OII - Earnings call transcript Q2 2024 | Oceaneering International, Inc.

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Operator

Welcome, everyone to Oceaneering's Second Quarter 2024 Earnings Conference Call. My name is Britney, and I will be your conference operator. [Operator Instructions]. With that, I will now turn the call over to Hilary Frisbie, Oceaneering Senior Director of Investor Relations.

Hilary Frisbie

Thanks, Britney. to Quarter welcome Call. Results and morning, Oceaneering's XXXX Second Conference Good call a Oceaneering's and being will Today's webcast, on replay is be available website.

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

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

Our comments financial measures. also non-GAAP include today

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

Roderick Larson

the morning, Good highlighting $XX,XXX call for I'd the driving exceeded per average bookings averaging manufactured range. million. backlog or Subsea revenue by energy-related by quarter, like continues the for to begin led our or in mid-XX% ROV business. to strength seeing increase, the during and day thanks utilized energy we're ending our Vehicles business Operated Consolidated quarter $X Remotely continued EBITDA today. the margins billion key at $XXX a quarter component SSR in with the into products joining Robotics that

and our and ADTech across Additionally, Technologies is Energy Aerospace strong quotation still activity businesses. Defense or

and performance segment XXXX. for XXXX our business and on year I'll outlook Today, of focus quarter third consolidated comments for the quarter our second my the and full

results. our for Now

$X million income These of related on of we foreign expenses gains million $X.XX was quarter, $X.X $XXX included of reported million. and exchange million share. $XX or per adjustments. $X.XX share net of second revenue results impact per discrete the million $XX.X to or the Adjusted tax adjusted net income For of

was XXXX quarter revenue up compared income up XX%. to was the Our of quarter as operating XXXX second XX% consolidated second and

SSR our Products with All achieved our and Manufactured revenue income in of increases segments. segments business improved operating

our $XX.X EBITDA range of second the was and quarter line of XXXX, our For in consolidated guidance consensus estimates. with adjusted million

at from the margin second look EBITDA quarter quarter ROV business and improvements SSR XXXX. to a period also as XX% revenue due segment in quarter higher compared XXXX to control cost day same second the operating second for of XX% XXXX. as increase margin continued revenue the the of income to let's operating Now by an average our was XX% compared improved operations on improved and XX% of income last measures. year over largely to per in

is businesses of XXXX. contracts quarter or under the split as our our end XXX the and of between which XX%, our revenue had the of on as was higher. revenue support Average XXXX the same utilized XX% of and was in the per of XX% was during utilized The of XX% day flat XXXX. the vessel-based relatively respectively, compared we At floating XX total was survey used and a second and same tooling ROV second XX%, period and business Utilization quarter at XX% in XX,XXX. ROE at $XX,XXX combined base contract fleet ROV and ROV in rigs revenue SSR the June, flat drill activity of were respectively, XX% XX% percentage split in XX%. to

operating an to increase million, in products quarter of XXXX, $XX.X increase manufactured a improved the to income of revenue. XX% XX% on to Turning compared second

for $XXX an XXXX million, visibility XX, XXXX. increase the energy manufacturing Our quarter into XXXX, backlog $XXX XXXX, into on and of was of second increasing over levels which gives million June us products activity

trailing the for X.XX was ratio book-to-bill XX Our months.

of and quarter of prior Integrity precontract revenue. margin OPG, in operating award margin to and XX% quarter the dock and on timing or Solutions, income Digital and quarter declined the were the the income due or increase income XXXX same as Group, operating compared that second year IMDS, quarter, second Projects costs operating expensed second during dry Offshore quarter Management to Our additional XXXX a were project the slightly in income operating costs mix. lower than XXXX

that second quarter unallocated XXXX income X%. and second as lower million to guidance business compared contract, taken to related revenue in to reserve than to during by levels line X% X-EVAS quarter. Space the our These of ] for ADTech was or increased to related decreased operating to a significantly [ $X.X predominantly due expected activity of in million Extra $XX.X were contractual to were Activity Services income the XXXX, while quarter Systems a decreases our the operating quarter decreased expenses dispute the spacesuit and Vehicular with margin

to the increase address in a our compared results the I'll basis, $XX will percentage million a outlook -- as the revenue. Now quarter. $XXX mid-single-digit On consolidated on to quarter third improve I adjusted with expect second sequentially range continue XXXX to for in address EBITDA million to our third XXXX of to of quarter low we

achieving third XXXX we slightly levels higher segment the slightly both businesses segment be low our to Our support is margin survey in activity in increase the our range. by projecting for to low across higher operations quarter expected are EBITDA in range. mid-XX% tooling and XX% with activities, drill ROV utilization utilized SSR are to expectations SSR, forecast days operating profitability. are: and For vessel-based ROV

revenue and percentage anticipate income we range the lower in with increase products, low operating to income teens margin. operating manufactured For

ongoing with based projection of mobile strategy. revenue our associated yield our growth will robotics This that on is receiving expectation implementing and materials margin lower costs

higher income on focused value-added relatively precontract is second XXXX. work anticipate in of third on revenue mid-teens margin on higher of to more is flat be that expectation the project quarter favorable during services. associated Operating scope and we quarter based for and range the mix significantly the results. recognized operating expected costs This with the we OPG, a performing For projects

operating For relatively IMDS, we revenue flat and expect profitability.

margin higher in expected recognized operating teens the with This revenue to For levels be is range low for million of consolidated range. ADTech, of second and XXXX, the quarter. and absence the in income third full activities on XXXX operating EBITDA relatively expenses our $XXX basis, based Unallocated are business million. be the compared in expectation reserves to On quarter we the of similar significantly in we year expect expect to the million range to $XXX adjusted in consolidated a as mid-$XX of the flat XXXX.

for range narrowed million. be is which be to income partially $XX interest $XXX Our expense ADTech. activity Net range to in expectation continuing in is million. to levels in lower anticipate $XXX by forecasted million to businesses, $XX our be on Net will based we results projected is healthy offshore range our of of in the the offset million

remains for the the same. guidance Our other consolidated year

to payments full segment $XX in to XXXX. estimated Our million of million per and maintenance $XXX $XX $XX are capital range to capital million million million forecast our for expenditures the million. to remains expenditure and of by compared expenses $XXX the includes Directionally, XXXX expected This and of million to growth for average XXXX tax $XX income We to capital cash organic $XX XXXX. remainder approximately year XXXX expenditures. unallocated of be million operations million quarter as between $XX for our $XX

in revenue. for continue in half increase expected year, to operating margins low to in SSR SSR, full year. second be mid-XX% margins For leading to of the are the mid-XX% improved forecast results a EBITDA on to the to we range range in low the mid-teens percentage the

utilized increase For per revenue year-over-year. expect ROV day we ROVs, to days utilized and

with support in higher with and the XX% relatively of drill XXXX and quarters. XX% expected low ROV quarters. XX% range mix higher We seasonal utilization Our be vessel-based estimate overall to service high during XX% remain to services in is to the third and same the seasonally utilization activity second XXXX second during again higher vessel-based fleet third the

for share forecast XX% in continue that will XX% support market remain We to the to the drill our range. market

manufactured products, expectation backlog project of increase in a This revenue businesses. and a For our slight on the in greater on income continuing our operating $XXX improvement XX% bidding margin. based portion in with is in to million in than energy strength a increase we activity converting

expect for full range We be will the of X.X book-to-bill year. the segment in ratio to X.X

results Mexico. increase revenue in to increased flat to improve in be Gulf with low international and year. in continue we operating the Overall, utilization for slight is to range of mid-teens expected OPG income XXXX, the OPG, For on the a activity margin to expect operating for

results operating For to income are revenue. IMDS increased similar on expected be

the for project income the range We to year-over-year year. mid-single-digit continue to remain margin in operating

with For income ADTech, increase results margin. is operating and projected lower operating to revenue income

$XXX million to of maintaining flow EBITDA encouraged worth confident cash flow range, of remainder $XXX at million while free we solid outlook million we free of performance over in secondly, $XXX half summary, It our And range million million. that our first million year, of on generate serve. the the noting In adjusted year. markets $XXX remainder remain the range midpoint the $XXX for the narrowing the to expect and cash the we guidance based guidance of to $XXX are the midpoint as our XXXX is to and we

in participation strength and of growth core business. find quarter had the to for opportunities their this resilience of Our program, ability a funnel continue to has on X-EVAS and Group focused me the changes due energy term markets increasing disappointing their though strategy to the energy addition and to well, markets. growth the our perform in longer non-energy [ in our ADTech excited new ] markets in future and sales the remain We

Oceaneering, take be appreciate continued in We you questions interest to happy and have. may I'll everyone's now any

Operator

David take from We'll first Smith our Partners. Instructions]. [Operator with Energy question Pickering

David Smith

Congratulations on the testing SSR margins.

up fair that in year, compared didn't last pricing it more to same to almost period? $X,XXX $XXX grow ROV probably than of daily day think So the costs QX a is

Roderick Larson

just think, of stability less think mean, plateauing, be put to churn. about talked before. business. the We've I We seen we've I greater in guess, I think, I one it. would costs with, had, Also churn I fair. way that's more

of costs kind of things those equipment more that as control a us helps add that of All well. steady-state and to operation

David Smith

profitability. that's this color. leading-edge as think just this is on has an existing acceleration is Okay. better rolling over to more ROV and largely inflected it Or impressive year? It I contracts? Should pricing the we backlog appreciate by that supported the pricing about

Roderick Larson

on both counts, it's actually. No,

of able there pricing. same see the been existing we've raise evidence move the we But in able price. leading-edge to the certainly, is we've to think on been that I contracts,

I it's So fronts. on think both

David Smith

And follow-up quarter? remind ROV about cadence. XX% I every to roughly you my the us how if it for typical very is the over all mean fleet is, could please of think reprice to related to contract last XX%

Roderick Larson

a see the than a think now. high more that's little year. starting extend contracts I We're to

per now. maybe closer to of in range moving quarter probably XX% from So something we're to the away XX% get that below

Operator

Our Benchmark. next question from Kurt Hallead with

Kurt Hallead

the insights and the for Thanks info all outlook. on

the their on report guys see the side initially with So on on their don't had know opportunity put with the respect I ROV day. that if to Transocean rigs yesterday let rates one status maybe of day fleet you up me just $XXX,XXX getting to a follow up pricing. out to the

been and ROV There's pricing a historically always between relationship pricing. a has positive rig -- been relationship, deepwater or a

you to change prior this referenced But I offshore that, rates commentary. think reason strength to in rates any rig is cycle there relationship versus between some going and think ROV cycles? pricing that your is

Roderick Larson

No, certainly. I relation that think persists

position some just for sort of durable by. one of on thing. And There's those it rigs goes a

go as that they have opportunity and the get So rigs as ROVs repriced, well. those

contracted think The that strong and is talked have utilization on goes. uncontracted the rigs. That we're actually on QX. looks other about people that utilization seeing We rigs thing

And the business. you're that correlation from be that our so a to when also rig companies, will hearing

been the that around for well as as us. and on pricing finally, we see contracts, good some these things has the really would performance-based which rigs offer thing But I of

where performance Our is we're differentiated.

that our so price now. to is market a actually right on nice performance we're condition seeing And ability really

Kurt Hallead

That's great. That's color. great Okay.

of you going So manufactured the sort be been of on that to product some again, little the what more outsourcing you a manufacturing. fact of guys kind the side, referenced maybe second you're bit dynamic just the occurring And has evolution on -- automated I [indiscernible] what of the out tease business.

outsourcing any about that for with is manufacturing? over incremental of transcom from your maybe and that that outlook the have timing the talk come ]. here then What So to incremental orders bit little the a [ around orders respect business

Roderick Larson

Yes.

from built I of got the contract outsource fully manufacturing we quarter. the that on first all, in think, manufacturer came is this our forklift first

could contract things look that of exciting fully forklifts can we year, by manufacturer. transferred was we the and that all be good the end So building that the be at

So that's track. on

would other far say -- we're be at ongoing. some As orders are their I existing trials volume as get go, trial some those few to still buyers. the plants. We've of got customer, forklifts think that least on I those into working could ones a

out that, those orders. I with making just them people getting working that fits with sure placing and initial for relationship comfortable technology, we're proving it then would say them through So larger the

Kurt Hallead

Okay. one just is that Appreciate that. And last me on for ADTech. then

You had that contract dispute.

probably can into back us, it amount what the make dispute? numbers, that with on associated contract we easy was but So if the you dollar

Roderick Larson

of of I I everybody do probably that, we're think are press. going in not about still talking where and on can't on And the want It's you -- is and does But over, that, are on was some couple much things for Collins around the might that one that maybe so can see NASA land. we to a reasons. what right? you that. that to and partner give has pretty Kurt, detail and seen Number open Collins

is it a now. So right dispute really

kind -- to stay it's hard that. to exact have give we of on So numbers

Kurt Hallead

lie. I to more. Okay. I got one And got

guys repurchase your on on move from as you to that be here? a What's indicated forward we you program. So executing now open thoughts share

Alan Curtis

Yes, Kurt, that I'll take one.

we looking coming one really our the And the we going kind at we're think our we're came happen. year as to starting customers. we I of from we lighter more said free to phrased flow, in and it's and cash little just very, calls of to our QX share in on were for see of repurchases in at free bit the probably opportunities how a back think, focus cash on saw of in looking half it going that cash we here prescriptive I in prior flow that

Operator

[Operator Instructions].

will take question with Jayne Energy We Daniel Josh next our from Partners.

Joshua Jayne

I want start the product -- to the side. wanted on to I start on manufactured

then for course comment announced in growth could for Mexico. where quarter sizable markets the some and business had expect umbilicals? just manufactured we forward? for going of those in outlook on products globally, awards the orders to maybe You And Maybe and over the further can Brazil see you

Roderick Larson

South activity I -- the think it global in I'll that margin, in America. you're put with still big is seeing way, Atlantic that

still Suriname, a Africa So and while lot in Total. Guyana, of see a obviously, activity is West a Africa, hotspot. We

kind see steady. -- just down it's in those certainly getting and a just Mexico big They're is Mexico regulatory the more active, are Mexico. some some projects go activity are side, say, but issues on of of projects. there. market. and You eye keep are little The ground, And Gulf but then of of the up Gulf on the the more things an see just of I We and things ongoing and off warm. run those got independents other left we would to projects certainly U.S. side bit of being to a They due the

And so particular. I watch those in would three

Joshua Jayne

plans that you of AUV a you and of Okay. and And reduction asset, methods. given time could guys release And at Freedom address May cut to there's you assume time Total build. great. versus then emissions completed XX% in Maybe for follow-up, had And that cost pipeline savings highlighted you where that the some the complete opportunities the be with just material my a about that your inspection to that existing those for in the you customer, would end addressable noted to the is ultimate maybe talk just could market half. and I'd

Roderick Larson

tool as out in amount and scanning so vessel pipeline say, time they're and use to and scan of carbon, able more a Yes, And less time. it's less short best you absolutely. as they with go a

certainly that half year, the have couple do come pipeline. prove out the of of the And advantages. So new some the back technology, biggest least commercial that's we see more as the things into interest, at one for a have of we

no feel we current Freedom market scanning good scan really there this we go application about the really to So But that's we biggest and intended. good, the feel pun revision with being and able is for pipelines, out them. of have

And so opportunity real. is that

using about additional CapEx be -- we'll does think it of I that growth talking builds. some for

that talked really phase. innovation side we in went running we're of good about last unit, trial other is for the this trials the The defense that

them I that likely the program there's think want work build something be would have good feel speak application put to some they'll well. out into we to as we that that that can't I So to in how for But as really a well. field.

Operator

David have with do from we a Pickering follow-up Smith And Partners. Energy

David Smith

midpoint. QX that's Thanks If think, are QX And what the product, mean for drivers the else? letting up and digits me manufactured from year if in. back normal the right, of flow-through I better of EBITDA RFP offset QX real the decline? right, math single full midpoint, something did I that midpoint a main that's pricing, bump a I implies would seasonal guidance, high

Roderick Larson

is the room. bit of a one the little That elephant of

it's the going OPG be movers stronger Gulf opportunities, are QX David. expect would than of for OPG. it's normally thanks two I of will And say would So the in a seasonality. and and some QX asking, be Really, #X, we a go into we international see to biggest that couple in things. having Mexico both

The other of be earlier for when greater I talked I rigs. utilization thing That about will is what contracted an SSR. mentioned upside

And we to vessel bit normally the work so stronger a SSR a in we a susceptible that fourth the gives quarter, think more little drill base, we're that fourth shift if support quarter. see where to

uptick those are the in fourth So two quarter. an movers biggest for

David Smith

Really appreciate that. if an I follow-up. could ask And unrelated

to for to give products. goods awards the compare margins successful ago? a how new awards large say, on [ you any back from, manufactured ] color and Can Just might embedded year

Roderick Larson

there's plus in chain, up, we're that are the just plants the these signed is constraints. right, of more seeing can the I overall, just some capacity mean, world as there load I Well, around say being supply

plant to you to where see access have have materials and availability. we're starting So you

in see pricing margins. are an We uptick and continuing to

continues generally better. the get think just to I added So backlog

Alan Curtis

Yes.

little I color it as projects XXXX of Rod notes, well. adding think the going that lot alluded David, be backlog, it visibility duration, long cycle long into this into we're and his that, is a XXXX more type a is call in while to gives to us to

we'll the now. out waiting we're So effectively of We'll XX received to materials lot a award, go XX which are materials, supply right on we to weeks when our order base. go

into So those streams see we down a year coming improve the revenue to pricing really don't road. that and our financials until start

Roderick Larson

right? loaded, anyways, it the I'll get, And thing without these goes line. also we saying, plants absorption better the I'd the fully have and absorption, final that to probably add closer say that is we but bottom The hits

Operator

line We the have turn closing questions over to time. our will remarks. additional any no on program further at the this or I presenters back for

Roderick Larson

there our Thank no Yes. XXXX up Second concludes Call. And I'll are great more day. a Conference for wrap thanking call. just the everybody Have you, This since questions, Britney. joining by Quarter

Operator

again, today's And does your this conference. Thank once conclude for you participation.

may disconnect. You

Oceaneering International (OII) 25 Jul 242024 Q2 Earnings call transcript