Oceaneering International, Inc. today reported record second quarter earnings for the period ended June 30, 2008. On revenue of $500 million, Oceaneering generated net income of $52.1 million, or $0.93 per share.
Oceaneering reported revenue of $432 million and net income of $47.9 million, or $0.86 per share, for the second quarter of 2007. For the first quarter of 2008, Oceaneering reported revenue of $436 million and net income of $41.3 million, or $0.74 per share.
This quarter's results include, in Mobile Offshore Production Systems (MOPS) gross margin, a $2.0 million gain on the sale of the production barge San Jacinto. Results for the second quarter of 2007 included $2.8 million of MOPS revenue and gross margin related to a contract termination settlement for the use of the San Jacinto.
Year-over-year, quarterly earnings increased due to growth in ROV, Subsea Products, and Inspection operating profits. Sequentially, quarterly earnings rose over 25% as all business segments achieved improved operating income results, led by Subsea Products and Subsea Projects.
T. Jay Collins, President and Chief Executive Officer, stated, "Our record second quarter earnings, which were above the midpoint of our guidance range, reflect the healthy demand we are experiencing for our subsea services and products. We continue to expect we will achieve a fifth consecutive year of record earnings in 2008.
"Our ROV and Inspection businesses achieved record quarterly operating income. We attained all-time high average ROV revenue per day-on-hire. During the quarter we put five new ROVs into service to meet rising market demand and disposed of three vehicles. At the end of June we had 214 ROVs in our fleet. Inspection results were attributable to our ongoing efforts to improve pricing and provide more value-added services.
"Compared to the first quarter of this year, Subsea Products operating income improved over 20% on higher sales of Multiflex umbilicals and our specialty subsea products, particularly ROV tooling. We realized a lower Subsea Products operating income margin than we had anticipated due to higher development costs on BOP control systems and lower utilization of our IWOCS rental fleet. At quarter-end our backlog was $372 million, up from $353 million at March 31, 2008.
"Subsea Projects operating income sequentially increased by more than 55%. This was primarily due to a seasonal increase in demand for our shallow water diving and deepwater vessel project services.
"We are revising our earnings outlook for 2008. Our annual EPS guidance range is now $3.45 to $3.65, down from $3.50 to $3.80. During the second half of 2008, we expect to achieve operating income growth for ROVs and Subsea Products and results from Subsea Projects comparable to the first half of the year.
"Due to lower than anticipated backlog and higher manufacturing and development costs, we are lowering our Subsea Products annual operating income growth range to $15 million to $20 million, from $25 million to $35 million. It is now apparent our Subsea Products operating income improvement for the second half of 2008 will not be as robust as previously projected. We are raising our ROV annual operating income growth range to $35 million to $45 million, from $30 million to $40 million, in light of our second quarter performance and an improved outlook.
"For the third quarter of 2008 we are forecasting EPS of $0.90 to $1.00. We are anticipating sequential quarterly profit improvements from ROVs and Subsea Products and lower profit contributions from Subsea Projects and MOPS.
"Looking beyond 2008, we anticipate demand for our deepwater services and products will continue to rise and, consequently, believe our business prospects for the next several years are excellent."