Exhibit 99.1
Oceaneering Announces Record Quarterly Earnings
—Earnings More Than Double Year-Over-Year and Increase Nearly 30% Sequentially
—2006 EPS Guidance Raised 25%
May 4, 2006 — Houston, Texas — Oceaneering International, Inc. (NYSE:OII) today reported all-time record quarterly earnings. For the quarter ended March 31, 2006, on revenue of $290 million, Oceaneering generated net income of $25.5 million, or $0.93 per share. During the corresponding period in 2005, Oceaneering reported revenue of $211 million and net income of $10.6 million, or $0.40 per share.
The 140% year-over-year increase in quarterly earnings was principally due to improvements in ROV, Subsea Products, and Subsea Projects operating profits. These improvements reflect Oceaneering’s business focus on deepwater and subsea completion activity and an increase in hurricane damage inspection and repair work.
Summary of Results
(in thousands, except per share amounts)
| | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | Mar. 31, | | | Dec. 31, | |
| | | 2006 | | | 2005 | | | 2005 | |
| Revenue | | $ | 289,509 | | | $ | 210,737 | | | $ | 288,725 | |
| Gross Margin | | $ | 60,317 | | | $ | 33,203 | | | $ | 56,176 | |
| Operating Income | | $ | 37,964 | | | $ | 14,493 | | | $ | 30,581 | |
| Net Income | | $ | 25,502 | | | $ | 10,592 | | | $ | 19,701 | |
| | | | | | | | | | | | | |
| Diluted Earnings Per Share | | $ | 0.93 | | | $ | 0.40 | | | $ | 0.72 | |
| | | | | | | | | | | | | |
| Weighted Average Number of Diluted Shares | | | 27,388 | | | | 26,510 | | | | 27,282 | |
For the fourth quarter of 2005, Oceaneering reported revenues of $289 million and net income of $19.7 million, or $0.72 per share. The 29% sequential improvement in quarterly net income was largely attributable to increased operating income from our ROV, Subsea Products, and Inspection segments and equity income from the Medusa Spar. Results for the fourth quarter of 2005 included a $6.1 million pre-tax asset write-down in our ROV segment and reflected an effective income tax rate of 29.2%. The tax rate for the first quarter of 2006 was 35.6%.
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John Huff, Chairman and Chief Executive Officer, stated, “We achieved record net income for the fourth consecutive quarter as market demand for our subsea services and products remained at a very high level. These earnings reflect the growth strategy we have in place, the ongoing secular demand growth for our offshore oilfield niche markets, and our participation in Gulf of Mexico (GOM) hurricane damage inspection and repair projects.
“Net income for the quarter was well above our EPS guidance range as all of our oilfield business activities performed above expectations, particularly Subsea Products and Subsea Projects. Subsea Products achieved record quarterly operating income from profit increases on sales of ROV tooling and Installation/Workover Control System rental services. Subsea Projects benefited from continued demand for GOM hurricane damage inspection and repair services at the unprecedented level set last quarter.
“ROV operating income sequentially improved due to an increase in average pricing and the fourth quarter asset write-down. Inspection operating income rose as a result of normal seasonality and our ongoing effort to sell more value-added services. Equity income from the Medusa Spar increased as we benefited from production for the full quarter.
“Subsea Products backlog at the end of March was $222 million. During the quarter we commissioned our large cabling machine at our Panama City, Florida facility, and we are currently manufacturing the first steel tube umbilical with this new equipment. In mid-April we began using our vesselThe Performer,an ROV support vessel equipped with a moonpool-deployed HydraÒ Millennium ROV, in the GOM to perform deepwater inspection, maintenance, and repair (IMR) work. In April we also chartered the M/VIsland Ranger, a Class 2 dynamically positioned vessel, for a three-year term commencing in February 2007. TheIsland Ranger, to be outfitted with two of our ROVs, will augment our ability to perform subsea IMR projects in the ultradeep waters of the GOM.
“Since our last quarterly financial press release, our assessment of the 2006 earnings prospects for all of our oilfield activities has improved, particularly for our ROV, Subsea Products, and Subsea Projects businesses, due to higher pricing and utilization of resources. Given our first quarter results and the improved outlook for the balance of this year, we now expect to achieve record EPS in 2006 of $3.60 to $3.90. This is up 25% from our previous guidance. For the second quarter we are forecasting EPS of $0.95 to $1.05.”
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: expectation for ongoing secular demand growth for its offshore niche markets; improved 2006 earnings prospects for all of its oilfield activities, particularly ROVs, Subsea Products, and Subsea Projects; improved outlook for the balance of this year; expectation of achieving the estimated record EPS range in 2006; and forecasted second quarter 2006 EPS range. 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 latest annual report onForm 10-K 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 May 5, 2006 at 10:00 a.m. central time, can be heard at www.companyboardroom.com (enter ticker OII).
PR 946
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OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | | | | | | | |
| | | Mar. 31, 2006 | | | Dec. 31, 2005 | |
| | | (in thousands) | |
| ASSETS | | | | | | | | |
| Current Assets (including cash and cash equivalents of $39,386 and $26,308) | | $ | 434,587 | | | $ | 394,233 | |
| Net Property and Equipment | | | 437,162 | | | | 409,201 | |
| Other Assets | | | 190,217 | | | | 186,134 | |
| | | | | | | |
| TOTAL ASSETS | | $ | 1,061,966 | | | $ | 989,568 | |
| | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| Current Liabilities | | $ | 252,724 | | | $ | 222,667 | |
| Long-term Debt | | | 180,000 | | | | 174,000 | |
| Other Long-term Liabilities | | | 60,747 | | | | 56,783 | |
| Shareholders’ Equity | | | 568,495 | | | | 536,118 | |
| | | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 1,061,966 | | | $ | 989,568 | |
| | | | | | | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | Mar. 31, | | | Mar. 31, | | | Dec. 31, | |
| | | 2006 | | | 2005 | | | 2005 | |
| | | (in thousands, except per share amounts) |
| Revenue | | $ | 289,509 | | | $ | 210,737 | | | $ | 288,725 | |
| Cost of Services and Products | | | 229,192 | | | | 177,534 | | | | 232,549 | |
| | | | | | | | | | |
| Gross Margin | | | 60,317 | | | | 33,203 | | | | 56,176 | |
| Selling, General and Administrative Expense | | | 22,353 | | | | 18,710 | | | | 25,595 | |
| | | | | | | | | | |
| Income from Operations | | | 37,964 | | | | 14,493 | | | | 30,581 | |
| Interest Income | | | 68 | | | | 61 | | | | 170 | |
| Interest Expense | | | (2,791 | ) | | | (2,194 | ) | | | (3,032 | ) |
| Equity Earnings of Unconsolidated Affiliates, net | | | 4,354 | | | | 4,092 | | | | 533 | |
| Other Income (Expense), net | | | 5 | | | | (30 | ) | | | (437 | ) |
| | | | | | | | | | |
| Income before Income Taxes | | | 39,600 | | | | 16,422 | | | | 27,815 | |
| Provision for Income Taxes | | | 14,098 | | | | 5,830 | | | | 8,114 | |
| | | | | | | | | | |
| Net Income | | $ | 25,502 | | | $ | 10,592 | | | $ | 19,701 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| Diluted Earnings per Share | | $ | 0.93 | | | $ | 0.40 | | | $ | 0.72 | |
| Weighted Average Number of Common Shares and Equivalents | | | 27,388 | | | | 26,510 | | | | 27,282 | |
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 | |
| | | | | | | Mar. 31, | | | Mar. 31, | | | Dec. 31, | |
| | | | | | | 2006 | | | 2005 | | | 2005 | |
| | | | | | | ($ in thousands) | |
| Remotely Operated Vehicles | | Revenue | | $ | 88,947 | | | $ | 67,616 | | | $ | 86,206 | |
| | | Gross margin | | $ | 26,584 | | | $ | 16,715 | | | $ | 18,715 | |
| | | Gross margin % | | | 30 | % | | | 25 | % | | | 22 | % |
| | | Operating income | | $ | 22,205 | | | $ | 13,081 | | | $ | 14,319 | |
| | | Days available | | | 15,855 | | | | 14,972 | | | | 16,263 | |
| | | Utilization | | | 85 | % | | | 77 | % | | | 85 | % |
| | | | | | | | | | | | | | | | | |
| Subsea Products | | Revenue | | $ | 84,518 | | | $ | 40,678 | | | $ | 83,893 | |
| | | Gross margin | | $ | 18,790 | | | $ | 2,559 | | | $ | 18,245 | |
| | | Gross margin % | | | 22 | % | | | 6 | % | | | 22 | % |
| | | Operating income | | $ | 12,561 | | | $ | (2,143 | ) | | $ | 11,636 | |
| | | Backlog | | $ | 222,000 | | | $ | 91,000 | | | $ | 196,000 | |
| | | | | | | | | | | | | | | | | |
| Subsea Projects | | Revenue | | $ | 41,120 | | | $ | 24,478 | | | $ | 43,663 | |
| | | Gross margin | | $ | 13,330 | | | $ | 4,950 | | | $ | 13,612 | |
| | | Gross margin % | | | 32 | % | | | 20 | % | | | 31 | % |
| | | Operating income | | $ | 11,938 | | | $ | 3,806 | | | $ | 12,275 | |
| | | | | | | | | | | | | | | | | |
| Mobile Offshore Production Systems | | Revenue | | $ | 13,332 | | | $ | 11,363 | | | $ | 13,083 | |
| | | Gross margin | | $ | 4,202 | | | $ | 4,348 | | | $ | 5,100 | |
| | | Gross margin % | | | 32 | % | | | 38 | % | | | 39 | % |
| | | Operating income | | $ | 3,984 | | | $ | 3,929 | | | $ | 4,780 | |
| | | | | | | | | | | | | | | | | |
| Inspection | | Revenue | | $ | 33,423 | | | $ | 36,932 | | | $ | 34,490 | |
| | | Gross margin | | $ | 5,361 | | | $ | 4,436 | | | $ | 4,077 | |
| | | Gross margin % | | | 16 | % | | | 12 | % | | | 12 | % |
| | | Operating income | | $ | 2,189 | | | $ | 1,234 | | | $ | 234 | |
| | | | | | | | | | | | | | | | | |
| Advanced Technologies | | Revenue | | $ | 28,169 | | | $ | 29,670 | | | $ | 27,390 | |
| | | Gross margin | | $ | 3,539 | | | $ | 5,914 | | | $ | 3,727 | |
| | | Gross margin % | | | 13 | % | | | 20 | % | | | 14 | % |
| | | Operating income | | $ | 1,611 | | | $ | 3,976 | | | $ | 1,431 | |
| | | | | | | | | | | | | | | | | |
| Unallocated Expenses | | Gross margin | | $ | (11,489 | ) | | $ | (5,719 | ) | | $ | (7,300 | ) |
| | | Operating income | | $ | (16,524 | ) | | $ | (9,390 | ) | | $ | (14,094 | ) |
| | | | | | | | | | | | | | | | | |
| TOTAL | | Revenue | | $ | 289,509 | | | $ | 210,737 | | | $ | 288,725 | |
| | | Gross margin | | $ | 60,317 | | | $ | 33,203 | | | $ | 56,176 | |
| | | Gross margin % | | | 21 | % | | | 16 | % | | | 19 | % |
| | | Operating income | | $ | 37,964 | | | $ | 14,493 | | | $ | 30,581 | |
| | | | | | | | | | | | | | | | | |
| SELECTED CASH FLOW INFORMATION | | | | | | | | | | | | | |
Capital expenditures, including acquisitions
| | $ | 46,204 | | | $ | 20,034 | | | $ | 37,394 | |
Depreciation and amortization
| | $ | 19,595 | | | $ | 18,229 | | | $ | 24,740 | |
