Oceaneering Announces Record First Quarter Earnings

-- Reports First Quarter 2013 EPS Above Guidance

-- Raises 2013 EPS Guidance Range to $3.10 to $3.30

-- Initiates Second Quarter 2013 EPS Guidance of $0.81 to $0.86

Apr 23, 2013, 17:01 ET from Oceaneering International, Inc.

HOUSTON, April 23, 2013 /PRNewswire/ -- Oceaneering International, Inc. (NYSE: OII) today reported record first quarter earnings for the period ended March 31, 2013.

On revenue of $718.6 million, Oceaneering generated net income of $74.8 million, or $0.69 per share.  During the corresponding period in 2012, Oceaneering reported revenue of $594.9 million and net income of $51.5 million, or $0.47 per share.

Summary of Results (in thousands, except per share amounts)

 

 

                       Three Months Ended                   

                March 31,         

  Dec. 31, 

2013

2012

2012

Revenue

$718,552

$594,893

$780,949

Gross Profit

160,375

123,303

172,528

Income from Operations

108,290

75,987

118,750

Net Income

74,849

51,455

$80,602

Diluted Earnings Per Share (EPS)

$0.69

$0.47

$0.74

Year over year, quarterly EPS increased 47% on income improvements from all operating business segments, led by Remotely Operated Vehicles (ROV) and Subsea Products.  Sequentially, quarterly EPS declined, as anticipated, because of a reduction in operating income from Subsea Products as a result of project timing and Subsea Projects due to seasonality in the U.S. Gulf of Mexico (GOM).

M. Kevin McEvoy, President and Chief Executive Officer, stated, "Our first quarter EPS was above our guidance range as we are off to a faster-than-expected start to the year.  This was, to a large extent, attributable to an acceleration of the timing of forecasted work in our Asset Integrity and Advanced Technologies businesses.  All of our business segments performed well, with Advanced Technologies achieving record quarterly operating income.

"Year over year, quarterly ROV operating income improved on the strength of a 13% increase in days on hire, particularly in the GOM and offshore Africa.  Our fleet utilization increased to 83% from 79% a year ago.  During the quarter we put six new systems into service and retired one.  At the end of the quarter we had 294 vehicles in our ROV fleet, an increase of 24 from March 2012.  For the balance of 2013, we expect to place 24 to 29 more new systems into service. 

"Subsea Products operating income was higher due to improved demand for all of our major product lines.  Our Subsea Products backlog at quarter-end was $776 million, compared to $402 million at the end of March 2012 and $681 million at the end of December 2012.

"Subsea Projects operating income increased on a full quarter of work on a field support vessel services contract offshore Angola, which commenced in February 2012.  Asset Integrity operating income improved on increased service demand in most geographic areas in which we operate.  Furthermore, during the first quarter of 2012, Asset Integrity results were adversely affected by a low profit contribution from operations acquired in December 2011 and poor execution on a job in the U.S.  Advanced Technologies operating income was higher in 2013 on an increase in work and operational efficiency on theme park projects and submarine maintenance activity for the U.S. Navy.

"Our outlook for the rest of this year remains very positive.  We continue to anticipate global demand growth for our services and products to support deepwater drilling, field development, and inspection, maintenance, and repair activities. We expect all of our operating business segments will achieve higher income in 2013 compared to 2012, notably:  ROV on greater service demand to support drilling and vessel-based projects; Subsea Products on higher demand for all of our major product lines, led by subsea hardware; and Subsea Projects on a full year of work offshore Angola. 

"Given this outlook and our first quarter earnings performance, we are raising our annual 2013 EPS guidance.  Our new guidance range is $3.10 to $3.30, up from $3.00 to $3.25 previously.  For the second quarter of 2013, we expect improvements in demand and operating results for all of our oilfield business segments.  We are forecasting EPS of $0.81 to $0.86.

"Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering's growth.  At the end of the quarter, our balance sheet remained conservatively capitalized with $128 million of cash, $90 million of debt, and $1.8 billion of equity.  During the quarter we generated EBITDA of $160 million and for 2013 we anticipate generating at least $690 million of EBITDA.  We fully intend to pursue organic growth and acquisition opportunities to expand Oceaneering's asset base and earnings capability.

"Today we announced a 22% increase in our regular quarterly cash dividend to $0.22 from $0.18 per share.  This underscores our confidence in Oceaneering's financial strength and future business prospects.

"Looking beyond 2013, our belief that the oil and gas industry will continue to invest in deepwater projects remains unchanged.  Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs.  With our existing assets, we are well positioned to supply a wide range of services and products to safely support the deepwater efforts of our customers."

Statements in this press release that express a belief, expectation, or intention are forward looking.  The forward-looking statements in this press release include the statements concerning Oceaneering's:  expected number of ROVs to be placed in service in 2013; statements about backlog, to the extent backlog may be an indicator of future revenue or profitability; positive outlook for the rest of 2013; continued anticipation of global demand growth to support deepwater drilling, field development, and inspection, maintenance, and repair activities; expectation that all of its operating business segments will achieve higher income in 2013 compared to 2012, and the basis for such growth in ROV, Subsea Products, and Subsea Projects; 2013 EPS guidance range; expectation of improvements in demand and operating results for all oilfield business segments in the second quarter of 2013; second quarter 2013 EPS guidance range; belief that its liquidity and projected cash flow provide ample resources to invest in the company's growth; anticipated minimum 2013 EBITDA; stated intent to pursue organic growth and acquisition opportunities to expand its asset base and earnings capability; confidence in its financial strength and future business prospects; belief that the oil and gas industry will continue to invest in deepwater projects; and belief that deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs.  These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on current information and expectations of Oceaneering that involve a number of risks, uncertainties, and assumptions.  Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated.  For a more complete discussion of these risk factors, please see Oceaneering's latest annual report on Form 10-K and quarterly reports on Form 10-Q  filed with the Securities and Exchange Commission. 

We define EBITDA as net income plus provision for income taxes, interest expense, net, and, depreciation and amortization.  EBITDA is a non-GAAP financial measure.  We have included EBITDA disclosures in this press release because EBITDA is widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry.  Our presentation of EBITDA may not be comparable to similarly titled measures other companies report.  Non-GAAP financial measures should be viewed in addition to and not as an alternative for our reported operating results or cash flow from operations or any other measure of performance as determined in accordance with GAAP.  For a reconciliation of our EBITDA amounts to the most directly comparable GAAP financial measures, please see the attached schedule.

Oceaneering is a global oilfield provider of engineered services and products, primarily to the offshore oil and gas industry, with a focus on deepwater applications.  Through the use of its applied technology expertise, Oceaneering also serves the defense, entertainment, and aerospace industries.

For further information, please contact Jack Jurkoshek, Director Investor Relations, Oceaneering International, Inc., 11911 FM 529, Houston, Texas 77041; Telephone 713-329-4670; E‑Mail investorrelations@oceaneering.com.  A live webcast of the company's earnings release conference call, scheduled for Wednesday, April 24, 2013 at 11:00 a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Mar 31, 2013

Dec 31, 2012

(in thousands)

ASSETS

Current Assets (including cash and cash equivalents of $127,990 and $120,549)

$

1,191,025

$

1,202,990

Net Property and Equipment

1,060,190

1,025,132

Other Assets

520,406

539,996

TOTAL ASSETS

$

2,771,621

$

2,768,118

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

$

598,239

$

617,185

Long-term Debt

90,000

94,000

Other Long-term Liabilities

249,308

241,473

Shareholders' Equity

1,834,074

1,815,460

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,771,621

$

2,768,118

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended

Mar 31, 2013

Mar 31, 2012

Dec 31, 2012

(in thousands, except per share amounts)

Revenue

$

718,552

$

594,893

$

780,949

Cost of services and products

558,177

471,590

608,421

Gross Profit

160,375

123,303

172,528

Selling, general and administrative expense

52,085

47,316

53,778

Income from Operations

108,290

75,987

118,750

Interest income

190

344

573

Interest expense

(763)

(545)

(1,135)

Equity earnings of unconsolidated affiliates, net

161

804

332

Other income (expense), net

1,390

(1,473)

(853)

Income before income taxes

109,268

75,117

117,667

Provision for income taxes

34,419

23,662

37,065

Net Income

$

74,849

$

51,455

$

80,602

Weighted Average Number of Diluted Common Shares

108,612

108,761

108,558

Diluted Earnings per Share

$0.69

$0.47

$0.74

The above Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

SEGMENT INFORMATION

 

For the Three Months Ended

Mar 31, 2013

Mar 31, 2012

Dec 31, 2012

($ in thousands)

Remotely Operated Vehicles

Revenue

$

229,628

$

193,971

$

226,098

Gross Profit

$

76,154

$

66,392

$

72,836

Operating income

$

65,835

$

56,933

$

61,147

Operating margin

29%

29%

27%

Days available

26,215

24,246

26,599

Utilization

83%

79%

79%

Subsea Products

Revenue

$

214,005

$

172,081

$

249,553

Gross Profit

$

62,345

$

46,781

$

72,196

Operating income

$

42,779

$

29,510

$

53,866

Operating margin

20%

17%

22%

Backlog

$

776,000

$

402,000

$

681,000

Subsea Projects

Revenue

$

88,455

$

72,676

$

114,728

Gross Profit

$

14,921

$

11,911

$

26,682

Operating income

$

11,620

$

7,567

$

22,160

Operating margin

13%

10%

19%

Asset Integrity

Revenue

$

114,849

$

93,456

$

114,677

Gross Profit

$

19,039

$

12,230

$

14,465

Operating income

$

12,339

$

6,538

$

7,658

Operating margin

11%

7%

7%

Advanced Technologies

Revenue

$

71,615

$

62,709

$

75,893

Gross Profit

$

13,308

$

7,723

$

10,279

Operating income

$

8,676

$

3,509

$

5,635

Operating margin

12%

6%

7%

Unallocated Expenses

Gross Profit

$

(25,392)

$

(21,734)

$

(23,930)

Operating income

$

(32,959)

$

(28,070)

$

(31,716)

TOTAL

Revenue

$

718,552

$

594,893

$

780,949

Gross Profit

$

160,375

$

123,303

$

172,528

Operating income

$

108,290

$

75,987

$

118,750

Operating margin

15%

13%

15%

SELECTED CASH FLOW INFORMATION

Capital expenditures, including acquisitions

$

94,177

$

92,677

$

84,050

Depreciation and Amortization

$

49,852

$

40,588

$

49,410

The above should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

For the Three Months Ended

Mar 31, 2013

Mar 31, 2012

Dec 31, 2012

(in thousands)

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

Net Income

$

74,849

$

51,455

$

80,602

Depreciation and Amortization

49,852

40,588

49,410

Subtotal

124,701

92,043

130,012

Interest Expense, Net

573

201

562

Provision for Income Taxes

34,419

23,662

37,065

EBITDA

$

159,693

$

115,906

$

167,639

2013 Estimates

Low

High

(in thousands)

Net Income

$

335,000

$

360,000

Depreciation and Amortization

200,000

210,000

Subtotal

535,000

570,000

Interest Income/Expense, Net

Provision for Income Taxes

155,000

165,000

EBITDA

$

690,000

$

735,000

SOURCE Oceaneering International, Inc.



RELATED LINKS

http://www.oceaneering.com