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Oceaneering International's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Stocks in this article: OII

Operating margin during the quarter was 29%, the same as a year ago and last quarter and slightly down from the 30% average last year. We continue to anticipate our ROV operating margin for the year 2012, maybe slightly higher than that of 2011.

During the quarter, we put 5 new ROVs into service and retired 2. At the end of March, we had 270 systems available for operation, up from 260, a year ago. Three of the new ROV's went to work on board vessels, and 2 went into drill support service on rigs. Our fleet mix during the quarter was 78% in drill support and 22% on vessel-based work, the same as last quarter and about the same as the 79-21 split in the first quarter of 2011.

We still anticipate adding 20 to 25 vehicles to our ROV fleet in 2012, 15 to 20 during the remaining 3 quarters and we presently have contracts for 19 of these. Some of these expected start days could, however, slip into 2013.

Now turning to Subsea Products. Year-over-year, first quarter operating income increased on higher demand for tooling and our Subsea Hardware. Primarily due to project timing, operating income declined sequentially on lower demand for Subsea Hardware and Installation and Workover Control System, or IWOCS services. Consistent with our expectation, products on operating margin is 17% for the quarter, with less than the 18% result for the first quarter of 2011, 21% of last quarter, and 18% for all of last year. For the year 2012, Subsea Products margin may be slightly lower than 2011 due to unanticipated change in mix. However, we continue to expect a record segment operating income for the year.

Our Subsea Products backlog at quarter end was $402 million, up from $382 million at the end of both March and December of 2011. Year-over-year, and sequentially, the backlog increase was attributable to tooling. Since the end of the quarter, we announced the award of Petrobras' Whales Park Umbilical Contract that added $70 million to our products backlog.

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