Oceaneering Reports First Quarter 2017 Results

HOUSTON, April 26, 2017 /PRNewswire/ -- Oceaneering International, Inc. ("Oceaneering") OII today reported a net loss of $7.5 million, or $(0.08) per share, on revenue of $446 million for the three months ended March 31, 2017.  Excluding the impacts of $2.1 million discrete tax expense and $2.2 million of pretax foreign currency exchange losses, adjusted net loss was $4.0 million, or $(0.04) per share.

For the fourth quarter of 2016, Oceaneering reported a net loss of $11.0 million, or $(0.11) per share, on revenue of $488 million.  Adjusted net income was $2.6 million, or $0.03 per share, excluding $12.9 million of pre-tax charges related primarily to restructuring measures, and an increase in the annual effective income tax rate recognized during the quarter.

Adjusted operating income, operating margin, net income (loss), earnings (loss) per share, and EBITDA and adjusted EBITDA (as well as EBITDA and adjusted EBITDA margins) are non-GAAP measures which exclude the impacts of certain identified items.  Reconciliations to the corresponding GAAP measures are shown in the tables titled Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS), EBITDA and EBITDA Margins, Adjusted Operating Income and Margins by Segment, and Adjusted EBITDA and Margins by Segment.  These tables are included below under the caption Reconciliations of Non-GAAP to GAAP Financial Information.

 

Operating results for the first quarter of 2017 were $10.9 million lower than the immediately preceding quarter on an adjusted basis, due to higher Unallocated Expenses, seasonality, and lower activity levels in Subsea Projects.  The primary cause of our net discrete tax expense was the result of a new accounting standard associated with share-based compensation.

M. Kevin McEvoy, Chief Executive Officer of Oceaneering, stated, "Our first quarter operating results were slightly better than our expectations.  Again, we are pleased that each of our operating segments generated positive results and, overall, maintained positive EBITDA and free cash flow.

"Compared to the adjusted fourth quarter of 2016, first quarter Remotely Operated Vehicle ("ROV") operating income was down on 13% lower revenue, resulting from 10% fewer days on hire and a 4% reduction in revenue per day on hire; our fleet utilization was 46%.  For the first quarter, ROV EBITDA margin of 37% was slightly better than the 35% for the immediately preceding quarter.

"During the quarter, we put two ROVs into service, both for vessel-based work; thereby ending the quarter with 282 work-class vehicles.  We believe that, as of the end of March, we maintained 53% drill support market share of the 151 contracted floating rigs.  Although we endeavor to maintain our drill support market share and place more ROVs on vessels, we need a sizable increase in our customers' offshore spending levels for there to be a discernible increase in ROV fleet utilization and profitability.

"Sequentially, Subsea Products revenue was flat on increased umbilical throughput offset by lower completion related activities and reduced production enhancement work.  Operating income improved due to cost reduction measures taken in prior periods.  Our Subsea Products backlog at March 31, 2017 was $407 million, compared to our December 31, 2016 backlog of $431 million.  The backlog decline was primarily related to umbilicals.  Our book-to-bill ratio for the first quarter was 0.84, which compared favorably to 0.74 for the trailing twelve months.

"Subsea Projects revenue and operating income were down substantially, resulting from reduced U.S. Gulf of Mexico demand and pricing for deepwater vessel and diving services.  Asset Integrity operating income was lower due to seasonality.  Advanced Technologies operating income improved due to increased commercial activities and work for the U.S. Navy.  Unallocated Expenses increased, as expected, from higher estimated incentive plan compensation.

"Based on our first quarter results, we continue to expect to be marginally profitable at the operating income line on a consolidated basis.  For the second quarter, we are anticipating quarterly operating income improvements from all of our business segments, except for Subsea Products which we are expecting to be relatively flat.  And today, we announced that the Board maintained our current dividend rate and declared a $0.15 per share dividend to be paid during the second quarter."

This release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected business, financial performance and prospects of Oceaneering.  More specifically, the forward-looking statements in this press release include the statements concerning Oceaneering's:  belief that it needs a sizable increase in its customers' offshore spending levels for there to be a discernible increase in its ROV fleet utilization and profitability;  expectation to continue to be marginally profitable at the operating income line on a consolidated basis;  and expectations regarding quarterly operating income from its segments in the second quarter of 2017, while providing a dividend to shareholders.  The forward-looking statements included in this release are based on our current expectations and are subject to certain risks, assumptions, trends and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements.  Among the factors that could cause actual results to differ materially include backlog, costs, capital expenditures, future earnings, capital allocation strategies, dividend levels, sustainability of dividend levels, liquidity, competitive position, financial flexibility, debt levels, forecasts or expectations regarding business outlook; growth for Oceaneering as a whole and for each of its segments (and for specific products or geographic areas within each segment); factors affecting the level of activity in the oil and gas industry; supply and demand of drilling rigs; oil and natural gas demand and production growth; oil and natural gas prices; fluctuations in currency markets worldwide; the loss of major contracts or alliances; future global economic conditions; and future results of operations.  For a more complete discussion of these risk factors, please see Oceaneering's latest annual report on Form 10-K and quarterly report on Form 10-Q filed with the Securities and Exchange Commission.

Oceaneering is a global 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, entertainment, and aerospace industries.  For more information on Oceaneering, please visit www.oceaneering.com.

Contact:
Suzanne Spera
Director, Investor Relations
Oceaneering International, Inc.
713-329-4707
investorrelations@oceaneering.com

 

 

 

 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION

In addition to financial results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), this Press Release also includes non-GAAP financial measures (as defined under SEC Regulation G).  We have included Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share, each of which excludes the effects of certain specified items, as set forth in the tables that follow.  As a result, these amounts are non-GAAP financial measures.  We believe these are useful measures for investors to review because they provide consistent measures of the underlying results of our ongoing business.  Furthermore, our management uses these measures as measures of the performance of our operations.  We have also included disclosures of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), EBITDA Margins and Free Cash Flow, as well as the following by segment:  Adjusted Operating Income and Margins, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margins.  We define EBITDA margin as EBITDA divided by revenue.  Adjusted EBITDA and Adjusted EBITDA Margins as well as Adjusted Operating Income and Margin and related information by segment exclude the effects of certain specified items, as set forth in the tables that follow.  EBITDA and EBITDA margins, Adjusted EBITDA and Adjusted EBITDA margins, and Adjusted Operating Income and Margins and related information by segment are each non-GAAP financial measures.  We define Free Cash Flow as cash flow provided by operating activities less organic capital expenditures (i.e., purchases of property and equipment other than those in business acquisitions).  We have included these disclosures in this press release because EBITDA, EBITDA margins and Free Cash Flow are widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry, and the adjusted amounts thereof (as well as Adjusted Operating Income and Margin by Segment) provide more consistent measures than the unadjusted amounts.  Furthermore, our management uses these measures for purposes of evaluating our financial performance.  Our presentation of EBITDA and EBITDA margins (and the adjusted amounts thereof) and Free Cash Flow may not be comparable to similarly titled measures other companies report.  Non-GAAP financial measures should be viewed in addition to and not as substitutes for our reported operating results, cash flows or any other measure prepared and reported in accordance with GAAP.   The tables that follow provide reconciliations of the non-GAAP measures used in this press release to the most directly comparable GAAP measures.

 

 

 

 

 

 

 

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SOURCE Oceaneering International, Inc.