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Oceaneering (OII) Q1 Earnings Top Estimates, Revenues Miss

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Oceaneering International, Inc. (OII - Free Report) delivered better-than-expected earnings for first-quarter 2020. The company reported adjusted earnings per share of 4 cents while the Zacks Consensus Estimate was of a loss of 19 cents. Moreover, the bottom line reversed the prior-year adjusted loss of 24 cents per share, attributable to benefits derived from cost-control measures.

However, the company’s revenues of $536.67 million missed the Zacks Consensus Estimate of $541 million. This underperformance could be attributed to disappointing results from the Advanced Technologies and the Subsea Projects units. However, the top line improved 8.7% year over year from $494 million.

Segmental Information

Remotely Operated Vehicles (ROV): Revenues were $111.78 million compared with $100.34 million in first-quarter 2019. Operating income was $9.06 million, higher than $1.42 million in the year-ago quarter attributable to cost management and efficiencies along with less installations and mobilizations. Meanwhile, days on hire rose 14.7% year over year to 14,853 while vessel utilization increased to 65% from 53% a year ago. 

Subsea Products: Revenues came in at $194.8 million, up from the prior-year figure of $128.8 million. Meanwhile, operating loss came in at $91.85 million compared with the year-ago loss of $476,000. However, the backlog surged to $528 million as of Mar 31, 2020 from the year-ago backlog of $464 million.

Subsea Projects: Revenues dropped 31.5% to $61.5 million from $89.7 million in the year-ago quarter. Moreover, the unit suffered an operating loss of $145.3 million against $2.89 million income in first-quarter 2019 due to weak revenues resulting from soft seasonal vessel and survey activity.

Asset Integrity: Revenues of $59.1 million were marginally lower than the year-ago figure of $60.7 million. Due to persistent pricing woes, the segment incurred an operating loss of $109.4 million, wider than the prior-year loss of $713,000.

Advanced Technologies: Revenues from this non-energy segment totalled $109.4 million, down from $114.3 million in first-quarter 2019.

Meanwhile, operating loss of $10.6 million came in against $9.59 million income in the year-ago quarter due to the unfavourable impact on entertainment business operating margins on account of the coronavirus pandemic.

Capital Expenditure & Balance Sheet

Capital expenditure in the first quarter including acquisitions summed $27.2 million. As of Mar 31, Oceaneering had cash and cash equivalents worth $307.5 million, and long-term debt of $806.4 million. The total debt to total capital was 55.9%.

Guidance

Oceaneering projects unallocated expenses in the high $20-million range per quarter.

The company has further slashed its capital expenditure estimate to the $45-$65 million band. Further, Oceaneering reduced cash tax payments view to the range of $30-$35 million. The company is targeting expense savings of $125-$160 million annualized by the end of this year and hopes to be free cash flow positive for 2020.

Zacks Rank & Performance of Other Energy Players

Oceaneering has a Zacks Rank #3 (Hold).

Among other players in the energy sector that already reported first-quarter earnings, the bottom-line results of Cheniere Energy Inc. (LNG - Free Report) , Murphy USA Inc. (MUSA - Free Report) and Williams Companies Inc. (WMB - Free Report) beat the respective Zacks Consensus Estimate by 204.3%, 4.3% and 4%. While Cheniere Energy and Williams Companies carry a Zacks Rank #2 (Buy), Murphy sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

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