OII - Earnings call transcript Q2 2020 | Oceaneering International, Inc.

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Operator

My name is Megan and I will be your conference operator. I would like to welcome everyone to Oceaneering Second Quarter 2020 Earnings Conference Call. [Operator instructions] With that, I will now turn the call over to Mark Peterson, Oceaneering's vice president, corporate development, and investor relations.

Mark Peterson

Thanks, Megan. Good morning, and welcome to Oceaneering's second-quarter 2020 results conference call. webcast, replay being on be is website. Oceaneering's call and will a available Today's

the are our call and on president us Joining today officer. financial officer, Alan senior will and and chief chief Rod who be comments; providing prepared Curtis, vice executive president Larson,

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

also today comments measures. include Our non-GAAP financial

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

Roderick Larson

the for everybody. morning, thanks And Good call today. joining

start way have I Oceaneering to you to offshore and and service coming prepared a work remarks, providers ways perhaps and before. to that's fellow the spirit second our the for previously time with have This envisioned. our great. they and may I a for take in the before the want quarter thank to employees, customers our not better ever that So the safely this make difference to together, industry we're is industry continue safer And going than made we make together in

thanks So to everybody. again

to make I'll remarks details I'll the After our open update of and some I'll the review our an second-quarter I'll remarks. of Now questions. call for outlook and reduction general with on to the provide you closing activities. the results. Today, you prepared second that, your my give expense XXXX, XXXX half

pandemic, oil the considering with summary uncertainties all second-quarter operating surrounding results. COVID-XX the our markets crude were the adjusted our for satisfied results, and we So

before were flow. consensus actions of products. substantially depreciation million, positive demand in reflected happy quarter light For our and margin results XX an by generated declined EBITDA interest, basis the been of these to widespread, amortization, And as EBITDA, to for say also points to adjusted with compared of expected benefits to positive $XX.X our in their estimates. These reduce or integrity, asset we maintaining million quarter. free adjusted adjusted cost which and is despite cash costs The exceeding of decrease I to margins of quarter first the the or quarter taxes, EBITDA of we these partially earnings attributable services the generated lower quarter, of second continuation have effect our $XX.X segments, structural consolidated operating for in the our of am generally as each XXXX, X% only a XX% second revenue. during XXXX, that except first increasing compared reductions

results declined the of expected, aggregate first to XXXX, during As the quarter second our compared segments quarter the of XXXX. energy of

this to impacts limited except employees generated disruptions However, segment, the our COVID-XX we positive integrity, We due and in declined protocols quarter, and performance EBITDA. Sequentially, million, decline but operational asset delays adjusted did the results results improved of second pandemic the the consolidated our each operating to segments, and response $X.X adjusted during operating some safety non-energy our expenses. in place to was lower and advanced experience by and into our and put operating industry customers. unallocated by partially that offset technologies,

end. and exceeded generated cash we second-quarter free million EBITDA at of quarter cash cash $XX.X of $XXX We had of consensus Our and equivalents estimates, $XX.X adjusted million flow. million

X% X% decrease compared hire at principally achieved XXXX. quarter are we were hire. second by declined revenue our on of a hire mobilizations of first business day at for initiatives. to during to the ROV quarter XX% the remained during segment from our first The a XX% XX% compared not the second in look decline in second calculation. the and EBITDA days as the by decline continue noteworthy fewer average operations margin quarter let's unchanged quarter. Sequentially, quarter revenue included on adjusted and Now ROV expense in concessions relatively per all day during on due and to to reduction in resulted which revenue, Pricing per revenue increased ROV quarterly progress standby days as the

As fewer adjusted declining yielded slightly offset days in for seasonal million. days drill hire marginal ROV our rigs, operating which by decreased, by and performance from This decrease as lower for on working were services a a expected, hire $X.X result, increase on only drilling support services. that resulted vessel-based

the quarter the and to end the respectively, fleet prior ROV of compared remained our of decrease XXXX. XX% to quarter drill in due Fleet XX%, from quarter. the XX% at size the to during was in on March hire. for it first the XX% XXX for days use fleet XXXX, activity, and decreased At June in vehicles, XX% support Our the utilization as was end same at vessel-based XX%

on compares with Our market XXX drill our support XX was to of end market share floating first-quarter at of end March. share XX% contracted of rigs the floating the ROVs the of under June XXX at of the XX%, rigs contract. This

XXX XX% XXXX number price falling quarter quickly for a the our commodity from approximately customers quarter, XXXX, first the an quarter During adapted the decrease. to second average environment, of working XX to of of of the rigs with the approximately floating lower for

products. Turning to subsea

riser, Brazil an hours of XXXX. XX% margin to our pipe results or drill margin services revenues by do the first decreased quarter, the products business materials, adjusted During the helped quarter Revenue generated highlight project to announced the scope contract. cost operating first delayed to receipt declined I customer-driven with by quarter, and businesses compared in levels. decrease declined and slightly due impacted work previously during four-year was Revenue in as to second DPR, a on the service in $X.X the our rental to consistent in COVID-XX. manufactured working in decreased delays our activity due performed us Persistent million want that operating efforts to quarter. adjusted we achieve reduction our first pursuant

Our subsea $XXX XX, was products our XXXX, compared million. million, backlog backlog June March to XX, of XXXX, $XXX in

improved of there uncertainties bookings to an repair, our trailing decreased Revenue fewer were investment reducing decisions by falling oil customer during the due prices and and the months IMR and Sequentially, work. replacement as respond $X.X regarding quarter was or maintenance the delayed to of adjusted product's operating second COVID-XX-related the for risks. oil customers many subsea quarter during were due XX out was expected, Customers our XX%, prices As Revenue book-to-bill ratio inspection, revenues. reduction results to to on declined potential operating quick X% X.XX. in million quarterly call the amount activity.

pleased adjusted improved that We execution as operating result reduction better a project of and ongoing are results activity. cost

on lower Asset nonrecurring and on result costs integrity's adjusted sequentially a declined as completed revenue results of certain projects. operating

technologies, solid our segment, our our performance adjusted non-energy to adversely continues commercial improved businesses. of For results businesses. operating sequentially government advanced affect due COVID-XX second-quarter to $X.X million

post-retirement as the sequentially financial However, improved measures XXXX cost trust expenses quarter. reduction Unallocated on of certain market-based held to benefit in on the first quarter the assets the quarter compared return results. for implemented first XXXX as obligations the for the of lower were impact during second-quarter our the limited

half the for And the we now quarter. for full our Additionally, and had outlook costs technology second of during reduced XXXX. year information

as prices. spending drivers our of encouraged well customer in a products and results, we the businesses. our in to gas within the reductions continue for remains we softness services potential as the commodity are demand Directionally, continued XXXX. expect volatility impacted responses the COVID-XX, in energy be macro second-quarter our of XXXX we serve of as consequence by and oil of by and surrounding likely Many for the Although associated markets uncertainty the will rest to effects

remainder entertainment Additionally, expect activity COVID-XX affect ride through potentially near-term and XXXX. project we not the to of challenges commodity a demand Angola of manufactured good government from levels driven we note, which well positive our in the do timing support products our business. project our prices, performance On in and by are will good light businesses, backlog intervention our

potential unallocated uncertainty $XX are to providing the for remainder we the quarter be financial for range and million high of spending the in second are half segment challenges, customer expenses XXXX. of Given third per XXXX. forecast quarter that affirm COVID-XX and not guidance We

of of Capital expenditure and annualized range to year by $XX year. affirm call, $XXX for our million in million cash reduction targeted guidance range $XX full of tax earnings initiatives. in guidance And the expectation now our million range release the tax our the XXXX, refunds plan the $XX expense we of to For reduction the end a expectation million $XX of the to flow $XXX inclusive update cash million generate an on in to of CARES million payments depreciation of $XX our million XXXX range first-quarter $XX In of free for XXXX, million, $XX to the conference million our for we expense. in positive of Act guidance outlined $XX reduced million. and of expenses our to

do structure; efforts would $XX of additional reminder, that when and reduction launching simplification of last activity reductions savings and $XX initiated, our categories elimination describe $XX announced achieved projects, structural approximately million rationalizing compensation not reductions improvements with picks as to to $XX them reduced estimate include cost progressing of I in assets. since to expected we including expense depreciation have to of these general majority efficiency like remainder the classify We efforts, four be a well, are the does return the up. facilities; and this cost These process emphasize therefore, As the cost operating million not annualized cost we these we that and these to reduction into throughout chain follows: in and quarter. enabling efforts been of year. the that be supply which activities, million classified nonproductive million nature, expect may as reductions other some savings

these add the together, So end $XXX lower reached range. we our when you million, of have or

a cash these all costs into quarter, we're environment. remains I continue be the In how with we course, approximate but serve. associated results. done, our to going million current am actions the second and we remains in priority realities of to challenges sheet balance Much in of our the markets to the the with $XX We pleased has expect faced responded proud to of work XXXX. Oceaneering the very summary. liquidity high Considering the Preserving team

refunds; are remote positive automation expect operations; on year goals full achieve to continue digitization, for through tax excellence working we and generate our adapt lower cost and reduced the questions new of enable achieve meaningful the you efforts; interest actions expand be based continued take customers to Oceaneering, of expectation operational CARES tenets; customer taxes targeted happy ways free reductions; spending; everyone's to decarbonization cash appreciate quality We have. XXXX on in Act flow their and to focus may from our our We cash generate and taking now our to capital. to drive for any cash to capital we'll working and interactions

Operator

Sean Our first Meakim instructions] JP question [Operator Morgan. with is from

open. Your is line

Roderick Larson

Sean. morning, Good

Sean Meakim

morning. Good

you the for the cost-out million of versus that release. level the program thank on to in So clarification $XX the portion D&A was the date

pursuing? helpful. still the that's are into more just we We're current target? are to get out think Could I maybe dive buckets you incremental what challenging cost-out see there? what opportunities then, a little there's a And the next else what far? you've left that do set out to major a chance program, that's your in is six in think I do are besides next environment the for about evaluating other case. quarters, the offshore reasonable we laid you think so here the opportunity which What How for

Roderick Larson

when to ask Well, Great, quite appreciate you of with the segments. is major across are all It distributed fair Sean. our where that of buckets the I'll they I kind are. start evenly question. say

sort the where So and the everywhere. maintenance appeared of margin shows think everybody in I -- that second quarter

came I So opportunities side evenly the that is well. good there's actually quarter in some the little there, spread. a strength this through of we think government and see news as AdTech, less Maybe because just

activity bid aggressive So because good been as haven't there's we there. there actually

there, think but pretty the to left what's about So little less maybe rest there a I get. widespread. When so is out

think I -- When of talked we some about timing. examples. facilities we it of the as is one

while at leases we're terms, facilities, identified they a that. take while like looking lease to things just get because the got of Some them, we've sub and we've and go

we've gets. is harder quicker to the sort and opposed that get like done, of stuff as reductions of other So things compensation some were to which the the

tools I kind in so there. hand. good our is what's ask the think And that's I When out you me that think left, got the of we've news still

the taken. the segment through looking activity it whether of that's as think actions And if would regional we Oceaneering, been success and surgical challenges can't targeted drop you the should can if certain expect And to there half region very regional or as at next And see for being the so be big aggregated ready. actually just we far whole pretty of sort result suggest that be we to afford so consolidating we making I hard of or because then that back be need we Places of a would see. year, in subscale, in decisions part going and the still a best we operations, of stay continued consolidated about there. that around like around any those the sort I year see declines we're to

need where I the rest see after. a bit. do Alan, And more. we're Would nodding is you're we we again, what So you stuff to that's if continues would I think pivot go And happen. anything? capture add to to little that

Alan Curtis

Yes, the head. announced, Far said here nail the as facilities. regional you We the think, I down two no, the I is locations, we next in calls at, hit thing I my as looking obviously, And started we're on East ago. had well. notes

we're locations. to continuing at right evaluate, the And levels they're of in well. as If that So places taking process it's support each make suboptimal, we're certain those business. of look harder enablers a the to

front in lines, organization, has or can think the on at we do. team we the it's efficient that's what whether working how whether the on I more throughout something it's office back been it's be the

has on try that. at Oceaneering, quality to excellence the been operational indicated, well as and and we're Rod tenet long As to a here as tenets, continue focus going

Sean Meakim

Got it.

is thinking just what be cash maybe flow then think cash operating free to flow a do great about we just good So the unpack, guidance. free number. It would

working then, operating free cash tax items, other excluding capital what And guidance. level breakeven and the of and So is maybe number. that kind CapEx one component that to for an is just

XXXX. $XX guidance for is CapEx So million million $XX to

$XX million year spent date. You to

back really, what what for 'XX, range million So has you that million. you're there to CapEx the is half range drives talk of a $XX of Can year? saying second-half about $X the

Alan Curtis

on successfully side. CapEx I more drill the we the first on going pipe it's contract. CapEx-driven. on to start I'll Obviously, did indicated, as mean, riser be Rod maintenance working get the system

obviously,, pleased it. very we're So capitalized and with that

half So there's very little of growth CapEx in the year. the back

we up, there flex As some. be could

still the left going on then or completing. freedom pipe be a calls, most with to that of a well bit been of some some systems, drill bit them. little going on a with the on maybe is associated of couple that we've we're working as riser that CapEx Liberty ROVs little of still technologies some have vehicle kind associated as it, on next-generation the and in have We Isurus-type to invest to continuing CapEx. the we're But still of the the that is We're it highlighting maintenance

And could if $X probably we just interest, to. a is other up flex we more the maintenance. had think we a I little some pure need if on bit So it million

range midpoint kind $XX that of the we're of kind in So go is the guiding. toward where million

at we're cash pull $XX million We out of CARES that Tax Obviously, looking flow. Looking this can event That got onetime free you is year a million. at. $XX kind the Act. to

when it come at cash of what timing are this to as of uncertain same will the all ability to process the we're we certainly the in, subject this all driving time. to get IRS' for So of But that year.

bleed that 'XX or of into part could well. roll over So over as

the levels Sean, the that toward capital, capital up out, comes the working back cash. of is free is notwithstanding should year one reduced working components, levers other on end bigger just of which The

Sean Meakim

Fair Thank right. you. All enough.

Operator

Taylor Our next Zurcher question Pickering, is from with Holt.

Your line is over.

Taylor Zurcher

this if revenue out you curious Thank very to am over low, the that but in morning. segment ask help about half Bookings over quite the I still think back bit were backlog. of coming And revenue and I on least year us and good healthy. wanted is just of was first you, products. backlog at the expectedly down progression just position subsea quarter the a sequentially, could the

Alan Curtis

Yes. lot We quarter, anything. the little timing noted, a third-party from executed coming the the it When and of the materials do than of Taylor, in half back was still at of expect a with year second suppliers. you look more you had that down receive timing some as to that be will bit, here is the

it's manufactured half the probably when XX% traditional XX%, to So back I year, be going the rental. and XX% certainly of XX% and at back look a service products to to going more

to in the the back the talked more as stream So backlog year the it we half call executing backlog umbilicals back be in into skewed from we more about to notes. as of manufactured revenue going we're that a will be products the put in

Taylor Zurcher

probably prices, overcorrected at like follow-up place past of it's activity a given in for environment here. these and to And general. the I clearly, the few we sort headwinds perfect to we're COVID-XX. months. from the But in on over commodity storm feel does the And of activity logistical downside Okay. deepwater a some plummet sort the mean, is of headed it bit created lower more probably pandemic's still from just high-level the ultra-deepwater

there's to so result any or standby go of you rigs I am the markets that the of might think that return half see where maybe a work year. the a pandemic you if curious the as case on idled and to And out that's well temporarily if had back few over there's as there

Roderick Larson

delay there's give some to so Yes, think the side. -- see than right? got I'll think speaks business lot market We've trying either direction, we out And upside to whole in on the a things, right. out called think that one of in of to to government Taylor. for or the called this you're guidance China vehicles, things really face we take the And because other in we've I in of Angola upside. to the I don't in hesitance we the got entertainment Hey, we room in work back that things with while, work move entertainment that, I our that go

is So in market lies I everybody I the really think think our which dynamics, facing right now. uncertainty

I a feel and would it one well. they now call when found a would effects saw be example, is They to went to go weeks. for mark whole in where even to two more we They're I could for well. and overshot they probably There out Norway, they to XX work. we persist. have days time, the for examples rig. had everything very the use, to clear test they've They And work say, they They stumbled clean You we've could short down we the They everybody, COVID had -- in going Brazil is Norway, times working Norway deepwater And Brazil, because like while go the disruption case. out. in rig. work. back then, back but

commodity places. affected than less by maybe price So other

in places more world the are that there So we think are resilient.

COVID think that -- both I commodity price. from and

But worse, that see right to we see a also onto to continue difficult settle places to So other get out. going do where that think message bit I you're it's could it and work. resolve little could while is this the

well. as watching we're what that's So

Taylor Zurcher

thanks Great. answer. Well, the for

Operator

Sabella with Bank from is next America. question Mike of Your

open. is line Your

Mike Sabella

Hey, good morning.

Roderick Larson

morning. Good

Mike Sabella

the around Do of I we again discussion how never if possible optimal debt here. guys opportunity we sitting for balance down have of Maybe of recently. tenders window bonds. a cash years Oceaneering next the kind here? the just you for could to all think is think capital prices come wondering move off with part structure couple on the of And about was there's kind another dust bit open the not, over little if Bond maybe sheet. do

Roderick Larson

in. I'll mean, take think, take we're first for But looking I part, the at I opportunities. still Alan still let one. we're and least, yes, second leaning maybe that

of move. just when and Our debt especially, we good But there's we're opportunity to has that there's debt. that ways a that course, And to a see number watching of XX that arises. think that to if address on market everything comes opportunity a getting or price the maturity we that -- if do can there's again,

others that good soft have that could of So and a be act. the for us some market a to wherewithal side

that debt do generally? speak. definitely Alan, think talk you I watch, want about So to is the to on structure so

Alan Curtis

No.

to How do into say, of XX the it Certainly, I is revolver there How think next, really months, looking beyond I'll all structure? the does same and But opportunity maintain XXs? the things act? over at of the we an up I debt each with those coming the how do we time, liquidity? play is, at January 'XX. think in revolver get the

recognize see where upside liquidity certain address we we're do So our to but have to are just return. in that from see we to need out too will very revenue with an pleased today, we today, position go that we and far we markets will can make We that back not to the market. this

call the improve the in take we are we at not indicated working how just out line, Oceaneering. cost top on do we As notes,

are at the So the something to working is I while this see able that same address today, down generating to to road, increasing revenues time. flexibility we it be need the have do we from capital

the looking the debt into upside that overall coming our one of could coming elements is key that's think to in I So discussion we're blend years. be trying the at on

Mike Sabella

a And end, much of should that Got quarter? carryover into million there kind EBITDA sorry am could into third the already. you we on straight And Or we a what XQ cuts. realized it. it sort is was any call quarter run how considering? on, it your of that just $XX heading And number, cost that -- is XQ? clarification just, you I of that of of all a gave to benefit be say, the guess, rate point if if I it, But in impact was kind

Alan Curtis

Yes.

go taken. really initiatives reduction And make the we realize any if compensation we've a, the we talking second do, of like things we in talk and don't example, about we're a that, of that. when of quarter, the benefit about the the month cost-saving for we So Michael, full

different varying is that. degrees So -- there of there's

So we'll it when Oceaneering. for we the when the realize depends $XX on in million represents quarter. really to cost in million, happens How $XX of much quarter out of get annualized million $XX that an that kind

you when the so get also And things more into to get we'll initialized. these quarter, third we'll see more see realized, get of things these start of

we So growing expect things wave that top are range, there's a $XX our the year-end, here end annualized number expect happening. of that if to by whether that realized we decreased number of whatever would including the top XXXX. And expense, that that million, we of of get be depreciation we get range, most come to with, the that in do up we if

Operator

with Ian is question next from Simmons. MacPherson Your

is line Your open.

Ian MacPherson

have is you in into it, the see that less ZIP morning, half, COVID government experiencing And the or notes been quarter, than Good recognizing QX better expecting. the of but much have half? business On Rod. up to was Thanks. of results of AdTech from been the screwed looking the your may more headwinds some code piece a do side AdTech, repeatability entertainment same notwithstanding is last still the my second I in good bigger in performance the the that second first-half fact from or even

Roderick Larson

No.

that that's durable. I given -- don't the our is cuts good news the that -- that especially on is think of Ian, in out some I strong back a out sense side happened to cost think, pretty year, we are coming commercial everything going the entertainment know we have what especially major going can the China. business the of, on the that in half can recovery isn't QX unless nothing I repeatable say that I with COVID of some expect that in have

one the strong. We've of like good bid on Then strong QX. the got looks activity business. there. So steady We've side, businesses have got that state within government we're the performance government to kind been

beatable. I QX repeatable, not yes, if is think So

Ian MacPherson

value the in then, That's for drivers Good. ROV Thanks. main the being helpful. oilfield time products And and being.

probably for To make into think example, EBITDA that's maybe as glide EBITDA year. that QX would ROVs, that Or second decrementals down contemplating bit activity would XX% from I sense we QX, put your suffers that to think decrementals with me, is For forward, down count about X little margins with which a how this continued me of the do in you a decrementals, margins into taking XX% kind The points. than that half. better saw kind a of the you do the modeling going that? could later you? cost-outs which XX%, Does little rig

Alan Curtis

example. I We're talk again, out, other we $XX think to to I when talking the improvements. for close question level the about up and that, and about cost-outs million process taken when came of talking about know earlier, we're we not cuts, get we've some things, just headcount

it of. like but to we really think incremental keep continue a maybe got a the so you that on put change. work worse, trend process to will way we our from to it benefit we got ahead about be that. there get after We Because, on to is talk don't lot when got said, improvement I count And to we'll that. I there's more think cost

Ian MacPherson

Appreciate color today. it. for Thanks insights the and

Operator

instructions] Scotiabank. next is from [Operator Your Vebs question with Vaishnav

Your is line open.

Vebs Vaishnav

Hey guys. Good you morning for questions. my thank and taking

Roderick Larson

Hi, Vebs.

Vebs Vaishnav

And Can around the the just we you stand? are there today adjustments is in debt those any and what like covenants? allowed governance, you how speak that about have

Roderick Larson

as Yes, basis, which indicated. you on Vebs, cap, have with debt-to-total just we adjusted covenants, is our a an debt

back the years of taken last we've added in that overall are equation. impairments the couple to the So

So it's as covenant XX% stands, on the a a adjusted total cap at level. debt-to-total

low in probably XX% we're math, range. the do you the If

Alan Curtis

of anecdotal our the it. And amount revolver, it to means we also full way that at as of have our access looking an revolver

Vebs Vaishnav

we like speak happening? -- If speak pushed to back – you it's can like Angola start speak about It expect we the been that can you -- work? XQ from -- when also project into seems come can about And

Roderick Larson

Yes, Vebs, but question. -- finish yes. the Go ahead,

Vebs Vaishnav

larger issues I had Also, kwanza. just hedges of one the about your to like like has just with many pier going given ask was Angolan

place? in are hedges Just what

Roderick Larson

Sure.

with mobilization a do So you're thing It's need the wells. the bring then has our get have there. I'll challenged big -- I on, Angola, to the We But we've that there them got in going the mobilized been pretty people spread. start of want is to customer we and you're believe a in cases, to sort work, we do but it's to mean, wants trying biggest actually just work, live now -- to in in. that certainly, to need some window and that right need we come working

that be believe to to finish the You able need going you're to work.

to want not started able get and be don't to finish. You

looking we're So the believe where West whole project. execute that stabilized we'll the be comfortable where the in window to Africa we're that point we situation, situation is the to COVID able for

cost of we think a but tell that's -- for for hedge on whether will again, you contract. can't in are at standpoint, XXXX pretty our tell our well, more From win the be open is hard wide especially pretty in I currencies to matched of hedge predict. open of us to can sure get tough you it -- our complete one's I to that to contracts, based it's I there's in more COVID, that's Africa, So started. the a built-in that which a would But but that very we're so most going be West least it

well any So we're what because think we left contract this in receive. when we'll to with executed that we'll be matched exposure we'll and -- whether kwanza don't is spend pretty currency believe undue as I this that

Vebs Vaishnav

Got it.

maybe I squeeze helpful. in one that's if can think, And more. I

XQ But in in obviously, could is like, third seasonally be macro, it the of So from up up. it's given business, down it really the the is three to we and advanced technologies, strong know. modestly like looking the Is but it fair business don't quarter? that flat maybe obviously, of modestly to quarter maybe modestly typically flat to XQ, Products sounds or each Energies a way next sounds characterizing

Roderick Larson

go in. think so. Alan. Yes, Jump I Yes, ahead

Alan Curtis

the into that up No, anticipated somewhat to raw and the of into that I called think process. you certainly products bit slide we a materials production QX didn't I we of no, of some think on it get in little put QX being form QX a

those bottom-line because of anticipate which we QX, the just impact materials at line drive in very in. happen So putting top of the but little we're all nature will will

from I So but it line, profit it. lot wouldn't could a of impact drive top

Vebs Vaishnav

advanced like like commercial can the aspect? offset government And, the technologies, business

Roderick Larson

look very of I we QX in QX commercial businesses. similar had I levels and the led of low would what I kind would by where is entertainment would think be it to Similarly, aspect government think at the business.

Operator

question Wolfe final with comes Gendron Research. from Our Blake

Your line open. is

Blake Gendron

forgetting for Hey, here. thanks, me guys, not on

pricing at pricing. first-half if back looks of implied to swing look day you is like ROVs If from on margins proxy cost-out an to margins, Obviously, relative a degradation the ROVs side half XXXX rate, I high at on the though, The low. want versus, it all-time the a implied that's the continue first EBIT that through. take fairly to certainly, for business. specifically offset margin, XXX an of least day from Just to for on are lot the sort rate that bps margin and by of

any scenario day deepwater. fleet. and on lower cost. pricing rate in implied even what the just activity deal. the I the context should the more You've to can't, am margin, adding It's probably modeling wondering, we services capable. It's in the sweeten appreciating expect And maybe taking the But how the likely drillers just for then, of auxiliary because impacts some that just they now are not you lower in rationalized worst-case

thoughts of the and around and be some really Just puts margins ROV helpful. would takes your

Roderick Larson

Sure.

day rate got the We day the scrubbed consider day we're on we of of because, day let on days, rate. if the like in So number an like it hard even active drop me out kind you with when said, rate. start pretty take not a you the really standby. rate But looks we actually well. held that's case. And We hit day

And COVID-related, you moving so we expect, people were were They Even did out. last out. this on and rig Oceaneering. and what people had as were trouble quarter, we the if have might and in they getting in

standby days, getting mobilized the rig more had either we or so And demobilized.

go And so rate. days, the those at mix a standby into lower

but you a think concessions. it rig category And really go where So like we we're had make lower. looks just much haven't in price, it to can't unfortunately, lower -- price that I

pretty been So stable. that's

communications system. the We've to that rig work. people challenging of operate to tooling. things to can do to the RWOCS or same because I going can can sweeten of we operate Going meaning we're mentioned that work. what guys do you I just the forward, have touting ourselves an some do been mean, we fewer They some customer. do better. some the the on an the to value can the can we have deal, keep They the survey do of can of think can do jobs, deliver IWOCS can two They we have remotely, the they

also share benefits. able multipurpose the reduce the to reduce They we being players to cost So cost Oceaneering to in the the that customer. have and

I along of technology drive operations. to things of are where with the things to those like remote have the we're margin the side push think future, really that's going to kinds in

So both the on That's And bottom cost can situation. of scraping we because, one we those necessarily it about the benefits being without lose-lose that customer. the and to benefits the price. they're believe us there's I can achievable things -- the important. are we one again, talk situation of benefit when give of And a kind

Blake Gendron

program and mentioned. Got it. around point revisit Did on fine just put what language the want the to you some helpful. That's cost-out of maybe a

the just Or maybe context have million? and you then, million, million, today $XX when you're have that that the the the I are here. And million? processes already guess, place initiated, quarter that realizing asking you is piece of in depreciation realized not the So is in my notes of you full hand. $XX am end? appreciating that is The full I already in or $XX $XX say

I annualized previously think of the first mentioned end million quarter. you the at $XX-or-so

timing getting number I all-in environment, just in million wondering, out am forward? So moving if line. it you're this from to of stay perspective, to then, there's like understand kind unpredictable seems time the that $XXX upside we too, trying a cut cost if Of And ahead

Roderick Larson

No.

on right the track. So you're

think you when that didn't capture through of So being we about quarter, But processes all the the $XX of the million at QX. $XX end we million, had place goodness full $XX get think million the to in annualized. about

QX million you did add goodness identified. So more in in add to more than take they want should QX, to plus those $XX when things, we the they

would way in if that's the XXXX. we hit about the $XXX So the if it's of, to $XXX reduction, realize that able most hit we growing million, a should million, something number. not including it we be think entirely, I And is the expense if full depreciation

but of of it more a keep that what's we of of edge, that. to each in get more the subsequent benefit plus that So grows, as to We sort we there, number to leading adding adding is quarter. the mix keep in and realize

So it. you got

would I $XXX start if -- mentioned say earlier about challenges is, the think thing see think I this to and other million? we The we we see the be need and need back very we efficiencies. to contracts. on call, need what to improving cost, to to but we regions, to but about to we need cutting not go processes, back just go specific We I improve

to take a process those little up. bit longer improvements ramp of some So

the Sometimes expenses. a facility, got out to lease we run

get off the but while expense we cannot all So maintenance, we a the out facility the have an and example. we takes care it of of to a shut can as move out, full can lights,

continue all going can if option say, market things, it's for upside where opportunities to gets we the is, this longer a to going out surely, just more us down, has subscale. gone out We places where there's tougher, of those and be forward think be So what I out. or taking about be there can can going it's to viable cost that very no take surgical we

Alan Curtis

clear, $XX to it This trying we to is We're we're even these be I say variable job. structural. cost not being million, want at try the associated in $XX to looking as would number. Blake, bigger going That million. though, a performing be when So and a QX, and are identified with that moved

be to XXXX. structurally Rob return cost is sustainable as driven out, trying we're So cost not focused said, what would in on that,

Blake Gendron

that point the structural time make variable out still on Got to about costs, want those makes just costs if it. And good no, sure I quarter. quarterly point and mean, not average. Yes, decrementals in your in pull second then, even are sense. it you to the I really top. was

potential understood appreciate and outlook If one So du activity in and transition. are still some here, on could projects, space, with the or leading relatively levels commentary. on I it's definitely your that Obviously, edge where specifically while subdued. play one jour sneak us, of some projects just conversations that. energy in Can the topic you in you the quick just of in what remind maybe renewable and customers are

Roderick Larson

No.

biggest a place operations, of our projects So that. support ROV to is is one -- though,

So wind the big out particularly projects, the that we in of are are supporting a North vessels lot doing there Sea.

we've great the there. So the sector, relationships European contractors got with major

good. So that's been

we is remember clearance. probably Ecosse, You route which bought

removal that's clearance or So that. trenching got some like boulder and things some and boulder

got have highly go so we to So there. marine I more skills of and into are work we've that Projects transferable we some think at skills we that. environment highly as look well, transferable

the work groups. United the involved more say, East been of is place States we survey in probably one think our other Coast than participate the, some I in has of group most. survey And the

installed for point So then, get there end inspection we asset to it that's I to asset be the grow, work mean, and integrity base to and management apply installed that and IMR believe But integrity. that asset more growing. part we'll work. of base, And kind continues of we more able as of us. for is the that into skills our of the spear

transition the and business more so that relationships good. go in think the more familiar that in sense offshore construction on a I that going growing. are think Our of of that a But it's it's get work. generally, of much and of finding if in so new of the players. the are actually with experience there because invest depend we just good And sort thing we for business and than penetration -- can and got marine We oilfield I that been part pursue out we accelerate we've wind the of group side could has the people faster

for So our sector. mostly good news

Blake Gendron

the appreciate Excellent. Thanks. Really guys. Excellent. update,

Roderick Larson

Blake. Thanks,

Operator

for Larson to this Rod the closing I turn back questions time. remarks. have call We further no at

Roderick Larson

Well, our just wrap joining questions, up concludes Thanks, since And call. are everybody to XXXX there everybody. second-quarter more conference want call. thanking the Great. I no by for this

Operator

conference concludes call. This today’s

You may now disconnect.

Oceaneering International (OII) 1 Aug 202020 Q2 Earnings call transcript