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Oceaneering Reports Fourth Quarter and Full Year 2015 Results
PR Newswire
- Reports Fourth Quarter EPS of $0.28 and Adjusted EPS of $0.58
- Reports Full Year EPS of $2.34 and Adjusted EPS of $2.87
- Expects to Maintain Current Quarterly Cash Dividend throughout 2016

HOUSTON, Feb. 10, 2016 /PRNewswire/ -- Oceaneering International, Inc. ("Oceaneering" or "the Company") (NYSE:OII) today reported net income of $27.5 million, or $0.28 per share, on revenue of $722 million for the three months ended December 31, 2015.  Adjusted net income was $57.4 million, or $0.58 per share, excluding the $45.9 million pre-tax impact of asset write-downs, provisions for certain reserves, restructuring expenses and foreign currency losses recognized during the quarter.  During the fourth quarter of 2014, Oceaneering reported net income of $102 million, or $0.99 per share, on revenue of $919 million

Adjusted pre-tax income, net income, and earnings per share are non-GAAP measures.  Reconciliations to the corresponding GAAP measures are shown in the table Pre-tax Income, Net Income and Diluted Earnings per Share (EPS).  The operating income and operating margin impact of the adjustments by segment is shown in the table Operating Income by Segment.  These tables are included below under the caption Reconciliations of Non-GAAP to GAAP Financial Information. 

For the year 2015, Oceaneering reported net income of $231 million, or $2.34 per share, on revenue of $3.1 billion.  Adjusted net income was $284 million, or $2.87 per share, excluding the $81.1 million pre-tax impact of asset write-downs, provisions for certain reserves, restructuring expenses and foreign currency losses recognized during the year.  This compared to 2014 net income of $428 million, or $4.00 per share, on revenue of $3.7 billion

Summary of Results

(in thousands, except per share amounts)



Three Months Ended


Year Ended


Dec. 31,


Sept. 30,


Dec. 31,


2015


2014


2015


2015


2014

Revenue

$722,066


$918,927


$743,613


$3,062,754


$3,659,624

Gross Margin

106,122


209,640


168,313


605,429


859,201

Income from Operations

45,756


152,239


113,464


373,810


628,330

Net Income

$27,505


$102,471


$68,539


$231,011


$428,329











Diluted Earnings Per Share (EPS)

$0.28


$0.99


$0.70


$2.34


$4.00

 

Despite declining earnings, annual free cash flow (defined as cash provided by operating activities less purchases of property and equipment) increased due to reductions in organic capital expenditures and working capital.  Free cash flow for 2015 of $360 million, or 127% of adjusted net income, exceeded the $335 million generated in 2014.  Reconciliations of annual free cash flow to cash provided by operating activities are shown in the table Free Cash Flow shown below under the caption Reconciliations of  Non-GAAP to GAAP Financial Information.

M. Kevin McEvoy, Oceaneering's Chief Executive Officer, stated, "The severe deterioration in oil prices and the resulting slowdown in deepwater activity since last year impacted our fourth quarter and full year results.  We have undertaken a series of initiatives to align our operations with current and anticipated declining activity and pricing levels.  Unfortunately, these restructuring steps required us to reduce our workforce, incur unusual expenses, and make certain accounting adjustments. 

"Although substantial restructuring progress has been made, we remain focused on organizing more effectively, managing costs, and improving our operational performance, while continuing to provide safe, innovative and cost-effective solutions that improve our customers' returns in a lower commodity price environment.  We believe our liquidity (including $385 million of cash at year-end), demonstrated cash flow generating capabilities, and $500 million revolving credit facility provide us with ample resources to manage our business through the current environment of reduced demand for our services and products. 

"In addition, our financial strength should enable Oceaneering to enhance shareholder value by continuing to invest in our current and adjacent market niches, and returning cash to our shareholders in the form of cash dividends and potential stock buybacks.  While we face a high degree of uncertainty in the offshore markets in which we participate, we are confident in our cash flow generating capabilities.  We presently intend and expect to continue the current quarterly cash dividend of $0.27 per share throughout 2016.  We may, however, revisit our quarterly dividend should market conditions deteriorate to the extent that our projected annual net income would not exceed the current annual dividend. 

"During 2015, we generated adjusted operating income of $417 million on revenue of $3.1 billion.  Compared to 2014, these results represent a 34% drop in operating income on a 16% decline in revenue.  On an adjusted basis, our 2015 consolidated operating margin of 14% compared to the 17% margin achieved in 2014. 

"On an adjusted basis, ROV operating income declined 32% year over year on 24% less revenue, driven by lower demand for drill support services and an 11% reduction in average revenue per day on hire.  Our total ROV days on hire declined by nearly 14,500, or 15%, to about 83,800 days for the year.  During 2015, we put 16 new ROVs into service (4 during the fourth quarter), retired 36 vehicles (25 during the fourth quarter), and transferred 1 to Advanced Technologies.  At year-end, we had 315 vehicles in our ROV fleet. 

"Subsea Products operating income, on an adjusted basis, declined 27% in 2015 relative to 2014, on a 23% reduction of revenue due to lower demand and pricing for tooling and subsea hardware and lower umbilical plant throughput.  Products backlog at the end of 2015 was $652 million, down from $690 million at the end of 2014.  This backlog decline was related to tooling and subsea hardware.  Products book-to-bill ratio for the year was 0.96.

"Considering the oil price environment and the global current oversupply of vessels, Subsea Projects operating income held up relatively well during 2015.  The decline was due to lower deepwater vessel activity and market pricing offshore Angola and in the U.S. Gulf of Mexico.  In 2015, Asset Integrity operating income declined precipitously on lower global demand and pricing for inspection services.  Advanced Technologies operating income for the year was lower due primarily to execution issues on certain theme park projects.  Unallocated Expenses during 2015 were lower mainly as a result of reduced performance-based incentive and deferred compensation expenses as plan targets were not achieved. 

"Total capital allocation spending was $650 million in 2015, compared to $1.1 billion in 2014.  We invested $200 million in organic capital expenditures and $244 million on acquisitions and other investments.  We also paid $106 million of cash dividends and spent $100 million on the repurchase of 2 million shares of our common stock. 

"For 2016, we are expecting lower demand for our services and products, and continued pricing pressure and spending cuts from our customers.  Consequently, we are projecting that all of our oilfield business segments will have lower operating income in 2016 than in 2015.  With our limited market visibility on how weak 2016 may actually be, we are not prepared to quantify the magnitude or duration of the decline or give annual and quarterly EPS guidance ranges. 

"In the current market environment, we intend to continue taking actions to restructure and integrate our service and product offerings to reduce our operating expenses and better serve our customers.  For 2016, we expect our organic capital expenditures to total between $150 million and $200 million, approximately $75 million of which is expected to be maintenance capital expenditure. 

"Longer term, deepwater is still expected to continue to play a critical role in global oil supply growth required to replace depletion and meet projected demand.  Major deepwater projects remain key long-term growth drivers within international oil company portfolios.  In the medium term, we believe there will be an uptick in demand for products and services to extend the producing life of existing offshore fields and to perform decommissioning work.  Consequently, we intend to continue our strategy to maintain or grow our market position and be prepared to expand our services and product line offerings should suitable opportunities arise."

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: belief that its liquidity, demonstrated cash flow generating capabilities, and credit facility provide it with ample resources to manage its business through the current environment of reduced demand for its services and products; belief that its financial strength should enable it to enhance shareholder value by continuing to invest in current and adjacent market niches, and returning cash to shareholders in the form of cash dividends and potential stock buybacks; expectation to continue its current quarterly dividend throughout 2016; expectation that it may revisit its quarterly dividend to the extent that its projected annual net income would not exceed the annual dividend; statements about backlog, to the extent it may be an indicator of future revenue or profitability; expectation for lower demand for its services and products, and continued pricing pressure and spending cuts from its customers; outlook for 2016; intention to continue taking actions to restructure and integrate its service and product offerings to reduce operating expenses and better serve customers; expectations about capital expenditures; expectation of deepwater's continued role in global oil supply growth; belief that, in the medium term, there will be an uptick in demand for products and services to extend the producing life of existing offshore fields and to perform decommissioning work; and intention to maintain or grow its market position and be prepared to expand its services and product line offerings should suitable opportunities arise.  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. 

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.  Oceaneering is publicly traded on the New York Stock Exchange under the symbol "OII."  

For more information on the Company, please visit Oceaneering's website at www.oceaneering.com.

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

 

















OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

















CONDENSED CONSOLIDATED BALANCE SHEETS






























Dec 31, 2015


Dec 31, 2014














(in thousands)

ASSETS















Current Assets (including cash and cash equivalents of $385,235 and $430,714)




$

1,517,493



$

1,713,550



Net Property and Equipment








1,266,731



1,305,822



Other Assets








645,312



485,568





TOTAL ASSETS


$

3,429,536



$

3,504,940


















LIABILITIES AND SHAREHOLDERS' EQUITY








Current Liabilities








$

615,956



$

679,137



Long-term Debt








795,836



743,469



Other Long-term Liabilities








439,010



424,863



Shareholders' Equity








1,578,734



1,657,471





TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$

3,429,536



$

3,504,940


















CONDENSED CONSOLIDATED STATEMENTS OF INCOME
























For the Three Months Ended


For the Year Ended








Dec 31, 2015


Dec 31, 2014


Sep 30, 2015


Dec 31, 2015


Dec 31, 2014








(in thousands, except per share amounts)


















Revenue




$

722,066



$

918,927



$

743,613



$

3,062,754



$

3,659,624



Cost of services and products




615,944



709,287



575,300



2,457,325



2,800,423




Gross Margin





106,122



209,640



168,313



605,429



859,201



Selling, general and administrative expense


60,366



57,401



54,849



231,619



230,871




Income from Operations


45,756



152,239



113,464



373,810



628,330



Interest expense, net of interest income


(6,183)



(3,179)



(6,167)



(24,443)



(4,415)



Other income (expense), net




464



96



(7,532)



(13,106)



(438)




Income before Income Taxes




40,037



149,156



99,765



336,261



623,477



Provision for income taxes


12,532



46,685



31,226



105,250



195,148




Net Income





$

27,505



$

102,471



$

68,539



$

231,011



$

428,329


















Weighted average diluted shares outstanding


98,268



103,851



98,185



98,808



107,091


Diluted Earnings per Share


$

0.28



$

0.99



$

0.70



$

2.34



$

4.00


















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


For the Year Ended







Dec 31, 2015


Dec 31, 2014


Sep 30, 2015


Dec 31, 2015


Dec 31, 2014







($ in thousands)












Remotely Operated Vehicles


Revenue



$

173,424



$

259,544



$

198,426



$

807,723



$

1,069,022



Gross Margin



$

25,206



$

89,080



$

60,681



$

227,330



$

361,466



Operating Income



$

16,621



$

79,635



$

52,417



$

192,514



$

320,550



Operating Income %



10

%


31

%


26

%


24

%


30

%


Days available



30,323



30,869



31,025



121,944



117,882



Days utilized



18,760



24,676



21,229



83,838



98,302



Utilization %



62

%


80

%


68

%


69

%


83

%
















Subsea Products


Revenue



$

258,889



$

314,739



$

220,039



$

959,714



$

1,238,746



Gross Margin



$

61,445



$

84,667



$

64,078



$

257,755



$

364,760



Operating Income



$

37,206



$

63,796



$

46,079



$

175,585



$

281,239



Operating Income %



14

%


20

%


21

%


18

%


23

%

Backlog at end of period



$

652,000



$

690,000



$

736,000



$

652,000



$

690,000

















Subsea Projects


Revenue



$

131,397



$

162,623



$

147,191



$

604,484



$

588,572



Gross Margin



$

15,953



$

38,138



$

34,830



$

114,672



$

124,418



Operating Income



$

10,310



$

34,113



$

28,841



$

92,034



$

107,852



Operating Income %



8

%


21

%


20

%


15

%


18

%
















Asset Integrity



Revenue



$

83,346



$

111,115



$

95,609



$

372,957



$

500,237



Gross Margin



$

7,784



$

14,476



$

15,009



$

47,342



$

87,236



Operating Income



$

85



$

5,886



$

8,549



$

18,235



$

55,469



Operating Income %



%


5

%


9

%


5

%


11

%
















Advanced Technologies


Revenue



$

75,010



$

70,906



$

82,348



$

317,876



$

263,047



Gross Margin



$

2,715



$

11,647



$

6,974



$

30,034



$

32,410



Operating Income



$

(3,233)



$

7,214



$

1,635



$

9,689



$

13,230



Operating Income %



(4)

%


10

%


2

%


3

%


5

%
















Unallocated Expenses















Gross Margin Expenses



$

(6,981)



$

(28,368)



$

(13,259)



$

(71,704)



$

(111,089)



Operating Income Expenses



$

(15,233)



$

(38,405)



$

(24,057)



$

(114,247)



$

(150,010)















TOTAL



Revenue



$

722,066



$

918,927



$

743,613



$

3,062,754



$

3,659,624



Gross Margin



$

106,122



$

209,640



$

168,313



$

605,429



$

859,201



Operating Income



$

45,756



$

152,239



$

113,464



$

373,810



$

628,330



Operating Income %



6

%


17

%


15

%


12

%


17

%
















SELECTED CASH FLOW INFORMATION





   Capital expenditures, including acquisitions



$

54,801



$

85,395



$

275,347



$

423,988



$

426,671


      Depreciation and Amortization



$

57,727



$

60,750



$

62,022



$

241,235



$

229,779

















 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION




In addition to financial results determined in accordance with US generally accepted accounting principles (GAAP), this Press Release also includes non-GAAP financial measures (as defined under SEC Regulation G).  The following is a reconciliation of these non-GAAP measures to the comparable GAAP measures:




Pre-tax income, Net Income and Diluted Earnings per Share (EPS)












Three Months Ended December 31, 2015






Pre tax


Tax


Net


EPS

Income before taxes, income taxes, net income and EPS as reported in accordance with GAAP


$

40,037



$

12,532



$

27,505



$

0.28


Adjustments for the effects of:










Inventory write-downs



16,965



5,938



11,027



0.11



Restructuring expenses



13,692



4,792



8,900



0.09



Non-current asset reserve



6,583



2,304



4,279



0.04



Allowance for bad debts



4,851



1,698



3,153



0.03



Fixed asset write-offs



2,911



1,019



1,892



0.02



Adjustments affecting income from operations


45,002



15,751



29,251



0.30



Foreign currency losses



938



328



610



0.01




Total of adjustments



45,940



16,079



29,861



0.30


Adjusted amounts



$

85,977



$

28,611



$

57,366



$

0.58



















Year Ended December 31, 2015






Pre tax


Tax


Net


EPS

Income before taxes, income taxes, net income and EPS as reported in accordance with GAAP


$

336,261



$

105,250



$

231,011



$

2.34


Adjustments for the effects of:










Inventory write-downs



25,990



9,097



16,893



0.17



Restructuring expenses



25,404



8,891



16,513



0.17



Non-current asset reserve



6,583



2,304



4,279



0.04



Allowance for bad debts



4,851



1,698



3,153



0.03



Fixed asset write-offs



2,911



1,019



1,892



0.02



Adjustments affecting income from operations


65,739



23,009



42,730



0.43



Foreign currency losses



15,360



5,376



9,984



0.10




Total of adjustments



81,099



28,385



52,714



0.53


Adjusted amounts



$

417,360



$

133,635



$

283,725



$

2.87


























The table above presents reconciliations of our results for the three- and twelve-month periods ended December 31, 2015, as reported in accordance with GAAP and as adjusted.  We believe the adjusted amounts are more representative of our ongoing performance.










Notes:

EPS figures may not total due to rounding.






In thousands except EPS figures.








Incremental applicable income tax rate for each adjusting item in each period presented is 35%.




Weighted average number of diluted shares in each period presented is the same for each adjusting item as used in accordance with GAAP for that period.




 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION

(continued)




Operating Income by Segment






For the Three Months Ended December 31, 2015





Remotely Operated Vehicles


Subsea Products


Subsea Projects


Asset Integrity


Advanced Tech.


Unalloc. Expenses


Total





(in thousands)

Operating income as reported in accordance with GAAP


$

16,621



$

37,206



$

10,310



$

85



$

(3,233)



$

(15,233)



$

45,756


Adjustments for the effects of:















Inventory write-downs


15,705



1,260











16,965



Restructuring expenses


3,130



4,966



1,846



3,670



47



33



13,692



Non-current asset reserve




6,583











6,583



Allowance for bad debts




4,851











4,851



Fixed asset write-offs


2,911













2,911




Total of adjustments


21,746



17,660



1,846



3,670



47



33



45,002


Adjusted amounts


$

38,367



$

54,866



$

12,156



$

3,755



$

(3,186)



$

(15,200)



$

90,758



















Revenue


$

173,424



$

258,889



$

131,397



$

83,346



$

75,010





$

722,066


Operating income % as reported in accordance with GAAP


10

%


14

%


8

%


0

%


(4)%





6

%

Operating income % using adjusted amounts


22

%


21

%


9

%


5

%


(4)%





13

%






















For the Year Ended December 31, 2015





Remotely Operated Vehicles


Subsea Products


Subsea Projects


Asset Integrity


Advanced Tech.


Unalloc. Expenses


Total





(in thousands)

Operating income as reported in accordance with GAAP


$

192,514



$

175,585



$

92,034



$

18,235



$

9,689



$

(114,247)



$

373,810


Adjustments for the effects of:















Inventory write-downs


15,705



10,285











25,990



Restructuring expenses


7,177



8,672



2,480



6,436



220



419



25,404



Non-current asset reserve




6,583











6,583



Allowance for bad debts




4,851











4,851



Fixed asset write-offs


2,911













2,911




Total of adjustments


25,793



30,391



2,480



6,436



220



419



65,739


Adjusted amounts


$

218,307



$

205,976



$

94,514



$

24,671



$

9,909



$

(113,828)



$

439,549



















Revenue


$

807,723



$

959,714



$

604,484



$

372,957



$

317,876





$

3,062,754


Operating income % as reported in accordance with GAAP


24

%


18

%


15

%


5

%


3

%




12

%

Operating income % using adjusted amounts


27

%


21

%


16

%


7

%


3

%




14

%


The table above presents reconciliations of our operating income and operating income % for the three- and twelve-month periods ended December 31, 2015, as reported in accordance with GAAP and as adjusted.  We believe the adjusted amounts are more representative of our ongoing performance.

 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION

(continued)

























Free Cash Flow






















For the Year Ended





Dec 31, 2015


Dec 31, 2014





(in thousands)

Net income




$

231,011



$

428,329


Depreciation and amortization




241,235



229,779


Other increases in cash from operating activities




88,162



63,654


Cash flow provided by operating activities




$

560,408



$

721,762


Purchases of  property and equipment




(199,970)



(386,883)


Free Cash Flow







$

360,438



$

334,879














 

Free Cash Flow represents cash flow provided by operating activities less organic capital expenditures (i.e., purchases of property and equipment other than those in business acquisitions).  Management believes that this is an important measure because it represents funds available to reduce debt and pursue opportunities that enhance shareholder value such as making acquisitions, and returning cash to shareholders through dividends or share repurchases.

 

























Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
















For the Three Months Ended


For the Year Ended




Dec 31, 2015


Dec 31, 2014


Sep 30, 2015


Dec 31, 2015


Dec 31, 2014




(in thousands)

Net income

$

27,505



$

102,471



$

68,539



$

231,011



$

428,329


Depreciation and amortization

57,727



60,750



62,022



241,235



229,779




Subtotal

85,232



163,221



130,561



472,246



658,108


Interest expense, net of interest income

6,183



3,179



6,167



24,443



4,415


Amortization included in interest expense

(280)





(266)



(1,077)




Provision for income taxes

12,532



46,685



31,226



105,250



195,148


EBITDA

$

103,667



$

213,085



$

167,688



$

600,862



$

857,671


























 

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.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/oceaneering-reports-fourth-quarter-and-full-year-2015-results-300218327.html

SOURCE Oceaneering International, Inc.

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