PR Newswire | Jul 29, 2020 05:01PM EDT

07/29 16:01 CDT

Oceaneering Reports Second Quarter 2020 Results HOUSTON, July 29, 2020

HOUSTON, July 29, 2020 /PRNewswire/ -- Oceaneering International, Inc. ("Oceaneering") (NYSE:OII) today reported a net loss of $24.8 million, or $(0.25) per share, on revenue of $427 million for the three months ended June 30, 2020. 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 other discrete tax adjustments.

During the prior quarter ended March 31, 2020, Oceaneering reported a net loss of $368 million, or $(3.71) per share, on revenue of $537 million. Adjusted net income was $3.5 million, or $0.04 per share, reflecting the impact of $393 million of pre-tax adjustments, primarily $379 million associated with goodwill impairments, asset impairments and write-offs recognized during the quarter.

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, 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 Six Months Ended

Jun 30, Mar 31, Jun 30,

2020 2019 2020 2020 2019

Revenue $ 427,216 $ 495,781 $ 536,668 $ 963,884 $ 989,667

Gross Margin 42,537 41,983 46,752 89,289 69,570

Income (Loss) from (5,182) (9,635) (380,757) (385,939) (31,349)Operations

Net Income (Loss) (24,788) (35,182) (367,598) (392,386) (60,009)

Diluted Earnings $ (0.25) $ (0.36) $ (3.71) $ (3.96) $ (0.61)(Loss) Per Share

Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, "Considering all of the uncertainties surrounding the crude oil markets and the COVID-19 pandemic, we were satisfied with our second quarter 2020 results. For the second quarter, we generated adjusted EBITDA of $40.5 million, exceeding consensus estimates, and we generated $26.9 million of free cash flow. These positive results were partially attributable to our actions to substantially reduce structural costs in light of an expected continuation of lower demand for our services and products. The positive effect of these cost reductions is reflected in our 9% consolidated adjusted EBITDA margin for the second quarter of 2020, which declined by only 14 basis points as compared to the first quarter of 2020, despite a 20% decrease in revenue.

"As expected, compared to the first quarter of 2020, the aggregate result of our energy segments declined during the second quarter of 2020. However, this decline was partially offset by improved performance in our non-energy segment, Advanced Technologies, and lower Unallocated Expenses. We did experience some operational disruptions and delays due to COVID-19 during the second quarter but the safety protocols we, and the industry, put into place in response to the pandemic limited impacts to our employees and customers.

"Sequentially, ROV adjusted operating performance declined as anticipated, primarily due to the lower number of working drilling rigs. This led to fewer days on hire for drill support services that were slightly offset by a marginal increase in days on hire for vessel-based services. Our fleet use during the quarter was 64% in drill support and 36% in vessel-based activity, compared to 68% and 32%, respectively, during the first quarter. Revenue declined 12%, primarily due to a 9% decrease in ROV days on hire. ROV adjusted EBITDA margin remained relatively unchanged at 31% during the second quarter of 2020 as compared to the adjusted EBITDA margin of 32% achieved during the first quarter of 2020.

"At the end of June 2020 our ROV fleet size was 250, unchanged from the first quarter. For the second quarter, utilization was 59%, down from 65% achieved for the quarter ended March 31, 2020. As of June 30, 2020, we had ROV contracts on 86 of the 139 floating rigs under contract, resulting in a drill support market share of 62%.

"Subsea Products adjusted operating results declined during the second quarter of 2020, as compared to the first quarter of 2020, on significantly lower revenue. Revenue in our manufactured products business was impacted by the delayed receipt of materials, customer-driven project delays, and reduced working hours due to COVID-19. Revenue in our service and rental business declined due to decreased activity, including the uncertainty of timing of our riserless light well intervention project in Angola. Persistent cost-reduction efforts helped us to achieve an adjusted operating margin consistent with the margin generated in the first quarter of 2020.

"Our Subsea Products backlog at June 30, 2020 was $486 million, compared to our March 31, 2020 backlog of $528 million. As expected, there were low levels of bookings during the second quarter, as many of our customers delayed investment decisions due to the uncertainties regarding oil prices and potential COVID-19-related operating risks. Revenue replacement during the quarter was 67% and our book-to-bill ratio for the trailing 12 months was 0.83.

"The second quarter 2020 Subsea Projects adjusted operating performance improved, as compared to the first quarter of 2020, on lower revenue. Revenue declined due to decreased customer activity, but we were pleased that adjusted operating results improved due to better project execution and ongoing cost-reduction activity. Asset Integrity's adjusted operating results declined sequentially on lower revenue and as a result of non-recurring costs on certain completed projects.

"For our non-energy segment, Advanced Technologies, second quarter 2020 adjusted operating results improved sequentially due to good performance from our government businesses. COVID-19 continues to adversely affect our commercial businesses. However cost reduction measures implemented during the first quarter of 2020 limited the financial impact on our second quarter 2020 results. Unallocated Expenses for the quarter were sequentially lower as the return on market-based assets held in a trust for the benefit of certain post-retirement obligations improved, as compared to a first quarter loss. Additionally, we had reduced information technology costs during the quarter.

"For the second quarter of 2020, our cash balance increased to $334 million, as we generated $26.9 million of free cash flow, largely driven by positive contributions from operations and working capital, and continued scrutiny of our capital expenditures.

"Although we are encouraged by our second quarter 2020 results, uncertainty remains for the rest of 2020. Many of the markets we serve will likely continue to be impacted by the effects of and associated responses to COVID-19, as well as potential reductions in customer spending as a consequence of the volatility in the macro drivers surrounding commodity prices. As a result, we are not providing segment financial guidance for the third quarter or second half of 2020. We affirm that Unallocated Expenses are forecast to be in the high-$20 million range per quarter. For the year, we affirm guidance for capital expenditures in the range of $45 million to $65 million, our cash tax payments in the range of $30 million to $35 million, and our expectation of CARES Act tax refunds in the range of $16 million to $34 million.

"In our first quarter 2020 earnings release, we outlined our plan for a targeted reduction of 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. These cost reduction efforts are progressing well, and we estimate that, since launching those efforts, approximately $85 million of annualized cost reductions have been initiated, with additional savings expected to be achieved throughout the remainder of the year. We continue to expect the cash costs associated with these actions to approximate $15 million in 2020.

"Preserving our liquidity and balance sheet remains a high priority in the current environment. We expect to generate positive free cash flow for the full year of 2020 based on actions we are taking to achieve cost reductions, reduced capital spending, lower cash taxes, our expectation for CARES Act tax refunds, and cash expected to be generated from working capital for the remainder of the year."

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: forecasted Unallocated Expenses per quarter, and annual capital expenditures and cash tax payments; targeted reduction range of annualized expenses, including depreciation expense; timing and anticipation of additional savings from cost reduction actions already initiated; cash costs associated with cost reduction actions; belief in generating positive free cash flow during 2020, and the bases for that belief, including expectations regarding: actions to achieve cost reductions, capital spending, cash taxes, CARES Act tax refunds, and cash from working capital for the remainder of the year.

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, entertainment, and aerospace 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

Jun 30, Dec 31, 2020 2019

(in thousands)

ASSETS

Current assets (including cash and cash equivalents of $333,509 $ 1,131,908 $ 1,244,436 and $373,655)

Net property and 647,864 776,532 equipment

Other assets 349,012 719,695

Total Assets $ 2,128,784 $ 2,740,663

LIABILITIES AND EQUITY

Current $ 452,444 $ 600,956 liabilities

Long-term 806,006 796,516 debt

Other long-term liabilities 244,925 267,782

Equity 625,409 1,075,409

Total Liabilities and $ 2,128,784 $ 2,740,663 Equity

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended For the Six Months Ended

Jun 30, Jun 30, Mar 31, Jun 30, Jun 30, 2020 2019 2020 2019 2020

(in thousands, except per share amounts)

Revenue $ 427,216 $ 495,781 $ 536,668 $ 963,884 $ 989,667

Cost of services 384,679 453,798 489,916 874,595 920,097 and products

Gross margin 42,537 41,983 46,752 89,289 69,570

Selling, general and 47,719 51,618 55,741 103,460 100,919 administrative expense

Long-lived assets - - 68,763 68,763 - impairments

Goodwill - - 303,005 303,005 - impairment

Income (loss) (5,182) (9,635) (380,757) (385,939) (31,349) from operations

Interest 511 1,848 1,277 1,788 4,452 income

Interest expense, net of (11,611) (10,199) (12,462) (24,073) (19,623) amounts capitalized

Equity in income (losses) of 674 - 1,197 1,871 (164) unconsolidated affiliates

Other income (3,660) 7 (7,128) (10,788) 726 (expense), net

Income (loss) before income (19,268) (17,979) (397,873) (417,141) (45,958) taxes

Provision (benefit) for 5,520 17,203 (30,275) (24,755) 14,051 income taxes

Net Income $ (24,788) $ (35,182) $ (367,598) $ (392,386) $ (60,009) (Loss)

Weighted averagediluted shares 99,273 98,929 99,055 99,164 98,822outstanding

Diluted earnings $ (0.25) $ (0.36) $ (3.71) $ (3.96) $ (0.61)(loss) per share

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

SEGMENT INFORMATION

For the Three Months Ended For the Six Months Ended

Jun 30, 2020 Jun 30, 2019 Mar 31, 2020 Jun 30, 2020 Jun 30, 2019

($ in thousands)

Remotely OperatedVehicles

Revenue $ 98,778 $ 120,363 $ 111,780 $ 210,558 $ 220,709

Gross margin $ 13,788 $ 17,360 $ 18,112 $ 31,900 $ 26,781

Operating income (loss) $ 5,975 $ 8,688 $ 9,066 $ 15,041 $ 10,106

Operating income (loss) % 6 % 7 % 8 % 7 % 5 %

Days available 22,750 25,006 22,750 45,500 49,512

Days utilized 13,501 15,423 14,853 28,354 28,365

Utilization 59 % 62 % 65 % 62 % 57 %

Subsea Products

Revenue $ 130,655 $ 138,910 $ 194,838 $ 325,493 $ 267,754

Gross margin $ 21,578 $ 21,029 $ 28,639 $ 50,217 $ 33,344

Operating income (loss) $ 9,068 $ 7,413 $ (91,858) $ (82,790) $ 6,937

Operating income (loss) % 7 % 5 % (47) % (25) % 3 %

Backlog at end of period $ 486,000 $ 596,000 $ 528,000 $ 486,000 $ 596,000

Subsea Projects

Revenue $ 56,326 $ 75,104 $ 61,455 $ 117,781 $ 164,832

Gross margin $ 6,331 $ 5,472 $ (2,114) $ 4,217 $ 14,505

Operating income (loss) $ 845 $ 87 $ (145,290) $ (144,445) $ 2,979

Operating income (loss) % 2 % - % (236) % (123) % 2 %

Asset Integrity

Revenue $ 48,077 $ 61,156 $ 59,132 $ 107,209 $ 121,845

Gross margin $ 4,155 $ 6,423 $ 8,729 $ 12,884 $ 12,695

Operating income (loss) $ (2,598) $ (1,302) $ (109,441) $ (112,039) $ (2,015)

Operating income (loss) % (5) % (2) % (185) % (105) % (2) %

Advanced Technologies

Revenue $ 93,380 $ 100,248 $ 109,463 $ 202,843 $ 214,527

Gross margin $ 15,089 $ 13,386 $ 13,428 $ 28,517 $ 28,634

Operating income (loss) $ 9,707 $ 7,241 $ (10,585) $ (878) $ 16,840

Operating income (loss) % 10 % 7 % (10) % - % 8 %

Unallocated Expenses

Gross margin $ (18,404) $ (21,687) $ (20,042) $ (38,446) $ (46,389)

Operating income (loss) $ (28,179) $ (31,762) $ (32,649) $ (60,828) $ (66,196)

Total

Revenue $ 427,216 $ 495,781 $ 536,668 $ 963,884 $ 989,667

Gross margin $ 42,537 $ 41,983 $ 46,752 $ 89,289 $ 69,570

Operating income (loss) $ (5,182) $ (9,635) $ (380,757) $ (385,939) $ (31,349)

Operating income (loss) % (1) % (2) % (71) % (40) % (3) %

The above Segment Information does not include adjustments for non-recurringtransactions. See the tables in our Reconciliations of Non-GAAP to GAAPFinancial Information section for financial measures that management considersrepresentative of our ongoing operations.

SELECTED CASH FLOW INFORMATION

For the Three Months Ended For the Six Months Ended

Jun 30, 2020 Jun 30, 2019 Mar 31, 2020 Jun 30, 2020 Jun 30, 2019

(in thousands)

CapitalExpenditures, $ 10,631 $ 40,898 $ 27,229 $ 37,860 70,862includingAcquisitions

Depreciation andamortization:

Energy Servicesand Products

Remotely Operated $ 22,892 $ 26,871 $ 25,725 $ 48,617 $ 54,861 Vehicles

Subsea 10,024 12,366 62,454 72,478 25,357 Products

Subsea 4,597 7,550 143,346 147,943 15,432 Projects

Asset 190 1,570 111,385 111,575 3,204 Integrity

Total EnergyServices and 37,703 48,357 342,910 380,613 98,854Products

Advanced 634 765 12,178 12,812 1,595Technologies

Unallocated 361 1,182 1,108 1,469 2,341Expenses

Total Depreciation $ 38,698 $ 50,304 $ 356,196 $ 394,894 $ 102,790 and Amortization

Goodwill and long-lived asset impairment expense, reflected in the depreciationand amortization expense above, was $310 million in the three months endedMarch 31, 2020 and the six months ended June 30, 2020.

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 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.

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

For the Three Months Ended

Jun 30, 2020 Jun 30, 2019 Mar 31, 2020

Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS (Loss) (Loss) (Loss)

(in thousands, except per share amounts)

Net income(loss) anddiluted EPS as $ (24,788) $ (0.25) $ (35,182) $ (0.36) $ (367,598) $ (3.71)reported inaccordance withGAAP

Pre-taxadjustments forthe effects of:

Long-lived assets - - 68,763 impairments

Long-lived assets - - 7,328 write-offs

Goodwill - - 303,005 impairment

Restructuring expenses and 5,708 - 6,630 other

Foreign currency 3,908 (59) 7,050 (gains) losses

Total pre-tax 9,616 (59) 392,776adjustments

Tax effect onpre-taxadjustments atthe applicablejurisdictional (2,331) 12 (45,355)statutory ratein effect forrespectiveperiods

Discrete taxitems:

Share-based 16 1 987compensation

Uncertain 735 1,268 (9,652)tax positions

U.S. CARES 1,159 - (33,784)Act

Valuation 3,245 - 65,208allowances

Other (1,887) 2,436 950

Total discrete tax 3,268 3,705 23,709 adjustments

Total of 10,553 3,658 371,130 adjustments

Adjusted Net $ (14,235) $ (0.14) $ (31,524) $ (0.32) $ 3,532 $ 0.04Income (Loss)

Weightedaverage dilutedsharesoutstanding 99,273 98,929 99,649utilized forAdjusted NetIncome (Loss)

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

For the Six Months Ended

Jun 30, 2020 Jun 30, 2019

Net Income Net Income (Loss) Diluted EPS Diluted EPS (Loss)

(in thousands, except per share amounts)

Net income (loss) anddiluted EPS as $ (392,386) $ (3.96) $ (60,009) $ (0.61)reported inaccordance with GAAP

Pre-tax adjustmentsfor the effects of:

Long-lived assets 68,763 - impairments

Long-lived assets 7,328 - write-offs

Goodwill impairment 303,005 -

Restructuring 12,338 - expenses and other

Foreign currency 10,958 (673) (gains) losses

Total pre-tax 402,392 (673)adjustments

Tax effect on pre-taxadjustments at theapplicablejurisdictional (47,686) 141statutory rate ineffect for respectiveperiods

Discrete tax items:

Share-based 1,003 987compensation

Uncertain tax (8,917) 2,290positions

U.S. CARES Act (32,625) -

Valuation 68,453 1,539allowances

Other (937) 295

Total discrete tax 26,977 5,111 adjustments

Total of adjustments 381,683 4,579

Adjusted Net Income $ (10,703) $ (0.11) $ (55,430) $ (0.56)(Loss)

Weighted averagediluted sharesoutstanding utilized 99,164 98,822for Adjusted NetIncome (Loss)

EBITDA and Adjusted EBITDA and Margins

For the Three Months Ended For the Six Months Ended

Jun 30, 2020 Jun 30, 2019 Mar 31, 2020 Jun 30, 2020 Jun 30, 2019

($ in thousands)

Net income $ (24,788) $ (35,182) $ (367,598) $ (392,386) $ (60,009)(loss)

Depreciationand 38,698 50,304 356,196 394,894 102,790amortization

Subtotal 13,910 15,122 (11,402) 2,508 42,781

Interestexpense, net of 11,100 8,351 11,185 22,285 15,171interest income

Amortizationincluded in 333 (335) (333) - (675)interestexpense

Provision(benefit) for 5,520 17,203 (30,275) (24,755) 14,051income taxes

EBITDA 30,863 40,341 (30,825) 38 71,328

Adjustmentsfor theeffects of:

Long-lived assets - - 68,763 68,763 - impairments

Restructuring expenses and 5,708 - 6,630 12,338 - other

Foreign currency 3,908 (59) 7,050 10,958 (673) (gains) losses

Total of 9,616 (59) 82,443 92,059 (673) adjustments

Adjusted $ 40,479 $ 40,282 $ 51,618 $ 92,097 $ 70,655 EBITDA

Revenue $ 427,216 $ 495,781 $ 536,668 $ 963,884 $ 989,667

EBITDA margin 7 % 8 % (6) % - % 7 %%

AdjustedEBITDA margin 9 % 8 % 10 % 10 % 7 %%

Free Cash Flow

For the Three Months Ended For the Six Months Ended

Jun 30, 2020 Jun 30, 2019 Mar 31, 2020 Jun 30, 2020 Jun 30, 2019

(in thousands)

Net Income $ (24,788) $ (35,182) $ (367,598) $ (392,386) $ (60,009)(loss)

Non-cashadjustments:

Depreciation and amortization, 38,698 50,304 356,196 394,894 102,790 including goodwill impairment

Other 41 495 64,137 64,178 557 non-cash

Otherincreases(decreases) in 23,567 37,968 (84,885) (61,318) 29,371cash fromoperatingactivities

Cash flowprovided by(used in) 37,518 53,585 (32,150) 5,368 72,709operatingactivities

Purchases ofproperty and (10,631) (40,898) (27,229) (37,860) (70,862)equipment

Free Cash Flow $ 26,887 $ 12,687 $ (59,379) $ (32,492) $ 1,847

Adjusted Operating Income (Loss) and Margins by Segment

For the Three Months Ended June 30, 2020

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles

($ in thousands)

OperatingIncome (Loss)as reported in $ 5,975 $ 9,068 $ 845 $ (2,598) $ 9,707 $ (28,179) $ (5,182)accordancewith GAAP

Adjustments forthe effects of:

Restructuring expenses and 1,336 1,646 1,250 1,536 (235) 175 5,708 other

Total of 1,336 1,646 1,250 1,536 (235) 175 5,708 adjustments

AdjustedOperating $ 7,311 $ 10,714 $ 2,095 $ (1,062) $ 9,472 $ (28,004) $ 526Income (Loss)

Revenue $ 98,778 $ 130,655 $ 56,326 $ 48,077 $ 93,380 $ 427,216

Operatingincome (loss)% as reported 6 % 7 % 2 % (5) % 10 % (1) %in accordancewith GAAP

Operatingincome (loss)% 7 % 8 % 4 % (2) % 10 % - %using adjustedamounts

For the Three Months Ended June 30, 2019

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles

($ in thousands)

OperatingIncome (Loss)as reported in $ 8,688 $ 7,413 $ 87 $ (1,302) $ 7,241 $ (31,762) $ (9,635)accordancewith GAAP

AdjustedOperating $ 8,688 $ 7,413 $ 87 $ (1,302) $ 7,241 $ (31,762) $ (9,635)Income (Loss)

Revenue $ 120,363 $ 138,910 $ 75,104 $ 61,156 $ 100,248 $ 495,781

Operatingincome (loss)% as reported 7 % 5 % - % (2) % 7 % (2) %in accordancewith GAAP

Operatingincome (loss)% 7 % 5 % - % (2) % 7 % (2) %using adjustedamounts

Adjusted Operating Income (Loss) and Margins by Segment

For the Three Months Ended March 31, 2020

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles

($ in thousands)

Operating Income(Loss) asreported in $ 9,066 $ (91,858) $ (145,290) $ (109,441) $ (10,585) $ (32,649) $ (380,757)accordance withGAAP

Adjustments forthe effects of:

Long-lived assets - 54,859 7,689 - 6,215 - 68,763 impairments

Long-lived assets - - 7,328 - - - 7,328 write-offs

Goodwill - 51,302 129,562 110,753 11,388 - 303,005 impairment

Restructuring expenses and 713 1,668 1,480 1,694 795 280 6,630 other

Total of 713 107,829 146,059 112,447 18,398 280 385,726 adjustments

AdjustedOperating Income $ 9,779 $ 15,971 $ 769 $ 3,006 $ 7,813 $ (32,369) $ 4,969(Loss)

Revenue $ 111,780 $ 194,838 $ 61,455 $ 59,132 $ 109,463 $ 536,668

Operating income(loss) % asreported in 8 % (47) % (236) % (185) % (10) % (71) %accordance withGAAP

Operating income(loss) % using 9 % 8 % 1 % 5 % 7 % 1 %adjusted amounts

Adjusted Operating Income (Loss) and Margins by Segment

For the Six Months Ended June 30, 2020

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles

($ in thousands)

OperatingIncome (Loss)as reported in $ 15,041 $ (82,790) $ (144,445) $ (112,039) $ (878) $ (60,828) $ (385,939)accordancewith GAAP

Adjustments forthe effects of:

Long-lived assets - 54,859 7,689 - 6,215 - 68,763 impairments

Long-lived assets - - 7,328 - - - 7,328 write-offs

Goodwill - 51,302 129,562 110,753 11,388 - 303,005 impairment

Restructuring expenses and 2,049 3,314 2,730 3,230 560 455 12,338 other

Total of 2,049 109,475 147,309 113,983 18,163 455 391,434 adjustments

AdjustedOperating $ 17,090 $ 26,685 $ 2,864 $ 1,944 $ 17,285 $ (60,373) $ 5,495Income (Loss)

Revenue $ 210,558 $ 325,493 $ 117,781 $ 107,209 $ 202,843 $ 963,884

Operatingincome (loss)% as reported 7 % (25) % (123) % (105) % - % (40) %in accordancewith GAAP

Operatingincome (loss)% 8 % 8 % 2 % 2 % 9 % 1 %using adjustedamounts

For the Six Months Ended June 30, 2019

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles

($ in thousands)

OperatingIncome (Loss)as reported in $ 10,106 $ 6,937 $ 2,979 $ (2,015) $ 16,840 $ (66,196) $ (31,349)accordancewith GAAP

AdjustedOperating $ 10,106 $ 6,937 $ 2,979 $ (2,015) $ 16,840 $ (66,196) $ (31,349)Income (Loss)

Revenue $ 220,709 $ 267,754 $ 164,832 $ 121,845 $ 214,527 $ 989,667

Operatingincome (loss)% as reported 5 % 3 % 2 % (2) % 8 % (3) %in accordancewith GAAP

Operatingincome (loss)% 5 % 3 % 2 % (2) % 8 % (3) %using adjustedamounts

EBITDA and Adjusted EBITDA and Margins by Segment

For the Three Months Ended June 30, 2020

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles and other

($ in thousands)

OperatingIncome (Loss)as reported in $ 5,975 $ 9,068 $ 845 $ (2,598) $ 9,707 $ (28,179) $ (5,182)accordancewith GAAP

Adjustments forthe effects of:

Depreciation and 22,892 10,024 4,597 190 634 361 38,698 amortization

Other pre-tax - - - - - (2,653) (2,653)

EBITDA 28,867 19,092 5,442 (2,408) 10,341 (30,471) 30,863

Adjustments forthe effects of:

Restructuring expenses and 1,336 1,646 1,250 1,536 (235) 175 5,708 other

Foreign currency - - - - - 3,908 3,908 (gains) losses

Total of 1,336 1,646 1,250 1,536 (235) 4,083 9,616 adjustments

Adjusted $ 30,203 $ 20,738 $ 6,692 $ (872) $ 10,106 $ (26,388) $ 40,479EBITDA

Revenue $ 98,778 $ 130,655 $ 56,326 $ 48,077 $ 93,380 $ 427,216

Operatingincome (loss)% as reported 6 % 7 % 2 % (5) % 10 % (1) %in accordancewith GAAP

EBITDA Margin 29 % 15 % 10 % (5) % 11 % 7 %

Adjusted 31 % 16 % 12 % (2) % 11 % 9 %EBITDA Margin

For the Three Months Ended June 30, 2019

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles and other

($ in thousands)

OperatingIncome (Loss)as reported in $ 8,688 $ 7,413 $ 87 $ (1,302) $ 7,241 $ (31,762) $ (9,635)accordancewith GAAP

Adjustments forthe effects of:

Depreciation and 26,871 12,366 7,550 1,570 765 1,182 50,304 amortization

Other pre-tax - - - - - (328) (328)

EBITDA 35,559 19,779 7,637 268 8,006 (30,908) 40,341

Adjustments forthe effects of:

Foreign currency - - - - - (59) (59) (gains) losses

Total of - - - - - (59) (59) adjustments

Adjusted $ 35,559 $ 19,779 $ 7,637 $ 268 $ 8,006 $ (30,967) $ 40,282EBITDA

Revenue $ 120,363 $ 138,910 $ 75,104 $ 61,156 $ 100,248 $ 495,781

Operatingincome (loss)% as reported 7 % 5 % - % (2) % 7 % (2) %in accordancewith GAAP

EBITDA Margin 30 % 14 % 10 % - % 8 % 8 %

Adjusted 30 % 14 % 10 % - % 8 % 8 %EBITDA Margin

EBITDA and Adjusted EBITDA and Margins by Segment

For the Three Months Ended March 31, 2020

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles and other

($ in thousands)

OperatingIncome (Loss)as reported in $ 9,066 $ (91,858) $ (145,290) $ (109,441) $ (10,585) $ (32,649) $ (380,757)accordancewith GAAP

Adjustments forthe effects of:

Depreciation and 25,725 62,454 143,346 111,385 12,178 1,108 356,196 amortization

Other pre-tax - - - - - (6,264) (6,264)

EBITDA 34,791 (29,404) (1,944) 1,944 1,593 (37,805) (30,825)

Adjustments forthe effects of:

Long-lived assets - 54,859 7,689 - 6,215 - 68,763 impairments

Restructuring expenses and 713 1,668 1,480 1,694 795 280 6,630 other

Foreign currency - - - - - 7,050 7,050 (gains) losses

Total of 713 56,527 9,169 1,694 7,010 7,330 82,443 adjustments

Adjusted $ 35,504 $ 27,123 $ 7,225 $ 3,638 $ 8,603 $ (30,475) $ 51,618EBITDA

Revenue $ 111,780 $ 194,838 $ 61,455 $ 59,132 $ 109,463 $ 536,668

Operatingincome (loss)% as reported 8 % (47) % (236) % (185) % (10) % (71) %in accordancewith GAAP

EBITDA Margin 31 % (15) % (3) % 3 % 1 % (6) %

Adjusted 32 % 14 % 12 % 6 % 8 % 10 %EBITDA Margin

EBITDA and Adjusted EBITDA and Margins by Segment

For the Six Months Ended June 30, 2020

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles and other

($ in thousands)

OperatingIncome (Loss)as reported in $ 15,041 $ (82,790) $ (144,445) $ (112,039) $ (878) $ (60,828) $ (385,939)accordancewith GAAP

Adjustments forthe effects of:

Depreciation and 48,617 72,478 147,943 111,575 12,812 1,469 394,894 amortization

Other pre-tax - - - - - (8,917) (8,917)

EBITDA 63,658 (10,312) 3,498 (464) 11,934 (68,276) 38

Adjustments forthe effects of:

Long-lived assets - 54,859 7,689 - 6,215 - 68,763 impairments

Restructuring expenses and 2,049 3,314 2,730 3,230 560 455 12,338 other

Foreign currency - - - - - 10,958 10,958 (gains) losses

Total of 2,049 58,173 10,419 3,230 6,775 11,413 92,059 adjustments

Adjusted $ 65,707 $ 47,861 $ 13,917 $ 2,766 $ 18,709 $ (56,863) $ 92,097EBITDA

Revenue $ 210,558 $ 325,493 $ 117,781 $ 107,209 $ 202,843 $ 963,884

Operatingincome (loss)% as reported 7 % (25) % (123) % (105) % - % (40) %in accordancewith GAAP

EBITDA Margin 30 % (3) % 3 % - % 6 % - %

Adjusted 31 % 15 % 12 % 3 % 9 % 10 %EBITDA Margin

For the Six Months Ended June 30, 2019

Remotely Subsea Subsea Asset Advanced Unallocated Operated Products Projects Integrity Tech. Expenses Total Vehicles and other

($ in thousands)

OperatingIncome (Loss)as reported in $ 10,106 $ 6,937 $ 2,979 $ (2,015) $ 16,840 $ (66,196) $ (31,349)accordancewith GAAP

Adjustments forthe effects of:

Depreciation and 54,861 25,357 15,432 3,204 1,595 2,341 102,790 amortization

Other pre-tax - - - - - (113) (113)

EBITDA 64,967 32,294 18,411 1,189 18,435 (63,968) 71,328

Adjustments forthe effects of:

Foreign currency - - - - - (673) (673) (gains) losses

Total of - - - - - (673) (673) adjustments

Adjusted $ 64,967 $ 32,294 $ 18,411 $ 1,189 $ 18,435 $ (64,641) $ 70,655EBITDA

Revenue $ 220,709 $ 267,754 $ 164,832 $ 121,845 $ 214,527 $ 989,667

Operatingincome (loss)% as reported 5 % 3 % 2 % (2) % 8 % (3) %in accordancewith GAAP

EBITDA Margin 29 % 12 % 11 % 1 % 9 % 7 %

Adjusted 29 % 12 % 11 % 1 % 9 % 7 %EBITDA Margin

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SOURCE Oceaneering International, Inc.