Oceaneering Bounces Back to Profit; Eyes Weaker 2018

Subsea engineering specialist Oceaneering has reported net income of $173.6 million, or $1.76 per share, on revenue of $484 million for the three months ended December 31, 2017.

Adjusted net loss was $8 million, or $8 cents per share, offset by $181 million adjustments, mostly related to $189 million non-cash tax benefit due to recent USA tax reform.

During the corresponding period in 2016, the company reported net loss of $11 million, or $11 cents per share, on revenue of $488 million.

To remind, during the prior quarter ended September 30, 2017, Oceaneering reported loss of $1.8 million, or 2 cents per share, on revenue of $476 million.

For the twelve months of 2017, the company booked a net income of $166 million, on revenue of $1.9 billion, against a profit of $24.6 million, on revenue of $2.3 billion.

Adjusted result was net loss of $6.8 million, or 7 cents per share, reflecting the impact of $173.2 million of adjustments, primarily from the above mentioned non-cash tax benefit.

The company ended the quarter with a total of 279 remotely operated vehicles. Fleet utilization was down from 50% in Q3 to 42% in Q4.

Subsea products backlog at December 31, 2017 was $276 million, compared to September 30, 2017 backlog of $284 million, and Q4 2016 backlog of $431 million.

2018 Outlook

“For 2018, overall, we project our consolidated revenue to be down slightly, with decreases in three of our energy segments, offset by increases in Asset Integrity and Advanced Technologies. We continue to project our 2018 results to be lower than our 2017 results, due to reduced pricing for our service and product offerings and lower absorption of our manufacturing fixed costs resulting from lower expected throughput. For the year, we anticipate generating $140 million to $180 million of EBITDA, with positive EBITDA contributions from each of our operating segments.

“Operationally, we anticipate ROVs, Subsea Products and Subsea Projects results to be lower, with the largest declines in profitability occurring in Subsea Products and Subsea Projects. For ROVs, we project increased days on hire, however, with lower operating results, due to a shift in geographic mix and continued competitive pricing that we expect to drive our average revenue per day lower,

“We expect Subsea Products segment results to decline due to anticipated lower pricing and manufacturing throughput, as we enter the year with less backlog compared to 2017, and the natural lag effect between our customer’s financial investment decisions and order awards,

“Our Subsea Projects segment is expected to have a more challenging year with reduced international vessel and diving activity, and continued competitive pressures on vessel dayrates in the spot call out market in the Gulf of Mexico, and the regulatory drydocking of the Ocean Intervention. Unlike 2017, we are entering 2018 with no meaningful fixed-term vessel contracts with our customers,”

“We believe our first quarter 2018 operating results will be lower than our fourth quarter results, due to a continuation of low levels of offshore activity. The decline will be lead by operating losses in our Subsea Products, Subsea Projects, and ROV segments,” said Roderick A. Larson, president and CEO of Oceaneering.

Subsea World News Staff

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