Exhibit 99.1
TO BUSINESS AND ENERGY EDITORS:
Oceaneering Announces 12% Sequential Improvement in Quarterly Earnings
HOUSTON, Nov. 10 /PRNewswire-FirstCall/ -- Oceaneering International, Inc.
(NYSE: OII) today reported earnings of $0.37 per common share for the third
quarter ended September 30, 2003; on revenue of $172.8 million, Oceaneering
generated net income of $9.0 million. For the second quarter of 2003,
Oceaneering reported earnings per share of $0.33, or net income of $8.1 million,
on revenue of $163.8 million.
The 12% increase in earnings over the second quarter was the result of
improved profit contributions by the Inspection, Subsea Projects, and Advanced
Technologies business segments.
Summary of Results
(in thousands, except per share amounts)
Three months ended Nine months ended
Sept. 30, June 30, Sept. 30,
2003 2002 2003 2003 2002
Revenue $172,754 $130,607 $163,761 $477,184 $411,006
Gross Margin $30,372 $30,079 $ 28,226 $82,761 $87,676
Operating
Income $16,050 $17,494 $14,743 $42,250 $52,702
Net Income $9,038 $11,909 $8,086 $23,159 $31,199
Diluted
Earnings
Per Share $0.37 $0.48 $0.33 $0.95 $1.27
Weighted
Average
Number of
Diluted
Shares 24,488 24,802 24,283 24,424 24,638
Oceaneering had third quarter 2002 revenue of $130.6 million and net income
of $11.9 million, or $0.48 per share. On comparable gross margin, the
year-over-year decline in quarterly net income was attributable to a higher
effective tax rate than in 2002. The 2002 tax rate was lower due to the
realization of previously unrecognized foreign tax credits and favorable
finalizations of tax positions related to Oceaneering's international oilfield
vessel and diving operations exited in 2000.
John Huff, Chairman and Chief Executive Officer, stated, "We are pleased
with the results for the quarter, which were within our earnings guidance range.
Gross margin from each of our business segments, with the exception of Subsea
Products, continued to improve in the third quarter, despite a challenging
market environment for oilfield services and products in general.
"When compared to the second quarter of this year, gross margin contribution
from our Inspection business increased due to higher service sales, particularly
in Europe, and an overall increase in gross margin percentage as we improved the
efficiency of our combined operations. Subsea Projects gross margin improved on
the strength of a higher profit contribution from our diving operations.
Advanced Technologies had a great quarter, setting a new revenue record while
achieving near record gross margin performance on the strength of additional
work performed for the U.S. Navy. Gross margins from our Remotely Operated
Vehicle (ROV) and Mobile Offshore Production Systems segments were comparable to
the second quarter.
"Subsea Products gross margin declined and backlog dropped to $17 million,
down from $26 million at the end of the second quarter. Our relatively low level
of backlog remains attributable to delayed umbilical orders and we continue to
expect our backlog to be higher by the end of this year. We are continuing our
efforts to locate a suitable facility to expand our U.S. umbilical plant
manufacturing capacity and product mix.
"Operating activities continued to provide strong cash flow during the third
quarter. Our capital expenditures, including acquisitions, were $25 million. Our
cash balance at quarter's end was $21 million and we had $85 million of funds
available under our $100 million credit facility.
"We are projecting earnings per share of approximately $0.25 for the fourth
quarter. Consequently, our current 2003 EPS outlook is $1.20. This forecast
reflects lower profit contributions in the last half of 2003 from our Subsea
Products and Subsea Projects business segments as a result of delays in contract
awards and reduced market demand for these operations.
"Considering the reduced levels of activity in the offshore energy services
and products markets, we are modifying our estimate of 2004 EPS to approximately
$1.40. This estimate is predicated on improving demand for our subsea products
and a continuation of current market conditions or similar demand trends for our
other business segments. We expect earnings from our existing business
operations to be augmented by cost efficiencies achieved from ongoing efforts,
the three product acquisitions we have made in 2003, and the planned expansion
of our umbilical manufacturing plants. Profit contributions from our announced
U.S. and Brazilian steel tube capabilities are expected by the third quarter of
2004. This $1.40 per share does not include any other acquisitions or capital
equipment additions.
"We continue to be bullish about the earnings leverage of our niche market
and deepwater focus. Should a substantive recovery in market demand occur,
particularly for our ROV and Subsea Projects, we will be able to utilize our
excess capacity and operating leverage to increase our earnings. However, we are
not satisfied with the status quo and will not simply wait for the market to
recover. In 2003 we proved our ability to make accretive acquisitions. We remain
committed to use our financial strength to make accretive investments that will
expand and augment our existing operations in 2004.
"During the quarter we announced an agreement to invest approximately
$45 million, subject to certain conditions, in the ownership of the Medusa Spar,
a floating production facility located in the Gulf of Mexico. It is our belief
that the closing of this transaction will occur by the end of this year, and
this investment will result in an upward revision to our 2004 EPS outlook."
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 intentions with respect to the use of its financial
strength, its projected earnings for 2003 and 2004, its expectations concerning
future umbilical orders and contributions from its U.S. and Brazilian steel tube
capabilities, incremental earnings contribution from additional asset and
acquisition investments, and the closing of the Medusa Spar transaction. 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: 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 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
telecommunications, 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 11,
2003 at 10:00 a.m. central time, can be heard at www.companyboardroom.com (enter
ticker OII).
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 30, 2003 Dec. 31, 2002
(in thousands)
ASSETS
Current Assets (including cash and cash
equivalents of $21,057 and $66,201) $244,748 $233,070
Net Property and Equipment 327,772 322,390
Other Assets 59,254 34,888
TOTAL ASSETS $631,774 $590,348
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $124,888 $116,031
Long-Term Debt 115,000 112,800
Other Long-Term Liabilities 52,636 47,652
Shareholders' Equity 339,250 313,865
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $631,774 $590,348
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months For the Nine Months
Ended Ended
Sept. 30, Sept. 30, June 30, Sept. 30,
2003 2002 2003 2003 2002
(in thousands, except per share amounts)
Revenue $172,754 $130,607 $163,761 $477,184 $411,006
Cost of Services
and Products 142,382 100,528 135,535 394,423 323,330
Gross Margin 30,372 30,079 28,226 82,761 87,676
Selling, General and
Administrative
Expenses 14,322 12,585 13,483 40,511 34,974
Income from
Operations 16,050 17,494 14,743 42,250 52,702
Interest Income 94 170 123 381 374
Interest Expense (2,105) (1,983) (1,931) (5,956) (6,665)
Equity Earnings
(Losses) of
Unconsolidated
Affiliates 35 (256) (85) (186) (568)
Other Expense, Net (169) (1,156) (410) (859) (1,901)
Income before
Income Taxes 13,905 14,269 12,440 35,630 43,942
Provision for
Income Taxes (4,867) (2,360) (4,354) (12,471) (12,743)
Net Income $ 9,038 $ 11,909 $ 8,086 $ 23,159 $ 31,199
Diluted Earnings per
Common Share $ 0.37 $ 0.48 $ 0.33 $ 0.95 $ 1.27
Weighted Average
Number of Common
Shares and
Equivalents 24,488 24,802 24,284 24,424 24,638
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.
SELECTED CASH FLOW INFORMATION
For the Three Months For the Nine Months
Ended Ended
Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30,
2003 2002 2003 2003 2002
($ in thousands)
Capital Expenditures,
Including
Acquisitions $24,564 $ 8,518 $26,276 $88,415 $20,543
Depreciation and
Amortization $14,233 $13,271 $14,174 $42,153 $38,514
SEGMENT INFORMATION
For the Three Months For the Nine Months
Ended Ended
Sept. 30, Sept. 30, June 30, Sept. 30, Sept. 30,
2003 2002 2003 2003 2002
($ in thousands)
OFFSHORE OIL AND GAS
Remotely Operated Vehicles
Revenues $ 40,644 $ 38,067 $ 40,879 $116,587 $111,819
Gross Margin $ 10,577 $ 10,048 $ 10,633 $ 30,069 $ 30,519
Gross Margin % 26% 26% 26% 26% 27%
Days Available 11,500 11,438 11,375 34,125 34,024
Utilization 71% 65% 72% 69% 68%
Subsea Products
Revenues $ 29,748 $ 23,925 $ 27,878 $ 81,667 $ 92,945
Gross Margin $ 4,366 $ 6,699 $ 6,366 $ 14,320 $ 22,152
Gross Margin % 15% 28% 23% 18% 24%
Subsea Projects
Revenues $ 20,375 $ 16,511 $ 18,367 $ 51,276 $ 60,012
Gross Margin $ 3,153 $ 2,742 $ 1,683 $ 7,127 $ 11,708
Gross Margin % 15% 17% 9% 14% 20%
Mobile Offshore
Production Systems
Revenues $ 11,732 $ 13,027 $ 12,068 $ 35,089 $ 37,728
Gross Margin $ 4,708 $ 5,966 $ 4,460 $ 13,769 $ 16,529
Gross Margin % 40% 46% 37% 39% 44%
Inspection
Revenues $ 37,688 $ 12,125 $ 34,761 $102,929 $ 32,182
Gross Margin $ 5,895 $ 1,432 $ 4,320 $ 13,365 $ 4,185
Gross Margin % 16% 12% 12% 13% 13%
ADVANCED TECHNOLOGIES
Revenues $ 32,567 $ 26,952 $ 29,808 $ 89,636 $ 76,320
Gross Margin $ 6,343 $ 6,438 $ 5,486 $ 17,216 $ 15,138
Gross Margin % 19% 24% 18% 19% 20%
UNALLOCATED EXPENSES $ (4,670) $ (3,246) $ (4,722) $(13,105) $(12,555)
TOTAL
Revenues $172,754 $130,607 $163,761 $477,184 $411,006
Gross Margin $ 30,372 $ 30,079 $ 28,226 $ 82,761 $ 87,676
Gross Margin % 18% 23% 17% 17% 21%
SOURCE Oceaneering International, Inc.
-0- 11/10/2003
/CONTACT: Jack Jurkoshek, Manager Investor Relations of
Oceaneering International, Inc.,
+1-713-329-4670, or fax, +1-713-329-4653/
/Web site: http://www.companyboardroom.com /
/Web site: http://www.oceaneering.com /
(OII)