COVINGTON, La., Aug. 1, 2018 /PRNewswire/ -- Hornbeck Offshore
Services, Inc. (NYSE:HOS) announced today results for the second
quarter ended June 30, 2018.
Following is an executive summary for this period and the
Company's future outlook:
- 2Q2018 revenues were $58.4
million, an increase of $16.8
million, or 40%, from 1Q2018 revenues of $41.6 million
- 2Q2018 diluted EPS was $(0.67), an improvement of $0.37 from 1Q2018 diluted EPS of $(1.04)
- 2Q2018 net loss was $(25.1)
million, an improvement of $13.6
million from 1Q2018 net loss of $(38.7) million
- 2Q2018 EBITDA was $11.2
million, an increase of $18.4
million, or 256%, from 1Q2018 EBITDA of $(7.2) million
- 2Q2018 average new gen OSV dayrates were $19,566, a sequential increase of $1,581, or 9%
- 2Q2018 effective new gen OSV dayrates were $5,283, a sequential increase of $1,560, or 42%
- 2Q2018 utilization of the Company's new gen OSV fleet was
27%, up from 21% sequentially
- 2Q2018 effective utilization of the Company's active new gen
OSVs was 76%, up from 71% sequentially
- The Company currently has 40 OSVs and one MPSV stacked and
expects to have 39 OSVs and one MPSV stacked at the end of
3Q2018
- In May 2018, the Company
closed the acquisition of four high-spec OSVs and other related
assets from Aries Marine for $40.9
million in cash
- Quarter-end cash was $109
million, down from $171
million sequentially, with $62
million of newbuild growth capex remaining to be
funded
- 2Q2018 total liquidity (cash and credit availability) of
$246 million represents a decrease of
$62 million, or 20%, from
1Q2018
The Company recorded a net loss for the second quarter of 2018
of $(25.1) million, or $(0.67) per diluted share, compared to a net loss
of $(19.5) million, or $(0.53) per diluted share, for the second quarter
of 2017; and a net loss of $(38.7)
million, or $(1.04) per
diluted share, for the first quarter of 2018. Included in the
Company's year-ago quarter results is a $15.5 million ($10.5
million after-tax or $0.29 per
diluted share) net gain on early extinguishment of debt resulting
from the repurchase of a portion of the Company's 1.500%
Convertible Senior Notes due 2019 and 5.875% Senior Notes due 2020,
offset in part by the write-off of certain related deal costs,
unamortized financing costs and original issue discount.
Excluding the impact of such net gain on early extinguishment of
debt, net loss and diluted EPS for the second quarter of 2017 would
have been $(30.0) million and
$(0.82) per share, respectively.
Diluted common shares for the second quarter of 2018 were
37.5 million compared to 36.8 million and 37.3 million for the
second quarter of 2017 and the first quarter of 2018, respectively.
GAAP requires the use of basic shares outstanding for diluted
EPS when reporting a net loss. EBITDA for the second quarter
of 2018 was $11.2 million compared to
$12.2 million for the second quarter
of 2017 and $(7.2) million for the
first quarter of 2018. Excluding the net gain on early
extinguishment of debt in the second quarter of 2017, prior-year
EBITDA would have been $(3.3)
million. For additional information regarding EBITDA
as a non-GAAP financial measure, please see Note 10 to the
accompanying data tables.
Revenues. Revenues were $58.4 million for the second quarter of 2018, an
increase of $21.0 million, or 56.1%,
from $37.4 million for the second
quarter of 2017; and an increase of $16.8
million, or 40.4%, from $41.6
million for the first quarter of 2018. The
year-over-year increase in revenues primarily resulted from
improved market conditions for the Company's MPSVs and, to a lesser
extent, increased revenues from its OSVs. The sequential
increase in revenues was primarily attributable to higher average
dayrates and utilization across the Company's active fleet of OSVs
and, to a lesser extent, seasonally-improved market conditions for
the MPSV fleet. As of June 30,
2018, the Company had 40 OSVs stacked. For the three
months ended June 30, 2018, the
Company had an average of 42.0 vessels stacked compared to 42.5
vessels stacked in the prior-year quarter and 44.0 vessels stacked
in the sequential quarter. Operating loss was $(15.6) million, or (26.7)% of revenues, for the
second quarter of 2018 compared to an operating loss of
$(31.3) million, or (83.7)% of
revenues, for the prior-year quarter; and an operating loss of
$(33.9) million, or (81.4)% of
revenues, for the first quarter of 2018. Average new
generation OSV dayrates for the first quarter of 2018 were
$19,566 compared to $17,202 for the same period in 2017 and
$17,985 for the first quarter of
2018. New generation OSV utilization was 27.0% for the second
quarter of 2018 compared to 22.3% for the year-ago quarter and
20.7% for the sequential quarter. Excluding stacked vessel
days, the Company's new generation OSV effective utilization was
76.0%, 66.6% and 71.3% for the same periods, respectively.
Utilization-adjusted, or effective, new generation OSV dayrates for
the first quarter of 2018 were $5,283
compared to $3,836 for the same
period in 2017 and $3,723 for the
first quarter of 2018.
Operating Expenses. Operating expenses were
$34.9 million for the second quarter
of 2018, an increase of $3.5 million,
or 11.1%, from $31.4 million for the
second quarter of 2017; and a decrease of $1.1 million, or 3.1%, from $36.0 million for the first quarter of 2018.
The year-over-year increase in operating expenses was
primarily due to four vessels that were acquired in the second
quarter of 2018 and a higher number of active vessels in the
Company's fleet during the three months ended June 30, 2018. The sequential decrease in
operating expenses was primarily due to lower contract-specific
cost-of-sales expenses associated with the Company's MPSV fleet and
lower maintenance and repair expense, partially offset by costs
related to vessels added to its fleet during the second quarter of
2018.
General and Administrative ("G&A").
G&A expense was $12.2
million for the second quarter of 2018 compared to
$9.4 million for the second quarter
of 2017; and $12.9 million for the
first quarter of 2018. The year-over-year increase in G&A
expense was primarily attributable to higher professional fees,
short-term incentive compensation and long-term incentive
compensation expense. Long-term incentive compensation was
higher due to a "mark-to-market" adjustment required by GAAP on
cash-settled awards to reflect the increase in the Company's stock
price during the three months ended June 30,
2018 compared to a decrease in the Company's stock price
during the three months ended June
30, 2017. These unfavorable variances were partially
offset by lower bad debt reserves. The sequential decrease in
G&A expense was primarily due to lower long-term incentive
compensation expense resulting from a change in mix of cash-settled
versus equity-settled long-term incentive awards and accelerated
expense for awards granted to retirement-eligible employees in the
first quarter of 2018.
Depreciation and Amortization. Depreciation
and amortization expense was $26.9
million for the second quarter of 2018, or $1.0 million lower than the year-ago quarter and
$0.3 million higher than the
sequential quarter. Depreciation expense was in-line with the
prior-year and sequential quarters. Amortization expense
decreased by $1.0 million from the
year-ago quarter, driven by postponed recertifications for certain
of the Company's stacked OSVs. Amortization expense increased
$0.3 million from the sequential
quarter, primarily related to the amortization of
commercial-related intangible assets associated with the
acquisition of four high-spec OSVs from Aries Marine
Corporation. However, amortization expense is expected to
increase in fiscal 2019 as a result of currently active vessels
that were placed in service under the Company's fifth OSV newbuild
program commencing their initial intermediate drydock or special
survey. The Company also expects amortization expense to
increase whenever market conditions warrant reactivation of
currently stacked vessels, which will then require the Company to
drydock such vessels and, thereafter, to revert back to historical
levels.
Interest Expense. Interest expense was
$16.4 million during the second
quarter of 2018, which was $3.0
million higher than the same period in 2017. The
increase was primarily due to the Company not capitalizing any
construction period interest during the second quarter of 2018
compared to $2.5 million, or roughly
16%, of its total interest costs for the year-ago quarter.
Six Month Results
Revenues for the first six months of 2018 increased 22.7% to
$100.0 million compared to
$81.5 million for the same period in
2017. Operating loss was $(49.4)
million, or (49.4)% of revenues, for the first six months of
2018 compared to an operating loss of $(57.8) million, or (70.9)% of revenues, for the
prior-year period. Net loss for the first six months of 2018
increased $16.3 million to a net loss
of $(63.7) million, or $(1.70) per diluted share, compared to a net loss
of $(47.4) million, or $(1.29) per diluted share, for the first six
months of 2017. EBITDA for the first six months of 2018
decreased 71.0% to $4.0 million
compared to $13.8 million for the
first six months of 2017. Included in the Company's results
for the first six months of 2017 was (i) a $15.5 million gain on early extinguishment of
debt, (ii) a $9.4 million redelivery
fee related to the completion of a long-term contract for one of
the Company's OSVs, and (iii) a $3.8
million increase in G&A expense resulting from
additional bad debt reserves. Excluding the net impact of
these three items, net loss, diluted EPS and EBITDA for the first
six months of 2017 would have been $(61.8)
million, $(1.69) per share and
$(7.3) million, respectively.
The year-over-year increase in vessel revenues is attributable to
seasonally-improved market conditions for the Company's MPSVs and,
to a lesser extent, increased revenues from its OSVs. For the
six months ended June 30, 2018, the
Company had an average of 43.0 vessels stacked compared to 44.2
vessels stacked in the prior-year period.
Recent Development Update
On May 18, 2018, the Company
completed its previously announced acquisition of four high-spec
OSVs from Aries Marine Corporation and certain of its affiliates
for $40.9 million in cash, inclusive
of $4.3 million of related vessel
equipment, certain commercial-related intangibles, the cost of fuel
and lube inventory and transaction fees. The acquired vessels
are 100% U.S.-flagged and are comprised of two 280 class OSVs and
two 300 class OSVs, all of which have a DP-2 designation. The
two 280 class OSVs were built in 2014 and 2015, respectively, and
have capacities of approximately 3,800 DWT and 13,000 barrels of
liquid mud. The two 300 class OSVs were built in 2010 and
2011, respectively, and have capacities of approximately 5,500 DWT
and 19,500 barrels of liquid mud. The acquisition was fully
funded with cash on hand. In accordance with the terms of the
Company's First-Lien Credit Facility, the vessels were pledged as
additional collateral against that facility.
Future Outlook
Based on the key assumptions outlined below and in the attached
data tables, the following statements reflect management's current
expectations regarding future operating results and certain events
during the Company's guidance period as set forth on pages 12 and
13 of this press release. These statements are
forward-looking and actual results may differ materially,
particularly given the volatility inherent in, and the currently
depressed conditions of, the Company's industry. Other than
as expressly stated, these statements do not include the potential
impact of any significant further change in commodity prices for
oil and natural gas; any additional future repositioning voyages;
any additional stacking or reactivation of vessels; unexpected
vessel repairs or shipyard delays; or future capital transactions,
such as vessel acquisitions, modifications or divestitures,
business combinations, possible share or note repurchases or
financings that may be commenced after the date of this
disclosure. Additional cautionary information concerning
forward-looking statements can be found on page 9 of this news
release.
Forward Guidance
The Company's forward guidance for selected operating and
financial data, outlined below and in the attached data tables,
reflects the current state of commodity prices and planned
decreases in the capital spending budgets of its
customers.
Vessel Counts. As of
June 30, 2018, the Company's fleet of
owned vessels consisted of 66 new generation OSVs and eight
MPSVs. The forecasted vessel counts presented in this press
release reflect the four-vessel acquisition discussed above and the
two MPSV newbuilds expected to be delivered during fiscal 2019, as
discussed below. With an average of 40.7 new generation OSVs
and 0.7 MPSVs projected to be stacked during fiscal 2018, the
Company's active fleet for 2018 is expected to be comprised of an
average of 23.8 new generation OSVs and 7.3 MPSVs. With an
assumed average of 38.0 new generation OSVs projected to be stacked
during fiscal 2019, the Company's active fleet for 2019 is expected
to be comprised of an average of 28.0 new generation OSVs and 9.0
MPSVs.
Operating Expenses. Aggregate
cash operating expenses are projected to be in the range of
$35.0 million to $40.0 million for the third quarter of 2018, and
$140.0 million to $150.0 million for the full-year 2018.
Reflected in the cash opex guidance ranges above are the
anticipated continuing results of several cost containment measures
initiated by the Company since the fourth quarter of 2014 due to
prevailing market conditions, including, among other actions, the
stacking of vessels on various dates from October 1, 2014 through June 30, 2018, as well as company-wide headcount
reductions and across-the-board pay-cuts for shoreside and vessel
personnel. The Company plans to reactivate one 300 class OSV
during the third quarter of 2018 and one 240 class OSV during the
fourth quarter of 2018. The Company may choose to stack or
reactivate additional vessels as market conditions warrant.
The cash operating expense estimate above is exclusive of any
additional repositioning expenses the Company may incur in
connection with the potential relocation of more of its vessels
into international markets or back to the GoM, and any
customer-required cost-of-sales related to future contract fixtures
that are typically recovered through higher dayrates.
G&A Expense. G&A expense
is expected to be in the approximate range of $12.0 million to $14.0
million for the third quarter of 2018, and $48.0 million to $53.0
million for the full fiscal year 2018.
Other Financial Data. Quarterly
depreciation, amortization, net interest expense, cash income
taxes, cash interest expense, weighted-average basic shares
outstanding and weighted-average diluted shares outstanding for the
third quarter of 2018 are projected to be $24.8 million, $2.6
million, $13.5 million,
$0.1 million, $15.6 million, 37.6 million and 37.9 million,
respectively. As a reminder, please note that GAAP requires
the use of basic shares outstanding for diluted EPS when reporting
a net loss. Guidance for depreciation, amortization, net
interest expense, cash income taxes and cash interest expense for
the full fiscal years 2018 and 2019 is provided on page 13 of this
press release. The Company's annual effective tax benefit
rate is expected to be between 18.0% and 20.0% for fiscal years
2018 and 2019.
Capital Expenditures Outlook
Update on OSV Newbuild Program #5. During the first
quarter of 2018, the Company notified the shipyard that it was
terminating the construction contracts for the final two vessels
under the Company's nearly completed 24-vessel domestic newbuild
program due to performance issues at the shipyard. The
Company continues to work with the issuer of the shipyard's
performance bonds in order to complete the construction of the
vessels at a completion yard. As of the date of termination,
these two remaining vessels, both of which are 400 class MPSVs,
were projected to be delivered in the second and third quarters of
2019, respectively. In the event that the Company is unable
to reach an agreement on completion of these vessels promptly,
delivery dates may be extended beyond the current
projections. The remaining shipyard contract price to be paid
by the Company as of the date of termination for both vessels was
approximately $53.7 million, before
application of liquidated damages and other deductions allowed by
the contracts. The Company also expects to incur an
additional $8.1 million of budgeted
project costs post-delivery for final outfitting of the vessels and
for installation and commissioning of the cranes.
The Company owns 66 new generation OSVs and eight MPSVs as of
June 30, 2018. Based on the
projected MPSV in-service dates, the Company expects to own eight
and ten MPSVs as of December 31, 2018
and December 31, 2019, respectively.
These vessel additions result in a projected average MPSV
fleet complement of 8.0, 9.0 and 10.0 vessels for the fiscal years
2018, 2019 and 2020, respectively. The aggregate cost of the
Company's fifth OSV newbuild program, excluding construction period
interest, is expected to be approximately $1,335.0 million, of which $17.5 million and $44.8
million are currently expected to be incurred in the full
fiscal years 2018 and 2019, respectively. However, the timing
of these remaining construction draws remains subject to change
commensurate with any potential further delays in the delivery
dates of the final two newbuild vessels as discussed above.
From the inception of this program through June 30, 2018, the Company has incurred
$1,273.2 million, or 95.4%, of total
project costs, including $0.1 million
that was spent during the second quarter of 2018. The Company
expects to incur newbuild project costs of $9.5 million during the third quarter of
2018.
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 2017, 2018 and 2019.
Maintenance capital expenditures, which are recurring in
nature, primarily include regulatory drydocking charges incurred
for the recertification of vessels and other vessel capital
improvements that extend or maintain a vessel's economic useful
life. The Company expects that its maintenance capital
expenditures for its fleet of vessels will be approximately
$22.2 million and $29.7 million for the full fiscal years 2018 and
2019, respectively. These cash outlays are expected to be
incurred over approximately 371 and 497 days of aggregate
commercial downtime in 2018 and 2019, respectively, during which
the applicable vessels will not earn revenue.
Update on Other Capital Expenditures. Please
refer to the attached data tables on page 12 of this press release
for a summary, by period, of historical and projected data for
other capital expenditures, for each of the quarterly and/or annual
periods presented for the fiscal years 2017, 2018 and 2019.
Other capital expenditures, which are generally
non-recurring, are comprised of the following: (i)
commercial-related capital expenditures, including 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 commercial-related intangibles; 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 commercial-related capital expenditures and
non-vessel capital expenditures to be approximately $5.9 million and $0.5
million, respectively, for the full fiscal years 2018 and
2019, respectively.
Liquidity Outlook
As of June 30, 2018, the Company's
total liquidity (cash and credit availability) was $245.8 million, comprised of $109.1 million of cash and $136.7 million of availability under its
First-Lien Credit Facility, which represents a decrease of
$61.7 million, or 20.1%, from the end
of the first quarter. The Company projects that, even with
the currently depressed operating levels, cash generated from
operations together with cash on hand and remaining availability
under its First-Lien Credit Facility should be sufficient to fund
its operations and commitments through at least December 31, 2019. However, absent the
combination of a significant recovery of market conditions such
that cash flow from operations were to increase materially from
projected levels, coupled with a refinancing and/or further
management of its funded debt obligations, the Company does not
currently expect to have sufficient liquidity to repay the full
amount of its 5.875% Senior Notes and 5.000% Senior Notes as they
mature in fiscal years 2020 and 2021, respectively. The
Company remains fully cognizant of the challenges currently facing
the offshore oil and gas industry and continues to review its
capital structure and assess its strategic options.
Conference Call
The Company will hold a conference call to discuss its second
quarter 2018 financial results and recent developments at
10:00 a.m. Eastern (9:00 a.m. Central) tomorrow, August 2, 2018. To participate in the call, dial
(412) 902-0030 and ask for the Hornbeck Offshore call at least 10
minutes prior to the start time. To access it live over the
Internet, please log onto the web at
http://www.hornbeckoffshore.com, on the "Investors" homepage of the
Company's website at least fifteen minutes early to register,
download and install any necessary audio software. Please
call the Company's investor relations firm, Dennard-Lascar, at
(713) 529-6600 to be added to its e-mail distribution list for
future Hornbeck Offshore news releases. An archived version of the
web cast will be available shortly after the call for a period of
60 days on the "Investors" homepage of the Company's website.
Additionally, a telephonic replay will be available through
August 16, 2018, and may be accessed
by calling (201) 612-7415 and using the pass code 13681004#.
Attached Data Tables
The Company has posted an electronic version of the following
four pages of data tables, which are downloadable in Microsoft
Excelâ„¢ format, on the "Investors" homepage of the Hornbeck Offshore
website for the convenience of analysts and investors.
In addition, the Company uses its website as a means of
disclosing material non-public information and for complying with
disclosure obligations under SEC Regulation FD. Such disclosures
will be included on the Company's website under the heading
"Investors." Accordingly, investors should monitor that portion of
the Company's website, in addition to following the Company's press
releases, SEC filings, public conference calls and webcasts.
Hornbeck Offshore Services, Inc. is a leading provider of
technologically advanced, new generation offshore service vessels
primarily in the Gulf of Mexico
and Latin America. Hornbeck
Offshore currently owns a fleet of 74 vessels primarily serving the
energy industry and expects to add two ultra high-spec MPSV
newbuilds to its fleet in 2019.
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 impacts from
oil and natural gas prices in the U.S. and worldwide; continued
weakness in demand and/or pricing for the Company's services
through and beyond the maturity of any of the Company's long-term
debt; unplanned customer suspensions, cancellations, rate
reductions or non-renewals of vessel charters or vessel management
contracts or failures to finalize commitments to charter or manage
vessels; continued weak capital spending by customers on offshore
exploration and development; the inability to accurately predict
vessel utilization levels and dayrates; sustained weakness in the
number of deepwater and ultra-deepwater drilling units operating in
the GoM or other regions where the Company operates; the effect of
inconsistency by the United States
government in the pace of issuing drilling permits and plan
approvals in the GoM or other drilling regions; any negative impact
on the Company's ability to successfully complete the remainder of
its current vessel newbuild program on-time or on-budget; the
inability to successfully market the vessels that the Company owns,
is constructing or might acquire; the government's cancellation or
non-renewal of the management, operations and maintenance contracts
for vessels; an oil spill or other significant event in
the United States or another
offshore drilling region that could have a broad impact on
deepwater and other offshore energy exploration and production
activities, such as the suspension of activities or significant
regulatory responses; the imposition of laws or regulations that
result in reduced exploration and production activities or that
increase the Company's operating costs or operating requirements;
environmental litigation that impacts customer plans or projects;
disputes with customers; bureaucratic, administrative or operating
barriers that delay vessels in foreign markets from going on-hire;
administrative barriers to exploration and production activities in
Brazil; disruption in the timing
and/or extent of Mexican offshore activities due to the results of
the recent presidential election or changes in law or policy; age
or other restrictions imposed on the Company's vessels by
customers; unanticipated difficulty in effectively competing in or
operating in international markets; less than anticipated subsea
infrastructure and field development demand in the GoM and other
markets affecting the Company's MPSVs; sustained vessel
over-capacity for existing demand levels in the markets in which
the Company competes; economic and geopolitical risks;
weather-related risks; upon a return to improved operating
conditions, the shortage of or the inability to attract and retain
qualified personnel, when needed, including vessel personnel for
active vessels or vessels the Company may reactivate or acquire;
any success in unionizing the Company's U.S. fleet personnel;
regulatory risks; the repeal or administrative weakening of the
Jones Act or adverse changes in the interpretation of the Jones
Act; 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; other industry risks;
fluctuations in foreign currency valuations compared to the U.S.
dollar and risks associated with expanded foreign operations, such
as non-compliance with or the unanticipated effect of tax laws,
customs laws, immigration laws, or other legislation that result in
higher than anticipated tax rates or other costs; the possible loss
or material limitation of the Company's tax net operating loss
carryforwards and other attributes due to a change in control, as
defined in Section 382 of the Internal Revenue Code; or the
inability of the Company to refinance or otherwise retire certain
funded debt obligations that come due in 2019, 2020 and 2021; or
the potential for any impairment charges that could arise in the
future and that would reduce the Company's consolidated net
tangible assets which, in turn, would further limit the Company's
ability to grant certain liens, make certain investments, and incur
certain debt under the Company's senior notes indentures and the
New Credit Facility. 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 lenders
to provide funding under the Company's New Credit Facility, if and
when required. Further, the Company can give no assurance
regarding when and to what extent it will effect common stock or
note repurchases. Should one or more of the foregoing risks
or uncertainties materialize in a way that negatively impacts the
Company, or should the Company's underlying assumptions prove
incorrect, the Company's actual results may vary materially from
those anticipated in its forward-looking statements, and its
business, financial condition and results of operations could be
materially and adversely affected and, if sufficiently severe,
could result in noncompliance with certain covenants of the
Company's existing indebtedness. Additional factors that you should
consider are set forth in detail in the "Risk Factors" section of
the Company's most recent Annual Report on Form 10-K as well as
other filings the Company has made and will make with the
Securities and Exchange Commission which, after their filing, can
be found on the Company's website www.hornbeckoffshore.com.
Regulation G Reconciliation
This Press Release also contains references to the non-GAAP
financial measures of earnings, or net income, before interest,
income taxes, depreciation and amortization, or EBITDA, and
Adjusted EBITDA. The Company views EBITDA and Adjusted EBITDA
primarily as liquidity measures and, therefore, believes that the
GAAP financial measure most directly comparable to such measure is
cash flows provided by operating activities. Reconciliations of
EBITDA and Adjusted EBITDA to cash flows provided by operating
activities are provided in the table below. Management's opinion
regarding the usefulness of EBITDA to investors and a description
of the ways in which management uses such measure can be found in
the Company's most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission, as well as in Note 10 to the
attached data tables.
Contacts:
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Todd Hornbeck,
CEO
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Jim Harp,
CFO
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Hornbeck Offshore
Services
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985-727-6802
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Ken Dennard, Managing
Partner
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Dennard-Lascar /
713-529-6600
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Hornbeck Offshore
Services, Inc. and Subsidiaries
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Unaudited
Consolidated Statements of Operations
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(in thousands,
except Other Operating and Per Share Data)
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|
|
|
|
|
|
|
|
|
|
Statement of
Operations (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
58,431
|
|
$
41,587
|
|
$
37,426
|
|
$ 100,018
|
|
$
81,505
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
34,858
|
|
35,969
|
|
31,368
|
|
70,827
|
|
59,303
|
|
|
|
|
Depreciation and amortization
|
26,886
|
|
26,640
|
|
27,945
|
|
53,526
|
|
56,346
|
|
|
|
|
General and administrative expense
|
12,246
|
|
12,875
|
|
9,432
|
|
25,121
|
|
23,674
|
|
|
|
|
|
73,990
|
|
75,484
|
|
68,745
|
|
149,474
|
|
139,323
|
|
|
|
|
Gain
(loss) on sale of assets
|
(13)
|
|
43
|
|
1
|
|
30
|
|
19
|
|
|
|
|
Operating loss
|
(15,572)
|
|
(33,854)
|
|
(31,318)
|
|
(49,426)
|
|
(57,799)
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
on early extinguishment of debt
|
-
|
|
-
|
|
15,478
|
|
-
|
|
15,478
|
|
|
|
|
Interest income
|
519
|
|
644
|
|
464
|
|
1,163
|
|
865
|
|
|
|
|
Interest expense
|
(16,401)
|
|
(13,945)
|
|
(13,429)
|
|
(30,346)
|
|
(27,238)
|
|
|
|
|
Other income (expense), net 1
|
(72)
|
|
9
|
|
54
|
|
(63)
|
|
(269)
|
|
|
|
|
|
(15,954)
|
|
(13,292)
|
|
2,567
|
|
(29,246)
|
|
(11,164)
|
|
|
|
|
Loss before income
taxes
|
(31,526)
|
|
(47,146)
|
|
(28,751)
|
|
(78,672)
|
|
(68,963)
|
|
|
|
|
Income tax
benefit
|
(6,438)
|
|
(8,491)
|
|
(9,262)
|
|
(14,929)
|
|
(21,576)
|
|
|
|
|
Net loss
|
$
(25,088)
|
|
$
(38,655)
|
|
$
(19,489)
|
|
$
(63,743)
|
|
$
(47,387)
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per common
share
|
$
(0.67)
|
|
$
(1.04)
|
|
$
(0.53)
|
|
$
(1.70)
|
|
$
(1.29)
|
|
|
|
|
Diluted loss per
common share
|
$
(0.67)
|
|
$
(1.04)
|
|
$
(0.53)
|
|
$
(1.70)
|
|
$
(1.29)
|
|
|
|
|
Weighted average
basic shares outstanding
|
37,496
|
|
37,339
|
|
36,769
|
|
37,419
|
|
36,683
|
|
|
|
|
Weighted average
diluted shares outstanding 2
|
37,496
|
|
37,339
|
|
36,769
|
|
37,419
|
|
36,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating
Data (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
Offshore Supply
Vessels:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of new
generation OSVs 3
|
63.9
|
|
62.0
|
|
62.0
|
|
63.0
|
|
62.0
|
|
|
|
|
Average number of active new
generation OSVs 4
|
22.7
|
|
18.0
|
|
20.7
|
|
20.4
|
|
19.4
|
|
|
|
|
Average new generation OSV
fleet capacity (deadweight) 3
|
228,925
|
|
220,072
|
|
220,172
|
|
224,498
|
|
220,172
|
|
|
|
|
Average new generation OSV
capacity (deadweight)
|
3,583
|
|
3,550
|
|
3,551
|
|
3,566
|
|
3,551
|
|
|
|
|
Average new generation
utilization rate 5
|
27.0%
|
|
20.7%
|
|
22.3%
|
|
23.9%
|
|
21.0%
|
|
|
|
|
Effective new generation
utilization rate 6
|
76.0%
|
|
71.3%
|
|
66.6%
|
|
73.9%
|
|
67.0%
|
|
|
|
|
Average new generation
dayrate 7
|
$
19,566
|
|
$
17,985
|
|
$
17,202
|
|
$
18,895
|
|
$
22,129
|
|
|
|
|
Effective dayrate
8
|
$
5,283
|
|
$
3,723
|
|
$
3,836
|
|
$
4,516
|
|
$
4,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
June 30,
|
|
As of
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
109,065
|
|
$
186,849
|
|
|
|
|
|
|
|
|
|
|
Working
capital
|
121,357
|
|
199,579
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
2,482,733
|
|
2,501,013
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
2,689,159
|
|
2,768,878
|
|
|
|
|
|
|
|
|
|
|
Total long-term
debt
|
1,083,094
|
|
1,080,826
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
1,363,632
|
|
1,437,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Data
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in
operating activities
|
$
(27,653)
|
|
$
(24,126)
|
|
|
|
|
|
|
|
|
|
|
Cash used in
investing activities
|
(49,131)
|
|
(8,063)
|
|
|
|
|
|
|
|
|
|
|
Cash used in
financing activities
|
(276)
|
|
(59,659)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel
revenues
|
$
49,481
|
|
$
33,134
|
|
$
29,339
|
|
$
82,615
|
|
$
65,188
|
|
|
Non-vessel revenues
9
|
8,950
|
|
8,453
|
|
8,087
|
|
17,403
|
|
16,317
|
|
|
Total
revenues
|
$
58,431
|
|
$
41,587
|
|
$
37,426
|
|
$ 100,018
|
|
$
81,505
|
|
|
Operating
loss
|
$
(15,572)
|
|
$
(33,854)
|
|
$
(31,318)
|
|
$
(49,426)
|
|
$
(57,799)
|
|
|
Operating
deficit
|
(26.7%)
|
|
(81.4%)
|
|
(83.7%)
|
|
(49.4%)
|
|
(70.9%)
|
|
|
Components
of EBITDA 10
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(25,088)
|
|
$
(38,655)
|
|
$
(19,489)
|
|
$
(63,743)
|
|
$
(47,387)
|
|
|
Interest
expense, net
|
15,882
|
|
13,301
|
|
12,965
|
|
29,183
|
|
26,373
|
|
|
Income tax
benefit
|
(6,438)
|
|
(8,491)
|
|
(9,262)
|
|
(14,929)
|
|
(21,576)
|
|
|
Depreciation
|
24,630
|
|
24,648
|
|
24,679
|
|
49,278
|
|
49,356
|
|
|
Amortization
|
2,256
|
|
1,992
|
|
3,266
|
|
4,248
|
|
6,990
|
|
|
EBITDA
10
|
$
11,242
|
|
$
(7,205)
|
|
$
12,159
|
|
$
4,037
|
|
$
13,756
|
|
|
Adjustments
to EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
Gain on early
extinguishment of debt
|
$
-
|
|
$
-
|
|
$
(15,478)
|
|
$
-
|
|
$
(15,478)
|
|
|
Stock-based
compensation expense
|
1,885
|
|
2,868
|
|
972
|
|
4,753
|
|
3,014
|
|
|
Interest
income
|
519
|
|
644
|
|
464
|
|
1,163
|
|
865
|
|
|
Adjusted
EBITDA 10
|
$
13,646
|
|
$
(3,693)
|
|
$
(1,883)
|
|
$
9,953
|
|
$
2,157
|
|
|
EBITDA
10 Reconciliation to GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
10
|
$
11,242
|
|
$
(7,205)
|
|
$
12,159
|
|
$
4,037
|
|
$
13,756
|
|
|
Cash paid for
deferred drydocking charges
|
(1,381)
|
|
(1,970)
|
|
(2,826)
|
|
(3,351)
|
|
(5,955)
|
|
|
Cash paid for
interest
|
(14,173)
|
|
(15,131)
|
|
(12,443)
|
|
(29,304)
|
|
(26,199)
|
|
|
Cash paid for
income taxes
|
(201)
|
|
(449)
|
|
(361)
|
|
(650)
|
|
(710)
|
|
|
Changes in
working capital
|
(15,990)
|
|
12,833
|
|
(2,813)
|
|
(3,157)
|
|
3,433
|
|
|
Stock-based
compensation expense
|
1,885
|
|
2,868
|
|
972
|
|
4,753
|
|
3,014
|
|
|
Gain on early
extinguishment of debt
|
-
|
|
-
|
|
(15,478)
|
|
-
|
|
(15,478)
|
|
|
Loss (gain) on
sale of assets
|
13
|
|
(43)
|
|
(1)
|
|
(30)
|
|
(19)
|
|
|
Changes in
other, net
|
(174)
|
|
223
|
|
284
|
|
49
|
|
4,032
|
|
|
Net cash used
in operating activities
|
$
(18,779)
|
|
$
(8,874)
|
|
$
(20,507)
|
|
$
(27,653)
|
|
$
(24,126)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hornbeck Offshore
Services, Inc. and Subsidiaries
|
Unaudited Other
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures and Drydock Downtime Data (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
June
30,
|
|
March
31,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
Drydock
Downtime:
|
|
|
|
|
|
|
|
|
|
|
|
|
New Generation
OSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing drydock activities
|
4.0
|
|
2.0
|
|
5.0
|
|
6.0
|
|
7.0
|
|
|
|
Commercial
downtime (in days)
|
88
|
|
91
|
|
68
|
|
179
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing drydock activities
|
1.0
|
|
-
|
|
2.0
|
|
1.0
|
|
4.0
|
|
|
|
Commercial
downtime (in days)
|
24
|
|
-
|
|
29
|
|
24
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial-related
Downtime11:
|
|
|
|
|
|
|
|
|
|
|
|
|
New Generation
OSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing commercial-related downtime
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
Commercial
downtime (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 charges
|
$
1,381
|
|
$
1,970
|
|
$
2,826
|
|
$
3,351
|
|
$
5,955
|
|
|
|
Other vessel
capital improvements
|
1,510
|
|
2,563
|
|
183
|
|
4,073
|
|
286
|
|
|
|
|
2,891
|
|
4,533
|
|
3,009
|
|
7,424
|
|
6,241
|
|
|
|
Other Capital
Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial-related capital expenditures
|
4,066
|
|
1,343
|
|
141
|
|
5,409
|
|
199
|
|
|
|
Non-vessel
related capital expenditures
|
74
|
|
7
|
|
418
|
|
81
|
|
548
|
|
|
|
|
4,140
|
|
1,350
|
|
559
|
|
5,490
|
|
747
|
|
|
|
|
$
7,031
|
|
$
5,883
|
|
$
3,568
|
|
$
12,914
|
|
$
6,988
|
|
|
|
Growth Capital
Expenditures (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
OSV newbuild
program #5
|
$
67
|
|
$
421
|
|
$
1,618
|
|
$
488
|
|
$
2,920
|
|
|
|
Vessel
acquisitions
|
36,869
|
|
-
|
|
-
|
|
36,869
|
|
-
|
|
|
|
|
$
36,936
|
|
$
421
|
|
$
1,618
|
|
$
37,357
|
|
$
2,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forecasted
Data12:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q
2018A
|
|
2Q
2018A
|
|
3Q
2018E
|
|
4Q
2018E
|
|
2018E
|
|
2019E
|
|
Drydock
Downtime:
|
|
|
|
|
|
|
|
|
|
|
|
|
New Generation
OSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing drydock activities
|
2.0
|
|
4.0
|
|
3.0
|
|
2.0
|
|
11.0
|
|
14.0
|
|
Commercial
downtime (in days)
|
91
|
|
88
|
|
68
|
|
69
|
|
316
|
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MPSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing drydock activities
|
-
|
|
1.0
|
|
-
|
|
-
|
|
1.0
|
|
7.0
|
|
Commercial
downtime (in days)
|
-
|
|
24
|
|
31
|
|
|
|
55
|
|
170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial-related
Downtime11:
|
|
|
|
|
|
|
|
|
|
|
|
|
New Generation
OSVs
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
vessels commencing commercial-related downtime
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Commercial
downtime (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 charges
|
$
2.0
|
|
$
1.4
|
|
$
7.0
|
|
$
3.4
|
|
$
13.8
|
|
$
26.4
|
|
Other vessel
capital improvements
|
2.6
|
|
1.5
|
|
2.8
|
|
1.5
|
|
8.4
|
|
3.3
|
|
|
4.6
|
|
2.9
|
|
9.8
|
|
4.9
|
|
22.2
|
|
29.7
|
|
Other Capital
Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial-related capital expenditures
|
1.3
|
|
4.1
|
|
0.2
|
|
-
|
|
5.6
|
|
-
|
|
Non-vessel
related capital expenditures
|
-
|
|
0.1
|
|
0.2
|
|
-
|
|
0.3
|
|
0.5
|
|
|
1.3
|
|
4.2
|
|
0.4
|
|
-
|
|
5.9
|
|
0.5
|
|
|
$
5.9
|
|
$
7.1
|
|
$
10.2
|
|
$
4.9
|
|
$
28.1
|
|
$
30.2
|
|
Growth Capital
Expenditures (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
OSV newbuild
program #5
|
$
0.4
|
|
$
0.1
|
|
$
9.5
|
|
$
7.5
|
|
$
17.5
|
|
$
44.8
|
|
Vessel
acquisitions
|
-
|
|
36.9
|
|
-
|
|
-
|
|
36.9
|
|
-
|
|
|
$
0.4
|
|
$
37.0
|
|
$
9.5
|
|
$
7.5
|
|
$
54.4
|
|
$
44.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hornbeck Offshore
Services, Inc. and Subsidiaries
|
Unaudited Other
Fleet and Financial Data
|
(in millions,
except Average Vessels and Tax Rate)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Guidance
of Selected Data (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q
2018E
|
|
Full-Year
2018E
|
|
Full-Year
2019E
|
|
|
|
|
|
|
|
|
Avg
Vessels
|
|
Avg
Vessels
|
|
Avg
Vessels
|
|
|
|
|
|
|
|
Fleet Data (as of
1-Aug-2018):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New generation OSVs -
Active
|
26.3
|
|
23.8
|
|
28.0
|
|
|
|
|
|
|
|
New generation OSVs -
Stacked 13
|
39.7
|
|
40.7
|
|
38.0
|
|
|
|
|
|
|
|
New generation OSVs -
Total
|
66.0
|
|
64.5
|
|
66.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New generation MPSVs -
Active
|
7.0
|
|
7.3
|
|
9.0
|
|
|
|
|
|
|
|
New generation MPSVs -
Stacked
|
1.0
|
|
0.7
|
|
-
|
|
|
|
|
|
|
|
New generation MPSVs -
Total
|
8.0
|
|
8.0
|
|
9.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
74.0
|
|
72.5
|
|
75.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q 2018E
Range
|
|
Full-Year
2018E Range
|
|
|
|
|
|
Cost
Data:
|
Low14
|
|
High
14
|
|
Low14
|
|
High
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
35.0
|
|
$
40.0
|
|
$
140.0
|
|
$
150.0
|
|
|
|
|
|
General and administrative
expense 15
|
$
12.0
|
|
$
14.0
|
|
$
48.0
|
|
$
53.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q
2018A
|
|
2Q
2018A
|
|
3Q
2018E
|
|
4Q
2018E
|
|
2018E
|
|
2019E
|
|
Other Financial
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
$
24.6
|
|
$
24.6
|
|
$
24.8
|
|
$
24.8
|
|
$
98.8
|
|
$103.0
|
|
Amortization
|
2.0
|
|
2.3
|
|
2.6
|
|
3.1
|
|
10.0
|
|
16.9
|
|
Interest
expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
16
|
$
15.9
|
|
$
16.2
|
|
$
16.3
|
|
$
16.4
|
|
$
64.8
|
|
$
74.6
|
|
Incremental non-cash
OID interest expense 17
|
1.0
|
|
1.0
|
|
1.0
|
|
1.0
|
|
4.0
|
|
2.7
|
|
Amortization of
deferred gain 18
|
(0.7)
|
|
(0.8)
|
|
(0.8)
|
|
(0.8)
|
|
(3.1)
|
|
(3.2)
|
|
Capitalized
interest
|
(2.3)
|
|
-
|
|
(2.5)
|
|
(2.6)
|
|
(7.4)
|
|
(4.6)
|
|
Interest
income
|
(0.6)
|
|
(0.5)
|
|
(0.5)
|
|
(0.5)
|
|
(2.1)
|
|
(1.6)
|
|
Total interest
expense, net
|
$
13.3
|
|
$
15.9
|
|
$
13.5
|
|
$
13.5
|
|
$
56.2
|
|
$
67.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
benefit rate
|
18.0%
|
|
20.0%
|
|
20.0%
|
|
20.0%
|
|
20.0%
|
|
19.0%
|
|
Cash paid for
(refunds of) income taxes
|
$
0.4
|
|
$
0.2
|
|
$
0.1
|
|
$
(0.6)
|
|
$
0.1
|
|
$
(2.5)
|
|
Cash paid for
interest 16
|
15.1
|
|
14.2
|
|
15.6
|
|
14.5
|
|
59.4
|
|
70.3
|
|
Weighted
average basic shares outstanding
|
37.3
|
|
37.5
|
|
37.6
|
|
37.6
|
|
37.5
|
|
37.9
|
|
Weighted
average diluted shares outstanding 19
|
37.9
|
|
37.8
|
|
37.9
|
|
37.9
|
|
37.9
|
|
38.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Represents other
income and expenses, including equity in income from investments
and foreign currency transaction gains or losses.
|
|
|
|
2
|
Due to net losses for
the three and six months ended June 30, 2018, the three and six
months ended June 30, 2017, and the three months ended March 31,
2018, the Company excluded the dilutive effect of equity awards
representing the rights to acquire 529, 639, 992, 988, and 750
shares of common stock, respectively, because the effect was
anti-dilutive. As of June 30, 2018, March 31, 2018 and June
30, 2017, 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 66
new generation OSVs as of June 30, 2018, including the four OSVs
recently acquired from Aries Marine. Excluded from this data
are eight MPSVs owned by the Company and four non-owned vessels
operated by the Company for the U.S. Navy.
|
|
|
|
4
|
In response to weak
market conditions, the Company elected to stack certain of its new
generation OSVs on various dates since October 1, 2014.
Active new generation OSVs represent vessels that are immediately
available for service during each respective period.
|
|
|
|
5
|
Average utilization
rates are based on a 365-day year for all active and stacked
vessels. 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 average new
generation utilization rate for the respective period.
|
|
|
|
9
|
Represents revenues
from shore-based operations, vessel-management services related to
non-owned vessels, including from the O&M contract with the
U.S. Navy, and ancillary equipment rentals, including from
ROVs.
|
|
|
|
10
|
Non-GAAP Financial
Measure
|
|
|
|
The Company discloses
and discusses EBITDA as a non-GAAP financial measure in its public
releases, including quarterly earnings releases, investor
conference calls and other filings with the Securities and Exchange
Commission. The Company defines EBITDA as earnings (net
income) before interest, income taxes, depreciation and
amortization. The Company's measure of EBITDA may not be
comparable to similarly titled measures presented by other
companies. Other companies may calculate EBITDA differently
than the Company, which may limit its usefulness as a comparative
measure.
|
|
|
|
|
The Company views
EBITDA primarily as a liquidity measure and, as such, believes that
the GAAP financial measure most directly comparable to it is cash
flows provided by operating activities. Because EBITDA is not
a measure of financial performance calculated in accordance with
GAAP, it should not be considered in isolation or as a substitute
for operating income, net income or loss, cash flows provided by
operating, investing and financing activities, or other income or
cash flow statement data prepared in accordance with
GAAP.
|
|
|
|
|
EBITDA is widely used
by investors and other users of the Company's financial statements
as a supplemental financial measure that, when viewed with GAAP
results and the accompanying reconciliations, the Company believes
EBITDA 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 has also historically made certain adjustments, as
applicable, to EBITDA for losses on early extinguishment of debt,
stock-based compensation expense and interest income, or Adjusted
EBITDA, to internally evaluate its performance based on the
computation of ratios used in certain financial covenants of its
credit agreements with various lenders. The Company believes
that such ratios can, at times, be material components of financial
covenants and, when applicable, failure to comply with such
covenants could result in the acceleration of indebtedness or the
imposition of restrictions on the Company's financial
flexibility.
|
|
|
|
Set forth below are
the material limitations associated with using EBITDA as a non-GAAP
financial measure compared to cash flows provided by operating
activities.
|
|
|
|
•
|
EBITDA does not
reflect the future capital expenditure requirements that may be
necessary to replace the Company's existing vessels as a result of
normal wear and tear,
|
|
|
|
|
•
|
EBITDA does not
reflect the interest, future principal payments and other
financing-related charges necessary to service the debt that the
Company has incurred in acquiring and constructing its
vessels,
|
|
|
|
|
•
|
EBITDA does not
reflect the deferred income taxes that the Company will eventually
have to pay once it is no longer in an overall tax net operating
loss position, as applicable, and
|
|
|
|
|
•
|
EBITDA does not
reflect changes in the Company's net working capital
position.
|
|
|
|
|
Management
compensates for the above-described limitations in using EBITDA as
a non-GAAP financial measure by only using EBITDA to supplement the
Company's GAAP results.
|
|
|
|
11
|
Commercial-related
Downtime results from commercial-related vessel improvements, such
as the addition of cranes, ROVs, helidecks, living quarters and
other specialized vessel equipment; the modification of vessel
capacities or capabilities, such as DP upgrades and mid-body
extensions, which costs are typically included in and offset, in
whole or in part, by higher dayrates charged to customers; and the
speculative relocation of vessels from one geographic market to
another.
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12
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The capital
expenditure amounts included in this table are anticipated cash
outlays before the allocation of construction period interest, as
applicable.
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13
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As of August 1, 2018,
the Company's inactive fleet of 40 new generation OSVs that were
"stacked" was comprised of the following: twelve 200 class OSVs,
twenty-four 240 class OSVs, three 265 class OSVs and one 300 class
OSV. In addition, the Company plans to reactivate one 300
class OSV during the third quarter of 2018 and one 240 class OSV
during the fourth quarter of 2018.
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14
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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.
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15
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The Company's forward
guidance for general and administrative expense includes an
estimate of stock-based compensation expense for outstanding
equity-settled and cash-settled awards. Such expense for
outstanding cash-settled awards is re-measured quarterly based on a
10-day trailing average stock price prior to each
quarter-end. As of June 30, 2018, the 10-day trailing average
stock price was $3.49 per share. Future increases or
decreases in such average stock price can be highly volatile and
will commensurately impact stock-based compensation expense (and
thus G&A expense) as cash-settled units are required to be
marked-to-market with cumulative catch-up adjustments at each
quarter-end.
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16
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Interest on the
Company's First-Lien Credit Facility is variable based on changes
in LIBOR, or the London Interbank Offered Rate. The guidance
included in this press release related to such facility is based on
industry estimates of LIBOR in future periods as of August 1,
2018. Actual results may differ from this estimate.
Interest expense on all of the Company's other funded debt is fixed
at rates set forth in the indentures governing such
notes.
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17
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Represents
incremental imputed non-cash OID interest expense required by
accounting standards pertaining to the Company's 1.500% convertible
senior notes due 2019.
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18
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Represents the
non-cash recognition of the $20.7 million gain on the debt-for-debt
exchange associated with the Company's First-Lien Credit Facility,
which is being deferred and amortized prospectively as a yield
adjustment to interest expense as required by GAAP under debt
modification accounting.
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19
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Projected
weighted-average diluted shares do not reflect any potential
dilution resulting from the Company's 1.500% convertible senior
notes. Warrants related to the Company's 1.500% convertible
senior notes become dilutive when the average price of the
Company's stock exceeds the effective conversion price for such
notes of $68.53.
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content:http://www.prnewswire.com/news-releases/hornbeck-offshore-announces-second-quarter-2018-results-300690541.html
SOURCE Hornbeck Offshore Services, Inc.