Oceaneering Reports Fourth Quarter and Full Year 2020 Results

Rhea-AI Summary

Oceaneering reported a net loss of $25.0 million, or $(0.25) per share, on revenues of $424 million for Q4 2020. Adjusted net income was $1.8 million, reflecting significant impairment and restructuring costs. Compared to Q3 2020, net loss improved from $79.4 million and revenue decreased from $440 million. The company's cash position rose to $452 million, while free cash flow generated in Q4 amounted to $89.4 million. For 2021, Oceaneering anticipates a stable revenue outlook with positive free cash flow, projecting adjusted EBITDA between $160 million and $210 million across segments.

Positive

• Improvement in adjusted net income to $1.8 million from Q3's adjusted loss of $17.6 million.
• Free cash flow generated was $89.4 million in Q4 2020, leading to an increased cash position of $452 million.
• Consolidated adjusted EBITDA of $47.1 million in Q4, exceeding guidance and consensus estimates.
• Forecast for full year 2021 indicates positive free cash flow exceeding 2020 levels.

Negative

• Net loss of $25.0 million in Q4 2020 reflects ongoing financial challenges.
• Year-over-year revenue decreased by 11% to $1.8 billion in 2020, impacted by lower activity across energy segments.
• Manufactured Products backlog fell from $318 million to $266 million, indicating declining demand.
• ROV fleet utilization decreased to 54% in Q4 from 59% in Q3.

HOUSTON, Feb. 24, 2021 /PRNewswire/ -- Oceaneering International, Inc. ("Oceaneering") (NYSE:OII) today reported a net loss of $25.0 million, or $(0.25) per share, on revenue of $424 million for the three months ended December 31, 2020.  Adjusted net income was $1.8 million, or $0.02 per share, reflecting the impact of $9.8 million of pre-tax adjustments associated with asset impairments and write-offs, restructuring and other expenses, and foreign exchange losses recognized during the quarter, and $9.6 million of discrete tax adjustments.

During the prior quarter ended September 30, 2020, Oceaneering reported a net loss of $79.4 million, or $(0.80) per share, on revenue of $440 million.  Adjusted net loss was $17.6 million, or $(0.18) per share, reflecting the impact of $68.7 million 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.

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, 2021 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												Year Ended
		Dec 31,								Sep 30,				Dec 31,
		2020				2019				2020				2020				2019
Revenue		$	424,262			$	560,810			$	439,743			$	1,827,889			$	2,048,124
Gross Margin		45,001				(20,387)				29,651				163,941				98,244
Income (Loss) from Operations		480				(254,170)				(60,620)				(446,079)				(290,713)
Net Income (Loss)		(25,000)				(262,912)				(79,365)				(496,751)				(348,444)
Diluted Earnings (Loss) Per Share		$	(0.25)			$	(2.66)			$	(0.80)			$	(5.01)			$	(3.52)

 

For the full year 2020:

• Consolidated Adjusted EBITDA was $184 million
• Consolidated Adjusted Operating Income was $20.6 million
• Cash flow from operations was $137 million and free cash flow was $76.0 million
• Cash position increased by $78.4 million, from $374 million to $452 million
• Cost improvement activities achieved the high end of $125 million to $160 million guidance range issued in the second quarter 2020

As of December 31, 2020:

• Remotely Operated Vehicles (ROV): fleet count was 250; Q4 fleet utilization was 54%; and Q4 average revenue per day on hire was $7,325
• Manufactured Products:  backlog was $266 million and trailing 12-month book-to-bill ratio was 0.4

Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, "We were pleased that our consolidated fourth quarter adjusted EBITDA of $47.1 million was sequentially higher than the third quarter 2020 and exceeded both our guidance and consensus estimates.  Each of our five operating segments recorded sequential improvement in adjusted operating income and adjusted EBITDA, despite lower revenue in three out of the five segments.  Fourth quarter 2020 consolidated adjusted operating income of $9.6 million was the best quarterly performance in 2020 and $4.0 million higher than in the third quarter.  Free cash flow generated during the fourth quarter 2020 was $89.4 million.  As a result of good operating cash flow, working capital efficiencies, and capital expenditure discipline, our cash position increased by $93.2 million during the fourth quarter 2020.  As of December 31, 2020, our cash position stood at $452 million.

"Our fourth quarter 2020 Subsea Robotics (SSR) adjusted operating income improved on lower revenue.  Adjusted fourth quarter operating results included recognition of approximately $3.0 million of cost structure improvements achieved throughout 2020.  Consequently, our SSR quarterly adjusted EBITDA margin of 33% was better than expected, up from the 31% achieved during the third quarter 2020, and consistent with the margin achieved during the first nine months of 2020.

"Sequentially, our fourth quarter 2020 ROV fleet count remained at 250 systems.  ROV days on hire declined 8% as compared to the third quarter 2020 due to expected lower seasonal activity.  Sequentially, our days on hire declined for both drill support and vessel-based services.  Fleet utilization declined to 54% in the fourth quarter 2020 from 59% in the third quarter 2020.  Average ROV revenue per day of on hire of $7,325 was 1% higher over the third quarter.

"Our ROV fleet use during the quarter was 60% in drill support and 40% in vessel-based activity.  As of December 31, 2020, we had ROV contracts on 75 of the 129 floating rigs under contract, or 58%, a slight market share increase from September 30, 2020, when we had ROV contracts on 76 of the 133 floating rigs under contract, or 57%.  Subject to quarterly variances, we continue to expect our drill support market share to generally approximate 60%.

"Manufactured Products (MP) fourth quarter 2020 adjusted operating income improved from the third quarter on lower segment revenue, which was adversely affected by supplier-related delays in our energy products businesses.  Adjusted operating income margin increased to 9% in the fourth quarter 2020, from 5% in the third quarter of 2020, due primarily to favorable contract close-outs and supply chain savings. The COVID-19 pandemic continued to dampen demand for our mobility solutions products during the fourth quarter 2020.  Our Manufactured Products backlog on December 31, 2020 was $266 million, compared to our September 30, 2020 backlog of $318 million.  Our book-to-bill ratio was 0.4 for the full year 2020, as compared with the trailing 12-month book-to-bill of 0.5 at September 30, 2020.

"Our fourth quarter 2020 Offshore Projects Group (OPG) adjusted operating income increased on lower revenue.  Revenue declined less than expected, as the Gulf of Mexico (GoM) experienced higher amounts of installation work and intervention, maintenance, and repair (IMR) activities with customers having pushed work into the fourth quarter due to several third quarter 2020 hurricanes.  The sequential increase in adjusted operating income was due to better activity-based pricing in the GoM and continued cost improvement.  During the quarter, engineering work continued on the Angola riserless light well intervention project.

"Integrity Management and Digital Solutions (IMDS) fourth quarter 2020 adjusted operating income was higher than third quarter on a marginal increase in revenue.  The improvement in adjusted operating income was largely driven by more effective use of personnel, as we continue to transform how and where work is performed.

"Aerospace and Defense Technologies (ADTech) fourth quarter 2020 adjusted operating income improved from the third quarter on higher revenue.  Adjusted operating income margin rose as a result of project mix and better-than-expected performance in our subsea defense technologies business.  At the corporate level, Unallocated Expenses were higher primarily due to increased incentive compensation accruals related to better fourth quarter operating and financial performance.

"For the year, activity levels and operating performance within our energy segments were lower than originally projected for 2020.  The COVID-19 pandemic negatively impacted operator investments in oil and gas projects, due to a decline in crude oil demand and pricing, and entertainment business spending, due to limited theme park attendance.  Activity levels and performance within our ADTech segment met expectations for the year.

"Compared to 2019, our 2020 consolidated revenue declined 11% to $1.8 billion, with revenue decreases in each of our four energy segments being partially offset by the revenue increase in ADTech.  2020 operating performance benefited considerably from the cost improvement measures instituted during the year, despite the headwinds of lower activity in our energy segments.  Consolidated 2020 adjusted operating results and adjusted EBITDA improved by $59.6 million and $19.5 million, respectively, led by our Manufactured Products and ADTech segments.  In 2020, each of our operating segments, with the exception of OPG, contributed positive adjusted operating income, and all our operating segments contributed positive adjusted EBITDA.  Overall, we generated adjusted EBITDA of $184 million.  We generated $137 million in cash flow from operations and invested $60.7 million in capital expenditures.  We ended the year with $452 million in cash.

"We anticipate our full year 2021 to yield positive free cash flow in excess of the amount generated in 2020, and the midpoint of our consolidated adjusted EBITDA range to approximate 2020 consolidated adjusted EBITDA.  Based on year-end 2020 backlog and anticipated order intake, we forecast generally flat consolidated revenue, with higher revenue in ADTech and IMDS to offset substantially lower revenue from our Manufactured Products segment.  We forecast relatively flat revenue in our SSR and OPG segments.  These projections assume no significant incremental COVID-19 impacts and generally stable oil and gas prices.  For the year, we anticipate generating $160 million to $210 million of adjusted EBITDA, with positive operating income and adjusted EBITDA contributions from each of our operating segments.  Apart from seasonality, we view pricing and margins in the current energy markets to be stable.  We forecast improved annual operating results in our SSR, OPG, IMDS, and ADTech segments, and lower operating results in our Manufactured Products segment.

"For SSR, our forecast for improved results is based on essentially flat ROV days on hire, minor shifts in geographic mix, and generally stable pricing.  Results for tooling-based services are expected to be flat, with activity levels generally following ROV days on hire.  Survey results are projected to improve on higher geoscience activity.  We forecast adjusted EBITDA margins to be consistent with those achieved in 2020.

"We expect Manufactured Products segment performance to decline, primarily as a result of the decreased order intake in our energy businesses during 2020.  We continue to closely monitor the impact of the COVID-19 pandemic on our mobility solutions businesses, and currently expect to see marginally higher activity and contribution from these businesses in 2021.  We forecast that our operating income margins will be in the low- to mid-single digit range for the year.

"OPG operating results are expected to improve in 2021, on generally stable offshore activity and margins, as compared to the last half of 2020.  Operating results and adjusted EBITDA are forecast to improve, largely due to the efficiency and cost improvement measures implemented in 2020 and improved year-over-year contribution from our Angola riserless light well intervention campaign.  Vessel day rates remain competitive but stable, and we expect to see opportunities for pricing improvements during periods of higher activity.  We also anticipate reduced charter obligations and increased flexibility on third-party vessels and an overall improvement in fleet utilization.  As has been the case over the last several years, this segment has the highest amount of speculative work incorporated in our guidance.

"IMDS results are forecast to improve on higher revenue, with the operating income margin averaging in the high-single digit range for the year.  Good order intake at the end of 2020 is expected to begin benefiting the business in the second quarter of 2021.

"Our 2021 ADTech revenue is expected to be higher, producing improved results with operating income margins consistent with those achieved in 2020.  Growth in this segment is expected to be broad-based, with revenue growth in each of our three government-focused businesses.

"For 2021, we anticipate Unallocated Expenses to average in the low- to mid-$30 million range per quarter as we forecast higher accrual rates for projected short- and long-term performance-based incentive compensation expense, as compared to 2020.

"Interest expense, net of interest income, is expected to be approximately $40 million, and we expect our 2021 cash tax payments to be in the range of $35 million to $40 million.  This includes taxes incurred in countries that impose tax on the basis of in-country revenue and bear no relationship to the profitability of such operations.  These cash tax payments do not include the impact of approximately $28 million of CARES Act tax refunds expected to be received in 2021.

"Our first quarter 2021 adjusted EBITDA is forecast to be in the range of $45 million to $50 million on sequentially higher revenue.  We expect sequentially lower activity and operating results in our SSR and MP segments, sequentially higher revenue and operating results in our IMDS segment, and sequentially higher revenue and relatively flat operating results in our ADTech segment.  OPG operating results are forecast to improve compared to the fourth quarter of 2020 on substantially higher revenue as we have commenced operations on the Angola riserless light well intervention project.

"Our priority continues to be generating cash.  In 2021, we expect to generate positive free cash flow in excess of the amount generated in 2020.  We forecast our organic capital expenditures to total between $50 million and $70 million.  This includes approximately $35 million to $40 million of maintenance capital expenditures and $15 million to $30 million of growth capital expenditures.  We remain committed to maintaining strong liquidity and believe that our cash position, undrawn revolving credit facility, and debt maturity profile should provide us ample resources and time to address potential opportunities to improve our returns."  

This release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs, future expected business and financial performance and prospects of Oceaneering.  More specifically, the forward-looking statements in this press release include the statements about Oceaneering's: backlog, to the extent backlog may be an indicator of future revenue or profitability; anticipated full year 2021 free cash flow and other consolidated financial results and the associated comparisons and explanations; expected 2021 activity in individual segments; financial results outlook for the full year and first quarter 2021, including anticipated revenue, costs, operating income, operating results, operating income margins, Adjusted EBITDA, Adjusted EBITDA contributions, and Adjusted EBITDA margins from each of our operating segments, and the associated comparisons and explanations, including speculative work for our OPG segment; assessment of the current energy markets; demand and activity levels in our business units; characterization of and timing of benefits from order intake at the end of 2020; anticipated full year 2021 and quarterly Unallocated Expenses and the associated explanations; expectations about full year 2021 interest expense, income tax payments, and CARES Act tax refunds, and the associated explanations; expected 2021 capital expenditures; and characterization of our liquidity, cash position, revolving credit facility, and debt maturity profile.

The forward-looking statements included in this release are based on our current expectations and are subject to certain risks, assumptions, trends, and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements.  Among the factors that could cause actual results to differ materially include: factors affecting the level of activity in the oil and gas industry, including worldwide demand for and prices of oil and natural gas, oil and natural gas production growth and the supply and demand of offshore drilling rigs; decisions about offshore developments to be made by oil and gas exploration, development and production companies; actions by members of OPEC and other oil-exporting countries; the use of subsea completions and our ability to capture associated market share; general economic and business conditions and industry trends; the strength of the industry segments in which we are involved; cancellations of contracts, change orders and other contractual modifications and the resulting adjustments to our backlog; collections from our customers; our future financial performance, including as a result of the availability, terms and deployment of capital; the consequences of significant changes in currency exchange rates; the volatility and uncertainties of credit markets; changes in tax laws, regulations and interpretation by taxing authorities; changes in, or our ability to comply with, other laws and governmental regulations, including those relating to the environment; the effects of competition; the continuing effects of the COVID-19 pandemic and any other public health threats that could limit access to customers', vendors' or our facilities or offices, impose travel restrictions on our personnel, or otherwise adversely affect our operations or demand for our services; 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
																					Dec 31, 2020				Dec 31, 2019
																					(in thousands)
ASSETS
	Current assets (including cash and cash equivalents of $452,016 and $373,655)																				$	1,170,263			$	1,244,436
	Net property and equipment																				591,107				776,532
	Other assets																				284,472				719,695
			Total Assets																		$	2,045,842			$	2,740,663
LIABILITIES AND EQUITY
	Current liabilities																				$	437,116			$	600,956
	Long-term debt																				805,251				796,516
	Other long-term liabilities																				245,318				267,782
	Equity																				558,157				1,075,409
			Total Liabilities and Equity																		$	2,045,842			$	2,740,663
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
									For the Three Months Ended												For the Year Ended
									Dec 31, 2020				Dec 31, 2019				Sep 30, 2020				Dec 31, 2020				Dec 31, 2019
									(in thousands, except per share amounts)
	Revenue								$	424,262			$	560,810			$	439,743			$	1,827,889			$	2,048,124
	Cost of services and products								379,261				581,197				410,092				1,663,948				1,949,880
		Gross margin							45,001				(20,387)				29,651				163,941				98,244
	Selling, general and administrative expense								42,839				59,717				49,396				195,695				214,891
	Long-lived assets impairments								1,682				159,353				—				70,445				159,353
	Goodwill impairment								—				14,713				40,875				343,880				14,713
		Income (loss) from operations							480				(254,170)				(60,620)				(446,079)				(290,713)
	Interest income								881				1,352				414				3,083				7,893
	Interest expense, net of amounts capitalized								(10,577)				(11,706)				(9,250)				(43,900)				(42,711)
	Equity in income (losses) of unconsolidated affiliates								266				941				131				2,268				1,331
	Other income (expense), net								(645)				(3,687)				(2,836)				(14,269)				(6,621)
		Income (loss) before income taxes							(9,595)				(267,270)				(72,161)				(498,897)				(330,821)
	Provision (benefit) for income taxes								15,405				(4,358)				7,204				(2,146)				17,623
		Net Income (Loss)							$	(25,000)			$	(262,912)			$	(79,365)			$	(496,751)			$	(348,444)
Weighted average diluted shares outstanding									99,306				98,930				99,297				99,233				98,876
Diluted earnings (loss) per share									$	(0.25)			$	(2.66)			$	(0.80)			$	(5.01)			$	(3.52)

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

SEGMENT INFORMATION
						For the Three Months Ended												For the Year Ended
						Dec 31, 2020				Dec 31, 2019 *				Sep 30, 2020				Dec 31, 2020				Dec 31, 2019 *
					($ in thousands)
Subsea Robotics (SSR)
			Revenue			$	114,711			$	151,104			$	119,617			$	493,332			$	583,652
	Gross margin					$	24,777			$	(8,228)			$	13,378			$	78,952			$	57,601
Operating income (loss)						$	14,477			$	(21,650)			$	2,127			$	(65,817)			$	11,627
Operating income (loss) %						13		%		(14)		%		2		%		(13)		%		2		%
	ROV Days available					22,999				25,576				23,000				91,499				100,480
	ROV Days utilized					12,456				14,836				13,601				54,411				58,347
	ROV Utilization					54		%		58		%		59		%		59		%		58		%
Manufactured Products (MP)
			Revenue			$	99,899			$	163,862			$	110,416			$	477,419			$	498,350
	Gross margin					$	20,092			$	16,789			$	11,242			$	62,962			$	48,865
Operating income (loss)						$	12,218			$	4,660			$	(38,198)			$	(88,253)			$	5,730
Operating income (loss) %						12		%		3		%		(35)		%		(18)		%		1		%
Backlog at end of period						$	266,000			$	548,000			$	318,000			$	266,000			$	548,000
Offshore Projects Group (OPG)
			Revenue			$	67,821			$	91,773			$	73,212			$	289,127			$	380,966
	Gross margin					$	(2,367)			$	(15,824)			$	(1,633)			$	1,265			$	4,339
Operating income (loss)						$	(9,940)			$	(167,221)			$	(12,282)			$	(105,680)			$	(170,013)
Operating income (loss) %						(15)		%		(182)		%		(17)		%		(37)		%		(45)		%
Integrity Management & Digital Solutions (IMDS)
			Revenue			$	54,307			$	68,029			$	53,933			$	226,938			$	266,086
	Gross margin					$	7,396			$	(6,133)			$	7,129			$	29,772			$	15,361
Operating income (loss)						$	892			$	(48,858)			$	793			$	(121,675)			$	(52,527)
Operating income (loss) %						2		%		(72)		%		1		%		(54)		%		(20)		%
Aerospace and Defense Technologies (ADTech)
			Revenue			$	87,524			$	86,042			$	82,565			$	341,073			$	319,070
	Gross margin					$	20,328			$	17,228			$	16,668			$	71,794			$	60,462
Operating income (loss)						$	16,525			$	12,360			$	13,097			$	56,023			$	42,574
Operating income (loss) %						19		%		14		%		16		%		16		%		13		%
Unallocated Expenses
	Gross margin					$	(25,225)			$	(24,219)			$	(17,133)			$	(80,804)			$	(88,384)
Operating income (loss)						$	(33,692)			$	(33,461)			$	(26,157)			$	(120,677)			$	(128,104)
Total
			Revenue			$	424,262			$	560,810			$	439,743			$	1,827,889			$	2,048,124
	Gross margin					$	45,001			$	(20,387)			$	29,651			$	163,941			$	98,244
Operating income (loss)						$	480			$	(254,170)			$	(60,620)			$	(446,079)			$	(290,713)
Operating income (loss) %						—		%		(45)		%		(14)		%		(24)		%		(14)		%

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 Year Ended
				Dec 31, 2020				Dec 31, 2019				Sep 30, 2020				Dec 31, 2020				Dec 31, 2019
				(in thousands)
Capital Expenditures, including Acquisitions				$	14,847			$	18,837			$	7,980			$	60,687			147,684
				For the Three Months Ended												For the Year Ended
				Dec 31, 2020				Dec 31, 2019 *				Sep 30, 2020				Dec 31, 2020				Dec 31, 2019 *
				(in thousands)
Depreciation and amortization:
Energy Services and Products
	Subsea Robotics			$	23,210			$	44,170			$	25,144			$	212,621			$	140,087
	Manufactured Products			3,193				5,779				44,028				66,772				20,732
	Offshore Projects Group			16,979				27,286				15,147				115,288				58,044
	Integrity Management & Digital Solutions			1,255				30,990				866				127,221				37,160
Total Energy Services and Products				44,637				108,225				85,185				521,902				256,023
Aerospace and Defense Technologies				667				646				654				2,666				2,644
Unallocated Expenses				1,146				1,199				1,712				4,327				4,760
Total Depreciation and Amortization				$	46,450			$	110,070			$	87,551			$	528,895			$	263,427

In the three months ended December 31, 2020, goodwill and long-lived asset impairment expense, reflected in the depreciation and amortization expense above, was $9.6 million. In the three months ended September 30, 2020, goodwill and long-lived asset impairment expense, reflected in the depreciation and amortization expense above, was $48 million. In the year ended December 31, 2020, goodwill and long-lived asset impairment expense, reflected in the depreciation and amortization expense above, was $368 million. In the three months and year ended December 31, 2019, goodwill and long-lived asset impairment expense, reflected in the depreciation and amortization expense above, was $59 million.

* 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, 2021 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
					Dec 31, 2020								Dec 31, 2019								Sep 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					$	(25,000)			$	(0.25)			$	(262,912)			$	(2.66)			$	(79,365)			$	(0.80)
Pre-tax adjustments for the effects of:
	Long-lived assets impairments				1,682								159,353								—
	Long-lived assets write-offs				9,571								44,653								7,243
	Inventory write-downs				—								21,285								7,038
	Goodwill impairment				—								14,713								40,875
	Restructuring expenses and other				(2,176)								11,751								11,048
	Foreign currency (gains) losses				720								3,477								2,462
Total pre-tax adjustments					9,797								255,232								68,666
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods					7,432								(50,653)								(13,211)
Discrete tax items:
Share-based compensation					13								2								16
Uncertain tax positions					3,033								1,276								(55)
U.S. CARES Act					—								—								—
Tax reform					—								272								—
Valuation allowances					5,635								59,667								6,599
Other					889								(356)								(278)
	Total discrete tax adjustments				9,570								60,861								6,282
	Total of adjustments				26,799								265,440								61,737
Adjusted Net Income (Loss)					$	1,799			$	0.02			$	2,528			$	0.03			$	(17,628)			$	(0.18)
Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)									99,712								99,721								99,297

Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS)
									For the Year Ended
									Dec 31, 2020								Dec 31, 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									$	(496,751)			$	(5.01)			$	(348,444)			$	(3.52)
Pre-tax adjustments for the effects of:
	Long-lived assets impairments								70,445								159,353
	Long-lived assets write-offs								24,142								44,653
	Inventory write-downs								7,038								21,285
	Goodwill impairment								343,880								14,713
	Restructuring expenses and other								21,210								11,751
	Foreign currency (gains) losses								14,140								6,320
Total pre-tax adjustments									480,855								258,075
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods									(53,465)								(51,250)
Discrete tax items:
Share-based compensation									1,032								989
Uncertain tax positions									(5,939)								3,046
U.S. CARES Act									(32,625)								—
Tax reform									—								(8,220)
Valuation allowances									80,687								61,174
Other									(326)								2,018
	Total discrete tax adjustments								42,829								59,007
	Total of adjustments								470,219								265,832
Adjusted Net Income (Loss)									$	(26,532)			$	(0.27)			$	(82,612)			$	(0.84)
Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)													99,233								98,876

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
EBITDA and Adjusted EBITDA and Margins
					For the Three Months Ended												For the Year Ended
					Dec 31, 2020				Dec 31, 2019				Sep 30, 2020				Dec 31, 2020				Dec 31, 2019
					($ in thousands)
Net income (loss)					$	(25,000)			$	(262,912)			$	(79,365)			$	(496,751)			$	(348,444)
Depreciation and amortization					46,450				110,070				87,551				528,895				263,427
	Subtotal				21,450				(152,842)				8,186				32,144				(85,017)
Interest expense, net of interest income					9,696				10,354				8,836				40,817				34,818
Amortization included in interest expense					322				(335)				317				639				(1,345)
Provision (benefit) for income taxes					15,405				(4,358)				7,204				(2,146)				17,623
	EBITDA				46,873				(147,181)				24,543				71,454				(33,921)
Adjustments for the effects of:
	Long-lived assets impairments				1,682				159,353				—				70,445				159,353
	Inventory write-downs				—				21,285				7,038				7,038				21,285
	Restructuring expenses and other				(2,176)				11,751				11,048				21,210				11,751
	Foreign currency (gains) losses				720				3,477				2,462				14,140				6,320
		Total of adjustments			226				195,866				20,548				112,833				198,709
	Adjusted EBITDA				$	47,099			$	48,685			$	45,091			$	184,287			$	164,788
Revenue					$	424,262			$	560,810			$	439,743			$	1,827,889			$	2,048,124
EBITDA margin %					11		%		(26)		%		6		%		4		%		(2)		%
Adjusted EBITDA margin %					11		%		9		%		10		%		10		%		8		%

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
Free Cash Flow
			For the Three Months Ended												For the Year Ended
			Dec 31, 2020				Dec 31, 2019				Sep 30, 2020				Dec 31, 2020				Dec 31, 2019
			(in thousands)
Net Income (loss)			$	(25,000)			$	(262,912)			$	(79,365)			$	(496,751)			$	(348,444)
Non-cash adjustments:
	Depreciation and amortization, including goodwill impairment		46,450				110,070				87,551				528,895				263,427
	Long-lived assets impairments		1,682				159,353				—				70,445				159,353
	Other non-cash		4,209				21,340				9,423				9,047				16,436
Other increases (decreases) in cash from operating activities			76,943				17,551				9,386				25,011				66,797
Cash flow provided by (used in) operating activities			104,284				45,402				26,995				136,647				157,569
Purchases of property and equipment			(14,847)				(18,837)				(7,980)				(60,687)				(147,684)
Free Cash Flow			$	89,437			$	26,565			$	19,015			$	75,960			$	9,885
2021 Adjusted EBITDA Estimates
															For the Year Ended
															December 31, 2021
															Low				High
															(in thousands)
Income (loss) before income taxes															$	(25,000)			$	20,000
Depreciation and amortization															145,000				150,000
	Subtotal														120,000				170,000
Interest expense, net of interest income															40,000				40,000
	Adjusted EBITDA														$	160,000			$	210,000
															For the Three Months Ended
															March 31, 2021
															Low				High
															(in thousands)
Income (loss) before income taxes															$	—			$	3,000
Depreciation and amortization															35,000				37,000
	Subtotal														35,000				40,000
Interest expense, net of interest income															10,000				10,000
	Adjusted EBITDA														$	45,000			$	50,000

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
Adjusted Operating Income (Loss) and Margins by Segment
				For the Three Months Ended December 31, 2020
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	14,477			$	12,218			$	(9,940)			$	892			$	16,525			$	(33,692)			$	480
Adjustments for the effects of:
	Long-lived assets impairments			—				—				1,304				378				—				—				1,682
	Long-lived assets write-offs			—				—				9,401				170				—				—				9,571
	Restructuring expenses and other			221				(3,489)				643				422				27				—				(2,176)
		Total of adjustments		221				(3,489)				11,348				970				27				—				9,077
Adjusted Operating Income (Loss)				$	14,698			$	8,729			$	1,408			$	1,862			$	16,552			$	(33,692)			$	9,557
Revenue				$	114,711			$	99,899			$	67,821			$	54,307			$	87,524							$	424,262
Operating income (loss) % as reported in accordance with GAAP				13		%		12		%		(15)		%		2		%		19		%						—		%
Operating income (loss)% using adjusted amounts				13		%		9		%		2		%		3		%		19		%						2		%
				For the Three Months Ended December 31, 2019 *
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	(21,650)			$	4,660			$	(167,221)			$	(48,858)			$	12,360			$	(33,461)			$	(254,170)
Adjustments for the effects of:
	Long-lived assets impairments			—				—				142,615				16,738				—				—				159,353
	Long-lived assets write-offs			11,340				482				18,723				14,108				—				—				44,653
	Inventory write-downs			15,433				2,107				2,771				719				255				—				21,285
	Goodwill impairment			—				—				—				14,713				—				—				14,713
	Restructuring expenses and other			4,228				757				3,526				3,082				102				56				11,751
		Total of adjustments		31,001				3,346				167,635				49,360				357				56				251,755
Adjusted Operating Income (Loss)				$	9,351			$	8,006			$	414			$	502			$	12,717			$	(33,405)			$	(2,415)
Revenue				$	151,104			$	163,862			$	91,773			$	68,029			$	86,042							$	560,810
Operating income (loss) % as reported in accordance with GAAP				(14)		%		3		%		(182)		%		(72)		%		14		%						(45)		%
Operating income (loss)% using adjusted amounts				6		%		5		%		—		%		1		%		15		%						—		%
* Recast to reflect segment changes.

				For the Three Months Ended September 30, 2020
				SSR				MP				OPG				IMDS				ADTech				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		%

Adjusted Operating Income (Loss) and Margins by Segment
				For the Year Ended December 31, 2020
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	(65,817)			$	(88,253)			$	(105,680)			$	(121,675)			$	56,023			$	(120,677)			$	(446,079)
Adjustments for the effects of:
	Long-lived assets impairments			—				61,074				8,826				545				—				—				70,445
	Long-lived assets write-offs			7,328				—				16,644				170				—				—				24,142
	Inventory write-downs			7,038				—				—				—				—				—				7,038
	Goodwill impairment			102,118				52,263				66,285				123,214				—				—				343,880
	Restructuring expenses and other			5,055				2,266				8,590				4,272				572				455				21,210
		Total of adjustments		121,539				115,603				100,345				128,201				572				455				466,715
Adjusted Operating Income (Loss)				$	55,722			$	27,350			$	(5,335)			$	6,526			$	56,595			$	(120,222)			$	20,636
Revenue				$	493,332			$	477,419			$	289,127			$	226,938			$	341,073							$	1,827,889
Operating income (loss) % as reported in accordance with GAAP				(13)		%		(18)		%		(37)		%		(54)		%		16		%						(24)		%
Operating income (loss)% using adjusted amounts				11		%		6		%		(2)		%		3		%		17		%						1		%
				For the Year Ended December 31, 2019 *
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	11,627			$	5,730			$	(170,013)			$	(52,527)			$	42,574			$	(128,104)			$	(290,713)
Adjustments for the effects of:
	Long-lived assets impairments			—				—				142,615				16,738				—				—				159,353
	Long-lived assets write-offs			11,340				482				18,723				14,108				—				—				44,653
	Inventory write-downs			15,433				2,107				2,771				719				255				—				21,285
	Goodwill impairment			—				—				—				14,713				—				—				14,713
	Restructuring expenses and other			4,228				757				3,526				3,082				102				56				11,751
		Total of adjustments		31,001				3,346				167,635				49,360				357				56				251,755
Adjusted Operating Income (Loss)				$	42,628			$	9,076			$	(2,378)			$	(3,167)			$	42,931			$	(128,048)			$	(38,958)
Revenue				$	583,652			$	498,350			$	380,966			$	266,086			$	319,070							$	2,048,124
Operating income (loss) % as reported in accordance with GAAP				2		%		1		%		(45)		%		(20)		%		13		%						(14)		%
Operating income (loss)% using adjusted amounts				7		%		2		%		(1)		%		(1)		%		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 December 31, 2020
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	14,477			$	12,218			$	(9,940)			$	892			$	16,525			$	(33,692)			$	480
Adjustments for the effects of:
	Depreciation and amortization			23,210				3,193				16,979				1,255				667				1,146				46,450
	Other pre-tax			—				—				—				—				—				(57)				(57)
	EBITDA			37,687				15,411				7,039				2,147				17,192				(32,603)				46,873
Adjustments for the effects of:
	Long-lived assets impairments			—				—				1,304				378				—				—				1,682
	Inventory write-downs			—				—				—				—				—				—				—
	Restructuring expenses and other			221				(3,489)				643				422				27				—				(2,176)
	Foreign currency (gains) losses			—				—				—				—				—				720				720
		Total of adjustments		221				(3,489)				1,947				800				27				720				226
Adjusted EBITDA				$	37,908			$	11,922			$	8,986			$	2,947			$	17,219			$	(31,883)			$	47,099
Revenue				$	114,711			$	99,899			$	67,821			$	54,307			$	87,524							$	424,262
Operating income (loss) % as reported in accordance with GAAP				13		%		12		%		(15)		%		2		%		19		%						—		%
EBITDA Margin				33		%		15		%		10		%		4		%		20		%						11		%
Adjusted EBITDA Margin				33		%		12		%		13		%		5		%		20		%						11		%
				For the Three Months Ended December 31, 2019 *
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	(21,650)			$	4,660			$	(167,221)			$	(48,858)			$	12,360			$	(33,461)			$	(254,170)
Adjustments for the effects of:
	Depreciation and amortization			44,170				5,779				27,286				30,990				646				1,199				110,070
	Other pre-tax			—				—				—				—				—				(3,081)				(3,081)
	EBITDA			22,520				10,439				(139,935)				(17,868)				13,006				(35,343)				(147,181)
Adjustments for the effects of:
	Long-lived assets impairments			—				—				142,615				16,738				—				—				159,353
	Inventory write-downs			15,433				2,107				2,771				719				255				—				21,285
	Restructuring expenses and other			4,228				757				3,526				3,082				102				56				11,751
	Foreign currency (gains) losses			—				—				—				—				—				3,477				3,477
		Total of adjustments		19,661				2,864				148,912				20,539				357				3,533				195,866
Adjusted EBITDA				$	42,181			$	13,303			$	8,977			$	2,671			$	13,363			$	(31,810)			$	48,685
Revenue				$	151,104			$	163,862			$	91,773			$	68,029			$	86,042							$	560,810
Operating income (loss) % as reported in accordance with GAAP				(14)		%		3		%		(182)		%		(72)		%		14		%						(45)		%
EBITDA Margin				15		%		6		%		(152)		%		(26)		%		15		%						(26)		%
Adjusted EBITDA Margin				28		%		8		%		10		%		4		%		16		%						9		%
* Recast to reflect segment changes.

				For the Three Months Ended September 30, 2020
				SSR				MP				OPG				IMDS				ADTech				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		%

EBITDA and Adjusted EBITDA and Margins by Segment
				For the Year Ended December 31, 2020
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	(65,817)			$	(88,253)			$	(105,680)			$	(121,675)			$	56,023			$	(120,677)			$	(446,079)
Adjustments for the effects of:
	Depreciation and amortization			212,621				66,772				115,288				127,221				2,666				4,327				528,895
	Other pre-tax			—				—				—				—				—				(11,362)				(11,362)
	EBITDA			146,804				(21,481)				9,608				5,546				58,689				(127,712)				71,454
Adjustments for the effects of:
	Long-lived assets impairments			—				61,074				8,826				545				—				—				70,445
	Inventory write-downs			7,038				—				—				—				—				—				7,038
	Restructuring expenses and other			5,055				2,266				8,590				4,272				572				455				21,210
	Foreign currency (gains) losses			—				—				—				—				—				14,140				14,140
		Total of adjustments		12,093				63,340				17,416				4,817				572				14,595				112,833
Adjusted EBITDA				$	158,897			$	41,859			$	27,024			$	10,363			$	59,261			$	(113,117)			$	184,287
Revenue				$	493,332			$	477,419			$	289,127			$	226,938			$	341,073							$	1,827,889
Operating income (loss) % as reported in accordance with GAAP				(13)		%		(18)		%		(37)		%		(54)		%		16		%						(24)		%
EBITDA Margin				30		%		(4)		%		3		%		2		%		17		%						4		%
Adjusted EBITDA Margin				32		%		9		%		9		%		5		%		17		%						10		%
				For the Year Ended December 31, 2019 *
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	11,627			$	5,730			$	(170,013)			$	(52,527)			$	42,574			$	(128,104)			$	(290,713)
Adjustments for the effects of:
	Depreciation and amortization			140,087				20,732				58,044				37,160				2,644				4,760				263,427
	Other pre-tax			—				—				—				—				—				(6,635)				(6,635)
	EBITDA			151,714				26,462				(111,969)				(15,367)				45,218				(129,979)				(33,921)
Adjustments for the effects of:
	Long-lived assets impairments			—				—				142,615				16,738				—				—				159,353
	Inventory write-downs			15,433				2,107				2,771				719				255				—				21,285
	Restructuring expenses and other			4,228				757				3,526				3,082				102				56				11,751
	Foreign currency (gains) losses			—				—				—				—				—				6,320				6,320
		Total of adjustments		19,661				2,864				148,912				20,539				357				6,376				198,709
Adjusted EBITDA				$	171,375			$	29,326			$	36,943			$	5,172			$	45,575			$	(123,603)			$	164,788
Revenue				$	583,652			$	498,350			$	380,966			$	266,086			$	319,070							$	2,048,124
Operating income (loss) % as reported in accordance with GAAP				2		%		1		%		(45)		%		(20)		%		13		%						(14)		%
EBITDA Margin				26		%		5		%		(29)		%		(6)		%		14		%						(2)		%
Adjusted EBITDA Margin				29		%		6		%		10		%		2		%		14		%						8		%
* Recast to reflect segment changes.

 

View original content:http://www.prnewswire.com/news-releases/oceaneering-reports-fourth-quarter-and-full-year-2020-results-301234892.html

SOURCE Oceaneering International, Inc.

FAQ

What was Oceaneering's net income for Q4 2020?

Oceaneering reported a net loss of $25.0 million for Q4 2020.

How did Oceaneering's revenue change in Q4 2020 compared to Q3 2020?

Revenue decreased from $440 million in Q3 2020 to $424 million in Q4 2020.

What is Oceaneering's expected adjusted EBITDA for 2021?

Oceaneering forecasts adjusted EBITDA between $160 million and $210 million for 2021.

What was Oceaneering's cash position at the end of 2020?

Oceaneering's cash position increased to $452 million by the end of 2020.

How did Oceaneering perform in terms of free cash flow in Q4 2020?

The company generated $89.4 million in free cash flow during Q4 2020.