Oceaneering (OII) Q4 Earnings Lag Estimates, Revenues Beat
Oceaneering International, Inc. OII reported fourth-quarter 2023 adjusted profit of 19 cents per share, which missed the Zacks Consensus Estimate of 23 cents. This underperformance was due to lower-than-expected operating income from the Manufactured Products and Integrity Management & Digital Solutions segments.
However, the bottom line outpaced the year-ago quarter’s figure of 6 cents. This can be attributed to year-over-year strong operating income from certain segments — Subsea Robotics, Offshore Projects Group and Aerospace and Defense Technologies.
Total revenues were $654.6 million, which beat the Zacks Consensus Estimate of $632 million. The top line also increased approximately 22.1% from the year-ago quarter’s level of $536.2 million.
Oceaneering International, Inc. Price, Consensus and EPS Surprise
Oceaneering International, Inc. price-consensus-eps-surprise-chart | Oceaneering International, Inc. Quote
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 $199.5 million compared with the year-ago quarter’s figure of $167.4 million. The top line also exceeded our projection of $195.9 million. The segment also reported an operating income of $50.6 million compared with $43.7 million a year ago. The figure was also higher than our estimate of $47.8 million.
Manufactured Products: The segment focuses on the manufactured products business, theme park entertainment systems and automated guided vehicles.
Revenues amounted to $133 million, up substantially from the prior-year figure of $100.2 million. However, the figure slightly missed our projection of $133.3 million. Moreover, the segment posted an operating profit of about $5.4 million in the fourth quarter, down from the year-ago quarter’s level of $6.1 million. The figure was less than our estimate of $6.3 million.Meanwhile, the backlog rose to $622 million as of Dec 31, 2023, from $467 million as of Dec 31, 2022.
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 31.6% to $161.2 million from $122.5 million in the year-ago quarter. The figure also outpaced our projection of $145.3 million. The unit’s operating income of $15.2 million compared favorably with the prior-year quarter’s level of $10.7 million. However, the figure was lower than our estimate of $22.3 million.
Integrity Management & Digital Solutions: This segment mainly covers Oceaneering’s Asset Integrity unit, along with its global data solutions business.
Revenues of $66 million went up from the year-ago quarter’s reported figure of $55.4 million.The figure also outpaced our projection of $63 million. The segment reported an operating income of $3.2 million, down from the prior-year quarter’s figure of $4.9 million.The figure, however, beat our estimate of $2.5 million.
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 $94.9 million, indicating an increase from $90.8 million recorded in the fourth quarter of 2022. The figure was also slightly higher than our estimate of $94.5 million. The operating income rose to $11 million from $10.3 million in the year-ago quarter. The figure, however, missed our estimate of $13.4 million.
Capital Expenditure & Balance Sheet
The capital expenditure in the fourth quarter, including acquisitions, totaled $30 million. As of Dec 31, 2023, OII had cash and cash equivalents worth $461.6 million and $568.7 million, respectively, along with a long-term debt of about $477.1 million. The debt-to-total capital was 42.9%.
Outlook
Oceaneering expects its consolidated earnings to be between $50 million and $60 million for the first quarter of 2024. Additionally, the company expects capital expenditures in the band of $110-$130 million and net income in the $125-$155 million range for the same quarter.
For full-year 2024, Oceaneering expects consolidated EBITDA to be in the $330-$380 million range, and free cash flow in the band of $110-$150 million.
Zacks Rank and Other Key Picks
Currently, OII carries a Zacks Rank #2 (Buy).
Investors interested in the energy sector might look at some other top-ranked stocks like Subsea 7 S.A. SUBCY, Energy Transfer LP ET and Murphy USA Inc. MUSA, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Subsea 7 is valued at $4.09 billion. The company currently pays a dividend of 38 cents per share, or 2.85%, on an annual basis.
SUBCY offers offshore project services for the energy industry, specializing in subsea field development, covering project management, design, engineering, procurement, fabrication, survey, installation and commissioning of seabed production facilities.
Energy Transfer is valued at $50.15 billion. The company currently pays a dividend of $1.26 per share, or 8.46%, on an annual basis.
ET is an independent energy company, principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
Murphy USA is valued at around $8.6 billion. In the past year, its shares have risen 55.3%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise, operating retail stores under the brands Murphy USA, Murphy Express and QuickChek.
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