Oceaneering Reports Record Fourth Quarter and Annual Earnings

-- Annual EPS Increased for the Fourth Consecutive Year and 29% Over 2012

-- Reaffirms 2014 EPS Guidance of $3.90 to $4.10

18 Feb, 2014, 17:02 ET from Oceaneering International, Inc.

HOUSTON, Feb. 18, 2014 /PRNewswire/ -- Oceaneering International, Inc. (NYSE: OII) today reported record fourth quarter and annual earnings for the periods ended December 31, 2013.      

For the fourth quarter of 2013, Oceaneering earned net income of $93.4 million, or $0.86 per share, on revenue of $894.8 million.  During the corresponding period in 2012, net income was $80.6 million, or $0.74 per share, on revenue of $780.9 million.  For the year 2013, Oceaneering reported net income of $371.5 million, or $3.42 per share, on revenue of $3.3 billion.  For the year 2012, net income was $289.0 million, or $2.66 per share, on revenue of $2.8 billion.

Fourth quarter 2013 results included a $3.3 million charge to establish an allowance for doubtful accounts related to Remotely Operated Vehicles (ROV) receivables from OGX Petróleo e Gás S.A., which initiated a court-supervised restructuring under Brazilian bankruptcy law during the period.  This charge was recorded as an ROV selling, general and administrative expense.

 

Summary of Results

(in thousands, except per share amounts)

       Three Months Ended           

         Year Ended         

      December 31,    

Sept. 30,

        December 31,        

2013

2012

2013

2013

2012

Revenue

$894,798

$780,949

$853,297

$3,287,019

$2,782,604

Gross Margin

197,805

172,528

205,492

765,536

627,858

Income from Operations

136,753

118,750

153,736

545,116

428,597

Net Income

$93,433

$80,602

$104,407

$371,500

$289,017

Diluted Earnings Per Share (EPS)

$0.86

$0.74

$0.96

$3.42

$2.66

 

Quarterly EPS increased year over year due to profit improvements by all oilfield business operations, led by ROV and Subsea Products.  Subsea Products achieved record quarterly operating income.

Annual EPS increased as all operating segments attained higher income.  Four of five segments achieved record operating income.  Although not a record, Subsea Projects operating income increased by 48%.  Overall operating margin was the second highest in Oceaneering's history.

M. Kevin McEvoy, President and Chief Executive Officer, stated, "Results for the fourth quarter and the year were exemplary as we achieved record EPS in each period.  Our ability to produce these exceptional results is largely attributable to our global focus on deepwater and subsea completion activity, the business expansion strategy we have in place, and our solid operational execution. 

"We achieved record ROV operating income for the tenth consecutive year on higher global demand to provide drill support and vessel-based services and the expansion of our fleet.  We increased our days on hire by more than 9,000, to over 91,000 days for the year.  Our fleet utilization rose to 85% from 80% in 2012.  During 2013 we put 26 new ROVs into service, retired 10, and transferred 1 system to Advanced Technologies for non-oilfield use.  At year end, we had 304 vehicles in our ROV fleet.

"Subsea Products annual operating income increased on higher demand for each of our major product lines, led by subsea hardware.  Products backlog at the end of 2013 was an all-time high of $906 million, up 33% from $681 million at the end of 2012.  This backlog growth was primarily attributable to four umbilical contracts, which added about $170 million to our 2013 backlog.  These umbilicals are for use in the U.S. Gulf of Mexico (GOM), West of Shetland, and offshore Egypt.

"Asset Integrity annual operating income improved in 2013 on higher service sales in most of the major geographic areas we serve, particularly Africa and Australia.  Advanced Technologies profits were up on theme park project activity and vessel maintenance work for the U.S. Navy.  Subsea Projects operating income also grew, primarily on increased deepwater vessel service activity.

"During 2013 our capital expenditures totaled $394 million, of which $226 million was spent on expanding and upgrading our ROV fleet.  We invested $103 million in our Subsea Products business, mainly to increase the capabilities of our umbilical plants in the U.S. and Scotland and expand our rental/service tooling hardware offerings.  We also paid $91 million of cash dividends.  In June we increased our regular quarterly cash dividend by more than 20% to $0.22 per common share.

"We continue to project record EPS for 2014 in the range of $3.90 to $4.10.  We anticipate sustained 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 $0.75 to $0.80.

"We expect all our oilfield segments will achieve higher operating income in 2014 compared to 2013:  ROV on greater worldwide service demand to support drilling and vessel-based projects; Subsea Products on higher demand for each of our major product lines; Subsea Projects on growth in deepwater service activity; and Asset Integrity on increased demand for our services.  

"Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering's growth.  At year end, our balance sheet reflected $91 million of cash, no debt, and $2.0 billion of equity.  We generated $746 million of EBITDA during 2013 and anticipate at least $850 million in 2014.

"Looking beyond 2014, we believe that the oil and gas industry will increase its investment in deepwater projects.  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 the 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:  statements about backlog, to the extent it may be an indicator of future revenue or profitability; projected 2014 EPS range; anticipated sustained global demand growth for its services and products; forecasted first quarter 2014 EPS range; expectation of higher operating income in 2014, compared to 2013, for all of its oilfield segments and the basis for such increases; belief that its liquidity and projected cash flow provide ample resources to invest in the company's growth; anticipated minimum 2014 EBITDA; belief about the future of oil and gas industry deepwater investment; and characterization of deepwater projects.  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, February 19, 2014 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, 2013

Dec 31, 2012

(in thousands)

ASSETS

Current Assets (including cash and cash equivalents of $91,430 and $120,549)

$

1,433,275

$

1,202,990

Net Property and Equipment

1,189,099

1,025,132

Other Assets

506,126

539,996

TOTAL ASSETS

$

3,128,500

$

2,768,118

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

$

727,088

$

617,185

Long-term Debt

94,000

Other Long-term Liabilities

357,972

241,473

Shareholders' Equity

2,043,440

1,815,460

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,128,500

$

2,768,118

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended

For the Year Ended

Dec 31, 2013

Dec 31, 2012

Sep 30, 2013

Dec 31, 2013

Dec 31, 2012

(in thousands, except per share amounts)

Revenue

$

894,798

$

780,949

$

853,297

$

3,287,019

$

2,782,604

Cost of services and products

696,993

608,421

647,805

2,521,483

2,154,746

Gross Margin

197,805

172,528

205,492

765,536

627,858

Selling, general and administrative expense

61,052

53,778

51,756

220,420

199,261

Income from Operations

136,753

118,750

153,736

545,116

428,597

Interest income

82

573

39

554

1,935

Interest expense

(27)

(1,135)

(851)

(2,194)

(4,218)

Equity earnings of unconsolidated affiliates, net

24

332

134

133

1,673

Other income (expense), net

(433)

(853)

(639)

(1,273)

(6,065)

Income before income taxes

136,399

117,667

152,419

542,336

421,922

Provision for income taxes

42,966

37,065

48,012

170,836

132,905

Net Income

$

93,433

$

80,602

$

104,407

$

371,500

$

289,017

Weighted Average Number of Diluted Common Shares

108,840

108,558

108,783

108,731

108,617

Diluted Earnings per Share

$0.86

$0.74

$0.96

$3.42

$2.66

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, 2013

Dec 31, 2012

Sep 30, 2013

Dec 31, 2013

Dec 31, 2012

($ in thousands)

Remotely Operated Vehicles

Revenue

$

254,958

$

226,098

$

254,979

$

981,728

$

853,520

Gross Margin

$

86,504

$

72,836

$

85,193

$

328,031

$

289,929

Operating income

$

72,209

$

61,147

$

74,710

$

281,973

$

248,972

Operating margin

28%

27%

29%

29%

29%

Days available

27,535

26,599

27,567

108,201

102,225

Days utilized

23,868

21,104

23,684

91,618

82,126

Utilization

87%

79%

86%

85%

80%

Subsea Products

Revenue

$

292,100

$

249,553

$

263,671

$

1,027,792

$

829,034

Gross Margin

$

85,576

$

72,196

$

80,896

$

311,206

$

241,240

Operating income

$

64,474

$

53,866

$

61,737

$

231,050

$

170,959

Operating margin

22%

22%

23%

22%

21%

Backlog

$

906,000

$

681,000

$

857,000

$

906,000

$

681,000

Subsea Projects

Revenue

$

159,658

$

114,728

$

143,132

$

509,440

$

379,571

Gross Margin

$

31,854

$

26,682

$

33,992

$

108,758

$

80,944

Operating income

$

27,555

$

22,160

$

30,700

$

93,865

$

63,461

Operating margin

17%

19%

21%

18%

17%

Asset Integrity

Revenue

$

123,673

$

114,677

$

118,657

$

481,919

$

435,381

Gross Margin

$

17,194

$

14,465

$

22,094

$

81,856

$

71,100

Operating income

$

9,892

$

7,658

$

16,373

$

55,243

$

45,196

Operating margin

8%

7%

14%

11%

10%

Advanced Technologies

Revenue

$

64,409

$

75,893

$

72,858

$

286,140

$

285,098

Gross Margin

$

5,153

$

10,279

$

11,170

$

44,576

$

38,681

Operating income

$

(287)

$

5,635

$

6,400

$

24,954

$

21,182

Operating margin

—%

7%

9%

9%

7%

Unallocated Expenses

Gross Margin

$

(28,476)

$

(23,930)

$

(27,853)

$

(108,891)

$

(94,036)

Operating income

$

(37,090)

$

(31,716)

$

(36,184)

$

(141,969)

$

(121,173)

TOTAL

Revenue

$

894,798

$

780,949

$

853,297

$

3,287,019

$

2,782,604

Gross Margin

$

197,805

$

172,528

$

205,492

$

765,536

$

627,858

Operating income

$

136,753

$

118,750

$

153,736

$

545,116

$

428,597

Operating margin

15%

15%

18%

17%

15%

SELECTED CASH FLOW INFORMATION

Capital expenditures, including acquisitions

$

113,156

$

84,050

$

105,119

$

393,590

$

309,858

Depreciation and Amortization

$

51,255

$

49,410

$

50,948

$

202,228

$

176,483

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, 2013

Dec 31, 2012

Sep 30, 2013

Dec 31, 2013

Dec 31, 2012

($ in thousands)

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

Net Income

$

93,433

$

80,602

$

104,407

$

371,500

$

289,017

Depreciation and Amortization

51,255

49,410

50,948

202,228

176,483

Subtotal

144,688

130,012

155,355

573,728

465,500

Interest Income/Expense, Net

(55)

562

812

1,640

2,283

Provision for Income Taxes

42,966

37,065

48,012

170,836

132,905

EBITDA

$

187,599

$

167,639

$

204,179

$

746,204

$

600,688

2014 Estimates

Low

High

(in thousands)

Net Income

$

425,000

$

445,000

Depreciation and Amortization

230,000

240,000

Subtotal

655,000

685,000

Interest Income/Expense, Net

Provision for Income Taxes

195,000

205,000

EBITDA

$

850,000

$

890,000

 

SOURCE Oceaneering International, Inc.



RELATED LINKS

http://www.oceaneering.com