Oceaneering Reports Fourth Quarter and Full Year 2020 Results
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 Diluted EPS Net Income Diluted EPS Net Income Diluted EPS
(Loss) (Loss) (Loss)
(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 Diluted EPS Net Income Diluted EPS
(Loss) (Loss)
(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
Total
Expenses
($ 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
Total
Expenses
($ 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 (14)
% 3
% (182) (72)
accordance with GAAP % % 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 2
% (35) (17)
accordance with GAAP % % 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
Total
Expenses
($ 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
Total
Expenses
($ 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
Total
Expenses
and other
($ 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
Total
Expenses
and other
($ 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 (14)
% 3
% (182) (72)
accordance with GAAP % % 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
Total
Expenses
and other
($ 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 2
% (35) (17)
accordance with GAAP % % 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
Total
Expenses
and other
($ 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
Total
Expenses
and other
($ 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.
