Oceaneering (NYSE: OII) reported Q1 EPS of $0.03, $0.09 better than the analyst estimate of ($0.06). Revenue for the quarter came in at $438 million versus the consensus estimate of $428.93 million.

Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, "We have continued to improve our operating performance by driving operational efficiency, led by focusing on safety, quality and value-based solutions for our customers. I am pleased with the rate of progress made during the first quarter of 2021. Each of our operating segments generated positive adjusted operating income and adjusted EBITDA, and our consolidated adjusted EBITDA of $52.8 million surpassed both our guidance and published consensus estimates. Based on our first quarter results and revised outlook, we are narrowing our expected adjusted EBITDA range to $180 million to $210 million for 2021.

"Our first quarter 2021 Subsea Robotics (SSR) adjusted operating income was flat on slightly higher revenue, as compared to fourth quarter 2020. Operating activity in our SSR segment exceeded our original expectation due to higher-than-forecast ROV drill support days and survey activity. Pricing for the various SSR services remained stable during the first quarter, resulting in an adjusted EBITDA margin of 32%, consistent with average adjusted EBITDA margins achieved during 2020.

"First quarter 2021 ROV activity remained consistent as compared to the fourth quarter of 2020 with fleet utilization averaging 53% versus 54% during the fourth quarter of 2020. A seasonal decrease in days on hire for vessel-based services was slightly offset by an increase in days on hire for drill support services. Our ROV fleet use during the first quarter 2021 was 64% in drill support and 36% in vessel-based activity versus fourth quarter 2020 use of 60% and 40%, respectively. Average ROV revenue per day of on hire of $7,874 was 7% higher over the fourth quarter.

"Sequentially, our first quarter 2021 ROV fleet count remained at 250 systems. As of March 31, 2021, we had ROV contracts on 78 of the 135 floating rigs under contract, or 58%, as compared to 58% as of December 31, 2020, when we had ROV contracts on 75 of the 129 floating rigs under contract. Subject to quarterly variances, we continue to expect our drill support market share to generally approximate 60%.

"Manufactured Products (MP) first quarter 2021 adjusted operating income declined, as expected, from the fourth quarter of 2020 on lower segment revenue. Adjusted operating income margin decreased to 4% in the first quarter of 2021, from 9% in the fourth quarter of 2020, which had benefited from favorable contract close-outs and negotiated supply chain savings that did not occur in the first quarter. Activity in our mobility solutions businesses remained weak during the first quarter of 2021. Our Manufactured Products backlog on March 31, 2021 was $248 million, compared to our December 31, 2020 backlog of $266 million. Our book-to-bill ratio was 0.6 for the trailing 12 months, as compared with a book-to-bill ratio of 0.4 for the year ended December 31, 2020.

"Our first quarter 2021 Offshore Projects Group (OPG) adjusted operating income increased on substantially higher revenue. Revenue benefited due to the start-up of field activities on the riserless light well intervention project in Angola. The sequential increase in adjusted operating income margin, from 2% in the fourth quarter of 2020 to 10% in the first quarter of 2021, was due to increased utilization of assets and personnel, while holding indirect costs stable.

"Integrity Management and Digital Solutions (IMDS) first quarter 2021 adjusted operating income was higher than fourth quarter of 2020 on flat revenue. The improvement in adjusted operating income margin, from 3% in the fourth quarter of 2020 to 5% in the first quarter of 2021, benefited from the continuing transformation of how and where work is performed, which is driving more effective use of personnel.

"Aerospace and Defense Technologies (ADTech) first quarter 2021 adjusted operating income marginally improved from the fourth quarter of 2020 on flat revenue. Adjusted operating income margin of 19% was consistent with that achieved for the fourth quarter of 2020. At the corporate level for the first quarter of 2021, Unallocated Expenses of $31.7 million were lower as compared to the fourth quarter of 2020.

"For the second quarter, compared to the first quarter, we anticipate higher activity levels and operating profitability improvement in our SSR and OPG segments, higher activity levels and relatively flat operating profitability in our IMDS and ADTech segments, and lower activity levels and lower operating profitability in our Manufactured Products segment. Unallocated Expenses are forecast to be in the low- to mid-$30 million range. On a consolidated basis, we expect second quarter 2021 results to improve, with adjusted EBITDA in the range of $55 million to $60 million on sequentially higher revenue.

"For the full year of 2021, at the segment level, as compared to 2020, we forecast SSR operating results to improve on slightly higher revenue, and adjusted EBITDA margin to remain relatively flat. ROV fleet utilization is expected to be in the upper 50% range for the year. For Manufactured Products, we forecast lower operating results as compared to 2020; however, we expect improved order intake during the first half of 2021, which should drive increased activity in the second half of 2021. The book-to-bill ratio is expected to be in the range of 1.1 to 1.5 for the full year, and adjusted operating margin is expected to be in the low- to mid-single digit range. For OPG, we forecast increased vessel utilization and the continuation of the Angola riserless light well intervention project to benefit OPG's results in the second quarter of 2021, leading to a meaningful annual improvement in adjusted operating results on higher revenue. For IMDS, we forecast improved operating results on higher revenue with adjusted operating margin in the high single-digit range for the year. And for ADTech, we expect improved operating results on increased revenue with an annual operating margin approximately the same as that achieved in 2020.

"We forecast our 2021 income tax payments to be in the range of $40 million to $45 million. In addition, we expect to receive CARES Act tax refunds of $28 million during the year. We continue to forecast our organic capital expenditures to total between $50 million and $70 million. This includes approximately $35 million to $40 million of maintenance capital expenditures and $15 million to $30 million of growth capital expenditures.

"Our first quarter performance and refreshed outlook for the year give us confidence to narrow our 2021 adjusted EBITDA guidance to a range of $180 million to $210 million. Our priority continues to be generating cash. In 2021, our expectation remains that we will generate positive free cash flow in excess of the amount generated in 2020, excluding the cash benefit associated with expected CARES Act tax refunds. We remain committed to maintaining strong liquidity and believe that our cash position, undrawn revolving credit facility and debt maturity profile should provide us ample resources and time to address potential opportunities to improve our returns."

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