Oceaneering Reports Record Quarterly Earnings

-- Initiates 2013 EPS guidance range of $3.00 to $3.25

29 Oct, 2012, 17:01 ET from Oceaneering International, Inc.

HOUSTON, Oct. 29, 2012 /PRNewswire/ -- Oceaneering International, Inc. (NYSE: OII) today reported record earnings for the third quarter ended September 30, 2012.  On revenue of $734 million, Oceaneering generated net income of $84.4 million, or $0.78 per share.

For the third quarter of 2011, Oceaneering reported revenue of $602 million and net income of $78.6 million, or $0.72 per share.  The 2011 results included an $18.3 million pre-tax gain in Subsea Projects, $11.9 million after tax using an incremental tax rate of 35%, on the sale of a mobile offshore production system and $4.9 million of tax benefits principally related to prior years.  For the second quarter of 2012, Oceaneering reported revenue of $673 million and net income of $72.6 million, or $0.67 per share.

Summary of Results

(in thousands, except per share amounts)

               Three Months Ended           

       Nine Months Ended       

         September 30,      

   June 30, 

              September 30,         

2012

2011

2012

2012

2011

Revenue

$734,217

$602,208

$672,545

$2,001,655

$1,618,466

Gross Profit

170,869

153,096

161,158

455,330

378,013

Income from Operations

123,813

109,622

110,047

309,847

252,363

Net Income

$84,406

$78,578

$72,554

$208,415

$177,341

Diluted Earnings Per Share

$0.78

$0.72

$0.67

$1.92

$1.63

Sequentially, quarterly earnings were higher on record operating income from Remotely Operated Vehicles (ROV) and Subsea Products.  Year over year, earnings increased on operating income improvements from ROV, Subsea Products, and Asset Integrity.

M. Kevin McEvoy, President and Chief Executive Officer, stated, "Our quarterly performance demonstrates the rising demand we are experiencing for our subsea services and products.  Overall, our operations performed within expectations and we remain on track to achieve record EPS for the year. 

"Compared to the second quarter of 2012, ROV operating income increased on the strength of higher global demand to provide drill support and vessel-based services.  Our ROV days on hire for the quarter increased to an all-time high of over 21,000.  Subsea Products operating income improved on increased profit contributions from all of our major product line categories, led by Installation and Workover Control System (IWOCS) services and subsea hardware.  Products operating margin for the quarter rose to a record 24%, due to higher profitability on IWOCS services and sales of subsea hardware and umbilicals.  Subsea Products backlog at quarter-end was $619 million, comparable to our June 30 backlog of $621 million and up from $403 million one year ago.

"We are narrowing our 2012 EPS guidance range to $2.60 to $2.65, up slightly at the midpoint from last quarter.  For the fourth quarter of 2012 we are projecting EPS of $0.68 to $0.73.                 

"We are initiating 2013 EPS guidance with a range of $3.00 to $3.25, up nearly 20% at the midpoint over our expectation for 2012.  For our services and products, we anticipate continued global demand growth 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 are at a record high level.

"Compared to 2012, we anticipate all of our segments will have higher operating income in 2013:  ROV on greater service demand to support drilling and vessel-based projects; Subsea Products on higher subsea hardware and tooling sales, and increased throughput at our umbilical plants; and Subsea Projects on a full year of work on the field support services contract for BP offshore Angola.

"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 $104 million of cash, $120 million of debt, and $1.7 billion of equity.  We generated EBITDA of $169 million during the quarter and $433 million year to date.  For 2012 and 2013, we anticipate generating EBITDA of at least $590 million and $670 million, respectively.

"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 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:  track to achieve record EPS for 2012; statements about backlog, to the extent backlog may be an indicator of future revenue or profitability; 2012 EPS guidance range; projected fourth quarter 2012 EPS; 2013 EPS guidance range; anticipated continued global demand growth for its services and products; anticipated operating income growth for all of its segments in 2013 relative to 2012, and the basis for such growth in ROVs, Subsea Products, and Subsea Projects; anticipated 2012 and 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 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 Tuesday, October 30, 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

Sept. 30, 2012

Dec. 31, 2011

(in thousands)

ASSETS

Current Assets (including cash and cash equivalents of $103,638

    and $106,142)

$       1,176,845

$         984,122

Net Property and Equipment

989,356

893,308

Other Assets

530,651

523,114

TOTAL ASSETS

$       2,696,852

$      2,400,544

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities 

$          615,353

$         501,375

Long-term Debt

120,000

120,000

Other Long-term Liabilities

227,263

221,207

Shareholders' Equity

1,734,236

1,557,962

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$       2,696,852

$      2,400,544

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended

For the Nine Months Ended

Sept. 30,

Sept. 30,

Jun. 30,

Sept. 30,

Sept. 30,

2012

2011

2012

2012

2011

(in thousands, except per share amounts)

Revenue

$   734,217

$    602,208

$   672,545

$   2,001,655

$   1,618,466

Cost of services and products

563,348

449,112

511,387

1,546,325

1,240,453

Gross Profit

170,869

153,096

161,158

455,330

378,013

Selling, general and administrative expense

47,056

43,474

51,111

145,483

125,650

Income from Operations

123,813

109,622

110,047

309,847

252,363

Interest income

824

204

194

1,362

460

Interest expense

(1,282)

(387)

(1,256)

(3,083)

(746)

Equity earnings of unconsolidated affiliates 

418

1,042

119

1,341

2,942

Other expense, net

(553)

(1,973)

(3,186)

(5,212)

(2,331)

Income before Income Taxes

123,220

108,508

105,918

304,255

252,688

Provision for income taxes

38,814

29,930

33,364

95,840

75,347

Net Income

$  84,406

$  78,578

$  72,554

$  208,415

$    177,341

Weighted Average Number of Diluted Common Shares

108,500

108,928

108,663

108,637

109,114

Diluted Earnings per Share 

$0.78

$0.72

$0.67

$1.92

$1.63

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 Nine Months Ended

Sept. 30,

Sept. 30,

Jun. 30,

Sept. 30,

Sept. 30,

2012

2011

2012

2012

2011

($ in thousands)

Remotely Operated Vehicles

Revenue

$   224,649

$   200,927

$  208,802

$     627,422

$    554,352

Gross Profit

$     76,524

$     69,052

$    74,177

$     217,093

$    190,989

Operating Income

$     66,724

$     60,054

$    64,168

$     187,825

$    165,605

Operating margin

30%

30%

31%

30%

30%

Days available

26,198

23,719

25,182

75,626

70,722

Utilization

81%

80%

81%

81%

76%

Subsea Products

Revenue

$   215,617

$    220,107

$ 191,783

$     579,481

$   573,225

Gross Profit

$     67,651

$      57,798

$   54,612

$     169,044

$   154,519

Operating Income

$     50,841

$      41,489

$   36,742

$     117,093

$   105,441

Operating margin

24%

19%

19%

20%

18%

Backlog

$   619,000

$    403,000

$ 621,000

$     619,000

$   403,000

Subsea Projects

Revenue

$   101,719

$      49,912

$   90,448

$     264,843

$   122,214

Gross Profit

$     22,202

$      23,326

$   20,149

$       54,262

$     32,896

Operating Income

$     17,765

$      20,983

$   15,969

$       41,301

$     25,893

Operating margin

17%

42%

18%

16%

21%

Asset Integrity

Revenue

$   113,588

$      71,633

$ 113,660

$     320,704

$   199,751

Gross Profit

$     20,457

$      12,879

$   23,948

$       56,635

$     35,221

Operating Income

$     14,556

$        8,858

$   16,444

$       37,538

$     24,087

Operating margin

13%

12%

14%

12%

12%

Advanced Technologies

Revenue

$    78,644

$      59,629

$   67,852

$     209,205

$   168,924

Gross Profit

$      9,753

$      10,517

$   10,926

$       28,402

$     24,086

Operating Income

$      5,393

$        5,769

$     6,645

$       15,547

$     11,446

Operating margin

7%

10%

10%

7%

7%

Unallocated Expenses

Gross Profit

$   (25,718)

$    (20,476)

$  (22,654)

$     (70,106)

$     (59,698)

Operating Income

$   (31,466)

$    (27,531)

$  (29,921)

$     (89,457)

$     (80,109)

TOTAL

Revenue

$   734,217

$    602,208

$  672,545

$  2,001,655

$  1,618,466

Gross Profit

$   170,869

$    153,096

$  161,158

$     455,330

$     378,013

Operating Income

$   123,813

$    109,622

$  110,047

$     309,847

$     252,363

Operating margin

17%

18%

16%

15%

16%

SELECTED CASH FLOW INFORMATION

Capital expenditures, including acquisitions

$     64,957

$    49,885

$  68,174

$   225,808

$   217,647

Depreciation and Amortization

$     44,839

$    39,603

$  41,646

$   127,073

$   112,748

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 Nine Months Ended

Sept. 30,

Sept. 30,

Jun. 30,

            Sept. 30,

Sept. 30,

2012

2011

2012

2012

2011

($ in thousands)

Earnings Before Interest, Taxes, Depreciation

and Amortization (EBITDA)

Net Income

$      84,406

$    78,578

$     72,554

$   208,415

$   177,341

Depreciation and Amortization

44,839

39,603

41,646

127,073

112,748

Subtotal

129,245

118,181

114,200

335,488

290,089

Interest Income/Expense, Net

458

183

1,062

1,721

286

Provision for Income Taxes

38,814

29,930

33,364

95,840

75,347

EBITDA

$    168,517

$   148,294

$   148,626

$   433,049

$    365,722

2012 Estimates

2013 Estimates

Low

High

Low

High

($ in thousands)

($ in thousands)

Net Income

$    285,000

$     290,000

$   325,000

$    355,000

Depreciation and Amortization

175,000

175,000

195,000

205,000

Subtotal

460,000

465,000

520,000

560,000

Interest Income/Expense, Net

-

-

-

-

Provision for Income Taxes

130,000

135,000

150,000

165,000

EBITDA

$    590,000

$   600,000

$   670,000

$    725,000

SOURCE Oceaneering International, Inc.



RELATED LINKS

http://www.oceaneering.com