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DVR Message Board

  • wazoo_wazoo_wazoo wazoo_wazoo_wazoo Nov 7, 2012 7:09 PM Flag

    Cal Dive Int'l (DVR) Misses Q3 EPS by 16c; Implements Restructuring Plan

    Cal Dive Int'l (DVR) Misses Q3 EPS by 16c; Implements Restructuring Plan
    6:06 PM ET, 11/07/2012
    Cal Dive Int'l (NYSE: DVR) reported Q3 EPS of ($0.17), $0.16 worse than the analyst estimate of ($0.01). Revenue for the quarter came in at $138.11 million versus the consensus estimate of $142.07 million.

    In response to the Gulf of Mexico market conditions experienced in 2012, during the third quarter the Company implemented a domestic restructuring plan that included consolidating departments and facilities, head-count reductions and selling non-core assets. The Company expects the restructuring to result in annual cost savings of approximately $15 million, $10 million of which will be cash cost savings, which will have a positive effect on EBITDA. Approximately $4 million of the cash cost savings will be from SG&A and the remainder from operations support overhead which is included in cost of sales on the Company s consolidated income statement. Severance charges of $2.2 million were recorded during the third quarter 2012 and were added back to EBITDA under the Company s credit facility with no impact on debt covenants.

    The Company is actively marketing for sale certain non-core assets that are expected to produce minimal EBITDA in 2012 and, for certain assets, that provided no EBITDA contribution for some time and have been impaired in prior years. As part of this plan, the Company expects to complete sales of certain under-utilized facilities by year-end for proceeds up to approximately $9 million. Proceeds will be used to reduce the balance of the existing term loan.

    The assets being marketed are classified as held for sale on the Company s consolidated balance sheet as of September 30, 2012. Based on a market evaluation of the assets and expected sales proceeds, the Company recorded an after-tax non-cash impairment charge of $14.8 million in the third quarter 2012. The net book value of these assets prior to the impairment charge was approximately $41.9 million. The majority of the impairment charge relates to two construction barges and three portable diving systems. Any net proceeds from the asset sales are expected to be used to repay debt. The exact timing of the asset sales is uncertain but pursuing these sales and repaying debt is a key focus for the Company going forward.