Oceaneering International, Inc. (NYSE:OII) Q2 2023 Results Conference Call July 27, 2023 12:00 PM ET

Company Participants

Mark Peterson - Vice President of Development and Investor Relations

Rod Larson - President and Chief Executive Officer

Alan Curtis - Senior Vice President and Chief Financial Officer

Conference Call Participants

Eddie Kim - Barclays

Kurt Hallead - Benchmark

David Smith - Pickering Energy Partners

Operator

My name is Brian, and I will be your conference operator. Welcome, everyone, to Oceaneering's Second Quarter 2023 Conference Call. [Operator Instructions]

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

Mark Peterson

Thanks, Brian. Good morning, and welcome to Oceaneering's Second 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 second quarter press release. We welcome your questions after the prepared statements. I will now turn the call over to Rod.

Rod Larson

Good morning, everybody, and thanks for joining the call today. I'd like to begin by emphasizing that our business activity is increasing and demonstrating quantifiable improvements from accelerating deepwater and nonenergy market fundamentals. Here are a few supporting data points.

On a consolidated basis, we produced operating income of $49.2 million in the second quarter of 2023, our highest quarterly operating income since 2015. For the first half of 2023, our energy segments generated an 18% increase in revenue and nearly a 100% increase in operating income as compared with the first half of 2022. Our near-term rolling sales funnel at 6/30/2023 was more than 35% greater than at the same time last year. And inbound orders year-to-date 2023 versus 2022 are up over 20%.

We expect strong offshore market dynamics to continue for the foreseeable future with robust bidding activity supporting our expectation for growing backlog and increasing activity in our energy segments. Market dynamics are also favorable for our Aerospace and Defense Technologies segment or ADTech and autonomous mobile robotics business or AMR. Based on our year-to-date results and our current expectations for the second half of 2023, we are narrowing our adjusted EBITDA guidance by raising the lower bound of the previous range and adjusting the range higher for our projected free cash flow. We now expect to generate between $275 million and $310 million of adjusted EBITDA and $90 million to $130 million of free cash flow for the full year.