It has been about a month since the last earnings report for Oceaneering International (OII Quick QuoteOII - Free Report) . Shares have lost about 1.4% 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 catalysts.

Oceaneering Q4 Earnings Top Estimates, Sales Miss Mark

Oceaneeringreported adjusted earnings per share of 2 cents. The Zacks Consensus Estimate was a loss of 22 cents. This better-than-expected result could be attributed to benefits from cost-control measures and higher revenue contribution from the Aerospace and Defense Technologies unit.

However, the prior-year adjusted earnings were 3 cents per share. The lower year-over-year earnings are owing to weak revenue contributions from the Subsea Robotics, Manufactured Products and Offshore Projects Group units.

Also, the company’s revenues of $424 million missed the Zacks Consensus Estimate of $427 million and fell 24.4% from the year-ago sales of $561 million too.

Segmental Information

In September, Oceaneering restructured its business units into five operating segments, namely subsea robotics, manufactured products, offshore projects group, integrity management & digital solutions, and aerospace and defense technologies.

Per Rod Larson, president and CEO of Oceaneering, this streamlining will help the company better its cost management moves as well as position it well to cater to the customer needs with greater efficiency and optimize its shareholder value.

Subsea Robotics (SSR): The unit provides remotely operated submersible vehicles for drill support, vessel-based inspection, subsea hardware installation, pipeline surveys and maintenance services.

Revenues of $114.7 million compared unfavorably with $151.1 million in fourth-quarter 2019. The segment reported operating income of $14.5 million. However, the year-ago quarter witnessed a loss of $21.7 million. This year-over-year outperformance is owing to recognition of around $3 million of cost structure improvements realized throughout 2020. Meanwhile, days on hire fell 16% year over year to 12,456 while ROV utilization decreased to 54% from 58% a year ago. 

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

Revenues came in at $99.9 million, down from the prior-year figure of $163.9 million. However, operating income of $12.2 million compared favorably with the year-ago income of $4.7 million. This outperformance can be attributed to favorable contract close-outs and supply-chain savings. Meanwhile, the backlog dropped to $266 million as of Dec 30, 2021 from the year-ago backlog of $548 million.

Offshore Projects Group (OPG):The segment involves Oceaneering’s former Subsea Projects segment excluding survey services and global data solutions, and its service and rental business excluding ROV tooling.

Revenues declined 26.1% to $67.8 million from $91.8 million in the year-ago quarter. Moreover, the unit’s operating loss of $9.9 million narrowed from $167.2 million loss in fourth-quarter 2019.

Integrity Management & Digital Solutions (IMDS): This segment mainly covers the company’s Asset Integrity segment along with its global data solutions business (GDS).

Revenues of $54.3 million declined from the year-ago figure of $68.02 million. However, the segment reported an operating income of $892,000 against the prior-year loss of $48.9 million as a result of enhanced execution of personnel.

Aerospace and Defense Technologies (ADTech): This segment is engaged in Oceaneering’s government business, which focuses on defense subsea technologies, marine services and space systems. 

Revenues from this segment totalled $87.5 million, up from $86.04 million in fourth-quarter 2019.

Operating income of $16.5 million rose from $12.4 million in the year-ago quarter on the back of project mix and a better-than-expected performance in its subsea defense technologies business.

Capital Expenditure & Balance Sheet

Capital expenditure in the fourth quarter including acquisitions summed $14.85 million. As of Dec 31, 2020, Oceaneering had cash and cash equivalents worth $452.01 million, and a long-term debt of $805.3 million. The total debt to total capital was 59.1%.

Guidance

For the full year, the company estimates adjusted EBITDA in the $160-$210 million range while for the first quarter of 2021, it expects the metric in the $45-$50 million band.  Further, it narrows its organic capex guidance to the $50-$70 million band (including $35-$40 million of maintenance capex and $15-$30 million of growth capex).  Oceaneering projects unallocated expenses at around $30 million per quarter.

The company expects cash tax payments in the range of $35-$40 million while its interest expense is estimated to be around $40 million. Also, it hopes to generate a positive free cash flow in 2021, surpassing the amount generated in 2020.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 82.61% due to these changes.

VGM Scores

Currently, Oceaneering International has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Oceaneering International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.