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Form 8-K OCEANEERING INTERNATIONA For: Oct 28

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October 28, 2015 5:09 PM 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):                    October 28, 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))


1

Item 2.02    Results of Operations and Financial Condition.

On October 28, 2015, we issued a press release announcing our earnings for the third quarter ended September 30, 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 October 28, 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 December 18, 2015 to shareholders of record at the close of business on November 27, 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 October 28, 2015 regarding Item 2.02
Exhibit 99.2
 
Press Release of Oceaneering International, Inc., dated October 28, 2015 regarding Item 8.01
    
    

2



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:
October 28, 2015
By:
/S/ ROBERT P. MINGOIA
 
 
 
Robert P. Mingoia
 
 
 
Vice President and Treasurer






3




Exhibit Index

Exhibit No.
 
Description
 
 
 
Exhibit 99.1
 
Press Release of Oceaneering International, Inc., dated October 28, 2015 regarding Item 2.02
Exhibit 99.2
 
Press Release of Oceaneering International, Inc., dated October 28, 2015 regarding Item 8.01


4


Exhibit 99.1


Oceaneering Announces Third Quarter Earnings

-- Lowers 2015 Annual EPS Guidance Range to $2.60 to $2.66
-- Initiates Fourth Quarter 2015 EPS Guidance of $0.54 to $0.60

October 28, 2015 - Houston, Texas - Oceaneering International, Inc. (NYSE: OII) today reported earnings for the quarter ended September 30, 2015. On revenue of $743.6 million, Oceaneering generated net income of $68.5 million, or $0.70 per share. These results included $9.2 million of pretax foreign currency losses, reported in other income and expenses.

Third quarter 2015 results compared to the corresponding period of 2014 and the second quarter of 2015 are shown in the table below.

Summary of Results
(in thousands, except per share amounts)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
 
 
2015
 
2014
 
2015
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
Revenue
$
743,613

 
$
973,089

 
$
810,303

 
$
2,340,688

 
$
2,740,697

Gross Margin
168,313

 
241,855

 
167,545

 
499,307

 
649,561

Income from Operations
113,464

 
181,918

 
107,940

 
328,054

 
476,091

Net Income
$
68,539

 
$
124,338

 
$
65,468

 
$
203,506

 
$
325,858

 
 
 
 
 
 
 
 
 
 
Diluted Earnings Per Share (EPS)
$0.70
 
$1.16
 
$0.66
 
$2.06
 
$3.01
 
 
 
 
 


Sequentially, quarterly earnings increased on lower Unallocated Expenses due to reductions in performance-based incentive and deferred compensation expenses. Year over year, quarterly earnings decreased on significantly lower demand and pricing for most of Oceaneering’s oilfield services and products. This was attributable to reductions in oil and gas industry capital and operating expenditures resulting from the steep decline in oil prices.

M. Kevin McEvoy, Chief Executive Officer, stated, “Our EPS for the quarter was within our guidance range, but was not achieved in the manner we initially anticipated. Compared to our earlier expectations, we experienced demand declines for tooling and Installation Workover and Control System services, as customer projects were either postponed or did not materialize. Furthermore, contract renewals for floating rigs on which we provide Remotely Operated Vehicle (ROV) drill support services were weaker than forecast. The unfavorable impacts of these market developments were more than offset by better results from Subsea Projects and lower Unallocated Expenses.


- 1 -





“Subsea Projects exceeded our expectations for the third quarter due to higher U.S. Gulf of Mexico (GOM) vessel utilization, which included completion of certain projects originally scheduled for the fourth quarter. Unallocated Expenses were lower as performance-based compensation expenses were reduced based on our current projections of results relative to the respective plan targets. In addition, during the quarter, we incurred substantial foreign currency losses, which our guidance did not consider.

“Compared to the second quarter, ROV operating income decreased on a 6% decline in average revenue per day on hire and lower global demand to support drilling. Our fleet utilization rate fell to 68% and operating income margin dropped to 26%. During the quarter we put five new vehicles into service and retired four. At the end of September, we had 337 vehicles in our fleet, compared to 332 one year ago.

“Subsea Products operating income was higher despite a decline in revenue, as the second quarter included an inventory write-down of $9.0 million. Products backlog at quarter-end was $736 million, compared to our June 30 backlog of $703 million and $768 million one year ago. Our products book-to-bill ratio for the third quarter was 1.15, year to date it was 1.07, and for the trailing twelve months it was 0.97.

“Sequentially, Subsea Projects operating income decreased largely due to declining demand and pricing for deepwater intervention services in the GOM and offshore Angola, and diving services in the GOM. Asset Integrity income improved due to a change in service mix and actions we took to lower operating costs, primarily a reduction in manning. Advanced Technologies operating income declined due to execution issues on certain theme park projects.

“We generated EBITDA of $168 million during the quarter, $497 million year to date, and for 2015 we anticipate generating at least $640 million. At the end of the quarter, we had $271 million in cash and an undrawn $500 million revolver.

“Our outlook for the fourth quarter of this year is down from what we envisioned at the time of our last quarterly earnings release. We now expect to report fourth quarter EPS in the range of $0.54 to $0.60. We are expecting sequential quarterly operating income declines from ROV, Subsea Projects, and Asset Integrity, a profit improvement from Advanced Technologies, lower Unallocated Expenses, and a similar profit contribution from Subsea Products. Given this outlook and our year-to-date performance, we are reducing our 2015 EPS guidance to a range of $2.60 to $2.66 from $2.70 to $2.90, down 6% at the midpoints.

“Based on the current number of floating rigs working and expectations for further reductions in offshore activities due to continued spending cuts by our customers, we believe our 2016 earnings will be lower than our projection for 2015. We are not, however, prepared to quantify the magnitude of the decline at this time.










- 2 -





“We continue to take actions to reduce our operating expenses and organic capital expenditures, and believe our cash flow and liquidity position us well to manage our business through the current low commodity price environment. Longer term, deepwater is still expected to continue to play a critical role in global oil supply growth required to replace depletion and meet projected demand. Consequently, we intend to continue our strategy to expand our service and product line offerings, as evidenced by our recent investments in survey and satellite-based positioning, data solutions, and subsea asset integrity.”

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: fourth quarter 2015 EPS guidance range; 2015 EPS guidance range; statements about backlog, to the extent it may be an indicator of future revenue or profitability; anticipated minimum 2015 EBITDA; outlook for the fourth quarter of 2015; anticipated sequential quarterly operating income expectations from each of its business segments, and from Unallocated Expenses; expectation for further reductions in offshore activities due to continued spending cuts by its customers; expected 2016 earnings relative to projected 2015 earnings; belief that its cash flow and liquidity position it to manage its business through the current low commodity price environment; expectation of deepwater’s continued role in global oil supply growth; and intent to continue its strategy to expand its service and product line offerings. 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, [email protected]. A live webcast of the company’s earnings conference call, scheduled for Thursday, October 29, 2015 at 11:00 a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.



PR 1241




- Tables follow on next page -

- 3 -





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sep 30, 2015
 
Dec 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets (including cash and cash equivalents of $271,155 and $430,714)
 
 
 
 
 
 
 
$
1,510,430

 
$
1,713,550

 
Net Property and Equipment
 
 
 
 
 
 
 
1,272,634

 
1,305,822

 
Other Assets
 
 
 
 
 
 
 
637,566

 
485,568

 
 
 
TOTAL ASSETS
 
$
3,420,630

 
$
3,504,940

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
$
623,827

 
$
679,137

 
Long-term Debt
 
 
 
 
 
 
 
797,495

 
743,469

 
Other Long-term Liabilities
 
 
 
 
 
 
 
410,392

 
424,863

 
Shareholders' Equity
 
 
 
 
 
 
 
1,588,916

 
1,657,471

 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
3,420,630

 
$
3,504,940

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
 
 
 
 
 
Sep 30, 2015
 
Sep 30, 2014
 
Jun 30, 2015
 
Sep 30, 2015
 
Sep 30, 2014
 
 
 
 
 
 
 
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
$
743,613

 
$
973,089

 
$
810,303

 
$
2,340,688

 
$
2,740,697

 
Cost of services and products
 
 
 
575,300

 
731,234

 
642,758

 
1,841,381

 
2,091,136

 
 
Gross Margin
 
 
 
 
168,313

 
241,855

 
167,545

 
499,307

 
649,561

 
Selling, general and administrative expense
 
54,849

 
59,937

 
59,605

 
171,253

 
173,470

 
 
Income from Operations
 
113,464

 
181,918

 
107,940

 
328,054

 
476,091

 
Interest income
 
 
 
229

 
130

 
51

 
436

 
250

 
Interest expense
 
 
 
(6,396
)
 
(677
)
 
(6,212
)
 
(18,696
)
 
(1,486
)
 
Equity earnings (losses) of unconsolidated affiliates
 
1,567

 
9

 
1

 
1,313

 
(19
)
 
Other income (expense), net
 
 
 
(9,099
)
 
(392
)
 
(6,484
)
 
(14,883
)
 
(515
)
 
 
Income before Income Taxes
 
 
 
99,765

 
180,988

 
95,296

 
296,224

 
474,321

 
Provision for income taxes
 
31,226

 
56,650

 
29,828

 
92,718

 
148,463

 
 
Net Income
 
 
 
 
$
68,539

 
$
124,338

 
$
65,468

 
$
203,506

 
$
325,858

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding
 
98,185

 
107,407

 
98,893

 
98,991

 
108,180

Diluted Earnings per Share
 
$
0.70

 
$
1.16

 
$
0.66

 
$
2.06

 
$
3.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 and Quarterly Report on Form 10-Q.




SEGMENT INFORMATION
 
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
 
 
 
 
Sep 30, 2015
 
Sep 30, 2014
 
Jun 30, 2015
 
Sep 30, 2015
 
Sep 30, 2014
 
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
Remotely Operated Vehicles
 
Revenue
 
 
$
198,426

 
$
285,385

 
$
216,426

 
$
634,299

 
$
809,478

 
Gross Margin
 
 
$
60,681

 
$
98,511

 
$
70,132

 
$
202,124

 
$
272,386

 
Operating Income
 
 
$
52,417

 
$
88,350

 
$
61,294

 
$
175,893

 
$
240,915

 
Operating Income %
 
 
26
%
 
31
%
 
28
%
 
28
%
 
30
%
 
Days available
 
 
31,025

 
30,103

 
30,465

 
91,621

 
87,013

 
Days utilized
 
 
21,229

 
25,247

 
21,710

 
65,078

 
73,626

 
Utilization %
 
 
68
%
 
84
%
 
71
%
 
71
%
 
85
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Products
 
Revenue
 
 
$
220,039

 
$
336,745

 
$
240,057

 
$
700,825

 
$
924,007

 
Gross Margin
 
 
$
64,078

 
$
105,406

 
$
62,465

 
$
196,310

 
$
280,093

 
Operating Income
 
 
$
46,079

 
$
83,430

 
$
42,286

 
$
138,379

 
$
217,443

 
Operating Income %
 
 
21
%
 
25
%
 
18
%
 
20
%
 
24
%
Backlog at end of period
 
 
$
736,000

 
$
768,000

 
$
703,000

 
$
736,000

 
$
768,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Projects
 
Revenue
 
 
$
147,191

 
$
151,560

 
$
172,324

 
$
473,087

 
$
425,949

 
Gross Margin
 
 
$
34,830

 
$
31,749

 
$
36,989

 
$
98,719

 
$
86,280

 
Operating Income
 
 
$
28,841

 
$
27,339

 
$
30,607

 
$
81,724

 
$
73,739

 
Operating Income %
 
 
20
%
 
18
%
 
18
%
 
17
%
 
17
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Integrity
 
 
Revenue
 
 
$
95,609

 
$
134,734

 
$
95,509

 
$
289,611

 
$
389,122

 
Gross Margin
 
 
$
15,009

 
$
27,687

 
$
11,750

 
$
39,558

 
$
72,760

 
Operating Income
 
 
$
8,549

 
$
19,583

 
$
4,576

 
$
18,150

 
$
49,583

 
Operating Income %
 
 
9
%
 
15
%
 
5
%
 
6
%
 
13
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advanced Technologies
 
Revenue
 
 
$
82,348

 
$
64,665

 
$
85,987

 
$
242,866

 
$
192,141

 
Gross Margin
 
 
$
6,974

 
$
7,439

 
$
10,945

 
$
27,319

 
$
20,763

 
Operating Income
 
 
$
1,635

 
$
2,863

 
$
6,267

 
$
12,922

 
$
6,016

 
Operating Income %
 
 
2
%
 
4
%
 
7
%
 
5
%
 
3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin expenses
 
 
$
(13,259
)
 
$
(28,937
)
 
$
(24,736
)
 
$
(64,723
)
 
$
(82,721
)
Operating income expenses
 
 
$
(24,057
)
 
$
(39,647
)
 
$
(37,090
)
 
$
(99,014
)
 
$
(111,605
)
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
 
Revenue
 
 
$
743,613

 
$
973,089

 
$
810,303

 
$
2,340,688

 
$
2,740,697

 
Gross Margin
 
 
$
168,313

 
$
241,855

 
$
167,545

 
$
499,307

 
$
649,561

 
Operating Income
 
 
$
113,464

 
$
181,918

 
$
107,940

 
$
328,054

 
$
476,091

 
Operating Income %
 
 
15
%
 
19
%
 
13
%
 
14
%
 
17
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SELECTED CASH FLOW INFORMATION
 
 
 
 
Capital expenditures, including acquisitions
 
 
$
44,428

 
$
79,788

 
$
275,347

 
$
369,187

 
$
341,276

Depreciation and Amortization
 
 
$
62,022

 
$
59,621

 
$
63,483

 
$
183,508

 
$
169,029

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





 
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
 
 
 
 
 
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
 
Sep 30, 2015
 
Sep 30, 2014
 
Jun 30, 2015
 
Sep 30, 2015
 
Sep 30, 2014
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
$
68,539

 
$
124,338

 
$
65,468

 
$
203,506

 
$
325,858

Depreciation and Amortization
62,022

 
59,621

 
63,483

 
183,508

 
169,029

 
 
Subtotal
130,561

 
183,959

 
128,951

 
387,014

 
494,887

Interest Expense, net of Interest Income
6,167

 
547

 
6,161

 
18,260

 
1,236

Amortization included in Interest Expense
(266
)
 
—

 
(265
)
 
(797
)
 
—

Provision for Income Taxes
31,226

 
56,650

 
29,828

 
92,718

 
148,463

 
 
EBITDA
$
167,688

 
$
241,156

 
$
164,675

 
$
497,195

 
$
644,586

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 Estimates
 
 
 
 
 
 
 
Low
 
High
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
Net Income
$
255,000

 
$
265,000

 
 
 
 
 
 
Depreciation and Amortization
245,000

 
250,000

 
 
 
 
 
 
 
 
Subtotal
500,000

 
515,000

 
 
 
 
 
 
Interest Expense, net of Interest Income
25,000

 
25,000

 
 
 
 
 
 
Provision for Income Taxes
115,000

 
120,000

 
 
 
 
 
 
 
 
EBITDA
$
640,000

 
$
660,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Exhibit 99.2




Oceaneering Declares Quarterly Dividend


October 28, 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 December 18, 2015 to shareholders of record at the close of business on November 27, 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., 11911 FM 529, Houston, Texas 77041; Telephone 713-329-4670; [email protected].





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