OCEANEERING INTERNATIONAL INC - FORM 8-K - EX-99.1 - PRESS RELEASE DATED APRIL 23, 2014 REGARDING ITEM 2.02 - April 23, 2014

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Exhibit 99.1


Oceaneering Announces Record First Quarter Earnings


-- First Quarter EPS Increases 22% Over 2013
-- Reaffirms 2014 EPS Guidance Range of $3.90 to $4.10
-- Initiates Second Quarter 2014 EPS Guidance of $0.97 to $1.01
-- Repurchases 500,000 Shares of Common Stock


April 23, 2014 - Houston, Texas - Oceaneering International, Inc. (NYSE:OII) today reported record first quarter earnings for the period ended March 31, 2014.

On revenue of $840.2 million, Oceaneering generated net income of $91.2 million, or $0.84 per share. During the corresponding period in 2013, Oceaneering reported revenue of $718.6 million and net income of $74.8 million, or $0.69 per share.

Summary of Results
(in thousands, except per share amounts)
 
Three Months Ended  
 
March 31,.
 
Dec. 31,
 
 
 
 
 
 
 
2014
 
2013
 
2013
 
 
 
 
 
 
Revenue
$840,201
 
$718,552
 
$894,798
Gross Margin
189,491
 
160,375
 
197,805
Income from Operations
132,862
 
108,290
 
136,753
Net Income
$91,225
 
$74,849
 
$93,433
 
 
 
 
 
 
Diluted Earnings Per Share (EPS)
$0.84
 
$0.69
 
$0.86
 


Year over year, quarterly EPS increased 22% on profit improvements by all oilfield business operations. Sequentially, quarterly EPS declined, as anticipated, as a result of lower operating income from Subsea Products and Subsea Projects.






M. Kevin McEvoy, President and Chief Executive Officer, stated, “We are off to a good start to the year as our record first quarter EPS was above our guidance. All of our business segments performed well relative to our forecasts, and we continue to expect to achieve record EPS for a fifth consecutive year.
“Compared to the first quarter of last year, quarterly ROV operating income improved on an increase in days on hire, the expansion of our fleet, and an improvement in operating margin. Our fleet utilization increased to 86% from 83% a year ago. During the quarter we put 14 new systems into service and retired 4. At the end of the quarter, we had 314 vehicles in our ROV fleet, an increase of 20 from March 2013. For the balance of 2014, we expect to place 16 to 21 more new systems into service.
“Subsea Products operating income was higher due to improved demand for subsea hardware and an increase in umbilical plant throughput. Our Subsea Products backlog at quarter-end was $894 million, compared to $776 million at the end of March 2013 and $906 million at the end of December 2013.

“Subsea Projects operating income increased on higher deepwater vessel activity in the U.S. Gulf of Mexico and offshore Angola. Asset Integrity operating income improved on increased service demand in the Middle East and the Caspian Sea area. Advanced Technologies operating income was lower on reductions in theme park project work and U.S. Navy submarine maintenance and engineering service activity.

“Our outlook for the rest of this year remains positive. 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. We expect all our oilfield segments to achieve higher income in 2014 compared to 2013. For the second quarter of 2014, we are forecasting EPS of $0.97 to $1.01.

“Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering’s growth. At the end of the quarter, our balance sheet reflected $106 million of cash, $90 million of debt, and $2.1 billion of equity. During the quarter we generated EBITDA of $186 million and for 2014 we anticipate generating at least $850 million of EBITDA.

“During the quarter we repurchased 500,000 shares of our common stock at a cost of about $35 million. Today we announced a 23% increase in our regular quarterly cash dividend to $0.27 from $0.22 per share. These actions underscore our continued confidence in Oceaneering’s financial strength and future business prospects.

“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 and opportunities to add new assets, we are well positioned to supply a wide range of services and products required to support the safe deepwater efforts of our customers.”







Statements in this press release that express a belief, expectation, or intention are forward looking. The forward-looking statements in this press release include the statements concerning Oceaneering’s: expectation of achieving record EPS for 2014; expected number of ROVs to be placed in service in the balance of 2014; statements about backlog, to the extent backlog may be an indicator of future revenue or profitability; positive outlook for the rest of 2014; 2014 EPS guidance range; continued anticipation of global demand growth to support deepwater drilling, field development, and inspection, maintenance, and repair activities; expectation that its oilfield segments will achieve higher income in 2014 compared to 2013; 2014 Q2 forecast EPS; belief that its liquidity and projected cash flow provide ample resources to invest in the company’s growth; anticipated minimum 2014 EBITDA; confidence in its financial strength and future business prospects; characterization of its quarterly dividend as “regular”; belief that the oil and gas industry will increase investments in deepwater projects; and belief that deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on current information and expectations of Oceaneering that involve a number of risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. 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 as net income plus provision for income taxes, interest expense, net, and, depreciation and amortization. EBITDA is a non-GAAP financial measure. We have included EBITDA disclosures in this press release because EBITDA 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 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 amounts to the most directly comparable GAAP financial measures, please see the attached schedule.


Oceaneering is a global oilfield 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 further information, please contact Jack Jurkoshek, Director Investor Relations,
Oceaneering International, Inc., 11911 FM 529, Houston, Texas 77041; Telephone 713-329-4670; E‑Mail investorrelations@oceaneering.com. A live webcast of the company’s earnings release conference call, scheduled for Thursday, April 24, 2014 at 11:00 a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.




- Tables follow on next page -





 
 
 
 
 
 
 
 
 
 
 
 
 
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mar 31, 2014
 
Dec 31, 2013
 
 
 
 
 
 
 
 
 
 
(in thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current Assets (including cash and cash equivalents of $106,339 and $91,430)
 
 
 
 
 
 
 
$
1,456,239

 
$
1,433,275

 
Net Property and Equipment
 
 
 
 
 
 
 
1,245,498

 
1,189,099

 
Other Assets
 
 
 
 
 
 
 
510,876

 
506,126

 
 
TOTAL ASSETS
 
 
 
 
 
 
 
$
3,212,613

 
$
3,128,500

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
$
695,441

 
$
727,088

 
Long-term Debt
 
 
 
 
 
 
 
90,000

 
—

 
Other Long-term Liabilities
 
 
 
 
 
 
 
336,812

 
357,972

 
Shareholders' Equity
 
 
 
 
 
 
 
2,090,360

 
2,043,440

 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
$
3,212,613

 
$
3,128,500

 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
 
 
 
 
 
 
 
Mar 31, 2014
 
Mar 31, 2013
 
Dec 31, 2013
 
 
 
 

 
 
 
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
$
840,201

 
$
718,552

 
$
894,798

 
Cost of services and products
 
 
 
 
 
650,710

 
558,177

 
696,993

 
 
Gross Margin
 
 
 
 
 
189,491

 
160,375

 
197,805

 
Selling, general and administrative expense
 
 
 
56,629

 
52,085

 
61,052

 
 
Income from Operations
 
 
 
 
 
132,862

 
108,290

 
136,753

 
Interest income
 
 
 
 
 
79

 
190

 
82

 
Interest expense
 
 
 
 
 
(411
)
 
(763
)
 
(27
)
 
Equity earnings (losses) of unconsolidated affiliates
 
 
 
(36
)
 
161

 
24

 
Other income (expense), net
 
 
 
 
 
294

 
1,390

 
(433
)
 
 
Income before Income Taxes
 
 
 
 
 
132,788

 
109,268

 
136,399

 
Provision for income taxes
 
 
 
 
 
41,563

 
34,419

 
42,966

 
 
Net Income
 
 
 
 
 
$
91,225

 
$
74,849

 
$
93,433

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding
 
 
 
108,724

 
108,612

 
108,840

Diluted Earnings per Share
 
 
 
 
 
$0.84
 
$0.69
 
$0.86
 
 
 
 
 
 
 
 
 
 
 
 
 
The above Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.




 
 
SEGMENT INFORMATION
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
 
 
 
 
 
 
 
 
Mar 31, 2014
 
Mar 31, 2013
 
Dec 31, 2013
 
 
 
 
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Remotely Operated Vehicles
Revenue
 
 
 
 
 
$
255,819

 
$
229,628

 
$
254,958

 
 
Gross Margin
 
 
 
 
 
$
87,190

 
$
76,154

 
$
86,504

 
 
Operating Income
 
 
 
 
 
$
76,740

 
$
65,835

 
$
72,209

 
 
Operating Income %
 
 
 
 
 
30
%
 
29
%
 
28
%
 
 
Days available
 
 
 
 
 
27,851

 
26,215

 
27,535

 
 
Days utilized
 
 
 
 
 
23,869

 
21,704

 
23,868

 
 
Utilization %
 
 
 
 
 
86
%
 
83
%
 
87
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Products
Revenue
 
 
 
 
 
$
260,010

 
$
214,005

 
$
292,100

 
 
Gross Margin
 
 
 
 
 
$
75,129

 
$
62,345

 
$
85,576

 
 
Operating Income
 
 
 
 
 
$
54,516

 
$
42,779

 
$
64,474

 
 
Operating Income %
 
 
 
 
 
21
%
 
20
%
 
22
%
 
 
Backlog at end of period
 
 
 
 
 
$
894,000

 
$
776,000

 
$
906,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Projects
Revenue
 
 
 
 
 
$
138,190

 
$
88,455

 
$
159,658

 
 
Gross Margin
 
 
 
 
 
$
24,409

 
$
14,921

 
$
31,854

 
 
Operating Income
 
 
 
 
 
$
20,537

 
$
11,620

 
$
27,555

 
 
Operating Income %
 
 
 
 
 
15
%
 
13
%
 
17
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Integrity
Revenue
 
 
 
 
 
$
124,159

 
$
114,849

 
$
123,673

 
 
Gross Margin
 
 
 
 
 
$
21,866

 
$
19,039

 
$
17,194

 
 
Operating Income
 
 
 
 
 
$
14,085

 
$
12,339

 
$
9,892

 
 
Operating Income %
 
 
 
 
 
11
%
 
11
%
 
8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advanced Technologies
Revenue
 
 
 
 
 
$
62,023

 
$
71,615

 
$
64,409

 
 
Gross Margin
 
 
 
 
 
$
7,727

 
$
13,308

 
$
5,153

 
 
Operating Income
 
 
 
 
 
$
2,955

 
$
8,676

 
$
(287
)
 
 
Operating Income %
 
 
 
 
 
5
%
 
12
%
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin expenses
 
 
 
 
 
$
(26,830
)
 
$
(25,392
)
 
$
(28,476
)
 
 
Operating income expenses
 
 
 
 
 
$
(35,971
)
 
$
(32,959
)
 
$
(37,090
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
Revenue
 
 
 
 
 
$
840,201

 
$
718,552

 
$
894,798

 
 
Gross Margin
 
 
 
 
 
$
189,491

 
$
160,375

 
$
197,805

 
 
Operating Income
 
 
 
 
 
$
132,862

 
$
108,290

 
$
136,753

 
 
Operating Income %
 
 
 
 
 
16
%
 
15
%
 
15
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SELECTED CASH FLOW INFORMATION
 
 
Capital expenditures, including acquisitions
 
 
 
 
 
$
104,038

 
$
94,177

 
$
113,156

 
 
Depreciation and Amortization
 
 
 
 
 
$
53,351

 
$
49,852

 
$
51,255

 
 
 
 
 
 
 
 
 
 
 
 
 
 
The above should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.





 
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
 
 
Mar 31, 2014
 
Mar 31, 2013
 
Dec 31, 2013
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
$
91,225

 
$
74,849

 
$
93,433

 
 
Depreciation and Amortization
53,351

 
49,852

 
51,255

 
 
Subtotal
144,576

 
124,701

 
144,688

 
 
Interest Income/Expense, Net
332

 
573

 
(55
)
 
 
Provision for Income Taxes
41,563

 
34,419

 
42,966

 
 
EBITDA
$
186,471

 
$
159,693

 
$
187,599

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 Estimates
 
 
 
 
 
Low
 
High
 
 
 
 
 
(in thousands)
 
 
 
 
Net Income
$
425,000

 
$
445,000

 
 
 
 
Depreciation and Amortization
230,000

 
240,000

 
 
 
 
Subtotal
655,000

 
685,000

 
 
 
 
Interest Income/Expense, Net
—

 
—

 
 
 
 
Provision for Income Taxes
195,000

 
205,000

 
 
 
 
EBITDA
$
850,000

 
$
890,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



OCEANEERING INTERNATIONAL INC Reports