Oceaneering International, Inc.

Q1 2021 Earnings Conference Call


spk_0: i need of canada and i'll be or conference operator i would like to welcome everyone to the oceaneering first quarter two thousand and twenty one earnings conference call all i have been placed on you to prevent any background noise at and snickers remarks to have a question and answer period but that on out in a call to mark peterson oceaneering vice president of corporate development and a better relations
spk_1: like you about a good morning everyone and welcome to ocean or it's first quarter twenty twenty one or results of and go to their each call is being what cast and a replay will be available on oceans side joining us on the call today or rod larson president and chief executive officer will be providing not the third comments in our curtis senior vice president financial officer before he began i would just like to remind the and that statements we like during the course of this call regarding our future an actual 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 with format of nineteen ninety odd a common today also include non gap financial measures additional details and reconciliations to the most recent directed variable gap financial measures can be found in our first quarter press release we walk in the questions after the prepared statements i will now turn a call over the rod
spk_2: you think martin good morning everybody paper during the all day the police to be sharing with you today or first quarter twenty twenty one results which reflect another corner of operating discipline and incremental efficiency gains while significant challenges remain with regard to the bulk of it is returning the markets as demonstrated by increasing demand the developing a man recovery combine with continued opec plus discipline has created more stable industry fundamentals thereby supporting expectation of increasing levels of activity for most more traditional services and products over the next several years today i'll post my comments on our performance for the first quarter twenty twenty one are consolidated and is a second outlook for the second quarter twenty twenty one and arkham proved consolidated twenty twenty one outlook as well as thoughts on how are supporting our customers with their lower carbon energy turned issue needs and efforts now for the results for the first quarter we reported in a loss of nine point four million dollars or nine cents per share on revenue four hundred thirty eight million dollars these results go to the impact of three point two million a pretax adjustments associated with restructuring and other expenses and board exchange losses recognize during the quarter adjusted net income was two point eight million dollars or three cents per share we continue to improve our operating performance by grinding operational efficiency but by focusing on safety quality and value based solutions for our customers i'm pleased with rate of progress made during the first twenty twenty one which enabled each of our operating segments to generate positive the just operating income and ejected a bitter and are adjusted consolidated a bit of fifty two point eight million dollars or as both are guidance and published consensus estimate based on our first quarter results interview used outlook we are narrowing are expected adjusted even arrange to one hundred eighty to two hundred and ten million dollars for twenty twenty one now let's look at our business operations by segment for the first quarter twenty twenty one some see robotics or ssr adjusted operating income was flat on slightly higher revenues or ssr quarterly adjusted even a margin of thirty two percent was consistent with recent fire quarters as pricing remain stable operating activity in our as as are saying that exceeded our original expectation due to higher than forecast rb drill support days and survey activity the revenue split between are remotely operated vehicle or rb business and are combined tooling and survey businesses as a percentage of our total as as our revenue was seventy eight and twenty two percent respectively compared to the a twenty split in immediate prior quarter as we did dissipated rb date on higher declined as compared to the fourth quarter due to expected lower seasonal activity days on higher were eleven thousand eight hundred eighty seven as compared to twelve thousand four hundred and fifty six during the fourth quarter twenty twenty the increase in girl support days on higher only slightly off setting the decline in vessel based services days or fleet use was sixty four percent internal support and thirty six percent in vessel based services vs fourth quarter fleet use of sixty and forty percent respectively for the first quarter we maintain our fleet count and two hundred hit the rv systems our fleet utilization was fifty three percent down slightly from fifty four percent in the fourth quarter twenty twenty average are we revenue per day on fire of seven thousand eight hundred seventy four dollars was seven percent over seven thousand three hundred and twenty five dollars achieved during the fourth quarter the sequential increase in revenue per day and higher was primarily due to favorable geographic mix and higher mandate associated with certain work scope for example installation and reactivation activities overall we continue to characterize pricing is able at the end of march we had already contracts on seventy eight of the one hundred and thirty five floating rate under contract or fifty percent black with fifty percent of december thirty first twenty twenty when we an rv contracts on seventy five of the one hundred and twenty ninth wedding rings on a contract subject quarterly variances we continue to a support mark a chair to generally approximate sixty percent turning the manufactured products our first quarter twenty twenty one adjusted operating income declined as expected from the fourth quarter on lower segment revenue adjusted operating income margin decrease to four percent in the first quarter of twenty twenty one from nine percent in the fourth quarter of twenty twenty which had benefited from favorable contract close out and negotiated supply chain savings the did not have or in the first quarter activity and our mobility solutions businesses remained week during the first quarter of twenty twenty one
spk_1: are manufactured products backlog and march thirty first twenty twenty one was two hundred forty eight million dollars compared to our december thirty first twenty twenty backlog of two hundred sixty six million dollars or book the bill ratio was point six for the
spk_2: as compared with a book to the ratio point for for the year ended december thirty first twenty twenty
spk_1: archer products group or opie first quarter twenty twenty one adjusted operating income increased on substantially higher revenue
spk_2: revenue benefited from the start up a field activities on the rise or was like well intervention project in angola
spk_1: the sequential increase in adjusted operating income margin from two percent in the fourth quarter of twenty twenty to ten percent of the first quarter of twenty twenty one was due to increased utilization of assets and personal while holding indirect costs table
spk_2: mexico and gum activity during the first relatively flat with the fourth quarter of twenty twenty as higher amounts of installation work or offset i lower amounts of interventions maintenance and repair or i am i work or integrity management and digital solutions or i india's first quarter twenty twenty one adjusted operating income was higher than fourth quarter twenty twenty on flat revenue improvement in adjusted operating income margin from three percent in the fourth quarter twenty twenty five percent in the first quarter of twenty twenty one benefited from ewing transformation of how and where workers performed which is driving more effective use of personnel or aerospace and defense technologies your ad tech first quarter twenty twenty one adjusted operating income largely improved from the fourth quarter on twenty of twenty twenty on flat revenue adjusted operating income margin of nineteen percent was consistent with that achieved the fourth quarter of twenty twenty unallocated expenses of thirty one point seven million dollars were lower as compared to fourth quarter during the first quarter we utilize one point seven million dollars of cash and operating activities as the annual payment of accrued employ incentive awards related to the attainment of specific performance goals and prior periods was mostly offset by good operating performance in addition ten point seven million dollars in cash was used for maintenance and girl capital expenditures these two items were the largest contributors to our nine point three million dollar cash reduction during the quarter at the in the quarter we had four hundred and forty three million dollars of cash and cash equivalents know borrowings and or five hundred million dollar revolving credit for
spk_1: chile and no loan maturities until november twenty twenty four
spk_2: now i will address our outlook for the second quarter of twenty twenty one on a consolidated basis we expect our second quarter twenty twenty one ourselves to prove with adjusted he without in the range of fifty five to sixty million dollars and sequentially higher revenues or second quarter twenty twenty one operations by segment as compared to the first quarter twenty twenty one we anticipate for ssr we're projecting higher seasonal i can
spk_1: every in our rv survey and tooling businesses to drive higher operating profitability
spk_2: are the days on higher expected to increase in both drill support and esl based activities as the sorry just it even a margin is forecast rain consistent as compared to the first quarter for manufactured products we anticipate lower revenue and operating profitability you're encouraged by reaching award activity in our energy products business however we continue to expect muted activity and or mobility solutions businesses
spk_1: pg we anticipate higher revenue and adjusted operating results
spk_2: we expect a seasonal pick up in i am are activity in the gulf of mexico and in addition work on the rise or less like well intervention project in angola as expected to continue through the second quarter bryan vs a guy revenue and relatively flat operating results with operating margins being relatively consistent with the first quarter twenty twenty one or tech weeks that high revenue and relatively flat operating results we expect to change in project mix with girl with an engineering operational and submarine repair services for the us navy and lower contribution from our space business unallocated expenses are expected to be in the low to mid thirty million dollar range directly for a full year twenty twenty one operations by segment as compared to twenty twenty we expect for ssr are we expect adjusted operating results to improve on slightly higher revenues are be days on higher are projected to remain relatively flat with some minor shift and geographic mix result retooling they services are expected to be flat with activity levels generally falling rb days on higher results are expected to improve on higher levels of activity as as our forecasts that adjusted even a margins are expected to remain consistent with those achieved and twenty twenty or obese we expect our twenty twenty service mix of sixty two percent grill support and thirty eight percent vessel they services to generally remain the same for twenty twenty one but higher missile base percentages during the seasonally higher second and third quarters
spk_1: we estimate overall rv legalization to be in the hot made it to high fifty percent range again with higher seasonal activity during the second and third quarters we continue to forecast that are marketshare for the girl support market will remain in the sixty percent range for the foreseeable future
spk_2: as of march thirty first twenty twenty one there were approximately fourteen oceaneering harvey's onboard thirteen floating drilling rigs with contract terms expiring before third quarter during the same period we expect thirty five of our are obese on twenty nine floating ranks to begin new contracts are manufactured products we expect sync with revenue and adjusted operating performance to decline year over year primarily as a result of the decreased order in taken our energy businesses during twenty twenty we are encouraged however with over one hundred and thirty five million in contract wins during the first four months and twenty twenty one which is expected to drive increased activity in the second half of twenty twenty one we continue to see marginally higher activity and contribution from our mobility solutions businesses and twenty twenty one but order activities expected to remain muted until twenty twenty two we forecast the that are operating income margins will be in the low to mid single digit range for the ear and segment book to the ratio will be in the range of one point one to one point five and a full year bro pg we expect a meaningful improvement in adjusted operating results on high revenue the biggest contributor to the expected increase in activity in this segment is the resumption of business to a more normalize level which is adversely impacted and twenty twenty two two uncertainty and low oil prices coupled with the impacts of coven most noticeably the rivals like well intervention project in angle at which was delayed and twenty twenty is expected to continue to the second quarter of twenty twenty one
spk_1: and based on a more stable and higher oil price we expect a seasonal pick up in i am are activity in the gulf of mexico which was muted and twenty twenty it'll they should have our vessels both old and chartered has improved to the point that may lead us to enter into spot charters on an as needed basis this year as has been the case over the past several years much of our gulf of mexico work continues to be call out in nature and therefore sensitive the current oil price
spk_2: for i am the us we expect an increase in revenue and adjusted operating income we expect higher revenue the back half a beer as we work on incremental contracts books during the fourth quarter of twenty twenty and the first quarter of twenty twenty one ramp up we forecast that are adjusted operating income margin will increase throughout the year as we continue to drive more efficiency in this business
spk_1: adjusted operating margins are expected average in the high single digit range for the year
spk_2: brad tech we expect higher avenue with operating results and operating results with operating income margins consistent with those achieved and twenty twenty we continue to see good growth opportunities in our sense he defense technologies business while we were disappointed that the dianetics team did not win the recently announced human landing system contract with nasa the loss of potential work on this project does not change our overall expectations for segment improvement in twenty twenty one or estimated organic capital expenditure total for twenty twenty one remains between fifty and seventy million dollars is includes approximately thirty five to forty million dollars or maintenance capital expenditures and fifteen to thirty million dollars of girls catholic senators we forecast are twenty twenty one income tax payments to be in the range of forty to forty five million dollars in addition we expect to receive cares act tax refunds and twenty eight million dollars during the year unallocated expenses are expected to average in the low to mid thirty million dollar range per quarter now turning to our balance sheet with four hundred and forty three million dollars of cash at the end of march and the expectation and generating twenty twenty one free cash flow in excess of that generated and twenty twenty we are well positioned to address or twenty twenty four debt maturity the continued actively review the situation to formulate ours strategy on how and when we will address is pending maturity and as a reminder we continue to have our five hundred million dollar under on our dollar available to us until november twenty twenty one and four hundred and fifty million dollars available until january twenty twenty three and how i'd like to make a few comments and how we're naming necessary changes in the energy industry the continued expected energy demand increase will open at numerous opportunities for companies focused on delivering the cleanest safest forms of energy unreliable and sustainable basis throughout the whole supply chain their inherent challenges with each for of energy as ocean or is done throughout if the plus years we will continue to adapt and lead the past few years we've made significant strides in developing enabling technologies to assist our customers and attaining their stated net neutral carbon goals such as remote piloting machine vision and machine learning applications commercialization of our liberty and is requires robotic vehicles the development of the soon to be commercial freedom robotic vehicle so what a footprint optimization and more efficient facilities transforming the manner and how and where we work focusing integrity management and digital solutions are ideas and digital and software enabled predictive analytical miles edition of a recent jones act as or outfitted with the most fuel efficient engines and additionally we're leveraging all of these capabilities and growing our government based and other non energy this was his just to name a few items most if not all of these plane important role in assisting our customers and achieving their state and carbon goals especially that is related or to developing and maintaining their offshore it it regardless of whether the energy they are producing comes from oil gas wind or hydrogen i am the as also plays a pivotal role in maintaining our customers onshore
spk_3: facilities
spk_2: as you can see we are continuing to evolve support our customers and societies clean energy goals
spk_4: in summary for free
spk_2: our first quarter performance and refreshed outlook for the year give us confidence the narrow our twenty twenty one adjusted even against to arrange and one hundred eighty to two hundred and ten million dollars the general macro environment for energy businesses has improved and we're cautiously optimistic and activity levels will also improve in the back half of this year and and twenty twenty two assuming that the commodity price remained sufficiently strong and stable
spk_1: growing our business profitably remains a primary focus for us and we're continually looking for ways to demonstrate the quality of our services and products while increasing the value proposition for customers
spk_2: i'm proud of the resiliency that are management employees have shown in navigating navigating the changes and challenges of the past several years despite the challenges with strengthened our service and product offerings and balance sheet position the company to succeed in the evolving market environments and i would also like to recognize an ocean here who left an indelible footprint on oceaneering as many have you seen john half will be rolling off our board of directors in may and obesity by jay cards as chairman of the board john's leadership and vision help transform us into the respected and recognize services and product leadership company we are today never compromising on safety and always committed to increasing the net wealth of our shareholders thank you john and the final reminder er focus continues to be generating positive free cash flow and twenty twenty one maintaining our strong liquidity position and improving our interns a or ones continued interest know sneering it will now be happy to take any questions you might
spk_0: at this time of you might i ask questions and paper star one and your town and keypad the first question pencil line of mike's about bank of america
spk_2: and morning and one or my
spk_1: what it is i wonder if you may be to stop you're just kind of a loaded on the guy know a narrow and that arrange really sorry bringing at the bottom and but i'm just gonna look at at the second half been in take what you know what the other one q and into to guide look like the bottom of the rain my you might imply kind of a step down from where we argue they can you to stop history some of the thing that the neil potentially bring bring to the bottom under that under the end of the range and and you know and i was reading about that
spk_2: yeah i think we're really in my it's it's not really into story i guess i there's a couple of new things but for small the standard stuff that the call at work and the gulf of mexico something were to happen in a course we've seen you know so far everything has been going well with permitting and we're getting down in the gulf of mexico but with the administration week we take a cautious look at that make sure that our customers can continue working on that as long as that happens when we got a good good commodity price i think we'll see good activity so while that that's out there is a possibility i think we do feel good and that activity will stay strong the other thing that we're looking at is how much can we put into the plants on you know we've we've got the umbilical plants which generally have a longer lead time and manufacture products but we've also got the other businesses gridlock in particular the connector businesses on they can do a faster turn so we can get more and more throughput there on that the again brings us up so there's a little bit of there's a little bit are escalating there but and then just generally you know this again gonna go back to some of the same old stories we've got some big deliveries for manufacture products in the back half of the year and we just need to make sure that the customers are are ready to take those on and and am i think i'm not questioning whether i we get that out and which is what happens when we're finished so we got we got some fourth quarter of stuff going there and intercourse just that with the leveled activity and you three i think that's that nature getting a pretty good feel for well where we see the uncertainty at least in the back half beer and that i would call it more to the upside maybe than the downside but that but those are or that those are the variables allen with you and anything
spk_1: yeah i think it's just me the uncertainty you know by now we certain see a stable oil price and it's benefiting as know should something happen we talk that opec lost the building it's really brought the markets at something that you're in the that something changed like we saw last year when it's kobe anaerobic clause yeah like a drug markets down and and some of those things that we traditionally say move the fastest yeah typically or opie business would be impacted if that was the case so we a we see the continued stability and that price of them with wanna think he would we be looking more towards the up gotta understand and then if we you just gonna switch gears and and maybe maybe just a longer can question around in some tea robotics margins and he knew when i'm on a whole lot of history and go off a given the be segmentation last year you know yeah right now are are counted ah you're soda soda started near where he had the peak of of anything we've seen from need i've reported so far it hit me think about that segment sort of longer term you were working working margins get you in chelsea robotic in what what what is more normal mean it's kind of medium term for that segment
spk_2: i think be a lot of the upside i don't think comes from some big strong know market driven rebound where their scarcity and and prices get moved out i would look for big move of there i'd look for incremental improvements with technology and was we is we start off more of the differentiated products like like israel his arm and and freedom and and more survey work and in in the mix i think those are the things are in dry margins up and and it's not going to be wild swings like like when you know that rates were scarce and harvey's were scarce and you watch the technology improvements i think that's what's delivering value for customers and and it's and it's not just on the he not just on the and down manning and some of the other things that we see from those products are are available that days there's a there's a carbon i hear that's really important thing about with liberty and freedom where we can offer customers solution that that really does ah produced our carbon footprint and and if you're if you're buying carbon credits to offset that and as a real financial value site i think that's where i see the change is happening than those are slow steady changes they're not they're not some whipsaw market kind of thing that i be looking for understood think everyone
spk_0: yeah i think like
spk_5: in a concussion concern the line and in the face and listen and
spk_1: thanks good morning good morning and
spk_2: i'll repeat the same question around potential conservatism with the guidance i just it in the what's this
spk_1: exclude the possibility that the the world relapses that in your base case that's not bad
spk_2: what else besides the l w like contract expiring and and into to what else is the an obvious minor and the second half versus the first half i don't see it and any other segments maybe a little bit in public but it's a big blow up on that point and a be you'd you'd you know our story really well so i'll i'll just say to the last couple years we had some nice long season work on you know that a summer was hurricane activity and others that drove some oh pg work for the third quarter to fourth quarter and gave us know the back half of the just stronger with a longer season it was kind of unique to the last couple years we haven't seen that every time cautious about about how much fourth quarter activity will have so that's the that's probably the biggest thing when you're trying to very over year and you're looking at that i just say we're going to have to see if if we get out if we it's the benefit along with a strong stay loyal price rape and and that's another thing that more stable oil price could also help us in the back half of year but where you'd have to see how that plays out so we aren't we are being cautious and and you gonna pick the right spot
spk_6: a really really focus on hope he gave the big well court that i will begin in subzero biotics due to the same extent because they get that they get that boos from for weather and seasonality and and just you know some of the same work at okay to eat as also affects them especially here in the gone
spk_1: okay okay
spk_2: caught your properly recently on the jam through april water and and and products and by one thirty five i either misheard or with confused by your comment that prepared remarks on of the bill for products for for this year if i can ask for every kid on that guy
spk_7: yeah we got a to a one point one to one point five for the full year
spk_1: but the bill okay so quite quite an acceleration there from trailing or direct
spk_6: if one thing you continue to see the units love these awards are very lumpy and so it will contain to see our customers progress with that by days a couple of these are pretty substantial and in nature so
spk_0: and when we get that the bigger awards that's when you'll see the inflection points or on
spk_8: can i found thanks on got an exclusive didn't wanna tell attention to the king and hot
spk_2: a argue marine and thank you that they have manufacture products for the hey talked about her heard of he really encouraging the fee and i just more broadly in your deepwater oriented segment cutting out the think about the away you're seeing them in those shots on goal as as we progress through twenty twenty one and feels like a personal and is probably at the top a bright spot right now and and that like any continue but i seen any any threats of green sheet activity in and other regions around the world like after west africa and and even in the gulf of mexico my keep on i can be perspective i would say yeah where we don't we see for you for and anyone one thing is to norwegian got knows shall continues to be pretty steady so that's been good products or build have been not hold it in green shoots you know things it's bike out obviously you said brazil's that latin america mean that that the northern lands the northern south america up again on an answer and an act and continued continues to be a very positive thing i'm thinking about the hole golf for example you know it that to as there's energy or form has been strong it and good things happening but mexico and united states i think about some of the projects that are are happening there are so yeah it west africa is there's good things
spk_8: actually i would call just all of africa and we've got we've got some some things go on there but again there's there's some challenges in africa so i kind of over here if you take the puts it takes it's hard to say that as an overall it's it's going to be really strong i would say it's more than more the other places are we talked about as the and he probably caught it it like it tells force majeure and in mozambique as they gonna get some things clean up there but that's that's not unusual for or the world that we've got it we got some rebalancing all the time but that is will watch that space to see if they if they they could get to the light side of that it could be good
spk_2: okay that's helpful and and i followed thing and i am the ass and related to a small smaller earning contributor but at the margin progression on basically flat as revenue has been a really nice to see and you've talked about that building pipeline of of opportunity than that segments out just wondering if you could i give us an update as soon as what you're saying i had a segment and may be talking about you know how your are transforming the way you're given work of said martins continued in prison for yeah sure i am in and thanks for asking mean it is it is one ose things that we haven't talked much about the past but it is that you know that moving from just being an fiction actually worked more than integrity management work more predictive modeling and we talked about bringing the work of people were you doing more and more remote access to to the assets and then sending the data to be worked on shore so instead of bringing people for the asset we're bringing acetate it to the people and that efficiency change has been great but that also and with we go i think a stronger handle on the value proposition for the customers we've been able to penetrate new customers and and girl in different markets i think getting a more global footprint has been an opportunity for growth that
spk_9: air but but the real prize to me is is moving up the value chain it's really moving from inspection to integrity management because about machine vision machine learning artificial intelligence predictive modeling that's where that that's where that is this needs to continue to grow and would got great people in place to do that back but the technology
spk_0: in the application of the technology so that's that's what we see as the promise to keep moving the margins there and to continue to grow the business
spk_1: i could hear they can use if thank you
spk_2: next question comes on the line of like entering lot of research
spk_1: thanks morning but yeah thanks i just wanna come back to be a pity segment yeah some very naughty sounds like an upside potential a nice hand up to an angle on the i am are not call our potential here the back half the year i'm just wondering i'm first on the profitability profile of those two things you know we see
spk_2: angle or a law and see i am are pick up in they're going to meaningful change segment margins and then you know seasonally or or otherwise will strengthen commodity yeah what kind of fall through to be potentially see and i am are in in twenty twenty two i know you're one of the companies that endeavors out further are guidance and that he had some visibility into this let me start with the hi i don't see dramatic shifts there his own in marjah ships i i do think that with the we do need the we do need the an activity levels to make that make that so till we gotta get we have to get the and utilization assets and that's really where that that magic happens and you we mentioned that a little bit about getting the assets will be currently am on a contract for the full you're fully allocated and then be able to the and to that capacity with was factors a will be a big part of of hidden those and of the high and of obese possibilities for the second half of the year
spk_1: i'm farther out i just wouldn't say it mean
spk_2: the campaigns and to be on it can be hard to predict and the when they come they're good you are gone and but that a lot of times there they are price sensitive than their budget sensitive so you don't i wouldn't i wouldn't venture to predict out to make orders but i'm alan anything you'd want and of that
spk_1: yeah i would add the a whopping and i i will met some insight earlier was you know when you look at the first half a year or so the back and lpg not only them the well intervention project that we have the general lol revenue meat the first have a was another pill support services contract and we're executing that's helpful for the family and the first half of the year girls did you like on town for himself
spk_2: the only can look at the revenue step down the back half yeah those are two pretty substantial or projects were working on in the first half a year that certainly does not reuptake itself in the back as will need to see more that call our nature i am are activity in the back at a supplement it on so edit that girl is part of why we don't have this is greater visibility into it or those markets like why would why they tend to be a little bit shorter duration of phone calls and yet that's that's totally fair and i appreciate the or the detail on one to come back the capital allocation are you mentioned the twenty twenty fours and from the optionality that you're going to be looking to attack that maturity and you notice your are you called out the step down in borrowing capacity a revolver i think you mentioned like twenty twenty one i'm obviously got some great organic growth avenues year especially you're not enter the segments are would emanate you know be a reason to potentially get after that maturity or not sooner or later are there any opportunity saying in some your non energy businesses where i'm in a could be at a for most damn cap taken drive of way i think they're i think there is like a we were in when we think about those they they tend to be they don't tend to be big transformational things they can be ways that we can go pick up technology that we can use gotta get within our core competency particularly marine so i think those are the kind of things we be looking out there ah
spk_10: it always i mean optionality preserving out he is always a big part of were over think about when we talk about it a retiree get early addressing the debt
spk_0: you know adjusting adjusting the things like that are so access to capital but i but i think we still are operating on first and foremost getting to a leverage ratio that guild investors are comfortable with and and then kind of setting that is argue normal as we go in and now pursue growth opportunities
spk_11: make sense pretty the time thanks
spk_1: that
spk_11: next question console honest and samantha her with and a car i inside
spk_12: you guys i'm thanks for my question
spk_1: couple of real quick ones on ssr and he called out higher survey works in the first quarter a couple times and instance wonder if he could elaborate on what that is being driven by and concur with years traditional i guess consumers are injured an entrepreneur things and maybe some of their energy transition at work
spk_2: right now most of this is in our traditional businesses are yeah we have done work in the offshore arena for that transition and the weird and east coast when specifically the table work with the and yearns for damn woods traditional customers
spk_1: and our customers threads taking advantage of just more pricey already thinking about maybe getting back on microcephaly offshore i would say it i would say it's more job
spk_2: the activity samantha then and it is a sort of annum are opportunistic after a price it it it's first steps so adding it bodes well for the rest for businesses as well or he great and in the other question with your newer or obese and you know the and highlighted at periods where shows are all these are working on by now can what put urge congress and with key to to have more of those wouldn't know the liberty freedom type assets sure it will let let me start with let me start with liberty liberty is being used primarily the north sea and and it's an opportunity for the customers who know that they've got installed as asset base some see the taken they can leave the liberty system without having about their to it if he will arm and it and it can communicate via a belated service it's got battery power they continued to work and do monitoring exercises while other things are happening in the feel it while they're doing production test or what have you so so that reduces the cost quite a bit by allowing them to to i to not have the cost of that boat or the carbon footprint of have an about their so that that that's an opportunity there and system because of handling system and everything else and and the fact that almost all of these vehicles are in some way shape or form of compatible with the exception of freedom we we utilize a lot of spares a lot of a lot of existing vehicles to build a system so that the cost is pretty manageable it's not a huge capital expense given that kind of the option so that's that's good going on and it's in it's good news when it happens if i use the israel his reasoning an interesting one because he is it has got a lot of re re purpose equipment in a system so the cost for us to put in israel system on is very cost effective and it's great benefit to our customers because they see the value and it can it can actually
spk_13: operate in higher clearance which means if you're up and most of these are are optional when installers and and so there were lazy nice directly to the vessel owners and the and the installers themselves and we can get them war days of operation per year by the able to operate the rv is in in higher weather conditions so
spk_2: that man is rpg can see where that be huge value if you've got a vessel out there that you know other what would only work
spk_1: that's a two year if you can get them to two hundred fifty days year that utilization is much much better so so we're looking at things like that the liberal past freedom is is a step change it's it's a whole different thing where we were we leave a vehicle resident in a lot of cases are using it to do different types of
spk_14: of survey
spk_0: where'd you get a lot more value for your survey you get a lot more work on where you can do you can use what we've got getting an and measurement surveys at the same time you're not just doing surveillance he can actually go back the spot measurements as well and that allows you to only deploy wants rather than deploying twice once for scanning and once for
spk_1: direct measurement so they they online high impact or customers armed and they all have what i would call reasonable ah capital demands on comparable to the rest are fully think fail that unix cut and consumerlab david smith a pack and energy drink your undermine more data
spk_2: because up in the feds honey badger guidance real quick the similar margin sequentially released on margin answer for your margin guidance look
spk_15: the kind of said like your flight year over year
spk_1: and the not mistaken that imply that of that down on of of the margin rate the second off and twenty one and other stars on the that gather some of atoms and how am i jump in here too but it it's a lot due to make sure which we pick some of the take out like the big are some rescue contract short of a mobilization which would you know we don't over mobilizations of the summer as cubic short of the mobilization that is out there is a a a bogey business with lower margins so that that makes changed as effect and tech as well alan we ended up yeah think the other companies you here in the next changed me i would be a human bladder system he had the we benefited from last year since been generic type work that was going through first corner of this year so with the have done yet exchange not being successful are user they are appealing it i think along with margin on but the expectations that's not going to materialize and second half
spk_0: are we had hoped one stage sir alex represents and is it is that reasonable that the think about the second half i can run rate as as a combat normalized level for the business

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