Sunday, GulfMark Offshore, Inc. (GLF), a provider marine transportation services to the energy industry, reported lower earnings for the first quarter, hurt by charges related to impairment of three vessels for the Gulf of Mexico market, partly offset by certain other gains.
Net income for the quarter slid to $14.2 million, or $0.56 per share from $32.3 million or $1.40 per share in the corresponding period last year.
Excluding items, earnings for the quarter were $33.3 million or $1.32 per share. On average, our analysts polled by Thomson Reuters expected the company to report earnings of $1.33 per share for the quarter. Analysts' estimates typically exclude special items.
Non-GAAP earnings for the quarter included impairment of the construction in progress balance related to three vessels for the Gulf of Mexico market for delivery in the first half of 2010. The impairment charge was $46.2 million with an after-tax impact of $29.2 million, or $1.16 per share.
GulfMark said though it intends to pursue all contractual and legal actions available to recover its investment, due to the uncertainty of recovery, it is taking an impairment charge for the full amount of its investment in these vessels.
Gains on disposal of vessels of $4.6 million, or $0.18 per share, which resulted in a net gain of $3.2 million. Additionally, insurance proceeds related to a damaged vessel resulted in a gain of $1.4 million. Results for the quarter also included a net tax benefit of $5.5 million, or $0.22 per share, related principally to changes enacted in January 2009 by the Norwegian taxing authority.
Revenue rose 30.5% to $108.8 million, from $83.35 million in the corresponding period last year. Three Street analysts expected the company to revenue of $112.10 million for the quarter. GulfMark Americas, which was acquired on July 1, 2008, contributed revenue of $36.3 million for the quarter.
The company said presently contract cover for the remainder of 2009 is 64% and contract cover for 2010 increased to 38% from the 34% during the fourth quarter of 2008.
Bruce Streeter, President and chief executive officer, said, "we continually monitor market conditions to determine the optimal mix of term versus spot contract coverage. The impact of the overall economic conditions and the resulting reduction in industry activity will increase the number of vessels available in the spot market. We expect that this will put pressure on near-term utilization. Our best protection from current conditions is our forward contract cover, the percentage of days existing vessels are under contract or option."
GLF rose $1.31 or 4.64% and closed Friday's regular trading at $29.56.
For comments and feedback: editorial@rttnews.com