Oceaneering (OII) Q1 Loss Narrower Than Estimates, Sales Beat

Oceaneering International OII reported a first-quarter 2022 adjusted loss of 6 cents per share, narrower than the Zacks Consensus Estimate of a loss of 10 cents. This outperformance was largely due to strong results in certain segments.

However, the bottom line worsened compared to the year-ago quarter’s profit of 3 cents per share. This can be attributed to lower year-over-year revenues from the Manufactured Products and Aerospace and Defense Technologies units and an increase in expenses.

Oceaneering’s total quarterly revenues of $446.2 million beat the Zacks Consensus Estimate of $416 million and increased approximately 2% from the year-ago sales of $437.5 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 of $128 million compared favorably with $119.2 million in the first quarter of 2021. However, the segment reported an operating income of $11.5 million, lower than the year-ago quarter’s $14.6 million due to seasonal factors and cost escalation. Days on hire fell 0.38% year over year to 11,842, while ROV utilization remained the same at 53%.

Manufactured Products: The segment focuses on the manufactured products business, theme park entertainment systems and automated guided vehicles.

Revenues were $82.7 million, down from the prior-year figure of $86.8 million. Lower sales, together with higher fixed costs, meant that the operating profit in the first quarter came in at $2.6 million compared with the year-ago quarter’s figure of $2.7 million. Meanwhile, the backlog rose to $334 million as of Mar 31, 2022.

Offshore Projects Group: This involves OII’s former Subsea Projects segment, excluding survey services and global data solutions, and its service and rental business, excluding ROV tooling.

Revenues increased about 9.1% to $97.4 million from $89.2 million in the year-ago quarter. Despite an uptick in revenues, the unit’s operating income of $666,000 compared unfavorably with the $8.8 million income reported in the first quarter of 2021 due to project cost overruns.

Integrity Management & Digital Solutions: This segment mainly covers Oceaneering’s Asset Integrity segment along with its global data solutions business.

Revenues of $56.6 million improved from the year-ago figure of $54 million. The segment also reported an operating income of $3.5 million compared with the prior-year quarter’s $2.5 million as a result of operational improvements.

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 $81.5 million, down from $88.3 million in the first quarter of 2021. As a result, the operating income of $11.8 million fell from $16.3 million in the year-ago quarter.

Oceaneering International, Inc. Price, Consensus and EPS Surprise

Oceaneering International, Inc. price-consensus-eps-surprise-chart | Oceaneering International, Inc. Quote

Capital Expenditure & Balance Sheet

The capital expenditure in the first quarter, including acquisitions, summed at $19.3 million. As of Mar 31, 2022, OII had cash and cash equivalents worth $438 million and long-term debt of about $701.8 million. The total debt-to-total capital was 58.3%.

Outlook

For the second quarter of 2022, Oceaneering predicts unallocated expenses to be in the mid-$30 million range. The company anticipates results to improve in the second quarter on a consolidated basis, with quarterly EBITDA forecast between $50 and $70 million on higher revenues.

For 2022, Oceaneering projects its consolidated EBITDA in the $225 million-$275 million range, continued significant free cash flow generation in the range of $75-$125 million. OII projects increased growth capital expenditures compared with 2021.

The company anticipates income tax payments in the band of $40-$45 million for 2022.

Zacks Rank & Stocks to Consider

Oceaneering currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space are Occidental Petroleum OXY, ConocoPhillips COP and Marathon Oil MRO, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the United States, Occidental Petroleum is among the largest oil producers. Occidental Petroleum is likely to post first-quarter results on May 10.

The Zacks Consensus Estimate for OXY’s earnings is pegged at $2 per share.

Considering production and reserves, ConocoPhillips is one of the leading exploration and production players in theglobal market ConocoPhillips is likely to post first-quarter results on May 5.

The Zacks Consensus Estimate for COP’s earnings is pegged at $3.24 per share, suggesting massive year-over-year growth.

Marathon Oil is a leading oil and natural gas exploration and production company. Marathon Oil is likely to post first-quarter results on May 4.

The Zacks Consensus Estimate for MRO’s earnings is pegged at 98 cents per share, suggesting a massive year-over-year improvement.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."

Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.