It has been about a month since the last earnings report for Oceaneering International (OII Quick QuoteOII - Free Report) . Shares have lost about 6.5% 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 its most recent earnings report in order to get a better handle on the important drivers.

Oceaneering Q1 Earnings Miss Estimates

Oceaneering International reported first-quarter 2023 adjusted profit of 5 cents per share, which missed the Zacks Consensus Estimate of 10 cents. This underperformance was due to lower-than-expected operating income from Aerospace and Defense Technologies segment.

However, the bottom line improved from the year-ago quarter’s loss of 6 cents per share. This can be attributed to year-over-year strong operating income from certain segments — Subsea Robotics, Manufactured Products, Offshore Projects Group and Integrity Management & Digital Solutions.

Total revenues amounted to $537 million, which missed the Zacks Consensus Estimate of $547 million. The top line, however, increased approximately 20.3% from the year-ago quarter’s $446.2 million owing to strong performance from Subsea Robotics and Manufactured Products segments.

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 $169.2 million compared with $128 million in the prior-year period. Operating income came in at $33.7 million, higher than the year-ago quarter’s $11.6 million. Days on hire increased 20.1% year over year to 14,228, while Remotely Operated Vehicles’ utilization remained unchanged at 63%.

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

Revenues were $112.9 million compared with the prior-year figure of $82.7 million. Operating profit came in at $11.3 million compared with the year-ago quarter’s figure of $2.6 million. This was primarily due to better cost absorption and a favorable project mix. Backlog rose to $446 million from $334 million as of Mar 31, 2023.

Offshore Projects Group: This includes Oceaneering’s former Subsea Projects segment, excluding survey services and global data solutions, and the service and rental business, without ROV tooling.

Revenues increased about 7% to $104.3 million from $97.4 million in the year-ago quarter. Operating income came in at $5.5 million compared with $666,000 in the first quarter of 2022. This improvement was due to increased vessel utilization.

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

Revenues were $60.1 million compared with the year-ago quarter’s figure of $56.6 million. This improvement can be attributed to increased revenues for extra projects. The segment also reported an operating income of $3.1 million compared with the prior-year quarter’s $3.5 million.

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

Revenues totaled $90.5 million compared with $81.5 million in the year-ago quarter. Operating income of $8.5 million declined from $11.8 million in the prior-year quarter. This can be attributed to higher planned costs on several projects in defense subsea technologies business.

Capital Expenditure & Balance Sheet

Capital expenditure, including acquisitions, came in at $18.3 million. As of Mar 31, 2023, OII had cash and cash equivalents worth $505 million and long-term debt of about $700.7 million. The total debt-to-total capital was 57.1%.

Outlook

For the second quarter of 2023, OII expects the Manufactured Products segment to experience higher activity levels but lower operating profitability compared with the previous quarter. It also expects the Integrity Management & Digital Solutions business to remain relatively flat in terms of both activity levels and operating profitability. While the Offshore Projects Group segment is projected to experience a significant improvement in operating profitability, the Subsea Robotics and Aerospace and Defense Technologies unit is likely to see higher activity levels and significant operating profitability improvements.

Unallocated expenses are expected in the mid-to-high $30 million range. For 2023, Oceaneering projects consolidated EBITDA in the $260-$310 million range, and continued significant free cash flow generation in the range of $75-$125 million. OII also anticipates capital expenditures of $90-$110 million. The company expects net income in the band of $75-$90 million and cash tax payments in the range of $60-$65 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

The consensus estimate has shifted 17.83% due to these changes.

VGM Scores

Currently, Oceaneering International has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second 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

Oceaneering International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.