Global Industries, Ltd. ( GLBL)

Q1 2011 Earnings Call

May 5, 2011 10:00 AM ET

Executives

Andy Smith – SVP and CFO

John Reed – CEO

Ashit Jain – COO and SVP, Asia Pacific & India

Analysts

Joe Gibney – Capital One Southcoast

Martin Malloy – Johnson Rice

Michael Marino – Stephens

Graham Mattison – Lazard Capital

Presentation

Operator

Welcome to Global Industries first 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, Andy Smith, Chief Financial Officer and Ashit Jain, Chief Operations Officer. I would now like to turn the meeting over to Mr. Andy Smith. Sir, please begin.

Andy Smith

Thank you. Good morning. I’d like to welcome everyone to Global Industries first quarter 2011 earnings conference call. The call is being recorded and will be available on our website at globalind.com.

Before we begin, I would 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 and may include risks and uncertainties which are more fully described in our filings with the Securities and 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, Mr. John Reed. John.

John Reed

Good morning and welcome to our call. Before I turn it back over to Andy for financial results and AJ to go through operating results, I want to update you on our progress against one of our key initiatives.

One of our core efforts has been to strengthen our project management and engineering. We’ve increased our engineering personnel by approximately 20% over the last year, giving us more depth to prepare tenders for submission and projects for execution. We will diligently continue to build on our technical strength and competence as this capability is key to our future success on larger and more complex projects.

Turning to the market, we have opened an office in Perth, Australia to pursue projects there primarily for the G1200, or 1201 as the requirements are generally well suited for their capabilities. We expect that the market in Australia will remain very active for the foreseeable future and establishing a presence there is mandatory to increase our participation.

We are actively pursuing prospects for the G1200 and G1201 with a total value of approximately $1 billion. However, the bulk of this value is for work beginning in 2012 and beyond.

Looking at the other market areas, we see the Gulf of Mexico slowly increasing as we stated before. However, the pace will mirror the permitting speed.

We were awarded two significant projects in the quarter; namely, a platform removal contract from McMoRan in the subsea pipeline and a flow line installation project for LLOG at 3,000 foot water depth. However, both are experiencing permitting delays.

In the Asia Pacific region, we have begun our second work season for Petrobras under our three year term agreement and continue to actively bid in the region. In Latin America, we see a large volume of work with PIMEX on the horizon, albeit again, mainly for 2012.

In general, our markets remain difficult for the remainder of 2011 and we don’t expect significant opportunities until 2012.

As stated in our last quarter call, we have segregated our dollar bid volume statistics into bids in house and outstanding and bids expected in the next 90 days to give a clearer picture of the future market situations.

Bids in house and outstanding have increased from $2.6 billion in January this year to $3.0 billion at the end of March. Bids expected in the next 90 days stand at $3.3 billion, down from $3.9 billion last quarter, however still considered a good indicator of growing activity. The most active region continues to be Asia Pacific followed by the Middle East.

Lastly, we have mobilized the G1200 to our first project and are laying pipe as we speak. The project is for Dubai Petroleum establishment and will utilize both our pipe lay capability and structural capability as the scope of work also includes the design, fabrication and installation of a small fixed structure.

The G1201 remains on schedule and budget and will be delivered in the third quarter of 2011. Finally, we’re also looking toward West Africa to develop future opportunities for these vessels, primarily in Angola, Ghana and equatorial Dubai.

We are completing our market survey including onsite investigations and development of our strategy for market re-entry. With that, I’ll turn it back over to Andy.

Andy Smith

Thanks John. As we noted in the last call, the company, in conjunctions with its transition from a regional operating structure to a more centralized approach, has begun to report its results in two new segments; construction and installation services and other offshore services.

Construction and installation services captures project work performed on a fixed price or unit price basis where the company takes responsibility for managing a project scope, which may include material procurement, third party subcontractors and includes a substantial project management effort.

Other offshore services will include our diving operations and day rate, time and materials are cost plus. We feel this restructuring of our operations and most importantly, our reporting, provides a better understanding of the risks and opportunities involved in our business.

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