Oceaneering Retires 39 ROVs in Q3 as Red Ink Flows

Oceaneering reported a net loss of $11.8 million, or $(0.12) per share, on revenue of $549 million for the three months ended September 30, 2016.

During the corresponding period in 2015, Oceaneering reported net income of $68.5 million, or $0.70 per share, on revenue of $744 million.

Adjusted net income was $16.6 million, or $0.17 per share, excluding $43.6 million of pre-tax charges recognized during the quarter and the related tax effects of those charges. These charges included $36.0 million related to the remotely operated vehicles (ROV) segment and $8.2 million related to the subsea products segment.

During the prior quarter ended June 30, 2016, Oceaneering reported net income of $22.3 million, or $0.23 per share, on revenue of $626 million; adjusted net income was $26.8 million, or $0.27 per share.

Sequentially, adjusted operating income declined 27% due to reduced profit contributions from subsea products and ROV, partially offset by improved results from subsea projects and asset integrity.

m-kevin-mcevoyM. Kevin McEvoy, chief executive officer of Oceaneering, said: “Lower activity in contracted floating rigs required us to reassess the number of ROVs we have in our fleet, as well as the associated inventory. As a result of our reassessment, we recorded a $36.0 million charge related to our retirement of 39 ROVs this quarter.

We also scrutinized assets in our Subsea Products segment and recorded an $8.2 million charge, related predominantly to tools and inventory in our portfolio used to support deepwater drilling and operations.

“Compared to the second quarter, ROV adjusted operating income was down substantially, due to a 4% reduction in revenue per day-on-hire and 6% fewer days utilized. For the third quarter, ROV adjusted operating income and EBITDA margins were 10% and 36%, respectively, compared to (19)% and 16% on an unadjusted basis.

“At the end of September, we had 279 vehicles in our fleet and utilization for the quarter was 52%. The 39 ROVs retired worked a total of 349 days in the third quarter; pro forma quarterly utilization, reflecting these vehicles as if they had been retired effective as of the beginning of the quarter was 58%.”

“Looking forward, we believe our fourth quarter results will be considerably lower than our adjusted third quarter results due to a continuation of weak demand for our services and products, exacerbated by seasonality. We expect sequentially lower operating income from each of our oilfield business segments, and slightly improved results from our non-oilfield segment Advanced Technologies.”

“With limited visibility, our outlook for 2017 can be characterized as marginally profitable at the operating income level on a consolidated basis. We expect the largest decline in profitability, year over year, to occur in Subsea Products and ROVs,” McEvoy added.

The company also informed it has reduced its quarterly dividend to $0.15 per share.

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