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    OII
    Earnings call· Mar 2026(Q1 FY26)

    OCEANEERING INTERNATIONAL Q1 FY26 earnings call OII

    Apr 23, 2026 Source

    Executive summary

    Oceaneering Q1 FY26 — Strong Order Intake and Ad Tech Growth Offset Energy Softness

    Oceaneering delivered Q1 FY26 results in line with guidance, driven by robust order intake and strong performance in Aerospace and Defense Technologies. While energy-related segments experienced some softness and geopolitical events impacted certain operations, the company reaffirmed its full-year outlook, anticipating an acceleration in energy market activity in the second half of the year.

    Highlights

    5

    • Consolidated revenue and adjusted EBITDA were consistent with guidance.

    • Strong Q1 order intake of approximately $1 billion, one of the healthiest since 2020, resulting in a constructive book-to-bill ratio.

    • Subsea Robotics (SSR) secured awards totaling approximately $300 million, including projects extending to 2031, improving utilization visibility.

    • Aerospace and Defense Technologies (Ad Tech) posted significant year-over-year revenue growth and added approximately $175 million in new contract awards.

    • Multiple survey contracts for the Ocean Intervention 2 were secured, ensuring high utilization for the next three quarters.

    Concerns

    5

    • Operating income was down 21% and Net income was down 28% year-over-year, materially impacted by a record Q1 2025 for the Offshore Project Group (OPG).

    • Adjusted EBITDA decreased 13% year-over-year to $83.7 million.

    • The company utilized $76.5 million in negative free cash flow during the quarter.

    • The Middle East conflict caused intermittent operational disruption, particularly for Integrity Management and Digital Solutions (IMDS), leading to flat regional results.

    • Ad Tech operating income and margin decreased primarily due to a net $5.5 million accrual related to a contract dispute.

    Guidance & targets

    22
    CategoryTargetConfidence
    Consolidated EBITDA
    $100 million to $110 million
    high materiality
    High
    Consolidated Revenue Growth
    low to mid-single-digit
    high materiality
    High
    Consolidated EBITDA
    $390 million to $440 million
    high materiality
    High
    SSR Revenue Growth
    low to mid-single-digit percentage
    medium materiality
    High
    Average ROV revenue per day utilized
    increase slightly compared to our 2025 average
    medium materiality
    High
    ROE fleet utilization
    mid-60% range
    medium materiality
    High
    Drill support market share
    55% to 60% range
    medium materiality
    High
    SSR EBITDA margins
    mid-30% range
    medium materiality
    High
    Manufactured Products Operating Income
    higher
    medium materiality
    High
    Manufactured Products Revenue
    slightly lower
    medium materiality
    High
    Manufactured Products Operating Income Margins
    mid-teens range
    medium materiality
    High
    Manufactured Products Book-to-bill ratio
    0.9 to 1.0
    medium materiality
    High
    OPG Revenue
    lower
    medium materiality
    High
    OPG Operating Income
    significantly lower
    medium materiality
    High
    OPG Margins
    mid-teens range
    medium materiality
    High
    IMDS Revenue Growth
    expected
    medium materiality
    High
    IMDS Operating Income
    expected to increase, but by less than we previously anticipated
    medium materiality
    High
    IMDS Margins
    mid-single-digit range
    medium materiality
    High
    Ad Tech Operating Income
    expected to increase
    medium materiality
    High
    Ad Tech Revenue
    significantly higher
    medium materiality
    High
    Ad Tech Margins
    low teens
    medium materiality
    High
    Unallocated Expenses
    approximately $50 million
    low materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Consolidated
    Revenue improved year-over-year, with increases in SSR, Manufactured Products, and Ad Tech. Operating income was $57.8 million (down 21% YoY), Net income was $36 million ($0.36 per share, down 28% YoY), and Adjusted EBITDA was $83.7 million (down 13% YoY). Comparisons are materially impacted by a record Q1 2025 for OPG.
    		$692 million3% improvement——
    Subsea Robotics (SSR)
    Operating income decreased despite higher revenue. Average ROV revenue per day utilized increased due to improved pricing and discrete Q1 items not expected to repeat. EBITDA margin declined due to lower ROV utilization and a geographic mix shift to lower profitability regions. Costs were incurred to prepare Ocean Intervention 2 and invest in the Freedom vehicle. Margins are expected to rebound in Q2.
    Average ROV revenue per day utilized: $12,401 (up from $10,788)EBITDA margin: 32% (declined)ROV utilization: 61% (decreased)ROV contracts on floating rigs: 83 of 143 (58% market share)ROV fleet count: 250 systemsRevenue split (ROV business): 79%Revenue split (tooling and survey businesses): 21%ROV days utilized (drill support): 67%ROV days utilized (vessel-based services): 33%
    		Increased YoY——$55.5 million operating income (down 7% YoY)
    Manufactured Products
    Revenue benefited from steel tube receipts (no margin). Operating income improved due to continued execution of higher-margin backlog and strong performance from rotator valves. Backlog declined over the past two quarters due to timing of awards, but underlying demand is healthy with substantial tendering activity.
    Operating income increase (excluding Q1 2025 inventory reserve): 37%Backlog (as of March 31, 2026): $492 millionBook-to-bill ratio: 0.91
    		Increased 6% YoY6%—$26.1 million operating income (18% of revenue)
    Offshore Project Group (OPG)
    Results decreased as activity returned to more typical seasonal levels compared to a record Q1 last year. Favorable project mix partially offset lower activity, supported by installation work and an international intervention project.
    		$135 million (decreased YoY)——$18 million operating income (14% margin)
    Integrity Management and Digital Solutions (IMDS)
    Revenue, operating income, and margin decreased due to lower activity in West Africa and Australia (latter due to exiting a low-margin contract). Middle East activity was flat year-over-year due to the conflict, despite initial growth expectations.
    		Decreased YoY——Decreased YoY
    Aerospace and Defense Technologies (Ad Tech)
    Revenue increased due to higher volumes in Oceaneering Technologies (OTECH) and Marine Services Division (MSD) business lines. Operating income and margin decreased primarily due to a net $5.5 million accrual related to a contract dispute resolution.
    		$131 million (increased YoY)——Decreased YoY

    Operational metrics

    7
    Cash utilized for operating activities
    $59.1 million
    Q1 FY26

    Largely for payment of performance-based incentive compensation and increased customer receivables.

    Organic capital expenditures
    $17.4 million
    Q1 FY26

    Investment in organic capital expenditures.

    Cash balance
    $607 million
    March 31, 2026

    Cash balance at the end of the quarter.

    Available secured revolving credit facility
    $215 million
    March 31, 2026

    Amount available under the secured revolving credit facility.

    Total liquidity
    $822 million
    March 31, 2026

    Combined cash balance and available credit facility.

    Unallocated expenses
    $49.3 million
    Q1 FY26

    Consistent with expectations for the quarter, increased year-over-year due to wage inflation, foreign exchange impacts, and increased IT costs.

    Ad Tech contract dispute accrual
    $5.5 million
    Q1 FY26

    Related to the expected resolution of a previously disclosed contract dispute, impacting operating income and margin.

    Industry KPIs

    5
    MetricValueDetails
    Book to bill ratio0.91ratio
    FCF CAPEX leverage-$76.5 millionUSD
    Digital recurring revenue—
    Segment adjusted EBITDA margin32%%
    Data center new energy revenue capacity—

    Orderbook & backlog

    2
    Total Order Intake$1 billionQ1 FY26

    one of the healthiest intake since 2020

    Includes SSR awards of approximately $300 million and Ad Tech awards of approximately $175 million.

    Manufactured Products Backlog$492 millionMarch 31, 2026

    down $51 million from Q1 2025

    Sales pipeline healthy, expecting to rebuild backlog in coming quarters as projects move to award.

    Risks & headwinds

    5
    Middle East conflictQ1 FY26, ongoing

    Intermittent disruption; IMDS regional results flat YoY

    Mitigation: Enacted established protocols, frequent contact with teams, taking necessary precautions, coordinating closely with customers and partners.

    Ad Tech contract disputeQ1 FY26

    Net $5.5 million accrual impacting operating income and margin

    Mitigation: Agreement expected to resolve the matter, reduce uncertainty, and enable focus on program execution. Obligation to be settled over the life of the associated multiyear contract.

    Lower activity in West Africa and Australia for IMDSQ1 FY26

    Decreased revenue, operating income, and margin for IMDS

    Mitigation: Exited a low-margin contract in Australia; demand for digital and engineering services expected to support full-year revenue growth.

    Lower margin IMR work and lower vessel utilization for OPGFull Year 2026

    Lower revenue and significantly lower operating income for OPG, with margins in mid-teens

    Mitigation: Partially offset by ongoing intervention work in the Caspian and an upcoming installation project in North Africa.

    Wage inflation, foreign exchange impacts, and increased IT costsOngoing

    Unallocated expenses approximately $50 million in Q1 FY26, expected to persist

    What to watch in Q2 FY26

    5

    ROV Utilization

    Q2/Q3 FY26
    Current61%
    TargetMid-60% range

    Why it matters

    ROV utilization is a key driver for the profitability of the Subsea Robotics segment.

    We anticipate that our ROE fleet utilization will be in the mid-60% range with higher activity levels during the second and third quarters...

    Q&A highlights

    8

    Were the $300 million SSR awards influenced by the Iran conflict or increased oil prices, and did the conflict lead to more customer inquiries?

    Management stated the awards were already underway and not directly impacted by the conflict. However, the awards included longer-term contracts (up to 5 years), suggesting a more sustained positive outlook beyond a temporary blip.

    “I think everything was kind of underway anyway. So not a big thing. I will call out this, but 1 of the things that's interesting about the order is that when you think about it is just a near-term or long-term effect on oil prices, we had an increase in longer-term contracts. So we averaged above 1 year for the contracts that were awarded, and we had some out to 5 years. So I think the longer term says that there's more than just a blip going on here.”

    asked by Edward Kim · answered by Roderick Larson

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Overview

    Oceaneering reported first quarter 2026 results consistent with guidance, demonstrating strong commercial momentum across its portfolio. Consolidated revenue improved 3% year-over-year to $692 million, with increases in Subsea Robotics (SSR), Manufactured Products, and Aerospace and Defense Technologies (Ad Tech). Ad Tech, in particular, posted significant year-over-year revenue growth, indicating steady demand in the defense sector, while SSR and Manufactured Products showed resilience despite softer energy activity.

    02

    Robust Order Intake and Backlog

    The company achieved a strong first quarter order intake of approximately $1 billion, marking one of the healthiest intake periods since 2020 and resulting in a constructive book-to-bill ratio. This included approximately $300 million in SSR awards, with some projects extending to 2031, enhancing long-term utilization visibility. Ad Tech also contributed significantly with approximately $175 million in new contract awards, exercised options, and increases to existing contract values.

    03

    Technological Advancements and Dual-Use Capabilities

    Oceaneering formally introduced Momentum, its next-generation electric work-class ROV, designed for improved supervised autonomy, endurance, and reliability, with mobilization expected in Q2. The company also advanced its autonomous systems portfolio, including the Freedom platform, with one commercial unit operating in West Africa and a specialized vehicle undergoing testing for the Defense Innovation Unit (DIU), reinforcing its position in both energy and defense markets.

    04

    Geopolitical Impact and Operational Adjustments

    The ongoing Middle East conflict led to intermittent operational disruptions, primarily affecting the Integrity Management and Digital Solutions (IMDS) segment, which saw regional results remain flat compared to the prior year. The company emphasized the safety of its personnel and property, implementing established protocols and coordinating closely with customers to manage these impacts, noting the consolidated financial effect has been modest to date.

    05

    Capital Allocation and Shareholder Returns

    In Q1, Oceaneering utilized $59.1 million for operating activities and invested $17.4 million in capital expenditures, resulting in negative free cash flow of $76.5 million. The company maintained a healthy liquidity position with $607 million in cash and $215 million available under its revolving credit facility. Share repurchases were paused due to heightened market volatility🌐 from the Middle East conflict, but the company remains committed to evaluating opportunistic repurchases as part of its capital deployment strategy.

    06

    Outlook Reaffirmation and Market Acceleration

    Despite the fluid conditions in the Middle East, Oceaneering reaffirmed its full-year 2026 guidance, anticipating an acceleration in energy market activity in the second half of the year. This includes potential for incremental OpEx-oriented work streams to materialize earlier. The company's confidence is supported by its strong Q1 order intake, robust sales funnel, broad geographic and market reach, healthy balance sheet, and global team commitment.

    AI-generated summary of the company’s earnings call. Not investment advice.