Oceaneering International(US:OII)2023-02-24 22:06Financial Data and Key Metrics Changes - The company increased its cash position by $141 million during Q4 2022, ending the year with a cash balance of $569 million [1][24] - Consolidated revenue for Q4 2022 was $536 million, a 4% decrease from Q3 2022, while consolidated adjusted EBITDA was $70 million, slightly above the midpoint of guidance [45][46] - For the full year 2022, consolidated revenue increased by 11% to $2.1 billion, with adjusted operating income of $111 million and adjusted EBITDA of $233 million, reflecting significant gains in SSR and OPG segments [22][23] Business Segment Data and Key Metrics Changes - SSR segment operating income improved sequentially despite lower revenue, with an EBITDA margin of 35% in Q4 2022, up from 31% in Q3 2022 [5][6] - Manufactured Products revenue increased by 7% to $100 million in Q4 2022, with an operating income margin of 6% [9] - OPG segment experienced a 20% revenue decline in Q4 2022, resulting in a decrease in operating income margin from 13% to 9% [11] - IMDS segment saw a sequential improvement in operating income margin from 5% to 9% despite a 5% decrease in revenue [12] Market Data and Key Metrics Changes - The average ROV revenue per day on hire increased by 6% to $8,967 in Q4 2022, while ROV days on hire decreased by 7% [7][6] - The company maintained a fleet count of 250 ROV systems, with 59% of floating rigs under contract [8] - The backlog for manufactured products grew from $365 million to $467 million from Q3 to Q4 2022, with a book-to-bill ratio of 1.39 for the full year [10] Company Strategy and Development Direction - The company aims to leverage its core robotics expertise across various markets, including traditional and renewable energy, aerospace and defense, and mobility solutions [49][50] - The focus for 2023 includes generating positive free cash flow and ensuring liquidity for upcoming debt maturities while pursuing strategic growth [71] - The company anticipates a 10% revenue growth in 2023 across all operating segments, driven by increased demand and improved pricing [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023, citing strong market signals and expected increases in offshore activity and capital spending [35][38] - The company expects to generate $260 million to $310 million in EBITDA for 2023, representing a 23% increase over 2022 adjusted EBITDA [52] - Management highlighted the importance of energy security and the growing demand for various energy sources as key drivers for future growth [48][38] Other Important Information - The company achieved a record low total recordable incident rate of 0.28 for the year, emphasizing its commitment to safety [28] - Sustainability initiatives are a core focus, with progress made on environmental, social, and governance (ESG) efforts [31][34] Q&A Session Summary Question: ROV dynamics and pricing - Management acknowledged pushback on pricing but noted isolated incidents of achieving 2014 pricing levels for ROVs, indicating potential for higher rates as the fleet is repriced [81] Question: Manufactured Products margins - Management indicated that pricing remains a major opportunity for margin improvement, with expectations for better margins in 2024 and 2025 due to a mix shift in products [82][84] Question: Free cash flow generation and capital deployment - Management provided guidance for free cash flow in the range of $75 million to $125 million for 2023, targeting over $100 million, and emphasized investment in high-growth markets [86][88] Question: ROV fleet count and expansion - Management stated a disciplined approach to fleet expansion, considering a utilization threshold of 70% to 75% before adding new assets [99] Question: Book-to-bill ratio and project timing - Management indicated expectations for the book-to-bill ratio to exceed 1.0, with typical timing for project awards occurring three to four months after FID [104][105]