Oceaneering International, Inc.

Q4 2020 Earnings Conference Call


spk_0: monuments jerusalem and i will be or conference operator or dutch welcome everyone to oceaneering fourth quarter and full gear two thousand twenty hurting swamp install alarms have been pushed on be to prevent any background which after the speech remarks the movie a question and answer period with that i'm not sure call over tomorrow oceaneering during lunchtime than a global development and best relations and watch it thank you jason good morning and welcome everyone to ocean or it's fourth quarter and full twenty twenty earnings conference call today today's called is being webcast and replay will be available on oceans website what me on the call today or rob larson president and chief executive officer who will be providing are prepared comments and our curtis she your rank as vice president and chief financial officer before we begin i would just like to remind protest bunch that statements we like during the course of this call regarding our for each your 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 at nineteen ninety five a comments today are also have also include non gap financial measures additional details and reconciliations to the most directly comparable or gap financial measures can be found in our third and fourth for the press release you walk in your questions after the prepared statements i will now during the call i were to rot good morning and pay for joining the call today there's an old saying it says what doesn't kill you makes you stronger and after the events of last year i can luxury a stronger and many fronts and i'm very proud what we averaged twenty twenty with all the challenges presented by the gate program and any including the crude oil demand destruction and resulting price collapse and the many challenges faced protecting our works force was still satisfy your customers gauges luxury still deliver improved consolidated adjusted offer years old and adjusted even as compared to the prior year we also generated meaningful free cash flow with our cat gallons increasing by seventy eight million dollars from pretty hundred seventy four million dollars in december thirty first three ninety two two to four hundred and fifty two million dollars and december thirty first twenty twenty today i'll focus my comments on our performance for the fourth quarter and flir twenty twenty or market outlook for twenty twenty one or here is consolidated twenty twenty one outlet including our expectation degenerate positive three cash flow in excess of the amount generating twenty twenty and even on the range of one hundred and sixty two hundred ten million dollars and are is the segment outlook for the full year and first quarter of twenty twenty one now moving to our results for the fourth quarter twenty twenty we reported that loss of twenty five million dollars or twenty five cents per share on revenue four hundred and twenty four million dollars these results include the impact of nine point eight million dollars for pretax adjustments associated with acid impairments and right else restructuring other expenses and foreign exchange was as right nice during the quarter and nine point six million dollars a discrete tax adjustments adjusted net income was one point eight million dollars or two cents per share we were pleased that are consolidated fourth quarter adjusted earnings before interest taxes depreciation and amortization or adjusted ebitda was forty seven point one million dollars and was sequentially higher than the third quarter twenty twenty and exceeded both are guidance and and census estimates each of our five operating segments recorded sequential improvement in adjusted operating income and adjusted ebitda despite lower revenue in three out of the five segments fourth quarter twenty twenty consolidated just operating income nine point six million dollars was the best quarterly performance and twenty twenty and four million dollars higher than the third quarter we generated one hundred and four million dollars cash from operating at chili's and after deducting fifty million dollars of capital expenditures are free cash flow with eighty nine million dollars for the quarter as a result of good average cash flow working capital efficiencies and capital expenditure discipline or cash position increased by ninety three point two million dollars during the fourth quarter twenty twenty as on december thirty first twenty twenty or cash balance good at four hundred and fifty two million dollars now let's look at our business operations by segment for the fourth quarter twenty twenty subzero bikes or ssr adjusted operating income improved sequentially on lower revenue adjusted fourth quarter operating results included recognition of approximately three million dollars of destruction improvements achieved around twenty twenty consequently are ssr quarterly just it even a margin of thirty three percent was better than expected up from the thirty one percent achieved during the third quarter twenty twenty and consistent with the margin achieved during the first nine months of twenty twenty the readily split between are remotely operated vehicle or of the business and are combined to me and survey businesses as a percentage of our let us are revenue was eighty and twenty percent respectively compared to eighty two and eighteen percent split in the prior quarter as we had anticipated early days of higher declined as compared to the third quarter due to expected lower seasonal activity of legalization for the fourth quarter was fifty four percent down from fifty nine percent with third quarter and or days on higher decline for both your support and a sunday services average rv revenue per day on higher up seven thousand three hundred twenty five dollars was one percent higher as compared to the third quarter date on higher were twelve thousand four hundred fifty six in the fourth quarter as compared to thirty thousand six hundred and one and the third quarter we ended the quarter and the year just as we began with a flea count of two hundred fifty rb systems or fourth quarter fleet use with sixty percent internal support and forty percent for vessel based activity as compared to fifty six and forty four percent respectively during the third quarter at the end of december we had already contract i'm seventy five to one hundred and twenty ninth wedding rings on a contract or fifty eight percent a slight marketshare increase from september thirtieth twenty twenty when we had already contract on seventy six with one hundred and thirty three fourteen rates and a contract for fifty seven percent subject to quarterly variances we continue expect our girl support marketshare generally approximate sixty percent during to manufacture products or fourth quarter twenty twenty just operating income improved from the third quarter alone or segment revenue which was adversely affected by supplier related delays in our energy price businesses adjusted operating income margin increased to nine percent in the fourth quarter twenty twenty from five percent in the third quarter twenty twenty due primarily to favorable contract was out and supply chain savings the coven eighteen pandemic continued a damp and demand for our mobility solutions products during the fourth quarter of twenty twenty or manufactured products backlog and december thirty first twenty twenty was two hundred and sixty six million dollars compared to our september three twenty two a backlog of three hundred eighty million dollars or book no ration which point for for the for your twenty twenty as compared with the trailing twelve month with the bill a point five and september thirtieth twenty twenty archer projects group or lpg fourth quarter twenty twenty adjusted operating income improved sequentially and lower revenue revenue decline less than expected as the gulf of mexico experienced higher amounts of installation work and intervention maintenance and repair activities with customers having put work into the fourth quarter due to the several third quarter twenty twenty hurricanes this control increase in adjusted operating income was due to better activity based pricing the gulf of mexico and continue cost improvement during the fourth quarter engineering work continued on the angola rice or less like well intervention project for integrity management digital solutions are i am vs fourth quarter twenty twenty adjusted operating income was higher than third quarter twenty twenty and a marginal increase in revenue improvement in adjusted operating income was largely driven by more effective use of personnel as we continue to transform how and where work is performed or aerospace and defense technologies are ad tech fourth quarter twenty twenty adjusted operating income improved from the third quarter on higher revenue adjusted operating income margin roles as a result of project next and better than expected performance in are some see defense technologies business unallocated expenses will proc higher primarily due to increased and of compensation accruals related to better fourth quarter operating and financial performance now alter my focus to our year over year results are twenty twenty compared to twenty nineteen
spk_1: for the boy your twenty twenty
spk_0: oceaneering reporter the net loss of four hundred ninety seven million dollars or five dollars and one cent per share on revenue at one point eight million adjusted net loss was twenty six point five million dollars or twenty seven cents per share reflecting the impact of four hundred and eighty one million dollars a pretax adjustments are nearly three hundred and forty four million dollars associated with good impairment in one hundred and two million dollars of acid and parents right now and right asked recognize during the year there's compared to a twenty nine pm that lasted three hundred and forty eight million dollars or three dollars and fifty two cents per share on revenue of two billion dollars and adjusted net loss of eighty two point six million or eighty four cents per share what a year activity levels and operating performance within our energy segments will lower than originally projected for twenty twenty a combination pandemic negatively impacted operator investments in oil and gas projects due to a decline in crude oil demand and pricing and entertainment is a spelling did a limited theme park attendance at give any levels and performance with that are at tech segment met expectations for earlier year compared to twenty nineteen or twenty twenty consolidated revenue declined eleven percent to one point eight billion dollars with revenue decreases in each of our for energy segments being partially offset by the revenue increase in an attack and text contribution or consolidators off continues to grow representing nineteen percent consolidated revenue and twenty twenty as compared to sixty percent and twenty nineteen despite the headwinds of lower activity in our energy segments consolidated twenty twenty adjusted operating results and adjusted even improved by fifty nine point six million dollars and nineteen point five million dollars respectively led by are manufactured products and and tech statements in twenty twenty each were operating segments with it section of okay eg interviewed positive adjusted operating income and all were operating segments contributed positive adjusted ebitda twenty twenty operating performance benefited considerably from the cost and proven measures recognize during the year we generated one hundred and thirty seven million dollars in cash flow from operations and investment sixty one million dollars in capital expenditures resolving in free cash flow seventy six million dollars when a new year with four hundred and fifty two million dollars in cash in twenty twenty we continue to adapt to the challenges posed in our markets as we got with the significant challenges presented by the governing pandemic by establishing and implementing protocols that have allowed us to protect personal and customers while delivering on our promises we implemented a cost and process improvement program to enhance the performance of our businesses this program targeted the removal of one hundred and twenty five one hundred and sixty million dollars in costs including depreciation some examples of these efforts are efficiency enabling projects which some a described as process improvements rationalizing facilities restructuring of operating segments to better leverage common attributes thereby enabling improve productivity and how and where work is performed initiating supply chain savings and eliminating know
spk_2: productive assets
spk_0: dirty and of twenty twenty we've implemented improvements to put us on the high end of that range and majority these reductions are structural in nature and are expected to benefit our result and twenty twenty one and beyond we maintain our commitment to capital disciplined by reducing capital expenditures to sixty one million dollars as compared to one hundred and forty eight million and twenty nineteen and we may think focus on our core values we're pleased with the notable achievements accomplished during twenty twenty we you significant improvement in our i and the as business with adjusted operating results improving by almost ten million dollars as compared to twenty nineteen with over two hundred and fifty million dollars and contract awards during the fourth quarter of twenty twain and early twenty twenty one forty five percent of which is incremental business is segments petition for girl and twenty twenty one are some cereal box business a recognized leader and were class rv services she cared more than two hundred and twenty five million dollars of contract during the fourth quarter twenty twenty our ad tech business men it's original performance targets created the beginning of twenty twenty before the gobi night he pandemic and this is also recorded several important incremental contract wins including partnering with dynamics to support their design of the human lunar landing system for nasa and a contract operate maintain the us navy submarine rescue systems were up to one hundred ninety million dollars assuming annual animals over five year period we maintain our commitment and focus on safety the team or need very focused on our lifesaving roles i did at identifying hi hazard tasks and developing engineered solutions to mitigate risks are total record once in a great or tr or i are a point three for twenty twenty is a record low pressure nary the following financial metrics improved it twenty twenty iba a one hundred and eighty four million dollars surpassed one hundred and sixty five million dollars generated and twenty nineteen positive free cash flow seventy six million dollars surpassed the ten million dollars generated and twenty nine paying cash increased to four hundred fifty two million dollars and consolidated adjusted even a margin of ten percent surpassed the eight percent margin achieved in twenty nineteen despite and an eleven percent decrease in revenue we continue to make good progress on or sustainability efforts or environmental social and governance and dissidents from an environmental perspective we continue to advance or capabilities as a technology delivery company to help our customers meet at reduced emissions goals we continued the development of clean energy technologies to assist or customers and mitigating carbon emissions these initiatives and our liberty is and freedom are obese we also continue implementing measures to reduce the amount of greenhouse gases and is emitted from our own operations including facility consolidations entered employee remote work option as well as increased recycling efforts from a social perspective we continue to explore new ways to make positive contributions in the communities where we operate and to increase workforce diversity within the company during the year we create diversity and inclusion council to focus on implementing new initiatives double further diverse by our global workforce we're leveraging employee research groups are ya geez including oceaneering ones network and art recently launched oceaneering veterans network to foster diverse and inclusive workplace from a governess perspective near taking action of the board level as well we recently announced the addition of to new board members which expands the diversity of the board while adding new skill sets and perspectives that are crucial associate focuses on energy transition strategies we also formalized are he has your boarding blackboards nominating and corporate governance committee during twenty twenty oceaneering file it's first sustainability of report which is posted on our website using the disclosure methodology outlined by the sustainability accounting standards board or sadly oh sharing continues to old and he has to enact a rating with and sci now turning to our twenty twenty one outlet for the markets we serve coming into the year most analysts and research pointed to continued headwinds for the outer well and gas market didn't low level of project sanctioning and twenty twenty and continued uncertainty surrounding over nineteen with your backsplash actions taken at the very beginning and twenty twenty one and growing optimism associated with numerous vaccine approvals many analysts and energy researchers are now forecasting read pricing to stabilize in the fifty five to sixty dollar per barrel range for twenty twenty one and longer term pricing to be and fifty to seventy dollar per day errol age we expect when pricing and fifty five sixty five dollar per barrel range will support resemble levels of i am are activity and twenty twenty one similar would similarly we believe that longer term right pricing forecast of fifty to seventy dollars per barrel will support increased archer products sanctioning activity in twenty twenty analysts and research service projections for other key metrics we track also support these expectations analysts data suggests that the floating recount stabilized and threw up twenty twenty one or remain close to the year and twenty twenty levels and approximately one hundred and thirty contracted riggs there were one hundred and twenty three three wards and twenty twenty and rice i forecasts a modest recovery to around two hundred and twenty twenty one and back into the three hundred range in twenty twenty two rice said also forecasts translations of two hundred and seventy three and twenty twenty one which approaches to twenty twenty total of two hundred and also according to rise been after projects with an aggregate value of approximately forty six billion dollars were sanctioned and twenty twenty or fifty three percent decrease from twenty nineteen sanctioning levels are expected to increase in twenty twenty one brown fifty five billion dollars and return to twenty ninety levels of around one hundred billion dollars and twenty twenty two rice said for gas global installed offshore wind capacity to increase my eleven point eight gigawatts by in twenty twenty one thirty seven percent or twenty twenty our entertainment business will continue to innovate as end of the man is expected growth theme park attendants to prevent damage levels by twenty twenty two and finally government related markets we serve are expected to remain relatively stable with continued modest growth for the foreseeable future now to our twenty twenty one consolidated outlook for oceaneering we just they are full year twenty twenty one operations feel positive free cash flow in excess of the amount generated in twenty twenty and an eight point of are consolidated adjusted even arrange to approximate twenty twenty consolidated just either based on your and twenty twenty backlog an anticipated order take we forecast generally flat consolidated revenue with i revenue in had taken i in the ass to offset substantially lower revenue from are manufactured products segment we forecast relatively flat revenue in our ssr in a opie segments these projections assume no significant incremental of nineteen impact and generally stable oil and gas prices where did year we anticipate generating one hundred and sixty to two hundred and ten million dollars adjusted ebitda the positive ah bringing come and adjust but contributions from each of our operating segments apart from seasonality moody pricing and margins in the current energy markets to be stated we forecast improved new operating results in our ssr or pg i am bs and and take segments and lore operating results are manufactured products segment or liquidity position at the beginning of twenty twenty one er mange robust with four hundred and fifty two million dollars of cash and and undrawn five hundred million dollar volver available until october twenty twenty one thereafter after four hundred fifty million dollars available until january twenty twenty three we expect to further strengthen this position and twenty twenty one by generating piloting free cash flow in excess of the mileage generated and twenty twenty as has been the case over the past several years is our intend to continue to strengthen our balance sheet to ensure that we are well positioned to deal with our five hundred million dollar bond maturity in november twenty twenty four for twenty twenty one we expect our organic capital expenditures to toggle between fifty million and seventy million dollars is includes approximately thirty five forty million dollars of neat it's capital expenditures and fifteen to thirty million dollars a girl capital expenditures we can tell you this script closely scrutinized are maintenance enderle capital expenditure skunk seeing and opportunities that will provide near term revenue cashflow and return we also continue to invest in new more efficient technologies that will help our customers and eating their goals to produce the cleanest safe was barrels to help meet their carbon neutral goals in twenty twenty one interest expense net of interest income is expected to be approximately forty million dollars and our cat tax payments are expected to be in the range of thirty five to forty million dollars this includes taxes incurred in countries that imposed tax on the basis of in country revenue and bear no relationship to the profitability of such operation and these gas tax payments do not include the impact are approximately twenty eight million dollars of care that tax refunds expected he received and twenty twenty one the rationally and twenty twenty one for our operations by stagnant can we expect for some see robotics are forecast for improve results is based on essentially flat early days on fire minor shifter geographic makes and generally stable pricing results for tooling a services are expected to be flat that with activity levels generally falling early days on higher survey results are projected to improve on higher geosyntec any we forecast adjusted even a margins to be consistent with those achieved and twenty twenty for our lives we expect or twenty twenty service next of sixty two percent real support and thirty eight percent vessel services to generally remain the same for twenty twenty one our overall rv fleet utilization is expected to be in the mid to high fifty percent range for the year with higher seasonal activity during that second and third quarters we expected generally sustain or rb market share in the sixty percent range for drill support at the end of twenty twenty their approximately twenty four oceaneering rvs onboard twenty one floating drilling rights with contract terms expiring during the first six months or twenty twenty one during that same period we expect twenty eight of our are and twenty four floating erased to begin new contracts for manufactured products we expect saying the performance to decline primarily as a result of the decreased order intake in her energy businesses during twenty twenty we continue to closely monitor the impacted culminating pandemic on or mobility solutions businesses and currently expect to see marginally higher activity and contribution from these businesses and twenty twenty one we forecast that are operating income margins will be in the low to mid single digit range for the year for i'll be doing operating results are expected to improve and twenty twenty one on generally stable offshore activity and margins comparable to the last half and twenty twenty operating results and adjusted even are forecast to improve largely due to the efficiency and cost improvement measures implemented in twenty twenty and improved year over your contribution from her angola riderless like well intervention campaign that someday rates remain competitive but stable and we expect to see opportunities for pricing improvements during periods of iraqi we also and his favorite is turner obligations and increased flexibility on third party vessels and on overall improvement in fleet legalization this has been the case over the last several years this segment has the highest amount of specular work incorporated in our guns for i in the s results are forecast to improve on fire revenue with operating income margins average in high single digit range for the year good ordering take at the end of twenty twenty is expected to begin benefiting the business in the second quarter of twenty twenty one we will continue to focus on the effective use of personnel and transforming how and where work is performed for an faq revenues expected to be higher greasing improve results with operating income margins consistent with those achieved and twenty twenty growth in the segment is expected to be broadbased with revenue growth in each of our governor or three government focused businesses for twenty twenty one we anticipate unallocated expenses to average in the low to mid thirty million dollar range for quarter as we forecast higher crime rates for projected short and long term performance based and of compensation expense as compared to twenty twenty for our first quarter twenty twenty one outlook we expect our first quarter twenty twenty one adjusted even at be in the range of forty five to fifty million dollars on sequentially higher revenue as compared to the fourth quarter twenty twenty we anticipate higher revenues and relatively flat operating results in our anthrax thing lower activity and opera years old and or ssr and manufactured products segments higher revenue and operating results in our i am the a segment and in our own pg segment operating results are forecast to improve on substantially higher revenue as we have commenced operations on angola rivals like well intervention project in closing our focus continues to be generating free cash flow maintaining our strong liquidity position demonstrating meaningful progress in advancing r e s t and energy transition efforts and improving our returns by driving efficiencies and consistent performance throughout organization engaging with our customers to develop value added solutions that increase their cash flow and or made discipline and our pricing decisions and capital deployment strategies finally i think our employees a man's with teams for their continued hard work and he's very challenging times as i stated my opening remarks i am very proud what we accomplished in twenty twenty and i think oceaneering a stronger on many fronts as we had a twenty twenty one we appreciate everyone's continued interest in oceaneering you will now be happy to take any questions you man at one time of your like last question a star one the number one on your telephone key time to try your quashed press the pound key will pause for just a moment it bothered you know lobster rovers question comes from a line of flung ultimate from jp morgan your life is over marshawn like that morning
spk_3: level on a lot
spk_0: a manufactured products will purposes i beg you bother detail that and there's a lot of ah going lowry that you offered deciding among fashion pollock a lot of get a little more detail on how you see a word and twenty one and coming on bellicose at least i'm i'm trying to get a home for how much inbound do you need and twenty one to have bought margin target or do you have enough line of sight again in that range new orders on forgotten any pull up a ladder have a twenty one i'd with the what i put it this way schon and thanks for the question we've got ah we got that the two big for you're working on will run throughout the year so that's your that's the lines share what we've got gotten the plan and then we we do expect it will be able to pick up some orders were not overly aggressive with little of once built in the plan and that that there will be have to have or will need to have some incoming in the first half of yourself a dash across the board that's not just an umbilical that's that's in a given that than some of the other connect the part where i'm in the in the nobility solutions as well and so we see some of that coming in all that all the all around the board and and if you know i mean some of those big projects bill goals are a long line of sight so that's not entirely what began the plan where which i think we've got edge that effectively got it now that you've like that makes sense and then it all at i think everyone's trying to unpacking new energy market can understand the value chain all a better sitting like offshore wind can you just talk about how you post these differences in those mottled compared to more traditional energy michael plug in terms of and a dynamic contracting terms i think he tallied you compare the to in terms of traditional on markets machine is need new emerging once that you're pursuing
spk_1: you know if you would have asking that question probably ill three four years ago i would have told you that it's a tough market you know that that their the pricing is a little bit harder to get you know that they they contract a little harder than some of our our will feel customers i think number one things have gotten better their i think we're starting a new were able to
spk_0: establish that the value of of of time and and new technology and and a lot of thing so it's were able to place more technology into that market then we have in the past and then establish longer term relationship so i think they were lived a going to be fair they were little hesitant about we will we were been interested if there's another pick up in oil and gas so we built they contribute with turn it into something better and and in the meantime in oil gas and gotten a little more challenging so i think it's really rebalanced quite a bit and and we would say that doesn't get the larger projects to have no yeah and i think rot one of things i would add it's just partnering with them in the development the astros vehicles and think that nature to help them be more efficient and their operations as has been something with i'm very proud out in the last year twelve eighteen months much the uptake that that you should go thanks your next question comes from a line of tiller so much more pickering and hope your line is open
spk_4: and thanks guys in and good morning and our first question just or with respect to the twenty twenty one guide and obviously yeah a big range of that even a line one sixty that the to tan and and an hour we still got a way to go before we we close our twenty twenty one that could use help but think about a kind of the probability of alchemy get into that higher and a guide and first the lower and and just really trying to get a sense of of how competent you feel and and get into the midpoint that guidance about one hundred eighty five million evil or next year or this year
spk_0: sure i think and feel pretty good because even more a little more the news it's half and most recently as is really putting some confidence out there about it more stabilized commodity price and a are being in that be in rage and i think we're confident about that range so i think we feel good about it will say the midpoint in the upper end of the range at that
spk_1: it certainly could a it is looking good and but it's it's really that is going to be most strongly driven by the stability and and the in the level of the commodity price because i think about i would walk your sort of the tiny these if we gotta we gotta good near term commodity price that spurs along the i am are activity that we we get the others are that are quicker
spk_0: on projects and those barrels already behind pipes of we could help produce more for their existing wells they don't be permits for that generally speaking out like a drilling permits so there there's more that we can do their especially with the riderless intervention campaign so that that can come that can happen a dry that that ranger and then you maybe later near we start see more recon tracks get picked up better utilization contracted range so that that helps them on the upper end of the rage and then finally get some if i eat and the door getting enough confidence over the longer term that we've been stable for a while it i had a better level and that's going to drive one manufactured products visits too so it's it's all about that that confidence that is by far the biggest number for us in this in this range
spk_4: understood it in a telephone and piggybacking on on want to shan't questions and manufactured products committee that's the segment that of going to have the the most acute i had me and twenty twenty one and the based on the gonna order outlook you haven't your plan the day at the have any cop and said that point twenty one might my represent at the bottom for mayfair
spk_1: your product police from the operating income perspective or and that would love it too soon to call this point the i think like i just can refer back to what we were talking about it it certainly looks like time when we look at the rice to data and others around on product if idea is that you know that twenty twenty was a low point and so
spk_0: so we see those project if i you like like so many are saying start to increase i think that we should see and we were gutted were to track with if i days and if they go up and that's going to be good for oceaneering as well so i did that that's what as what's out there in the market right now as far as all that the customer budgeting and and the expectation so i gonna go with that and get it looks way like i'm we should start to see that in in unfortunately that and there's this rate lags a little bit so long ideas and twenty twenty as the habits effect and twenty twenty one and improving and twenty twenty one will start to build and twenty two and and beyond so and you got it right
spk_4: awesome thanks for the answers
spk_0: that
spk_1: you are or she comes from a lot about far from bag of america i fighters were blood
spk_0: the morning an allegorical get a to circle back to the ones you guys on the and other lot of will repeat that here you the guys are gonna hire avenue flat actually bit awkward over order can you just can't walk through some of that lead among people here on here are you talking from caught come back into the system or your there anything else impacting once you or maybe can benefit that that out that forgive you know i i would you same first while you'll get some things we talk about already i'm in l will be out here but but one of the one of the things as the rider was like well campaign is it is a good part of the que on story i'll hit on your question casa we don't see any real sniffing asked creep back in i would point your tentative know a little bit of in in it's i think it's temporary but a little bit of struggle get people through the uk right now i'm just with the with the back of the the new strains of the nineteen and slow down some of that means keep or and quarantining little bit longer it's that's not significant i think most do things were saying it if they're coming in the system their their temporary pieces on overall the like we got we got get control and in l a you know kind in the background we still got were some realizing more and more of the good work we didn't like in the cost reductions in twenty nineteen twenty twenty so i'm a that still come again so i don't think ah sir are really have a big concern for us in and que one elena any other comments you dad
spk_2: not to either i pointed any lpg certainly as we bought in a mobilize in or out working on the russian slight well i'm getting campaign angola the other stories of big would talk about in the past is a dropout your contract that we had working for petrobras in brazil
spk_5: the operation them drawn contract out beginning of this this quarter of a we had two of them beginning and that middle of last year so yeah that's incremental as well as so that the costs continue to be a focus and and looking at it from the plants but are not saying you know creep in that area this point
spk_0: understood calm and and then they hooked us more about on the isle question the ah that that is wearing a lot about not much go on the have so much uncertainty are magnified perspective yell it seemed like so far the impacted than pretty minimal he had some some have even kind of called towards a court order that get a get together you know just to get ahead at a riot or a change a long black modified like today you know what are you that thing that not next though you're a longer term how by that overtime given a neocon a new development flows what he thinks in a way they get all mean are numb the that more maintenance or and services what i think actually give an answer either i like the way you said that because i think one of the trade offs we see as and if we start to see maybe a little bit of a hang up in in or knitting it it could allow us to do more of that the maintenance work where the i am or because you have you if you've got some money to spend you get a decent commodity brighton and he he can drill a new album
spk_1: could get the most of the wells you got that could that could turn some didn't change the work by a we actually have good participation in that kind of work so that that could be good for some inheritor obviously any long term issues in the gulf of mexico would be would be more serious all of us that i think that's that's when things were watching her
spk_6: carefully obviously
spk_7: understood the ever
spk_0: yeah thank you your next explosion comes from the line of macpherson from the sun's energy your lines open thanks the morning run after graduation here under on the results and a know it's been a lot of heavy lifting it when it when he was cute and fruits sound like you yeah thanks for all of them the detail well i'm looking oceaneering into breath of your services and technology and through the lens of energy transition to the it it seems much broader than just offshore wind i'm obviously getting less attention than some other areas that ocean bottom mining for rare earths offshore projects for carbon capture and storage these are all areas what did i did to me seemed synergistic with with what you already have new your ten so how are you thinking about these different in markets for energy transition into what you already have and you're not just replacing your business a growing your business into new areas a it's it's absolutely a key focus for us and a and they were trying to trying to help people understand it in some of them some some a when we talk butter investments it's it's gotta be focused on those types of activities not guess in just greater industrialization broadly written i'm definitely not more the same we need to make me need turn this corner with and in a lot of our customers are doing so that's that's really helpful to we play a high we place behind has his on in the places that are occurring customers or go and because we know we've got that the sales channel there but also just the things a plan to our strengths like you said some see mining on it i'd it's still win but floating offshore wind is an even bigger deal for us because the deepwater play
spk_2: in some of this repurchasing are potentially repurchasing platforms i to be to the hydrogen producing or that would that would definitely help our ideas group because that integrity management of extending the life of these assets as there being refurbished there's a lot a great opportunities out there and and it's it's it's actually pretty exciting to see
spk_0: say okay we need to look at all then but then we also need to make some really good bets on which will have scale which from happening the soonest and which from our best best suited our capabilities
spk_8: yeah that makes sense know i would say i think it's probably helped not hurt to shed more light one in the granularity that attack for the market understanding your business or your valuation and when you get to the point of having scale with all these different energy transitioning
spk_0: ah opportunity the even if it's and usually total could as will mark and and then at some point you know current revenue run rate and action that would be an ld helpful for your story as well do you have some aspiration that to put more specificity on those numbers for for kind business and perspective business you know navy during twenty twenty one
spk_9: i think ordered to the will probably be cautious i i liked the idea of an understanding with the capabilities are but i think we're we're going to be a conservative is always get we don't want to oversell something that that doesn't have the right scale so i'll make sure that we are in were misleading anybody you don't buy it like getting excited about
spk_7: be about the ideas before they they have meaningful financial impact but but it point well taken i think we will try to at least get glimpses of warmer going and in and with with all that with conscience and how long it takes to get there but i appreciate the comment
spk_0: great thanks right if anything it once again if you like to ask a question who's press star and the number one on your telephone keypad more next caution comes from a line of like gender the for more research he likens open a thanks good morning and and and appreciate all the guidance and and the time of year and one the circle back onto subzero biotics seem like a pretty flat outlook for a flutter town baked into my pocket money for twenty twenty one i'm also at the back out hagel store for console acceleration there aren't you thought well am i thought that the gop mexico yeah think that he i'm just wondering now as we start to get a few more floaters into a into the water here in the market starts to normalize whether and matters all that much if it's an existing customer of yours or at it's a new customer i'm just wondering if it's if it's existing customers that are adding more rate as opposed to additional customers coming in them
spk_1: market on what the marketshare implications could before he on the on a robotic side
spk_0: it great question i'm obviously a it it's easier it's an existing customer it's especially easier for already on the rake and we been talking a lot about in a trying to say on the best assets the ones that are most likely to go to work and and we've been very effective so i think that that really helps us with the new customers as a robbery
spk_5: here you reduce your mobilization costs and and we got a track record established with that rig which you know they can they can tell you that if if they're out they're satisfied with that relationships well so and just watch canada rigs bed but that that amp actually plays in our favor is because of our position on on those i body assets so that it we buy for all
spk_0: i'm so he and he might expect
spk_4: but and a sense or and them from a follow up on the i think it be
spk_0: tough for me to go through the working capital special the movie pieces in in your outlook so maybe from of have three cats conversion perspective from even up perhaps could you could walk through now that you've reoriented and a rejiggered some your segments your how would you characterize each in terms of high for gascon version verses low for yeah swimmers and the reason i'm asking that we see obviously growth upside and downside and each each line near like at it back and impact the ad free cash flow conversion ultimately moving forward thanks
spk_2: the a lot of big you're like most people can look at it as like is going and look a diva die in year and how you convert that and in a going at one hundred eighty five is your midpoint do you like architects guide week seventy the midpoint of sixty ah which consistent what we did this year interest expense of cash but forty million dollars of net interest expense and in cash tacky the midpoint of thirty seven point five so if you look at that you get to a a a number of about forty seven point five each take it
spk_0: ned point of all of those and then we said our last call that we did expect to generate i'm working capital release associated with some project milestones ishares well in a gives us a cop and it's gonna get better than the two thousand and twenty free cash flow and in one thing that that are operating that's coming out and then we also have the care stacks acted rod is prepared remarks at another twenty seven twenty eight million dollars a week displayed on top of that
spk_8: totally understood so yeah we have a damper times when you're on chicken in such good guidance i'm just wondering for maybe the out years and in an eye on a you much but it with the a and tech continue to grow in excess of the cyclicality it's on me your energy segments of into this yeah materially capital a business for you such that peak
spk_2: and version over time starts to improve
spk_10: yeah if you look at both the i m d s an ad tech those new tend to be more out
spk_0: more or less out very light and capital intensity and so are those are ones that we do like the growth prospects and and eight returns or of are nice very helpful thanks jeff there are no further questions on from a call back over to mr robertson prequels employment

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