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OI

OCEANEERING INTERNATIONAL INC (OII)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat versus Street: revenue $698.2M and diluted EPS $0.54, both above S&P Global consensus; adjusted EBITDA rose 20% YoY to $103.3M and EBITDA margin improved to 15% .
  • All segments improved YoY; ADTech ramped on recent awards, OPG executed higher‑margin well intervention work internationally, SSR day rates moved up to $11,265 per ROV day, and MP converted higher‑margin backlog .
  • Guidance tightened higher quality: FY25 adjusted EBITDA narrowed to $390–$420M (from $380–$430M prior), Q3 EBITDA guided to $100–$110M; FY25 revenue growth guided mid‑single digits; ROV utilization mid‑ to high‑60% .
  • Near‑term stock catalysts: visible beat vs estimates, multi‑year OPG vessel/IMR awards (bp Mauritania, Gulf of Mexico), defense/space funding tailwinds, and CFO’s line‑of‑sight to H2 free cash flow ramp, partially offset by softer Survey activity and higher unallocated expenses vs plan .

What Went Well and What Went Wrong

What Went Well

  • Broad‑based strength: “all operating segments produced quarterly year‑over‑year improvements in revenue, operating income, and operating income margin” .
  • Pricing/mix: SSR ROV revenue per day increased to $11,265 and OPG executed higher‑margin well intervention/stimulation projects internationally, expanding margins to 15% .
  • Defense ramp: ADTech operating income +125% YoY with margin at 15% as large programs commenced; management highlighted UUVs, submarine maintenance, and space program funding momentum (“Big Beautiful Bill”) .

What Went Wrong

  • Survey softness: SSR revenue growth trimmed to mid‑single digits for FY25 due to lower than expected Survey contributions; potential cold‑stacking of a survey vessel if opportunities fail to materialize .
  • Mix shift risk: OPG expects H2 results to be impacted by geographic/service mix, shifting from higher‑margin intervention toward lower‑margin IMR in the U.S. Gulf; Q3 OPG profitability guided down on flat revenue .
  • Corporate cost pressure: Unallocated expenses were $46.7M in Q2 (slightly above guidance); MP book‑to‑bill 0.65 for the 12‑month period ending June 30, 2025, though management expects back‑half orders .

Financial Results

Consolidated Performance (GAAP and Non‑GAAP)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$713.5 $674.5 $698.2
Diluted EPS ($USD)$0.55 $0.49 $0.54
Operating Income ($USD Millions)$77.9 $73.5 $79.2
Gross Margin ($USD Millions)$141.9 $135.0 $148.4
Adjusted EBITDA ($USD Millions)$101.5 $96.7 $103.3
EBITDA Margin (%)14% 14% 15%

Versus Prior Year (YoY) – Q2 2025 vs Q2 2024

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$668.8 $698.2
Diluted EPS ($USD)$0.34 $0.54
Operating Income ($USD Millions)$60.4 $79.2
Adjusted EBITDA ($USD Millions)$85.9 $103.3

Segment Breakdown

SegmentQ1 2025 Revenue ($M)Q1 2025 OI ($M)Q2 2025 Revenue ($M)Q2 2025 OI ($M)
Subsea Robotics (SSR)$206.0 $59.6 $218.8 $64.5
Manufactured Products (MP)$135.0 $8.7 $145.1 $18.8
Offshore Projects Group (OPG)$164.9 $35.7 $149.3 $21.7
Integrity Mgmt & Digital Solutions (IMDS)$71.4 $3.5 $75.4 $4.6
Aerospace & Defense Technologies (ADTech)$97.2 $10.7 $109.6 $16.3
Unallocated Expenses—$(44.6) —$(46.7)

KPIs and Cash Flow

KPIQ1 2025Q2 2025
ROV Days Available22,500 22,750
ROV Days Utilized15,093 15,289
ROV Utilization (%)67% 67%
ROV Revenue per Day ($USD)$10,788 $11,265
MP Backlog ($USD Millions)$543 $516
Cash Flow from Operations ($USD Millions)$(80.7) $77.2
Free Cash Flow ($USD Millions)$(106.8) $46.9
Shares Repurchased479,154 ($10.0M) 471,759 ($10.0M)
Cash & Equivalents ($USD Millions)$382 $434

Performance vs S&P Global Consensus (Q2 2025)

MetricConsensusActualResult
Revenue ($USD Millions)$680.9*$698.2 Beat
Diluted EPS ($USD)$0.396*$0.54 Beat
# EPS Estimates4*——
# Revenue Estimates2*——

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD Millions)FY 2025$380–$430 $390–$420 Narrowed; raised low end / lowered high end
Consolidated Revenue GrowthFY 2025N/AMid‑single digits New/affirmed direction
EBITDA ($USD Millions)Q3 2025N/A$100–$110 New
SSR Revenue GrowthFY 2025N/AMid‑single digits (lower Survey contribution) New detail
ROV Fleet UtilizationFY 2025N/AMid‑ to high‑60% New
IMDS Operating MarginFY 2025N/AMid‑single digit % New
Unallocated Expenses ($USD Millions)Q3 2025N/A$45–$50 New
MP Book‑to‑Bill (ratio)FY 20250.9–1.0 0.9–1.0 (unchanged) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Offshore rig “white space”Day rates up; utilization ~66–68%; supportive macro Some impact expected; SSR pricing uplift offsets; watch Survey utilization Neutral to slightly cautious
ROV pricing and utilizationQ1 ROV rev/day $10,788; utilization 67% ROV rev/day $11,265; utilization 67%; pricing rollover main driver Improving pricing; stable utilization
OPG visibility and mixStrong GOM/West Africa activity; margins 21% in Q4; 22% in Q1 Longer‑term IMR/vessel contracts (GOM, bp Mauritania); H2 mix shift to lower‑margin IMR Visibility up; margin mix headwind
Defense/space fundingADTech steady in Q4; large award in Q1 “Big Beautiful Bill” boosts UUVs, submarine maintenance, and space (Artemis, thermal protection) Accelerating tailwinds
Free cash flow cadenceQ4 FY24 FCF strong; Q1 FY25 FCF negative on working capital CFO sees H2 ramp; receivables collection drives Q3/Q4 FCF Seasonal H2 recovery
Survey businessNot highlighted in Q4/Q1May cold‑stack a vessel if opportunities don’t materialize Softer near‑term outlook

Management Commentary

  • “We delivered a 20% increase in consolidated adjusted EBITDA. This marks eight straight quarters of meeting or exceeding our adjusted EBITDA guidance range…” .
  • “Average ROV revenue per day inflected earlier than expected to $11,265” .
  • “ADTech improved as work commenced on several recent contract awards… MSD had high activity levels in submarine repairs and dry deck shelter overhauls” .
  • “We anticipate… the recently passed reconciliation bill… will positively impact all three of our AdTech business lines over the next five years” .
  • “Unallocated expenses of $46.7M were slightly higher than our guidance for the quarter” .

Q&A Highlights

  • Rig “white space”: SSR seeing some impact but pricing uplift offsetting; key watch is Survey; may cold‑stack a vessel if demand doesn’t materialize .
  • ROV pricing mechanics: uplift mostly contract rollover, limited FX/performance‑based contributions near term .
  • MP orders: management expects flattish 2024–2025 orders; back‑half loaded with ~$100M commitments already in early Q3; Greylock/Rotator lines strengthening .
  • Free cash flow ramp: seasonal pattern with H2 inflow; receivables underpin visibility to FCF delivery in Q3/Q4 .
  • OPG visibility: multi‑year IMR and vessel agreements improve backlog stability despite market volatility .

Estimates Context

  • Q2 2025 results beat consensus on both revenue and EPS; management narrowed FY25 adjusted EBITDA range to $390–$420M following strong first‑half execution .
  • Street estimates likely need upward revision for SSR pricing durability and ADTech ramp, while embedding OPG margin moderation in H2 due to IMR mix and slightly higher corporate expenses .

S&P Global consensus values used above.*

Key Takeaways for Investors

  • Broad‑based beat with margin expansion and stronger pricing supports near‑term estimate revisions and positive sentiment; SSR day‑rate progression and ADTech ramp are the key earnings drivers .
  • Expect H2 free cash flow inflection as receivables convert, enabling continued buybacks (Q2 repurchases ~$10M) and balance‑sheet flexibility; ending cash $434M, no revolver borrowings .
  • Monitor Survey softness and OPG mix shift to IMR in the U.S. Gulf, which can temper margin trajectory despite backlog visibility (bp Mauritania IMR, GOM vessel services) .
  • Defense/space tailwinds appear durable across UUVs, submarine maintenance, and human spaceflight/thermal protection systems, supporting ADTech growth and margin stability into 2026–2027 .
  • MP conversion of higher‑margin backlog is delivering, with back‑half orders expected; near‑term book‑to‑bill remains below 1.0 but guidance is intact (0.9–1.0) .
  • Corporate costs ran a touch high in Q2; Q3 unallocated expense guided $45–$50M—watch execution against cost envelope .
  • Net‑net: visibility is improving and the narrative is favorable; traders should anchor on continued delivery vs guidance, near‑term FCF realization, and pricing momentum in SSR, while hedging for Survey/OPG mix risks .