Odyssey Marine Exploration, Inc. (NASDAQ:OMEX), a pioneer in the
field of deep-ocean exploration, reports results for the fourth
quarter and full year ended December 31, 2015.
Fourth Quarter 2015 Highlights
- Total revenue was $3.3 million compared to $0.3 million in
the fourth quarter of 2014 and was primarily related to a
project conducted under contract with a third-party entity.
- Net income was $2.2 million compared to a net loss of $5.2
million in the fourth quarter of 2014.
- Earnings per share, on a split adjusted basis, were $0.33
compared to a loss of $(0.72) in the fourth quarter of 2014.
- In the fourth quarter of 2015, Odyssey sold certain intangible
and tangible assets primarily related to its shipwreck business to
Monaco Financial LLC and affiliated entities for approximately $21
million in aggregate consideration (the “Monaco transaction”). As
part of the Monaco transaction, Odyssey retained a 21.25% interest
in the future net proceeds from shipwreck projects and entered into
an exclusive contract to provide shipwreck search and recovery
services.
- As a result of the Monaco transaction, (i) all of Odyssey’s
bank debt, which totaled $11.7 million, was repaid in full; (ii)
$2.2 million of Odyssey’s debt owed to Monaco Financial was
retired; (iii) a further $5 million of this debt ceased to accrue
interest and is only repayable under certain circumstances and only
from future proceeds from specified shipwreck projects; and (iv) a
$2.0 million loan, which was advanced in October and December of
2015, was forgiven.
Seabed Mineral Exploration Update The “Don
Diego” deposit is currently a focus of Odyssey’s mineral
exploration division. The company believes that the “Don
Diego” deposit contains phosphate rock that can be extracted on a
financially attractive basis and that the product will be
attractive to Mexican and other world producers of fertilizers.
Exploraciones Oceanicas (ExO), the Mexican
company that controls the "Don Diego" offshore phosphate resource,
has conducted extensive scientific testing of the mineralized
phosphate material and the environmental impact of recovering the
mineralized material from the seafloor. ExO has been working
with environmental experts on the impact assessment and permit
process, with potential partners on the extraction program, and
with financial advisors on the strategic growth alternatives.
A public hearing on the current Environmental Impact Assessment
(EIA) application was conducted by SEMARNAT on October 8, 2015,
additional questions were received from SEMARNAT in November 2015,
and ExO’s responses to the questions were filed with SEMARNAT on
December 3, 2015. In order to move to the next phase of
development of the deposit, Odyssey and its subsidiaries need the
approval of this environmental permit application. A decision on
this application is expected in the near future. Odyssey indirectly
owns 54% of the outstanding shares of a subsidiary, Oceanica
Resources S. de. R.L., which owns Exploraciones Oceanicos, S. R.L.
de CV, the Mexican operating company with the mining concession
containing the Don Diego phosphate deposit.
Shipwreck Projects UpdateIn the fourth quarter
of 2015, a third-party company contracted Odyssey to recover cargo
from a shipwreck located in the Mediterranean Sea. Odyssey
recognized $3.0 million of revenue in 2015 for these services. The
recovered cargo is the property of the contracting party and was
not part of the Monaco transaction summarized below.
On December 10, 2015, Odyssey sold certain
intangible and tangible assets primarily related to its shipwreck
business to Monaco Financial, LLC and affiliated entities for
aggregate consideration of approximately $21.0 million. The
company’s shipwreck database and research library was acquired by
Magellan Offshore Services, Ltd. (“Magellan”). However, Odyssey
retained its vessel, equipment, tools, and specialized offshore
team members. As part of the Monaco transaction, Magellan
agreed to exclusively hire Odyssey on a “cost plus” basis for any
shipwreck search and recovery projects conducted in the next five
years. In turn, Odyssey agreed not to compete with Magellan in the
shipwreck search and recovery business. Odyssey is also entitled to
receive 21.25% of the net proceeds from any monetization of
recovered cargo. As part of the Monaco transaction, Odyssey
retained four pre-existing projects, including the HMS Victory 1744
and HMS Sussex projects. Magellan may participate in funding
the recovery costs of these projects in the future, and will have
the right to receive up to 50% of Odyssey’s net proceeds, if
any.
Monaco Financial, LLC acquired all of Odyssey’s
remaining coins, ingots and bars from the SS Republic, “Tortugas,”
and SS Gairsoppa shipwrecks, as well as an interest in the proceeds
payable to Odyssey under the Master Services Agreement for the SS
Central America project. Monaco Financial also purchased Odyssey’s
headquarters building and leased office space back to Odyssey.
Seascape Artifact Exhibits acquired Odyssey’s artifact
collection, exhibits, and all of Odyssey’s shipwreck intellectual
property and copyrights, including video, photos and
publications.
Management Commentary“Following a productive
fourth quarter in 2015, we believe this year is off to a great
start with positive developments already coming to fruition. As we
continue to await the approval of our ‘Don Diego’ environmental
permit, the MINOSA team’s ongoing cooperation and support, in
conjunction with the recent agreement with Epsilon, reinforces our
belief that MINOSA is the right partner for Odyssey's offshore
mineral exploration business,” said Mark Gordon, Odyssey chief
executive officer and president. “Additionally, we recently
regained compliance with NASDAQ’s continued listing
requirements.”
Fourth Quarter and Full Year 2015 Financial
ResultsTotal revenue in the fourth quarter of 2015 was
$3.3 million, compared to $0.3 million in the same year-ago
quarter. Total revenue for the full year of 2015 was $5.3 million
versus $1.3 million in 2014, an increase of $4.0 million.
$3.3 million of the revenue in 2015 resulted from providing marine
exploration services to third parties, primarily for a shipwreck
recovery project in the fourth quarter, and $1.9 million of the
2015 revenue resulted from the sale of inventory items such as
coins. The 2014 revenue was primarily due to coin sales and
the sale of gold obtained from refining the silver bullion
recovered from the Gairsoppa shipwreck.
Operations and research expenses in the fourth
quarter of 2015 were $2.4 million compared to $4.5 million in the
same quarter of the prior year. For the full year 2015, operations
and research expenses were $11.4 million as compared to $19.5
million in 2014. The $8.0 million decrease in 2015 is
primarily due to (a) lower costs in 2015 associated with the Dorado
Discovery vessel that came off a long term lease in August 2014,
and (b) our Odyssey Explorer vessel was operating offshore for most
of 2014, whereas in 2015 it only operated offshore for part of the
year. The 2014 period included a credit to expenses of $6.3 million
for the priority cost recoupment on the SS Central America
shipwreck project. Excluding this credit to expenses of $6.3
million in 2014, operations and research expenses actually
decreased by $14.3 million in 2015.
Marketing, general and administrative expenses
in the fourth quarter of 2015 were $2.9 million compared to $1.6
million in the same year-ago quarter. For the full year 2015,
marketing, general and administrative expenses increased from $9.8
million in 2014 to $11.5 million. This $1.7 million variance
is primarily due to (i) a reversal of a bad debt provision of $0.5
million in 2014, (ii) higher legal and transaction costs in 2015
related to the Stock Purchase Agreement with MINOSA, (iii) the
accelerated vesting of restricted stock units related to the
retirement of the Company’s former general counsel in June 2015,
and (iv) the accrual of compensation expenses for 2015.
The net income for the fourth quarter of 2015 was $2.2 million,
or $0.33 per share, compared to net loss of $5.2 million, or
$(0.72) per share, in the same quarter of the prior year. For the
full year 2015, the net loss was $18.2 million, or $(2.46) per
share, compared to a net loss of $26.5 million, or $(3.74) per
share, in 2014. The improvement in the net results in the
fourth quarter of 2015 and the full year 2015 are due primarily to
the reduction in the expenses related to vessel operations and to
the gain of $5.6 million recognized in the fourth quarter of 2015
related to the Monaco transaction.
Cash and cash equivalents totaled $2.2 million
as of December 31, 2015, compared to $3.1 million a year earlier.
The decrease was mainly the result of cash used in
operations. Although there were significant cash inflows from
financing activities ($15.5 million) in 2015, operating activities
consumed $17.2 million of cash. The operating cash flows
improved by 40% from the previous year primarily as a result of
reducing the marine expenditures on vessels.
Cash flows provided by financing activities in
2015 were $15.5 million. During this period, Odyssey borrowed
$14.75 million from MINOSA and $2.0 million from Monaco. On
December 10, 2015, Odyssey repaid all of its bank loans, which
resulted in the release of $0.5 million in restricted cash that had
been required to be maintained in a restricted bank account related
to the bank loans. This cash inflow was partially offset by
repayment of debt obligations, which included $0.7 million in
mortgage payable reductions after the sale of our Nassau Street
building and an additional $1.1 million in payments on the term
loan from Fifth Third Bank.
Consolidated financial statements as well as Odyssey’s Annual
Report on Form 10-K for the year ended December 31, 2015, are
available on the company's website at www.odysseymarine.com as well
as at www.sec.gov.
Conference CallOdyssey will not hold a
conference call to discuss the fourth quarter and annual results at
this time. Once significant corporate developments occur, we will
schedule a conference call to update shareholders. Shareholders
with questions about the Odyssey’s fourth quarter and full year
2015 results may submit inquiries by emailing
IR@odysseymarine.com.
About Odyssey Marine Exploration Odyssey Marine
Exploration, Inc. (Nasdaq:OMEX) is engaged in deep-ocean
exploration using innovative methods and state of-the-art
technology for shipwreck projects and mineral exploration. For
additional details, please visit www.odysseymarine.com. The company
also maintains a Facebook page at
http://www.facebook.com/OdysseyMarine and a Twitter feed
@OdysseyMarine. For additional details on Odyssey Marine
Exploration, please visit www.odysseymarine.com.
Forward Looking InformationOdyssey Marine
Exploration believes the information set forth in this Press
Release may include "forward looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Act of 1934. Certain factors that could cause results to differ
materially from those projected in the forward-looking statements
are set forth in "Risk Factors" in Part I, Item 1A of the Company's
Annual Report on Form 10-K for the year ended December 31, 2015,
which was filed with the Securities and Exchange Commission on
March 30, 2016. The financial and operating projections as well as
estimates of mining assets are based solely on the assumptions
developed by Odyssey that it believes are reasonable based upon
information available to Odyssey as of the date of this release.
All projections and estimates are subject to material
uncertainties, and should not be viewed as a prediction or an
assurance of actual future performance. The validity and accuracy
of Odyssey's projections will depend upon unpredictable future
events, many of which are beyond Odyssey's control and,
accordingly, no assurance can be given that Odyssey's assumptions
will prove true or that its projected results will be achieved.
Cautionary Note to U.S. InvestorsThe U.S.
Securities and Exchange Commission (SEC) permits mining companies,
in their filings with the SEC, to disclose only those mineral
deposits that a company can economically and legally extract or
produce. We use certain terms in this press release, such as
“measured” “indicated,” and “inferred” “resources,” which the SEC
guidelines strictly prohibit us from including in our filings with
the SEC. "Inferred mineral resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all
or any part of an inferred mineral resource will ever be upgraded
to a higher category. U.S. investors are cautioned not to assume
that part or all of the inferred mineral resource exists, or is
economically or legally mineable, and urged to consider closely the
disclosures in the our Form 10-K which may be secured from us or
from the SEC’s website at http://www.sec.gov/edgar.shtml.
CONTACT:
Liz Shows
Odyssey Marine Exploration, Inc.
(813) 876-1776 x 2335
lshows@odysseymarine.com
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