Oceaneering’s profit stumbles and falls on low demand

Oceaneering International, Inc., a Houston-based subsea engineering company, has almost halved its third quarter 2015 profit when compared to the same period last year due to low demand. 

Namely, the company generated net income of $68.5 million in 3Q 2015, compared to $124 million in 3Q 2014.

Furthermore, Oceaneering reported revenues of $743.6 million, versus $973.1 million in the corresponding period last year.

According to Oceaneering, year over year, quarterly earnings decreased on significantly lower demand and pricing for most of its oilfield services and products. This was attributable to reductions in oil and gas industry capital and operating expenditures resulting from the steep decline in oil prices, said the company.

M. Kevin McEvoy, Chief Executive Officer, stated, “Our EPS for the quarter was within our guidance range, but was not achieved in the manner we initially anticipated. Compared to our earlier expectations, we experienced demand declines for tooling and Installation Workover and Control System services, as customer projects were either postponed or did not materialize. 

“Furthermore, contract renewals for floating rigs on which we provide Remotely Operated Vehicle (ROV) drill support services were weaker than forecast. The unfavorable impacts of these market developments were more than offset by better results from Subsea Projects and lower Unallocated Expenses.

“We generated EBITDA of $168 million during the quarter, $497 million year to date, and for 2015 we anticipate generating at least $640 million. At the end of the quarter, we had $271 million in cash and an undrawn $500 million revolver.

Outlook

Providing an outlook for the next quarter, McEvoy said: “Our outlook for the fourth quarter of this year is down from what we envisioned at the time of our last quarterly earnings release. We now expect to report fourth quarter EPS in the range of $0.54 to $0.60.

Oceaneering CEO said the company is reducing its 2015 EPS guidance to a range of $2.60 to $2.66 from $2.70 to $2.90, down 6% at the midpoints.

McEvoy added: “Based on the current number of floating rigs working and expectations for further reductions in offshore activities due to continued spending cuts by our customers, we believe our 2016 earnings will be lower than our projection for 2015. We are not, however, prepared to quantify the magnitude of the decline at this time.”

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