Oceaneering International (OII 1.57%) warned investors earlier this year that 2018 would be a challenging one. The offshore service and product company also thought that the first quarter would be particularly tough because it's a seasonally weaker quarter. While it didn't go exactly as the company envisioned, the results met its muted expectations overall.
Oceaneering results: The raw numbers
|
Metric |
Q1 2018 |
Q1 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$416.4 million |
$446.2 million |
-7% |
|
Adjusted net income |
($40.2 million) |
($4.2 million) |
N/M |
|
Adjusted EPS |
($0.41) |
($0.04) |
N/M |
Data source: Oceaneering International.
Image source: Getty Images.
What happened with Oceaneering this quarter?
Oceaneering's financial results continued to sink:
- Heading into the quarter, Oceaneering expected operating losses from its subsea products, subsea projects, and remotely operated vehicles (ROV) segments, along with breakeven results from asset integrity and an improvement in profitability from advanced technologies. While results in the ROV and subsea projects segments declined as expected, subsea products' operating income dropped less than anticipated because the company was able to pull certain projects forward. Meanwhile, asset integrity hit the mark with roughly breakeven results. Finally, operating income from the advanced technology segment didn't improve as anticipated due to some unexpected costs. In the end, however, everything balanced out since the company's consolidated results matched its forecast.
- While the company reported another net loss, it still generated $5.6 million in cash flow from operating activities. It used that money, plus some of the cash on its balance sheet, to invest $25.7 million in organically growing its portfolio. Further, the company spent $68.4 million to acquire Ecosse, which will increase its market position in the offshore renewable energy market. Even with those expenditures, the company ended the quarter with more than $1.1 billion in cash against just $785 million in long-term debt.
What management had to say
CEO Rod Larson commented on the company's results, pointing out that,
Our consolidated first quarter operating results met our expectations, and reflected the seasonality and timing of projects within our energy services businesses. We are pleased that each of our operating segments generated positive EBITDA, and our consolidated adjusted EBITDA of $25.2 million was in line with consensus published estimates.
As Larson notes, the quarter had its share of challenges due to seasonality and timing, made worse by the continued sluggishness of the offshore drilling market. However, the company battled through those issues and posted results that met its modest expectations.
Looking forward
The first quarter is a seasonally slow one for Oceaneering. Because of that, Larson stated that "for the second quarter, compared to the first quarter, we anticipate quarterly operating profitability and improvements from all of our business segments, with the exception of Subsea Products, due to the pull-forward of projects into the first quarter, as previously mentioned." However, even with that uptick, the company still expects 2018 to be a tough year, which is why it reaffirmed its prior guidance that full-year results would be much lower than they were in 2017.
