UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4, 2005
Cal Dive International, Inc.
| Minnesota | 000-22739 | 95-3409686 | ||
| (State or other jurisdiction | (Commission File Number) | (IRS Employer Identification No.) | ||
| of incorporation) | ||||
| 400 N. Sam Houston Parkway E., | 77060 | |||
| Suite 400 | (Zip Code) | |||
| Houston, Texas | ||||
| (Address of principal executive offices) |
281-618-0400
(Registrant’s telephone number,
including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
Attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein are the press release and First Quarter 2005 Earnings Conference Call Presentation issued by the Registrant on May 4, 2005 regarding earnings for the first quarter of 2005. This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act registration statements.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
| Number | Description | |
99.1
|
Press Release of Cal Dive International, Inc. dated May 4, 2005 reporting Cal Dive’s financial results for the first quarter of 2005. | |
99.2
|
First Quarter 2005 Earnings Conference Call Presentation. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 5, 2005
| CAL DIVE INTERNATIONAL, INC. | ||||||
| By: | /s/ A. WADE PURSELL | |||||
| A. Wade Pursell | ||||||
| Senior Vice President and Chief Financial Officer | ||||||
Index to Exhibits
| Exhibit No. | Description | |
99.1
|
Press Release of Cal Dive International, Inc. dated May 4, 2005 reporting Cal Dive’s financial results for the first quarter of 2005. | |
99.2
|
First Quarter 2005 Earnings Conference Call Presentation. |
|
PRESSRELEASE |
www.caldive.com
Cal Dive International, Inc. • 400 N. Sam Houston Parkway E., Suite 400 • Houston, TX 77060-3500 • 281-618-0400 • fax: 281-618-0505
For Immediate Release
|
05-015 | |||
| Contact: | Wade Pursell | |||
Date: May 4, 2005
|
Title: | Chief Financial Officer |
Cal Dive Reports Quarterly Earnings of 64 Cents Per Share
(70 Cents Before Expensed Acquisition Costs)
HOUSTON, TX – Cal Dive International, Inc. (Nasdaq: CDIS) reported first quarter net income of $25.4 million or $0.64 per diluted share. Included in the earnings was a pre-tax $4.5 million, or $.06 per diluted share, for the write off of seismic costs acquired as part of the Company’s recently announced oil and gas production acquisitions. Net income before the charge doubled the level achieved during last year’s first quarter.
Summary of Results
(in thousands, except per share amounts and percentages)
| First Quarter | Fourth Quarter | |||||||||||
| 2005 | 2004 | 2004 | ||||||||||
Revenues |
$ | 159,575 | $ | 120,714 | $ | 162,990 | ||||||
Gross Profit |
51,873 | 31,741 | 53,030 | |||||||||
| 33 | % | 26 | % | 33 | % | |||||||
Net Income |
25,411 | 13,645 | 25,269 | |||||||||
| 16 | % | 11 | % | 16 | % | |||||||
Diluted Earnings Per Share |
0.64 | 0.36 | 0.65 | |||||||||
Owen Kratz, Chairman and Chief Executive Officer of Cal Dive, stated, “Absent the unusual charge, this was our fourth consecutive quarter of record earnings, driven by excellent offshore performance and gradually improving market conditions for Marine Contracting together with continued strong performance by the oil and gas production division (ERT). Following this strong start to the year, we now anticipate 2005 earnings to be in the increased range of $2.30 — $2.90 per share.
“We have also been particularly busy setting the groundwork for further growth of Cal Dive in 2006 and beyond. We started by placing a long term debt facility and then announced strategic acquisitions in the Shelf sector of the Marine Contracting market. Finally, we closed several very exciting production contracting deals, which involved both significant reserve additions for ERT and good opportunities for deepwater Marine Contracting work.”
Financial Highlights
| • | Revenues: The $38.9 million increase in year-over-year first quarter revenues reflects not only increases in commodity prices, but also a significant improvement in Marine Contracting revenues driven primarily by improved market conditions. | |||
| • | Margins: 33% was seven points better than the year-ago quarter due to improved utilization and rates across virtually all business groups within Marine Contracting and the increase in commodity prices. | |||
| • | SG&A: $12.8 million increased $1.7 million from the same period a year ago due primarily to improved financial results and the related increase from our incentive compensation programs. With this increase, SG&A was 8% of first quarter revenues, compared to 9% a year ago. | |||
| • | Equity in Earnings: $1.7 million reflects our share of Deepwater Gateway, L.L.C.’s earnings for the quarter. This reflects a 51% decrease from the fourth quarter due to the expected fall-off in production from the Marco Polo reservoir and to the early retirement of Deepwater Gateway’s term loan, which resulted in a $1.2 million charge for the write-off of deferred financing charges. | |||
| • | Debt: On March 30, 2005, Cal Dive issued $300 million of Convertible Senior Notes. We utilized $72 million of the proceeds to fund Cal Dive’s portion of the early retirement of Deepwater Gateway’s term loan. Total debt to book capitalization was 44% at March 31, 2005, offset by $362 million of unrestricted cash. Subsequent to March 31, 2005, the Company announced acquisitions of certain assets of Stolt Offshore, subject to regulatory approval, and Torch Offshore, subject to bankruptcy court approvals, for approximately $205 million combined, if completed. In addition, the Company announced three production contracting transactions. | |||
Further details are provided in the presentation for Cal Dive’s quarterly conference call (see the Investor Relations page of www.caldive.com). The call, scheduled for 9:00 a.m. Central Daylight Time on Thursday, May 5, 2005, will be webcast live. A replay will be available from the Audio Archives page.
Cal Dive International, Inc., headquartered in Houston, Texas, is an energy service company which provides alternate solutions to the oil and gas industry worldwide for marginal field development, alternative development plans, field life extension and abandonment, with service lines including marine diving services, robotics, well operations, facilities ownership and oil and gas production.
This press release and attached presentation contain forward-looking statements that involve risks, uncertainties and assumptions that could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any projections of revenue, gross margin, expenses, earnings or losses from operations, or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statement concerning developments, performance or industry rankings relating to services; any statements regarding future economic conditions or performance; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include the performance of contracts by suppliers, customers and partners; employee management issues; complexities of global political and economic developments, and other risks described from time to time in our reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ending December 31, 2004. We assume no obligation and do not intend to update these forward-looking statements.
CAL DIVE INTERNATIONAL, INC.
Comparative Condensed Consolidated Statements of Operations
| Three Months Ended Mar. 31, | ||||||||
| (000's omitted, except per share data) | 2005 | 2004 | ||||||
| (unaudited) | ||||||||
Net Revenues |
$ | 159,575 | $ | 120,714 | ||||
Cost of Sales |
107,702 | 88,973 | ||||||
Gross Profit |
51,873 | 31,741 | ||||||
Selling and Administrative |
12,837 | 11,158 | ||||||
Income from Operations |
39,036 | 20,583 | ||||||
Equity in Earnings of Production Facilities Investments |
1,729 | — | ||||||
Interest Expense, net & Other |
264 | 1,555 | ||||||
Income Before Income Taxes |
40,501 | 19,028 | ||||||
Income Tax Provision |
14,540 | 5,019 | ||||||
Net Income |
25,961 | 14,009 | ||||||
Preferred Stock Dividends and Accretion |
550 | 364 | ||||||
Net Income Applicable to Common Shareholders |
$ | 25,411 | $ | 13,645 | ||||
Other Financial Data: |
||||||||
Income from Operations |
$ | 39,036 | $ | 20,583 | ||||
Equity in Earnings of Production Facilities Investments |
1,729 | — | ||||||
Share of Production Facilities Investments: |
||||||||
Depreciation |
1,010 | — | ||||||
Interest Expense, net |
1,383 | — | ||||||
Depreciation and Amortization: |
||||||||
Marine Contracting |
9,094 | 8,900 | ||||||
Oil and Gas Production |
17,629 | 17,500 | ||||||
EBITDA (1) |
$ | 69,881 | $ | 46,983 | ||||
Weighted Avg. Shares Outstanding: |
||||||||
Basic |
38,571 | 37,946 | ||||||
Diluted |
40,869 | 39,150 | ||||||
Earnings Per Share: |
||||||||
Basic |
$ | 0.66 | $ | 0.36 | ||||
Diluted |
$ | 0.64 | $ | 0.36 | ||||
| (1) | The Company calculates EBITDA as earnings before net interest expense, taxes, depreciation and amortization (which includes non-cash asset impairments) and the Company’s share of depreciation and net interest expense from its Production Facilities Investments. EBITDA and EBITDA margin (defined as EBITDA divided by net revenue) are supplemental non-GAAP financial measurements used by CDI and investors in the marine construction industry in the evaluation of its business due to the measurements being similar to income from operations. |
Comparative Condensed Consolidated Balance Sheets
| ASSETS | LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||||||||||||
| (000's omitted) | Mar. 31, 2005 | Dec. 31, 2004 | Mar. 31, 2005 | Dec. 31, 2004 | |||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||
Current Assets: |
Current Liabilities: | ||||||||||||||||||
Cash and equivalents |
$ | 362,267 | $ | 91,142 | Accounts payable |
$ | 57,094 | $ | 56,047 | ||||||||||
Accounts receivable |
110,261 | 114,709 | Accrued liabilities |
74,191 | 75,502 | ||||||||||||||
Other current assets |
37,202 | 48,110 | Current mat of L-T debt |
7,240 | 9,613 | ||||||||||||||
|
|
|||||||||||||||||||
Total Current Assets |
509,730 | 253,961 | Total Current Liabilities | 138,525 | 141,162 | ||||||||||||||
Net Property & Equipment: |
Long-term debt | 436,036 | 138,947 | ||||||||||||||||
Marine Contracting |
408,702 | 411,596 | Deferred income taxes | 135,999 | 133,777 | ||||||||||||||
Oil and Gas Production |
169,986 | 172,821 | Decommissioning liabilities | 83,544 | 79,490 | ||||||||||||||
Equity Investments in Production Facilities |
135,656 | 67,192 | Other long term liabilities | 4,345 | 5,090 | ||||||||||||||
Goodwill |
84,073 | 84,193 | Convertible preferred stock | 55,000 | 55,000 | ||||||||||||||
Other assets, net |
60,022 | 48,995 | Shareholders' equity | 514,720 | 485,292 | ||||||||||||||
|
|
|||||||||||||||||||
Total Assets |
$ | 1,368,169 | $ | 1,038,758 | Total Liabilities & Equity | $ | 1,368,169 | $ | 1,038,758 | ||||||||||
| Owen Kratz - Chief Executive Officer Martin Ferron - President Wade Pursell - Chief Financial Officer First Quarter 2005 Earnings Conference Call May 5, 2005 |
| Agenda I. Summary of Results II. Operational Highlights by Segment A. Marine Contracting i. Shelf Contracting ii. Deepwater & Robotics iii. Well Operations B. Production Facilities C. Oil & Gas Production III. Strategic Overview and Outlook IV. Questions & Answers 2 |
| FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements that involve risks, uncertainties and assumptions that could cause our results to differ materially from those expressed or implied by such forward- looking statements. All statements, other than statements of historical fact, are statements that could be deemed "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any projections of revenue, gross margin, expenses, earnings or losses from operations, or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statement concerning developments, performance or industry rankings relating to services; any statements regarding future economic conditions or performance; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include the performance of contracts by suppliers, customers and partners; employee management issues; complexities of global political and economic developments, and other risks described from time to time in our reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ending December 31, 2004. We assume no obligation and do not intend to update these forward-looking statements. 3 |
| Summary of Results (all amounts in thousands, except per share amounts and percentages) 4 First Quarter First Quarter Fourth Quarter 2005 2004 2004 Revenues $159,575 $120,714 $162,990 Gross Profit (Before Unusual Charges) 56,370 31,741 56,930 35% 26% 35% Asset Impairment Charges ^ ^ <3,900> Expensed Acquisition Costs <4,497> ^ ^ Net Income 25,411 13,645 25,269 16% 11% 16% Diluted Earning Per Share 0.64 0.36 0.65 EBITDA 69,882 46,983 71,810 44% 39% 44% |
| MARAD Construction and Other Long Term Debt Revolving Credit 5 (Amounts in Millions) 3/31/05 12/31/04 12/31/03 12/31/02 Debt To Book Capitalization 40% 35% 22% 44% Convertible Notes |
| Convertible Notes Total Principal Amount: $300 million Coupon: 3.25% Maturity: 20 years, Callable after 7 years, Puttable at end of 7, 10 and 15 years Conversion Price: $64.27 Net Share Settlement Election: Cal Dive will settle the conversion value by paying the principal amount in cash and delivering shares for value above the conversion price, if any. Dilution Impact: None initially - - only above $64.27 per share (Example: At $100 per share, 4% dilution). 6 |
| Marine Contracting (MC) First Quarter First Quarter Fourth Quarter 2005 2004 2004 Revenues $100,487 $72,160 $101,451 Gross Profit 20,961 4,062 16,152 21% 6% 16% 7 (Amounts reflected are before intercompany eliminations and pre-tax charges for marine asset value impairments in Q4/04) Q1/05: Overall revenue declined sequentially mainly due to lower procurement related revenue in the Well Operations division and a seasonally slower quarter for Shelf services. Gross profit margins improved 5% sequentially and 15% year over year due to strong execution and better market conditions. |
| Marine Contracting (MC) cont. Q2/05 and Outlook: We expect Q2 financial performance to be weaker than Q1 due to the timing of the drydocking of the Seawell, Mystic Viking and Cal Diver II. However, demand is building in most market sectors and we anticipate getting back on track with gradually improving performance during the second half of the year. 8 |
| MC - Shelf First Quarter First Quarter Fourth Quarter 2005 2004 2004 48% 32% 68% Utilization Utilization dropped from the record level of Q4/04 due to a lower volume of Hurricane Ivan related work and normal seasonality. Demand for the saturation diving vessels (Cal Diver I and II) remains strong and we are starting to see an expected pick-up in surface diving activity linked to Inspection, Repair and Maintenance (IRM) work. 9 |
| MC - Shelf Strategic Acquisitions Transaction with Stolt Offshore, involving the purchase of Shelf assets, is still due to close during Q2. The deal is expected to be neutral to earnings during the remainder of 2005, as integration takes place, but is likely to produce between $25 million - $30 million of EBITDA in 2006. Asset Purchase Agreement signed with Torch Offshore for the acquisition of five shelf vessels and a deepwater pipelay vessel - Midnight Express for a total of $80 million. Under the terms of the agreement, we would be the initial (i.e., "stalking horse") bidder for these assets in a bankruptcy auction currently planned for early June. Our existing Shelf assets, together with those acquired, will be placed in a new wholly owned subsidiary. 10 |
| MC - Deepwater & Robotics First Quarter First Quarter Fourth Quarter 2005 2004 2004 Deepwater Contracting 63% 70% 64% Robotics 63% 49% 61% Utilization Q1/05: Deepwater vessel utilization was flat with Q4/04 despite a gradual decline in Hurricane Ivan related work. The drydocking of the Intrepid was completed in January and she finished an important tie-back pipelay project in 5,800 fsw during the remainder of the quarter. The robotics group (Canyon) had a record quarter largely driven by robust demand for both ROV support and pipeline burial services in the Europe/Africa/Mediterranean region. 11 |
| MC - Deepwater & Robotics cont. Q2/05 and Outlook: The active deepwater vessels have good backlogs and the Witch Queen will recommence operations in the Trinidad market during the quarter. We are particularly encouraged that the deepwater tie-back pipelay market is developing as we expected when we converted the Intrepid. Bidding activity for this type of project is at an all time high. Demand for Canyon's services is expected to remain high during Q2 and we presently have four support vessels on charter. Our second, high power, deepwater pipeline burial unit will also enter service during the second quarter. 12 |
| MC - Well Operations First Quarter First Quarter Fourth Quarter 2005 2004 2004 96% 82% 92% Utilization Q1/05: The Q4000 had a record quarter for profitability and has now worked almost every day since early July last year. The Seawell was able to complete the Statoil work season in early February without further adverse incident and then transferred straight back to work in the British sector of the North Sea for the rest of the quarter. 13 |
| MC - Well Operations cont. Q2/05 and Outlook: The drydocking of the Q4000 has been delayed until Q3 to allow her to complete an ongoing work commitment and she has good prospects after that. The Seawell entered drydock in mid April and she should get back to work in mid May. She is fully booked for the remainder of the year. In general, as drill rig rates continue to rise, we are achieving improved pricing for both well intervention assets. 14 |
| Production Facilities First Quarter First Quarter Fourth Quarter 2005 2004 2004 Equity in Earnings $1,729 $^ $3,555 Production throughput (MBOe) 1,259 ^ 2,533 15 Q1/05: The equity contribution from Deepwater Gateway (Marco Polo) declined from Q4/04 due to the expected fall-off in production from the Marco Polo reservoir and a $1.2 million charge related to the early retirement of the entity's term loan. Outlook: Incremental tariff income will be achieved from the tie-back of the K2 field in Q2 and the K2 North field in Q3. Anadarko is also fast tracking the procurement of hardware necessary to tie back the recent discovery made on the Genghis Khan field. |
| Oil & Gas Production First Quarter First Quarter Fourth Quarter 2005 2004 2004 Revenues $63,386 $55,195 $66,833 Gross Profit 35,409 27,769 40,762 56% 50% 61% Production (BCFe): Shelf 6.7 8.5 7.1 Gunnison 2.3 1.5 2.7 Average Commodity Prices (net of hedging impact): Oil/Bbl $44.02 $30.66 $39.77 Gas/Mcf 6.64 5.63 6.83 16 (Amounts reflected are before pre-tax charges for expensed acquisition costs in Q1/05) |
| Oil & Gas Production Q1: Shelf: Commodity prices remained robust in the first quarter with our net realized price per BCFe up 27% from the prior year first quarter and slightly ahead (3%) of last quarter. Shelf production declined 6% from last quarter due mainly to unexpected downtime at EC 374 in February. Margins were negatively impacted by a $1.7 million charge taken at EC 38 as a result of unsuccessful well work. Natural gas made up 58% of the shelf production in Q1. Gunnison: Production declined 15% from last quarter due mainly to unexpected downtime in February resulting from pipeline problems. Natural gas made up 52% of Gunnison production in Q1. Outlook: We remain confident that through continuing exploitation efforts and acquisitions, we will achieve our 2005 guidance of 40 - 45 BCFe of total production. 17 |
| Oil & Gas Production Development Property Acquisitions Telemark (30%), Devil's Island (50%), Tulane (50%) and Bass Lite (37.5%). Total Estimated Acquisition and Development Costs: $300 million to $375 million primarily over the next three years. Total Estimated Acquisition Reserves: 130 to 200 BCFe. Total Associated Marine Contracting Work: $90 million to $120 million. 18 |
| Hedging: As of March 31, 2005 Production Period Instrument Type Average Monthly Volumes Weighted Average Price Crude Oil: April - June 2005 Collars 50 MBbl $38.60 - $50.99 April - June 2005 Swaps 20 MBbl $35.80 July - December 2005 Collars 70 MBbl $40.00 - $53.84 Natural Gas: April - June 2005 Collars 400,000 MMBtu $5.75 - $8.79 July - December 2005 Collars 325,000 MMBtu $5.31 - $9.83 19 |
| 2005 Objectives Marine Contracting Revenues: $300 - 330 million Margins: 13% - 15% Oil and Gas 40 - 45 BCFe of production PUD acquisition Mature property acquisition Production Facilities Equity earnings: $22 - 27 million Start up of production from K2/K2N Identify and progress next opportunity Financial Earnings in range $2.00 - $2.70/share No equity dilution Safety TRIR below 1.8 20 Goals |