Form 8-K OCEANEERING INTERNATIONA For: Oct 29
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�29, 2014
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)) |
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Item 2.02����Results of Operations and Financial Condition.
On October�29, 2014, we issued a press release announcing our earnings for the third quarter ended September�30, 2014. 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�29, 2014, 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�19, 2014 to shareholders of record at the close of business on November�28, 2014. 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.
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Exhibit 99.1 | Press Release of Oceaneering International, Inc., dated October 29, 2014 regarding Item�2.02 | |
Exhibit 99.2 | Press Release of Oceaneering International, Inc., dated October 29, 2014 regarding Item�8.01 | |
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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�29, 2014 | By: | �����������������������/S/ ROBERT P. MINGOIA |
Robert P. Mingoia | |||
Vice President and Treasurer | |||
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Exhibit Index
Exhibit No. | Description | |
Exhibit 99.1 | Press Release of Oceaneering International, Inc., dated October 29, 2014 regarding Item�2.02 | |
Exhibit 99.2 | Press Release of Oceaneering International, Inc., dated October 29, 2014 regarding Item�8.01 | |
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Exhibit 99.1
Oceaneering Reports Record Quarterly Earnings
--�Repurchases 3,000,000 Shares of Common Stock
-- Narrows 2014 EPS Guidance Range to $3.95 to $4.00
-- Initiates 2015 EPS Guidance Range of $4.10 to $4.50
October 29, 2014 - Houston, Texas - Oceaneering International, Inc. (NYSE: OII) today reported record earnings for the third quarter ended September 30, 2014. On revenue of $973.1�million, Oceaneering generated net income of $124.3�million, or $1.16�per share.
For the third quarter of 2013, Oceaneering reported revenue of $853.3�million and net income of $104.4�million, or $0.96�per share. For the second quarter of 2014, Oceaneering reported revenue of $927.4�million and net income of $110.3�million, or $1.02�per share.
Summary of Results
(in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2014 | 2013 | |||||||||||||||
Revenue | $ | 973,089 | $ | 853,297 | $ | 927,407 | $ | 2,740,697 | $ | 2,392,221 | |||||||||
Gross Margin | 241,855 | 205,492 | 218,215 | 649,561 | 567,731 | ||||||||||||||
Income from Operations | 181,918 | 153,736 | 161,311 | 476,091 | 408,363 | ||||||||||||||
Net Income | $ | 124,338 | $ | 104,407 | $ | 110,295 | $ | 325,858 | $ | 278,067 | |||||||||
Diluted Earnings Per Share (EPS) | $1.16 | $0.96 | $1.02 | $3.01 | $2.56 | ||||||||||||||
Sequentially, quarterly EPS was 14% higher on operating income improvements from all business segments, led by Remotely Operated Vehicles (ROV). Year over year, quarterly EPS increased by 21% on the strength of operating income improvements from Subsea Products and ROV. EPS for the first nine months of 2014 was up 18% over the comparable period in 2013.
M. Kevin McEvoy, President and Chief Executive Officer, stated, We achieved record EPS for the quarter, demonstrating the high level of demand we experienced for our subsea services and products. Our results were highlighted by all-time high operating income from our ROV and Subsea Products businesses.
We remain on track to achieve record EPS for 2014. For the fourth quarter, we are projecting EPS of $0.94 to $0.99. Given this outlook and our year-to-date performance, we are narrowing our 2014 EPS guidance range to $3.95 to $4.00 from $3.95 to $4.05.
-�more�-
Compared to the second quarter of 2014, ROV operating income increased on higher global demand to support drilling and vessel-based projects and an improvement in operating margin. Our ROV days on hire for the quarter increased to a record high of over 25,200 and our operating margin improved to 31% from 28% due largely to a change in geographic operations mix, resulting in a higher average revenue per day-on-hire. During the quarter we put 14 new vehicles into service and retired five. At the end of September, we had 332 vehicles in our fleet, compared to 302 one year ago.
Subsea Products operating income was higher due to increased demand for tooling and subsea work systems. Products backlog at quarter-end was $768�million, compared to our June 30 backlog of $850�million and $857�million one year ago.
Subsea Projects operating income increased due to a seasonal uptick in U.S. Gulf of Mexico demand for diving services. Asset Integrity operating income improved due to activity increases in the United Kingdom and Australia, and a $2.5 million gain on the sale of a non-core operation that was part of our AGR�FO acquisition in 2011. Advanced Technologies income increased due to higher profitability on vessel maintenance and engineering services for the U.S. Navy.
During the third quarter, we repurchased 3.0 million shares of our common stock at a cost of $201�million. Year to date, we have repurchased 3.5 million shares at a cost of $237 million. The decision to repurchase our shares reflects our belief that Oceaneerings stock has been undervalued. It also underscores our willingness to return cash to our shareholders and confidence in Oceaneerings financial strength and future business prospects. We have 5.4 million shares remaining under our current Board of Directors share repurchase authorization. Year to date, we have spent $318 million on share repurchases and cash dividends.
As previously announced, we reached agreement for $800 million of committed bank facilities, consisting of a $500 million five-year revolver and a $300 million three-year delayed-draw term loan, to provide us with increased financial flexibility.
We are initiating 2015 EPS guidance with a range of $4.10 to $4.50, based on an average of 105.7�million diluted shares. While we are facing widely publicized concerns regarding the future of deepwater activity, our 2015 guidance is based on assumptions that service and product demand to perform life-of-field activities and develop new fields will be higher than in 2014 and global floating rig demand will be about the same.
Our liquidity and projected cash flow provide us with resources to invest in Oceaneerings growth and return cash to our shareholders, and we intend to continue doing so. We generated EBITDA of $241�million during the quarter and $645�million year to date. For 2014 and 2015, we anticipate generating EBITDA of at least $845�million and $880 million, respectively.
-�more�-
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Compared to 2014, we anticipate all of our business segments will have higher operating income in 2015, notably: ROV on greater service demand to support drilling and vessel-based projects; Subsea Products on the strength of higher demand for tooling and installation and workover control system services; and Subsea Projects on growth in deepwater intervention service activity in the GOM and diving in the GOM and offshore Angola.
For 2015 and beyond, we believe that the oil and gas industry will continue its investment in deepwater projects. Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs. With our existing assets and opportunities to add new assets, we are well positioned to supply a wide range of the services and products required to safely support the deepwater efforts of our customers.
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 Oceaneerings: expectation of achieving record EPS in 2014; fourth quarter EPS guidance range; revised 2014 EPS guidance range; statements about backlog, to the extent backlog may be an indicator of future revenue or profitability; belief that its stock has been undervalued; confidence in its financial strength and future business prospects; increased financial flexibility provided by its announced committed bank facilities; 2015 EPS guidance range; projected average diluted shares for 2015; assumptions regarding 2015 market demand relative to 2014; belief that its liquidity and projected cash flow provide resources to invest in the companys growth and return cash to shareholders, and intention to continue doing so; anticipated minimum 2014 and 2015 EBITDA; anticipation that all its business segments will have higher operating income in 2015, and the basis for such increases in ROVs, Subsea Products, and Subsea Projects; belief that the oil and gas industry will continue its investment in deepwater projects; and belief that deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs. 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 Oceaneerings 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 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, [email protected]. A live webcast of the companys earnings release conference call, scheduled for Thursday, October 30, 2014 at 11:00�a.m. Eastern, can be accessed at www.oceaneering.com/investor-relations/.
-�Tables follow on next page�-
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OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||||
Sep�30, 2014 | Dec�31, 2013 | ||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||
Current Assets (including cash and cash equivalents of $74,592 and $91,430) | $ | 1,558,389 | $ | 1,433,275 | |||||||||||||||||||||
Net Property and Equipment | 1,314,764 | 1,189,099 | |||||||||||||||||||||||
Other Assets | 518,302 | 506,126 | |||||||||||||||||||||||
TOTAL ASSETS | $ | 3,391,455 | $ | 3,128,500 | |||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||
Current Liabilities | $ | 725,542 | $ | 727,088 | |||||||||||||||||||||
Long-term Debt | 250,000 | ||||||||||||||||||||||||
Other Long-term Liabilities | 397,040 | 357,972 | |||||||||||||||||||||||
Shareholders' Equity | 2,018,873 | 2,043,440 | |||||||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 3,391,455 | $ | 3,128,500 | |||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||
Sep�30, 2014 | Sep�30, 2013 | Jun�30, 2014 | Sep�30, 2014 | Sep�30, 2013 | |||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||||
Revenue | $ | 973,089 | $ | 853,297 | $ | 927,407 | $ | 2,740,697 | $ | 2,392,221 | |||||||||||||||
Cost of services and products | 731,234 | 647,805 | 709,192 | 2,091,136 | 1,824,490 | ||||||||||||||||||||
Gross Margin | 241,855 | 205,492 | 218,215 | 649,561 | 567,731 | ||||||||||||||||||||
Selling, general and administrative expense | 59,937 | 51,756 | 56,904 | 173,470 | 159,368 | ||||||||||||||||||||
Income from Operations | 181,918 | 153,736 | 161,311 | 476,091 | 408,363 | ||||||||||||||||||||
Interest income | 130 | 39 | 41 | 250 | 472 | ||||||||||||||||||||
Interest expense | (677 | ) | (851 | ) | (398 | ) | (1,486 | ) | (2,167 | ) | |||||||||||||||
Equity earnings (losses) of unconsolidated affiliates | 9 | 134 | 8 | (19 | ) | 109 | |||||||||||||||||||
Other income (expense), net | (392 | ) | (639 | ) | (417 | ) | (515 | ) | (840 | ) | |||||||||||||||
Income before Income Taxes | 180,988 | 152,419 | 160,545 | 474,321 | 405,937 | ||||||||||||||||||||
Provision for income taxes | 56,650 | 48,012 | 50,250 | 148,463 | 127,870 | ||||||||||||||||||||
Net Income | $ | 124,338 | $ | 104,407 | $ | 110,295 | $ | 325,858 | $ | 278,067 | |||||||||||||||
Weighted average diluted shares outstanding | 107,407 | 108,783 | 108,421 | 108,180 | 108,703 | ||||||||||||||||||||
Diluted Earnings per Share | $ | 1.16 | $ | 0.96 | $ | 1.02 | $ | 3.01 | $ | 2.56 | |||||||||||||||
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, 2014 | Sep�30, 2013 | Jun�30, 2014 | Sep�30, 2014 | Sep�30, 2013 | ||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Remotely Operated Vehicles | Revenue | $ | 285,385 | $ | 254,979 | $ | 268,274 | $ | 809,478 | $ | 726,770 | |||||||||||||
Gross Margin | $ | 98,511 | $ | 85,193 | $ | 86,685 | $ | 272,386 | $ | 241,527 | ||||||||||||||
Operating Income | $ | 88,350 | $ | 74,710 | $ | 75,825 | $ | 240,915 | $ | 209,764 | ||||||||||||||
Operating Income % | 31 | % | 29 | % | 28 | % | 30 | % | 29 | % | ||||||||||||||
Days available | 30,103 | 27,567 | 29,059 | 87,013 | 80,666 | |||||||||||||||||||
Days utilized | 25,247 | 23,684 | 24,510 | 73,626 | 67,750 | |||||||||||||||||||
Utilization % | 84 | % | 86 | % | 84 | % | 85 | % | 84 | % | ||||||||||||||
Subsea Products | Revenue | $ | 336,745 | $ | 263,671 | $ | 327,252 | $ | 924,007 | $ | 735,692 | |||||||||||||
Gross Margin | $ | 105,406 | $ | 80,896 | $ | 99,558 | $ | 280,093 | $ | 225,630 | ||||||||||||||
Operating Income | $ | 83,430 | $ | 61,737 | $ | 79,497 | $ | 217,443 | $ | 166,576 | ||||||||||||||
Operating Income % | 25 | % | 23 | % | 24 | % | 24 | % | 23 | % | ||||||||||||||
Backlog at end of period | $ | 768,000 | $ | 857,000 | $ | 850,000 | $ | 768,000 | $ | 857,000 | ||||||||||||||
Subsea Projects | Revenue | $ | 151,560 | $ | 143,132 | $ | 136,199 | $ | 425,949 | $ | 349,782 | |||||||||||||
Gross Margin | $ | 31,749 | $ | 33,992 | $ | 30,122 | $ | 86,280 | $ | 76,904 | ||||||||||||||
Operating Income | $ | 27,339 | $ | 30,700 | $ | 25,863 | $ | 73,739 | $ | 66,310 | ||||||||||||||
Operating Income % | 18 | % | 21 | % | 19 | % | 17 | % | 19 | % | ||||||||||||||
Asset Integrity | Revenue | $ | 134,734 | $ | 118,657 | $ | 130,229 | $ | 389,122 | $ | 358,246 | |||||||||||||
Gross Margin | $ | 27,687 | $ | 22,094 | $ | 23,207 | $ | 72,760 | $ | 64,662 | ||||||||||||||
Operating Income | $ | 19,583 | $ | 16,373 | $ | 15,915 | $ | 49,583 | $ | 45,351 | ||||||||||||||
Operating Income % | 15 | % | 14 | % | 12 | % | 13 | % | 13 | % | ||||||||||||||
Advanced Technologies | Revenue | $ | 64,665 | $ | 72,858 | $ | 65,453 | $ | 192,141 | $ | 221,731 | |||||||||||||
Gross Margin | $ | 7,439 | $ | 11,170 | $ | 5,597 | $ | 20,763 | $ | 39,423 | ||||||||||||||
Operating Income | $ | 2,863 | $ | 6,400 | $ | 198 | $ | 6,016 | $ | 25,241 | ||||||||||||||
Operating Income % | 4 | % | 9 | % | % | 3 | % | 11 | % | |||||||||||||||
Unallocated Expenses | ||||||||||||||||||||||||
Gross margin expenses | $ | (28,937 | ) | $ | (27,853 | ) | $ | (26,954 | ) | $ | (82,721 | ) | $ | (80,415 | ) | |||||||||
Operating income expenses | $ | (39,647 | ) | $ | (36,184 | ) | $ | (35,987 | ) | $ | (111,605 | ) | $ | (104,879 | ) | |||||||||
TOTAL | Revenue | $ | 973,089 | $ | 853,297 | $ | 927,407 | $ | 2,740,697 | $ | 2,392,221 | |||||||||||||
Gross Margin | $ | 241,855 | $ | 205,492 | $ | 218,215 | $ | 649,561 | $ | 567,731 | ||||||||||||||
Operating Income | $ | 181,918 | $ | 153,736 | $ | 161,311 | $ | 476,091 | $ | 408,363 | ||||||||||||||
Operating Income % | 19 | % | 18 | % | 17 | % | 17 | % | 17 | % | ||||||||||||||
SELECTED CASH FLOW INFORMATION | ||||||||||||||||||||||||
Capital expenditures, including acquisitions | $ | 79,788 | $ | 105,119 | $ | 157,450 | $ | 341,276 | $ | 280,434 | ||||||||||||||
Depreciation and Amortization | $ | 59,621 | $ | 50,948 | $ | 56,057 | $ | 169,029 | $ | 150,973 | ||||||||||||||
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, 2014 | Sep�30, 2013 | Jun�30, 2014 | Sep�30, 2014 | Sep�30, 2013 | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Net Income | $ | 124,338 | $ | 104,407 | $ | 110,295 | $ | 325,858 | $ | 278,067 | |||||||||||
Depreciation and Amortization | 59,621 | 50,948 | 56,057 | 169,029 | 150,973 | ||||||||||||||||
Subtotal | 183,959 | 155,355 | 166,352 | 494,887 | 429,040 | ||||||||||||||||
Interest Income/Expense, Net | 547 | 812 | 357 | 1,236 | 1,695 | ||||||||||||||||
Provision for Income Taxes | 56,650 | 48,012 | 50,250 | 148,463 | 127,870 | ||||||||||||||||
EBITDA | $ | 241,156 | $ | 204,179 | $ | 216,959 | $ | 644,586 | $ | 558,605 | |||||||||||
2014 Estimates | 2015 Estimates | ||||||||||||||||||||
Low | High | Low | High | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||
Net Income | $ | 425,000 | $ | 430,000 | $ | 435,000 | $ | 475,000 | |||||||||||||
Depreciation and Amortization | 225,000 | 230,000 | 240,000 | 250,000 | |||||||||||||||||
Subtotal | 650,000 | 660,000 | 675,000 | 725,000 | |||||||||||||||||
Interest Income/Expense, Net | 5,000 | 5,000 | |||||||||||||||||||
Provision for Income Taxes | 195,000 | 195,000 | 200,000 | 215,000 | |||||||||||||||||
EBITDA | $ | 845,000 | $ | 855,000 | $ | 880,000 | $ | 945,000 | |||||||||||||
Exhibit 99.2
Oceaneering Declares Quarterly Dividend
October�29, 2014 - 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�19, 2014 to shareholders of record at the close of business on November�28, 2014.
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;
E-Mail [email protected].