Exhibit 99.1
Oceaneering Announces Record Quarterly Earnings
—Earnings Increase 38% Year-Over-Year and 21% Sequentially—
—ROV Utilization Hits 88%—
—Subsea Products Backlog Surpasses $180 Million—
—2005 and 2006 EPS Guidance Raised—
October 31, 2005 — Houston, Texas — Oceaneering International, Inc. (NYSE:OII) today reported record earnings for the third quarter ended September 30, 2005. On revenue of $263.1 million, Oceaneering generated net income of $17.7 million, or $0.66 per share. For the third quarter of 2004, Oceaneering reported revenue of $192.9 million and net income of $12.8 million, or $0.50 per common share.
The year-over-year increase in quarterly earnings of 38% was due to increases in ROV, Subsea Projects, Subsea Products, and Inspection operating profits.
Summary of Results
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | | Nine months ended | |
| | | September 30, | | | June 30, | | | September 30, | |
| | | 2005 | | | 2004 | | | 2005 | | | 2005 | | | 2004 | |
| Revenue | | $ | 263,111 | | | $ | 192,862 | | | $ | 235,970 | | | $ | 709,818 | | | $ | 554,143 | |
| Gross Margin | | $ | 49,334 | | | $ | 34,205 | | | $ | 40,567 | | | $ | 123,104 | | | $ | 92,708 | |
| Operating Income | | $ | 28,335 | | | $ | 18,719 | | | $ | 20,660 | | | $ | 63,488 | | | $ | 44,507 | |
| Net Income | | $ | 17,714 | | | $ | 12,846 | | | $ | 14,673 | | | $ | 42,979 | | | $ | 28,588 | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted Earnings Per Share | | $ | 0.66 | | | $ | 0.50 | | | $ | 0.55 | | | $ | 1.61 | | | $ | 1.12 | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted Average Number of Diluted Shares | | | 26,921 | | | | 25,871 | | | | 26,582 | | | | 26,671 | | | | 25,612 | |
For the second quarter of 2005, Oceaneering reported revenue of $236.0 million and net income of $14.7 million, or $0.55 per share. The sequential increase in net income of 21% was attributable to improved operating income contributions from our ROV, Subsea Projects, and Subsea Products segments.
John Huff, Chairman and Chief Executive Officer, stated, “We achieved record net income results for the second consecutive quarter as market demand for our niche market subsea products and services continued to escalate. Year to date we have already earned more net income than in all of 2004. We are on pace to realize 50% net income growth for the year 2005 over 2004. Furthermore, our sustainable business growth prospects for 2006 and beyond, driven by deepwater oil and gas exploration and development activity, look very promising.
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“When compared to the second quarter of this year, Subsea Products operating income improved due to the profit contribution of the GrayLoc acquisition made at the end of the second quarter, and a reduction in losses we have been incurring at our umbilical plant in Panama City, FL. ROV profitability rose primarily due to an increase in our fleet utilization rate to 88%, up from 81% in the second quarter. Subsea Projects results were higher due to an escalation in deepwater IMR projects and inspection work to assess damage caused by Hurricane Katrina.
“During the quarter we took several actions to position Oceaneering to achieve improved future financial results. We announced $58 million of capital spending projects. Of this amount, approximately $30 million is for our Subsea Products business and $23 million for expansion of our ROV fleet. Respectively, these two segments represent the fastest growing and the most profitable lines of business in which we can find attractive investment opportunities. The remaining $5 million will be invested in a saturation diving system to increase our participation in the pipeline and platform repairs of damage caused by the three major Gulf of Mexico hurricanes in the past 12 months.
“We secured a one-year contract for the use of the MSVOcean Interventionand announced $55 million of umbilical contracts to be built at our Brazil and U.S. manufacturing plants. Total new orders for our Subsea Products segment were approximately $134 million and our products backlog at the end of the quarter was $181 million.
“ Based upon our earnings performance in the first nine months of this year we are increasing our EPS guidance for 2005 to a range of $2.25 to $2.30. For the fourth quarter, we are anticipating profit growth in our Subsea Products segment to be offset somewhat by normal winter season declines in our ROV and Inspection operations, along with the possibility of minimal production throughput at the Medusa Spar.
“Since our last earnings release, the outlook for our oilfield products and services has improved and the expected market demand for our non-oilfield business has declined somewhat. We now believe 2006 EPS will be in the record range of $2.70 to $2.85, based on an estimated 27.5 million shares outstanding. The 2006 EPS growth is anticipated to be driven by profit improvements from our oilfield Subsea Products, particularly our umbilical manufacturing operation, current prospects for higher ROV pricing and a larger fleet size, and an expected increased level of Subsea Projects profitability due to Hurricanes Katrina and Rita repair work.”
Statements in this press release that express a belief, expectation, or intention, as well as those that are not historical fact, are forward looking. The forward-looking statements in this press release include the statements concerning Oceaneering’s assessment of having sustainable growth prospects for 2006 and beyond, projected 2005 net income growth, anticipation that hurricane repair work will last for the next few years, improved outlook for oilfield products and services, expected market demand decline for non-oilfield business, projected 2005 and 2006 EPS ranges, and estimated shares outstanding in 2006. 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. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: industry conditions; prices of crude oil and natural gas; Oceaneering’s ability to obtain and the timing of new projects; and changes in competitive factors. 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. These and other risks are more fully described in Oceaneering’s annual report on Form 10-K for the year ended December 31, 2004 and its other periodic filings with the Securities and Exchange Commission.
Oceaneering is an advanced applied technology company that provides engineered services and hardware to Customers who operate in marine, space, and other harsh environments. Oceaneering’s services and products are marketed worldwide to oil and gas companies, government agencies, and firms in the aerospace and marine engineering and construction industries.
For further information, please contact Jack Jurkoshek, Manager Investor Relations, Oceaneering International, Inc., 11911 FM 529, Houston, Texas 77041; Telephone 713-329-4670; Fax 713-329-4653;www.oceaneering.com. A live webcast of the Company’s earnings release conference call, scheduled for November 1, 2005 at 10:00 a.m., central time, can be heard atwww.companyboardroom.com (enter ticker OII).
PR 929
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OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | | | | | | | |
| | | Sept. 30, 2005 | | | Dec. 31, 2004 | |
| | | (in thousands) | |
| ASSETS | | | | | | | | |
| Current Assets (including cash and cash equivalents of $35,833 and $16,781) | | $ | 361,540 | | | $ | 276,876 | |
| Net Property and Equipment | | | 403,912 | | | | 401,054 | |
| Other Assets | | | 185,417 | | | | 141,734 | |
| | | | | | | |
| TOTAL ASSETS | | $ | 950,869 | | | $ | 819,664 | |
| | | | | | | |
| | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| Current Liabilities | | $ | 204,645 | | | $ | 170,672 | |
| Long-term Debt | | | 175,295 | | | | 142,172 | |
| Other Long-term Liabilities | | | 53,578 | | | | 52,383 | |
| Shareholders’ Equity | | | 517,351 | | | | 454,437 | |
| | | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 950,869 | | | $ | 819,664 | |
| | | | | | | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Nine Months Ended | |
| | | Sept. 30, | | | Sept. 30, | | | June 30, | | | September 30, | |
| | | 2005 | | | 2004 | | | 2005 | | | 2005 | | | 2004 | |
| | | (in thousands, except per share amounts) | |
| Revenue | | $ | 263,111 | | | $ | 192,862 | | | $ | 235,970 | | | $ | 709,818 | | | $ | 554,143 | |
| Cost of Services and Products | | | 213,777 | | | | 158,657 | | | | 195,403 | | | | 586,714 | | | | 461,435 | |
| | | | | | | | | | | | | | | | |
| Gross Margin | | | 49,334 | | | | 34,205 | | | | 40,567 | | | | 123,104 | | | | 92,708 | |
| Selling, General and Administrative Expense | | | 20,999 | | | | 15,486 | | | | 19,907 | | | | 59,616 | | | | 48,201 | |
| | | | | | | | | | | | | | | | |
| Income from Operations | | | 28,335 | | | | 18,719 | | | | 20,660 | | | | 63,488 | | | | 44,507 | |
| Interest Income | | | 181 | | | | 767 | | | | 93 | | | | 335 | | | | 889 | |
| Interest Expense | | | (2,655 | ) | | | (2,141 | ) | | | (2,221 | ) | | | (7,070 | ) | | | (6,403 | ) |
| Equity Earnings of unconsolidated affiliates, net | | | 2,061 | | | | 2,480 | | | | 3,956 | | | | 10,109 | | | | 5,936 | |
| Other Income (Expense), net | | | (457 | ) | | | (61 | ) | | | 260 | | | | (227 | ) | | | (947 | ) |
| | | | | | | | | | | | | | | | |
| Income before income taxes | | | 27,465 | | | | 19,764 | | | | 22,748 | | | | 66,635 | | | | 43,982 | |
| Provision for Income Taxes | | | (9,751 | ) | | | (6,918 | ) | | | (8,075 | ) | | | (23,656 | ) | | | (15,394 | ) |
| | | | | | | | | | | | | | | | |
| Net Income | | $ | 17,714 | | | $ | 12,846 | | | $ | 14,673 | | | $ | 42,979 | | | $ | 28,588 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted Earnings per Share | | $ | 0.66 | | | $ | 0.50 | | | $ | 0.55 | | | $ | 1.61 | | | $ | 1.12 | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average number of common shares and equivalents | | | 26,921 | | | | 25,871 | | | | 26,582 | | | | 26,671 | | | | 25,612 | |
The above Condensed Consolidated Balance Sheets and Consolidated Statements of Income should be read in conjunction with the Company’s latest Annual Report, Quarterly Report on Form 10-Q and Annual Report on Form 10-K.
SEGMENT INFORMATION
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | For the Three Months Ended | | | For the Nine Months Ended | |
| | | | | | | Sept. 30, | | | Sept. 30, | | | June 30, | | | Sept. 30, | | | Sept. 30, | |
| | | | | | | 2005 | | | 2004 | | | 2005 | | | 2005 | | | 2004 | |
| | | | | | | ($ in thousands) | |
| Remotely Operated Vehicles | | Revenue | | $ | 85,749 | | | $ | 56,546 | | | $ | 75,607 | | | $ | 228,972 | | | $ | 158,032 | |
| | | Gross margin | | $ | 27,948 | | | $ | 16,407 | | | $ | 21,041 | | | $ | 65,704 | | | $ | 41,908 | |
| | | Gross margin % | | | 33 | % | | | 29 | % | | | 28 | % | | | 29 | % | | | 27 | % |
| | | Operating income | | $ | 24,061 | | | $ | 13,692 | | | $ | 17,501 | | | $ | 54,643 | | | $ | 34,359 | |
| | | Days available | | | 15,923 | | | | 14,689 | | | | 15,271 | | | | 46,166 | | | | 41,996 | |
| | | Utilization | | | 88 | % | | | 69 | % | | | 81 | % | | | 82 | % | | | 68 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Subsea Products | | Revenue | | $ | 65,430 | | | $ | 37,162 | | | $ | 49,038 | | | $ | 155,146 | | | $ | 107,013 | |
| | | Gross margin | | $ | 10,522 | | | $ | 5,612 | | | $ | 5,787 | | | $ | 18,868 | | | $ | 17,985 | |
| | | Gross margin % | | | 16 | % | | | 15 | % | | | 12 | % | | | 12 | % | | | 17 | % |
| | | Operating income | | $ | 4,020 | | | $ | 2,002 | | | $ | 428 | | | $ | 2,305 | | | $ | 6,961 | |
| | | Backlog | | $ | 181,000 | | | $ | 73,000 | | | $ | 112,000 | | | $ | 181,000 | | | $ | 73,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Subsea Projects | | Revenue | | $ | 30,023 | | | $ | 15,278 | | | $ | 23,464 | | | $ | 77,965 | | | $ | 44,184 | |
| | | Gross margin | | $ | 8,327 | | | $ | 2,406 | | | $ | 4,233 | | | $ | 17,510 | | | $ | 5,905 | |
| | | Gross margin % | | | 28 | % | | | 16 | % | | | 18 | % | | | 22 | % | | | 13 | % |
| | | Operating income | | $ | 7,176 | | | $ | 1,238 | | | $ | 2,962 | | | $ | 13,944 | | | $ | 2,325 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Mobile Offshore Production Systems | | Revenue | | $ | 12,898 | | | $ | 11,613 | | | $ | 12,747 | | | $ | 37,008 | | | $ | 37,508 | |
| | | Gross margin | | $ | 4,323 | | | $ | 4,536 | | | $ | 4,559 | | | $ | 13,230 | | | $ | 13,496 | |
| | | Gross margin % | | | 34 | % | | | 39 | % | | | 36 | % | | | 36 | % | | | 36 | % |
| | | Operating income | | $ | 4,019 | | | $ | 4,076 | | | $ | 4,068 | | | $ | 12,016 | | | $ | 12,088 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Inspection | | Revenue | | $ | 39,972 | | | $ | 37,719 | | | $ | 43,463 | | | $ | 120,367 | | | $ | 109,825 | |
| | | Gross margin | | $ | 6,058 | | | $ | 4,883 | | | $ | 7,133 | | | $ | 17,627 | | | $ | 13,140 | |
| | | Gross margin % | | | 15 | % | | | 13 | % | | | 16 | % | | | 15 | % | | | 12 | % |
| | | Operating income | | $ | 3,085 | | | $ | 1,887 | | | $ | 3,393 | | | $ | 7,712 | | | $ | 4,540 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Advanced Technologies | | Revenue | | $ | 29,039 | | | $ | 34,544 | | | $ | 31,651 | | | $ | 90,360 | | | $ | 97,581 | |
| | | Gross margin | | $ | 4,636 | | | $ | 6,682 | | | $ | 6,495 | | | $ | 17,045 | | | $ | 18,648 | |
| | | Gross margin % | | | 16 | % | | | 19 | % | | | 21 | % | | | 19 | % | | | 19 | % |
| | | Operating income | | $ | 2,779 | | | $ | 4,975 | | | $ | 4,353 | | | $ | 11,108 | | | $ | 13,074 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Unallocated Expenses | | Gross margin | | $ | (12,480 | ) | | $ | (6,321 | ) | | $ | (8,681 | ) | | $ | (26,880 | ) | | $ | (18,374 | ) |
| | | Operating income | | $ | (16,805 | ) | | $ | (9,151 | ) | | $ | (12,045 | ) | | $ | (38,240 | ) | | $ | (28,840 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| TOTAL | | Revenue | | $ | 263,111 | | | $ | 192,862 | | | $ | 235,970 | | | $ | 709,818 | | | $ | 554,143 | |
| | | Gross margin | | $ | 49,334 | | | $ | 34,205 | | | $ | 40,567 | | | $ | 123,104 | | | $ | 92,708 | |
| | | Gross margin % | | | 19 | % | | | 18 | % | | | 17 | % | | | 17 | % | | | 17 | % |
| | | Operating income | | $ | 28,335 | | | $ | 18,719 | | | $ | 20,660 | | | $ | 63,488 | | | $ | 44,507 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| SELECTED CASH FLOW INFORMATION | | | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures, including acquisitions
| | $ | 7,769 | | | $ | 36,460 | | | $ | 63,832 | | | $ | 91,635 | | | $ | 121,904 | |
Depreciation and amortization
| | $ | 18,683 | | | $ | 16,484 | | | $ | 17,961 | | | $ | 54,873 | | | $ | 48,446 | |
