Oceaneering International, Inc. (OII) Bundle
Understanding Oceaneering International, Inc. (OII) Revenue Streams
Understanding Oceaneering International, Inc.'s Revenue Streams
Oceaneering International, Inc. generates revenue through several primary sources, including its Energy and Aerospace and Defense Technologies segments. Below is a breakdown of the company's revenue streams for the year 2024.
| Business Segment | Revenue (Three Months Ended Sep 30, 2024) | Revenue (Three Months Ended Sep 30, 2023) | Revenue (Nine Months Ended Sep 30, 2024) | Revenue (Nine Months Ended Sep 30, 2023) |
|---|---|---|---|---|
| Subsea Robotics | $215,715 | $197,343 | $617,632 | $553,016 |
| Manufactured Products | $143,734 | $122,877 | $412,501 | $360,698 |
| Offshore Projects Group | $147,539 | $150,273 | $406,651 | $385,127 |
| Integrity Management & Digital Solutions | $73,622 | $66,056 | $216,804 | $189,305 |
| Aerospace and Defense Technologies | $99,201 | $98,631 | $294,123 | $281,931 |
| Total Revenue | $679,811 | $635,180 | $1,947,711 | $1,770,077 |
The year-over-year revenue growth rate indicates a significant increase in revenue across several segments. The total revenue for the three months ended September 30, 2024, was $679,811 thousand, reflecting a 6.9% increase from $635,180 thousand in the same period of 2023. For the nine-month period, total revenue grew to $1,947,711 thousand, up 10.0% from $1,770,077 thousand in 2023.
The contribution of different business segments to overall revenue is as follows:
- Subsea Robotics: 31.8% of total revenue in Q3 2024.
- Manufactured Products: 21.2% of total revenue in Q3 2024.
- Offshore Projects Group: 21.7% of total revenue in Q3 2024.
- Integrity Management & Digital Solutions: 10.8% of total revenue in Q3 2024.
- Aerospace and Defense Technologies: 14.6% of total revenue in Q3 2024.
Significant changes in revenue streams have been observed, particularly in the Subsea Robotics segment, which reported an increase in revenue from $197,343 thousand in Q3 2023 to $215,715 thousand in Q3 2024, representing a 9.0% growth. This increase is attributed to improved ROV pricing and higher demand.
The company's backlog also reflects its revenue potential, with a total backlog of $671 million as of September 30, 2024, compared to $556 million a year earlier.
A Deep Dive into Oceaneering International, Inc. (OII) Profitability
Profitability Metrics
In evaluating the financial health of the company, profitability metrics such as gross profit, operating profit, and net profit margins are essential. The following table summarizes the key profitability figures for the three- and nine-month periods ended September 30, 2024, compared to the same periods in 2023.
| Metrics | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 |
|---|---|---|---|---|
| Revenue (in thousands) | $679,811 | $635,180 | $1,947,711 | $1,770,077 |
| Gross Profit (in thousands) | $130,962 | $114,697 | $343,557 | $293,342 |
| Operating Income (in thousands) | $71,333 | $57,929 | $168,390 | $133,878 |
| Net Income (in thousands) | $41,237 | $29,812 | $91,369 | $52,874 |
| Operating Margin (%) | 10% | 9% | 9% | 8% |
| Net Profit Margin (%) | 6.07% | 4.69% | 4.68% | 2.98% |
Over the past year, there has been a noticeable upward trend in profitability metrics. The gross profit margin improved from 18.07% in Q3 2023 to 19.27% in Q3 2024, indicating enhanced cost management and operational efficiency. Operating income also saw a significant increase, reflecting a robust operational performance in the latest reporting period.
When comparing these metrics to industry averages, the company is performing well. The industry average operating margin for similar businesses is around 8-10%, positioning the company at the higher end of this range. This is indicative of effective cost management strategies and strong demand for its services.
In terms of operational efficiency, the company has demonstrated an ability to maintain low selling, general, and administrative expenses relative to revenue. For the three-month period ended September 30, 2024, SG&A expenses were $59,629 thousand, constituting approximately 8.77% of total revenue, down from 8.94% in the same period of 2023. This reduction reflects a continued focus on cost control and operational efficiency.
The following table illustrates the profitability ratios over the past nine months:
| Period | Gross Margin (%) | Operating Margin (%) | Net Margin (%) |
|---|---|---|---|
| Q3 2024 | 19.27% | 10.00% | 6.07% |
| Q3 2023 | 18.07% | 9.11% | 4.69% |
| Q2 2024 | 18.50% | 9.50% | 5.50% |
| Q2 2023 | 17.80% | 8.90% | 4.40% |
The performance in profitability metrics indicates that the company is on a positive trajectory, with continuous improvement in margins and effective cost management strategies being implemented. The upward trend in each metric over the past year further supports the company's strong financial health.
As of September 30, 2024, the company reported a net income of $41,237 thousand, significantly increasing from $29,812 thousand in the prior year. This growth is reflective of strategic initiatives aimed at enhancing operational efficiencies and capturing new market opportunities.
Overall, the profitability metrics present a compelling case for investors, showcasing a company that is not only generating revenues but also converting those revenues into substantial profits through disciplined cost management and strategic growth initiatives.
Debt vs. Equity: How Oceaneering International, Inc. (OII) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, the company reported long-term debt of $500 million, which consists entirely of 6.000% Senior Notes due in 2028. The unamortized discount and debt issuance costs associated with these notes were $19.294 million, bringing the net long-term debt to $480.706 million.
The total equity for the same period was reported at $704.041 million, which includes common stock, additional paid-in capital, retained earnings, and other comprehensive income.
Debt-to-Equity Ratio
The debt-to-equity ratio is a critical metric for assessing the financial leverage of a company. For this company, the calculation as of September 30, 2024, is:
| Debt | Equity | Debt-to-Equity Ratio |
|---|---|---|
| $480.706 million | $704.041 million | 0.682 |
This debt-to-equity ratio of 0.682 indicates a relatively conservative approach to leveraging, as it is below the typical industry standard of around 1.0.
Recent Debt Issuances and Refinancing Activity
In October 2023, the company completed a private placement of an additional $200 million aggregate principal amount of the 2028 Senior Notes, which was a significant step in managing its debt profile. The company pays interest on these notes semi-annually, with the next payments due on February 1 and August 1 of each year.
Credit Ratings
The company's credit ratings have not been explicitly detailed in the recent filings, but it maintains compliance with all financial covenants under its revolving credit agreement, which reflects a stable credit position.
Balancing Debt Financing and Equity Funding
The company has strategically balanced its debt and equity funding to finance growth. For instance, through the first nine months of 2024, it utilized $17 million in cash for financing activities primarily due to share repurchases, reflecting a preference for equity buybacks while maintaining a manageable debt level.
Overall, the company appears to be in a strong position to manage its debt while pursuing growth opportunities through its equity structure.
Assessing Oceaneering International, Inc. (OII) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 30, 2024, the current ratio is approximately 2.06, calculated from current assets of $616 million and current liabilities of $299 million.
Quick Ratio: The quick ratio stands at 1.53, derived from quick assets (current assets minus inventory) totaling $491 million.
Analysis of Working Capital Trends
Net working capital as of September 30, 2024, is $611 million, indicating a healthy liquidity position. This represents an increase from $554 million at the end of 2023.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Net Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $616 | $299 | $611 |
| December 31, 2023 | $554 | $300 | $554 |
| September 30, 2023 | $590 | $330 | $260 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024:
- Net Cash Provided by Operating Activities: $74.8 million
- Net Cash Used in Investing Activities: ($63.2 million)
- Net Cash Used in Financing Activities: ($17.1 million)
- Net Decrease in Cash and Cash Equivalents: ($9.7 million)
Cash and cash equivalents at the end of the period were $451.9 million, down from $461.6 million at the beginning of the period.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has $215 million in unused commitments under its Revolving Credit Facility. This facility provides a cushion for potential liquidity needs.
Long-term debt as of September 30, 2024, totals $500 million, with no significant liquidity concerns noted. The company is compliant with all financial covenants and has demonstrated robust cash flow generation capabilities.
Overall, the liquidity position remains strong, supported by substantial cash reserves and manageable debt levels.
Is Oceaneering International, Inc. (OII) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio: As of September 30, 2024, the diluted earnings per share (EPS) was $0.40. The stock price was approximately $15.50. Thus, the P/E ratio is calculated as follows:
P/E Ratio = Stock Price / EPS = $15.50 / $0.40 = 38.75
Price-to-Book (P/B) Ratio: As of September 30, 2024, total equity was $704,041,000. The number of outstanding shares was 102,613,000. The book value per share is:
Book Value per Share = Total Equity / Outstanding Shares = $704,041,000 / 102,613,000 = $6.86
The P/B ratio is calculated as follows:
P/B Ratio = Stock Price / Book Value per Share = $15.50 / $6.86 = 2.26
Enterprise Value-to-EBITDA (EV/EBITDA): The enterprise value (EV) is calculated by adding market capitalization, total debt, and subtracting cash and cash equivalents. Total debt as of September 30, 2024, was $500 million, and cash and cash equivalents were $452 million. The market capitalization is:
Market Capitalization = Stock Price x Outstanding Shares = $15.50 x 102,613,000 = $1,595,000,000
EV = Market Capitalization + Total Debt - Cash = $1,595,000,000 + $500,000,000 - $452,000,000 = $1,642,000,000
EBITDA for the nine months ended September 30, 2024, was $168,390,000. Therefore, the EV/EBITDA is calculated as:
EV/EBITDA = EV / EBITDA = $1,642,000,000 / $168,390,000 = 9.76
Stock Price Trends
The stock price has experienced fluctuations over the past 12 months, starting at approximately $10.00 a year ago and reaching a high of $16.00. The following table summarizes stock price trends:
| Date | Stock Price |
|---|---|
| September 2023 | $10.00 |
| December 2023 | $12.00 |
| March 2024 | $14.00 |
| June 2024 | $16.00 |
| September 2024 | $15.50 |
Dividend Yield and Payout Ratios
As of September 30, 2024, the company has not declared any dividends. Therefore, the dividend yield is 0%. Consequently, the payout ratio is also 0%.
Analyst Consensus on Stock Valuation
According to the latest analyst ratings, the consensus is as follows:
| Analyst Rating | Number of Analysts |
|---|---|
| Buy | 6 |
| Hold | 2 |
| Sell | 1 |
Key Risks Facing Oceaneering International, Inc. (OII)
Key Risks Facing Oceaneering International, Inc.
The financial health of Oceaneering International, Inc. is influenced by various internal and external risk factors. These include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
Oceaneering operates in a highly competitive landscape, particularly within the offshore energy sector. The company's primary competitors include major players like Halliburton and Schlumberger, which could impact its market share and pricing strategies. The company reported a book-to-bill ratio of 1.21 for the trailing 12 months ended September 30, 2024, down from 1.31 for the year ended December 31, 2023.
Regulatory Changes
Changes in regulations, particularly related to environmental standards and offshore drilling practices, pose significant risks. The company is subject to various laws and regulations in multiple jurisdictions, which can affect operational costs and project timelines. As of September 30, 2024, Oceaneering had accrued $30 million in other long-term liabilities for worldwide unrecognized tax liabilities.
Market Conditions
Market volatility in the energy sector significantly impacts Oceaneering's revenue. The company generates a substantial portion of its revenue from contracts in the U.S. Gulf of Mexico, which are more active during the second and third quarters. For the three months ended September 30, 2024, the company reported revenue of $679.8 million, a slight increase from $635.2 million in the same period of 2023.
Operational Risks
Operational risks include the efficiency of project execution and the performance of equipment. As reported, the company experienced changes in project mix and vessel downtime that adversely affected its Offshore Projects Group segment. The operational income from this segment was $20.3 million for the three months ended September 30, 2024, down from $26.7 million in the prior year.
Financial Risks
Financial risks are associated with liquidity and capital management. As of September 30, 2024, Oceaneering reported long-term debt of $500 million from its 2028 Senior Notes, with interest payments due semi-annually. The company also utilized $36 million for maintenance capital expenditures and $37 million for growth capital expenditures in the first nine months of 2024.
Strategic Risks
Strategic risks involve the company's ability to adapt to changing market demands and technological advancements. Oceaneering is focusing on expanding its capabilities in mobile robotics and offshore renewables. The company’s revenue from its Subsea Robotics segment increased to $215.7 million for the three months ended September 30, 2024, compared to $197.3 million in the prior year.
Mitigation Strategies
To mitigate these risks, Oceaneering is investing in operational efficiency programs and diversifying its service offerings. The company is also actively managing its capital expenditures and maintaining compliance with financial covenants under its revolving credit agreement.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition affecting market share | Book-to-bill ratio of 1.21 |
| Regulatory Changes | Compliance with environmental regulations | Accrued liabilities of $30 million |
| Market Conditions | Volatility in energy sector | Revenue of $679.8 million |
| Operational Risks | Efficiency of project execution | Operating income of $20.3 million from OPG |
| Financial Risks | Liquidity and capital management | Long-term debt of $500 million |
| Strategic Risks | Adapting to market demands | Subsea Robotics revenue of $215.7 million |
Future Growth Prospects for Oceaneering International, Inc. (OII)
Future Growth Prospects for Oceaneering International, Inc.
Analysis of Key Growth Drivers
The company is poised for future growth through several key drivers:
- Product Innovations: Continued advancements in subsea robotics, including ROV technology, are expected to enhance service offerings.
- Market Expansions: Expansion into offshore renewable energy markets, particularly in wind energy installations.
- Acquisitions: Pursuing strategic acquisitions to broaden capabilities and service offerings, particularly in the aerospace and defense sectors.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024, was $1.947 billion, compared to $1.770 billion for the same period in 2023, indicating a year-over-year growth of approximately 10%. Operating income also increased from $133.9 million in 2023 to $168.4 million in 2024. The earnings per share (EPS) for the nine months ended September 30, 2024, was $0.90, up from $0.53 in the prior year.
Strategic Initiatives or Partnerships
The company has entered into several strategic partnerships aimed at enhancing operational efficiency and expanding its market reach:
- Partnerships with renewable energy firms to develop solutions for offshore wind projects.
- Collaborations with technology providers to advance digital solutions in asset integrity management.
Competitive Advantages
Oceaneering maintains several competitive advantages that position it for growth:
- Industry Leadership: The company is one of the largest providers of ROV services globally, holding a substantial market share.
- Diverse Service Offerings: A comprehensive portfolio across various sectors, including energy, aerospace, and defense, allows for cross-selling opportunities.
- Strong Backlog: As of September 30, 2024, the company reported a backlog of $671 million, up from $556 million in September 2023.
Financial Summary Table
| Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Revenue | $679.8 million | $635.2 million | $1.947 billion | $1.770 billion |
| Operating Income | $71.3 million | $57.9 million | $168.4 million | $133.9 million |
| Net Income | $41.2 million | $29.8 million | $91.4 million | $52.9 million |
| Earnings Per Share (EPS) | $0.40 | $0.29 | $0.90 | $0.53 |
| Backlog | $671 million | $556 million | - | - |
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Article updated on 8 Nov 2024
Resources:
- Oceaneering International, Inc. (OII) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Oceaneering International, Inc. (OII)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Oceaneering International, Inc. (OII)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.