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SEACOR Marine Holdings Inc. - Quarter Report: 2020 March (Form 10-Q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020               or             

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from              to

Commission file number 1-37966

SEACOR Marine Holdings Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

47-2564547

(State or Other Jurisdiction of

Incorporation or Organization)

 

(IRS Employer

Identification No.)

 

 

 

12121 Wickchester Suite 500, Houston, TX

 

77079

 

(Address of Principal Executive Offices)

 

(Zip Code)

 

 

 

 

Registrant’s Telephone Number, Including Area Code: (346) 980-1700

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

SMHI

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  

 

Accelerated filer  

 

Non-accelerated filer 

 

 

Smaller reporting company  

 

Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No  

 

  

 

The total number of shares of common stock, par value $.01 per share (“Common Stock”), outstanding as of May 4, 2020 was 23,027,225. The Registrant has no other class of common stock outstanding.

i


SEACOR MARINE HOLDINGS INC.

Table of Contents

 

 

 

Part I.

 

Financial Information

 

1

 

 

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

1

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019

 

1

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Loss for the Three Months Ended March 31, 2020 and 2019

 

2

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2020 and 2019

 

3

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2020 and 2019

 

4

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019

 

5

 

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

6

 

 

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

 

 

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

40

 

 

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

40

 

 

 

 

 

 

Part II.

 

Other Information

 

43

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

43

 

 

 

 

 

 

 

 

Item 1A.

Risk Factors

 

43

 

 

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

45

 

 

 

 

 

 

 

 

Item 3.

Default Upon Senior Securities

 

45

 

 

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

45

 

 

 

 

 

 

 

 

Item 5.

Other Information

 

45

 

 

 

 

 

 

 

 

Item 6.

Exhibits

 

46

 

 

i


PART I—FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

 

March 31, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

69,220

 

 

$

83,943

 

Restricted cash

 

 

3,353

 

 

 

3,104

 

Receivables:

 

 

 

 

 

 

 

 

Trade, net of allowance for credit loss accounts of $375 and $455 in 2020 and 2019, respectively

 

 

48,192

 

 

 

49,128

 

Other

 

 

27,872

 

 

 

18,531

 

Inventories

 

 

1,575

 

 

 

1,228

 

Prepaid expenses and other

 

 

2,653

 

 

 

2,612

 

Total current assets

 

 

152,865

 

 

 

158,546

 

Property and Equipment:

 

 

 

 

 

 

 

 

Historical cost

 

 

930,264

 

 

 

976,978

 

Accumulated depreciation

 

 

(312,911

)

 

 

(358,962

)

 

 

 

617,353

 

 

 

618,016

 

Construction in progress

 

 

55,302

 

 

 

74,344

 

Net property and equipment

 

 

672,655

 

 

 

692,360

 

Right-of-Use Asset - Operating Leases

 

 

8,990

 

 

 

17,313

 

Investments, at Equity, and Advances to 50% or Less Owned Companies

 

 

125,010

 

 

 

124,680

 

Construction Reserve Funds

 

 

3,745

 

 

 

12,893

 

Other Assets

 

 

3,270

 

 

 

3,401

 

 

 

$

966,535

 

 

$

1,009,193

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Current portion of operating lease liabilities

 

 

13,359

 

 

$

15,099

 

Current portion of long-term debt:

 

 

 

 

 

 

 

 

Recourse

 

 

36,278

 

 

 

17,802

 

Non-recourse

 

 

806

 

 

 

 

Accounts payable and accrued expenses

 

 

32,023

 

 

 

25,691

 

Due to SEACOR Holdings

 

 

66

 

 

 

74

 

Accrued wages and benefits

 

 

1,274

 

 

 

1,832

 

Accrued interest

 

 

1,835

 

 

 

731

 

Accrued income taxes

 

 

1,143

 

 

 

 

Deferred revenue and unearned revenue

 

 

3,787

 

 

 

5,327

 

Accrued capital, repair and maintenance expenditures

 

 

10,577

 

 

 

15,997

 

Accrued insurance deductibles and premiums

 

 

2,921

 

 

 

3,564

 

Accrued professional fees

 

 

652

 

 

 

871

 

Derivatives

 

 

4,893

 

 

 

3,009

 

Other current liabilities

 

 

2,867

 

 

 

4,820

 

Total current liabilities

 

 

112,481

 

 

 

94,817

 

Long-Term Operating Lease Liabilities

 

 

7,859

 

 

 

9,822

 

Long-Term Debt:

 

 

 

 

 

 

 

 

Recourse

 

 

217,733

 

 

 

239,939

 

Non-recourse

 

 

138,996

 

 

 

140,312

 

Conversion Option Liability on Convertible Senior Notes

 

 

91

 

 

 

5,205

 

Deferred Income Taxes

 

 

26,113

 

 

 

33,905

 

Deferred Gains and Other Liabilities

 

 

7,951

 

 

 

6,269

 

Total liabilities

 

 

511,224

 

 

 

530,269

 

Equity:

 

 

 

 

 

 

 

 

SEACOR Marine Holdings Inc. stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $.01 par value, 60,000,000 shares authorized; 23,099,127 and 21,928,674 shares issued in 2020 and 2019, respectively

 

 

231

 

 

 

219

 

Additional paid-in capital

 

 

447,425

 

 

 

429,318

 

Retained earnings

 

 

11,131

 

 

 

27,076

 

Shares held in treasury of 71,902 and 47,185, respectively, at cost

 

 

(844

)

 

 

(669

)

Accumulated other comprehensive loss, net of tax

 

 

(2,971

)

 

 

1,548

 

 

 

 

454,972

 

 

 

457,492

 

Noncontrolling interests in subsidiaries

 

 

339

 

 

 

21,432

 

Total equity

 

 

455,311

 

 

 

478,924

 

 

 

$

966,535

 

 

$

1,009,193

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

1


SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS

(in thousands, except share data)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Operating Revenues

 

$

41,743

 

 

$

44,910

 

Costs and Expenses:

 

 

 

 

 

 

 

 

Operating

 

 

24,620

 

 

 

35,166

 

Administrative and general

 

 

10,765

 

 

 

10,812

 

Lease expense

 

 

3,407

 

 

 

4,137

 

Depreciation and amortization

 

 

15,001

 

 

 

16,097

 

 

 

 

53,793

 

 

 

66,212

 

Gain (loss) on Asset Dispositions and Impairments, Net

 

 

(12,572

)

 

 

268

 

Operating Loss

 

 

(24,622

)

 

 

(21,034

)

Other Income (Expense):

 

 

 

 

 

 

 

 

Interest income

 

 

676

 

 

 

354

 

Interest expense

 

 

(7,638

)

 

 

(7,664

)

SEACOR Holdings guarantee fees

 

 

(16

)

 

 

(29

)

Derivative gains (losses), net

 

 

5,114

 

 

 

(925

)

Foreign currency gains, net

 

 

65

 

 

 

670

 

 

 

 

(1,799

)

 

 

(7,594

)

Loss from Continuing Operations Before Income Tax Benefit and Equity in Earnings of 50% or Less Owned Companies

 

 

(26,421

)

 

 

(28,628

)

Income Tax Benefit

 

 

(6,668

)

 

 

(3,831

)

Loss from Continuing Operations Before Equity in Earnings of 50% or Less Owned Companies

 

 

(19,753

)

 

 

(24,797

)

Equity in Losses of 50% or Less Owned Companies

 

 

(239

)

 

 

(3,476

)

Loss from Continuing Operations

 

 

(19,992

)

 

 

(28,273

)

(Loss) Income on Discontinued Operations, Net of Tax (see Note 15)

 

 

 

 

 

 

Net Loss

 

 

(19,992

)

 

 

(28,273

)

Net Loss attributable to Noncontrolling Interests in Subsidiaries

 

 

(4,047

)

 

 

(2,724

)

Net Loss attributable to SEACOR Marine Holdings Inc.

 

$

(15,945

)

 

$

(25,549

)

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss Per Common Share and Warrants of SEACOR Marine Holdings Inc.

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.66

)

 

$

(1.11

)

Discontinued operations

 

 

 

 

 

 

 

 

$

(0.66

)

 

$

(1.11

)

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares and Warrants Outstanding:

 

 

 

 

 

 

 

 

Basic and diluted shares

 

 

23,989,029

 

 

 

23,090,137

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

2


SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2020

 

 

2019

 

 

Net Loss

 

$

(19,992

)

 

$

(28,273

)

 

Other Comprehensive Loss:

 

 

 

 

 

 

 

 

 

Foreign currency translation gains (losses)

 

 

(2,528

)

 

 

875

 

 

Derivative losses on cash flow hedges

 

 

(2,038

)

 

 

(710

)

 

Reclassification of derivative gains on cash flow hedges to interest expense

 

 

196

 

 

 

71

 

 

Reclassification of derivative losses on cash flow hedges to equity in earnings

of 50% or less owned companies

 

 

(149

)

 

 

(260

)

 

 

 

 

(4,519

)

 

 

(24

)

 

Income tax benefit (expense)

 

 

 

 

 

 

 

 

 

 

(4,519

)

 

 

(24

)

 

Comprehensive Loss

 

 

(24,511

)

 

 

(28,297

)

 

Comprehensive Loss attributable to Noncontrolling Interests in Subsidiaries

 

 

(4,047

)

 

 

(2,724

)

 

Comprehensive Loss attributable to SEACOR Marine Holdings Inc.

 

$

(20,464

)

 

$

(25,573

)

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

3


SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in thousands)

 

 

 

Shares of

Common

Stock

Outstanding

 

 

Common

Stock

 

 

Additional

Paid-In

Capital

 

 

Shares

Held in

Treasury

 

 

Treasury

Stock

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Loss

 

 

Non-

Controlling

Interests In

Subsidiaries

 

 

Total

Equity

 

For the three months ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

21,881,487

 

 

$

219

 

 

$

429,318

 

 

 

47,187

 

 

$

(669

)

 

$

27,076

 

 

$

1,548

 

 

$

21,432

 

 

$

478,924

 

Issuance of Common Stock

 

 

900,000

 

 

 

9

 

 

 

3,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,358

 

Cancellation of employee share awards

 

 

(1,497

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock grants

 

 

271,950

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Amortization of employee share awards

 

 

 

 

 

 

 

 

1,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,069

 

Restricted stock vesting

 

 

(24,715

)

 

 

 

 

 

 

 

 

24,715

 

 

 

(175

)

 

 

 

 

 

 

 

 

 

 

 

(175

)

Acquisition of consolidated joint venture

 

 

 

 

 

 

 

 

13,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,046

)

 

 

(3,357

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,945

)

 

 

 

 

 

(4,047

)

 

 

(19,992

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,519

)

 

 

 

 

 

(4,519

)

March 31, 2020

 

 

23,027,225

 

 

$

231

 

 

$

447,425

 

 

 

71,902

 

 

$

(844

)

 

$

11,131

 

 

$

(2,971

)

 

$

339

 

 

$

455,311

 

 

 

 

Shares of

Common

Stock

Outstanding

 

 

Common

Stock

 

 

Additional

Paid-In

Capital

 

 

Shares

Held in

Treasury

 

 

Treasury

Stock

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Loss

 

 

Non-

Controlling

Interests In

Subsidiaries

 

 

Total

Equity

 

For the three months ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

20,439,208

 

 

$

204

 

 

$

415,372

 

 

 

4,007

 

 

$

(91

)

 

$

126,834

 

 

$

(16,788

)

 

$

29,404

 

 

$

554,935

 

Impact of adoption of new accounting standard for leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,416

 

 

 

 

 

 

 

 

 

10,416

 

December 31, 2018

 

 

20,439,208

 

 

 

204

 

 

 

415,372

 

 

 

4,007

 

 

 

(91

)

 

 

137,250

 

 

 

(16,788

)

 

 

29,404

 

 

 

565,351

 

Issuance of Common Stock

 

 

653,872

 

 

 

7

 

 

 

6,589

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,596

 

Amortization of employee share awards

 

 

 

 

 

 

 

 

776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

776

 

Exercise of options

 

 

8,750

 

 

 

 

 

 

108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

108

 

Restricted stock vesting

 

 

(21,551

)

 

 

 

 

 

 

 

 

21,551

 

 

 

(282

)

 

 

 

 

 

 

 

 

 

 

 

(282

)

Cancellation of employee share awards

 

 

(1,000

)

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15

)

Acquisition of consolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,114

)

 

 

(2,114

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,549

)

 

 

 

 

 

(2,724

)

 

 

(28,273

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24

)

 

 

 

 

 

(24

)

March 31, 2019

 

 

21,079,279

 

 

$

211

 

 

$

422,830

 

 

 

25,558

 

 

$

(373

)

 

$

111,701

 

 

$

(16,812

)

 

$

24,566

 

 

$

542,123

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

4


SEACOR MARINE HOLDINGS INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Cash Flows from Continuing Operating Activities:

 

 

 

 

 

 

 

 

Net Loss

 

$

(19,992

)

 

$

(28,273

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

15,001

 

 

 

16,097

 

Deferred financing costs amortization

 

 

312

 

 

 

320

 

Restricted stock amortization

 

 

1,069

 

 

 

761

 

Restricted stock vesting

 

 

(175

)

 

 

(282

)

Debt discount amortization

 

 

1,478

 

 

 

1,373

 

Bad debt recoveries

 

 

(80

)

 

 

(404

)

Loss (gain) from equipment sales, retirements or impairments

 

 

12,572

 

 

 

(268

)

Derivative (gains) losses

 

 

(5,114

)

 

 

925

 

Cash settlement on derivative transactions, net

 

 

(214

)

 

 

(75

)

Currency losses

 

 

(65

)

 

 

(670

)

Deferred income taxes

 

 

(7,768

)

 

 

(5,160

)

Equity losses

 

 

239

 

 

 

3,476

 

Dividends received from equity investees

 

 

 

 

 

400

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

 

 

Accounts receivables

 

 

(10,424

)

 

 

(4,275

)

Other assets

 

 

(855

)

 

 

(2,791

)

Accounts payable and accrued liabilities

 

 

5,908

 

 

 

13,991

 

Net cash used in operating activities

 

 

(8,108

)

 

 

(4,855

)

Cash Flows from Continuing Investing Activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(11,244

)

 

 

(20,633

)

Proceeds from disposition of property and equipment

 

 

3,105

 

 

 

378

 

Net change in construction reserve fund

 

 

9,148

 

 

 

(48

)

Investments in and advances to 50% or less owned companies

 

 

(245

)

 

 

(1,951

)

Net cash provided by (used in) investing activities

 

 

764

 

 

 

(22,254

)

Cash Flows from Continuing Financing Activities:

 

 

 

 

 

 

 

 

Payments on long-term debt

 

 

(5,222

)

 

 

(4,361

)

Purchase of subsidiary shares from noncontrolling interests

 

 

 

 

 

(3,392

)

Proceeds from exercise of stock options and Warrants

 

 

 

 

 

108

 

Net cash used in financing activities

 

 

(5,222

)

 

 

(7,645

)

Effects of Exchange Rate Changes on Cash and Cash Equivalents

 

 

(1,908

)

 

 

873

 

Net Decrease in Cash, Restricted Cash and Cash Equivalents

 

 

(14,474

)

 

 

(33,881

)

Cash Flows from Discontinued Operations:

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

2,888

 

Investing Activities

 

 

 

 

 

(376

)

Effects of Exchange Rate Changes on Cash, Restricted Cash and Cash Equivalents

 

 

 

 

 

612

 

Net Decrease in Cash, Restricted Cash and Cash Equivalents on Discontinued Operations

 

 

 

 

 

3,124

 

Net Decrease in Cash, Restricted Cash and Cash Equivalents

 

 

(14,474

)

 

 

(30,757

)

Cash, Restricted Cash and Cash Equivalents, Beginning of Period

 

 

87,047

 

 

 

96,852

 

Cash, Restricted Cash and Cash Equivalents, End of Period

 

$

72,573

 

 

$

66,095

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements and should be read in conjunction herewith.

5


SEACOR MARINE HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.

BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated financial statements include the accounts of SEACOR Marine Holdings Inc. and its consolidated subsidiaries (the “Company”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the unaudited condensed consolidated financial statements for the periods indicated. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”).   

Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the “Company” refers to SEACOR Marine Holdings Inc. and its consolidated subsidiaries and any reference in this Quarterly Report on Form 10-Q to “SEACOR Marine” refers to SEACOR Marine Holdings Inc. without its consolidated subsidiaries. 

The outbreak of the novel coronavirus (“COVID-19”) and related decreases in commodity prices resulting from oversupply and demand weakness have caused significant disruptions and volatility in the global marketplace during the first quarter of 2020.  These conditions have persisted into the second quarter, and there remains a continuing uncertainty regarding the length and impact of COVID-19 on the energy industry and the outlook for our business. Although the decrease in oil and natural gas prices has not led to a significant decrease in the demand for our products and services, a prolonged period of severely depressed oil and natural gas prices compared to historic averages could have a material adverse effect on our business.

Recently Adopted Accounting Standards.

On June 30, 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326). This ASU represents a significant change in the Accounting for Credit Losses model. This ASU introduced the Current Expected Credit Losses (“CECL”) model, which requires earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models in current U.S. generally accepted accounting principles (“GAAP”), which generally require that a loss be incurred before it is recognized. The standard applies to financial assets arising from revenue transactions such as contract assets and accounts receivables and is effective for fiscal years beginning after December 15, 2019. The adoption of the standard by the Company did not have a material impact on its consolidated financial position nor on its results of operations and cash flows.

On August 29, 2018, the FASB issued an amendment to the accounting standards, which requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customers in a software licensing arrangement. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The adoption of the standard by the Company did not have a material impact on its consolidated financial position nor on its results of operations and cash flows.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The ASU eliminates certain disclosures as to the amount of and reasons for transfers between Level 1 and Level 2 of the fair

6


value hierarchy. The ASU adds disclosure requirements for Level 3 measurements. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The adoption of the standard by the Company did not have a material impact on the Company's disclosures.

Critical Accounting Policies.

Basis of Consolidation. The consolidated financial statements include the accounts of SEACOR Marine and its controlled subsidiaries. Control is generally deemed to exist if the Company has greater than 50% of the voting rights of a subsidiary. All significant intercompany accounts and transactions are eliminated in the combination and consolidation.

Noncontrolling interests in consolidated subsidiaries are included in the consolidated balance sheets as a separate component of equity. The Company reports consolidated net income (loss) inclusive of both the Company’s and the noncontrolling interests’ share, as well as the amounts of consolidated net income (loss) attributable to each of the Company and the noncontrolling interests. If a subsidiary is deconsolidated upon a change in control, any retained noncontrolled equity investment in the former controlled subsidiary is measured at fair value and a gain or loss is recognized in net income (loss) based on such fair value. If a subsidiary is consolidated upon a change in control, any previous noncontrolled equity investment in the subsidiary is measured at fair value and a gain or loss is recognized in net income (loss) based on such fair value.

The Company employs the equity method of accounting for investments in 50% or less owned companies that it does not control but has the ability to exercise significant influence over the operating and financial policies of the business venture. Significant influence is generally deemed to exist if the Company has between 20% and 50% of the voting rights of a business venture but may exist when the Company’s ownership percentage is less than 20%. In certain circumstances, the Company may have an economic interest in excess of 50% but may not control and consolidate the business venture. Conversely, the Company may have an economic interest less than 50% but may control and consolidate the business venture. The Company reports its investments in and advances to these business ventures in the accompanying consolidated balance sheets as investments, at equity, and advances to 50% or less owned companies. The Company reports its share of earnings from investments in 50% or less owned companies in the accompanying consolidated statements of net income (loss) as equity in earnings (losses) of 50% or less owned companies, net of tax.

The Company employs the cost method of accounting for investments in 50% or less owned companies it does not control or exercise significant influence. These investments in private companies are carried at cost and are adjusted only for capital distributions and other-than-temporary declines in fair value.

Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current period presentation.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include those related to deferred revenues, allowance for doubtful accounts, useful lives of property and equipment, impairments, income tax provisions and certain accrued liabilities. Actual results could differ from estimates and those differences may be material.

Revenue Recognition. Revenue is recognized when (or as) the Company transfers promised goods or services to its customers in amounts that reflect the consideration to which the Company expects to be entitled to in exchange for those goods or services, which occurs when (or as) the Company satisfies its contractual obligations and transfers over control of the promised goods or services to its customers. Costs to obtain or fulfill a contract are expensed as incurred.

The Company earns revenue primarily from the time charter and bareboat charter of vessels to customers.

7


Since the Company charges customers based upon daily rates of hire, vessel revenues are recognized on a daily basis throughout the contract period. Under a time charter, the Company provides a vessel to a customer and is responsible for all operating expenses, typically excluding fuel. Under a bareboat charter, the Company provides a vessel to a customer and the customer assumes responsibility for all operating expenses and assumes all risks of operation. In the U.S. Gulf of Mexico, time charter durations and rates are typically established in the context of master service agreements that govern the terms and conditions of the charter.

Contract or charter durations may range from several days to several years. Charters vary in length from short-term to multi-year periods, many with cancellation clauses and without early termination penalties. As a result of options and frequent renewals, the stated duration of charters may have little correlation with the length of time the vessel is contracted to provide services to a particular customer.

The Company also contracts with various customers to carry out management services for vessels as agents for and on behalf of ship owners. These services include crew management, technical management, commercial management, insurance arrangements, sale and purchase of vessels, provisions and bunkering. As the manager of the vessels, the Company undertakes to use its best endeavors to provide the agreed management services as agents for and on behalf of the owners in accordance with sound ship management practice and to protect and promote the interest of the owners in all matters relating to the provision of services hereunder. The Company also contracts with various customers to carry out management services regarding engineering for vessel construction and vessel conversions. The vast majority of the ship management agreements span over the length of one to three years and are typically billed on a monthly basis. The Company transfers control of the service to the customer and satisfies its performance obligation over the term of the contract, and therefore recognized revenue over the term of the contract while related costs are expensed as incurred.

Revenue that does not meet these criteria is deferred until the criteria is met and such revenue is considered a contract liability. Contract liabilities, which are included in other current liabilities in the accompanying consolidated balance sheets, for the three months ended March 31 were as follows (in thousands):

 

 

 

2020

 

 

2019

 

Balance at beginning of period

 

$

4,786

 

 

$

1,327

 

Revenues deferred during the period

 

 

5

 

 

 

3,409

 

Revenues recognized during the period

 

 

(1,526

)

 

 

(1,136

)

Balance at end of period

 

$

3,265

 

 

$

3,600

 

 

As of March 31, 2020, the Company had deferred revenues of $3.3 million primarily related to $1.5 million of prepaid vessel management fees, and $1.8 million related to the time charter of offshore support vessels to customers from which collections were not reasonably assured.

Property and Equipment. Equipment, stated at cost, is depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to each class of asset, the estimated useful life is based upon a newly built asset being placed into service and represents the time period beyond which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life, typically the next survey or certification date.

As of March 31, 2020, the estimated useful life (in years) of each of the Company’s major categories of new equipment was as follows:

 

Offshore Support Vessels:

 

 

Crew transfer vessels

 

10

All other offshore support vessels (excluding crew transfer)

 

20

 

Equipment maintenance and repair costs and the costs of routine overhauls, drydockings and inspections performed on vessels and equipment are charged to operating expense as incurred. Expenditures that extend the

8


useful life or improve the marketing and commercial characteristics of equipment as well as major renewals and improvements to other properties are capitalized.

 

Certain interest costs incurred during the construction of equipment are capitalized as part of the assets’ carrying values and are amortized over such assets’ estimated useful lives. During the three months ended March 31, 2020, capitalized interest totaled $0.2 million.

 

Impairment of Long-Lived Assets. The Company performs an impairment analysis of long-lived assets used in operations, including intangible assets, when indicators of impairment are present. These indicators may include a significant decrease in the market price of a long-lived asset or asset group, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition, or a current period operating or cash flow loss combined with a history of operating or cash flow losses or a forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group. If the carrying values of the assets are not recoverable, as determined by their estimated future undiscounted cash flows, the estimated fair value of the assets or asset groups are compared to their current carrying values and impairment charges are recorded if the carrying value exceeds fair value.

Market conditions caused by COVID-19, including the decrease in oil and natural gas prices as well as the affect the pandemic has had on our stock price, caused a triggering event to occur requiring us to test our assets for impairment. During the first quarter of 2020, the Company impaired the right-to-use assets on two of its leased liftboats. Based on the current market environment, it was determined that neither of these two vessels would return to active service during their remaining lease terms. Therefore, the Company recorded an impairment of $7.4 million in total for two leased-in vessels and recorded a partial impairment on one liftboat for $1.8 million based on an outside valuation of its remaining liftboat fleet. Estimated fair values for the Company’s owned vessels were established by independent appraisers based on researched market information, replacement cost information, and other data. If market conditions further decline from the depressed utilization and rates per day worked experienced over the last three years, fair values based on future appraisals could decline significantly. There were no other impairments of right-to-use assets or any other assets in the first quarter of 2020.

The Company’s other vessel classes and other individual vessels in active service and cold-stacked status, for which no impairment was deemed necessary, have generally experienced a less severe decline in utilization and rates per day worked based on specific market factors. The market factors include vessels with more general utility to a broad range of customers (e.g., fast support vessels (“FSVs”)), vessels required for customers to meet regulatory mandates and operating under multiple year contracts and vessels that serve customers outside of the offshore oil and natural gas market (e.g., crew transfer vessels (“CTVs”)).

For vessel classes and individual vessels with indicators of impairment but not recently impaired as of March 31, 2020, the Company has estimated that their future undiscounted cash flows exceed their current carrying values. The Company’s estimates of future undiscounted cash flows are highly subjective as utilization and rates per day worked are uncertain, especially in light of the affect COVID-19 has had on the timing of an estimated market recovery in the offshore oil and natural gas markets and the timing and cost of reactivating cold-stacked vessels. If market conditions decline further, changes in the Company’s expectations on future cash flows may result in recognizing additional impairment charges related to its long-lived assets in future periods.

Impairment of 50% or Less Owned Companies. Investments in 50% or less owned companies are reviewed periodically to assess whether there is an other-than-temporary decline in the carrying value of the investment. In its evaluation, the Company considers, among other items, recent and expected financial performance and returns, impairments recorded by the investee and the capital structure of the investee. When the Company determines the estimated fair value of an investment is below carrying value and the decline is other-than-temporary, the investment is written down to its estimated fair value. Actual results may vary from the Company’s estimates due to the uncertainty regarding projected financial performance, the severity and expected duration of declines in value and the available liquidity in the capital markets to support the continuing operations of the investee, among other factors. Although the Company believes its assumptions and estimates are reasonable, the investee’s actual performance compared with the estimates could produce different results and

9


lead to additional impairment charges in future periods. During the three months ended March 31, 2020 and 2019, the Company did not recognize any impairment charges related to its 50% or less owned companies.

Income Taxes. During the three months ended March 31, 2020, the Company’s effective income tax rate of 25.2% was primarily due to taxes provided on income attributable to noncontrolling interests, foreign sourced income not subject to U.S. income taxes, foreign taxes not creditable against U.S. income taxes, and the adjustment for the acquisition of the remaining minority membership interest in Falcon Global Holdings LLC (“Falcon Global Holdings”) (see “Note 10. Stockholder’s Equity”).

Accumulated Other Comprehensive Income (Loss). The components of accumulated other comprehensive loss were as follows (in thousands):

 

 

 

SEACOR Marine Holdings Inc.

Stockholders’ Equity

 

 

Noncontrolling Interests

 

 

 

 

 

 

 

Foreign

Currency

Translation

Adjustments

 

 

Derivative

Losses on

Cash Flow

Hedges, net

 

 

Total

 

 

Foreign

Currency

Translation

Adjustments

 

 

Derivative

Income

(Losses) on

Cash Flow

Hedges, net

 

 

Other

Comprehensive

Loss

 

December 31, 2019

 

$

4,685

 

 

$

(3,137

)

 

$

1,548

 

 

$

(1,445

)

 

$

(11

)

 

$

6,716

 

Other comprehensive loss

 

 

(2,528

)

 

 

(1,991

)

 

 

(4,519

)

 

 

 

 

 

 

 

 

(4,519

)

Three months ended March 31, 2020

 

$

2,157

 

 

$

(5,128

)

 

$

(2,971

)

 

$

(1,445

)

 

$

(11

)

 

$

2,197

 

 

Loss Per Share. Basic loss per common share of the Company is computed based on the weighted average number of common shares and warrants to purchase common shares at an exercise price of $0.01 per share (“Warrants”) issued and outstanding during the relevant periods. The Warrants are included in the basic loss per common share because the shares issuable upon exercise of the Warrants are issuable for de minimis cash consideration and therefore not anti-dilutive. Diluted loss per common share of the Company is computed based on the weighted average number of common shares and Warrants issued and outstanding plus the effect of other potentially dilutive securities through the application of the treasury stock method and the if-converted method that assumes all common shares have been issued and outstanding during the relevant periods pursuant to the conversion of the Convertible Senior Notes. For both the three months ended March 31, 2020 and 2019, diluted earnings per common share of the Company excluded 2,183,708 common shares, respectively, issuable pursuant to the Company’s Convertible Senior Notes (see “Note 5. Long-Term Debt”) as the effect of their inclusion in the computation would be anti-dilutive. In addition, for the three months ended March 31, 2020 and 2019, diluted loss per common share of the Company excluded 461,363 and 129,080 shares of restricted stock, respectively, and 921,069 and 791,816 shares of stock, respectively, issuable upon exercise of outstanding stock options as the effect of their inclusion in the computation would be anti-dilutive.

 

2.TRANSFORMATION, FACILITY RESTRUCTURING AND SEVERANCE CHARGES

 

Due to the highly competitive nature of the Company’s business and the continuing losses incurred over the last few years, the Company continues to reduce its overall cost structure and workforce to better align the Company with current activity levels. The ongoing transformation plan, which began in the third quarter of 2019 and is expected to extend through the second quarter of 2020 (the “Transformation Plan”), includes a workforce reduction, organization restructuring, facility consolidations and other cost reduction measures and efficiency initiatives across the Company’s geographic regions. The Transformation Plan was initiated to reduce the Company’s overall cost structure to better align with current activity levels of oil and gas exploration and production, and the Company continues to evaluate additional opportunities for further cost reductions to adapt to changing conditions caused by COVID-19.

 

In connection with the Transformation Plan, the Company recognized restructuring and transformation charges of $0.5 million for the three months ended March 31, 2020, which include severance charges of $0.5 million and other restructuring charges of less than $0.1 million. Other restructuring charges included contract termination costs, relocation and other associated costs. The restructuring and transformation charges are reflected in the Company’s general and administration expense.

10


 

The components of restructuring charges by segment for the three months ended March 31, 2020 were as follows (in thousands):

 

 

 

United

States

(primarily

Gulf of

Mexico)

 

 

Africa

(primarily

West

Africa)

 

 

Middle

East

and Asia

 

 

Latin

America

 

 

Europe

(primarily

North

Sea)

 

 

Total

 

Transformation Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance Charges

 

$

128

 

 

$

 

 

$

235

 

 

$

 

 

$

110

 

 

$

473

 

Other Charges

 

 

22

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

51

 

Total Charges

 

$

150

 

 

$

 

 

$

264

 

 

$

 

 

$

110

 

 

$

524

 

 

The severance and other restructuring charges gave rise to certain liabilities, the components of which are summarized in the following table (in thousands), and largely relate to liabilities accrued as part of the 2019 Transformation Plan that will be paid pursuant to the respective arrangements and statutory requirements.

 

 

 

United

States

(primarily

Gulf of

Mexico)

 

 

Africa

(primarily

West

Africa)

 

 

Middle

East

and Asia

 

 

Latin

America

 

 

Europe

(primarily

North

Sea)

 

 

Total

 

Transformation Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance Liability

 

$

84

 

 

$

 

 

$

 

 

$

 

 

$

28

 

 

$

112

 

Other Liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liability

 

$

84

 

 

$

 

 

$

 

 

$

 

 

$

28

 

 

$

112

 

 

 

The following table is a summary of the cumulative restructuring and reorganization cost incurred to date in operating charges and the estimated remaining restructuring and reorganization costs to be incurred as of March 31, 2020 (in thousands).

 

 

 

Transformation Plan

 

Cumulative restructuring costs incurred to date in operating charges

 

$

4,242

 

Estimated additional restructuring costs to be incurred

 

 

1,501

 

Total restructuring and reorganization costs incurred and to be incurred

 

$

5,743

 

 

3.EQUIPMENT ACQUISITIONS AND DISPOSITIONS

During the three months ended March 31, 2020, capital acquisitions were $11.2 million. Equipment deliveries during the three months ended March 31, 2020 include one platform supply vessel (“PSV”).   

 

During the three months ended March 31, 2020, the Company sold two anchor handling towing supply (“AHTS”) vessels and one specialty vessel previously removed from service, two FSVs and other equipment for $3.1 million ($2.2 million cash and $0.9 million in previously received deposits) and gains of $1.1 million. In addition, the Company received $2.1 million in deposits for future sales.

4.

INVESTMENTS, AT EQUITY AND ADVANCES TO 50% OR LESS OWNED COMPANIES

SEACOSCO. The Company, through SEACOR Offshore Asia LLC, an indirect wholly-owned subsidiary of SEACOR Marine (“SEACOR Offshore Asia”), owns an unconsolidated 50% interest in SEACOSCO Offshore LLC (“SEACOSCO”). China Shipping Fan Tai Limited (“CSFT”) and China Shipping Industry (Hong Kong) Co., Limited (“CSIHK”) own the other 50% interest in SEACOSCO.

Effective May 31, 2019, SEACOR Offshore Asia, CSFT, CSIHK and COSCO Shipping Heavy Industry (Guangdong) Co., Ltd. (the “Shipyard”), the shipbuilder and lender under deferred payment agreements (“DPAs”) that are secured by the PSVs acquired by SEACOSCO, entered into a Memorandum of Understanding (“MOU”) pursuant to which (i) the Shipyard agreed to not take any action with respect to any existing defaults

11


under the DPAs until August 31, 2019, (ii) SEACOR Offshore Asia was authorized to provide, in its sole discretion, shareholder loans to SEACOSCO and/or its subsidiaries, in an aggregate amount of $13.0 million, in respect of working capital or other payment obligations at an interest rate of 15% per annum and, subject to the priority of the indebtedness under the DPAs, the shareholder loans will have senior priority to any and all other debts of SEACOSCO and/or its subsidiaries, (“SEACOR Shareholder Loans”), (iii) the parties set out the non-binding principal terms and conditions for SEACOR Offshore Asia’s potential acquisition of the 50% interest in SEACOSCO owned by CSFT and CSIHK and (iv) in connection with such acquisition, SEACOR Offshore Asia or its nominee may acquire from the Shipyard two additional PSVs that had been under options held by SEACOSCO.

Management remains in discussions with the Shipyard, CSFT and CSIHK with respect to the other transactions contemplated by the MOU and the ongoing funding requirements of SEACOSCO. Subject to these ongoing discussions, effective January 2020, SEACOSCO ceased all principal and interest payments in connection with DPAs and has approximately $3.7 million in outstanding payments as of May 1, 2020. As of March 31, 2020, the balance on the SEACOR Shareholder Loans was $13.0 million, which is the aggregate amount of SEACOR Shareholder Loans provided, and SEACOR Marine recognized interest income of $1.0 million. As of March 31, 2020, an additional $5.6 million was due from SEACOSCO to the Company related to a Ship Management Agreement.

5.

LONG-TERM DEBT

The Company’s long-term debt obligations as of March 31, 2020 and December 31, 2019 were as follows (in thousands):

 

 

 

March 31, 2020

 

 

December 31, 2019

 

Recourse Long-term debt(1):

 

 

 

 

 

 

 

 

Convertible Senior Notes

 

$

125,000

 

 

$

125,000

 

SEACOR Marine Foreign Holdings Syndicated Credit Facility

 

 

110,500

 

 

 

113,750

 

Sea-Cat Crewzer III Term Loan Facility

 

 

22,891

 

 

 

24,128

 

SEACOR Alps

 

 

10,440

 

 

 

10,534

 

SEACOR 88/888 Term Loan

 

 

5,500

 

 

 

5,500

 

BNDES Equipment Construction Finance Notes

 

 

2,844

 

 

 

3,332

 

Total recourse Long-term debt

 

 

277,175

 

 

 

282,244

 

Non-recourse Long-term debt(2):

 

 

 

 

 

 

 

 

Falcon Global USA Term Loan Facility

 

 

102,349

 

 

 

102,349

 

Falcon Global USA Revolver

 

 

15,000

 

 

 

15,000

 

Windcat Workboats Facilities

 

 

23,919

 

 

 

24,730

 

SEACOR 88/888 Term Loan

 

 

5,500

 

 

 

5,500

 

Total non-recourse Long-term debt

 

 

146,768

 

 

 

147,579

 

Total principal due for long-term debt

 

 

423,943

 

 

 

429,823

 

Current portion due within one year

 

 

(37,084

)

 

 

(17,802

)

Unamortized debt discount

 

 

(24,865

)

 

 

(26,343

)

Deferred financing costs

 

 

(5,265

)

 

 

(5,427

)

Long-term debt, less current portion

 

$

356,729

 

 

$

380,251

 

 

 

(1)

Recourse debt represents debt issued by SEACOR Marine and/or its subsidiaries and guaranteed by SEACOR Marine as defined in the relevant debt agreements.

 

(2)

Non-recourse debt represents debt issued by the Company’s Consolidated Subsidiaries with no recourse to SEACOR Marine, other than certain limited support obligations as defined in the respective debt agreements, which in aggregate are not considered to be material to the Company’s business and financial condition.

12


As of March 31, 2020, the Company was in compliance with all debt covenants except for a covenant included in the Sea-Cat Crewzer III Term Loan Facility, which is guaranteed by SEACOR Marine. Under the facility, SEACOR Marine is required to maintain a net financial debt to equity ratio of 70%. As of March 31, 2020, SEACOR Marine’s net financial debt to equity ratio was 72%. The Company and the lenders under this facility are in discussions to waive or otherwise modify the terms of this guarantor covenant. Sea-Cat Crewzer III LLC, an indirect wholly-owned subsidiary of SEACOR Marine and the borrower under the Sea-Cat Crewzer III Term Loan Facility, is otherwise in compliance with all financial covenants and payment obligations under this facility, as is SEACOR Marine. The aforementioned non-compliance does not cause any cross defaults under the Company’s other credit facilities or the immediate acceleration of the Sea-Cat Crewzer III Term Loan Facility.

Until a waiver or modification of the terms of this guarantor covenant is received from the lenders under this facility, the Company has classified the balance of this debt as current.  The Company expects to receive such a waiver or modification in the second quarter of 2020 and upon receipt will reclassify the debt to long term.

On February 7, 2020, SEACOR Marine, Falcon Global USA LLC, an indirect wholly-owned subsidiary of SEACOR Marine (“FGUSA”), and certain subsidiaries of FGUSA, entered into a consent, agreement and an omnibus amendment (the “Omnibus Amendment”) to that certain (i) $131.1 million term and revolving loan facility, dated as of February 8, 2018, with a syndicate of lenders administered by JP Morgan Chase Bank, N.A. (the “Credit Facility”) and (ii) obligation guaranty issued by SEACOR Marine, dated February 8, 2018, pursuant to which SEACOR Marine guarantees certain limited obligations of FGUSA under the Credit Facility (the “Guaranty”). The Omnibus Amendment provides for, among other things, (i) the extension from March 2020 to March 2021 of the commencement of monthly repayment of the term loan, with payments being the lesser of (a) $0.8 million per month and (b) the amount outstanding under the term loan and (ii) the extension of the term of the Guaranty for an additional one year from February 8, 2020 to February 8, 2021.

On April 29, 2020, FGUSA and certain subsidiaries of FGUSA, entered into a sixth consent and agreement (the “Sixth Consent and Agreement”) to the Credit Facility, which provides that, among other things, (i) the deadline for delivery of the audited financial statements of FGUSA and its consolidated subsidiaries for the fiscal year ended December 31, 2019 (“FGUSA 2019 Audited Financial Statements”) was extended from April 29, 2020 to May 31, 2020, (ii) the FGUSA 2019 Audited Financial Statements are not required to be delivered without a “going concern” or like qualification, commentary or exception, and (iii) the deadline for delivery of certain physical vessel appraisals was extended to December 31, 2020.

On March 3, 2020, Windcat Workboats Holdings Ltd, an indirect wholly-owned subsidiary of SEACOR Marine (“Windcat Workboats”), together with certain other obligors that are its subsidiaries (collectively, the “Obligors”) entered into an agreement (the “RCF Agreement”) with Coöperatieve Rabobank U.A. (the “Agent”) to amend the €25 million revolving credit facility agreement, originally dated as of May 24, 2016, as amended and restated from time to time. Amended provisions included, among other things, the extension of the maturity date from December 31, 2021 to December 31, 2022. Applicable fees in the amount of €0.1 million were paid in conjunction with the RCF Amendment and amortized over the credit facility term. As of March 31, 2020, the Company has $2.3 million available under its Windcat Workboats credit facilities.

Letters of Credit. As of March 31, 2020, the Company had outstanding letters of credit of $0.4 million securing lease obligations and labor and performance guaranties.

6.

LEASES

As of March 31, 2020, the Company leased in two AHTS vessels, two liftboats, one FSV and certain facilities and other equipment. The leases typically contain purchase and renewal options or rights of first refusal with respect to the sale or lease of the equipment. As of March 31, 2020, the remaining lease terms of the vessels have remaining durations ranging from eight to 20 months. The lease terms of the other equipment range in duration from two to 321 months.

13


As of March 31, 2020, future minimum payments for operating leases for the remainder of 2020 and the years ended December 31 were as follows (in thousands):

 

Remainder of 2020

 

$

11,489

 

2021

 

 

7,127

 

2022

 

 

669

 

2023

 

 

622

 

2024

 

 

697

 

Years subsequent to 2024

 

 

4,439

 

 

 

 

25,043

 

Interest component

 

 

(3,825

)

 

 

 

21,218

 

Current portion of long-term operating lease liabilities

 

 

13,359

 

Long-term operating lease liabilities

 

$

7,859

 

 

For the three months ended March 31, the components of lease expense were as follows (in thousands):

 

 

 

2020

 

 

2019

 

Operating lease expense

 

$

3,275

 

 

$

3,612

 

Short-term lease expense (lease duration of twelve months or less at lease commencement)

 

 

132

 

 

 

525

 

 

 

$

3,407

 

 

$

4,137

 

 

For the three months ended March 31, 2020, other information related to operating leases were as follows (in thousands except weighted average data):

 

 

 

2020

 

Operating cash flows from operating leases

 

$

3,838

 

Right-of-use assets obtained for operating lease liabilities

 

$

9

 

Weighted average remaining lease term, in years

 

 

4.9

 

Weighted average discount rate

 

 

4.2

%

 

7.

INCOME TAXES

The following table reconciles the difference between the statutory federal income tax rate for the Company and the effective income tax rate on continuing operations for the three months ended March 31, 2020:

 

Statutory rate

 

 

21.0

 

%

Foreign taxes not creditable against U.S. income tax

 

 

(3.7

)

 

Falcon Global Acquisition

 

 

12.0

 

 

Noncontrolling interests

 

 

(3.4

)

 

Other

 

 

(0.7

)

 

 

 

 

25.2

 

%

  

In response to the COVID-19 pandemic, in March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was passed by the U.S. Congress and signed into law by the president. The CARES Act includes a number of provisions that amended the current U.S. tax regime applicable to the Company, including allowing net operating losses generated in 2018 through 2020 to be carried back for up to five years. The Company continues to assess the changes to U.S. tax laws included in the CARES Act but believes the changes included in the CARES Act may result in the recognition of a meaningful U.S. tax asset.

 

14


8.

DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

Derivative instruments are classified as either assets or liabilities based on their individual fair values. The fair values of the Company’s derivative instruments were as follows (in thousands):

 

 

 

March 31, 2020

 

 

December 31, 2019

 

 

 

 

Derivative

Asset

 

 

Derivative

Liability

 

 

Derivative

Asset

 

 

Derivative

Liability

 

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap agreements (cash flow hedges)

 

$

 

 

$

4,893

 

 

$

 

 

$

3,009

 

 

 

 

 

 

 

 

4,893

 

 

 

 

 

 

3,009

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion option liability on Convertible Senior Notes

 

 

 

 

 

91

 

 

 

 

 

 

5,205

 

 

 

 

$

 

 

$

4,984

 

 

$

 

 

$

8,214

 

 

 

Cash Flow Hedges. The Company and certain of its 50% or less owned companies have interest rate swap agreements designated as cash flow hedges. By entering into these interest rate swap agreements, the Company and its 50% or less owned companies have converted the variable LIBOR or EURIBOR component of certain of their outstanding borrowings to a fixed interest rate. The Company recognized immaterial losses on derivative instruments designated as cash flow hedges during the three months ended March 31, 2020. As of March 31, 2020, the interest rate swaps held by the Company and its 50% or less owned companies were as follows:

 

Windcat Workboats had two interest rate swap agreements maturing in 2021 that call for the Company to pay a fixed rate of interest of (0.03%) plus margin on the aggregate notional value of €15.0 million (approximately $16.5 million) and receive a variable interest rate based on EURIBOR on the aggregate notional value;

 

SEACOR Marine Foreign Holdings Inc., an indirect wholly-owned subsidiary of SEACOR Marine (“SMFH” or “SEACOR Marine Foreign Holdings”), had an interest rate swap agreement maturing in 2023 that calls for SMFH to pay a fixed rate of interest of 3.32% per annum on the amortized notional value of $8.5 million and receive a variable interest rate based on LIBOR on the amortized notional value;

 

SMFH had an interest rate swap agreement maturing in 2023 that calls for SMFH to pay a fixed rate of interest of 3.195% per annum on the amortized notional value of $48.5 million and receive a variable interest rate based on LIBOR on the amortized notional value; and

 

SEACOR 88 LLC and SEACOR 888 LLC, both indirect wholly-owned subsidiaries of SEACOR Marine (collectively, “SEACOR 88/888”), have an interest rate swap agreement maturing in 2023 that calls for SEACOR 88/888 to pay a fixed rate of interest of 3.2% per annum on the amortized notional value of $5.5 million and receive a variable interest rate based on LIBOR on the amortized notional value. 

Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments for the three months ended March 31, 2020 as follows (in thousands):

 

 

 

2020

 

 

2019

 

Conversion option liability on Convertible Senior Notes

 

$

5,114

 

 

$

(925

)

Interest rate swap agreements

 

 

 

 

 

 

 

 

$

5,114

 

 

$

(925

)

 

15


The conversion option liability relates to the bifurcated embedded conversion option in the Convertible Senior Notes issued to investment funds managed and controlled by The Carlyle Group (“Carlyle”). See “Note 9. Fair Value Measurements”.

The Company and certain of its 50% or less owned companies have entered into interest rate swap agreements that did not qualify as cash flow hedges for the general purpose of providing protection against increases in interest rates, which might lead to higher interest costs. As of March 31, 2020, these interest rate swaps held by the Company or its 50% or less owned companies were as follows:

 

SEACOR OSV Partners I LP (“OSV Partners”) has two interest rate swap agreements with maturities in 2020 that call for OSV Partners to pay a fixed rate of interest ranging from 1.89% to 2.27% per annum on the aggregate amortized notional value of $22.0 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value; and

 

Mantenimiento Express Maritimo, S.A.P.I. de C.V. (“MexMar”), in which the Company has a 49% noncontrolling interest, has five interest rate swap agreements with maturities in 2023 that call for MexMar to pay a fixed rate of interest ranging from 1.71% to 2.10% per annum on the aggregate amortized notional value of $79.7 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value.

 

9.

FAIR VALUE MEASUREMENTS

The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities as of March 31, 2020 that are measured at fair value on a recurring basis were as follows (in thousands):

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Construction reserve funds

 

$

3,745

 

 

$

 

 

$

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments

 

 

 

 

 

4,893

 

 

 

 

Conversion Option Liability on Convertible Senior Notes

 

 

 

 

 

 

 

 

91

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Construction reserve funds

 

$

12,893

 

 

$

 

 

$

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments

 

 

 

 

 

3,009

 

 

 

 

Conversion Option Liability on Convertible Senior Notes

 

 

 

 

 

 

 

 

5,205

 

 

Level 3 Measurement. The fair value of the conversion option liability on the Convertible Senior Notes is estimated with significant inputs that are both observable and unobservable in the market and therefore is considered a Level 3 fair value measurement. The Company used a binomial lattice model that assumes the holders will maximize their value by finding the optimal decision between redeeming at the redemption price or converting into shares of Common Stock.  This model estimates the fair value of the conversion option as the differential in the fair value of the notes including the conversion option compared with the fair value of the notes

16


excluding the conversion option. The significant observable inputs used in the fair value measurement include the price of Common Stock and the risk-free interest rate. The significant unobservable inputs are the estimated Company credit spread and Common Stock volatility, which were based on comparable companies in the transportation and energy industries. 

The estimated fair values of the Company’s other financial assets and liabilities as of March 31, 2020 were as follows (in thousands):

 

 

 

 

 

 

 

Estimated Fair Value

 

 

 

Carrying

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

72,573

 

 

$

72,573

 

 

$

 

 

$

 

Investments, at cost, in 50% or less owned companies (included in other assets)

 

 

132

 

 

see below

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, including current portion

 

 

393,813

 

 

 

 

 

 

350,081

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

87,047

 

 

$

87,047

 

 

$

 

 

$

 

Investments, at cost, in 50% or less owned companies (included in other assets)

 

 

132

 

 

see below

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, including current portion

 

 

398,053

 

 

 

 

 

 

380,815

 

 

 

 

 

The carrying value of cash, cash equivalents and restricted cash approximates fair value. The fair value of the Company’s long-term debt was estimated based upon quoted market prices or by using discounted cash flow analysis based on estimated current rates for similar types of arrangements. It was not practicable to estimate the fair value of certain of the Company’s investments, at cost, in 50% or less owned companies because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs. Considerable judgment was required in developing certain of the estimates of fair value including the consideration of the recent COVID-19 pandemic that has caused significant volatility in U.S. and international markets, and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

The Company’s other assets and liabilities that were measured at fair value during the three months ended March 31, 2020 were as follows (in thousands);

 

2020

 

Level 1

 

 

Level 2

 

 

Level 3

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

 

 

 

 

 

 

 

Liftboats

 

$

 

 

$

8,100

 

 

$

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

$

 

 

$

520

 

 

$

 

FSVs

 

 

 

 

 

1,858

 

 

 

 

 

Property and equipment. During the three months ended March 31, 2020, the Company recognized impairment charges of $9.2 million primarily associated with certain vessels. The Level 2 fair values were determined based on the sales prices of similar property and equipment as scrap value. 

10.

STOCKHOLDERS’ EQUITY

On March 20, 2020, SEACOR LB Holdings LLC, an indirect wholly-owned subsidiary of SEACOR Marine (“SEACOR LB Holdings”), entered into a membership interest purchase agreement with SEACOR Marine, Montco Offshore, LLC (“Montco”) and Lee Orgeron, the principal of Montco, pursuant to which SEACOR LB Holdings purchased the 28% minority equity interest in Falcon Global Holdings held by Montco in exchange for 900,000 shares of SEACOR Marine common stock, par value $0.01 per share, issued to Montco as

17


purchase consideration in a private placement. The purchase resulted in the Company owning 100% of Falcon Global Holdings.

 

11.

NONCONTROLLING INTERESTS IN SUBSIDIARIES

Noncontrolling interests in the Company’s consolidated subsidiaries were as follows (in thousands):

 

 

 

Noncontrolling

Interests

 

 

March 31, 2020

 

 

December 31,

2019

 

Falcon Global Holdings

 

0%

 

(1)

 

 

 

$

21,119

 

Other

 

1.8%

 

 

 

339

 

 

 

313

 

 

 

 

 

 

 

$

339

 

 

$

21,432

 

 

(1)

Before March 20, 2020, noncontrolling interest was 28%.

Falcon Global Holdings.  Prior to March 20, 2020, the Company held 72% of the equity interest in Falcon Global Holdings. On March 20, 2020, the Company completed the acquisition of the 28% minority interest in Falcon Global Holdings, resulting in the Company’s 100% ownership of Falcon Global Holdings. Consideration paid by the Company was 900,000 shares of Common Stock issued in a private placement to the seller of the minority interest, Montco.

During the three months ended March 31, 2020, the net loss of Falcon Global Holdings was $14.5 million, including non-cash impairment charges of $9.2 million. These charges were recognized concurrently with the acquisition of the minority interest with $4.1 million of net loss attributable to noncontrolling interest.

 

12.

COMMITMENTS AND CONTINGENCIES

As of March 31, 2020, the Company’s unfunded capital commitments were $34.2 million for three PSVs and two CTVs. All of the unfunded capital commitments are payable during the remainder of 2020. The Company has indefinitely deferred an additional $16.3 million of orders with respect to two FSVs that the Company had previously reported unfunded capital commitments. 

On April 20, 2020, the vessel SEACOR Andes was delivered, which is the second vessel of a purchase of three vessels that was contracted in January 2019. The vessel SEACOR Alps was delivered in September 2019. The third contracted vessel, the SEACOR Atlas, is expected to be delivered in the second quarter of 2020.

On April 17, 2020, Hull 488, which was under construction at the Gulf Craft Shipyard, was sold by the Company for $14.5 million resulting in a gain of $2.1 million, which will be recognized in the second quarter of 2020.

In 2015, the Brazilian Federal Revenue Office issued a tax-deficiency notice to Seabulk Offshore do Brasil Ltda (“Seabulk Offshore do Brasil”), an indirect wholly-owned subsidiary of SEACOR Marine, with respect to certain profit participation contributions (“PIS”) and social security financing contributions (“COFINS”) requirements alleged to be due from Seabulk Offshore do Brasil (“Deficiency Notice”). In February 2015, Company deposited with the relevant Brazilian court an amount equal to USD $1.2 million and appealed the Deficiency Notice on the basis that such contributions were not applicable in the circumstances of a 70%/30% cost allocation structure.  The case was remitted to the second instance and is currently awaiting trial. Recently, a local Brazilian law was enacted that supports the Company’s position that such contribution requirements are not applicable, but it is uncertain whether such law will be taken into consideration with respect to administrative proceedings commenced prior to the enactment of the law. Accordingly, the success of Seabulk Offshore do Brasil in the administrative proceedings cannot be assured. The potential range of levies arising from the Deficiency Notice is R$12.8 million - R$17.5 million (USD $2.3 million – USD $3.2 million based on the exchange rate as of March 31, 2020). 

In the normal course of its business, the Company becomes involved in various other litigation matters including, among others, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in

18


its financial statements related thereto where appropriate. It is possible that a change in the Company’s estimates of that exposure could occur, but the Company does not expect such changes in estimated costs would have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

13.

STOCK BASED COMPENSATION

Transactions in connection with the Company’s 2017 Equity Incentive Plan during the three months ended March 31, 2020 were as follows:

 

Restricted Stock Activity:

 

 

 

 

Outstanding as of December 31, 2019

 

 

303,609

 

Granted

 

 

271,950

 

Vested

 

 

112,699

 

Forfeited

 

 

1,497

 

Outstanding as of March 31, 2020

 

 

461,363

 

 

 

 

 

 

Stock Option Activity:

 

 

 

 

Outstanding as of December 31, 2019

 

 

913,569

 

Granted

 

 

37,500

 

Exercised

 

 

 

Forfeited

 

 

30,000

 

Outstanding as of March 31, 2020

 

 

921,069

 

 

For the three months ended March 31, 2020, the Company acquired for treasury 24,715 shares of Common Stock for an aggregate purchase price of $0.2 million from its employees to cover their tax withholding obligations upon the lapsing of restrictions on share awards. These shares were purchased in accordance with the terms of the Company’s 2017 Equity Incentive Plan.    

 

19


14.SEGMENT INFORMATION

The Company’s segment presentation and basis of measurement of segment profit or loss are as previously described in the 2019 Annual Report. Certain reclassifications of prior period information have been made to conform the current period’s reportable segment presentation as a result of the Company’s presentation of Discontinued Operations (see “Note 15. Discontinued Operations”). The following tables summarize the operating results, capital expenditures and assets of the Company’s reportable segments for the periods indicated (in thousands):

 

 

 

United

States

(primarily

Gulf of

Mexico)

 

 

Africa

(primarily

West

Africa)

 

 

Middle

East

and Asia

 

 

Latin

America

 

 

Europe,

Continuing

Operations

 

 

Total

 

For the Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

4,375

 

 

$

11,095

 

 

$

11,767

 

 

$

3,396

 

 

$

8,657

 

 

$

39,290

 

Bareboat charter

 

 

724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

724

 

Other marine services

 

 

642

 

 

 

167

 

 

 

420

 

 

 

149

 

 

 

351

 

 

 

1,729

 

 

 

 

5,741

 

 

 

11,262

 

 

 

12,187

 

 

 

3,545

 

 

 

9,008

 

 

 

41,743

 

Direct Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

2,928

 

 

 

2,695

 

 

 

3,811

 

 

 

1,215

 

 

 

3,057

 

 

 

13,706

 

Repairs and maintenance

 

 

617

 

 

 

1,435

 

 

 

1,246

 

 

 

392

 

 

 

1,114

 

 

 

4,804

 

Drydocking

 

 

1,057

 

 

 

8

 

 

 

414

 

 

 

(114

)

 

-

 

 

 

1,365

 

Insurance and loss reserves

 

 

135

 

 

 

193

 

 

 

339

 

 

 

69

 

 

 

203

 

 

 

939

 

Fuel, lubes and supplies

 

 

524

 

 

 

472

 

 

 

665

 

 

 

135

 

 

 

271

 

 

 

2,067

 

Other

 

 

79

 

 

 

571

 

 

 

683

 

 

 

305

 

 

 

101

 

 

 

1,739

 

 

 

 

5,340

 

 

 

5,374

 

 

 

7,158

 

 

 

2,002

 

 

 

4,746

 

 

 

24,620

 

Direct Vessel Profit

 

$

401

 

 

$

5,888

 

 

$

5,029

 

 

$

1,543

 

 

$

4,262

 

 

 

17,123

 

Other Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expense

 

$

2,138

 

 

$

1,126

 

 

$

45

 

 

$

9

 

 

$

89

 

 

 

3,407

 

Administrative and general

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,765

 

Depreciation and amortization

 

 

5,358

 

 

 

2,604

 

 

 

3,790

 

 

 

899

 

 

 

2,350

 

 

 

15,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,173

 

Gain on Asset Dispositions and Impairments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,572

)

Operating Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(24,622

)

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and Equipment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical Cost

 

 

256,059

 

 

 

199,242

 

 

 

281,767

 

 

 

74,308

 

 

 

118,888

 

 

 

930,264

 

Accumulated Depreciation

 

 

(120,599

)

 

 

(52,225

)

 

 

(67,829

)

 

 

(17,271

)

 

 

(54,987

)

 

 

(312,911

)

 

 

$

135,460

 

 

$

147,017

 

 

$

213,938

 

 

$

57,037

 

 

$

63,901

 

 

$

617,353

 

Total Assets (1)

 

$

191,611

 

 

$

158,660

 

 

$

245,279

 

 

$

134,171

 

 

$

106,412

 

 

$

836,133

 

 

(1)

Total assets by region does not include corporate assets of $130,403 as of March 31, 2020.

 

 

 

20


 

 

United

States

(primarily

Gulf of

Mexico)

 

 

Africa

(primarily

West

Africa)

 

 

Middle

East

and Asia

 

 

Latin

America

 

 

Europe,

Continuing

Operations

 

 

Total

 

For the Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

8,005

 

 

$

10,773

 

 

$

12,499

 

 

$

4,922

 

 

$

4,620

 

 

$

40,819

 

Bareboat charter

 

 

 

 

 

 

 

 

 

 

 

1,143

 

 

 

 

 

 

1,143

 

Other

 

 

1,132

 

 

 

(637

)

 

 

228

 

 

 

635

 

 

 

1,590

 

 

 

2,948

 

 

 

 

9,137

 

 

 

10,136

 

 

 

12,727

 

 

 

6,700

 

 

 

6,210

 

 

 

44,910

 

Direct Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

4,503

 

 

 

3,867

 

 

 

4,254

 

 

 

1,556

 

 

 

2,443

 

 

 

16,623

 

Repairs and maintenance

 

 

2,778

 

 

 

1,184

 

 

 

2,193

 

 

 

335

 

 

 

1,094

 

 

 

7,584

 

Drydocking

 

 

1,994

 

 

 

338

 

 

 

159

 

 

 

79

 

 

 

-

 

 

 

2,570

 

Insurance and loss reserves

 

 

592

 

 

 

213

 

 

 

327

 

 

 

135

 

 

 

147

 

 

 

1,414

 

Fuel, lubes and supplies

 

 

683

 

 

 

754

 

 

 

709

 

 

 

428

 

 

 

232

 

 

 

2,806

 

Other

 

 

90

 

 

 

2,106

 

 

 

1,100

 

 

 

521

 

 

 

352

 

 

 

4,169

 

 

 

 

10,640

 

 

 

8,462

 

 

 

8,742

 

 

 

3,054

 

 

 

4,268

 

 

 

35,166

 

Direct Vessel Profit, from Continuing Operations

 

$

(1,503

)

 

$

1,674

 

 

$

3,985

 

 

$

3,646

 

 

$

1,942

 

 

$

9,744

 

Other Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expense

 

$

2,911

 

 

$

785

 

 

$

46

 

 

$

1

 

 

$

394

 

 

$

4,137

 

Administrative and general

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,812

 

Depreciation and amortization

 

 

5,498

 

 

 

2,356

 

 

 

4,249

 

 

 

1,936

 

 

 

2,058

 

 

 

16,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,046

 

Loss on Asset Dispositions and Impairments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

268

 

Operating Loss, for Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(21,034

)

As of March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and Equipment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical Cost

 

 

416,559

 

 

 

207,167

 

 

 

310,297

 

 

 

119,699

 

 

 

114,382

 

 

 

1,168,104

 

Accumulated Depreciation

 

 

(223,720

)

 

 

(59,652

)

 

 

(85,627

)

 

 

(60,444

)

 

 

(48,796

)

 

 

(478,239

)

 

 

$

192,839

 

 

$

147,515

 

 

$

224,670

 

 

$

59,255

 

 

$

65,586

 

 

$

689,865

 

Total Assets (1)

 

$

330,938

 

 

$

160,624

 

 

$

266,007

 

 

$

128,421

 

 

$

91,047

 

 

$

977,037

 

 

(1)

Total assets by region does not include corporate assets of $135,312 as of March 31, 2019.

 

The Company’s investments in 50% or less owned companies, which are accounted for under the equity method, also contribute to its consolidated results of operations. As of March 31, 2020 and 2019, the Company’s investments, at equity and advances to 50% or less owned companies in its other 50% or less owned companies were $125.0 million and $124.7 million, respectively. Equity in (losses) earnings of 50% or less owned companies for the three months ended March 31, 2020 and 2019 were ($0.2) million and ($3.4) million, respectively.

21


 

15.DISCONTINUED OPERATIONS

 

On December 2, 2019, the Company completed the sale of its North Sea standby safety business, which was previously classified as assets held for sale. Following the completion of the sale, the Company has no continuing involvement in this business, which is considered a strategic shift in the Company’s operations. Summarized selected operating result of the Company’s assets, previously classified as held for sale were as follows (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

Boston Putford Offshore Safety Ltd

 

 

 

 

Operating Revenues:

 

 

 

 

Time charter

 

$

11,308

 

Other revenue

 

 

31

 

 

 

 

11,339

 

Costs and Expenses:

 

 

 

 

Operating

 

 

9,111

 

Direct Vessel Profit

 

 

2,228

 

 

 

 

 

 

General and Administrative Expenses

 

 

1,188

 

Lease Expense

 

 

11

 

Depreciation

 

 

1,096

 

 

 

 

2,295

 

Gain on Asset Dispositions and Impairments, Net

 

 

91

 

Operating Income

 

 

24

 

Other Income (Expense)

 

 

 

 

Interest income

 

 

3

 

Interest expense

 

 

(71

)

Foreign currency translation loss

 

 

(35

)

 

 

 

(103

)

Operating Loss Before Equity Earnings of 50% or Less Owned Companies, Net of Tax

 

 

(79

)

Income Tax Expense

 

 

 

Operating Loss Before Equity Earnings of 50% or Less Owned Companies

 

 

(79

)

Equity in Earnings of 50% or Less Owned Companies, Net of Tax

 

 

79

 

Net (Loss) Income from Discontinued Operations

 

$

 

 

 

 

22


ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters and involve significant known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Certain of these risks, uncertainties and other important factors are discussed in Item 1A. (Risk Factors) and Item 7. (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of the Company’s 2019 Annual Report. However, it should be understood that it is not possible to identify or predict all such risks, uncertainties and factors, and others may arise from time to time.  All of these forward-looking statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” and similar expressions are intended to identify forward-looking statements Forward looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. It is advisable, however, to consult any further disclosures the Company makes on related subjects in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.

Overview

The following analysis of our financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the 2019 Annual Report.

The Company provides global marine and support transportation services to offshore oil, natural gas exploration and windfarm development and production facilities worldwide. As of March 31, 2020, the Company and its joint ventures operated a diverse fleet of 147 support and specialty vessels, of which 97 were owned or leased-in, 47 were joint ventured and three were managed on behalf of unaffiliated third parties. The primary users of the Company’s services are major integrated oil companies, large independent oil and natural gas exploration and production companies and emerging independent companies, as well as windfarm operations and installation contractors.

The Company’s fleet features offshore support and specialty vessels that deliver cargo and personnel to offshore installations; handle anchors and mooring equipment required to tether rigs to the seabed; tow rigs and assist in placing them on location and moving them between regions; provide construction, well workover and decommissioning support; carry and launch equipment used underwater in drilling and well installation, maintenance and repair; and provide windfarm installation, maintenance and repair support. Additionally, the Company’s vessels provide accommodations for technicians and specialists, safety support and emergency response services. The Company’s fleet also features CTVs used primarily in windfarm operations.

The Company operates its fleet in five principal geographic regions: the U.S., primarily in the Gulf of Mexico; Africa, primarily in West Africa; the Middle East and Asia; Latin America, primarily in Mexico, Brazil and Guyana; and Europe, primarily in the North Sea. The Company’s vessels are highly mobile and regularly and routinely move between countries within a geographic region. In addition, the Company’s vessels are also redeployed among the geographic regions, subject to flag restrictions, as changes in market conditions dictate. The number and type of vessels operated, their rates per day worked and their utilization levels are the key determinants of the Company’s operating results and cash flows. Unless a vessel is cold-stacked, there is little reduction in daily running costs for the vessels and, consequently, operating margins are most sensitive to changes

23


in rates per day worked and utilization. The Company manages its fleet utilizing a global network of shore side support, administrative and finance personnel.

 

 

In the recent months, oil prices have experienced record declines in response to a significant amount of anticipated oversupply in oil and natural gas caused by (i) the COVID-19 pandemic that began in late 2019 and has led to a substantial decrease in global economic activity and (ii) supply decisions principally by Russia and Saudi Arabia resulting in failure to agree on terms to maintain production limits and the ensuing influx of additional oil to an already oversupplied market. These recent declines in oil and natural gas prices come on top of prices that have, for the last few years, been below historic averages. On January 2, 2020, West Texas Intermediate (“WTI”) crude oil prices closed at a price of $61.18 per barrel. By March 31, 2020, the last trading date of the first quarter of 2020, WTI crude oil prices closed at a price of $20.48 per barrel and on April 20, 2020, the New York Mercantile Exchange (“NYMEX”) WTI oil futures price for May 2020 went “negative” to -$37.63 per barrel. While OPEC+ members have implemented production cuts, the cuts have failed to have a material positive affect on oil and natural gas prices. To the extent that the outbreak of COVID-19 continues to negatively impact demand, the Company expects there to be excess supply of oil and natural gas for the foreseeable future. This excess supply could, in turn, result in transportation and storage capacity constraints in the United States, or even the elimination of available storage.

The Company’s business is, to a large extent, tied to the level of offshore exploration, development and production activity by oil and gas companies around the world. Although the decrease in oil and natural gas prices has not had a material effect on our business to date, to the extent that oil and gas companies decide to abandon or delay offshore oil and gas projects due to the lower demand for oil and natural gas and resulting lower prices, it could have a material adverse effect on our business and financial condition.

There are a number of steps the Company can take to mitigate any adverse effects to its business stemming from the COVID-19 pandemic and the resulting depressed oil and natural gas price environment, including sales of assets, workforce reductions and other cost reduction measures. In addition, we expect to receive a meaningful amount of tax refunds over the next 12 months as a result of the changes in the current U.S. tax law included in the CARES Act.

Certain macro drivers somewhat independent of oil and natural gas prices have the ability to continue to support the Company’s business, including: (i) underspending by oil and gas producers during the current industry downturn leading to pent up demand for maintenance and growth capital expenditures; and (ii) improved extraction technologies. While alternative forms of energy may gain a foothold in the long term, for the foreseeable future, the Company believes demand for gasoline and oil will be sustained, as well as demand for electricity from natural gas.

Low oil prices and the subsequent decline in offshore exploration have forced many operators in the industry to restructure or liquidate assets. The Company continues to closely monitor the delivery of newly built offshore support vessels to the industry-wide fleet, which is creating situations of oversupply, thereby further lowering the demand for the Company’s existing offshore support vessel fleet. A continuation of (i) low customer exploration and drilling activity levels, and (ii) continued excess supply of offshore support vessels whether from laid up fleets or newly built vessels could, in isolation or together, have a material adverse effect on the Company’s business, financial position, results of operations, cash flows and growth prospects.

The Company adheres to a strategy of cold-stacking vessels (removing from active service) during periods of weak utilization in order to reduce the daily running costs of operating the fleet, primarily personnel, repairs and maintenance costs, as well as to defer some drydocking costs into future periods. The Company considers various factors in determining which vessels to cold-stack, including upcoming dates for regulatory vessel inspections and related docking requirements. The Company may maintain class certification on certain cold-stacked vessels, thereby incurring some drydocking costs while cold-stacked. Cold-stacked vessels are returned to active service when market conditions improve, or management anticipates improvement, typically leading to increased costs for drydocking, personnel, repair and maintenance in the periods immediately preceding the vessels’ return to active service. Depending on market conditions, vessels with similar

24


characteristics and capabilities may be rotated between active service and cold-stack. On an ongoing basis, the Company reviews its cold-stacked vessels to determine if any should be designated as retired and removed from service based on the vessels physical condition, the expected costs to reactivate and restore class certification, if any, and its viability to operate within current and projected market conditions. As of March 31, 2020, 12 of the Company’s 97 owned and leased-in, in-service vessels were cold-stacked worldwide, and an additional one owned vessel was retired and removed from service.

Recent Developments  

Amendment of Falcon Global Credit Agreement. On February 7, 2020, SEACOR Marine, FGUSA, and certain subsidiaries of FGUSA, entered into an Omnibus Amendment to that certain (i) Credit Facility and (ii) Guaranty. The Omnibus Amendment provides for, among other things (i) the extension from March 2020 to March 2021 of the commencement of monthly repayment of the term loan, with payments being the lesser of (a) $0.8 million per month and (b) the amount outstanding under the term loan and (ii) the extension of the term of the Guaranty for an additional one year from February 8, 2020 to February 8, 2021.

On April 29, 2020, FGUSA and certain subsidiaries of FGUSA, entered into the Sixth Consent and Agreement, which provides that, among other things, (i) the deadline for delivery of the FGUSA 2019 Audited Financial Statements is extended from April 29, 2020 to May 31, 2020, (ii) the FGUSA 2019 Audited Financial Statements are not required to be without a “going concern” or like qualification, commentary or exception, and (iii) the deadline for delivery of certain physical vessel appraisals is extended to December 31, 2020.

Sale of North Sea Standby Safety Fleet. On December 2, 2019, SEACOR Capital (UK) Limited, an indirect wholly-owned subsidiary of SEACOR Marine (“SEACAP”), completed the sale of its standby safety fleet business, which we refer to as the emergency response and rescue vessel (“ERRV”) fleet. Unless the context indicates otherwise, all of the results presented in this Quarterly Report on Form 10-Q exclude the ERRV fleet operations which are classified as discontinued operations.

Costs and Restructuring Initiatives. During the third quarter of 2019, the Company initiated certain cost reduction initiatives to better align its operating expenses with the current state of its business and the offshore marine industry, including a reduction of workforce, reorganization of the management structure, closure and/or consolidation of certain facilities and streamlining of operations. The Company expects these initiatives, which will impact all of its reportable segments, to be completed by the second quarter of 2020 and is targeting annualized recurring savings of at least $8.0 million once completed. For the three months ended March 31, 2020, the Company incurred one-time restructuring charges totaling $0.5 million related to these restructuring activities. Management continues to focus on optimizing the cost structure and regional footprint of the business to help maintain the Company’s competitiveness in the industry, improve its operating leverage and position itself to take advantage of market opportunities.

25


Consolidated Results of Operations

The sections below provide an analysis of the Company’s results of operations for the three months (“Current Year Quarter”) ended March 31, 2020 compared with the three months (“Prior Year Quarter”) ended March 31, 2019. For the periods indicated, the Company’s consolidated results of operations were as follows (in thousands, except statistics): 

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rates Per Day Worked (excluding crew transfer)

 

$

11,157

 

 

 

 

 

 

$

9,796

 

 

 

 

 

Average Rates Per Day

 

$

7,163

 

 

 

 

 

 

$

7,109

 

 

 

 

 

Fleet Utilization (excluding crew transfer)

 

 

57

%

 

 

 

 

 

 

57

%

 

 

 

 

Fleet Utilization

 

 

63

%

 

 

 

 

 

 

58

%

 

 

 

 

Fleet Available Days (excluding crew transfer)

 

 

5,210

 

 

 

 

 

 

 

6,496

 

 

 

 

 

Fleet Available Days

 

 

8,668

 

 

 

 

 

 

 

9,916

 

 

 

 

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

39,290

 

 

 

94

%

 

$

40,819

 

 

 

91

%

Bareboat charter

 

 

724

 

 

 

2

%

 

 

1,143

 

 

 

3

%

Other marine services

 

 

1,729

 

 

 

4

%

 

 

2,948

 

 

 

7

%

 

 

 

41,743

 

 

 

100

%

 

 

44,910

 

 

 

100

%

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

13,706

 

 

 

33

%

 

 

16,623

 

 

 

37

%

Repairs and maintenance

 

 

4,804

 

 

 

12

%

 

 

7,584

 

 

 

17

%

Drydocking

 

 

1,365

 

 

 

3

%

 

 

2,570

 

 

 

6

%

Insurance and loss reserves

 

 

939

 

 

 

2

%

 

 

1,414

 

 

 

3

%

Fuel, lubes and supplies

 

 

2,067

 

 

 

5

%

 

 

2,806

 

 

 

6

%

Other

 

 

1,739

 

 

 

4

%

 

 

4,169

 

 

 

9

%

 

 

 

24,620

 

 

 

59

%

 

 

35,166

 

 

 

78

%

Administrative and general

 

 

10,765

 

 

 

26

%

 

 

10,812

 

 

 

24

%

Depreciation and amortization

 

 

15,001

 

 

 

36

%

 

 

16,097

 

 

 

36

%

Lease expense - operating

 

 

3,407

 

 

 

8

%

 

 

4,137

 

 

 

9

%

 

 

 

53,793

 

 

 

129

%

 

 

66,212

 

 

 

147

%

Gains (Loss) on Asset Dispositions and Impairments, Net

 

 

(12,572

)

 

 

(30

%)

 

 

268

 

 

 

1

%

Operating Loss

 

 

(24,622

)

 

 

(59

%)

 

 

(21,034

)

 

 

(47

%)

Other (Expense) Income, Net

 

 

(1,799

)

 

 

(4

%)

 

 

(7,594

)

 

 

(17

%)

Loss Before from Continuing Operations Before Income Tax Benefit and Equity in Earnings of 50% or Less Owned Companies

 

 

(26,421

)

 

 

(63

%)

 

 

(28,628

)

 

 

(64

%)

Income Tax Expense (Benefit)

 

 

(6,668

)

 

 

(16

%)

 

 

(3,831

)

 

 

(9

%)

Loss from Continuing Operations Before Equity in Earnings of 50% or Less Owned Companies

 

 

(19,753

)

 

 

(47

%)

 

 

(24,797

)

 

 

(55

%)

Equity in Losses of 50% or Less Owned Companies

 

 

(239

)

 

 

(1

%)

 

 

(3,476

)

 

 

(8

%)

Loss from Continuing Operations

 

 

(19,992

)

 

 

(48

%)

 

 

(28,273

)

 

 

(63

%)

(Loss) Gain from Assets Held for Sale, Net of Tax

 

 

 

 

 

%

 

 

 

 

 

%

Net Loss

 

 

(19,992

)

 

 

(48

%)

 

 

(28,273

)

 

 

(63

%)

Net Gain (Loss) attributable to Noncontrolling Interests in Subsidiaries

 

 

(4,047

)

 

 

(10

%)

 

 

(2,724

)

 

 

(6

%)

Net Loss attributable to SEACOR Marine Holdings Inc.

 

$

(15,945

)

 

 

(38

%)

 

$

(25,549

)

 

 

(57

%)

 

Direct Vessel Profit. Direct vessel profit (defined as operating revenues less operating expenses excluding leased-in equipment, “DVP”) is the Company’s measure of segment profitability when applied to reportable segments and a non-GAAP measure when applied to individual vessels, fleet categories or the combined fleet. DVP is a critical financial measure used by the Company to analyze and compare the operating performance of its individual vessels, fleet categories, regions and combined fleet, without regard to financing decisions (depreciation and interest expense for owned vessel vs. lease expense for leased-in vessels). DVP is also useful when comparing the Company’s fleet’s performance against those of its competitors who may have differing fleet financing structures.

26


DVP by region and by vessel class has material limitations as an analytical tool in that it does not reflect all of the costs associated with the operation of the Company’s fleet and it should not be considered in isolation or used as a substitute for the Company’s results as reported under GAAP. A reconciliation of DVP by region and by vessel class to operating loss, its most comparable GAAP measure, is included in the tables below.

The following tables summarize the operating results and property and equipment for the Company’s reportable segments for the periods indicated (in thousands, except statistics):

 

 

 

United

States

(primarily

Gulf of

Mexico)

 

 

Africa

(primarily

West

Africa)

 

 

Middle

East

and Asia

 

 

Latin

America

 

 

Europe, Continuing Operations

 

 

Total

 

For the Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rates Per Day

 

$

20,988

 

 

$

9,249

 

 

$

9,634

 

 

$

9,397

 

 

$

3,471

 

 

$

7,163

 

Fleet Utilization

 

 

11

%

 

 

89

%

 

 

73

%

 

 

93

%

 

 

73

%

 

 

63

%

Fleet Available Days

 

 

1,864

 

 

 

1,346

 

 

 

1,671

 

 

 

389

 

 

 

3,398

 

 

 

8,668

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

4,375

 

 

$

11,095

 

 

$

11,767

 

 

$

3,396

 

 

$

8,657

 

 

$

39,290

 

Bareboat charter

 

 

724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

724

 

Other marine services

 

 

642

 

 

 

167

 

 

 

420

 

 

 

149

 

 

 

351

 

 

 

1,729

 

 

 

 

5,741

 

 

 

11,262

 

 

 

12,187

 

 

 

3,545

 

 

 

9,008

 

 

 

41,743

 

Direct Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

2,928

 

 

 

2,695

 

 

 

3,811

 

 

 

1,215

 

 

 

3,057

 

 

 

13,706

 

Repairs and maintenance

 

 

617

 

 

 

1,435

 

 

 

1,246

 

 

 

392

 

 

 

1,114

 

 

 

4,804

 

Drydocking

 

 

1,057

 

 

 

8

 

 

 

414

 

 

 

(114

)

 

 

 

 

 

1,365

 

Insurance and loss reserves

 

 

135

 

 

 

193

 

 

 

339

 

 

 

69

 

 

 

203

 

 

 

939

 

Fuel, lubes and supplies

 

 

524

 

 

 

472

 

 

 

665

 

 

 

135

 

 

 

271

 

 

 

2,067

 

Other

 

 

79

 

 

 

571

 

 

 

683

 

 

 

305

 

 

 

101

 

 

 

1,739

 

 

 

 

5,340

 

 

 

5,374

 

 

 

7,158

 

 

 

2,002

 

 

 

4,746

 

 

 

24,620

 

Direct Vessel Profit

 

$

401

 

 

$

5,888

 

 

$

5,029

 

 

$

1,543

 

 

$

4,262

 

 

 

17,123

 

Other Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expense

 

$

2,138

 

 

$

1,126

 

 

$

45

 

 

$

9

 

 

$

89

 

 

 

3,407

 

Administrative and general

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,765

 

Depreciation and amortization

 

 

5,358

 

 

 

2,604

 

 

 

3,790

 

 

 

899

 

 

 

2,350

 

 

 

15,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,173

 

Gain on Asset Dispositions and Impairments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,572

)

Operating Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(24,622

)

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and Equipment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical Cost

 

 

256,059

 

 

 

199,242

 

 

 

281,767

 

 

 

74,308

 

 

 

118,888

 

 

 

930,264

 

Accumulated Depreciation

 

 

(120,599

)

 

 

(52,225

)

 

 

(67,829

)

 

 

(17,271

)

 

 

(54,987

)

 

 

(312,911

)

 

 

$

135,460

 

 

$

147,017

 

 

$

213,938

 

 

$

57,037

 

 

$

63,901

 

 

$

617,353

 

Total Assets (1)

 

$

189,249

 

 

$

158,660

 

 

$

245,279

 

 

$

134,171

 

 

$

106,412

 

 

$

833,771

 

 

(1)

Total assets by region does not include corporate assets of $130,403 as of March 31, 2020.

27


 

 

 

United

States

(primarily

Gulf of

Mexico)

 

 

Africa

(primarily

West

Africa)

 

 

Middle

East

and Asia

 

 

Latin

America

 

 

Europe, Continuing Operations

 

 

Total

 

For the Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rates Per Day

 

$

10,588

 

 

$

9,461

 

 

$

8,386

 

 

$

12,900

 

 

$

2,339

 

 

$

7,109

 

Fleet Utilization

 

 

28

%

 

 

87

%

 

 

72

%

 

 

71

%

 

 

60

%

 

 

58

%

Fleet Available Days

 

 

2,698

 

 

 

1,313

 

 

 

2,061

 

 

 

541

 

 

 

3,303

 

 

 

9,916

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

8,005

 

 

$

10,773

 

 

$

12,499

 

 

$

4,922

 

 

$

4,620

 

 

$

40,819

 

Bareboat charter

 

 

 

 

 

 

 

 

 

 

 

1,143

 

 

 

 

 

 

1,143

 

Other

 

 

1,132

 

 

 

(637

)

 

 

228

 

 

 

635

 

 

 

1,590

 

 

 

2,948

 

 

 

 

9,137

 

 

 

10,136

 

 

 

12,727

 

 

 

6,700

 

 

 

6,210

 

 

 

44,910

 

Direct Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

4,503

 

 

 

3,867

 

 

 

4,254

 

 

 

1,556

 

 

 

2,443

 

 

 

16,623

 

Repairs and maintenance

 

 

2,778

 

 

 

1,184

 

 

 

2,193

 

 

 

335

 

 

 

1,094

 

 

 

7,584

 

Drydocking

 

 

1,994

 

 

 

338

 

 

 

159

 

 

 

79

 

 

 

 

 

 

2,570

 

Insurance and loss reserves

 

 

592

 

 

 

213

 

 

 

327

 

 

 

135

 

 

 

147

 

 

 

1,414

 

Fuel, lubes and supplies

 

 

683

 

 

 

754

 

 

 

709

 

 

 

428

 

 

 

232

 

 

 

2,806

 

Other

 

 

90

 

 

 

2,106

 

 

 

1,100

 

 

 

521

 

 

 

352

 

 

 

4,169

 

 

 

 

10,640

 

 

 

8,462

 

 

 

8,742

 

 

 

3,054

 

 

 

4,268

 

 

 

35,166

 

Direct Vessel Profit, from Continuing Operations

 

$

(1,503

)

 

$

1,674

 

 

$

3,985

 

 

$

3,646

 

 

$

1,942

 

 

 

9,744

 

Other Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expense

 

$

2,911

 

 

$

785

 

 

$

46

 

 

$

1

 

 

$

394

 

 

 

4,137

 

Administrative and general

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,812

 

Depreciation and amortization

 

 

5,498

 

 

 

2,356

 

 

 

4,249

 

 

 

1,936

 

 

 

2,058

 

 

 

16,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,046

 

Loss on Asset Dispositions and Impairments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

268

 

Operating Loss, for Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(21,034

)

As of March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and Equipment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical cost

 

$

416,559

 

 

$

207,167

 

 

$

310,297

 

 

$

119,699

 

 

$

114,382

 

 

$

1,168,104

 

Accumulated depreciation

 

 

(223,720

)

 

 

(59,652

)

 

 

(85,627

)

 

 

(60,444

)

 

 

(48,796

)

 

 

(478,239

)

 

 

$

192,839

 

 

$

147,515

 

 

$

224,670

 

 

$

59,255

 

 

$

65,586

 

 

$

689,865

 

Total Assets(1)

 

$

330,938

 

 

$

160,624

 

 

$

266,007

 

 

$

128,421

 

 

$

91,047

 

 

$

977,037

 

 

 

(1)

Total assets by region does not include corporate assets of $135,312 as of March 31, 2019.

 

28


For additional information, the following tables summarize the world-wide operating results and property and equipment for each of the Company’s vessel classes for the periods indicated (in thousands, except statistics):

 

 

 

Anchor

handling

towing

supply

 

 

Fast

support

 

 

Supply

 

 

Specialty

 

 

Liftboats

 

 

Crew

Transfer

 

 

Other

activity

 

 

Total

 

For the Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rates Per Day

 

$

8,012

 

 

$

8,472

 

 

$

7,360

 

 

$

 

 

$

27,513

 

 

$

2,375

 

 

$

 

 

$

7,163

 

Fleet Utilization

 

 

39

%

 

 

76

%

 

 

79

%

 

 

%

 

 

31

%

 

 

72

%

 

 

%

 

 

63

%

Fleet Available Days

 

 

709

 

 

 

2,521

 

 

 

433

 

 

 

91

 

 

 

1,456

 

 

 

3,458

 

 

 

 

 

 

8,668

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

2,225

 

 

$

16,284

 

 

$

2,520

 

 

$

 

 

$

12,339

 

 

$

5,922

 

 

$

 

 

$

39,290

 

Bareboat charter

 

 

 

 

 

724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

724

 

Other marine services

 

 

559

 

 

 

(355

)

 

 

(69

)

 

 

 

 

 

250

 

 

 

315

 

 

 

1,029

 

 

 

1,729

 

 

 

 

2,784

 

 

 

16,653

 

 

 

2,451

 

 

 

 

 

 

12,589

 

 

 

6,237

 

 

 

1,029

 

 

 

41,743

 

Direct Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

892

 

 

 

4,659

 

 

 

1,206

 

 

 

13

 

 

 

4,097

 

 

 

2,592

 

 

 

247

 

 

 

13,706

 

Repairs and maintenance

 

 

408

 

 

 

2,278

 

 

 

348

 

 

 

11

 

 

 

650

 

 

 

1,056

 

 

 

53

 

 

 

4,804

 

Drydocking

 

 

22

 

 

 

36

 

 

 

 

 

 

 

 

 

1,307

 

 

 

 

 

 

 

 

 

1,365

 

Insurance and loss reserves

 

 

45

 

 

 

332

 

 

 

67

 

 

 

20

 

 

 

679

 

 

 

99

 

 

 

(303

)

 

 

939

 

Fuel, lubes and supplies

 

 

216

 

 

 

904

 

 

 

119

 

 

 

22

 

 

 

490

 

 

 

230

 

 

 

86

 

 

 

2,067

 

Other

 

 

259

 

 

 

1,000

 

 

 

397

 

 

 

101

 

 

 

147

 

 

 

86

 

 

 

(251

)

 

 

1,739

 

 

 

 

1,842

 

 

 

9,209

 

 

 

2,137

 

 

 

167

 

 

 

7,370

 

 

 

4,063

 

 

 

(168

)

 

 

24,620

 

Direct Vessel Profit (Loss)

 

$

942

 

 

$

7,444

 

 

$

314

 

 

$

(167

)

 

$

5,219

 

 

$

2,174

 

 

$

1,197

 

 

$

17,123

 

Other Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expense

 

$

1,216

 

 

$

352

 

 

$

 

 

$

 

 

$

1,497

 

 

$

 

 

$

342

 

 

$

3,407

 

Administrative and general

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,765

 

Depreciation and amortization

 

 

561

 

 

 

5,118

 

 

 

787

 

 

 

128

 

 

 

6,128

 

 

 

1,717

 

 

 

562

 

 

 

15,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,173

 

Gain on Asset Dispositions and Impairments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,572

)

Operating Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(24,622

)

As of March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and Equipment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical cost

 

$

50,189

 

 

$

382,254

 

 

$

61,626

 

 

$

6,940

 

 

$

327,028

 

 

$

77,867

 

 

$

24,360

 

 

$

930,264

 

Accumulated depreciation

 

 

(30,289

)

 

 

(98,219

)

 

 

(9,258

)

 

 

(3,079

)

 

 

(101,114

)

 

 

(52,951

)

 

 

(18,001

)

 

 

(312,911

)

 

 

$

19,900

 

 

$

284,035

 

 

$

52,368

 

 

$

3,861

 

 

$

225,914

 

 

$

24,916

 

 

$

6,359

 

 

$

617,353

 

29


 

 

 

 

Anchor

handling

towing

supply

 

 

Fast

support

 

 

Supply

 

 

Specialty

 

 

Liftboats

 

 

Crew

Transfer

 

 

Other

activity

 

 

Total

 

For the Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Rates Per Day

 

$

8,502

 

 

$

7,609

 

 

$

7,001

 

 

$

 

 

$

17,750

 

 

$

2,325

 

 

$

 

 

$

7,109

 

Fleet Utilization

 

 

38

%

 

 

68

%

 

 

62

%

 

 

%

 

 

46

%

 

 

60

%

 

 

%

 

 

58

%

Fleet Available Days

 

 

900

 

 

 

3,295

 

 

 

501

 

 

 

90

 

 

 

1,710

 

 

 

3,420

 

 

 

 

 

 

9,916

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

2,875

 

 

$

17,083

 

 

$

2,182

 

 

$

 

 

$

13,877

 

 

$

4,802

 

 

$

 

 

$

40,819

 

Bareboat charter

 

 

 

 

 

 

 

 

1,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,143

 

Other marine services

 

 

(658

)

 

 

(251

)

 

 

781

 

 

 

 

 

 

2,080

 

 

 

322

 

 

 

674

 

 

 

2,948

 

 

 

 

2,217

 

 

 

16,832

 

 

 

4,106

 

 

 

 

 

 

15,957

 

 

 

5,124

 

 

 

674

 

 

 

44,910

 

Direct Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

1,390

 

 

 

5,511

 

 

 

1,678

 

 

 

65

 

 

 

5,097

 

 

 

2,309

 

 

 

573

 

 

 

16,623

 

Repairs and maintenance

 

 

630

 

 

 

2,337

 

 

 

619

 

 

 

4

 

 

 

2,828

 

 

 

1,096

 

 

 

70

 

 

 

7,584

 

Drydocking

 

 

75

 

 

 

350

 

 

 

162

 

 

 

 

 

 

1,983

 

 

 

 

 

 

 

 

 

2,570

 

Insurance and loss reserves

 

 

122

 

 

 

326

 

 

 

105

 

 

 

8

 

 

 

884

 

 

 

104

 

 

 

(135

)

 

 

1,414

 

Fuel, lubes and supplies

 

 

62

 

 

 

1,102

 

 

 

399

 

 

 

31

 

 

 

1,005

 

 

 

189

 

 

 

18

 

 

 

2,806

 

Other

 

 

592

 

 

 

2,464

 

 

 

1,144

 

 

 

95

 

 

 

444

 

 

 

113

 

 

 

(683

)

 

 

4,169

 

 

 

 

2,871

 

 

 

12,090

 

 

 

4,107

 

 

 

203

 

 

 

12,241

 

 

 

3,811

 

 

 

(157

)

 

 

35,166

 

Direct Vessel Profit (Loss), from Continuing Operations

 

$

(654

)

 

$

4,742

 

 

$

(1

)

 

$

(203

)

 

$

3,716

 

 

$

1,313

 

 

$

831

 

 

 

9,744

 

Other Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease expense

 

$

1,539

 

 

$

352

 

 

$

318

 

 

$

 

 

$

1,498

 

 

$

 

 

$

430

 

 

 

4,137

 

Administrative and general

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,812

 

Depreciation and amortization

 

 

575

 

 

 

5,944

 

 

 

1,036

 

 

 

128

 

 

 

6,053

 

 

 

2,031

 

 

 

330

 

 

 

16,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,046

 

Loss on Asset Dispositions and Impairments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

268

 

Operating Loss, for Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(21,034

)

As of March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and Equipment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical cost

 

$

197,343

 

 

$

434,298

 

 

$

81,407

 

 

$

25,683

 

 

$

329,525

 

 

$

75,204

 

 

$

24,644

 

 

$

1,168,104

 

Accumulated depreciation

 

 

(169,305

)

 

 

(104,524

)

 

 

(38,238

)

 

 

(20,561

)

 

 

(77,938

)

 

 

(49,553

)

 

 

(18,120

)

 

 

(478,239

)

 

 

$

28,038

 

 

$

329,774

 

 

$

43,169

 

 

$

5,122

 

 

$

251,587

 

 

$

25,651

 

 

$

6,524

 

 

$

689,865

 

 

 

Fleet Counts. The Company’s fleet count as of March 31, 2020 and December 31, 2019 was as follows:

 

 

 

Owned

 

 

Joint Ventured

 

 

Leased-in

 

 

Managed

 

 

Total

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

 

4

 

 

 

 

 

 

4

 

 

 

 

 

8

 

FSV

 

 

28

 

 

 

5

 

 

 

1

 

 

 

1

 

 

35

 

Supply

 

 

5

 

 

 

34

 

 

 

 

 

 

2

 

 

41

 

Specialty

 

 

1

 

 

 

3

 

 

 

 

 

 

 

 

4

 

Liftboats

 

 

14

 

 

 

 

 

 

2

 

 

 

 

 

16

 

Crew transfer

 

 

38

 

 

 

5

 

 

 

 

 

 

 

 

43

 

 

 

 

90

 

 

 

47

 

 

 

7

 

 

 

3

 

 

 

147

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

 

4

 

 

 

 

 

 

4

 

 

 

 

 

 

8

 

FSV

 

 

30

 

 

 

5

 

 

 

1

 

 

 

1

 

 

 

37

 

Supply

 

 

4

 

 

 

34

 

 

 

 

 

 

2

 

 

 

40

 

Specialty

 

 

1

 

 

 

3

 

 

 

 

 

 

1

 

 

 

5

 

Liftboats

 

 

14

 

 

 

 

 

 

2

 

 

 

 

 

 

16

 

Crew transfer

 

 

38

 

 

 

5

 

 

 

 

 

 

 

 

 

43

 

 

 

 

91

 

 

 

47

 

 

 

7

 

 

 

4

 

 

 

149

 

 

30


Operating Income (Loss)

United States, primarily Gulf of Mexico. For the three months ended March 31, the Company’s time charter statistics and direct vessel profit (loss) in the United States was as follows (in thousands, except statistics):

 

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rates Per Day Worked:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

$

 

 

 

 

 

 

$

7,153

 

 

 

 

 

FSV

 

 

7,400

 

 

 

 

 

 

 

7,634

 

 

 

 

 

Supply

 

 

7,380

 

 

 

 

 

 

 

 

 

 

 

 

Liftboats

 

 

32,416

 

 

 

 

 

 

 

13,260

 

 

 

 

 

Overall

 

 

20,988

 

 

 

 

 

 

 

10,588

 

 

 

 

 

Utilization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

 

%

 

 

 

 

 

 

2

%

 

 

 

 

FSV

 

 

25

%

 

 

 

 

 

 

39

%

 

 

 

 

Supply

 

 

10

%

 

 

 

 

 

 

%

 

 

 

 

Liftboats

 

 

10

%

 

 

 

 

 

 

31

%

 

 

 

 

Overall

 

 

11

%

 

 

 

 

 

 

28

%

 

 

 

 

Available Days:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

 

273

 

 

 

 

 

 

 

450

 

 

 

 

 

FSV

 

 

364

 

 

 

 

 

 

 

883

 

 

 

 

 

Supply

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

Specialty

 

 

91

 

 

 

 

 

 

 

90

 

 

 

 

 

Liftboats

 

 

1,092

 

 

 

 

 

 

 

1,275

 

 

 

 

 

Overall

 

 

1,864

 

 

 

 

 

 

 

2,698

 

 

 

 

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

4,375

 

 

 

76

%

 

$

8,005

 

 

 

88

%

Bareboat charter

 

 

724

 

 

 

13

%

 

 

 

 

 

%

Other marine services

 

 

642

 

 

 

11

%

 

 

1,132

 

 

 

12

%

 

 

 

5,741

 

 

 

100

%

 

 

9,137

 

 

 

100

%

Direct operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

2,928

 

 

 

51

%

 

 

4,503

 

 

 

49

%

Repairs and maintenance

 

 

617

 

 

 

11

%

 

 

2,778

 

 

 

30

%

Drydocking

 

 

1,057

 

 

 

18

%

 

 

1,994

 

 

 

22

%

Insurance and loss reserves

 

 

135

 

 

 

2

%

 

 

592

 

 

 

6

%

Fuel, lubes and supplies

 

 

524

 

 

 

9

%

 

 

683

 

 

 

7

%

Other

 

 

79

 

 

 

1

%

 

 

90

 

 

 

1

%

 

 

 

5,340

 

 

 

93

%

 

 

10,640

 

 

 

116

%

Direct Vessel Profit

 

$

401

 

 

 

7

%

 

$

(1,503

)

 

 

(16

)%

 

Current Year Quarter compared with Prior Year Quarter

 

Operating Revenues. Charter revenues were $2.9 million lower in the Current Year Quarter compared with the Prior Year Quarter. Charter revenues were $1.7 million lower due to net fleet dispositions, $0.6 million lower due to the repositioning of vessels between geographic regions and $0.6 million lower due to lower utilization of the core fleet. As of March 31, 2020, the Company had 12 of 23 owned and leased-in vessels (two AHTS vessels, three FSVs, six liftboats, and one specialty vessel) cold-stacked in this region compared with 16 of 32 vessels as of March 31, 2019.

 

Direct Operating Expenses. Direct operating expenses were $5.3 million lower in the Current Year Quarter compared with the Prior Year Quarter. Direct operating expenses were $1.2 million lower due to the repositioning of vessels between geographic regions and $0.9 million lower due to net fleet dispositions. Direct operating expenses for the core fleet were $3.2 million lower which was primarily due to reduced repair and drydocking costs.

 

31


 

Africa, primarily West Africa. For the three months ended March 31, the Company’s time charter statistics and direct vessel profit in Africa was as follows (in thousands, except statistics):

 

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rates Per Day Worked:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

$

8,241

 

 

 

 

 

 

$

9,325

 

 

 

 

 

FSV

 

 

9,554

 

 

 

 

 

 

 

10,196

 

 

 

 

 

Supply

 

 

9,192

 

 

 

 

 

 

 

7,414

 

 

 

 

 

Overall

 

 

9,249

 

 

 

 

 

 

 

9,461

 

 

 

 

 

Utilization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

 

73

%

 

 

 

 

 

 

94

%

 

 

 

 

FSV

 

 

94

%

 

 

 

 

 

 

86

%

 

 

 

 

Supply

 

 

100

%

 

 

 

 

 

 

81

%

 

 

 

 

Overall

 

 

89

%

 

 

 

 

 

 

87

%

 

 

 

 

Available Days:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

 

345

 

 

 

 

 

 

 

270

 

 

 

 

 

FSV

 

 

910

 

 

 

 

 

 

 

769

 

 

 

 

 

Supply

 

 

91

 

 

 

 

 

 

 

274

 

 

 

 

 

Overall

 

 

1,346

 

 

 

 

 

 

 

1,313

 

 

 

 

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

11,095

 

 

 

99

%

 

$

10,773

 

 

 

106

%

Other marine services

 

 

167

 

 

 

1

%

 

 

(637

)

 

 

(6

%)

 

 

 

11,262

 

 

 

100

%

 

 

10,136

 

 

 

100

%

Direct operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

2,695

 

 

 

24

%

 

 

3,867

 

 

 

38

%

Repairs and maintenance

 

 

1,435

 

 

 

13

%

 

 

1,184

 

 

 

12

%

Drydocking

 

 

8

 

 

 

0

%

 

 

338

 

 

 

3

%

Insurance and loss reserves

 

 

193

 

 

 

2

%

 

 

213

 

 

 

2

%

Fuel, lubes and supplies

 

 

472

 

 

 

4

%

 

 

754

 

 

 

7

%

Other

 

 

571

 

 

 

5

%

 

 

2,106

 

 

 

21

%

 

 

 

5,374

 

 

 

48

%

 

 

8,462

 

 

 

83

%

Direct Vessel Profit

 

$

5,888

 

 

 

52

%

 

$

1,674

 

 

 

17

%

 

Current Year Quarter compared with Prior Year Quarter

Operating Revenues.  Time charter revenues were $0.3 million higher in the Current Year Quarter compared with the Prior Year Quarter. Time charter revenues were $0.6 million higher due to one vessel commencing a time charter after previously having revenues recognized only upon receipt of cash, due to collection concerns, and $0.3 million lower due to the repositioning of vessels between geographic regions.

Direct Operating Expenses.  Direct operating expenses were $3.1 million lower in the Current Year Quarter compared with the Prior Year Quarter. On an overall basis, operating costs were $2.5 million lower due to the repositioning of vessels between geographic regions, $0.3 million lower for the active fleet and other changes in fleet mix and $0.3 million lower due to the timing of drydockings.

32


Middle East and Asia. For the three months ended March 31, the Company’s time charter statistics and direct vessel profit in the Middle East and Asia was as follows (in thousands, except statistics):

 

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rates Per Day Worked:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

$

5,619

 

 

 

 

 

 

$

5,892

 

 

 

 

 

FSV

 

 

7,784

 

 

 

 

 

 

 

6,111

 

 

 

 

 

Supply

 

 

6,685

 

 

 

 

 

 

 

5,982

 

 

 

 

 

Liftboats

 

 

28,093

 

 

 

 

 

 

 

27,150

 

 

 

 

 

Crew transfer

 

 

1,982

 

 

 

 

 

 

 

2,025

 

 

 

 

 

Overall

 

 

9,634

 

 

 

 

 

 

 

8,386

 

 

 

 

 

Utilization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

 

27

%

 

 

 

 

 

 

41

%

 

 

 

 

FSV

 

 

73

%

 

 

 

 

 

 

79

%

 

 

 

 

Supply

 

 

91

%

 

 

 

 

 

 

50

%

 

 

 

 

Liftboats

 

 

84

%

 

 

 

 

 

 

100

%

 

 

 

 

Crew transfer

 

 

60

%

 

 

 

 

 

 

50

%

 

 

 

 

Overall

 

 

73

%

 

 

 

 

 

 

72

%

 

 

 

 

Available Days:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AHTS

 

 

91

 

 

 

 

 

 

 

180

 

 

 

 

 

FSV

 

 

974

 

 

 

 

 

 

 

1,341

 

 

 

 

 

Supply

 

 

273

 

 

 

 

 

 

 

180

 

 

 

 

 

Liftboats

 

 

182

 

 

 

 

 

 

 

180

 

 

 

 

 

Crew transfer

 

 

151

 

 

 

 

 

 

 

180

 

 

 

 

 

Overall

 

 

1,671

 

 

 

 

 

 

 

2,061

 

 

 

 

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

11,767

 

 

 

97

%

 

$

12,499

 

 

 

98

%

Other marine services

 

 

420

 

 

 

3

%

 

 

228

 

 

 

2

%

 

 

 

12,187

 

 

 

100

%

 

 

12,727

 

 

 

100

%

Direct operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

3,811

 

 

 

31

%

 

 

4,254

 

 

 

33

%

Repairs and maintenance

 

 

1,246

 

 

 

10

%

 

 

2,193

 

 

 

17

%

Drydocking

 

 

414

 

 

 

3

%

 

 

159

 

 

 

1

%

Insurance and loss reserves

 

 

339

 

 

 

3

%

 

 

327

 

 

 

2

%

Fuel, lubes and supplies

 

 

665

 

 

 

5

%

 

 

709

 

 

 

5

%

Other

 

 

683

 

 

 

6

%

 

 

1,100

 

 

 

8

%

 

 

 

7,158

 

 

 

59

%

 

 

8,742

 

 

 

68

%

Direct Vessel Profit

 

$

5,029

 

 

 

41

%

 

$

3,985

 

 

 

31

%

 

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Time charter revenues were $0.7 million lower in the Current Year Quarter compared with the Prior Year Quarter primarily due to net fleet dispositions. As of March 31, 2020, the Company had no owned and leased in vessels cold stacked in this region compared with one of 23 vessels as of March 31, 2019.

Direct Operating Expenses. Direct operating expenses were $1.6 million lower in the Current Year Quarter compared with the Prior Year Quarter, primarily due to net fleet dispositions and the timing of dry dockings and certain repair expenditures.

33


Latin America (Brazil, Mexico, Central and South America). For the three months ended March 31, the Company’s time charter statistics and direct vessel profit in Latin America was as follows (in thousands, except statistics):

 

 

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rates Per Day Worked:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FSV

 

$

7,204

 

 

 

 

 

 

$

6,800

 

 

 

 

 

Liftboats

 

 

15,913

 

 

 

 

 

 

 

18,212

 

 

 

 

 

Overall

 

 

9,397

 

 

 

 

 

 

 

12,900

 

 

 

 

 

Utilization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FSV

 

 

99

%

 

 

 

 

 

 

59

%

 

 

 

 

Liftboats

 

 

100

%

 

 

 

 

 

 

85

%

 

 

 

 

Overall

 

 

93

%

 

 

 

 

 

 

71

%

 

 

 

 

Available Days:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FSV

 

 

273

 

 

 

 

 

 

 

302

 

 

 

 

 

Supply

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

Liftboats

 

 

91

 

 

 

 

 

 

 

239

 

 

 

 

 

Overall

 

 

389

 

 

 

 

 

 

 

541

 

 

 

 

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

3,396

 

 

 

96

%

 

$

4,922

 

 

 

73

%

Bareboat charter

 

 

-

 

 

 

%

 

 

1,143

 

 

 

17

%

Other marine services

 

 

149

 

 

 

4

%

 

 

635

 

 

 

9

%

 

 

 

3,545

 

 

 

100

%

 

 

6,700

 

 

 

100

%

Direct operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

1,215

 

 

 

34

%

 

 

1,556

 

 

 

23

%

Repairs and maintenance

 

 

392

 

 

 

11

%

 

 

335

 

 

 

5

%

Drydocking

 

 

(114

)

 

 

(3

%)

 

 

79

 

 

 

1

%

Insurance and loss reserves

 

 

69

 

 

 

2

%

 

 

135

 

 

 

2

%

Fuel, lubes and supplies

 

 

135

 

 

 

4

%

 

 

428

 

 

 

6

%

Other

 

 

305

 

 

 

9

%

 

 

521

 

 

 

8

%

 

 

 

2,002

 

 

 

56

%

 

 

3,054

 

 

 

45

%

Direct Vessel Profit

 

$

1,543

 

 

 

44

%

 

$

3,646

 

 

 

54

%

 

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. Charter revenues were $2.7 million lower in the Current Year Quarter compared with the Prior Year Quarter. Charter revenues were $1.6 million lower due to the repositioning of vessels between geographic regions and $1.1 million lower due to the sale of two vessels on bareboat charter. As of March 31, 2020, the Company had no owned and leased-in vessels cold-stacked in this region compared with one of seven vessels as of March 31, 2019.

Direct Operating Expenses. Direct operating expenses were $1.1 million lower in the Current Year Quarter compared with the Prior Year Quarter. On an overall basis, vessel operating expenses were $1.4 million lower due to the repositioning of vessels between geographic regions, and $0.3 million higher due to net fleet additions.

 

 

34


Europe, primarily North Sea. For the three months ended March 31, the Company’s time charter statistics and direct vessel profit in Europe was as follows (in thousands, except statistics):

 

 

 

For the Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Time Charter Statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rates Per Day Worked:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liftboats

 

 

32,038

 

 

 

 

 

 

 

 

 

 

 

 

Crew Transfer

 

 

2,389

 

 

 

 

 

 

 

2,339

 

 

 

 

 

Overall

 

 

3,471

 

 

 

 

 

 

 

2,339

 

 

 

 

 

Utilization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liftboats

 

 

100

%

 

 

 

 

 

 

%

 

 

 

 

Crew Transfer

 

 

73

%

 

 

 

 

 

 

61

%

 

 

 

 

Overall

 

 

73

%

 

 

 

 

 

 

61

%

 

 

 

 

Available Days:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supply

 

 

 

 

 

 

 

 

 

47

 

 

 

 

 

Liftboats

 

 

91

 

 

 

 

 

 

 

16

 

 

 

 

 

Crew Transfer

 

 

3,307

 

 

 

 

 

 

 

3,240

 

 

 

 

 

Overall

 

 

3,398

 

 

 

 

 

 

 

3,303

 

 

 

 

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time charter

 

$

8,657

 

 

 

96

%

 

$

4,620

 

 

 

74

%

Other marine services

 

 

351

 

 

 

4

%

 

 

1,590

 

 

 

26

%

 

 

 

9,008

 

 

 

100

%

 

 

6,210

 

 

 

100

%

Direct operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

 

3,057

 

 

 

34

%

 

 

2,443

 

 

 

39

%

Repairs and maintenance

 

 

1,114

 

 

 

12

%

 

 

1,094

 

 

 

18

%

Insurance and loss reserves

 

 

203

 

 

 

2

%

 

 

147

 

 

 

2

%

Fuel, lubes and supplies

 

 

271

 

 

 

3

%

 

 

232

 

 

 

4

%

Other

 

 

101

 

 

 

1

%

 

 

352

 

 

 

6

%

 

 

 

4,746

 

 

 

53

%

 

 

4,268

 

 

 

69

%

Direct Vessel Profit, for Continuing Operations

 

$

4,262

 

 

 

47

%

 

$

1,942

 

 

 

31

%

 

Current Year Quarter compared with Prior Year Quarter

Operating Revenues. For CTVs, time charter revenues were $1.1 million higher. Time charter revenues were $0.6 million higher due to net fleet additions, and $0.5 million higher for the core fleet, primarily due to increased utilization. As of March 31, 2020, the Company had one CTV retired and removed from service in this region.

For liftboats, time charter revenues were $2.9 million higher due to the repositioning of vessels between geographic regions.

Other marine services were $1.2 million lower primarily due to lower mobilization revenues for the liftboat vessels, and the termination of a charter of a PSV owned by a joint venture.

 

Direct Operating Expenses. Direct operating expenses were $0.5 million higher in the Current Year Quarter compared to the Prior Year Quarter. On an overall basis, vessel operating expenses were $0.6 million higher due to the repositioning of vessels between geographic regions and $0.3 million higher due to net fleet additions. Vessel operating expenses were $0.4 million lower due to the termination of a charter-in of a PSV from a joint venture.

Leased Expense. Leased-in equipment expenses for the Current Year Quarter were $0.7 million lower compared with the Prior Year Quarter, primarily due to the completion of the lease of one supply vessel.

Administrative and general. Administrative and general expenses were flat for the Current Year Quarter compared to the Prior Year Quarter.

Depreciation and amortization. Depreciation and amortization expense for the Current Year Quarter was $1.1 million lower compared with the Prior Year Quarter primarily due to net fleet dispositions.

35


 

Gains (Losses) on Asset Dispositions and Impairments, Net. During the Current Year Quarter, the Company sold two AHTS vessels and one specialty vessel previously removed from service, two FSVs and other equipment for $3.1 million ($2.2 million cash and $0.9 million in previously received deposits) and gains of $1.1 million all of which was recognized currently. In addition, the Company recorded impairment charges of $9.2 million related to one liftboat and two leased-in liftboats and recognized net losses of $4.5 million ($4.8 million loss due to the disposal of one vessel under construction, offset by a $0.3 million gain due to the redelivery of one leased-in AHTS vessel). During the Prior Year Quarter, the Company sold one vessel under construction for net proceeds of $4.3 million (all of which were previously received deposits) and gains of $0.2 million, (all of which was recognized currently).

 

Other Income (Expense), Net

For the periods ended March 31, the Company’s other income (expense) was as follows (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Other Income (Expense):

 

 

 

 

 

 

 

 

Interest income

 

$

676

 

 

$

354

 

Interest expense

 

 

(7,638

)

 

 

(7,664

)

SEACOR Holdings guarantee fees

 

 

(16

)

 

 

(29

)

Derivative losses, net

 

 

5,114

 

 

 

(925

)

Foreign currency gains, net

 

 

65

 

 

 

670

 

 

 

$

(1,799

)

 

$

(7,594

)

 

Interest income. Interest income in the Current Year Quarter was higher compared with the Prior Year Quarter primarily due to intercompany notes with one of the Company’s joint ventures.  

Interest expense. Interest expense was flat for the Current Year Quarter compared to the Prior Year Quarter.

Derivative losses, net. Net derivative gains during the Current Year Quarter compared to the Prior Year Quarter were primarily due to decreases in the fair value of the Company’s conversion option liability embedded in the Company’s Convertible Senior Notes. The decrease in the conversion option liability was primarily the result of the drop in the fair value of the Company’s stock price.

Foreign currency gains, net. Foreign currency gains for the Current Year Quarter were relatively stable compared with more volatility of fluctuating currencies during 2019.

Income Tax Benefit

For the three months ended March 31, 2020, the Company’s effective income tax rate of 25.2% was primarily due to taxes provided on income attributable to noncontrolling interests, foreign sourced income not subject to U.S. income taxes, foreign taxes not creditable against U.S. income taxes, and the annual return-to-accrual adjustment for the prior year. During the three months ended March 31, 2019, the Company’s effective income tax rate of 13.4% was primarily due to taxes provided on income attributable to noncontrolling interests, foreign sourced income not subject to U.S. income taxes, foreign taxes not creditable against U.S. income taxes, and a reversal of an unrecognized tax benefit.

36


Equity in Earnings (Losses) of 50% or Less Owned Companies

Equity in losses of 50% or less owned companies for the Current Year Quarter compared with the Prior Year Quarter were $3.2 million lower due to the following changes in equity earnings (losses) (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

MexMar

 

$

1,389

 

 

$

109

 

OSV Partners

 

 

(473

)

 

 

(463

)

Dynamic Offshore Drilling

 

 

 

 

 

(741

)

SEACOSCO

 

 

(675

)

 

 

(1,641

)

Other

 

 

(480

)

 

 

(740

)

 

 

$

(239

)

 

$

(3,476

)

 

Liquidity and Capital Resources

General

The Company’s ongoing liquidity requirements arise primarily from working capital needs, capital commitments and its obligations to service outstanding debt. The Company may use its liquidity to fund capital expenditures, make acquisitions or to make other investments. Sources of liquidity are cash balances, construction reserve funds and cash flows from operations. From time to time, the Company may secure additional liquidity through asset sales or the issuance of debt, shares of SEACOR Marine Common Stock or common stock of its subsidiaries, preferred stock or a combination thereof.

As of March 31, 2020, the Company had unfunded capital commitments of $34.2 million that included three PSVs and two CTVs. All of the unfunded capital commitments are payable during the remainder of 2020. The Company has indefinitely deferred an additional $16.3 million of orders with respect to two FSVs that the Company had previously reported unfunded capital commitments. 

As of March 31, 2020, the Company had outstanding debt of $393.8 million, net of debt discount and issue costs. The Company’s contractual long-term debt maturities as of March 31, 2020, are as follows:

 

 

 

Actual

 

Remainder 2020

 

$

12,733

 

2021

 

 

25,446

 

2022

 

 

49,926

 

2023

 

 

231,674

 

2024

 

 

92,412

 

Years subsequent to 2024

 

 

11,752

 

 

 

$

423,943

 

 

As of March 31, 2020, the Company held balances of cash, cash equivalents, restricted cash and construction reserve funds totaling $76.3 million. As of March 31, 2020, construction reserve funds of $3.7 million were classified as non-current assets in the accompanying condensed consolidated balance sheets as the Company has the intent and ability to use the funds to acquire equipment. Additionally, the Company had $2.3 million available under subsidiary credit facilities.

37


Summary of Cash Flows

For the three months ended March 31, the following is a summary of the Company’s cash flows (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Cash flows provided by or (used in):

 

 

 

 

 

 

 

 

Operating Activities

 

$

(8,108

)

 

$

(4,855

)

Investing Activities

 

 

764

 

 

 

(22,254

)

Financing Activities

 

 

(5,222

)

 

 

(7,645

)

Effects of Exchange Rate Changes on Cash, Restricted Cash and Cash Equivalents

 

 

(1,908

)

 

 

873

 

Net Increase in Cash, Restricted Cash and Cash Equivalents from Discontinued Operations

 

 

 

 

 

3,124

 

Net (Decrease) Increase in Cash, Restricted Cash and Cash Equivalents

 

$

(14,474

)

 

$

(30,757

)

 

Operating Activities

Cash flows used in continuing operating activities decreased by $3.3 million in the Current Year Quarter compared with the Prior Year Quarter. The components of cash flows used in operating activities during the Current Year Quarter and Prior Year Quarter were as follows:

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

DVP:

 

 

 

 

 

 

 

 

United States, primarily Gulf of Mexico

 

$

401

 

 

$

(1,503

)

Africa, primarily West Africa

 

 

5,888

 

 

 

1,674

 

Middle East and Asia

 

 

5,029

 

 

 

3,985

 

Latin America

 

 

1,543

 

 

 

3,646

 

Europe, Continuing Operations

 

 

4,262

 

 

 

1,942

 

Operating, leased-in equipment (excluding amortization of deferred gains)

 

 

(3,838

)

 

 

(4,842

)

Administrative and general (excluding provisions for bad debts and amortization of share awards)

 

 

(9,776

)

 

 

(10,455

)

SEACOR Holdings management and guarantee fees

 

 

(16

)

 

 

(29

)

Dividends received from 50% or less owned companies

 

 

 

 

 

400

 

 

 

 

3,493

 

 

 

(5,182

)

Changes in operating assets and liabilities before interest and income taxes

 

 

(7,144

)

 

 

2,924

 

Restricted stock vested

 

 

(175

)

 

 

(282

)

Cash settlements on derivative transactions, net

 

 

(214

)

 

 

(75

)

Interest paid, excluding capitalized interest (1)

 

 

(4,744

)

 

 

(4,593

)

Interest received

 

 

676

 

 

 

354

 

Income taxes refunded, net

 

 

 

 

 

1,999

 

Total cash flows provided by (used in) operating activities

 

$

(8,108

)

 

$

(4,855

)

 

(1)

During the Current Year Quarter and the Prior Year Quarter, capitalized interest paid and included in purchases of property and equipment for continuing operations was $0.2 million and $0.4 million, respectively.

For a detailed discussion of the Company’s financial results for the reported periods, see “Consolidated Results of Operations” included above. Changes in operating assets and liabilities before interest and income taxes are the result of the Company’s working capital requirements.

Investing Activities

During the Current Year Quarter, net cash provided by investing activities was $0.8 million, primarily for the following:

 

capital expenditures were $11.2 million;

 

the Company sold two AHTS vessels and one specialty vessel previously retired and removed from service, two FSVs and other equipment for net proceeds of $3.1 million ($2.2 million cash and $0.9 million in previously received deposits);

38


 

construction reserve funds account transactions included withdrawals of $9.1 million; and

 

the Company made investments in, and advances to, its 50% or less owned companies of $0.2 million.

During the Prior Year Quarter, net cash used in investing activities of continuing operations was $22.3 million, primarily as a result of the following:

 

capital expenditures were $20.6 million;

 

the Company sold one vessel under construction for net proceeds of $4.3 million (all of which was a previously received deposit) and received $0.4 million in deposits for the future sale of vessels; and

 

the Company made investments in, and advances to, its 50% or less owned companies of $2.0 million, comprised primarily of its capital contribution in the SEACOSCO joint venture.

Financing Activities

During the Current Year Quarter, net cash used in financing activities was $5.2 million. The Company:

 

made scheduled payments on long-term debt and obligations of $5.2 million.

During the Prior Year Quarter, net cash used in financing activities was $7.6 million. The Company:

 

made scheduled payments on long-term debt and obligations of $4.4 million;

 

purchased subsidiary shares from holders of noncontrolling interests for $3.4 million; and

 

issued Common Stok for proceeds of $0.1 million.

 

Short and Long-Term Liquidity Requirements

The Company believes that a combination of cash balances on hand, construction reserve funds, cash generated from operating activities, availability under existing subsidiary financing arrangements and access to the credit and capital markets will provide sufficient liquidity to meet its obligations, including to support its capital expenditures program, working capital and debt service requirements. The Company continually evaluates possible acquisitions and dispositions of certain businesses and assets. The Company’s sources of liquidity may be impacted by the general condition of the markets in which it operates and the broader economy as a whole, which may limit its access to the credit and capital markets on acceptable terms. To date, the COVID-19 pandemic has not had a material impact on the Company’s liquidity or, except as noted in “Note 5. Long-Term Debt” in the unaudited consolidated financial statements included in Part I. Item 1. “Financial Statements” elsewhere in this Quarterly Report on Form 10-Q, the Company’s ability to meet its financial maintenance covenants in its various credit facilities. Management will continue to closely monitor the Company’s liquidity and the credit and capital markets generally and more specifically as it relates to the COVID-19 pandemic. As noted above under “Overview”, there are a number of steps the Company can take to mitigate any adverse effects to the Company's liquidity stemming from the COVID-19 pandemic and the resulting depressed oil and natural gas price environment, including sales of assets, workforce reduction and other cost reduction measures. In addition, we expect to receive a meaningful amount of tax refunds over the next 12 months as a result of the changes in the current U.S. tax law included in the CARES Act.

39


Off-Balance Sheet Arrangements

For a discussion of the Company’s off-balance sheet arrangements, refer to Liquidity and Capital Resources included in the Company’s 2019 Annual Report. There has been no material change in the Company’s off-balance sheet arrangements during the three months ended March 31, 2020.

Debt Securities and Credit Agreements

For a discussion of the Company’s debt securities and credit agreements, see “Note 5. Long-Term Debt” in the unaudited consolidated financial statements included in Part I. Item 1. “Financial Statements” elsewhere in this Quarterly Report on Form 10-Q and in “Note 8. Long-Term Debt” in the Company’s audited consolidated financial statements included in its 2019 Annual Report.

Contractual Obligations and Commercial Commitments

For a discussion of the Company’s contractual obligations and commercial commitments, refer to Liquidity and Capital Resources included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. There has been no material change in the Company’s contractual obligations and commercial commitments.

Contingencies

As of March 31, 2020, SEACOR Holdings has guaranteed $18.5 million on behalf of the Company for various obligations including: performance obligations under sale-leaseback arrangements and invoiced amounts for funding deficits under the Merchant Navy Officers Pension Fund (“MNOPF”). Pursuant to a Distribution Agreement with SEACOR Holdings, SEACOR Holdings charges the Company a fee of 0.5% per annum on outstanding guaranteed amounts, which declines as the obligations are settled by the Company.

In the normal course of its business, the Company becomes involved in various other litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its financial statements related thereto where appropriate. It is possible that a change in the Company’s estimates of that exposure could occur, but the Company does not expect such changes in estimated costs would have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the Company’s exposure to market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk” included in the Company’s 2019 Annual Report. There has been no material change in the Company’s exposure to market risk during the three months ended March 31, 2020.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

With the participation of the Company’s principal executive officer and principal financial officer, management evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of March 31, 2020. Based on their evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2020 solely as a result of the material weakness in the Company’s internal control over financial reporting described below.

40


The Company’s disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosures. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those internal control systems determined to be effective can provide only a level of reasonable assurance with respect to financial statement preparation and presentation.

Material Weakness in Internal Control Over Financial Reporting Existing as of March 31, 2020

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

During the preparation of the Company’s financial statements as of and for the quarter ended March 31, 2020, prior to public dissemination of the condensed consolidated financial statements and related information for the period, an error was identified related to the accounting for its bifurcated conversion option liability derivative embedded in its convertible senior notes (See “Note 8. Derivative Instruments and Hedging Strategies” in the unaudited consolidated financial statements included in Part I. Item 1. “Financial Statements” elsewhere in this Quarterly Report on Form 10-Q). As a result, the Company’s management evaluated the effectiveness of the related internal control over financial reporting as of March 31, 2020 and determined that a material weakness existed.  Specifically, management determined the Company did not maintain effective controls over the journal entry review of estimates utilizing third-party information, as the control did not operate at the designed level of precision to initially detect the error.  

As noted above, the error was detected prior to the release of the applicable financial statements, and notwithstanding the identified material weakness, management believes the condensed consolidated financial statements, as included in this Quarterly Report on Form 10-Q, fairly represent, in all material respects, the Company’s financial condition, results of operations and cash flows as of and for the periods presented in accordance with generally accepted accounting principles in the United States. No previously reported financial statements were affected by this error.

41


Remediation Plans

Management and the board of directors take the Company’s internal control over financial reporting and the integrity of its financial statements seriously and has immediately begun evaluating a comprehensive remediation plan to address the material weakness identified above. Management currently does not have an expected timetable for the execution and completion of a remediation plan, which will include enhancements to the journal entry review of estimates utilizing third-party information control. Management and the board of directors are committed to maintaining a strong internal control environment and will make every effort to ensure that the material weakness described above will be promptly remediated, however, the material weakness cannot be considered remediated until the applicable remedial control is implemented and operates for a sufficient period of time to allow management to conclude, through testing, that this remediation plan is implemented and the control is operating effectively.

Changes in Internal Control Over Financial Reporting

Other than the identification of the material weakness discussed above, there have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

42


PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

For a description of developments with respect to pending legal proceedings described in the Company’s 2019 Annual Report, see “Note 12. Commitments and Contingencies” included in Part I. Item 1. “Financial Statements” elsewhere in this Quarterly Report on Form 10-Q.

ITEM 1A.

RISK FACTORS

For a discussion of the Company’s risk factors, refer to “Risk Factors” included in the Company’s 2019 Annual Report. Except as set forth below, there have been no material changes in the Company’s risk factors during the Current Three Months.

The Company is exposed to fluctuating prices of oil and decreased demand for oil. The coronavirus (COVID-19) pandemic has resulted in a decrease in the price of and demand for oil, which has caused, and may continue to cause, a decrease in the demand for the Company’s services.

In the recent months, oil prices have experienced record declines in response to a significant amount of anticipated oversupply in oil and natural gas caused by (i) the COVID-19 pandemic that began in late 2019 and has led to a substantial decrease in global economic activity and (ii) supply decisions principally by Russia and Saudi Arabia resulting in failure to agree on terms to maintain production limits and the ensuing influx of additional oil to an already oversupplied market. These recent declines in oil and natural gas prices come on top of prices that have, for the last few years, been below historic averages. On January 2, 2020, WTI crude oil prices closed at a price of $61.18 per barrel. By March 31, 2020, the last trading date of the first quarter of 2020, WTI crude oil prices closed at a price of $20.48 per barrel and on April 20, 2020, the NYMEX WTI oil futures price for May 2020 went “negative” to -$37.63 per barrel. While OPEC+ members have implemented production cut, the cuts have failed to have a material positive affect on oil and natural gas prices. To the extent that the outbreak of COVID-19 continues to negatively impact demand, the Company expects there to be excess supply of oil and natural gas for the foreseeable future. This excess supply could, in turn, result in transportation and storage capacity constraints in the United States, or even the elimination of available storage.

The market for the Company’s offshore support services is impacted by the comparative price for exploring, developing, and producing oil and natural gas and by the corresponding supply and demand for oil and natural gas, both globally and regionally. Since developing offshore oil fields, particularly in deep waters, is one of the most expensive sources of hydrocarbons and providing transportation and logistics services to these markets is the largest component of the Company’s business, the Company is particularly exposed to depressed oil and natural gas prices that last for some period of time. When the Company’s customers experience low commodity prices or come to believe that they will be low in the future, they generally reduce their capital spending for offshore drilling, exploration and field development. The significant decrease in oil and natural gas prices that began in the second half of 2014 caused a reduction in many of the Company’s customers’ exploratory, drilling, completion and other production activities and, as a result, related spending on the Company’s services.  The decrease in prices caused by COVID-19 could cause the Company’s customers’ to further reduce exploratory, drilling, completion and other production activities, which could have a material adverse effect on the Company’s business and liquidity.  

43


The Company’s operation and workforce faces risks related to the COVID-19 pandemic, which could significantly disrupt the Company’s operations.

The Company’s business could be adversely affected by the effects of the widespread outbreak of COVID-19. The pandemic may affect the health of the Company’s workforce, and international, national and local government interventions enacted to reduce the spread of COVID-19 may render the Company’s employees unable to work or travel. Although the Company’s workforce is largely considered to be “essential” under guidance issued by the U.S. Cybersecurity and Infrastructure Security Agency, work, travel and other restrictions may vary in other regions of the world in which the Company has significant operations, such as Africa, Middle East and Asia, Latin America and Europe. Similarly, if the COVID-19 pandemic were to impact a location where the Company has a high concentration of business and resources, its workforces could be affected by the outbreak, which could also significantly disrupt operations and the ability to provide services.

The duration and severity of the business disruption and related financial impact from the COVID-19 pandemic cannot be reasonably estimated at this time. If the impact of the COVID-19 pandemic continues for an extended period of time, not only could it materially adversely affect the demand for the Company’s services but also the ability to provide such services, either of which could have a material adverse effect on each company’s business.

Restrictions imposed by the terms of the Company’s existing credit facilities may limit the Company’s operating and financial flexibility. In addition, there can be no assurance that the Company will meet the requirements of its financial covenants on an ongoing basis or that if it should fail to meet such covenants in the future, the lender under the relevant credit agreement will agree to waivers or amendments with respect thereto.

Many of the Company’s existing credit facilities impose restrictions, such as negative covenants and maintenance of financial ratio covenants, which may limit its operating and financial flexibility. Negative covenants such as limitations on additional indebtedness or liens may affect the Company’s ability to incur additional debt if needed, while asset sale covenants could affect its ability to sell assets to generate liquidity. The Company’s ability to maintain financial ratio covenants may be affected by general economic conditions or other events beyond the Company’s control and no assurance can be given that such ratios will be met in the future. If the Company is unable to meet such ratios, it may be unable to reach agreements with the lenders under such agreements for waivers and/or amendments to the applicable covenants.

Failure to achieve and maintain effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on the Company.

As a public company, SEACOR Marine is required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), requires that we evaluate and determine the effectiveness of our internal control over financial reporting and, beginning with our annual report for the fiscal year ending December 31, 2022, provide a management report on the internal control over financial reporting. Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act.

In connection with the preparation of its Quarterly Report on Form 10-Q for the period ended March 31, 2020, it was determined that there was a material weakness in the Company’s internal control over financial reporting limited to the journal entry review of estimates utilizing third-party information as described in Part II, Item 4 of this Quarterly Report on Form 10-Q.

To address this material weakness, we have immediately begun evaluating a comprehensive remediation plan, which will include enhancements to the journal entry review of estimates utilizing third-party information control. While we will be implementing such enhancements to this review process to remediate this material weakness, we cannot predict the success of such plan or the outcome of our assessment of this plan at this time. If our steps are insufficient to successfully remediate the material weakness and otherwise establish and maintain an

44


effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence in us and the value of our common stock could be materially and adversely affected. We can give no assurance that this implementation will remediate this deficiency in internal control or that additional material weaknesses in our internal control over financial reporting will not be identified in the future. If the Company is unable to maintain adequate internal control over financial reporting, it may be unable to report its financial information on a timely basis, may violate applicable stock exchange listing rules or suffer other adverse regulatory consequences and may breach the covenants under its credit facilities. There could also be a negative reaction in the price of the Company’s Common Stock due to a loss of investor confidence in the Company and the reliability of its financial statements. It cannot be assumed that the Company will not have another material weakness in its internal controls over financial reporting in the future.

Moreover, the Company’s internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.

For as long as we are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404. We could be an “emerging growth company” for up to two more years. An independent assessment of the effectiveness of our internal control over financial reporting could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a), (b) None.

 

 

(c)

This table provides information with respect to purchases by the Company of shares of its Common Stock during the Current Quarter:

 

 

 

Total Number of

Shares Withheld

 

 

Average Price per

Share

 

 

Total Number of

Shares Purchased

as Part of a Publicly

Announced Plan

 

 

Maximum Number

of Shares that may

be Purchased Under

the Plan

 

January 1, 2020 to March 31, 2020

 

 

24,715

 

 

$

7.08

 

 

 

 

 

 

 

 

For the three months ended March 31, 2020, the Company acquired for treasury 24,715 shares of Common Stock for an aggregate purchase price of $175,072 from its employees to cover their tax withholding obligations upon the lapsing of restrictions on share awards. These shares were purchased in accordance with the terms of the Company’s 2017 Equity Incentive Plan.

ITEM 3.DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

 

ITEM 5.

OTHER INFORMATION

 

None.

 

 

45


ITEM 6.

EXHIBITS

 

10.1

 

Registration Rights Agreement, dated March 20, 2020, by and between SEACOR Marine Holdings Inc. and Montco Offshore, LLC (incorporated herein by reference to Exhibit 4.1 of SEACOR Marine Holdings Inc.’s Form 8-K filed with the Commission on March 20, 2020 (File No. 001-37966)).

 

 

 

10.2

 

Consent, Agreement and Omnibus Amendments, dated as of February 7, 2020, by and among Falcon Global USA LLC, the other loan parties thereto, SEACOR Marine Holdings Inc., JPMorgan Chase Bank, N.A. and the lenders party thereto (incorporated herein by reference to Exhibit 10.1 of SEACOR Marine Holdings Inc.’s Form 8-K filed with the Commission on February 11, 2020 (File No. 001-37966)).

 

 

 

10.3

 

Sixth Consent and Agreement, dated April 29, 2020, by and among Falcon Global USA LLC, the other loan parties thereto, JPMorgan Chase Bank, N.A. and the lenders party thereto (incorporated herein by reference to Exhibit 10.1 of SEACOR Marine Holdings Inc.’s Form 8-K filed with the Commission on May 1, 2020 (File No. 001-37966)).

 

 

 

31.1

 

Certification by the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

 

 

 

31.2

 

Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

 

 

 

32  

 

Certification by the Principal Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

101.INS**

 

XBRL Instance Document

 

 

 

101.SCH**

 

XBRL Taxonomy Extension Schema

 

 

 

101.CAL**

 

XBRL Taxonomy Extension Calculation Linkbase

 

 

 

101.DEF**

 

XBRL Taxonomy Extension Definition Linkbase

 

 

 

101.LAB**

 

XBRL Taxonomy Extension Label Linkbase

 

 

 

101.PRE**

 

XBRL Taxonomy Extension Presentation Linkbase

 

*

Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished to the SEC upon request.

**

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability

46


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

 

 

SEACOR Marine Holdings Inc. (Registrant)

 

 

 

 

 

 

DATE:

 

May 11, 2020

By:

 

/s/ John Gellert

 

 

 

 

 

John Gellert, President,

Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

 

 

DATE:

 

May 11, 2020

By:

 

/s/ Jesús Llorca

 

 

 

 

 

Jesús Llorca, Executive Vice President

and Chief Financial Officer

(Principal Financial Officer)

 

DATE:

 

May 11, 2020

By:

 

/s/ Gregory S. Rossmiller

 

 

 

 

 

Gregory S. Rossmiller,

Senior Vice President

and Chief Accounting Officer

(Principal Accounting Officer)

 

 

47