OII - Earnings call transcript Q1 2020 | Oceaneering International, Inc.

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Operator

My name is Marcella, and I will be your conference operator. I would like to welcome everyone to Oceaneering's First Quarter 2020 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 period

With that, I will turn the call over to Mark Peterson, Oceaneering's Vice President of Corporate Development and Investor Relations.

Mark Peterson

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

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

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

financial Our comments include today non-GAAP measures. also

in questions to We most financial and our the comparable after reconciliations quarter details Additional press statements. welcome the release. be your directly GAAP first prepared found measures can

I turn over to will Rob. the now call

Roderick Larson

call crude business thanks quarter and expectation will of businesses long well changes and further improving joining brought fueled makes? as for the and our all COVID-XX pandemic conditions began then morning of XXXX We a swift erupted Good What the as and plans This fundamentals deterioration our oil park our of with the the a market has about fundamentals, deterioration to spending persist. customer the negatively the affect theme segments that difference growth as across business. marginal today. these as

reduce to costs result, order financial to a in decisive in action this As we’re taking performance drive environment.

their customers, the uncertainty live and of taking to we safety steps continuing our and well-being threat actively and and and employees support With COVID-XX, around where work. is Oceaneering the communities our the families,

from on Health corporate medical measures regional corporate and the Disease Prevention, Centers advisor. International response preventative for our plans guidance based implemented and and Control developed World SOS, and Organization, We've received

our support Our prevent to while goal of ensuring the exposure minimize operations. customers infection, is continued and

for our Now results.

on goodwill per revenue or including results These $XXX $XX.X million of $XXX in $XXX Adjusted million reported included $X.XX the with asset was net For recognized loss associated foreign of $XXX impairments the during impairments, of adjustments, share we quarter. share. million per $XX.X $X.XX or the million first pre-tax restructuring negative of $X.X and losses impact exchange million. million a net quarter, of costs and million income write-offs,

Despite of our challenges, first key significant The quarter cost quarter these during results factor results included the expectations. of from benefit global implemented pleased was which in XXXX achieving we within and performance are that reduction first better-than-anticipated energy-focused measures fourth XXXX. quarter exceeded businesses, the the our adjusted

segments adjusted before Each estimates. million surpassed generated And results and of and our operating both positive and positive EBITDA. amortization depreciation taxes, published or EBITDA adjusted of earnings consolidated adjusted forecast our operating consensus $XX.X our interest, adjusted

of by segment Compared per on fourth business operations X% at to look let’s the hire. hire first average Now revenue of quarter the our on XXXX. day quarter days for on flat XXXX, decreased ROV

to mobilizations, XX%. XX% adjusted utilization cost control slightly in and adjusted increased Adjusted EBITDA operating efficiencies, measures with EBITDA. performance expected, and resulted and to ongoing installations fewer As improved margin along and ROV improved

the although Keep at reported did fourth of ROVs that XX impact in XXXX utilization that end include were not mind was the XX%, the it the of quarter. quarter retired fourth

of For XX%. quarter, been -- had reflecting comparison, the at was the if utilization, retired pro forma they of fourth as vehicles beginning these quarter at end the

fleet quarter, XXX same size During our vehicles, year-end the first the XXXX. at as remained

we of vessel market contract, rigs end and on a was of quarter XX%. compared XX% XX% Our in under fleet floating ROV and of in the respectively based support in XX% contracts the XXXX. during support the had drill use XX% XX drill fourth first resulting for March, activity to quarter share the XXX of At

expectations comparable revenue exceeded results operating Manufactured to the adjusted expectations. operating quarter results and XXXX of the products met quarter first and fourth XXXX. results Products, were Subsea to of Turning

due to results in outperformed Norway and rental and higher Service West activity largely Africa.

Our service and XX-XX in compared Subsea respectively a in split, Products revenue rental mix in quarter. and manufactured XX% quarter the fourth to was for the XX% products

was the Products of compared backlog March and Subsea to the Reflecting of XX, level was our at lower Our at quarter X.X. book-to-bill activity, December XX, million higher $XXX ratio XXXX million XXXX. level $XXX throughput market for first

a Subsea of Projects on revenue and survey lower results vessel declined operating lower result as sequential adjusted seasonally activity.

in cost of from benefiting quarter fourth the improved, results XXXX operating adjusted undertaken of quarter the reduction Integrity first Asset activities XXXX. and

Adverse our adjusted flat. gains our For service operating theme XXXX our impacts to non-energy from business first quarter was COVID-XX park government offset our businesses. result entertainment segment, sequentially of Technologies, Advanced results

during As of declined the a quarter XXXX, incentive-based of first compensation. quarter compared fourth lower as XXXX to accruals expenses of for unallocated result the

contributors during During decrease for quarter, cash represented of and net we million of the activities $XX.X and maintenance in our to capital million $XX.X first largest the a operating used $XX.X million cash expenditures. These items cash two quarter. the growth

milestone large decreased our anticipated, balance with of and a timing contracts. As a during customer quarter, primarily collections, associated payments the cash progress, in vendors to as difference result cash on several

disbursed during to incentive periods. payments related Additionally, we prior in accrued attainment performance goals employee quarter, of the specific

revolving cash and million XXXX. At maturities loan our no equivalents, facility, under had end the no million of quarter, cash the $XXX we credit and November borrowings until $XXX in

our in still sheet. cap add impairments. to million recognized not revolver our XX, down cap, based all back we is adjusted March of could debt determination, we covenant determine adjusted clarification, entire To As get Based on be on compliance. $XXX the previously a and draw on cap, as equity to the balance

full-year on second and our quarter outlook. Moving to

crude due of the second not lower oil majority EBITDA by the gas the profoundly operating the the the lack visibility COVID-XX, price and of Many our customer reductions a or serve in to environment. result effects as associated of markets full XXXX being quarter in as oil to well and as guidance the responses significant affected our of and spending are for year of businesses. providing we of are We the

We quarter. maintain excuse forecasted guidance million unallocated expenses that in are in me, range high-$XX the to the mid be our - per

$XX expenditure and XXXX capital $XX the lowering million payments by range by million to We revising guidance lowering million. guidance to million $XX are our $XX cash tax to to range further

Directionally, energy we are further significant with for a of in businesses. We demand re-openings. expect and our within dealing operators services timing their closed products of including impacts anticipate reduction business. the decreased the result park facilities our to uncertain COVID-XX-related revenue as our entertainment Theme and challenges,

which public any COVID-XX-related so activities entertainment oil of unaffected, contracting are revenue, consolidated not Our to be approximately relatively delays. tied absent government supported businesses, crude or markets, our represented XX% the XXXX closely should

liquidity to priority sheet. time, balance any balance is In and environment our during this turning and preserve our complex sheet. and Now to liquidity especially the top

to by resizing and our reduce our operations action are We leaning taking and this evolving in businesses costs restructuring energy decisive environment.

by We annualized depreciation of range $XXX are million million XXXX, of of million expense. the $XX inclusive a $XXX in expenses of to end currently to targeting reduced the of reduction million $XX

organization offshore, driving elimination reduce projects non-value-added actions and facilities, cost. Cost lease eliminate working reduction, reduce for and expenses, on reduction enabling and our people which to of number improvements process include include taken rationalizing some are the the facilities to of consolidation, being efficiency to focus tenants or the throughout remote quality operating increasing operations

the operating of aligning and leverage business which more like-for-like services elimination by Simplification Actions and structure. products way provide headcount assets, efficient Oceaneering in in a recently facilities people, management and better to to perform will include layers. to-date of our to activities simplify permanent We've does actions and continue way. to take taken reductions

Senior our Vice senior X.X% salaries XX% base The reduced President XX% leadership for our positions, reductions. President by and myself, for Compensation of have all for our Vice been positions. for

addition, reduced long-term expected under we incentive XXX(k) plans. short-term and our on our have by match XX% In Company reduced and payouts the the plan

include contracts us cost chain can undertaken reduction where steps bundle lines market pricing purchases vendors conditions. with with and also of and light current savings, costs. achieve assets, implementing lower business benefit inventories will Other lower in we activities We're renegotiate to eliminate carrying being taking to lower non-productive which across supply

million categories, in an these to XXXX. to addition depreciation also benefit from to as reduction million cost a $XX see In to compared estimated expect $XX we

Although to us and benefit non-cash it a of it this because operating is return position worthy is sooner. performance highlighting expense, profitability to will our

$XX this that's cost annualized expense. initiated, Since net effort, million of and of reductions have been depreciation approximately launching

expected the second achieved in majority savings throughout third Additional and to with year, be the occurring are the remainder of quarters. the

We these cash associated expect actions million. the with costs to around $XX be

up at the you I Now, retiring many May, to Marvin wrap next and of the a to known his starts I end before him thank offer of Oceaneering well wanted before who will is he chapter. you to special from call, be Migura,

several past President me executive overseeing XX years, years Financial Marvin advisor Officer, Chief strategic and has past a Oceaneering team. served over the as and support of the functions, all Vice Over as our management to our Executive

did Oceaneering. Marvin's retirement, extensive quarterly know the an issues on humor not him years? have missed earnings your wishes asset knowledge during Difficulty] Marvin critical focus and XX that common Best made [Technical ability at of you sense, the Company, to And his hand, guidance, business sense has Marvin. of one his call for invaluable to

You'll be missed.

forward. results at the adapted our changes anticipated have our So changed Oceaneering results. and for the in occurred had in to significant show have that pricing place with summary, quarter. I that and then believe beginning since the moving products pleased market first successfully these I'm the quarter services realities Clearly, drastically of activity

undoubtedly successful services balance way, this actions there presented under of will adapting and these that many will realities, our already new in quality the be and challenges of of and the be products While market succeeding confident result a in health the as changing we with environment. sheet, I'm our

now your continued take and you we we'll may this to questions everyone's open in up Marcella, interest have. appreciate for happy Oceaneering We any questions. be

Operator

question from first Meakim Sean comes Your line [JPMorgan]. of the

open. is line Your

Roderick Larson

Good Sean. morning,

Sean Meakim

Good morning.

formal issues, around some you're impact obviously, of we the some the but through understood businesses? And mostly go to each this I businesses. I guidance focus more to of probably, seeing point, on giving granularity impact on there's across just these different but difficulty So, think want ROVs, of maybe at could how

to they're folks anything around costs, to trying of terms take nailed in near are in the out. shed not So, that's down, expectations customer decision-making term, trying

chain would in some of the And second to them the field an provide say issues, side, I in couple COVID-XX-related perspective? context then next more would as both managing pieces us hear love the activity issues, those around on also to some well see critical how you from on quarters. as the you're Some granularity for through supply there, those how

Roderick Larson

guess do - rig the counts of beginning Sean, weekly rig been Yeah. the drop April. the I challenge the we I since you're here pretty significantly watching count, mean, has see that

that what's exactly cautious we're not sure happened. So very we're

people moving I mean, then of next to on we're they week. project going to the work in us the one where a some out say, we've we had and they and and week all countries of up this pick operators that little get have took and discontinue relief it

on. picture it's So really going get to clear of hard a what's

good But utilization. rigs say a coming ROV drop. think off market as I we're persist quarter even will share with will We

tell on from what's it's So eye follow it's count thing best is going just likely past. rig I business and the on I think - an The much we're that business, I in you to the think vast deviate paralleled pretty the rig the rigs way keep closely. don't can will with

to because brownfield of to We if production work people start that the activity big they people that projects may want to the doing keep on more out, even where some continue to that don't little see are capital vessels expense. going get a do make stalled remedial

or money projects. really to cash preserving those customers the come of do with a dividend some are just who Our still the paying up challenged for big to

thing on can those things best are I things watch. to you granularity. think the I tell That's So, the

And I then, go, more same as we're as far story, is than yeah, delays cancellations. we're right? what seeing products seeing think

little that So where hasn't yet, even people like the business products in but a would slow we manufactured do down tuned. stay see been to tremendous things but bit,

their them everybody think is making those still under I in getting feet decisions.

Sean Meakim

is All right, detail that thanks. appreciate and helpful. the context I

analysis it competitive your or direct about your cost companies thinking through you've public the will like to you're round? just How comps at just cost-out even fixed once does look latest at look as have maybe to your cost your this going looking you out process, relative in sphere? done other then, this looking completed structure, would looks much what How structure compared cost initiative, peers? So

sufficient and like and get a I'd competitive I'm relative medium-term to the resizing a make to to more to process come margin yourself this guess trying on being business learn sense a stage. how more of I as perspective at this you've for level about from returns cost-out that basis.

Roderick Larson

did serve we G&A drilled against just headcount our so the we competitors, the sometimes what's so that exactly to level, IT, always and you're those and get in and and down benchmark Sure. on of we just that you -- we Sean, cost not said, in actually groups, focus And in know don't being can non-competitive. -- all different that and HR, -- we where places sort where

get to effectively. try so of attack we those we that So can granularity things that level

So, I range range in we than the from savings, midpoint, that believe to at we peers. I is, - we're think gave those of and be I the guide the are high-end to we if what would be anywhere midpoint we better would going at numbers of didn't hit - that

that in just us, to are best that a say make would were sure class well. some against those that to industrials close not comparing I And we opened just wide we for as but aperture pretty peers

I get and that as range. as the now, end for, pretty like it again, a target. we're we more feels when Company the perhaps a will aggressive of market changes be So aggressive shooting target right high And think, smaller to for that

to to working on we're have So that. keep going

Sean Meakim

Understood. thanks All for feedback. right, the

Operator

of the line O'Leary TPH Company. Your comes from George next question from &

open. is line Your

Roderick Larson

Good morning, George.

George O'Leary

Rob. all? How Good you are morning, Good morning, guys.

Roderick Larson

good. Doing

George O'Leary

I about wanted talked off start guys to asset bit place rationalization. little was you First a incremental

write-off already fell You've I understandable is in which that bucket. then of of understand impairment types going that were and some just in DD&A forward write-offs, what asset that One, impacts assets long-lived and impairments for some environment. completely just this of better there to kind wanted how and done

Alan Curtis

primary Yeah, that took I'd what on at quarter The vessels I it in we was be going another impairments I'll say, of $X.X of is some shallow to some million kind we When assets, the reduction take ongoing had DD&A, of water incrementally a one. was depreciation. that that look component. kind

off, being that a not written actually assets this values lot was was this of impaired So that assets had were forward. going

George O'Leary

if markets level also naturally question COVID, offshore you your deepwater below crude changes which done And seeing would Okay. and XXXX, get prices part up of then, share you do think efficiently. were oil if and and of is, impacts shift geo work That's about a of, the most in is by of you're just any that where the kind hold where kind question, some to driven presence, activity very biggest helpful. that today across theaters the inability which global expect you resilience two-pronged

offshore do markets oil XXXX greatest expect but and it's one rolled And for you have the all geo questions of then weakness into from apologies tied incremental impact most progresses? which conversely, you see seen both price crude COVID kind together. as So, where the and multiple to

Roderick Larson

opportunities saw activity to say that moving soon clicking. give muddy, there. in as I going one wish kept George, just about Norway, really clarity, I places could of pieces, it's as greater like I start It Norway I the but has you Wow! all the good we get is talking will really but that great

number longer-term Norway So point got has of high focus. and is, a just a that one, kind of part that's

much by less so of that So done was Equinor the we those one work places is there, and saw where disruption. of

got we've workforce a course, very Norway. Of indigenous in

So to in about and we have worry people didn't out. getting

minor. some really, was a like it past event quarter, if there saw that about So really was during just -- platform happening COVID that the on specifically, a of we was

long labor-intensive have Even go been periods. go has to to though Africa a We've inefficiency we in have it's people a I maintain at, periods. you West They through quarantine workforce been more so we job, able through need because done slows you people things that still more and rotate great much process less just indigenous challenging we've out. have because But there. quarantine as got those think, to It continuity. down. business think

quite we I these the places, is, governments commitments But that with of contrast commitments there compare when have sometimes say is commitments. as seem just thing one and things where the to local to those ongoing follow that to also operators the those or and pull projects and stakes driving through conserve next cash up the ahead be can to move quickly on

work, more are a places to those of challenging also some they inertia the little have more while projects. in So,

been been there the good The we've Evolution Gulf I but Gulf there, so are And able we've control keep continuity work had going. Mexico in more -- -- only able the so, and their Mexico, think our vessels budgets. has keep to to business then, of doing operators the in vessels of own of

other decisions. and down without partner not So do making things able up agreements, own as their they speed their to as guess, impediment, much, are much slow I than to and

we in it's to playing question now, but see challenging of the answer, still but places. happen right good think I lot out, things a So

the of impairment is a in in offshore Sea. haven't we things the nice seen activity North big One wind

been been essential fairly trying that's but around for work. been people other even So I'm COVID, great all just do, some almost move as -- during we've to in of entertainment really good the the small hang-ups -- with work listed we're than we the it's us, because

so been And to able we've keep busy.

overcoming very really working. new to keep seen able able our had haven't to they work, while We we seen adopt -- going people to a are wasn't work and were, the work procedures but that customers and right of shift to stoppages. it were keep ways come deciding few We what

been that's So great.

Alan Curtis

of far in as took that I got And answer add the a want George, my to component. short quarter. we impairments one asset on little the kind I bit as

distribution, and we in We call segment, which also Subsea our our most within that had Subsea umbilicals which was hardware-related. fair Products of amount is

facilities some Brazil, to and related the issues impairment we Angola, So Rosie. took in

that component. be other the would So

George O'Leary

attention. my helpful. that dollar that Yeah, noticed I caught That's million Okay. impairment definitely $XX-ish

helps kind circle of there. to that So the square

Alan Curtis

Yeah.

George O'Leary

you from color the appreciate guys. I

Roderick Larson

George. Thanks,

Operator

Cowen. line from of question Marc Your next Bianchi from the comes

is open. line Your

Marc Bianchi

commentary I the about least the maybe would would up have in then I toward being is in questions couple and AdTech anything could fair it? as is other things kind probably summary? the downside lot. the progress, with think think downside just has and products what closer some be it you'd of Or to maybe segments here market side, the toward somewhere guess following see the between way ROV that about AdTech Is closer how hearing I'm other a of perhaps and ROV may of segments that there a to correct the Thanks then most maybe be that you and side.

Roderick Larson

Yeah, Marc, Government mix break the is affected. bit. to just got little got them. probably I least up We a the think you've

So, split just least affected, when government down, you we is not I do affected. know a is take ad because maybe, probably they that's work. -- shut they most get -- because parks, those the couldn't the AdTech, not probably, a it's entertainment into

Other to shut happen shops, really than on they're just our in that we vehicles completing down. working be

we to values the some the of to people serve expect term, find in way longer back customers get in pick up I get again. some participate or say, We technology to the to Now, safe would it them they'll make and might to parks. their of -- ingenuity

participate hardest the hoping definitely hit. were we So with they're that, but to

we've that it -- customers seen manageable Integrity past, our of that costs it can is We've Asset activity of a and postpone the some push hit seems if in get they lot like out. pretty hard because for

or happen get the of you got just maybe see certain a So they kind a hangover stop. but they the get they pretty to to quickly. gets ROV thing, a little bit to little -- more want in campaign volume finish of well it's reductions drilling because before the part a tend they same to

more over. little a get they So run

backlog. with because right, year that you're amount placed. been products already And We working out then, longer, run pretty on have you're a good of came the of orders

before, So we've phase we right? But to that. work seen this get through

low ROVs if where, oil get that orders survey then downturn up, the the cycle the plays kind it coverage normal for seen back another ROVs that, fine, following see backlog don't We've we manufacturing the side. and of of and are you absorption picking if to that's start come, get but when or product year, then backlog low say, when first out,

maybe is would and business really customers that almost because intervention, well I if time. any points look -- well Rental could I the you've got important it, a based the well they've an think light to a the finer on the like shut Service star in, AdTech at in remediation, lot that the the and just business, that the do is that, that's which got what production But happen of stuff of want that

Marc Bianchi

here, That's back thanks have helpful, kind terms low- 'XX guess, quarter-to-quarter, guys decrementals and annual from I the If know EBITDA in are affect cuts dampen I leverage of cost to for in were that and Okay. do range I the the somewhat? that. on of had margin but just those an you decremental should 'XX operating back look of which the kind to choppy basis. things looking mid-XX% you years, to the

there. Should program? like recalling better now, don't remember wrong that you but that to guys we just given I prior Because I'm a cutting this major in maybe cutting this do cost the expect things than cost had we program that downturn,

Roderick Larson

-- support and on any take Marc price our from that I we're meaningful. understanding we've we it the right? because 'XX -- got think never lower but can hand, in we've a because goes, more customers a I 'XX that I point, got it on relief how yeah, you of also really other the price, think low nothing account are on into starting depends floor been time, mean,

we'll years. think the pressure don't I in So same those saw see that we

better And think of sort at structural the the we I done definitely G&A, part. have yeah,

it will the will to get the we think if decrementals advantage that working as that of to of edges fight well. that some if the lower -- I be hearing, the quote. of there come So we've drops point ends hard lower will a be been range our activity to But

Marc Bianchi

comments. Thanks sense, the Rob. Makes Yeah. a for lot

Operator

the line Scott Citigroup. of Gruber question Your next from from comes

is open. line Your

Roderick Larson

Scott. Morning,

Unidentified Analyst

Scott's Good Hey. associate Good Justin This is morning, Hey. Howe, guys. guys. on [indiscernible] behalf. morning, his

Roderick Larson

Justin. Hey,

Unidentified Analyst

as million does to implemented kind cost from that $XXX savings me that that include of in -- million? of the new $XXX us 'XX as guys So were XQ guide cost-out Is help if well program, you understand XQ the could that 'XX? that $XX million with

Alan Curtis

that's Yes, of part it.

Unidentified Analyst

of previous the of that -- that been much programs has How realized from been Okay. those cost implemented? have savings

Alan Curtis

would I in year. depreciation was predominantly of into it's QX that taken say the account last

Unidentified Analyst

Okay.

Alan Curtis

process. any announced kind of a programs. been It's haven't We fluid

Asset So, that the to of whole a forward. last the ones, just some alluded most Rod started Integrity on but call fluid with non-depreciation the it time, we QX from of it's been process

Unidentified Analyst

I guide, Okay. the that. much not said the cost you but reductions -- that the And included from could appreciate know I side? in of that given are from kind guys additional see how volume-related the savings current variable you market activity,

Alan Curtis

I reduction That's the volume, a the hardware component line to going top that's mean, don't that to key see happen there, tremendous so to offside. activity -- and that's going significant on we depend don't would we a savings or with if want be FIDs umbilicals in well. impact a see being as

Unidentified Analyst

sufficient is we well? model maintenance or of continued kind $X on as kind going Okay. be, XXXX a just move for rate can run quarter next year, kind of a kind me kind of looks wondering that a kind And your the And a we it's if remainder basis, then levels into a just considered run CapEx like is if lastly rate to basis expect with of this activity million for for of of that level? year of lag,

Alan Curtis

with associated I contract a that's bit little growth for of QX the still pipe think riser in drill there here being Brazil. is CapEx completed

equally the the $X not little about three amortized QX, quarters, would it be on be equipment a say higher go among will million more going quarter. to is to this bit I is So heavy net in probably as that

lighter QX and run I CapEx the will have at heavier those 'XX. the that it we of be assets And half of CapEx back the probably then could from more will year. for that maintenance a be modeling complete a rate look you as will So, demand expect in -- the

Unidentified Analyst

all from me. Thanks. it. Okay. I appreciate That's

Roderick Larson

Thank, Justin.

Operator

of question from next RBC. comes Hallead Your the from line Kurt

Your line is open.

Kurt Hallead

all well. morning families I Hey, and are good doing everybody, your hope

Roderick Larson

morning. Good Kurt. Hey,

Kurt Hallead

retirement. Marvin, best. And All on the morning. your Good congrats

Marvin Migura

Thanks, Kurt.

Kurt Hallead

welcome. You're

So, provided and CapEx gentlemen, going press you that to information that to million components on that all on, of to in with midpoint the adds of be with reductions But contribution I think you'd of the a -- conference tried full those me take night up basis. if just to I hoping the positive last logic the to guys all of able help the those cash take I were I've run you release call all today. terms on components, the $XX and and if reductions all dynamics, in cost around provided so year tax I -- some

Just to so you closely with kind make pretty my matched of math up check [Technical wanted to math double sure provided the far. Difficulty]

Operator

Your next Mike from question comes the Sabella... line of

Roderick Larson

what happened there? So,

Alan Curtis

Hang on.

So...

Kurt Hallead

to… I tough it that of a needed was question didn't think that you

Alan Curtis

So, if you think about...

Kurt Hallead

the components midpoint, All add about to up million $XX at is those about that right?

Alan Curtis

amount the taking You're from the Cares Act?

Kurt Hallead

that depreciation I that concluded took I tax. took Yeah, cash change in into and account dynamic. kind your that offset of the

your tax, up, and your Took midpoint CARES So, cash the your all that, you about of depreciation. your that's $XX million. that CapEx, OpEx, your took Act add

free that Just cash was dynamic as year. I about for want the correctly sure understanding make to you thought flow

Alan Curtis

Compared flow. depreciation free cash on to

Kurt Hallead

back Well, that again, you out. get

the in more million, right, range, $XX be like that? something $XX it'd million maybe So,

Alan Curtis

That's there. I yes, agree

Kurt Hallead

expect you in from working contribution did did what be? positive in contribution in a capital but commentary, And point suggested just think XXXX. maybe lot guys time, changed conference capital thanks. that your could on that working All $X for that XXXX. do curious call, know right, last you you To then, million capital a contribution has magnitude you indicate I the million since to of $XX working

Alan Curtis

we're receivables. a going it's be still range, of I lot prepared give don't but a to generating of do see cash think we and through unfortunately to it positive being liquidation

Kurt Hallead

thing, last then decline, were we a revenue one really so matter. just to And if fair. just number take that's Okay, let's doesn't the say,

revenues a let's on XX% go just down So, say by broad-brush.

that Marc's that indicated profitability. per starting point question think about a guys earlier impact reasonable the be to a EBITDA kind of You decrement on XX% could on

And of run then an adding midpoint, your we be again savings, back -- the I would expense would at operating rate million. about -- which assuming on we'd $XXX annualized be

the expense kind that the for that to is EBITDA, the a logic fair look operating correct? at on back an margin, exit the look Is process about think of I XXXX. add then that decline, of way the as So exit basis savings So, decremental it? revenue that at on

Alan Curtis

Yeah. I'm of that. all trying to follow

Kurt Hallead

$XX by will right? down top then your is got go million. revenues on cost million, $XXX of which Say you savings $XXX And declined that, by million, EBITDA

onto the of million something you basically down because your $XX by So cost that it add doesn't goes go EBITDA savings. really by $XXX down and million, that less

I'm logic it. you trying that to all Is right? the on So guys that's that understand are a get trying to thinking -- just about

Alan Curtis

I Yes. apologize.

Kurt Hallead

No, that's fine.

about more end. my That's to All Thanks it it on need Sorry be. guys. making than complicated right.

Alan Curtis

you. Thank

Operator

Your of comes America. the Bank next of Mike Sabella question from from line

open. line is Your

Mike Sabella

Hey, thanks. was that coming also. Appreciate I next the warning

just through just we of can cycle, a them in us environment operators through IMR in know as they're I back pretty versus time, of at walk it's an how kind sort but develops normal where normal environment an are in on? uncertain in and bringing IMR if this kind you kind think probably environment we wells then market cyclical and So a of think of of where shutting

Roderick Larson

on think yeah, hit I thing. I think the -- important you've

of a and in, the company because, when cycle, at then that the a from reaction decline, infrastructure see see kind production they then decide in price getting to in would don't see that's comes when just interesting back, shut of a oil be managing already we initially getting about see new the the place. first will of that of see because this thing and whatever we you're plays I fall-off it's think one normal hey, is, the they've think just restabilized knee-jerk in sort normal cycle, everything activity out more talking it stop to wells if we be a people we spend, I

cheapest the generally it's So, next barrel.

does I pretty think it well.

sort that we What of would a and be is that there wells, when think more you about wells, in remediation hydrate wave we restart right? work could bow could start like I activity could do, meaning in of this think can to so, the actually happen see of I it be, additional restart when when line, wells. especially to case work I some of do, flow bigger go And extreme, to say, when try even things think the you some shut kicks those you you that, in hydraulic

exaggerated So what I be. an version cycle probably a a normal of think it's would

Mike Sabella

I cuts little That's sorry, should really to through the Did a kind we of helpful – that hop late. think on makes walk across how the then, the on cost I'm board? is cutting is or it And this sense. you segment and focus had will

Roderick Larson

pretty significant redesign. combining is can think, We've I with through mean more in is. Mike, -- think because we've Yeah, got, we've it it mentioned we're broad-brush, like call, a org really the it's like you of I gone like.

looking allocate allocate to going much overall going facility. into be, do same to for other one the the it trying less when to move you So to what's is group we are, just meaningful at three how example, than you those be or because groups each to

So, better of better -- things level. those kinds top look the from

Mike Sabella

Thanks a That's lot guys. great.

Operator

Research. Wolfe from of the from line Gendron next Your Blake comes question

Your line is open.

Blake Gendron

the by in just the way, Thanks I is covenant there. that. commercials the digging appreciate saw at on term. very Good the going over commentary be the you much. update ROVs and component would it's is on that of stickier My bridged least 'XX, morning, the on little kind of rigs to floaters, guys. near there Can imagine bit contractual sort to kind of like what because us I first question missed on follow-up in a the be side? should we

offshore how your oil And that environment, kind there lower ROV rig then Are we of kind to payment component But see termination if sort that? there -- impact do terminations in is a any does of on of business? of on to what Thanks. can gain this are the downturn share rigs back downturn go potentially question, in wondering rigs that as to back-end I'm as this stacked you do following work.

Roderick Larson

So, quit and rigs and I is or anything it's fees to work and -- -- mean, is be really when for us. term quit those it's Blake, lost. they no when that's magic day loss working don't even in that us. That going or they they're like revenue work I for termination contracted there get

-- you'll count know working support business. you ROV watch just that the it's affecting rig side of of how So kind our drill and it's

because we we you rig. the carbon -- to operating footprint, also support that people be number have reduce using using, been really operations, we're and the those to can support that but resident and hard because ROVs to else can have upside that remote centers don't leveraging is and hybrid of on some get get working we're that The the we're vessel some a one, them, we've few really can a from the share de-manning, off around of everything world market ROVs

hard do, we've -- people situation this. a more that moving I that, seen it before has interested So in as to start realize is people ever to get like especially than already mean,

the going have place, So to the in have that's or I able to what to machines already leverage. machines we're the travel, being have not people moving around have think to

And new those why, to resident that the where we've it's build, to money pertinent if things new past. we kinds the way going CapEx, new put but that of we're maintenance look some not not believe automation, some the to is the also oilfield, of continue the in always necessarily at build done in things the CapEx vehicle, that's you are of

So we're think into the is this, and going going kind of what look the to to I technology have of side like leading the way. to on other of that's edge lean

Blake Gendron

That's Wondering some and just sort you focus, but software helpful good if not you government given the the in uncertainty specifically any versus that, on Advanced perspective. side. oil globally. entertainment the of of of spend of with on change markets a just a degree the there's In gas, It's us down to that focus guys the run been Tech, R&D of the business. focus gave some

the the plan now spend do of in current continuing a -- little part that resilient business more more on can that put kind you You tape? of given maybe bit just to toward so it's R&D commodity

Roderick Larson

Oh! it, for do vehicle things even entertainment, make even all now, to do the control It's all challenged side AGV though look stuff flip Yeah. the though those software, same technology the if we standpoint, the in And directly say applicable. I entertainment's from the you the would systems, business. of a at that's we work right that -- ride systems

-- people, of the invest going going said automation some again, think that's -- I a factories the everywhere for elbow the it's lot places, they of in automation else I go just using to to by work the in going continuing that's be to and about like have vehicle I number up. elbow of that, to these to technology have, think to demand we be ROVs, where So in able reduce we're to in

really That is said around resiliency. continue we I to you've So have what like invest. -- to

I two think it's very those much the case for businesses.

Blake Gendron

it. Got guys. a I'll lot Thanks back. turn it

Roderick Larson

Blake. Thanks,

Operator

question comes David the Smith of Energy. next from Your line from Heikkinen

is line Your open.

David Smith

how year, ask, from cash Heikkinen your morning. to significant Smith at? the flow Wanted of Dave given discounts balance cash curious you advantage wide to free take opportunity that the view Energy. Hey, good expectation and I'm your is for of debt trading do the

Roderick Larson

jump I'll mean, the I let thought, I'll much we opportunities So, finish are focused on first but and Alan in very there.

cash about talked we've so far. is balances our is how at looking why think cash really those I and use debt of carried we shifted

we've pretty traded. best this been during options trying -- our are thinly dislocation, bonds of time look to at our trying Just to because

buy move or we us. bonds whether So a entirely to and can wasn't not big clear back make

the we're I see options, it you much very think do. we So but evaluating way

anything? add you would Alan,

Alan Curtis

think you it well captured quite Rod. No, I there,

should I required. report that we'll anything, think we it it's do when on one

David Smith

more I to piling. ROV appreciate remote like was It And sounds are. with traction ask I it. going if you're you getting

you to sure for piloting real drilling in make interest getting wanted remote Just understood. I support? Are

Roderick Larson

as work it support, will for like I it that, some it, where used a we've where launch often, really and as things to on and vessel, see that as drilling an especially, intermittent platform most we able got We that's to the the a on call would probably be work would have more where do ROV station drilling we it be rig but not but can is of well. can opportunity for, frequently ROV that's

David Smith

Great, thank you very much.

Roderick Larson

Yep. Thanks, Dave.

Operator

comes next Your question Simmons. the Ian line Instructions] from from [Operator of Macpherson

Your line open. is

Ian Macpherson

Good Thanks. morning.

Roderick Larson

morning, Good Ian.

Ian Macpherson

wanted dropped at has rationalize their seats, do Obviously, changed one the the industry you overhead, unfold from and how to do most to think do more on crystallize see no calculus likes from ask industrywide Oceaneering here the from your etc. know value think this but I we our seat, for what to going consolidate participate? I M&A? prices And for looks feel like the Rod, it's how need and crisis that you opportunity you recent to

Roderick Larson

nailed to levels, group no sort those set, service longer-term to find you sense, activity smaller activity partnerships gotten and there. denying There I as one, true. have of a if the is see where Challenge, is think that, all try level, just it is find that Ian, the we there it, peer makes suppressed want like-for-like absolutely our right, companies things of Number and the good to mean, those challenges. I you combinations. two opportunity

get So you just the bump. get the synergy, you G&A don't

And is the share to trying price our to all takes and it and so going for a this have because is a then for I beginning. bit, while on to things little shock looking we're say, since that it's value to would a what us those believe stabilize strike tremendous on, been

it those values in believe also and but for settled the right. have that got not that that's just going combinations I we settle think realization a have is, happen, matter we that out, timing to but to everybody so to it's relative -- So just what where get ourselves it's the the

you it. just I an first do what from at look would standpoint, Oceaneering when the business we to I of doing order think tell we're exactly is that,

If you the consolidator. to good can for a be takes you it things be -- it example, have want all prove be you want to if you to a to consolidator, do

like-for-like, the doing good combining functions function. facilities, things work what our the And organization businesses work serve own that rationalizing we're really these the different centralized that's right across today now with together having being at that exactly all making is our can

right you the the things those out some there to are -- kind give those deals be of future. do think the I to of in in what make looking market

definitely we're preparing think to though go. of other Company everybody when when we the I is -- even that do waiting So for ready that to some be stuff, we able to are

Ian Macpherson

in degree the for saw just some release year, assume tackled for probably be guidance Alan, should capital for with we some would to free Is Rod. that flow And the pretty We've -- a fair starting significant questions. working QX, free good cash Got second to had we follow-up already quarter, you. of you, anyway QX positive so reversal is flow that help probably flow I at neutral a a in assume of of that derisk a the in movement cash cash the a EBITDA print assumption target to look we sequentially the for on free it. obviously, that kind year. year, Thank cash I probably the through or deficit that then degrading But QX?

Alan Curtis

QX, No, it's be QX. think going more to I

that Revenue back with off more yet, so year half the hasn't as lower probably generate from of to sheet anticipate QX, have back levels of think we heavier revenue, well, do be some story. as we tax I in back year refund able in alluded of the will we to, CapEx should well. the half the year. that back the balance the in that We our a I than getting half the precipitously of as and in dropped of QX year of half cash will

Ian Macpherson

clarification. Okay, that answers guys. for thanks today, for the Thanks

Roderick Larson

Thank you. Yep.

Operator

There other time. I at questions this the back turn the call to are will over presenters. no

Roderick Larson

for conference call. Thanks, Marcella. this no like joining Since everyone. first there I'd quarter by everybody thanking are XXXX to call. our Thank concludes you, other questions, And up the wrap

Operator

This call. concludes today's conference

disconnect.+ now may You

Oceaneering International (OII) 14 May 202020 Q1 Earnings call transcript