My name is Buena and I'll be your conference operator. I would like to welcome everyone to Oceaneering International Incorporated 2022 First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session.

With that, I will now turn the call over to Mark Peterson, Oceaneering's Vice President of Corporate Development and Investor Relations. Go ahead, sir..

Thank you, Buena. Good morning, everyone and welcome to Oceaneering's first quarter 2022 results conference call. Today's call is being webcast and a replay will be available on Oceaneering's website.

Joining us on the call today 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.

Before we begin, I would just like to remind participants that statements we make during the course of this call regarding our future financial performance, business strategy, plans for future operations and industry conditions are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Our comments today are also non-GAAP -- also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our first quarter press release. We welcome your questions after the prepared statements. I will now turn the call over to Rod..

for SSR, we forecast improved operating results and higher revenue; ROV days on hire are projected to increase year-over-year by a double-digit percentage with tooling-based services results generally following ROV days on hire; survey results are expected to improve on higher levels of activity as well; SSR forecasted adjusted EBITDA margins are expected to average in the low 30% range for the full year.

For ROVs, we expect our 2021 service mix of 60% drill support and 40% vessel-based services to generally remain the same for 2022 with higher vessel-based percentages during the seasonally higher second and third quarters.

We estimate overall ROV fleet utilization to be in the mid-60% range, again, with higher seasonal activity during the second and third quarters. Pricing for our ROV services continues to increase, allowing us to offset increasing costs for assets and labor.

We continue to forecast that our market share for the drill support market will remain in the 55% to 60% range for the near term. As of March 31, 2022, they were approximately five Oceaneering ROVs, onboard eight floating drilling rigs, with contract terms expiring before third quarter.

During the same period, we expect 30 of our ROVs on 26 floating rigs to begin new contracts. For manufactured products, we expect segment revenue to be up significantly and operating performance to improve year-over-year, primarily as a result of increased order intake in our energy businesses during 2021.

This order intake is expected to drive increased activity in the second half of 2022. We forecast that our operating income margins will be in the low to mid-single-digit range for the year.

Additionally, we continue to see good bid activity in our energy products businesses and are beginning to see some positive market signs in our Mobility Solutions businesses pointing to an increase in bidding activity. This supports our expectation that segment book-to-bill ratio will be in the range of 1.0 to 1.2 for the full year.

For OPG, we expect an increase in revenue and operating results. OPG's business is primarily tied to short cycle fundamentals and the current supportive commodity price environment is driving a noticeable increase in demand for our services, particularly in the Gulf of Mexico.

Based on this demand signal, we recently added vessel capacity to meet the forecasted increase in IMR activity throughout the remainder of 2022. We expect increased vessel utilization and pricing to improve OPG's operating margins into the low to mid-teens range for the remainder of 2022.

For IMDS, we project an increase in revenue and operating income. As noted in our first quarter 2022 press release, IMBS continues to be successful in expanding into new geographies and adding new customers. This success is expected to result in higher revenue over the three remaining quarters of 2022.

We forecast year-over-year operating income margin to be essentially flat. For ADTech, we project higher revenue and lower operating results than achieved in 2021. Operating income margin is projected to decline as compared to 2021 due to shift in revenue mix but is expected to remain in the mid-teens range for 2022.

We continue to see good growth opportunities across all our businesses in ADTech. Our estimated organic capital expenditure total for 2022 remains between $70 million and $90 million. This includes approximately $40 million to $45 million of maintenance capital expenditures and $30 million to $45 million of growth capital expenditures.

We forecast our 2022 cash income tax payments to be in the range of $40 million to $45 million. Unallocated expenses are expected to average in the mid-$30 million range per quarter for the remainder of 2022. Now, turning to our balance sheet and liquidity.

With $438 million of cash at the end of March and the expectation of generating 2022 free cash flow in the range of $75 million to $125 million, we continue to be well positioned to address our 2024 debt maturity.

After repurchasing $100 million of our 2024 debt in 2021, we are looking at additional options that will allow us to further mitigate the 2024 debt balance. Subsequent to quarter end, we replaced our credit facility with a new $215 million senior secured revolving credit facility that gives us financial flexibility over the next four years.

On a macro basis, we continue to see positive signs in our offshore energy markets and feel that commodity prices will remain supportive of higher activity levels over the next several years, as evidenced by the current projection by the Energy Information Administration for Brent crude oil price to average $103 per barrel in 2022 and more than $92 per barrel in 2023.

Our internal estimates of continued gradual growth in ROV activity, Rystad Energy's expectation for increased offshore FIDs in both 2022 and 2023 as compared to 2021.

Rystad Energy is also projecting tree installations to be up by approximately 9% in 2022 and new tree orders to be up over 90% as compared to 2021 and the increasing importance of energy security on the geopolitical front.

In summary, our first quarter performance and refreshed outlook for the year give us confidence to maintain our 2022 adjusted EBITDA guidance range of $225 million to $275 million.

We believe that supportive energy markets will drive healthy levels of free cash flow and investment opportunities in our traditional businesses over the next several years.

At the same time, we continue to pursue opportunities in the energy transition and nonenergy markets as we focus on growing our businesses in these areas to underpin a more sustainable future for the company.

While we continue to face the issues of inflation, hiring and retaining personnel, supply chain obstacles and shifting COVID guidelines, our management and employees have been effectively managing these challenges.

We continue to strengthen our service and product offerings and our balance sheet in order to best position the company for success in these evolving market environments.

We remain focused on generating substantial positive free cash flow in 2022, operational excellence, quality and safety and enhancing customer engagement, allowing us to win more of the most desirable opportunities, all of which result in improving our returns.

We appreciate everyone's continued interest in Oceaneering, and we'll now be happy to take any questions you might have..

Operator:.

Thanks, Buena. If there are no questions at this time, I'd just like to thank everybody for joining the call today and this concludes our first quarter 2022 conference call. Thank you, everyone..

And this concludes today's conference call. Thank you for participating. You may now disconnect..