EXHIBIT 99.1
OCEANEERING ANNOUNCES FOURTH QUARTER AND ANNUAL EARNINGS
February 18, 2004 - Houston, Texas - Oceaneering International, Inc. (NYSE:OII)
today reported fourth quarter and annual earnings for the periods ended December
31, 2003.
During the fourth quarter, on revenue of $162.1 million, Oceaneering generated
net income of $6.1 million, or $0.25 per common share. During the corresponding
period in 2002, Oceaneering reported revenue of $136.5 million and net income of
$8.9 million, or $0.36 per common share. For the year, Oceaneering reported net
income of $29.3 million, or $1.20 per common share, on revenue of $639.2
million. Net income for 2002 was $40.1 million, a record high, or $1.63 per
common share, on revenue of $547.5 million.
Summary of Results
(in thousands, except per share amounts)
<Table>
<Caption>
Three months ended Year ended
----------------------------------- ---------------------
Dec. 31, Sept. 30, Dec. 31,
--------------------- --------- ---------------------
2003 2002 2003 2003 2002
-------- -------- -------- -------- --------
Revenue $162,065 $136,461 $172,754 $639,249 $547,467
Gross Margin $ 28,023 $ 26,489 $ 30,372 $110,784 $114,165
Operating Income $ 11,747 $ 15,001 $ 16,050 $ 53,997 $ 67,703
Net Income $ 6,142 $ 8,934 $ 9,038 $ 29,301 $ 40,133
Diluted Earnings Per Share $ 0.25 $ 0.36 $ 0.37 $ 1.20 $ 1.63
Weighted Average Number of Diluted Shares 24,539 24,821 24,488 24,453 24,683
</Table>
Annual net income decreased $10.8 million primarily due to lower operating
performance by Oceaneering's Subsea Products segment and 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. Fourth quarter results were down because of a lower
profit contribution from Subsea Products.
John Huff, Chairman and Chief Executive Officer, stated, "Results for the fourth
quarter met our expectations. For the whole of 2003, we achieved the third
highest earnings in Oceaneering's history in spite of a tough market for
oilfield services and products in general. ROV gross margin was the second
highest in Oceaneering's history despite a persistence of lackluster demand for
drill support services.
"More noteworthy, we completed or initiated acquisitions and major capital
investments totaling approximately $300 million to position Oceaneering for
increased profitability in the years ahead. If the pending transactions close,
the additions to our asset base will represent an 80+% increase over our
long-term assets at the beginning of 2003. We have a new four-year $250 million
revolving credit facility in place to provide the funding for our capital
expansion initiatives.
- more -
"The OIS acquisition we completed in January propelled our Inspection business
segment to record profits. Including the contribution from the Nauticos
acquisition in April, our Advanced Technologies segment achieved near-record
performance on the strength of increased work for the U.S. Navy. Our investment
in an ownership position in the Medusa Spar, finalized in late December, added a
new dimension to our mobile offshore production business. In the Subsea Products
arena, we selected a Florida facility as the new location for our U.S. umbilical
manufacturing plant and obtained several umbilical contracts, which caused an
increase in our backlog to $47 million at year-end.
"We are in the final stages of our due diligence process towards closing the
announced and pending acquisitions of ROV businesses from Subsea 7 and Stolt
Offshore. We expect to complete the Stolt transaction shortly and hope to
finalize the Subsea 7 purchase by the end of the first quarter of 2004.
Acquisition of these ROV fleets will significantly increase our international
market presence and substantially enlarge our existing leadership position as a
worldwide ROV service provider.
"Looking forward, our 2004 EPS outlook is $1.55 to $1.60. This estimate is
predicated on improving demand for our subsea products and a continuation of
current demand trends for our other business segments. Compared to 2003, 2004
will include incremental earnings contributions from acquisitions and
investments made during 2003. Our new steel tube umbilical manufacturing
equipment should be operational in our Brazil plant during the second quarter of
2004 and in our new Florida facility during the fourth quarter. This 2004
outlook does not include the anticipated accretive effects of the two pending
ROV-related acquisitions. Consequently, we believe it may be possible to achieve
record EPS in 2004.
"We are projecting a relatively slow EPS start to what is expected to be a very
good year. The slow start is attributable to reduced demand for our Subsea
Projects and Inspection businesses and a continued low profit contribution from
Subsea Products until production ramps up. We are forecasting first quarter 2004
EPS of approximately $0.20, followed by second quarter EPS of $0.45 to $0.50.
Earnings in the second half of 2004 are expected to show substantial
improvement.
"Our preliminary earnings assessment for 2005 is to achieve additional EPS
growth of 20%, exclusive of the anticipated accretive effects of the pending or
any future acquisitions. Our projected earnings growth is based on our
expectations of improving market demand for our services and products, driven by
increased floating drilling rig use and subsea completion activity."
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 closing of two pending ROV-related acquisitions and the
impacts of those transactions on Oceaneering's international market presence,
leadership position and earnings, the availability of financing to fund its
capital expansion initiatives, projected earnings for 2004 and the possibility
of achieving record EPS in 2004, the anticipated timetable for new equipment
becoming operational, its expectations concerning market demand, and its
preliminary assessment of EPS growth in 2005. 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 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 February 19, 2004
at 10:00 a.m. central time, can be heard at www.companyboardroom.com (enter
ticker OII).
PR 869
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OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
2003 2002
-------- --------
(in thousands)
ASSETS
Current Assets (including cash and cash equivalents of
$18,396 and $66,201) $224,765 $233,070
Net Property and Equipment 329,070 322,390
Other Assets 109,021 34,888
-------- --------
TOTAL ASSETS $662,856 $590,348
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $132,972 $116,031
Long-Term Debt 122,324 112,800
Other Long-Term Liabilities 48,185 47,652
Shareholders' Equity 359,375 313,865
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $662,856 $590,348
======== ========
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended For the Year Ended
------------------------------------------- --------------------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31,
2003 2002 2003 2003 2002
--------- --------- --------- --------- ---------
(in thousands, except per share amounts)
Revenue $ 162,065 $ 136,461 $ 172,754 $ 639,249 $ 547,467
Cost of Services and Products 134,042 109,972 142,382 528,465 433,302
--------- --------- --------- --------- ---------
Gross Margin 28,023 26,489 30,372 110,784 114,165
Selling, General and Administrative Expenses 16,276 11,488 14,322 56,787 46,462
--------- --------- --------- --------- ---------
Income from Operations 11,747 15,001 16,050 53,997 67,703
Interest Income 192 294 94 573 668
Interest Expense (1,855) (1,945) (2,105) (7,811) (8,610)
Equity Earnings (Losses) of Unconsolidated
Affiliates 226 (515) 35 40 (906)
Other Expense, Net (861) (252) (169) (1,720) (2,330)
--------- --------- --------- --------- ---------
Income before Income Taxes 9,449 12,583 13,905 45,079 56,525
Provision for Income Taxes (3,307) (3,649) (4,867) (15,778) (16,392)
--------- --------- --------- --------- ---------
Net Income $ 6,142 $ 8,934 $ 9,038 $ 29,301 $ 40,133
========= ========= ========= ========= =========
Diluted Earnings per Common Share $ 0.25 $ 0.36 $ 0.37 $ 1.20 $ 1.63
Weighted Average Number of Common Shares
and Equivalents 24,539 24,821 24,488 24,453 24,683
</Table>
SELECTED CASH FLOW INFORMATION
For the Three Months Ended For the Year Ended
--------------------------------------- -----------------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2003 2002 2003 2003 2002
-------- -------- --------- -------- --------
(in thousands)
Capital expenditures, including acquisitions $ 11,955 $ 14,009 $ 24,564 $100,370 $ 34,552
Depreciation and amortization $ 14,810 $ 13,827 $ 14,233 $ 56,963 $ 52,341
SEGMENT INFORMATION
For the Three Months Ended For the Year Ended
--------------------------------------------- ---------------------------
Dec. 31, Dec. 31, Sept. 30, Dec. 31, Dec. 31,
2003 2002 2003 2003 2002
--------- --------- --------- --------- ---------
($ in thousands)
OIL AND GAS
Remotely Operated Vehicles
Revenues $ 43,772 $ 37,800 $ 40,644 $ 160,359 $ 149,619
Gross Margin $ 11,968 $ 9,019 $ 10,577 $ 42,037 $ 39,538
Gross Margin % 27% 24% 26% 26% 26%
Days Available 11,530 11,561 11,500 45,655 45,585
Utilization 72% 70% 71% 70% 69%
Subsea Products
Revenues $ 25,873 $ 30,282 $ 29,748 $ 107,540 $ 123,227
Gross Margin $ 4,096 $ 7,268 $ 4,366 $ 18,416 $ 29,420
Gross Margin % 16% 24% 15% 17% 24%
Subsea Projects
Revenues $ 17,520 $ 18,697 $ 20,375 $ 68,796 $ 78,709
Gross Margin $ 3,819 $ 4,710 $ 3,153 $ 10,946 $ 16,418
Gross Margin % 22% 25% 15% 16% 21%
Mobile Offshore Production Systems
Revenues $ 11,747 $ 10,810 $ 11,732 $ 46,836 $ 48,538
Gross Margin $ 4,444 $ 4,651 $ 4,708 $ 18,213 $ 21,180
Gross Margin % 38% 43% 40% 39% 44%
Inspection
Revenues $ 33,670 $ 11,844 $ 37,688 $ 136,599 $ 44,026
Gross Margin $ 3,192 $ 1,428 $ 5,895 $ 16,557 $ 5,613
Gross Margin % 9% 12% 16% 12% 13%
ADVANCED TECHNOLOGIES
Revenues $ 29,483 $ 27,028 $ 32,567 $ 119,119 $ 103,348
Gross Margin $ 4,899 $ 4,940 $ 6,343 $ 22,115 $ 20,078
Gross Margin % 17% 18% 19% 19% 19%
UNALLOCATED EXPENSES $ (4,395) $ (5,527) $ (4,670) $ (17,500) $ (18,082)
TOTAL
Revenues $ 162,065 $ 136,461 $ 172,754 $ 639,249 $ 547,467
Gross Margin $ 28,023 $ 26,489 $ 30,372 $ 110,784 $ 114,165
Gross Margin % 17% 19% 18% 17% 21%
</Table>