Oceaneering Reports Fourth Quarter and Full Year 2019 Results

·15 mins read

HOUSTON , Feb. 24, 2020 /PRNewswire/ -- Oceaneering International, Inc. ("Oceaneering") (NYSE:OII) today reported a net loss of $263 million , or $(2.66) per share, on revenue of $561 million for the three months ended December 31, 2019.  Adjusted net income was $2.5 million , or $0.03 per share, reflecting the impact of $255 million of pre-tax adjustments, primarily $240 million associated with asset impairments, write-downs and write-offs recognized during the quarter.  During the prior quarter ended September 30, 2019, Oceaneering reported a net loss of $25.5 million , or $(0.26) per share, on revenue of $498 million , and an adjusted net loss of $29.7 million , or $(0.30) per share.

For the full year 2019, Oceaneering reported a net loss of $348 million , or $(3.52) per share, on revenue of $2 billion .  Adjusted net loss was $83 million , or $(0.84) per share, reflecting the impact of $258 million of pre-tax adjustments, primarily $240 million associated with asset impairments, write-downs and write-offs recognized during the year.  This compared to 2018 net loss of $212 million , or $(2.16) per share, on revenue of $1.9 billion , and adjusted net loss of $69.7 million , or $(0.71) 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 2020 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, 2020 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,










2019


2018


2019


2019


2018












Revenue


$

560,810



$

495,095



$

497,647



$

2,048,124



$

1,909,482

Gross Margin


(20,387)



33,035



49,061



98,244



129,226

Income (Loss) from Operations


(254,170)



(97,144)



(5,194)



(290,713)



(145,482)

Net Income (Loss)


(262,912)



(64,139)



(25,523)



(348,444)



(212,327)












Diluted Earnings (Loss) Per Share


$

(2.66)



$

(0.65)



$

(0.26)



$

(3.52)



$

(2.16)

Roderick A. Larson , President and Chief Executive Officer of Oceaneering, stated, "We were pleased that our consolidated fourth quarter adjusted EBITDA of $48.7 million exceeded both our guidance and consensus estimates.  Our fourth quarter results reflect higher activity levels, and we were encouraged that four of our five operating segments recorded sequential improvements in adjusted operating results and adjusted EBITDA.  As a result of the free cash flow generated during the fourth quarter, primarily due to a reduction in working capital, our cash position as of December 31, 2019 increased to $374 million .

"During the quarter, we recognized certain non-cash charges related to impairments to the carrying value of several of our vessels and certain other assets, including goodwill and intangible assets, as market conditions no longer support the prior valuations for these assets.  A small portion of the asset write-downs related to the retirement of 30 ROVs from our fleet.  Additionally, we recognized restructuring costs as we continue to focus our efforts on adapting our asset base, geographic footprint and staffing levels for the realities of the markets we serve.

"Sequentially, ROV days on hire declined as expected by 2%, however a 5% increase in average revenue per day on hire resulted in a 3% increase in revenue for the fourth quarter. Adjusted operating results declined due to costs incurred to prepare our fleet for an anticipated increase in activity during 2020. These preparation costs were the leading contributor to the decline of our ROV quarterly adjusted EBITDA margin to 27%, from the 31% achieved during the first nine months of 2019.

"Our fleet utilization for the fourth quarter was 58%, down from 60% in the third quarter, primarily due to normal seasonality associated with the global vessel market.  Our fourth quarter fleet use was 64% in drill support and 36% in vessel-based activity, compared to 63% and 37%, respectively, during the third quarter.  At the end of December, we had ROV contracts on 98 of the 156 floating rigs under contract, or 63%.

"At the end of 2019, our ROV fleet size was 250 vehicles, as compared to 276 vehicles at the end of the third quarter.  This reflects the retirement of 30 vehicles from our active fleet during the quarter and the addition of 4 units.  The retired ROVs provided approximately 2% of the total days worked during the fourth quarter.  Pro forma fourth quarter utilization, reflecting these vehicles as if they had been retired effective as of the beginning of the quarter, was 64%.

"Subsea Products fourth quarter adjusted operating results were essentially flat with the third quarter on higher revenue.  As projected, increased throughput within our manufactured products business was somewhat offset by lower seasonal demand within our service and rental business.  The difference in revenue mix between our manufactured products business and our service and rental business resulted in a quarterly adjusted operating margin decline to 8.0% for the fourth quarter from 8.8% for the third quarter of 2019.  Our Subsea Products backlog on December 31, 2019 was $630 million , compared to our September 30, 2019 backlog of $609 million .  Our book-to-bill ratio of 1.5, for the full year 2019, was slightly favorable to our guidance range.

"Sequentially, Subsea Projects adjusted operating results improved substantially on higher revenue.  This improvement was primarily due to better-than-anticipated Gulf of Mexico intervention, maintenance and repair (IMR) activity, and higher survey services activity from several geoscience and marine construction projects.  Asset Integrity adjusted operating results improved on a modest increase in revenue.

"As compared to the third quarter, Advanced Technologies adjusted fourth quarter operating income increased on higher revenue.  However, these results were disappointing as performance fell well short of our guidance because the expected improvement in entertainment business operating margins was not achieved.  This under-performance was chiefly due to cost overruns on certain completed projects, postponement in project awards, and customer-requested delays in project progression.  During the fourth quarter, our government business performed well, as anticipated. Unallocated Expenses were in line with expectations.

"The full year 2019 consolidated adjusted financial results were consistent with our guidance but were achieved in a different manner than expected.  Activity levels and operating performance within our energy segments exceeded our original expectations, led by our ROV and Subsea Products segments. Operating performance within our Advanced Technologies segment fell short of expectations, primarily due to execution issues and customer-driven project delays and cancellations within our entertainment business.  Compared to 2018, our 2019 consolidated revenue increased 7% to $2.0 billion , with revenue increases in ROV, Subsea Products and Advanced Technologies being partially offset by revenue decreases in Subsea Projects and Asset Integrity.  Consolidated adjusted operating results improved by $22.4 million , led by our Subsea Products and ROV segments.  In 2019, each of our operating segments, except Asset Integrity, contributed positive operating income, as adjusted, and all of our operating segments contributed positive EBITDA, as adjusted.  Overall, we generated adjusted EBITDA of $165 million . We generated $158 million in cash flow from operations and invested $148 million on capital expenditures.

"We expect our 2020 financial results to improve year over year, due to our expectations for higher activity and operating margins in each of our segments.  For the year, we anticipate generating $180 million to $220 million of EBITDA, with positive operating income and EBITDA contributions from each of our operating segments.  At the midpoint of this range, our EBITDA for 2020 would represent a 21% increase over 2019 adjusted EBITDA.  Apart from seasonality, we view pricing and margins in the current energy markets to be stable with increasing opportunities for improvement.  We anticipate all of our segments will generate improved annual operating results, with the largest increases in profitability occurring in ROV, Subsea Products and Advanced Technologies.

"For ROVs, our expectation for improved results is based on increased days on hire in both drill support and vessel-based services, minor shifts in geographic mix, and generally stable pricing.  We project fewer installations and demobilizations in 2020, which are expected to lower operating costs, as compared to 2019.  We expect EBITDA margins to average approximately 30% for the full year.

"We expect Subsea Products segment performance to improve, as a result of increased throughput and better absorption of fixed costs within our manufactured products business unit, as well as higher activity levels and contribution from our service and rental business unit.  We anticipate that our operating income margins will improve slightly and average in the mid-single digit range for the year.

"Subsea Projects operating results are expected to improve slightly in 2020, primarily due to lower depreciation as compared to 2019.  EBITDA is expected to decline modestly in anticipation of reduced international and Gulf of Mexico vessel activity. Vessel dayrates remain competitive but stable, and we expect to see opportunities for pricing improvements during periods of higher activity.  Similar to 2019, this segment has the highest projected amount of speculative work contained within our guidance.  Asset Integrity results are expected to improve on relatively flat revenue as the benefits from cost control measures implemented in late 2019 and early 2020 should be realized beginning in the second quarter of 2020.

"Our 2020 Advanced Technologies results are projected to increase on higher revenues, with operating margins expected to be in the high-single digit range for the year.  We expect a modest improvement in operating results within our government-related units and operating improvement within our commercial units on improved execution and expected project awards and progression.  We are currently monitoring the impact to ongoing and anticipated projects in China , due to the coronavirus situation.

"For 2020, we anticipate Unallocated Expenses to increase to an average of $35 million per quarter as we expect full accrual rates for projected short- and long-term performance-based incentive compensation expense, as compared to 2019.

"Interest expense, net of interest income, is expected to be approximately $40 million , and we expect our 2020 cash tax payments to be approximately $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.  At this time, we do not foresee realizing a current-year tax benefit from our projected consolidated pre-tax loss, so any discussion of an estimated effective tax rate would not be meaningful.

"Our first quarter 2020 EBITDA is forecasted to be in the range of $36 million to $42 million .  We expect lower seasonal activity in our Subsea Projects segment and in our service rental business within our Subsea Products segment.  Advanced Technologies operating results are expected to be essentially flat on marginally lower revenues.

"Capital discipline continues to be of utmost importance and we expect to generate significant positive free cash flow in 2020.  We expect our organic capital expenditures to total between $75 million and $105 million.  This includes approximately $40 million to $50 million of maintenance capital expenditures and $35 million to $55 million of growth capital expenditures, including approximately $5 million of carryover from 2019.  We remain committed to maintaining strong liquidity and believe that our cash position, $500 million undrawn revolving credit facility and debt maturity profile should provide us ample resources and time to address future 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: our backlog, to the extent backlog may be an indicator of future revenue or profitability; industry conditions; our financial results outlook for the full year and first quarter of 2020, including anticipated operating income, operating results, EBITDA, EBITDA contributions and EBITDA margins from each of our operating segments, and the associated explanations; the expectation and timing of the benefits from cost control measures in Asset Integrity implemented in late 2019 and early 2020; the impact to ongoing and anticipated projects in China , due to the coronavirus situation; our projected consolidated pre-tax operating loss; demand and activity levels in our business units; anticipated full year and quarterly Unallocated Expenses; our expectations about interest expense and the associated explanations; our expected income tax payments; our expectations regarding a current-year tax benefit on our projected consolidated pre-tax operating loss; our forecasted first quarter operating results from our segments and the associated comparisons and explanations; our expectation about the full year 2020 free cash flow; our expected 2020 capital expenditures; our belief that our strong cash position, revolving credit facility and debt maturity profile provide us with ample resources and time to address future opportunities to improve our returns.

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; 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 continued availability of qualified personnel; our ability to obtain raw materials and parts on a timely basis and, in some cases, from limited sources; operating risks normally incident to offshore exploration, development and production operations; hurricanes and other adverse weather and sea conditions; cost and time associated with drydocking of our vessels; the highly competitive nature of our businesses; adverse outcomes from legal or regulatory proceedings; the risks associated with integrating businesses we acquire; rapid technological changes; and social, political, military and economic situations in foreign countries where we do business and the possibilities of civil disturbances, war, other armed conflicts or terrorist attacks.  For a more complete discussion of these and other risk factors, please see Oceaneering's latest annual report on Form 10-K and subsequent quarterly reports on Form 10Q filed with the Securities and Exchange Commission.  You should not place undue reliance on forward-looking statements. Except to the extent required by applicable law, Oceaneering undertakes no obligation to update or revise any forward-looking statement.

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

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

Contact:
Mark 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,
2019


Dec 31,
2018














(in thousands)

ASSETS

















Current assets (including cash and cash equivalents of $373,655 and $354,259)




$

1,244,436



$

1,244,889



Net property and equipment







776,532



964,670



Other assets










719,695



615,439





Total Assets






$

2,740,663



$

2,824,998




















LIABILITIES AND EQUITY






Current liabilities










$

600,956



$

494,741



Long-term debt










796,516



786,580



Other long-term liabilities






267,782



128,379



Equity










1,075,409



1,415,298





Total Liabilities and Equity






$

2,740,663



$

2,824,998




















CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




























For the Three Months Ended


For the Year Ended










Dec 31,
2019


Dec 31,
2018


Sep 30,
2019


Dec 31,
2019


Dec 31,
2018










(in thousands, except per share amounts)




















Revenue






$

560,810



$

495,095



$

497,647



$

2,048,124



$

1,909,482



Cost of services and products


581,197



462,060



448,586



1,949,880



1,780,256




Gross margin


(20,387)



33,035



49,061



98,244



129,226



Selling, general and administrative expense


59,717



53,730



54,255



214,891



198,259



Long-lived assets impairments


159,353







159,353





Goodwill impairment


14,713



76,449





14,713



76,449




Income (loss) from operations


(254,170)



(97,144)



(5,194)



(290,713)



(145,482)



Interest income






1,352



1,775



2,089



7,893



9,962



Interest expense, net of amounts capitalized


(11,706)



(9,684)



(11,382)



(42,711)



(37,742)



Equity in income (losses) of unconsolidated affiliates


941



(519)



554



1,331



(3,783)



Other income (expense), net


(3,687)



(2,390)



(3,660)



(6,621)



(8,788)




Income (loss) before income taxes


(267,270)



(107,962)



(17,593)



(330,821)



(185,833)



Provision (benefit) for income taxes


(4,358)



(43,823)



7,930



17,623



26,494




Net Income (Loss)


$

(262,912)



$

(64,139)



$

(25,523)



$

(348,444)



$

(212,327)




















Weighted average diluted shares outstanding


98,930



98,534



98,930



98,876



98,496


Diluted earnings (loss) per share


$

(2.66)



$

(0.65)



$

(0.26)



$

(3.52)



$

(2.16)





















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, 2019


Dec 31, 2018


Sep 30, 2019


Dec 31, 2019


Dec 31, 2018







($ in thousands)












Remotely Operated Vehicles
















Revenue



$

116,020



$

96,736



$

113,101



$

449,830



$

394,801



Gross margin



$

(7,728)



$

6,764



$

18,908



$

37,961



$

32,652


Operating income (loss)



$

(18,660)



$

(1,275)



$

10,145



$

1,591



$

1,641


Operating income (loss) %



(16)

%


(1)

%


9

%


%


%


Days available



25,576



25,272



25,392



100,480



101,464



Days utilized



14,836



13,147



15,146



58,347



52,084



Utilization



58

%


52

%


60

%


58

%


51

%
















Subsea Products
















Revenue



$

183,659



$

129,509



$

150,836



$

602,249



$

515,000



Gross margin



$

4,527



$

10,156



$

28,030



$

65,901



$

59,984


Operating income (loss)



$

(10,325)



$

(3,803)



$

13,219



$

9,831



$

5,614


Operating income (loss) %



(6)

%


(3)

%


9

%


2

%


1

%

Backlog at end of period



$

630,000



$

332,000



$

609,000



$

630,000



$

332,000

















Subsea Projects
















Revenue



$

86,728



$

89,295



$

75,996



$

327,556



$

329,163



Gross margin



$

1,546



$

2,795



$

5,213



$

21,264



$

9,596


Operating income (loss)



$

(148,075)



$

(79,379)



$

(616)



$

(145,712)



$

(86,008)


Operating income (loss) %



(171)

%


(89)

%


(1)

%


(44)

%


(26)

%
















Asset Integrity
















Revenue



$

61,835



$

62,830



$

59,274



$

242,954



$

253,886



Gross margin



$

(6,867)



$

8,086



$

5,273



$

11,101



$

34,995


Operating income (loss)



$

(48,919)



$

1,349



$

(2,453)



$

(53,387)



$

8,660


Operating income (loss) %



(79)

%


2

%


(4)

%


(22)

%


3

%
















Advanced Technologies
















Revenue



$

112,568



$

116,725



$

98,440



$

425,535



$

416,632



Gross margin



$

12,354



$

22,314



$

9,413



$

50,401



$

58,959


Operating income (loss)



$

5,270



$

15,406



$

2,958



$

25,068



$

33,920


Operating income (loss) %



5

%


13

%


3

%


6

%


8

%















Unallocated Expenses















Gross margin



$

(24,219)



$

(17,080)



$

(17,776)



$

(88,384)



$

(66,960)


Operating income (loss)



$

(33,461)



$

(29,442)



$

(28,447)



$

(128,104)



$

(109,309)















Total


















Revenue



$

560,810



$

495,095



$

497,647



$

2,048,124



$

1,909,482



Gross margin



$

(20,387)



$

33,035



$

49,061



$

98,244



$

129,226


Operating income (loss)



$

(254,170)



$

(97,144)



$

(5,194)



$

(290,713)



$

(145,482)


Operating income (loss) %



(45)

%


(20)

%


(1)

%


(14)

%


(8)

%


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.
















SELECTED CASH FLOW INFORMATION


















For the Three Months Ended


For the Year Ended







Dec 31, 2019


Dec 31, 2018


Sep 30, 2019


Dec 31, 2019


Dec 31, 2018







(in thousands)













Capital Expenditures, including Acquisitions



$

18,837



$

25,721



$

57,985



$

147,684



$

178,038














Depreciation and amortization:












Energy Services and Products













Remotely Operated Vehicles



$

32,043



$

27,972



$

26,767



$

113,671



$

111,311



Subsea Products



30,992



11,797



12,055



68,404



53,085



Subsea Projects



14,541



85,651



8,130



38,103



114,481



Asset Integrity



30,529



1,585



1,634



35,367



6,904


Total Energy Services and Products



108,105



127,005



48,586



255,545



285,781


Advanced Technologies



766



786



761



3,122



3,081


Unallocated Expenses



1,199



1,125



1,220



4,760



4,728



Total Depreciation and Amortization



$

110,070



$

128,916



$

50,567



$

263,427



$

293,590

















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 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, 2019

Dec 31, 2018

Sep 30, 2019






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


$

(262,912)



$

(2.66)



$

(64,139)



$

(0.65)



$

(25,523)



$

(0.26)


Pre-tax adjustments for the effects of:














Long-lived assets impairments


159,353













Long-lived assets write-offs


44,653













Inventory write-downs


21,285













Goodwill impairment


14,713





76,449









Restructuring expenses and other


11,751













Foreign currency (gains) losses


3,477





2,559





3,516




Total pre-tax adjustments


255,232





79,008





3,516




















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


(50,653)





(11,914)





(738)




Discrete tax items:













Share-based compensation


2












Uncertain tax positions


1,276





7,811





(520)




Tax reform


272





560





(8,492)




Valuation allowances


59,667





(3,784)





(32)




Other


(356)





(241)





2,079





Total discrete tax adjustments


60,861





4,346





(6,965)





Total of adjustments


265,440





71,440





(4,187)




Adjusted Net Income (Loss)


$

2,528



$

0.03



$

7,301



$

0.07



$

(29,710)



$

(0.30)


Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)




99,721





99,331





98,930







































For the Year Ended



Dec 31, 2019

Dec 31, 2018



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






$

(348,444)



$

(3.52)



$

(212,327)



$

(2.16)


Pre-tax adjustments for the effects of:










Long-lived assets impairments






159,353









Long-lived assets write-offs


44,653





7,691





Inventory write-downs


21,285









Goodwill impairment


14,713





76,449





Restructuring expenses and other


11,751









Gain on sale of investment






(9,293)





Foreign currency (gains) losses






6,320





18,037




Total pre-tax adjustments






258,075





92,884




















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






(51,250)





(14,668)




















Discrete tax items:









Share-based compensation






989








Uncertain tax positions






3,046





12,644




Tax reform






(8,220)





8,492




Valuation allowances






61,174





35,352




Other






2,018





7,930





Total discrete tax adjustments






59,007





64,418





Total of adjustments






265,832





142,634




Adjusted Net Income (Loss)






$

(82,612)



$

(0.84)



$

(69,693)



$

(0.71)


Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)








98,876





98,496
































EBITDA and Adjusted EBITDA and Margins




















For the Three Months Ended


For the Year Ended






Dec 31, 2019


Dec 31, 2018


Sep 30, 2019


Dec 31, 2019


Dec 31, 2018






($ in thousands)















Net income (loss)



$

(262,912)



$

(64,139)



$

(25,523)



$

(348,444)



$

(212,327)


Depreciation and amortization



110,070



128,916



50,567



263,427



293,590



Subtotal



(152,842)



64,777



25,044



(85,017)



81,263


Interest expense, net of interest income


10,354



7,909



9,293



34,818



27,780


Amortization included in interest expense


(335)



(333)



(335)



(1,345)



(1,772)


Provision (benefit) for income taxes



(4,358)



(43,823)



7,930



17,623



26,494



EBITDA



(147,181)



28,530



41,932



(33,921)



133,765


Adjustments for the effects of:













Long-lived assets impairments



159,353







159,353





Inventory write-downs



21,285







21,285





Restructuring expenses and other



11,751







11,751





Gain on sale of investment











(9,293)



Foreign currency (gains) losses



3,477



2,559



3,516



6,320



18,037




Total of adjustments



195,866



2,559



3,516



198,709



8,744



Adjusted EBITDA



$

48,685



$

31,089



$

45,448



$

164,788



$

142,509
















Revenue



$

560,810



$

495,095



$

497,647



$

2,048,124



$

1,909,482
















EBITDA margin %



(26)

%


6

%


8

%


(2)

%


7

%

Adjusted EBITDA margin %



9

%


6

%


9

%


8

%


7

%















Free Cash Flow










For the Year Ended




Dec 31, 2019


Dec 31, 2018




(in thousands)

Net Income (loss)


$

(348,444)



$

(212,327)


Non-cash adjustments:






Depreciation and amortization, including goodwill impairment


263,427



293,590



Long-lived assets impairments


159,353





Other non-cash


16,436



15,317


Other increases (decreases) in cash from operating activities


66,797



(60,013)


Cash flow provided by operating activities


157,569



36,567


Purchases of property and equipment


(147,684)



(109,467)


Free Cash Flow


$

9,885



$

(72,900)














2020 EBITDA Estimates




For the Year Ended




December 31, 2020




Low


High




(in thousands)

Income (loss) before income taxes


$

(40,000)



$


Depreciation and amortization


180,000



180,000



Subtotal


140,000



180,000


Interest expense, net of interest income


40,000



40,000



EBITDA


$

180,000



$

220,000

















For the Three Months Ended




March 31, 2020




Low


High




(in thousands)

Income (loss) before income taxes


$

(19,000)



$

(13,000)


Depreciation and amortization


45,000



45,000



Subtotal


26,000



32,000


Interest expense, net of interest income


10,000



10,000



EBITDA


$

36,000



$

42,000








Adjusted Operating Income (Loss) and Margins by Segment






For the Three Months Ended December 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


$

(18,660)



$

(10,325)



$

(148,075)



$

(48,919)



$

5,270



$

(33,461)



$

(254,170)


Adjustments for the effects of:















Long-lived assets impairments





142,615



16,738







159,353



Long-lived assets write-offs


5,697



18,757



6,091



14,108







44,653



Inventory write-downs


15,343



3,567



1,586





789





21,285



Goodwill impairment








14,713







14,713



Restructuring expenses and other


2,297



2,650



2,851



3,082



815



56



11,751




Total of adjustments


23,337



24,974



153,143



48,641



1,604



56



251,755



















Adjusted Operating Income (Loss)


$

4,677



$

14,649



$

5,068



$

(278)



$

6,874



$

(33,405)



$

(2,415)



















Revenue


$

116,020



$

183,659



$

86,728



$

61,835



$

112,568





$

560,810


Operating income (loss) % as reported in accordance with GAAP


(16)

%


(6)

%


(171)

%


(79)

%


5

%




(45)

%

Operating income (loss)% using adjusted amounts


4

%


8

%


6

%


%


6

%




%






















For the Three Months Ended December 31, 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


$

(1,275)



$

(3,803)



$

(79,379)



$

1,349



$

15,406



$

(29,442)



$

(97,144)


Adjustments for the effects of:















Goodwill impairment






76,449









76,449




Total of adjustments






76,449









76,449


Adjusted Operating Income (Loss)


$

(1,275)



$

(3,803)



$

(2,930)



$

1,349



$

15,406



$

(29,442)



$

(20,695)



















Revenue


$

96,736



$

129,509



$

89,295



$

62,830



$

116,725





$

495,095


Operating income (loss) % as reported in accordance with GAAP


(1)

%


(3)

%


(89)

%


2

%


13

%




(20)

%

Operating income (loss)% using adjusted amounts


(1)

%


(3)

%


(3)

%


2

%


13

%




(4)

%






For the Three Months Ended September 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


$

10,145



$

13,219



$

(616)



$

(2,453)



$

2,958



$

(28,447)



$

(5,194)


Adjusted Operating Income (Loss)


$

10,145



$

13,219



$

(616)



$

(2,453)



$

2,958



$

(28,447)



$

(5,194)



















Revenue


$

113,101



$

<