Oceaneering Stock Sinks Nearly 17% as Third-Quarter Profit Misses Estimates and Fourth-Quarter Outlook Softens

Shares of Oceaneering International Inc. sank nearly 17% on Thursday after the offshore energy services and technology company reported third-quarter profit below Wall Street expectations and forecast weaker results for the fourth quarter.

Oceaneering shares fell $7.37, or 16.72%, to $36.72 in midday trading, cutting the company's market value to about $3.6 billion. The decline followed a 4.5% drop in after-hours trading on Wednesday, immediately after the results were released.

Earnings miss

Oceaneering reported adjusted earnings of 50 cents per share for the quarter ended Sept. 30, down from 55 cents a year earlier and well below the average analyst estimate of 59 cents.

Revenue rose 6% to $784.6 million from $742.9 million, slightly above expectations of about $780.6 million.

Net income fell 26% to $52.6 million, or 52 cents per diluted share, from $71.3 million, or 71 cents per share, a year earlier. The results included a $19 million loss related to the early repayment of debt.

Adjusted earnings before interest, taxes, depreciation and amortization rose 7% to $119.4 million.

"Our third-quarter results were in line with our guidance and consensus estimates," said Rod Larson, Oceaneering's president and chief executive, referring to the company's own targets.

Segment results

The company's largest business, Subsea Robotics, which operates remotely operated vehicles used in offshore oil and gas operations, increased operating income by 16% to $75.4 million on revenue of $233 million.

Manufactured Products revenue rose 8% to $168.2 million, while Aerospace and Defense Technologies revenue rose 7% to $135.1 million, although operating income in that unit fell.

But there were signs of softness. The Manufactured Products business reported a book-to-bill ratio of 0.77 over the past 12 months, meaning it is taking in fewer new orders than it is completing, a potential warning sign for future revenue.

Weaker outlook

The company's fourth-quarter outlook also weighed on the stock. Oceaneering forecast EBITDA of $85 million to $95 million for the quarter, well below the $119.4 million in adjusted EBITDA it reported in the third quarter.

It also expects operating income in its Subsea Robotics business to decline in the fourth quarter.

For 2027, the company issued initial guidance for consolidated EBITDA of $430 million to $480 million and said it expects free cash flow to exceed this year's level. Oceaneering plans to provide more detailed 2027 guidance with its fourth-quarter results.

Larson said the company remained on track to reach the top end of its full-year free cash flow guidance.

Profit-taking after big rally

The sharp decline also reflects how far the stock had run. Before Thursday, Oceaneering shares had climbed about 85% over the past year, as investors bet on growing demand for offshore energy services and the company's expansion into defense technology.

That rally left the stock vulnerable to profit-taking when results fell short of expectations.

Strong balance sheet

Despite the miss, Oceaneering's financial position remains solid. The company generated $163 million in operating cash flow and $142 million in free cash flow during the quarter. It ended the quarter with $735 million in cash and more than $1 billion in total liquidity, including its credit line.

The company also repurchased about $5 million of its shares during the quarter and said it expects to continue buybacks next year.

What's next

Investors will watch the fourth-quarter results for signs of whether the expected slowdown is temporary and whether new orders pick up in its manufactured products business.

Oil prices, which rose this week amid tensions in the Middle East, could also influence offshore spending decisions by energy companies in 2027, a key driver of demand for Oceaneering's services.