Oceaneering International, Inc. Q4 FY2025 earnings call

• 2025 had strong execution across the business, with $3.7 billion order intake, book-to-bill ratio 1.33, adjusted EBITDA margins expanded by 140 basis points, each operating segment improved year-over-year. - Achieved 99% ROV uptime for second consecutive year and seventh time in past 10 years. - Won highest ever initial contract award in Oceaneering's history through ADTech. - Integrated GDi into IMDS segment. - Repurchased approximately 1.8 million shares for $40 million. - Cash balance increased to $689 million at year-end. - Total recordable incident rate of 0.22 in 2025, a record low. - 2026 market outlook: ADTech to be primary growth driver based on backlog and increased defense/govt spending. Energy-focused businesses: 2026 results to reflect global oil market oversupplied early, tightening later. Offshore activity levels relatively flat in first half, increased in second half and 2027. FIDs and subsea tree awards indicators for offshore activity.

SSR: Fourth quarter operating income was $67.8 million, 7% higher on relatively flat revenue. EBITDA margin improved to 38% from 36%. Average ROV revenue per day utilized increased from $10,481 in 2024 to $11,210 in 2025, with a fourth quarter exit rate of $11,550. ROV fleet utilization was 62%. Full-year 2025 revenue was $569 million and operating income was $72 million, the highest since 2020. Manufactured Products: Fourth quarter revenue was $132 million, down 7% year-over-year. Operating income was $20.4 million and operating income margin was 15% increased. Full-year 2025 revenue was $569 million and operating income was $72 million, highest since 2020. Year-end 2025 backlog was $511 million, down 15% from 2024. OPG: Fourth quarter revenue was $131 million, down 29% year-over-year. Operating income decreased to $15 million and operating income margin declined to 11%. IMDS: Fourth quarter revenue declined due to lower activity levels in Europe and West Africa. Operating income declined by $2 million. ADTech: Fourth quarter 2025 operating income increased 43% and operating income margin improved to 11% on a 29% increase in revenue. Had 2 fourth quarter awards on unexercised options in 2025, establishing strong multiyear backlog for revenue growth.

• Projected consolidated revenue in 2026 to grow in low to mid-single-digit percentage range. ADTech revenue to improve significantly. SSR and IMDS revenue improvement to offset anticipated declines in OPG and Manufactured Products. - Anticipated EBITDA in 2026 to be $390 million to $440 million, with year-over-year improvements in all segments except OPG. EBITDA margins: Manufactured Products and IMDS to improve, SSR and ADTech to be stable, OPG to decrease. - Anticipated positive free cash flow of $100 million to $120 million. - Organic capital expenditures in 2026 to total between $105 million and $115 million, 40% allocated to growth and 60% to maintenance. - Forecasted interest expense net of interest income in 2026 to be in range of $21 million to $26 million. - Cash tax payments in 2026 expected to be in range of $95 million to $105 million.

Q: Could you talk about the typical lead time and process of government services type of projects from the time that they're awarded to whenever they would show up for you typically?

A: It varies quite a bit. Some things with existing products ramp up quickly. Some new things start with engineering studies, prototyping, etc. It's a mix of both.

Q: Could you talk about the future of IMDS and then also your digital software offerings and how you could potentially expand them sort of outside what you're doing within energy?

A: Laser scanning technology can be used in offshore platform and subsea infrastructure inspection, improving detection precision and creating demand for ROVs and vessels.

Q: Has any of the recent rig side deals changed your thoughts moving forward on M&A? Or should we expect Oceaneering just to sort of operate how they've been over the last couple of years and sort of sticking to your knitting and with the focus on free cash flow generation and returning it to shareholders with your capital allocation?

A: GDi acquisition was a good technology bolt-on. Strong balance sheet and cash flow give flexibility for potential M&A when right opportunities arise.

Q: Congrats on a great print. So curious if you're seeing any traction on the autonomous forklift side after kind of like the big delivery, I think you had kind of exiting last year.

A: There's a lot of interest. It's in get to know you activities. Adoption depends on whether brownfield applications are ready with people and location. Interest is high, but need to see how fast adoptions pick up.