Global Industries Ltd. Q2 2010 Earnings Call Transcript

Global Industries Ltd. Q2 2010 Earnings Call Transcript
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Global Industries Ltd. (GLBL)

Q2 2010 Earnings Call

August 05, 2010 10:00 am ET

Executives

Andy Smith - SVP & CFO

John Reed - CEO

Analysts

Graham Mattison

Brad Handler

Joe Gibney - Capital One

Marshall Adkins

Martin Malloy - Johnson Rice

Michael Marino - Stephens

Jeff Spittel - Madison Williams

Presentation

Operator

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Previous Statements by GLBL
» Global Industries, Ltd. Q1 2010 Earnings Call Transcript
» Global Industries, Ltd. Q4 2009 Earnings Call Transcript
» Global Industries, Ltd. Q2 2009 Earnings Call Transcript

Welcome to the Global Industries’ Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. (Operator Instructions) Today’s conference is being recorded. If you have any objections, you may disconnect at this time.

On the call this morning are John Reed, Chief Executive Officer and Andy Smith, Chief Financial Officer.

I’d now like to turn the meeting over to Mr. Andy Smith. Sir, you may begin.

Andy Smith

Thank you, and good morning. I would like to welcome everyone to Global Industries’ second quarter 2010 earnings conference call. The call is being recorded and will be available on our website at globalind.com.

Before we began, I’d like to remind everyone that certain of our comments and responses to questions reflect our current views and assumptions and are considered forward-looking statements as defined in securities laws and regulations. It may include risks and uncertainties, which are more fully described in our filings with the Securities & Exchange Commission. Interested parties are directed to our website for access to our SEC filings.

Now I’ll turn it over to our Chief Executive Officer, John Reed. John?

John Reed

Good morning and welcome to our call. During the call this morning, we will cover operational and financial results. Before we do that, I’d like to stay a few words about the quarter and our plans going forward.

We’re clearly disappointed with our second quarter results. The current worldwide market for our services is suppressed and as a result pricing has suffered.

In addition, both our North America OCD and North America Subsea segment has been negatively affected by the permitting delays our customers are experiencing as a consequence of the oil spill in the US Gulf of Mexico.

In this environment execution is crucial. We will continue to improve our execution in all aspects of our business to achieve satisfactory results regardless of market condition. While favorable market conditions are clearly preferred, we must actively manage our robust and lean times.

To that end, we’re continuing our pursuit of a number of initiatives. First, we remained focused on utilization of our assets and the rationalization of our fleet. We’re taking a hard look at our fleet and made decisions about some assets and their contribution to our strategic plans.

During the quarter, we sold two vessels as they no longer met our needs. Assets which are idle, underutilized, ineffective or inefficient, will continue to be evaluated.

We continue to better match expenses to the revenue for the current opportunity set so that we can maintain adequate profitability regardless of market condition. Specifically, in our North American region during the second quarter, we executed a reduction in force to maintain control of overall costs, though we added corporate staff. As our efforts to centralize our project execution continue, our regional Senior Vice Presidents and Directors are pursuing cost reduction in line with the current market conditions in their regions.

We continue to build our business acquisition and project execution capability. Last quarter, we announced the addition of John Sprot as Vice President of Projects as well as Mr. Ashit Jain who is assuming his position as COO in the next week. We’ve since added Mr. Eric van Baars as VP of Engineering. Eric has 30 years plus experience in the offshore pipelay industry primarily with Allseas and Subsea 7. His focus will be building engineering support for tender preparation and project execution.

In addition, Mr. Jim Osborn joined Global as Chief Marketing Officer. He also has 30 years experience in the industry, primarily with KBR and INTECSEA Engineering. Jim will build on our business acquisition capability and focus our efforts on improved targeting of projects worldwide.

As most of you are aware, we will be taking delivery of our newest vessel, the Global 1200 in September this year. I’m happy to announce that the 1200 is on schedule and on budget. The 1200 and following its completion, the 1201, will be the centerpieces of Global’s fleet and we are currently forming and coordinating, marking the operations and project management team to support each vessel.

With regard to our JV with Fluor, we have after good discussions with their management, decided to dissolve our formal relationship. We have for various reasons, differing views on risk profiles and think that going forward, both companies would be better served to evaluate future joint opportunities on a case by case basis. We remain confident that given the right project, the combination of Global and Fluor would be mutually beneficial and we continue to evaluate those opportunities.

Finally on a rolling 12-month basis, our bids in-house and outstanding volume is up approximately 20% over last quarter. While we don’t see a major upturn in the near future, bid activity in our Asia-Pacific, Middle East and Latin American regions have increased. In addition, we believe that our backlog will continue to increase at a slow pace over the remainder of this year.

And with that, I’ll turn it back over to Andy.

Andy Smith

Thanks, John. For the second quarter 2010, consolidated revenues were $121.8 million compared with $294.8 million for the same quarter last year. Gross profit was $7.2 million for the second quarter compared to $65.2 million for the same quarter last year.

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