"Friede Goldman Halter Announces Financial Results"
Monday November 13, 7:07 pm Eastern Time
Press Release
GULFPORT, Miss.--(BUSINESS WIRE)--Nov. 13, 2000--Friede Goldman Halter, Inc. (NYSE:FGH - news) today announced third-quarter 2000 results for the period ending September 30, 2000. The Company reported a net loss of $9.4 million, or $0.19 per fully diluted share, on revenue of $162.2 million. For the comparable 1999 period, the Company reported a net loss of $8.5 million, or $0.36 per fully diluted share. Results for the current period incorporate the results of Halter Marine Group, which was acquired by Friede Goldman International in a stock-for-stock merger on November 3, 1999.
The Offshore segment's operating loss of $4.0 million on revenues of $88.6 million contributed to the Company's financial results for the quarter mainly due to cost overruns on existing contracts. The Engineered Products and Vessels segments reported profit from operations for the quarter.
The Company continued its efforts to reduce selling, general and administrative (SG&A) expenses during the quarter. SG&A expenses totaled $14.4 million for the quarter, compared to $21.1 million in the third quarter of 1999 for the combined companies on a pro-forma basis. At the current run rate, SG&A for fiscal year end 2000 is expected to be less than $60.0 million compared to the $86.2 million for the combined companies on a pro forma basis in fiscal 1999.
Backlog for the Company totaled $403.5 million at September 30, 2000 and consisted of $171.3 million from the Offshore segment, $144.1 million from the Vessels segment and $88.1 million from the Engineered Products segment. Backlog at September 30, 2000 does not include approximately $53.0 million in contracts that were announced in October.
On October 24, 2000, the Company entered into a three year $110.0 million credit agreement, which is comprised of a $70.0 million line of credit and a $40.0 million term loan.
``We've had several recent significant events,'' said John Alford, chief executive officer and president of Friede Goldman Halter. ``First, the completion of $110.0 million of financing and the sale of our boat repair yards improved our financial condition. Second, the backlog announced in the last two months and the projects currently being negotiated, are indications that market conditions are improving. We had expected this increase in activity to develop earlier and this is reflected in our results. With commodity prices remaining strong, we expect to see increased activity as we move into 2001. Third, we have completed significant consolidation through reduction in the number of our facilities. We feel we are now at the optimum size to sustain anticipated improved market conditions. We have continued to reduce SG&A and will pursue more efficient operations.''
Since the merger of approximately a year ago, the Company has reduced SG&A, debt and the number of facilities along with successfully consolidating the offshore division. The Company has also spent significant efforts and resources on two unprofitable contracts that started construction in 1998. The Company is focused on completing these projects as soon as possible and continuing its efforts towards building profitable backlog. The Company is starting to see improved market conditions based on recent project announcements. Its three business segments have historically had strong market share and customer loyalty and the Company intends to capitalize on these strengths going forward.
Friede Goldman Halter is a world leader in the design and manufacture of equipment for the maritime and offshore energy industries. Its operating units are Friede Goldman Offshore (construction, upgrade and repair of drilling units, mobile production units and offshore construction equipment), Halter Marine (construction of ocean-going vessels for commercial and governmental markets), FGH Engineered Products Group (design and manufacture of cranes, winches, mooring systems and marine deck equipment), and Friede & Goldman Ltd. (naval architecture and marine engineering).
Note: This press release includes certain statements that may be deemed to be ``forward-looking statements'' within the meaning of Section 27A of The Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Friede Goldman Halter expects, believes or anticipates will or may occur in the future, are forward-looking statements. These statements are based on certain assumptions and analyses made by Friede Goldman Halter, Inc. in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Friede Goldman Halter and which are discussed in Friede Goldman Halter's Registration Statement on Form S-3, the 1999 Annual Report on Form 10-K, and subsequent Forms 10-Q. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.
FRIEDE GOLDMAN HALTER, INC.
Consolidated Income Statement and Other Information by Segment
Nine Months Ended September 30, 1999
(Unaudited)
(in millions)
Three Months Ended Nine Months Ended
Sept 30 Sept 30
2000 1999 2000 1999
--------- -------- --------- ---------
Contract revenue earned $ 162.2 $ 51.7 $ 568.0 $ 330.3
Cost of revenue earned 153.6 56.1 546.1 288.7
--------- -------- --------- ---------
Gross profit (loss) 8.6 (4.4) 21.9 41.6
Selling, general and
administrative expenses 14.3 6.7 43.0 24.3
Amortization of goodwill 1.9 0.4 5.7 0.6
--------- -------- --------- ---------
Operating income (loss) (7.6) (11.5) (26.8) 16.7
Other expense (income):
Interest expense 7.9 1.4 25.5 3.1
Other, net (0.6) -- 0.1 --
--------- -------- --------- ---------
Income (loss) before income
taxes (14.9) (12.9) (52.4) 13.6
Income tax expense (benefit) (5.5) (4.4) (21.8) 4.1
--------- -------- --------- ---------
Net income (loss) $ (9.4) $ (8.5) $ (30.6) $ 9.5
========= ======== ========= =========
Net income (loss) per share $ (0.19)$ (0.36)$ (0.71)$ 0.41
Net income (loss) per share,
diluted $ (0.19)$ (0.36)$ (0.71)$ 0.40
Weighted average shares
outstanding:
Basic 48.8 23.4 43.2 23.4
Diluted 48.8 23.4 43.2 23.6
Depreciation expense:
Included in cost of
revenue earned 4.6 3.1 14.1 6.0
Included in SG&A expenses 0.2 -.06 1.2 1.0
--------- -------- --------- ---------
Total depreciation 4.8 2.5 15.3 7.0
========= ======== ========= =========
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
FRIEDE GOLDMAN HALTER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2000 1999
---------- ----------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 70,550 $ 15,124
Accounts receivable 69,306 143,037
Income tax receivable 591 38,657
Inventories 45,033 45,261
Costs and estimated earnings
in excess of billings on
uncompleted contracts 80,409 143,769
Prepaid expenses and other 12,879 17,048
Deferred income tax asset 16,950 45,403
---------- ----------
Total current assets 295,718 448,299
---------- ----------
Investment in unconsolidated
subsidiary 13,035 13,035
Property, plant and equipment,
net of accumulated depreciation 267,696 334,642
Goodwill, net of accumulated
amortization 196,666 195,137
Other assets 9,035 9,779
---------- ----------
$ 782,150 $1,000,892
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt, including
current portion of long-term
debt $ 7,399 $ 13,645
Accounts payable 96,251 115,918
Accrued liabilities 69,197 117,966
Reserve for losses on
uncompleted contracts 32,222 66,226
Billings in excess of costs
and estimated earnings on
uncompleted contracts 41,829 50,725
--------- ---------
Total current liabilities 246,898 364,480
Deferred income tax liability 10,485 56,190
Long-term debt, less current
portion 209,319 299,075
Other 445 --
--------- ---------
Total liabilities 467,147 719,745
--------- ---------
Deferred government subsidy, net
of accumulated amortization 30,363 33,026
Stockholders' equity:
Preferred stock -- --
Common stock 487 400
Additional paid-in capital 299,571 230,166
Retained earnings (deficit) (12,110) 18,520
Treasury stock (199) --
Accumulated other comprehensive
income (loss) (3,109) (965)
--------- ----------
Total stockholders' equity 284,640 248,121
--------- ----------
$ 782,150 $1,000,892
========= ==========
FRIEDE GOLDMAN HALTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Contract revenue
earned $ 162,180 $ 51,699 $ 568,039 $ 330,345
Cost of revenue
earned 153,551 56,132 546,182 288,762
--------- --------- --------- ---------
Gross profit (loss) 8,629 (4,433) 21,857 41,583
Selling, general and
administrative expenses 14,376 6,720 43,008 24,299
Amortization of goodwill 1,881 380 5,643 555
--------- --------- --------- ---------
Operating
income (loss) (7,628) (11,533) (26,794) 16,729
--------- --------- --------- ---------
Other expense:
Interest
expense, net 7,871 1,404 25,542 3,109
Other (590) 16 50 61
--------- --------- --------- ---------
Total other
expense 7,281 1,420 25,592 3,170
--------- --------- --------- ---------
Income (loss)
before income
taxes (14,909) (12,953) (52,386) 13,559
Provision for
income tax
expense (benefit) (5,507) (4,425) (21,766) 4,051
--------- --------- --------- ---------
Net income (loss) $ (9,402) $ (8,528) $ (30,620) $ 9,508
========= ========= ========= =========
Net income
(loss) per share:
Basic $ (0.19) $ (0.36) $ (0.71) $ 0.41
========= ========= ========= =========
Diluted $ (0.19) $ (0.36) $ (0.71) $ 0.40
========= ========= ========= =========
Weighted average
shares outstanding:
Basic 48,778 23,428 43,234 23,353
Diluted 48,778 23,428 43,234 23,586
The accompanying notes are an integral part of these financial statements.
2. Business Segments
Effective with the merger with HMG on November 3, 1999, the Company classifies its business into three segments: Vessels, Offshore, and Engineered Products. Operations within the Vessels segment include the new construction and repair of a wide variety of vessels for the government, offshore energy and commercial markets. Effective with the sale of the Company's vessel repair business as discussed Note 8, the Company is no longer engaged in the business of vessel repair. Operations within the Offshore segment include the new construction, conversion and repair of mobile offshore drilling rigs and production platforms. Operations within the Engineered Products segment include the design, manufacture and marketing of cranes, mooring systems, derricks, and other marine deck equipment.
The Company evaluates the performance of its segments based upon income before interest and income taxes as these expenses are not allocated to the segments.
Selected information as to the operations of the Company by segment is set forth below (in thousands).
Three months ended September 30, 2000
-------------------------------------
Engineered
Vessels Offshore Products Corporate Total
------- -------- ---------- --------- -----
Revenues $ 40,960 $ 88,591 $ 32,629 $ - $ 162,180
Operating
income
(loss) $ 673 $ (4,015) $ 4,285 $ (8,571) $ (7,628)
Total
assets $ 118,117 $ 277,611 $ 59,553 $ 326,869 $ 782,150
Three months ended September 30, 1999
-------------------------------------
Engineered
Offshore Products Corporate Eliminations Total
-------- ---------- --------- ------------ -----
Revenues $ 46,503 $ 5,196 $ - $ - $ 51,699
Operating
income
(loss) $ (8,766) $ (689) $ (2,078) $ - $(11,533)
Total
assets $ 207,708 $ 50,866 $ 65,331 $ (47,844) $276,061
Nine months ended September 30, 2000
------------------------------------
Engineered
Vessels Offshore Products Corporate Total
------- -------- ---------- --------- -----
Revenues $186,126 $292,737 $89,176 $ - $568,039
Operating
income
(loss) $17,407 $(28,232) $7,258 $(23,227) $(26,794)
Nine months ended September 30, 1999
------------------------------------
Engineered
Offshore Products Corporate Total
-------- ---------- --------- -----
Revenues $303,717 $26,628 $ - $330,345
Operating
income
(loss) $24,152 $323 $(7,746) $16,729
--------------------------------------------------------------------------------
Contact:
Friede Goldman Halter, Inc.
Chris Cunningham, 228/897-4987
www.fgh.com
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