Oceaneering International ((OII)) has held its Q1 earnings call. Read on for the main highlights of the call.
Oceaneering International’s recent earnings call painted a picture of robust growth and strategic advancements, underscored by a strong first quarter performance. The company reported significant improvements in net income and revenue, with particular success in its Subsea Robotics and Offshore Projects Group. Despite some challenges in the Manufactured Products segment and cash flow management, the overall sentiment was positive, with the benefits slightly outweighing the concerns.
Strong First Quarter Performance
Oceaneering International reported a remarkable first quarter, with net income reaching $50.4 million, or $0.49 per share, marking a 233% increase from the previous year. The company’s consolidated revenue rose by 13% to $675 million, while consolidated adjusted EBITDA saw a 57% improvement, reaching $96.7 million. These figures highlight the company’s strong financial health and operational efficiency.
Subsea Robotics and Offshore Projects Group Success
The Subsea Robotics (SSR) and Offshore Projects Group (OPG) were standout performers this quarter. SSR experienced an 8% increase in average ROV revenue per day and a 25% rise in EBITDA. Meanwhile, OPG achieved a 43% increase in revenue, driven by improved vessel activity, which significantly boosted operating income.
Largest Contract in Aerospace and Defense Technologies
A major highlight for Oceaneering was securing the largest initial contract value in the history of its Aerospace and Defense Technologies (AdTech) segment. This contract is expected to drive significant operating income growth in 2025, marking a strategic win for the company.
Strong Order Intake and Backlog
The first quarter of 2025 saw Oceaneering’s order intake reach approximately $1.2 billion, with a current backlog that has improved from the same time last year. This strong order intake and backlog position the company well for future growth and stability.
Decline in Manufactured Products Operating Income
Despite overall positive performance, the Manufactured Products segment faced challenges, with operating income declining significantly. This was primarily due to a $10.4 million inventory reserve related to the theme park ride business, and a decrease in backlog by $54 million compared to the first quarter of 2024.
Negative Free Cash Flow
The company reported a negative free cash flow of $106.8 million, with its cash balance declining to $382 million. This aspect of the financials highlights an area of concern that the company will need to address moving forward.
Flat Performance in Certain Segments
The Integrity Management and Digital Solutions (IMDS) and AdTech segments experienced flat or slightly declining operating income, despite relatively stable revenue. This indicates a need for strategic adjustments to enhance profitability in these areas.
Forward-Looking Guidance
Oceaneering International’s guidance for the coming quarters remains optimistic. The company expects revenue and EBITDA to continue increasing, with second-quarter EBITDA projected between $95 million and $105 million. For the full year 2025, EBITDA is anticipated to range between $380 million and $430 million. This outlook is supported by a diverse backlog and sustained market activity, although potential geopolitical uncertainties remain a consideration.
In summary, Oceaneering International’s earnings call highlighted a strong start to the year, with impressive gains in key segments and strategic contract wins. While challenges in cash flow and certain segments persist, the overall sentiment remains positive, with a promising outlook for continued growth and profitability.