Oceaneering International, Inc. (OII) Q4 2022 Earnings Call Transcript

Oceaneering International, Inc. (NYSE:OII) Q4 2022 Earnings Conference Call February 24, 2023 11:00 AM ET

Company Participants

Mark Peterson - Vice President of Development and Investor Relations

Rod Larson - President and Chief Executive Officer

Alan Curtis - Senior Vice President and Chief Financial Officer

Conference Call Participants

Kurt Hallead - Benchmark

Eddie Kim - Barclays

Operator

Good morning. My sanction is Joanna, and I will beryllium your convention operator. Welcome, everyone to Oceaneering's Fourth Quarter and Full-Year 2022 Earnings Conference Call. [Operator Instructions] There will beryllium a question-and-answer play aft nan speakers’ remarks.

With that, I will now move nan telephone complete to Mark Peterson, Oceaneering's Vice President of Development and Investor Relations. Please spell ahead.

Mark Peterson

Thank you, Joanna. Good morning, and welcome, everyone, to Oceaneering's 4th fourth and full-year 2022 net convention call. Today's telephone is being webcast, and a replay will beryllium disposable connected Oceaneering's website.

With maine connected nan telephone coming are Rod Larson, President and Chief Executive Officer, who will beryllium providing our prepared comments; Alan Curtis, Senior Vice President and Chief Financial Officer; and Wit LeBlanc, Vice President and Chief Accounting Officer.

Before we begin, I would for illustration to punctual participants that statements we make during nan people of this telephone regarding our early financial performance, business strategy, plans for early operations and manufacture conditions are forward-looking statements made pursuant to nan safe harbor provisions of nan Private Securities Litigation Reform Act of 1995. Our comments coming besides see non-GAAP financial measures.

Additional specifications and reconciliations to nan astir straight comparable GAAP financial measures tin beryllium recovered successful our 4th fourth property release. We invited your questions aft nan prepared statements.

I will now move nan telephone complete to Rod.

Rod Larson

Hey, bully morning, and acknowledgment for joining nan telephone today. 2022 marked our 4th consecutive twelvemonth of improved adjusted EBITDA performance. In our offshore power markets, nan twelvemonth unfolded mostly arsenic we expected, pinch seasonally little activity levels and accrued mentation costs during nan first-half of nan year, progressing into higher activity levels and accrued margins during nan second-half of nan year.

Our consolidated adjusted EBITDA of $233 cardinal was supra nan midpoint of our guidance scope and year-over-year adjusted EBITDA maturation was led by important improvements successful our Subsea Robotics aliases SSR and Offshore Projects Group, OPG conception results.

We delivered $121 cardinal of rate travel from operations, spent $81 cardinal connected superior expenditures and accrued our rate position by $30.6 cardinal to $569 cardinal connected December 31, 2022. We are encouraged by our beardown bid intake during nan second-half of 2022, improving pricing and expanding income pipeline. We expect these affirmative fundamentals to thrust improved financial capacity successful 2023.

Today, I will attraction my comments connected our capacity for nan 4th fourth and full-year of 2022, our marketplace outlook for 2023, Oceaneering's consolidated 2023 outlook, including our anticipation to make affirmative free rate travel successful nan scope of $75 cardinal to $125 cardinal and EBITDA successful nan scope of $260 cardinal to $310 cardinal and our conception outlook for nan first 4th and afloat twelvemonth of 2023.

Now moving to our results. For nan 4th fourth of 2022, we reported nett income of $23.1 cardinal aliases $0.23 per share. These results see nan effect of $0.2 cardinal of pretax adjustments associated pinch overseas speech losses and antagonistic $16.6 cardinal of discrete taxation adjustments chiefly owed to changes successful valuation allowances and definite adjustments to anterior twelvemonth taxes.

Adjusted nett income was $6.4 cardinal aliases $0.06 per share. Consolidated gross of $536 cardinal was 4% little than successful nan 3rd quarter, pinch gross increases successful our manufactured products and Aerospace and Defense Technologies aliases AdTech segments, being much than offset by gross decreases successful our different operating segments, peculiarly OPG.

Fourth 4th 2022 consolidated operating income of $42.2 cardinal was 10% little than successful nan 3rd 4th connected a emblematic seasonal diminution successful activity successful our offshore segments. Our consolidated adjusted net earlier interest, taxes, depreciation and amortization aliases adjusted EBITDA of $70 cardinal was supra nan midpoint of our implied guidance scope provided astatine nan opening of nan 4th fourth and was somewhat higher than statement estimates.

And for clarity, nan imaginable merchandise waste successful our intermezo business did not occur. Although we knowledgeable emblematic seasonality, it is worthy noting that nan mixed gross and adjusted EBITDA levels successful our SSR and OPG segments during nan 4th fourth of 2022 were importantly greater than nan corresponding 4th successful 2021. We spot this arsenic a affirmative parameter for prospects successful our power businesses successful 2023.

Our 4th fourth 2022 results besides included accrual releases resulting from much businesslike unit and inventory guidance initiatives that occurred passim nan twelvemonth and chiefly benefited our SSR and Integrity Management and Digital Solutions segments. We generated $159 cardinal of rate from operating activities and aft deducting $25.9 cardinal of superior expenditures, our free rate travel was a beardown $134 cardinal for nan quarter.

Good operating rate flow, moving superior efficiencies and superior expenditure subject allowed america to summation our rate position by $141 cardinal during nan 4th fourth of 2022. As of December 31, 2022, our rate equilibrium stood astatine $569 million.

Now let's look astatine our business operations by conception for nan 4th fourth of 2022. SSR operating income improved sequentially, contempt marginally little revenue. Activity levels successful our remotely operated vehicle, ROV, tooling and study businesses were mostly accordant pinch expectations.

As mentioned, SSR's results included accrual adjustments resulting from unit and inventory efficiencies recognized successful nan 4th quarter. These reserves and accruals stay passim nan twelvemonth and nan adjustments resulted from reconciliations performed successful nan 4th quarter.

As a result, SSR EBITDA separator of 35% during nan 4th fourth was supra nan 31% achieved during nan 3rd 4th of 2022. Without nan use of these releases, SSR's 4th fourth 2022 EBITDA separator would person been comparatively accordant pinch nan separator achieved successful nan anterior quarter.

The SSR gross divided was 77% from our ROV business and 23% from our mixed tooling and study businesses, nan aforesaid arsenic successful nan contiguous anterior quarter. Fourth 4th 2022 ROV days connected prosecute were 14,350 aliases 7% lower, arsenic compared to 15,408 successful nan 3rd 4th pinch each nan diminution coming from vessel-based days arsenic a consequence of seasonality.

Our fleet usage during nan 4th was 65% successful drill support and 35% successful vessel-based services, compared to 60% and 40%, respectively, during nan 3rd quarter. Fleet utilization declined to 62% successful nan 4th fourth from 67% successful nan 3rd 4th of 2022. Fourth 4th 2022 mean ROV gross per time connected prosecute of $8,967 was 6% higher than successful nan 3rd 4th of 2022.

We ended nan 4th and nan twelvemonth conscionable arsenic we began pinch a fleet count of 250 ROV systems. During nan 4th quarter, we retired 3 systems and added 3 systems to our fleet. At nan extremity of December, we had ROV contracts connected 83 of nan 141 floating rigs nether statement aliases 59%, nan aforesaid percent arsenic connected September 30, 2022, erstwhile we had ROV contracts connected 82 of nan 140 floating rigs nether contract.

Turning to Manufactured Products. Our 4th fourth gross of $100 cardinal was 7% higher than successful nan 3rd 4th of 2022. Operating income of $6.1 cardinal and operating income separator of 6% were higher sequentially owed to a favorable task mix. Bidding activity was robust successful our energy-focused businesses during nan 4th quarter, and we are excited to spot expanding liking successful our Mobility Solutions businesses arsenic evidenced by our precocious announced contracts for 85 MaxMover autonomous counterbalance forklifts to beryllium delivered successful 2023 and 2024.

Our manufactured products backlog connected December 31, 2022, was $467 million, a beardown summation complete our September 30, 2022 backlog of $365 million. Our book-to-bill ratio was 1.39 for nan full-year of 2022, arsenic compared pinch nan trailing 12-month book-to-bill of 1.08 connected September 30, 2022.

OPG 4th fourth 2022 operating income declined connected little revenue. Revenue was 20% little chiefly owed to seasonality successful nan Gulf of Mexico aliases GoM. Fourth 4th 2022 operating income separator of 9% declined from 13% achieved successful nan 3rd 4th of 2022. This diminution was owed to lower-than-anticipated alloy utilization resulting from task schedules shifting into mid-2023 and higher-than-expected alloy demobilization expenses.

For IMDS, 4th fourth 2022 operating income improved sequentially connected 5% little revenue. Operating income separator for nan 4th fourth improved to 9% from 5% successful nan 3rd 4th of 2022. The separator betterment was mostly owed to statement repricing and nan use associated pinch businesslike unit guidance successful nan year.

Our Ad Tech 4th fourth operating income declined from nan 3rd 4th of 2022 connected a 7% summation successful revenue. AdTech operating income separator declined arsenic expected to 11% owed to changes successful task mix. Fourth 4th 2022 unallocated expenses of $33.6 cardinal were sequentially higher owed to a operation of accrued accruals for semipermanent performance-based compensation and accrued accusation exertion costs.

Now I'll move my attraction to our year-over-year results for 2022, compared to 2021. For nan year, consolidated operating income improved sequentially connected higher revenue, arsenic compared to 2021, consolidated adjusted operating income. 2022's improved results were chiefly owed to affirmative power markets that spurred accrued offshore activity successful our SSR and OPG segments, which realized improved pricing and accrued utilization successful nan 2nd half of nan year.

Impacts from nan U.S. government's continuing solution successful nan early portion of 2022, resulted successful little gross and little operating income from our AdTech segment. Compared to 2021, our 2022 consolidated gross accrued 11% to $2.1 billion, pinch gross maturation successful our OPG, SSR and Manufactured Products segments being partially offset by gross declines successful our IMDS and AdTech segments.

Consolidated 2022 adjusted operating income of $111 cardinal and adjusted EBITDA of $233 cardinal improved by $38.8 cardinal and $22 million, respectively, pinch important gains successful our SSR and OPG segments being partially offset by declines successful our AdTech, IMDS and Manufactured Products segments. We generated $121 cardinal successful rate provided from operations and invested $81 cardinal successful superior expenditures.

For nan afloat twelvemonth of 2022, we generated $39.8 cardinal of free rate travel and accrued our rate equilibrium by $30.6 cardinal to $569 million. We are pleased pinch notable achievements accomplished during 2022, including nan following: each of our 5 operating segments achieved affirmative operating income and affirmative adjusted EBITDA.

Our SSR and OPG segments achieved meaningful year-over-year betterment pinch a mixed gross summation of 21% and a mixed EBITDA betterment of $38.5 million, arsenic compared to 2021. Our SSR business continued to execute outstanding drill support ROV capacity pinch 99% uptime achieved during nan year.

We besides achieved a commercialized method readiness level connected Freedom, our hybrid ROV aliases an autonomous underwater vehicle, aliases AUV. Our Oceaneering mobile robotics business launched its MaxMover autonomous counterbalance forklift merchandise during nan twelvemonth and we person seen beardown business liking since its preamble to nan marketplace arsenic evidenced by important contracts pinch a awesome shaper to proviso 85 forklifts to beryllium delivered successful 2023 and 2024.

Our AdTech conception secured respective meaningful contracts during nan twelvemonth contempt a diminution successful gross caused by nan national government's continuing resolution. Our Defense Subsea Technologies business was awarded a multiyear statement by nan U.S. Navy to supply subsea systems to support nan modified Virginia-class submarine level and our Space Systems business arsenic portion of nan squad led by Collins Aerospace, connected a multiyear statement to create next-generation other vehicular abstraction suits.

From a information standpoint, Oceaneering squad remains focused connected life-saving rules, identifying precocious hazard tasks and processing engineered solutions to mitigate risks which led to a full recordable incident rate, aliases TRIR, of 0.28 for nan year, mounting a caller grounds debased complaint for Oceaneering. While galore of our yearly financial metrics improved sequentially successful 2022, I would for illustration to item conscionable a fewer of them.

Consolidated backlog grew by 15% from $1.7 cardinal connected December 31, 2021, to $1.9 cardinal connected December 31, 2022. Net income from a GAAP position was affirmative for nan first clip since 2017. Cash accrued by $30.6 cardinal to $569 million. Our expertise to summation our rate position complete nan past respective years now gives america a important elasticity connected really we woody pinch our $400 cardinal indebtedness maturity successful November 2024.

Net indebtedness to adjusted EBITDA ratio of 0.6 times connected December 31, 2022, improved from 0.8 times by December 31, 2021, and remains very favorable. Our endeavor worth grew to $1.9 cardinal astatine nan extremity of 2022, arsenic compared to $1.3 cardinal astatine nan extremity of 2021 connected nan spot of our expanding stock price.

Sustainability remains a halfway attraction pinch further advancement being made connected our environmental, societal and governance initiatives. From an biology standpoint, successful 2022, we revenge our first ambiance alteration study informed by nan task unit connected climate-related financial disclosures. We besides revenge our yearly sustainability study utilizing nan disclosure methodology outlined by nan Sustainability Accounting Standards Board. Both reports are posted connected our website.

We proceed to create and germinate technologies utilizing our integer and halfway robotics expertise to create efficiencies for our customers while mitigating c emissions. From a societal perspective, we created an worker acquisition section reporting straight to our Chief Human Resources Officer, to put further accent connected connecting pinch our employees, supporting their improvement and expanding their entree to various profession opportunities.

Our definitive desire to create and beforehand early activity from wrong nan institution showed bully results successful 2022, pinch 1 promotion to nan executive activity squad and 2 promotions into conception activity positions. Also, nan summation of our caller Chief Legal Officer, diversifies nan perspectives and processes for productivity of our executive activity team.

From a governance perspective, we person taken steps to hole for nan projected Securities and Exchange Commission, emissions and cybersecurity reporting requirements and judge we are good positioned to comply should those rules beryllium adopted. Oceaneering besides continues to clasp an ESG Index A standing pinch nan MSCI.

Now turning to our 2023 outlook for nan markets we serve. We expect nan 2023 forecasted mean Brent value of astir $85 per tube to prolong precocious patient levels of offshore operating and superior spending passim nan year. Analysts and investigation work projections for different cardinal metrics we way support expectations for accrued activity successful 2023.

Research root information indicates floating rig time rates proceed to summation astir a tightening floater market, which we position arsenic an denotation of expanding demand. There were astir 250 character awards successful 2022, and Rystad forecasts a greater than 45% summation successful 2023 to astir 360 and remaining complete 300 into 2024. Rystad had besides forecast character installations to beryllium fundamentally level year-over-year pinch 339 installations forecast for 2023.

Analysts besides task important maturation successful offshore renewables markets complete nan adjacent decade. Rystad estimates that offshore upwind CapEx and OpEx spending will summation astir 20% year-over-year. Rystad besides sees continuing double-digit maturation done nan extremity of nan decade pinch spending projected to beryllium astir $130 cardinal by 2030. And finally, we expect nan government-related markets we service to stay comparatively unchangeable pinch continued humble maturation for nan foreseeable future.

Now to our 2023 consolidated outlook for Oceaneering. With each nan affirmative signs we are seeing successful our energy, aerospace and defense and mobility solutions markets, we are optimistic astir our prospects for 2023. Global power request continues to grow, and each forms of power stay critically important to satisfying these needs.

Given years of underinvestment successful accepted power sources, accrued accent connected power security, request dynamics and comparative advantages of offshore production, including larger assets bases and little c footprint.

We spot a beardown up rhythm unfolding successful our accepted offshore power markets. We are encouraged by nan important opportunities we spot to deploy our halfway robotics expertise into a assortment of markets, including accepted and renewable energy, aerospace and defense, mobility solutions, business and manufacturing.

Based connected year-end 2022 backlog, nan expected meaningful summation successful backlog conversion, anticipated 2023 bid intake and existent marketplace fundamentals, we are projecting our 2023 consolidated gross to turn by much than 10% pinch accrued gross successful each of our operating segments, led by manufactured products and SSR.

We expect sequential betterment successful our 2023 financial results based connected our expectations for higher operating income and higher margins successful our SSR, OPG and Manufactured Products segments, somewhat higher operating income and unchangeable margins successful our AdTech conception and comparatively unchangeable operating income and margins for our IMDS segment.

For nan year, we expect generating $260 cardinal to $310 cardinal of EBITDA pinch incremental betterment complete 2022, coming chiefly from our SSR and OPG segments. At nan midpoint of this range, our 2023 EBITDA would correspond a 23% summation complete 2022 adjusted EBITDA.

We expect our full-year 2023 to output affirmative free rate travel of $75 cardinal to $125 million. Based connected nan existent marketplace conditions, we expect bully opportunities for improved pricing and margins successful our energy-focused businesses and unchangeable pricing and margins successful our government-focused businesses.

For 2023, we forecast our integrated superior expenditures to full betwixt $90 cardinal and $110 million. This includes astir $45 cardinal to $50 cardinal of attraction superior expenditures and $45 cardinal to $60 cardinal of maturation superior expenditures. We expect commodity prices will support maturation and free rate procreation successful our power businesses during 2023 to underpin these investments.

Considering our meaningful rate equilibrium and rising liking rates, we forecast our 2023 liking disbursal nett of liking income to diminution to astir $28 million. We expect our 2023 rate taxation payments to beryllium successful nan scope of $60 cardinal to $65 million. This includes taxes incurred successful countries that enforce taxation connected nan ground of in-country gross and carnivore nary narration to nan profitability of specified operations.

Directionally successful 2023 for our operations by segment. Our anticipation for improved results for SSR is based connected accrued ROV days connected hire, insignificant favorable displacement successful geographic operation and continued pricing improvements. Results for tooling-based services are expected to amended pinch activity levels mostly pursuing ROV days connected hire.

Survey results are projected to amended arsenic good pinch some geophysical and study and positioning businesses seeing accrued world activity. We expect gross maturation successful nan debased double-digit scope and accrued EBITDA margins to mean successful nan debased to mid-30% scope for nan full-year.

For ROVs, we expect our 2022 work operation of 61% drill support and 39% alloy services to stay mostly nan aforesaid done 2023. Our wide ROV fleet utilization is expected to beryllium successful nan mid to high-60% scope for nan year, pinch higher seasonal activity during nan 2nd and 3rd quarters. We expect to mostly prolong our ROV marketplace stock successful nan 55% to 60% scope for drill support services.

At nan extremity of 2022, location were astir 18 Oceaneering ROVs connected board, 14 of nan 25 floating drilling rigs pinch statement position expiring during nan first six months of 2023. During nan aforesaid period, we expect 44 of our ROEs connected 34 of nan 52 floating rigs to statesman caller contracts.

For Manufactured Products, we task conception capacity to amended connected a important summation successful revenue, chiefly based connected 2022 bid intake successful our power businesses. Bidding activity successful our power businesses remains robust, and we expect this to proceed during 2023. We forecast Manufactured Products operating income margins to mean successful nan mid-single-digit scope for nan twelvemonth pinch revenue, pinch task operation wrong our umbilical business shifting to much accepted manufacturing activities.

Additionally, we are seeing increasing liking successful our Mobility Solutions business, arsenic highlighted by our precocious announced contracts to present 85 MaxMover autonomous counterbalance forklift systems successful 2023 and 2024, expanding activity from our mobility solutions businesses successful 2023.

So OPG, operating results are forecast to amended successful 2023 connected a mean summation successful revenue. These projections are based connected improved alloy utilization successful nan Gulf of Mexico and accrued world activity and installation, involution and diving, astir notably successful nan 2nd and 3rd quarters.

In general, we expect to support a accordant level of chartered vessels and whitethorn look to augment this capacity pinch further vessels, depending connected nan marketplace conditions and circumstantial projects. Vessel time rates are expected to stay astatine comparatively precocious levels done 2023. However, we expect these costs to beryllium offset by supportive demand-based pricing.

Overall, for 2023, we expect OPG operating income margins to mean successful nan mid-teens range. As per usual, this conception has nan highest magnitude of speculative activity incorporated successful our guidance.

For IMDS, operating results are forecast to beryllium comparatively level successful 2023 connected somewhat higher revenue. We spot bully world opportunities for statement renewals and growth, particularly successful areas wherever we tin leverage integer and robotic capabilities. Operating income separator is expected to stay successful nan mid-single-digit scope for nan year.

For AdTech, our 2023 gross and operating results are expected to beryllium higher than those successful 2022. We expect maturation successful each 3 of our government-focused businesses, which secured respective cardinal statement awards during nan 2nd half of 2022. Operating income margins are expected to mean successful nan debased teens scope for nan year.

For 2023, we expect unallocated expenses to mean successful nan mid to precocious $30 cardinal scope per quarter. For our first 4th 2023 outlook, fixed nan higher costs of performing offshore activity complete nan past respective years, customers are progressively readying their activity to debar periods of higher upwind risk.

As a result, we expect a first 4th seasonal impact, peculiarly successful our OPG business. Considering this and anticipated task timing starring to higher levels of utilization successful nan 2nd and 3rd quarters, we are forecasting our first 4th 2023 adjusted EBITDA to beryllium successful nan scope of $40 cardinal to $50 million.

At nan respect to midpoint, our first 4th guidance represents a 43% summation complete nan comparable play successful 2022 and is expected to correspond a percent of our yearly EBITDA akin to nan anterior year.

Sequentially, we task higher gross and operating results successful our Manufactured Products segment. Lower gross and operating results and our SSR, IMDS and AdTech segments and little gross and importantly little operating results successful our OPG segment.

Despite nan seasonality impacts expected during nan first quarter, marketplace signals proceed to constituent to robust offshore activity, some successful nan Gulf of Mexico and internationally complete nan remainder of 2023. And we stay assured successful achieving full-year 2023 EBITDA astir nan midpoint of our guided range.

In closing, our attraction is to make meaningful free rate travel and ensuring we person capable liquidity to reside our 2024 indebtedness maturity, while continuing to prosecute strategical growth. To beryllium a bully steward of institution resources and progressing our ESG initiatives, to amended our returns by expanding nan utilization of our assets, maintaining elastic and businesslike alloy fleet management, driving efficiencies and accordant capacity passim our organization, engaging pinch our customers to create value-added solutions that summation their rate travel and improving pricing and margins commensurate pinch nan worth we bring to those customers and astir importantly, to stay dedicated to information and well-being of our labor and our customers.

Achieving occurrence requires a squad effort and nary of our accomplishments would person been imaginable without our dedicated and passionate labor and guidance teams. I want to personally convey our labor for driving nan successes we are seeing successful Oceaneering. I besides want to convey our shareholders who person shown expanding assurance successful our expertise to turn and toggle shape our company.

I'm highly excited astir nan affirmative marketplace signs for our businesses, including nan opportunity for expanding our prices and margins successful our accepted businesses and nan increasing prospects we spot to leverage our robotics acquisition successful caller markets.

We admit everyone's continued liking successful Oceaneering, and we'll now beryllium happy to return immoderate questions you whitethorn have.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, we will now statesman nan question-and-answer session. [Operator Instructions] First mobility comes from Kurt Hallead astatine Benchmark. Please spell ahead.

Kurt Hallead

Hey, bully morning, guys.

Rod Larson

Good morning, Kurt.

Kurt Hallead

Hey, it’s a awesome recap. I deliberation immoderate of nan ROV dynamics are benignant of starting to summation immoderate momentum. As you mentioned, offshore rig rates thin to beryllium a really bully starring parameter for nan ROV rates. And it seems for illustration what you said, we person 44 ROVs that are group to reprice I guess, sometime present successful 2023. So I guess, a benignant of a starring mobility here. The past clip besides rig rates were complete $400,000 a day. ROV rates were location betwixt $10,000 to $12,000 a day. That'd beryllium up astir 25%, 30% from what you did successful nan 4th quarter.

So are you getting immoderate pushback astatine all? Do you spot an opportunity to benignant of get akin pricing mid-cycle? Just benignant of get a consciousness of really you spot things and whether they -- nan dynamics betwixt nan rig rates and ROV rates person changed astatine all.

Rod Larson

Yes. So there's ever pushback. I mean -- but I will opportunity this. As we reprice, we are seeing -- we've seen immoderate very -- and I'll beryllium careful, I'd opportunity immoderate very isolated incidents wherever we are starting to spot that 2014 pricing. So I deliberation that's directionally correct. I deliberation that complete time, arsenic we reprice, we'll beryllium capable to spot immoderate of those rates and those things that mostly hap successful nan markets that are astir difficult to service wherever we do a awesome job. So depending connected wherever they come, I deliberation we tin commencement bumping up against those rates, again, it's conscionable going to beryllium getting a greater percent of nan fleet repriced.

Kurt Hallead

Okay. That's adjacent enough. I guess, nan 2nd constituent of my mobility is benignant of connected nan Manufactured Product side. Initially here, conscionable trying to get a consciousness connected what you deliberation is wrong your power arsenic a company, to benignant of thrust margins supra and beyond benignant of that single-digit benignant of scope that you referenced. And are location things that you tin perfectly do present successful 2023 that could supply immoderate upside to that?

Rod Larson

I'll commencement a small bit, and past I'll fto Alan jump successful because that's his home. That's wherever he came from earlier this job. But I would opportunity pricing is still nan awesome opportunity present because while location are immoderate efficiencies gained, we still person a ample magnitude of commodity value built into nan building of nan umbilical products, successful general, reasoning astir alloy conduit and copper.

So we're conscionable going to person to support driving price, we spot that nan capacity is starting to get much constrained astatine nan umbilical plants. So we're going to person to -- we're going to person to beryllium assured that if we want to get nan customers nan transportation times they want and support those slots unfastened for them truthful that they tin get their projects done, location will beryllium a willingness to salary for that. Alan, thing connected nan costs broadside aliases that you'd add?

Alan Curtis

No. I deliberation I would adhd -- I would look astatine it arsenic separator betterment will beryllium astir apt much seen successful ‘24 and ‘25. In ‘23, we person a small spot of a operation displacement successful immoderate of nan products and services that we're offering that we expect gross connected this twelvemonth versus past year. So we had immoderate higher separator activity that really went done past year, revenues we recognized and past immoderate of nan activity that we're doing this twelvemonth was priced successful a small spot much competitory environment. And past arsenic we look astatine nan plants filling up, we deliberation there's room to move value present that will use ‘24 and ‘25. So we do expect separator progression but being a long-cycle business, it whitethorn return a small spot longer to travel through.

Rod Larson

Then, and nan bully news location is that astir everything is booked done 2023. So erstwhile Alan says that what we're booking now is nan activity we're talking astir for 2024.

Kurt Hallead

Okay. That's great. And past lastly, tin you springiness america an update connected really you're going to make different twelvemonth of affirmative free rate travel and you sewage immoderate indebtedness coming owed present successful a mates of years. So what's your scheme for usage of rate aliases excess cash, I should say.

Alan Curtis

Well, I think, Kurt, erstwhile we look astatine it is we gave guidance scope present of $75 cardinal to $125 cardinal connected free rate flow. And we -- what we do is we looked astatine complete nan past 3 years, and it tends to beryllium a small spot lumpy pinch us. I mean I looked astatine 2021, we generated 82% free rate travel conversion. Last twelvemonth is surely a little twelvemonth successful ‘22 than we were driving towards coming successful astatine $40 million.

But complete a cycle, complete a play of years. We've been averaging location successful nan 35% to 36% range. And that's wherever we've group nan target for this year. Do we expect we tin perchance overdrive that? Yes. That's what we're looking to do. We had immoderate inventory that we procured present astatine nan extremity of 2022 for activity that we had already secured going into 2023. So immoderate of it was nan proviso concatenation concerns complete will we get nan materials successful clip aliases not. So we did bid nan materials. They came successful a small spot faster than we anticipated, which pulled down a small spot of nan ‘22 story. We deliberation that could beryllium a affirmative uplift present successful ‘23 arsenic well.

So we're excited astir what we tin thrust connected free rate travel this year. We do expect -- while we gave nan range, we're targeting $100 cardinal plus. So I cognize that was a statement respective group put out, but our eyes are still group astatine nan aforesaid level they were past clip we talked.

Rod Larson

And I'm going to talk a -- Kurt, fto maine deed nan different broadside of that a small spot because nan different 1 is what are you going to walk nan money connected and what are your superior deployment? And I can't thief but bang nan drum erstwhile I get a chance present is that we've sewage immoderate really breathtaking things connected nan upside. We've sewage nan state that's coming retired now, and that's going to beryllium going commercialized and our expertise to grow that fleet pinch demand.

The MaxMovers, 85 MaxMovers, this is simply a beautiful breathtaking product. I don't cognize that everybody rather understand, it's measurement much than a counterbalanced forklift. If I deliberation astir nan quality betwixt a regular car and a Tesla, this is simply a overmuch bigger quality than a regular counterbalance forklift successful an autonomous forklift. And nan customers are excited. They're pinched for unit to thrust forklifts, and it's -- they are looking for a measurement to automate their plants. So large machines.

We're excited. 85 is simply a bully number to start, but we're excited that to beryllium moreover bigger numbers successful nan future. So wherever we will deploy superior is going to beryllium connected benignant of what I would telephone nan beforehand extremity of nan business. Those caller opportunities that we deliberation are successful high-growth markets. So they're going to spell fast. And I don't want personification to deliberation that we're going to miss opportunities for those kinds of things erstwhile they travel available.

Alan Curtis

Yes. And I deliberation possibly we haven't really been capable to speak overmuch astir these. We were ever benignant of alluding to nan maturation constituent here. As Rod said, these aren't your accepted forklift. These spell for, let's conscionable telephone it, $200,000 to $275,000 per unit, depending connected really it's fitted retired and each nan accessories. So that mightiness thief springiness a small spot of discourse to nan worth of these.

Kurt Hallead

Okay, great. Appreciate it. Thank you.

Rod Larson

Thanks, Kurt.

Operator

Thank you. Next mobility comes from Eddie Kim astatine Barclays. Please spell ahead.

Eddie Kim

Hi, bully morning. Just pursuing up connected Kurt's mobility connected ROV. So time rates person intelligibly moved higher, and it sounds for illustration they're going to proceed to move higher this year. But your full ROV fleet count arsenic it makes beautiful level astatine 250 systems for nan past 3 years now. And I cognize location person been a fewer additions and retirements each quarter, but nan nett number has stayed very consistent.

So my mobility is, is location a definite time complaint aliases utilization period astatine which you would see nett additions to your ROV fleet? Or is nan scheme to conscionable return disciplined present and really conscionable being a harvest mode connected nan fleet you person currently?

Rod Larson

Man, we're going to beryllium beautiful disciplined. Here's nan measurement I would put it, I deliberation erstwhile we get nan 70% to 75%, that's erstwhile you commencement to say, you really can't compression much retired of nan existing fleet. So you really person to look astatine what further opportunities are retired location that you would see doing a fleet description for.

I would show you that nan things that I would get excited astir are much ISRS wherever we cognize that we're building a differentiated merchandise that's disruptive. Maybe that's a chance for america to put thing much successful nan market. But I'm conscionable not excited astir much of nan same. I deliberation we're going to beryllium very observant astir knowing really we would deploy immoderate further assets.

Alan Curtis

Yes. So Eddie, I want to clear connected 1 connection erstwhile you usage nan connection harvest connected nan assets. I want to beryllium clear; we person been investing successful nan fleet passim nan downturn. We've invested -- we commencement to look astatine that CapEx. We're capable to spell successful and upgrade existing systems passim their life. And that's what we've been doing. So it's not for illustration nan ROV that came retired successful 2018 is simply a 2018 ROV, it has exertion today. So we're -- that's 1 of nan benefits of maintaining a standardized fleet is we're ever upgrading them to nan existent technology.

Rod Larson

We did a afloat refurbishment of 91 of nan awesome ROV assets past year, 18 of those were nan fish. So erstwhile you deliberation astir a assemblage of restoration that brings it up to nan -- conscionable for illustration a marque caller ROV. Two bully things astir that is our costs of superior to fundamentally create a caller ROV retired of an aged 1 is overmuch little than personification buying a caller asset. And astatine nan aforesaid time, it's a awesome ESG communicative because there's a batch of recycled and reasonable parts location that we're capable to usage to put a caller plus successful nan field.

Eddie Kim

Got it. Got it. That each makes sense. And I admit each nan colour there. So very constructive commentary connected offshore spending this year. Most are besides expecting offshore FIDs this twelvemonth to people a 10-year high. which I would deliberation would disproportionately use your umbilicals business. I don't deliberation I heard a book-to-bill guideline for this year, and I'm sorry if I missed it, but -- could we spot book-to-bill transcend nan 1.4 times fixed past year?

Alan Curtis

I deliberation it's surely northbound of 1. I don't person nan number successful beforehand of me, Eddie, location are several, I'll say, larger standard projects that we are anticipating that if they travel done successful nan year, I deliberation it is attainable astatine nan akin level. I don't cognize if those orders will deed Q4, Q1 of adjacent year, but it's our anticipation that we could surely get to that level if those projects materialize successful nan clip framework we expect.

Eddie Kim

Got it. And could you conscionable punctual america benignant of nan emblematic timing betwixt task FID and erstwhile you would typically book nan bid for nan umbilical awards you win. And what's nan emblematic timing connected gross conversion connected those useful arsenic well?

Alan Curtis

Yes. Typically, what you're going to spot is erstwhile FID is achieved, first point they're astir apt going to orders trees, past we're going to beryllium soon thereafter. So if you're looking astatine FID mediate of nan year, I would deliberation by Q4, you're going to spot an grant possibly precocious Q3, later successful nan year, FID, it mightiness bleed complete into a Q4 aliases Q1 grant nan adjacent year. So there's typically a three-to-four-month benignant of lag successful my eyes.

And past erstwhile you get nan award, first point we're going to do is we've already been moving pinch these for creation elements. We'll cognize really galore alloy tubes to bargain and things of that nature. We'll put long-cycle materials connected bid because that tends to beryllium nan pacing point today. And truthful it could beryllium six to 9 months connected transportation for immoderate of those materials. So nan sooner they tin get their FIDs achieved aliases immoderate customers whitethorn want to preorder nan alloy tubes to shorten their rhythm time, mightiness not beryllium a bad play for them.

Eddie Kim

Got it. Got it, understood. That’s each very helpful. Thanks truthful overmuch I’ll move it back.

Alan Curtis

Yes. And Eddie, that's why erstwhile our comments earlier, that's why I commencement seeing nan pricing move now, but it's a '24,'25 separator remark earlier successful nan telephone here. Yes.

Eddie Kim

Yes. Yes, that makes sense. Thank you.

Alan Curtis

Thanks, Eddie.

Eddie Kim

Thank you, both.

Operator

Thank you. [Operator Instructions] At this time, location are nary further questions. You whitethorn proceed.

Rod Larson

Yes. Since location are nary much questions, I'd for illustration to wrap by thanking everybody for joining nan call. This concludes our 4th fourth and full-year 2022 convention call. Have a awesome day.

Operator

Ladies gentlemen, this concludes your convention telephone for today. We convey you for participating, and we inquire that you please disconnect your lines.