Q1 2022 Oceaneering International Inc Earnings Call

Turning to operations by segment as compared to the first quarter of 2022 for.

<unk>, we are projecting significantly higher seasonal activity and operating profitability in our Rovs survey and tooling businesses.

Our <unk> days on hire are expected to increase in both drill support and vessel based activities achieving utilization in the mid 60% range SSR adjusted EBITDA margin is forecast to rebound to the high 20% to low 30% range, reflecting a more normal run rate and lower preparatory costs.

Yes.

For manufactured products, we anticipate higher revenue operating profitability in the second quarter of 2022 will be highly influenced by the timing of anticipated product sales, which could lead to either higher or lower operating income in the second quarter of 2022 as compared to the first quarter of 2022.

We continue to see active bidding in our energy products businesses and are becoming more optimistic for increased bidding activity in our mobility solutions businesses.

For LPG, we anticipate significantly higher revenue and operating results, we expect a robust seasonal pickup in intervention maintenance and repair or EMR activity, primarily in the Gulf of Mexico operating income margins are expected to increase to the low double digit range in the second quarter of 2022.

As mentioned in my opening comments, we have secured increased vessel capacity, which is expected to benefit results through the remainder of 2022.

For <unk>, we expect higher revenue and operating results with operating margins improving modestly over the first quarter of 2022 for.

For AD Tech, we expect higher revenue and operating results, we expect a slight revenue mix shift to result in slight sequential decline in operating income margins unallocated.

<unk> expenses are expected to be in the mid $30 million range in the second quarter of 2022.

Directionally for our full year 2022 operations by segment as compared to 2021, we expect for SSR, we forecast improved operating results on higher revenue <unk> days on hire are projected to increase year over year by a double digit percentage with tooling based services results generally followed.

<unk> days on hire.

Survey results are expected to improve on higher levels of activity as well SSR forecasted adjusted EBITDA margins are expected to average in the low 30% range for the full year.

For Rovs, we expect our 2021 service mix of 60% drill support and 40% vessel based services to generally remain the same for 2022 with higher vessel based percentages during the seasonally higher second and third quarters.

We estimate overall ROE V fleet utilization to be in the mid 60% range again with higher seasonal activity during the second and third quarters.

Pricing for our RV services continues to increase, allowing us to offset increasing costs for assets and labor.

We continue to forecast that our market share for the drill support market will remain in the 55% to 60% range for the near term.

As of March 31, 2022, there were approximately five are oceaneering rovs onboard eight floating drilling rigs with contract terms expiring before third quarter. During the same period, we expect 30 of our Rovs on 26 floating rigs to begin new contracts.

For.

Factored products, we expect segment revenue to be up significantly and operating performance to improve year over year, primarily as a result of increased order intake in our energy businesses. During 2021. This order intake is expected to drive increased activity in the second half of 2022, we forecast that our operating income margins will be in the low to mid <unk>.

Single digit range for the year. Additionally, we continue to see good bid activity in our energy products businesses and are beginning to see some positive market signs in our mobility solutions businesses pointing to an increase in bidding activity.

This supports our expectation that segment book to Bill ratio will be in the range of 1.0 to one two for the full year.

For <unk>, we expect an increase in revenue and operating results <unk> business is primarily tied to short cycle fundamentals and the current supported commodity price environment is driving a noticeable increase in demand for our services, particularly in the Gulf of Mexico.

Based on this demand signal, we recently added vessel capacity to meet the forecasted increase in iron ore activity throughout the remainder of 2022.

<unk> increased vessel utilization and pricing to improve ocg's operating margins into the low to mid teens range for the remainder of 2022.

For <unk>, we projected increase in revenue and operating income as noted in our first quarter 2022 press release <unk> continues to be successful in expanding into new geographies and adding new customers.

This success is expected to result in higher revenue over the three remaining quarters of 2022, we forecast year over year operating income margin to be essentially flat.

For AD Tech, we project higher revenue and lower operating results and achieved in 2021 operating income margin is projected to decline as compared to 2021 due to shifts in revenue mix, but is expected to remain in the mid teens range for 2022, we continue to see good growth opportunities across all our businesses in AD Tech.

Our estimated organic capital expenditure total for 2022 remains between 70 and $90 million. This includes approximately $40 million to $45 million of maintenance capital expenditures and $30 to $45 million of growth capital expenditures, we forecast our 2022 cash income tax payments to be in the range of 40% to $45 million.

Unallocated expenses are expected to average in the mid $30 million range per quarter for the remainder of 2022.

Now turning to our balance sheet and liquidity.

With $438 million of cash at the end of March and the expectation of generating 2022 free cash flow in the range of $75 million to $125 million we.

To be well positioned to address our 2024 debt maturity after repurchasing $100 million of our 2020 for that in 2021, we are looking at additional options that will allow us to further mitigate the 2024 debt balance subsequent to quarter end, we replaced our credit facility with a new $215 million senior secured.

Revolving credit facility that gives us financial flexibility over the next four years.

On a macro basis, we continue to see positive signs in our offshore energy markets and feel that commodity prices will remain supportive of higher activity levels over the next several years as evidenced by the.

Current projections by the energy information administration for Brent crude oil price to average $103 per barrel in 2022 and more than $92 per barrel in 2023.

Our internal estimates of continued gradual growth in <unk> activity right fit energy's expectation for increased offshore <unk> in both 2022 and 2023 as compared to 2021.

<unk> energy is also projecting tree installations to be up by approximately 9% in 2022, and nutri orders to be up over 90% as compared to 2021.

And the increasing importance of energy security on the geopolitical front.

In summary, our first quarter performance and our first refreshed outlook for the year give us confidence to maintain our 2022 adjusted EBITDA guidance range of $225 million to $275 million, we believe that supportive energy markets will drive healthy levels of free cash flow and investment opportunities in our traditional businesses.

Over the next several years.

At the same time, we continue to pursue opportunities in the energy transition and non energy markets as we focus on growing our businesses in these areas to underpin a more sustainable future for the company.

While we continue to face the issues of inflation hiring and retaining personnel supply chain obstacles and shifting COVID-19 guidelines, our management and employees have been effectively managing these challenges we continue to strengthen our service and product offerings and our balance sheet in order to best position the company for success in these evolving.

Market environments.

We remain focused on generating substantial positive free cash flow in 2022 operational excellence quality and safety and enhancing customer engagement, allowing us to win more of the most desirable opportunities all of which result in improving our returns.

We appreciate everyone's continued interest in oceaneering and will now be happy to take any questions you might have.

Thank you reminder, to ask a question. Please press star one on your telephone.

Question first.

And please standby.

The Q&A roster once again ask a question. Please press the star and the number one on your telephone.

Thanks, where if there are no.

Questions at this time I'd, just like to thank everybody for joining the call today and this concludes our first quarter 2022 conference call. Thank you everyone.

And this concludes today's conference call. Thank you for participating you may now disconnect.

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Yes.

With regard.

With regard.

Sure.