Record Fourth Quarter and Annual Earnings for Oceaneering

Oceaneering International, Inc. reported record fourth quarter and annual earnings for the periods ended December 31, 2013.

Record Fourth Quarter and Annual Earnings for Oceaneering

For the fourth quarter of 2013, Oceaneering earned net income of $93.4 million, or $0.86 per share, on revenue of $894.8 million. During the corresponding period in 2012, net income was $80.6 million, or $0.74 per share, on revenue of $780.9 million. For the year 2013, Oceaneering reported net income of $371.5 million, or $3.42 per share, on revenue of $3.3 billion. For the year 2012, net income was $289.0 million, or $2.66 per share, on revenue of $2.8 billion.

Fourth quarter 2013 results included a $3.3 million charge to establish an allowance for doubtful accounts related to Remotely Operated Vehicles (ROV) receivables from OGX Petróleo e Gás S.A., which initiated a court-supervised restructuring under Brazilian bankruptcy law during the period.

This charge was recorded as an ROV selling, general and administrative expense.

Quarterly EPS increased year over year due to profit improvements by all oilfield business operations, led by ROV and Subsea Products. Subsea Products achieved record quarterly operating income.

Annual EPS increased as all operating segments attained higher income. Four of five segments achieved record operating income. Although not a record, Subsea Projects operating income increased by 48%. Overall operating margin was the second highest in Oceaneering’s history.

M. Kevin McEvoy, President and Chief Executive Officer, stated, “Results for the fourth quarter and the year were exemplary as we achieved record EPS in each period. Our ability to produce these exceptional results is largely attributable to our global focus on deepwater and subsea completion activity, the business expansion strategy we have in place, and our solid operational execution.

“We achieved record ROV operating income for the tenth consecutive year on higher global demand to provide drill support and vessel-based services and the expansion of our fleet. We increased our days on hire by more than 9,000, to over 91,000 days for the year. Our fleet utilization rose to 85% from 80% in 2012. During 2013 we put 26 new ROVs into service, retired 10, and transferred 1 system to Advanced Technologies for  non-oilfield use. At year end, we had 304 vehicles in our ROV fleet.

“Subsea Products annual operating income increased on higher demand for each of our major product lines, led by subsea hardware. Products backlog at the end of 2013 was an all-time high of $906 million, up 33% from $681 million at the end of 2012. This backlog growth was primarily attributable to four umbilical contracts, which added about $170 million to our 2013 backlog. These umbilicals are for use in the U.S. Gulf of Mexico (GOM), West of Shetland, and offshore Egypt.

“Asset Integrity annual operating income improved in 2013 on higher service sales in most of the major geographic areas we serve, particularly Africa and Australia. Advanced Technologies profits were up on theme park project activity and vessel maintenance work for the U.S. Navy. Subsea Projects operating income also grew, primarily on increased deepwater vessel service activity.

“During 2013 our capital expenditures totaled $394 million, of which $226 million was spent on expanding and upgrading our ROV fleet. We invested $103 million in our Subsea Products business, mainly to increase the capabilities of our umbilical plants in the U.S. and Scotland and expand our rental/service tooling hardware offerings. We also paid $91 million of cash dividends. In June we increased our regular quarterly cash dividend by more than 20% to $0.22 per common share.

“We continue to project record EPS for 2014 in the range of $3.90 to $4.10. We anticipate sustained global demand growth for our services and products to support deepwater drilling, field development, and inspection, maintenance, and repair activities. This market outlook is supported by industry observations and assessments that deepwater drilling is increasing, subsea equipment orders are escalating, and backlog to perform offshore construction projects is at a historically high level. Consistent with our historical seasonal earnings pattern, we are forecasting first quarter EPS of $0.75 to $0.80.

“We expect all our oilfield segments will achieve higher operating income in 2014 compared to 2013: ROV on greater worldwide service demand to support drilling and vessel-based projects; Subsea Products on higher demand for each of our major product lines; Subsea Projects on growth in deepwater service activity; and Asset Integrity on increased demand for our services.

“Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering’s growth. At year end, our balance sheet reflected $91 million of cash, no debt, and $2.0 billion of equity. We generated $746 million of EBITDA during 2013 and anticipate at least $850 million in 2014.

“Looking beyond 2014, we believe that the oil and gas industry will increase its investment in deepwater projects. Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs. With our existing assets, we are well positioned to supply a wide range of the services and products required to support the safe deepwater efforts of our customers.”

Press Release, February 19, 2014; Image: Oceaneering

Related news

List of related news articles