Oceaneering International (OII) Up 3.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Oceaneering International (OII). Shares have added about 3.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Oceaneering International due for a pullback? 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 catalysts.
Oceaneering Q2 Earnings Miss Estimates
Oceaneering International reported second-quarter 2023 adjusted profit of 18 cents per share, which missed the Zacks Consensus Estimate of 30 cents. This underperformance was due to lower-than-expected operating income from the Subsea Robotics and Manufactured Products segments.
However, the bottom line was better than the year-ago quarter’s figure of 7 cents. This can be attributed to higher-than-expected operating income from the Offshore Projects Group segment.
Total revenues were $597.9 million, which missed the Zacks Consensus Estimate of $602 million. The top line, however, increased approximately 14.1% from the year-ago quarter’s level of $524 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 $186.5 million compared with $157.1 million in the prior-year period. The figure was also higher than our projection of $179 million. Operating income totaled $42.2 million, higher than the year-ago quarter’s $25.9 million. The figure, however, missed our estimate of $51 million. Days on hire increased 9.6% year over year to 16,032, while Remotely Operated Vehicles’ utilization remained unchanged at 70%.
Manufactured Products: The segment focuses on the manufactured products business, theme park entertainment systems and automated guided vehicles.
Revenues amounted to $124.9 million compared with $105.5 million a year ago. The figure outpaced our projection of $119.2 million. Operating profit totaled $10.6 million against the year-ago quarter’s reported loss of $1.4 million. The figure missed our estimate of $11 million. Backlog rose to $418 million from $335 million as of Jun 30, 2023.
Offshore Projects Group: This segment includes Oceaneering’s former Subsea Projects segment, excluding survey services and global data solutions, and the service and rental business, without ROV tooling.
Revenues increased about 12% to $ 130.5 million from $116.5 million in the year-ago quarter. The figure beat our projection of $125 million. Operating income totaled $17.1 million compared with $17.5 million in the second quarter of 2022. The figure outpaced our estimate of $11.7 million.
Integrity Management & Digital Solutions: This segment mainly covers Oceaneering’s Asset Integrity segment, along with its global data solutions business.
Revenues totaled $63.2 million compared with the year-ago quarter’s figure of $59.4 million. The figure outpaced our projection of $62.3 million. The segment also reported an operating income of $3.8 million compared with $3.4 million a year ago. The figure is higher than our estimate of $3.3 million.
Aerospace and Defense Technologies: The segment is engaged in Oceaneering’s government business and focuses on defense subsea technologies, marine services and space systems.
Revenues totaled $92.8 million compared with $85.6 million in the year-ago quarter. The figure is lower than our projection of $125.2 million. Operating income of $49.2 million increased from $22.8 million in the prior-year quarter. The figure beat our estimate of $11.7 million.
Capital Expenditure & Balance Sheet
Capital expenditure, including acquisitions, totaled $22.4 million. The figure is lower than our projection of $27.2 million. As of Jun 30, 2023, OII had cash and cash equivalents worth $504 million and long-term debt of about $700.4 million. The total debt-to-total capital was 55.9%.
Outlook
For 2023, Oceaneering projects consolidated EBITDA in the $2275-$310 million range and continued free cash flow generation in the band of $90-$130 million. It also anticipates capital expenditures and net income in the range of $90-$110 million and $75-$90 million, respectively.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Oceaneering International has an average Growth Score of C, 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 C. 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 these revisions 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.
Performance of an Industry Player
Oceaneering International belongs to the Zacks Oil and Gas - Field Services industry. Another stock from the same industry, Liberty Oilfield Services (LBRT), has gained 0.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Liberty Oilfield Services reported revenues of $1.2 billion in the last reported quarter, representing a year-over-year change of +26.8%. EPS of $0.87 for the same period compares with $0.55 a year ago.
For the current quarter, Liberty Oilfield Services is expected to post earnings of $0.73 per share, indicating a change of -6.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -4.4% over the last 30 days.
Liberty Oilfield Services has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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