Oceaneering anticipates $390M–$440M EBITDA for 2026 while strengthening ADTech and SSR growth

Earnings Call Insights: Oceaneering International (OII) Q3 2025

MANAGEMENT VIEW

* Roderick Larson, President, CEO & Director, highlighted that "we surpassed the high end of our guidance range, generating consolidated adjusted EBITDA of $111 million marking our highest quarterly performance since the fourth quarter of 2015." He attributed this to high-quality backlog conversion in manufactured products, robust Offshore Projects Group (OPG) activity, progress in Aerospace and Defense Technologies (ADTech), and sustained remotely operated vehicle (ROV) pricing and performance.
* Oceaneering reported revenue of $743 million, up 9% year-over-year, and operating income of $86.5 million, a 21% rise. Free cash flow reached $77 million, and share repurchases totaled approximately $10 million, ending with $506 million in cash.
* The CEO noted a significant $180 million Subsea Robotics (SSR) contract with Petrobras and emphasized robust growth prospects in Brazil, stating the company is "well positioned" in that market and sees "as big opportunities we've probably ever seen in Brazil."
* ADTech operating income increased by 36% to $16.6 million on a 27% revenue rise, with margin improvement, driven by defense contract wins. Management noted the segment is expected to grow as a portion of the business over the next 3 to 5 years due to low capital intensity and increasing international demand.
* Larson announced the planned retirement of CFO Alan Curtis effective January 1, transitioning to an advisory role, and introduced Mike Sumruld as the incoming Senior VP of Finance.
* Alan Curtis, Senior VP & CFO, stated: "It was -- we had management meetings last week and just to see the whole team rallying around this growth aspect of ADTech and all of the people from the energy side of the business. It was just nice to see 80 people sit there and rally around how can we get there faster."

OUTLOOK

* For Q4 2025, revenue is expected to be lower, with consolidated EBITDA projected between $80 million and $90 million. Improvements in ADTech and SSR will only partially offset a reduction in international OPG projects.
* Full year 2025 adjusted EBITDA guidance remains at $391 million to $401 million, with free cash flow of $110 million to $130 million.
* Initial 2026 guidance forecasts consolidated EBITDA in the range of $390 million to $440 million, with expectations for similar free cash flow as 2025. Growth is projected in ADTech along with stable activity in energy-focused businesses. Management cited expectations for "significant growth in ADTech and stable activity levels across our energy-focused businesses."
* Oceaneering plans continued share repurchases in 2026, with 5.8 million shares remaining under authorization.

FINANCIAL RESULTS

* The company achieved consolidated adjusted EBITDA of $111 million, the highest since Q4 2015, and revenue of $743 million for Q3 2025.
* Manufactured Products operating income doubled to $24.7 million on a 9% revenue increase, driven by higher-margin backlog execution and pricing improvements in Grayloc and Rotator product lines. The segment reported a $208 million order intake with a backlog of $568 million and a book-to-bill ratio of 0.82.
* SSR revenue and operating income were flat, while ROV revenue per day utilized increased to $11,254, offsetting slightly lower utilization rates.
* OPG operating income rose 17% to $23.7 million on a 16% revenue increase, with healthy vessel utilization. ADTech operating income grew 36% to $16.6 million, with a 27% revenue increase.
* IMDS operating income and margin improved due to the absence of a prior noncash charge, despite a slight revenue decline.

Q&A

* Joshua Jayne, Daniel Energy Partners, LLC, asked about Ocean Intervention II and the efficiencies from simultaneous autonomous survey operations. Larson responded that the vessel enables "more with less," reducing costs and improving data quality, resulting in a "more robust solution" for customers.
* Jayne questioned the company's Brazilian market outlook and SSR contract wins. Larson explained that Brazil's market is "really robust" with significant exploration and infrastructure opportunities, and that "market share continues to increase" as Brazilian customers are first adopters of new technologies.
* Jayne inquired about ADTech's capital competition and future business share. Larson emphasized the "low capital intensity" and alignment with existing business units, foreseeing "more international opportunities" and growth supported by NATO and allied defense spending. Curtis added that management is rallying around ADTech's growth.
* Scott Gruber, Citigroup Inc., Research Division, questioned Q4 revenue declines in Manufactured Products and margin implications. Curtis clarified that the segment's earnings quality is improving due to higher-margin backlog conversion and operational excellence, with more benefit expected in 2026. Larson added that the sales funnel is strong and projects are booking into 2027.
* Gruber asked about ADTech growth cadence embedded in 2026 guidance. Curtis explained the ramp-up of a large-scale project will drive continued revenue progression through 2026 and into 2027, with further opportunities pending.

SENTIMENT ANALYSIS

* Analysts maintained a neutral to slightly positive tone, focusing on operational efficiency, segment growth, market share, and margin sustainability. Questions were constructive, seeking detail on segment dynamics and future growth drivers.
* Management's tone was confident and forward-looking during prepared remarks and the Q&A, using phrases like "we continue to see growth opportunities" and "we are able to scale that up significantly." Curtis described the team as "rallying around" growth initiatives.
* Compared to the previous quarter, management's confidence increased, particularly regarding ADTech and robust market conditions in Brazil. Analyst tone shifted from cautious to more inquisitive about growth and profitability drivers.

QUARTER-OVER-QUARTER COMPARISON

* Management guidance remains consistent, with a narrowed and reaffirmed full-year EBITDA range for 2025. The 2026 outlook was initiated, emphasizing ADTech growth and stable energy business activity, contrasting with the previous quarter's focus on manufacturing and OPG contract visibility.
* Segment performance highlights shifted from concerns over offshore activity to confidence in backlog conversion and margin expansion.
* Analyst focus in Q3 shifted towards future growth, capital efficiency, and international market opportunities, especially in Brazil and defense.
* Management's tone is more optimistic, particularly about ADTech and SSR, compared to a more measured outlook in Q2. Analyst sentiment shifted from cautious (regarding offshore "white space" and order trends) to more growth-oriented inquiries.

RISKS AND CONCERNS

* Management identified a projected decline in OPG revenue and operating income for Q4 2025 due to the absence of large-scale international projects and lower vessel activity.
* IMDS is expected to see decreased revenue and operating income in Q4 due to lower activity.
* The company does not plan to renew a charter for an international vessel, anticipating seasonally lower activity.
* 2026 guidance assumes the resolution of the government shutdown in 2025, and OPG customer schedules have not yet finalized for some projects, representing a risk to revenue timing.

FINAL TAKEAWAY

Oceaneering International closed Q3 2025 with its strongest adjusted EBITDA in a decade, underpinned by manufacturing backlog conversion, robust SSR and ADTech performance, and increased free cash flow. The company reaffirmed its full-year guidance and introduced a 2026 EBITDA target of $390 million to $440 million, highlighting significant ADTech growth and stable energy markets. With management transitions underway and continued share repurchases planned, Oceaneering sees expanding opportunities in defense and international energy, while proactively addressing segment-specific risks and cost controls to drive long-term shareholder value.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/oii/earnings/transcripts]

MORE ON OCEANEERING

* Oceaneering International, Inc. (OII) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4832590-oceaneering-international-inc-oii-q3-2025-earnings-call-transcript]
* Oceaneering International: Offshore Tailwinds Meet Onshore Pressures - Hold For Now [https://seekingalpha.com/article/4812085-oceaneering-international-stock-offshore-tailwinds-meet-onshore-pressures-hold]
* Oceaneering GAAP EPS of $0.71, revenue of $742.9M [https://seekingalpha.com/news/4507198-oceaneering-gaap-eps-of-0_71-revenue-of-742_9m]
* Oceaneering Q3 2025 Earnings Preview [https://seekingalpha.com/news/4506265-oceaneering-q3-2025-earnings-preview]
* Seeking Alpha’s Quant Rating on Oceaneering [https://seekingalpha.com/symbol/OII/ratings/quant-ratings]