OII - Earnings call transcript Q3 2017 | Oceaneering International, Inc.

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Operator

Good morning. My name is Denise and I will be your conference operator today. At this time, I would like to welcome everyone to the Oceaneering Third Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator of you Director conference. begin Investor Spera, may Relations, your Suzanne

Suzanne Spera

being replay you, welcome website. conference XXXX is and Good call. and the call Thank morning quarter to Denise. on be will available Oceaneering third Today's webcast Oceaneering's a results

us Chief Rod President Financial President. Marvin Senior Executive call Officer; and our prepared are be Vice who and will providing the comments; on Chief Joining Larson, Officer, Alan Curtis, Migura,

make during we business participants the we to XXXX. Before of operations Private provisions I that regarding are call pursuant like would strategy, conditions Safe statements forward-looking of future performance, course remind to the Securities our begin, just for and financial Litigation this industry Harbor Act the made of statements future plans Reform

non-GAAP measures. today Our include comments also financial

reconciliations I the measures Rod. over turn press release. to comparable GAAP and found our after details questions will statements. your directly to the third financial in most prepared now We quarter be can call Additional the welcome

Roderick Larson

morning, joining Good the and call today. for thanks

I would elephants my room. to the in address the two Before remarks, like prepared I begin

like reiterate I investments would that's bolt-on organic for the Company to remains first, our and through priority number and acquisitions. cash So used one growing

quarter positioning this fourth for full-year we the the the the in and press release board As many you current for focus on cash flow did for did future. to time at outlook diminishing probably operations noticed, our a growth not. not mention they of it's the dividend Company from prudent of because yesterday our XXXX, declaring resources quarter the for feel With an and

reinstating see quarterly don't position improvement and on the a anticipate market a flow. cash our dividend we While our quarterly a dividend we cash review basis, free to significant project outlook in until will we a board continue

of generate organic capital our XXXX debt did projected expenditures. maintenance the and not mean debt to cash cash or continue XXXX EBITDA and we sufficient that cash simply were statement indicated, We that should to our press flow than that perhaps invest growth expected will anticipated cash in Second our and and CapEx. reiterating servicing In flow. fund more written positive flows. have release flow to generate sufficient imply the cash to total equal our flows future, regarding point, service we We will we

my Now remarks. back to originally prepared

As loss of per share we we a the reported in third in press our incur release, quarter. $X.XX

these our results items in three outlook. However, did included not that considered been

Therefore, discrete non-income losses, taxes, Specifically offset expense tax $X.X items. of foreign results EBITDA in million during $X.XX the reflected for quarter income prior million for adjusted $X.X million $X.X related $XX year operating for exchange and million and EPS with profits expectations. Expenses, Sequentially, and and by relatively Subsea operating reduced mainly our Projects Unallocated income ROVs. to increased being we improved profit in were line realized by XX% Products, contributions adjusted and from Subsea lower due primarily

remains that an results services rate pricing and provision, to sluggish and believe higher to degradation and are was in tax approval offshore progression. Project income than the percentage light landscape mix we Subsea earnings the adjusted, statutory market these pre-tax as losses. challenging jurisdictions tax extremely commendable oilfield the Our geographic of which our We and of generated of in due products due continued of

declined which the revenue facility, expected and does third million of cash on basis $XX free of and than generated another United remained due for a operating consolidated ROV are for cash quarter mix. end industry ending first quarter, I'd to XX, to due XXXX. flow operating and operations more $XXX our the a by our on the second well balance On daily to was in million downturn. business sheet have We Furthermore, of compared we million of an our September per income increase for XXXX, pleased legacy that and now believe EBITDA on we and segment adjusted Over quarter. of operating months segments business profitable. States. revolving in our undrawn $XXX cash and at costs. each X% day flow. the nine the million an average cash of provide expand us quarter geographic XXXX manage At lower until third in million had ROV credit $XXX the we in shift optionality range lower to of expire the the Average not $XXX per through day revenue average our contracts as the offer trend to like hire October of positioned services we to products review continuing liquidity hire and

increased Our as our margin to declined to XX,XXX cost XX%, XX%. higher approximately associated startups and personnel fleet X% delays costs demobilizing due vessel maintaining second the on additional EBITDA days Consequently, with Days ROVs, in repair to expense. increased due from to incurring XX% utilization ROV hire XX% maintenance and adjusted improve quarter. for from

work We utilization. attempt market to bid or in continue to grow maintain in prevalent market rates at share currently

XX, June compares the the At end XXX the use XXXX. of March XX% XX% to of drill This and at size of we rigs of fleet the and end contract. XXXX the on XXX having in preceding or floating during of quarter Our at of support ROVs mix contracted remained September, XX% fleet our XX% At vessel-based vehicles. end at immediately was unchanged the from the end the had ROVs under activity. rigs quarter on September

of an our service unit and improved in improved to as being Now turning on a Operating due business higher by Products, by unit. execution umbilical generated our segment Subsea the in our my comments margin operating percentage revenue the decline rental quarterly revenues. excellent business quarter third XX% income expected

with XXXX $XXX Appomattox. attributable XX, Subsea associated June decline of The production Shell order million $XXX backlog was umbilical intake Our and backlog to XX, backlog to was compared Products September XXXX at million. our largely lower

change quarter. past prior Our has X.XX, was book-to-bill ratio and no the X.XX the year-to-date been from XX months

revenue driven Projects increased, income principally Mexico work. in improvements and U.S. Subsea of operating Gulf by seasonal deepwater vessel For

slightly Asset income projected. as Integrity operating was down

revenue compared expected Advanced levels and third income expenditures U.S. to our totaled Subsea operating of to primarily and due segment, Technologies, For our for for the quarter the Unallocated quarter work corporate most the Organic the ROV in during as lower expenses. declined segments. $XX quarter which lower prior invested capital million approximately Navy. due lower were to Expenses non-oilfield of was Product

to we $XX presence investment expand the in Caspian million made Additionally, our Region. an equity

also cash million We $XX in paid dividends.

quarter our seasonality We level and address be adjusted will Most in other decline ROV proceed Project the of segments quarter of is modestly fourth income markets. segments the in Subsea due for me our expected our the few quarter to believe outlook Oilfield very near-term operating we considerably in let to as lower results activity. of to our Oilfield reduced and by than support results our catalyst segment. improvement be third XXXX with Now fourth lower an from

For fewer services revenue a partially decrease modest our slightly demand on are day. Sequentially projecting Expenses. segment segment improvement seasonality. working Unallocated vessel Advanced and non-Oilfield demand is income we ROV for quarterly Technologies days expecting Lower per lower attributable to based we're our provide higher average due to largely to operating and reduced

quarter. average costs the a to We daily also compared in our prior decline operating expect

range inspection repair on actually Our during working IMR our floating and ROV the the we of ROV determined by the high utilization the fleet XXXX, XX% vessel Consequently, mid-XX% and activity and based the of our range. largely the for segment guidance the year remainder level to maintenance undertaken. results are are for number rigs adjusting or of full-year of ROV EBITDA

during begin additional them XX%. Of contracts. floaters set share for of floaters, were fourth of We XX and expect to market we we XX Of expiring maintain XX this ROVs floating and approximately new or drill have There that new rigs were September, ROV contract period. XX our XX quarter same XX%. have end are to the rolling have ROVs support. or contracts XX total four of drilling terms during the new receiving contracts, At on slightly floating increase rigs XX the to them XX the there are

fewer contracts encouraging, wells fourth as incur days we to While in support this of many drill are or is expected some drilled. anticipate between time these rigs quarter the idle

to maintain need a more levels discernible increase customers' in increase on sizeable in offshore fleet we be profitability. our place share ROV and vessels, support spending endeavor and ROVs utilization drill we Although market a for our there to

and For recent competitive Subsea contracts contracts outlook is we completed mid more further legacy pricing or to the enter Products for can at due single-digit executed. margins been having better being pricing with that umbilical range

from our III For global release vessel and year. in seasonal during the this expect operations, the to of of to price vessels due Mexico. of vessel water we BP Ocean quarter income Gulf the current lower profit Intervention due work Subsea a by lower deep contribution Projects, the oversupply in I continued low operating U.S. environment, the Angola decrease third

Our two-year India term Island early the Pride November. is scheduled to for end contract offshore in

has customer several have IMR we to The out requirements vessel for work. however, this to to their field exercise not work, periods tender them, this future option Our are is they available use the them. right and bidding in for

lower fourth For XXXX expect to results seasonal quarter decreases. in Asset of due the our be Integrity, we to

we For park improvement activity segment, increased a technologies, our expect the to slight projects. theme on non-oilfield advance due

the at income will quarter be line a that been operating outlook has basis we revised for downward, on continue of full-year XXXX. our fourth we consolidated While to profitable believe marginally the

to to CapEx million million of our our Turning maintenance this million. to our range expectations, $XX to are $XX expected of narrowing for year a estimated organic million and lowering $XX total expenditure we CapEx approximately capital to amount $XXX

the perspective, Jones in change with first and made the service we Evolution, Regarding has December X% offshore providers macro costs end vessel, service have the quarter progress FIDs economics and awards mid contracted a product with from field Subsea placed thirty about and first working the oil December our From stable and to XXXX and of activity project have and resilient XXXX. XXXX development life, Act rig delivered count of showing operators lowering been be improving towards of trend the offshore no positively, Ocean down at signs year-on-year. to begun expected some prices, somewhat floating considerable only and

Almost in significant For XX of infrastructure existing projects XXXX there with smaller XXXX. about and developments that are capture cycle umbilical XX project typically offerings, a of project. investments. a sanction half looking come are product fourth with well the requiring projects six invest the in We're risk for oil are CapEx less are first quarter this to these size influenced for to have FID and Operators only short it compared minimize been smaller usually hints as a all the projects more year-to-date, to time is service in to of operator by leveraging lag tiebacks, few sanctioned, months FIDs in offshore the change FIDs CapEx encouraged and placement projects. bodes to the focus for earlier integrated of and intensive by our us order between already year

thereby to from been Regarding with breakeven leading begin projects Subsea expected of In in projected continue XX%, Subsea development, the XXXX to rebound a are current a XXXX, cost estimates about down we number further in the summary, increase a project have XXXX. outlook, Trees, to XX down, decline of compared in Tree challenging driving estimates. XXXX another indicator reworked for tree X% that orders forward. which XXXX reduced, to from and in XX% moving XXX points and year-over-year for XXX is Tree in installations sanctions projected demand tree Subsea about to which is XXXX indicate project trees is in encouraged research enabling represents installations increase a XXXX

be and However, we expect the to likely slow laborious. recovery is

activities into based the and than reductions and XXXX expectations working as to Looking XXXX, believe be XXXX. after floating further expenditures, in XXXX, oil gas pushed forward of operating industry our we on number for earnings rigs will and expected lower current and significantly capital get

anticipated growth each we consolidated than positive our capital maintenance XXXX basis, debt to during and we that On However, our more operating cash should generate of our contribute flows organic fund EBITDA. a and expect sufficient segments will expenditures. service

and XXXX, For growth our CapEx range to organic million expect maintenance $XXX million. $XX to we from

do to While increase be an improve the an not shift near-term we XXXX, momentum in we market meaningfully in to pricing. weakness the during are to activity expect or offshore offset levels second present opportunity adequate this anticipating to half of

However, XXXX in than in we been have we do anticipate busier being XXXX.

ability decline to last We a more offshore to although lower In our be difficult. in are due market profitability. oilfield this However, pricing, even expecting services closing, manage we through remain confident XXXX has two challenging and is in cycle. been for our our years to going the the business

driven dynamics, services business non-oilfield is mention the core would to Oceaneering's offshore macro Advanced This our remiss While of segment. offshore not customers. serves products Technology our be I oil by offering and

offshore to to resources approach activity, can to provide as are entirely overall an This become During business the portfolio well substantial. of products current base. our non-cyclical pleased our Technology we in low level different the has to have leverage contribution unit services we as a existing earnings segment service to and Advanced customer

maintaining Moving invest organization balance business, of our and and and continues our focus investment the develop projects be grow in, life the directly value-added in the or finally, with given markets that meet strong we term, our engaging expenditure opportunities an gas Defending we flow, customers deepwater believe oilfield to efficiencies of any lower depletion, happy organization, to emerge forward, cash throughout need that in will we few for each cycle. to solutions and oil ongoing sheet. of a levels the more interest have. phase past now over customers in focus coupled their our the participate to that with Company might offshore controlling appreciate looking with our take reservoir share in market to our Oceaneering be of will costs increase our more existing Longer the And with driving maintaining the on may production level commensurate continued operating growing years demand. everyone's to you and questions industry again meaningfully projected

Operator

[Operator Your comes from question Ian with Macpherson Simmons. first Instructions]

is line open. Your

Ian Macpherson

Hi. Thanks. Good morning.

Roderick Larson

Good morning, Ian.

Ian Macpherson

off Box worse opened call with you simply and you've stock gotten with answer I'm an question or the outlook. XXX say kick and want EBITDA started, that? to prices don't a since to, you XXXX it intend be you a for to XXX and now, I not. XXXX ask Rod, to I sorry that know I EBITDA. between only XXXX to The don't mean Pandora's to on And give comment Any so the seems I want blush would right range bogey for but

Roderick Larson

right. Ian, I it got mean you

I think we give with of so kind the we've can we right levels. for about much as guidance stands XXXX, said it given what now funding as

Ian Macpherson

that, All right. have so Well, on let one. me I tried another

Roderick Larson

I appreciate it.

Ian Macpherson

well, So leading-edge after we expecting stabilize for the basis? so that revenue the but QX, quarter, next the area we per comes look at this down per that range when EBITDA cost down, XX% a And of day to ROVs in comes QX? a for is quarters are to day as for on it possible think about couple

Roderick Larson

would look I of towards QX. we in we think be we think when it, looked Ian. that the mid-XX% at And we guided in range still in XX% it the lower year at the suggest, range would I and the totality

Ian Macpherson

on and Got queue. pass it it. I get will in back Thanks.

Roderick Larson

Thanks.

Operator

with Your next Syed Goldman comes question from Waqar Sachs.

Your open. line is

Waqar Syed

What's low E&Ps. to Thank you CapEx with With as and your and it taking being offshore well. OpEx it third-party, of of analysis is respect your macro discussions in kind lower source, the the own question. being my for guidance is

your macro so in assumption? And what's that level confidence

Roderick Larson

what It largely so are we're regard our following a those private publishing it's headlines. comes from not customers conversation

Waqar Syed

that a day And already go down in and to a Okay. of rates or down the that's room ROV you day on think you in if the lot in XXXX see back you about side roughly more kind compared rates Subsea XX% deflation to so we've general have further? we

Roderick Larson

it work drops think on and few the Waqar, moves is and where the what different forward. past not largely - that the of we've depending one than where off seen the - in I work it's much really the over quarters

dollar stable get of there, if in the that. priced for higher lower pressure the if of more we but activity chance even in activity see There of some to could environments is up it and more we shift back to So environments. regard sort blips little more some or those be to

activities I happen. So where those on it would really depends say

Waqar Syed

you and assuming? are guidance are like priced higher regions shifts low-priced in more Gulf your the Norway the in implying of to But what you the Mexico? It regions

Roderick Larson

call Yes you're mentioned we seeing, that's the what in notes. and and

readily know where utilization that Then there just when from there thing you we well. gap we're between on the moving contract rig, the jobs on is good harder the rate see now a even happens and we here that's either a up were doing. bid we're we working is And rig what bit weren't had more because and well breaks these and between well single day were or other some collecting rig but is starting wells. to working to it utilization contract a little shows The not apparent, was the five-year

the So and that that's noticed winning Waqar as the hope of in everybody that affecting we're let. are of things disruption sort fighting is fair that new being it of but us now us were contracts for one of of than you right well, working more share that's system noticed and because inefficiency the drilling our contracts that that's I sort long-term

Waqar Syed

in Yes, I'll ask and maybe queue back the get Thank okay questions. you.

Roderick Larson

you. Thank

Operator

from question comes next Your with Loop Stephen Capital. Gengaro

open. Your is line

Stephen Gengaro

Thanks. Good morning.

we As drop for of about to progression are next the going sense most you We'd business be the that year. give the next year-over-year of think segments think us you least year? a the versus the to areas sort willing

Alan Curtis

that's our see going products one probably business. say umbilical a steeper is down the area in be backlog trend manufactured seen to as you've would decline I we really and the

Stephen Gengaro

have suggesting you. hear margins? then about year lower next are harm the margin less said busier I Thank That you revenues is is you than profile? with And of missed some the I may Okay. call being right that

Roderick Larson

correct. That's

Stephen Gengaro

Thank you. Okay.

Roderick Larson

that work the doing. be going we're see we actually one Yes, that just it's to harder

Stephen Gengaro

Great. Thank you.

Operator

with Your from Chase next Mulvehill question Research. Wolfe comes

open. is line Your

Roderick Larson

Good morning, Chase.

Chase Mulvehill

morning. Good

to outlook but ROV to for could products of some if side? for XXXX don't I to business. EBITDA, margins kind not try margins talk in the going you XX I'm your push know on in know maybe there color the Maybe on you So the

Alan Curtis

prepared think to in discussion I that still yet, level we're have don't planning tables. we're the

Chase Mulvehill

come I we cost at day $XXX XQ kind out look in Understood. that back it day? there was that SG&A XQ kind there drove that? maintenance higher of guess ROV kind if own higher back and XQ that Was that and in of and up cash cost it one-off back dollars looks and own we know kind and for was anything DNA of Okay. like about at might cash per business look expense down higher out like of we call or the anything per

Alan Curtis

comments Yes, you Rod's some about as well had higher within the are in if cost you demobilization talked quarter. we R&M as costs

do not anticipate, of we quarter we as bit a into a little well. and coming did shift the mix fourth see So probably

As dip utilization during quarter. we it the fourth does typically the vessel expect probably as down

coming see day do cost down we So QX. in cash per

Chase Mulvehill

talk Okay, opposed all in. grow In opportunities I'll right. looking jump about more kind to Last one the operating as customers, of back get the at and press of you CapEx. noted that you and to release, to the company favor spinning kind exposure

elaborate looking asked you be So could at acquisitions, - want asset acquisitions, heavy? and when of asset you that to you kind on if is light it

Roderick Larson

I Right examples. some I you give now asset its light, mean

is of We business Caspian continue But an in well that's We OpEx can on type ongoing Ocean business. about Blue well up of business that our as exposure acquisition. more to We're that's do to following pushing hard well. offshore that the our one we intervention kind on talked invest IMR in places Asset Integrity we the market. those believe

OpEx So some that, well. as us push like and offers more geographic we that exposure

and outside things also your non-oilfield of we're at the automation the leverage some the where we things kinds look the can - So we those that to that some business. are our expertise oilfield continue of in looking at of of

those mixture a of kinds it's So things. of

Chase Mulvehill

a we to have When actually expect Okay, that to more. take you I flat? do that busier in mean could be said be couple you XXXX, revenues

Roderick Larson

let there what activity pieces. things does - being some like very is of competitive, out at be We the to and about there. that's Directionally, being are continues still is talked Yes, going be bids shorter it term, really are and shorter we're there especially look when talking. the price it softness to

there in well. So second in we And of it I the a half more you're the than of out year past. battle fighting more as often we pickup the were the think see

Chase Mulvehill

over, Got it, - turn you. Already back it okay. thank I'll

Operator

with Your question next Meakim JPMorgan. from comes Sean

line Your open. is

Roderick Larson

morning, Good Sean.

Sean Meakim

Good morning.

what I on what uplift thinking of So incremental - and due about to apart utilization come Mexico on the of seasonality? the third that quarter I'm ball? - think the due as just Gulf to some Just think kind business, the what ROV portion of were of change out, core as to the was the about

Roderick Larson

Mexico at things the seasonality of Don't down and be level do right we've give any some to can us rates of in Gulf and while day Sean. have come a vessels we sensitivity, is strong you We've that and some have they're time a market, in it, spoken about mean broken working. I off. does the it of is that so now mentioned IMR that one of vessel little which bit the

but there's there. of some there's softness, that also mix So in

So hard down nail said. as Alan to it it's

Sean Meakim

Okay, the agreements agreements ROVs, of point, just overall implemented just touch in Maybe supply - indications that's based on to Are those business? here are with accretive any this of vessel the those at how Maersk. the fully fair.

Roderick Larson

on the assets have We do board.

quarter, think still few of have announced Maersk vessels. a And a place they you probably assets. saw of All as into We to those last did few the were the delaying on Maersk I XXXX.

work? when come out. assets as So place on we they as to those and how going have that be vessels how vessels on the sort they installations of project still it's active following far few are, business are be creative and other to their board doing to going subsequent And a

Sean Meakim

and quarter that you just for quarter, about with year the - product product impact the the Fair should umbilical, part on business? exhaustion about one seasonal think then side, budget of kind in about just the the sales, customers it. how how got some on fourth last products think - on the fourth that taking enough of Okay, just we how

Roderick Larson

within I fourth would say. much backlog. be in the umbilical's. not is producing It's can from seasonal They're quarter impact There

is backlog the - the react the rental comes, Some - revenue happens. But little of and a umbilical's, when of and had we're part - we're lot work kind bit typically get have business book rapidly a we were if more able the is don't that the that XX to call verticals. we September one ship more the that quarter. been during of fourth in prosecuting phone We

Sean Meakim

Okay. lot. Thanks Fair a enough.

Operator

Your next question from Jim Credit comes with Wicklund Suisse.

open. is line Your

James Wicklund

enough Rod, drinks I you didn't buy in Jackson nearly Hall.

Roderick Larson

been have must Jim. That

James Wicklund

must have about That on working been, us some little Can give bit to new and vessel I you talk to what on was be can on Jones ear understand you grinning now guidance Kevin on? expected you ear XXXX what the a entire time. the depreciation and Act

Roderick Larson

don't goes field a sight the quarter. for first it have Appomattox We we to depreciation work for Shell do do call of get but contract out. the line Jim, vessel vessel when talked think into the when some aspect, - work last work into comes or we I we the have in about

excited a work first-grade about So a on to it on customer top-notch like a certainly having Appomattox. feel to put

Alan Curtis

to Jim, operating. to have our we down own something we are Give those, lot a vessels about we're you don't of think -

boat there higher working can busy. keep this if it out for we thing our we being the our we own work still own it's depreciation on know case versus good if the you that keep think us. to get, We operate and above, a vessels about in So in

James Wicklund

like depreciated? years Can a would you how over vessel be us that tell many

Roderick Larson

years. XX XX to Yes. Typically

James Wicklund

like we know question Okay. much The it we're the how Ian's first model. question. that Because next on a costs, can the one best is the doing we question,

guidance. can give some dividend. the board You probably maybe you us can't answer, set but The

the management? you ideas, tell terms for the us about talked the what years. Can last going we have board's the or lot about of the What recommendation You what dividend dividends think thinking is in guys what in the a to maybe should couple of forward? board

Alan Curtis

We way it we largely mean, I cash use that that in take recommend, the ability. that resources that want things Jim, and generate whether on growth for the that's mean dividend to doesn't cash to pay other we there flow and interfere it has or a say with, advantage sufficient I And have put continue generating. resources cash on free opportunities I hand of we're based is is number with one. to

than so when going like of this of look opportunities. more really think activity if be entirety want that to you've the because near-term, got especially where in And to you get at pricing diminished situation in a year, the the to be there's flow have And opportunity. you and pricing able you we cash that the

when then start see flow our cash fewer opportunities, we dividend. to money is there's that shift maybe more So start which back we the two comes allocating to number

James Wicklund

Go Okay. ahead.

Roderick Larson

think little looking of at kind for at I Oceaneering, very looking level a XXXX, we Jim, XXXX your depreciation similar. higher question bit total to I think would it model

James Wicklund

are your - stocks Acquisitions appreciate gotten you're last if could. from they've out cheaper, there, cheaper. one the I gotten looking I helpful. that. very That's And Perfect. all

choose acquisition, between a or had preference? making If an you to today you do back have stock buying

Roderick Larson

we answer the make thing. depends you I could But easy biggest give mean us I grow. like acquisition. on the things that that's the

James Wicklund

appreciated. much Okay. Very

Roderick Larson

Jim. Thanks

Operator

question from Vaishnav & Cowen Co. comes next with Your Vaibhav

open. is line Your

Roderick Larson

Hey. morning, Vaibhav. Good

Vaibhav Vaishnav

from it and Think offshore? or think Would agree XXXX. what Hey. quarter offshore quarter you how for from macro has level the you fourth fourth or do about or into say the about would going progression it already down still XXXX if you bottomed

Roderick Larson

business that can Vaibhav, year. the well where us sort as the of some we've of part we resolution there next see first as with shift think we flat is it but seasonal, the activity is, from seen the of there as being I determine - that for is into QX

Vaibhav Vaishnav

Okay.

- forward missing? about it what I flat think quarter So I your about if be the outside and would think factor, flattish the fourth then seasonality guidance going being am

Roderick Larson

question I'm could give not - Vaibhav, me try? I understand sure you the another

Vaibhav Vaishnav

about And was should pieces fourth pie be XXXX? at that to basically missing What the of of think that whatever about EBITDA picked that should I if quarter the the think just I I'm doing think bigger to annualized about are what I that? thinking if being get

Roderick Larson

about mean significant think don't we've piece question you like end to that talking there that little have of are think that I bit year is I we shifts I if knows… a towards have. that said the the more

Vaibhav Vaishnav

thinking of here it better what on. is does from I'm get What

So let's side surprises think missing to say if I quarter? that about I think for thinking EBITDA million being $XXX say that? fourth am that think Should assumption be down about annualized for $XX while what ROV about the up I it where could the a if just do for I let's if million or something is side XXXX an or

Roderick Larson

and the if - second and I you in more, there annualize think Oceaneering the is any particular seasonality is quarter. third for thing This happens the quarter missing you're

I one be because substantially quarter quarter the annualize to So better. year lower. is or and press the we'd quarter point and on and of the then ever the then know to said usually as expect releases call off be weakest wouldn't in could try we fourth we And level activity in promotion second take first be quarter third you then

something I trying to of would not sanity. test our if I annualize for was So quarters, any

Vaibhav Vaishnav

thing How think seasonality Got need to I is fair. biggest it. that test the about. That's

work Evolution is Pride Ocean Evolution and for on going Island about about can we what Island with of Pride respectively and could you what on kind think XXXX? mentioned and Ocean elaborate You

Roderick Larson

our customers capability in it not a As understand both cost we lower a full or less for alternative India. looking time

different kind of so of re-biding they're scope for work. And basically a

will we that trying hopefully good there participate so adjust So there think change a so successful. can when we've relationship continue and to that's be we got we're to the

Appomattox With with have is is some so we today. or the and Evolution that the the already Evolution, installation that we've started working for vessels is that work

looking So to something we done and the the available know bodes that ongoing, got that it and there we're materialize looking we've like work. to not all to so testing we're when and it's work is so put for

Vaibhav Vaishnav

Okay. M&A question And on of been last times. it couple has a

think want Just XXX about you like how the do think of spot for when that about the I the or M&A? to spot is million guys size like last you think the you sweet what the think guys was about one sweet deal about

Roderick Larson

slightly but lower bolt-on to to the something more something well that things like got other package different. ability on be on that with really drilling that's us going mean do, nice having I that material and boat comprehensive rig. backlog We fits the high, to pretty that's maybe it we something give acquisition offer getting a say the it's a

for we can a That's $XX to that I more So some the a range. million probably value-added really we of those things million that are service say provide $XX that are mean customer. in at things look

Vaibhav Vaishnav

Okay. for Thank That's questions. my very taking helpful. you

Operator

comes Brad with question next Your Jefferies. from Handler

is line open. Your

Brad Handler

guys. Thanks

Roderick Larson

Brad. morning. Good

Brad Handler

could you vessels the please have the Evolution Good comes play done if How the morning. I do Gulf? actually, in how you not to Could you am speak the this once but you sure many be in into Gulf? in past you expect marketing

Roderick Larson

the of of Gulf vessel not are relationships We've ancillary is part but say As reason some can we of management the because big great the ROVs, go. do in the we're to constrained I'd happy Mexico. that a a project is Gulf providers what services, boat in supply got we meaning, with many the and lot we supply as the of we we

we'll not take when always to robust the a a a sometimes dependent necessary. we we more But we job days on have whether it's get start we little the and more of boat So not agreement level at dock. next activity, have are for or from to If looking hire them.

Brad Handler

- So work in another until it like charter on we need or any more terms alliance that way and doesn't vessel sounds to work that a think period? - the and of anymore for doesn't we don't not ex-date it the to just it's it need is way or time should

Roderick Larson

of the We're some for finding the through up. the and best job pick time. provider's boats rotating the guys. all vessel some We've them We're other being working the able other boat of active continually got with

would consider we've keeps at lot a got some I then So best got big the that worlds, own our a I stuff the - to capacity our we've of got of side, access and down of boat on cost we've spot think price. to other

even challenging well environment. pretty think I in that's working a So

Alan Curtis

And the charter from under alliance, Brad just of do March XXXX. through we have

Brad Handler

Okay. still? under charter anything Is there else

Roderick Larson

reliance, that's so. under a as charter well. agreement with the do vessel we so there ends Until back, charter we end as the we back finish have that soon And to

Brad Handler

gotcha. Okay,

within on XXXX? you framework I can of expenses the Can for sort guess and for on guidance XXXX? comment comment unallocated you Okay,

Roderick Larson

would we per very pretty time, $XX sort in million quarter. similar them in been year, to point this good, There's see of At range by that they're this mid unchanged.

Brad Handler

terms Okay. does in any if reliably When set have sort question, get that yet same of the things. in other just the maybe guess I how from I of guess Do that? insight I get Navy? and then I'm business, Tech at And Ad advance I mean chipping away you some

Roderick Larson

segment go in we're this I to XXXX prepared really think outlook time. by don't on point our at segment

Brad Handler

I'll you. Thank it back. okay. Understand, turn

Operator

Your Instructions] comes of from next Clarke Bank Brian Royal with question [Operator Canada.

is open. line Your

Kurt Hallead

completely generic. the Hi. obviously dynamic Hallead Actually, so their wallets morning. investment now. very of okay right Good on it's is here. with leaving I base And kind respect Hey, speaking Kurt your guidance

what concern, an a to kind best of that I the was earlier, opportunity out your concern is investors of what I gather number here? relates little continuing here dividend it's jump would two words be guys the in as concerns to a one from we think what have the are here windows bit the or help here the You as biggest indicated to to referenced best biggest priority? you - forum your

Roderick Larson

I believe to going to available. really lot I'm a is say maybe We and another now. like way. wouldn't important available future opportunity growth follow time, a extra this to capital an to dynamic the companies being that it of us now funds those to or maybe at the have on market invest What be stronger new resources opportunities and can time a in in available to the I technologies - able and have a really right different to and There's our But hope is here. work that that to focus on very that pickup

to their cover, meant is to It's it's want have and focused. push I be our hunt leverage to it definitely want variability can that not we key is flexibility some forward that's people ahead. or So and down, hopefully that - to attention that have redirect believe and not to that what we a duck

Kurt Hallead

to eliminate the invest. doesn't necessarily to and right, context wouldn't dividend to are to you then it for that right, in mean have Okay, opportunities make completely look happen there and I just that would ways

is reduced flaw - a my were all that already You've maybe say I there logic it's if number be the or but nothing. and dividend, dividend growth sitting one is is two a and the XXXX, priority, number not would in coming priority, so into completely your chair okay, and

Alan Curtis

argue, that one you call could mean what was again in middle. We wouldn't definitely can is would one just it the of I of forward. And go or just things that those quarter as or decide No, We it's one move of again, you way able it optionality kind things. but at split be to have much like it I I want do you it other. next felt that this was the is to quarter, those hand how to

Roderick Larson

declare board I this and decision even significantly [indiscernible] The alternatives for all And discussed was think we cash we've those a that to with dividend flows fully decided improve. declare not at not and doing they until to don't level at our time. with that management decided

Kurt Hallead

I terminology, company's say I just here, may mean general book And But cheek. percentage you a If and that it every it's significantly the would kind a bracket dictionary? is semantics I significantly I of sense general tongue what a get Okay. - - sense mean right, what of basis, a of in in terms book, the definition in have just Oceaneering then would in do percentage? of what of significantly if on

Roderick Larson

in will I see wait XXXX, to we've second tell intention stopping substantial. going to start mean we're the it's an than and not dividend XXXX. the intention starting we is I XXXX. that during with stop Oceaneering we're didn't is definition, you it. in of We it what those it's But I brings I it, never what half the to said rate didn't not and think significant the larger activity mean, improved for ever stopping not with And dividend XXXX of look

Kurt Hallead

is down dividend. my - I Oceaneering dictionary for trying But reference appreciate kind of and in terms what significantly, your being was the dictionary earnings frame out I'll… just again, color of on of figure significantly. the Clearly what to

Alan Curtis

I'm enough, to said the service we everybody have going enough. what asking and try the have plus information we should something to went think I purely and historical but debt say to we got is because the reiterate it's CapEx set guide we when a I more only people said think maintenance is you've already for, shouldn't that said than floor,

your say without ball to trying low. to harder pushing too idea crystal I we're than is a think good so is trying that And

be to And so it that don't expect we dire.

So significant. hopefully substantial you at tune helping I'm better little least a

Kurt Hallead

the appreciate you your ways help you and trying color get do I want And make you as to that sure get message that to out well.

you. Thank it. appreciate So

Roderick Larson

all appreciate We help. that

Operator

comes next Macpherson with Ian question Your Simmons. from

Your line is open.

Roderick Larson

Welcome back Ian.

Ian Macpherson

follow-up. Thanks to the

with friction around lining your new the mentioned given by awards XX% point rig - the thought getting on hit for contracts, best also contracts term I just data you contracts. the spottiness interrupted recent share and You you've the utilization ROVs of silver was but recent rate shorter on

would second the world. or rig in probably year contract around eight, of there seven awards been call half the I I what think long-term this

share, contracts have you're term those As your to or deepwater rate been share awarded on those? comment above you market longer that hit well pertained on also can rig

Roderick Larson

I'd good. but through. with by level go have some at I way one, fighting can We're confidence doing our XX% one to say of we're

So it upside on be down wouldn't that.

Ian Macpherson

your guidance this Got about it's And what CapEx for CapEx lastly, maintenance next it. your year. is year for twice expected

So are for just you maintenance anticipated clarify scale I'm your year. CapEx CapEx some that's embedding growth to in assuming comparable next

Roderick Larson

so businesses that's markets a position the many I out of many comes it. such the you this so And of color that is great got we're you hope and know we've and is that more Yes, the got don't latest, when in want that expectation you're that to that the the were greatest give to we the in up best. give want up have you we don't of it's brand, Oceaneering, our

the that next. think so continuing you've to I improve very well what's maintain coming apart we are to accurately broken operating And fleet continuing we're

Ian Macpherson

All right. Thanks.

Operator

Your from comes next Capital question Gibney One. Joe with

is line open. Your

Roderick Larson

Good morning, Joe.

Joseph Gibney

morning, guys. morning. Good Good

through we I to work trying relative This how able to the flow one ended that, Just cash on of here. flow provided year certainly color sort it's would open that on together provide the from material on you capital any away mean working but of put I be cash working that capital and so that. are working any to discussion you to can circling within pieces view question in capital understand be also helpful? be should assumption changes just are anticipating XXXX any back on in you material thoughts and is high-level here

Roderick Larson

up No are little we think those of of our I buy to indicated get see - revenue flattish be for bit larger we going the XXXX, levels some one a think range, activity I see by and material that I inventory uptick and at time wise - did point in in don't a there. that a that would not components this of little say of change I bit

during We are and years. inventory able pull to utilize the our

expecting not in this I'm in working capital at point either a So time. change big way

Joseph Gibney

are that with Okay. customer. this That's it's it has so roll on helpful. charter Could is clarify the you missed you're bidding charter process due the November vessel - that again been re-up correct us undergoing you if apologize I Pride your with in

Roderick Larson

agreement the I meaning will work when customer can the the that vessel mean will with call ends a we owner. charter board end back we contract with board it back we we what the stay that so our to intend pride have and, no and will on is would an stand the

what available So to given going find asking I don't India. for that for think try they're can customers apply that what the to ask is to in vessel it's work other for we

suitable So work, is for it's on for but the not up a we it of good that work for part for that if won't more may finding have to look pay won't we vessel we give working. type

Joseph Gibney

Understood.

Okay. That's helpful.

Okay it. appreciate guys turn back. I'll it I

Operator

Coleman comes Fargo. from Wells question with next Your Sullivan

open. is line Your

Coleman Sullivan

Hi, good morning.

Roderick Larson

morning. Good

Coleman Sullivan

have of I Most quick a covered. been one. had

in it back the XXXX and directionally I On decline to loaded comments was would business guys somewhat versus the the more XQ be that seem How do in products would up XQ in see the services that rental XXXX seasonality? general would half imply? guess on side trend like would you

Roderick Larson

of be the Subsea in year that one-way that received good. backlog awards going probably the you of to is the gave guidance see build not lack the XXXX number we that best we that side been Product is the entering think And of I of this we've business this down year. kind both segment Yes, the is that's with

we contracts do Subsea and they that be they will those segment. challenged Product units will of come to that envision expect we within the the but business being So are out book do the margin. when In the more let it a coming prior more at thinner

Coleman Sullivan

Okay.

Roderick Larson

the QX is in that see the QX would think next have on greatest what I intervention kind to year. that you're products well of do I will we so and materialize to and then in impact interest some the that that's going and in seasonal, the the is work others of service other And then we would that part add of see have rental how your light directionally business lot and of business and do correct a that is that's that

Coleman Sullivan

on ROV the like generally between mix geographic kind case service? speak rates we've contracts not more the lot but to those on is seeing how I pricing at to fair you I pressure and were quarters pretty guys of is some this we're so over mix compared side? is it's seems that think gotten seeing spawn the and where mix a the placement based How point last vessel recent rig to All what back have the the strong gotten least couple a more pricing you're of more right. of On guess

Roderick Larson

keep demonstrate is in the we blip try QX credit you nail take to we it, the up - let a for can and best people head the is all because I on try to that way know and we we didn't mix. saw It - it hit the

against in forward us. So going kicking worked the We see our that favor. three works uptick down that

I mix. think a that lot be of it geographic to is going

it see a where as ROV. well. operating - integrated as solutions. we're We're overall more Another we're coming than the provide places to that provides it we return is factor Oceaneering again can to than we're then operating value Those more offering into are that's play, more starting more a better

Coleman Sullivan

right, I'll back it next. All turn

Operator

Smith from David comes Your next question Heikkinen Energy. with

line Your open.

Roderick Larson

Dave. morning Good

Alan Curtis

morning. good Hi,

David Smith

give products guidance, segment So mean margins. a high this understand don't it want think to could but theoretical is you is to so single-digit reasonable question, that I to XXXX just mid

Going XXXX, and mix increasing? service forward the of on based into rentals

Roderick Larson

nail the I the going on based influence that's of well lower. head. A on be ball significant on here, as around positive think the I like you and to service think we Crystal going the can service, as to lot see mix to by think come activity I produce. is I it a quarter-by-quarter Alan's up be more rates hit that said good it's page looking of have because

David Smith

have from I the just or that was there's taken some that contemplation and ability fixed maybe out of side business? cost Okay wondering any a manufacturing

Roderick Larson

courting talked needed. look to need will about we about this who into all. was we business without right XXXX of areas at the it past. business talked having we and We also right that time beginning all That need definitely one on we grow telling be areas is of our sizing business our is not had certain the size that thing means umbilical the have came utilization the was would in That there. business we would I factories of take opportunity and, where so say, not year, actions they're our where resources Especially same we to

that. think manage through I we will

David Smith

I and that Appreciate more one may. if

- How us any give you going acquisition? if CapEx update far investment, whether Ocean includes non-equipment? on potential so additional Just Blue could XXXX and wondering investment that's the

Roderick Larson

it's had the got feedback customer on No, absolutely We've so well. great now. done. We've experience fully equipment work I integrated. some mean with going we've

we we to feel positive that positive about a enough, and it are continuing very say So I would invest.

even be that kind guidance, same, and continue more potential is to for push the unlock customers. able yes. of out technology to XXXX not it further we in of the to to CapEx get grow more but want and included That So - of just more the business

Brad Handler

Great, thank you very much.

Operator

with & Company. comes from Vaibhav Your Vaishnav last Cowen question

Your line is open.

Vaibhav Vaishnav

Thanks for putting me back on.

Roderick Larson

Vebs Hi,

Vaibhav Vaishnav

I heard you would XXXX hear be XXXX? guys that correct? I flat said think I revenues Did

Alan Curtis

in the our That's somewhere range. kind initial of flattish -

Vaibhav Vaishnav

you have can much paid and in you year so far? this say cash taxes how it Got

Alan Curtis

you don't have to Vebs. one… back have that I'll that on I get one with

Vaibhav Vaishnav

you Thank all that's much. All from me. right, so

Roderick Larson

Okay, thanks Vebs.

Operator

further There closing I'll queued remarks. at are no Rod for this up the call questions over time. to turn back

Roderick Larson

joining are a there this XXXX questions, concludes I'd and more conference since great for Well, our right. like All up, I third just quarter everyone wrap day. call. Have to thank no

Operator

This concludes today's call. conference

now may disconnect. You

Oceaneering International (OII) 26 Oct 172017 Q3 Earnings call transcript