Picture supply: The Motley Idiot.
Oceaneering Worldwide (OII -8.39%)
Q1 2022 Earnings Name
Apr 28, 2022, 11:00 a.m. ET
Contents:
- Ready Remarks
- Questions and Solutions
- Name Members
Ready Remarks:
Operator
My title is Buena, and I will be your convention operator. I want to welcome everybody to Oceaneering Worldwide Included 2022 first quarter earnings convention name. [Operator instructions] With that, I’ll now flip the decision over to Mark Peterson, Oceaneering’s vice chairman of company growth and investor relations. Go forward, sir.
Mark Peterson — Vice President of Company Growth and Investor Relations
Thanks, Buena. Good morning, everybody, and welcome to Oceaneering’s first quarter 2022 outcomes convention name. At this time’s name is being webcast and a replay shall be accessible on Oceaneering’s web site. Becoming a member of us on the decision in the present day are Rod Larson, president and chief government officer, who shall be offering our ready feedback; and Alan Curtis, senior vice chairman and chief monetary officer.
Earlier than we start, I might identical to to remind contributors that statements we make in the course of the course of this name relating to our future monetary efficiency, enterprise technique, plans for future operations and trade situations are forward-looking statements made pursuant to the secure harbor provisions of the Non-public Securities Litigation Reform Act of 1995. Our feedback in the present day are additionally non-GAAP — additionally embrace non-GAAP monetary measures. Extra particulars and reconciliations to probably the most instantly comparable GAAP monetary measures will be present in our first quarter press launch. We welcome your questions after the ready statements.
I’ll now flip the decision over to Rod.
Rod Larson — President and Chief Govt Officer
Good morning, and thanks for becoming a member of the decision in the present day. Our first quarter working outcomes replicate our continued expectation and important preparation for growing exercise all through the rest of 2022. Because of this, our first quarter 2022 monetary outcomes have been impacted by elevated prices. The macro drivers supporting this anticipated enhance in exercise stay in place and proceed to be supportive of a strong ramp up in exercise and pricing enhancements starting within the second quarter and persevering with by the rest of the yr.
This outlook, coupled with elevated vessel capability secured for the rest of the yr, offers us confidence to keep up our unique EBITDA steering of $225 million to $275 million for the total yr of 2022. At this time, I am going to focus my feedback on our efficiency for the primary quarter of 2022, our consolidated and enterprise section outlook for the second quarter and full yr of 2022, our stability sheet and liquidity scenario and the optimistic macro knowledge factors driving our markets. Now, for our outcomes. For the primary quarter, we reported a internet lack of $19.2 million or $0.19 per share on income of $446 million.
These outcomes included the impression of $0.4 million of pre-tax changes related to overseas trade features and $13.1 million of discrete tax changes, primarily because of modifications in valuation allowances. Adjusted internet loss was $6.4 million or $0.06 per share. Our consolidated first quarter 2022 unfolded largely as anticipated as we skilled increased prices in hiring and coaching of personnel and mobilization of kit in preparation for a major exercise enhance anticipated for the rest of 2022. These prices largely impacted our vitality segments.
Nonetheless, every of our working segments generated optimistic working earnings and optimistic EBITDA within the quarter. Our offshore initiatives group section skilled price overruns on a venture and schedule modifications that affected the timing of venture work. Nonetheless, these impacts have been largely offset by decrease unallocated bills and barely improved outcomes from our Aerospace and Protection section. Per our steering, these components resulted in consolidated adjusted EBITDA of $31.5 million for the primary quarter of 2022, a major lower from the prior quarter.
Now, let us take a look at our enterprise operations by section for the primary quarter of 2022. Subsea Robotics or SSR working earnings was considerably decrease on a modest lower in income as in comparison with the fourth quarter 2021. Operations have been impacted by seasonal components, leading to lowered ROV exercise and elevated prices related to hiring and coaching and asset preparedness for anticipated 2022 work. These components resulted in a lowered EBITDA margin of 24% for the primary quarter.
We anticipate the work related to these prices to materialize over the rest of 2022 with EBITDA margins recovering as effectively. The income break up between our remotely operated car, or ROV, enterprise and our mixed tooling and survey companies as a share of our complete SSR income, was 76% and 24%, respectively, in comparison with the 77%, 23% break up within the speedy prior quarter. First quarter 2022 ROV days on rent have been sequentially decrease because of usually decrease seasonal exercise. Days on rent have been 11,842 as in comparison with 12,747 in the course of the fourth quarter of 2021, with decreases in each drill help and vessel-based days on rent.
Our fleet use was 63% in drill help and 37% in vessel-based providers versus fourth quarter 2021 fleet use of 62% and 38%, respectively. For the primary quarter, we maintained our fleet depend at 250 ROV programs, and our fleet utilization was 53%, down barely from 55% within the fourth quarter 2021. Common ROV income per day on rent was $8,196. It was basically flat with that achieved in the course of the fourth quarter of 2021.
On the finish of March, we had ROV contracts on 72 of the 131 floating rigs beneath contract or 55%. This was flat with the prior quarter after we had ROV contracts on 75 of the 137 floating rigs beneath contract. Topic to quarterly variances, we proceed to count on our drill help market share to typically stay within the vary of 55% to 60%. Turning to manufactured merchandise.
Our first quarter 2022 working earnings declined as in comparison with the fourth quarter of 2021 adjusted outcomes on a 20% lower in section income. Working earnings margin decreased to three% within the first quarter of 2022 from an adjusted 9% margin within the fourth quarter of 2021, primarily because of the lack of ability to completely take up mounted prices of the section over a lowered income base. Our vitality merchandise companies skilled good order consumption within the first quarter, whereas bookings in our mobility options companies continued to lag. Our manufactured merchandise backlog on March 31, 2022, was $334 million in comparison with our December 31, 2021, backlog of $318 million.
Our book-to-bill ratio was 1.2 for the trailing 12 months as in contrast with a book-to-bill ratio of 1.1 for the yr ended December 31, 2021. The offshore initiatives group, or OPG, first quarter 2022, working earnings declined sequentially regardless of increased income. Working earnings margin declined to 1% within the first quarter from 8% within the fourth quarter 2021 because of price overruns skilled on a venture and lower-than-expected vessel utilization ensuing from scheduled modifications that affected the timing of venture work. As with our different offshore companies, we skilled increased prices within the first quarter of 2022 in reference to hiring and tools readiness to organize for anticipated increased exercise in the course of the the rest of 2022.
For Integrity Administration and Digital Options, or IMDS, first quarter 2022 working earnings was decrease than the fourth quarter of 2021 on a 6% seasonal lower in income. Working earnings margin declined to six% within the first quarter of 2022 from 10% within the fourth quarter of 2021, primarily because of much less environment friendly absorption of mounted prices. Our aerospace and protection applied sciences, or AdTech, first quarter 2022 working earnings improved sequentially on barely decrease income. Working earnings margin of 15% improved over the 13% achieved for the fourth quarter of 2021 because of favorable venture combine.
Unallocated bills of $31.3 million have been decrease than anticipated as we lowered spending to higher align with our income streams. In the course of the first quarter, we reported a money discount of $100 million. We utilized $80.5 million of money in working actions, primarily because of a rise in working capital related to accounts receivable and the fee of accrued worker incentive compensation. As well as, $19.3 million of money was used for upkeep and development capital expenditures.
On the finish of the quarter, we had $438 million of money and money equivalents, no borrowings beneath our revolving credit score facility and the mortgage maturities till November of 2024. Now, I am going to handle our outlook for the second quarter of 2022. On a consolidated foundation, we count on our second quarter 2022 outcomes to enhance considerably with adjusted EBITDA within the vary of $50 million to $70 million on sequentially increased income. This wider-than-usual vary of quarterly adjusted EBITDA steering displays uncertainty within the timing of sure anticipated product gross sales and venture work in addition to attained ranges of offshore utilization and pricing.
For our second quarter 2022 operations by section as in comparison with the primary quarter of 2022, for SSR, we’re projecting considerably increased seasonal exercise and working profitability in our ROV survey and tooling companies. ROV days on rent are anticipated to extend in each drill help and vessel-based actions, attaining utilization within the mid-60% vary. SSR adjusted EBITDA margin is forecast to rebound to the excessive 20% to low 30% vary reflecting a extra regular run charge and decrease preparatory prices. For manufactured merchandise, we anticipate increased income.
Working profitability within the second quarter of 2022 shall be extremely influenced by the timing of anticipated product gross sales, which might result in both increased or decrease working earnings within the second quarter of 2022 as in comparison with the primary quarter of 2022. We proceed to see energetic bidding in our vitality merchandise companies and have gotten extra optimistic for elevated bidding exercise in our mobility options companies. For OPG, we anticipate considerably increased income and working outcomes. We count on a strong seasonal pickup in intervention, upkeep and restore or IMR exercise, primarily within the Gulf of Mexico.
Working earnings margins are anticipated to extend to the low double-digit vary within the second quarter of 2022. As talked about in my opening feedback, we’ve got secured elevated vessel capability, which is predicted to learn outcomes by the rest of 2022. For IMBS, we count on increased income and working outcomes with working margins bettering modestly over the primary quarter of 2022. For ADTech, we count on increased income and working outcomes.
We count on a slight income combine shift to lead to slight sequential decline within the working earnings margins. Unallocated bills are anticipated to be within the mid-$30 million vary within the second quarter of 2022. Directionally, for our full yr 2022 operations by section as in comparison with 2021, we count on, for SSR, we forecast improved working outcomes and better income, ROV days on rent are projected to extend yr over yr by a double-digit share with tooling-based providers outcomes typically following ROV days on rent, survey outcomes are anticipated to enhance on increased ranges of exercise as effectively, SSR forecasted adjusted EBITDA margins are anticipated to common within the low 30% vary for the total yr. For ROVs, we count on our 2021 service mixture of 60% drill help and 40% vessel-based providers to typically stay the identical for 2022 with increased vessel-based percentages in the course of the seasonally increased second and third quarters.
We estimate general ROV fleet utilization to be within the mid-60% vary, once more, with increased seasonal exercise in the course of the second and third quarters. Pricing for our ROV providers continues to extend, permitting us to offset growing prices for belongings and labor. We proceed to forecast that our market share for the drill help market will stay within the 55% to 60% vary for the close to time period. As of March 31, 2022, they have been roughly 5 Oceaneering ROVs, onboard eight floating drilling rigs, with contract phrases expiring earlier than third quarter.
Throughout the identical interval, we count on 30 of our ROVs on 26 floating rigs to start new contracts. For manufactured merchandise, we count on section income to be up considerably and working efficiency to enhance yr over yr, primarily because of elevated order consumption in our vitality companies throughout 2021. This order consumption is predicted to drive elevated exercise within the second half of 2022. We forecast that our working earnings margins shall be within the low to mid-single-digit vary for the yr.
Moreover, we proceed to see good bid exercise in our vitality merchandise companies and are starting to see some optimistic market indicators in our mobility options companies pointing to a rise in bidding exercise. This helps our expectation that section book-to-bill ratio shall be within the vary of 1.0 to 1.2 for the total yr. For OPG, we count on a rise in income and working outcomes. OPG’s enterprise is primarily tied to brief cycle fundamentals and the present supportive commodity worth setting is driving a noticeable enhance in demand for our providers, significantly within the Gulf of Mexico.
Based mostly on this demand sign, we not too long ago added vessel capability to satisfy the forecasted enhance in IMR exercise all through the rest of 2022. We count on elevated vessel utilization and pricing to enhance OPG’s working margins into the low to mid-teens vary for the rest of 2022. For IMDS, we venture a rise in income and working earnings. As famous in our first quarter 2022 press launch, IMBS continues to achieve success in increasing into new geographies and including new clients.
This success is predicted to lead to increased income over the three remaining quarters of 2022. We forecast year-over-year working earnings margin to be basically flat. For ADTech, we venture increased income and decrease working outcomes than achieved in 2021. Working earnings margin is projected to say no as in comparison with 2021 because of shift in income combine, however is predicted to stay within the mid-teens vary for 2022.
We proceed to see good development alternatives throughout all our companies in ADTech. Our estimated natural capital expenditure complete for 2022 stays between $70 million and $90 million. This consists of roughly $40 million to $45 million of upkeep capital expenditures and $30 million to $45 million of development capital expenditures. We forecast our 2022 money earnings tax funds to be within the vary of $40 million to $45 million.
Unallocated bills are anticipated to common within the mid-$30 million vary per quarter for the rest of 2022. Now, turning to our stability sheet and liquidity. With $438 million of money on the finish of March and the expectation of producing 2022 free money move within the vary of $75 million to $125 million, we proceed to be effectively positioned to handle our 2024 debt maturity. After repurchasing $100 million of our 2024 debt in 2021, we’re further choices that may enable us to additional mitigate the 2024 debt stability.
Subsequent to quarter finish, we changed our credit score facility with a brand new $215 million senior secured revolving credit score facility that provides us monetary flexibility over the following 4 years. On a macro foundation, we proceed to see optimistic indicators in our offshore vitality markets and really feel that commodity costs will stay supportive of upper exercise ranges over the following a number of years, as evidenced by the present projection by the Power Info Administration for Brent crude oil worth to common $103 per barrel in 2022 and greater than $92 per barrel in 2023. Our inside estimates of continued gradual development in ROV exercise, Rystad Power’s expectation for elevated offshore FIDs in each 2022 and 2023 as in comparison with 2021. Rystad Power can be projecting tree installations to be up by roughly 9% in 2022 and new tree orders to be up over 90% as in comparison with 2021 and the growing significance of vitality safety on the geopolitical entrance.
In abstract, our first quarter efficiency and refreshed outlook for the yr give us confidence to keep up our 2022 adjusted EBITDA steering vary of $225 million to $275 million. We consider that supportive vitality markets will drive wholesome ranges of free money move and funding alternatives in our conventional companies over the following a number of years. On the identical time, we proceed to pursue alternatives within the vitality transition and nonenergy markets as we concentrate on rising our companies in these areas to underpin a extra sustainable future for the corporate. Whereas we proceed to face the problems of inflation, hiring and retaining personnel, provide chain obstacles and shifting COVID tips, our administration and workers have been successfully managing these challenges.
We proceed to strengthen our service and product choices and our stability sheet to be able to finest place the corporate for achievement in these evolving market environments. We stay targeted on producing substantial optimistic free money move in 2022, operational excellence, high quality and security and enhancing buyer engagement, permitting us to win extra of probably the most fascinating alternatives, all of which lead to bettering our returns. We recognize everybody’s continued curiosity in Oceaneering, and we’ll now be glad to take any questions you might need.
Questions & Solutions:
Operator
[Operator instructions]
Rod Larson — President and Chief Govt Officer
Thanks, Buena. If there aren’t any questions at the moment, I might identical to to thank everyone for becoming a member of the decision in the present day, and this concludes our first quarter 2022 convention name. Thanks, everybody.
Operator
[Operator signoff]
Period: 19 minutes
Name contributors:
Mark Peterson — Vice President of Company Growth and Investor Relations
Rod Larson — President and Chief Govt Officer
