Oceaneering Sees Record Quarterly Earnings
Oceaneering International reported record quarterly earnings. For the quarter ended June 30, 2007, on revenue of $432 million, Oceaneering generated net income of $47.9 million, or $0.86 per share. The substantial increase in quarterly earnings was attributable to improvements in operating income performance by each of its business segments.
Oceaneering reported revenue of $311 million and net income of $30.6 million, or $0.56 per share, for the second quarter of 2006. For the first quarter of 2007, Oceaneering reported revenue of $344 million and net income of $33.2 million, or $0.60 per share.
Summary of Results (in thousands, except per share amounts) Three months ended Six months ended June 30, March 31, June 30, 2007 2006 2007 2007 2006 Revenues $432,041 $311,063 $344,004 $776,045 $600,572 Gross Margin $106,010 $71,957 $79,602 $185,612 $132,274 Operating Income $76,298 $47,899 $53,536 $129,834 $85,863 Net Income $47,873 $30,601 $33,166 $81,039 $56,103 Diluted Earnings Per Share $0.86 $0.56 $0.60 $1.46 $1.02 Weighted Average Number of Diluted Shares 55,678 55,088 55,474 55,593 4,932
The earnings growth from the second quarter of 2006 was led by Remotely Operated Vehicles (ROVs) and Subsea Products, which reflect Oceaneering's business focus on deepwater and subsea completion activity. The sequential rise was led by improvements in ROV and Subsea Projects. This quarter's results include a $2.8 million settlement, recorded in Mobile Offshore Production Systems revenue and gross margin, related to the previously announced contract termination for use of the PB San Jacinto.
T. Jay Collins, President and Chief Executive Officer, stated, "Our record quarterly earnings performance is evidence of the high demand we are experiencing for our subsea services and products and our strong operational execution. Earnings for the period were substantially above our guidance range as our ROV, Subsea Projects, and Inspection businesses performed above our expectations, with each achieving record operating income results.
When compared to the first quarter of this year, ROV operating income increased over 30%. We raised our average revenue per day-on-hire to $8,300 and increased our number of days on hire by growing our fleet size and increasing fleet utilization to 87%. During the quarter we put 13 new vehicles into service to meet rising market demand and disposed of four systems. At the end of June we had 202 ROVs in our fleet.
Subsea Projects operating income improved due to an increase in hurricane damage-related project activity and demand growth for our deepwater subsea equipment installation and inspection, repair, and maintenance services. In view of Subsea Projects' strong second quarter performance and our contract visibility, we now believe this segment's operating income in 2007 will exceed the record set in 2006.
Inspection financial results sequentially increased as a result of normal seasonality and strong overall demand growth in most of the geographical markets we serve. We continued to benefit from our ongoing efforts to improve pricing and sell more value-added services. Given Inspection's first half performance, we now expect the annual 2007 operating income contribution from this segment to be higher than in 2006.
Subsea Products' record operating income performance surpassed the first quarter and doubled that of the second quarter of 2006. Year-to-date operating profit from this segment is more than 75% of our 2006 annual total, and we anticipate even better earnings performance in the second half of this year. At quarter-end our backlog was $378 million, up $133 million from a year ago and slightly more than last quarter.
Taking into consideration our earnings during the second quarter of 2007 and our improved Subsea Projects and Inspection annual operating income outlooks, we are raising our 2007 EPS guidance range. We now forecast record EPS for 2007 in the range of $2.95 to $3.10, a growth rate of more than 30% over our 2006 record. For the third quarter of 2007 we are forecasting EPS of $0.80 to $0.88.
Looking beyond 2007, we anticipate demand for our deepwater services and products will continue to rise from current levels and consequently believe that our business prospects for the next several years are excellent."
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