Oceaneering International Q3 2024 Earnings Report

Oceaneering International EPS Results

• Actual EPS: $0.36
• Consensus EPS: $0.44
• Beat/Miss: Missed by -$0.08
• One Year Ago EPS: $0.38

Oceaneering International Revenue Results

• Actual Revenue: $679.81 million
• Expected Revenue: $693.69 million
• Beat/Miss: Missed by -$13.88 million
• YoY Revenue Growth: +7.00%

Oceaneering International Announcement Details

• Quarter: Q3 2024
• Date: 10/23/2024
• Time: After Market Closes
• Conference Call Date: Thursday, October 24, 2024
• Conference Call Time: 11:00AM ET

Oceaneering International (NYSE:OII) is a Houston, Texas-based global engineering and technology company that provides products and services to the offshore energy, defense, aerospace, and industrial markets. The company is best known for its subsea capabilities, including remotely operated vehicles (ROVs), subsea tooling, umbilicals, engineering services, and inspection, maintenance, and repair solutions for offshore infrastructure.

Oceaneering’s business also includes offshore project management, asset integrity management, digital and data solutions, and the design and manufacture of specialized equipment. Its advanced technologies operations support applications such as space exploration, defense and security, robotics, and other complex environments requiring remotely operated or highly engineered systems.

Founded in 1969, Oceaneering serves customers internationally through operations and projects in major offshore energy regions and other industrial and technology markets. The company is headquartered in Houston and is led by President and Chief Executive Officer Roderick A. Larson.

Oceaneering International Q3 2024 Earnings Call Transcript

Key Takeaways

• In Q3, Oceaneering achieved $98.1 million in adjusted EBITDA and $67 million in free cash flow, repurchasing 422,229 shares for $10 million despite two Gulf hurricanes and a $3 million Maritime Intelligence divestiture loss.
• The Subsea Robotics segment delivered a 36% EBITDA margin (up from 31%) on 9% revenue growth, with operating income rising 37%, driven by improved ROV pricing, tooling and survey performance, and ongoing cost control.
• Manufactured Products revenue increased 17% with a 37% rise in operating income, supported by strong order intake and a backlog that grew to $671 million, yielding a trailing 12-month book-to-bill ratio of 1.21.
• For Q4, consolidated revenue is expected to rise—led by Manufactured Products and Offshore Projects—with adjusted EBITDA anticipated to remain similar to Q3 levels as Offshore Projects margins rebound to the low-20% range.
• Oceaneering’s 2025 guidance targets $400 million–$430 million in adjusted EBITDA, a ~20% increase year-over-year, driven by continued growth and margin expansion across all segments, especially SSR, Manufactured Products and AdTech.

Presentation

[Operator]

Welcome to Oceaneering's third quarter 2024 earnings conference call. My name is David, and I'll be your conference operator. All lines have been placed on mute to prevent any background noise. There will be a question-and-answer period after the speaker's remarks. With that, I'll now turn the call over to Hilary Frisbie, Oceaneering's Senior Director of Investor Relations.

[Hilary Frisbie, Senior Director of Investor Relations at Oceaneering]

Thanks, David. Good morning, and welcome to Oceaneering's third quarter 2024 results conference call. Today's call is being webcast, and a replay will be available on Oceaneering's website. Joining us on the call are Rod Larson, President and Chief Executive Officer, who will be providing our prepared comments, and Alan Curtis, Senior Vice President and Chief Financial Officer. Before we begin, I would like to remind participants that statements we make during the course of this call regarding our future financial performance, business strategy, plans for future operations, and industry conditions are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our third quarter press release. We welcome your questions after the prepared statements.

[Hilary Frisbie, Senior Director of Investor Relations at Oceaneering]

I will now turn the call over to Rod.

[Rod Larson, President and CEO at Oceaneering]

Good morning, and thanks for joining the call today. First off, thank you to the many Oceaneers who delivered $98.1 million in adjusted EBITDA, despite two large hurricanes in the Gulf of Mexico that impacted our offshore operations and three of our onshore facilities in Louisiana and Florida, as well as absorbing an approximate $3 million loss as we fine-tuned our business portfolio and sold our Maritime Intelligence business. I believe this speaks to both the resiliency of our Oceaneers and portfolio of businesses. That being said, I'd like to highlight some of our achievements from the third quarter of 2024. As I just mentioned, we delivered $98.1 million in adjusted EBITDA, which was in line with our guidance and consensus estimates. We generated healthy free cash flow of $67 million.

[Rod Larson, President and CEO at Oceaneering]

Subsea Robotics (SSR) EBITDA margins continued to expand to 36%, and yes, we did a share repurchase. Now I'll focus my comments on our performance for the third quarter of 2024, our consolidated and business segment outlook for the fourth quarter and full year of 2024, and our initial consolidated 2025 outlook. Now, for our third quarter 2024 results. For the third quarter, we reported net income of $41.2 million, or $0.40 per share, on revenue of $680 million. Adjusted net income was $37.2 million, or $0.36 per share. These adjusted results included the impact of $400,000 in foreign exchange gains, a $600,000 tax effect on adjustments associated with foreign exchange gains, and $4.2 million related to discrete tax adjustments.

[Rod Larson, President and CEO at Oceaneering]

Our consolidated third quarter 2024 operating income, as compared to the third quarter of 2023, was up 23% on a 7% increase in revenue. Our improved third quarter results were primarily due to strong performance in our SSR and Manufactured Products segments. For the third quarter of 2024, our consolidated adjusted EBITDA of $98.1 million was in line with our guidance range and consensus estimates. We generated $67 million in free cash flow and are pleased to report that we repurchased 422,229 shares for approximately $10 million during the third quarter of 2024. Our ending cash balance was $452 million. Now let's look at our business operations by segment for the third quarter of 2024 as compared to the third quarter of 2023.

[Rod Larson, President and CEO at Oceaneering]

SSR operating income was 37% higher on a 9% increase in revenue, with operating income margins expanding 623 basis points as compared to third quarter of 2023. EBITDA margin also improved over the same period last year to 36% from 31% due to improved ROV pricing and execution, performance improvements in our Tooling and Survey groups, and ongoing cost control measures. Average ROV revenue per day utilized of $10,576 was 13% higher, and fleet utilization of 69% and days utilized of 15,796 were both essentially flat as compared to the third quarter of 2023.

[Rod Larson, President and CEO at Oceaneering]

ROV fleet use during the third quarter of 2024 was 66% in drill support and 34% in vessel-based activity, compared to 61% and 39%, respectively, in the same period of 2023. The revenue split between our ROV business and our combined Tooling and Survey businesses as a percentage of our total SSR revenue was 77% and 23%, as compared to 76% and 24%, respectively, in the third quarter of 2023. At the end of September, we had 59% of the contracted floating rig market and ROV contracts on 85 of the 145 floating rigs under contract. Turning to Manufactured Products, compared to the third quarter of 2023, operating income was $11.3 million, an increase of 37% on a 17% increase in revenue.

[Rod Larson, President and CEO at Oceaneering]

Order intake during the quarter was solid, and our backlog on September 30th, 2024, was $671 million, an increase of $115 million over the third quarter of 2023. Our book-to-bill ratio was 1.21 for the trailing twelve months. Our Offshore Projects Group, or OPG, third quarter 2024 revenue, operating income, and operating income margin declined as compared to the third quarter of 2023. The declines were due to changes in project mix, which was more focused on lower margin inspection, maintenance, and repair, or IMR services, than in the same quarter in the prior year, as well as vessel crane repair costs and the associated vessel downtime.

[Rod Larson, President and CEO at Oceaneering]

Integrity Management and Digital Solutions, or IMDS, third quarter 2024 operating income and operating income margin both declined as compared to the same quarter in the prior year on an 11% increase in revenue. The decline was due to the one-time non-cash charge associated with the divestiture of our Maritime Intelligence division in September of 2024. Notwithstanding this one-time charge, operating results in the core IMDS businesses improved in the third quarter of 2024 as compared to the third quarter of 2023. Aerospace and Defense Technologies, or ADTech, third quarter 2024 revenue was essentially flat as compared to the third quarter of 2023, while operating income and operating income margins decreased due to increased project proposal costs associated with anticipated work in 2025 and changes in project mix.

[Rod Larson, President and CEO at Oceaneering]

Unallocated expenses of $38.9 million were in line with our guidance for the quarter and lower than the same period last year. Now I'll address our outlook for the fourth quarter of 2024 as compared to the third quarter of 2024. On a consolidated basis, we expect our fourth quarter 2024 revenue to increase, led by increases in Manufactured Products and OPG, with adjusted EBITDA similar to that achieved in the third quarter of 2024. Our expectations for our fourth quarter 2024 operations by segment are: SSR, we are projecting slightly lower revenue and operating profitability. As compared to the third quarter 2024, we forecast a decline in ROV days utilized in drill support activities, which we anticipate will be partially offset by an increase in vessel support activities. Overall, ROV fleet utilization is expected to be in the upper 60% range.

[Rod Larson, President and CEO at Oceaneering]

SSR fourth quarter adjusted EBITDA margin is forecast to remain in the mid-30% range. For Manufactured Products, we anticipate revenue to increase due to deliveries of our MaxMover Counterbalance forklifts. Operating income and an operating income margin are expected to be down significantly due to lower plant absorption related to holiday schedules and the delivery of MaxMovers at margins currently lower than those achieved in our energy businesses. For OPG, we anticipate increased revenue and significantly higher operating results, with operating income margin in the low-20% range. This forecast is based on an improved project mix to include more installation and intervention services, with multiple projects in West Africa commencing in the fourth quarter, and the return to service of the vessel that underwent, and I will add, completed the previously mentioned crane repairs.

[Rod Larson, President and CEO at Oceaneering]

For IMDS, following the divestiture of the Maritime Intelligence division, we expect operating profitability to improve on lower revenue. For ADTech, we expect lower revenue and significantly lower operating income, with operating income margin in the low teens percentage range. This outlook is based on delays in the timing of project schedules and awards, and unallocated expenses are expected to be in the $40 million range for the fourth quarter of 2024. For the full year of 2024, as reported yesterday, we expect to generate adjusted EBITDA within the revised range of $340 million-$350 million. Our free cash flow guidance for the year remains unchanged in the range of $110 million-$150 million. Now, looking forward, I'd like to provide you with our initial thoughts on Oceaneering's 2025 outlook.

[Rod Larson, President and CEO at Oceaneering]

As announced yesterday, we are initiating 2025 EBITDA guidance in the range of $400 million-$430 million. At the midpoint of $415 million, this would represent a 20% increase over the midpoint of our revised adjusted EBITDA guidance for 2024. We are confident in our ability to deliver this improvement in 2025 based on increased revenue and improved operating income across all of our operating segments, led by notable gains from SSR, Manufactured Products and, not to be missed, ADTech. For SSR, we project similar utilization levels in ROV, but improved revenue and further margin expansion on continued pricing momentum and efficiency gains in ROV and improved performance from Survey and Tooling. For Manufactured Products, we forecast increased throughput and conversion of higher margin Manufactured Products backlog and better performance in our non-energy products businesses.

[Rod Larson, President and CEO at Oceaneering]

For OPG, we expect increased international activity, higher margin intervention and installation projects, and no major vessel dry docks. For IMDS, operating income is expected to be significantly higher due to improved commercial terms and not incurring a loss associated with the previously mentioned sale of the Maritime Intelligence business. For ADTech, we forecast significant growth in revenue and operating income on low to mid-teens margins. Our outlook is based on revised program schedules and commencement of new program awards, and unallocated expenses are expected to increase modestly, in the range of $40 million-$45 million per quarter, with year-over-year increases due to planned implementation of a new ERP and other information technology costs. This level of performance in 2025 also underpins our expectation that our 2025 free cash flow will exceed that generated in 2024.

[Rod Larson, President and CEO at Oceaneering]

In 2025, we expect capital expenditures to be modestly higher than 2024, as we focus on growth in our various robotics platforms and new ERP and other opportunities generating the highest returns. I'd like to highlight that year-over-year, in 2025, we are projecting a significantly stronger first quarter. This is based on our expectations that we will maintain ROV pricing and margin improvements achieved throughout 2024. Our OPG results will improve significantly with the absence of a dry dock in 2025, yielding lower dry dock costs and improved vessel availability, and OPG work commenced in the fourth quarter of 2024 will continue in the first quarter of 2025. We will provide more specific guidance on our expectations for 2025 during the year-end reporting process. In summary, we believe we are well positioned to deliver our customers' needs in the foreseeable future.

[Rod Larson, President and CEO at Oceaneering]

We continue to maintain and grow our market share in our core businesses, and we are entering new markets by leveraging our robotics capabilities, all of which are made possible by the relentless efforts of talented Oceaneers around the globe. We appreciate everyone's continued interest in Oceaneering and will now be happy to answer any questions you may have.

[Operator]

At this time, if you'd like to ask a question, please press the star and one keys on your telephone keypad. Keep in mind, you may remove yourself from the question queue at any time by pressing star and two. Again, it is star and one if you'd like to ask a question today. We'll take our first question from Kurt Hallead with Benchmark. Please go ahead. Your line is open.

[Kurt Hallead, Head of Global Energy at Benchmark]

Hey, good morning, everybody.

[Rod Larson, President and CEO at Oceaneering]

Morning, Kurt.

[Kurt Hallead, Head of Global Energy at Benchmark]

Hey, so just, I'm glad you guys put some markers out there for 2025, given that there's been a lot of, you know, discussion around offshore driller and white space utilization and so on. So obviously, you've incorporated that. So the question would be, how much white space have you incorporated? How does that white space potentially impact you? And my, I guess the real gist of the question is, my understanding is that you have a very significant share in the 7G drillship market, but it seems like a lot of this potential, you know, downtime might be for 6G rigs. So kind of a broad question, but really wanna get a little bit more context around how you're thinking about it.

[Rod Larson, President and CEO at Oceaneering]

No, I think you got it, Kurt. I mean, we're not seeing significant white space. We did, you know, we did talk a little bit about utilization and maybe some of the peak utilization we were hoping for doesn't necessarily happen in the first part of the year or so. But even with that, I mean, with the pricing improvements, with the other things that are going on that are going the right way with cost control and efficiency, turning ROVs around, it still bodes for a really strong year. I mean, SSR still delivers some of the best improvements year over year of any of our divisions. So I think that's the short story. Vessels stay strong.

[Rod Larson, President and CEO at Oceaneering]

A better year for OPG means a better year for SSR, and we've also got more juice in both the Tooling and the survey side.

[Kurt Hallead, Head of Global Energy at Benchmark]

Got it. And then, you know, typically there is a correlation and a little bit of a lag effect between, you know, the move in the day rate for the rigs and then your pricing. You did indicate you expect to get better pricing and maintain the pricing that you got through 2024. So, you know, is there a way you give us a general sense of, you know, what kind of percentage pricing improvement year on year you guys are factoring into your EBITDA guidance for SSR?

[Rod Larson, President and CEO at Oceaneering]

I don't know that I could get that specific, Kurt, because it really depends on region. I mean, we've rolled some contracts in some of the better regions, some of the better pricing regions. So as they roll, we'll move those prices up. But it's hard for me to really pin a number on what that would be on the whole, because it's gonna depend on the utilization of those days in those regions.

[Kurt Hallead, Head of Global Energy at Benchmark]

Gotcha. And then, my follow-up would be on the Manufactured Products side. You know, you guys are obviously starting to deliver on the automated forklifts and so on. And just wanna get an update on how that outsourcing process has been going. It seems like it's gonna be a little bit of drag here on margins in the near term, but how do you see that outsourcing agreement, you know, evolving and improving margins going forward?

[Rod Larson, President and CEO at Oceaneering]

So I'll say this: the execution has been good, meaning, you know, this handover between we've been building these things in Orlando, and we've moved that to our outsourced facility or outsourced manufacturer. I think the handoff has been great. We've moved some inventory across. We've done some things like that. We've built the first article. I think what the problem with the margins is, until we get them fully switched, we're kind of paying for both sides, right? So there's some redundant costs in the startup, but as those things resolve, and, you know, Alan, I think, has mentioned this before, as we start to build volume in that business, we get more vehicles out.

[Rod Larson, President and CEO at Oceaneering]

Not only are you selling vehicles, but you're, you know, that whole razor and the blades part, when we get more of those razor blade sales on sparing and service and other thing on an installed base, that's when we expect this thing to really come to fruition.

[Kurt Hallead, Head of Global Energy at Benchmark]

Okay. And I may have missed it if you mentioned it during your early part of your commentary, but what was your order intake for the automated forklifts during the quarter?

[Rod Larson, President and CEO at Oceaneering]

.Yeah, it wasn't in there, Kurt. I don't think we've got that ready for public consumption anyways.

[Alan Curtis, Senior VP and CFO at Oceaneering]

Yeah. Kurt, I can just say there were no large material orders for MaxMover during the quarter.

[Kurt Hallead, Head of Global Energy at Benchmark]

Okay. All right. That's great. Thank you.

[Operator]

We'll take our next question from Sean Mitchell with Daniel Energy Partners. Please go ahead.

[Sean Mitchell, Managing Partner at Daniel Energy Partners]

Good morning, guys. Thanks for taking the question. Earlier this month, you guys put out a release highlighting you were awarded a multimillion-dollar contract by the U.S. Department of Defense to build, you know, autonomous underwater vehicle, establish an onshore remote operation center for the U.S. Navy. If you gain further traction here, how do you envision the total addressable market in the defense industry with something like AUVs? And then, I think you noted the unit was being built in Morgan City. When will that be delivered?

[Rod Larson, President and CEO at Oceaneering]

So, I'll start with the last question. We're set for a Q2 2025 delivery of the vehicle.

[Sean Mitchell, Managing Partner at Daniel Energy Partners]

Okay.

[Rod Larson, President and CEO at Oceaneering]

Yeah, so that's exciting. You know, I could be tongue-in-cheek, and I could tell you, you know, I could say, "I could tell you, but I'd have to kill you," on the defense side, but we really don't know. I mean, it depends on what the use cases are for the government. I mean, we would say pretty bullish on it in the sense that you see all these articles that are out there right now talking about the use of drones, more use of drones, and more use of autonomy by the military, and how they think that's a real force multiplier. So we're keen on it.

[Rod Larson, President and CEO at Oceaneering]

I think what will really tell is when they get this first article in their hands and they start working with it and you know, putting it through its paces and seeing how many of the things they want to do are achieved. Manufacturing base, and for us, that's a huge opportunity because we do some of that work now, but we've also been working really hard with the OEMs to help them expand their capabilities. So that's another big one to watch.

[Sean Mitchell, Managing Partner at Daniel Energy Partners]

Got it. Thank you. Maybe one follow-up, just when you think about uses of CapEx going forward for your, for the company in 2025 and beyond, relative to kind of the approximately $120 million you'll spend this year, how should we think about not only the dollar amount, but the makeup? Do you push harder in autonomy than maybe you already have, or how should we be thinking about CapEx?

[Rod Larson, President and CEO at Oceaneering]

Yeah, let's start with the basics. I mean, one thing to note is that as we spend more money, a greater percentage is going to growth. And when we think about growth, I don't think about more of the same, right? I'm not thinking about, you know, doing more of the things we finally got decent absorption on, things like umbilical plants and some of our other hardware out in the field. But I think we do. We lean more on next generation, things that are gonna be differentiated, things that will make us more competitive, maybe even a little bit disruptive. It's definitely where we want to spend money.

[Sean Mitchell, Managing Partner at Daniel Energy Partners]

Got it. Thanks for taking my questions, guys.

[Rod Larson, President and CEO at Oceaneering]

Yeah. Thanks, Sean.

[Operator]

And we'll take. As a reminder, if you'd like to ask a question today, please press the star and one keys. We'll take our next question from David Smith with Pickering Energy Partners. Please go ahead. Your line is open.

[David Smith, Director at Pickering Energy Partners]

Hey, good morning.

[Rod Larson, President and CEO at Oceaneering]

Good morning, Dave.

[David Smith, Director at Pickering Energy Partners]

I just wanted to comment. I thought the SSR margin improvement was really impressive, you know, given the limited increase in ROV day rate. So I wanted to ask if it's fair to assume the average daily ROV OpEx came down in Q3 also, or if that segment margin really benefited more from the Tooling and Survey business.

[Rod Larson, President and CEO at Oceaneering]

I think a lot of it is the efficiency side and cost. I mean, the other thing I can say is and I've kind of harped on this a little bit, but I'll say it again: There is something good that happens when our utilization gets up in that, I wanna say, maybe 65, even if we hit 80. The machine just runs better. I mean, you see fewer COPQ events or problems. The team is sort of in a rhythm. It does really run best, its efficiency is best when we're humming, and we've just got everything moving along.

[Rod Larson, President and CEO at Oceaneering]

So I think that lack of, you know, COPQ, operating efficiency, you know, more days without mobilizations, all those things really do turn into lower OpEx and better operating efficiency out in the field.

[Alan Curtis, Senior VP and CFO at Oceaneering]

Yeah. I'll add, Rod, that as we were preparing the notes, Martin McDonald, our Senior Vice President of Subsea Robotics, emphasized the efficiency gains that they were making in ROV. So he wanted to make certain that it was clearly evident that it was not just Tooling and Survey.

[Rod Larson, President and CEO at Oceaneering]

They are-

[Rod Larson, President and CEO at Oceaneering]

When they have more data to work with, you can just imagine they're doing more predictive maintenance. They're looking at, you know, modeling failures and getting ahead of these things and understanding when the maintenance needs to be done based on the current operating profile. The turnaround on vehicles even, you know, how long it takes for them when they get an ROV into the shop till they can get it serviced and then back out in the field. All of those things, they're pushing on every button. I've been using this analogy a lot internally, but I tell them, "Everything's an F1 race.

[Rod Larson, President and CEO at Oceaneering]

Every time we come into the pits, we figure out how to take seconds off the next lap, no matter whether that's the driver, time in pits, whatever," and they've really taken it to heart.

[David Smith, Director at Pickering Energy Partners]

I appreciate that. So it sounds like the ROV margin improvement we've been seeing is really about the price improvement and efficiency gains. I did wanna ask if you're seeing tailwinds or if you envision, you know, further tailwinds on, you know, initiatives like remote piloting, right? To save costs or, you know, maybe performance contract benefits.

[Rod Larson, President and CEO at Oceaneering]

Yeah, and we do. I mean, there's always more to get, and I think it's like peeling the onion. You do find new things when as the farther you go, so it doesn't seem like we run out of opportunities. The other thing, I mean, the remote piloting, what we're seeing is the more satellite coverage we get, the more 5G around the world we get, the more opportunity there is. So right now, we can set up the operating centers anywhere in the world. That's not a problem.

[Rod Larson, President and CEO at Oceaneering]

The issue is really whether or not we can have 5G to the rig so that we can get that low latency we need, or 5G or equivalent, to operate an ROV remotely, because the lag time will be just too hard to operate the ROV in those places where we can't get that sort of communication bandwidth.

[David Smith, Director at Pickering Energy Partners]

I appreciate the color. If I could flip one more and just circling back to Sean's question. You know, if the defense AUV business grows, wanted to make sure that if we should be thinking about that as kind of a manufacturing sale that goes through ADTech as opposed to growing the ROV count and Subsea Robotics.

[Rod Larson, President and CEO at Oceaneering]

Yeah, it would be, it would be more on that side. You know, we do. But the other side I would just point out is a lot of the work that we do for the government with, you know, with government-owned, company-operated, so they call it a GOCO, where we would actually sell the equipment to the government. They would own it, but and a lot of times we would operate some of that, much like we operate the submarine rescue equipment package. We build some of that, but now we're actually maintaining and operating that equipment on behalf of the government. So I think there's some opportunity on both sides.

[David Smith, Director at Pickering Energy Partners]

Perfect. Thank you very much.

[Rod Larson, President and CEO at Oceaneering]

You bet.

[Operator]

And once again, if you'd like to ask a question, please press the star and one keys. We do have a follow-up question from Kurt Hallead with Benchmark. Please go ahead.

[Kurt Hallead, Head of Global Energy at Benchmark]

Hey, guys. So, you guys referenced you started the share repo program. Just wanted to get an update from you guys on how you are thinking about that dynamic. You know, are you considering the possibility to be more programmatic about it, or are you still looking at it as being opportunistic? That's part of it. Second part was, I think in the last time that you guys provided us with viewpoints on capital allocation, you didn't specifically commit to, you know, percentage of the cash flow that's gonna go to the shareholder distribution. So I was just wondering if you kinda have reconsidered that and give us some updates on that.

[Rod Larson, President and CEO at Oceaneering]

I'd put it this way, Kurt. I mean, we're looking at current and future dilution, so we are at least saying that should be a goal to try to manage or eliminate dilution through our employee stock plan. So I think that's one way I'd look at sort of the sizing it. I think it's gonna be somewhere between programmatic and opportunistic. I think we want-- we don't want it to be, you know, every nine years, meaning, you know, last time we did this was 2015, and we'll wait another nine years. That's not-- That's certainly not the case. But I think we're gonna be cautious because you mentioned the whole capital allocation thing.

[Rod Larson, President and CEO at Oceaneering]

We do have a significant number of opportunities that we think are really on the growth side of the business, so we're gonna stick with our guns. You know, we've said it for a long time, organic growth, inorganic growth, and then return of capital. So I think we'll stick to that. But you also know that we've been fairly conservative with the investment, too. We're not just throwing money around. And we did tighten up a lot, especially during, you know, the downturn. But I don't think there's gonna be any urgency to go back to, or I don't know, Oceaneering was ever there, but as the industry got a little wild with spending money, that's certainly not our plan. Alan, would you add anything?

[Alan Curtis, Senior VP and CFO at Oceaneering]

No, I think that's, that's spot on, Rod. It, it's clear. We, we do have a little bit more in the pipeline today than we've seen in the last, you know, five years, that are kinda gonna fit into that propeller chart that we have in our investor deck that focuses on, you know, opportunities in the IMDS space, things that are in the Aerospace and Defense side of the business and other mobile robotics. So I, I think we're clearly defined as to what we're looking for.

[Kurt Hallead, Analyst at Benchmark]

Excellent. All right, thanks.

[Rod Larson, President and CEO at Oceaneering]

Thanks, Kurt.

[Operator]

Once again, if you do have a question, please press the star and one keys. We'll pause for another moment to allow any further questions to queue. There are no further questions on the line at this time. I'll return the program to Rod Larson for any additional or closing comments.

[Rod Larson, President and CEO at Oceaneering]

Since there are no more questions, I'm gonna just wrap by thanking everyone for joining the call. This concludes our third quarter 2024 conference call. Have a great day, everybody.

[Operator]

This does conclude today's program. Thank you for your participation, and you may now disconnect.

Participants

Analysts

• Hilary Frisbie, Senior Director of Investor Relations at Oceaneering
• Rod Larson, President and CEO at Oceaneering
• Kurt Hallead, Head of Global Energy at Benchmark
• Alan Curtis, Senior VP and CFO at Oceaneering
• Sean Mitchell, Managing Partner at Daniel Energy Partners
• David Smith, Director at Pickering Energy Partners
• Kurt Hallead, Analyst at Benchmark