Oceaneering International, Inc. (OII) Q1 2014 Earnings Report, Transcript and Summary

Good morning. My name is Beth, and I will be your conference operator. At this time, I would like to welcome everyone to our 2014 First Quarter Earnings Conference Call. [Operator Instructions] Jack Jurkoshek, you may begin your conference.

Good morning, everybody. Thank you for joining us on our call. As usual, a webcast of this event is being made available through the StreetEvents Network service by Thomson Reuters. Joining me today are Kevin McEvoy, our President, Chief Executive Officer, who will be leading the call this morning; Marvin Migura, our Executive Vice President; and Cardon Gerner, our Senior Vice President, Chief Financial Officer. Just as a reminder, remarks we make during the course of the call regarding our earnings guidance, 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. And I'm now going to turn the call over to Kevin.

Good morning, and thanks for joining the call. I'm pleased to be with you here today. Our record first quarter EPS of $0.84 was above our guidance and was up 22% compared to the first quarter of 2013. All of our business segments performed well relative to our forecast. Year-over-year, all of our oilfield business operations achieved higher operating income. Our outlook for 2014 remains positive. We continue to anticipate global demand growth for our services and products to support deepwater drilling; field development; and inspection, maintenance and repair activities. Given this outlook, and our first quarter earnings performance, we are reaffirming our previously announced EPS guidance range for the year of $3.90 to $4.10. During the quarter, we purchased 500,000 shares of our common stock at a cost of about $35 million. And yesterday, we announced a 23% increase in our regular quarterly dividend to $0.27 from $0.22 per share. These actions underscore our confidence in Oceaneering's financial strength and future business prospects. I'd now like to review our operations for the first quarter. Year-over-year, ROV operating income improved 17% on an increase in days on hire, largely to provide drill support services and an improvement in operating margin. Our ROV days on hire increased 10% to approximately 23,900 days, notably on increased demand in the U.S. Gulf of Mexico and offshore Africa and Southeast Asia. Sequentially, although ROV days on hire were flat, operating income increased. This was primarily due to the $3.3 million charge we recorded in the fourth quarter of 2013 to establish an allowance for doubtful accounts related to Brazilian receivables from OGX. Our fleet utilization rate during the quarter was 86% compared to 83% a year ago and 87% last quarter. We are still projecting that our fleet utilization for 2014 will be around 85%, but recognize there is risk to this, predominantly due to our exposure on floating rigs willing [ph] off contract during the remainder of this year. However, we have possible upside on vessel work, so we will see how all this plays out. We still expect to achieve record ROV segment operating income for the 11th consecutive year. Operating margin during the quarter was 30%, up from 29% a year ago, and 28% last quarter. We continue to anticipate a 29% to 30% annual margin for ROVs in 2014. During the quarter, we put 14 new ROVs into service and retired 4. At the end of March, we had 314 systems available for operation, up from 294 a year ago; 9 of the new ROVs went to work in drill support service and 5 on board vessels. At the end of the quarter, we had ROVs on 167, or 59%, of the 283 floating rigs under contract. Notably, during the quarter, the number of net floating rigs under contract went up by 1, and the number of rigs we had ROVs on went up by 7. During the quarter, 7 new floaters were added to the global fleet, all had contracts, and we had the ROV work on 5 of them. We also picked up ROV work on 2 additional rigs. Year-over-year, the contracts and rig count increased by 12 and the number of rigs we had ROVs on increased by 14. Our fleet mix during the quarter was 75% drill support and 25% on vessel-based work, the same as last quarter and about the same as the 74/26 split in the first quarter of 2013. We still anticipate adding 30 to 35 vehicles to our ROV fleet in 2014, 16 to 21 during the remaining 3 quarters. We have firm contracts in hand for all of these. Of course, the timing of some of these contracted ROVs being placed into service is dependent upon new rig deliveries occurring as currently projected during the balance of this year. Now turning to Subsea Products, year-over-year, first quarter operating income improved 27% due to higher demand for Subsea Hardware and increased throughput in our umbilical plants. As anticipated, operating income declined sequentially from a record high in the fourth quarter of 2013 due to project timing, which reduced demand for tooling in Subsea Hardware and lower umbilical plant throughput. For the year 2014, we continue to forecast Subsea Products margin will likely be in the range of 19% to 21%, lower than the 22% of 2013 due to an anticipated change in sales mix featuring a higher percentage of umbilical revenue. However, we still expect record segment operating income for the year. Our Subsea Products backlog at quarter end was $894 million compared to $776 million at the end of March 2013, and $906 million at the end of December 2013. Year-over-year, the backlog increase was attributable to increases in each of our 4 major product lines led by umbilical and tooling awards. As for the remaining business operations for the first quarter, Subsea Projects operating income improved year-over-year on higher deepwater vessel activity in the U.S. Gulf of Mexico and offshore Angola. In the Gulf of Mexico, we benefited from an increase in installation activity, the use of the Normand Flower, which we added to our chartered vessel fleet in December of 2013, and increased use of the Ocean Alliance, which was in a shipyard being retrofitted for most of the first quarter in 2013. Offshore Angola, we benefited from the use of the Maersk Attender that was released in early February and higher demand for support tugs, barges and utility vessels. The Bourbon Evolution 803, which we contracted to work offshore Angola as a replacement vessel for the Maersk Attender, went on hire at the end of March. Sequentially, operating income declined as expected, but it was better than we had anticipated due to work we secured to perform Subsea Hardware installations in the Gulf of Mexico. Asset Integrity operating income improved year-over-year on higher service demand in the Middle East and the Caspian Sea area. Sequentially, operating income increased due to additional expense recognized in the fourth quarter of 2013 for asset writeoffs and to accrue for former AGR employee past service obligations. Advanced Technologies operating income was lower year-over-year on reductions and theme park project work and U.S. Navy submarine maintenance and engineering service activity. Sequentially, operating income improved on increases in U.S. Navy and NASA work and better execution on entertainment projects relative to the fourth quarter of 2013. In summary, our first quarter results were above our expectations, and we look forward to realizing a fifth consecutive year of record EPS in 2014. Our focus on providing services and products for deepwater and subsea completions positions us to participate in the continuation of a secular growth trend in the oilfield services and products industry. We were pleased with our flat -- cash flow generation of $186 million of EBITDA during the quarter. Capital expenditures for the quarter totaled about $104 million, of which $57 million was invested in ROVs and $30 million was spent on Subsea Products. Now let's talk about our 2014 EPS outlook. You might ask since we've exceeded our Q1 guidance, why are we not raising our 2014 annual guidance. Let me remind you that our earnings estimates contain a considerable amount of uncontracted or speculative work, and there are 9 more months left in the year. While we feel more confident with our annual earnings guidance with a good Q1 in the record books, we believe it would not be prudent to adjust our annual earnings expectations 3 months into the year. So we are simply reaffirming our 2014 EPS guidance with a range of $3.90 to $4.10. Compared to 2013, we continue to expect each of our oilfield business segments will achieve higher income in 2014. ROVs on greater service demand to support drilling and vessel-based projects; Subsea Products on higher demand for each of our major product lines; subsea Projects are in growth in deepwater service activity; and Asset Integrity on increased demand for our services. I believe we are well-prepared for the opportunity of challenges we face in 2014, and we have both the assets in place and the investment capacity to take advantage of growing demand for our services and products. In 2014, we expect 29 new floating rigs may be placed into service; 6 of these occurred in the first quarter, and we have the ROV work on 4. Of the remaining 23, 12 ROV contracts have been let, and we have won 11, leaving 11 opportunities to pursue. However, only 1 of these 11 rigs has a signed operator contract. For 2014, we anticipate generating at least $850 million of EBITDA. Our balance sheet and projected cash flow provide us with ample resources to invest in Oceaneering's growth. Our organic CapEx estimate for this year is around $450 million. Of this amount, we expect $225 million for adding systems to our ROV fleet and vehicle upgrades; $120 million for enhancing our Subsea Products capabilities, particularly to expand our IWOCS and tooling rental and service hardware offerings; and $65 million for Subsea Projects, largely to fund the construction progress payments for a new Subsea support vessel scheduled to be delivered by the end of the first quarter of 2016. Our focus in 2014, as it was in 2013, will be on earnings growth and investment opportunities. Moving on to our second quarter outlook, we are projecting EPS in a range of $0.97 to $1.01. Sequentially, we anticipate quarterly operating income improvements from all of our business segments led by Subsea Products on the strength of increased demand for tooling and subsea work systems. We are also expecting year-over-year second quarter operating profit increases for each of our business segments with the exception of Advanced Technologies. AdTech operating income is expected to be lower due to a reduction in entertainment project work and incentive fees, and a reduction in U.S. Navy engineering services and purchasing activity due to government funding challenges. On a macro basis, we remain convinced that our strategy to focus on providing services and products to facilitate deepwater exploration and production remain sound. We believe the oil and gas industry will continue its investment in deepwater as it remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates and relatively low finding and development costs. We anticipate that demand for our deepwater services and products will continue to rise and believe our business prospects for the next several years remain promising. At the end of March 2014, 116 of the 162 existing high-spec drillships and fifth- and sixth-generation semis were contracted to operators other than Petrobras in Brazil. We had ROV contracts on 92 of these for a market share of 79%. There were a total of 100 new floating rigs on order. And we expect 72 of these will go to work for operators other than Petrobras in Brazil. On these, 19 ROV contracts have been let, and we have won 17 of them, leaving 53 contracting opportunities to be pursued. So the visibility of growth for this market remains promising despite the fact that some of these new rigs will likely be used to displace existing less-technically capable rigs. And looking forward, we see no reason why we will not continue to be the dominant provider of ROV services on high-spec rigs working for operators other than Petrobras in Brazil. The outlook for floating rig demand in the Gulf of Mexico remains encouraging. There were 48 rigs under contract in this area at the end of the first quarter, up 10 from a year ago and up 3 from last quarter. We have the ROV work on 42 of them. Furthermore, there are 6 additional floaters scheduled to commence working in the area during the rest of the year, and we have the ROV work on all of them. So even with the possible release on some of the 48 rigs currently under contract, there should be a good level of rig activity for the balance of this year. As the use of floating rigs grows, we believe that it is inevitable that discoveries will eventually drive orders for Subsea Hardware to levels not previously experienced and demand for ROV to support vessel-based activities should follow. Quest Offshore's latest Subsea Hardware forecast for the period 2014 to '18 includes an increase in tree orders of about 60% over the previous 5 years. Although tree orders are projected to decline somewhat in 2014 due to lower demand by Petrobras, tree installations are forecast to continue increasing to an all-time high of about 350, up 8% over 2013, and grow to 420 in 2015, a 20% annual increase. In addition, Quest is forecasting a 48% increase in umbilical orders for the 5-year period of 2014 to '18 compared to the previous 5 years. While subsea tree orders are a leading indicator of future field development activity, it is subsea tree installations outside of Brazil that matter most to Oceaneering. Based on their subsea tree order forecast, Quest Offshore is projecting average annual subsea tree installations of 370 outside of Brazil over the 5-year period 2014 to '18, an increase of over 55% from the previous 5 years. The number of subsea completions in service compared to 2013 is projected to increase by around 1,000 trees, more than 30%, by the end of 2018 in spite of the fact that about 800 wells are forecast to be removed from service. We believe that projected rise in tree installations and the growing number of subsea completions in service will lead to umbilical and connection hardware sales, demand for IWOCS services and vessel-based ROV and tooling demand. Furthermore, industry and regulatory emphasis on safe and reliable operations is providing additional opportunities for us to demonstrate our capabilities. We are well positioned to supply a wide range of the services and products required to safely support the deepwater efforts of our customers. We believe Oceaneering's business prospects for the long term remain promising. Our commanding competitive position, technology leadership and strong balance sheet and cash flow enable us to continue to grow the company, and we intend to do so. In conclusion, for 2014, we are anticipating that we will achieve another record year of EPS performance. We believe this distinguishes Oceaneering from many other oilfield service companies. We appreciate everyone's interest in Oceaneering, and I will now be happy to take any questions you may have.

[Operator Instructions] Your first question comes the line of Jim Crandell from Cowen.

Kevin, kind of a 2-part question on ROVs. I guess nobody doubts that you have firm contracts for this -- these new equipment, but several observers think that a number of the older floaters could go idle. I guess, do you think there is risk in your overall utilization number at this point from a fairly meaningful number of old floaters going idle over the course of 2014-15?

Jim, I want to clarify some before we answer that. When you're talking old floaters, if we're talking the non-fifth- and sixth-generation ones of the lower spec ones, we quantified that. So I think what we're seeing is that there is more risk being talked about on the fifth-generation rigs, which we had -- fifth and sixth generation rigs, which we have an almost 80% market share outside of Petrobras in Brazil. So yes, to the effect that those rigs stack or that they have idle time between contracts, we do have exposure there, more so than we do on the lower-spec rigs.

And would you expect at this point that generation rigs similar to the Horizon and that vintage would go idle here over the course of this year and next year?

I don't think we really have any visibility on that. I mean, so far, we're all reading the same stuff, so we'll see it as it unfolds. There is some potential softness there. We'll just have to see how it plays out.

And are you seeing any increased pricing pressure on either new contracts or renewals on ROVs? I know there's extreme emphasis on price out there in the oilfield. Is that having an effect on your ROV pricing?

Not particularly.

Your next question comes from the line of Jon Donnel, Howard Weil.

A little bit of a follow-up question on the ROV and just kind of the utilization expectations. When you think -- because as we look over the past couple of quarters here, you probably exceeded the expectations, at least, from our side of the Street, and as we get into the spring and summer months, we typically see a pickup in that [ph] utilization. Is that -- is the continuation the sort of the lower overall full-year utilization just a reflection of your thoughts on the risk on the fifth and sixth gen side, or is there more to it that we should be thinking about?

No, there's really not anymore to it. I mean, we are sort of handicapped the lower end of the older rigs as Marvin stated earlier, and we really have not tried to guess anything about fifth and sixth gen rigs at this point in time. So as we said, we'll just have to see how that plays out.

So there are already meaningful change to that -- your exposure for those fourth gen and older rigs compared to what you'd given us on the last call or is it still -- should we be thinking about that in the same order of magnitude?

Same order of magnitude as far as we could see at this point.

Okay, and then regarding the capital structure here, with the debt addition and then also the share repurchases here, it looks like there may be a little bit more room for additional share repurchases, just kind of comparing those 2 numbers. What's your thoughts in terms of uses of cash here going forward, and as our additional share repurchases, some of it that's still kind of at the forefront here for you guys?

Well our cash usage is -- our priorities have not changed, it is organic growth followed by acquisitions. Dividend payment is set for what we plan to do there, and last is repurchase of shares, and I think we have always said that's pretty opportunistic. Our main goal is to maintain a fairly constant level of shares outstanding. And beyond that, it would have to be different changes in the market to -- so I wouldn't expect the continuation of that.

Your next question comes from the line of Ian Macpherson, Simmons. Ian Macpherson - Simmons & Company International, Research Division: Kevin, I wonder if you could help me just understand the mechanics, if we get a say, a bad case scenario with fifth gen and sixth gen utilization. Can you explain what -- how that works mechanically for your -- how your idleness unfolds when, if rigs go -- say, a fifth gen rig goes idle for 2 or 3 months but a lot of its spread [ph] costs stay on it. How does that impact your revenue stream? Do you have [indiscernible] can separate it fully with the rig, and do you have to mobilize everything off the rig at that time, and how sticky are your units on the rigs [indiscernible] contract gaps?

Typically, what happens is if the operator is no longer paying for a rig, then we would be off hire. And we have the choice of taking our equipment off and being reimbursed for that by the operator or leaving it on and hoping that the rig will be picked up. Typically, unless it is just a really old rig with very few prospects or it's going to cold stack, unless those conditions are there, we leave our equipment on and go with the expectation that they will be recontracted.

And our crews, Ian, go to the beach and go home, go off payroll, and we close up the ROV control vans, and leave it in the secure place on the rig. So the main prospect continues as appreciation...

So the revenue stops and depreciation is essentially the only thing that continues.

Your next question comes from the line of Brad Handler, Jefferies.

Could we -- let's move away from ROVs, please, and talk about Products and Projects. I guess, I'm curious if you guys have ever allocated revenues in those 2 divisions between life of field and installation?

No.

And know what the mix is.

No. We've never done that. I mean we -- our primary focus is on for the projects business now. The primary focus is IMR. We do get involved in installation activities with what I would call the lower end of the spectrum there below the level of pipe installations and heavy stuff that the big contractors do. For example, flying leads and connection hardware and that sort of thing, trees, we do, we can install trees and do a fair number of those. But we don't separate those out. But the majority of what we do, you could think about in terms of IMR. The Projects.

The Projects exactly. And then in Products, I guess it's more of an emerging area, right? But some of the -- whether its acid injection or some of the life of field stuff you talked about in tooling. Is that, I don't know -- I don't know if you can make a rough allocation for us and think about how that might grow?

I really can't make an allocation on it. I think, if you look at the product sales part of the business, that's all obviously on the construction side of the ledger there. A significant part of the tooling business, that whole group there, is more focused towards life of field, and IWOCS could be either.

You're next question comes from the line of Jim Wicklund from Crédit Suisse. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Can we talk about the umbilical market for a little bit? How's that going? I know you had gotten some big orders last year. Can we just give a rundown of that market?

Well the market really has not changed materially. I mean we -- the market conditions are still the same in terms of overcapacity relative to demand. But we do see demand increasing with the forecasts that are out there with Quest, and we're continuing to pursue that business. We're expecting, as we stated earlier, to have a better result in the whole Product segment this year than we had last year. We also -- I mean, we're just pursuing the market as we have been, and we're expecting more business from that particular segment, the umbilical part of it, this year than we had last year.

And I think the good news, Jim, is we had $260 million of product revenue, and backlog didn't go down but 12, and I think we had expected and we do expect through the year to work off some of those large umbilical awards that you mentioned that we achieved last year. But in Q1, we were able to replace most of that with another umbilical award. So the thing that I want to remind everybody is umbilical awards are very lumpy, and our quarterly backlog number may vary substantially, depending upon timing of those awards. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Okay, and this is probably a softball question, but I would assume that your umbilicals are as world class as anyone else's?

Absolutely.

Maybe better.

Your next question comes from the line of Ed Muztafago, Societe Generale.

Maybe just wanted to kind of stay on the Products business a little bit, and coming -- going back to some of the comments from a couple of the other subsea equipment companies. They kind of highlighted the first quarter as being atypically strong in the Gulf of Mexico on the services side. And I'm just wondering if you could kind of comment on how you sort of viewed it on a relative basis, and what that mean -- might mean for the improvement in 2Q? And then just sort of secondarily to that, how -- what does it actually take to keep the products business at kind of the high end of your expected margin range?

Well the, I mean, margin range as we articulated pretty consistently is really all about the mix and how much we have coming from IWOCS and tooling and the higher-margin components of the Products group relative to umbilicals, and typically, due to the seasonality aspect of those businesses, you expect second and third quarters to be better margin months. Again, bearing in mind whatever the volume of the umbilicals business there is at that time.

From the Gulf of Mexico standpoint, where was nothing notable in our Products segment that would spike out of the Gulf of Mexico as being particularly good or bad. It was pretty much as expected, and I think there are no implications for Q2 related to how good Q1 was, I mean it we...

I think that's related more to how many trees and things got installed in the first quarter, which have service components associated with them, and that's just a timing thing for them.

Okay. So presumably, it's kind of the normal uptick in terms of the seasonal pattern in 2Q into 3Q. So and then as a second question, I just wanted to try and think on the Products business, we had the Maersk vessel come off and the Bourbon vessel come back on late in the quarter. I'm not sure how much slack or downtime there was between them. So just trying to think with respect to the Projects business as we kind of go to 2Q and 3Q, can we get back to that 20%, 21% margin level that you guys hit in the middle of last year?

Well, we said margin is going to be slightly improved year-over-year for the entire year, notwithstanding quarterly timings. And we indicated that the Maersk Attender went off in middle of Feb., and the Bourbon Evolution 803 came on at the end of March, and we really mean the end. So there was a little bit of spread [ph] there.

Your next question comes from the line of Ole Slorer, Morgan Stanley.

I wonder whether you could just help us think of -- understand how you view the opportunity around kind of subsea processing and boosting, and there seems to be some signs that are quite encouraging in terms of Projects coming forward there, although, of course, also things like Ormen Lange going back on the backburner again, but I think we all can understand the opportunity around the drilling rigs. If that slow [ph] started 3% or 4%, you maintain market share. That's kind of obvious. But as the industry changes and you're hearing increasingly that you referenced that trees, for example, but you're seeing really that the subsea -- the technology players are now starting to book a lot more revenue per tree because of the things going on as well. So how do you view this opportunity? Let's say, in an -- what I'm trying to get at is if the industry let's say, slows down to a 3%, 4% growth rate on the drillings side rather than the high single digits, how should we think about -- or how do you think about your growth opportunity as you layer in these other opportunities?

Well, I think the life of field or the production cycle is a huge focus for us, and, I think, that stuff goes on for 20, 30 years, however long it goes. With regard to the subsea processing part, we think that is very interesting. We believe that, that would present a lot more opportunities for our tooling and ROV interface activity for life of field IMR. But having said that, I think that it is going to happen gradually over time. So I wouldn't see any inflection point there. But I think it's logical to think that, that would provide a lot more opportunities for our businesses just like the relatively dumb iron [ph] stuff that's down there now does.

Are you having any discussions with oil company customers in terms of technology challenges that they need to solve and tools -- dedicated tools and products that you need to develop to talk about organic opportunities, is that part of it?

Well, we're always looking at such organic opportunities, I mean, the challenges that the oil companies have, some of them are pretty large like moving to a 20,000 PSI operating system to generic problems that are becoming more and more prevalent like hydro remediation and that sort of thing. And so we're talking to them about those specific things. Obviously, its a whole industry effort to try to get to the 20,000 PSI level.

[Operator Instructions] Your next question comes from the line of Jim Crandell, Cowen.

I wanted to follow up with a question about ROVs. If you take your non-rig-related ROV business, can you give us some sense of the relative importance of the different markets for that like x percent goes to seismic vessel, x percent to OSVs, et cetera?

Okay, well, 25% of our fleet is engaged in vessel-based activities and primarily, these are on ROV intervention vessels, whether working directly for us, which is only a few, or working for other folks. And some of that activity is construction-related, but that would be probably the smaller share of it all, primarily directed to intervention activities outside the wellbore on the seabed.

I don't know if we had any in seismic.

No, there's nothing in seismic. Yes and we really don't have anything in survey either.

Okay. My follow-up question is that, coming back to umbilicals, if we're in for a long subsea cycle here, then we go on -- if we go on another, let's say, 3 to 4 years on the upside, is the state of supply/demand in umbilical such then getting better pricing is, a, likely, and b, is it a high priority for you as you think about the business to try to get better pricing on umbilicals?

We -- there's so much capacity in the marketplace that we don't really see any big opportunity to increase pricing. I think things seem to be getting more technically challenging with cross-section designs. And so we think that favors our high focus on the engineering and the technical side of that business, but unfortunately with so many opportunities for operators to shop around and, they're keeping the pricing downs. So I really would not expect any big movements in pricing in that.

But Jim, if we are -- that's really short term. If we are talking about 4 years of up cycle and more subsea completions with the technical complexity of the umbilicals, I think we will continue to do better as we have over the last 3 years in getting our share of the market.

So you can improve your margins in umbilicals from here without pricing primarily because of the increased complexity of the projects?

Well, it's hard to separate pricing and cost. I mean when you get to a more complex umbilical, you're going to have a higher cost and a higher price associated with it. So I think there's a lot of things moving in the correct direction in umbilicals. But our overriding concern remains just the excess capacity, where it's 2x. It's really hard to push pricing.

But volume definitely helps, and we are seeing steady increases in volume year-to-year, at least as far as our business is concerned.

Your next question comes from the line of Daniel Burke, Johnson Rice. Daniel J. Burke - Johnson Rice & Company, L.L.C., Research Division: On the Projects business, it seems like you, all, stayed pretty active through the Q4, Q1, period which can have some seasonal impacts. I guess I was just curious, when we look to the step-up in Q2, what portion of that is driven by Angola and the full contribution, or a near full contribution, for the Bourbon vessel, more activity there versus the ability to ramp up more on the Gulf of Mexico side?

I think you're going to see more impact on the Gulf of Mexico between Q1 and Q2 just basically because of seasonality. We said Q1 was a little better than we had expected because we picked up some installation work. So the typical ramp like you saw last year, I would not -- I would encourage you to not expect that again next year because last year, we had a lot of ramp-up in Angola between Q1 and Q2. But this year, Angola's going full bore with that minor window when the Maersk Attender went off and the Evolution -- Bourbon Evolution came on. So I would say that the seasonality impact between Q1 and Q2 is going to be in the Gulf. Daniel J. Burke - Johnson Rice & Company, L.L.C., Research Division: Okay, Marvin. And then I guess my second question will be a little bit more high level. I just noticed in the press release that you guys had referred to opportunities to add new assets. I don't remember that language having been there in the past. I guess I was just curious if that was signaling anything or referencing organic or M&A opportunities that, that you guys feel could be more imminent?

Daniel, thank you for reading our press release all the way to the end. Sometimes attention spans wane when you get near that point. But after so many quarters of using the same phrase, we had an enlightening thought or question. If we can meet demand with our existing assets, why are we investing $450 million in CapEx. So we added a meaningful phrase. We believe we have great opportunity to continue to grow primarily through organic growth and hopefully some bolt-on acquisitions. We've done this successfully in the past, and we expect to continue. That is the full meaning of that new phrase opportunity add new assets. It just didn't make as much sense to us when we read it again and said, if we got existing assets that serve demand, that's not the story. Our story is about sustainable growth, and that's what we talked about at all the conferences, and that's why we just added that phrase in there. And I'm glad you read it. Thank you.

We usually try not to be so subtle. Daniel J. Burke - Johnson Rice & Company, L.L.C., Research Division: Well, look, there was a part of me that was hoping there were some signal in there, but I'll settle for the more reading comprehension-focused answer.

Your next question a follow-up question from the line of Ed Muztafago, Societe Generale.

Just wondering, maybe, if you could just kind of on the acquisition topic talk a little bit -- one of the ways that you've grown your business on the ROV side is through occasional acquisition, and if we do have slightly lower-than-expected project activity near term from some of the IOCs pushing CapEx to the right and potentially lower utilization rates on floaters. Can you talk to how you see the acquisition market specifically on the ROV side of the business over, maybe, the next 12 to 18 months?

I don't think we really see any opportunities in the ROV world for acquisitions. Most of the other operators of ROVs have got a core business that they are focused on. Subsea 7 for construction. Technique [ph] for construction. Fugro primarily surveys some IMR, and then there's a scattering of others. So there really is nobody that would be obvious to buy. So we're not really anticipating that, that would be in the frame.

And why buy when you can build? I mean what we got is a standard fleet. We use our ROVs. They're fungible. Our technicians can run on whether they're in Angola, Brazil, Norway or the Gulf of Mexico and Southeast Asia. If we add others' ROVs, they won't have been built by Oceaneering, and then you start getting separate crews that can run a 4 [indiscernible] versus a SMV or Schilling. So we really see no advantages -- I mean, if there is a fire sale, which we do not foresee and -- but our focus is not on ROV acquisitions when we can build them and keep our standard framework for ROVs.

Specially since there aren't really any opportunities.

Right.

There are no further questions at this time, I'll turn the call back to our presenters. Excuse me, we do have another question from the line of Jim Wicklund, a follow-up. James Knowlton Wicklund - Crédit Suisse AG, Research Division: We talked -- you talked about CapEx for this year. You got the big boat coming in. Do you have any ideas, will CapEx you think be higher or lower in '15? Is there any reason to think you wouldn't keep growing and building and ramping up CapEx as you go?

We're expecting to be able to continue to grow along with the market demand. And so -- I mean we hadn't really thought about what that number would be for '15, but certainly directionally, we think as long as the market continues in the direction that it appears to be going that we'll have plenty of opportunities to continue to grow organically, and hopefully, pick up some acquisitions along the way as well. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Perfect. And a follow-up if I could, as you just raised your dividend, everybody's doing that, do you have a yield in mind?

No. James Knowlton Wicklund - Crédit Suisse AG, Research Division: Do you have a goal of raising the dividend every year?

No. James Knowlton Wicklund - Crédit Suisse AG, Research Division: What's the dividend plan?

Dividend plan is -- it's been pretty consistent. We look at it, but we have no stated payout or no stated yield objectives or metrics that we are following. But you can look at it, and you'd see pretty consistently, we've been consistent on both. But I mean we're not a -- we have no stated dividend policy. We review it annually, and last 3 years in a row, we've increased it substantially. But our past performance should not be indicative of the future. James Knowlton Wicklund - Crédit Suisse AG, Research Division: I've heard that before.

[indiscernible].

No further questions. I'll turn the call back to our presenters for closing remarks.

Okay. Since there are no more questions, I'd like to wrap up by thanking everyone for joining the call. We are very pleased with our record first quarter results and anticipate producing a fifth consecutive year of record EPS for 2014. This concludes our first quarter 2014 conference call. Thanks, and have a great day.

This concludes today's conference call. You may now disconnect. Thank you.