HOUSTON, July 21, 2016 /PRNewswire/ — Oceaneering International, Inc. (“Oceaneering”) (NYSE: OII) today 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 prior quarter ended March 31, 2016, Oceaneering reported net income of $25.1 million, or $0.26 per share, on revenue of $608 million. Those results included $5.9 million of pre-tax foreign currency losses, reported in other income and expenses.
The calculations of adjusted net income and earnings per share are shown in the table Adjusted Net Income and Diluted Earnings per Share (EPS), under the caption Reconciliation of Non-GAAP to GAAP Financial Information.
Sequentially, operating income declined 20% on reduced profit contributions from Subsea Products and Remotely Operated Vehicles (“ROV”), with a slight increase in Subsea Projects and Advanced Technologies, and lower Unallocated Expenses. Without the impact of $5.8 million of bad debt expense, adjusted operating income was down 8%.
M. Kevin McEvoy, Chief Executive Officer of Oceaneering, stated, “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.
“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 long-term 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.
“In navigating this landscape, we remain focused on maintaining our market position while working to preserve Oceaneering’s core capabilities for the long term, balanced with the imperative to tailor costs and resources to match our demand profile. These efforts combined with our liquidity and ability to generate cash leave us well-positioned for the eventual offshore and subsea market cycle recovery.”
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 the Company. More specifically, the forward-looking statements in this press release include the statements concerning Oceaneering’s: characterization of certain third-party vessels as most likely to return to work when the market recovers; statements about backlog, to the extent it may be an indicator of future revenue or profitability; expectation about Subsea Products’ margins; overall outlook for the second half of 2016,and expected contributions of each segment to the operating results for the second half of 2016; and belief that its liquidity and ability to generate cash leave it well-positioned for the eventual offshore and subsea market cycle recovery. 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 reports on Form 10-Q filed with the Securities and Exchange Commission.
We define “EBITDA margin” as (1) net income plus provision for income taxes, interest expense, net, and depreciation and amortization divided by (2) total revenue. EBITDA margin is a non-GAAP financial measure. We have included EBITDA margin disclosures in this press release because EBITDA margin is widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry. Our presentation of EBITDA margin may not be comparable to similarly titled measures other companies report. Non-GAAP financial measures should be viewed in addition to and not as an alternative for our reported operating results or cash flow from operations or any other measure of performance as determined in accordance with GAAP. For a reconciliation of our EBITDA margin amounts to the most directly comparable GAAP financial measures, please see the attached schedule.
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.
Director, Investor Relations
Oceaneering International, Inc.
SOURCE Oceaneering International, Inc.