OII - Earnings call 3 2023 | Oceaneering International, Inc.

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Operator

Welcome, everyone to the Oceaneering's Third Quarter 2023 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.

Mark Peterson

Thank you. Good morning, and welcome to Oceaneering's Third Quarter 2023 Results Conference Call. Today's call is being webcast, and a replay will be available on Oceaneering's website.

and call who Rod prepared working will Curtis, Vice the Chief President comments; with on and Senior Officer, Officer; Relations. Executive be President me us in today who Larson, are and Alan Hilary Investor Joining Frisbie, Financial is Chief providing our

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

Our measures. comments financial include today non-GAAP also

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

Roderick Larson

joining for today. thanks and morning, the call Good

on be happy As with our is year, the our thoughts we're XXXX of custom this you providing time Oceaneering's outlook. to at initial

As our and amortization guidance initiating announced a over the depreciation $XXX in would range the At midpoint, interest, EBITDA XXXX. million of EBITDA this $XXX XXXX earnings of before increase the yesterday, midpoint represent guidance $XXX or revised tax, million. for adjusted XX% we to for million, are

backlog We XXXX businesses, energy driven are this based evidenced deliver growth million. of confident in our our in energy almost by order traditional offshore intake by increasing our solid on needs, of improvement as ability third to $XXX global in continuing quarter expectations growing

our in in Aerospace that These products our flow XXXX segment measurable or anticipated in fundamentals expectation improvement XXXX. ADTech generated free our businesses. our exceed for cash Technologies manufactured Defense that will growth Expectations also underpin and nonenergy and

comments the my our focus XXXX. quarter third I'll for of performance Now on

outlook fourth comments, questions. expectations. After and the EBITDA consolidated make our I'll current the the some market closing and and cash outlook, to of year opening flow and these remarks XXXX free Oceaneering's mentioned your guidance for quarter range initial full XXXX, before business segment including outlook, consolidated Our previously then call

quarter our to results. third Now summary

our primarily drove of offshore at strong million third segments. cash global operating third our estimates improved Subsea improvements consolidated range We was which flow consensus OPG quarter $XX.X results were or for of Offshore Our produced due or free end EBITDA, and the $XX.X the of million to and adjusted quarter. Offshore upper Projects exceeded quarter-over-quarter guided Robotics, SR, and activity Group, in activity.

also saw In addition, our improvement AdTech we and as segment. expected, in

SSR business tooling as compared The contract hire of split, on quarter. Sequential and the levels improved look with by XX% our was the as revenue let's XX,XXX XXXX, expected quarter and pricing. over to second segment increased XX%-XX% split benefit in for of prior slight combined the and activity. lower higher by quarter operations reflecting EBITDA when SSR survey from both at business and second and operating compared days improvements income ROV new offset ROE of ROV days at margin being XX% SSR the lower the X% revenue Now our survey the from of compared to our were for immediate quarter. days XX% pricing to activity XXXX. businesses the during respectively, XX,XXX tooling third ROV quarter second

services, the in as September slight was hire at of had of in XX%, the achieved services, ROV drill average X% a XXX We XXX per the ended in And support decline and With quarter in floating than market June maintained quarter. second systems, on contract. the ROV vessel-based on support the third recorded was our rigs as the our day fleet fleet revenue count vessel-based the same higher the second XX% had XX% utilization and under fleet the XX, XXXX. quarter quarter of ROV the floating achieved XXX in from Average XXXX, hire on $X,XXX per XX% our day slight in in the for end XX contracts decrease contract. support days of XX% ROV drill compared ROV to use increase a rigs share of with we contracts on was under XX XXXX, second of drill when revenue $X,XXX quarter. At we XX%

percentage to of quarter respectively, from quarter revenue XXXX XXXX energy of with $XXX and primarily operating XX, and X%, was related million and strong to products. $XXX June businesses XXXX. Order income to million increasing our results quarter Sequentially, changes Operating declined the in $X.X Turning on third XX, second product intake manufactured on declined. during backlog throughout million due September from this mix. our XXXX, margin

on successful Our increased to increase was in a income months. OPG from for months were Operating in second from quarter rate XX% operating contract second margin services XX, as quarter X.XX of of in and X% million. of on $XX.X XX% income revenue. from the revenue. XXXX September second on quarter quarter third Management the the XX quarter the from X% income to mix X.XX compared operating mix. AdTech IMDS, reflecting improved operating margin income income margin preceding in XXXX as XXXX, ended Solutions, increased dispute. Integrity the in the third changes for XXXX due increase vessel-based on Operating compared trailing income XXXX second to quarter was changes or quarter, recovery Unallocated for and and a Operating the Digital second increase in XX% book-to-bill of from of margin a XX% commercial service of expenses geographic recorded declined quarter X% demand in the X slight resolution XXXX, X% third service quarter the prior and a primarily the significantly slightly increased declined costs. XXXX revenue. achieved improved the quarter margin benefited globally, and to

XXXX. will on XXXX flat relatively a of fourth compared for as third I'll revenue consolidated results. quarter quarter basis, to our quarter that the believe On Now decline address EBITDA our we outlook fourth our

in relatively and a the offshore the lower slightly we expect anticipate quarter, markets. our each the Broadly lower unallocated quarter third seasonal we to slightly activity activity except still fourth segments XXXX manufactured for quarter, of While slowdown products compared for of in we in as good our fourth expect expenses.

are drill days For in profitability. third quarter slightly are operating quarter than being compared seasonal revenue our to days. vessel-based fourth XXXX as days and SSR, segment slightly for offset relatively compared on more by decline to third with we the lower support quarter slightly higher a decline as operations XXXX, flat of by with hire the forecasted ROV projecting

to quarter. activity survey good during continue expect fourth the We

over third overall range. SSR to in assumes quarter remaining fourth forecast fleet XXXX, low while XXXX margin anticipated range. the of the Our adjusted in ROE be XX% utilization upper is quarter the to improve XX% EBITDA

lower compared For the manufactured margin to with quarter the profitability single-digit significantly products, low in as we and third operating range. an revenue operating increase in anticipate income

Our portfolio. fourth quarter forecast the incur anticipates improve of costs manufactured may that products to profitability our we

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

OPG, quarter the revenue For fourth and lower in operating profitability significantly slightly of XXXX. lower we expect

expected West be vessel region Africa commercial to absence anticipate to a activity projected benefited that is addition we is to of impacted in in lower which in cost dispute the third negatively lower Operating quarter, income third revenue the with by shift of in mix resolution, close in to West the the quarter. levels Africa. the Although remain absorption

As a is averaging to lower, the sequentially, range. quarter expected operating fourth margin low result, XXXX be income teens in

XXXX. quarter revenue as of IMDS, compared For the with operating we and third expect slightly results lower

forecast ADTech, For and operating we to slightly lower quarter. compared income third lower as revenue the

during to project quarter to margin mix. We changes slight decline expect due the income operating fourth in

For to percentage be million Unallocated the in the range. in be are expected expect we to fourth margins the operating low quarter, to expenses low mid-teens range. income $XX

For $XXX year narrow within to XXXX, adjusted generate $XXX the we full million of EBITDA million. to the range expect

of $XX million. capital $XXX organic expenditures of million to range to narrowed in million $XX cash is for the payments for guidance is in range guidance the our and income tax million, Our $XX

cash Our flow guidance free unchanged. is

for between XXXX. full and generate cash in the to expect of range year free We the million $XXX positive $XX million flow

turning to cash debt free our Now and position. flow

Our cash of increase was $XXX in million as stood the At flow to at million XXXX. $XXX for $XX.X XXXX driver and debt was our quarter, [ our equivalents primary million the XX, the of third the end operations cash cash September third from and position of in ]. quarter the net

November disclosed liquidity. we will releases, significantly to million XXXX XXXX. of transaction in our in recent series the Once on while scheduled November extended in initiated substantial have As press our September our XXXX, early a February debt maturity final address maintaining completed XX, XXXX, is transactions mature senior to notes to we $XXX designed

term. of businesses, commodity national priorities our and Positive a outlook support expectation see we and solid Now in for strong businesses forward looking dynamics XXXX. our for for and government-focused medium fundamentals our to pricing each current to energy offshore our continue the demand businesses. growth in resulting supporting our expectations support X-year security Overall, supply

XXXX, impact dollar, with of impact this would that U.K. particularly be and businesses. to positive year-over-year, performance would a increased capabilities generated nonenergy our addition, higher currently in XXXX remote range led Capital countries energy our to be be Accordingly, improved anticipating by like cash EBITDA than segments, international automated grow the in I guidance returns. XXXX $X anticipates our and robotics remains highest XXXX, on to U.S. robotics our range negatively and forecast excess million. In continued that to of $XXX various activity range operating a and to out and million businesses, like robotic see dollar expenditures gains in expanding strong here across opportunities as all we million expect expect operations. time, estimate which generating from free from in we into million in in of increasing capital leverage In and our the focus solutions, $XX XXXX. At XXXX flow we of levels of earnings growth We operating priority, to $XXX opportunities meaningful to discipline demand OPG. Brazil. we and U.S. SSR to we point year-over-year and of generate Norway, the EBITDA across looking flow in to our we for the are driving flat platforms the modestly

on million for our to We guidance and our range full will financial to the our $XXX on provide adjusted fourth $XXX year-to-date narrowing performance summary, during we a year. XXXX, expectations million are process. In based expectations quarter the EBITDA the year-end more of for of XXXX reporting for guidance specific

expanding the We continued national continue our XXXX ability security apply Underwater including, focus to energy on global markets example, Counterbalance increasing further for Freedom on in all to business our to issues, Autonomous achieve see demands our based nonenergy with for growth our segments in opportunities energy in in and growth to expertise Forklift MaxMover new and us a and Autonomous these confidence provide forecasts. robotics Vehicle

free Our and a maintaining attracting to retaining each and top performance, financial a and success be services generating energy and and safety flow, world-class our inorganic growing positive margins maintaining for on through discipline, capital strong organic means, significant the focus cash us priorities to talent and these and during continues positions fair for our culture safety generate transition. pricing increasing return products. Optimizing of our

liquidity aspirations. in to Our commitment shareholder be any continued now have. We substantial growth maintaining generating interest ability return to we'll sheet supports and questions a take and you continuing flow cash and everyone's strong may happy fund meaningful balance future our free appreciate Oceaneering, to and

Operator

Kurt Hallead from question Benchmark. from [Operator comes Instructions]Your first

Kurt Hallead

Never a moment. dull

with XXXX, do of where overdone. an it's is, like guidance what And within X% I know. say, start I'd X% they're I'll a definitely Street But given So is looks the for observation. levels it selloff your

So on to question. the

outlook the of initial an the XXXX. for EBITDA on part So you business and provided will the -- kind that. strongest referenced SSR of And be outlook products you of manufactured driver

more get give into little of I going year. was you around, and out SSR say, margin what let's context that progression could utilization? what think you if in maybe And think of wondering So you of us you kind next terms do a

Roderick Larson

a Kurt. I'll that Sure. hit little bit,

line mostly. kind we tracking of increases improve I we're rig of think we slightly where on from holds to the maybe mean have today. market seeing what what share is we're sight I think we to utilization, are

working or unless quarters. huge peak during many next have how not think we it's that month floater XXs again, on we goes more working into days. see low depending year, adds that, the peak we those So But rig

just we schedule We what in So utilization. we at telling the encouraging that's but look the for it But us what market, news. the will be. again, we have look from rig also -- at we hearing themselves operators hear what

utilization. On on we land kind drive One just where of to that's So is we'll pricing, say of we the pricing. things continue

was been probably happening I there. in is a correct. continues optimism pricing of be and to there improvements what smaller there's chunks And in lot the what's think bits out it consensus but market, directionally than out think driving I are maybe the

So how long takes those, definitely walk we see recognize just have margins in we up into to but continued it of next see year... to -- all and

Kurt Hallead

Got yes. then -- you. And maybe my

Alan Curtis

Yes.

length. bid seeing tends field lot these contract, longer be I support services about there. a we the to some And the have of a OPG contract interest there tend of duration, we've we think, to was of -- now. Kurt, years outlook, items other our in kind why in confidence that your question We're for several kind be I out right been true talking through of to in which of level have in think X market of and

So to what longer would of sign and there saw in for duration see can where other services to contracts management time out the is returning back services, we frame encouraged provide. we're project and up market vessel we XXXX kind that people for support

So to on in starting other hit cylinders really 'XX. that's part see OPG why we the of more

Roderick Larson

our to I And out your ask comment a we opened same. want that's the of question. did really, that I next consensus. off you we when make -- kind FX before that I why it about mean the not you Kurt, are And point far And want up one when effect. to think think we're numbers said you

much in the us we year coming having the markets that kind maybe of right that what currency effect. is our Brazil. going in and full of think there's pretty the lot pressure on strong without international with some the A consensus currency benefit U.K. was think shared Norway, growth I dollar, to FX next of the and be -- from

bet So we're to if close I number. same darn you true that up, the

Kurt Hallead

Okay. that Great. color. Appreciate

in your Second penetration you market manufactured business if So question then is just embedded is industrial right? update an on robotics wonder the us give I believe I -- products, could on whether that's autonomous autonomous get? and market business of to been have, see on penetration people evolving that how the you've what you just you movers, on your kind able forklifts or

Roderick Larson

going up. new is getting customers. penetration Market We're

So we've of added a some with pretty strong interest. couple customers

I think everything change the but today. of PO, short just that could

that the X got number the one order is our customers customer. are but biggest of significant. So improving, that from also We -- more orders

really looks getting we're and lot that. really a good recognition again, that for strong. And of So

our The pushed margins manufactured we out other thing meeting annual I would and products. just in call planning week, in hard on products is really manufactured we had last

some in -- that drive will some will the those don't built We're but be, taking manufactured business. we've we products So built changes know in improvement what some cost action think margin costs. we in we for

Alan Curtis

describing we've robotics, the as to the people I Yes. on have and ZF mobile on not I mean, seen from think or been the solidifying came movers may arrangement our announcement well you seen that about recent market.

that encouraged really continue what much. build we're out robotics. with impact 'XX that's So . something in we But longer I as term, mobile think to doesn't

Operator

Instructions] [Operator from comes from James next Schumm question TD And Cowen. your

James Schumm

Just snuck in there. .

Roderick Larson

man. dodged, you Glad

James Schumm

Just $XX,XXX. the in the still maybe day of play? then outlook. past, exit about in this ROV, on 'XX, year in Is or at that? rate talked I update the Is think rate mean $XX,XXX. exiting we've I the that And SSR

Roderick Larson

the longer I away, that numbers to know don't but I challenged. it's it's think just think taking I have gone build.

I another pushing we're to So whether hard. to quarter still that those X takes get or numbers, think

We've got strong other GOM, the Africa and like of some markets, of markets the on on and how the just I'll West track. markets depends And we're some it strong develop. say

is -- rates. are and Norway harder I market, those stable ROV fairly a lower but it's is think of some the where

to underside average So of they're in growing opportunities, that with try non-Petrobras is get customers on probably the Brazil, global to like more especially the looks of our the something which is average. one to

James Schumm

you're funding issues so ADTech to in or and have talking shifting And and next issue now going go expect to any a past, government is any with wanted months the and in we we're be to resolution we there these if you government ADTech spending dislocations the if about forward Great. currently continuing quarters? impact Okay. then just negative see guys an as having I have had -- you with around when in few

Roderick Larson

would James. means aren't projects is that We've what what scrubbed Most products. is that problems of existing pretty it's of I well, need in say right accepted. And -- being now like we resolution I had is not mean past continuing biggest where working on one we're new the the

to projects. think are would well. that a sensitive delay, of we couple maybe things smaller There but pretty So be bodes they're that

So that mix. the in built most it's of -- we've got

Operator

next Pickering Smith Energy question from comes Your Partners. from David

David Smith

Very I update of big, lumpy you orders. wondering is the was had for impressive percentage if order that there, nonenergy. were could backlog on intake for And there give manufactured maybe any just segment if if some products. you the quick color what a

Alan Curtis

Yes.

I quarter nonenergy And say, widespread. order, think some across a in. sites. we nice in that mean, in to, of mobile past, have of come to been see robotics I single lumpiness alluded which pretty in in not fluent alluded the platform. I disclosed orders the various orders the Rod There the we plant side, would the really stream orders, is did midsized backlog the intake, we've kind just David, haven't add the of the certainly while to third These of it's a been part order to can good some

will time on base build mobile order year for autonomous forklifts. platform a So we've at than doubled manufacturing more nice these next in the certainly point this that

business that within our So across order picking up certainly unit. is the board adoption

David Smith

I of good color That's kind and related... guess appreciated.

Alan Curtis

to more do look is to still the just when that we big we're But I've products. and time being awards the at award feed additional at you talk that I of because meaningful in and lived across one I'd as about getting always like anticipate me work, every the plant is it's that these just all this in we business, all able it plants. one something plant some And the looking is to backlog, things sites, what's get than it David, absorption at. important by manufactured add

it's well through organization. spread So the

David Smith

OPG, color. coming make my that DPR the to syntax would I to correct? did appreciate memory, refresh that through want sure system or I wise, just be

Alan Curtis

Correct.

David Smith

And... Perfect.

Alan Curtis

the extension which, Petrobras It's kind don't an for they point, they're to but option of of the December additional it's us. add But this to option we at contract believe for year. an system, an good to existing this work through it's been with do going hold take,

strong fact, area In our been throughout growth for of this many year. Brazil a us has businesses

David Smith

absolutely. I Yes, if may. And last one,

for on in OPG the the resolution the could the had dispute for please third commercial Just quarter? elaborate you calibration, margins that impact

Alan Curtis

of don't customer QX, what a but an really I had number where we're the in think we've successfully it the negotiate there we quarter. that, element some we've third out level of reserves in to on taken put it's and with QX, able

So year, within right. pot is the the

margins reflective say, of through I customer the of We just this within working would had quarter. our bit true the operations. I'll So for of that, the lumpiness year, what the little say, a with

Operator

call are turn Larson back time. there final further I questions this to no over the comments. for Rod And at will

Roderick Larson

concludes since third the call, more thanking conference XXXX right. I'll joining this call. All quarter by Thank for are Well, our wrap questions, there everybody and up no just you.

Operator

We for you for Ladies joining, you your you. may today. lines. this your Thank and conference call concludes thank now gentlemen, disconnect and

Oceaneering International (OII) 26 Oct 232023 Q3 Earnings call transcript