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    OII
    Earnings call· Jun 2026(Q2 FY26)

    OCEANEERING INTERNATIONAL INC OII

    Jul 23, 2026 Source

    Executive summary

    Oceaneering Q2 FY26 — Strong Operational Execution Drives Highest EBITDA Since 2015

    Oceaneering delivered strong Q2 FY26 results, with adjusted EBITDA reaching its highest level in over a decade, driven by robust operational execution across most segments, particularly Offshore Projects Group. The company also enhanced its financial flexibility through debt refinancing and an expanded credit facility. While facing headwinds in the IMDS segment, management remains confident in its full-year outlook, focusing on organic growth in energy and defense, alongside continued shareholder returns.

    Highlights

    5

    • Adjusted EBITDA of $115 million, the highest quarterly level since Q3 2015, exceeding guidance.

    • Revenue increased 10% year-over-year to $768 million, with growth in every segment except IMDS.

    • Operating income increased 11% to $88.2 million, and net income increased 19% to $65 million or $0.65 per share.

    • Strengthened capital structure by placing $500 million senior notes due 2034, retiring 2028 notes, and increasing credit facility commitments from $215 million to $345 million.

    • Secured new contract awards in ADTech, including a joint contract from the Defense Innovation Unit for an extra large unmanned underwater vehicle.

    Concerns

    3

    • IMDS revenue, operating income, and margin decreased due to lower activity and increased personnel costs, with operating income expected to be in the low single-digit percentage range for FY26.

    • ROV utilization slightly lower at 66% compared to 67% in the prior year, largely due to lower activity in the U.S. Gulf.

    • Manufactured Products backlog decreased to $445 million on June 30, 2026, reflecting execution of previously awarded work.

    Guidance & targets

    12
    CategoryTargetConfidence
    Adjusted EBITDA
    $115 million to $125 million
    high materiality
    High
    SSR Revenue and Operating Income
    increased
    medium materiality
    Medium
    Manufactured Products Revenue and Operating Income
    decrease slightly
    medium materiality
    Medium
    OPG Revenue and Operating Income
    increase
    medium materiality
    Medium
    IMDS Revenue
    increase
    medium materiality
    Medium
    IMDS Operating Income
    relatively flat
    medium materiality
    Medium
    AdTech Revenue and Operating Income
    increase
    medium materiality
    Medium
    Unallocated Expenses
    approximately $50 million
    low materiality
    High
    Consolidated Adjusted EBITDA
    $400 million to $440 million
    high materiality
    High
    IMDS Operating Income
    decrease significantly
    medium materiality
    Medium
    IMDS Operating Income Margin
    low single-digit percentage range
    medium materiality
    Medium
    Manufactured Products Book-to-Bill Ratio
    0.9 to 1.0
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Subsea Robotics (SSR)
    Improved year-over-year results driven by higher average ROV revenue per day utilized and increased survey activity. EBITDA margin flat as higher ROV pricing was offset by geographic and service mix, including greater contribution from lower-margin survey business.
    Operating income growth YoY: 3%EBITDA margin: 35%ROV utilization: 66%ROV utilization YoY comparison: down from 67%Average ROV revenue per day utilized: $11,894Average ROV revenue per day utilized YoY comparison: up from $11,265ROV business revenue split: 77% of total SSR revenueROV business revenue split YoY comparison: down from 79%Combined tooling and survey business revenue split: 23% of total SSR revenueCombined tooling and survey business revenue split YoY comparison: up from 21%ROV days utilized in drill support: 64%ROV days utilized in drill support YoY comparison: up from 63%ROV days utilized in vessel-based services: 36%ROV days utilized in vessel-based services YoY comparison: down from 37%Market share of ROV contracts on floating rigs: 59% (82 of 139 rigs)ROV fleet count: 250 systems
    		$232 million6%—$66.3 million operating income
    Manufactured Products
    Improvements largely driven by continued conversion of higher-margin backlog, increased volume in rotator balance business, and improved results in Mobility Solutions.
    Operating income growth YoY: 17%Operating income margin: 15%Operating income margin YoY comparison: up 178 basis points
    		$149 million3%—$21.9 million operating income
    Offshore Projects Group (OPG)
    Impressive year-over-year improvements supported by a favorable project mix and disciplined execution on international intervention and installation projects (Caspian Sea, offshore Egypt). Vessel utilization declined year-over-year but expected to improve in Q3.
    Operating income growth YoY: 39%Operating income margin: 16%
    		$183 million22%—$30 million operating income
    Integrity Management and Digital Solutions (IMDS)
    Revenue, operating income, and margin decreased due to lower activity levels and related cost absorption, as well as increased personnel-related costs in West Africa and the Middle East. Uncertainty regarding overall activity in these regions continues.
    		decreased——decreased
    AdTech
    Operating income margin declined reflecting changes in program mix and timing in Oceaneering Technologies (OTECH) business lines.
    Operating income margin: 12%
    		$133 million22%—$16.4 million operating income

    Operational metrics

    11
    Adjusted EBITDA
    $115 millionup 11% YoY
    Q2 FY26

    Highest quarterly level since Q3 2015, exceeded high end of guidance range.

    Operating income growth
    11%YoY
    Q2 FY26

    Consolidated operating income increased 11% to $88.2 million.

    Net income attributable to Oceaneering growth
    19%YoY
    Q2 FY26

    Net income attributable to Oceaneering increased 19% to $65 million or $0.65 per share.

    Cash from operating activities
    $55.2 millionYoY decrease
    Q2 FY26

    Year-over-year decrease primarily reflected timing of project milestones, customer receipts, and vendor payments.

    Organic capital expenditures
    $23.2 million
    Q2 FY26

    34% allocated to growth and 66% to maintenance.

    Share repurchases
    $10 million
    Q2 FY26

    Resumed share buybacks during the quarter.

    Cash balance
    $629 million
    Q2 FY26 end
    Total liquidity
    $844 million
    Q2 FY26 end

    No borrowings under revolving credit facility.

    Senior notes maturity extension
    $500 million
    June 2026

    Placed $500 million of senior notes due 2034 and used proceeds with cash on hand to retire $500 million of senior notes due 2028.

    Revolving credit facility commitments
    $345 millionup from $215 million
    July 2026

    Amended secured revolving credit facility, increasing commitments from $215 million to $345 million and extending maturity.

    Unallocated expenses
    $46.6 millionrelatively flat YoY
    Q2 FY26

    In line with guidance.

    Industry KPIs

    5
    MetricValueDetails
    Rpo backlog$445 millionUSD
    Book to bill ratio0.88x
    FCF CAPEX leverage$32 million FCF; $23.2 million capexUSD
    Orders bookings by segment—
    Segment adjusted EBITDA margin35% (SSR); 15% (Manufactured Products); 16% (OPG); 12% (AdTech)%

    Orderbook & backlog

    1
    Manufactured Products Backlog$445 millionJune 30, 2026

    decreased

    Reflecting execution of previously awarded work. Expected to improve in H2 2026.

    Deals & partnerships

    2
    Defense Innovation UnitJoint contract to support development of an extra large unmanned underwater vehicle (UUV).

    Highlights strategy to deploy dual-use technologies for energy and government customers, demonstrating ability to collaborate with partners to meet defense industry needs.

    Lockheed MartinSpace Systems team recognized as a best-in-class supplier for their work on the ARTEMIS program.

    Recognition for best-in-class supplier status.

    Risks & headwinds

    2
    Uncertainty in IMDS activity levelsFull year 2026

    IMDS operating income to decrease significantly compared to FY25, with operating income margin in the low single-digit percentage range.

    Mitigation: Middle East operations have begun to stabilize, which should support improved cost absorption in future quarters.

    Lower activity in West AfricaQ2 FY26, ongoing

    Contributed to IMDS revenue, operating income, and margin decrease.

    Mitigation: Middle East operations have begun to stabilize, which should support improved cost absorption in future quarters.

    What to watch in Q3 FY26

    5

    IMDS Operating Income Margin

    Q3 FY26 and beyond
    Currentlow single-digit percentage range (FY26 outlook)
    TargetImprovement from current low single-digit range

    Why it matters

    IMDS segment is facing significant headwinds; recovery is key to overall segment performance and revised full-year outlook.

    We now expect IMDS operating income to decrease significantly compared to the full year of 2025 and for operating income margin to be in the low single-digit percentage range.

    Q&A highlights

    5

    With a strong net cash position and recent refinancing, how will capital allocation evolve, especially regarding organic/inorganic growth and shareholder returns?

    Management reiterated its "organic first, inorganic second, return of capital third" strategy. Organic investment will focus on high-performing energy businesses like SSR, emphasizing automation and high-tech services, and expanding the defense side through both organic investment and opportunistic inorganic moves in less competitive areas. Share buybacks will continue.

    “I would say we still say organic first, inorganic growth second and then return of capital to the shareholders, again, with the share buybacks being primary right now.”

    asked by Keith Beckmann · answered by Roderick Larson

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q2 Performance and Financial Strengthening

    Oceaneering reported its highest adjusted EBITDA since Q3 2015, reaching $115 million, driven by strong operational execution, particularly in the Offshore Projects Group. The company also proactively strengthened its capital structure by issuing $500 million in senior notes due 2034 to retire existing 2028 notes and expanded its revolving credit facility from $215 million to $345 million, extending its maturity to July 2031. These actions provide enhanced financial flexibility for future growth.

    02

    Subsea Robotics (SSR) Momentum

    SSR saw improved year-over-year results, supported by higher average ROV revenue per day utilized, which increased from $11,265 to $11,894. Survey activity also increased with the Ocean Intervention II vessel commencing operations. The segment secured new ROV service contract awards in Brazil, improving future demand visibility, and maintained a 59% market share of ROV contracts on floating rigs.

    03

    ADTech's Dual-Use Technology Strategy

    The Advanced Technologies (ADTech) segment secured new contract awards across defense and subsea applications, including a significant joint contract from the Defense Innovation Unit for an extra large unmanned underwater vehicle. This highlights Oceaneering's strategy to leverage dual-use technologies for both energy and government customers, demonstrating collaboration capabilities in the defense industry. The Space Systems team also received recognition as a best-in-class supplier by Lockheed Martin for the ARTEMIS program.

    04

    Manufactured Products Backlog and Outlook

    While Manufactured Products' backlog decreased to $445 million due to execution of prior work, the company anticipates an improvement in the second half of the year. Multiple awards were won early in Q3, with additional awards expected in Q3 and Q4, reinforcing the full-year book-to-bill guidance of 0.9 to 1.0. Operating income margin improved to 15%, up 178 basis points year-over-year, driven by higher-margin backlog conversion and improved Mobility Solutions.

    05

    Offshore Projects Group (OPG) Outperformance

    OPG delivered impressive year-over-year improvements, with revenue increasing 22% to $183 million and operating income up 39% to $30 million, achieving a 16% operating income margin. This strong performance was attributed to a favorable project mix and disciplined execution on international intervention and installation projects, including light well intervention in the Caspian Sea and an installation project in offshore Egypt, which are expected to continue into Q3.

    06

    IMDS Challenges and Revised Outlook

    The Integrity Management and Digital Solutions (IMDS) segment experienced decreased revenue, operating income, and margin due to lower activity and increased personnel costs, particularly in West Africa and the Middle East. While Middle East operations are stabilizing, uncertainty persists. The full-year outlook for IMDS operating income has been revised to a significant decrease compared to FY25, with margins in the low single-digit percentage range.

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