Cal Dive Reports Fourth Quarter 2012 Loss (USA)

Cal Dive Reports Fourth Quarter 2012 Loss (USA)

Cal Dive International, Inc. generated a fourth quarter 2012 loss of $4.4 million, or $0.05 per diluted share, excluding a $4.0 million after-tax non-cash charge related to the marked-to-market adjustment of the derivative liability for the Company’s convertible debt, a $4.1 million after-tax non-cash fixed asset impairment charge, as well as two non-cash income tax adjustments totaling $6.6 million.

For the fourth quarter 2012, the Company reported EBITDA of $13.5 million compared to $12.8 million for the fourth quarter 2011. Including the charges above, the Company reported a fourth quarter 2012 loss of $19.1 million, or $0.21 per diluted share, compared to a loss of $8.8 million, or $0.10 per diluted share, for the fourth quarter 2011.

Excluding the charges discussed above, the improvement in results is primarily attributable to the Company’s West Africa operations and higher activity in Mexico. Additionally, higher activity for the Company’s multi-service vessel, Uncle John, which worked the entire fourth quarter 2012, benefited the quarterly results. The Uncle John was in drydock for two months during the fourth quarter 2011. These improvements were offset by lower activity and margins in Australia during the fourth quarter 2012 compared to 2011 as the prior year included diving activity from the highly profitable Gorgon project which has been completed.

The Company reported a full year 2012 loss of $65.0 million, or $0.70 per diluted share compared to a full year 2011 loss of $66.9 million, or $0.73 per diluted share. Included in these losses are non-cash after-tax impairment charges of $19.7 million during 2012 and $30.4 million during 2011. Excluding these non-cash impairment charges, a full year 2012 after-tax non-cash gain of $1.4 million related to the marked-to-market adjustment of the Company’s convertible debt and the tax related adjustments discussed above, the Company generated a loss of $40.2 million, or $0.43 per diluted share, for 2012 compared to a loss of $36.5 million, or $0.40 per diluted share, in 2011. Neither of the tax adjustments recorded during the fourth quarter of 2012 will impact cash taxes for 2013. The Company reported full year 2012 EBITDA of $23.3 million compared to $40.6 million for full year 2011.

Quinn Hébert, Chairman, President and Chief Executive Officer of Cal Dive, stated, “We were pleased to wrap up a challenging 2012 with our best quarterly operating results of the year. Our international activity remained strong and our domestic working season held up reasonably well during the quarter. The market in 2012 presented many challenges but we feel confident heading into 2013 that we will see the financial benefits of our cost restructuring efforts, an improving domestic market and continued strong international activity. Regarding the first quarter 2013, the winter season will limit opportunities in the Gulf of Mexico but we anticipate significant financial improvement from last year since the Uncle John and Kestrel will not be in drydock as they were in the first quarter 2012. The Kestrel is booked for the entire quarter on its charter in Mexico and the Uncle John is expected to have good utilization during the quarter. In addition, we expect to realize a full quarter of cost savings from our initiatives in the latter part of 2012.”

Financial Highlights

— Backlog: Contracted backlog was $172 million as of December 31, 2012. This compares to backlog of $178 million at December 31, 2011 and $224 million at September 30, 2012. Of this backlog, $137 million relates to international work with the remainder relating to work in the U.S. Gulf of Mexico and 80% is expected to be earned in 2013. Approximately $65 million of the backlog relates to work scheduled to be completed in the first quarter 2013 compared to $36 million that was in the December 31, 2011 backlog to be completed in the first quarter 2012.

— Revenues: Fourth quarter 2012 revenues increased by $19.0 million to $146.4 million as compared to fourth quarter 2011. The increase is primarily attributable to higher activity in Mexico, the Company’s joint venture work in West Africa that began in the second half of 2012 and increased utilization of the Uncle John. These revenue increases were partially offset by a decrease in diving activity in Australia.

— Gross Profit: Fourth quarter 2012 gross profit increased by $2.3 million to $10.1 million as compared to fourth quarter 2011. The improvement in gross profit for the fourth quarter 2012 is primarily attributable to higher activity in Mexico, the results from the Company’s West Africa operations and improvement in the U.S. Gulf of Mexico, specifically full utilization of the Uncle John during the quarter. These improvements were offset by lower activity and margins in Australia.

— SG&A: Fourth quarter 2012 SG&A increased by $0.1 million to $13.0 million as compared to fourth quarter 2011. The increase is primarily due to higher domestic employee medical claims and legal costs associated with international operations offset by lower stock based compensation expense and headcount reductions relating to cost savings initiatives. As a percentage of revenues, SG&A was 8.9% for the fourth quarter 2012 compared to 10.1% for the fourth quarter 2011. The Company expects its quarterly SG&A to decrease during 2013 compared to 2012 due to its cost savings initiatives.

— Interest Expense: Fourth quarter 2012 net interest expense increased by $1.8 million to $4.6 million as compared to fourth quarter 2011, primarily due to the non-cash interest expense relating to the accretion of the debt discount of the Company’s convertible debt and higher average outstanding debt during the period.

Additionally, during the fourth quarter 2012, the Company recorded interest expense of $6.2 million for the marked-to-market adjustment in the fair value of the derivative liability related to the embedded conversion feature of the Company’s convertible debt due to the increase in the Company’s stock price.

— Income Tax: The effective tax benefit rate for the fourth quarter 2012 was 4.1% compared to a tax benefit rate of 9.5% for the fourth quarter 2011. The low benefit rate for fourth quarter 2012 is due to a $5.2 million non-cash income tax valuation allowance on foreign tax credits and foreign losses and a $1.4 million discrete period tax adjustment. The benefit from these foreign tax credits could be realized in future periods as the Company generates profits. The low effective tax benefit rate for the fourth quarter 2011 was primarily due to a tax reserve for a foreign uncertain tax position.

— Balance Sheet: As of December 31, 2012, total debt consisted of $86.25 million in convertible notes, $42.1 million under a term loan and $31.8 million outstanding under a revolving credit facility. Cash and cash equivalents were $8.3 million, for a net debt position of $151.8 million at December 31, 2012, compared to net debt positions of $134.4 million at December 31, 2011 and $161.7 million at September 30, 2012. The secured debt amount that is subject to financial covenants was $73.9 million at December 31, 2012 and $150.0 million at December 31, 2011. Total debt presented on the consolidated balance sheet is net of a debt discount of $22.8 million on the Company’s convertible debt. The increase in amounts outstanding under the revolving credit facility at the end of 2012 compared to 2011 is due to increased international activity and the funding of associated working capital requirements.

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Press Release, February 28, 2013