USA: SEACOR Holdings Announces Third Quarter Results

SEACOR Holdings Inc. (NYSE: CKH) today announced its results for the third quarter of 2010. Net income attributable to SEACOR Holdings Inc. for the quarter ended September 30, 2010 was $149.9 million, or $7.14 per diluted share, on operating revenues of $979.8 million.

For the nine months ended September 30, 2010, net income attributable to SEACOR Holdings Inc. was $217.6 million, or $9.99 per diluted share, on operating revenues of $2,069.0 million.

Oil spill response activities following the sinking of the Deepwater Horizon in April defined this period’s results as they reflect the significant combined response effort from SEACOR’s Environmental Services, Offshore Marine Services, Aviation Services and Harbor and Offshore Towing Services business units. Response activities are now winding down and equipment, people, vessels and helicopters are being released from spill support activities.

For the preceding quarter ended June 30, 2010, net income attributable to SEACOR Holdings Inc. was $64.1 million, or $2.93 per diluted share, on operating revenues of $694.6 million. Comparison of results for the quarter ended September 30, 2010 with the preceding quarter ended June 30, 2010 is included in the discussion below.

For the quarter ended September 30, 2009, net income attributable to SEACOR Holdings Inc. was $26.3 million, or $1.23 per diluted share, on operating revenues of $446.1 million. For the nine months ended September 30, 2009, net income attributable to SEACOR Holdings Inc. was $121.6 million, or $5.53 per diluted share, on operating revenues of $1,234.8 million.

Highlights for the Quarter

Offshore Marine Services — Operating income in the third quarter was $69.3 million on operating revenues of $160.9 million compared with operating income of $42.9 million on operating revenues of $147.1 million in the preceding quarter. Third quarter results included $12.7 million in gains on asset dispositions compared with $2.0 million in gains in the preceding quarter.

Overall operating revenues were $13.8 million higher in the third quarter. Time charter revenues increased by $6.6 million to $138.2 million primarily due to the deployment of additional vessels in support of the Deepwater Horizon oil spill response. Other operating revenues were $7.2 million higher in the third quarter primarily due to the provision of other equipment and services associated with the Deepwater Horizon oil spill response and increased bareboat charter revenues.

As of September 30, 2010, the Company had deferred $19.7 million of vessel charter hire scheduled to be paid through the conveyance of a limited net profit interest in developmental oil and gas producing properties owned by a customer. Of this amount, $1.9 million was deferred in the third quarter. The Company will continue to recognize revenues as cash is received or earlier should future payments become determinable.

The number of days available for charter in the third quarter decreased by 120, or 1.0%, due to net fleet dispositions. Overall utilization increased from 77.4% to 83.5% and overall average day rates, based on time charter revenues recognized, decreased by 1.7% from $13,906 per day to $13,667 per day. As of September 30, 2010, the Company had seven vessels cold-stacked in the U.S. Gulf of Mexico compared with four as of June 30, 2010.

Marine Transportation Services — Marine Transportation Services reported an operating loss in the third quarter of $17.3 million on operating revenues of $18.5 million compared with operating income of $3.3 million on operating revenues of $21.3 million in the preceding quarter. As previously reported, the Seabulk America was scheduled to undergo a regulatory drydocking in the third quarter, a requirement for continued operation. Given the prevailing market conditions, the Company deferred the drydocking, laid-up the vessel and recognized an impairment charge of $18.7 million which reduced the vessel’s carrying value to its fair value.

Inland River Services — Operating income in the third quarter was $36.0 million on operating revenues of $41.4 million compared with operating income of $6.4 million on operating revenues of $34.6 million in the preceding quarter. During the third quarter, Inland River Services recognized gains on asset dispositions of $16.5 million from the sale of barges to its South American joint venture and recognized previously deferred gains of $12.2 million following the acquisition of a controlling interest in another of its joint ventures.

Operating income from the pooled hopper fleet increased due to higher freight rates and increased activity on the lower Mississippi River in support of the beginning of harvest season. The increase was partially offset by a reduction in the liquid unit tow operation primarily due to higher repair and maintenance costs and related downtime.

Aviation Services — Operating income in the third quarter was $11.9 million on operating revenues of $67.1 million compared with operating income of $5.5 million on operating revenues of $62.4 million in the preceding quarter.

Operating revenues were higher primarily due to more flight hours in Alaska in support of offshore oil and gas activities, flightseeing and firefighting contracts. Revenues from leasing activities improved due to increased flight hours on existing contracts. Operating expenses were lower due to a reduction in repair and maintenance expense.

Environmental Services — Operating income in the third quarter was $125.0 million on operating revenues of $468.2 million compared with operating income of $78.9 million on operating revenues of $214.6 million in the preceding quarter. The improvement in operating results was primarily due to activities associated with the Deepwater Horizon oil spill response. Environmental Services provided vessels, equipment and people to support clean-up activities throughout the U.S. Gulf of Mexico region as well as professional assistance, consulting services and software systems in support of incident management activities.

Commodity Trading and Logistics — Commodity Trading and Logistics reported a segment profit in the third quarter of $4.6 million on operating revenues of $216.9 million compared with a segment profit of $0.5 million on operating revenues of $203.1 million in the preceding quarter. Results from energy trading activities, including the Company’s equity interest in its alcohol manufacturing facility joint venture, improved by $2.4 million compared with the preceding quarter. Results from rice trading activities also improved while results from sugar trading activities were lower than the preceding quarter.

Harbor and Offshore Towing Services — Operating income in the third quarter was $4.3 million on operating revenues of $19.4 million compared with operating income of $4.9 million on operating revenues of $19.0 million in the preceding quarter. Second quarter results included $1.2 million in gains on asset dispositions.

Interest Expense — Interest expense in the third quarter was lower primarily due to higher capitalized interest, the payoff of various miscellaneous and equipment related notes and the redemption of certain of the Company’s Title XI Bonds in the second quarter.

Marketable Securities — Marketable security losses were $0.1 million in the third quarter compared with losses of $5.4 million in the preceding quarter. The losses in the preceding quarter were primarily the result of losses on long equity positions.

Derivatives — Derivative income, net was $1.6 million in the third quarter primarily due to gains on foreign currency option and future contracts partially offset by commodity swap option and future contracts and equity index and options.

Foreign Currency Losses, net — Foreign currency gains, net were $7.6 million in the third quarter primarily due to the strengthening of the euro against the U.S. dollar.

Stock Repurchases — During the third quarter, the Company purchased 77,200 shares of its common stock at an average price of $77.63 per share. At the end of the quarter, 21,230,924 shares of SEACOR’s common stock remained outstanding.

Capital Commitments — The Company’s unfunded capital commitments as of September 30, 2010 consisted primarily of offshore support vessels, helicopters, an interest in a dry-bulk articulated tug-barge, inland river dry cargo barges and other equipment, and totaled $279.8 million, of which $69.4 million is payable during 2010 and the balance payable through 2013. Of the total unfunded capital commitments, $2.8 million may be terminated without further liability. Subsequent to September 30, 2010, the Company committed to purchase additional equipment totaling $4.1 million. As of September 30, 2010, the Company held balances of cash, cash equivalents, restricted cash, marketable securities, construction reserve funds and title XI reserve funds totaling $1,052.5 million.

SEACOR is a global provider of equipment and services primarily supporting the offshore oil and gas and marine transportation industries. SEACOR offers customers a diversified suite of services including offshore marine, marine transportation, inland river, aviation, environmental, commodity trading and logistics and offshore and harbor towing. SEACOR is focused on providing highly responsive local service combined with the highest safety standards, innovative technology, modern, efficient equipment and dedicated professional employees.

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Source: SEACOR, October  22, 2010;