Company Overview - Oceaneering International (OII) is a global provider of engineered services and products primarily to the offshore oil and gas industry [2] - The stock ended the last trading session at $18.08, reflecting a 13.4% increase, following a 16.8% loss over the past four weeks [1] Market Response - The positive movement in OII's stock is linked to the market's reaction to a tariff pause, which alleviated trade uncertainties and temporarily boosted oil and natural gas prices, benefiting energy service providers [2] - The broader market sentiment is influenced by President Trump's tariff policy [2] Earnings Expectations - Oceaneering International is expected to report quarterly earnings of $0.36 per share, representing a year-over-year increase of 157.1% [3] - Revenue expectations for the upcoming report are $663.56 million, which is a 10.8% increase from the same quarter last year [3] Stock Performance and Estimates - The consensus EPS estimate for OII has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] - The stock currently holds a Zacks Rank of 3 (Hold) [4] - In comparison, Core Laboratories (CLB), another company in the same industry, saw a 20.1% increase in its stock price but has returned -27.5% over the past month [4]

Core Insights - Oceaneering International, Inc. has secured a multi-year contract with the U.S. Department of Defense, marking the highest initial contract value in its history, which emphasizes the company's growing influence in maritime technology and national security [1] - The Aerospace and Defense Technologies (ADTech) segment accounts for approximately 15% of Oceaneering's total revenues, with nearly $393 million generated in 2024, indicating a positive trajectory for the company and its stakeholders [2] Contract Details - The contract entails designing, building, testing, and delivering an advanced maritime mobility system, reinforcing Oceaneering's reputation as a trusted partner in defense technology [3] - Oceaneering's extensive experience in offshore energy, robotics, and manufacturing is leveraged to drive innovation across multiple sectors [3] Company Positioning - This achievement validates Oceaneering's technical capabilities and solidifies its status as a key player in defense engineering, aligning with the Department of Defense's mission for operational excellence in maritime mobility [4] - The contract signifies the potential for further growth in Oceaneering's long-standing relationship with the U.S. government, showcasing the company's ability to deliver advanced technological solutions [5] Industry Trends - Oceaneering's success highlights the convergence between energy services and advanced technology solutions, as the company expands beyond traditional offshore operations [6] - This shift reflects a broader trend among energy service providers diversifying their capabilities to remain competitive in a rapidly evolving market [6]

Financial Performance and Risks - The company emphasizes the importance of various factors that could cause actual results to differ materially from forward-looking statements, including global demand for oil and natural gas, and decisions by OPEC [74]. - The company’s financial performance is influenced by various external factors, including global oil and natural gas prices, government spending, and economic conditions [74]. - The company faces risks related to project cancellations and adjustments in its backlog, which could materially affect its financial condition and cash flows [112]. - The company is subject to risks associated with integrating acquired businesses and the competitive nature of its operations [80]. - The company acknowledges various risks and uncertainties that may adversely affect its financial condition and market value of securities [101]. - The company may face increased scrutiny and regulatory burdens due to negative public perception regarding environmental issues, impacting its operations and profitability [121]. - The company faces risks related to employee misconduct and non-compliance with laws, which could negatively impact revenue and profits [123]. - The company may experience difficulties in obtaining letters of credit and surety bonds, which are necessary for bidding on contracts, potentially impacting business operations [128]. - The company is exposed to various operational risks, including blowouts and severe weather conditions, which could result in substantial liabilities [114]. - The company faces risks associated with foreign currency fluctuations, particularly in countries reliant on oil revenue [108]. Environmental, Social, and Governance (ESG) Initiatives - The company is committed to environmental, social, and governance (ESG) efforts, with materials summarizing these initiatives available on its website [80]. - The company highlights its environmental, social, and governance (ESG) efforts, including annual disclosures aligned with the Sustainability Accounting Standards Board [80]. - Public and investor scrutiny regarding ESG practices could negatively affect the company's reputation and trading price of securities [131]. - The company is exposed to risks related to sustainability goals and targets, which could affect reputation and financial performance if not met [142]. - The company may face increased scrutiny from investors regarding its sustainability practices, which could impact its ability to attract and retain employees [144]. - Legislative responses to climate change, including the EPA's final methane rules announced on December 2, 2023, could increase operating costs and affect demand for the company's services [116]. - Climate-related business trends may lead to decreased demand for goods that produce significant greenhouse gas emissions, impacting the company's product offerings [105]. - The company aims to innovate products that enhance energy efficiency and reduce emissions, addressing challenges in the energy sector [105]. - Increased competition to develop innovative products with lower emissions is anticipated due to climate change legislation and regulation [122]. Operational Challenges - The company has experienced challenges related to the availability and increased costs of chartered vessels, which may impact future financial performance [74]. - The company has faced challenges related to the availability of qualified personnel and the timely procurement of raw materials [80]. - The company operates in a highly competitive industry, facing challenges from competitors with greater financial resources, particularly in the Energy business where capital investment is critical [141]. - The company’s backlog is an uncertain indicator of future revenue, as project cancellations or delays could significantly impact expected earnings [113]. - The company may face challenges related to the implementation of new IT systems, which could disrupt business operations and incur substantial costs [152]. Regulatory and Compliance Issues - The company is actively monitoring changes in tax laws and regulations that could impact its operations [80]. - Changes in U.S. foreign trade policies could impose additional trade barriers, adversely affecting the company's operations and financial condition [109]. - The Inflation Reduction Act (IRA) includes a 15% corporate minimum tax for companies with adjusted financial statement income exceeding $1.0 billion, which may impact the company's consolidated financial statements [125]. - The company operates in a highly regulated environment, and changes in laws and regulations could significantly increase operating costs [124]. - Compliance with evolving data privacy and security regulations may lead to increased operational costs and potential liabilities for the company [155]. - The company may face significant penalties for non-compliance with data privacy laws, which could adversely affect its financial condition [157]. - Future legislation regarding artificial intelligence and data privacy could impose additional compliance burdens, affecting the company's operational flexibility [158]. Leadership and Governance - The company has adopted corporate governance guidelines and a code of ethics for its executives, ensuring compliance and ethical conduct [79]. - The company has a diverse executive team with extensive experience in various sectors, including aerospace, defense, and offshore projects [81]. - The company has experienced leadership changes, with several executives serving in their roles for over five years, ensuring stability [81][82]. - The company has a diverse board of directors with extensive experience across various industries, enhancing governance and strategic oversight [98][99]. Technology and Innovation - The company is focused on growth expectations for its mobile robotics technology products, which are influenced by general economic conditions and industry trends [74]. - The company’s growth strategy includes the development and commercialization of new technologies, which involves risks and uncertainties related to capital investment and market competition [138]. - The company relies on intellectual property rights and confidentiality agreements to protect its proprietary technology, which is crucial for maintaining its competitive position [145]. - Significant reliance on proprietary technology and trade secrets that are not patent-protected, with potential risks of misappropriation [146]. - Future licensing of third-party intellectual property may not be obtainable on commercially reasonable terms, potentially increasing costs [147]. Economic Conditions - The offshore oil and gas industry is characterized by significant price volatility, impacting exploration and development activities [102]. - The ongoing geopolitical tensions, such as the conflict between Russia and Ukraine, could impact oil and gas prices and demand for the company's services [102]. - Significant inflation and rising interest rates have been observed, which could adversely affect the company's costs of materials and labor, impacting profit margins [129]. - Approximately 58% of the company's consolidated revenue in 2024 is attributable to international operations, exposing it to various geopolitical and economic risks [108].

Core Insights - Oceaneering International, Inc. (OII) reported an adjusted profit of 37 cents per share for Q4 2024, missing the Zacks Consensus Estimate of 45 cents due to lower-than-expected operating income from several segments [1] - Total revenues reached $713 million, exceeding the Zacks Consensus Estimate of $682 million and representing an 8.9% increase from $655 million in the same quarter last year [2] Financial Performance - The company achieved a net income of $56.1 million, reflecting a 26% year-over-year growth, and reported an operating income of $77.9 million, a 64% increase compared to the previous year [4] - Adjusted EBITDA for the quarter was $102 million, marking a 35% increase from the prior year, with cash flow from operating activities at $128 million and free cash flow at $94.5 million [4] Segment Performance - Subsea Robotics segment revenues totaled $212.2 million, up from $199.5 million year-over-year, but missed the estimate of $214.1 million; operating income increased to $63.5 million from $50.6 million [5][6] - Manufactured Products segment revenues rose to $143 million from $133 million, but fell short of the estimate of $149 million; operating profit decreased to $4.2 million from $5.4 million [6][7] - Offshore Projects Group revenues increased by 14.4% to $184.4 million, surpassing the estimate of $149.1 million, with operating income rising to $39.3 million from $15.2 million [8][9] - Integrity Management & Digital Solutions segment revenues grew to $75.1 million from $66 million, exceeding the estimate of $72.6 million, while operating income fell to $2 million from $3.2 million [9][10] - Aerospace and Defense Technologies segment revenues increased to $98.8 million from $94.9 million, beating the estimate of $97 million, but operating income dropped to $9.9 million from $11 million [10][11] Capital Expenditure and Balance Sheet - Capital expenditure for Q4 totaled $61 million, with cash and cash equivalents at $497.5 million and long-term debt at approximately $482 million, resulting in a debt-to-total capital ratio of 40.1% [12] Outlook - The company anticipates growth across key segments for Q1 2025, particularly in Subsea Robotics and Offshore Projects Group, while expecting stable performance in Manufactured Products and flat revenues in Integrity Management & Digital Solutions and Aerospace & Defense Technologies [14][15] - For 2025, net income is projected between $160 million and $190 million, with consolidated EBITDA expected between $380 million and $430 million, and free cash flow anticipated between $110 million and $130 million [16] - The company aims for strong growth throughout 2025, focusing on revenue and operating income increases across all segments and integrating a recently acquired digital services provider [17]

Oceaneering International, Inc. (NYSE:OII) Q4 2024 Earnings Conference Call February 20, 2025 11:00 AM ET Company Participants Hilary Frisbie – Senior Director-Investor Relations Rod Larson – President and Chief Executive Officer Alan Curtis – Senior Vice President and Chief Financial Officer Conference Call Participants Eddie Kim – Barclays Kurt Hallead – Benchmark Company Josh Jayne – Daniel Energy Partners Desiree Welcome to Oceaneering's fourth quarter and full year 2024 earnings conference call. My nam ...

Financial Data and Key Metrics Changes - Oceaneering reported a net income of $56.1 million or $0.55 per share, a 26% year-over-year increase [11] - Consolidated revenue for Q4 2024 was $713 million, a 9% increase compared to the same period in the previous year [11] - Adjusted EBITDA for Q4 2024 was $102 million, representing a 35% year-over-year increase [11] - For the full year 2024, consolidated revenue increased 10% to $2.7 billion from $2.4 billion in 2023 [21] - Free cash flow for 2024 was $96.1 million compared to $109 million in 2023 [22] Business Segment Data and Key Metrics Changes - Subsea Robotics (SSR) operating income increased by 26% to $63.5 million on a 6% revenue increase [13] - Operating income for the Offshore Projects Group (OPG) improved significantly to $39.3 million, with a revenue increase of 14% to $184 million [17] - Manufactured Products segment revenue increased by 8% year-over-year to $143 million, but operating income margin declined to 3% due to reserves taken on a project [15][18] - Integrity Management and Digital Solutions (IMDS) saw a decrease in operating income despite a revenue increase, primarily due to acquisition-related costs [18] Market Data and Key Metrics Changes - Oceaneering's ROV uptime rate was 99% at year-end, indicating strong operational performance [7] - The company holds 59% of the contract floating rate market with ROV contracts on 84 of 140 contracts [14] - The book-to-bill ratio for the full year 2024 was 0.7, down from 1.31 in 2023, indicating a decrease in order intake relative to revenue [16] Company Strategy and Development Direction - Oceaneering is focused on leveraging market dynamics in 2025, with expectations for mid to high single-digit revenue growth across all segments [28] - The company aims to improve pricing and project mix, with anticipated EBITDA growth led by SSR, AdTech, and Manufactured Products segments [30] - Oceaneering is committed to safety, achieving a 56% reduction in high potential incidents in 2024 [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of defense-related markets and the potential for growth in the AdTech sector [27][28] - The company is monitoring geopolitical changes and their potential impact on markets served, but does not expect a material impact on energy services products [27] - The forecast for 2025 includes expectations for improved results in SSR based on sustained pricing improvements and stable demand [33] Other Important Information - Oceaneering completed the acquisition of Global Design Innovation Limited (GDI), enhancing its digital and software solutions capabilities [8] - The company plans to invest approximately $130 million to $140 million in organic capital expenditures in 2025, including maintenance and growth capital [31] Q&A Session Summary Question: Pricing increase in ROVs - Management indicated that pricing improvements are driven by both drilling support and vessel-based work, with expectations for continued upward progression despite flat activity levels [46][49] Question: Guidance on orders and book-to-bill for manufactured products - No specific guidance was provided, but management noted a healthy sales pipeline and expectations for future orders [50][52] Question: ROV utilization assumptions and market tightness - Management expects flattish rig activity but noted increased market share in Brazil, which provides some protection against market fluctuations [60][61] Question: Update on outsourced manufacturing for mobile robotics - Management expressed confidence in the quality of outsourced manufacturing and noted ongoing discussions with customers for larger volume orders [62][64] Question: Margin improvement in manufactured products - Management highlighted that margin improvements are driven by better pricing in backlog and operational efficiencies [67][70] Question: Offshore Projects Group performance and outlook - Management emphasized growth opportunities in light well intervention and infrastructure rework, particularly in the Gulf of Mexico and West Africa [78][80] Question: M&A opportunities in the current market - Management noted an increase in M&A opportunities and expressed excitement about potential acquisitions that align with their strategic goals [87][89]

Core Viewpoint - Oceaneering International reported quarterly earnings of $0.37 per share, missing the Zacks Consensus Estimate of $0.45 per share, but showing an increase from $0.19 per share a year ago, indicating a -17.78% earnings surprise [1] Group 1: Earnings Performance - The company has not surpassed consensus EPS estimates over the last four quarters [2] - Oceaneering International's revenues for the quarter ended December 2024 were $713.45 million, exceeding the Zacks Consensus Estimate by 4.63%, compared to $654.63 million in the same quarter last year [2] - The company has topped consensus revenue estimates three times in the last four quarters [2] Group 2: Stock Performance and Outlook - Oceaneering International shares have declined approximately 1.5% since the beginning of the year, while the S&P 500 has gained 4.2% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $0.34 for the upcoming quarter and $1.79 for the current fiscal year [4][7] - The Zacks Rank for Oceaneering International is currently 3 (Hold), indicating expected performance in line with the market [6] Group 3: Industry Context - The Oil and Gas - Field Services industry, to which Oceaneering International belongs, is currently ranked in the bottom 21% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [5]

Revenue Performance - Oceaneering reported consolidated revenue of $2.7 billion for the full year 2024, a 10% increase over 2023[6]. - Fourth quarter 2024 revenue reached $713.5 million, the highest quarterly revenue since Q4 2015[5]. - Revenue for the three months ended December 31, 2024, was $713,450,000, an increase of 9% compared to $654,629,000 for the same period in 2023[24]. - Revenue for the year ended December 31, 2024, reached $2,661,161,000, an increase from $2,424,706,000 in 2023, representing a growth of approximately 9.8%[48]. - Revenue for the three months ended September 30, 2024, was $679,811,000, compared to $654,629,000 for the same period in 2023, marking an increase of approximately 4%[46]. - The revenue from the MP segment for 2024 was $555,500,000, up from $493,692,000 in 2023, marking a growth of approximately 12.5%[48]. EBITDA and Profitability - Adjusted consolidated EBITDA for 2024 increased by 20% to $347 million, marking the sixth consecutive year of EBITDA growth[6]. - The company achieved adjusted EBITDA exceeding $100 million for the first time since Q2 2016[5]. - Adjusted EBITDA for Q4 2024 was $101,536,000, up from $75,141,000 in Q4 2023, reflecting an increase of about 35%[44]. - The EBITDA for the year ended December 31, 2024, was $348,077 thousand, compared to $287,687 thousand for the year ended December 31, 2023, reflecting a significant growth[35]. - The Adjusted EBITDA margin for the year ended December 31, 2024, was 13%, consistent with the previous year, indicating stable operational efficiency[35]. - The EBITDA margin for Q4 2024 was 14%, consistent with the adjusted EBITDA margin, while the EBITDA margin for Q4 2023 was 12%[44]. - The operating income as reported in accordance with GAAP for 2024 was $246,270,000, compared to $181,328,000 in 2023, reflecting an increase of about 36%[48]. - Operating income margins for 2024 were reported at 9%, up from 7% in 2023, showing an improvement in profitability[48]. Future Projections - For 2025, Oceaneering projects revenue of $713 million, a 9% increase year over year, and adjusted EBITDA of $102 million, a 35% increase year over year[8]. - Operating income for 2025 is expected to be $77.9 million, reflecting a 64% increase year over year[8]. - The company estimates consolidated EBITDA for the year ending December 31, 2025, to be between $380,000 thousand and $430,000 thousand, indicating expected growth[40]. - The estimated Free Cash Flow for the year ending December 31, 2025, is projected to be between $110,000 thousand and $130,000 thousand, suggesting a recovery in cash generation[42]. Cash Flow and Backlog - Oceaneering's cash flow from operating activities for 2024 was $203 million, with free cash flow of $96.1 million, a 12% decrease year over year[6]. - The backlog at year-end 2024 was $604 million, a 3% decrease compared to the same period in 2023[9]. - The backlog at the end of the period for Manufactured Products was $604,000,000, down from $622,000,000 in the previous year[24]. Segment Performance - Subsea Robotics segment revenue increased to $212,190,000, up from $199,505,000, with an operating income margin of 30%[24]. - Manufactured Products segment revenue rose to $142,999,000, with an operating income margin of 3%[24]. - Offshore Projects Group revenue was $184,386,000, with a significant increase in operating income margin to 21% from 9%[24]. - Integrity Management & Digital Solutions revenue reached $75,062,000, with an operating income margin of 3%[24]. - Aerospace and Defense Technologies generated revenue of $98,813,000, maintaining an operating income margin of 10%[24]. Net Income and Earnings Per Share - For the year ended December 31, 2024, the company reported a net income of $147,468 thousand and diluted EPS of $1.44, compared to a net income of $97,403 thousand and diluted EPS of $0.95 for the year ended December 31, 2023[32]. - Adjusted Net Income for the year ended December 31, 2024, was $117,144 thousand with an adjusted diluted EPS of $1.14, up from an adjusted net income of $81,949 thousand and adjusted diluted EPS of $0.80 for the previous year[32]. - Adjusted Net Income for the three months ended December 31, 2024, was $37,460,000, with a diluted EPS of $0.37[31]. Capital Expenditures - Capital expenditures for the three months ended December 31, 2024, were $61,023,000, compared to $34,045,000 in the same period last year[27]. Strategic Initiatives - The company plans to integrate Global Design Innovation Ltd. to identify market expansion opportunities following its acquisition in Q4 2024[7]. - The company continues to focus on market expansion and new product development as part of its strategic initiatives moving forward[45].

Core Viewpoint - Oceaneering International (OII) is expected to report a year-over-year increase in earnings and revenues for the quarter ended December 2024, with a consensus outlook that will significantly influence its stock price depending on actual results compared to estimates [1][2]. Earnings Expectations - The consensus estimate for OII's quarterly earnings is $0.45 per share, reflecting a year-over-year increase of +136.8%. Revenues are anticipated to be $681.86 million, which is a 4.2% increase from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their initial estimates during this period [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for OII is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +10.11%, indicating a bullish sentiment among analysts regarding the company's earnings prospects [10]. Historical Performance - In the last reported quarter, OII was expected to post earnings of $0.44 per share but only achieved $0.36, resulting in a surprise of -18.18%. The company has not beaten consensus EPS estimates in any of the last four quarters [12][13]. Stock Movement Potential - The stock may experience upward movement if the upcoming earnings report exceeds expectations, while a miss could lead to a decline. The sustainability of any immediate price change will depend on management's discussion of business conditions during the earnings call [2][14]. Investment Considerations - While OII appears to be a compelling earnings-beat candidate, investors should consider other factors beyond earnings surprises when making investment decisions [16].

Group 1 - Oceaneering International, Inc. (OII) has ordered 100 units of Exail's Octans 9 Attitude Heading Referencing Systems (AHRS) to enhance its offshore survey and positioning capabilities [1] - The acquisition of Octans 9 AHRS units demonstrates OII's commitment to using high-performance navigation systems, which will improve accuracy and reliability in offshore operations [2] - The Octans 9 AHRS features advanced technology, including compact design, lower power consumption, and integrated GNSS sensors, providing real-time attitude and heading data [3] Group 2 - The order reinforces the strong relationship between Oceaneering and Exail, confirming the reliability and quality of Exail's technology [4] - Oceaneering is recognized as a leading supplier of offshore equipment and technology solutions to the energy industry [5] - Investors may consider other top-ranked stocks in the energy sector, such as ARC Resources Ltd., Equinor ASA, and Gulfport Energy Corporation, which have favorable growth prospects [6]