Financial Data and Key Metrics Changes - The company reported a net income of $54.4 million, or $0.54 per share, for Q2 2025, with consolidated revenue increasing to $698 million, a 4% increase year-over-year [5][6] - Consolidated operating income rose by 31% to $79.2 million, and consolidated adjusted EBITDA grew by 20% to $103 million [6][20] - Free cash flow for the quarter was $46.9 million, with an ending cash position of $434 million and no borrowings under the secured revolving credit facility [6][7] Business Segment Performance - Subsea Robotics (SSR) saw operating income improve by 4% to $64.5 million, with revenue increasing approximately 2% and an EBITDA margin of 35% [8][9] - Manufactured Products generated operating income of $18.8 million, marking a 31% rise, with revenue growing by 4% to $145 million [10][11] - Offshore Projects Group (OPG) reported operating income of $21.7 million, with revenue increasing by 4% and operating income margin expanding to 15% [12][13] - Aerospace and Defense Technologies (AdTech) operating income increased by 125% to $16.3 million, with a 13% increase in revenue [15][17] Market Data and Key Metrics Changes - ROV revenue per day increased to $11,065, with fleet utilization at 67% [5][8] - The company maintained a 60% share of the contracted floating rig market with ROV contracts on 81 of the 136 floating rigs under contract [9] - The company anticipates continued tendering activity supportive of ROV utilization and pricing assumptions, particularly in decommissioning opportunities in Europe [9][10] Company Strategy and Industry Competition - The company remains positive about growth in both energy and aerospace and defense markets, with expectations for continued growth beyond 2025 [23] - The recent reconciliation bill is expected to positively impact all three AdTech business lines over the next five years, particularly in unmanned underwater vehicles [18][23] - The company is gearing up to increase capacity to serve the submarine maintenance and repair market due to anticipated funding increases [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain market share and improve operational results across segments [21][22] - The outlook for Q3 2025 includes expected increases in consolidated revenue and EBITDA, with projections for SSR and AdTech showing significant growth [19][20] - Management noted that visibility into future contracts has improved, particularly with larger international contracts [49] Other Important Information - Unallocated expenses for the quarter were $46.7 million, slightly higher than guidance [19] - The company has secured order commitments totaling approximately $100 million in the first weeks of Q3 2025 [11][32] Q&A Session Summary Question: Impact of offshore rig white space on business - Management acknowledged some impact but noted that pricing improvements have offset concerns, with expectations for ROV utilization to reach 70% by year-end [26][27] Question: Orders in the manufactured product segment - Management indicated that orders are expected to be flat year-over-year, with positive signals for 2026 [30][32] Question: ROV utilization outlook - Management stated that the lower utilization outlook relates to both vessel and rig support, with increased clarity on plans for Q4 [39][40] Question: Free cash flow visibility - Management highlighted that cash flow typically rebounds in Q3 and Q4, with significant amounts sitting in receivables [42][44] Question: OPG business visibility - Management confirmed improved visibility due to securing larger contracts, which stabilizes the business [48][49] Question: Potential impact of the reconciliation bill - Management discussed the positive implications for OTEC and other business lines, particularly in defense and space sectors [50][55]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $603.3 million, representing a year-over-year increase of 14.2% and 13.8% on a constant currency basis [10][12] - EBITDA for Q2 2025 was $130.5 million, an increase of 16.2% compared to $112.3 million in Q2 2024, with an EBITDA margin of 21.6% [11][12] - Net income for Q2 2025 was $90.3 million, a 2.2% increase from $88.4 million in the prior year [12] Business Line Data and Key Metrics Changes - Net new business awards entering backlog in Q2 increased by 12.6% year-over-year to $620.5 million, resulting in a net book-to-bill ratio of 1.03 [8][10] - Ending backlog as of June 30, 2025, was approximately $2.9 billion, a decrease of 1.8% from the prior year [8] Market Data and Key Metrics Changes - The company anticipates that approximately $1.75 billion of backlog will convert to revenue in the next twelve months, with a backlog conversion rate of 21.2% in Q2 [9][10] - The funding environment has stabilized and improved, allowing most clients with ongoing studies to secure sufficient funding [7][10] Company Strategy and Development Direction - The company raised its revenue guidance for 2025 by $280 million at the midpoint, now expecting total revenue in the range of $2.42 billion to $2.52 billion, reflecting growth of 14.7% to 19.5% over 2024 [14] - The strategic shift towards faster-burning therapeutic areas is expected to increase reimbursable costs as a percentage of revenue by 200 to 300 basis points over the remainder of the year [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about accelerating revenue in the second half of the year due to improved funding, fewer cancellations, and rapid project start-ups [7][10] - The management acknowledged that while the funding environment has improved, there remains uncertainty regarding future cancellations and their impact on 2026 [29][30] Other Important Information - The company repurchased approximately 1.75 million shares for $518.5 million in Q2 2025, with $826.3 million remaining under the share repurchase authorization program [12][13] - The effective tax rate for 2025 is expected to be between 18.5% and 19% [14] Q&A Session Summary Question: What are the booking expectations for the second half? - Management expects bookings to increase, with a reasonable chance of getting the book-to-bill ratio back over 1.15, depending on cancellation rates [19] Question: Can you provide information on cancellations? - Cancellations were down across the entire portfolio, with rates lower than historical averages, contributing to better-than-expected bookings and performance [20] Question: How does the increase in pass-through costs impact revenue? - The increase in pass-through costs is expected to significantly influence revenue, with a large portion of the revenue increase attributed to accelerated reimbursable cost activity [24] Question: What is the outlook for funding and demand activity? - Management noted that while funding has improved, there is still uncertainty regarding potential future downturns in demand activity [30] Question: How did intra-quarter trends evolve in Q2? - The business environment remained strong throughout Q2, with low cancellation rates contributing to a stable demand environment [35] Question: What are the dynamics around bookings and competitive win rates? - The win rate was lower in Q2 due to the presence of large projects that were lost, but the overall number of decisions made increased significantly [48] Question: What is the expected hiring trend for the second half? - The company anticipates accelerated hiring in the second half, with a focus on maintaining mid to upper single-digit growth rates for the year [85]

Fortrea Holdings (FTRE) Q4 2024 Earnings Call March 03, 2025 09:00 AM ET Company Participants Hima Inguva - Head of Investor Relations & Corporate DevelopmentThomas Pike - CEO, President & ChairmanJill McConnell - Chief Financial OfficerPatrick Donnelly - Managing DirectorDavid Windley - Managing DirectorCharles Rhyee - Managing DirectorMichael Ryskin - Managing Director Conference Call Participants Justin Bowers - AnalystElizabeth Anderson - Senior Managing Director & Research AnalystLuke Sergott - Analyst ...