Good morning, ladies and gentlemen. My name is Michelle, and I will be your conference operator today. Welcome to Oceaneering's First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. There will be a question-and-answer period after the speakers’ remarks.

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

Thanks, Michelle. Good morning, everyone, and welcome to Oceaneering's first quarter 2023 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 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 on a mid-teens percentage increase in 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 service mix of 61% drill support and 39% vessel-based services in 2022 to remain relatively the same in 2023 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 share of the drill support market will remain in the 55% to 60% range for the near term. As of March 31, 2023, there are approximately five Oceaneering ROVs on board five floating drilling rigs with contract terms expiring during -- before the third quarter.

During the same period, we expect 33 of our ROVs on 27 floating rigs to begin new contracts. For manufactured products, we expect a significant increase in revenue and operating income with our healthy backlog levels driving increased activity throughout the year.

We project a slight improvement in operating income margin over the full year of 2022, averaging in the mid-single digit range for 2023. Bidding activity in our energy businesses remains robust.

Bidding activity in our Mobility Solutions businesses is improving, especially with respect to our MaxMover counterbalance forklift product, where we are seeing noticeable customer interest. We expect segment book-to-bill ratio to be in the range of 1.2 to 1.4 for the full year.

For OPG, we expect relatively flat revenue and significantly improved operating income, driven by increased vessel utilization to result in operating income margins averaging in the low teens range for the year.

We continue to actively monitor the vessel market and customer activities, and we will adjust our vessel charters as required to best serve anticipated demand. For IMDS, we project slightly higher operating income results.

Our focus on expanding into new geographies and adding new customers is expected to result in a high single to low double-digit growth in revenue as compared to 2022. We forecast year-over-year operating income margin to remain in the mid-single digit range for the year.

For ADTech, we project higher operating income results on a low to mid-teens increase in revenue as compared to 2022, with operating income margin projected to remain in the low teens range. We continue to see good growth opportunities across all of our ADTech businesses.

On a consolidated basis, our estimated organic capital expenditure total for 2023 remains between $90 million and $110 million. This includes approximately $45 million to $50 million of maintenance capital expenditures and $45 million to $60 million of growth capital expenditures.

We forecast our 2023 cash income tax payments to be in the range of $60 million to $65 million. Net interest expense is projected to be in the range of $15 million to $20 million as we continue to benefit from investing our cash at higher interest rates.

And unallocated expenses are expected to average in the mid to high $30 million range per quarter for the remainder of 2023. Now turning to our balance sheet and liquidity.

With $505 million of cash at the end of March and the expectation of generating 2023 free cash flow in the range of $75 million to $125 million, we continue to be well positioned to address our 2024 debt maturity.

Given that the current level of interest earned on our invested cash largely offsets the interest obligations under the 2024 senior notes, we continue to invest our cash. Our undrawn senior secured revolving credit facility gives us additional financial flexibility over the next three years.

On a macro basis, we see continued signs -- 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 $85 per barrel in 2023 and more than $80 per barrel in 2024.

Our internal estimates of continued gradual growth in ROV activity, independent research forecasts for nearly double the offshore FIDs in 2023 over 2022 and another increase in 2024. Projected [free] (ph) installations to increase approximately 10% year-over-year and [nutri] (ph) orders to be up over 60% as compared to 2022.

And finally, and importantly, evidence of the geopolitical front that energy security remains a priority. In summary, our first quarter performance and refreshed outlook for the year give us confidence to maintain our 2023 adjusted EBITDA guidance range of $260 million to $310 million.

We remain well positioned to generate healthy levels of free cash flow from our traditional energy markets over the next several years, while maintaining focus on increasing our participation in longer-term non-energy growth markets.

We remain focused on safety, first and foremost, generating substantial positive free cash flow in 2023, improving our returns through increased asset utilization, creating value-added solutions for our customers and improving pricing and margins.

And remaining focused on ESG principles for the benefit of our employees, our customers, our shareholders and our communities. We appreciate everyone's continued interest in Oceaneering, and we'll now be happy to take any questions you may have..

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] There are no questions from the phone lines, gentlemen, please proceed with any closing remarks..

No. Thank you very much. I'd like to wrap up by thanking everyone for joining the call. This concludes our first quarter 2023 conference call..

Ladies and gentlemen, this does indeed concludes your conference call for this morning. We would like to thank you all for your participation and ask you to please disconnect your lines..

End of Q&A:.