Hornbeck Offshore Services, Inc. (NYSE:HOS)

Hornbeck Offshore Services, Inc. (NYSE:HOS) New Credit Facility

Hornbeck Offshore Services, Inc. (NYSE:HOS)

Hornbeck Offshore Services, Inc. (NYSE:HOS) financial flexibility has received a major boost with the signing of a new credit facility agreement. Under the terms of the agreement, the company will refinance its existing $200 million senior secured revolving credit facility with a new first-lien, “delayed draw” credit facility. The six-year term agreement provides the company with $300 million.

New Credit Facility

The new credit facility will accrue an interest rate of either LIBOR rate or base rate, at the company’s option. Hornbeck Offshore says it will focus its efforts on lowering the interest rate to lower the current call protection to two years.

The facility increases Hornbeck Offshore Services, Inc. (NYSE:HOS)’s applicable borrowing base from $75 million in addition to extending the maturity date by over three years. Funds from the new facility are to be used for general corporate purposes as well as for working capital. Hornbeck also plans to acquire a number of distressed assets in the market.

Hornbeck Offshore Woes

The pursuit by Hornbeck Offshore Services, Inc. (NYSE:HOS) of a new credit facility does not come as a surprise given that its cash balance has come under pressure. The company recently posted a wider than expected first quarter net loss. The offshore company says it generated a net loss of $27.9 million for the first three months of the year, up from a net loss of $7.5 million as of Q1 2016.

The company appears to be struggling with its core business as its revenues have dropped by 42.6% to $32.7 million in the quarter. Weak global market conditions continue to hurt operations leading to an increase in vessels stacked. As of the end of the first quarter, the company had an average of 45.9 vessels stacked compared to 33.7 a year ago.

“[…]The Company’s active fleet for 2017 is expected to be comprised of an average of 17.2 new generation OSVs and 6.1 MPSVs. With an assumed average of 46.0 new generation OSVs and 2.0 MPSVs projected to be stacked during fiscal 2018, the Company’s active fleet for 2018 is expected to be comprised of an average of 16.0 new generation OSVs and 7.3 MPSVs,” Hornbeck Offshore Services, Inc. (NYSE:HOS) in a statement.

Hornbeck Offshore Services, Inc. (NYSE:HOS) Operating expenses in the quarter dropped to $27.9 million from $40.4 million, helped by a decrease in the company’s active fleet. General and administrative expenses on the other hand nearly doubled to $14.2 million from $8.7 million. Hornbeck Offshore attributes the increase to bad debt reserves and an increase in short-term incentive compensation.

Hornbeck Offshore Services, Inc. (NYSE:HOS) stock was up by 33.33% in Friday’s trading session to end the week at $2.64 a share. Today HOS shares are down around 5%.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

Hornbeck Offshore Services, Inc. (NYSE:HOS) Hits Weekly Highs

Hornbeck Offshore Services, Inc. (NYSE:HOS)

Hornbeck Offshore Services, Inc. (NYSE:HOS) received good news from the debt markets and a key analyst last week. Today the stock’s low was just $0.06 off its 52-week lows but HOS shares did end up on their highs for the preceding week of trading. On Friday HOS closed at $3.20 and opened today at $3.16 and closed up almost 16% at $$3.71. Additionally, Todd Hornbeck, President and CEO, purchased 61,250 shares last Thursday.

Hornbeck Offshore Services, Inc. (NYSE:HOS) provides marine transportation, subsea installation, and accommodation support to oilfield exploration and production companies as well as offshore construction, and the U.S. military. It operates primarily in the Gulf of Mexico but also has operational capabilities in Latin America as well as select other international locales. Hornbeck Offshore Services, Inc. (NYSE:HOS) is headquartered in Covington, LA.

Last week, Hornbeck Offshore Services, Inc. (NYSE:HOS) got some good news from the debt markets. Its 2020 5.875% bond rose in price 1.5% against its face value. Additionally, Zack’s investment analysts raised their rating on HOS to a “Hold” rating from a “Sell”. That brings the total number of “Hold” ratings on HOS to six while one analyst rates HOS shares as a “Strong Buy”.

There is a strong short position on Hornbeck Offshore Services, Inc. (NYSE:HOS) equal to over 35% of the float. Given HOS share’s volumes, that equates to a short ratio of 9.29. The 52-week low for Hos is $3.00 and the 52-week high is $12.57. Analyst’s consensus price target for HOS is $8.00.

Sales and EPS has been sliding since 2014. EPS in 2014 was $2.43 but that declined to a figure of a loss of -$1.76 in 2016. The 2014 sales figure for Hornbeck Offshore Services, Inc. (NYSE:HOS) was $634.8 million but that number shrank to $224.3 million in 2016. On a brighter note – the number of outstanding shares of HOS has remained stable and dilution has not been a concern for investors.

3/20/2017
Ticker Symbol HOS
Last Price a/o 4:00 PM EST  $                      3.71
Average Volume                1,240,000
Market Cap (mlns)  $                  135.30
Sales (mlns) $224.30
Shares Outstanding (mlns) 36.47
Share Float (mlns) 32.11
Shortable Yes
Optionable Yes
Inside Ownership 11.00%
Short Float 35.76%
Short Interest Ratio 9.29
Quarterly Return -51.82%
YTD Return -48.61%
Year Return -64.02%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.