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Oceaneering (OII) Q2 Loss Narrower Than Expected, Sales Miss
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Oceaneering International, Inc. (OII - Free Report) reported adjusted second-quarter 2020 loss per share of 14 cents, narrower than the Zacks Consensus Estimate of a loss of 19 cents as well as the prior-year adjusted loss of 32 cents, attributable to benefits from cost- control measures.
However, the company’s revenues of $427.22 million missed the Zacks Consensus Estimate of $452 million and also fell 14% from the year-ago sales of $496 million. This underperformance could be attributed to lower-than-expected revenues from the Remotely Operated Vehicles and the Subsea Products units.
Segmental Information
Remotely Operated Vehicles (ROV): Revenues of $98.78 million compared unfavourably with $120.4 million in second-quarter 2019. Operating income of $5.97 million was lower than $8.68 million in the year-ago quarter due to reduced working drilling rigs. Meanwhile, days on hire fell 12.5% year over year to 13,501 while vessel utilization decreased to 59% from 62% a year ago.
Subsea Products: Revenues came in at $130.7 million, down from the prior-year figure of $138.9 million due to lower activity. However, operating income of $9.06 million compared favourably with the year-ago income of $7.41 million on sustained cost-reduction efforts. Meanwhile, the backlog dropped to $486 million as of Jun 30, 2020 from the year-ago backlog of $596 million.
Subsea Projects: Revenues dropped 25% to $56.3 million from $75.1 million in the year-ago quarter. However, the unit’s operating income of $845,000 skyrocketed 871.3% from $87,000 in second-quarter 2019, led by project execution and the ongoing cost-saving activity.
Asset Integrity: Revenues of $48.1 million were declined from the year-ago figure of $61.2 million. Due to persistent pricing woes and non-recurring costs of a few finished projects, the segment incurred an operating loss of $2.6 million, wider than the prior-year loss of $1.3 million.
Advanced Technologies: Revenues from this non-energy segment totalled $93.4million, down from $100.2 million in second-quarter 2019.
Operating income of $9.71 million rose from $7.24 million in the year-ago quarter on the back of a favourable impact on government business and cost-management measures.
Oceaneering International, Inc. Price, Consensus and EPS Surprise
Capital expenditure in the second quarter including acquisitions summed $10.63 million. As of Jun 30, 2020, Oceaneering had cash and cash equivalents worth $333.5 million, and a long-term debt of $806 million. The total debt to total capital was 56.3%.
Guidance
The company did not issue any segmental financial guidance for the third quarter and the remainder of 2020 due to coronavirus-related uncertainties weighing on the industry. However, Oceaneering projects unallocated expenses in the high $20-million range per quarter.
The company also reiterates its capital expenditure estimate in the $45-$65 million band. Further, Oceaneering expects cash tax payments view in the range of $30-$35 million. The company is targeting expense savings of $125-$160 million, annualized by the end of this year (including $35-$40 million of depreciation expense reduction) and hopes to generate free cash flow for 2020. Of this, Oceaneering already realized $85 million in cost savings (excluding depreciation).
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Oceaneering (OII) Q2 Loss Narrower Than Expected, Sales Miss
Oceaneering International, Inc. (OII - Free Report) reported adjusted second-quarter 2020 loss per share of 14 cents, narrower than the Zacks Consensus Estimate of a loss of 19 cents as well as the prior-year adjusted loss of 32 cents, attributable to benefits from cost- control measures.
However, the company’s revenues of $427.22 million missed the Zacks Consensus Estimate of $452 million and also fell 14% from the year-ago sales of $496 million. This underperformance could be attributed to lower-than-expected revenues from the Remotely Operated Vehicles and the Subsea Products units.
Segmental Information
Remotely Operated Vehicles (ROV): Revenues of $98.78 million compared unfavourably with $120.4 million in second-quarter 2019. Operating income of $5.97 million was lower than $8.68 million in the year-ago quarter due to reduced working drilling rigs. Meanwhile, days on hire fell 12.5% year over year to 13,501 while vessel utilization decreased to 59% from 62% a year ago.
Subsea Products: Revenues came in at $130.7 million, down from the prior-year figure of $138.9 million due to lower activity. However, operating income of $9.06 million compared favourably with the year-ago income of $7.41 million on sustained cost-reduction efforts. Meanwhile, the backlog dropped to $486 million as of Jun 30, 2020 from the year-ago backlog of $596 million.
Subsea Projects: Revenues dropped 25% to $56.3 million from $75.1 million in the year-ago quarter. However, the unit’s operating income of $845,000 skyrocketed 871.3% from $87,000 in second-quarter 2019, led by project execution and the ongoing cost-saving activity.
Asset Integrity: Revenues of $48.1 million were declined from the year-ago figure of $61.2 million. Due to persistent pricing woes and non-recurring costs of a few finished projects, the segment incurred an operating loss of $2.6 million, wider than the prior-year loss of $1.3 million.
Advanced Technologies: Revenues from this non-energy segment totalled $93.4million, down from $100.2 million in second-quarter 2019.
Operating income of $9.71 million rose from $7.24 million in the year-ago quarter on the back of a favourable impact on government business and cost-management measures.
Oceaneering International, Inc. Price, Consensus and EPS Surprise
Oceaneering International, Inc. price-consensus-eps-surprise-chart | Oceaneering International, Inc. Quote
Capital Expenditure & Balance Sheet
Capital expenditure in the second quarter including acquisitions summed $10.63 million. As of Jun 30, 2020, Oceaneering had cash and cash equivalents worth $333.5 million, and a long-term debt of $806 million. The total debt to total capital was 56.3%.
Guidance
The company did not issue any segmental financial guidance for the third quarter and the remainder of 2020 due to coronavirus-related uncertainties weighing on the industry. However, Oceaneering projects unallocated expenses in the high $20-million range per quarter.
The company also reiterates its capital expenditure estimate in the $45-$65 million band. Further, Oceaneering expects cash tax payments view in the range of $30-$35 million. The company is targeting expense savings of $125-$160 million, annualized by the end of this year (including $35-$40 million of depreciation expense reduction) and hopes to generate free cash flow for 2020. Of this, Oceaneering already realized $85 million in cost savings (excluding depreciation).
Zacks Rank & Key Picks
Oceaneering currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Halliburton Company (HAL - Free Report) , Core Laboratories NV (CLB - Free Report) and Pembina Pipeline Corp (PBA - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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