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Non-Tech : Hvide Marine HMAR - High Growth, Undervalued
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To: Grommit who wrote (398)6/10/1998 1:29:00 PM
From: Grommit  Read Replies (2) of 547
 
Dayrates and back to basics. I have seen rumors here and there of oodles of boats idle in the gulf and of dayrates at $7000.

I think I posted it already, but I called HMAR last week and was told that all boats are working. Dayrates in the high $79xx. I called TDW today and was told that a few boats are idle and dayrates are $7500. I would not read too much into the different answers -- the key is not whether dayrates are $7900 or $7500 rather utilization rates. TDW says their utilization is down to 80%, which implies more than a few boats not working -- but not working for what reason? Idle or maintenance? I could not find out. They have 140 supply boats in the gulf. Let's say 90% is full utilization. So, if their 80% utilization is true, at most, TDW has 14 boats idle. But I would put more weight on the direct answer of "a couple of boats idle". Anyway, it is inconceivable that TDW would trash the datrates on 120 boats to keep the last 2-10 boats working.

With $7500 dayrate HMAR revenue drops by... 28 boats * $1000 lower dayrate * 86% utilization * 90 days = $2.2 million per quarter lower revenue/profit before tax.

Then $2.2 million * .60% after tax / 19.5 million shares = $0.067 EPS per qtr. As long as utilization stays high, the EPS reduction is modest.

Clearly the immediate situation is not what is driving the prices of these stocks, people are assuming a much larger decline in fundamentals. Fundamentals = demand and supply of boats.

Historical demand is here: offshore-data.com Future demand is not available. Supply depends on new builds, redeployments and retirements which is a bitch to get. Last discussion I heard was that a bunch of new boats are coming out this summer, but are mainly contracted to new rigs. Should be only a modest downer on dayrates.

I keep getting the feeling that I am missing something. Any ideas?
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