Oceaneering Reports Record Fourth Quarter and Annual Earnings

-- Reaffirms 2013 EPS Guidance of $3.00 to $3.25

13 Feb, 2013, 17:02 ET from Oceaneering International, Inc.

HOUSTON, Feb. 13, 2013 /PRNewswire/ -- Oceaneering International, Inc. (NYSE: OII) today reported record fourth quarter and annual earnings for the periods ended December 31, 2012.      

For the fourth quarter of 2012, Oceaneering earned net income of $80.6 million, or $0.74 per share, on revenue of $780.9 million. During the corresponding period in 2011, net income was $58.3 million, or $0.54 per share, on revenue of $574.2 million.  For the year 2012, Oceaneering reported net income of $289.0 million, or $2.66 per share, on revenue of $2.8 billion.  For the year 2011, net income was $235.7 million, or $2.16 per share, on revenue of $2.2 billion.

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

         Three Months Ended                           

           Year Ended        

      December 31,    

Sept. 30,

        December 31,        

2012

2011

2012

2012

2011

 

Revenue

$780,949

$574,197

 

$734,217

$2,782,604

$2,192,663

Gross Profit

172,528

130,746

170,869

627,858

508,759

Income from Operations

118,750

82,468

123,813

428,597

334,831

Net Income

$80,602

$58,317

$84,406

$289,017

$235,658

Diluted Earnings Per Share (EPS)

$0.74

$0.54

$0.78

$2.66

$2.16

Year over year, annual EPS increased 23% due to record operating income from our Remotely Operated Vehicles (ROV), Subsea Products, Asset Integrity, and Advanced Technologies segments and the commencement of a three-year field support vessel services contract offshore Angola.  Quarterly EPS increased 37% on income improvements from all operating business segments, led by Subsea Products and Subsea Projects. 

M. Kevin McEvoy, President and Chief Executive Officer, stated, "Our record annual earnings of $289 million and EPS of $2.66 were largely attributable to our global focus on deepwater and subsea completion activity.  Each of our five operating business segments attained higher income than in 2011.

"We achieved record ROV operating income for the ninth consecutive year on higher demand to provide drill support and vessel-based services, notably offshore Africa and in the U.S. Gulf of Mexico (GOM), and expansion of our fleet.  We increased our days on hire by more than 9,000 to over 82,000 days for the year.  Our fleet utilization rose to 80% from 77% in 2011.  During 2012 we put 37 new ROVs into service and retired 15.  At year end we had 289 vehicles in our ROV fleet.

"Subsea Products operating income increased primarily on higher demand for tooling.  Products backlog at the end of 2012 was $681 million, up 78% from $382 million at the end of 2011.  This backlog growth was largely attributable to three large umbilical contracts we secured, which in total added nearly $245 million to our backlog.  One of these, the largest umbilical order in Oceaneering's history, is for Petrobras' first large pre-salt project.

"Asset Integrity operating income improved in 2012 on higher service sales in most of the major geographic areas we serve, particularly in Norway due to the business acquisition we completed in December 2011.  Subsea Projects operating income increased due to recovering demand for our services in the GOM and the work offshore Angola.  Advanced Technologies profits were up on engineering and vessel maintenance work for the U.S. Navy and theme park project activity.

"During 2012 our capital expenditures totaled $310 million, of which $198 million was spent on expanding and upgrading our ROV fleet.  We invested $68 million in our Subsea Products business, largely to increase the capabilities of our umbilical plants in Brazil and Scotland and to expand our rental tooling operation.  In addition to our capital expenditures, we repurchased 400,000 shares of our common stock for $19 million and paid $75 million of cash dividends.  In June we increased our regular quarterly cash dividend by 20% to $0.18 per common share. 

"We are forecasting our 2013 EPS to be in the range of $3.00 to $3.25.  We anticipate continued global demand growth for our services and products to support deepwater drilling, field development, and inspection, maintenance, and repair activities.  This market outlook is supported by industry observations and assessments that deepwater drilling is increasing, subsea equipment orders are escalating, and backlog to perform offshore construction projects is at a historically high level.  Consistent with our historical seasonal earnings pattern, we are forecasting first quarter EPS of $0.55 to $0.60.

"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 line categories, led by subsea hardware; and Subsea Projects on a full year of work offshore Angola.

"Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering's growth.  At year end, our balance sheet remained conservatively capitalized with $121 million of cash, $94 million of debt, and $1.8 billion of equity.  We generated slightly over $600 million of EBITDA during 2012 and anticipate producing EBITDA of at least $675 million in 2013.

"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:  statements about backlog, to the extent backlog may be an indicator of future revenue or profitability; 2013 EPS guidance range; anticipated continued global demand growth to support deepwater drilling, field development, and inspection, maintenance, and repair activities; references to industry observations and assessments that deepwater drilling is increasing and subsea equipment orders are escalating; first quarter 2013 EPS guidance range; 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; belief that its liquidity and projected cash flow provide ample resources to invest in the company's growth; anticipated minimum 2013 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 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 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 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 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, 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 Thursday, February 14, 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

 

Dec. 31, 2012

Dec. 31, 2011

(in thousands)

ASSETS

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

    and $106,142)

$    1,202,990

$         984,122

Net Property and Equipment

1,025,132

893,308

Other Assets

539,996

523,114

TOTAL ASSETS

$    2,768,118

$      2,400,544

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities 

$       617,185

$         501,375

Long-term Debt

94,000

120,000

Other Long-term Liabilities

241,473

221,207

Shareholders' Equity

1,815,460

1,557,962

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$    2,768,118

$      2,400,544

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended

For the Year Ended

Dec. 31

Dec. 31,

Sept. 30,

Dec. 31,

Dec. 31,

2012

2011

2012

2012

2011

(in thousands, except per share amounts)

Revenue

$   780,949

$       574,197

$         734,217

$        2,782,604

$     2,192,663

Cost of services and products

608,421

443,451

563,348

2,154,746

1,683,904

Gross Profit

172,528

130,746

170,869

627,858

508,759

Selling, general and administrative expense

53,778

48,278

47,056

199,261

173,928

Income from Operations

118,750

82,468

123,813

428,597

334,831

Interest income

573

428

824

1,935

888

Interest expense

(1,135)

(350)

(1,282)

(4,218)

(1,096)

Equity earnings of unconsolidated affiliates, net

332

859

418

1,673

3,801

Other income (expense), net

(853)

1,792

(553)

(6,065)

(539)

Income before Income Taxes

117,667

85,197

123,220

421,922

337,885

Provision for income taxes

37,065

26,880

38,814

132,905

102,227

Net Income

$      80,602

$         58,317

$            84,406

$           289,017

$        235,658

Weighted Average Number of Diluted Common Shares

108,558

108,671

108,500

108,617

109,001

Diluted Earnings per Share 

$0.74

$0.54

$0.78

$2.66

$2.16

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 Year Ended

Dec. 31,

Dec. 31,

Sept. 30,

Dec. 31,

Dec. 31,

2012

2011

2012

2012

2011

($ in thousands)

Remotely Operated Vehicles

Revenue

$   226,098

$       200,681

$         224,649

$           853,520

$        755,033

Gross Profit

$      72,836

$         69,298

$            76,524

$           289,929

$        260,287

Operating income

$      61,147

$         59,100

$            66,724

$           248,972

$        224,705

Operating margin

27%

29%

30%

29%

30%

Days available

26,599

24,277

26,198

102,225

94,999

Utilization

79%

79%

81%

80%

77%

Subsea Products

Revenue

$   249,553

$       196,987

$         215,617

$           829,034

$        770,212

Gross Profit

$      72,196

$         53,285

$            67,651

$           241,240

$        207,804

Operating income

$      53,866

$         36,743

$            50,841

$           170,959

$        142,184

Operating margin

22%

19%

24%

21%

18%

Backlog

$   681,000

$       382,000

$         619,000

$           681,000

$        382,000

Subsea Projects

Revenue

$   114,728

$         45,263

$         101,719

$           379,571

$        167,477

Gross Profit

$      26,682

$           9,108

$            22,202

$             80,944

$           42,004

Operating income

$      22,160

$           6,769

$            17,765

$             63,461

$           32,662

Operating margin

19%

15%

17%

17%

20%

Asset Integrity

Revenue

$   114,677

$         66,826

$         113,588

$           435,381

$        266,577

Gross Profit

$      14,465

$         10,888

$            20,457

$             71,100

$           46,109

Operating income

$        7,658

$           6,473

$            14,556

$             45,196

$           30,560

Operating margin

7%

10%

13%

10%

11%

Advanced Technologies

Revenue

$      75,893

$         64,440

$            78,644

$           285,098

$        233,364

Gross Profit

$      10,279

$           9,688

$              9,753

$             38,681

$           33,774

Operating income

$        5,635

$           5,215

$              5,393

$             21,182

$           16,661

Operating margin

7%

8%

7%

7%

7%

Unallocated Expenses

Gross Profit

$    (23,930)

$       (21,521)

$          (25,718)

$            (94,036)

$         (81,219)

Operating income

$    (31,716)

$       (31,832)

$          (31,466)

$         (121,173)

$       (111,941)

TOTAL

Revenue

$   780,949

$       574,197

$         734,217

$        2,782,604

$     2,192,663

Gross Profit

$   172,528

$       130,746

$         170,869

$           627,858

$        508,759

Operating income

$   118,750

$         82,468

$         123,813

$           428,597

$        334,831

Operating margin

15%

14%

17%

15%

15%

SELECTED CASH FLOW INFORMATION

Capital expenditures, including acquisitions

$      84,050

$       308,998

$            64,957

$           309,858

$        526,645

Depreciation and Amortization

$      49,410

$         38,479

$            44,839

$           176,483

$        151,227

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 Year Ended

Dec. 31,

Dec. 31,

Sept. 30,

Dec. 31,

Dec. 31,

2012

2011

2012

2012

2011

(in thousands)

Earnings Before Interest, Tax, Depreciation and

Amortization (EBITDA)

Net Income

$      80,602

$         58,317

$            84,406

$           289,017

$        235,658

Depreciation and Amortization

49,410

38,479

44,839

176,483

151,227

Subtotal

130,012

96,796

129,245

465,500

386,885

Interest Expense, Net

562

(78)

458

2,283

208

Provision for Income Taxes

37,065

26,880

38,814

132,905

102,227

EBITDA

$   167,639

$       123,598

$         168,517

$           600,688

$        489,320

2013 Estimates

Low

High

(in thousands)

Net Income

$   325,000

$       355,000

Depreciation and Amortization

200,000

210,000

Subtotal

525,000

565,000

Interest Expense, Net

-

-

Provision for Income Taxes

150,000

165,000

EBITDA

$   675,000

$       730,000

SOURCE Oceaneering International, Inc.



RELATED LINKS

http://www.oceaneering.com