SOURCE: Trico Marine Services, Inc.

March 01, 2007 01:13 ET

Trico Marine Services Reports 2006 Fourth Quarter and Year End Results; Record Revenues, Operating and Net Income Lead to Highest Annual Financial Results in Company History

HOUSTON, TX -- (MARKET WIRE) -- March 1, 2007 -- Trico Marine Services, Inc. (NASDAQ: TRMA) (the "Company" or "Trico") today announced its financial results for the quarter and year ended December 31, 2006, reporting quarterly net income of $16.4 million, or $1.07 per share (diluted), and annual net income of $58.7 million, or $3.86 earnings per share (diluted).


(In thousands, except                                           Non-GAAP
 per share data and day                                         Combined
 rates)                    Three       Three                    Results
                           months      months                   for the
                           ended       ended      Year ended   Year ended
                          December    September    December     December
                          31, 2006     30, 2006    31, 2006    31, 2005(1)
                        -----------  -----------  -----------  -----------
Charter hire revenues   $    66,003  $    67,042  $   243,424  $   171,822

Operating income             24,627       23,961       88,390       42,695

Net income (loss)            16,386       17,821       58,724      (41,261)

Diluted EPS             $      1.07  $      1.17  $      3.86          N/A


Average Day Rates:
Supply / Anchor
 Handling (North Sea
 class)                 $    24,375  $    22,474  $    20,455  $    16,300

Supply Vessels (Gulf
 class)                      10,580       11,639       11,071        6,493


Utilization:
Supply / Anchor
 Handling (North Sea
 class)                          96%          92%          94%          92%

Supply Vessels (Gulf
 class)                          66%          71%          66%          60%


(1) Includes periods of both the Successor and Predecessor Companies,
    before and after our reorganization.  The combined results for the
    year ended December 31, 2005 represent a non-GAAP financial measure
    due to our reorganization.  A reconciliation of these non-GAAP
    financial measures to the comparable GAAP financial measures is
    contained in the financial tables to this press release.


President and Chief Executive Officer, Trevor Turbidy, commented, "We are extremely pleased with our continued progress, our fourth quarter results and full year 2006 financial performance. While we did experience a decline from record levels of our average day rates for our Gulf Class supply vessels in the fourth quarter, we are generating significant cash flow at current rates for our Gulf Class vessels. The North Sea market gained strength throughout the year and was extremely robust in the fourth quarter with anchor handling and PSV spot rates setting all time records. We aggressively pursued opportunities to reactivate and mobilize our vessels to growing international markets as evidenced by our agreement with China Oilfield Services Limited ('COSL') in Southeast Asia and our increased scope of operations in West Africa. Already in 2007, we capitalized on an extremely attractive financing opportunity to provide Trico additional liquidity to augment its fleet renewal program through constructing new vessels, acquiring existing vessels and pursuing attractive corporate acquisition opportunities."

Highlights for the Year

-- Achieved annual records for the following financial metrics -- charter
    hire revenues, operating income and net income:
       - Charter hire revenues increased $71.6 million to $243.4 million
         for 2006, representing a 42% increase over charter hire revenues
         of $171.8 million for 2005.
       - Operating income increased $45.7 million or 107% compared to the
         year end 2005.
       - Net income of $58.7 million, or $3.86 per diluted share, for the
         year ended December 31, 2006, compared to a loss of $41.3 million
         for the year ended 2005.
 -- Entered into three new vessel building contracts to construct a Marin
    Teknikk Design MT6009 MKII platform supply vessel and two GPA 640
    platform supply vessels.
 -- Together with COSL, formed Eastern Marine Services Limited for the
    development and provision of marine offshore support services in
    Southeast Asia.
Subsequent Event

--  In February 2007, we raised $150 million aggregate principal amount of
    3.0% senior convertible debentures providing additional financial
    flexibility to pursue opportunities in emerging markets, further augment
    our fleet renewal program and pursue strategic acquisition opportunities
    that may arise.
    
Highlights for the Quarter

--  Although revenues from Gulf Class supply vessels decreased by $5.2
    million, or 16% compared with the third quarter, revenues for the AHTSs and
    PSVs in the North Sea increased 13% and 15%, respectively, in the fourth
    quarter compared to the third quarter
--  Operating income increased $0.7 million from $23.9 million in the
    third quarter due in part to a reduction in M&C costs of $1.7 million in
    the fourth quarter
--  North Sea market continued to be robust, with record day rates being
    set in the spot anchor handler market. Average day rates for Trico's North
    Sea class fleet improved by 8% over the third quarter.
    

Summary Results

Charter hire revenues for the quarter ended December 31, 2006 were $66.0 million, a $1.0 million decrease compared to the third quarter of 2006. This decrease can be attributed to a reduction in demand for supply vessels in the Gulf of Mexico as a result of decreased hurricane related construction work and lower number of active jackup rigs in the Gulf of Mexico. Reduced charter hire revenues in the Gulf were partially offset by continued strength in the North Sea market in which our vessels experienced increased day rates and utilization.

During the fourth quarter of 2006, maintenance and classification (M&C) costs were incurred in respect of one North Sea class supply vessel, and three Gulf class supply vessels, and costs were incurred to destack five vessels related to our Southeast Asia partnership for a total cost of $4.4 million. In the third quarter of 2006, the Company incurred M&C work on three North Sea class vessels and six Gulf class supply vessels for a total cost of $6.1 million.

Charter hire revenues for the year ended December 31, 2006 increased 42% or $71.6 million compared to the year ended December 31, 2005. This increase was primarily due to (i) increased average day rates for our North Sea vessels, bolstered by two of our anchor handling vessels operating in the spot market in a year that experienced record-setting day rates, and (ii) increased utilization and day rates for our Gulf class supply vessels.

Direct operating expenses for the year ended December 31, 2006 increased 25% or $21.7 million compared to the year ended December 31, 2005. The increase is primarily due to increased labor costs of $5.9 million, increased mobilization expense of $1.3 million due to the mobilization of five vessels to West Africa, and increased marine inspection costs of $13.2 million attributable to destacking of nine of our cold stacked vessels and the timing and class of vessels undergoing regulatory drydockings. As a result of our accounting policy to expense maintenance and classification costs as incurred, the timing of a vessel's regulatory drydocking and the class of vessels undergoing regulatory drydocking may result in fluctuations in direct vessel operating expenses when compared to prior periods.

The Company reduced its number of stacked supply vessels to one by remaining committed to our strategy of increasing our presence in expanding international markets and reducing our dependency on mature markets. We recognize the volatility in the U.S. Gulf of Mexico and have opportunistically mobilized vessel from the U.S. Gulf in order to maintain historically robust day rates. We removed 10 vessels from our stacked fleet during 2006, of which 7 were reactivated and mobilized to international markets, 2 were reactivated and placed into service in the U.S. Gulf to replace vessels that had been mobilized internationally and one was sold.

In January 2007, North Sea day rates averaged $22,353 with utilization of 98% while day rates for our Gulf class supply vessels averaged $9,741 with utilization of 71%, or 85% for all actively marketed vessels.

About Trico

Trico provides a broad range of marine support services to the oil and gas industry, primarily in the North Sea, Gulf of Mexico, West Africa, Mexico, Southeast Asia (through its partnership) and, to a lesser extent, Brazil. The services provided by the Company's diversified fleet of vessels include the transportation of drilling materials, supplies and crews to drilling rigs and other offshore facilities; towing drilling rigs and equipment from one location to another; and support for the construction, installation, repair and maintenance of offshore facilities. Trico has its principal office in Houston, Texas.

For more information about Trico Marine Services, Inc., visit us on the web at www.tricomarine.com.

Certain statements in this press release that are not historical fact may be "forward-looking statements." Actual events may differ materially from those projected in any forward-looking statement. There are a number of important factors involving risks and uncertainties beyond the control of the Company that could cause actual events to differ materially from those expressed or implied by such forward-looking statements. A description of risks and uncertainties relating to Trico Marine Services, Inc. and its industry and other factors, which could affect the Company's results of operations or financial condition, are included in the Company's Securities and Exchange Commission filings. Trico undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report.


TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except share and per share amounts)

                                        Three months        Three months
                                           ended                ended
                                     December 31, 2006   September 30, 2006
                                     -----------------   ------------------
Revenues:
Charter hire                           $     66,003        $     67,042
Amortization of non-cash
 deferred revenues                              613               1,127
Other vessel income                             276                 368
                                       ------------        ------------
Total revenues                               66,892              68,537

Operating expenses:
Direct vessel operating
 expenses and other                          28,629              28,131
General and administrative                    7,414               7,229
Depreciation and amortization expense         6,224               6,246
Impairment on assets held for sale,
 net of insurance recoveries                      -               3,185
Gain on sales of assets                          (2)               (215)
                                       ------------        ------------
Total operating expenses                     42,265              44,576

Operating income                             24,627              23,961

Interest expense                               (123)               (279)
Amortization of deferred
 financing costs                                (35)                (37)
Foreign exchange gain (loss)                 (1,846)              2,246
Interest income                               1,546               1,227
Other income (loss), net                       (167)               (139)
                                       ------------        ------------
Income before income taxes
 and noncontrolling
interest in loss of
 consolidated subsidiary                     24,002              26,979

Income tax expense                            8,796               9,963
                                       ------------        ------------

Income before noncontrolling
 interest in loss of consolidated
 subsidiary                                  15,206              17,016
                                       ------------        ------------

Noncontrolling interest in loss
 of consolidated subsidiary                   1,180                 805

Net income                             $     16,386        $     17,821
                                       ------------        ------------

Basic income per common share:
   Net income                          $       1.12        $       1.22
                                       ------------        ------------
   Average common shares outstanding     14,667,556          14,634,937
                                       ------------        ------------

Diluted income per common share:
   Net income                          $       1.07        $       1.17
                                       ------------        ------------
   Average common shares outstanding     15,274,223          15,254,877
                                       ------------        ------------




               TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                (UNAUDITED)
            (In thousands, except share and per share amounts)

                              Successor Company       Predecessor Company
                            ======================  ======================
                                          Period      Period     Combined
                             Results       from        from      Results
                             for the     March 15,   January 1,  for the
                               Year        2005        2005        Year
                              ended       through     through     ended
                             December    December   March 14,    December
                             31, 2006    31, 2005      2005      31, 2005
                            ----------  ----------  ----------  ----------
Revenues:
Charter hire                $  243,424  $  141,953  $   29,869  $  171,822
Amortization of non-cash
 deferred revenues               4,322      10,137           -      10,137
Other vessel income                971         309          17         326
                            ----------  ----------  ----------  ----------
Total revenues                 248,717     152,399      29,886     182,285

Operating expenses:
Direct vessel operating
 expenses and other            106,981      69,081      16,217      85,298
General and administrative      27,102      21,387       4,030      25,417
Amortization of marine
 inspection costs                    -           -       2,055       2,055
Depreciation and
 amortization expense           24,998      20,403       6,703      27,106
Impairment of long-lived
 assets                              -           -           -           -
Impairment on assets held
 for sale, net of insurance
 recoveries                      2,580       2,237           -       2,237
(Gain) loss on sales of
 assets                         (1,334)     (2,525)          2      (2,523)
                            ----------  ----------  ----------  ----------
Total operating expenses       160,327     110,583      29,007     139,590

Operating income                88,390      41,816         879      42,695

Reorganization costs                 -           -      (6,659)     (6,659)
Gain on debt discharge               -           -     166,459     166,459
Fresh-start adjustments              -           -    (219,008)   (219,008)
Interest expense                (1,286)     (6,430)     (1,940)     (8,370)
Amortization of deferred
 financing costs                     -        (285)        (50)       (335)
Loss on early retirement of
 debt                             (168)     (3,950)          -      (3,950)
Interest income                  4,198         615           -         615
Other income (loss), net          (672)       (402)          5        (397)
                            ----------  ----------  ----------  ----------
Income before income taxes
 and noncontrolling
 interest in loss of
 consolidated subsidiary        90,462      31,364     (60,314)    (28,950)

Income tax expense              33,723      11,264       1,047      12,311
                            ----------  ----------  ----------  ----------

Income before
 noncontrolling interest in
 loss of consolidated
 subsidiary                     56,739      20,100     (61,361)    (41,261)
                            ----------  ----------  ----------  ----------

Noncontrolling interest's
 loss in subsidiary              1,985           -           -           -

Net income (loss)           $   58,724  $   20,100  $  (61,361) $  (41,261)
                            ==========  ==========  ==========  ==========

Basic income (loss) per
 common share:
   Net income (loss)        $     4.01  $     1.78  $    (1.66)
                            ----------  ----------  ----------
   Average common shares
    outstanding             14,628,490  11,271,786  36,908,505
                            ==========  ==========  ==========

Diluted income (loss) per
 common share:
   Net income (loss)        $     3.86  $     1.74  $    (1.66)
                            ----------  ----------  ----------
   Average common shares
    outstanding             15,206,137  11,558,100  36,908,505
                            ==========  ==========  ==========




                                  For the    For the
                                   Three      Three
                                  Months     Months        Year Ended
                      Month of     Ended      Ended        December 31,
                       January   December   September  -------------------
Average Day Rates:      2007     31, 2006   30, 2006     2006     2005(1)
                      ---------  ---------  ---------  ---------  --------
  PSV/AHTS (North Sea
   class)                22,353  $  24,375  $  22,474  $  20,455  $ 16,300
  Supply (Gulf class)     9,741     10,580     11,639     11,071     6,493
  Crew/line handling      5,323      5,585      5,512      4,785     2,402

Utilization:
  PSV/AHTS (North Sea
   class)                    98%        96%        92%        94%       92%
  Supply (Gulf
   class)(2)                 71%        66%        71%        66%       60%
  Crew/line handling         97%        82%        87%        86%       90%

Average Number of
  Vessels:
  PSV/AHTS (North Sea
   class)                  16.0       16.0       16.0       16.0      16.8
  Supply (Gulf class)      42.4       44.0       44.0       44.3      47.6
  Crew/line handling        8.0        8.0        8.0        8.7      16.4

(1) Results and day rates for the year ended December 31, 2005 comprise
    results of both the Successor and Predecessor Companies, before and
    after our emergence from bankruptcy.
(2) Stacked vessels are included in the calculation of utilization.
    Excluding stacked vessels, our supply vessel utilization was 85%
    during the month of January 2007, 82% and 91% during the three month
    periods ended December 31, 2006 and the quarter ended September 30,
    2006 respectively, and 88% and 92% for the years ended December 31,
    2006 and 2005, respectively.



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share and per share amounts)



                                                December 31,  December 31,
ASSETS                                              2006          2005
                                                ------------  ------------
Current assets:
  Cash and cash equivalents                     $    114,173  $     51,218
  Available for sale securities                        2,475             -
  Restricted cash                                        716           570
  Accounts receivable, net                            58,787        42,986
  Prepaid expenses and other current assets            4,036         3,484
  Assets held for sale                                 3,048         5,853
                                                ------------  ------------
    Total current assets                             183,235       104,111

Property and equipment:
  Land and buildings                                   1,995         1,844
  Marine vessels                                     256,125       241,360
  Construction-in-progress                            15,876           235
  Transportation and other                             2,328         1,566
                                                ------------  ------------
                                                     276,324       245,005
Less accumulated depreciation and amortization        44,476        19,359
                                                ------------  ------------
  Net property and equipment                         231,848       225,646

Restricted cash - noncurrent                          11,842         7,253
Other assets                                           8,397         7,212
                                                ------------  ------------
  Total assets                                  $    435,322  $    344,222
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term and current maturities of debt     $      1,258  $     36,610
  Accounts payable                                    11,055         6,295
  Accrued expenses                                    14,590        10,715
  Accrued insurance reserve                            3,062         3,426
  Accrued interest                                       110           288
  Income taxes payable                                 2,092           518
                                                ------------  ------------
    Total current liabilities                         32,167        57,852

Long-term debt, including premiums                     8,605         9,928
Deferred income taxes                                 63,327        46,055
Deferred revenues on unfavorable contracts             1,376         5,379
Other liabilities                                      2,199         2,576
                                                ------------  ------------
  Total liabilities                                  107,674       121,790

Noncontrolling interest                               15,310             -

COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Preferred stock, $.01 par value                            -             -
Old Common stock, $.01 par value                           -             -
New Common stock, $.01 par value                         148           146
Warrants - Series A                                    1,646         1,649
Warrants - Series B                                      634           634
Additional paid-in capital                           231,218       208,143
Retained earnings                                     78,824        20,100
Unamortized pension loss, net on income tax of
 $ 0.3 million                                          (708)            -
Cumulative foreign currency translation
 adjustment                                              576        (8,240)
                                                ------------  ------------
Total stockholders' equity                           312,338       222,432
                                                ------------  ------------

Total liabilities and stockholders' equity      $    435,322  $    344,222
                                                ============  ============



TRICO MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)


                                  Successor Company   Predecessor Company
                                ====================  ====================
                                            Period     Period   Combined
                                 Results     from       from     Results
                                 for the   March 15,   January   for the
                                  Year       2005      1, 2005     Year
                                  ended     through    through     ended
                                December   December   March 14,  December
                                31, 2006   31, 2005     2005     31, 2005
                                ---------  ---------  ---------  ---------
Net income (loss)               $ 58,724   $ 20,100   $ (61,361) $ (41,261)
  Adjustments to reconcile net
   income (loss) to net cash
   provided by operating
   activities:
      Depreciation and
       amortization                25,029     20,636      8,808     29,444
      Amortization of deferred
       revenues                    (4,322)   (10,137)         -    (10,137)
      Deferred marine
       inspection costs                 -          -     (1,277)    (1,277)
      Deferred income taxes        29,856     10,084     (1,047)     9,037
      Gain on debt discharge            -          -   (166,459)  (166,459)
      Fresh start adjustments           -          -    219,008    219,008
      Impairment on assets held
       for sale                     2,580      2,237          -      2,237
      Loss on early retirement
       of debt                          -      3,950          -      3,950
      Loss (gain) on sales of
       assets                      (1,334)    (2,525)         2     (2,523)
      Provision for doubtful
       accounts                     1,234        668         40        708
      Stock compensation
       expense                      2,024      2,012          9      2,021
      Noncontrolling interest
       in loss of consolidated
       subsidiary                  (1,985)         -          -          -
      Change in operating
       assets and liabilities:
         Accounts receivable      (15,522)   (12,688)     2,404    (10,284)
         Prepaid expenses and
          other current assets       (384)      (760)      (630)    (1,390)
         Accounts payable and
          accrued expenses          8,938     (4,629)     7,676      3,047
         Other, net                (3,107)    (1,774)     1,995        221
                                ---------  ---------  ---------  ---------
         Net cash provided by
          operating activities    101,731     27,174      9,168     36,342
                                ---------  ---------  ---------  ---------

Cash flows from investing
 activities:
   Purchases of property and
    equipment                     (19,472)    (1,814)      (947)    (2,761)
   Proceeds from sales of
    assets                          3,402      6,988          -      6,988
   Increase in
    available-for-sale
    securities                     (2,475)         -          -          -
   Increase in restricted cash     (4,682)      (882)       508       (374)
   Other, net                           -          -       (211)      (211)
                                ---------  ---------  ---------  ---------
         Net cash provided by
          (used in) investing
          activities              (23,227)     4,292       (650)     3,642
                                ---------  ---------  ---------  ---------

Cash flows from financing
 activities:
   Net proceeds from issuance
    of common stock                     -     95,323          -     95,323
   Net proceeds from exercises
    of warrants and option            994      1,806          -      1,806
   Proceeds from issuance of
    debt                           15,878     60,550     54,550    115,100
   Repayment of debt              (54,041)  (156,380)   (56,771)  (213,151)
   Contribution from
    noncontrolling interest        20,910
   Deferred financing costs and
    other                              (2)         -       (375)      (375)
                                ---------  ---------  ---------  ---------
         Net cash (used in)
          provided by financing
          activities              (16,261)     1,299     (2,596)    (1,297)
                                ---------  ---------  ---------  ---------

Effect of exchange rate changes
 on cash and cash equivalents         712       (701)        62       (639)

Net increase in cash and cash
 equivalents                       62,955     32,064      5,984     38,048
Cash and cash equivalents at
 beginning of period               51,218     19,154     13,170     13,170
                                ---------  ---------  ---------  ---------
Cash and cash equivalents at
 end of period                  $ 114,173  $  51,218  $  19,154  $  51,218
                                =========  =========  =========  =========

Contact Information

  • Contact information:
    Geoff Jones
    VP & CFO
    (713) 780-9926