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Oceaneering (OII) Q1 Earnings and Revenues Beat Estimates

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Oceaneering International, Inc. (OII - Free Report) reported first-quarter 2021 adjusted earnings of 3 cents per share, which beat the Zacks Consensus Estimate of a loss of 5 cents per share. The better-than-expected result benefitted from cost-management measures and higher revenue contribution from the Offshore Projects Group segment.

However, the bottom line fell from the year-ago earnings of 4 cents due to lower-than-expected sales from the Aerospace and Defense Technologies, and the Manufactured Products units. Precisely, revenues from the segments totaled $88.3 million and $86.8 million, lagging the Zacks Consensus Estimates of $95 million each.

Oceaneering’s total quarterly revenues of $438 million surpassed the Zacks Consensus Estimate of $433 million but declined 18.4% from the year-ago sales of $537 million.

Oceaneering International, Inc. Price, Consensus and EPS Surprise

 

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 $119.1 million compared unfavorably with $139.8 million in first-quarter 2020. The segment reported an operating income of $14.6 million. However, the year-ago quarter witnessed a loss of $94.1 million. Meanwhile, days on hire fell 20% year over year to 11,887, while ROV utilization decreased to 53% from 65% a year ago.

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

The segment’s revenues were $86.8 million, down from the prior-year figure of $166.5 million. However, operating income of $2.8 million increased considerably against the year-ago loss of $66.1 million. The outperformance can be attributed to favorable contract close-outs. Meanwhile, the backlog dropped to $248 million as of Mar 31, 2021.

Offshore Projects Group: 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 increased 20.2% to $89.2 million from $74.3 million in the year-ago quarter. Moreover, the unit’s operating income of $8.8 million increased from the $79.9 million loss reported in first-quarter 2020.

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

Revenues of $54 million declined from the year-ago figure of $64.7 million. However, the segment reported an operating income of $2.5 million against the prior-year loss of $121.5 million as a result of enhanced execution of personnel.

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 from the segment totaled $88.3 million, down from $91.4 million in first-quarter 2020.

Operating income of $16.8 million rose from $13 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 first quarter, including acquisitions, summed $10.7 million. As of Mar 31, 2021, Oceaneering had cash and cash equivalents worth $442.7 million, and long-term debt of $804.9 million. The total debt to total capital was 59.5%.

Outlook

For 2021, the company expects an adjusted EBITDA of $180-$210 million. Moreover, Oceaneering estimates adjusted EBITDA of $55-$60 million for second-quarter 2021. Further, it maintains its previous organic capex guidance of $50-$70 million (including $35-$40 million of maintenance capex and $15-$30 million of growth capital expenditure). Oceaneering projects unallocated expenses at around $30 million per quarter.

The company anticipates cash tax payments of $40-$45 million for 2021. Also, it hopes to generate a positive free cash flow this year, surpassing the amount generated in 2020.

Zacks Rank & Key Picks

Oceaneering currently has a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Bonanza Creek Energy, Inc. (BCEI - Free Report) , Exxon Mobil Corporation (XOM - Free Report) and Whiting Petroleum Corporation (WLL - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bonanza’s earnings for 2021 are expected to rise 21.7% year over year.

Exxon’s earnings for 2021 are expected to increase 18.2% year over year.

Whiting Petroleum’s earnings for 2021 are expected to grow 7.6% year over year.

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