Exhibit 99.1
| | | |
Global Industries, Ltd. | |  |
| | | |
| | | For Immediate Release |
| | | Contact: Jeff Levos |
PRESS RELEASE | | Tel: 281.529.7979 |
GLOBAL INDUSTRIES, LTD. ANNOUNCES RESULTS
FOR THE SECOND QUARTER OF 2008
Company Initiates Share Repurchase Program
Carlyss, Louisiana, August 4, 2008 — Global Industries, Ltd. (Nasdaq: GLBL) announced revenues of $300.5 million in the second quarter of 2008, an increase of almost 21 percent, compared to $248.9 million in the second quarter of 2007. Net loss was $13.5 million, or $0.12 diluted loss per share, for the second quarter 2008. This compares to net income of $41.1 million, or $0.35 diluted income per share, for the second quarter of 2007.
During the second quarter of 2008, the Company increased its offshore activities in two new expanding markets, and gross profit was impacted by standby costs driven by exceptional weather downtime periods, logistical issues (such as port clearance and permitting) and rescheduling required as a result of difficulties in availability of support vessels and customer-furnished equipment and materials, as well as vessels undergoing dry docking activity.
Today, the Company’s Board of Directors approved a program which authorizes $100 million for the repurchase of outstanding shares of the Company’s common stock during the next year.
Revenues increased by $51.6 million in the 2008 second quarter from the 2007 second quarter, reflecting revenue growth in international regions. Revenues generated from the Middle East, Latin America and West Africa more than offset lower revenues from North America and Asia Pacific/India.
Gross profit decreased by $66.3 million (or $0.39 per diluted share) to $7.8 million in the 2008 second quarter from $74.1 million in the 2007 second quarter. Middle East gross profits declined by $21.9 from the 2007 second quarter due to project delays caused by harsh weather (approximately $6 million or $0.04 per diluted share), port logistics (approximately $12 million or $0.07 per diluted share), as well as non-availability of support vessels related to rescheduling and delays in customer-furnished equipment and materials. Latin America gross profit declined by $19.7 million from the 2007 second quarter as a result of port clearance issues (approximately $9 million or $0.05 per diluted share), as well as harsh weather conditions (approximately $6 million or $0.03 per diluted share) and logistical issues. This compares to high margins from projects in Latin America in the 2007 second quarter, partially driven by the favorable resolution of change orders. Gross profit in West Africa declined by $0.4 million from the 2007 second quarter, inclusive of a $4.4 million (or $0.03 per diluted share) reserve for disputed receivables surrounding a project completed in the prior year. The unfavorable impact of dry docking costs on gross profit for North America and Asia Pacific/India was approximately $10 million or $0.06 per diluted share.
Selling, general and administrative expenses of $25.0 million for the second quarter of 2008 increased by $5.1 million (or $0.03 per diluted share) over the same quarter last year, primarily due to increased labor and infrastructure support costs related to geographical expansion into Brazil and the Middle East.
Interest income of $3.5 million for the second quarter of 2008 decreased by $2.3 million (or $0.01 per diluted share) over the same quarter last year primarily due to lower rates.
-More -
Other income, net decreased by $3.3 million (or $0.02 per diluted share) from the 2007 second quarter, primarily reflecting losses on foreign currency exchange incurred in the 2008 second quarter.
The effective tax rate was 25 percent for the second quarter of 2008, a decrease of approximately 5 percentage points (or $0.01 per diluted share) compared to 30 percent for the second quarter of 2007. This reflects changes in the mix of taxable earnings by jurisdiction.
During the second quarter of 2008, the Company booked $179.5 million of net new work resulting in a backlog of $415.6 million as of June 30, 2008. Bidding activities have increased from the first quarter of 2008 and remain very strong.
“I am pleased with the growth of our revenues in the quarter which reflects our expanded operations into international regions. Unfortunately, during the quarter our profit performance was substantially impacted by extended periods of standby in the Middle East and Latin America and extended periods of regulatory dry docking in North America and Asia Pacific/India.
We are working diligently to overcome the challenges in these regions. We have implemented project recovery plans and process improvements which should mitigate the cost overruns in subsequent periods. Such improvements include potential recoveries for cost overruns through change orders and claims, cost reduction activities for our West Africa operations and reorganization of our Middle East operations. Operations will be further enhanced regarding availability of vessels, as there is minimal dry docking activity scheduled for the remainder of 2008.
I believe that the current trends in energy prices and offshore exploration and development will drive increasing demand for our services for the remainder of 2008 and beyond. Our balance sheet remains strong, including significant cash balances and we remain confident in our ability to effectively capitalize on these opportunities. In that regard, I am pleased our Board of Directors has approved our share repurchase program. This program will allow us to opportunistically purchase shares when we consider market conditions to be favorable, while allowing us to continue executing our strategy of geographic diversification, broadening business segments, upgrading the fleet, and investing in people and technologies” said B.K. Chin, Chairman and Chief Executive Officer of Global Industries.
A conference call will be held at 9:00 a.m. Central Daylight Saving Time on Tuesday, August 5, 2008. Anyone wishing to listen to the conference call may dial 888.455.8368 (domestic) or 210.839.8890 (international) and request connection to the “Global Second Quarter Earnings” call. Phone lines will open fifteen minutes prior to the start of the call. The call will also be webcast in real time on the Company’s website atwww.globalind.com, where it will also be archived for anytime reference until August 27, 2008.
All individuals listening to the conference call or the replay are reminded that all conference call material is copyrighted by Global and cannot be recorded or rebroadcast without Global’s express written consent.
Global Industries, Ltd. is a leading offshore solution provider of offshore construction, engineering, project management and support services, including pipeline construction, platform installation and removal, deepwater/SURF installations, IRM, and diving to the oil and gas industry worldwide. The Company’s shares are traded on the NASDAQ Global Select Market under the symbol “GLBL”.
This press release may contain forward-looking information based on current information and expectations of the Company that involve a number of risks, uncertainties, and assumptions. Among the factors that could cause the actual results to differ materially are: industry conditions, prices of crude oil and natural gas, the Company’s ability to obtain and the timing of new projects, and changes in competitive factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual outcomes could vary materially from those indicated.
-More -
Set forth are the Company’s results of operations and selected balance sheet amounts for the periods indicated.
| | | | | | | | | | | | | | | | | |
| | | (In thousands, except per share amounts) | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30 | | | June 30 | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Results of Operations(Unaudited) | | | | | | | | | | | | | | | | |
| Revenues | | $ | 300,543 | | | $ | 248,940 | | | $ | 602,008 | | | $ | 525,949 | |
| Cost of operations | | | 292,707 | | | | 174,807 | | | | 539,842 | | | | 358,342 | |
| | | | | | | | | | | | | |
Gross profit | | | 7,836 | | | | 74,133 | | | | 62,166 | | | | 167,607 | |
| Loss (gain) on asset disposals | | | 151 | | | | 12 | | | | (2,012 | ) | | | (1,308 | ) |
| Selling, general and administrative expenses | | | 24,961 | | | | 19,884 | | | | 48,000 | | | | 38,028 | |
| | | | | | | | | | | | | |
Operating income (loss) | | | (17,276 | ) | | | 54,237 | | | | 16,178 | | | | 130,887 | |
| | | | | | | | | | | | | |
| Interest income | | | 3,470 | | | | 5,766 | | | | 10,233 | | | | 10,810 | |
| Interest expense | | | (1,708 | ) | | | (2,032 | ) | | | (5,826 | ) | | | (4,773 | ) |
| Other income (expense), net | | | (2,489 | ) | | | 765 | | | | (1,632 | ) | | | 606 | |
| | | | | | | | | | | | | |
Income (loss) before taxes | | | (18,003 | ) | | | 58,736 | | | | 18,953 | | | | 137,530 | |
| Income taxes (benefits) | | | (4,523 | ) | | | 17,607 | | | | 5,603 | | | | 41,945 | |
| | | | | | | | | | | | | |
Net income (loss) | | $ | (13,480 | ) | | $ | 41,129 | | | $ | 13,350 | | | $ | 95,585 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Earnings (Loss) Per Common Share | | | | | | | | | | | | | | | | |
| Basic | | $ | (0.12 | ) | | $ | 0.35 | | | $ | 0.12 | | | $ | 0.82 | |
| Diluted | | $ | (0.12 | ) | | $ | 0.35 | | | $ | 0.12 | | | $ | 0.81 | |
| | | | | | | | | | | | | | | | | |
Weighted Average Common Shares Outstanding | | | | | | | | | | | | | | | | |
| Basic | | | 114,260 | | | | 117,305 | | | | 113,954 | | | | 116,946 | |
| Diluted | | | 114,260 | | | | 119,168 | | | | 115,716 | | | | 118,675 | |
| | | | | | | | | | | | | | | | | |
Other Data | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | $ | 14,779 | | | $ | 15,960 | | | $ | 28,851 | | | $ | 32,759 | |
| Backlog at end of period | | | | | | | | | | $ | 415,594 | | | $ | 545,963 | |
| | | | | | | | | |
| | | As of | | As of |
| | | June 30 | | December 31 |
| (In thousands) | | 2008 | | 2007 |
Selected Balance Sheet Amounts | | (unaudited) | | | | |
| Cash and cash equivalents | | $ | 488,363 | | | $ | 723,450 | |
| Marketable securities | | | 47,168 | * | | | 99,935 | |
| Working Capital | | | 621,178 | | | | 843,017 | |
| Total Assets | | | 1,648,414 | | | | 1,589,798 | |
| Debt | | | 392,320 | | | | 394,300 | |
| Shareholders’ Equity | | | 884,039 | | | | 853,592 | |
| | |
| * | | Includes $41,968 million of auction rate securities classified as long term as of June 30, 2008 |
-More -
Set forth are the Company’s results of operations by reportable segment for the periods indicated.
RESULTS OF OPERATIONS BY REPORTABLE SEGMENT(1)
(Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30 | | | June 30 | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Total segment revenues | | | | | | | | | | | | | | | | |
| North America OCD | | $ | 22,632 | | | $ | 31,176 | | | $ | 29,572 | | | $ | 48,038 | |
| North America Subsea | | | 35,681 | | | | 42,699 | | | | 59,700 | | | | 72,104 | |
| Latin America | | | 55,578 | | | | 33,017 | | | | 125,750 | | | | 134,865 | |
| West Africa | | | 77,123 | | | | 57,976 | | | | 117,740 | | | | 109,250 | |
| Middle East | | | 66,938 | | | | 34,014 | | | | 152,447 | | | | 43,425 | |
| Asia Pacific/India | | | 49,886 | | | | 67,741 | | | | 131,894 | | | | 147,957 | |
| | | | | | | | | | | | | |
| Subtotal | | | 307,838 | | | | 266,623 | | | | 617,103 | | | | 555,639 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Intersegment eliminations | | | | | | | | | | | | | | | | |
| North America OCD | | | — | | | | (5,587 | ) | | | — | | | | (7,726 | ) |
| North America Subsea | | | (6,990 | ) | | | (3,512 | ) | | | (13,028 | ) | | | (5,286 | ) |
| Middle East | | | (305 | ) | | | (8,471 | ) | | | (2,067 | ) | | | (16,565 | ) |
| Asia Pacific/India | | | — | | | | (113 | ) | | | — | | | | (113 | ) |
| | | | | | | | | | | | | |
| Subtotal | | | (7,295 | ) | | | (17,683 | ) | | | (15,095 | ) | | | (29,690 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Consolidated revenues | | $ | 300,543 | | | $ | 248,940 | | | $ | 602,008 | | | $ | 525,949 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Income (loss) before taxes | | | | | | | | | | | | | | | | |
| North America OCD | | $ | 650 | | | $ | 6,435 | | | $ | (7,280 | ) | | $ | 5,226 | |
| North America Subsea | | | 6,045 | | | | 15,812 | | | | 4,471 | | | | 26,421 | |
| Latin America | | | (14,588 | ) | | | 11,511 | | | | 3,236 | | | | 64,819 | |
| West Africa | | | (7,291 | ) | | | (8,290 | ) | | | (13,494 | ) | | | (7,781 | ) |
| Middle East | | | (11,531 | ) | | | 11,019 | | | | 6,438 | | | | 12,538 | |
| Asia Pacific/India | | | 9,167 | | | | 19,744 | | | | 21,806 | | | | 31,337 | |
| Corporate | | | (455 | ) | | | 2,505 | | | | 3,776 | | | | 4,970 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Consolidated income (loss) before taxes | | $ | (18,003 | ) | | $ | 58,736 | | | $ | 18,953 | | | $ | 137,530 | |
| | | | | | | | | | | | | |
| | |
| (1) | | Financial information in the above table reflects reorganized reportable segments which were aligned in 2007. Also, reportable segments previously titled Gulf of Mexico are now titled North America. |
- End-
