PR Newswire | Oct 28, 2020 05:01PM EDT

10/28 16:01 CDT

Oceaneering Reports Third Quarter 2020 Results HOUSTON, Oct. 28, 2020

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 PetersonVice 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 affiliates131 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, 2020Sep 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 EPSNet Income (Loss)Diluted EPSNet Income (Loss)Diluted EPS

(in thousands, except per share amounts)



Net income (loss) and diluted EPS as $(79,365) $ (0.80) $ (25,523) $ (0.26) $ (24,788) $ (0.25) reported in accordance with GAAP

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 other11,048 - 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(13,211) (738) (2,331) in effect for respective periods

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 99,297 98,930 99,273 Income (Loss)



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 EPSNet Income (Loss)Diluted EPS

(in thousands, except per share amounts)



Net income (loss) and diluted EPS as $ (471,751) $(4.76) $ (85,532) $(0.87) reported in accordance with GAAP

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 other23,386 -

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(60,897) (597) rate in effect for respective periods

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 99,209 98,858 Income (Loss)



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, 2020Sep 30, 2019Jun 30, 2020Sep 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 expense317 (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, 2020Sep 30, 2019Jun 30, 2020Sep 30, 2020Sep 30, 2019

(in thousands)

Net Income (loss) $ (79,365)$ (25,523)$ (24,788)$(471,751)$ (85,532)

Non-cash adjustments:

Depreciation and amortization, including 87,551 50,567 38,698 482,445 153,357 goodwill impairment

Other non-cash 9,423 (5,461) 41 73,601 (4,904)

Other increases (decreases) in cash from 9,386 19,875 23,567 (51,932) 49,246 operating activities

Cash flow provided by (used in) operating 26,995 39,458 37,518 32,363 112,167 activities

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

Integrity Subsea ManufacturedOffshore Management Aerospace Unallocated Products Projects & Digital and Defense Total Robotics Group TechnologiesExpenses Solutions

($ in thousands)

Operating Income (Loss) as reported $2,127 $(38,198) $(12,282) $793 $13,097 $(26,157)$(60,620) in accordance with GAAP

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 2 %(35) %(17) %1 %16 % (14) %reported in accordance with GAAP

Operating income (loss)% using 10 %5 %- %2 %17 % 1 %adjusted amounts



For the Three Months Ended September 30, 2019 *

Integrity Subsea Offshore Aerospace Unallocated Manufactured Management Total Robotics Products Projects & Digital and Defense Expenses Group Technologies Solutions

($ in thousands)

Operating Income (Loss) as reported $15,457 $(2,158) $(34) $(1,721) $11,709 $(28,447)$(5,194) in accordance with GAAP



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 10 %(2) %- %(3) %15 % (1) %reported in accordance with GAAP

Operating income (loss)% using 10 %(2) %- %(3) %15 % (1) %adjusted amounts



* Recast to reflect segment changes.













For the Three Months Ended June 30, 2020 *

Integrity Offshore Aerospace Subsea Manufactured Management Unallocated Products Projects and Defense Expenses Total Robotics Group & Digital Technologies Solutions

($ in thousands)

Operating Income (Loss) as reported $11,662 $ 3,865 $(4,135) $(1,825) $ 13,430 $(28,179)$(5,182) in accordance with GAAP

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 10 %4 % (6) %(3) %17 % (1) %reported in accordance with GAAP

Operating income (loss) % using 11 %5 % (4) %(1) %17 % - %adjusted amounts



* Recast to reflect segment changes.







Adjusted Operating Income (Loss) and Margins by Segment



For the Nine Months Ended September 30, 2020

Integrity Manufactured Offshore Aerospace Unallocated Subsea Management Total Robotics Products Projects & Digital and Defense Expenses Group Technologies Solutions

($ in thousands)

Operating Income (Loss) as reported$(80,294) $(100,471) $(95,740) $(122,567) $39,498 $(86,985)$(446,559) in accordance with GAAP

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 (21) %(27) %(43) %(71) %16 % (32) %reported in accordance with GAAP

Operating income (loss)% using 11 %5 %(3) %3 %16 % 1 %adjusted amounts



For the Nine Months Ended September 30, 2019 *

Integrity Offshore Management Aerospace Subsea Manufactured Projects UnallocatedTotal Robotics Products Group & Digital and Defense Expenses Technologies Solutions

($ in thousands)

Operating Income (Loss) as reported$33,277 $1,070 $(2,792) $(3,669) $30,214 $(94,643)$(36,543) in accordance with GAAP



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 8 %- %(1) %(2) %13 % (2) %reported in accordance with GAAP

Operating income (loss)% using 8 %- %(1) %(2) %13 % (2) %adjusted amounts



* 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

Integrity Aerospace Subsea ManufacturedOffshore Management Unallocated Products Projects & Digital and Defense Expenses Total Robotics Group and other Solutions Technologies

($ in thousands)

Operating Income (Loss) as reported $2,127 $(38,198) $(12,282) $793 $13,097 $(26,157)$(60,620) in accordance with GAAP

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 2 %(35) %(17) %1 %16 % (14) %reported in accordance with GAAP

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 *

Integrity Unallocated Subsea ManufacturedOffshore Management Aerospace Projects Expenses Total Robotics Products Group & Digital and Defense Technologiesand other Solutions

($ in thousands)

Operating Income (Loss) as reported $15,457 $(2,158) $(34) $(1,721) $11,709 $(28,447)$(5,194) in accordance with GAAP

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 10 %(2) %- %(3) %15 % (1) %reported in accordance with GAAP

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 *

Offshore Integrity Aerospace Unallocated Subsea Manufactured Management Total Robotics Products Projects & Digital and Defense Expenses Group Solutions Technologiesand other

($ in thousands)

Operating Income (Loss) as reported$11,662 $3,865 $(4,135) $(1,825) $13,430 $(28,179)$(5,182) in accordance with GAAP

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 10 %4 % (6) %(3) %17 % (1) %reported in accordance with GAAP

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

Integrity Unallocated Offshore Aerospace Subsea Manufactured Projects Management and Defense Expenses Total Robotics Products & Digital Group Technologiesand other Solutions

($ in thousands)

Operating Income (Loss) as reported$(80,294) $(100,471) $(95,740) $(122,567) $39,498 $(86,985)$(446,559) in accordance with GAAP

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 (21) %(27) %(43) %(71) %16 % (32) %reported in accordance with GAAP

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 *

Integrity Aerospace Offshore Management Unallocated Subsea Manufactured Projects and Defense Total Robotics Products Group & Digital Expenses Technologiesand other Solutions

($ in thousands)

Operating Income (Loss) as reported$33,277 $1,070 $(2,792) $(3,669) $30,214 $(94,643)$(36,543) in accordance with GAAP

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 8 %- %(1) %(2) %13 % (2) %reported in accordance with GAAP

EBITDA Margin 30 %5 %10 %1 %14 % 8 %

Adjusted EBITDA Margin 30 %5 %10 %1 %14 % 8 %



* Recast to reflect segment changes.

View original content: http://www.prnewswire.com/news-releases/oceaneering-reports-third-quarter-2020-results-301162240.html

SOURCE Oceaneering International, Inc.