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Oceaneering (OII) Incurs Narrower-Than-Expected Loss in Q2

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Oceaneering International, Inc. (OII - Free Report) reported second-quarter 2018 adjusted loss of 23 cents per share, narrower than the Zacks Consensus Estimate of loss of 26 cents. However, the bottom line compares unfavorably with the prior-year quarter earnings of 2 cents per share.

Total revenues of $478.7 million topped the Zacks Consensus Estimate of $446 million. However, the top line declined about 7% from $515 million in the prior-year quarter.

Segmental Information

Remotely Operated Vehicles: This segment’s revenues were $107.4 million compared with $103.4 million in second-quarter 2017. The segment generated operating earnings of around $4.5 million compared with operating income of $10.4 million in the year-ago quarter. The results were adversely impacted by a shift in geographic mix, along with higher costs related to reactivation and mobilization of remotely operated vehicles.

Subsea Products: The segment’s revenues declined to $121.7 million from the prior-year quarter’s figure of $174.9 million. Operating income tumbled 78.2% to $2.3 million from $10.5 million generated in the second quarter of 2017. This deterioration was a result of reduced activities and increasing costs. Notably, the backlog of the segment came in at $245 million.

Subsea Projects: Revenues from this segment amounted to $78 million compared with $75.5 million recorded in the year-ago quarter. The segment incurred an operating loss of $10.4 million, backsliding from the operating income of $3 million recorded a year ago. Lower-than-expected margins and delayed projects affected the segment’s performance.

Asset Integrity: The segment’s revenues totaled $67.4 million, higher than the year-ago quarter’s recorded figure of $58.2 million. However, operating income declined to $3.4 million as a result of cost inefficiency from $3.8 million in the prior-year quarter.

Advanced Technologies: Revenues from this segment were around $104.1 million, higher than $103 million in second-quarter 2017 level amid higher government related work. As such, operating income rose to $7.9 million from $7.6 million in the year-ago quarter.

Balance Sheet

Capital expenditure in the second quarter was $27.8 million.

As of Jun 30, 2018, Oceaneering had cash and cash equivalents of $769.8 million and long-term debt of around $782.2 million. The debt-to-capitalization ratio of the company was 33.2%.

Updated Guidance

The company updated its full-year 2018 guidance and now expects EBITDA within $140-$160 million compared with the prior guidance band of $140-$180 million. At the midpoint of this range, the EBITDA would represent a 43.3% decline from 2017 levels.

Oceaneering now anticipates its capital expenditure between $100 million and $140 million compared with the prior guidance of $80-$100 million.

Zacks Rank & Key Picks

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

Some better-ranked players in the energy space are China Petroleum and Chemical Corporation (SNP - Free Report) , also known as Sinopec, ConocoPhillips (COP - Free Report) , and Marathon Oil Corporation (MRO - Free Report) . While Sinopec sports a Zacks Rank #1(Strong Buy), ConocoPhillips and Marathon Oil carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

ConocoPhillips, based in Houston, TX, is a major global exploration and production company. It pulled off an average positive earnings surprise of 27.59% in the last four quarters.

Marathon Oil, leading energy explorer, surpassed earnings estimates in three of the four trailing quarters with an average positive earnings surprise of 60.36%.

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