Oceaneering International(OII) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements The company's H1 2025 financial statements reflect revenue growth, a doubling of net income to $104.8 million, and increased equity to $848.1 million Consolidated Balance Sheets Total assets slightly decreased to $2.33 billion, while total liabilities decreased to $1.48 billion, and total equity increased to $848.1 million Consolidated Balance Sheet Highlights (in thousands) | Account | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,392,707 | $1,387,896 | | Cash and cash equivalents | $434,048 | $497,516 | | Total Assets | $2,327,582 | $2,336,347 | | Total Current Liabilities | $696,863 | $796,938 | | Long-term debt | $484,648 | $482,009 | | Total Liabilities | $1,479,458 | $1,616,025 | | Total Equity | $848,124 | $720,322 | Consolidated Statements of Operations Q2 2025 revenue increased to $698.2 million, with net income rising to $54.4 million, and H1 2025 net income more than doubled to $104.8 million Key Operational Metrics (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $698,161 | $668,808 | $1,372,684 | $1,267,900 | | Gross margin | $148,427 | $120,211 | $283,438 | $212,595 | | Income from operations | $79,189 | $60,364 | $152,661 | $97,057 | | Net Income | $54,442 | $34,997 | $104,819 | $50,132 | | Diluted EPS | $0.54 | $0.34 | $1.03 | $0.49 | Consolidated Statements of Comprehensive Income (Loss) Comprehensive income significantly increased to $75.3 million in Q2 2025 and $146.0 million for H1 2025, driven by higher net income and positive currency adjustments Comprehensive Income (Loss) Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $54,442 | $34,997 | $104,819 | $50,132 | | Foreign currency translation adjustments | $20,866 | $(10,525) | $41,202 | $(26,488) | | Comprehensive income (loss) | $75,308 | $24,472 | $146,021 | $23,644 | Consolidated Statements of Cash Flows Net cash used in operations improved to $3.5 million for H1 2025, while investing and financing activities used $52.0 million and $25.6 million respectively Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $(3,531) | $(17,094) | | Net Cash Provided by (Used in) Investing Activities | $(52,006) | $(43,211) | | Net Cash Provided by (Used in) Financing Activities | $(25,600) | $(7,002) | | Net Increase (Decrease) in Cash | $(63,468) | $(78,693) | | Cash and Cash Equivalents—End of Period | $434,048 | $382,873 | Consolidated Statements of Equity Total equity increased to $848.1 million by June 30, 2025, driven by net income and positive foreign currency translation adjustments - Total equity grew by $127.8 million in the first six months of 2025, reaching $848.1 million[22] - Key drivers for the equity increase were net income of $104.8 million (across two quarters) and positive other comprehensive income of $41.2 million[22] - The company purchased $20.1 million of treasury stock during the first six months of 2025[22][19] Notes to Consolidated Financial Statements Detailed notes cover accounting policies, revenue recognition, segment performance, debt, and a subsequent event regarding new tax legislation - The company recorded inventory write-downs of $15.1 million in the first six months of 2025, primarily related to its theme park ride business and obsolete inventory[36] - Projected losses of $4.6 million were recognized in the first six months of 2025 for six business contracts in the Manufactured Products segment[51] - As of June 30, 2025, the company had $414 million in remaining performance obligations, with $306 million expected to be recognized as revenue over the next 12 months[70] - On July 4, 2025, the 'One Big Beautiful Bill Act' (OBBBA) was signed into law, with the company currently assessing its financial impact[117] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses improved H1 2025 operating results driven by new contracts and strong segment performance, maintaining adequate liquidity with $434 million in cash - Diluted EPS for the first six months of 2025 was $1.03, more than double the $0.49 from the same period in 2024[124] - The cash balance decreased by $63 million in the first half of 2025 due to operating activities, capital expenditures ($56 million), and share repurchases ($20 million)[125] - The company's liquidity is considered strong, with $434 million in cash and $215 million of unused commitments under its revolving credit facility as of June 30, 2025[146][147] - The company repurchased approximately 1.0 million shares for $20 million in the first six months of 2025[155][158] Results of Operations Consolidated revenue increased to $698.2 million in Q2 2025, with H1 2025 operating income rising 57% to $152.7 million, driven by strong segment performance Segment Operating Income (Loss) Highlights (in thousands) | Segment | H1 2025 Operating Income | H1 2024 Operating Income | Change | | :--- | :--- | :--- | :--- | | Subsea Robotics | $124,137 | $105,987 | +17.1% | | Manufactured Products | $27,439 | $27,559 | -0.4% | | Offshore Projects Group | $57,329 | $14,092 | +306.8% | | Integrity Management & Digital Solutions | $8,109 | $7,088 | +14.4% | | Aerospace and Defense Technologies | $26,964 | $20,052 | +34.5% | - The Manufactured Products segment's H1 2025 operating results were negatively impacted by a $13 million inventory reserve related to its theme park ride business[133] - The Offshore Projects Group (OPG) segment's operating income increased significantly due to higher-margin international projects and improved vessel utilization[134] - Unallocated corporate operating expenses increased in H1 2025 to $91.3 million from $77.7 million YoY, primarily due to higher accruals for incentive-based compensation and IT costs[141] Liquidity and Capital Resources The company maintains strong liquidity with $434 million in cash and $215 million available credit, expecting $115-120 million in 2025 capital expenditures Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(3,531) | $(17,094) | | Net Cash Used in Investing Activities | $(52,006) | $(43,211) | | Net Cash Used in Financing Activities | $(25,600) | $(7,002) | - The company expects to fund its 2025 capital expenditures of $115 million to $120 million using available cash[154] - The company's only major debt consists of $500 million in 6.000% Senior Notes, maturing in February 2028[156][83] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from interest rate and foreign currency fluctuations, which are not considered material as of June 30, 2025 - The company does not use derivative instruments for speculative or trading purposes[162] - Foreign currency translation adjustments positively impacted equity by $41 million for H1 2025, reflecting a weakening U.S. dollar[163] - Foreign currency transaction gains of $6.5 million were recorded in other income for the first six months of 2025[164] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with minor internal control modifications due to new software implementation - The principal executive and financial officers concluded that disclosure controls and procedures were effective as of June 30, 2025[166] - A new software application for the ADTech segment led to modifications in internal controls to enhance government contracting requirements[167] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course litigation, with management not expecting a material adverse effect on financial condition or results - Information regarding legal proceedings is incorporated by reference from Note 7—"Commitments and Contingencies"[170][90] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 471,759 shares in Q2 2025 under its existing program, with 6.2 million shares remaining available for repurchase Share Repurchase Activity - Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | — | $— | | May 2025 | — | $— | | June 2025 | 471,759 | $21.42 | - The maximum number of shares that may yet be purchased under the plan is 6,223,660 as of the end of June 2025[171] Item 5. Other Information An executive officer adopted a Rule 10b5-1 trading plan for the sale of up to 65,690 shares, effective August 2025 through April 2026 - An executive officer adopted a Rule 10b5-1 trading plan for the potential sale of up to 65,690 shares[172] Item 6. Exhibits This section indexes all exhibits filed with the Form 10-Q, including officer certifications and XBRL data files Signatures The report was duly authorized and signed on July 24, 2025, by the principal executive and financial officers