Le Lézard
Classified in: Oil industry, Business, Covid-19 virus
Subject: ERN

Oceaneering Reports Third Quarter 2020 Results


HOUSTON, Oct. 28, 2020 /PRNewswire/ -- Oceaneering International, Inc. ("Oceaneering") (NYSE:OII) today reported a net loss of $79.4 million, or $(0.80) per share, on revenue of $440 million for the three months ended September 30, 2020.  Adjusted net loss was $17.6 million, or $(0.18) per share, reflecting the impact of $68.7 of pre-tax adjustments associated with goodwill impairment, write-offs of fixed assets, inventory write-downs, restructuring expenses, and foreign exchange losses recognized during the quarter and $6.3 million of discrete tax adjustments.

During the prior quarter ended June 30, 2020, Oceaneering reported a net loss of $24.8 million, or $(0.25) per share, on revenue of $427 million.  Adjusted net loss was $14.2 million, or $(0.14) per share, reflecting the impact of $9.6 million of pre-tax adjustments associated with restructuring expenses and foreign exchange losses recognized during the quarter and $3.3 million of discrete tax adjustments.

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 margins) 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 Margins, 2020 Adjusted EBITDA Estimates, Free Cash Flow, Adjusted Operating Income (Loss) and Margins 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


Nine Months Ended



Sep 30,


Jun 30,


Sep 30,










2020


2019


2020


2020


2019












Revenue


$

439,743



$

497,647



$

427,216



$

1,403,627



$

1,487,314


Gross Margin


29,651



49,061



42,537



118,940



118,631


Income (Loss) from Operations


(60,620)



(5,194)



(5,182)



(446,559)



(36,543)


Net Income (Loss)


(79,365)



(25,523)



(24,788)



(471,751)



(85,532)













Diluted Earnings (Loss) Per Share


$

(0.80)



$

(0.26)



$

(0.25)



$

(4.76)



$

(0.87)







Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, "In September, we announced a realignment of our operating segments, and this is our first quarter to announce earnings under this new structure.  The primary reason for adopting the new operating segments was to better leverage common synergies, thereby enabling productivity in how work is performed.  We are seeing the results of these changes in our consolidated third quarter 2020 results.  Despite continuing energy and entertainment market headwinds, we generated positive free cash flow, and both adjusted EBITDA and adjusted operating income improved as compared to the second quarter 2020.  Overall, we were encouraged by the performance of our energy businesses and the stable contribution from our Aerospace and Defense Technologies (ADTech) segment.

"On a consolidated basis, we generated adjusted EBITDA of $45.1 million, exceeding the consensus estimate. Our consolidated adjusted operating income for the third quarter 2020 improved as efficiency gains from our cost-out efforts are meaningfully enhancing our bottom-line results. Sequentially, the adjusted operating results for each of our segments, except Subsea Robotics (SSR), improved as compared to the second quarter 2020.  Each operating segment reported positive adjusted operating income and adjusted EBITDA.  Our cash position of $359 million at September 30, 2020 increased by $25.3 million from June 30, 2020, as we generated $19.0 million of free cash flow, largely driven by positive contributions from operations and working capital, and ongoing capital conservation.

"Operationally, for the third quarter 2020, our SSR adjusted operating income decreased on flat revenue, primarily due to lower contributions from our tooling and survey businesses.  Due to this lower contribution, SSR adjusted EBITDA margins declined slightly to 31% in the third quarter 2020 as compared to 32% in the second quarter 2020.

"Our third quarter 2020 remotely operated vehicle (ROV) performance was comparable with the second quarter 2020.  As of September 30, 2020, our ROV fleet count was 250 systems, the same as June 30, 2020. Our fleet utilization during the third quarter 2020 was 59%, the same as the prior quarter.  Sequentially, ROV days on hire were flat as well.  Average ROV revenue per day on hire was marginally lower, declining 1% sequentially, primarily due to changes in geographic mix.

"Our ROV fleet use during the quarter was 56% in drill support and 44% in vessel-based activity.  The decline in the number of working floating drilling rigs from the second quarter 2020 to third quarter 2020 led to fewer days on hire for our drill support services, which were offset by an increase in days on hire for vessel-based services.  As of September 30, 2020, we had ROV contracts on 76 of the 133 floating rigs under contract, or 57%.  As of June 30, 2020, we had ROV contracts on 86 of the 139 floating rigs under contract, or 62%.  Subject to quarterly variances, we continue to expect our drill support market share to generally remain in the 60% range. 

"Manufactured Products (MP) adjusted operating income during the third quarter 2020 was up slightly as compared to the second quarter 2020, on a 10% increase in revenue.  Much of the revenue increase was attributable to percentage-of-completion revenue recognition on certain lower margin project components in our umbilical manufacturing business.  During the third quarter, COVID-19 had limited impact on our energy manufacturing business, but continued to adversely affect manufacturing timing in our non-energy entertainment business.

"Overall, for year-to-date 2020, reduced order intake in our energy-related manufacturing business is primarily attributable to the significant decrease in final investment decisions undertaken by our oil and gas customers, due to low oil demand and pricing.  Our MP backlog as of September 30, 2020 was $318 million, compared to our recast June 30, 2020 backlog of $380 million. Our book-to-bill ratio, year to date, was 0.4 and for the past twelve months was 0.5.

"Sequentially, Offshore Projects Group (OPG) third quarter adjusted operating results improved on flat revenue.  Call-out work during the third quarter was relatively consistent with the second quarter 2020, with the improved operating results benefiting from the cost-outs and operating synergies implemented in connection with our new operating model.  The impacts of COVID-19 continue to delay the Angola light well intervention project, but we are optimistic that this work will begin to move forward either late in the fourth quarter 2020 or early in the first quarter 2021.  Integrity Management and Digital Solutions (IMDS) adjusted operating results were higher sequentially on flat revenue and improved execution.

"Our government-focused business, ADTech, reported slightly higher sequential adjusted operating income for the third quarter 2020 on slightly higher revenues.  ADTech represented approximately 19% of our consolidated revenues during the third quarter of 2020 and we appreciate the relative stability of this business, considering the challenges we currently face in our energy businesses.  Unallocated Expenses for the third quarter 2020 declined sequentially, due primarily to lower accruals for incentive-based compensation.

"Looking forward, we believe our fourth quarter 2020 results will decline sequentially with the onset of lower seasonal offshore activity and customer budget exhaustion negatively affecting our energy businesses.  Sequentially, we are projecting lower operating results in each of our segments, except Manufactured Products, which is expected to recognize higher revenue and operating income as a result of percentage-of-completion revenue and operating income recognition on certain projects.  Unallocated Expenses are expected to approximate $30 million.

"For the full year of 2020, we expect to generate adjusted EBITDA in the range of $165 million to $175 million.  We are narrowing our guidance range for capital expenditures to $50 million to $60 million.  We affirm guidance for cash tax payments in the range of $30 million to $35 million, and our expectation of CARES Act and other tax refunds in the range of $16 million to $34 million.  We continue to expect to generate positive free cash flow for the full year of 2020 and expect the fourth quarter of 2020 to benefit from positive working capital changes and the tax refunds mentioned above.

"We announced a plan at the end of the first quarter 2020 to reduce annualized expenses in the range of $125 million to $160 million by the end of 2020, inclusive of $35 million to $40 million of reduced depreciation expense.  We estimate that, since launching this plan, approximately $100 million of annualized cost reductions have been initiated, exclusive of depreciation, with additional savings expected to be achieved through the fourth quarter of 2020.  We continue to estimate the cash costs associated with these actions to approximate $15 million in 2020.

"We anticipate the oil sector will face continuing headwinds in 2021, due to uncertainties around demand recovery and the resulting softness in energy commodity prices.  Despite this backdrop, we currently expect our consolidated activity levels and EBITDA performance in 2021 will closely resemble 2020.  We also expect to generate significant free cash flow in 2021, which will also benefit from working capital release associated with final project milestone payments in our Manufactured Products segment.  We will continue to review our forecast as we develop a definitive operating plan for 2021 and will update our expectations during the year-end reporting process. 

"Preserving and improving our liquidity and balance sheet remain high priorities. The firm capital discipline policy we adopted in 2020 is showing tangible results which we expect will provide meaningful free cash flow in the future."

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 the statements concerning Oceaneering's: estimated timing of commencement of the Angola light well intervention project; estimated future drill support market share; fourth quarter 2020 and full year 2020 segment operating results; forecasted fourth quarter Unallocated Expenses and annual guidance ranges for adjusted EBITDA, capital expenditures, cash tax payments, and CARES Act tax refunds; belief in generating positive free cash flow during 2020 with the fourth quarter benefiting from CARES Act tax refunds and positive working capital changes; estimate of annualized cost reductions initiated, expected additional savings to be achieved through the fourth quarter of 2020, and estimated cash costs associated with its 2020 plan to reduce annualized expenses; anticipated oil sector outlook; expected 2021 consolidated activity levels, EBITDA, and free cash flow; continued review and update of its forecast; and expectation of future free cash flow.

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; actions by members of OPEC and other oil exporting countries; 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; the continuing effects of the COVID-19 pandemic and the governmental, customer, supplier, and other responses thereto; 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 10Q filed with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements.  Except to the extent required by applicable law, Oceaneering undertakes no obligation to update or revise any forward-looking statement.

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, aerospace, and entertainment 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


































Sep 30, 2020


Dec 31, 2019














(in thousands)

ASSETS

















Current assets (including cash and cash equivalents of $358,777 and $373,655)






$

1,125,820



$

1,244,436



Net property and equipment







609,426



776,532



Other assets










302,454



719,695





Total Assets






$

2,037,700



$

2,740,663




















LIABILITIES AND EQUITY










Current liabilities










$

431,175



$

600,956



Long-term debt










805,631



796,516



Other long-term liabilities






241,475



267,782



Equity










559,419



1,075,409





Total Liabilities and Equity






$

2,037,700



$

2,740,663




















CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




























For the Three Months Ended


For the Nine Months Ended










Sep 30, 2020


Sep 30, 2019


Jun 30, 2020


Sep 30, 2020


Sep 30, 2019










(in thousands, except per share amounts)




















Revenue






$

439,743



$

497,647



$

427,216



$

1,403,627



$

1,487,314



Cost of services and products


410,092



448,586



384,679



1,284,687



1,368,683




Gross margin


29,651



49,061



42,537



118,940



118,631



Selling, general and administrative expense


49,396



54,255



47,719



152,856



155,174



Long-lived assets impairments


?



?



?



68,763



?



Goodwill impairment


40,875



?



?



343,880



?




Income (loss) from operations




(60,620)



(5,194)



(5,182)



(446,559)



(36,543)



Interest income






414



2,089



511



2,202



6,541



Interest expense, net of amounts capitalized


(9,250)



(11,382)



(11,611)



(33,323)



(31,005)



Equity in income (losses) of unconsolidated affiliates


131



554



674



2,002



390



Other income (expense), net


(2,836)



(3,660)



(3,660)



(13,624)



(2,934)




Income (loss) before income taxes


(72,161)



(17,593)



(19,268)



(489,302)



(63,551)



Provision (benefit) for income taxes


7,204



7,930



5,520



(17,551)



21,981




Net Income (Loss)


$

(79,365)



$

(25,523)



$

(24,788)



$

(471,751)



$

(85,532)




















Weighted average diluted shares outstanding


99,297



98,930



99,273



99,209



98,858


Diluted earnings (loss) per share


$

(0.80)



$

(0.26)



$

(0.25)



$

(4.76)



$

(0.87)




















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 Nine Months Ended





Sep 30, 2020


Sep 30, 2019 *


Jun 30, 2020 *


Sep 30, 2020


Sep 30, 2019 *




($ in thousands)

Subsea Robotics












Revenue


$

119,617



$

151,492



$

119,234



$

378,621



$

432,548



Gross margin


$

13,378



$

26,783



$

21,324



$

54,175



$

65,829


Operating income (loss)


$

2,127



$

15,457



$

11,662



$

(80,294)



$

33,277


Operating income (loss) %


2

%


10

%


10

%


(21)

%


8

%


ROV Days available


23,000



25,392



22,750



68,500



74,904



ROV Days utilized


13,601



15,146



13,501



41,955



43,511



ROV Utilization


59

%


60

%


59

%


61

%


58

%














Manufactured Products













Revenue


$

110,416



$

114,487



$

100,570



$

377,520



$

334,488



Gross margin


$

11,242



$

9,145



$

13,679



$

42,870



$

32,076


Operating income (loss)


$

(38,198)



$

(2,158)



$

3,865



$

(100,471)



$

1,070


Operating income (loss) %


(35)

%


(2)

%


4

%


(27)

%


?

%

Backlog at end of period


$

318,000



$

582,000



$

380,000



$

318,000



$

582,000















Offshore Projects Group













Revenue


$

73,212



$

89,115



$

73,840



$

221,306



$

289,193



Gross margin


$

(1,633)



$

8,337



$

3,170



$

3,632



$

20,163


Operating income (loss)


$

(12,282)



$

(34)



$

(4,135)



$

(95,740)



$

(2,792)


Operating income (loss) %


(17)

%


?

%


(6)

%


(43)

%


(1)

%














Integrity Management & Digital Solutions












Revenue


$

53,933



$

65,332



$

53,969



$

172,631



$

198,057



Gross margin


$

7,129



$

6,612



$

5,455



$

22,376



$

21,494


Operating income (loss)


$

793



$

(1,721)



$

(1,825)



$

(122,567)



$

(3,669)


Operating income (loss) %


1

%


(3)

%


(3)

%


(71)

%


(2)

%














Aerospace and Defense Technologies












Revenue


$

82,565



$

77,221



$

79,603



$

253,549



$

233,028



Gross margin


$

16,668



$

15,960



$

17,313



$

51,466



$

43,234


Operating income (loss)


$

13,097



$

11,709



$

13,430



$

39,498



$

30,214


Operating income (loss) %


16

%


15

%


17

%


16

%


13

%













Unallocated Expenses













Gross margin


$

(17,133)



$

(17,776)



$

(18,404)



$

(55,579)



$

(64,165)


Operating income (loss)


$

(26,157)



$

(28,447)



$

(28,179)



$

(86,985)



$

(94,643)














Total















Revenue


$

439,743



$

497,647



$

427,216



$

1,403,627



$

1,487,314



Gross margin


$

29,651



$

49,061



$

42,537



$

118,940



$

118,631


Operating income (loss)


$

(60,620)



$

(5,194)



$

(5,182)



$

(446,559)



$

(36,543)


Operating income (loss) %


(14)

%


(1)

%


(1)

%


(32)

%


(2)

%


The above Segment Information does not include adjustments for non-recurring transactions.   See the tables in our Reconciliations of Non-GAAP to GAAP Financial Information section for financial measures that management considers representative of our ongoing operations.


* Recast to reflect segment changes.


 

SELECTED CASH FLOW INFORMATION


















For the Three Months Ended


For the Nine Months Ended







Sep 30, 2020


Sep 30, 2019


Jun 30, 2020


Sep 30, 2020


Sep 30, 2019







(in thousands)













Capital Expenditures, including Acquisitions



$

7,980



$

57,985



$

10,631



$

45,840



128,847




















For the Three Months Ended


For the Nine Months Ended







Sep 30, 2020


Sep 30, 2019 *


Jun 30, 2020 *


Sep 30, 2020


Sep 30, 2019







(in thousands)

Depreciation and amortization:












Energy Services and Products













Subsea Robotics



$

25,144



$

31,090



$

25,080



$

189,411



$

95,917



Manufactured Products



44,028



4,920



3,587



63,579



14,953



Offshore Projects Group



15,147



10,610



8,255



98,309



30,758



Integrity Management & Digital Solutions



866



2,087



757



125,966



6,170


Total Energy Services and Products



85,185



48,707



37,679



477,265



147,798


Aerospace and Defense Technologies



654



640



658



1,999



1,998


Unallocated Expenses



1,712



1,220



361



3,181



3,561


                    Total Depreciation and Amortization



$

87,551



$

50,567



$

38,698



$

482,445



$

153,357

















In the three and nine months ended September 30, 2020, goodwill and long-lived asset impairment expense, reflected in the depreciation and amortization expense above, was $48 million and $358 million, respectively.
















* Recast to reflect segment changes.

 

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 (Loss) and Diluted Earnings (Loss) 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 measures as measures of the performance of our operations.  We have also included disclosures of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), EBITDA Margins, 2020 Adjusted EBITDA Estimates, and Free Cash Flow, as well as the following by segment:  Adjusted Operating Income and Margins, EBITDA, EBITDA Margins, Adjusted EBITDA and Adjusted EBITDA Margins.  We define EBITDA Margin as EBITDA divided by revenue.  Adjusted EBITDA and Adjusted EBITDA Margins 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 Margins, Adjusted EBITDA and Adjusted EBITDA Margins, 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 Margins 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 Margins 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






Sep 30, 2020

Sep 30, 2019

Jun 30, 2020






Net Income (Loss)


Diluted EPS


Net Income (Loss)


Diluted EPS


Net Income (Loss)


Diluted EPS






(in thousands, except per share amounts)








Net income (loss) and diluted EPS as reported in accordance with GAAP


$

(79,365)



$

(0.80)



$

(25,523)



$

(0.26)



$

(24,788)



$

(0.25)


Pre-tax adjustments for the effects of:














Long-lived assets write-offs


7,243





?





?





Inventory write-downs


7,038





?





?





Goodwill impairment


40,875





?





?





Restructuring expenses and other


11,048





?





5,708





Foreign currency (gains) losses


2,462





3,516





3,908




Total pre-tax adjustments


68,666





3,516





9,616




















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


(13,211)





(738)





(2,331)




Discrete tax items:













    Share-based compensation


16





?





16




    Uncertain tax positions


(55)





(520)





735




    U.S. CARES Act


?





?





1,159




    Tax reform


?





(8,492)





?




    Valuation allowances


6,599





(32)





3,245




    Other


(278)





2,079





(1,887)





Total discrete tax adjustments


6,282





(6,965)





3,268





Total of adjustments


61,737





(4,187)





10,553




Adjusted Net Income (Loss)


$

(17,628)



$

(0.18)



$

(29,710)



$

(0.30)



$

(14,235)



$

(0.14)


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




99,297





98,930





99,273


















 

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











For the Nine Months Ended







Sep 30, 2020

Sep 30, 2019










Net Income (Loss)


Diluted EPS


Net Income (Loss)


Diluted EPS










(in thousands, except per share amounts)








Net income (loss) and diluted EPS as reported in accordance with GAAP






$

(471,751)



$

(4.76)



$

(85,532)



$

(0.87)


Pre-tax adjustments for the effects of:














Long-lived assets impairments






68,763





?





Long-lived assets write-offs






14,571





?





Inventory write-downs






7,038





?





Goodwill impairment






343,880





?





Restructuring expenses and other






23,386





?





Foreign currency (gains) losses






13,420





2,843




Total pre-tax adjustments






471,058





2,843




















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






(60,897)





(597)




Discrete tax items:













    Share-based compensation






1,019





987




    Uncertain tax positions






(8,972)





1,770




    U.S. CARES Act






(32,625)





?




    Tax reform






?





(8,492)




    Valuation allowances






75,052





1,507




    Other






(1,215)





2,374





Total discrete tax adjustments






33,259





(1,854)





Total of adjustments






443,420





392




Adjusted Net Income (Loss)






$

(28,331)



$

(0.29)



$

(85,140)



$

(0.86)


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








99,209





98,858



















 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
















EBITDA and Adjusted EBITDA and Margins




















For the Three Months Ended


For the Nine Months Ended






Sep 30, 2020


Sep 30, 2019


Jun 30, 2020


Sep 30, 2020


Sep 30, 2019






($ in thousands)















Net income (loss)



$

(79,365)



$

(25,523)



$

(24,788)



$

(471,751)



$

(85,532)


Depreciation and amortization



87,551



50,567



38,698



482,445



153,357



Subtotal



8,186



25,044



13,910



10,694



67,825


Interest expense, net of interest income


8,836



9,293



11,100



31,121



24,464


Amortization included in interest expense


317



(335)



333



317



(1,010)


Provision (benefit) for income taxes



7,204



7,930



5,520



(17,551)



21,981



EBITDA



24,543



41,932



30,863



24,581



113,260


Adjustments for the effects of:













Long-lived assets impairments



?



?



?



68,763



?



Inventory write-downs



7,038



?



?



7,038



?



Restructuring expenses and other



11,048



?



5,708



23,386



?



Foreign currency (gains) losses



2,462



3,516



3,908



13,420



2,843




Total of adjustments



20,548



3,516



9,616



112,607



2,843



Adjusted EBITDA



$

45,091



$

45,448



$

40,479



$

137,188



$

116,103
















Revenue



$

439,743



$

497,647



$

427,216



$

1,403,627



$

1,487,314
















EBITDA margin %



6

%


8

%


7

%


2

%


8

%

Adjusted EBITDA margin %



10

%


9

%


9

%


10

%


8

%















 



























Free Cash Flow
















For the Three Months Ended


For the Nine Months Ended




Sep 30, 2020


Sep 30, 2019


Jun 30, 2020


Sep 30, 2020


Sep 30, 2019




(in thousands)

Net Income (loss)


$

(79,365)



$

(25,523)



$

(24,788)



$

(471,751)



$

(85,532)


Non-cash adjustments:












Depreciation and amortization, including goodwill impairment


87,551



50,567



38,698



482,445



153,357



Other non-cash


9,423



(5,461)



41



73,601



(4,904)


Other increases (decreases) in cash from operating activities


9,386



19,875



23,567



(51,932)



49,246


Cash flow provided by (used in) operating activities


26,995



39,458



37,518



32,363



112,167


Purchases of property and equipment


(7,980)



(57,985)



(10,631)



(45,840)



(128,847)


Free Cash Flow


$

19,015



$

(18,527)



$

26,887



$

(13,477)



$

(16,680)






































2020 Adjusted EBITDA Estimate










For the Year Ended










December 31, 2020










Low


High










(in thousands)

Adjusted income (loss) before income taxes








$

(38,000)



$

(28,000)


Depreciation and amortization








160,000



160,000



Subtotal








122,000



132,000


Interest expense, net of interest income








43,000



43,000



Adjusted EBITDA








$

165,000



$

175,000














 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION





Adjusted Operating Income (Loss) and Margins by Segment






For the Three Months Ended September 30, 2020





Subsea

Robotics


Manufactured
Products


Offshore
Projects
Group


Integrity
Management
& Digital

Solutions


Aerospace
and Defense
Technologies


Unallocated

Expenses


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

2,127



$

(38,198)



$

(12,282)



$

793



$

13,097



$

(26,157)



$

(60,620)


Adjustments for the effects of:















Long-lived assets write-offs


?



?



7,243



?



?



?



7,243



Inventory write-downs


7,038



?



?



?



?



?



7,038



Goodwill impairment


?



40,875



?



?



?



?



40,875



Restructuring expenses and other


2,535



2,559



5,326



83



545



?



11,048




Total of adjustments


9,573



43,434



12,569



83



545



?



66,204



















Adjusted Operating Income (Loss)


$

11,700



$

5,236



$

287



$

876



$

13,642



$

(26,157)



$

5,584



















Revenue


$

119,617



$

110,416



$

73,212



$

53,933



$

82,565





$

439,743


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


2

%


(35)

%


(17)

%


1

%


16

%




(14)

%

Operating income (loss)% using adjusted amounts


10

%


5

%


?

%


2

%


17

%




1

%






















For the Three Months Ended September 30, 2019 *





Subsea

Robotics


Manufactured
Products


Offshore

Projects
Group


Integrity

Management
& Digital

Solutions


Aerospace

and Defense
Technologies


Unallocated

Expenses


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

15,457



$

(2,158)



$

(34)



$

(1,721)



$

11,709



$

(28,447)



$

(5,194)



















Adjusted Operating Income (Loss)


$

15,457



$

(2,158)



$

(34)



$

(1,721)



$

11,709



$

(28,447)



$

(5,194)



















Revenue


$

151,492



$

114,487



$

89,115



$

65,332



$

77,221





$

497,647


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


10

%


(2)

%


?

%


(3)

%


15

%




(1)

%

Operating income (loss)% using adjusted amounts


10

%


(2)

%


?

%


(3)

%


15

%




(1)

%


* Recast to reflect segment changes.


 





























For the Three Months Ended June 30, 2020 *





Subsea

Robotics


Manufactured
Products


Offshore

Projects
Group


Integrity

Management

& Digital

Solutions


Aerospace

and Defense

Technologies


Unallocated
Expenses


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

11,662



$

3,865



$

(4,135)



$

(1,825)



$

13,430



$

(28,179)



$

(5,182)


Adjustments for the effects of:
















Restructuring expenses and other


1,380



1,212



1,405



1,536



?



175



5,708




Total of adjustments


1,380



1,212



1,405



1,536



?



175



5,708


Adjusted Operating Income (Loss)


$

13,042



$

5,077



$

(2,730)



$

(289)



$

13,430



$

(28,004)



$

526



















Revenue


$

119,234



$

100,570



$

73,840



$

53,969



$

79,603





$

427,216


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


10

%


4

%


(6)

%


(3)

%


17

%




(1)

%

Operating income (loss) % using adjusted amounts


11

%


5

%


(4)

%


(1)

%


17

%




?

%


* Recast to reflect segment changes.

 






Adjusted Operating Income (Loss) and Margins by Segment






For the Nine Months Ended September 30, 2020





Subsea
Robotics


Manufactured

Products


Offshore

Projects
Group


Integrity

Management
& Digital

Solutions


Aerospace

and Defense
Technologies


Unallocated

Expenses


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

(80,294)



$

(100,471)



$

(95,740)



$

(122,567)



$

39,498



$

(86,985)



$

(446,559)


Adjustments for the effects of:















Long-lived assets impairments


?



61,074



7,522



167



?



?



68,763



Long-lived assets write-offs


7,328



?



7,243



?



?



?



14,571



Inventory write-downs


7,038



?



?



?



?



?



7,038



Goodwill impairment


102,118



52,263



66,285



123,214



?



?



343,880



Restructuring expenses and other


4,834



5,755



7,947



3,850



545



455



23,386




Total of adjustments


121,318



119,092



88,997



127,231



545



455



457,638



















Adjusted Operating Income (Loss)


$

41,024



$

18,621



$

(6,743)



$

4,664



$

40,043



$

(86,530)



$

11,079



















Revenue


$

378,621



$

377,520



$

221,306



$

172,631



$

253,549





$

1,403,627


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


(21)

%


(27)

%


(43)

%


(71)

%


16

%




(32)

%

Operating income (loss)% using adjusted amounts


11

%


5

%


(3)

%


3

%


16

%




1

%






















For the Nine Months Ended September 30, 2019 *





Subsea
Robotics


Manufactured
Products


Offshore
Projects
Group


Integrity
Management

& Digital

Solutions


Aerospace

and Defense
Technologies


Unallocated
Expenses


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

33,277



$

1,070



$

(2,792)



$

(3,669)



$

30,214



$

(94,643)



$

(36,543)



















Adjusted Operating Income (Loss)


$

33,277



$

1,070



$

(2,792)



$

(3,669)



$

30,214



$

(94,643)



$

(36,543)



















Revenue


$

432,548



$

334,488



$

289,193



$

198,057



$

233,028





$

1,487,314


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


8

%


?

%


(1)

%


(2)

%


13

%




(2)

%

Operating income (loss)% using adjusted amounts


8

%


?

%


(1)

%


(2)

%


13

%




(2)

%


* Recast to reflect segment changes.

 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION





EBITDA and Adjusted EBITDA and Margins by Segment






For the Three Months Ended September 30, 2020





Subsea

Robotics


Manufactured
Products


Offshore
Projects
Group


Integrity
Management
& Digital

Solutions


Aerospace

and Defense

Technologies


Unallocated
Expenses
and other


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

2,127



$

(38,198)



$

(12,282)



$

793



$

13,097



$

(26,157)



$

(60,620)


Adjustments for the effects of:















Depreciation and amortization


25,144



44,028



15,147



866



654



1,712



87,551



Other pre-tax


?



?



?



?



?



(2,388)



(2,388)



EBITDA


27,271



5,830



2,865



1,659



13,751



(26,833)



24,543


Adjustments for the effects of:















Inventory write-downs


7,038



?



?



?



?



?



7,038



Restructuring expenses and other


2,535



2,559



5,326



83



545



?



11,048



Foreign currency (gains) losses


?



?



?



?



?



2,462



2,462




Total of adjustments


9,573



2,559



5,326



83



545



2,462



20,548


Adjusted EBITDA


$

36,844



$

8,389



$

8,191



$

1,742



$

14,296



$

(24,371)



$

45,091



















Revenue


$

119,617



$

110,416



$

73,212



$

53,933



$

82,565





$

439,743


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


2

%


(35)

%


(17)

%


1

%


16

%




(14)

%

EBITDA Margin


23

%


5

%


4

%


3

%


17

%




6

%

Adjusted EBITDA Margin


31

%


8

%


11

%


3

%


17

%




10

%






















For the Three Months Ended September 30, 2019 *





Subsea

Robotics


Manufactured

Products


Offshore
Projects
Group


Integrity
Management

& Digital

Solutions


Aerospace

and Defense
Technologies


Unallocated

Expenses

and other


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

15,457



$

(2,158)



$

(34)



$

(1,721)



$

11,709



$

(28,447)



$

(5,194)


Adjustments for the effects of:















Depreciation and amortization


31,090



4,920



10,610



2,087



640



1,220



50,567



Other pre-tax


?



?



?



?



?



(3,441)



(3,441)



EBITDA


46,547



2,762



10,576



366



12,349



(30,668)



41,932


Adjustments for the effects of:















Foreign currency (gains) losses


?



?



?



?



?



3,516



3,516




Total of adjustments


?



?



?



?



?



3,516



3,516


Adjusted EBITDA


$

46,547



$

2,762



$

10,576



$

366



$

12,349



$

(27,152)



$

45,448



















Revenue


$

151,492



$

114,487



$

89,115



$

65,332



$

77,221





$

497,647


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


10

%


(2)

%


?

%


(3)

%


15

%




(1)

%

EBITDA Margin


31

%


2

%


12

%


1

%


16

%




8

%

Adjusted EBITDA Margin


31

%


2

%


12

%


1

%


16

%




9

%


















* Recast to reflect segment changes.

`












For the Three Months Ended June 30, 2020 *





Subsea
Robotics


Manufactured
Products


Offshore

Projects
Group


Integrity
Management
& Digital
Solutions


Aerospace

and Defense
Technologies


Unallocated

Expenses
and other


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

11,662



$

3,865



$

(4,135)



$

(1,825)



$

13,430



$

(28,179)



$

(5,182)


Adjustments for the effects of:















Depreciation and amortization


25,080



3,587



8,255



757



658



361



38,698



Other pre-tax


?



?



?



?



?



(2,653)



(2,653)



EBITDA


36,742



7,452



4,120



(1,068)



14,088



(30,471)



30,863


Adjustments for the effects of:















Restructuring expenses and other


1,380



1,212



1,405



1,536



?



175



5,708



Foreign currency (gains) losses


?



?



?



?



?



3,908



3,908




Total of adjustments


1,380



1,212



1,405



1,536



?



4,083



9,616


Adjusted EBITDA


$

38,122



$

8,664



$

5,525



$

468



$

14,088



$

(26,388)



$

40,479



















Revenue


$

119,234



$

100,570



$

73,840



$

53,969



$

79,603





$

427,216


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


10

%


4

%


(6)

%


(3)

%


17

%




(1)

%

EBITDA Margin


31

%


7

%


6

%


(2)

%


18

%




7

%

Adjusted EBITDA Margin


32

%


9

%


7

%


1

%


18

%




9

%


















* Recast to reflect segment changes.

 






EBITDA and Adjusted EBITDA and Margins by Segment






For the Nine Months Ended September 30, 2020





Subsea
Robotics


Manufactured
Products


Offshore
Projects

Group


Integrity

Management
& Digital

Solutions


Aerospace
and Defense

Technologies


Unallocated

Expenses

and other


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

(80,294)



$

(100,471)



$

(95,740)



$

(122,567)



$

39,498



$

(86,985)



$

(446,559)


Adjustments for the effects of:















Depreciation and amortization


189,411



63,579



98,309



125,966



1,999



3,181



482,445



Other pre-tax


?



?



?



?



?



(11,305)



(11,305)



EBITDA


109,117



(36,892)



2,569



3,399



41,497



(95,109)



24,581


Adjustments for the effects of:















Long-lived assets impairments


?



61,074



7,522



167



?



?



68,763



Inventory write-downs


7,038



?



?



?



?



?



7,038



Restructuring expenses and other


4,834



5,755



7,947



3,850



545



455



23,386



Foreign currency (gains) losses


?



?



?



?



?



13,420



13,420




Total of adjustments


11,872



66,829



15,469



4,017



545



13,875



112,607


Adjusted EBITDA


$

120,989



$

29,937



$

18,038



$

7,416



$

42,042



$

(81,234)



$

137,188



















Revenue


$

378,621



$

377,520



$

221,306



$

172,631



$

253,549





$

1,403,627


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


(21)

%


(27)

%


(43)

%


(71)

%


16

%




(32)

%

EBITDA Margin


29

%


(10)

%


1

%


2

%


16

%




2

%

Adjusted EBITDA Margin


32

%


8

%


8

%


4

%


17

%




10

%






















For the Nine Months Ended September 30, 2019 *





Subsea
Robotics


Manufactured
Products


Offshore
Projects
Group


Integrity
Management

& Digital

Solutions


Aerospace

and Defense

Technologies


Unallocated

Expenses
and other


Total





($ in thousands)

Operating Income (Loss) as reported in accordance with GAAP


$

33,277



$

1,070



$

(2,792)



$

(3,669)



$

30,214



$

(94,643)



$

(36,543)


Adjustments for the effects of:















Depreciation and amortization


95,917



14,953



30,758



6,170



1,998



3,561



153,357



Other pre-tax


?



?



?



?



?



(3,554)



(3,554)



EBITDA


129,194



16,023



27,966



2,501



32,212



(94,636)



113,260


Adjustments for the effects of:















Foreign currency (gains) losses


?



?



?



?



?



2,843



2,843




Total of adjustments


?



?



?



?



?



2,843



2,843


Adjusted EBITDA


$

129,194



$

16,023



$

27,966



$

2,501



$

32,212



$

(91,793)



$

116,103



















Revenue


$

432,548



$

334,488



$

289,193



$

198,057



$

233,028





$

1,487,314


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


8

%


?

%


(1)

%


(2)

%


13

%




(2)

%

EBITDA Margin


30

%


5

%


10

%


1

%


14

%




8

%

Adjusted EBITDA Margin


30

%


5

%


10

%


1

%


14

%




8

%


















* Recast to reflect segment changes.

 

SOURCE Oceaneering International, Inc.


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