Le Lézard
Classified in: Oil industry, Business
Subjects: ERN, ERP

Oceaneering Reports Fourth Quarter and Full Year 2018 Results


HOUSTON, Feb. 13, 2019 /PRNewswire/ -- Oceaneering International, Inc. ("Oceaneering") (NYSE:OII) today reported a net loss of $64.1 million, or $(0.65) per share, on revenue of $495 million for the three months ended December 31, 2018.  Adjusted net income was $7.3 million, or $0.07 per share, reflecting the impact of $71.4 million of net adjustments, primarily a $76.4 million pre-tax goodwill impairment in its Subsea Projects segment.  During the prior quarter ended September 30, 2018, Oceaneering reported a net loss of $66.0 million, or $(0.67) per share, on revenue of $519 million, and an adjusted net loss of $13.9 million, or $(0.14) per share.

For the full year 2018, Oceaneering reported a net loss of $212 million, or $(2.16) per share, on revenue of $1.9 billion.  Adjusted net loss was $69.7 million, or $(0.71) per share, reflecting the impact of $143 million of net adjustments.  These adjustments included the $76.4 million pre-tax goodwill impairment referred to above, $18.0 million of foreign currency exchange losses and $64.4 million of discrete tax benefits.  This compared to 2017 net income of $166.4 million, or $1.68 per share, on revenue of $1.9 billion, and adjusted net loss of $6.8 million, or $(0.07) per share.

Adjusted operating income (loss), operating margins, net income (loss) and earnings (loss) per share, EBITDA and adjusted EBITDA (as well as EBITDA and adjusted EBITDA margin and forecasted 2019 EBITDA) and free cash flow are non-GAAP measures that exclude the impacts of certain identified items.  Reconciliations to the corresponding GAAP measures are shown in the tables Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS), EBITDA and EBITDA Margin, 2019 EBITDA Estimates, Free Cash Flow, Adjusted Operating Income (Loss) and Margin by Segment, and EBITDA and Adjusted EBITDA and Margins by Segment.  These tables are included below under the caption Reconciliations of Non-GAAP to GAAP Financial Information.

Summary of Results

(in thousands, except per share amounts)




Three Months Ended


Years Ended



Dec 31,


Sep 30,


Dec 31,










2018


2017


2018


2018


2017












Revenue


$

495,095



$

484,175



$

519,300



$

1,909,482



$

1,921,507


Gross Margin


33,035



41,299



47,635



129,226



194,610


Income (Loss) from Operations


(97,144)



(9,115)



(1,552)



(145,482)



10,656


Net Income (Loss)


$

(64,139)



$

173,568



$

(65,979)



$

(212,327)



$

166,398













Diluted Earnings (Loss) Per Share (EPS)


$

(0.65)



$

1.76



$

(0.67)



$

(2.16)



$

1.68


Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, "Overall, our fourth quarter adjusted operating results, and adjusted EBITDA of $31.1 million were in line with our expectations.  We are pleased to report continued growth in our Advanced Technologies segment, where we achieved record earnings in the fourth quarter.  As expected, due to seasonality and lower activity, our energy-related segments each reported a sequential quarterly decline in earnings, most notably in our Subsea Products and Subsea Projects segments.  Consolidated adjusted operating results were $19.1 million less than third quarter.

"Sequentially, ROV operating results for the fourth quarter were down, due to 8% less revenue on 8% fewer days worked.  Our fleet utilization for the fourth quarter was 52%, down from 56% in the third quarter, primarily attributable to seasonality associated with the global vessel market.  Our fleet use during the fourth quarter was 67% in drill support and 33% in vessel-based activity, compared to the third quarter of 59% in drill support and 41% in vessel-based activity.  At the end of 2018, our ROV fleet size was 275 vehicles as compared to 279 vehicles at the end of the third quarter.

"Subsea Products fourth quarter operating results were lower than the third quarter as a combined result of the Panama City manufacturing facility being offline for several weeks due to damage sustained from Hurricane Michael, and execution of lower margin work in our service and rental business.  Our Subsea Products backlog at December 31, 2018 was $332 million, compared to our September 30, 2018 backlog of $333 million.  Our book-to-bill ratio was 1.1 for the full year 2018.

"Sequentially, Subsea Projects adjusted operating results declined for the fourth quarter, mainly due to a seasonal slowdown in intervention, maintenance and repair (IMR) and survey activities.  Additionally, our renewables business unit experienced a lull in activity and contract awards.  Asset Integrity operating income was lower due to a seasonal decrease in activity.

"Advanced Technologies fourth quarter operating income grew significantly on a 6% increase in revenue, largely due to completion of certain jobs and close-out of contracts in our entertainment business and improved performance in our automated guided vehicle offerings, resulting in both a record quarter and year for this segment.  Unallocated Expenses were in line with expectations.

"The full year of 2018 unfolded largely as we expected, with increased levels of oilfield activity being more than offset by lower pricing for our services and products.  Year over year, our 2018 consolidated revenue approximated that of 2017, with revenue increases in ROV, Subsea Projects, Asset Integrity and Advanced Technologies being offset by a substantial revenue decline in Subsea Products.  Despite record earnings in our Advanced Technologies segment, consolidated adjusted operating results decreased $74.2 million, with the largest declines in our Subsea Products and ROV segments.  In 2018, each of our operating segments contributed positive EBITDA, and overall we generated adjusted EBITDA of $143 million.  Annual capital expenditures totaled $178 million, including $68.6 million for acquisitions.  We ended the year with $354 million in cash.

"We expect our 2019 financial results to improve year-over-year based on increased activity across all of our segments.  For the year, we anticipate generating $140 million to $180 million of EBITDA, with positive EBITDA contributions from each of our operating segments.  At the midpoint of this range, our EBITDA for 2019 would represent a 12% increase over 2018 adjusted EBITDA.  Apart from seasonality, we view pricing and margins in the current market to be relatively stable.  Operationally, we anticipate all of our segments, with the exception of Asset Integrity, to generate improved yearly results, with the largest increase in profitability occurring in Subsea Products and Advanced Technologies, beginning with the second quarter.

"For ROVs, our expectation for improved results is based on increased days on hire, minor shifts in geographic mix, and generally stable pricing while managing continued mobilization and make-ready challenges.  We expect Subsea Products segment performance to improve as a result of securing good order intake in 2018 and early 2019, driving increased throughput within our manufactured products business unit, and higher activity levels and contribution from the services and rental unit.  With increased overall activity and better absorption of our fixed costs, we anticipate that our operating income margins will settle in the mid-single digit range.

"Subsea Projects is expected to generate better results in 2019 with improvements in survey and renewables being modestly offset by reduced international and Gulf of Mexico vessel activity.  Vessel dayrates remain very competitive but appear to have stabilized.  We expect to place the Ocean Evolution into service during the second quarter of 2019.  Asset Integrity results are expected to be relatively flat year-over-year as contract pricing remains extremely competitive.

"Our 2019 Advanced Technologies results are projected to increase, due to continued high demand and activity levels in our entertainment business, improvements in our automated guided vehicle operations, and modest growth in our government-related units.

"For 2019, we anticipate Unallocated Expenses to increase due to the expectation for higher projected short- and long-term performance-based incentive compensation expense. Our Unallocated Expenses have been running at decreased levels over the last few years, as our financial results have not achieved performance targets, primarily due to the prolonged downturn in the offshore oilfield markets we serve. Based on an expected increase in offshore activities, a more stable pricing environment, realized benefits from ongoing cost and performance initiatives, and continued growth in our Advanced Technology segment, we expect to achieve our performance targets for 2019, as well as longer-term. Therefore, as we reestablish accruals for our short-term and long-term incentive compensation programs, Unallocated Expenses are expected to average $35 million per quarter.

"Net interest expense is expected to be approximately $38 million, as a result of a full year of payments on our $300 million of senior notes issued in February 2018 and higher floating interest rates.  In addition, we will not be capitalizing interest on the Ocean Evolution for the full year.  We expect our 2019 income tax payments to be approximately $25 million.  This represents taxes incurred in countries that impose tax on the basis of in-country revenues and bear no relationship to profitability of such operations.  At this time, we do not foresee realizing a current-year tax benefit from our projected consolidated pre-tax loss, so any discussion of an estimated effective tax rate would not be meaningful.

"Our first quarter 2019 operating results and EBITDA are forecasted to be substantially lower than our fourth quarter results due to the combination of the increase in Unallocated Expenses discussed above and a lower operating income contribution from Advanced Technologies, due to a lower number of job completions and contract close-outs in our commercial businesses.  We expect the combined results of our energy segments to be similar to the fourth quarter results.

"Capital discipline is of utmost importance and we expect to generate positive free cash flow for 2019.  We expect our organic capital expenditures to total between $105 million and $125 million.  This includes approximately $40 million to $50 million of maintenance capital expenditures and $65 million to $75 million of growth capital expenditures, including the final payments to complete the Jones Act vessel Ocean Evolution and the purchase of equipment needed to support the Brazil drill pipe riser contract we were awarded in the third quarter of 2018.  In addition to our commitment to generate positive free cash flow in this market environment, we believe our strong cash position, $500 million undrawn revolving credit facility and debt maturity profile provide us ample resources and time to address future opportunities to improve our returns."

This release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs, future expected business and financial performance and prospects of Oceaneering.  More specifically, the forward-looking statements in this press release include statements about:  our backlog, to the extent backlog may be an indicator of future revenue or profitability; industry conditions; our financial results outlook for the full year and first quarter of 2019, including anticipated EBITDA and EBITDA contributions from each of our segments, and expected operating contributions from each of our segments and the associated explanations; our expectation about Subsea Products margins; the anticipated timing for the Ocean Evolution to be placed into service; our projected consolidated pre-tax operating loss; demand and activity levels in our business units; anticipated full year and quarterly Unallocated Expenses; our expectations about interest expense and the associated explanations; our expected income tax payments; the anticipated impact of current-year tax benefit on our projected consolidated pre-tax operating loss; our forecasted first quarter operating results from our segments and the associated comparisons and explanations; our expectation about the full year 2019 free cash flow; our expected 2019 capital expenditures; our belief that our strong cash position, revolving credit facility and debt maturity profile provide us with ample resources and time to address future opportunities to improve our returns.  The forward-looking statements included in this release are based on our current expectations and are subject to certain risks, assumptions, trends and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements.  Among the factors that could cause actual results to differ materially include:  factors affecting the level of activity in the oil and gas industry, including worldwide demand for and prices of oil and natural gas, oil and natural gas production growth and the supply and demand of offshore drilling rigs; decisions about offshore developments to be made by oil and gas exploration, development and production companies; the use of subsea completions and our ability to capture associated market share; general economic and business conditions and industry trends; the strength of the industry segments in which we are involved; cancellations of contracts, change orders and other contractual modifications and the resulting adjustments to our backlog; collections from our customers; our future financial performance, including as a result of the availability, terms and deployment of capital; the consequences of significant changes in currency exchange rates; the volatility and uncertainties of credit markets; changes in tax laws, regulations and interpretation by taxing authorities; changes in, or our ability to comply with, other laws and governmental regulations, including those relating to the environment; the continued availability of qualified personnel; our ability to obtain raw materials and parts on a timely basis and, in some cases, from limited sources; operating risks normally incident to offshore exploration, development and production operations; hurricanes and other adverse weather and sea conditions; cost and time associated with drydocking of our vessels; the highly competitive nature of our businesses; adverse outcomes from legal or regulatory proceedings; the risks associated with integrating businesses we acquire; rapid technological changes; and social, political, military and economic situations in foreign countries where we do business and the possibilities of civil disturbances, war, other armed conflicts or terrorist attacks.  For a more complete discussion of these and other risk factors, please see Oceaneering's latest annual report on Form 10?K and subsequent quarterly reports on Form 10?Q filed with the Securities and Exchange Commission.

Oceaneering is a global provider of engineered services and products, primarily to the offshore energy industry.  Through the use of its applied technology expertise, Oceaneering also serves the defense, entertainment, and aerospace industries.
For more information on Oceaneering, please visit www.oceaneering.com.

Contact:
Mark Peterson
Vice President, Corporate Development and Investor Relations
Oceaneering International, Inc.
713-329-4507
investorrelations@oceaneering.com

 

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES





















CONDENSED CONSOLIDATED BALANCE SHEETS






































Dec 31, 2018


Dec 31, 2017
















(in thousands)

ASSETS



















Current Assets (including cash and cash equivalents of $354,259 and $430,316)


$

1,244,889



$

1,187,402



Net Property and Equipment







964,670



1,064,204



Other Assets












615,439



772,344





TOTAL ASSETS






$

2,824,998



$

3,023,950






















LIABILITIES AND EQUITY






Current Liabilities












$

494,741



$

435,797



Long-term Debt












786,580



792,312



Other Long-term Liabilities






128,379



131,323



Equity












1,415,298



1,664,518





TOTAL LIABILITIES AND EQUITY


$

2,824,998



$

3,023,950






















CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
































For the Three Months Ended


For the Year Ended












Dec 31, 2018


Dec 31, 2017


Sep 30, 2018


Dec 31, 2018


Dec 31, 2017












(in thousands, except per share amounts)






















Revenue








$

495,095



$

484,175



$

519,300



$

1,909,482



$

1,921,507



Cost of services and products


462,060



442,876



471,665



1,780,256



1,726,897




Gross Margin


33,035



41,299



47,635



129,226



194,610



Selling, general and administrative expense


53,730



50,414



49,187



198,259



183,954



Goodwill impairment


76,449



?



?



76,449



?




Income (loss) from Operations


(97,144)



(9,115)



(1,552)



(145,482)



10,656



Interest income

1,775



1,976



2,645



9,962



7,355



Interest expense


(9,684)



(5,300)



(9,885)



(37,742)



(27,817)



Equity earnings (losses) of unconsolidated affiliates


(519)



(185)



(1,684)



(3,783)



(1,983)



Other income (expense), net


(2,390)



(2,154)



5,632



(8,788)



(6,055)




Income (loss) before Income Taxes


(107,962)



(14,778)



(4,844)



(185,833)



(17,844)



Provision for income taxes (benefit)


(43,823)



(188,346)



61,135



26,494



(184,242)




Net income (loss)




$

(64,139)



$

173,568



$

(65,979)



$

(212,327)



$

166,398






















Weighted average diluted shares outstanding


98,534



98,852



98,533



98,496



98,764


Diluted Earnings (loss) per Share



$

(0.65)



$

1.76



$

(0.67)



$

(2.16)



$

1.68



The above Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

 

SEGMENT INFORMATION






For the Three Months Ended


For the Year Ended






Dec 31, 2018


Dec 31, 2017


Sep 30, 2018


Dec 31, 2018


Dec 31, 2017






($ in thousands)











Remotely Operated Vehicles


Revenue


$

96,736



$

91,584



$

105,045



$

394,801



$

393,655



Gross Margin


$

6,764



$

9,154



$

8,757



$

32,652



$

50,937


Operating Income (Loss)


$

(1,275)



$

1,056



$

772



$

1,641



$

22,366


Operating Income (Loss) %


(1)

%


1

%


1

%


?

%


6

%


Days available


25,272



25,737



25,668



101,464



101,951



Days utilized


13,147



10,785



14,249



52,084



47,282



Utilization %


52

%


42

%


56

%


51

%


46

%















Subsea Products


Revenue


$

129,509



$

156,398



$

137,099



$

515,000



$

625,513



Gross Margin


$

10,156



$

24,384



$

18,748



$

59,984



$

97,086


Operating Income (Loss)


$

(3,803)



$

11,121



$

5,367



$

5,614



$

45,539


Operating Income (Loss)%


(3)

%


7

%


4

%


1

%


7

%

Backlog at end of period


$

332,000



$

276,000



$

333,000



$

332,000



$

276,000
















Subsea Projects


Revenue


$

89,295



$

73,376



$

104,972



$

329,163



$

291,993



Gross Margin


$

2,795



$

4,348



$

10,829



$

9,596



$

25,021


Operating Income (Loss)


$

(79,379)



$

580



$

6,088



$

(86,008)



$

10,279


Operating Income (Loss) %


(89)

%


1

%


6

%


(26)

%


4

%















Asset Integrity



Revenue


$

62,830



$

64,830



$

62,346



$

253,886



$

236,778



Gross Margin


$

8,086



$

9,243



$

9,430



$

34,995



$

37,382


Operating Income


$

1,349



$

2,159



$

2,275



$

8,660



$

11,231


Operating Income %


2

%


3

%


4

%


3

%


5

%















Advanced Technologies


Revenue


$

116,725



$

97,987



$

109,838



$

416,632



$

373,568



Gross Margin


$

22,314



$

8,383



$

14,824



$

58,959



$

44,421


Operating Income


$

15,406



$

2,779



$

8,960



$

33,920



$

22,039


Operating Income %


13

%


3

%


8

%


8

%


6

%















Unallocated Expenses











Gross Margin


$

(17,080)



$

(14,213)



$

(14,953)



$

(66,960)



$

(60,237)


Operating Income


$

(29,442)



$

(26,810)



$

(25,014)



$

(109,309)



$

(100,798)














TOTAL



Revenue


$

495,095



$

484,175



$

519,300



$

1,909,482



$

1,921,507



Gross Margin


$

33,035



$

41,299



$

47,635



$

129,226



$

194,610


Operating Income (Loss)


$

(97,144)



$

(9,115)



$

(1,552)



$

(145,482)



$

10,656


Operating Income (Loss) %


(20)

%


(2)

%


?

%


(8)

%


1

%

 

SELECTED CASH FLOW INFORMATION
















For the Three Months Ended


For the Year Ended






Dec 31, 2018


Dec 31, 2017


Sep 30, 2018


Dec 31, 2018


Dec 31, 2017






(in thousands)












Capital expenditures, including acquisitions


$

25,721



$

33,780



$

30,389



$

178,038



$

104,958













Depreciation and Amortization:











Energy Services and Products












Remotely Operated Vehicles


$

27,972



$

27,445



$

27,428



$

111,311



$

113,979



Subsea Products


11,797



13,437



12,349



53,085



52,561



Subsea Projects


85,651



8,127



7,464



114,481



31,869



Asset Integrity


1,585



2,336



1,635



6,904



7,715


Total Energy Services and Products


127,005



51,345



48,876



285,781



206,124


Advanced Technologies


786



794



792



3,081



3,171


Unallocated Expenses


1,125



900



1,035



4,728



4,224



Total Depreciation and Amortization


$

128,916



$

53,039



$

50,703



$

293,590



$

213,519


 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION

In addition to financial results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), this Press Release also includes non-GAAP financial measures (as defined under SEC Regulation G).  We have included Adjusted Net Income and Diluted Earnings per Share, each of which excludes the effects of certain specified items, as set forth in the tables that follow.  As a result, these amounts are non-GAAP financial measures.  We believe these are useful measures for investors to review, because they provide consistent measures of the underlying results of our ongoing business.  Furthermore, our management uses these as measures of the performance of our operations.  We have also included disclosures of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), EBITDA Margin, 2019 EBITDA Estimates and Free Cash Flow, as well as the following by segment:  Adjusted Operating Income and Margin, EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin.  We define EBITDA Margin as EBITDA divided by revenue.  Adjusted EBITDA and Adjusted EBITDA Margin as well as Adjusted Operating Income and Margin and related information by segment exclude the effects of certain specified items, as set forth in the tables that follow.  EBITDA and EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin, and Adjusted Operating Income and Margin and related information by segment are each non-GAAP financial measures.  We define Free Cash Flow as cash flow provided by operating activities less organic capital expenditures (i.e., purchases of property and equipment other than those in business acquisitions).  We have included these disclosures in this press release because EBITDA, EBITDA Margin and Free Cash Flow are widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry, and the adjusted amounts thereof (as well as Adjusted Operating Income and Margin by Segment) provide more consistent measures than the unadjusted amounts.  Furthermore, our management uses these measures for purposes of evaluating our financial performance.  Our presentation of EBITDA, EBITDA Margin and Free Cash Flow (and the Adjusted amounts thereof) may not be comparable to similarly titled measures other companies report.  Non-GAAP financial measures should be viewed in addition to and not as substitutes for our reported operating results, cash flows or any other measure prepared and reported in accordance with GAAP.  The tables that follow provide reconciliations of the non-GAAP measures used in this press release to the most directly comparable GAAP measures.

 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION


Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS)






For the Three Months Ended






Dec 31, 2018

Dec 31, 2017

Sep 30, 2018






Net Income


Diluted EPS


Net Income


Diluted EPS


Net Income


Diluted EPS






(in thousands, except per share amounts)

Net Income (Loss) and Diluted EPS as reported in accordance with GAAP


$

(64,139)



$

(0.65)



$

173,568



$

1.76



$

(65,979)



$

(0.67)


Pre-tax adjustments for the effects of:














Charge related to prior year non-income related taxes


?





700





?





Goodwill impairment


76,449





?





?





Gain on sale of investment


?





?





(9,293)





Foreign currency losses


2,559





1,750





3,745




Total pre-tax adjustments


79,008





2,450





(5,548)




















Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods (2)


(11,914)





(858)





1,165




Discrete tax adjustments:














Uncertain tax positions


7,811





?





3,571





Tax reform


560





(222,019)





7,932





Valuation allowances


(3,784)





56,026





39,136





Other


(241)





(23,124)





5,853




Total discrete tax adjustments


4,346





(189,117)





56,492




Difference in tax provision on income before taxes in accordance with GAAP (1)


?





5,944





?





Total of adjustments


71,440





(181,581)





52,109




Adjusted Net Income (Loss) and Adjusted Diluted EPS


$

7,301



$

0.07



$

(8,013)



$

(0.08)



$

(13,870)



$

(0.14)


















Weighted average diluted shares outstanding utilized for Adjusted Diluted EPS




99,331





98,279




98,533

















Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS)



For the Year Ended



Dec 31, 2018

Dec 31, 2017



Net Income


Diluted EPS


Net Income


Diluted EPS



(in thousands, except per share amounts)

Net Income (Loss) and Diluted EPS as reported in accordance with GAAP


$

(212,327)



$

(2.16)



$

166,398



$

1.68


Pre-tax adjustments for the effects of:










Charge related to prior year non-income related taxes


?





2,200





Goodwill impairment


76,449





?





Property & equipment write-offs


4,233





?





Intangible asset write-offs


3,458





?





Gain on sale of investment


(9,293)





?





Foreign currency losses


18,037





5,156




Total pre-tax adjustments


92,884





7,356




Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods (2)


(14,668)





(2,575)




Discrete tax adjustments:










Uncertain tax positions





12,644





?





Tax reform





8,492





(222,019)





Valuation allowances





35,352





56,026





Other





7,930





(23,124)




Total discrete tax adjustments


64,418





(189,117)




Difference in tax provision on income before taxes in accordance with GAAP (1)


?





11,121





Total of adjustments






142,634





(173,215)




Adjusted Net Income (Loss) and Adjusted Diluted EPS




$

(69,693)



$

(0.71)



$

(6,817)



$

(0.07)
















Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)




98,496





98,238



Note:





(1)

For consistency in presentation, the difference in tax provision on income before taxes is computed using the U.S. statutory rate of 35% for 2017, in determining Adjusted Net Income (Loss) for the respective periods.  This is not calculated for the three months and twelve months ended December 31, 2018, and three months ended September 30, 2018 due to changes in U.S. tax law.



(2)

For the three months and twelve months ended December 31, 2018, $22.3 million of goodwill impairment is not deductible for tax purposes.


 

EBITDA and EBITDA Margins
















For the Three Months Ended


For the Year Ended




Dec 31, 2018


Dec 31, 2017


Sep 30, 2018


Dec 31, 2018


Dec 31, 2017




($ in thousands)













Net income (loss)


$

(64,139)



$

173,568



$

(65,979)



$

(212,327)



$

166,398


Depreciation and amortization


128,916



53,039



50,703



293,590



213,519



Subtotal


64,777



226,607



(15,276)



81,263



379,917


Interest expense, net of interest income


7,909



3,324



7,240



27,780



20,462


Amortization included in interest expense


(333)



(283)



(332)



(1,772)



(1,132)


Provision for income taxes (benefit)


(43,823)



(188,346)



61,135



26,494



(184,242)



EBITDA


$

28,530



$

41,302



$

52,767



$

133,765



$

215,005














Revenue


$

495,095



$

484,175



$

519,300



$

1,909,482



$

1,921,507














EBITDA margin %


6

%


9

%


10

%


7

%


11

%













 

2019 EBITDA Estimates








Low


High



(in thousands)

Loss before income taxes


$

(110,000)



$

(70,000)


Depreciation and amortization


212,000



212,000



Subtotal


102,000



142,000


Interest expense, net of interest income


38,000



38,000



EBITDA


$

140,000



$

180,000












Free Cash Flows



For the Year Ended



Dec 31, 2018


Dec 31, 2017



(in thousands)

Net income (loss)


$

(212,327)



$

166,398


Depreciation and amortization


293,590



213,519


Other increases (decreases) in cash from operating activities


(44,696)



(243,439)


Cash flow provided by operating activities


36,567



136,478


Purchases of property and equipment


(109,467)



(93,680)


Free Cash Flow


$

(72,900)



$

42,798







 

Adjusted Operating Income (Loss) and Margins by Segment






For the Three Months Ended December 31, 2018





Remotely
Operated
Vehicles


Subsea
Products


Subsea
Projects


Asset
Integrity


Advanced
Tech.


Unalloc.
Expenses


Total





($ in thousands)

Operating income (loss) as reported in accordance with GAAP


$

(1,275)



$

(3,803)



$

(79,379)



$

1,349



$

15,406



$

(29,442)



$

(97,144)


Adjustments for the effects of:
















Goodwill impairment


?



?



76,449



?



?



?



76,449




Total of adjustments


?



?



76,449



?



?



?



76,449


Adjusted operating income (loss)


$

(1,275)



$

(3,803)



$

(2,930)



$

1,349



$

15,406



$

(29,442)



$

(20,695)



















Revenue


$

96,736



$

129,509



$

89,295



$

62,830



$

116,725





$

495,095


Operating income (loss) % as reported in accordance with GAAP


(1)

%


(3)

%


(89)

%


2

%


13

%




(20)

%

Operating income (loss) % using adjusted amounts


(1)

%


(3)

%


(3)

%


2

%


13

%




(4)

%







































For the Three Months Ended December 31, 2017





Remotely
Operated
Vehicles


Subsea
Products


Subsea
Projects


Asset
Integrity


Advanced
Tech.


Unalloc.
Expenses


Total





($ in thousands)

Operating income (loss) as reported in accordance with GAAP


$

1,056



$

11,121



$

580



$

2,159



$

2,779



$

(26,810)



$

(9,115)


Adjustments for the effects of:
















Charge related to prior year non-income related taxes


600



100



?



?



?



?



700




Total of adjustments


600



100



?



?



?



?



700


Adjusted operating income (loss)


$

1,656



$

11,221



$

580



$

2,159



$

2,779



$

(26,810)



$

(8,415)




































Revenue


$

91,584



$

156,398



$

73,376



$

64,830



$

97,987





$

484,175


Operating income (loss) % as reported in accordance with GAAP


1

%


7

%


1

%


3

%


3

%




(2)%


Operating income (loss) % using adjusted amounts


2

%


7

%


1

%


3

%


3

%




(2)%

















For the Three Months Ended September 30, 2018





Remotely
Operated
Vehicles


Subsea
Products


Subsea
Projects


Asset
Integrity


Advanced
Tech.


Unalloc.
Expenses


Total





($ in thousands)

Operating income (loss) as reported in accordance with GAAP


$

772



$

5,367



$

6,088



$

2,275



$

8,960



$

(25,014)



$

(1,552)


Adjusted operating income (loss)


$

772



$

5,367



$

6,088



$

2,275



$

8,960



$

(25,014)



$

(1,552)




































Revenue


$

105,045



$

137,099



$

104,972



$

62,346



$

109,838





$

519,300


Operating income (loss) % as reported in accordance with GAAP


1

%


4

%


6

%


4

%


8

%




?

%

Operating income (loss) % using adjusted amounts


1

%


4

%


6

%


4

%


8

%




?

%


 

Adjusted Operating Income (Loss) and Margins by Segment






For the Year Ended December 31, 2018





Remotely Operated Vehicles


Subsea Products


Subsea Projects


Asset Integrity


Advanced Tech.


Unalloc. Expenses


Total





($ in thousands)

Operating income (loss) as reported in accordance with GAAP


$

1,641



$

5,614



$

(86,008)



$

8,660



$

33,920



$

(109,309)



$

(145,482)


Adjustments for the effects of:
















Goodwill impairment


?



?



76,449



?



?



?



76,449



Property & equipment write-offs


617



1,531



2,085



?



?



?



4,233



Intangible assets write-offs


?



?



3,458



?



?



?



3,458




Total of adjustments


617



1,531



81,992



?



?



?



84,140


Adjusted operating income (loss)


$

2,258



$

7,145



$

(4,016)



$

8,660



$

33,920



$

(109,309)



$

(61,342)



















Revenue


$

394,801



$

515,000



$

329,163



$

253,886



$

416,632





$

1,909,482


Operating income (loss) % as reported in accordance with GAAP


?

%


1

%


(26)

%


3

%


8

%




(8)

%

Operating income (loss) % using adjusted amounts


1

%


1

%


(1)

%


3

%


8

%




(3)

%






















For the Year Ended December 31, 2017





Remotely Operated Vehicles


Subsea Products


Subsea Projects


Asset Integrity


Advanced Tech.


Unalloc. Expenses


Total





($ in thousands)

Operating income as reported in accordance with GAAP


$

22,366



$

45,539



$

10,279



$

11,231



$

22,039



$

(100,798)



$

10,656


Adjustments for the effects of:
















Charge related to prior year non-income related taxes


1,875



325



?



?



?



?



2,200




Total of adjustments


1,875



325



?



?



?



?



2,200


Adjusted operating income


$

24,241



$

45,864



$

10,279



$

11,231



$

22,039



$

(100,798)



$

12,856



















Revenue


$

393,655



$

625,513



$

291,993



$

236,778



$

373,568





$

1,921,507


Operating income % as reported in accordance with GAAP


6

%


7

%


4

%


5

%


6

%




1

%

Operating income % using adjusted amounts


6

%


7

%


4

%


5

%


6

%




1

%


 

EBITDA and Adjusted EBITDA and Margins by Segment






For the Three Months Ended December 31, 2018





Remotely
Operated
Vehicles


Subsea
Products


Subsea
Projects


Asset
Integrity


Advanced
Tech.


Unalloc.
Expenses
and other


Total





($ in thousands)

Operating income (loss) as reported in accordance with GAAP


$

(1,275)



$

(3,803)



$

(79,379)



$

1,349



$

15,406



$

(29,442)



$

(97,144)


Adjustments for the effects of:
















Depreciation and amortization


27,972



11,797



85,651



1,585



786



1,125



128,916



Other pre-tax


?



?



?



?



?



(3,242)



(3,242)



EBITDA


26,697



7,994



6,272



2,934



16,192



(31,559)



28,530


Adjustments for the effects of:
















Foreign currency losses


?



?



?



?



?



2,559



2,559




Total of adjustments


?



?



?



?



?



2,559



2,559


Adjusted EBITDA


$

26,697



$

7,994



$

6,272



$

2,934



$

16,192



$

(29,000)



$

31,089



















Revenue


$

96,736



$

129,509



$

89,295



$

62,830



$

116,725





$

495,095


Operating income (loss) % as reported in accordance with GAAP


(1)

%


(3)

%


(89)

%


2

%


13

%




(20)

%

EBITDA Margin


28

%


6

%


7

%


5

%


14

%




6

%

Adjusted EBITDA Margin


28

%


6

%


7

%


5

%


14

%




6

%






















For the Three Months Ended December 31, 2017





Remotely
Operated
Vehicles


Subsea
Products


Subsea
Projects


Asset
Integrity


Advanced
Tech.


Unalloc.
Expenses
and other


Total





($ in thousands)

Operating income (loss) as reported in accordance with GAAP


$

1,056



$

11,121



$

580



$

2,159



$

2,779



$

(26,810)



$

(9,115)


Adjustments for the effects of:
















Depreciation and amortization


27,445



13,437



8,127



2,336



794



900



53,039



Other pre-tax


?



?



?



?



?



(2,622)



(2,622)



EBITDA


28,501



24,558



8,707



4,495



3,573



(28,532)



41,302


Adjustments for the effects of:
















Charge related to prior year non-income related taxes


600



100



?



?



?



?



700



Foreign currency losses


?



?



?



?



?



1,750



1,750




Total of adjustments


600



100



?



?



?



1,750



2,450


Adjusted EBITDA


$

29,101



$

24,658



$

8,707



$

4,495



$

3,573



$

(26,782)



$

43,752



















Revenue


$

91,584



$

156,398



$

73,376



$

64,830



$

97,987





$

484,175


Operating income (loss) % as reported in accordance with GAAP


1

%


7

%


1

%


3

%


3

%




(2)

%

EBITDA Margin


31

%


16

%


12

%


7

%


4

%




9

%

Adjusted EBITDA Margin


32

%


16

%


12

%


7

%


4

%




9

%















For the Three Months Ended September 30, 2018





Remotely
Operated
Vehicles


Subsea
Products


Subsea
Projects


Asset
Integrity


Advanced
Tech.


Unalloc.
Expenses
and other


Total





($ in thousands)

Operating income (loss) as reported in accordance with GAAP


$

772



$

5,367



$

6,088



$

2,275



$

8,960



$

(25,014)



$

(1,552)


Adjustments for the effects of:
















Depreciation and amortization


27,428



12,349



7,464



1,635



792



1,035



50,703



Other pre-tax


?



?



?



?



?



3,616



3,616



EBITDA


28,200



17,716



13,552



3,910



9,752



(20,363)



52,767


Adjustments for the effects of:
















Gain on sale of investment


?



?



?



?



?



(9,293)



(9,293)



Foreign currency losses


?



?



?



?



?



3,745



3,745




Total of adjustments


?



?



?



?



?



(5,548)



(5,548)


Adjusted EBITDA


$

28,200



$

17,716



$

13,552



$

3,910



$

9,752



$

(25,911)



$

47,219



















Revenue


$

105,045



$

137,099



$

104,972



$

62,346



$

109,838





$

519,300


Operating income (loss) % as reported in accordance with GAAP


1

%


4

%


6

%


4

%


8

%




?

%

EBITDA Margin


27

%


13

%


13

%


6

%


9

%




10

%

Adjusted EBITDA Margin


27

%


13

%


13

%


6

%


9

%




9

%


















 

EBITDA and Adjusted EBITDA and Margins by Segment






For the Year Ended December 31, 2018





Remotely
Operated
Vehicles


Subsea
Products


Subsea
Projects


Asset
Integrity


Advanced
Tech.


Unalloc.
Expenses
and other


Total





($ in thousands)

Operating income (loss) as reported in accordance with GAAP


$

1,641



$

5,614



$

(86,008)



$

8,660



$

33,920



$

(109,309)



$

(145,482)


Adjustments for the effects of:
















Depreciation and amortization


111,311



53,085



114,481



6,904



3,081



4,728



293,590



Other pre-tax


?



?



?



?



?



(14,343)



(14,343)



EBITDA


112,952



58,699



28,473



15,564



37,001



(118,924)



133,765


Adjustments for the effects of:
















Gain on sale of investment


?



?



?



?



?



(9,293)



(9,293)



Foreign currency losses


?



?



?



?



?



18,037



18,037




Total of adjustments


?



?



?



?



?



8,744



8,744


Adjusted EBITDA


$

112,952



$

58,699



$

28,473



$

15,564



$

37,001



$

(110,180)



$

142,509



















Revenue


$

394,801



$

515,000



$

329,163



$

253,886



$

416,632





$

1,909,482


Operating income (loss) % as reported in accordance with GAAP


?

%


1

%


(26)

%


3

%


8

%




(8)

%

EBITDA Margin


29

%


11

%


9

%


6

%


9

%




7

%

Adjusted EBITDA Margin


29

%


11

%


9

%


6

%


9

%




7

%






















For the Year Ended December 31, 2017





Remotely
Operated
Vehicles


Subsea
Products


Subsea
Projects


Asset
Integrity


Advanced
Tech.


Unalloc.
Expenses
and other


Total





($ in thousands)

Operating income as reported in accordance with GAAP


$

22,366



$

45,539



$

10,279



$

11,231



$

22,039



$

(100,798)



$

10,656


Adjustments for the effects of:
















Depreciation and amortization


113,979



52,561



31,869



7,715



3,171



4,224



213,519



Other pre-tax


?



?



?



?



?



(9,170)



(9,170)



EBITDA


136,345



98,100



42,148



18,946



25,210



(105,744)



215,005


Adjustments for the effects of:
















Charge related to prior year non-income related taxes


1,875



325



?



?



?



?



2,200



Foreign currency losses


?



?



?



?



?



5,156



5,156




Total of adjustments


1,875



325



?



?



?



5,156



7,356


Adjusted EBITDA


$

138,220



$

98,425



$

42,148



$

18,946



$

25,210



$

(100,588)



$

222,361



















Revenue


$

393,655



$

625,513



$

291,993



$

236,778



$

373,568





$

1,921,507


Operating income % as reported in accordance with GAAP


6

%


7

%


4

%


5

%


6

%




1

%

EBITDA Margin


35

%


16

%


14

%


8

%


7

%




11

%

Adjusted EBITDA Margin


35

%


16

%


14

%


8

%


7

%




12

%

 

SOURCE Oceaneering International, Inc.


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