Form 8-K OCEANEERING INTERNATIONA For: Sep 01

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September 1, 2015 10:48 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):                September 1, 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 7.01    Regulation FD Disclosure.

During the morning of September 1, 2015, Marvin J. Migura, our Executive Vice President, is delivering a prepared statement to investors at the 2015 Morgan Stanley Summer Houston Energy Summit in Houston, TX. A copy of that statement is included as Exhibit 99.1 to this report.
The reconciliation of the non-GAAP terms adjusted diluted earnings per share and EBITDA used in Mr. Migura's statement can be found in Exhibit 99.1 of our Current Report on Form 8-K dated July 22, 2015.
The information furnished pursuant to this Item 7.01 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.
Please note that certain statements in the prepared statement are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995 and are subject to the "Safe Harbor" provisions of those statutes. Forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "plan," "guidance," "forecast," "budget," "goal" or other words that convey the uncertainty of future events or outcomes. Among other items, the forward-looking statements in the prepared statement included statements regarding:
•
Our previously-announced earnings estimate for the second half of 2015 and the components of that estimate;
•
Our belief that our second half outlook by business segment, including our assumptions and forecasts, we presented at our second quarter's earnings conference call may have been optimistic;
•
Our statement that expected work is being postponed and the summer call out market and rig contract renewals are weaker than we previously anticipated;
•
Our belief that our earnings can still be within our guidance range as lower Unallocated Expenses will somewhat mitigate the shortfall from operations;
•
Our plan to continue to adjust our cost structure in response to reduced demand for our services and products;
•
Our expectation that the second half reduction in Unallocated Expenses will come mostly from lower incentive and deferred compensation expense;
•
Our anticipated 2015 EBITDA;
•
Our expectation that our liquidity and projected cash flow provide us with ample resources to continue to invest in our future and return capital to our shareholders;
•
Our expectation to reduce our 2015 organic Capex to between $200 million and $250 million;
•
Our belief that we are financially positioned to make additional acquisition investments that augment our services and product offerings, or add technologies;
•
Our intent at this time to continue to pay a quarterly cash dividend, currently $0.27 per quarter;
•
Our statement that other uses of capital may include share repurchases;
•
Our intent to continue our practice of announcing share repurchases, if any, on a quarterly basis;
•
Our belief that our cash flow and liquidity position us well to manage our business through the current low commodity price environment; and
•
Our expectation that, longer-term, deepwater will continue to play a critical role in global oil supply growth required to replace depletion and meet expected demand.

2



These forward-looking statements are based on our current information and expectations 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:

•
worldwide demand for oil and gas;
•
general economic and business conditions and industry trends;
•
delays in deliveries of deepwater drilling rigs;
•
delays in deepwater development activities;
•
the ability of the Organization of Petroleum Exporting Countries, or OPEC, to set and maintain production levels;
•
the level of production by non-OPEC countries;
•
the ability of oil and gas companies to generate funds for capital expenditures;
•
domestic and foreign tax policy;
•
laws and governmental regulations that restrict exploration and development of oil and gas in various offshore jurisdictions;
•
technological changes;
•
the political environment of oil-producing regions;
•
the price and availability of alternative fuels; and
•
overall economic conditions.

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 additional information regarding these and other factors that could cause our actual results to differ materially from those expressed in our forward-looking statements, see our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2014 and our subsequent Quarterly Reports on Form 10-Q.

Except as required by applicable law, we do not undertake any obligation to update or revise any of our forward-looking statements, whether as a result of new information, future events or otherwise.




3


Item 9.01    Financial Statements and Exhibits.

Exhibits:

 
 
 
 
 
Registration or File Number
 
Form of Report
 
Report Date
 
Exhibit Number
 
 
 
 
 
 
 
 
 
 
 
 
 
99.1
 
Prepared statement by Marvin J. Migura to investors at the 2015 Morgan Stanley Summer Houston Energy Summit in Houston, TX
*
99.2
 
Reconciliation of GAAP to non-GAAP financial information used in Exhibit 99.1
 
1-10945
 
8-K
 
July 22, 2015
 
99.1
 
 
 
 
 
 
 
 
 
 
 
 
 
*
 
Exhibit previously filed with the Securities and Exchange Commission, as indicated, and
incorporated herein by reference.






4







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:
September 1, 2015
By:
/S/ ROBERT P. MINGOIA
 
 
 
Robert P. Mingoia
 
 
 
Vice President and Treasurer






5



Index to Exhibits

 
 
 
 
 
Registration or File Number
 
Form of Report
 
Report Date
 
Exhibit Number
 
 
 
 
 
 
 
 
 
 
 
 
 
99.1
 
Prepared statement by Marvin J. Migura to investors at the 2015 Morgan Stanley Summer Houston Energy Summit in Houston, TX
*
99.2
 
Reconciliation of GAAP to non-GAAP financial information used in Exhibit 99.1
 
1-10945
 
8-K
 
July 22, 2015
 
99.1
 
 
 
 
 
 
 
 
 
 
 
 
 
*
 
Exhibit previously filed with the Securities and Exchange Commission, as indicated, and
incorporated herein by reference.


6


Exhibit 99.1

OPENING

Good morning. It's a pleasure to be with you today to talk about Oceaneering.

I'd like to thank Ole for inviting us to participate in this conference again this year.

Just as a reminder, forward-looking remarks I make during the course of this meeting are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

I should also note that the adjusted EPS and EBITDA amounts I will be mentioning today are non-GAAP measures. We previously provided disclosures about these when we issued our second quarter earnings release. These disclosures, including reconciliations to the most comparable GAAP measures, were included in Exhibit 99.1 to our current report on Form 8-K filed with the SEC on July 22, 2015.


2015 OVERVIEW

About six weeks ago, we reported second quarter 2015 EPS of $0.66, which was within our guidance range.

However, these results included a couple of items totaling $0.10 per share that had not been considered in our guidance. Specifically, a $9.0 million, or $0.06 per share, inventory write-down and $6.0 million, or $0.04 per share, of net foreign currency exchange losses.

Therefore, normalized operating results during the quarter of an adjusted EPS of $0.76 surpassed what we had anticipated. This was attributable to performances by our ROV and Subsea Projects segments. ROV benefited from better-than-expected revenue per day on hire due to more vessel-based services, and Subsea Projects profited from higher U.S. Gulf of Mexico demand for deepwater intervention and diving services.

During our second quarter earnings conference call, we indicated that, during the second half of 2015, relative to the first half, we expected to generate:
•
Higher operating income from Subsea Products and Advanced Technologies;
•
Lower ROV and Subsea Projects results, and a
•
Similar contribution from Asset Integrity.

Subsea Products profits were expected to be up on:
•An increase in throughput at our umbilical manufacturing plants and higher distribution hardware sales; and,
•Higher tooling and subsea work system sales.

AdTech operating income was forecast to increase, primarily on higher commercial theme park activity.

ROV operating income was expected to decline on a decrease in the number of days on hire and lower average revenue per day on hire.

Our guidance assumed a projected fleet utilization for the second half of the year of around 67%. This estimate took into consideration our exposure on floating rigs, and "call out"




vessel-based work. If we achieve the expected second half utilization, our annual 2015 utilization would be about 70% --- compared to 83% in 2014.
 
Subsea Projects operating profit was anticipated to be substantially lower due to:
•
A reduction in work for BP offshore Angola, including the release of the Bourbon Evolution 803 that occurred at the end of April;
•
Lower pricing for deepwater intervention services in the U.S. Gulf of Mexico; and
•
Lower demand and pricing for diving services in the GOM.

We believe the full impact of competitive vessel pricing will be realized in the second half. The impact during the first half was muted due to higher dayrates on jobs in backlog carried over from 2014.

On our second quarter call, we continued to forecast income declines for all of our oilfield operating segments in 2015. We expected to report EPS of $1.34 to $1.54 during the second half of 2015, compared to $1.36 in the first half. Our mid-year EPS guidance, on a GAAP basis, was a range of $2.70 to $2.90, down 30% at the midpoint from 2014. As a reminder, our guidance does not assume any additional foreign currency exchange gains or losses.

Since our conference call, we realize our second half outlook by business segment may have been a bit optimistic. Expected work is being postponed and the summer "call out" market and rig contract renewals are weaker than anticipated. However, we currently believe our earnings can still be within our guidance range as lower Unallocated Expenses will somewhat mitigate the shortfall from operations. The second half reduction in Unallocated Expenses will come mostly from lower incentive and deferred compensation expense. And, we continue to adjust our cost structure in response to reduced demand for our services and products.

Given the challenging market conditions we face, we're still feeling pretty good about the results of our operations and our outlook -- relative to the results of others in our space.

We anticipate generating at least $660 million of EBITDA during 2015. At the end of June we had $191 million of cash and an undrawn $500 million revolver. We believe our liquidity and projected cash flow provide us ample resources to continue to invest in Oceaneering's future and return capital to our shareholders.

Our organic Capex estimate for this year remains between $200 million and $250 million, down from $387 million in 2014. Additionally, in early April, for approximately $230 million, we completed the acquisition of C & C Technologies, a global provider of survey, autonomous underwater vehicle, or AUV, and satellite-based positioning services.

We are financially positioned to make additional investments and will continue to pursue acquisitions that augment our services and products offerings, or add technologies.

At this time. we intend to continue paying a quarterly cash dividend, which is currently $0.27 per share. Other uses of capital may include share repurchases.

During the first half of 2015 we repurchased 2.0 million shares of our common stock at a cost of $101 million. At the end of June, we had remaining authorization to repurchase 8.0 million shares. We have no time constraint with regard to this authorization and will continue our practice of announcing share repurchases, if any, on a quarterly basis.





IN CONCLUSION:

2015 is turning out to be a very challenging year. The oil and gas industry in general, and the offshore market in particular, is experiencing demand destruction not seen since the mid‑80s. Given all of the unknowns in our markets, we have decided to give advanced notice that we will not be providing 2016 EPS guidance in our third quarter earnings release, as we have done in the past. We will continue to assess the market and perhaps provide a 2016 annual outlook when we report our 2015 year end results in February 2016.

We 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.

We appreciate everyone's interest in Oceaneering. I will now be happy to take any questions you may have.





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