EX-99.1 2 exhibit9918k2q2019.htm EXHIBIT 99.1 EARNINGS PRESS RELEASE 2Q 2019 Exhibit



Exhibit 99.1


Oceaneering Reports Second Quarter 2019 Results

HOUSTON, July 24, 2019 – Oceaneering International, Inc. ("Oceaneering") (NYSE:OII) today reported a net loss of $35.2 million, or $(0.36) per share, on revenue of $496 million for the three months ended June 30, 2019. During the prior quarter ended March 31, 2019, Oceaneering reported a net loss of $24.8 million, or $(0.25) per share, on revenue of $494 million, and an adjusted net loss of $23.9 million, or $(0.24) per share.

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 forecasted 2019 EBITDA) 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, 2019 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
 
Six Months Ended
 
 
Jun 30,
 
Mar 31,
 
Jun 30,
 
 
 
 
 
 
 
 
 
2019
 
2018
 
2019
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
495,781

 
$
478,674

 
$
493,886

 
$
989,667

 
$
895,087

Gross Margin
 
41,983

 
29,728

 
27,587

 
69,570

 
48,556

Income (Loss) from Operations
 
(9,635
)
 
(19,637
)
 
(21,714
)
 
(31,349
)
 
(46,786
)
Net Income (Loss)
 
(35,182
)
 
(33,076
)
 
(24,827
)
 
(60,009
)
 
(82,209
)
 
 
 
 
 
 
 
 
 
 
 
Diluted Earnings (Loss) Per Share
 
$
(0.36
)
 
$
(0.34
)
 
$
(0.25
)
 
$
(0.61
)
 
$
(0.83
)
 
 
 
 
 

Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, "Overall, the sequential improvement in our second quarter 2019 operating results met our expectations. Our energy segments, as a whole, performed well, while our non-energy segment, Advanced Technologies, fell short of our expectations. Unallocated Expenses were lower than forecast. For the second quarter, consolidated EBITDA of $40.3 million was in line with consensus estimates, and we generated $12.7 million of free cash flow.

"Sequentially, ROV operating income improved as expected, resulting from higher seasonal activity for vessel-based services and an increase in the number of working floating rigs for which we provide drill support. Our fleet use during the quarter was 63% in drill support and 37% in vessel-based activity, compared to 69% and 31%, respectively, during the prior quarter. Revenue grew 20%, principally due to the 19% increase in ROV days on hire. ROV EBITDA margin improved by 23 basis points to 30%.

"At the end of June 2019, our ROV fleet size was 276 vehicles, utilization improved to 62% from 53% in the first quarter, and we had ROV contracts on 101 of the 161 floating rigs under contract, resulting in a drill support market share of 63%.





"Subsea Products operating income improved during the second quarter of 2019 on a modest sequential increase in quarterly revenue. These operating results were better than expected due to a substantial increase in revenue within our manufactured products business and an exceptional operating margin within our service and rental business. Our Subsea Products backlog at June 30, 2019 was $596 million, compared to our March 31, 2019 backlog of $464 million. This includes the recently announced award for umbilicals, hardware and aftermarket services related to the Mozambique LNG project. Our book-to-bill ratio for the trailing twelve months was 1.65.

"The second quarter 2019 Subsea Projects operating income was sequentially lower than forecast as the expected increase in call-out work did not materialize, and operational issues on a couple of projects caused cost overruns. We continue to believe that pricing for diving and deepwater vessel services in our international and U.S. Gulf of Mexico markets has generally stabilized. We are pleased to report that the Ocean Evolution was put to work on her first project in June.

"The second quarter 2019 Asset Integrity operating results decreased slightly on flat revenue compared to the first quarter, as pricing for inspection services remains very competitive.

"For our non-energy segment, Advanced Technologies, second quarter 2019 operating income declined sequentially, predominantly due to our not securing a large anticipated U.S. Navy contract and production timing associated with certain theme park projects. Unallocated Expenses were lower quarter over quarter, as we deferred expenditures into the second half of 2019.

"For the third quarter of 2019, compared to the second quarter, we are expecting a slight improvement in our overall operating results on moderately higher revenue. For our energy segments, we expect declines in operating contribution from our ROV segment on flat activity levels due to a change in operating mix, a decline in profitability in Subsea Products, due to a greater proportion of segment revenue coming from manufacturing, and relatively flat results in our Subsea Projects and Asset Integrity segments. For our non-energy segment, Advanced Technologies, we expect revenue to increase and operating margins to improve to the low double-digit range. Unallocated Expenses are expected to be in the mid-$30 million range.

"For the first half of 2019, we generated $70.7 million of adjusted EBITDA. Based on our first half results and our expectations for the remainder of the year, we are narrowing our EBITDA guidance by lowering the top end of our guidance range from $180 million to $170 million, due primarily to project call-out work not materializing to the degree necessary to achieve the high end of our prior guidance. We now expect our 2019 adjusted EBITDA to be between $150 million and $170 million.

"Our confidence in our guidance for the second half of 2019 is based on our existing backlog and expected order intake in Subsea Products and Advanced Technologies, as well as our anticipation of an increase in the number of working floating drilling rigs. We are affirming our expectation to generate positive free cash flow for the full year 2019."

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 and future expected business, financial performance and prospects of Oceaneering. More specifically, the forward-looking statements in this press release include the statements concerning Oceaneering’s: outlook and EBITDA guidance for the third quarter and full year of 2019; projected positive free cash flow; anticipated consolidated EBITDA and segment EBITDA contributions; expected segment contributions to periodic and full-year 2019 operating results; Subsea Products backlog; Subsea Products and Advanced Technologies order intake; forecasted Unallocated Expenses; and overall view of market conditions, including an anticipated increase in working floating drilling rigs. 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; supply and demand of drilling rigs; oil and natural gas demand and production growth; oil and natural gas prices; fluctuations in currency markets worldwide; future global economic conditions; the loss of major contracts or alliances; future performance under our customer contracts; and the effects of competition. 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 10‑Q filed with the Securities and Exchange Commission.

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

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

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



- Tables follow on next page -




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jun 30, 2019
 
Dec 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets (including cash and cash equivalents of $355,838 and $354,259)
 
 
 
$
1,195,193

 
$
1,244,889

 
Net property and equipment
 
 
 
 
 
 
947,787

 
964,670

 
Other assets
 
 
 
 
 
 
 
 
 
795,655

 
615,439

 
 
 
Total Assets
 
 
 
 
 
$
2,938,635

 
$
2,824,998

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
$
491,044

 
$
494,741

 
Long-term debt
 
 
 
 
 
 
 
 
 
795,639

 
786,580

 
Other long-term liabilities
 
 
 
 
 
292,919

 
128,379

 
Equity
 
 
 
 
 
 
 
 
 
1,359,033

 
1,415,298

 
 
 
Total Liabilities and Equity
 
 
 
 
 
$
2,938,635

 
$
2,824,998

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
 
 
 
 
 
 
Jun 30, 2019
 
Jun 30, 2018
 
Mar 31, 2019
 
Jun 30, 2019
 
Jun 30, 2018
 
 
 
 
 
 
 
 
 
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
$
495,781

 
$
478,674

 
$
493,886

 
$
989,667

 
$
895,087

 
Cost of services and products
 
453,798

 
448,946

 
466,299

 
920,097

 
846,531

 
 
Gross margin
 
41,983

 
29,728

 
27,587

 
69,570

 
48,556

 
Selling, general and administrative expense
 
51,618

 
49,365

 
49,301

 
100,919

 
95,342

 
 
Income (loss) from operations
 
 
 
(9,635
)
 
(19,637
)
 
(21,714
)
 
(31,349
)
 
(46,786
)
 
Interest income
 
 
 
 
 
1,848

 
2,950

 
2,604

 
4,452

 
5,542

 
Interest expense, net of amounts capitalized
 
(10,199
)
 
(8,802
)
 
(9,424
)
 
(19,623
)
 
(18,173
)
 
Equity in income (losses) of unconsolidated affiliates
 
—

 
(737
)
 
(164
)
 
(164
)
 
(1,580
)
 
Other income (expense), net
 
7

 
(3,556
)
 
719

 
726

 
(12,030
)
 
 
Income (loss) before income taxes
 
(17,979
)
 
(29,782
)
 
(27,979
)
 
(45,958
)
 
(73,027
)
 
Provision (benefit) for income taxes
 
17,203

 
3,294

 
(3,152
)
 
14,051

 
9,182

 
 
Net Income (Loss)
 
$
(35,182
)
 
$
(33,076
)
 
$
(24,827
)
 
$
(60,009
)
 
$
(82,209
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding
 
98,929

 
98,531

 
98,714

 
98,822

 
98,457

Diluted earnings (loss) per share
 
$
(0.36
)
 
$
(0.34
)
 
$
(0.25
)
 
$
(0.61
)
 
$
(0.83
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 Six Months Ended
 
 
 
 
 
 
Jun 30, 2019
 
Jun 30, 2018
 
Mar 31, 2019
 
Jun 30, 2019
 
Jun 30, 2018
 
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
Remotely Operated Vehicles
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
$
120,363

 
$
107,426

 
$
100,346

 
$
220,709

 
$
193,020

 
Gross margin
 
 
$
17,360

 
$
12,176

 
$
9,421

 
$
26,781

 
$
17,131

Operating income (loss)
 
 
$
8,688

 
$
4,542

 
$
1,418

 
$
10,106

 
$
2,144

Operating income (loss) %
 
 
7
 %
 
4
 %
 
1
 %
 
5
 %
 
1
 %
 
Days available
 
 
25,006

 
25,386

 
24,506

 
49,512

 
50,524

 
Days utilized
 
 
15,423

 
13,654

 
12,942

 
28,365

 
24,688

 
Utilization
 
 
62
 %
 
54
 %
 
53
 %
 
57
 %
 
49
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Products
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
$
138,910

 
$
121,704

 
$
128,844

 
$
267,754

 
$
248,392

 
Gross margin
 
 
$
21,029

 
$
16,075

 
$
12,315

 
$
33,344

 
$
31,080

Operating income (loss)
 
 
$
7,413

 
$
2,295

 
$
(476
)
 
$
6,937

 
$
4,050

Operating income (loss) %
 
 
5
 %
 
2
 %
 
—
 %
 
3
 %
 
2
 %
Backlog at end of period
 
 
$
596,000

 
$
245,000

 
$
464,000

 
$
596,000

 
$
245,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
$
75,104

 
$
78,036

 
$
89,728

 
$
164,832

 
$
134,896

 
Gross margin
 
 
$
5,472

 
$
(5,145
)
 
$
9,033

 
$
14,505

 
$
(4,028
)
Operating income (loss)
 
 
$
87

 
$
(10,358
)
 
$
2,892

 
$
2,979

 
$
(12,717
)
Operating income (loss) %
 
 
—
 %
 
(13
)%
 
3
 %
 
2
 %
 
(9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Integrity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
$
61,156

 
$
67,422

 
$
60,689

 
$
121,845

 
$
128,710

 
Gross margin
 
 
$
6,423

 
$
9,461

 
$
6,272

 
$
12,695

 
$
17,479

Operating income (loss)
 
 
$
(1,302
)
 
$
3,357

 
$
(713
)
 
$
(2,015
)
 
$
5,036

Operating income (loss) %
 
 
(2
)%
 
5
 %
 
(1
)%
 
(2
)%
 
4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advanced Technologies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
$
100,248

 
$
104,086

 
$
114,279

 
$
214,527

 
$
190,069

 
Gross margin
 
 
$
13,386

 
$
13,999

 
$
15,248

 
$
28,634

 
$
21,821

Operating income (loss)
 
 
$
7,241

 
$
7,886

 
$
9,599

 
$
16,840

 
$
9,554

Operating income (loss) %
 
 
7
 %
 
8
 %
 
8
 %
 
8
 %
 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
 
$
(21,687
)
 
$
(16,838
)
 
$
(24,702
)
 
$
(46,389
)
 
$
(34,927
)
Operating income (loss)
 
 
$
(31,762
)
 
$
(27,359
)
 
$
(34,434
)
 
$
(66,196
)
 
$
(54,853
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
$
495,781

 
$
478,674

 
$
493,886

 
$
989,667

 
$
895,087

 
Gross margin
 
 
$
41,983

 
$
29,728

 
$
27,587

 
$
69,570

 
$
48,556

Operating income (loss)
 
 
$
(9,635
)
 
$
(19,637
)
 
$
(21,714
)
 
$
(31,349
)
 
$
(46,786
)
Operating income (loss) %
 
 
(2
)%
 
(4
)%
 
(4
)%
 
(3
)%
 
(5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




SELECTED CASH FLOW INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
 
 
 
Jun 30, 2019
 
Jun 30, 2018
 
Mar 31, 2019
 
Jun 30, 2019
 
Jun 30, 2018
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditures, including Acquisitions
 
 
$
40,898

 
$
27,798

 
$
29,964

 
$
70,862

 
$
121,928

 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
 
 
 
 
Energy Services and Products
 
 
 
 
 
 
 
 
 
 
 
 
Remotely Operated Vehicles
 
 
$
26,871

 
$
28,269

 
$
27,990

 
$
54,861

 
$
55,911

 
Subsea Products
 
 
12,366

 
14,914

 
12,991

 
25,357

 
28,939

 
Subsea Projects
 
 
7,550

 
13,053

 
7,882

 
15,432

 
21,366

 
Asset Integrity
 
 
1,570

 
1,836

 
1,634

 
3,204

 
3,684

Total Energy Services and Products
 
 
48,357

 
58,072

 
50,497

 
98,854

 
109,900

Advanced Technologies
 
 
765

 
737

 
830

 
1,595

 
1,503

Unallocated Expenses
 
 
1,182

 
1,034

 
1,159

 
2,341

 
2,568

Total Depreciation and Amortization
 
 
$
50,304

 
$
59,843

 
$
52,486

 
$
102,790

 
$
113,971

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




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, 2019 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
(continued)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
 
 
 
 
Jun 30, 2019
Jun 30, 2018
Mar 31, 2019
 
 
 
 
 
Net Income
 
Diluted EPS
 
Net Income
 
Diluted EPS
 
Net Income
 
Diluted EPS
 
 
 
 
 
(in thousands, except per share amounts)
 
 
 
 
 
 
 
Net income (loss) and diluted EPS as reported in accordance with GAAP
 
$
(35,182
)
 
$
(0.36
)
 
$
(33,076
)
 
$
(0.34
)
 
$
(24,827
)
 
$
(0.25
)
Pre-tax adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed asset write-offs
 
—

 
 
 
4,233

 
 
 
—

 
 
 
Intangible asset write-offs
 
—

 
 
 
3,458

 
 
 
—

 
 
 
Foreign currency (gains) losses
 
(59
)
 
 
 
3,418

 
 
 
(614
)
 
 
Total pre-tax adjustments
 
(59
)
 
 
 
11,109

 
 
 
(614
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods
 
12

 
 
 
(2,173
)
 
 
 
129

 
 
Discrete tax items
 
 
 
 
 
 
 
 
 
 
 
 
    Share-based compensation
 
1

 
 
 
14

 
 
 
986

 
 
    Uncertain tax positions
 
1,268

 
 
 
1,357

 
 
 
1,022

 
 
    Valuation allowances
 
—

 
 
 
—

 
 
 
1,539

 
 
    Other
 
2,436

 
 
 
(191
)
 
 
 
(2,141
)
 
 
 
Total discrete tax adjustments
 
3,705

 
 
 
1,180

 
 
 
1,406

 
 
 
Total of adjustments
 
$
3,658

 
 
 
$
10,116

 
 
 
$
921

 
 
Adjusted Net Income (Loss)
 
$
(31,524
)
 
$
(0.32
)
 
$
(22,960
)
 
$
(0.23
)
 
$
(23,906
)
 
$
(0.24
)
Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)
 
 
 
98,929

 
 
 
98,531

 
 
 
98,714

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended
 
 
Jun 30, 2019
Jun 30, 2018
 
 
Net Income
 
Diluted EPS
 
Net Income
 
Diluted EPS
 
 
(in thousands, except per share amounts)
 
 
 
 
 
 
 
Net income (loss) and diluted EPS as reported in accordance with GAAP
 
 
 
 
 
$
(60,009
)
 
$
(0.61
)
 
$
(82,209
)
 
$
(0.83
)
Pre-tax adjustments for the effects of:
 
 
 
 
 
 
 
 
 
Fixed asset write-offs
 
—

 
 
 
4,233

 
 
 
Intangible asset write-offs
 
 
 
 
 
—

 
 
 
3,458

 
 
 
Foreign currency (gains) losses
 
 
 
 
 
(673
)
 
 
 
11,733

 
 
Total pre-tax adjustments
 
 
 
 
 
(673
)
 
 
 
19,424

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods
 
 
 
 
 
141

 
 
 
(3,919
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discrete tax items
 
 
 
 
 
 
 
 
    Share-based compensation
 
 
 
 
 
987

 
 
 
1,820

 
 
    Uncertain tax positions
 
 
 
 
 
2,290

 
 
 
1,261

 
 
    Valuation allowances
 
 
 
 
 
1,539

 
 
 
—

 
 
    Other
 
 
 
 
 
295

 
 
 
499

 
 
 
Total discrete tax adjustments
 
 
 
 
 
5,111

 
 
 
3,580

 
 
 
Total of adjustments
 
 
 
 
 
4,579

 
 
 
19,085

 
 
Adjusted Net Income (Loss)
 
 
 
 
 
$
(55,430
)
 
$
(0.56
)
 
$
(63,124
)
 
$
(0.64
)
Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)
 
 
 
 
 
 
 
98,822

 
 
 
98,457

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA and EBITDA Margins
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
 
 
 
 
 
Jun 30, 2019
 
Jun 30, 2018
 
Mar 31, 2019
 
Jun 30, 2019
 
Jun 30, 2018
 
 
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
 
 
$
(35,182
)
 
$
(33,076
)
 
$
(24,827
)
 
$
(60,009
)
 
$
(82,209
)
Depreciation and amortization
 
 
 
50,304

 
59,843

 
52,486

 
102,790

 
113,971

 
Subtotal
 
 
 
15,122

 
26,767

 
27,659

 
42,781

 
31,762

Interest expense, net of interest income
 
8,351

 
5,852

 
6,820

 
15,171

 
12,631

Amortization included in interest expense
 
(335
)
 
(333
)
 
(340
)
 
(675
)
 
(1,107
)
Provision (benefit) for income taxes
 
 
 
17,203

 
3,294

 
(3,152
)
 
14,051

 
9,182

 
EBITDA
 
 
 
$
40,341

 
$
35,580

 
$
30,987

 
$
71,328

 
$
52,468

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
$
495,781

 
$
478,674

 
$
493,886

 
$
989,667

 
$
895,087

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA margin %
 
 
 
8
%
 
7
%
 
6
%
 
7
%
 
6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2019 EBITDA Estimates
 
 
 
 
 
 
 
 
 
Low
 
High
 
 
 
(in thousands)
Income (loss) before income taxes
 
$
(95,000
)
 
(75,000
)
Depreciation and amortization
 
210,000

 
210,000

 
Subtotal
 
115,000

 
135,000

Interest expense, net of interest income
 
35,000

 
35,000

 
EBITDA
 
$
150,000

 
$
170,000

 
 
 
 
 
 
 
 
 
 
 
 
Free Cash Flow
 
 
 
 
 
 
 
 
 
For the Six Months Ended
 
 
 
Jun 30, 2019
 
Jun 30, 2018
 
 
 
(in thousands)
Net Income (loss)
 
$
(60,009
)
 
$
(82,209
)
Depreciation and amortization
 
102,790

 
113,971

Other increases (decreases) in cash from operating activities
 
29,928

 
(16,077
)
Cash flow provided by operating activities
 
72,709

 
15,685

Purchases of property and equipment
 
(70,862
)
 
(53,530
)
Free Cash Flow
 
$
1,847

 
$
(37,845
)





RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
Adjusted Operating Income (Loss) and Margins by Segment
 
 
 
 
 
For the Three Months Ended June 30, 2019
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses
 
Total
 
 
 
 
($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP
 
$
8,688

 
$
7,413

 
$
87

 
$
(1,302
)
 
$
7,241

 
$
(31,762
)
 
$
(9,635
)
Adjusted Operating Income (Loss)
 
$
8,688

 
$
7,413

 
$
87

 
$
(1,302
)
 
$
7,241

 
$
(31,762
)
 
$
(9,635
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
120,363

 
$
138,910

 
$
75,104

 
$
61,156

 
$
100,248

 
 
 
$
495,781

Operating income (loss) % as reported in accordance with GAAP
 
7
%
 
5
%
 
—
 %
 
(2
)%
 
7
%
 
 
 
(2
)%
Operating income (loss)% using adjusted amounts
 
7
%
 
5
%
 
—
 %
 
(2
)%
 
7
%
 
 
 
(2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30, 2018
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses
 
Total
 
 
 
 
($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP
 
$
4,542

 
$
2,295

 
$
(10,358
)
 
$
3,357

 
$
7,886

 
$
(27,359
)
 
$
(19,637
)
Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed asset write-offs
 
617

 
1,531

 
2,085

 
—

 
—

 
—

 
4,233

 
Intangible assets write-offs
 
—

 
—

 
3,458

 
—

 
—

 
—

 
3,458

 
 
Total of adjustments
 
617

 
1,531

 
5,543

 
—

 
—

 
—

 
7,691

Adjusted Operating Income (Loss)
 
$
5,159

 
$
3,826

 
$
(4,815
)
 
$
3,357

 
$
7,886

 
$
(27,359
)
 
$
(11,946
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
107,426

 
$
121,704

 
$
78,036

 
$
67,422

 
$
104,086

 
 
 
$
478,674

Operating income (loss) % as reported in accordance with GAAP
 
4
%
 
2
%
 
(13
)%
 
5
 %
 
8
%
 
 
 
(4
)%
Operating income (loss)% using adjusted amounts
 
5
%
 
3
%
 
(6
)%
 
5
 %
 
8
%
 
 
 
(2
)%
 



RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
Adjusted Operating Income (Loss) and Margins by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended March 31, 2019
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses
 
Total
 
 
 
 
($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP
 
$
1,418

 
$
(476
)
 
$
2,892

 
$
(713
)
 
$
9,599

 
$
(34,434
)
 
$
(21,714
)
Adjusted Operating Income (Loss)
 
$
1,418

 
$
(476
)
 
$
2,892

 
$
(713
)
 
$
9,599

 
$
(34,434
)
 
$
(21,714
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
100,346

 
$
128,844

 
$
89,728

 
$
60,689

 
$
114,279

 
 
 
$
493,886

Operating income (loss) % as reported in accordance with GAAP
 
1
%
 
—
%
 
3
%
 
(1
)%
 
8
%
 
 
 
(4
)%
Operating income (loss) % using adjusted amounts
 
1
%
 
—
%
 
3
%
 
(1
)%
 
8
%
 
 
 
(4
)%
 





RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
Adjusted Operating Income and Margins by Segment
 
 
 
 
 
For the Six Months Ended June 30, 2019
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses
 
Total
 
 
 
 
($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP
 
$
10,106

 
$
6,937

 
$
2,979

 
$
(2,015
)
 
$
16,840

 
$
(66,196
)
 
$
(31,349
)
Adjusted Operating Income (Loss)
 
$
10,106

 
$
6,937

 
$
2,979

 
$
(2,015
)
 
$
16,840

 
$
(66,196
)
 
$
(31,349
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
220,709

 
$
267,754

 
$
164,832

 
$
121,845

 
$
214,527

 
 
 
$
989,667

Operating income (loss) % as reported in accordance with GAAP
 
5
%
 
3
%
 
2
 %
 
(2
)%
 
8
%
 
 
 
(3
)%
Operating income (loss) % using adjusted amounts
 
5
%
 
3
%
 
2
 %
 
(2
)%
 
8
%
 
 
 
(3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2018
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses
 
Total
 
 
 
 
($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP
 
$
2,144

 
$
4,050

 
$
(12,717
)
 
$
5,036

 
$
9,554

 
$
(54,853
)
 
$
(46,786
)
Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed asset write-offs
 
617

 
1,531

 
2,085

 
—

 
—

 
—

 
4,233

 
Intangible assets write-offs
 
—

 
—

 
3,458

 
—

 
—

 
—

 
3,458

 
 
Total of adjustments
 
617

 
1,531

 
5,543

 
—

 
—

 
—

 
7,691

Adjusted Operating Income (Loss)
 
$
2,761

 
$
5,581

 
$
(7,174
)
 
$
5,036

 
$
9,554

 
$
(54,853
)
 
$
(39,095
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
193,020

 
$
248,392

 
$
134,896

 
$
128,710

 
$
190,069

 
 
 
$
895,087

Operating income (loss) % as reported in accordance with GAAP
 
1
%
 
2
%
 
(9
)%
 
4
 %
 
5
%
 
 
 
(5
)%
Operating income (loss) % using adjusted amounts
 
1
%
 
2
%
 
(5
)%
 
4
 %
 
5
%
 
 
 
(4
)%
 



RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
EBITDA and Adjusted EBITDA and Margins by Segment
 
 
 
 
 
For the Three Months Ended June 30, 2019
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses and other
 
Total
 
 
 
 
($ in thousands)
Operating income (loss) as reported in accordance with GAAP
 
$
8,688

 
$
7,413

 
$
87

 
$
(1,302
)
 
$
7,241

 
$
(31,762
)
 
$
(9,635
)
Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
26,871

 
12,366

 
7,550

 
1,570

 
765

 
1,182

 
50,304

 
Other pre-tax
 
—

 
—

 
—

 
—

 
—

 
(328
)
 
(328
)
 
EBITDA
 
35,559

 
19,779

 
7,637

 
268

 
8,006

 
(30,908
)
 
40,341

Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency (gains) losses
 
—

 
—

 
—

 
—

 
—

 
(59
)
 
(59
)
 
 
Total of adjustments
 
—

 
—

 
—

 
—

 
—

 
(59
)
 
(59
)
Adjusted EBITDA
 
$
35,559

 
$
19,779

 
$
7,637

 
$
268

 
$
8,006

 
$
(30,967
)
 
$
40,282

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
120,363

 
$
138,910

 
$
75,104

 
$
61,156

 
$
100,248

 
 
 
$
495,781

Operating income (loss) % as reported in accordance with GAAP
 
7
%
 
5
%
 
—
 %
 
(2
)%
 
7
%
 
 
 
(2
)%
EBITDA Margin
 
30
%
 
14
%
 
10
 %
 
—
 %
 
8
%
 
 
 
8
 %
Adjusted EBITDA Margin
 
30
%
 
14
%
 
10
 %
 
—
 %
 
8
%
 
 
 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30, 2018
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses and other
 
Total
 
 
 
 
($ in thousands)
Operating income (loss) as reported in accordance with GAAP
 
$
4,542

 
$
2,295

 
$
(10,358
)
 
$
3,357

 
$
7,886

 
$
(27,359
)
 
$
(19,637
)
Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
28,269

 
14,914

 
13,053

 
1,836

 
737

 
1,034

 
59,843

 
Other pre-tax
 
—

 
—

 
—

 
—

 
—

 
(4,626
)
 
(4,626
)
 
EBITDA
 
32,811

 
17,209

 
2,695

 
5,193

 
8,623

 
(30,951
)
 
35,580

Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency (gains) losses
 
—

 
—

 
—

 
—

 
—

 
3,418

 
3,418

 
 
Total of adjustments
 
—

 
—

 
—

 
—

 
—

 
3,418

 
3,418

Adjusted EBITDA
 
$
32,811

 
$
17,209

 
$
2,695

 
$
5,193

 
$
8,623

 
$
(27,533
)
 
$
38,998

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
107,426

 
$
121,704

 
78,036

 
$
67,422

 
$
104,086

 
 
 
$
478,674

Operating income (loss) % as reported in accordance with GAAP
 
4
%
 
2
%
 
(13
)%
 
5
 %
 
8
%
 
 
 
(4
)%
EBITDA Margin
 
31
%
 
14
%
 
3
 %
 
8
 %
 
8
%
 
 
 
7
 %
Adjusted EBITDA Margin
 
31
%
 
14
%
 
3
 %
 
8
 %
 
8
%
 
 
 
8
 %
`



RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
EBITDA and Adjusted EBITDA and Margins by Segment
 
 
 
 
 
For the Three Months Ended March 31, 2019
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses and other
 
Total
 
 
 
 
($ in thousands)
Operating income (loss) as reported in accordance with GAAP
 
$
1,418

 
$
(476
)
 
$
2,892

 
$
(713
)
 
$
9,599

 
$
(34,434
)
 
$
(21,714
)
Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
27,990

 
12,991

 
7,882

 
1,634

 
830

 
1,159

 
52,486

 
Other pre-tax
 
—

 
—

 
—

 
—

 
—

 
215

 
215

 
EBITDA
 
29,408

 
12,515

 
10,774

 
921

 
10,429

 
(33,060
)
 
30,987

Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency (gains) losses
 
—

 
—

 
—

 
—

 
—

 
(614
)
 
(614
)
 
 
Total of adjustments
 
—

 
—

 
—

 
—

 
—

 
(614
)
 
(614
)
Adjusted EBITDA
 
$
29,408

 
$
12,515

 
$
10,774

 
$
921

 
$
10,429

 
$
(33,674
)
 
$
30,373

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
100,346

 
$
128,844

 
$
89,728

 
$
60,689

 
$
114,279

 
 
 
$
493,886

Operating income (loss) % as reported in accordance with GAAP
 
1
%
 
—
 %
 
3
%
 
(1
)%
 
8
%
 
 
 
(4
)%
EBITDA Margin
 
29
%
 
10
 %
 
12
%
 
2
 %
 
9
%
 
 
 
6
 %
Adjusted EBITDA Margin
 
29
%
 
10
 %
 
12
%
 
2
 %
 
9
%
 
 
 
6
 %





RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
EBITDA and Adjusted EBITDA and Margins by Segment
 
 
 
 
 
For the Six Months Ended June 30, 2019
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses and other
 
Total
 
 
 
 
($ in thousands)
Operating income (loss) as reported in accordance with GAAP
 
$
10,106

 
$
6,937

 
$
2,979

 
$
(2,015
)
 
$
16,840

 
$
(66,196
)
 
$
(31,349
)
Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 

 
Depreciation and amortization
 
54,861

 
25,357

 
15,432

 
3,204

 
1,595

 
2,341

 
102,790

 
Other pre-tax
 
—

 
—

 
—

 
—

 
—

 
(113
)
 
(113
)
 
EBITDA
 
64,967

 
32,294

 
18,411

 
1,189

 
18,435

 
(63,968
)
 
71,328

Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency (gains) losses
 
—

 
—

 
—

 
—

 
—

 
(673
)
 
(673
)
 
 
Total of adjustments
 
—

 
—

 
—

 
—

 
—

 
(673
)
 
(673
)
Adjusted EBITDA
 
$
64,967

 
$
32,294

 
$
18,411

 
$
1,189

 
$
18,435

 
$
(64,641
)
 
$
70,655

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
220,709

 
$
267,754

 
$
164,832

 
$
121,845

 
$
214,527

 
 
 
$
989,667

Operating income (loss) % as reported in accordance with GAAP
 
5
%
 
3
%
 
2
 %
 
(2
)%
 
8
%
 
 
 
(3
)%
EBITDA Margin
 
29
%
 
12
%
 
11
 %
 
1
 %
 
9
%
 
 
 
7
 %
Adjusted EBITDA Margin
 
29
%
 
12
%
 
11
 %
 
1
 %
 
9
%
 
 
 
7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended June 30, 2018
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unallocated Expenses and other
 
Total
 
 
 
 
($ in thousands)
Operating income (loss) as reported in accordance with GAAP
 
$
2,144

 
$
4,050

 
$
(12,717
)
 
$
5,036

 
$
9,554

 
$
(54,853
)
 
$
(46,786
)
Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
55,911

 
28,939

 
21,366

 
3,684

 
1,503

 
2,568

 
113,971

 
Other pre-tax
 
—

 
—

 
—

 
—

 
—

 
(14,717
)
 
(14,717
)
 
EBITDA
 
58,055

 
32,989

 
8,649

 
8,720

 
11,057

 
(67,002
)
 
52,468

Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency (gains) losses
 
—

 
—

 
—

 
—

 
—

 
11,733

 
11,733

 
 
Total of adjustments
 
—

 
—

 
—

 
—

 
—

 
11,733

 
11,733

Adjusted EBITDA
 
$
58,055

 
$
32,989

 
$
8,649

 
$
8,720

 
$
11,057

 
$
(55,269
)
 
$
64,201

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
193,020

 
$
248,392

 
$
134,896

 
$
128,710

 
$
190,069

 
 
 
$
895,087

Operating income (loss) % as reported in accordance with GAAP
 
1
%
 
2
%
 
(9
)%
 
4
 %
 
5
%
 
 
 
(5
)%
EBITDA Margin
 
30
%
 
13
%
 
6
 %
 
7
 %
 
6
%
 
 
 
6
 %
Adjusted EBITDA Margin
 
30
%
 
13
%
 
6
 %
 
7
 %
 
6
%
 
 
 
7
 %