Roundhill Acquirers Deep Value ETF

Revenue for the third quarter of 2007 was $75.5 million, compared with $41.9 million in Q2 2007 and $64.4 million in Q3 2006. Adjusted EBITDA was $11.1 million versus $22.8 million in Q3 2006, and net income was $3.6 million, or $0.14 per share, versus $13.7 million, or $0.92 per diluted share, in Q3 2006. SG&A was $10.3 million, including $3.3 million of non-cash stock-based compensation; D&A was $2.2 million. One-time charges in net income totaled $900,000, or $0.03 per share. Full-year 2007 revenue is expected to be $265 million to $275 million. Q4 2007 adjusted EBITDA is expected to be $16 million to $18 million, and Q4 EPS is expected to be $0.12 to $0.16, including one-time charges of $0.16 to $0.20 per share related to severance and debt extinguishment. 2008 revenue is expected to be $320 million to $350 million, excluding any revenue from the Superior Achiever. Capital expenditures were $117 million through September 30, with $17 million expected in Q4 and about $39 million remaining for completion of the Achiever.

Jim Mermis framed the quarter as a step forward in a broader transformation from a Gulf of Mexico shallow-water operator into an international subsea construction and project management company. He emphasized Trinidad as proof of the strategy, along with Ocean Flow, new engineering hires, the Middle East office, and plans to move four-point vessels into higher-return international markets such as West Africa and the Middle East. His tone was optimistic about the long-term repositioning, but he repeatedly acknowledged that the company was not fully there yet and that Gulf of Mexico shallow-water demand remained soft.

Roger Burks highlighted the quarter’s core numbers and the main drivers behind them: stronger Trinidad revenue, but lower earnings power from the Endeavor and Gulmar Falcon drydockings and soft four-point/callout diving demand. He noted SG&A of $10.3 million, including $3.3 million of stock comp, D&A of $2.2 million, and one-time charges of $900,000; he also said stock-based compensation should fall to about $9 million in 2008. On the balance sheet and capital plan, he cited $59.2 million of long-term debt, covenant amendments and waivers, a pending refinancing of the term loan, $117 million of capex through September 30, $17 million expected in Q4, and about $39 million remaining for the Achiever.

Analysts focused on where growth would come from in 2008, especially international backlog, the Gulf of Mexico outlook, capital spending, covenant pressure, and insider selling. Management said it had about $300 million of bids out in West Africa and the Middle East, expected awards in the near term, and reiterated that 2008 guidance excludes the Toisa Puma and any Superior Achiever revenue. On liquidity, Burks said the company had adjusted revolver covenants, was close to a new term loan commitment, and felt comfortable going into next year, while Mermis defended insider sales as tax/diversification-related and said he still held more than eight times his yearly earnings in company stock.