HOUSTON, July 30 /PRNewswire-FirstCall/ -- Oceaneering International, Inc. today reported record second quarter earnings for the period ended June 30, 2008. On revenue of $500 million, Oceaneering generated net income of $52.1 million, or $0.93 per share.
Oceaneering reported revenue of $432 million and net income of $47.9 million, or $0.86 per share, for the second quarter of 2007. For the first quarter of 2008, Oceaneering reported revenue of $436 million and net income of $41.3 million, or $0.74 per share.
Summary of Results (in thousands, except per share amounts) Three months ended Six months ended June 30, March 31, June 30, 2008 2007 2008 2008 2007 Revenue $500,120 $432,041 $435,815 $935,935 $776,045 Gross Margin 118,290 106,010 98,666 216,956 185,612 Operating Income 81,465 76,298 64,770 146,235 129,834 Net Income 52,123 47,873 41,279 93,402 81,039 Diluted Earnings Per Share $0.93 $0.86 $0.74 $1.67 $1.46 Weighted Average Number of Diluted Shares 56,069 55,678 55,978 56,024 55,593
This quarter's results include, in Mobile Offshore Production Systems (MOPS) gross margin, a $2.0 million gain on the sale of the production barge San Jacinto. Results for the second quarter of 2007 included $2.8 million of MOPS revenue and gross margin related to a contract termination settlement for the use of the San Jacinto.
Year-over-year, quarterly earnings increased due to growth in ROV, Subsea Products, and Inspection operating profits. Sequentially, quarterly earnings rose over 25% as all business segments achieved improved operating income results, led by Subsea Products and Subsea Projects.
T. Jay Collins, President and Chief Executive Officer, stated, "Our record second quarter earnings, which were above the midpoint of our guidance range, reflect the healthy demand we are experiencing for our subsea services and products. We continue to expect we will achieve a fifth consecutive year of record earnings in 2008.
"Our ROV and Inspection businesses achieved record quarterly operating income. We attained all-time high average ROV revenue per day-on-hire. During the quarter we put five new ROVs into service to meet rising market demand and disposed of three vehicles. At the end of June we had 214 ROVs in our fleet. Inspection results were attributable to our ongoing efforts to improve pricing and provide more value-added services.
"Compared to the first quarter of this year, Subsea Products operating income improved over 20% on higher sales of Multiflex umbilicals and our specialty subsea products, particularly ROV tooling. We realized a lower Subsea Products operating income margin than we had anticipated due to higher development costs on BOP control systems and lower utilization of our IWOCS rental fleet. At quarter-end our backlog was $372 million, up from $353 million at March 31, 2008.
"Subsea Projects operating income sequentially increased by more than 55%. This was primarily due to a seasonal increase in demand for our shallow water diving and deepwater vessel project services.
"We are revising our earnings outlook for 2008. Our annual EPS guidance range is now $3.45 to $3.65, down from $3.50 to $3.80. During the second half of 2008, we expect to achieve operating income growth for ROVs and Subsea Products and results from Subsea Projects comparable to the first half of the year.
"Due to lower than anticipated backlog and higher manufacturing and development costs, we are lowering our Subsea Products annual operating income growth range to $15 million to $20 million, from $25 million to $35 million. It is now apparent our Subsea Products operating income improvement for the second half of 2008 will not be as robust as previously projected. We are raising our ROV annual operating income growth range to $35 million to $45 million, from $30 million to $40 million, in light of our second quarter performance and an improved outlook.
"For the third quarter of 2008 we are forecasting EPS of $0.90 to $1.00. We are anticipating sequential quarterly profit improvements from ROVs and Subsea Products and lower profit contributions from Subsea Projects and MOPS.
"Looking beyond 2008, we anticipate demand for our deepwater services and products will continue to rise and, consequently, believe our business prospects for the next several years are excellent."
Statements in this press release that express a belief, expectation or intention, as well as those that are not historical fact, are forward looking. The forward-looking statements in this press release include the statements concerning Oceaneering's: expectation of achieving a fifth consecutive year of record earnings in 2008; forecasted 2008 EPS range; expectations that during the second half of 2008 ROV and Subsea Products operating income will grow and that Subsea Projects results will be comparable to the first half of the year; 2008 operating income growth ranges for Subsea Products and ROVs; forecasted third quarter 2008 EPS range; anticipation of achieving, in the third quarter of 2008, sequential quarterly profit improvements from ROVs and Subsea Products and lower profit contributions from Subsea Projects and MOPS; anticipation that demand beyond 2008 for its deepwater services and products will continue to rise from current levels; and belief that its business prospects for the next several years are excellent.
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; 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. These and other risks are more fully described in Oceaneering's latest annual report on Form 10-K and its other periodic filings with the Securities and Exchange Commission.
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; Fax 713-329-4653; E-Mail
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2008 Dec. 31, 2007 (in thousands) ASSETS Current Assets (including cash and cash equivalents of $28,829 and $27,110) $ 745,300 $ 670,569 Net Property and Equipment 701,137 638,107 Other Assets 256,096 222,764 TOTAL ASSETS $1,702,533 $1,531,440 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities $ 362,804 $ 338,975 Long-term Debt 226,500 200,000 Other Long-term Liabilities 90,776 77,155 Shareholders' Equity 1,022,453 915,310 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,702,533 $1,531,440 CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Three Months For the Six Months Ended Ended June 30, June 30, March 31, June 30, 2008 2007 2008 2008 2007 (in thousands, except per share amounts) Revenue $500,120 $432,041 $435,815 $935,935 $776,045 Cost of Services and Products 381,830 326,031 337,149 718,979 590,433 Gross margin 118,290 106,010 98,666 216,956 185,612 Selling, General and Administrative Expense 36,825 29,712 33,896 70,721 55,778 Income from operations 81,465 76,298 64,770 146,235 129,834 Interest Income 77 137 131 208 252 Interest Expense, net (3,503) (3,972) (3,309) (6,812) (7,102) Equity Earnings of Unconsolidated Affiliates 612 1,052 841 1,453 2,241 Other Income (Expense), net 1,537 (205) 1,074 2,611 (173) Income before income taxes 80,188 73,310 63,507 143,695 125,052 Provision for Income Taxes 28,065 25,437 22,228 50,293 44,013 Net Income $ 52,123 $ 47,873 $ 41,279 $ 93,402 $ 81,039 Diluted Earnings per Share $0.93 $0.86 $0.74 $1.67 $1.46 Weighted average number of common shares and equivalents 56,069 55,678 55,978 56,024 55,593 The above Condensed Consolidated Balance Sheets and Consolidated Statements of Income should be read in conjunction with the Company's latest Annual Report, Quarterly Report on Form 10-Q and Annual Report on Form 10-K. SEGMENT INFORMATION For the Three Months For the Six Months Ended Ended June 30, June 30, March 31, June 30, June 30, 2008 2007 2008 2008 2007 ($ in thousands) Remotely Operated Vehicles Revenue $159,229 $130,219 $144,729 $303,958 $243,549 Gross margin $ 53,068 $ 42,364 $ 48,629 $101,697 $ 75,047 Operating income $ 45,338 $ 36,675 $ 41,497 $ 86,835 $ 64,168 Operating income % 28% 28% 29% 29% 26% Days available 19,114 18,038 19,232 38,346 35,047 Utilization 84% 87% 80% 82% 86% Subsea Products Revenue $164,124 $117,311 $138,518 $302,642 $222,182 Gross margin $ 38,185 $ 30,552 $ 32,594 $ 70,779 $ 59,545 Operating income $ 25,432 $ 20,973 $ 20,717 $ 46,149 $ 41,597 Operating income % 15% 18% 15% 15% 19% Backlog $372,000 $378,000 $353,000 $372,000 $378,000 Subsea Projects Revenue $ 58,790 $ 68,575 $ 47,614 $106,404 $101,675 Gross margin $ 20,906 $ 25,524 $ 14,040 $ 34,946 $ 41,097 Operating income $ 18,878 $ 23,564 $ 12,133 $ 31,011 $ 37,634 Operating income % 32% 34% 25% 29% 37% Inspection Revenue $ 67,969 $ 55,417 $ 59,551 $127,520 $102,837 Gross margin $ 13,776 $ 11,144 $ 11,587 $ 25,363 $ 17,826 Operating income $ 9,337 $ 7,516 $ 7,537 $ 16,874 $ 10,997 Operating income % 14% 14% 13% 13% 11% Mobile Offshore Production Systems Revenue $ 10,165 $ 14,453 $ 10,033 $ 20,198 $ 25,477 Gross margin $ 4,766 $ 6,027 $ 2,670 $ 7,436 $ 9,425 Operating income $ 4,341 $ 5,640 $ 2,254 $ 6,595 $ 8,706 Operating income % 43% 39% 22% 33% 34% Advanced Technologies Revenue $ 39,843 $ 46,066 $ 35,370 $ 75,213 $ 80,325 Gross margin $ 6,430 $ 7,245 $ 4,934 $ 11,364 $ 13,120 Operating income $ 3,335 $ 5,028 $ 2,105 $ 5,440 $ 8,954 Operating income % 8% 11% 6% 7% 11% Unallocated Expenses Gross margin $(18,841) $(16,846) $(15,788) $(34,629) $(30,448) Operating income $(25,196) $(23,098) $(21,473) $(46,669) $(42,222) TOTAL Revenue $500,120 $432,041 $435,815 $935,935 $776,045 Gross margin $118,290 $106,010 $ 98,666 $216,956 $185,612 Operating income $ 81,465 $ 76,298 $ 64,770 $146,235 $129,834 Operating income % 16% 18% 15% 16% 17% SELECTED CASH FLOW INFORMATION Capital expenditures, including acquisitions $ 58,210 $ 60,795 $ 87,824 $146,034 $111,513 Depreciation and amortization $ 27,541 $ 22,386 $ 26,499 $ 54,040 $ 44,133
