Oceaneering International, Inc., a subsea engineering and applied technology company based in Houston, informed Wednesday in its second quarter 2015 earnings report that its net income for the second quarter has dropped compared to the same period last year.
On revenue of $810.3 million, Oceaneering generated net income of $65.5 million, or $0.66 per share. Excluding the impacts of a $9.0 million inventory write-down, or $0.06 per share, and $6.0 million of net foreign currency exchange losses, or $0.04 per share, adjusted net income was $75.2 million, or $0.76 per share.
During the corresponding period in 2014, Oceaneering reported revenue of $927.4 million and net income of $110.3 million, or $1.02 per share.
According to the company, the inventory write-down, reported in Subsea Products gross margin, was a result of a decision to exit the business of manufacturing subsea blowout preventer (BOP) control systems. The foreign currency exchange losses, reported in other income and expense, included $8.9 million of losses in Angola, attributable to its central bank’s devaluation of the kwanza, primarily in June.
Year over year, quarterly operating income declined on reduced profit contributions from Remotely Operated Vehicles (ROV), Subsea Products, and Asset Integrity. Quarterly earnings were down due to the operating income decline, the foreign currency exchange losses, and higher interest expense as a result of indebtedness incurred during the second half of 2014.
M. Kevin McEvoy , Chief Executive Officer, stated, “Our operating results during the quarter surpassed what we had anticipated. This was attributable to performances from our ROV and Subsea Projects segments. ROV benefited from better-than-expected revenue per day on hire due to more vessel work, and Subsea Projects profited from higher U.S. Gulf of Mexico (GOM) demand for deepwater intervention and diving services.
“We made a decision during the quarter to cease manufacturing subsea BOP control systems due to deteriorating demand prospects. We intend to continue providing aftermarket parts for the installed base.
Outlook down on reduced expectations
“Our overall outlook for the second half of this year is down somewhat from last quarter’s guidance, primarily on reduced expectations for Subsea Products and Asset Integrity.
“We believe our cash flow and liquidity position us well to manage our business through the current low commodity price environment. Longer-term, deepwater is still expected to continue to play a critical role in global oil supply growth required to replace depletion and meet projected demand.”