Oceaneering Reports Record Quarterly Earnings

-- Raises 2013 EPS guidance range to $3.35 to $3.40

-- Initiates 2014 EPS guidance range of $3.90 to $4.10

Oct 28, 2013, 17:02 ET from Oceaneering International, Inc.

HOUSTON, Oct. 28, 2013 /PRNewswire/ -- Oceaneering International, Inc. (NYSE: OII) today reported record earnings for the third quarter ended September 30, 2013.  On revenue of $853 million, Oceaneering generated net income of $104.4 million, or $0.96 per share.

For the third quarter of 2012, Oceaneering reported revenue of $734 million and net income of $84.4 million, or $0.78 per share.  For the second quarter of 2013, Oceaneering reported revenue of $820 million and net income of $98.8 million, or $0.91 per share.

Summary of Results

(in thousands, except per share amounts)

              Three Months Ended            

      Nine Months Ended     

         September 30,      

   June 30, 

            September 30,       

2013

2012

2013

2013

2012

Revenue

$853,297

$734,217

$820,372

$2,392,221

$2,001,655

Gross Profit

205,492

170,869

201,864

567,731

455,330

Income from Operations

153,736

123,813

146,337

408,363

309,847

Net Income

$104,407

$84,406

$98,811

$278,067

$208,415

Diluted Earnings Per Share

$0.96

$0.78

$0.91

$2.56

$1.92

Sequentially, quarterly EPS was 5% higher on operating income improvements from Remotely Operated Vehicles (ROV) and Subsea Projects.  Year over year, quarterly EPS increased by 23% on operating income improvements from all business segments.

M. Kevin McEvoy, President and Chief Executive Officer, stated, "We achieved record EPS for the quarter, demonstrating the high level of demand we are experiencing for our subsea services and products.  Our results were highlighted by all-time high operating income from our ROV business and better than anticipated Subsea Products operating margin.

"Overall, we remain on track to achieve record EPS for 2013, which we now believe will be up more than 25% over 2012.  Given our third quarter results and an improved fourth quarter outlook for Subsea Products and Subsea Projects, our new annual guidance range is $3.35 to $3.40, up from $3.20 to $3.35.  For the fourth quarter of 2013, we are projecting EPS of $0.80 to $0.85

"Compared to the second quarter of 2013, ROV operating income increased on higher global demand to support drilling and vessel-based projects.  Our ROV days on hire for the quarter increased to a record high of nearly 23,700 and our fleet utilization rate rose to 86%.  During the quarter we put seven new vehicles into service and transferred one system to Advanced Technologies for non-oilfield use.  At the end of September we had 302 vehicles in our fleet, compared to 285 one year ago.  Subsea Projects operating income increased due to a seasonal uptick in U.S. Gulf of Mexico demand for deepwater intervention and shallow water diving services and additional vessel activity offshore Angola.

"Subsea Products operating income was flat with the second quarter of 2013, and was better than we had anticipated due to a higher contribution from tooling.  Products backlog at quarter-end was $857 million, down 5% from our June 30 backlog of $902 million and up 38% from $619 million one year ago.

"We are initiating 2014 EPS guidance with a range of $3.90 to $4.10, up 19% at the midpoint over our forecast for 2013.  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 growing, and backlog to perform offshore construction projects is at a historically high level.

"Compared to 2013, we anticipate all of our oilfield segments will have higher operating income in 2014, notably:  ROV on greater service demand to support drilling and vessel-based projects, led by increased activity off Africa; Subsea Products on higher demand for each of our major product lines; and Subsea Projects on growth in deepwater intervention service activity in the U.S. Gulf of Mexico and additional work 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 reflected $102 million of cash, $40 million of debt, and $2.0 billion of equity.  We generated EBITDA of $204 million during the quarter and $559 million year to date.  For 2013 and 2014, we anticipate generating EBITDA of at least $735 million and $845 million, respectively.

"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:  expectation of achieving record EPS in 2013, and the percentage increase over 2012 EPS; characterization of fourth quarter outlook; revised 2013 EPS guidance range; fourth quarter EPS guidance range; statements about backlog, to the extent backlog may be an indicator of future revenue or profitability; 2014 EPS guidance range; anticipated market outlook relative to its services and products; anticipation of higher operating income in 2014 compared to 2013, for all of its oilfield segments and the basis for such increases in ROVs, 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 and 2014 EBITDA and the related low and high estimates of EBITDA and the components thereof; belief that the oil and gas industry will increase its investment 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 Tuesday, October 29, 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

Sep 30, 2013

Dec 31, 2012

(in thousands)

ASSETS

Current Assets (including cash and cash equivalents of $102,349 and $120,549)

$

1,391,404

$

1,202,990

Net Property and Equipment

1,127,494

1,025,132

Other Assets

509,628

539,996

TOTAL ASSETS

$

3,028,526

$

2,768,118

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

$

703,255

$

617,185

Long-term Debt

40,000

94,000

Other Long-term Liabilities

307,714

241,473

Shareholders' Equity

1,977,557

1,815,460

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

3,028,526

$

2,768,118

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended

For the Nine Months Ended

Sep 30, 2013

Sep 30, 2012

Jun 30, 2013

Sep 30, 2013

Sep 30, 2012

(in thousands, except per share amounts)

Revenue

$

853,297

$

734,217

$

820,372

$

2,392,221

$

2,001,655

Cost of services and products

647,805

563,348

618,508

1,824,490

1,546,325

Gross Profit

205,492

170,869

201,864

567,731

455,330

Selling, general and administrative expense

51,756

47,056

55,527

159,368

145,483

Income from Operations

153,736

123,813

146,337

408,363

309,847

Interest income

39

824

243

472

1,362

Interest expense

(851)

(1,282)

(553)

(2,167)

(3,083)

Equity earnings of unconsolidated affiliates, net

134

418

(186)

109

1,341

Other income (expense), net

(639)

(553)

(1,591)

(840)

(5,212)

Income before income taxes

152,419

123,220

144,250

405,937

304,255

Provision for income taxes

48,012

38,814

45,439

127,870

95,840

Net Income

$

104,407

$

84,406

$

98,811

$

278,067

$

208,415

Weighted Average Number of Diluted Common Shares

108,783

108,500

108,713

108,703

108,637

Diluted Earnings per Share

$0.96

$0.78

$0.91

$2.56

$1.92

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

Sep 30, 2013

Sep 30, 2012

Jun 30, 2013

Sep 30, 2013

Sep 30, 2012

($ in thousands)

Remotely Operated Vehicles

Revenue

$

254,979

$

224,649

$

242,163

$

726,770

$

627,422

Gross Profit

$

85,193

$

76,524

$

80,180

$

241,527

$

217,093

Operating income

$

74,710

$

66,724

$

69,219

$

209,764

$

187,825

Operating margin

29

%

30

%

29

%

29

%

30

%

Days available

27,567

26,198

26,884

80,666

75,626

Days utilized

23,684

21,344

22,362

67,750

61,022

Utilization

86

%

81

%

83

%

84

%

81

%

Subsea Products

Revenue

$

263,671

$

215,617

$

258,016

$

735,692

$

579,481

Gross Profit

$

80,896

$

67,651

$

82,389

$

225,630

$

169,044

Operating income

$

61,737

$

50,841

$

62,060

$

166,576

$

117,093

Operating margin

23

%

24

%

24

%

23

%

20

%

Backlog

$

857,000

$

619,000

$

902,000

$

857,000

$

619,000

Subsea Projects

Revenue

$

143,132

$

101,719

$

118,195

$

349,782

$

264,843

Gross Profit

$

33,992

$

22,202

$

27,991

$

76,904

$

54,262

Operating income

$

30,700

$

17,765

$

23,990

$

66,310

$

41,301

Operating margin

21

%

17

%

20

%

19

%

16

%

Asset Integrity

Revenue

$

118,657

$

113,588

$

124,740

$

358,246

$

320,704

Gross Profit

$

22,094

$

20,457

$

23,529

$

64,662

$

56,635

Operating income

$

16,373

$

14,556

$

16,639

$

45,351

$

37,538

Operating margin

14

%

13

%

13

%

13

%

12

%

Advanced Technologies

Revenue

$

72,858

$

78,644

$

77,258

$

221,731

$

209,205

Gross Profit

$

11,170

$

9,753

$

14,945

$

39,423

$

28,402

Operating income

$

6,400

$

5,393

$

10,165

$

25,241

$

15,547

Operating margin

9

%

7

%

13

%

11

%

7

%

Unallocated Expenses

Gross Profit

$

(27,853)

$

(25,718)

$

(27,170)

$

(80,415)

$

(70,106)

Operating income

$

(36,184)

$

(31,466)

$

(35,736)

$

(104,879)

$

(89,457)

TOTAL

Revenue

$

853,297

$

734,217

$

820,372

$

2,392,221

$

2,001,655

Gross Profit

$

205,492

$

170,869

$

201,864

$

567,731

$

455,330

Operating income

$

153,736

$

123,813

$

146,337

$

408,363

$

309,847

Operating margin

18

%

17

%

18

%

17

%

15

%

SELECTED CASH FLOW INFORMATION

Capital expenditures, including acquisitions

$

105,119

$

64,957

$

81,138

$

280,434

$

225,808

Depreciation and Amortization

$

50,948

$

44,839

$

50,173

$

150,973

$

127,073

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

Sep 30, 2013

Sep 30, 2012

Jun 30, 2013

Sep 30, 2013

Sep 30, 2012

($ in thousands)

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

Net Income

$

104,407

$

84,406

$

98,811

$

278,067

$

208,415

Depreciation and Amortization

50,948

44,839

50,173

150,973

127,073

Subtotal

155,355

129,245

148,984

429,040

335,488

Interest Expense, Net

812

458

310

1,695

1,721

Provision for Income Taxes

48,012

38,814

45,439

127,870

95,840

EBITDA

$

204,179

$

168,517

$

194,733

$

558,605

$

433,049

2013 Estimates

2014 Estimates

Low

High

Low

High

(in thousands)

(in thousands)

Net Income

$

365,000

$

370,000

$

425,000

$

445,000

Depreciation and Amortization

200,000

205,000

225,000

230,000

Subtotal

565,000

575,000

650,000

675,000

Interest Income/Expense, Net

Provision for Income Taxes

170,000

170,000

195,000

205,000

EBITDA

$

735,000

$

745,000

$

845,000

$

880,000

 

SOURCE Oceaneering International, Inc.



RELATED LINKS

http://www.oceaneering.com