Cal Dive International, Inc. (NYSE:DVR) reported third quarter 2012 financial results and implementation of a company restructuring plan that includes cost saving measures and the placing of certain non-core assets up for sale.
Third Quarter 2012 Results
The Company reported a third quarter 2012 loss of $15.9 million, or $0.17 per diluted share, compared to a loss of $34.4 million, or $0.37 per diluted share for third quarter 2011. Included in the loss for the third quarter 2012 is a $14.8 million after-tax non-cash impairment charge related to certain non-core assets classified as held for sale as part of the implementation of the Company’s restructuring plan. Also included in the third quarter 2012 loss is a $5.4 million after-tax non-cash benefit related to the adjustment of the fair value of the derivative liability associated with the embedded conversion feature within the Company’s convertible debt. Comparatively, the Company’s third quarter 2011 results included after-tax non-cash impairment charges of $28.8 million. The most significant factors affecting the Company’s operating results for the third quarter 2012 were:
The Uncle John, the Company’s most profitable asset, experienced an interruption in its light well intervention operations in the middle of August. The riser system, which was separately leased by the customer from a third party contractor unrelated to the Company, did not operate according to specifications. The customer decided to halt operations until the equipment could be repaired and thus released the Uncle John. The Uncle John did not work for the remainder of the quarter, and the negative impact to EBITDA for the third quarter from this event was approximately $5 million. The vessel returned to work in early October and is expected to be utilized for the remainder of 2012 and into 2013.
During the third quarter 2012, the Kestrel performed low margin work in the U.S. Gulf of Mexico spot market, compared to the prior year third quarter when the vessel was utilized on a profitable salvage project. As a result, the vessel generated approximately $4 million less EBITDA during third quarter 2012 compared to third quarter 2011. As previously announced, in mid-October, the Kestrel commenced a two-year bareboat charter with a major contractor to work in Mexico that is expected to result in annual EBITDA of approximately $10 million.
The Company incurred an EBITDA loss of approximately $2.5 million on a lump-sum salvage project during the third quarter 2012. The loss was the cumulative result of higher than normal weather delays associated with Tropical Storm Debby and Hurricane Isaac and scheduling conflicts which required the Company to utilize higher cost assets on the project than originally planned.
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