Welcome to Oceaneering's second quarter 2025 earnings conference call. My name is Rob and I will be your conference operator. All lines have been placed on mute to prevent any background noise. There will be a question and answer period after the speaker's remarks. With that, I will now turn the call over to Hilary Frisby, Oceaneering's Senior Director of Investor Relations.

Thanks, Rob. Good morning and welcome to Oceaneering's second quarter 2025 earnings conference call. Today's call is being webcast and a replay will be available on Oceaneering's website. Joining us on the call are Rod Larson, President and Chief Executive Officer, who will be providing our prepared comments, and Alan Curtis, Senior Vice President and Chief Financial Officer. After Rod's remarks, we'll open up the call for questions. Before we begin, I'd like to remind participants that statements we make during this call regarding our future financial performance, business strategy, plans for future operations and industry conditions, our forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our second quarter press release, which is posted on our website. I'll now turn the call over to Rod.

Hey, good morning, everybody, and thanks for joining the call today. I continue to be incredibly proud of our team's consistent delivery against our guidance. When we provided our adjusted EBITDA guidance during the month, this marks eight straight quarters of meeting or exceeding our adjusted EBITDA guidance range, and 12 quarters. This kind of consists in the second quarter of 2025 to beating the midpoint during quarterly year-over-year improvements in revenue, operating income, and operating income margin. In particular, and well-stimulation, a significant increase in manufactured products results improved as we progressed higher margin backlog through our manufacturing plants and, not to be missed, inflected earlier than expected. Today, I'll focus my comments on our second quarter results through the third quarter. I'll start with our consolidated results. As we reported yesterday, we generated net income of $54.4 million, $198 million, a 4% increase. We also achieved notable growth in the second quarter of 2025. Consolidated operating income rose by 31% to 79.2%. Consolidated adjusted EBITDA grew 20% to $103 million. We generated $77.2 million of cash in operating activities and utilized 30% free cash flow. For the fourth consecutive quarter, we repurchased approximately $10 million worth. Our ending cash position was $434 million, with no borrowings under our secured revolving credit bill. Now let's look at our results by business segment for the second quarter of 2025, as compared to the second quarter. Once your robotics or SSR earnings improved activity levels in white space, on an increase in average ROV revenue per day utilized, demonstrating our ability to realize pricing improvements in new contracts. We anticipate these higher rates will carry through the second half of 2025, despite a portion of our use. Due to the increased revenue per day utilized, SSR produced operating income of $64.5 million, an improvement of 4%. Revenue increased approximately 2% and EBITDA margin expanded. ROV fleet utilization for the quarter was solid at 63% in drill support and 37%. Revenue split between our ROV business and our combined tooling and survey businesses as a percentage of our total SSR revenue was 79% and 21% respectively. of June 30th, 2025. We had with ROV contracts on 81 of the 130. We look forward to this more decommissioning opportunities in Europe, which will help the strong first half performance of our ROV tooling business. Pursuing new opportunities in our survey geoscience business, we may cold stack. Manufactured products generated operating income of $18.8 million, marking a 31%. Our confidence in our second half forecast is underpinned by the continued manufacturing our full year 2025 book to build guidance of 0.9 we've consistently anticipated that our order intake will be concentrated in the second half of the year and we've already secured order commitments totaling approximately 100 million dollars in the first week to finalize those operating income of 21.7 million dollars revenue increased by four percent these contracts provide us with visibility into opgs vessel utilization and activity levels for the remainder of 2025 we project vessel utilization and activity levels will be solid in the third quarter of 2025 based on current backlog and quotation activity given current Brent we do not expect for integrity management and digital solutions or imds operating income and operating income margin improved on relatively flat revenue we continue to integrate global design innovation or gdi into our integrity management business with operating income our oceanering technologies or o-tech business line benefited from the with high looking into the second half of the year we anticipate further revenue increases in o-tech from recently announced defense contract and from c defense contract is projected to steadily ramp up it increases funding for turning our outlook to the third quarter of 2024 we forecast increases in consolidated revenue and and finally we project final we've narrowed our guidance range by tightening both the lower and the higher ends for our full-year 2025 operations by segment. For SSR, we forecast improved operating results on a mid-single-digit percentage increase in revenue. Our revised guidance on revenue growth is based on our projection for lower-than-expected contributions from our survey business. SSR EBITDA margin is projected to average in the mid-30% range for the full year. We estimate that our overall ROV fleet utilization will be in the mid-to-high 60% range for the full year. We are confident that we will sustain our ROV market share for drill support services in the 55 to 60 percent. For manufactured products, we project significantly improved operating income on better operating margins and increased range of 0.9. For OPG, we expect year-over-year operating results to improve on flat to slightly increased revenue. Overall, for 2025, OPG operating income margin is expected to be in the mid-teens percentage. For MDS, we forecast a significant increase in operating results on increased revenue with operating income margin expected to be in the mid-single-digit percent. Operating results are forecasted to stay utilized. Appreciate everyone's continued interest in Oceaneering.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 in your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Your first question comes from a line of Eddie Kim from Barclays. Your line is open.

Hi, good morning. So we've heard about offshore rig white space from the offshore drillers for several quarters now. More recently, some of the larger diversified service companies have started to mention this as well, but this doesn't seem readily apparent in any part of your business at this point. The place that would show up is, of course, your ROVs business, but pricing there continues to increase almost quarter after quarter. So all that to say, are you seeing any kind of impact to your business due to offshore rig white space? If you haven't, do you expect to see it maybe later this year, or do you think your business will emerge relatively unscathed from this?

Great question, Eddie. And I think your question and questions we get all the time is like people are looking for that other shoe to fall right when when's it going to happen i would say you know we do we do see some of that we we were we were expecting to get closer to the that you know exit in the year with a 70 at least so we've seen some of it um as we talked about you know the getting to our pricing point sooner than we expected is offset some of that um so you know we see some of that um maybe some of the offset is is the increase in some of the abandonment activity, particularly in Europe. So there's some puts and takes in there that have leveled us off. But really, I mean, the thing to watch in the SSR business is going to be survey. We set up to run two vessels. We've been running one. We were hoping to get to two, but we might not get to two in the geoscience part of survey. But other than that, I mean, RVs, we've trimmed the sails a little bit, but it's kind of been within the range of expectations.

Got it. Got it. Thank you. My follow-up is just on orders in your manufactured product segment, which is mostly comprised of subsea umbilicals. Orders have been trending below one-time's book-to-bill now for several quarters. And it looks like full-year orders this year will likely be down versus last year. Could you just give us your latest thoughts on the umbilicals business and how you see that trending maybe this year and into next year? or should we expect kind of a flattish trajectory as we move to next year? Or do you expect a rebound? Just any thoughts on the umbilicals business?

Well, yeah, let me start with, you know, orders year over year, we think are more 24 to 25 or more flattish. We don't really expect them to be down. And it is, we knew early in the year that we were going to be back half loaded on orders. And it's so far, I mean, it's pretty early in the back half, but the first few weeks have been really good. I mentioned earlier $100 million already in the first few weeks, and we have the rest of the things we expect to come in are still out there in the pipeline, so that part's good. 25 to 26, I would just say that you're hearing a lot of good things from FIDs, about subsea tree orders, so we see good things happen in umbilicals. We think that there's going to be a pretty good book, so a little bit TBD, a little early to call a year over year, but but i do think that there's good signals for 26. the other thing i'd call out and we don't we don't talk about it a lot because in total total revenue dollars it's a great business and that graylock business which continues to grow there's good things going on got it great thanks for that caller i'll turn it back your next question comes from a line of david smith from pickering energy

partners your line is open hey good morning uh congratulations on the solid q2 results Thanks David. Just following up on Eddie's question, wanted to ask if that slightly lower full-year RV utilization outlook relates more to vessel support or rig support, and if you characterize that as a change in visibility for underlying activity or something else.

It's both. I mean we see it on both sides, so it's not just one or the other, so it's a little bit of both. And I would just say it is increased clarity and, you know, seeing what everybody's plans are going to be, especially in the fourth. We're just being perfect.

And related around the RV pricing uplift, is this mostly a function of contract rollover, maybe a little bit of FX? Or are we seeing, is it too early to ask if we're seeing any benefits show up from maybe, you know, some performance-based deals?

I would say it's mostly the contracts. um we don't see it's not big there's not a big fx effect and there's not a big um a big effect of the i mean those are things that are are trued up later so i would just say those are those are but it's mostly just just that that continued rollover perfect appreciate it if i could sneak one more in um free cash flow was kind of modest in the first half so there's obviously a large ramp implied for for the second half to meet the full year guide can you walk us through your visibility on that step up kind of what are the biggest contributors you know how much of that

improvement is already in motion or or still dependent on execution yeah i'll take this one uh david you know a lot of it is is kind of how we've seen the last four or five years play out where you know q1 is a pretty big cash draw for us we rebound generate positive cash in q2 but Really, it's been more of a Q3, Q4 story for us the last, I'll say, four to five years, and we're seeing that again this year. We do have line of sight to a good amount of it because it's sitting in receivables. So I think it's going and getting paid for the work we've performed and bringing that cash in in Q3, Q4 timeframe.

Very much appreciate it. I'll turn it back over.

Your next question comes from a line of Josh Jane from Daniel Energy Partners. Your line is open.

First one I had was on the OPG business. To me, it sounds like there's more visibility today and work is getting booked more out into the future than there has been previously. And so, first of all, is that accurate?

And if so, maybe you could just discuss that dynamic today, even in what's been a pretty volatile market. i think i think josh you're right and it's it's a little bit of function of when i've always talked about these these bigger chunks of business um when we start to book like like the bp mauritania those big international contracts really call out the gulf of mexico you know for the most part there's still call-out work but we're able to secure more given days okay and then second Second question, I just wanted to go back to comments you made surrounding the potential impact from the big, beautiful bill.

You already had some pretty strong momentum around the business lines that could benefit from this. Maybe you could just dive in a little bit more to how you're thinking about that and positioning the company for what sounds like could be even more sizable growth over the next couple of years. Just some details around that would be helpful. Thanks.

I think, you know, the O-Tech side with the vehicle businesses is a big thing because that's always been – it had bilateral support. You know, a lot of things – the U.S. has great supremacy, and they're very, very keen to maintain that. And we provide, obviously, a lot of – I think that's a big part of it. But probably even more exciting is the way it affects the other – they were really worried for a while, especially when doji was in appear to be going the other way but now we see things like artemans refunded um just the phone started ringing immediately with we think space definitely we talked about thermal protection systems which is good because that that covers the full gamut anything with a booster underneath it but but human space flight and then i'd also go being

able to keep thanks alternative and that concludes our question and answer period i will now turn the call back over to Rod Larson for some final closing remarks.

Well since there are no more questions I'll just wrap up by thanking everybody for joining. This concludes our second quarter 2025 conference call. Have a great day.

Thank you for joining you may now disconnect.