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Oceaneering International (OII) Down 11.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Oceaneering International (OII - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Oceaneering International due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Oceaneering Q2 Earnings Lag Estimates, Revenues Beat
Oceaneering International reported adjusted profit of 28 cents per share for the second quarter of 2024, missing the Zacks Consensus Estimate of 37 cents. This was due to lower-than-expected operating income from the company’s Offshore Projects Group, Integrity Management & Digital Solutions, and Aerospace and Defense Technologies segments.
However, the bottom line surpassed the year-ago quarter’s reported figure of 18 cents. This can be attributed to year-over-year strong operating income from certain segments — Subsea Robotics, and Manufactured Products.
Total revenues were $668.8 million, which beat the Zacks Consensus Estimate of $665 million and increased approximately 11.9% from the year-ago quarter’s level of $597.9 million.
Segmental Information
Subsea Robotics: The unit provides remotely operated submersible vehicles for drill support, vessel-based inspection, subsea hardware installation, pipeline surveys and maintenance services.
Revenues totaled $215 million compared with the year-ago quarter’s figure of $186.5 million. The top line surpassed our projection of $207.7 million. The segment also reported an operating income of $61.8 million compared with $42.2 million a year ago. The figure was higher than our estimate of $45.6 million.
Manufactured Products: The segment focuses on the manufactured products business, theme park entertainment systems and automated guided vehicles.
Revenues amounted to $139.3 million, up substantially from the prior-year figure of $124.9 million. The top line beat our projection of $137.2 million. Moreover, the segment posted an operating profit of about $14.4 million in the first quarter, up from the year-ago quarter’s level of $10.6 million. The reported figure beat our estimate of $13.6 million. Meanwhile, the backlog rose to $713 million as of Jun 30, 2024, from $418 million as of Jun 30, 2023.
Offshore Projects Group: This segment involves Oceaneering’s former Subsea Projects unit, excluding survey services and global data solutions, and the service and rental business, excluding ROV tooling.
Revenues increased about 10.3% to $144.1 million from $130.5 million in the year-ago quarter. However, the figure missed our projection of $146.4 million. The unit’s operating income totaled $13.2 million compared with the prior-year quarter’s level of $17.1 million. The figure also missed our estimate of $18 million.
Integrity Management & Digital Solutions: This segment covers Oceaneering’s Asset Integrity unit, along with its global data solutions business.
Revenues of $73.5 million increased from the year-ago quarter’s reported figure of $63.2 million. However, the figure missed our projection of $82.3 million. The segment reported an operating income of $3.5 million, down from the prior-year quarter’s figure of $3.8 million, but in line with our estimate.
Aerospace and Defense Technologies: The segment is engaged in Oceaneering’s government business, which focuses on defense subsea technologies, marine services and space systems.
Revenues totaled $97 million, up from $92.8 million recorded in the second quarter of 2023. However, the figure missed our estimate of $102.7 million.The operating income dropped to $7.2 million from $11.4 million in the year-ago quarter and missed our estimate of $12.6 million.
Capital Expenditure & Balance Sheet
The capital expenditure in the second quarter, including acquisitions, totaled $22.9 million. As of Jun 30, 2024, OII had cash and cash equivalents worth $382.9 million and $461.6 million, respectively, along with a long-term debt of about $479.4 million. The debt-to-total capital was 42.2%.
Outlook
For the third quarter of 2024, Oceaneering anticipates slight improvements in activity levels and operating profitability for the Subsea Robotics segment. Manufactured Products revenues are expected to be higher, albeit with lower operating profitability. The Offshore Projects Group segment is projected to maintain similar revenues to the previous quarter but with significantly higher operating profitability.
The Integrity Management & Digital Solutions segment is expected to see relatively flat activity levels and operating profitability. Aerospace and Defense Technologies segment revenues are projected to remain flat, with significantly higher operating profitability. Unallocated expenses are forecasted to be around $40 million in the same period.
The company also anticipates continued sequential improvement in operating results, with EBITDA expected to range between $95 million and $105 million, driven by a low to mid-single-digit percentage increase in revenues in the same time frame.
The company expects full-year 2024 consolidated adjusted EBITDA to be between $340 million and $370 million, with net income anticipated to range from $130 million to $150 million. Additionally, the operating income and margins for the Aerospace and Defense Technologies segment are expected to be lower compared to 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Oceaneering International has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, Oceaneering International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Oceaneering International (OII) Down 11.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Oceaneering International (OII - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Oceaneering International due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Oceaneering Q2 Earnings Lag Estimates, Revenues Beat
Oceaneering International reported adjusted profit of 28 cents per share for the second quarter of 2024, missing the Zacks Consensus Estimate of 37 cents. This was due to lower-than-expected operating income from the company’s Offshore Projects Group, Integrity Management & Digital Solutions, and Aerospace and Defense Technologies segments.
However, the bottom line surpassed the year-ago quarter’s reported figure of 18 cents. This can be attributed to year-over-year strong operating income from certain segments — Subsea Robotics, and Manufactured Products.
Total revenues were $668.8 million, which beat the Zacks Consensus Estimate of $665 million and increased approximately 11.9% from the year-ago quarter’s level of $597.9 million.
Segmental Information
Subsea Robotics: The unit provides remotely operated submersible vehicles for drill support, vessel-based inspection, subsea hardware installation, pipeline surveys and maintenance services.
Revenues totaled $215 million compared with the year-ago quarter’s figure of $186.5 million. The top line surpassed our projection of $207.7 million. The segment also reported an operating income of $61.8 million compared with $42.2 million a year ago. The figure was higher than our estimate of $45.6 million.
Manufactured Products: The segment focuses on the manufactured products business, theme park entertainment systems and automated guided vehicles.
Revenues amounted to $139.3 million, up substantially from the prior-year figure of $124.9 million. The top line beat our projection of $137.2 million. Moreover, the segment posted an operating profit of about $14.4 million in the first quarter, up from the year-ago quarter’s level of $10.6 million. The reported figure beat our estimate of $13.6 million. Meanwhile, the backlog rose to $713 million as of Jun 30, 2024, from $418 million as of Jun 30, 2023.
Offshore Projects Group: This segment involves Oceaneering’s former Subsea Projects unit, excluding survey services and global data solutions, and the service and rental business, excluding ROV tooling.
Revenues increased about 10.3% to $144.1 million from $130.5 million in the year-ago quarter. However, the figure missed our projection of $146.4 million. The unit’s operating income totaled $13.2 million compared with the prior-year quarter’s level of $17.1 million. The figure also missed our estimate of $18 million.
Integrity Management & Digital Solutions: This segment covers Oceaneering’s Asset Integrity unit, along with its global data solutions business.
Revenues of $73.5 million increased from the year-ago quarter’s reported figure of $63.2 million. However, the figure missed our projection of $82.3 million. The segment reported an operating income of $3.5 million, down from the prior-year quarter’s figure of $3.8 million, but in line with our estimate.
Aerospace and Defense Technologies: The segment is engaged in Oceaneering’s government business, which focuses on defense subsea technologies, marine services and space systems.
Revenues totaled $97 million, up from $92.8 million recorded in the second quarter of 2023. However, the figure missed our estimate of $102.7 million.The operating income dropped to $7.2 million from $11.4 million in the year-ago quarter and missed our estimate of $12.6 million.
Capital Expenditure & Balance Sheet
The capital expenditure in the second quarter, including acquisitions, totaled $22.9 million. As of Jun 30, 2024, OII had cash and cash equivalents worth $382.9 million and $461.6 million, respectively, along with a long-term debt of about $479.4 million. The debt-to-total capital was 42.2%.
Outlook
For the third quarter of 2024, Oceaneering anticipates slight improvements in activity levels and operating profitability for the Subsea Robotics segment. Manufactured Products revenues are expected to be higher, albeit with lower operating profitability. The Offshore Projects Group segment is projected to maintain similar revenues to the previous quarter but with significantly higher operating profitability.
The Integrity Management & Digital Solutions segment is expected to see relatively flat activity levels and operating profitability. Aerospace and Defense Technologies segment revenues are projected to remain flat, with significantly higher operating profitability. Unallocated expenses are forecasted to be around $40 million in the same period.
The company also anticipates continued sequential improvement in operating results, with EBITDA expected to range between $95 million and $105 million, driven by a low to mid-single-digit percentage increase in revenues in the same time frame.
The company expects full-year 2024 consolidated adjusted EBITDA to be between $340 million and $370 million, with net income anticipated to range from $130 million to $150 million. Additionally, the operating income and margins for the Aerospace and Defense Technologies segment are expected to be lower compared to 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Oceaneering International has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, Oceaneering International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.