EXHIBIT 99.2
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, AUGUST 6, 1998
CEANIC ANNOUNCES PROFITABLE 1998 SECOND QUARTER
Houston, Texas - Ceanic Corporation (NASDAQ: DIVE) today announced revenue
of $41.7 million and net income of $1.8 million ($0.17 per share) for the
second quarter ended June 30, 1998 compared with revenue of $28.2 million
and net income of $1.6 million ($0.16 per share) for the same period a year
ago. However, as a result of approximately $1.1 million in non-recurring,
pre-tax restructuring charges, the Company reported net income of $1.1
million or $0.11 per share.
For the six months ended June 30, 1998, net income was $2.4 million ($0.22
per share) on revenue of $77.7 million, compared to net income of $1.9
million ($0.19 per share) on revenue of $56.8 million for the six months
ended June 30, 1997. However, as a result of the non-recurring charges, the
Company reported net income of $1.8 million or $0.17 per share.
"We are pleased with our second quarter results and note our deepwater
intervention technology strategy is providing solid returns," said Kevin
Peterson, Ceanic's President and CEO. "Our Americas Region is particularly
busy and profitable, exceeding even our own internal expectations, which
unfortunately, is partially offset by lower than expected results from our
international expansion strategy. Moreover, in spite of weaker oil prices,
our activity levels in the Gulf have remained high."
Revenue increased by $13.6 million or 48% primarily due to increased
demand in the Americas Region for the Company's services related to its
newly acquired deepwater ROVs and vessels. Ceanic also experienced
increased activity in its General Contracting Division and increased demand
for its subsea products in the second quarter of 1998.
Ceanic's gross profit margins decreased from 36.8% in the second quarter
of 1997 to 32.2% in the current quarter primarily as a result of lower
margins in its international regions and Subsea Products Division.
Ceanic's SG&A increased 25% to $7.2 million in the second quarter of 1998
compared to $5.8 million for the prior year quarter primarily due to the
Company's international expansion into Southeast Asia and Europe, coupled
with supporting the increased activity levels in the Americas Region.
However, as a percentage of revenue, SG&A for the second quarter decreased
to 17%, down from 21% for the same period of last year and down from 18% in
the first quarter of 1998. In connection with its previously announced SG&A
reduction initiative completed in July 1998, the Company recorded a non-
recurring charge of approximately $1.1 million as a result of severance and
related costs associated with layoffs of approximately 30 persons, severance
arrangements for two executive officers and closure of four offices, as well
as costs incurred in connection with the pending sale of the Company to
Stolt Comex Seaway S.A. The SG&A initiative is expected to reduce the
Company's annualized SG&A run rate by approximately 15% which is expected to
be realized in the 1998 third quarter.
Ceanic's depreciation and amortization expense increased 36% to $3.1
million for the second quarter of 1998 compared to $2.3 million in the
second 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.
As previously announced, Stolt Comex Seaway S.A. and Ceanic have executed
a definitive merger agreement pursuant to which Stolt Comex Seaway will
acquire all of the outstanding common stock of Ceanic for $20.00 per share
in cash. The merger agreement is subject to approval by Ceanic's
shareholders and other conditions customary to transactions of this type.
The special shareholder meeting to consider and approve the merger is
scheduled for August 17, 1998 and Ceanic expects the transaction to close
promptly thereafter.
Regional Review/Outlook
Americas Region
Ceanic's Americas Region continued to experience strong operating results
in the second quarter of 1998 with revenues increasing by $4.3 million or
26% over the prior year quarter and overall gross profit margins remaining
stable from period to period. The most significant activity increases came
from the utilization of deepwater ROVs and vessels which include the
American Defender, a 220 foot dynamically positioned vessel placed in
service in late 1997, as well as the growth of the Company's core diving
business.
Asia Pacific Region
Although both activity and profitability of this region have steadily
improved in the second quarter of 1998 compared to earlier in the year,
management is disappointed by the region's results and continues to evaluate
its market presence in this Asia Pacific Region.
Europe Africa Region
In the second quarter of 1998, activity in West Africa increased over that
of the first few months of 1998 as well as the second quarter of 1997;
however, results were well below Ceanic's expectations. The Aberdeen office
did not contribute to the 1998 second quarter results due to a lack of
marketable assets; however, two ROVs have been deployed to this region to
pursue available opportunities.
General Contracting Division
As a result of a strong backlog and work beginning on several recently
awarded projects, Ceanic's General Contracting Division experienced strong
second quarter results with revenues increasing 127% from $3.8 million in
the second quarter of 1997 to $8.7 million in the second quarter of 1998.
Gross profit percentages remained stable from period to period.
Subsea Products
Ceanic's Products Division experienced strong sales in the second quarter
of 1998. The Field Development group completed the installation of a Tarpon
Guyed Monotower in Indonesia. Hard Suits completed its manufacturing of a
HARDSUIT(TM) diving suit for delivery to the Italian Navy and continued
progress on U.S. Navy contracts. The Big Inch and Concrete Storage
Divisions continued to experience strong demand for their products.
Statements in this press release regarding profitability of the Company in
general; utilization and dayrates in the Gulf of Mexico; opportunities in
the General Contracting, Asia Pacific and Europe Africa markets; and other
statements included herein that are not statements of historical fact are
forward-looking statements involving factors that could cause actual results
to vary materially from those predicted. Other forward-looking statements,
including statements as to the Company's profitability, depend upon, among
other things, prices of crude oil and natural gas, weather conditions in
offshore markets, capital expenditures by customers and the Company's
ability to procure large turnkey projects.
Ceanic is a leading provider of diving services, intervention
technologies, subsea products, field development, general contracting and
marine construction services to offshore, governmental and industrial
customers in the U.S. and internationally.
Tables follow . . .
CEANIC CORPORATION
Consolidated Results of Operations and Financial Position
($ in thousands except for per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
Income Statement 1998 1997(F1) 1998 1997(F1)
---- ----- ---- ----
Revenues $41,728 $28,177 $77,745 $56,753
Gross profit 13,440 10,380 24,501 18,634
Selling, general and administrative
expenses 7,247 5,782 13,765 11,117
Depreciation and amortization 3,078 2,258 6,075 4,576
Restructuring charges 1,071 - 1,071 -
-------- -------- ------- --------
Operating income 2,044 2,340 3,590 2,941
Other income (expense), net (23) 537 (467) 332
-------- -------- ------- --------
Income before income taxes 2,021 2,877 3,123 3,273
Income tax provision 875 1,235 1,350 1,405
Net income $1,146 $1,642 $ 1,773 $1,868
====== ====== ======= ======
Net income per share $ .11 $ .16 $ .17 $ .19
====== ====== ======= ======
Weighted average shares outstanding 10,646 10,516 10,643 9,707
====== ======= ======= ======
Operational Data
Dive crew days 13,112 12,284 23,530 23,809
Dive crews per day 144 135 130 132
Diving support vessel utilization 44% 54% 44% 51%
Earnings before interest, taxes,
depreciation and
amortization (EBITDA) $5,122 $4,598 $9,665 $7,517
EBITDA as % of revenue 12.3% 16.3% 12.4% 13.2%
SG&A as % of revenue 17.4% 20.5% 17.7% 19.6%
Gross profit % 32.2% 36.8% 31.5% 2.8%
June 30, December 31,
Balance Sheet 1998 1997
------- ------
Assets:
Current assets $72,795 $55,286
Other long-term assets 90,120 79,014
--------- ---------
Total assets $162,915 $134,300
========= =========
Liabilities & Stockholders' Equity:
Current liabilities $58,389 $29,698
Long-term debt 7,252 $8,060
Other liabilities 6,016 6,291
Stockholders' equity 91,258 90,251
--------- ---------
Total liabilities & stockholders equity $162,915 $134,300
========== =========
<F1> Certain amounts presented in the results of operations for the three
and six months ended June 30, 1997 have been reclassified to conform with
the 1998 presentation.
More...
Three Months Ended June 30, 1998
(dollar amounts in thousands)
----------------------------------------------------------
(Unaudited)
Asia Europe
Americas Pacific Africa General Subsea
Region<F2> Region Region Contracting<F3>Products<F4> Total
-------- ------- ------ ----------- --------- -----
Revenues $21,374 $1,731 $3,554 $8,665 $6,404 $41,728
Expenses $13,021 $1,365 $2,979 $6,940 $3,983 $28,288
Gross profit $8,353 $ 366 $ 575 $1,725 $2,421 $13,440
Gross profit
percentage 39.1% 21.1% 16.2% 19.9% 37.8% 32.2%
Three Months Ended June 30, 1997<F1>
(dollar amounts in thousands)
-----------------------------------------------------------
(Unaudited)
Asia Europe
Americas Pacific Africa General Subsea
Region<F2> Region Region Contracting<F3>Products<F4> Total
-------- ------- ------ ----------- --------- -----
Revenues $17,025 $ 298 $2,738 $3,823 $4,293 $28,177
Expenses $10,177 $ 153 $1,860 $3,021 $2,586 $17,797
Gross profit $6,848 $ 145 $ 878 $ 802 $1,707 $10,380
Gross profit
percentage 40.2% 48.7% 32.1% 21.0% 39.8% 36.8%
<F1> Certain amounts presented in the 1997 results of operations have been
reclassified to conform with the 1998 presentation.
<F2> 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.
<F3> Includes diving and related services in U.S. inland markets, off the U.S. West
Coast and in Latin America.
<F4> Includes manufacturing and marketing of Big Inch pipeline connectors, Tarpon
marginal well production systems, Tarpon Concrete Storage Systems and Ceanic
Hard Suits Inc. products.
Six Months Ended June 30, 1998
(dollar amounts in thousands)
----------------------------------------------------------------
(Unaudited)
Asia Europe
Americas Pacific Africa General Subsea
Region<F2> Region Region Contracting<F3>Products<F4> Total
-------- ------- ------ ----------- --------- -----
Revenues $40,694 $2,845 $5,254 $15,811 $13,141 $77,745
Expenses $25,221 $2,491 $4,491 $13,116 $7,925 $53,244
Gross profit $15,473 $ 354 $ 763 $2,695 $5,216 $24,501
Gross profit
percentage 38.0% 12.4% 14.5% 17.0% 39.7% 31.5%
Six Months Ended June 30, 1997
(dollar amounts in thousands)<F1>
-------------------------------------------------
(Unaudited)
Asia Europe
Americas Pacific Africa General Subsea
Region<F2> Region Region Contracting<F3>Products<F4> Total
-------- ------- ------ ----------- --------- -----
Revenues $30,486 $ 298 $5,579 $11,612 $8,778 $56,753
Expenses $20,234 $ 153 $3,467 $9,143 $5,122 $38,119
Gross profit $10,252 $ 145 $2,112 $2,469 $3,656 $18,634
Gross profit
percentage 33.6% 48.7% 37.9% 21.3% 41.6% 32.8%
(F1) Certain amounts presented in the 1997 results of operations have been
reclassified to conform with the 1998 presentation.
(F2) 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.
(F3) Includes diving and related services in U.S. inland markets, off the U.S. West
Coast and in Latin America.
(F4) Includes manufacturing and marketing of Big Inch pipeline connectors, Tarpon
marginal well production systems, Tarpon Concrete Storage Systems and Ceanic
Hard Suits Inc. products.