and eight more coming which likely have no work either. Multiply this across the other companies and you have a mighty oversupply of expensive boats sitting and sucking up cash.
Stacked Hornbeck OSVs hidden away in Houma, Louisiana.
Hornbeck Offshore, one of the largest operators of offshore supply vessels in the U.S. Gulf of Mexico, revealed Thursday that the company has now stacked a total of 18 new generation OSVs, part of aggressive cost cutting measures undertaken by the company in response to tough market conditions.
The number of stacked vessels is up 12 OSVs since last reported, the company revealed in its first quarter results released Thursday.
The stacking of the 18 new generation OSVs has occurred on various dates since October 1, 2014, Hornbeck said, and is just one of several cost containment measures recently initiated by company. Other measures include company-wide headcount reductions and across-the-board pay-cuts for shore-side personnel.
The company was still able to post a net income of $35.8 million on $134.6 million in revenues in Q1, according to the results.
As of March 31, 2015, the company’s fleet consisted of 60 new generation OSVs and five MPSVs, including 16 new HOSMAX vessels that have been placed in-service. Hornbeck has an additional eight newbuild HOSMAX vessels due for delivery during 2015 and 2016.
Hornbeck said that the average dayrates for new generation OSVs in Q1 2015 were $26,705, down $900 from the previous quarter and in-line with the prior-year quarter.
The company reported operating expenses of $61.4 million in Q1 2015, a decrease of $7.2 million, or 10.5% compared to Q1 2014 and a decrease of $18.7 million, or 23.3%, from Q4 2014. Hornbeck said that this year-over-year decrease in the operating expenses was due to the number of vessels idled or stacked since late 2014, which has resulted in a substantial reduction in mariner headcount.
Hornbeck attributes the results to soft market conditions for high-spec OSVs operating in the GoM spot market.
Hornbeck’s full Q1 2015 results can be found on its website.
How do you figure that? Stacking boats that are paid for isn’t going to suck up cash. Not sure if you realize it, but when an OSV is cold stacked, they shut it down completely and padlock the hatches. There is no skeleton crew like on drillships, etc. think Ready Reserve Fleet.
It’s just older 240’s and 250’s and the old Seamar stretch boats. Everything is paid for and not costing a dime. They are all padlocked but bridled and saddled and ready to go. A crew could show up and have any one of them underway in an hour or so. Sorry Mr Doom and Gloom it sucks but the company isn’t going out of business just yet.
[QUOTE=Fraqrat;161224]It’s just older 240’s and 250’s and the old Seamar stretch boats. Everything is paid for and not costing a dime. They are all padlocked but bridled and saddled and ready to go. A crew could show up and have any one of them underway in an hour or so. Sorry Mr Doom and Gloom it sucks but the company isn’t going out of business just yet.[/QUOTE]
fine…those boats may be paid for but the ones coming aren’t unless they pay cash for their newbuilds then they are a cash drain as I said.
besides the comments are fair…I didn’t write the original article
Updated - - -
[QUOTE=bcoogan23;161225]Exactly, what did I tell you a few weeks ago about talking about OUR GoM and OUR boats. What is your obsession with hating on us???[/QUOTE]
I don’t hate YOU but I do hate Joe…
I disdain you GoM mariners for being Joe lovers and for your insular and provincial ways of operating vessels.
Unfortunately this is a sign of the times but this to shall pass. Todd is a very smart young man and his father was a very cunning business man. If I was a stockholder I would sleep well knowing they are doing what needs to be done in these trying times. I’m sure all of us are doing what we have to do to keep the companies going and as many of our Mariners working as possible. There is nothing we can do about things today it’s how we get through this and are better for it on the other side.
[QUOTE=Fraqrat;161224]It’s just older 240’s and 250’s and the old Seamar stretch boats. Everything is paid for and not costing a dime. They are all padlocked but bridled and saddled and ready to go. A crew could show up and have any one of them underway in an hour or so. Sorry Mr Doom and Gloom it sucks but the company isn’t going out of business just yet.[/QUOTE]
I guarantee that they aren’t paid for and they do cost money no matter how much you want them not to. It’s cash flow and debt… HOS has bonds and stock holders. Very intricate valuations involved and I assure you that tons of assets are a drag. That’s why boat companies go under. If it was as simple as locking up the vessel every boat company that ever existed would still be “in business”, just sitting in a forgotten bayou somewhere. If widgets sell for 2 dollar and it costeses you 3 dollar to make them, selling more (or keeping them locked up) don’t solve the problem.
[QUOTE=Jeaux Bawss;161227]Unfortunately this is a sign of the times but this to shall pass. Todd is a very smart young man and his father was a very cunning business man. If I was a stockholder I would sleep well knowing they are doing what needs to be done in these trying times. I’m sure all of us are doing what we have to do to keep the companies going and as many of our Mariners working as possible. There is nothing we can do about things today it’s how we get through this and are better for it on the other side.[/QUOTE]
Understood that layoffs and down turns are always a possibility. No guarantees in any business. But I think a lot of the animosity is in the selection process and who draws the short straw. As a matter of fact, drawing straws might be the fairest method… Was the selection process purely on seniority (the union method), or was it merit based? Would any of this have been spelled out for all to see? I think an understanding would help deter all the guys that spend every freaking penny they make from being so far in the hole. Not that that’s the employers responsibility but I think in the end it provides a more stable work force.
[QUOTE=Jeaux Bawss;161227]Unfortunately this is a sign of the times but this to shall pass. Todd is a very smart young man and his father was a very cunning business man. If I was a stockholder I would sleep well knowing they are doing what needs to be done in these trying times. I’m sure all of us are doing what we have to do to keep the companies going and as many of our Mariners working as possible. There is nothing we can do about things today it’s how we get through this and are better for it on the other side.[/QUOTE]
Every good manager knows nothing cheers people up like empty platitudes.
All of those vessels are paid for. I’m not putting company business out on the net. I’m sure it’s in annual reports somewhere if you need verification. The only thing it’s costing right now is probably insurance and whatever the rent is for the parking spot.
[QUOTE=Fraqrat;161242]All of those vessels are paid for. I’m not putting company business out on the net. I’m sure it’s in annual reports somewhere if you need verification. The only thing it’s costing right now is probably insurance and whatever the rent is for the parking spot.[/QUOTE] I wasn’t knocking HOS… But I was directly commenting on the “Irrational Exuberance”, and that cuts both ways. Companies don’t make gazillion dollars without risk and we don’t see, (guarantee we don’t fully understand), all the finance involved. The other side of the coin is that we as mariners are also deep in the “Irrational Exuberance” of never ending pay raises and we should have jobs no matter what the state of the economy i.e. “The company should provide for our well being no matter how broke they are going.”
Sir how do you come to this conclusion? If there is no money coming in how can I provide for your well being? Do I raid my personal bank accounts? Do I sell all of my personal belongings to raise cash to keep the payroll account solvent? This is disingenuous on your part. If you pay a neighborhood kid to do your yard work when winter comes do you still pay him even though there is no work to do? I have never heard of such in my life. If your lose your job should the bank absolve you of paying your mortgage regardless? Times are hard day rates are soft and charters are hard to come by. Everyone is hurting in some way and yes some more than others.
Unions aren’t there to protect you from real downturns. They are there to help make sure layoffs are conducted fairly according to contract and law. I’ve been laid off from shoreside union jobs. Generally, it’s last hired= first fired. Without a union, “Jeaux Bawss” can keep his favorites and shitcan the rest, no matter how long they’ve been there. Obviously there are advantages and disadvantages to both systems.
[QUOTE=Jeaux Bawss;161248]Sir how do you come to this conclusion? If there is no money coming in how can I provide for your well being? Do I raid my personal bank accounts? Do I sell all of my personal belongings to raise cash to keep the payroll account solvent? This is disingenuous on your part. If you pay a neighborhood kid to do your yard work when winter comes do you still pay him even though there is no work to do? I have never heard of such in my life. If your lose your job should the bank absolve you of paying your mortgage regardless? Times are hard day rates are soft and charters are hard to come by. Everyone is hurting in some way and yes some more than others.[/QUOTE] Sorry, my punctuation has caused you to misinterpret my comment. That was a continuation of the “Irrational Exuberance” on the mariners side of the equation. I by no means expect anyone to provide for my existence, quite the contrary.
[QUOTE=catherder;161252]Unions aren’t there to protect you from real downturns. They are there to help make sure layoffs are conducted fairly according to contract and law. I’ve been laid off from shoreside union jobs. Generally, it’s last hired= first fired. Without a union, “Jeaux Bawss” can keep his favorites and shitcan the rest, no matter how long they’ve been there. Obviously there are advantages and disadvantages to both systems.[/QUOTE]
If there is no basis to the job performance then that is a major flaw in my book. But the Jeaux Boss has his version of merit based on the good ol boy club. Neither seems unbiased? Maybe that’s why so many in the oil field stick with Jeaux… Easier to go with the flow, because you can’t bullshit the number of years on the job. Easier for a new guy to backstab his way to the top than waiting for others to retire.
I’ve been sitting in Fourchon for a week now and haven’t seen that many of the newer vessels idle. HOS might be the exception with 3-4 of them at HOS Port. Big Orange and others seem to have their newer ones out working.
I believe HOS does most of their business on the spot market more so than long term charters.
OP article came out same times as first quarter earnings. Quoted below. Seems like whatever they are doing is working. HOS stock is still a good value and I’m adding all the time.
• Hornbeck Offshore (HOS +10.1%) is one of the day’s biggest gainers after Q1 earnings trumped analyst expectations by a wide margin.
• Lower costs helped drive the strong Q1 result, as HOS’s operating expenses fell 10.5% Y/Y to $61M; HOS expects Q2 operating expenses of $60M-$65M.
• Q1 revenues fell 1.5% Y/Y to $134M, slightly trailing analyst estimates: HOs blames soft spot market conditions, which led it late last year to moor 18 of its offshore support vessels compared with none of the ships being kept out of service during the year-ago period.
• The lower revenue was partially offset by $18M in revenue earned from the full or partial-period contribution of 12 vessels that were placed in service since December 2013 under HOS’s fifth OSV newbuild program.
• Q1 average new generation OSV dayrates were $26,705, down $900 Q/Q and in-line with the prior-year quarter.
