Odyssey Marine Implements Management Transitions

Odyssey Marine Exploration, Inc. has implemented its planned management transitions that were announced in August.

Odyssey President Mark D. Gordon assumed the additional role of chief executive officer on October 1, 2014, succeeding Gregory P. Stemm, who had held the position since 2007. Stemm has become chairman of the board, succeeding Bradford B. Baker, who will continue to serve as lead director. Stemm, in his new role, will continue to provide counsel to the company, focusing his efforts on identifying and developing new business opportunities for Odyssey.

“These management changes reflect the broader, ongoing transition of Odyssey from an entrepreneurial business model to a more predictable revenue-generating entity as well as our anticipation of new projects and monetization events ahead,” commented Stemm.

As part of the planned transition, Gordon has been working closely with Stemm on initiatives that position the company for profitability, which include:

• Moving the company from solely seeking high-value historical shipwrecks towards a more balanced model that includes commodity shipwrecks and mineral exploration;
• Implementing increased financial discipline that resulted in outsourcing the exhibit business, discontinuing the long-term lease of the Discovery Dorado vessel, and developing financial modeling for all new projects. This discipline is projected to reduce expenses by 30%, improve asset utilization, and improve the risk/return profile on selected projects;
• Increasing communication and transparency with stakeholders via quarterly conference calls, letters to shareholders, and an outreach to institutional investors;
• Attracting new talent to the company including the CFO and a new independent board member with previous Wall Street investment banking experience.

These initiatives have helped Odyssey deliver multiple profitable projects over the past three years that demonstrate the basic business model can be successful.

• In 2012 and 2013, the Gairsoppa project generated $79 million in cash proceeds of which $12 million went to the UK Government and the silver refiner, leaving $67 million for Odyssey. After direct project costs of $27 million, a project profit of $40 million was generated for a gross margin of 60%;
• Since the inception of the Oceanica project, Odyssey has spent approximately $20 million in direct costs and received $27.5 million cash in exchange for a minority stake in Oceanica. Odyssey currently retains 54% of the equity in Oceanica which has tremendous potential to produce significant returns for Odyssey;
• The 2014 Central America project, conducted between April and September of this year, is expected to generate a gross margin well in excess of 30%.

Gordon plans to continue the focus on deep-ocean exploration while implementing modifications to the existing business model that are designed to expand the demonstrated individual project profitability into enhanced overall operating results with more predictable positive financial results.

“Given my first-hand knowledge and understanding of Odyssey’s strengths, capabilities and challenges, I believe we have a phenomenal opportunity to take our successful project model and make small modifications to our business to produce positive, more predictable operating cash flows for years to come,” said Gordon. “These adjustments to our business model are designed to mitigate risk, enhance our cash generation, and continue to allow us to harvest our portfolio of valuable projects in a disciplined manner that continues to produce leveraged returns.”

“As we begin the final quarter of 2014, we will focus on improving asset utilization and aligning our expenses and investments with defined opportunities that have demonstrative near-term return. We will continue to develop projects that build long-term shareholder value and build on our legacy of excellence in deep-ocean exploration,” continued Gordon.

Press Release, October 02, 2014