Oceaneering International, Inc. (OII) is a global technology company that delivers engineered services and products, as well as robotic solutions, to the offshore energy, defense, aerospace, manufacturing, and entertainment industries. The company's diverse portfolio and strategic focus have enabled it to navigate the challenges of the past year with resilience, showcasing its ability to adapt and capitalize on emerging opportunities.
Financials
For the full year 2024, Oceaneering expects its consolidated adjusted EBITDA to be in the range of $340 million to $370 million, with net income anticipated to range from $130 million to $150 million. The company's annual operating cash flow stood at $193,752,000, while its annual free cash flow reached $93,026,000. These robust financial metrics underscore Oceaneering's operational efficiency and its capacity to generate sustainable cash flows, even in a dynamic market environment.
In the second quarter of 2024, Oceaneering reported net income of $34,997,000, or $0.34 per share, on revenue of $668,808,000. The company's adjusted net income for the quarter was $28,600,000, or $0.28 per share, which included the impact of $1,000,000 in foreign exchange gains and $5,500,000 in expenses related to discrete tax adjustments.
Business Overview
Oceaneering's second-quarter performance showcased the strength of its diversified business model, with all of its operating segments reporting revenue increases and improved operating income in the Subsea Robotics (SSR) and Manufactured Products segments. The company's consolidated second-quarter 2024 operating income increased by 23% compared to the same period in the prior year, while revenue grew by 12%.
Subsea Robotics (SSR) Segment
The SSR segment, which provides remotely operated vehicles (ROVs) for drill support and vessel-based services, reported a 46% increase in operating income on a 15% rise in revenue. This was driven by improvements in ROV average revenue per day, which increased by 16% to $10,528, and continued cost control measures, leading to an EBITDA margin expansion to 34% from 30% in the prior-year period.
Manufactured Products Segment
Oceaneering's Manufactured Products segment, which focuses on distribution and connection systems, as well as autonomous mobile robotic technology and entertainment systems, also delivered strong results. Operating income in this segment improved by 35% on a 12% increase in revenue, reflecting the segment's growing backlog, which stood at $713 million as of June 30, 2024, up from $418 million a year earlier.
Other Segments
The company's Offshore Projects Group (OPG) segment, which provides subsea installation, intervention, and inspection, maintenance, and repair services, experienced a decline in operating income and margin due to the timing of pre-contract award costs and project mix. The Integrity Management & Digital Solutions (IMDS) segment also reported slightly lower operating income and margin, despite a 16% increase in revenue.
Oceaneering's Aerospace and Defense Technologies (ADTech) segment, which provides services and products to the U.S. government and its prime contractors, saw a significant decline in operating income and margin, primarily due to a reserve related to a contractual dispute and lower-than-expected activity levels in the Space Systems business.
Outlook
Looking ahead, Oceaneering provided guidance for the third quarter of 2024, expecting a sequential improvement in its consolidated results. The company anticipates adjusted EBITDA in the range of $95 million to $105 million, driven by a low to mid-single-digit percentage increase in revenue. This outlook is supported by the company's expectations for slightly higher activity levels and operating profitability in the SSR segment, increased Manufactured Products revenue with lower operating income, significantly higher OPG operating results, relatively flat IMDS performance, and significantly higher ADTech operating income.
For the full year 2024, Oceaneering expects its consolidated adjusted EBITDA to be in the range of $340 million to $370 million, with net income anticipated to range from $130 million to $150 million. The company's guidance reflects its confidence in the continued strength of its energy-related businesses, which is expected to partially offset lower results in the ADTech segment.
Geographic Diversification
Oceaneering's geographic diversification is another key strength, with the company generating 57% of its second-quarter 2024 revenue from international markets, including Africa, Norway, the United Kingdom, Brazil, and Asia-Pacific. This global footprint has helped the company navigate regional challenges and capitalize on growth opportunities across various markets.
Liquidity
The company's liquidity position remains robust, with $382,873,000 in cash and cash equivalents as of June 30, 2024, and $215,000,000 in unused commitments under its revolving credit facility. Oceaneering's debt-to-total capital ratio stood at 42.2% as of the same date, providing the company with financial flexibility to fund its strategic initiatives and navigate market uncertainties.
Strategic Focus
Oceaneering's strategic focus on innovation and technology-driven solutions has been a key driver of its success. The company's investments in areas like autonomous underwater vehicles, digital solutions, and mobile robotics have positioned it to capitalize on emerging trends and diversify its revenue streams beyond the traditional oil and gas industry.
Conclusion
Despite the challenges faced by the energy sector, Oceaneering has demonstrated its resilience and adaptability. The company's diversified business model, global reach, and commitment to innovation have enabled it to navigate the industry's complexities and position itself for long-term growth. As Oceaneering continues to execute on its strategic priorities, investors can look forward to the company's continued evolution and its ability to create value in the years ahead.