OCEANEERING INTERNATIONAL INC

Previous wording

Consistent with recent years, our cash balance declined during the first quarter of 2024. We utilized $70 million of cash in operating activities along with $13 million of cash for maintenance capital expenditures and $13 million for growth capital expenditures in the first quarter of 2024. These items were the largest contributors to our $107 million cash reduction during the first quarter of 2024.

Current wording

In the six-month period ended June 30, 2024, we utilized $17 million of cash in operating activities along with $27 million of cash for maintenance capital expenditures and $21 million for growth capital expenditures. These items were the largest contributors to our $79 million cash reduction during the first six months of 2024.

Previous wording

We operate in five business segments. Our segments are contained within two businesses—services and products provided primarily to the oil and gas industry, and to a lesser extent, the mobility solutions and offshore renewables industries, among others (“Energy”), and services and products provided to non-energy industries (Aerospace and Defense Technologies (“ADTech”)). Our four business segments within the Energy business are Subsea Robotics, Manufactured Products, OPG and Integrity Management & Digital Solutions (“IMDS”). We report our ADTech business as one segment. Our Unallocated Expenses are those not associated with a specific business segment.

Current wording

We operate in five business segments. Our segments are contained within two businesses—services and products provided primarily to the oil and gas industry, and to a lesser extent, the mobility solutions and offshore renewables industries, among others (“Energy”), and services and products provided to non-energy industries (Aerospace and Defense Technologies (“ADTech”)). Our four business segments within the Energy business are Subsea Robotics,

Previous wording

The primary focus of our Energy business is toward maintaining the positive momentum from our operational efficiency programs that leverage our asset base and capabilities for providing services and products for offshore energy operations and subsea completions. These efforts continue to benefit us during the current upstream spending cycle that is consistent with the ongoing increase in global demand for energy. We also are focused on deploying our capabilities to grow business in mobile robotics, offshore wind installations, nuclear, and other clean energy solutions.

Current wording

The primary focus of our Energy business is maintaining the positive momentum from our operational efficiency programs that leverage our asset base and capabilities for providing services and products for offshore energy operations and subsea completions. These efforts continue to benefit us during the current upstream spending cycle that is consistent with the ongoing increase in global demand for energy. We also are focused on deploying our capabilities to grow business in mobile robotics, offshore wind installations, nuclear, and other clean energy solutions.

Previous wording

The table that follows sets out revenue and profitability for the business segments within our Energy business. In the Subsea Robotics section of the table that follows, “ROV days available” includes all days from the first day that a ROV is placed into service until the ROV is retired. All days in this period are considered available days, including periods when a ROV is undergoing maintenance or repairs. Our ROVs do not have scheduled maintenance or repair that requires significant time during which the ROVs are not available for utilization.

Current wording

The table that follows sets out revenue and profitability for the business segments within our Energy business. In the Subsea Robotics section of the table that follows, “ROV days utilized” is the number of ROV days for which we earn revenue during a specified period. “ROV days available” includes all days from the first day that a ROV is placed into service until the ROV is retired. All days in this period are considered available days, including periods when a ROV is undergoing maintenance or repairs. Our ROVs do not have scheduled maintenance or repair that requires significant time during which the ROVs are not available for utilization. “ROV utilization” percentage is defined as “ROV days utilized” divided by “ROV days available”.

Previous wording

Subsea Robotics. We believe we are the world's largest provider of ROV services and, generally, this business segment has been the largest contributor to our Energy business operating income. Our Subsea Robotics segment revenue reflects the utilization percentages, fleet sizes and average pricing in the respective periods. Our survey services business provides survey and positioning, and geoscience services. The following table presents revenue from ROV services as a percentage of total Subsea Robotics revenue:

Current wording

Subsea Robotics. We believe we are the world's largest provider of ROV services and, generally, this business segment has been the largest contributor to our Energy business operating income. Our Subsea Robotics segment revenue reflects the ROV utilization percentages, fleet sizes and average pricing in the respective periods. Our ROV tooling provides an additional operational interface between an ROV and equipment located subsea. Our survey services business provides survey and positioning, and geoscience services. The following table presents revenue from ROV services as a percentage of total Subsea Robotics revenue:

Previous wording

During the first quarter of 2024, Subsea Robotics operating income increased on higher revenue as compared to the corresponding period of the prior year, primarily as a result of higher average revenue per day in 2024 along with an increase in days on hire and slight improvement in fleet utilization.

Current wording

Subsea Robotics operating income for the three- and six-month periods ended June 30, 2024, increased as compared to the corresponding periods of the prior year on higher revenue, as a result of higher average revenue per day in 2024 resulting from improved pricing.

Previous wording

Our Manufactured Products backlog was $597 million as of March 31, 2024 compared to $622 million and $446 million as of December 31, 2023 and March 31, 2023, respectively. Our book-to-bill ratio was 1.30 for the trailing 12 months ended March 31, 2024, as compared to 1.31 for the year ended December 31, 2023 and 1.27 for the trailing 12 months ended March 31, 2023.

Current wording

Our Manufactured Products backlog was $713 million as of June 30, 2024, compared to $622 million and $418 million as of as of December 31, 2023 and June 30, 2023, respectively. Our book-to-bill ratio was 1.56 for the trailing 12 months ended June 30, 2024, as compared to 1.31 for the year ended December 31, 2023, and 1.19 for the trailing 12 months ended June 30, 2023.

Previous wording

Our OPG operating results declined in the first quarter of 2024 as compared to the corresponding period of the prior year, despite higher revenue resulting from increased activity levels in the U.S. and Africa. In the first quarter 2024, operating results decreased as compared to the corresponding period of the prior year primarily due to drydock expenses incurred during the first quarter of 2024 along with changes in the project mix.

Current wording

Our OPG operating results decreased on higher revenue for the three- and six-month periods ended June 30, 2024, as compared to the corresponding periods of the prior year, primarily due to timing of pre-contract award costs that were expensed during the first six months of 2024 along with changes in the project mix. Our OPG operating results for the six-month period ended June 30, 2024, also included drydock expenses incurred during the first quarter of 2024 that decreased our operating results as compared to the corresponding period of the prior year.

Previous wording

Our IMDS operating results for the first quarter of 2024 were higher on increased revenue, as compared to the corresponding period of the prior year. In the first quarter of 2024, our integrity management business had increased revenue and operating results while our maritime and energy businesses were relatively flat when compared to the first quarter of 2023.

Current wording

Our IMDS operating results for the three-month period ended June 30, 2024 decreased slightly on higher revenue, as compared to the corresponding period of the prior year. Our IMDS revenue and operating results for the six-month period ended June 30, 2024 improved as compared to the corresponding period of the prior year primarily due to increased revenue and operating results for our integrity management business while our maritime and energy businesses were relatively flat.

Previous wording

Revenue, gross margin and operating income (loss) information for our ADTech segment are as follows:

Current wording

Revenue and operating income (loss) information for our ADTech segment are as follows:

Previous wording

Our ADTech segment operating results and revenue for the first quarter of 2024 improved as compared to the corresponding period of the prior year primarily due to increased activity and margins in our defense subsea technologies business.

Current wording

ADTech operating results for the three-month period ended June 30, 2024, declined significantly on higher revenue when compared to the corresponding period of the prior year, primarily due to a reserve taken during the quarter for a contract dispute as well as lower activity levels in our space systems business. Our ADTech operating results for the six-month period ended June 30, 2024, increased slightly on higher levels of revenue when compared to the corresponding period of the prior year, primarily due to due to increased activity and margins in our defense subsea technologies business, partially offset by a reserve taken during the second quarter of 2024 for a contract dispute and lower activity levels in our space systems business.

Previous wording

Our Unallocated Expenses (i.e., those not associated with a specific business segment) within gross margin consist of expenses related to our incentive and deferred compensation plans, including restricted stock units, performance units and bonuses, as well as other general expenses. Our Unallocated Expenses within operating expenses consist of those expenses within gross margin plus general and administrative expenses related to corporate functions.

Current wording

Our Unallocated Expenses (i.e., those not associated with a specific business segment) consist of expenses related to our incentive and deferred compensation plans, including restricted stock units, performance units and bonuses, as well as other general expenses that are recorded in gross margin, plus selling, general and administrative expenses related to corporate functions:

Previous wording

Our unallocated operating expenses for the first quarter of 2024 were higher as compared to the corresponding period of the prior year primarily due to higher information technology costs.

Current wording

Our Unallocated operating expenses for the three- and six-month periods ended June 30, 2024, were higher as compared to the corresponding periods of the prior year primarily due to higher information technology costs.

Previous wording

Interest income for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 decreased primarily due to lower cash balances.

Current wording

Interest income for the three- and six-month periods ended June 30, 2024, as compared to the three- and six-month periods ended June 30, 2023, decreased primarily due to lower cash balances.

Previous wording

In addition to interest on borrowings, interest expense includes amortization of loan costs and interest rate swap settlements, fees for lender commitments under our senior secured revolving credit agreement and fees for standby letters of credit and bank guarantees that banks issue on our behalf for performance bonds, bid bonds and self-insurance requirements. Interest expense for the three months ended March 31, 2024 as compared to the immediately preceding quarter was higher primarily due to the $2.7 million write-off of the interest rate swap settlement gains associated with the retirement of our 4.650% Senior Notes due 2024 in the fourth quarter of 2023.

Current wording

In addition to interest on borrowings, interest expense includes amortization of loan costs, interest rate swap settlements and debt discount, fees for lender commitments under our senior secured revolving credit agreement and fees for standby letters of credit and bank guarantees that banks issue on our behalf for performance bonds, bid bonds and self-insurance requirements. Interest expense for the three- and six-month periods ended June 30, 2024, as compared to the three- and six-month periods ended June 30, 2023, was relatively flat.

Previous wording

Foreign currency transaction gains and losses are the principal component of other income (expense), net. In the three-month periods ended March 31, 2024 and 2023, we incurred foreign currency transaction gains (losses) of $2.2 million and $0.3 million, respectively, primarily resulting from foreign currency fluctuations in multiple countries. We could incur further foreign currency exchange gains (losses) in countries where we operate due to foreign currency exchange fluctuations.

Current wording

Foreign currency transaction gains and losses are the principal component of other income (expense), net. In the three-month periods ended June 30, 2024 and 2023, we incurred foreign currency transaction gains (losses) of $1.0 million and $(4.9) million, respectively. In the six-month periods ended June 30, 2024 and 2023, we incurred foreign currency transaction gains (losses) of $3.2 million and $(4.6) million, respectively. The currency gains (losses) in the 2024 and 2023 periods were primarily resulting from foreign currency fluctuations in multiple countries. We could incur further foreign currency exchange gains (losses) in countries where we operate due to foreign currency exchange fluctuations.

Previous wording

Our tax provision is based on (1) our earnings for the period and other factors affecting the tax provision and (2) the operations of foreign branches and subsidiaries that are subject to local income and withholding taxes. Factors that affect our tax rate include our profitability levels in general and the geographical mix of our results. The effective tax rate for the three-month periods ended March 31, 2024 and 2023 was different than the U.S. federal statutory rate of 21%, primarily due to the geographical mix of revenue and earnings, changes in valuation allowances and uncertain tax positions, and other discrete items. We do not believe a comparison of the effective tax rate for the three-month periods ended March 31, 2024 and 2023 is meaningful. We continue to make an assertion to indefinitely reinvest the unrepatriated earnings of any foreign subsidiary that would incur material tax consequences upon the distribution of such earnings.

Current wording

Our tax provision is based on (1) our earnings for the period and other factors affecting the tax provision and (2) the operations of foreign branches and subsidiaries that are subject to local income and withholding taxes. Factors that affect our tax rate include our profitability levels in general and the geographical mix of our results. The effective tax rate for the three- and six-month periods ended June 30, 2024 and 2023, was different than the U.S. federal statutory rate of 21%, primarily due to the geographical mix of revenue and earnings, changes in valuation allowances and uncertain tax positions, and other discrete items. We do not believe a comparison of the effective tax rate for the three- and six-month periods ended June 30, 2024 and 2023, is meaningful. We continue to make an assertion to indefinitely reinvest the unrepatriated earnings of any foreign subsidiary that would incur material tax consequences upon the distribution of such earnings.

Previous wording

During the twelve-month period ended December 31, 2023, we received refunds of $23 million under the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), including interest of $1.7 million which was recorded as a tax benefit.

Current wording

During the three-month period ended June 30, 2023, we received refunds of $23 million under the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), including interest of $1.7 million, which was recorded as a tax benefit.

Previous wording

We consider our liquidity and capital resources adequate to support our operations, capital commitments and strategic growth initiatives. Our ability to generate substantial cash flow over the last several years has allowed us to reduce our long-term debt while maintaining a strong liquidity position. As of March 31, 2024, we had working capital of $534 million, including cash and cash equivalents of $355 million. Additionally, as of March 31, 2024, we had $215 million of unused commitments through our senior secured revolving credit agreement that we entered into in April 2022 (as amended by an Agreement and Amendment No. 1 to Credit Agreement, dated September 20, 2023, the “Revolving Credit Agreement”). Availability under the $215 million revolving credit facility (“Revolving Credit Facility”) may be limited by certain financial covenants and the requirement that any borrowing under the Revolving Credit Facility not require the granting of any liens to secure any senior notes issued by us. The indentures governing the 2028 Senior Notes generally limit our ability to incur secured debt for borrowed money (such as borrowings under the Revolving Credit Facility) to 15% of our Consolidated Net Tangible Assets (as defined in such indentures).

Current wording

We consider our liquidity and capital resources adequate to support our operations, capital commitments and strategic growth initiatives. Our ability to generate substantial cash flow over the last several years has allowed us to reduce our long-term debt while maintaining a strong liquidity position. As of June 30, 2024, we had working capital of $560 million, including cash and cash equivalents of $383 million. Additionally, as of June 30, 2024, we had $215 million of unused commitments through our senior secured revolving credit agreement that we entered into in April 2022 (as amended by an Agreement and Amendment No. 1 to the Credit Agreement, dated September 20, 2023, the “Revolving Credit Agreement”). Availability under the $215 million revolving credit facility (“Revolving Credit Facility”) may be limited by certain financial covenants and the requirement that any borrowing under the Revolving Credit Facility not require the granting of any liens to secure any senior notes issued by us. The indentures governing the 2028 Senior Notes generally limit our ability to incur secured debt for borrowed money (such as borrowings under the Revolving Credit Facility) to 15% of our Consolidated Net Tangible Assets (as defined in such indentures).

Previous wording

Our nearest maturity of indebtedness is $500 million of our 2028 Senior Notes. From time to time, we may engage in certain transactions in order to manage our outstanding debt prior to maturity, including by engaging in repurchases via open-market or privately negotiated transactions, redemptions, exchanges, tender offers or otherwise. We can provide no assurances as to the timing of any such repurchases or whether we will complete any such repurchases at all. We do not intend to disclose further information regarding any such repurchase transactions, except to the extent required in our subsequent periodic filings on Forms 10-K or 10-Q, or unless otherwise required by applicable law.

Current wording

Our nearest maturity of indebtedness is $500 million of our 2028 Senior Notes. From time to time, we may engage in certain transactions in order to manage our outstanding debt prior to maturity, including repurchases via open-market or privately negotiated transactions, redemptions, exchanges, tender offers or otherwise. We can provide no assurances as to the timing of any such transactions or whether we will complete any such transactions at all. We do not intend to disclose further information regarding any such transactions, except to the extent required in our subsequent periodic filings on Forms 10-K or 10-Q, or unless otherwise required by applicable law.

Previous wording

Cash flows for the three months ended March 31, 2024 and 2023 are summarized as follows:

Current wording

Cash flows for the six months ended June 30, 2024 and 2023, are summarized as follows:

Previous wording

Our primary sources and uses of cash flows from operating activities for the three months ended March 31, 2024 and 2023 are as follows:

Current wording

Our primary sources and uses of cash flows from operating activities for the six months ended June 30, 2024 and 2023, are as follows:

Previous wording

The decrease in cash related to accounts receivable and contract assets in the three months ended March 31, 2024 reflects the timing of project milestones and customer payments. The decrease in cash related to inventory in the three months ended March 31, 2024 was primarily due to higher activity and related increases in our Subsea Robotics and Manufactured Products inventory. The decrease in cash related to current liabilities in the three months ended March 31, 2024 reflects the timing of vendor payments and payout of incentive compensation accruals.

Current wording

The decrease in cash related to accounts receivable and contract assets in the six months ended June 30, 2024, reflects the timing of project milestones and customer payments. The decrease in cash related to inventory in the six months ended June 30, 2024, was primarily due to higher activity and related increases in our Manufactured Products and Subsea Robotics inventory. The increase in cash related to current liabilities in the six months ended June 30, 2024, reflects the timing of vendor payments.

Previous wording

Our capital expenditures of $26 million were higher during the first three months of 2024, as compared to $18 million in the first three months of 2023, primarily due to increased capital expenditures in 2024 in our Subsea Robotics segment for ROV upgrades and replacements and in our Manufactured Products segment related to our autonomous mobile robotic technology business.

Current wording

In the six months ended June 30, 2024, we used $43 million in net investing activities, primarily for capital expenditures of $48 million with over half being in our Subsea Robotics segment. Capital expenditures were higher during the first six months of 2024, as compared to $41 million in the first six months of 2023, primarily due to increased capital expenditures in our OPG segment to extend our capabilities for new contract awards and in our Manufactured Products segment related to our autonomous mobile robotic technology business.

Previous wording

In 2024, we expect our organic capital expenditures to total between $110 million to $130 million, exclusive of business acquisitions, which we expect to fund using our available cash.

Current wording

For 2024, we expect our organic capital expenditures to total between $110 million to $130 million, exclusive of business acquisitions, which we expect to fund using our available cash.

Previous wording

In the three months ended March 31, 2024 and 2023, we used $7.5 million and $4.9 million, respectively, of cash in financing activities primarily due to payment of tax withholding related to vesting of stock awards.

Current wording

In the six months ended June 30, 2024 and 2023, we used $7.0 million and $5.3 million, respectively, of cash in financing activities primarily due to payment of tax withholding related to vesting of stock awards.

Previous wording

As of March 31, 2024, we had long-term debt in the principal amount of $500 million outstanding consisting of our 2028 Senior Notes. We pay interest on the 2028 Senior Notes on February 1 and August 1 of each year, and the 2028 Senior Notes are scheduled to mature on February 1, 2028. In the three months ended March 31, 2024 and 2023, we did not repurchase or redeem any of the 2028 Senior Notes. For more on the 2028 Senior Notes, see Note 6—”Debt” in the Notes to Consolidated Financial Statements included in this quarterly report.

Current wording

As of June 30, 2024, we had long-term debt in the principal amount of $500 million outstanding consisting of our 2028 Senior Notes. We pay interest on the 2028 Senior Notes on February 1 and August 1 of each year, and the 2028 Senior Notes are scheduled to mature on February 1, 2028. In the six months ended June 30, 2024 and 2023, we did not repurchase or redeem any of the 2028 Senior Notes. For more on the 2028 Senior Notes, see Note 6—“Debt” in the Notes to Consolidated Financial Statements included in this quarterly report.

Previous wording

As of March 31, 2024, we had $215 million of unused commitments under our Revolving Credit Facility. As of March 31, 2024, we were in compliance with all of the financial covenants set for in the Revolving Credit Agreement. For more on our Revolving Credit Facility (including the financial covenants thereunder), see Note 6—”Debt” in the Notes to Consolidated Financial Statements included in this quarterly report.

Current wording

As of June 30, 2024, we had $215 million of unused commitments under our Revolving Credit Facility. As of June 30, 2024, we were in compliance with all of the financial covenants set forth in the Revolving Credit Agreement. For more on our Revolving Credit Facility (including the financial covenants thereunder), see Note 6—“Debt” in the Notes to Consolidated Financial Statements included in this quarterly report.