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Form 8-K OCEANEERING INTERNATIONA For: Apr 22

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April 23, 2015 6:03 AM EDT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):                    April 22, 2015

OCEANEERING INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation)
1-10945
(Commission
File Number)
95-2628227
(IRS Employer
Identification No.)

11911 FM 529
Houston, TX
(Address of principal executive offices)

77041
(Zip Code)

Registrant's telephone number, including area code: (713) 329-4500
                                        
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02    Results of Operations and Financial Condition.

On April 22, 2015, we issued a press release announcing our earnings for the first quarter ended March 31, 2015. A copy of that press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.



Item 8.01    Other Events.

On April 22, 2015, we also announced that our Board of Directors declared a quarterly dividend of $0.27 per common share. The dividend will be payable on June 19, 2015 to shareholders of record at the close of business on May 29, 2015. A copy of that press release is furnished as Exhibit 99.2 to this report and is incorporated by reference herein.



Item 9.01    Financial Statements and Exhibits.

The following are being furnished as exhibits to this report.
        
Exhibit 99.1
 
Press Release of Oceaneering International, Inc., dated April 22, 2015 regarding Item 2.02

Exhibit 99.2
 
Press Release of Oceaneering International, Inc., dated April 22, 2015 regarding Item 8.01

    
    




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
 
OCEANEERING INTERNATIONAL, INC.
 
 
 
 
Date:
April 22, 2015
By:
                       /S/ ROBERT P. MINGOIA
 
 
 
Robert P. Mingoia
 
 
 
Vice President and Treasurer










Exhibit Index

Exhibit No.
 
Description
 
 
 
Exhibit 99.1
 
Press Release of Oceaneering International, Inc., dated April 22, 2015 regarding Item 2.02
Exhibit 99.2
 
Press Release of Oceaneering International, Inc., dated April 22, 2015 regarding Item 8.01




Exhibit 99.1


Oceaneering Announces First Quarter Earnings


-- First Quarter 2015 EPS Above Guidance
-- Lowers Annual 2015 EPS Guidance to a Range of $2.80 to $3.20
-- Initiates Second Quarter 2015 EPS Guidance of $0.64 to $0.70
-- Repurchases 1.1 million Shares of Common Stock

April 22, 2015 - Houston, Texas - - Oceaneering International, Inc. (NYSE: OII) today reported first quarter earnings for the period ended March 31, 2015.

On revenue of $786.8 million, Oceaneering generated net income of $69.5 million, or $0.70 per share. During the corresponding period in 2014, Oceaneering reported revenue of $840.2 million and net income of $91.2 million, or $0.84 per share.

Summary of Results
(in thousands, except per share amounts)
 
Three Months Ended
 
March 31,
 
Dec. 31,
 
2015
 
2014
 
2014
Revenue
$
786,772

 
$
840,201

 
$
918,927

Gross Margin
163,449

 
189,491

 
209,640

Income from Operations
106,650

 
132,862

 
152,239

Net Income
$
69,499

 
$
91,225

 
$
102,471

 
 
 
 
 
 
Diluted Earnings Per Share
$
0.70

 
$
0.84

 
$
0.99


Year over year and sequentially, quarterly earnings were down primarily as a result of lower demand and pricing for many of the services and products we offer. This was attributable to the significant drop in crude oil prices since June 2014, which in turn has led to oil and gas industry reductions in capital and operating expenditures.

Year over year, quarterly earnings decreased largely on lower Remotely Operated Vehicles (ROV) and Asset Integrity operating profit contributions, and higher interest expense as a result of indebtedness incurred during the second half of 2014. Sequentially, quarterly earnings declined on lower income from all operating business segments and higher interest expense.

M. Kevin McEvoy, Chief Executive Officer, stated, “2015 will be a very challenging year despite our first quarter EPS exceeding our guidance. Our above guidance performance was attributable, to a considerable extent, to an acceleration of forecasted work in our Subsea Products and Subsea Projects businesses and cost reduction measures put in place.
“Since our last earnings release, our oilfield business outlook for the remaining quarters of this year has weakened for ROV, Subsea Projects, and Asset Integrity. We are now faced with customers demanding price concessions and competitors willing to dramatically reduce prices to secure utilization for their




assets. Consequently, we are lowering our 2015 EPS guidance to a range of $2.80 to $3.20, down from $3.10 to $3.50. For the second quarter of 2015, we are forecasting EPS of $0.64 to $0.70.
“Compared to the first quarter of last year, quarterly ROV operating income declined on a reduction in days on hire and lower average pricing. Our fleet utilization decreased to 73% from 86% a year ago and revenue per day-on-hire was 8% lower. During the quarter we put four new systems into service and retired four. At the end of the quarter, we had 336 vehicles in our ROV fleet, an increase of 22 from March 2014.

“Asset Integrity operating income dropped on lower service demand in most of the areas in which we operate. Subsea Products operating income also declined primarily due to lower demand for subsea hardware, mainly BOP control system replacements and clamp connectors. Our Subsea Products backlog at quarter-end was $788 million, up $98 million from December 2014, but down $106 million from March 2014.

“We generated EBITDA of $165 million during the quarter and anticipate generating at least $680 million for the year 2015. At the end of the quarter, we had $305 million in cash, $50 million available to be drawn on a three-year delayed draw term loan, and an undrawn $500 million revolver.

“During the quarter we paid $27 million in cash dividends and repurchased 1.1 million shares of our common stock at a cost of about $56 million. Additionally, earlier this month we completed the acquisition of C & C Technologies, Inc., a global provider of survey and satellite-based positioning services. The acquisition price of approximately $230 million was paid in cash. These actions underscore our continued confidence in Oceaneering’s financial strength and future business prospects.

“We remain convinced that our strategy to focus on providing services and products that facilitate deepwater exploration and production remains sound. Deepwater is still expected to continue to play a critical role in global oil supply growth despite its large capital commitments, technical challenges, and the current commodity price environment. Therefore, we anticipate demand for our deepwater services and products will rebound and rise over time, and believe our long-term business prospects remain promising. We are well positioned to supply a wide range of the services and products required to safely support the deepwater efforts of our customers and have the cash flow and liquidity to manage our business through the current low commodity price environment.”

Statements in this press release that express a belief, expectation, or intention are forward looking. The forward-looking statements in this press release include the statements concerning Oceaneering’s: expectation that 2015 will be a very challenging year; 2015 EPS guidance range; 2015 Q2 EPS guidance range; statements about backlog, to the extent it may be an indicator of future revenue or profitability; anticipated minimum 2015 EBITDA; confidence in its financial strength and future business prospects; belief that its strategic focus remains sound; expectation of deepwater’s continued role in global oil supply growth; anticipated rebound and rise over time of demand for its deepwater services and products; belief that its long-term business prospects remain promising; characterization of its position relative to the deepwater efforts of its customers; and belief that it has the cash flow and liquidity to manage its business through the current low commodity price environment. 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. 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. 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.

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. For a reconciliation of our EBITDA amounts to the most directly comparable GAAP financial measures, please see the attached schedule.


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.

For further information, please contact Jack Jurkoshek, Director Investor Relations,
Oceaneering International, Inc, 713-329-4670, E‑Mail [email protected]. A live webcast of the company’s earnings release conference call, scheduled for Thursday, April 23, 2015 at 11:00 a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.









- Tables follow on next page -





 
 
 
 
 
 
 
 
 
 
 
 
 
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mar 31, 2015
 
Dec 31, 2014
 
 
 
 
 
 
 
 
 
 
(in thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current Assets (including cash and cash equivalents of $304,512 and $430,714)
 
 
 
 
 
 
 
$
1,609,711

 
$
1,713,550

 
Net Property and Equipment
 
 
 
 
 
 
 
1,272,410

 
1,305,822

 
Other Assets
 
 
 
 
 
 
 
471,822

 
492,329

 
 
TOTAL ASSETS
 
 
 
 
 
 
 
$
3,353,943

 
$
3,511,701

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
$
601,842

 
$
679,137

 
Long-term Debt
 
 
 
 
 
 
 
750,000

 
750,000

 
Other Long-term Liabilities
 
 
 
 
 
 
 
418,429

 
424,944

 
Shareholders' Equity
 
 
 
 
 
 
 
1,583,672

 
1,657,620

 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
$
3,353,943

 
$
3,511,701

 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
 
 
 
 
 
 
 
Mar 31, 2015
 
Mar 31, 2014
 
Dec 31, 2014
 
 
 
 
 
 
 
 
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
$
786,772

 
$
840,201

 
$
918,927

 
Cost of services and products
 
 
 
 
 
623,323

 
650,710

 
709,287

 
 
Gross Margin
 
 
 
 
 
163,449

 
189,491

 
209,640

 
Selling, general and administrative expense
 
 
 
 
 
56,799

 
56,629

 
57,401

 
 
Income from Operations
 
 
 
 
 
106,650

 
132,862

 
152,239

 
Interest income
 
 
 
 
 
156

 
79

 
43

 
Interest expense, net of amounts capitalized
 
 
 
 
 
(6,088
)
 
(411
)
 
(3,222
)
 
Equity in losses of unconsolidated affiliates
 
 
 
 
 
(255
)
 
(36
)
 
(32
)
 
Other income, net
 
 
 
 
 
700

 
294

 
128

 
 
Income before income taxes
 
 
 
 
 
101,163

 
132,788

 
149,156

 
Provision for income taxes
 
 
 
 
 
31,664

 
41,563

 
46,685

 
 
Net Income
 
 
 
 
 
$
69,499

 
$
91,225

 
$
102,471

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Number of Diluted Common Shares
 
 
 
 
 
99,912

 
108,724

 
103,851

Diluted Earnings per Share
 
 
 
 
 
$0.70
 
$0.84
 
$0.99
 
 
 
 
 
 
 
 
 
 
 
 
 
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.




 
 
SEGMENT INFORMATION
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
 
 
 
 
 
 
 
 
Mar 31, 2015
 
Mar 31, 2014
 
Dec 31, 2014
 
 
 
 
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Remotely Operated Vehicles
Revenue
 
 
 
 
 
$
219,447

 
$
255,819

 
$
259,544

 
 
Gross Margin
 
 
 
 
 
$
71,311

 
$
87,190

 
$
89,080

 
 
Operating income
 
 
 
 
 
$
62,182

 
$
76,740

 
$
79,635

 
 
Operating margin
 
 
 
 
 
28
%
 
30
%
 
31
%
 
 
Days available
 
 
 
 
 
30,131

 
27,851

 
30,869

 
 
Days utilized
 
 
 
 
 
22,139

 
23,869

 
24,676

 
 
Utilization
 
 
 
 
 
73
%
 
86
%
 
80
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Products
Revenue
 
 
 
 
 
$
240,729

 
$
260,010

 
$
314,739

 
 
Gross Margin
 
 
 
 
 
$
69,767

 
$
75,129

 
$
84,667

 
 
Operating income
 
 
 
 
 
$
50,014

 
$
54,516

 
$
63,796

 
 
Operating margin
 
 
 
 
 
21
%
 
21
%
 
20
%
 
 
Backlog
 
 
 
 
 
$
788,000

 
$
894,000

 
$
690,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Projects
Revenue
 
 
 
 
 
$
153,572

 
$
138,190

 
$
162,623

 
 
Gross Margin
 
 
 
 
 
$
26,900

 
$
24,409

 
$
38,138

 
 
Operating income
 
 
 
 
 
$
22,276

 
$
20,537

 
$
34,113

 
 
Operating margin
 
 
 
 
 
15
%
 
15
%
 
21
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Integrity
Revenue
 
 
 
 
 
$
98,493

 
$
124,159

 
$
111,115

 
 
Gross Margin
 
 
 
 
 
$
12,799

 
$
21,866

 
$
14,476

 
 
Operating income
 
 
 
 
 
$
5,025

 
$
14,085

 
$
5,886

 
 
Operating margin
 
 
 
 
 
5
%
 
11
%
 
5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advanced Technologies
Revenue
 
 
 
 
 
$
74,531

 
$
62,023

 
$
70,906

 
 
Gross Margin
 
 
 
 
 
$
9,400

 
$
7,727

 
$
11,647

 
 
Operating income
 
 
 
 
 
$
5,020

 
$
2,955

 
$
7,214

 
 
Operating margin
 
 
 
 
 
7
%
 
5
%
 
10
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated Expenses
Gross Margin
 
 
 
 
 
$
(26,728
)
 
$
(26,830
)
 
$
(28,368
)
 
 
Operating income
 
 
 
 
 
$
(37,867
)
 
$
(35,971
)
 
$
(38,405
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
Revenue
 
 
 
 
 
$
786,772

 
$
840,201

 
$
918,927

 
 
Gross Margin
 
 
 
 
 
$
163,449

 
$
189,491

 
$
209,640

 
 
Operating income
 
 
 
 
 
$
106,650

 
$
132,862

 
$
152,239

 
 
Operating margin
 
 
 
 
 
14
%
 
16
%
 
17
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SELECTED CASH FLOW INFORMATION
 
 
 
 
 
 
Capital expenditures, including acquisitions
 

 

 
$
49,412

 
$
104,038

 
$
85,395

 
 
Depreciation and Amortization
 
 
 
 
 
$
58,003

 
$
53,351

 
$
60,750

 
 
 
 
 
 
 
 
 
 
 
 
 
 
The above should be read in conjunction with the Company's latest Annual Report on Form 10-K.





 
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
 
 
 
 
 
 
 
For the Three Months Ended
 
 
 
 
 
 
 
Mar 31, 2015
 
Mar 31, 2014
 
Dec 31, 2014
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
 
 
 
 
$
69,499

 
$
91,225

 
$
102,471

 
 
Depreciation and Amortization
 
 
 
 
58,003

 
53,351

 
60,750

 
 
Subtotal
 
 
 
 
127,502

 
144,576

 
163,221

 
 
Interest Income/Expense, Net
 
 
 
 
5,932

 
332

 
3,179

 
 
Amortization included in interest expense
 
 
 
 
(266
)
 
—

 
—

 
 
Provision for Income Taxes
 
 
 
 
31,664

 
41,563

 
46,685

 
 
EBITDA
 
 
 
 
$
164,832

 
$
186,471

 
$
213,085

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 Estimates
 
 
 
 
 
 
 
 
 
Minimum
 
Maximum
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
Net Income
$
280,000

 
$
320,000

 
 
 
 
 
 
 
 
Depreciation and Amortization
245,000

 
255,000

 
 
 
 
 
 
 
 
Subtotal
525,000

 
575,000

 
 
 
 
 
 
 
 
Interest Income/Expense, Net
25,000

 
25,000

 
 
 
 
 
 
 
 
Provision for Income Taxes
130,000

 
145,000

 
 
 
 
 
 
 
 
EBITDA
$
680,000

 
$
745,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Exhibit 99.2




Oceaneering Declares Quarterly Dividend


April 22, 2015 - Houston, Texas - Oceaneering International, Inc. (NYSE: OII) announced today that its Board of Directors declared a regular quarterly dividend of $0.27 per common share. The dividend is payable June 19, 2015 to shareholders of record at the close of business on May 29, 2015.

Oceaneering is a global oilfield 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.

For further information, please contact Jack Jurkoshek, Director Investor Relations,
Oceaneering International, Inc.; 713-329-4670; E-Mail [email protected].






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