's
opportunistic spot contracting strategy allowed one of its MPSVs to achieve
especially strong dayrates. However, based on the recent exercise by a
customer of a contractual option for that vessel at a lower, but still
attractive, dayrate commensurate with a longer-term commitment, the record
fleetwide average and effective MPSV dayrates achieved during the second
quarter will not be repeatable during the second half of 2014. In addition,
the scheduled drydocking of one MPSV in the third quarter will not allow the
Company to achieve 100% MPSV utilization for that quarter, as it did in the
second quarter.

Operating Expenses.Aggregate cash operating expenses are projected to be in
the range of $74.0 million to $79.0 million for the third quarter of 2014, and
$295.0 million to $305.0 million for the full-year 2014. This annual guidance
range includes roughly $5.7 million of total out-of-pocket costs related to
the conversion and repositioning of multiple vessels for international or
specialty charter commitments. Through the second quarter, the Company has
incurred $4.5 million of these operating costs and expects to incur $1.2
million in the third quarter. Not included in these costs is the lost revenue
related to such vessels during approximately 175 days of aggregate
commercial-related downtime. Please refer to the attached data table on page
12 of this press release for a summary, by period and by vessel type, of
historical and projected data for commercial-related downtime (in days) for
each of the quarterly and/or annual periods presented for the fiscal years
2013, 2014, and 2015. 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 vessels into international markets or back to the
GoM and any customer-required cost-of-sales related to future contract
fixtures that are typically recovered through higher dayrates.

G&A Expenses.General and administrative ("G&A") expenses are expected to be
in the approximate range of $15.0 million to $16.0 million for the third
quarter of 2014, and $59.0 million to $62.0 million for the full-year 2014,
commensurate with the Company's pending fleet growth and expanding
international operations. The Company expects to remain within its historical
range of G&A-to-revenue margins, as well as those of its public OSV peer
group.

Other Financial Data.Projected quarterly depreciation, amortization, net
interest expense, cash income taxes, cash interest expense and
weighted-average diluted shares outstanding for the third quarter of 2014 are
$18.3 million, $11.0 million, $8.9 million, $1.7 million, $13.9 million and
37.0 million, respectively. Guidance for depreciation, amortization, net
interest expense, cash income taxes and cash interest expense for each of the
remaining quarters of fiscal 2014 and for the full-year 2015 is provided on
page 13 of this press release. The Company's annual effective tax rate is
expected to be in the range of 36.0% to 38.0% for fiscal years 2014 and 2015.

Capital Expenditures Outlook

Update on OSV Newbuild Program #5.The Company's fifth OSV newbuild program
consists of four 300 class OSVs, five 310 class OSVs, ten 320 class OSVs and
five 310 class MPSVs. As of July 30, 2014, the Company has placed nine
vessels in-service under this program – four in 2013, two in

February 2014, one in April 2014 and two in July 2014. The 15 remaining
vessels under this 24-vessel domestic newbuild program are currently expected
to be delivered in accordance with the table below:

                  2014        2015                    2016                    Total
                  3Q  4Q  1Q  2Q  3Q  4Q  1Q  2Q  3Q  4Q
Estimated

In-ServiceDates:
300 class OSVs    —     —     —     —     —     —     —     —     —     —     —
310 class OSVs    1     1     2     —     —     —     —     —     —     —     4
320 class OSVs    1     3     2     —     —     —     —     —     —     —     6
Total OSVs        2     4     4     —     —     —     —     —     —     —     10
310classMPSVs   1     —     —     —     1     1     —     1     1     —     5
Total Newbuilds   3     4     4     —     1     1     —     1     1     —     15

The Company continues to monitor production deficiencies experienced at one of
the shipyards and to employ all tools contractually available to improve
progress and to ensure all possible efforts are made to meet the requirements
of the contract. Production at the other two yards remains on-time or ahead
of schedule on a combined basis. The full-year 2014 average vessel-delivery
projections have not changed materially since last reported. Based on the
updated schedule above of projected vessel in-service dates, the Company
expects to own and operate 64 and 68 new generation OSVs as of December 31,
2014 and 2015, respectively. These vessel additions result in a projected
average new generation OSV fleet complement of 58.0, 67.6 and 68.0 vessels for
the fiscal years 2014, 2015 and 2016, respectively. Based on the updated
schedule above of projected vessel in-service dates, the Company now expects
to own and operate five, seven, and nine MPSVs as of December 31, 2014, 2015,
and 2016, respectively. These vessel additions result in a projected average
MPSV fleet complement of 4.3, 5.3, 7.8 and 9.0 vessels for the fiscal years
2014, 2015, 2016 and 2017, respectively. The aggregate cost of the Company's
fifth OSV newbuild program, excluding construction period interest, is
expected to be approximately $1.25 billion, of which $383.5 million, $124.2
million and $25.8 million are expected to be incurred in fiscal years 2014,
2015 and 2016, respectively. From the inception of this program through June
30, 2014, the Company has incurred $910.3 million, or 72.8%, of total expected
project costs, including $87.1 million that was spent during the second
quarter of 2014.

Update on Maintenance Capital Expenditures. Please refer to the attached data
table on page 12 of this press release for a summary, by period and by vessel
type, of historical and projected data for drydock downtime (in days) and
maintenance capital expenditures for each of the quarterly and/or annual
periods presented for the fiscal years 2013, 2014, and 2015. Maintenance
capital expenditures, which are recurring in nature, primarily include
regulatory drydocking charges incurred for the recertification of vessels and
other vessel capital improvements that extend or maintain a vessel's economic
useful life. The Company expects that its maintenance capital expenditures
for its Upstream fleet of vessels will be approximately $72.3 million and
$30.5 million, respectively, for the full-years 2014 and 2015, respectively.

Update on Other Capital Expenditures. Please refer to the attached data
tables on page 12 of this press release for a summary, by period, of
historical and projected data for other capital expenditures, for each of the
quarterly and/or annual periods presented for the fiscal years 2013, 2014 and
2015. Other capital expenditures, which are generally non-recurring, are
comprised of the following: (i) commercial-related vessel improvements, such
as the addition of cranes, ROVs, helidecks, living quarters and other
specialized vessel equipment, or the modification of vessel capacities or
capabilities, such as DP upgrades and mid-body extensions, which costs are
typically included in and offset, in whole or in part, by higher dayrates
charged to customers; and (ii) non-vessel related capital expenditures,
including costs related to the Company's shore-based facilities, leasehold
improvements and other corporate expenditures, such as information technology
or office furniture and equipment. The Company expects miscellaneous
incremental commercial-related vessel improvements and non-vessel capital
expenditures to be approximately $33.2 million and $15.5 million,
respectively, for the full-years 2014 and 2015, respectively. 

Liquidity Outlook

As of June 30, 2014, the Company had a cash balance of $264.3 million and an
undrawn $300 million revolving credit facility. Together with cash on-hand,
the Company expects to generate sufficient cash flow from operations to cover
all of its growth capital expenditures for the remaining 15 HOSMAX vessels
under construction, commercial-related capital expenditures, and all of its
annually recurring cash debt service, maintenance capital expenditures and
cash income taxes through the completion of the newbuild program without ever
having to use its currently undrawn revolving credit facility. The Company
has no funded debt outstanding that matures any sooner than fiscal 2019.

Conference Call

The Company will hold a conference call to discuss its second quarter 2014
financial results and recent developments at 10:00 a.m. Eastern (9:00 a.m.
Central) tomorrow, July 31, 2014. To participate in the call, dial (719)
457-1035 and ask for the Hornbeck Offshore call at least 10 minutes prior to
the start time. To access it live over the Internet, please log onto the web
at http://www.hornbeckoffshore.com, on the "Investors" homepage of the
Company's website at least fifteen minutes early to register, download and
install any necessary audio software. Please call the Company's investor
relations firm, Dennard-Lascar, at (713) 529-6600 to be added to its e-mail
distribution list for future Hornbeck Offshore news releases. An archived
version of the web cast will be available shortly after the call for a period
of 60 days on the "Investors" homepage of the Company's website. Additionally,
a telephonic replay will be available through August 14, 2014, and may be
accessed by calling (719) 457-0820 and using the pass code 6298867#.

Attached Data Tables

The Company has posted an electronic version of the following four pages of
data tables, which are downloadable in Microsoft Excel™ format, on the
"Investors" homepage of the Hornbeck Offshore website for the convenience of
analysts and investors.

In addition, the Company uses its website as a means of disclosing material
non-public information and for complying with disclosure obligations under SEC
Regulation FD. Such disclosures will be included on the Company's website
under the heading "Investors." Accordingly, investors should monitor that
portion of the Company's website, in addition to following the Company's press
releases, SEC filings, public conference calls and webcasts.

Hornbeck Offshore Services, Inc. is a leading provider of technologically
advanced, new generation offshore service vessels primarily in the U.S. Gulf
of Mexico and Latin America. Hornbeck Offshore currently owns a fleet of 64
vessels primarily serving the energy industry and has 15 additional high-spec
Upstream vessels under construction for delivery through 2016.

Forward-Looking Statements

This Press Release contains "forward-looking statements," as contemplated by
the Private Securities Litigation Reform Act of 1995, in which the Company
discusses factors it believes may affect its performance in the future.
Forward-looking statements are all statements other than historical facts,
such as statements regarding assumptions, expectations, beliefs and
projections about future events or conditions. You can generally identify
forward-looking statements by the appearance in such a statement of words like
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"forecast," "intend," "may," "might," "plan," "potential," "predict,"
"project," "remain," "should," "will," or other comparable words or the
negative of such words. The accuracy of the Company's assumptions,
expectations, beliefs and projections depends on events or conditions that
change over time and are thus susceptible to change based on actual
experience, new developments and known and unknown risks. The Company gives no
assurance that the forward-looking statements will prove to be correct and
does not undertake any duty to update them. The Company's actual future
results might differ from the forward-looking statements made in this Press
Release for a variety of reasons, including the effect of inconsistency by the
United States government in the pace of issuing drilling permits and plan
approvals in the GoM or other drilling regions; the Company's inability to
successfully complete its fifth OSV newbuild 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; environmental litigation
that impacts customer plans or projects; fewer than expected additions to the
GoM active deepwater drilling rig fleet; disputes with customers;
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; a sustained 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 2011; 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; less than expected growth in Mexican offshore
activities driven by legal reform there; sustained declines in oil and natural
gas prices; further increases in operating costs, such as mariner wage
increases; 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 in
the GoM and other markets; fewer than anticipated deepwater and
ultra-deepwater drilling units operating in the GoM or other regions that the
Company operates in; the level of fleet additions by the Company and its
competitors that could result in over capacity in the markets in which the
Company competes; economic and political risks; weather-related risks; the
shortage of or the inability to attract and retain qualified personnel,
including vessel personnel for active and newly constructed vessels;
regulatory risks; the repeal or administrative weakening of the Jones Act or
changes in the interpretation of the Jones Act related to the U.S. citizenship
qualification; drydocking delays and cost overruns and related risks; vessel
accidents, pollution incidents, or other events resulting in lost revenue,
fines, penalties or other expenses that are unrecoverable from insurance
policies or other third parties; unexpected litigation and insurance expenses;
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 7 to the
attached data tables.

Contacts: Todd Hornbeck, CEO
           Jim Harp, CFO
           Hornbeck Offshore Services
           985-727-6802
           Ken Dennard, Managing Partner
           Dennard-Lascar / 713-529-6600



 Hornbeck Offshore Services, Inc. and Subsidiaries
 Unaudited Consolidated Statements of Operations
 (in thousands, except Other Operating and Per Share Data)
 Statement of Operations (unaudited):
                    Three Months Ended                 Six Months Ended
                    June 30,     March 31,  June 30,   June 30,   June 30,
                    2014         2014       2013       2014       2013
 Revenues           $ 171,099    $       $137,811   $307,684   $270,337
                                 136,585
 Costs and
 expenses:
  Operating 71,405       68,581     58,701     139,986    114,995
 expenses
 
 Depreciation and   27,543       29,360     20,908     56,903     40,327
 amortization
  General
 and administrative 15,487       13,685     13,323     29,172     26,319
 expenses
                    114,435      111,626    92,932     226,061    181,641
  Gain on   92           69         1,569      161        1,569
 sale of assets
  Operating 56,756       25,028     46,448     81,784     90,265
 income
 Other income
 (expense):
  Loss on
 early              -            -          (1,457)    -          (25,776)
 extinguishment of
 debt
  Interest  283          364        668        647        1,245
 income
  Interest  (7,016)      (7,232)    (13,242)   (14,248)   (26,964)
 expense
  Other
 income (expense),  40           (77)       93         (37)       (16)
 net^1
                    (6,693)      (6,945)    (13,938)   (13,638)   (51,511)
 Income before      50,063       18,083     32,510     68,146     38,754
 income taxes
 Income tax expense 18,838       6,729      12,244     25,567     14,560
 Income from
 continuing         31,225       11,354     20,266     42,579     24,194
 operations
 Income from
 discontinued       8            412        3,564      420        5,795
 operations, net of
 tax
 Net income         $  31,233   $      $ 23,830  $ 42,999  $ 29,989
                                 11,766
 Earnings per share
 Basic earnings per
 common share from  $   0.86  $      $        $        $  
 continuing                       0.32    0.56       1.18       0.68
 operations
 Basic earnings per
 common share from  -            0.01       0.10       0.01       0.16
 discontinued
 operations
 Basic earnings per $   0.86  $      $        $        $  
 common share                     0.33    0.66       1.19       0.84
 Diluted earnings
 per common share   $   0.85  $      $        $        $  
 from continuing                  0.31    0.55       1.16       0.66
 operations
 Diluted earnings
 per common share   -            0.01       0.10       0.01       0.16
 from discontinued
 operations
 Diluted earnings   $   0.85  $      $        $        $  
 per common share                 0.32    0.65       1.17       0.82
 Weighted average
 basic shares       36,254       36,169     35,864     36,212     35,742
 outstanding
 Weighted average
 diluted shares     36,775       36,717     36,499     36,746     36,425
 outstanding^2
 Other Operating Data (unaudited):
                    Three Months Ended                 Six Months Ended
                    June 30,     March 31,  June 30,   June 30,   June 30,
                    2014         2014       2013       2014       2013
 Offshore Supply
 Vessels:
  Average
 number of new      56.0         54.2       50.0       55.1       50.5
 generation OSVs^3
  Average new
 generation OSV     167,846      157,296    126,870    162,571    127,530
 fleet capacity
 (deadweight)^3
  Average new
 generation OSV     2,997        2,901      2,538      2,949      2,526
 capacity
 (deadweight)
  Average new
 generation         85.7%        75.3%      88.3%      80.6%      87.5%
 utilization rate^4
  Average new                $    
 generation         $  27,565   26,237     $ 26,079  $ 26,958  $ 25,611
 dayrate^5
  Effective     $  23,623   $      $ 23,028  $ 21,728  $ 22,410
 dayrate^6                       19,756
 Balance Sheet Data (unaudited):
                    As of        As of

                    June 30,     December
                                 31,
                    2014         2013
 Cash and cash      $ 264,269    $   
 equivalents                     439,291
 Working capital    385,676      518,959
 Property, plant    2,332,463    2,125,374
 and equipment, net
 Total assets       2,918,695    2,834,280
 Total long-term    1,068,716    1,064,092
 debt
 Stockholders'      1,342,597    1,295,428
 equity
 Cash Flow Data (unaudited):
                    Six Months Ended
                    June 30,     June 30,
                    2014         2013
 Cash provided by                $    
 operating          $  60,722   97,797
 activities
 Cash used in
 investing          (240,434)    (237,197)
 activities
 Cash provided by
 financing          2,500        186,721
 activities



 Hornbeck Offshore Services, Inc. and Subsidiaries
 Unaudited Other Financial Data
 (in thousands, except Financial Ratios)
 Other Financial Data (unaudited):
                     Three Months Ended                Six Months Ended
                     June 30,   March 31,   June 30,   June 30,   June 30,
                     2014       2014        2013       2014       2013
 CONTINUING
 OPERATIONS:
 Vessel revenues     $167,742   $134,029    $136,607   $301,771   $268,044
 Non-vessel revenues 3,357      2,556       1,204      5,913      2,293
 Total revenues      $171,099   $136,585    $137,811   $307,684   $270,337
 Operating income    $ 56,756  $ 25,028   $ 46,448  $ 81,784  $ 90,265
 Operating margin    33.2%      18.3%       33.7%      26.6%      33.4%
  Components of
 EBITDA^7
  Income from
 continuing          $ 31,225  $ 11,354   $ 20,266  $ 42,579  $ 24,194
 operations
  Interest expense, 6,733      6,868       12,574     13,601     25,719
 net
  Income tax        18,838     6,729       12,244     25,567     14,560
 expense
  Depreciation      17,612     16,185      13,448     33,797     26,644
  Amortization      9,931      13,175      7,460      23,106     13,683
  EBITDA^7          $ 84,339  $ 54,311   $ 65,992  $138,650   $104,800
  Adjustments to
 EBITDA
  Loss on early     $      $       $         $    
 extinguishment of    -         -         1,457     -          $ 25,776
 debt
  Stock-based
 compensation        3,685      2,631       3,111      6,316      6,418
 expense
  Interest income   283        364         668        647        1,245
  Adjusted EBITDA^7 $ 88,307  $ 57,306   $ 71,228  $145,613   $138,239
 EBITDA^7
 Reconciliation to
 GAAP:
  EBITDA^7          $ 84,339  $ 54,311   $ 65,992  $138,650   $104,800
  Cash paid for
 deferred drydocking (19,725)   (9,915)     (9,328)    (29,640)   (15,009)
 charges
  Cash paid for     (11,390)   (13,882)    (13,667)   (25,272)   (27,932)
 interest
  Cash paid for     (774)      (937)       (1,372)    (1,711)    (1,925)
 taxes
  Changes in        (32,236)   4,633       21,474     (27,603)   7,385
 working capital
  Stock-based
 compensation        3,685      2,631       3,111      6,316      6,418
 expense
  Loss on early
 extinguishment of   -          -           1,457      -          25,776
 debt
  Changes in other, 119        (137)       (1,575)    (18)       (1,716)
 net
  Net cash provided
 by operating        $ 24,018  $ 36,704   $ 66,092  $ 60,722  $ 97,797
 activities
 DISCONTINUED
 OPERATIONS:
 Revenues            $      $        $ 16,512  $       $ 31,502
                      -        12                    12
 Operating income    13         643         5,715      656        9,304
 Operating margin    0.0%       nmf        34.6%      nmf       29.5%
  Components of
 EBITDA^7
  Income from       $                  $         $        $ 
 discontinued        8         $   412  3,564     420       5,795
 operations
  Interest expense, -          -           -          -          -
 net
  Income tax        5          231         2,151      236        3,511
 expense (benefit)
  Depreciation      -          29          1,965      29         4,079
  Amortization      -          -           1,168      -          2,501
  EBITDA^7          $       $   672  $         $        $ 15,886
                     13                    8,848     685
  Adjustments to
 EBITDA
  Loss on early     $      $       $      $      $    
 extinguishment of    -         -          -         -         -
 debt
  Stock-based
 compensation        -          -           11         -          26
 expense
  Interest income   -          -           -          -          -
  Adjusted EBITDA^7 $       $   672  $         $        $ 15,912
                     13                    8,859     685
 EBITDA^7
 Reconciliation to
 GAAP:
  EBITDA^7          $       $   672  $         $        $ 15,886
                     13                    8,848     685
  Cash paid for
 deferred drydocking -          -           (1,964)    -          (3,717)
 charges
  Cash paid for     -          -           -          -          -
 interest
  Cash paid for     -          -           -          -          -
 taxes
  Changes in        (162)      809         (2,021)    647        (487)
 working capital
  Stock-based
 compensation        -          -           11         -          26
 expense
  Loss on early
 extinguishment of   -          -           -          -          -
 debt
  Changes in other, -          (655)       (30)       (655)      (30)
 net
  Net cash provided
 by (used in)        $        $   826  $         $        $ 11,678
 operating           (149)                  4,844     677
 activities



 Hornbeck Offshore Services, Inc. and Subsidiaries
 Unaudited Other Financial Data
 Capital Expenditures and Drydock Downtime Data from Continuing Operations
 (unaudited):
 Historical Data:
                      Three Months Ended           Six Months Ended
                      June     March     June 30,  June 30,  June 30,
                      30,      31,
                      2014     2014      2013      2014      2013
 Drydock Downtime:
 New-Generation OSVs
 Number of vessels
 commencing drydock   5.0      12.0      7.0       17.0      9.0
 activities
 Commercial downtime  272      281       198       553       256
 (in days)
 MPSVs
 Number of vessels
 commencing drydock   -        1.0       -         1.0       -
 activities
 Commercial downtime  -        9         -         9         -
 (in days)
 Commercial-related
 Downtime^8:
 200 class OSV
 retrofit program
 Number of vessels
 commencing retrofit  -        -         2.0       -         2.0
 activities
 Commercial downtime  -        -         220       -         400
 (in days)
 New-Generation OSVs
 Number of vessels
 commencing           -        1.0       -         1.0       -
 commercial-related
 downtime
 Commercial downtime  -        83        -         83        -
 (in days)
 MPSVs
 Number of vessels
 commencing           -        -         -         -         -
 commercial-related
 downtime
 Commercial downtime  -        -         -         -         -
 (in days)
 Maintenance and
 Other Capital
 Expenditures (in
 thousands):
 Maintenance Capital
 Expenditures:
 Deferred drydocking  $        $ 9,915   $ 9,328   $ 29,640  $ 15,009
 charges              19,725
 Other vessel capital 10,335   7,149     2,144     17,484    4,471
 improvements
                      30,060   17,064    11,472    47,124    19,480
 Other Capital
 Expenditures:
 200 class OSV        -        122       17,462    122       21,696
 retrofit program
 Commercial-related   5,631    7,385     1,554     13,016    1,619
 vessel improvements
 Non-vessel related   639      556       2,459     1,195     2,938
 capital expenditures
                      6,270    8,063     21,475    14,333    26,253
                      $        $ 25,127  $ 32,947  $ 61,457  $ 45,733
                      36,330
 Growth Capital
 Expenditures (in
 thousands):
 OSV newbuild program $        $         $         $         $
 #5                   87,073   106,680   130,346   193,753   212,921
 Forecasted Data^9:
                      1Q       2Q 2014A  3Q 2014E  4Q 2014E  2014E     2015E
                      2014A
 Drydock Downtime:
 New-Generation OSVs
 Number of vessels
 commencing drydock   12.0     5.0       2.0       1.0       20.0      15.0
 activities
 Commercial downtime  281      272       49        22        624       409
 (in days)
 MPSVs
 Number of vessels
 commencing drydock   1.0      -         1.0       -         2.0       -
 activities
 Commercial downtime  9        -         24        -         33        -
 (in days)
 Commercial-related
 Downtime^8:
 New-Generation OSVs
 Number of vessels
 commencing           1.0      -         -         1.0       2.0       -
 commercial-related
 downtime
 Commercial downtime  83       -         -         92        175       48
 (in days)
 MPSVs
 Number of vessels
 commencing           -        -         -         -         -         -
 commercial-related
 downtime
 Commercial downtime  -        -         -         -         -         -
 (in days)
 Maintenance and
 Other Capital
 Expenditures (in
 millions):
 Maintenance Capital
 Expenditures:
 Deferred drydocking  $ 9.9    $ 19.7    $ 12.2    $ 6.0     $ 47.8    $ 28.0
 charges
 Other vessel capital 7.1      10.4      4.9       2.1       24.5      2.5
 improvements
                      17.0     30.1      17.1      8.1       72.3      30.5
 Other Capital
 Expenditures:
 200 class OSV        0.1      -         -         -         0.1       -
 retrofit program
 Commercial-related   7.4      5.6       7.9       5.6       26.5      11.5
 vessel improvements
 Non-vessel related   0.6      0.6       1.9       3.5       6.6       4.0
 capital expenditures
                      8.1      6.2       9.8       9.1       33.2      15.5
                      $ 25.1   $ 36.3    $ 26.9    $ 17.2    $ 105.5   $ 46.0
 Growth Capital
 Expenditures (in
 millions):
 OSV newbuild program $ 106.7  $ 87.1    $ 111.4   $ 78.3    $ 383.5   $
 #5                                                                    124.2



 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 from Continuing
 Operations (unaudited):
                3Q       3Q 2014E  Full-Year  2H 2014E  Full-Year  Full-Year
                2014E              2014E                2015E      2015E
                Avg      Contract  Avg        Contract  Avg        Contract
                Vessels  Backlog   Vessels    Backlog   Vessels    Backlog
 Fleet Data (as
 of
 30-Jul-2014):
  Upstream
  New
 generation     30.7     100%      27.3       100%      17.3       97%
 OSVs - Term^10
  New
 generation     28.1     42%       30.7       24%       50.3       0%
 OSVs - Spot^11
  New
 generation     58.8     72%       58.0       61%       67.6       25%
 OSVs - Total
  New
 generation     4.2      89%       4.3        69%       5.3        20%
 MPSVs
  Total     63.0               62.3                 72.9
 Upstream
                3Q 2014E Range   Full-Year 2014E
                                   Range
 Cost Data:     Low^12   High^12   Low^12     High^12
  Operating  $     $      $      $   
 expenses        74.0           295.0     
                          79.0               305.0
  General             $      $      $   
 and            $                      
 administrative  15.0    16.0    59.0        62.0
 expenses
                1Q       2Q 2014A  3Q 2014E   4Q 2014E  2014E      2015E
                2014A
 Other
 Financial
 Data:
                $     $      $      $      $      $    
  Depreciation  16.2                                  
                          17.6    18.3        20.2    72.3       88.0
  Amortization 13.2     9.9       11.0       10.5      44.6       35.8
  Interest
 expense, net:
  Interest     $     $      $      $      $      $    
 expense         13.7                                  
                          13.7    13.7        13.7    54.8       54.4
  Incremental
 non-cash OID   2.3      2.3       2.4        2.4       9.4        9.9
 interest
 expense^13
  Capitalized  (8.7)    (9.0)     (7.0)      (5.6)     (30.3)     (13.8)
 interest
  Interest     (0.4)    (0.3)     (0.2)      (0.1)     (1.0)      (1.0)
 income
  Total        $     $      $      $      $      $    
 interest         6.9                                 
 expense, net              6.7   8.9        10.4    32.9       49.5
  Income tax   37.2%    37.6%     37.5%      37.5%     37.5%      37.0%
 rate
  Cash income  $     $      $      $      $      $    
 taxes            0.9                                  
                           0.8   1.7         1.0   4.4       9.8
  Cash
 interest       13.9     11.4      13.9       11.4      50.6       50.6
 expense
  Weighted
 average        36.7     36.8      37.0       37.0      37.0       37.3
 diluted shares
 outstanding^14



^1 Represents other income and expenses, including equity in income from
      investments and foreign currency transaction gains or losses.
      For the three and six months ended June 30, 2014 and 2013 and the three
      months ended March 31, 2014, the Company had no anti-dilutive stock
      options. As of June 30, 2014, March 31, 2014, and June 30, 2013, the
      1.500% convertible senior notes were not dilutive, as the average price
^2 of the Company's stock was less than the effective conversion price of
      $68.53 for such notes. As of June 30, 2013, the 1.625% convertible
      senior notes retired in November 2013 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.
      The Company owned 56 new generation OSVs as of June 30, 2014, and placed
      in-service two HOSMAX newbuild OSVs in July 2014. Excluded from this
^3 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 Average utilization rates are average rates based on a 365-day year.
      Vessels are considered utilized when they are generating revenues.
      Average new generation OSV dayrates represent average revenue per day,
^5 which includes charter hire, crewing services, and net brokerage
      revenues, based on the number of days during the period that the OSVs
      generated revenues.
^6 Effective dayrate represents the average dayrate multiplied by the
      utilization rate for the respective period.
^7 Non-GAAP Financial Measure

The Company discloses and discusses EBITDA as a non-GAAP financial measure in
its public releases, including quarterly earnings releases, investor
conference calls and other filings with the Securities and Exchange
Commission. The Company defines EBITDA as earnings (net income) before
interest, income taxes, depreciation and amortization. The Company's measure
of EBITDA may not be comparable to similarly titled measures presented by
other companies. Other companies may calculate EBITDA differently than the
Company, which may limit its usefulness as a comparative measure.

The Company views EBITDA primarily as a liquidity measure and, as such,
believes that the GAAP financial measure most directly comparable to it is
cash flows provided by operating activities. Because EBITDA is not a measure
of financial performance calculated in accordance with GAAP, it should not be
considered in isolation or as a substitute for operating income, net income or
loss, cash flows provided by operating, investing and financing activities, or
other income or cash flow statement data prepared in accordance with GAAP.

EBITDA is widely used by investors and other users of the Company's financial
statements as a supplemental financial measure that, when viewed with GAAP
results and the accompanying reconciliations, the Company believes provides
additional information that is useful to gain an understanding of the factors
and trends affecting its ability to service debt, pay deferred taxes and fund
drydocking charges and other maintenance capital expenditures. The Company
also believes the disclosure of EBITDA helps investors meaningfully evaluate
and compare its cash flow generating capacity from quarter to quarter and year
to year.

EBITDA is also a financial metric used by management (i) as a supplemental
internal measure for planning and forecasting overall expectations and for
evaluating actual results against such expectations; (ii) as a significant
criteria for annual incentive cash bonuses paid to the Company's executive
officers and other shore-based employees; (iii) to compare to the EBITDA of
other companies when evaluating potential acquisitions; and (iv) to assess the
Company's ability to service existing fixed charges and incur additional
indebtedness.

In addition, the Company also makes certain adjustments, as applicable, to
EBITDA for losses on early extinguishment of debt, stock-based compensation
expense and interest income, or Adjusted EBITDA, to 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.

  oEBITDA 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,
  oEBITDA 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,
  oEBITDA 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
  oEBITDA 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.

      Commercial-related Downtime results from commercial-related vessel
      improvements, such as the addition of cranes, ROVs, helidecks, living
      quarters and other specialized vessel equipment; the modification of
^8 vessel capacities or capabilities, such as DP upgrades and mid-body
      extensions, which costs are typically included in and offset, in whole
      or in part, by higher dayrates charged to customers; and the speculative
      relocation of vessels from one geographic market to another.
^9 The capital expenditure amounts included in this table are cash outlays
      before the allocation of construction period interest, as applicable.
      As of July 30, 2014, the Company's active fleet of 31 new generation
      OSVs that were committed to "term" contracts (time charters of one year
^10  or longer in duration at inception) was comprised of the following fleet
      mix: eight 200 class OSVs, nineteen 240 class OSVs and four 300 class
      OSVs.
      As of July 30, 2014, the Company's active fleet of 27 new generation
      OSVs that were available for "spot" contracts (time charters of less
^11  than one year in duration at inception) or additional "term" contracts
      was comprised of the following fleet mix: five 200 class OSVs, twelve
      240 class OSVs, four 265 class OSVs and six 300 class OSVs.
      The "low" and "high" ends of the guidance ranges set forth in this table
^12  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.
      Represents incremental imputed non-cash OID interest expense required by
^13  accounting standards pertaining to the Company's 1.500% convertible
      senior notes due 2019. 
      Projected weighted-average diluted shares do not reflect any potential
      dilution resulting from the Company's 1.500% convertible senior notes.
^14  Warrants related to the Company's 1.500% convertible senior notes become
      dilutive when the average price of the Company's stock exceeds the
      effective conversion price for such notes of $68.53.



SOURCE Hornbeck Offshore Services, Inc.

Website: http://www.hornbeckoffshore.com
 
Press spacebar to pause and continue. Press esc to stop.