Oceaneering Profit Down 64% in Q1

Oceaneering reported net income of $25.1 million, or $0.26 per share, on revenue of $608 million for the three months ended March 31, 2016.

During the corresponding period in 2015, Oceaneering reported net income of $69.5 million (approx. 64 per cent higher), or $0.70 per share, on revenue of $787 million.

For the fourth quarter of 2015, Oceaneering reported net income of $27.5 million, or $0.28 per share, on revenue of $722 million.

Revenues for the first quarter of 2016 were 23% lower than the corresponding period of 2015 and 16% lower than the immediately preceding quarter.

Consequently, compared to the first quarter of 2015, quarterly earnings were down as a result of lower demand and pricing for all Oceaneering’s oilfield service and product lines. Sequentially, quarterly earnings declined due to a lower level of offshore activity, resulting from further weakening market conditions, seasonality, and higher unallocated expenses.

M. Kevin McEvoy, Oceaneering’s CEO, stated: “While our results for the first quarter reflect the challenging times we face in this low oil price market environment, we are pleased that each of our operating segments remained profitable, and our EBITDA margin of 17% held up relatively well when compared to others and our own full year 2015 EBITDA margin of 20%.”

“Compared to the first quarter of last year, quarterly ROV operating income was down substantially on 33% lower revenue, resulting from 28% fewer days on hire and a 7% reduction in revenue per day on hire. Our fleet utilization decreased to 56% from 73% a year ago. During the quarter, we put four new ROVs into service and retired one. At the end of the quarter, we had 318 vehicles in our ROV fleet. Our drill support market share during this period was 57% of the 193 floating rigs under contract, compared to 58% a year ago. In spite of the current shrinking available market, we remain focused on maintaining our market share of ROVs on contracted rigs and high specification third party vessels.

“Subsea Products operating income decreased 19%, primarily due to reduced demand for tooling and installation and workover control systems. Our Subsea Products backlog at
quarter-end was $576 million, down $76 million from December 2015. Subsea Products operating margin of 21% was flat compared to the first quarter of 2015 and was a function of executing backlog orders priced prior to the significant downturn in the industry. We expect margins to weaken throughout the year, as we process backlog that more closely reflects the current market environment.

“Subsea Projects operating income dropped mainly due to lower deepwater vessel demand and pricing, the drydock of the Ocean Alliance for regulatory inspection, and low demand for survey services. Asset Integrity operating income continued to fall on lower global demand and pricing for inspection services. Advanced Technologies operating income was lower, due to completing certain commercial programs and other theme park projects at low margins on previously disclosed execution and contracting issues.

In addition, Oceaneering declared a regular quarterly dividend of $0.27 per common share. According to the company, the dividend is payable June 17, 2016 to shareholders of record at the close of business on May 27, 2016.