Oceaneering International, Inc. Q3 FY2025 earnings call

• In Q3, Oceaneering surpassed the high end of guidance range, generating consolidated adjusted EBITDA of $111 million, the highest quarterly performance since 2015 Q4.
• Results driven by conversion of higher-quality backlog in manufactured products, high activity levels and favorable project mix in OPG, progression in ADTech, and ROV pricing and performance.
• Outlook for Q4 2025: Revenue expected lower, OPG revenue and operating income to decrease significantly, ADTech revenue and operating income to increase significantly. Full year 2025 adjusted EBITDA expected $391 million - $401 million, full year free cash flow guidance $110 million - $130 million. Initial 2026 guidance: Consolidated EBITDA $390 million - $440 million, growth in ADTech, stable activity in energy-focused businesses.
• Continues to return capital to shareholders, repurchasing ~$10 million of common stock shares, ending cash position $506 million.
• Acknowledges Alan Curtis' retirement as CFO on January 1, thanking him for his contributions

Subsea Robotics (SSR)

• Revenue and operating income were essentially flat in Q3 2025 compared to Q3 2024, with an EBITDA margin of 36%. ROV revenue per day utilized increased to $11,254 from $10,576, offsetting lower ROV fleet utilization of 65%. Fleet use in drill support was 63% and in vessel-based activity was 37%, similar to Q3 2024. ROE business accounted for 77% and combined tooling and survey businesses accounted for 23% of SSR revenue.

Manufactured Products

• Operating income was $24.7 million, operating income margin 16%, with revenue up 9%. Order intake in the quarter was $208 million, and backlog on September 30, 2025, was $568 million. Book-to-bill ratio for the trailing 12-month period was 0.82.

Offshore Projects Group (OPG)

• Operating income increased 17% to $23.7 million on a 16% increase in revenue, with operating income margin flat at 14%.

Integrity Management and Digital Solutions (IMDS)

• Operating income and margin improved on a slight decline in revenue, reflecting the absence of a one-time noncash charge from the divestiture of the Maritime Intelligence division in Q3 2024.

Aerospace and Defense Technologies (ADTech)

• Operating income significantly increased by 36% to $16.6 million on a 27% increase in revenue, with operating income margin improving slightly to 13%, driven by increased activity levels in the defense business

• Q4 2025: Revenue expected lower; OPG revenue and operating income to decrease significantly due to absence of large-scale international projects, lower vessel activity in U.S. Gulf; ADTech revenue and operating income to increase significantly. Unallocated expenses expected ~$45 million.
• Full year 2025: Adjusted EBITDA expected $391 million - $401 million, full year free cash flow guidance $110 million - $130 million.
• 2026: Initial consolidated EBITDA guidance $390 million - $440 million, driven by growth in ADTech and stable activity in energy-focused businesses. SSR expected slight revenue and operating income increase with stable EBITDA margins; Manufactured products expected improved operating income and margins; OPG revenue and operating income to decrease on project mix changes; IMDS expected increased revenue and operating income; ADTech expected significant revenue and operating income increase

Q: Just when I think about the business moving forward toward the Ocean Intervention II, talk about the advantages that's going to provide and how we should think about those capabilities and the business moving forward?

A: Sure. I think, Josh, I mean, you saw some of that in the tour, but the main takeaway is being able to do more with less. So you decrease the service expression, you decrease fuel usage, you decrease personnel on board. So much more efficient, not just from a cost standpoint, but also from a time standpoint, being able to do more. The other thing that isn't necessarily intuitively obvious because we're doing these things simultaneously and we're gathering this data, you're actually cross-checking data. So you're getting data from 2 different sources at the same time, you get a better idea early about your data quality. So I think all in all, it just provides the customer a more robust solution and getting that data into their hands sooner.

Q: I wanted to get some more color on one of the segments in 4Q of Manufactured product, that's been a big source of growth this year. You mentioned the continued strength on a year-over-year basis in 4Q on operating income, but on lower revenues. What do you think that means for margins? And kind of what's driving the revenue decline?

A: Yes. Give me one second here, Scott. I'm looking at -- I don't know if we're implying double-digit decline in revenue. And I think it's really the quality of earnings is where we see the increase in the operating income and EBITDA for the segment. So a lot of the backlog we've been talking about for the last 2 years where we received the improved pricing, a lot of that is starting to flow through as you witnessed this year. There's a good part of that still in backlog that we expect to execute in '26. And at the same time, we've taken some I'll say, operational excellence focus in this area as well and continue to look at how we can improve our cost structure across the board. And I think we're expecting to realize some additional benefit in '26 there.