HOUSTON, April 29, 2019 /PRNewswire/ -- Oceaneering International, Inc. ("Oceaneering") (NYSE:OII) today reported a net loss of $24.8 million, or $(0.25) per share, on revenue of $494 million for the three months ended March 31, 2019. Excluding the impacts of $0.9 million of adjustments, comprised of foreign currency exchange gains and tax adjustments related to discrete tax items, adjusted net loss was $23.9 million, or $(0.24) per share.
For the fourth quarter of 2018, Oceaneering reported a net loss of $64.1 million, or $(0.65) per share, on revenue of $495 million. Adjusted net income was $7.3 million, or $0.07 per share, reflecting the impact of $71.4 million of adjustments, primarily a $76.4 million pre-tax goodwill impairment in its Subsea Projects segment.
Adjusted operating income (loss), operating margins, net income (loss) and earnings (loss) per share, EBITDA and adjusted EBITDA (as well as EBITDA and adjusted EBITDA margins and forecasted 2019 EBITDA) and free cash flow are non-GAAP measures that exclude the impacts of certain identified items. Reconciliations to the corresponding GAAP measures are shown in the tables Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS), EBITDA and EBITDA Margins, 2019 EBITDA Estimates, Free Cash Flow, Adjusted Operating Income (Loss) and Margins by Segment, and EBITDA and Adjusted EBITDA and Margins by Segment. These tables are included below under the caption Reconciliations of Non-GAAP to GAAP Financial Information.
Summary of Results | ||||||||||||
(in thousands, except per share amounts) | ||||||||||||
Three Months Ended | ||||||||||||
Mar 31, | Dec 31, | |||||||||||
2019 | 2018 | 2018 | ||||||||||
Revenue | $ | 493,886 | $ | 416,413 | $ | 495,095 | ||||||
Gross Margin | 27,587 | 18,828 | 33,035 | |||||||||
Income (Loss) from Operations | (21,714) | (27,149) | (97,144) | |||||||||
Net Income (Loss) | (24,827) | (49,133) | (64,139) | |||||||||
Diluted Earnings (Loss) Per Share | $ | (0.25) | $ | (0.50) | $ | (0.65) | ||||||
Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, "We are very pleased that our first quarter results exceeded expectations. Higher than expected activity and good execution within our energy-focused businesses were key factors in achieving this performance. Each of our operating segments generated positive EBITDA, and our consolidated adjusted EBITDA of $30.4 million surpassed published consensus estimates.
"Based on our first quarter results and our expectations for the remainder of 2019, we are narrowing our adjusted EBITDA guidance by raising the low end of the previous range, and now expect to generate between $150 million and $180 million of adjusted EBITDA in 2019. We continue to project positive free cash flow for the year.
"Sequentially, our first quarter ROV revenues and operating results increased. ROV EBITDA margin increased to 29% and utilization increased to 53%. Average ROV revenues per day on hire increased 5% due largely to reimbursement of costs associated with mobilizations and installations. At the end of March, our ROV fleet count remained at 275 vehicles. Our fleet use during the quarter was 69% in drill support and 31% in vessel-based activity. At the end of March, we had ROV contracts on 97 of the 159 floating rigs under contract, resulting in a drill support market share of 61%.
"Compared to the fourth quarter, Subsea Products first quarter operating results improved on flat quarterly revenues. This improvement was largely due to higher levels of service and rental activity at improved margins achieved by good execution. Our Subsea Products backlog at March 31, 2019 was $464 million, compared to our December 31, 2018 backlog of $332 million. The backlog increase was largely attributable to umbilical and related hardware order intake. Our book-to-bill ratio for the trailing twelve months was 1.4.
"Sequentially, Subsea Projects operating results improved on flat revenue due to favorable project mix and good execution. Asset Integrity operating income was near breakeven on slightly lower revenue.
"For our non-energy segment, Advanced Technologies, first quarter 2019 operating results declined sequentially, due primarily to a lower number of job completions and contract close-outs in our commercial businesses. In addition, as anticipated, Unallocated Expenses were higher in the first quarter of 2019 compared to the fourth quarter of 2018.
"During the quarter, we generated $19.1 million of cash flow provided by operating activities, and utilized $30.0 million of cash for maintenance and growth capital expenditures, resulting in a use of $10.8 million in cash during the quarter.
"For the second quarter, compared to the first quarter, we anticipate quarterly operating profitability and improvement in our ROV, Subsea Projects, and Advanced Technologies segments and relatively flat quarter-to-quarter results in our Subsea Products and Asset Integrity segments. Unallocated Expenses are forecast to be in the mid-$30 million range, consistent with the first quarter. On a consolidated basis, we expect the sequential quarterly results to improve substantially, with EBITDA being in line with current published consensus estimates.
"For the full year of 2019, at the segment level, we forecast overall ROV fleet utilization in the upper 50% range and ROV EBITDA margin to remain relatively flat. For Subsea Products, we continue to expect: good order intake during the first half of 2019 driving increased activity in the second half of 2019; a book-to-bill ratio in the range of 1.25 to 1.4 for the full year; and operating margins in the mid-single digit range. We expect good activity levels in our Subsea Projects segment for the remainder of 2019. For Asset Integrity, we expect a slight increase in activity during the second half of 2019 and operating margins in the low-single digit range.
"Our outlook for the energy segments, along with projected improvement in Advanced Technologies' operating results, give us confidence to narrow our 2019 EBITDA guidance. Our 2019 income tax payments are anticipated to be approximately $25 million, net."
This release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected business, financial performance and prospects of Oceaneering. More specifically, the forward-looking statements in this press release include the statements concerning Oceaneering's: outlook and EBITDA guidance for the full year and second quarter of 2019; projected positive free cash flow; anticipated consolidated EBITDA and segment EBITDA contributions; expected segment contributions to 2019 operating results; forecasted ROV fleet utilization and EBITDA margins; Subsea Products backlog and expectations of Subsea Products margins and book-to-bill ratio; forecasted Unallocated Expenses; and overall view of the markets. The forward-looking statements included in this release are based on our current expectations and are subject to certain risks, assumptions, trends and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Among the factors that could cause actual results to differ materially include: factors affecting the level of activity in the oil and gas industry, including worldwide demand for and prices of oil and natural gas, oil and natural gas production growth and the supply and demand of offshore drilling rigs; decisions about offshore developments to be made by oil and gas exploration, development and production companies; the use of subsea completions and our ability to capture associated market share; general economic and business conditions and industry trends; the strength of the industry segments in which we are involved; cancellations of contracts, change orders and other contractual modifications and the resulting adjustments to our backlog; collections from our customers; our future financial performance, including as a result of the availability, terms and deployment of capital; the consequences of significant changes in currency exchange rates; the volatility and uncertainties of credit markets; changes in tax laws, regulations and interpretation by taxing authorities; changes in, or our ability to comply with, other laws and governmental regulations, including those relating to the environment; the continued availability of qualified personnel; our ability to obtain raw materials and parts on a timely basis and, in some cases, from limited sources; operating risks normally incident to offshore exploration, development and production operations; hurricanes and other adverse weather and sea conditions; cost and time associated with drydocking of our vessels; the highly competitive nature of our businesses; adverse outcomes from legal or regulatory proceedings; the risks associated with integrating businesses we acquire; rapid technological changes; and social, political, military and economic situations in foreign countries where we do business and the possibilities of civil disturbances, war, other armed conflicts or terrorist attacks. For a more complete discussion of these and other risk factors, please see Oceaneering's latest annual report on Form 10‑K and filed with the Securities and Exchange Commission.
Oceaneering is a global provider of engineered services and products, primarily to the offshore energy industry. Through the use of its applied technology expertise, Oceaneering also serves the defense, entertainment, and aerospace industries.
For more information on Oceaneering, please visit www.oceaneering.com.
Contact:
Mark Peterson
Vice President, Corporate Development and Investor Relations
Oceaneering International, Inc.
713-329-4507
[email protected]
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||
Mar 31, 2019 | Dec 31, 2018 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Current Assets (including cash and cash equivalents of $341,763 and $354,259) | $ | 1,220,392 | $ | 1,244,889 | |||||||||||||||
Net Property and Equipment | 955,739 | 964,670 | |||||||||||||||||
Other Assets | 795,387 | 615,439 | |||||||||||||||||
TOTAL ASSETS | $ | 2,971,518 | $ | 2,824,998 | |||||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||||
Current Liabilities | $ | 500,311 | $ | 494,741 | |||||||||||||||
Long-Term Debt | 790,969 | 786,580 | |||||||||||||||||
Other Long-Term Liabilities | 288,738 | 128,379 | |||||||||||||||||
Equity | 1,391,500 | 1,415,298 | |||||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 2,971,518 | $ | 2,824,998 | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
For the Three Months Ended | |||||||||||||||||||
Mar 31, 2019 | Mar 31, 2018 | Dec 31, 2018 | |||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
Revenue | $ | 493,886 | $ | 416,413 | $ | 495,095 | |||||||||||||
Cost of services and products | 466,299 | 397,585 | 462,060 | ||||||||||||||||
Gross Margin | 27,587 | 18,828 | 33,035 | ||||||||||||||||
Selling, general and administrative expense | 49,301 | 45,977 | 53,730 | ||||||||||||||||
Goodwill impairment | — | — | 76,449 | ||||||||||||||||
Income (loss) from Operations | (21,714) | (27,149) | (97,144) | ||||||||||||||||
Interest income | 2,604 | 2,592 | 1,775 | ||||||||||||||||
Interest expense | (9,424) | (9,371) | (9,684) | ||||||||||||||||
Equity earnings (losses) of unconsolidated affiliates | (164) | (843) | (519) | ||||||||||||||||
Other income (expense), net | 719 | (8,474) | (2,390) | ||||||||||||||||
Income (loss) before Income Taxes | (27,979) | (43,245) | (107,962) | ||||||||||||||||
Provision (benefit) for income taxes | (3,152) | 5,888 | (43,823) | ||||||||||||||||
Net Income (loss) | $ | (24,827) | $ | (49,133) | $ | (64,139) | |||||||||||||
Weighted average diluted shares outstanding | 98,714 | 98,383 | 98,534 | ||||||||||||||||
Diluted Earnings (Loss) per Share | $ | (0.25) | $ | (0.50) | $ | (0.65) | |||||||||||||
The above Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q. |