Oceaneering International(OII)2021-10-28 19:22Financial Data and Key Metrics Changes - For Q3 2021, consolidated EBITDA was $50.3 million, a decrease from Q2 2021 but within the guidance range [9] - Cash flow from operations was $36.5 million, and free cash flow was $24 million [10] - The cash balance at the end of Q3 2021 was $448 million, slightly down due to repurchases of senior notes [10][27] - The company initiated 2022 EBITDA guidance in the range of $225 million to $275 million, representing a 16% increase from the 2021 adjusted EBITDA midpoint of $215 million [7] Business Segment Performance Changes - Subsea Robotics (SSR) revenue increased slightly, but operating income declined due to lower margins in ROV services [12] - Manufactured Products revenue was $75.4 million, with a backlog of $334 million, improving from $315 million in Q2 2021 [14] - Offshore Projects Group (OPG) revenue declined by 11%, but operating income margin improved from 7% to 8% [15] - Aerospace and Defense Technologies (ADTech) operating income declined by 15%, with an operating income margin of 16% [17] Market Data and Key Metrics Changes - The Gulf of Mexico operations were impacted by Hurricane Ida, affecting overall activity levels [11] - The company maintained a 58% drill support market share with ROV contracts on 77 of the 133 floating rigs [13] - The book-to-bill ratio was 1.3 for the first nine months of 2021, indicating a healthy order intake [14] Company Strategy and Industry Competition - The company is focusing on growth in energy transition markets, including offshore wind, while maintaining a balanced approach to capital allocation [28][36] - There is an emphasis on reducing carbon footprints in oil and gas operations, with investments in autonomous vehicles and new technologies [36] - The company expects to generate positive free cash flow similar to 2021 levels while addressing its 2024 debt maturity [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the energy services industry and anticipated growth in offshore oil and gas markets [28] - The company expects improved operating performance across segments in 2022, particularly in Subsea Robotics and offshore projects [29] - Management highlighted the importance of addressing inflation and supply chain issues while attracting and retaining talent [30] Other Important Information - Unallocated expenses for Q4 2021 are expected to be in the mid-$30 million range due to increased IT spending [25] - The company is narrowing its adjusted EBITDA guidance for the full year 2021 to a range of $210 million to $220 million [30] Q&A Session Summary Question: What is the outlook for OPG in 2022? - Management noted that improved contracting activity and customer signals are framing the outlook for OPG [33] Question: Where are the best opportunities for growth capital allocation? - Management indicated that 90% of new product development is targeted at non-oil and gas markets, with a focus on carbon reduction technologies [36] Question: What are the promising offshore deepwater basins for growth? - Management highlighted South America, particularly Brazil and Guyana, as strong growth areas, along with sustained activity in Norway and West Africa [40] Question: What is the company's approach to returning cash via dividends or buybacks? - Management stated that while growth opportunities are prioritized, they remain open to discussing dividends or buybacks in the future [42] Question: How is the company managing staffing challenges for ROVs? - Management confirmed that they have been effective in rehiring technicians and leveraging their global footprint to address staffing needs [45]