Oceaneering International, Inc reported first quarter earnings for the period ended March 31, 2011. On revenue of $470.4 million, Oceaneering generated net income of $42.1 million, or $0.77 per share.
During the corresponding period in 2010, Oceaneering reported revenue of $435.2 million and net income of $39.2 million, or $0.71 per share.
Year over year, quarterly earnings per share (EPS) improved primarily as a result of a lower tax rate. Subsea Products and Inspection operating income were higher but not enough to offset lower operating income from our other business segments. Sequentially, quarterly EPS declined as anticipated due to a substantial reduction in operating income from Subsea Projects and lower profit contributions from Subsea Products and ROV.
T. Jay Collins, President and Chief Executive Officer, stated, “For the quarter, our EPS was above the top end of our $0.65 to $0.70 guidance range. We achieved operating income slightly better than forecasted from all of our oilfield business segments and lowered our estimated annual tax rate from 34.5% to 31.5%. Our reduced tax rate reflects our intent to reinvest in international operations, therefore, we are no longer providing for U.S. taxes on certain of our foreign earnings.
“Year over year, Subsea Products operating income improved by $12 million, over 75%, on the strength of higher umbilical plant throughput and an increase in Installation, Workover, and Control System (IWOCS) service sales. At the end of the quarter we acquired Norse Cutting & Abandonment AS for approximately $56 million. This acquisition increases our subsea tooling product line and enhances our ability to participate as a subcontractor in the plug, abandonment, and decommissioning of production platforms and subsea wellheads. Our Subsea Products backlog at quarter-end was $382 million, essentially flat with the end of 2010 and up $44 million from the end of March 2010.
“Inspection operating income, compared to the first quarter of last year, increased due to higher international service sales.
“Our outlook for 2011 overall remains positive and we now believe it is highly likely that we will achieve record EPS for the year. We are raising our 2011 EPS guidance from the range $3.45 to $3.75 to a range of $3.65 to $3.90 to account for our lower estimated tax rate, first quarter operating results, and revised outlooks for Subsea Projects and Subsea Products.
“We now forecast Subsea Projects to have lower operating income than previously anticipated. It appears that our previous projection of demand for our services in the U.S. Gulf of Mexico (GOM) to perform installation projects and inspection, maintenance, and repair work during the remaining three quarters of 2011 was too high. The extent to which this demand actually materializes is a major factor that will influence our 2011 results. At this time, we are not revising our outlook for ROVs as we anticipate strong international demand will offset weak non-drill support demand in the GOM.
“We now project Subsea Products to perform better on the strength of higher tooling and IWOCS service sales. As a result, we anticipate Subsea Products operating income will be higher in 2011 than 2010.
“For the second quarter of 2011, we expect improvements in demand for all of our oilfield business segments. We are forecasting EPS of $0.90 to $1.00.
“Our liquidity and projected cash flow provide us with ample resources to invest in Oceaneering’s growth. At the end of the quarter we had $187 million of cash and $300 million available under our revolving credit facility. For 2011 we anticipate generating at least $435 million of EBITDA.
“Looking beyond 2011, our belief that the oil and gas industry will continue to invest in deepwater projects remains unchanged. Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates. With our existing assets, we are well positioned to supply a wide range of the services and products required to support safe deepwater efforts of our customers.”
Source:Oceaneering , April 28, 2011;