HOUSTON, Feb. 18 /PRNewswire-FirstCall/ -- Oceaneering International, Inc. today reported record fourth quarter and annual earnings for the periods ended December 31, 2008. Fourth quarter and annual earnings increased for the fifth consecutive year.
During the fourth quarter of 2008, on revenue of $525.7 million, Oceaneering generated net income of $51.0 million, or $0.93 per share. During the corresponding period in 2007, Oceaneering reported revenue of $481.6 million and net income of $45.5 million, or $0.81 per share. For the year 2008, Oceaneering reported net income of $199.4 million, or $3.58 per share, on revenue of nearly $2.0 billion. Net income for 2007 was $180.4 million, or $3.24 per share, on revenue of over $1.7 billion.
Summary of Results (in thousands, except per share amounts) Three months ended Year Ended December 31, Sept. 30, December 31, 2008 2007 2008 2008 2007 Revenue $525,691 $481,611 $515,795 $1,977,421 $1,743,080 Gross Margin 120,248 110,160 127,596 464,800 413,285 Operating Income 81,626 74,184 89,697 317,558 289,623 Net Income 51,009 45,482 54,975 199,386 180,374 Diluted Earnings Per Share $0.93 $0.81 $0.99 $3.58 $3.24 Weighted Average Number of Diluted Shares 55,053 55,934 55,794 55,722 55,755
Annual and quarterly net income increased year over year, $19.0 million and $5.5 million respectively, as a result of higher operating income performances from Remotely Operated Vehicles (ROV), Subsea Products, and Inspection. This quarter's results included, in Mobile Offshore Production Systems gross margin, a $5.7 million impairment charge to reduce our investment in the Ocean Pensador, an oil tanker held for possible conversion, to its fair value.
T. Jay Collins, President and Chief Executive Officer, stated, "Results for the fourth quarter and the year were exceptional. Annual earnings of nearly $200 million were the highest in Oceaneering's history, over 10% above last year's record result. In 2008 we achieved best ever ROV, Subsea Products, and Inspection operating income performances.
"Compared to 2007, we grew annual ROV operating income by expanding our fleet and increasing average revenue per day-on-hire for our services. Subsea Products profit improved on the strength of increased ROV tooling sales and higher throughput at our umbilical plants. Inspection results rose as we secured additional work associated with offshore production platforms, LNG and petrochemical facilities, and pipelines at higher margins.
"In 2008 we continued to take actions to position the company for future growth and enhance our financial flexibility. We invested $252 million to upgrade and expand our service and product line offerings. Nearly ninety percent of this investment was spent on our ROV and Subsea Products businesses. These two operations offer promising long-term prospects, as they are tied to deepwater and subsea completion activity. We entered into a one-year, unsecured, $85 million term loan agreement to augment our existing $300 million revolving credit facility. As of December 31, 2008, we had $229 million of debt and $196 million available under our credit facilities.
"At this time, we face a deteriorating macroeconomic environment that threatens a prolonged worldwide recession, oil prices not seen since 2004, and an exceptionally tight credit market. These conditions are having a negative impact on oil and gas exploration and development spending plans and, consequently, our earnings prospects for 2009. We do not pretend to have a "bulletproof" business strategy. It would, therefore, be presumptuous to claim we know the exact impact our customers' spending cuts will have on demand for our services and products. However, we believe the deepwater market will be among the least vulnerable to these cuts. This belief is based on the inherent size and long-term nature of deepwater projects and our expectation that oil prices will inevitably rebound to a level that will make these projects more economical. While work on most authorized deepwater projects is likely to continue, the urgency to start new projects is in question.
"We are forecasting our 2009 EPS to be in the range of $3.00 to $3.60. Compared to 2008, our forecast assumptions are that we will achieve profit growth from our ROV business and declines in operating income from our Subsea Projects, Inspection, and MOPS operations. We expect the profit contribution from Subsea Products to be similar to 2008, as the efficiency gains we plan to achieve in our manufacturing processes may be offset by a decline in demand for some of our product lines. Further development project delays would dampen our expectation for Subsea Products profit in 2009. For the first quarter of 2009, we are forecasting EPS of $0.60 to $0.70.
"During 2009 we anticipate generating $290 million to $325 million of cash flow, defined simply as net income plus depreciation expense. This projected cash flow and our existing revolving debt availability should give us ample liquidity to fund our estimated $175 million of capital expenditures and repay the $105 million of debt scheduled to mature in 2009.
"Looking longer term, our belief remains unchanged that the oil and gas industry will continue to invest in deepwater to counteract high existing reservoir depletion rates. Deepwater is one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low per barrel finding and development costs. Therefore, we anticipate that demand for our deepwater services and products will remain promising for the next several years."
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: belief that its ROV and Subsea Products businesses offer promising long-term prospects; belief that the deepwater market will be among the least vulnerable to its customers' spending cuts and the assumptions for that belief, including the inherent size and long-term nature of deepwater projects and the belief that oil prices will inevitably rebound to a level that will make deepwater projects more economical; belief that work on most authorized deepwater projects is likely to continue and uncertainty regarding the urgency to start new projects; 2009 EPS guidance range of $3.00 to $3.60 and the assumptions for this forecast, including profit growth from its ROV business, operating income declines from its Subsea Projects, Inspection, and MOPS operations, and a profit contribution similar to 2008 from its Subsea Products business; expectation of efficiency gains in its Subsea Products manufacturing processes and the possibility that these gains may be offset by a decline in demand for some of its product lines; assessment that further development project delays would dampen its expectation for Subsea Products profit in 2009; first quarter 2009 EPS of $0.60 to $0.70; anticipation of generating $290 million to $325 million of cash flow, as defined, in 2009; expectation that capital expenditures will be approximately $175 million in 2009; expectation of ample liquidity from projected cash flow and existing revolving debt availability, which will be available to fund its estimated capital expenditures and repay its debt scheduled to mature in 2009; belief that the oil and gas industry will continue to invest in deepwater to counteract high existing reservoir depletion rates; and anticipation that longer-term demand for its deepwater services and products will remain promising. 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 subsequent 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
PR 1023 OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Dec. 31, 2008 Dec. 31, 2007 (in thousands) ASSETS Current Assets (including cash and cash equivalents of $11,200 and $27,110) $747,705 $670,569 Net Property and Equipment 697,430 638,107 Other Assets 224,885 222,764 TOTAL ASSETS $1,670,020 $1,531,440 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities $357,327 $338,975 Long-term Debt 229,000 200,000 Other Long-term Liabilities 116,039 77,155 Shareholders' Equity 967,654 915,310 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,670,020 $1,531,440 CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended For the Year Ended Dec. 31, Dec. 31, Sept. 30, December 31, 2008 2007 2008 2008 2007 (in thousands, except per share amounts) Revenue $525,691 $481,611 $515,795 $1,977,421 $1,743,080 Cost of Services and Products 405,443 371,451 388,199 1,512,621 1,329,795 Gross Margin 120,248 110,160 127,596 464,800 413,285 Selling, General and Administrative Expense 38,622 35,976 37,899 147,242 123,662 Income from Operations 81,626 74,184 89,697 317,558 289,623 Interest Income 395 630 304 907 1,198 Interest Expense (3,603) (3,831) (3,070) (13,485) (15,333) Equity earnings of unconsolidated affiliates, net 22 767 444 1,919 4,030 Other Income (Expense), net 597 (1,778) (2,887) 321 (2,020) Income before income taxes 79,037 69,972 84,488 307,220 277,498 Provision for Income Taxes 28,028 24,490 29,513 107,834 97,124 Net Income $ 51,009 $ 45,482 $ 54,975 $ 199,386 $ 180,374 Diluted Earnings per Share $ 0.93 $ 0.81 $0.99 $ 3.58 $ 3.24 Weighted average number of common shares and equivalents 55,053 55,934 55,794 55,722 55,755 The above Condensed Consolidated Balance Sheets and 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, 2008 2007 2008 2008 2007 ($ in thousands) Remotely Operated Vehicles Revenue $160,253 $145,945 $161,710 $ 625,921 $ 531,381 Gross margin $ 60,809 $ 47,563 $ 58,764 $ 221,270 $ 168,322 Operating income $ 52,891 $ 40,259 $ 50,617 $ 190,343 $ 144,242 Operating margin % 33% 28% 31% 30% 27% Days available 20,649 19,024 20,057 79,052 72,880 Utilization 82% 87% 84% 82% 87% Subsea Products Revenue $171,129 $154,569 $176,086 $ 649,857 $ 521,937 Gross margin $ 35,356 $ 33,568 $ 40,612 $ 146,747 $ 133,285 Operating income $ 22,189 $ 21,421 $ 27,708 $ 96,046 $ 92,804 Operating margin % 13% 14% 16% 15% 18% Backlog $298,000 $338,000 $334,000 $ 298,000 $ 338,000 Subsea Projects Revenue $ 90,312 $ 73,088 $ 59,801 $ 256,517 $ 257,752 Gross margin $ 26,735 $ 28,362 $ 19,853 $ 81,534 $ 100,577 Operating income $ 24,034 $ 26,253 $ 17,771 $ 72,816 $ 92,841 Operating margin % 27% 36% 30% 28% 36% Inspection Revenue $ 56,253 $ 58,667 $ 65,336 $ 249,109 $ 219,686 Gross margin $ 10,275 $ 8,886 $ 12,880 $ 48,518 $ 37,195 Operating income $ 5,973 $ 5,000 $ 8,170 $ 31,017 $ 22,749 Operating margin % 11% 9% 13% 12% 10% Mobile Offshore Production Systems Revenue $ 9,389 $ 11,260 $ 9,687 $ 39,274 $ 50,103 Gross margin $ (2,049) $ (31) $ 2,974 $ 8,361 $ 12,443 Operating income (loss) $ (2,418) $ (315) $ 2,553 $ 6,730 $ 11,048 Operating margin % -26% -3% 26% 17% 22% Advanced Technologies Revenue $ 38,355 $ 38,082 $ 43,175 $ 156,743 $ 162,221 Gross margin $ 4,433 $ 5,016 $ 5,799 $ 21,596 $ 25,561 Operating income $ 1,450 $ 1,365 $ 2,883 $ 9,773 $ 14,458 Operating margin % 4% 4% 7% 6% 9% Unallocated Expenses Gross margin $(15,311) $(13,204) $(13,286) $ (63,226) $ (64,098) Operating income $(22,493) $(19,799) $(20,005) $ (89,167) $ (88,519) TOTAL Revenue $525,691 $481,611 $515,795 $1,977,421 $1,743,080 Gross margin $120,248 $110,160 $127,596 $ 464,800 $ 413,285 Operating income $ 81,626 $ 74,184 $ 89,697 $ 317,558 $ 289,623 Operating margin % 16% 15% 17% 16% 17% SELECTED CASH FLOW INFORMATION Capital expenditures, including acquisitions $ 53,850 $ 55,778 $ 52,393 $ 252,277 $ 233,795 Depreciation and amortization, including impairment charge $ 33,022 $ 25,110 $ 27,967 $ 115,029 $ 93,776
