Oceaneering Profit Plunges

Oceaneering International reported net income of $22.3 million, or $0.23 per share, on revenue of $626 million for the three months ended June 30, 2016.

Excluding the impacts of a total of $7.0 million of bad debt expense and foreign currency exchange losses, adjusted net income was $26.8 million, or $0.27 per share.

During the corresponding period in 2015, Oceaneering reported net income of $65.4 million, or $0.66 per share, on revenue of $810 million.

M. Kevin McEvoy, chief executive officer of Oceaneering, said, “Despite the ongoing challenging offshore market environment, we are pleased that each of our operating segments remained profitable, excluding the negative impact of the bad debt expense. Relative to our peers, overall EBITDA margin of 15% is noteworthy.”

He continued: “Compared to the first quarter, ROV operating income was down, resulting primarily from a 6% decline in average revenue per day on hire due to lower pricing and a shift in geographic mix. During the quarter our ROV fleet size of 318 vehicles and utilization of 55% was unchanged from that of the prior quarter. Our drill support market share during this period was 58% of the 174 floating rigs under contract, essentially flat with the prior quarter. We remain focused on maintaining our market share of ROVs on contracted rigs and high-specification third-party vessels most likely to return to work when the market recovers, as demonstrated by our recent announcement of our long-term arrangement with Heerema Marine Contractors.

“Subsea Products operating income declined as expected, due to a combination of lower margins realized on umbilical throughput and reduced demand for tooling and installation and workover control systems. Our Subsea Products backlog at June 30, 2016 was $503 million, compared to our March 31, 2016 backlog of $576 million. The backlog decline was primarily related to umbilicals. We continue to expect Subsea Products margins to weaken throughout the year on lower throughput and more competitive pricing for the orders currently in execution. Our book to bill ratio year-to-date was 0.61.

“Subsea Projects operating income increased, mainly due to lower regulatory vessel inspection expenses and additional revenue, as the Ocean Alliance returned to work after a scheduled drydocking. Asset Integrity operating income declined, primarily due to a $3.3 million bad debt provision recognized during the quarter.

“Advanced technologies operating income increased, due to increased engineering services and support for the U.S. Navy. Unallocated expenses were lower due to reduced incentive compensation expense, principally related to our  longterm plans.

“With continued limited visibility, we are expecting that the second half of 2016 will be weaker than the first half. We expect lower operating income contributions from Subsea Products and ROVs, partially offset by an increase in Advanced Technologies, while other segment results should be relatively flat on an adjusted basis. We are continuing to focus our operations on
proactively working with our customers to develop cost effective and efficient solutions that may enable more projects to progress despite a low commodity price.”