Oceaneering International, Inc. OII reported an adjusted third-quarter 2024 profit of 36 cents per share, which missed the Zacks Consensus Estimate of 44 cents. This was due to lower-than-expected operating income from the company’s Subsea Robotics, Offshore Projects Group, Integrity Management & Digital Solutions and Aerospace and Defense Technologies segments.
However, the bottom line was flat year over year. This can be attributed to year-over-year strong operating income from the Manufactured Products segment.
Total revenues were $679.8 million, which beat the Zacks Consensus Estimate of $674 million and increased approximately 7.1% from the year-ago level of $635 million.
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The company bought back 422,229 shares at a cost of around $10 million in the third quarter. OII reported a net income of $41.2 million and an adjusted EBITDA of $98.1 million, while consolidated operating income for the same period was $71.3 million.
OII's fleet of Remotely Operated Vehicles (ROVs) numbered 250 with a utilization rate of 69%.
Oceaneering International, Inc. Price, Consensus and EPS Surprise
Oceaneering International, Inc. Price, Consensus and EPS Surprise
Oceaneering International, Inc. price-consensus-eps-surprise-chart | Oceaneering International, Inc. Quote
Segmental Information
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 totaled $215.7 million compared with the year-ago quarter’s $197.3 million. The top line surpassed our projection of $201.5 million.
The segment also reported an operating income of $65.7 million compared with $47.8 million a year ago. The figure was also higher than our estimate of $60.6 million.
Manufactured Products: The segment focuses on the manufactured products business, theme park entertainment systems and automated guided vehicles.
Revenues amounted to $143.7 million, up substantially from the prior-year figure of $122.9 million. However, the top line missed our projection of $157.4 million. The segment posted an operating profit of about $11.3 million, up from the year-ago quarter’s $8.2 million. Moreover, the reported figure beat our estimate of $9.1 million.
Additionally, the backlog rose to $671 million as of Sept. 30, 2024, from $556 million as of Sept. 30, 2023.
Offshore Projects Group (OPG): This segment involves Oceaneering’s former Subsea Projects unit, excluding survey services and global data solutions and the service and rental business, excluding ROV tooling.
Revenues decreased about 1.9% to $147.5 million from $150.3 million in the year-ago quarter, due to changes in project mix in international markets, vessel crane repair costs and associated vessel downtime. However, the figure beat our projection of $144.3 million. The unit’s operating income totaled $20.3 million compared with the prior-year quarter’s $26.7 million. The figure beat our estimate of $18.7 million.
Integrity Management & Digital Solutions (IMDS): This segment covers Oceaneering’s Asset Integrity unit, along with its global data solutions business.
Revenues of $73.5 million increased from the year-ago quarter’s $66.1 million. However, the figure marginally missed our projection of $73.6 million. The segment reported an operating income of $0.7 million, down from the prior-year quarter’s $3.2 million. The figure also missed our estimate of $0.9 million.
Aerospace and Defense Technologies (ADTech): The segment is engaged in Oceaneering’s government business, which focuses on defense subsea technologies, marine services and space systems.
Revenues totaled $99.2 million, marginally up from $98.6 million recorded in the third quarter of 2023. Moreover, the figure beat our estimate of $97.2 million. The operating income dropped to $12.2 million from $14.1 million in the year-ago quarter and missed our estimate of $12.9 million.
OII’s Capital Expenditure & Balance Sheet
The capital expenditure in the third quarter, including acquisitions, totaled $24.9 million.
As of Sept. 30, 2024, OII had cash and cash equivalents worth $451.9 million and $461.6 million, respectively, along with a long-term debt of about $480.7 million. The debt-to-total capital was 40.6%.
Outlook for Oceaneering
This Zacks Rank #3 (Hold) company has updated its full-year guidance for 2024 and has introduced initial projections for 2025. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For the fourth quarter of 2024, the company expects a slight increase in consolidated revenues compared with the third quarter, while adjusted EBITDA is anticipated to remain consistent with the same.
For 2024, it anticipates consolidated adjusted EBITDA to range between $340 million and $350 million. For 2025, consolidated EBITDA is expected to be between $400 million and $430 million. Free cash flow is anticipated to exceed the 2024 level.
At the segment level, OII’s Subsea Robotics is predicted to experience a slight decline in revenues and operating profitability due to normal seasonal variations. Although revenues for Manufactured Products are expected to rise, operating profitability is likely to decline significantly. Conversely, Offshore Projects Group is expected to see increased revenues and notably higher operating profitability.
OII’s Integrity Management & Digital Solutions is anticipated to improve its operating profitability, even with a decline in revenues, while both revenues and operating profitability for Aerospace and Defense Technologies are expected to decrease. Unallocated expenses for OII are projected to be around $40 million.
Oceaneering projects increased revenues and enhanced operating performance across all segments in 2025, particularly from Subsea Robotics, Manufactured Products and Integrity Management & Digital Solutions.
Important Energy Earnings So Far
While it is still early in the earnings season, there have been a few key energy releases so far. Let us glance through a couple of them.
Liberty Energy LBRT, a Denver-CO-based oil and gas equipment company, announced an adjusted net income of 45 cents per share, which missed the Zacks Consensus Estimate of 55 cents. This was primarily due to poor equipment and services execution and lower activity in the reported quarter. Additionally, the bottom line declined from the year-ago quarter’s reported figure of 86 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, LBRT’s board of directors announced a dividend of 8 cents per common share payable on Dec. 20, to its stockholders of record as of Dec. 6. This dividend represents a 14% increase from the prior regular quarterly dividend of 7 cents per share. In the quarter, Liberty returned $51 million to its shareholders through a combination of share repurchases and cash dividends.
Energy infrastructure provider,Kinder Morgan, Inc. KMI reported third-quarter adjusted earnings per share of 25 cents, which missed the Zacks Consensus Estimate of 27 cents. The bottom line was flat year over year. The weakness in quarterly results was caused by lower contributions from the Products Pipelines and CO2 business segments.
KMI also announced a quarterly cash dividend of 28.75 cents per share for the third quarter of 2024 (annualized dividend of $1.15), implying a 2% increase from the third-quarter 2023 level. The dividend is payable on Nov. 15, 2024, to its shareholders of record as of Oct. 31.
Schlumberger Limited SLB, a Houston, TX-based oil and gas equipment and services provider announced third-quarter earnings of 89 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 88 cents. The bottom line also increased from the year-ago quarter’s 78 cents.
The strong quarterly earnings were primarily driven by broad-based earnings growth and margin expansion, especially in the Middle East, Asia and offshore North America. Additionally, cost optimization, greater adoption of digital solutions and contributions from long-cycle deepwater and gas projects played significant roles.
SLB reported a free cash flow of $1.81 billion in the third quarter. As of Sept. 30, the company had approximately $4.46 billion in cash and short-term investments. At the end of the quarter, it registered a long-term debt of $11.86 billion.
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