HOUSTON, April 28 /PRNewswire-FirstCall/ -- Oceaneering International, Inc. today reported first quarter earnings for the period ended March 31, 2010. On revenue of $435.2 million, Oceaneering generated net income of $39.2 million, or $0.71 per share. During the corresponding period in 2009, Oceaneering reported revenue of $435.1 million and net income of $44.3 million, or $0.80 per share.
Summary of Results (in thousands, except per share amounts) Three months ended ------------------ March 31, Dec. 31, --------- -------- 2010 2009 2009 ---- ---- ---- Revenue $435,170 $435,100 $452,262 Operating Income 62,329 69,380 72,132 Net Income $39,243 $44,345 $46,058 Diluted Earnings Per Share $0.71 $0.80 $0.83
Year over year, ROV operating income continued to grow, however, overall quarterly earnings declined primarily as a result of reduced operating income contribution from our Subsea Projects business. Subsea Projects results reflect reduced demand for our diving and vessel services in the U.S. Gulf of Mexico and include a $5.2 million impairment charge to reduce our carrying value of The Performer to its fair value, less the anticipated cost to sell. We decided to put the vessel up for sale after completion of its Angola contract in March.
Sequentially, quarterly earnings declined due to the asset impairment charge noted above and normal seasonal reductions in demand for our ROV and Inspection services. Additionally, the fourth quarter of 2009 included a $1.9 million gain realized on the sale of the Ocean Producer.
With the sale of the Ocean Producer, our Mobile Offshore Production Systems (MOPS) business is no longer significant to Oceaneering's overall performance. Consequently, our MOPS financial results are now included within our Subsea Projects segment, and historical segment results have been conformed to the current year presentation.
T. Jay Collins, President and Chief Executive Officer, stated, "For the quarter, all of our business operations performed well, and our 2010 outlook remains very positive. Including the unanticipated impairment charge, our EPS was slightly above the midpoint of our guidance range due to another exemplary performance by our ROV operations.
"We achieved record first quarter ROV operating income. While our utilization rate slipped to 75% due to slow construction support activity, we were able to increase ROV profits and profitability year over year by controlling our expenses and increasing our vehicle days on hire. Quarterly ROV operating margin was at an all-time high. During the quarter, we put five new ROVs into service, and at the end of March 2010 we had 253 vehicles in our fleet, compared to 233 a year ago. We expect to add 20 new ROVs to the fleet in 2010.
"Our Subsea Products backlog at quarter-end was $338 million, up slightly from our December 31 backlog and up 20% from that of one year ago. The subsea umbilical market remains very competitive, with several large orders recently being awarded to others. However, bidding activity has increased for several of our product lines, and we continue to project improved demand for our specialty subsea products with a meaningful increase in operating income during the second half of 2010.
"During the quarter, the Ocean Intervention II unfortunately incurred substantial deck damage while installing an umbilical in heavy winter weather. The vessel is expected to be out of service undergoing repairs until the end of the third quarter. The cost of the repairs should be covered by our insurance except for a small deductible.
"While we have some moving pieces, our outlook for 2010 remains basically the same as we discussed during our last earnings release conference call. We are forecasting our 2010 EPS to be relatively flat with 2009, in the range of $3.25 to $3.55. The major determinant of the spread in our 2010 EPS guidance range is the extent to which deepwater construction activity increases over the balance of this year. The level of construction activity impacts demand for our ROV construction services, subsea products, and our deepwater vessel services in the U.S. Gulf of Mexico.
"For the second quarter of 2010, we expect seasonal improvements in demand for our ROV and Inspection services, higher sales for our specialty subsea products, and a lower contribution from Subsea Projects. We are forecasting EPS of $0.80 to $0.85.
"Looking longer term, our belief that the oil and gas industry will continue to invest in deepwater to counteract high existing reservoir depletion rates remains unchanged. 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 demand for our deepwater services and products will remain promising. With our existing assets, we are well positioned to supply a wide range of the services and products required to support the deepwater exploration, development, and production efforts of our customers.
"At the end of the quarter, we had $220 million of cash, $120 million of debt, $200 million available under our revolving credit facility, and $1.3 billion of equity. For 2010 we anticipate generating in excess of $300 million of cash flow, simply defined as net income plus depreciation and amortization. Our balance sheet and projected cash flow provide us with ample resources to invest in Oceaneering's growth."
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: positive outlook for 2010; expected addition of 20 new ROVs in 2010; projection of improved demand for its specialty subsea products; projection of a meaningful increase in specialty subsea products operating income during the second half of 2010; expectation that Ocean Intervention II will be out of service, undergoing repairs until the end of the third quarter; expectation that the cost of the repairs, minus the deductible, will be covered by its insurance; 2010 EPS guidance range of $3.25 to $3.55; expectation of second quarter 2010 seasonal improvements in demand for its ROV and Inspection services, higher specialty subsea product sales, and a lower contribution from Subsea Projects; second quarter 2010 forecasted EPS range of $0.80 to $0.85; belief that the oil and gas industry, over the long term, will continue to increase its investment in deepwater to counteract high existing reservoir depletion rates; anticipation that demand for its deepwater services and products will remain promising; anticipation of generating, during 2010, in excess of $300 million of cash flow, as defined, and the expectation that this cash flow will provide ample resources to invest in the company's growth; and forecasted EBITDA for 2010 and the related reconciliations thereof to forecasted net income. 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; changes in customers' operational plans or schedules; contract cancellations or modifications; difficulties executing under contracts; 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. For a more complete discussion of these and other risk factors, please see Oceaneering's annual report on Form 10-K for the year ended December 31, 2009 and subsequent quarterly reports on Form 10-Q filed 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 investorrelations@oceaneering.com. A live webcast of the company's earnings release conference call, scheduled for Thursday, April 29, 2010 at 11:00 a.m. Eastern, can be accessed at http://www.oceaneering.com/investor-relations/.
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Mar. 31, Dec. 31, 2010 2009 --------- --------- (in thousands) ASSETS Current Assets (including cash and cash equivalents of $220,039 and $162,351) $945,694 $874,139 Net Property and Equipment 743,023 766,361 Other Assets 239,985 239,787 ------- ------- TOTAL ASSETS $1,928,702 $1,880,287 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities $400,077 $388,547 Long-term Debt 120,000 120,000 Other Long-term Liabilities 151,470 147,417 Shareholders' Equity 1,257,155 1,224,323 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,928,702 $1,880,287 ========== ========== CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended -------------------------- Mar. 31, Mar. 31, Dec. 31, 2010 2009 2009 ---- ---- ---- (in thousands, except per share amounts) Revenue $435,170 $435,100 $452,262 Cost of services and products 335,465 329,298 344,528 ------- ------- ------- Gross Profit 99,705 105,802 107,734 Selling, general and administrative expense 37,376 36,422 35,602 ------ ------ ------ Income from Operations 62,329 69,380 72,132 Interest income 103 135 181 Interest expense (1,641) (2,381) (1,478) Equity earnings of unconsolidated affiliates, net 565 883 825 Other income (expense), net (982) 206 (800) ---- --- ---- Income before Income Taxes 60,374 68,223 70,860 Provision for income taxes 21,131 23,878 24,802 ------ ------ ------ Net Income $39,243 $44,345 $46,058 ======= ======= ======= Net Income Attributable to Diluted Common Shares $39,061 $43,991 $45,737 Weighted Average Number of Diluted Common Shares 55,224 54,863 55,095 Diluted Earnings per Share $0.71 $0.80 $0.83 The above Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q. SEGMENT INFORMATION For the Three Months Ended -------------------------- Mar. 31, Mar. 31, Dec. 31, 2010 2009 2009 ---- ---- ---- ($ in thousands) Remotely Operated Vehicles Revenue $158,947 $155,598 $167,580 Operating income $53,736 $48,796 $55,158 Operating margin 34% 31% 33% Days available 22,398 20,671 22,724 Utilization 75% 80% 78% Subsea Products Revenue $111,403 $114,924 $124,467 Operating income $15,655 $15,788 $15,093 Operating margin 14% 14% 12% Backlog $338,000 $282,000 $321,000 Subsea Projects Revenue $57,824 $71,763 $53,694 Operating income $7,058 $19,493 $15,081 Operating margin 12% 27% 28% Inspection Revenue $50,506 $49,073 $53,739 Operating income $4,720 $6,630 $5,569 Operating margin 9% 14% 10% Advanced Technologies Revenue $56,490 $43,742 $52,782 Operating income $4,264 $2,053 $1,988 Operating margin 8% 5% 4% Unallocated Operating Expenses income $(23,104) $(23,380) $(20,757) TOTAL Revenue $435,170 $435,100 $452,262 Operating income $62,329 $69,380 $72,132 Operating margin 14% 16% 16% SELECTED CASH FLOW INFORMATION Capital expenditures, including acquisitions $36,199 $45,387 $29,970 Depreciation and Amortization, including impairment charge $39,033 $28,023 $33,433 RECONCILIATION of GAAP to NON-GAAP FINANCIAL INFORMATION For the Three Months Ended -------------------------- Mar. 31, Mar. 31, Dec. 31, 2010 2009 2009 ---- ---- ---- ($ in thousands) Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net Income $39,243 $44,345 $46,058 Depreciation and Amortization, including impairment charge 39,033 28,023 33,433 ------ ------ ------ Subtotal 78,276 72,368 79,491 Interest Income/Expense, Net 1,538 2,246 1,297 Provision for Income Taxes 21,131 23,878 24,802 ------ ------ ------ EBITDA $100,945 $98,492 $105,590 ======== ======= ======== 2010 Estimates -------------- Low High --- ---- (in thousands) Net Income $180,000 $195,000 Depreciation and Amortization, including impairment charge 135,000 145,000 ------- ------- Subtotal 315,000 340,000 Interest Income/Expense, Net 5,000 5,000 Provision for Income Taxes 95,000 105,000 ------ ------- EBITDA $415,000 $450,000 ======== ======== SEGMENT INFORMATION For the Three Months Ended -------------------------- Mar. 31, June 30, Sept. 30, Dec. 31, 2009 2009 2009 2009 ---- ---- ---- ---- ($ in thousands) Remotely Operated Vehicles Revenue $155,598 $160,040 $166,010 $167,580 Operating income $48,796 $49,735 $53,994 $55,158 Operating margin 31% 31% 33% 33% Days available 20,671 21,121 22,011 22,724 Utilization 80% 80% 79% 78% Subsea Products Revenue $114,924 $115,587 $132,748 $124,467 Operating income $15,788 $15,591 $14,054 $15,093 Operating margin 14% 13% 11% 12% Backlog $282,000 $350,000 $328,000 $321,000 Subsea Projects Revenue $71,763 $73,329 $75,821 $53,694 Operating income $19,493 $21,347 $19,483 $15,081 Operating margin 27% 29% 26% 28% Inspection Revenue $49,073 $55,746 $57,582 $53,739 Operating income $6,630 $6,948 $7,296 $5,569 Operating margin 14% 12% 13% 10% Advanced Technologies Revenue $43,742 $45,981 $51,875 $52,782 Operating income $2,053 $3,950 $4,375 $1,988 Operating margin 5% 9% 8% 4% Unallocated Operating Expenses income $(23,380) $(23,273) $(22,896) $(20,757) TOTAL Revenue $435,100 $450,683 $484,036 $452,262 Operating income $69,380 $74,298 $76,306 $72,132 Operating margin 16% 16% 16% 16% Year Ended ---------- Dec. 31, 2009 ---- ($ in thousands) Remotely Operated Vehicles Revenue $649,228 Operating income $207,683 Operating margin 32% Days available 86,527 Utilization 79% Subsea Products Revenue $487,726 Operating income $60,526 Operating margin 12% Backlog $321,000 Subsea Projects Revenue $274,607 Operating income $75,404 Operating margin 27% Inspection Revenue $216,140 Operating income $26,443 Operating margin 12% Advanced Technologies Revenue $194,380 Operating income $12,366 Operating margin 6% Operating Unallocated Expenses income $(90,306) TOTAL Revenue $1,822,081 Operating income $292,116 Operating margin 16% NOTE: The above information reflects the inclusion of our MOPS segment into our Subsea Projects segment. SEGMENT INFORMATION For the Three Months Ended -------------------------- Mar. 31, June 30, Sept. 30, Dec. 31, 2008 2008 2008 2008 ---- ---- ---- ---- ($ in thousands) Remotely Operated Vehicles Revenue $144,729 $159,229 $161,710 $160,253 Operating income $41,497 $45,338 $50,617 $52,891 Operating margin 29% 28% 31% 33% Days available 19,232 19,114 20,057 20,649 Utilization 80% 84% 84% 82% Subsea Products Revenue $138,518 $164,124 $176,086 $171,129 Operating income $20,717 $25,432 $27,708 $22,189 Operating margin 15% 15% 16% 13% Backlog $353,000 $372,000 $334,000 $298,000 Subsea Projects Revenue $57,647 $68,955 $69,488 $99,701 Operating income $14,387 $23,219 $20,324 $21,616 Operating margin 25% 34% 29% 22% Inspection Revenue $59,551 $67,969 $65,336 $56,253 Operating income $7,537 $9,337 $8,170 $5,973 Operating margin 13% 14% 13% 11% Advanced Technologies Revenue $35,370 $39,843 $43,175 $38,355 Operating income $2,105 $3,335 $2,883 $1,450 Operating margin 6% 8% 7% 4% Unallocated Operating Expenses income $(21,473) $(25,196) $(20,005) $(22,493) TOTAL Revenue $435,815 $500,120 $515,795 $525,691 Operating income $64,770 $81,465 $89,697 $81,626 Operating margin 15% 16% 17% 16% Year Ended ---------- Dec. 31, 2008 ---- ($ in thousands) Remotely Operated Vehicles Revenue $625,921 Operating income $190,343 Operating margin 30% Days available 79,052 Utilization 82% Subsea Products Revenue $649,857 Operating income $96,046 Operating margin 15% Backlog $298,000 Subsea Projects Revenue $295,791 Operating income $79,546 Operating margin 27% Inspection Revenue $249,109 Operating income $31,017 Operating margin 12% Advanced Technologies Revenue $156,743 Operating income $9,773 Operating margin 6% Operating Unallocated Expenses income $(89,167) TOTAL Revenue $1,977,421 Operating income $317,558 Operating margin 16% NOTE: The above information reflects the inclusion of our MOPS segment into our Subsea Projects segment.
Oceaneering International, Inc.
CONTACT: Jack Jurkoshek, Director Investor Relations of Oceaneering
International, Inc., +1-713-329-4670, fax, +1-713-329-4653,
investorrelations@oceaneering.com
Web Site: http://www.oceaneering.com/
