EXHIBIT 99.1
NEWS RELEASE
For further information contact:
Kevin C. Peterson Bradley M. Parro
Chief Executive Officer Chief Financial Officer
(713) 430-1100 (713) 430-1100
FOR IMMEDIATE RELEASE
THURSDAY, MAY 14, 1998
CEANIC ANNOUNCES FIRST QUARTER, 1998 RESULTS; 26% REVENUE INCREASE
AND SUBSTANTIAL INCREASE IN PROFITABILITY
Houston, Texas -- American Oilfield Divers, Inc. doing business as Ceanic
(NASDAQ: DIVE) today reported revenue of $36.0 million and net income of
$627,000 ($0.06 per share) for the first quarter ended March 31, 1998
compared with revenue of $28.6 million and net income of $226,000 for the
same period a year ago.
"In spite of unusually bad weather, our first quarter results of
operations have begun to reflect our strategy to position ourselves as a
deepwater, high technology provider of innovative solutions as those assets
are less weather-sensitive," said Kevin Peterson, Ceanic's President and
CEO. "As our new larger dynamically positioned vessels and deepwater ROV's
come on line throughout the year, we expect this strategy to continue to add
positive results with the full impact expected to be realized in the first
half of 1999. Meanwhile, our core Americas Region market has produced
consistent revenues and has increased margins. Conversely, our
international expansion strategy has yet to contribute to earnings."
The 26% increase in revenue was primarily due to increased demand for the
Company's services attributable to the addition of certain deepwater assets
in Ceanic's Americas Region along with overall higher utilization of
existing assets in the Gulf of Mexico. Ceanic also experienced increased
demand for its subsea products in the first quarter of 1998.
Ceanic's gross profit margins increased from 28.9% in the first quarter of
1997 to 30.7% in the current quarter primarily as a result of the
improvements in the Americas Region gross profit margins, partially offset
by low activity levels in the Europe Africa and Asia Pacific Regions, and
lower margins in the General Contracting Division.
Ceanic's SG&A increased 22% to $6.5 million in the first quarter of
1998 compared to $5.3 million for the prior year quarter primarily due to
costs associated with the Company's international and deepwater expansion
strategy. The process of resizing the international and administrative
management infrastructure has been initiated and is expected to be completed
within the second quarter of 1998. The Company's targeted annual SG&A
reduction is $3 million to $4 million.
Ceanic's depreciation and amortization expense increased 29% to $3.0
million for the first quarter of 1998 compared to $2.3 million in the first
quarter of 1997. This increase is primarily attributable to capital
expenditures made in 1997 for additions to the Company's product and service
offerings, particularly in the deepwater Gulf of Mexico market.
Regional Review/Outlook
Americas Region
Ceanic's Americas Region experienced strong operating results in the first
quarter of 1998 with revenues increasing by $5.9 million or 44% over the
prior year quarter, and gross profit percentage increasing from 25.3% to
36.9% in the current quarter. The vessel service line recorded the most
significant improvement as a result of the American Defender's, a 220 foot
dynamically positioned vessel, first full quarter of operations, as well as
increased utilization and day rates for the existing vessel fleet.
Asia Pacific
Although this region has experienced initial success in the area of field
development, its underlying business (diving, ROV's, vessels) had low
activity and specific job-related losses. Management is currently
evaluating the cost structure in this region and intends to continue to
develop Ceanic's international market presence, but in a more cost effective
manner.
Europe Africa Regions
The Europe Africa Region is comprised of two distinct areas. West Africa
experienced a slow start up in the first quarter with increasing activity
for the second quarter of 1998. The Aberdeen office has yet to receive
designated assets and therefore is not contributing revenues to the region.
Assets are expected to be in the region by the third and fourth quarters of
1998.
Subsea Products
Ceanic's Products Division achieved strong results in the first quarter of
1998. Hard Suits recorded strong operating results in the current quarter
with the manufacturing of a HARDSUIT(TM) diving suit for delivery to the
Italian Navy and the continued progress on U.S. Navy contracts. Big Inch
experienced record demand for its pipeline connector and repair products
attributable to a heavy winter construction season and a significant number
of large diameter pipeline repairs. Finally, in the first quarter of 1998,
Ceanic's Field Development group completed the fabrication of a Tarpon Guyed
Monotower in Indonesia with the installation scheduled to be completed in
the second quarter of 1998.
General Contracting Division
Ceanic's General Contracting Division experienced flat quarter-over-
quarter revenue in the current period. This coupled with certain non-
recurring project cost overruns resulted in a reduction in the Division's
gross profit percentage from 21.4% in the first quarter of 1997 to 13.6% in
the current quarter. Although the first quarter results were down from the
prior year, the General Contracting Division has recently been awarded
several significant contracts and has a backlog of $24.5 million.
Statements in this press release regarding profitability of the Company in
general; utilization and dayrates in the Gulf of Mexico; opportunities in
the General Contracting, Asia Pacific and Europe Africa markets; and other
statements included herein that are not statements of historical fact are
forward-looking statements involving factors that could cause actual
results to vary materially from those predicted. Other forward-looking
statements, including statements as to the Company's profitability, depend
upon, among other things, prices of crude oil and natural gas, weather
conditions in offshore markets, capital expenditures by customers and the
Company's ability to procure large turnkey projects.
Ceanic is a leading provider of diving services, intervention
technologies, subsea products, field development, general contracting and
marine construction services to offshore, governmental and industrial
customers in the U.S. and internationally.
Tables follow . . .
AMERICAN OILFIELD DIVERS, INC.
Consolidated Results of Operations and Financial Position
($ in thousands except for per share amounts)
Three Months Ended
March 31,
----------
Income Statement 1998 1997<F1>
---- ----
Revenues $36,017 $28,576
------ ------
Gross profit 11,061 8,254
Selling, general and administrative expenses 6,518 5,335
Depreciation and amortization 2,997 2,318
----- -----
Operating income 1,546 601
Other expense, net (444) (205)
----- ------
Income before income taxes 1,102 396
Income tax provision 475 170
----- -----
Net income $ 627 $ 226
===== =====
Net income per share (basic) $ .06 $ .03
===== =====
Net income per share (diluted) $ .06 $ .03
===== =====
Weighted average shares outstanding 10,641 8,890
===== =====
Operational Data
Dive crew days 10,418 11,525
Dive crews per day 116 128
Diving support vessel utilization 47% 47%
Earnings before interest, taxes,
depreciation and amortization (EBITDA) $4,543 $2,919
EBITDA as % of revenue 12.6% 10.2%
SG&A as % of revenue 18.1% 18.7%
Gross profit % 30.7% 28.9%
March 31, December 31,
Balance Sheet 1998 1997
--------- ----------
Assets:
Current assets $59,637 $55,286
Other long-term assets 84,208 79,014
--------- ---------
Total assets $143,845 $134,300
========= =========
Liabilities & Stockholders' Equity:
Current liabilities $38,129 $29,698
Long-term debt 7,759 8,060
Other liabilities 7,293 6,291
Stockholders' equity 90,664 90,251
-------- --------
Total liabilities & stockholders equity $143,845 $134,300
======== ========
<F1> Certain amounts presented in the results of operations for the three
months ended March 31, 1997 have been reclassified to conform with the
1998 presentation.
More...
Three Months Ended March 31, 1998
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(Unaudited) (dollars in thousands)
Americas Pacific Europe Africa General Subsea
Region<F1> Region Region Contracting<F2> Products<F3> Total
--------- -------- ------------- ----------- -------------- --------
Diving and related revenues $19,320 $1,114 $1,700 $7,146 $6,737 $36,017
Diving and related expenes $12,200 $1,126 $1,512 $6,176 $3,942 $24,956
Gross profit (loss) $ 7,120 $ (12) $ 188 $ 970 $2,795 $11,061
Gross profit percentage 36.9% (1.1%) 11.1% 13.6% 41.5% 30.7%
Three Months Ended March 31, 1997
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(Unaudited) (dollars in thousands)
Americas Pacific Europe Africa General Subsea
Region<F1> Region Region Contracting<F2> Products<F3> Total
--------- -------- ------------- ----------- -------------- --------
Diving and related revenues $13,461 $ -- $ 2,841 $ 7,789 $ 4,485 $ 28,576
Diving and related expenses $10,057 $ -- $ 1,607 $ 6,122 $ 2,536 $ 20,322
Gross profit $ 3,404 $ -- $ 1,234 $ 1,667 $ 1,949 $ 8,254
Gross profit percentage 25.3% -- 43.4% 21.4% 43.5% 28.9%
<F1> Includes operations in the Company's Americas Region, which encompasses
diving, intervention technology, vessel and related services, all of which
were performed in the Gulf of Mexico.
<F2> Includes diving and related services in U.S. inland markets, off the U.S.
West Coast and in Latin America.
<F3> Includes manufacturing and marketing of Big Inch pipeline connectors,
marginal well production systems, Tarpon Concrete Storage Systems and
Hard Suits Inc. products.
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