Oceaneering reported revenue of $337 million and net income of $38.5 million, or $0.70 per share, for the third quarter of 2006. For the second quarter of 2007, Oceaneering reported revenue of $432 million and net income of $47.9 million, or $0.86 per share.
Higher operating income performances by Remotely Operated Vehicles (ROVs), Subsea Products, and Subsea Projects generated the earnings growth over the levels achieved in both the third quarter of 2006 and the second quarter of 2007. The ROV and Subsea Products improvements reflect Oceaneering's business focus on deepwater and subsea completion activity. The Subsea Projects increase was attributable to additional work associated with Gulf of Mexico deepwater infrastructure and damage caused by hurricanes in 2005.
T. Jay Collins, President and Chief Executive Officer, stated, "We are very pleased with this quarter's record results. Demand for our subsea services and products remained at a very high level and we continued to have strong operational execution. Year-to-date we have earned more net income than in all of last year and are on track to achieve earnings growth of 40% for the year 2007 over 2006.
"Earnings for the quarter were above our guidance range as our ROV, Subsea Products, and Subsea Projects business performed above what we had anticipated, with each achieving record quarterly operating income results.
"ROV operating income improved as our average revenue per day-on-hire surpassed $8,600. Our year-to-date ROV pricing is up over 15% and the number of ROV days on hire has increased by more than 10% compared to the first three quarters of 2006. Our ROV fleet utilization was 88%, equaling our record set during the third quarter of 2005.
"Subsea Products operating income rose on higher umbilical manufacturing throughput and continued growth in demand for our specialty subsea products. At quarter-end our backlog was $344 million, up from $281 million a year ago and down from $378 million last quarter.
"Subsea Projects operating income grew on the strength of hurricane damage-related project activity, particularly on the previously announced contracts to support platform decommissioning operations.
"Since our last quarterly earnings release our assessment for 2007 has improved and we now expect to achieve record EPS in the range of $3.15 to $3.25, a growth of approximately 40% over our 2006 record. For the fourth quarter, we are forecasting EPS of $0.73 to $0.83 in anticipation of normal seasonal demand declines for our Subsea Projects and Inspection services. Furthermore, two of our dive support vessels will be in drydock during a portion of the quarter undergoing regulatory inspections.
"We are forecasting EPS for 2008 in the range of $3.50 to $3.80. The 2008 growth in EPS is anticipated to be led by profit improvements from ROVs, due to higher average pricing and an increase in average fleet size, and Subsea Products, due to increased demand for all of our product line offerings. The operating income contribution from our Subsea Projects segment is projected to decline approximately $20 million. We anticipate decreasing demand for our diving and shallow-water vessel services as hurricane damage projects near completion. Additionally, four of our six company-owned vessels, including all three of our deepwater boats, will be temporarily out of service during the year undergoing regulatory drydock inspections.
"Looking beyond 2008, we anticipate demand for our deepwater services and products will continue to rise and, consequently, believe that our business prospects for the next several years are excellent."
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