SEACOR Holdings Announces Results for the First Quarter Ended March 31, 2020
SEACOR Holdings Inc yesterday announced its results for the first quarter ended March 31, 2020:
Net income attributable to stockholders for the quarter ended March 31, 2020 was $1.5 million ($0.07 per diluted share) compared with $7.7 million ($0.41 per diluted share) for the quarter ended March 31, 2019. The current quarter included a $12.7 million ($0.64 per diluted share) income tax benefit as a result of the passage of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and included net foreign currency losses of $3.6 million ($0.18 per diluted share) primarily due to the depreciation of the Colombian peso relative to the U.S. dollar.
Operating loss for the quarter ended March 31, 2020 was $0.1 million compared with operating income of $19.0 million for the quarter ended March 31, 2019.
“Cash Earnings” for the quarter ended March 31, 2020 were $17.1 million compared with $26.7 million for the quarter ended March 31, 2019.
The Company uses the non-GAAP financial measures “Cash Earnings” and OIBDA in this release; a reconciliation to their closest U.S. GAAP measure is included in “Use of non-GAAP Financial Measures” in this release.
Charles Fabrikant, Executive Chairman, commented on the quarter’s results and impact of COVID-19 as follows:
“Our first and most important operational priority is, at all times and in all circumstances, the safety and well-being of our more than 2,000 employees. We are taking enhanced precautions in response to the unprecedented challenges of COVID-19. We look to local, state and federal directives and follow best practices.
All SEACOR operations have been deemed essential. Our ships, tugs and warehouses, continue to fulfill their mission transporting and distributing essential goods. I want to express deep-felt appreciation to SEACOR’s dedicated workforce for providing these necessary services to support our customers and the common effort.
The COVID-19 pandemic had a limited impact on our first quarter financial performance. Our diversified services dampened, and, hopefully, will continue to mitigate for us the severe economic fallout of COVID-19 on the economy. SEA-Vista, our Jones Act tanker business, benefits from charters that extend through the first quarter of 2021 and beyond. SCF’s barges continue to move grain on the inland waterways and its terminals transfer agricultural and industrial essentials. Our Granite City, Illinois based oil storage facility is fully utilized for the first time in many months. Our harbor tugs continue docking ships with inbound goods and exports.
Two of our service lines, SEACOR Island Lines, our liner and logistics support for the Bahamas and Caribbean, and Waterman Steamship, our Government Services group, have in the recent weeks experienced weaker demand. The Bahamas, like the U.S., has a “shelter in place” order in effect and in April the U.S. military instituted a moratorium on movements of cargo handled by vessels such as ours.
I am quite pleased with our first quarter results. The primary cause for the large swing in cash earnings relates to performing periodic, heavy maintenance for some of our vessels and a falloff in revenues related to Witt-O’Brien’s engagement in the U.S. Virgin Islands. Witt has been able to leverage its expertise in government consulting to assist hospitals, helping them to expedite access to FEMA funding. It also expanded its services with its recent acquisition of Navigate which advises clients on crisis communications and public relations.
As a result of the passage of the CARES Act, we can carryback net operating tax losses from 2019 to recoup $32 million of cash. This will boost SEACOR’s already strong levels of liquidity.”
The “Operating Discussion” below is a comparison of results for the quarter ended March 31, 2020 with the prior year quarter ended March 31, 2019.
Ocean Transportation & Logistics Services – Operating income and OIBDA were $7.5 million and $17.8 million in the current year quarter compared with $18.8 million and $20.1 million, respectively. Operating results were impacted by a $6.7 million increase in dry-docking costs, which included the installation of a ballast water treatment system for one U.S.-flag petroleum and chemical carrier, and major overhauls for five harbor tugs. The related off-hire time for dry-docking the U.S.-flag petroleum and chemical carrier accounted for a $2.5 million decrease in operating income. Projected dry-docking costs for the remainder of 2020 are $5.5 million.
Two U.S.-flag petroleum and chemical carriers embarked on extensions of prior charters that last year had been at more favorable rates. In addition, operating results were impacted by a change in contract for one U.S.-flag petroleum and chemical carrier, which commenced a multiyear bareboat charter following the conclusion of a multiyear time charter.
Our port and infrastructure services business and SEACOR Island Lines both experienced revenue growth year over year and made an increased contribution to operating income. Waterman Logistics had continued success this quarter winning bids to move specialized cargo for the U.S. government. The Jones Act dry bulk carrier fleet benefited from steady cargo volumes and a full quarter of operations with no dry-dockings. In the aggregate, these service lines had a positive incremental contribution of $4.8 million compared with the prior year quarter.
Inland Transportation & Logistics Services – Operating income and OIBDA were $1.0 million and $7.2 million in the current year quarter compared with $2.7 million and $8.4 million, respectively. The 4% year over year decline in U.S. grain exports through the Gulf of Mexico reduced demand for barge freight and activity levels at the Company’s terminals on the Mississippi and Illinois Rivers. The primary culprits were the China trade war, U.S. government farm subsidy programs which were a disincentive to exports, and competition from South America as a result of a stronger U.S. dollar.
Witt O’Brien’s – Operating loss and negative OIBDA were $(1.1) million and $(0.9) million, respectively, in the current year quarter compared with operating income and OIBDA of $4.6 million and $4.8 million, respectively. Operating revenues and operating income in the U.S. Virgin Islands were $8.4 million and $5.2 million lower, respectively, than the prior year quarter when certain key task orders related to immediate requirements of responding to hurricanes were still being completed. The current year quarter’s results were also negatively impacted by an accrual of $1.4 million for a retroactive charge due to a change in the application of the gross receipts tax in the U.S. Virgin Islands.
Capital Commitments – The Company’s capital commitments as of March 31, 2020 were $61.0 million and included four U.S.-flag harbor tugs, the Company’s interest in two foreign-flag rail ferries, six inland river dry-cargo barges, two inland river towboats, other equipment and vessel and terminal improvements. Subsequent to March 31, 2020, the Company committed to purchase other property and equipment for $1.1 million.
Income Taxes – The current quarter included a $12.7 million ($0.64 per diluted share) income tax benefit as a result of the passage of the CARES Act into law, which allows net operating losses generated in 2018 through 2020 to be carried back up to five years. As a result, the Company expects a tax refund of approximately $32 million once the refund requests are processed.
Liquidity and Debt – During the current year quarter, the Company repurchased $15.6 million in principal amount of its 3.0% Convertible Senior Notes for $15.4 million.
As of March 31, 2020, the Company’s balances of cash, cash equivalents, restricted cash, restricted cash equivalents, and marketable securities totaled $85.2 million. As of March 31, 2020, total outstanding debt was $298.8 million, and the Company had $225.0 million of borrowing capacity under its credit facilities.
Equity – As of March 31, 2020, the total shares outstanding were 20,333,024.
Source: SEACOR Holdings Inc.