Oceaneering reports record earnings

February 15, 2013

Oceaneering International, Inc. reported record fourth-quarter and annual earnings for the periods ended December 31, 2012.
For the 4Q 2012, Oceaneering earned net income of $80.6 million, or $0.74 per share, on revenue of $780.9 million. During the corresponding period in 2011, net income was $58.3 million, or $0.54 per share, on revenue of $574.2 million. For the year 2012, Oceaneering reported net income of $289.0 million, or $2.66 per share, on revenue of $2.8 billion. For the year 2011, net income was $235.7 million, or $2.16 per share, on revenue of $2.2 billion.

Year over year, annual EPS increased 23% due to record operating income from our Remotely Operated Vehicles (ROV), Subsea Products, Asset Integrity, and Advanced Technologies segments and the commencement of a 3-year field support vessel services contract offshore Angola. Quarterly EPS increased 37% on income improvements from all operating business segments, led by Subsea Products and Subsea Projects.

M. Kevin McEvoy, President and Chief Executive Officer, stated, “Our record annual earnings of $289 million and EPS of $2.66 were largely attributable to our global focus on deepwater and subsea completion activity. Each of our five operating business segments attained higher income than in 2011.

Millennium ROV working subseaMillennium ROV working subsea (Image: Oceaneering)

“We achieved record ROV operating income for the ninth consecutive year on higher demand to provide drill support and vessel-based services, notably offshore Africa and in the U.S. Gulf of Mexico (GOM), and expansion of our fleet. We increased our days on hire by more than 9,000 to over 82,000 days for the year. Our fleet utilization rose to 80% from 77% in 2011. During 2012, we put 37 new ROVs into service and retired 15. At year end we had 289 vehicles in our ROV fleet.

“Subsea Products operating income increased primarily on higher demand for tooling. Products backlog at the end of 2012 was $681 million, up 78% from $382 million at the end of 2011. This backlog growth was largely attributable to three large umbilical contracts we secured, which in total added nearly $245 million to our backlog. One of these, the largest umbilical order in Oceaneering’s history, is for Petrobras’ first large pre-salt project.

“Asset Integrity operating income improved in 2012 on higher service sales in most of the major geographic areas we serve, particularly in Norway due to the business acquisition we completed in December 2011. Subsea Projects operating income increased due to recovering demand for our services in the GOM and the work offshore Angola. Advanced Technologies profits were up on engineering and vessel maintenance work for the U.S. Navy and theme park project activity.

“During 2012, our capital expenditures totaled $310 million, of which $198 million was spent on expanding and upgrading our ROV fleet. We invested $68 million in our Subsea Products business, largely to increase the capabilities of our umbilical plants in Brazil and Scotland and to expand our rental tooling operation. In addition to our capital expenditures, we repurchased 400,000 shares of our common stock for $19 million and paid $75 million of cash dividends. In June, we increased our regular quarterly cash dividend by 20% to $0.18 per common share.

“We are forecasting our 2013 EPS to be in the range of $3.00 to $3.25. We anticipate continued 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 $0.55 to $0.60.

“We expect all of our operating business segments will achieve higher income in 2013 compared to 2012, notably: ROV on greater service demand to support drilling and vessel-based projects; Subsea Products on higher demand for all of our major product line categories, led by subsea hardware; and Subsea Projects on a full year of work offshore Angola.

“Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering’s growth. At year end, our balance sheet remained conservatively capitalized with $121 million of cash, $94 million of debt, and $1.8 billion of equity. We generated slightly over $600 million of EBITDA during 2012 and anticipate producing EBITDA of at least $675 million in 2013.

“Looking beyond 2013, our belief that the oil and gas industry will continue to invest in deepwater projects remains unchanged. 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 services and products to safely support the deepwater efforts of our customers.”



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