Oceaneering Reports Third Quarter 2020 Results

Rhea-AI Summary

Oceaneering reported a net loss of $79.4 million or $(0.80) per share for Q3 2020 on revenues of $440 million. Adjusted net loss was $17.6 million, impacted by $68.7 million in pre-tax adjustments. Compared to Q2, net loss increased from $24.8 million on lower revenues. Adjusted EBITDA rose to $45.1 million, exceeding expectations. The cash position improved to $359 million, with $19 million free cash flow. Despite headwinds in the energy market, segments reported positive adjusted income. Future results are projected to decline due to seasonal factors.

Positive

• Adjusted EBITDA increased to $45.1 million, exceeding consensus estimates.
• Generated positive free cash flow of $19 million.
• Cash position improved to $359 million, up by $25.3 million from Q2.
• Each operating segment reported positive adjusted operating income and EBITDA.

Negative

• Net loss of $79.4 million for Q3, a significant increase from $24.8 million in Q2.
• Revenue decreased to $440 million, down from $497.6 million year-over-year.
• Manufactured Products backlog decreased from $380 million to $318 million.
• Project delays in the Angola light well intervention due to COVID-19.

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

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

Adjusted operating income (loss), operating margins, net income (loss) and earnings (loss) per share, EBITDA and adjusted EBITDA (as well as EBITDA and adjusted EBITDA margins) and free cash flow are non-GAAP measures that exclude the impacts of certain identified items.  Reconciliations to the corresponding GAAP measures are shown in the tables Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS), EBITDA and EBITDA Margins, 2020 Adjusted EBITDA Estimates, Free Cash Flow, Adjusted Operating Income (Loss) and Margins by Segment, and EBITDA and Adjusted EBITDA and Margins by Segment. These tables are included below under the caption Reconciliations of Non-GAAP to GAAP Financial Information.

Summary of Results
(in thousands, except per share amounts)
		Three Months Ended												Nine Months Ended
		Sep 30,								Jun 30,				Sep 30,
		2020				2019				2020				2020				2019
Revenue		$	439,743			$	497,647			$	427,216			$	1,403,627			$	1,487,314
Gross Margin		29,651				49,061				42,537				118,940				118,631
Income (Loss) from Operations		(60,620)				(5,194)				(5,182)				(446,559)				(36,543)
Net Income (Loss)		(79,365)				(25,523)				(24,788)				(471,751)				(85,532)
Diluted Earnings (Loss) Per Share		$	(0.80)			$	(0.26)			$	(0.25)			$	(4.76)			$	(0.87)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs, future expected business and financial performance and prospects of Oceaneering.  More specifically, the forward-looking statements in this press release include the statements concerning Oceaneering's: estimated timing of commencement of the Angola light well intervention project; estimated future drill support market share; fourth quarter 2020 and full year 2020 segment operating results; forecasted fourth quarter Unallocated Expenses and annual guidance ranges for adjusted EBITDA, capital expenditures, cash tax payments, and CARES Act tax refunds; belief in generating positive free cash flow during 2020 with the fourth quarter benefiting from CARES Act tax refunds and positive working capital changes; estimate of annualized cost reductions initiated, expected additional savings to be achieved through the fourth quarter of 2020, and estimated cash costs associated with its 2020 plan to reduce annualized expenses; anticipated oil sector outlook; expected 2021 consolidated activity levels, EBITDA, and free cash flow; continued review and update of its forecast; and expectation of future free cash flow.

The forward-looking statements included in this release are based on our current expectations and are subject to certain risks, assumptions, trends and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements.  Among the factors that could cause actual results to differ materially include: factors affecting the level of activity in the oil and gas industry, including worldwide demand for and prices of oil and natural gas, oil and natural gas production growth and the supply and demand of offshore drilling rigs; actions by members of OPEC and other oil exporting countries; decisions about offshore developments to be made by oil and gas exploration, development and production companies; the use of subsea completions and our ability to capture associated market share; general economic and business conditions and industry trends; the strength of the industry segments in which we are involved; the continuing effects of the COVID-19 pandemic and the governmental, customer, supplier, and other responses thereto; cancellations of contracts, change orders and other contractual modifications and the resulting adjustments to our backlog; collections from our customers; our future financial performance, including as a result of the availability, terms and deployment of capital; the consequences of significant changes in currency exchange rates; the volatility and uncertainties of credit markets; changes in tax laws, regulations and interpretation by taxing authorities; changes in, or our ability to comply with, other laws and governmental regulations, including those relating to the environment; the continued availability of qualified personnel; our ability to obtain raw materials and parts on a timely basis and, in some cases, from limited sources; operating risks normally incident to offshore exploration, development and production operations; hurricanes and other adverse weather and sea conditions; cost and time associated with drydocking of our vessels; the highly competitive nature of our businesses; adverse outcomes from legal or regulatory proceedings; the risks associated with integrating businesses we acquire; rapid technological changes; and social, political, military and economic situations in foreign countries where we do business and the possibilities of civil disturbances, war, other armed conflicts or terrorist attacks.  For a more complete discussion of these and other risk factors, please see Oceaneering's latest annual report on Form 10-K and subsequent quarterly reports on Form 10Q filed with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements.  Except to the extent required by applicable law, Oceaneering undertakes no obligation to update or revise any forward-looking statement.

Oceaneering is a global provider of engineered services and products, primarily to the offshore energy industry. Through the use of its applied technology expertise, Oceaneering also serves the defense, aerospace, and entertainment industries.

For more information on Oceaneering, please visit www.oceaneering.com.

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

 

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
																					Sep 30, 2020				Dec 31, 2019
																					(in thousands)
ASSETS
	Current assets (including cash and cash equivalents of $358,777 and $373,655)																				$	1,125,820			$	1,244,436
	Net property and equipment																				609,426				776,532
	Other assets																				302,454				719,695
			Total Assets																		$	2,037,700			$	2,740,663
LIABILITIES AND EQUITY
	Current liabilities																				$	431,175			$	600,956
	Long-term debt																				805,631				796,516
	Other long-term liabilities																				241,475				267,782
	Equity																				559,419				1,075,409
			Total Liabilities and Equity																		$	2,037,700			$	2,740,663
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
									For the Three Months Ended												For the Nine Months Ended
									Sep 30, 2020				Sep 30, 2019				Jun 30, 2020				Sep 30, 2020				Sep 30, 2019
									(in thousands, except per share amounts)
	Revenue								$	439,743			$	497,647			$	427,216			$	1,403,627			$	1,487,314
	Cost of services and products								410,092				448,586				384,679				1,284,687				1,368,683
		Gross margin							29,651				49,061				42,537				118,940				118,631
	Selling, general and administrative expense								49,396				54,255				47,719				152,856				155,174
	Long-lived assets impairments								—				—				—				68,763				—
	Goodwill impairment								40,875				—				—				343,880				—
		Income (loss) from operations							(60,620)				(5,194)				(5,182)				(446,559)				(36,543)
	Interest income								414				2,089				511				2,202				6,541
	Interest expense, net of amounts capitalized								(9,250)				(11,382)				(11,611)				(33,323)				(31,005)
	Equity in income (losses) of unconsolidated affiliates								131				554				674				2,002				390
	Other income (expense), net								(2,836)				(3,660)				(3,660)				(13,624)				(2,934)
		Income (loss) before income taxes							(72,161)				(17,593)				(19,268)				(489,302)				(63,551)
	Provision (benefit) for income taxes								7,204				7,930				5,520				(17,551)				21,981
		Net Income (Loss)							$	(79,365)			$	(25,523)			$	(24,788)			$	(471,751)			$	(85,532)
Weighted average diluted shares outstanding									99,297				98,930				99,273				99,209				98,858
Diluted earnings (loss) per share									$	(0.80)			$	(0.26)			$	(0.25)			$	(4.76)			$	(0.87)
The above Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

 

SEGMENT INFORMATION
				For the Three Months Ended												For the Nine Months Ended
				Sep 30, 2020				Sep 30, 2019 *				Jun 30, 2020 *				Sep 30, 2020				Sep 30, 2019 *
			($ in thousands)
Subsea Robotics
Revenue				$	119,617			$	151,492			$	119,234			$	378,621			$	432,548
	Gross margin			$	13,378			$	26,783			$	21,324			$	54,175			$	65,829
Operating income (loss)				$	2,127			$	15,457			$	11,662			$	(80,294)			$	33,277
Operating income (loss) %				2		%		10		%		10		%		(21)		%		8		%
	ROV Days available			23,000				25,392				22,750				68,500				74,904
	ROV Days utilized			13,601				15,146				13,501				41,955				43,511
	ROV Utilization			59		%		60		%		59		%		61		%		58		%
Manufactured Products
		Revenue		$	110,416			$	114,487			$	100,570			$	377,520			$	334,488
	Gross margin			$	11,242			$	9,145			$	13,679			$	42,870			$	32,076
Operating income (loss)				$	(38,198)			$	(2,158)			$	3,865			$	(100,471)			$	1,070
Operating income (loss) %				(35)		%		(2)		%		4		%		(27)		%		—		%
Backlog at end of period				$	318,000			$	582,000			$	380,000			$	318,000			$	582,000
Offshore Projects Group
		Revenue		$	73,212			$	89,115			$	73,840			$	221,306			$	289,193
	Gross margin			$	(1,633)			$	8,337			$	3,170			$	3,632			$	20,163
Operating income (loss)				$	(12,282)			$	(34)			$	(4,135)			$	(95,740)			$	(2,792)
Operating income (loss) %				(17)		%		—		%		(6)		%		(43)		%		(1)		%
Integrity Management & Digital Solutions
		Revenue		$	53,933			$	65,332			$	53,969			$	172,631			$	198,057
	Gross margin			$	7,129			$	6,612			$	5,455			$	22,376			$	21,494
Operating income (loss)				$	793			$	(1,721)			$	(1,825)			$	(122,567)			$	(3,669)
Operating income (loss) %				1		%		(3)		%		(3)		%		(71)		%		(2)		%
Aerospace and Defense Technologies
		Revenue		$	82,565			$	77,221			$	79,603			$	253,549			$	233,028
	Gross margin			$	16,668			$	15,960			$	17,313			$	51,466			$	43,234
Operating income (loss)				$	13,097			$	11,709			$	13,430			$	39,498			$	30,214
Operating income (loss) %				16		%		15		%		17		%		16		%		13		%
Unallocated Expenses
	Gross margin			$	(17,133)			$	(17,776)			$	(18,404)			$	(55,579)			$	(64,165)
Operating income (loss)				$	(26,157)			$	(28,447)			$	(28,179)			$	(86,985)			$	(94,643)
Total
		Revenue		$	439,743			$	497,647			$	427,216			$	1,403,627			$	1,487,314
	Gross margin			$	29,651			$	49,061			$	42,537			$	118,940			$	118,631
Operating income (loss)				$	(60,620)			$	(5,194)			$	(5,182)			$	(446,559)			$	(36,543)
Operating income (loss) %				(14)		%		(1)		%		(1)		%		(32)		%		(2)		%
The above Segment Information does not include adjustments for non-recurring transactions.   See the tables in our Reconciliations of Non-GAAP to GAAP Financial Information section for financial measures that management considers representative of our ongoing operations.
* Recast to reflect segment changes.

 

SELECTED CASH FLOW INFORMATION
						For the Three Months Ended												For the Nine Months Ended
						Sep 30, 2020				Sep 30, 2019				Jun 30, 2020				Sep 30, 2020				Sep 30, 2019
						(in thousands)
Capital Expenditures, including Acquisitions						$	7,980			$	57,985			$	10,631			$	45,840			128,847
						For the Three Months Ended												For the Nine Months Ended
						Sep 30, 2020				Sep 30, 2019 *				Jun 30, 2020 *				Sep 30, 2020				Sep 30, 2019
						(in thousands)
Depreciation and amortization:
Energy Services and Products
	Subsea Robotics					$	25,144			$	31,090			$	25,080			$	189,411			$	95,917
	Manufactured Products					44,028				4,920				3,587				63,579				14,953
	Offshore Projects Group					15,147				10,610				8,255				98,309				30,758
	Integrity Management & Digital Solutions					866				2,087				757				125,966				6,170
Total Energy Services and Products						85,185				48,707				37,679				477,265				147,798
Aerospace and Defense Technologies						654				640				658				1,999				1,998
Unallocated Expenses						1,712				1,220				361				3,181				3,561
Total Depreciation and Amortization						$	87,551			$	50,567			$	38,698			$	482,445			$	153,357
In the three and nine months ended September 30, 2020, goodwill and long-lived asset impairment expense, reflected in the depreciation and amortization expense above, was $48 million and $358 million, respectively.
* Recast to reflect segment changes.

 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION 

In addition to financial results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), this Press Release also includes non-GAAP financial measures (as defined under SEC Regulation G).  We have included Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share, each of which excludes the effects of certain specified items, as set forth in the tables that follow.  As a result, these amounts are non-GAAP financial measures.  We believe these are useful measures for investors to review because they provide consistent measures of the underlying results of our ongoing business.  Furthermore, our management uses these measures as measures of the performance of our operations.  We have also included disclosures of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), EBITDA Margins, 2020 Adjusted EBITDA Estimates, and Free Cash Flow, as well as the following by segment:  Adjusted Operating Income and Margins, EBITDA, EBITDA Margins, Adjusted EBITDA and Adjusted EBITDA Margins.  We define EBITDA Margin as EBITDA divided by revenue.  Adjusted EBITDA and Adjusted EBITDA Margins as well as Adjusted Operating Income and Margin and related information by segment exclude the effects of certain specified items, as set forth in the tables that follow.  EBITDA and EBITDA Margins, Adjusted EBITDA and Adjusted EBITDA Margins, and Adjusted Operating Income and Margin and related information by segment are each non-GAAP financial measures.  We define Free Cash Flow as cash flow provided by operating activities less organic capital expenditures (i.e., purchases of property and equipment other than those in business acquisitions).  We have included these disclosures in this press release because EBITDA, EBITDA Margins and Free Cash Flow are widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry, and the adjusted amounts thereof (as well as Adjusted Operating Income and Margin by Segment) provide more consistent measures than the unadjusted amounts.  Furthermore, our management uses these measures for purposes of evaluating our financial performance.  Our presentation of EBITDA, EBITDA Margins and Free Cash Flow (and the Adjusted amounts thereof) may not be comparable to similarly titled measures other companies report.  Non-GAAP financial measures should be viewed in addition to and not as substitutes for our reported operating results, cash flows or any other measure prepared and reported in accordance with GAAP.   The tables that follow provide reconciliations of the non-GAAP measures used in this press release to the most directly comparable GAAP measures.

 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS)
					For the Three Months Ended
					Sep 30, 2020								Sep 30, 2019								Jun 30, 2020
					Net Income (Loss)				Diluted EPS				Net Income (Loss)				Diluted EPS				Net Income (Loss)				Diluted EPS
					(in thousands, except per share amounts)
Net income (loss) and diluted EPS as reported in accordance with GAAP					$	(79,365)			$	(0.80)			$	(25,523)			$	(0.26)			$	(24,788)			$	(0.25)
Pre-tax adjustments for the effects of:
	Long-lived assets write-offs				7,243								—								—
	Inventory write-downs				7,038								—								—
	Goodwill impairment				40,875								—								—
	Restructuring expenses and other				11,048								—								5,708
	Foreign currency (gains) losses				2,462								3,516								3,908
Total pre-tax adjustments					68,666								3,516								9,616
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods					(13,211)								(738)								(2,331)
Discrete tax items:
Share-based compensation					16								—								16
Uncertain tax positions					(55)								(520)								735
U.S. CARES Act					—								—								1,159
Tax reform					—								(8,492)								—
Valuation allowances					6,599								(32)								3,245
Other					(278)								2,079								(1,887)
	Total discrete tax adjustments				6,282								(6,965)								3,268
	Total of adjustments				61,737								(4,187)								10,553
Adjusted Net Income (Loss)					$	(17,628)			$	(0.18)			$	(29,710)			$	(0.30)			$	(14,235)			$	(0.14)
Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)									99,297								98,930								99,273

 

Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS)
									For the Nine Months Ended
									Sep 30, 2020								Sep 30, 2019
									Net Income (Loss)				Diluted EPS				Net Income (Loss)				Diluted EPS
									(in thousands, except per share amounts)
Net income (loss) and diluted EPS as reported in accordance with GAAP									$	(471,751)			$	(4.76)			$	(85,532)			$	(0.87)
Pre-tax adjustments for the effects of:
	Long-lived assets impairments								68,763								—
	Long-lived assets write-offs								14,571								—
	Inventory write-downs								7,038								—
	Goodwill impairment								343,880								—
	Restructuring expenses and other								23,386								—
	Foreign currency (gains) losses								13,420								2,843
Total pre-tax adjustments									471,058								2,843
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods									(60,897)								(597)
Discrete tax items:
Share-based compensation									1,019								987
Uncertain tax positions									(8,972)								1,770
U.S. CARES Act									(32,625)								—
Tax reform									—								(8,492)
Valuation allowances									75,052								1,507
Other									(1,215)								2,374
	Total discrete tax adjustments								33,259								(1,854)
	Total of adjustments								443,420								392
Adjusted Net Income (Loss)									$	(28,331)			$	(0.29)			$	(85,140)			$	(0.86)
Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)													99,209								98,858

 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
EBITDA and Adjusted EBITDA and Margins
					For the Three Months Ended												For the Nine Months Ended
					Sep 30, 2020				Sep 30, 2019				Jun 30, 2020				Sep 30, 2020				Sep 30, 2019
					($ in thousands)
Net income (loss)					$	(79,365)			$	(25,523)			$	(24,788)			$	(471,751)			$	(85,532)
Depreciation and amortization					87,551				50,567				38,698				482,445				153,357
	Subtotal				8,186				25,044				13,910				10,694				67,825
Interest expense, net of interest income					8,836				9,293				11,100				31,121				24,464
Amortization included in interest expense					317				(335)				333				317				(1,010)
Provision (benefit) for income taxes					7,204				7,930				5,520				(17,551)				21,981
	EBITDA				24,543				41,932				30,863				24,581				113,260
Adjustments for the effects of:
	Long-lived assets impairments				—				—				—				68,763				—
	Inventory write-downs				7,038				—				—				7,038				—
	Restructuring expenses and other				11,048				—				5,708				23,386				—
	Foreign currency (gains) losses				2,462				3,516				3,908				13,420				2,843
		Total of adjustments			20,548				3,516				9,616				112,607				2,843
	Adjusted EBITDA				$	45,091			$	45,448			$	40,479			$	137,188			$	116,103
Revenue					$	439,743			$	497,647			$	427,216			$	1,403,627			$	1,487,314
EBITDA margin %					6		%		8		%		7		%		2		%		8		%
Adjusted EBITDA margin %					10		%		9		%		9		%		10		%		8		%

 

Free Cash Flow
			For the Three Months Ended												For the Nine Months Ended
			Sep 30, 2020				Sep 30, 2019				Jun 30, 2020				Sep 30, 2020				Sep 30, 2019
			(in thousands)
Net Income (loss)			$	(79,365)			$	(25,523)			$	(24,788)			$	(471,751)			$	(85,532)
Non-cash adjustments:
	Depreciation and amortization, including goodwill impairment		87,551				50,567				38,698				482,445				153,357
	Other non-cash		9,423				(5,461)				41				73,601				(4,904)
Other increases (decreases) in cash from operating activities			9,386				19,875				23,567				(51,932)				49,246
Cash flow provided by (used in) operating activities			26,995				39,458				37,518				32,363				112,167
Purchases of property and equipment			(7,980)				(57,985)				(10,631)				(45,840)				(128,847)
Free Cash Flow			$	19,015			$	(18,527)			$	26,887			$	(13,477)			$	(16,680)
2020 Adjusted EBITDA Estimate
															For the Year Ended
															December 31, 2020
															Low				High
															(in thousands)
Adjusted income (loss) before income taxes															$	(38,000)			$	(28,000)
Depreciation and amortization															160,000				160,000
	Subtotal														122,000				132,000
Interest expense, net of interest income															43,000				43,000
	Adjusted EBITDA														$	165,000			$	175,000

 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
Adjusted Operating Income (Loss) and Margins by Segment
				For the Three Months Ended September 30, 2020
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	2,127			$	(38,198)			$	(12,282)			$	793			$	13,097			$	(26,157)			$	(60,620)
Adjustments for the effects of:
	Long-lived assets write-offs			—				—				7,243				—				—				—				7,243
	Inventory write-downs			7,038				—				—				—				—				—				7,038
	Goodwill impairment			—				40,875				—				—				—				—				40,875
	Restructuring expenses and other			2,535				2,559				5,326				83				545				—				11,048
		Total of adjustments		9,573				43,434				12,569				83				545				—				66,204
Adjusted Operating Income (Loss)				$	11,700			$	5,236			$	287			$	876			$	13,642			$	(26,157)			$	5,584
Revenue				$	119,617			$	110,416			$	73,212			$	53,933			$	82,565							$	439,743
Operating income (loss) % as reported in accordance with GAAP				2		%		(35)		%		(17)		%		1		%		16		%						(14)		%
Operating income (loss)% using adjusted amounts				10		%		5		%		—		%		2		%		17		%						1		%
				For the Three Months Ended September 30, 2019 *
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	15,457			$	(2,158)			$	(34)			$	(1,721)			$	11,709			$	(28,447)			$	(5,194)
Adjusted Operating Income (Loss)				$	15,457			$	(2,158)			$	(34)			$	(1,721)			$	11,709			$	(28,447)			$	(5,194)
Revenue				$	151,492			$	114,487			$	89,115			$	65,332			$	77,221							$	497,647
Operating income (loss) % as reported in accordance with GAAP				10		%		(2)		%		—		%		(3)		%		15		%						(1)		%
Operating income (loss)% using adjusted amounts				10		%		(2)		%		—		%		(3)		%		15		%						(1)		%
* Recast to reflect segment changes.

 

				For the Three Months Ended June 30, 2020 *
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	11,662			$	3,865			$	(4,135)			$	(1,825)			$	13,430			$	(28,179)			$	(5,182)
Adjustments for the effects of:
	Restructuring expenses and other			1,380				1,212				1,405				1,536				—				175				5,708
		Total of adjustments		1,380				1,212				1,405				1,536				—				175				5,708
Adjusted Operating Income (Loss)				$	13,042			$	5,077			$	(2,730)			$	(289)			$	13,430			$	(28,004)			$	526
Revenue				$	119,234			$	100,570			$	73,840			$	53,969			$	79,603							$	427,216
Operating income (loss) % as reported in accordance with GAAP				10		%		4		%		(6)		%		(3)		%		17		%						(1)		%
Operating income (loss) % using adjusted amounts				11		%		5		%		(4)		%		(1)		%		17		%						—		%
* Recast to reflect segment changes.

 

Adjusted Operating Income (Loss) and Margins by Segment
				For the Nine Months Ended September 30, 2020
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	(80,294)			$	(100,471)			$	(95,740)			$	(122,567)			$	39,498			$	(86,985)			$	(446,559)
Adjustments for the effects of:
	Long-lived assets impairments			—				61,074				7,522				167				—				—				68,763
	Long-lived assets write-offs			7,328				—				7,243				—				—				—				14,571
	Inventory write-downs			7,038				—				—				—				—				—				7,038
	Goodwill impairment			102,118				52,263				66,285				123,214				—				—				343,880
	Restructuring expenses and other			4,834				5,755				7,947				3,850				545				455				23,386
		Total of adjustments		121,318				119,092				88,997				127,231				545				455				457,638
Adjusted Operating Income (Loss)				$	41,024			$	18,621			$	(6,743)			$	4,664			$	40,043			$	(86,530)			$	11,079
Revenue				$	378,621			$	377,520			$	221,306			$	172,631			$	253,549							$	1,403,627
Operating income (loss) % as reported in accordance with GAAP				(21)		%		(27)		%		(43)		%		(71)		%		16		%						(32)		%
Operating income (loss)% using adjusted amounts				11		%		5		%		(3)		%		3		%		16		%						1		%
				For the Nine Months Ended September 30, 2019 *
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	33,277			$	1,070			$	(2,792)			$	(3,669)			$	30,214			$	(94,643)			$	(36,543)
Adjusted Operating Income (Loss)				$	33,277			$	1,070			$	(2,792)			$	(3,669)			$	30,214			$	(94,643)			$	(36,543)
Revenue				$	432,548			$	334,488			$	289,193			$	198,057			$	233,028							$	1,487,314
Operating income (loss) % as reported in accordance with GAAP				8		%		—		%		(1)		%		(2)		%		13		%						(2)		%
Operating income (loss)% using adjusted amounts				8		%		—		%		(1)		%		(2)		%		13		%						(2)		%
* Recast to reflect segment changes.

 

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
EBITDA and Adjusted EBITDA and Margins by Segment
				For the Three Months Ended September 30, 2020
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	2,127			$	(38,198)			$	(12,282)			$	793			$	13,097			$	(26,157)			$	(60,620)
Adjustments for the effects of:
	Depreciation and amortization			25,144				44,028				15,147				866				654				1,712				87,551
	Other pre-tax			—				—				—				—				—				(2,388)				(2,388)
	EBITDA			27,271				5,830				2,865				1,659				13,751				(26,833)				24,543
Adjustments for the effects of:
	Inventory write-downs			7,038				—				—				—				—				—				7,038
	Restructuring expenses and other			2,535				2,559				5,326				83				545				—				11,048
	Foreign currency (gains) losses			—				—				—				—				—				2,462				2,462
		Total of adjustments		9,573				2,559				5,326				83				545				2,462				20,548
Adjusted EBITDA				$	36,844			$	8,389			$	8,191			$	1,742			$	14,296			$	(24,371)			$	45,091
Revenue				$	119,617			$	110,416			$	73,212			$	53,933			$	82,565							$	439,743
Operating income (loss) % as reported in accordance with GAAP				2		%		(35)		%		(17)		%		1		%		16		%						(14)		%
EBITDA Margin				23		%		5		%		4		%		3		%		17		%						6		%
Adjusted EBITDA Margin				31		%		8		%		11		%		3		%		17		%						10		%
				For the Three Months Ended September 30, 2019 *
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	15,457			$	(2,158)			$	(34)			$	(1,721)			$	11,709			$	(28,447)			$	(5,194)
Adjustments for the effects of:
	Depreciation and amortization			31,090				4,920				10,610				2,087				640				1,220				50,567
	Other pre-tax			—				—				—				—				—				(3,441)				(3,441)
	EBITDA			46,547				2,762				10,576				366				12,349				(30,668)				41,932
Adjustments for the effects of:
	Foreign currency (gains) losses			—				—				—				—				—				3,516				3,516
		Total of adjustments		—				—				—				—				—				3,516				3,516
Adjusted EBITDA				$	46,547			$	2,762			$	10,576			$	366			$	12,349			$	(27,152)			$	45,448
Revenue				$	151,492			$	114,487			$	89,115			$	65,332			$	77,221							$	497,647
Operating income (loss) % as reported in accordance with GAAP				10		%		(2)		%		—		%		(3)		%		15		%						(1)		%
EBITDA Margin				31		%		2		%		12		%		1		%		16		%						8		%
Adjusted EBITDA Margin				31		%		2		%		12		%		1		%		16		%						9		%
* Recast to reflect segment changes.

`

				For the Three Months Ended June 30, 2020 *
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	11,662			$	3,865			$	(4,135)			$	(1,825)			$	13,430			$	(28,179)			$	(5,182)
Adjustments for the effects of:
	Depreciation and amortization			25,080				3,587				8,255				757				658				361				38,698
	Other pre-tax			—				—				—				—				—				(2,653)				(2,653)
	EBITDA			36,742				7,452				4,120				(1,068)				14,088				(30,471)				30,863
Adjustments for the effects of:
	Restructuring expenses and other			1,380				1,212				1,405				1,536				—				175				5,708
	Foreign currency (gains) losses			—				—				—				—				—				3,908				3,908
		Total of adjustments		1,380				1,212				1,405				1,536				—				4,083				9,616
Adjusted EBITDA				$	38,122			$	8,664			$	5,525			$	468			$	14,088			$	(26,388)			$	40,479
Revenue				$	119,234			$	100,570			$	73,840			$	53,969			$	79,603							$	427,216
Operating income (loss) % as reported in accordance with GAAP				10		%		4		%		(6)		%		(3)		%		17		%						(1)		%
EBITDA Margin				31		%		7		%		6		%		(2)		%		18		%						7		%
Adjusted EBITDA Margin				32		%		9		%		7		%		1		%		18		%						9		%
* Recast to reflect segment changes.

 

EBITDA and Adjusted EBITDA and Margins by Segment
				For the Nine Months Ended September 30, 2020
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	(80,294)			$	(100,471)			$	(95,740)			$	(122,567)			$	39,498			$	(86,985)			$	(446,559)
Adjustments for the effects of:
	Depreciation and amortization			189,411				63,579				98,309				125,966				1,999				3,181				482,445
	Other pre-tax			—				—				—				—				—				(11,305)				(11,305)
	EBITDA			109,117				(36,892)				2,569				3,399				41,497				(95,109)				24,581
Adjustments for the effects of:
	Long-lived assets impairments			—				61,074				7,522				167				—				—				68,763
	Inventory write-downs			7,038				—				—				—				—				—				7,038
	Restructuring expenses and other			4,834				5,755				7,947				3,850				545				455				23,386
	Foreign currency (gains) losses			—				—				—				—				—				13,420				13,420
		Total of adjustments		11,872				66,829				15,469				4,017				545				13,875				112,607
Adjusted EBITDA				$	120,989			$	29,937			$	18,038			$	7,416			$	42,042			$	(81,234)			$	137,188
Revenue				$	378,621			$	377,520			$	221,306			$	172,631			$	253,549							$	1,403,627
Operating income (loss) % as reported in accordance with GAAP				(21)		%		(27)		%		(43)		%		(71)		%		16		%						(32)		%
EBITDA Margin				29		%		(10)		%		1		%		2		%		16		%						2		%
Adjusted EBITDA Margin				32		%		8		%		8		%		4		%		17		%						10		%
				For the Nine Months Ended September 30, 2019 *
				Subsea Robotics				Manufactured Products				Offshore Projects Group				Integrity Management & Digital Solutions				Aerospace and Defense Technologies				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	33,277			$	1,070			$	(2,792)			$	(3,669)			$	30,214			$	(94,643)			$	(36,543)
Adjustments for the effects of:
	Depreciation and amortization			95,917				14,953				30,758				6,170				1,998				3,561				153,357
	Other pre-tax			—				—				—				—				—				(3,554)				(3,554)
	EBITDA			129,194				16,023				27,966				2,501				32,212				(94,636)				113,260
Adjustments for the effects of:
	Foreign currency (gains) losses			—				—				—				—				—				2,843				2,843
		Total of adjustments		—				—				—				—				—				2,843				2,843
Adjusted EBITDA				$	129,194			$	16,023			$	27,966			$	2,501			$	32,212			$	(91,793)			$	116,103
Revenue				$	432,548			$	334,488			$	289,193			$	198,057			$	233,028							$	1,487,314
Operating income (loss) % as reported in accordance with GAAP				8		%		—		%		(1)		%		(2)		%		13		%						(2)		%
EBITDA Margin				30		%		5		%		10		%		1		%		14		%						8		%
Adjusted EBITDA Margin				30		%		5		%		10		%		1		%		14		%						8		%
* Recast to reflect segment changes.

 

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

SOURCE Oceaneering International, Inc.

FAQ

What was Oceaneering's net loss for Q3 2020?

Oceaneering reported a net loss of $79.4 million or $(0.80) per share for Q3 2020.

How did Oceaneering's revenue change in Q3 2020 compared to Q2 2020?

Oceaneering's revenue increased to $440 million in Q3 2020 from $427 million in Q2 2020.

What is Oceaneering's adjusted EBITDA for Q3 2020?

Oceaneering's adjusted EBITDA for Q3 2020 was $45.1 million.

What cash flow did Oceaneering generate in Q3 2020?

Oceaneering generated $19 million of free cash flow in Q3 2020.

How much did Oceaneering's cash position improve by in Q3 2020?

Oceaneering's cash position improved by $25.3 million to $359 million as of September 30, 2020.

What challenges does Oceaneering expect in 2021?

Oceaneering anticipates continuing challenges in the oil sector in 2021 due to uncertainties around demand recovery.