News & Media
Odyssey Marine Exploration Announces Second Quarter 2006 Results
Revenue Doubles from First to Second Quarter in 2006
Tampa, FL - August 7, 2006 - Odyssey Marine Exploration (AMEX: OMR) Inc., a leader in the field of deep-ocean shipwreck exploration, today filed a quarterly report with the Securities and Exchange Commission detailing results of the Company's second quarter 2006.
For the second quarter 2006, Odyssey reported revenue of $2.0 million compared to $3.8 million in the second quarter 2005. The Company also reported a net loss of $4.1 million, compared to a net loss of $1.0 million in 2005. The net loss per share for the second quarter 2006 was $.09, compared to a net loss of $.03 in the second quarter 2005. (Second-quarter 2006 earnings included the expense associated with adopting Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment, which requires the expensing of stock options. The adoption of SFAS 123(R) resulted in a second-quarter 2006 EPS impact of $0.01 per share.)
"While we remain disappointed with our financial results, we are encouraged by our quarter to quarter revenue improvement, which included doubling our revenue from the first quarter 2006. We will continue to implement key changes to our strategic business plan, which are already showing results, while we continue to aggressively search for deep-ocean shipwrecks that can be archaeologically excavated and capitalized relatively quickly," said John C. Morris, Odyssey's Chairman and CEO.
Second Quarter 2006 Results
Revenue for the second quarter 2006 was $2.0 million compared to $3.8 million in the second quarter 2005. Revenues are generated primarily through the sale of gold and silver coins, but also include other artifacts and merchandise. Also, included in the Company's revenue for 2006 was $.1 million of admissions and merchandise sales from its themed attractions segment.
The decrease of $1.8 million in 2006 was due to a lower availability of high-value numismatic gold coins, sales to fewer independent coin dealers, and a shift to a higher volume of lower priced silver coins. Odyssey's experience has shown that many of these independent dealers are primarily interested in higher quality numismatic gold coins. As the Company's availability of these higher quality gold coins diminishes, it expects the number of independent dealers interested in its coins to be reduced.
After investigating opportunities to increase revenue and reduce expenses without compromising the overall strategic business plan, the Company decided earlier in the year to restructure its business development and sales functions. Direct sales (e.g. inbound and outbound call center and related infrastructure) were outsourced to an experienced direct marketing call center partner so the internal business development team can focus on indirect (wholesale) sales channels and joint venture opportunities.
While marketing programs associated with this restructuring are still ramping up, initial results are positive. Marketing channel tests underway, including direct mail, outbound tele-sales, financial newsletter inserts and catalog sales, are generating sales results at or above forecast levels. Odyssey plans to add additional channels to this mix in 2006.
Operations and research expenses were $3.7 million in the second quarter of 2006, compared to $2.8 million in 2005. Of the $.9 million increase, $.5 million was due to additional usage of the Company's leased vessel and mobilization expenses associated with the recently purchased vessel, and $.4 million was due to operational costs of the themed attractions segment, primarily associated with the New Orleans attraction which was closed 2005, and re-opened in February 2006.
Marketing, general and administrative expenses were $2.2 million in the second quarter 2006 as compared to $2.3 million in 2005. The decrease of $.1 million is primarily related to lower marketing expenses of $.3 million, offset by higher shared-based compensation costs related to adoption of FASB 123R in 2006.
QUARTERLY OPERATIONAL REVIEW
In the past, Odyssey has occasionally disclosed information concerning each of its existing and planned search operations. As the Company may have entered into agreements with parties who have provided information regarding targets, and in order to protect the identities of targets in Odyssey's operations, the Company will defer disclosing specific information relating to search targets or agreements until it has located targeted shipwreck or shipwrecks and determined the most appropriate course of action to protect Odyssey's property rights.
Ongoing Shipwreck Projects
For the first time in Odyssey's history, the Company has three large research ships (the Odyssey Explorer, a leased vessel, and Odyssey's newly purchased search vessel) working simultaneously on shipwreck expeditions. Odyssey's leased vessel continues to conduct side-scan and magnetometer search operations and anomaly inspections for the "Atlas" search project. The new search vessel recently purchased by the Company is also mobilized and currently conducting inspections on targets previously located.
Odyssey's 251' deep-ocean archaeological platform, the Odyssey Explorer is presently conducting operations. For security reasons, information relating to these operations may not be disclosed until completion of recovery operations if and when they occur.
Odyssey's 2006 expansion of search and excavation capabilities and operations reflects the Company's focus on and commitment to its core business - finding high-value shipwrecks.
In March 2006, the Company submitted an archaeological plan which addressed issues raised by the Autonomous Region of Andalucia and the central Spanish government in reference to the ongoing HMS Sussex project. In May 2006, a response was received from the Ministry of Foreign Affairs with several technical questions raised by the Junta of Andalucia. In early June, Odyssey provided clarification on these points to the Kingdom of Spain's Ministry of Foreign Affairs through the offices of the Embassy of the United Kingdom.
As part of the archaeological plan, Odyssey has agreed to undertake additional survey operations in the area and to provide Andalucia with a detailed survey of the region's underwater cultural heritage in deep water, as well as assistance in developing a plan for managing those resources.
Odyssey is continuing to work in a cooperative manner with the Junta of Andalucia and the central Spanish government and is awaiting final comments on the plan before resuming operations on the shipwreck believed to be HMS Sussex. Based on communications from the Spanish Government and other sources, the Company anticipates that the archaeological plan will be deemed acceptable and Odyssey plans to begin work on the Sussex project later in 2006, according to a schedule that allows Odyssey to continue work on one of its other projects until the weather window closes.
HMS Sussex was an 80-gun English warship lost in a severe storm in the western Mediterranean in 1694. Research suggests the Sussex was carrying a large cargo of coins when she sank. Odyssey believes it has located the shipwreck of HMS Sussex and has signed an exclusive partnering agreement with the legal owner of the shipwreck, the Government of the United Kingdom, for the archaeological excavation of the shipwreck.
Odyssey has already completed to the satisfaction of the Government of the United Kingdom all work detailed in Phase 1A of the Sussex archaeological project plan. The Company has also completed a portion of Phase 1B. (A public version of the project plan is available for viewing at www.shipwreck.net.)
About Odyssey Marine Exploration
Odyssey Marine Exploration is an American Stock Exchange Company with several shipwreck projects in various stages of development throughout the world. Additional information about Odyssey, its projects, methodologies and technologies, is available at www.shipwreck.net.
For additional information, please contact John McNeilly, Odyssey's Associate Director of Corporate Communications, at 813-876-1776 (ext. 2553).
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