Oceaneering Announces Record Second Quarter Earnings

-- Narrows 2012 EPS Guidance Range to $2.55 to $2.65

-- Initiates Third Quarter 2012 EPS Guidance of $0.75 to $0.80

Jul 25, 2012, 17:01 ET from Oceaneering International, Inc.

HOUSTON, July 25, 2012 /PRNewswire/ -- Oceaneering International, Inc. (NYSE: OII) today reported record second quarter earnings for the period ended June 30, 2012.  On revenue of $673 million, Oceaneering generated net income of $72.6 million, or $0.67 per share.  During the corresponding period in 2011, Oceaneering reported revenue of $546 million and net income of $56.7 million, or $0.52 per share.  

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

 Three Months Ended          

Six Months Ended    

             June 30,          

March 31,

               June 30,            

2012

2011

2012

2012

2011

Revenue

$672,545

$545,838

$594,893

$1,267,438

$1,016,258

Gross Profit

161,158

126,116

123,303

284,461

224,917

Operating Income

110,047

81,674

75,987

186,034

142,741

Net Income

$72,554

$56,693

$51,455

$124,009

$98,763

Diluted Earnings Per Share

$0.67

$0.52

$0.47

$1.14

$0.91

Year over year and sequentially, quarterly earnings per share (EPS) increased as all business segments achieved higher operating income, led by Remotely Operated Vehicles (ROV), Subsea Projects, and Asset Integrity. 

M. Kevin McEvoy, President and Chief Executive Officer, stated, "Our EPS was up 43% over the first quarter of this year, and up 29% compared to the second quarter of 2011.  As expected, operating income margin improved sequentially in each of our operating segments.  We achieved record quarterly ROV and Asset Integrity operating income. 

"Our outlook for the remainder of this year remains very positive.  Given this outlook and our year-to-date performance, we are narrowing our 2012 EPS guidance range to $2.55 to $2.65 from $2.45 to $2.65, up slightly at the midpoint.  Compared to the first half, we anticipate achieving higher operating income during the second half of 2012, principally due to our ROV and Subsea Products businesses.  We continue to forecast operating income growth for all of our segments in 2012 relative to 2011. 

"Compared to the first quarter, ROV operating income increased on the strength of higher demand for both drilling and vessel-based support services, notably in the U.S. Gulf of Mexico.  During the quarter we put 13 new ROVs into service and retired 3.  At the end of June we had 280 vehicles in our fleet, compared to 262 one year ago.  During the second half of this year we expect to place into service 7 to 12 more new systems.  We now anticipate adding a total of 25 to 30 new systems to our ROV fleet and retiring 5 in 2012.

"Subsea Products operating income rose on the strength of increased revenue and profitability from tooling.  Subsea Products backlog at quarter-end was $621 million, up from our March backlog of $402 million and $405 million one year ago.  The substantial increase in backlog was attributable to two large umbilical contracts we announced during the quarter.

 "Subsea Projects operating income increased due to an escalation of work for BP off Angola.  Asset Integrity operating income was higher on increased service sales in all of the major geographic areas we serve, markedly in Norway due to the acquisition we made in late 2011.

"Other expense, net, of $3.2 million for the quarter and $4.6 million year-to-date consisted primarily of foreign currency exchange losses, principally related to our Brazilian operations, as the U.S. dollar strengthened against the Brazilian real. 

"For the third quarter of 2012, we expect a sequential improvement in operating income, principally from our ROV and Subsea Products business segments.  We are projecting EPS of $0.75 to $0.80.

"Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering's growth.  During the quarter we generated EBITDA of $149 million, $265 million year to date, and for 2012 we anticipate generating at least $565 million.  At the end of the quarter our balance sheet remained conservatively capitalized with $86 million of cash, $125 million of debt, and $1.6 billion of equity.

"During the quarter we purchased 400,000 shares of our common stock at a cost of about $19.4 million.  And, as announced in April, we increased our regular quarterly cash dividend to $0.18 from $0.15 per share.  These actions underscore our continued confidence in Oceaneering's financial strength and future business prospects. 

"Looking beyond 2012, 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 the services and products required to support safe 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:  positive outlook for the rest of 2012; 2012 EPS guidance range; anticipated operating income results during the second half of 2012; forecasted operating income growth for 2012 relative to 2011; expected additions and retirements of ROVs in service during the second half of this year; anticipated additions and retirements of ROVs to its fleet in 2012; expected third quarter 2012 sequential improvement in operating income, principally from ROVs and Subsea Products; projected third quarter EPS; expectation that its liquidity and projected cash flow will provide ample resources to invest in the company's growth; anticipated 2012 EBITDA; 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. 

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.  Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to:  industry conditions; prices of crude oil and natural gas; Oceaneering's ability to obtain, and the timing of, new projects; changes in customers' operational plans or schedules; contract cancellations or modifications; difficulties executing under contracts; and changes in competitive factors.  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 and other risk factors, please see Oceaneering's annual report on Form 10-K for the year ended December 31, 2011 and subsequent 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 income/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 these EBITDA amounts to the most directly comparable GAAP financial measures, please see the attached schedules.

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 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 Thursday, July 26, 2012 at 11:00 a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.

 

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Jun. 30, 2012

Dec. 31, 2011

(in thousands)

ASSETS

Current Assets (including cash and cash equivalents of $85,588

    and $106,142)

$   1,040,234

$       984,122

Net Property and Equipment

962,403

893,308

Other Assets

522,227

523,114

TOTAL ASSETS

$   2,524,864

$    2,400,544

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities 

$      562,226

$       501,375

Long-term Debt

125,000

120,000

Other Long-term Liabilities

212,990

221,207

Shareholders' Equity

1,624,648

1,557,962

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$   2,524,864

$    2,400,544

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended

For the Six Months Ended

Jun. 30,

Jun. 30,

Mar. 31,

Jun. 30,

Jun. 30,

2012

2011

2012

2012

2011

(in thousands, except per share amounts)

Revenue

$    672,545

$    545,838

$    594,893

$    1,267,438

$    1,016,258

Cost of services and products

511,387

419,722

471,590

982,977

791,341

Gross Profit

161,158

126,116

123,303

284,461

224,917

Selling, general and administrative expense

51,111

44,442

47,316

98,427

82,176

Income from Operations

110,047

81,674

75,987

186,034

142,741

Interest income

194

89

344

538

256

Interest expense

(1,256)

(212)

(545)

(1,801)

(359)

Equity earnings of unconsolidated affiliates, net

119

1,430

804

923

1,900

Other expense, net

(3,186)

(217)

(1,473)

(4,659)

(358)

Income before Income Taxes

105,918

82,764

75,117

181,035

144,180

Provision for income taxes

33,364

26,071

23,662

57,026

45,417

Net Income

$      72,554

$      56,693

$      51,455

$      124,009

$        98,763

Weighted Average Number of Diluted Common Shares

108,663

109,147

108,761

108,706

109,075

Diluted Earnings per Share 

$0.67

$0.52

$0.47

$1.14

$0.91

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

For the Six Months Ended

Jun. 30,

Jun. 30,

Mar. 31,

Jun. 30,

Jun. 30,

2012

2011

2012

2012

2011

($ in thousands)

Remotely Operated Vehicles

Revenue

$    208,802

$    189,097

$     193,971

$     402,773

$      353,425

Gross Profit

$      74,177

$     66,529

$      66,392

$     140,569

$      121,937

Operating income

$      64,168

$     58,145

$      56,933

$     121,101

$      105,551

Operating margin

31%

31%

29%

30%

30%

Days available

25,182

23,729

24,246

49,428

47,003

Utilization

81%

76%

79%

80%

74%

Subsea Products

Revenue

$    191,783

$    195,800

$     172,081

$     363,864

$      353,118

Gross Profit

$      54,612

$      54,934

$       46,781

$     101,393

$        96,721

Operating income

$      36,742

$      36,269

$       29,510

$       66,252

$        63,952

Operating margin

19%

19%

17%

18%

18%

Backlog

$    621,000

$    405,000

$     402,000

$     621,000

$      405,000

Subsea Projects

Revenue

$      90,448

$     34,733

$      72,676

$     163,124

$        72,302

Gross Profit

$      20,149

$       4,239

$      11,911

$       32,060

$          9,570

Operating income

$      15,969

$       1,874

$        7,567

$       23,536

$          4,910

Operating margin

18%

5%

10%

14%

7%

Asset Integrity

Revenue

$    113,660

$     69,768

$      93,456

$     207,116

$      128,118

Gross Profit

$      23,948

$     12,945

$      12,230

$       36,178

$        22,342

Operating income

$      16,444

$       9,349

$        6,538

$       22,982

$        15,229

Operating margin

14%

13%

7%

11%

12%

Advanced Technologies

Revenue

$      67,852

$     56,440

$      62,709

$     130,561

$      109,295

Gross Profit

$      10,926

$       7,256

$        7,723

$       18,649

$        13,569

Operating income

$        6,645

$       3,160

$        3,509

$       10,154

$          5,677

Operating margin

10%

6%

6%

8%

5%

Unallocated Expenses

Gross Profit

$     (22,654)

$    (19,787)

$     (21,734)

$     (44,388)

$      (39,222)

Operating income

$     (29,921)

$    (27,123)

$     (28,070)

$     (57,991)

$      (52,578)

TOTAL

Revenue

$     672,545

$    545,838

$     594,893

$  1,267,438

$   1,016,258

Gross Profit

$     161,158

$    126,116

$     123,303

$     284,461

$      224,917

Operating income

$     110,047

$      81,674

$       75,987

$     186,034

$      142,741

Operating margin

16%

15%

13%

15%

14%

SELECTED CASH FLOW INFORMATION

Capital

expenditures,

including

acquisitions

$      68,174

$     58,270

$      92,677

$     160,851

$      167,762

Depreciation and Amortization

$      41,646

$     37,708

$      40,588

$       82,234

$        73,145

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

For the Six Months Ended

Jun. 30,

Jun. 30,

Mar. 31,

Jun. 30,

Jun. 30,

2012

2011

2012

2012

2011

($ in thousands)

Earnings Before Interest, Tax, Depreciation and

Amortization (EBITDA)

Net Income

$      72,554

$      56,693

$      51,455

$    124,009

$      98,763

Depreciation and Amortization

41,646

37,708

40,588

82,234

73,145

Subtotal

114,200

94,401

92,043

206,243

171,908

Interest Income/Expense, Net

1,062

123

201

1,263

103

Provision for Income Taxes

33,364

26,071

23,662

57,026

45,417

EBITDA

$    148,626

$    120,595

$    115,906

$    264,532

$    217,428

2012 Estimates

Low

High

(in thousands)

Net Income

$    275,000

$    290,000

Depreciation and Amortization

165,000

170,000

Subtotal

440,000

460,000

Interest Income/Expense, Net

-

-

Provision for Income Taxes

125,000

135,000

EBITDA

$    565,000

$    595,000

 

SOURCE Oceaneering International, Inc.



RELATED LINKS

http://www.oceaneering.com