OII - Earnings call transcript Q3 2021 | Oceaneering International, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello. My name is Deb and I will be your conference operator. I would like to welcome everyone to the Oceaneering's Third Quarter 2021 Earnings Conference Call. [Operator Instructions] With that, I will now turn the call over to Mark Peterson, Oceaneering's Vice President of Corporate Development and Investor Relations. The floor is yours.

Mark Peterson

Deb. you, Thank welcome Call. and Third XXXX Quarter Good to Conference Results morning, Oceaneering's Today's replay and on webcast, call being is a Oceaneering's will website. available be

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

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

Our comments non-GAAP non-GAAP include also financial today measures. are also --

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

Rod Larson

call year, receive this on thanks morning, At time joining we questions today. the the the of are coming of year. Good for the and focused most

happy we're Oceaneering's you our by to providing on outlook. XXXX initial thoughts start So

quality XXXX initiating of year-over-year to underpins segments, in also our EBITDA supporting calendar expectation flow and XXXX As fundamentals Manufactured represent generate solid process we're We're Aerospace million. backlog activity midpoint, ability from compared adjusted deliver in XX% recovery in to cash midpoint our would efficiency gains and to of as compared level our similar segment. energy million. At Technologies This our commodity the XXXX enhancements, to this for XXXX. improvement continued solid yesterday, improvement guidance the this range in based segment levels of a Products Defense increased as economy, of free performance $XXX of increase in $XXX our revised global prices our and announced the guidance million to the $XXX EBITDA on year confident in XXXX

quarter year and comments XXXX generate the and of the my our outlook to quarter outlook, consolidated to levels some and our net previously the activities XXXX, our XXXX performance questions. then segment these make on market third EBITDA cash to full Oceaneering's consolidated call comments, of growth for opening to continuing while debt including compared current mentioned fourth guidance range flow business I'll XXXX take our support some Now as your improve outlook position. expectations before and initial free focus closing similar After the for of to I'll remarks --

Now to our third quarter summary results.

of guidance within senior quarter. third with additional at but of We million range XXXX in quarter, EBITDA through of team's the bringing $XX.X Our during constrained the our hurricanes, quarter the the chain. to $XX and navigate the during the with total a of we made for progress XXXX, the open a challenges, quarter beginning supply from tightening million, inflation, $XX.X produced the presented consolidated labor preparation second our decrease planning ability instrumental market to repurchases global were these repurchases year. the provided challenges third of and market which Despite debt included notes, million reduction a

the $XX in million third from During generated cash of cash flow. $XX.X quarter, flow operations and free we million generated

$XXX energy-focused senior notes. million, Our businesses XXXX work slightly balance end the third quarter. at third our the of our during fell the aforementioned active the remain cash quarter due seasonally of to repurchases primarily Offshore to in

performed X Gulf operating the each muted segments of Ida of in as In our operations the by high our However, beginning of Hurricane at third forecast currents. loop the were and quarter. general, Mexico

revenue Subsea as increased third activity good the the compared quarter. Robotics SSR look by Now operations business quarter levels second or to continuing our let's XXXX. at with for slightly segment of offshore

attributed services, margins due to lower from or XXXX extended bonus ROV geographic mix throughout changes that rotations to recognized COVID-XX However, operating primarily enduring technicians the declined work our income remotely for in challenges. for special and vehicle operated

during SSR SSR prior our quarter, immediate the and business our As was hire adjusted The to result, XX% in support active. respectively, businesses X% days split quarter. lower survey ROV XX-XX of EBITDA a from as revenue ROV increase. days to a on margin vessel-based to than both and on an hire remained were drill slightly XX% as XX% increased activity compared With was from the and split, increase combined quarter. for in second services, Sequential the slightly tooling seasonally compared the XX,XXX second compared offshore XX,XXX days

our we as of to fleet contracts XX%, second during generally up XX% was end to drill quarter. share XX%. quarter. revenue the Average revenue day second of per on support slightly XX ROV achieved when support September, XX market services ROV respectively, contract, average the XX%, XXX systems, fleet on floating share prior Our fleet ROV quarter on utilization was Subject the XX% XXX third drill in support contract. day XX% in was our under than had in vessel-based the rigs ROV was and variances, continue quarterly $X,XXX rigs on a under the quarter. which the our hire we drill second We at and ROV the we same of of count had to in approximate contracts and market the XXX XX% At X% use quarter with from of versus $X,XXX lower floating hire XX% the expect maintained per share

the essentially Turning Sequentially, and second flat third margin quarter marginally products. income despite operating to manufactured revenue. quarter our XXXX operating lower with income were

challenge $XX.X as subdued, recover. in ability manufacturing cost of this to revenue which continued economy base -- remains suboptimal, Third a our business. to quarter continues to of see our gradual or challenge solutions expected Activities the but increase nonenergy leverage the our are to million mobility XXXX remains

$XXX Our products of million, was $XXX September on quarter million. manufactured backlog second our on backlog XXXX XX, improving

on for or caused Hurricane in Mexico, of Gulf the the delays third the revenue. conclusion Ida second high X% XXXX IMR activities to XX group the benefits. performance efficiency work but or benefited XXXX Management to XXXX seasonal quarter by X for to September flat projects income to currents. quarter on riserless incremental million of activities. second XXXX, and on improved was a for third of from Angola XX% revenue. spending the Angola to Unallocated Operating XXXX X.X Solutions, declined sequential in second of in improvements information income of third higher intervention was months. activity ratio ongoing X% and XXXX the was and primary to and projects to months declined XXXX, maintenance primarily an decrease XXXX, less The loop for of work ADTech and driver quarter improved low-margin margin in or several component income operating flat income quarter quarter XX, well due to technology to Operating on $XX.X book-to-bill the XX% the some compared expenses XX% as as improved from due third in margin of were light X% was compared Operating Revenue from despite decline XXXX Offshore delayed repair as of show on sequentially ended the slightly the manpower revenue. good income lower OPG quarter expected, Defense continue field was infrastructure. income due on the primarily inspection, a relatively higher project. Our operating trailing second X.X than quarter higher or Digital Technologies of margin in as the Aerospace third of revenue. relatively Integrity operating and quarter IMDS, quarter expected

our of Now for XXXX. address I'll fourth the outlook quarter

We third being quarter the are slightly higher XXXX on as our in decline results projecting operating results. our a with same revenue EBITDA approximately consolidated

still hurricanes benefit to as Although the and quarter work AdTech compared and some expect that we we profitability out the activities was we in expenses. from result pushed third see typical results do our offshore fourth to loop of a Broadly improved unallocated during offset currents, quarter slowdown XXXX see lower by the third of the the expect seasonal to expect operating from for the as to segments XXXX higher quarter, energy operating be of in quarter. fourth

the quarter operating the in hire SSR, revenue profitability ROV quarter. we segment to days with as flat projecting to to decrease modest third continuing XXXX factors to seasonal during survey compared on of a are our fourth due relatively quarter on XXXX, decline good operations are by for For as quarter. activity compared fourth forecast third the typical

SSR be quarter. the third in Our ROV range. improve XX% to margin to high to one-off fleet the expenditures the as forecast that is of EBITDA the impacted exclusion compared quarter anticipated utilization due assumes third to overall

rigs board terms with approximately XX year-end. September of the there As by were XX drilling Oceaneering XX on of XX, floating expiring ROVs XXXX, contract

of During the ROVs we to to new have expect XX XX XX rigs floating the begin period, same on contracts.

single-digit to are significant in profitability to our we through expect better revenue the be higher products promising level first high energy mid- projected our leverage quarters to in activity manufactured X of our to over Award begins range For the seen and facilities. as to anticipate a to products, manufacturing businesses. increase base. improve able to margins cost continues look flow operating as we Operating awards the

projects. We strengthening new seem businesses our committing their headwinds CapEx on Mobility Solutions customers near-term sheets expect before continued focused balance in our as to

X.X of to continue full ratio between We and for forecast a the XXXX. X.X of year book-to-bill

operating of range, lower the to being to margins to and mid-single-digit activities results Angola. revenue and lower a seasonality income in fixed the spread a Operating substantially cost lower expected project over typical in base. due from reduction result we OPG, quarter contribution to revenue field decline support as For low primarily fourth are

Mexico currents, As not to expect Hurricane improving do quarter due as mentioned, and of was carryover Ida significantly third this high fourth of activity quarter IMR results. loop delayed some that see we but Gulf

quarter For IMDS fourth significantly improving results.

relatively For revenue third of third with remain the we XXXX. consistent the results to quarter IMDS, from and both expect -- operating

revenue third forecast as we operating results flat For the quarter. and to lower ADTech, compared relatively

same operating information products year-over-year infrastructure. technology For level margin the spending And for will XXXX. adjusted based year show Unallocated manufactured of of range increased on for approximately to operating expect are the the to mid-$XX in sequential full million primarily our to the our be year to the are as be segment XXXX, we for continue except segments, full margin due expected expenses operating of we XXXX, that improvement. expecting each on guidance,

generate $XXX to expect the narrowed within million adjusted We million. of to range $XXX EBITDA

to range of are million $XX capital narrowing our also for We the to million. guidance expenditure $XX

remains to in Our guidance payments of for $XX million tax the cash range million. $XX

generation continue expect with these of tax receipt in million Act million $XX the amount of refunds timing CARES The flow or XXXX we cash $XX payments, quarter generated in of third of remains received of million uncertain. that $X.X for of in to continue to XXXX. these Regardless be whether XXXX to of of remaining remaining XXXX. of payments in We this the XXXX positive expect excess timing the free

to turning Now sheet. balance our

third debt total we of senior a million position the an year-to-date repurchased $XX million. as $XX.X net Our additional notes during quarter repurchase our for improved XXXX of

cash million, of flow end at from and cash had quarter. and operations Our the million cash $XXX third equivalents we was $XX.X of the

We in generated cash XXXX. continue expect will generated free flow that exceed XXXX to in

XXXX positioned the us are We of the available $XXX steps our undrawn XXXX. from until during to fourth our And million senior notes. we down to well address which revolver, $XXX to January million have quarter maturity XXXX of

interest longer positioned gas both Confidence accelerating is and the that growth term. growth markets, and appear markets to our in wind And of supportive We short industry energy in we offshore commodity the benefit offshore continued energy over anticipate are believe forward the energy to term. gradual prices to markets. to and XXXX. from medium services including segments these the over growth transition offshore and looking in Now oil returning

for financial process. traditional million of reporting increasing help narrowing their businesses the supporting provide guidance Confidence for XXXX, full for million underpin forecast anticipate adjusted positive our this With our to with returning markets. for to over in At continued healthy our positive to goals. cash our free $XXX our and we expenditures guidance capital services higher past We'll gains We million and can each rebound performance steady activity aerospace flow government remains Accordingly, be fundamentals range levels customers companies projected improved generating our and over market activity flow able carbon fourth range based XXXX. $XXX within in Solutions a government-focused combined for time, in quarter next at serving increased a year-to-date million our encouraged of in specific demonstrated growth we of With on year-end offshore Subsea invest more and segment of and positioned the by expectation years, operating led industry operations, capital an I'm we expectations in and several EBITDA also $XXX the businesses as defense we the emerging expectations believe reduction in levels expected that XXXX. $XXX segments, projects. to several especially the increased to focus, to generate In Mobility continued ADTech in operating growth markets. well performance XXXX, as the This, of our to firm years. and EBITDA XXXX by across our the that we're is the Robotics growth cash on operations. year. summary, more during for from discipline the participation similar businesses expect levels to energy expect general flow cash to from catalyst in of levels in those XXXX, achieve our

be and Our growing be of and Oceaneering focus everyone's debt supply appreciate questions issues, you technologies we'll in We maturity, inflation our into and capabilities happy free any maintaining XXXX, and positive continues financial have. chain cash might generating to flow Oceaneering, and and interest continued leveraging on our the markets. new mitigating XXXX effects top take in XXXX talent, to addressing retaining flexibility by now attracting

Operator

Your of with the Pickering. question Zurcher first Taylor [Operator from Instructions] comes line Tudor,

Taylor Zurcher

was line, expecting. at one question least very really the the segment. My And to specific is I first the to relative my just what XXXX is at on encouraging, EBITDA outlook

of discrete but You it there's also I about in or Angola way, on And in of called obviously, the goes in projects that that SSR OPG, OPG. should out in GoM work think speculative feels segment benefited like lot type leading a Angola one and when I discrete just a segment. from say, that project the call-out lot

XXXX? outlook OPG XXXX in just for to relative So curious what's the framing improved

Rod Larson

think I we market quote, see for us. And discrete request contracting we mean, And that to I the signal improvement right? Taylor, when activity in so you projects, now, signals. tangible the nailed look at it. very customer right we what see

that tuned. we'll be month just of specifically to So say the Hopefully, I would so. stay able or next share more news in some

So of out. that clear some should that

Taylor Zurcher

XXXX. the the just or you Okay. for interesting out Understood there. And generation certainly EBITDA then type sort Two, year, growth some the it's capital your me to it with the a And year. improved and follow-up buckets non-oil increase of all makes opportunities. next just on spend next to were sense in have flexibility that allocation you on called growth gas spend largely capital certainly which

your about help growth versus and seeing you between capital of segments? best non-oil if oil you're your And think curious today? capital allocation where could other we allocate gas the about businesses So just gas-oriented opportunities should think to traditional oriented how and offshore us some

Rod Larson

Happy Sure. do that. to

kind oil of is at at XX% about And but XX% things of some So on our markets. our and development other -- is maybe when our new gas. also look focused development for stream it. and look -- product they targeted new specifically interesting I we it's and application have that in may developing the they're other then gas, things oil product are

oil product the we And development, think nice new a the the because we've are especially oversupplied. I that's of markets know markets gas for balance that we and whether with and side got going the we're still most serve direction is our other So of key.

don't capital. they require down a on doubling lot So of

their market, customers we in that spend at gas oil reduce looking where the carbon footprint. So help can we're do we our and ways

large clearance that's then we Liberty days clearance, side, the support vehicle which Also of water again, fewer type see things that And more think about building on specifically the route opportunities built things going really do. that wind the offshore on route to. to for to money out offshore see vessels vehicles And nonenergy more We activities. vehicle, So subsea wind, market. autonomous ROV the [indiscernible] of some freedom, build like our the equipment. resident support being some on a to is will you create we then one

business Our can we AGV-type term finally, lot the got I opportunities Mobility reduction, are more one maybe don't obviously, And a some customers. most more exciting that biggest of people longer vehicles -- about then and things one think business see modeling we've carbon the do the that also In Solutions one of for that's where to is able is us think more some being that IMDS you predictive data entertainment. our and we When avoided. escapes for build

for a opportunities our into infrastructure, greater do able robust to very, and give to more their able customers there. them strong analysis insight being very So being

So build and that on we think to there's great expand opportunity our business to capabilities.

Operator

Sandler. line with Piper next comes Your from of Ian MacPherson question the

Ian MacPherson

How go clear year? do of the see Sea offshore bit as [indiscernible] see movement mean, Mexico, to bottom, we Others like deepwater obvious next some year first a directionally. And then up, America half to the I about Norway less are you and in projects world. nowhere in the promising the growth maybe anyway. think large the XX,XXX and me of we their already most earlier basins I not South starting seems big little it think point. Brazil theoretically Gulf up, of at an of than cyclical but off are a immediately has and North the but of rest next lot

'XX. don't So project into know I how those

thinking ask 'XX, into wanted a 'XX? about from to perspective, you're growth I you how basins So the key

Rod Larson

the all opportunity IOCs, I But more think see can opening [Guyana], think, investment it. Definitely, create can little I a some there. there. to add what with I strong trying America up to you Ian, Brazil is the I'm Well, South nailed particularly.

looks that good. So

of Mexico. You mentioned Gulf

[indiscernible] talk but are big schedule. Trion] to could side but have projects Gulf project it there is according big if the of that that, get is taking of be potential some in kind bigger think the Mexican We always they very I Mexico. one [BHP go about of don't that there specific,

getting has the still boom, consumer But always not didn't West in we -- that that think And you Africa, improvement it that things I got coming like much said, of but one you a -- see we Africa. like activity been is because strength technology You've to that West so of generally back. a one you sustained happening mention got do Norway, it's and like see Norway. in well so maybe really we some

would for especially that as in So presence that's Angola. good the new well, be Whether already it's reinvestment based strong been great or work in We've there, obviously, that's us. that Oceaneering. infrastructure for just got on

held I would an big have as interest in political then West there in There So to as again the projects that up East opportunity stuff up a projects price Africa. whether that for Africa Energy's little that Total the for But well pick bode Mozambique. got well. think of some by the high work been commodity bit well. And -- it's there's

could of activity most swing watch the in us places say for Africa, I'd be So of maybe one that deepwater.

Ian MacPherson

year. capital as at Great. cash What that can to looks buybacks And you to part like you on then should below capital. return about end via to or -- Oceaneering? next preference I before the ambition between dividends is how strategy the the question or important And two. on It say of today the by was just be Xx leverage following ask of going you're Taylor's

Rod Larson

this don't give say [TBD]. But idea. I mean, I a I we've got a of I'd -- lot lot on growth. of anybody Yes. ideas great to want good think

timed to the of growth it's the markets, Some got emerging in be right.

of to on back conservative I want we're an the maybe wait. stuff opportunity, we creates on that as find if shelf an anyway. pretty going about of revisiting dividend. we for and the developing being And But to things as mean, put we're that can. we'll So eye now, some I that. aren't don't these that go right to think bunch If I to a fast keep have

table. and talking to what get think don't on. is only nothing something an to about lot creates do to the we're we right can but opportunity a think So definitely off questioned in deploying we be that that the kind at really, that. We look a disciplined now, want return of really we'll be future, good of And I if

Operator

question next Your comes [Samantha Instructions] ISI. [Operator with Evercore from Hu]

Unidentified Analyst

to how and Are ROVs to for what had? I you technicians the fairly to hire of seems challenges side? rig? that [indiscernible]. that Definitely, just I'd it on a you of able like XX decent wondering to of those staffing have in like back highlighted previously XX and reactivated starting rigs rates with ROVs. able on there's tie another you coming actually to that couple you move on sort then terms you you back if maybe the rigs stream. you deal go for talk off ROV are coming you could been to labor you that people being can the you're guys technicians the was and speak with Are rigs contracts, logistics of onto offshore back of and Maybe to have dealing

Rod Larson

think a issue that, is on challenging. hit I you is that great

we've and were So one effective. you at Again, right. get We been your -- far back those got it people. of We ROVs far, more point. some operating go pretty

then. bigger staff a we had So

and people So quit what that to quarter. back had people to this we reasons we've go everybody anxious But one extended else, back especially some and aren't they who the that those to work of paid offshore some of special get working like been last hitches, -- where of go during able saw of happened kind when COVID people doing that's the there's back. why bonus

put put been ROV And draw the past U.S. long. the we Angola, -- India of miss when employ [indiscernible] done phenomenon still the of people we both happening, Mexico, Malaysia things and when still more [Guyana]. always the So a there call at the return in out are And to think lot in it's work. the it in that doing But to that example, lines successful. one Far Indonesia. I When can locations. our were in of those is areas We the we to we to we if international there, techs incentives in people have look be serve which from we talent for kind are of the and to called East, But for we've have we out some call --

So any that, content market. always and been I able be train think to one locals able to being that's have then local being labor seekers particularly to great leveraged and the not

been one it's helpful. that's has So Is -- footprint where global really it challenging? again, Yes, But our been it's challenging. helpful. places those it's of

Unidentified Analyst

And just be Okay. commentary you'll I of -- -- some I able to similar any manufactured next to there but early, maybe think it's don't Great. mean, for sort get the Do booking sort around also way year? year? think range hit for next you products gave you of is bookings too

Rod Larson

watch to I near some maybe the talk on we projects, don't know say, give like are that of we're that least there'll color about at I you said just in news, news about coming expect be do the I'd things share we'll ready to some future. because what Kind some in levels.

tuned, So that give little tells levels least and evidence what be. those anecdotal might a you you again, stay we'll more at

Unidentified Analyst

for XXXX Thank you Okay. providing guidance.

Operator

remarks? have Do final questions Gentlemen, any in you no [Operator Instructions] we closing have queue.

Rod Larson

our quarter third Thank there since Deb. that conference no just call. call. by XXXX everybody this No, concludes I I'll the would say more thanking for just up questions, And wrap you, joining are

Operator

participating in Thank today's conference. you for

now lines. your may disconnect You

Mark Peterson	IR
Rod Larson	CEO
Alan Curtis	CFO
Taylor Zurcher	Tudor, Pickering
Ian MacPherson	Piper Sandler

Oceaneering International (OII) 28 Oct 212021 Q3 Earnings call transcript