OCEANEERING INTERNATIONAL INC

Previous wording

•the collectability of accounts receivable and realizability of contract assets at the amounts reflected on our most recent balance sheet;

Current wording

•the collectability of accounts receivable and realizability of contract assets at the amounts reflected on our most recent consolidated balance sheet;

Previous wording

Our diluted earnings (loss) per share for the three- and six-month periods ended June 30, 2024 were $0.34 and $0.49, respectively, as compared to $0.19 and $0.23, respectively, for the corresponding periods of the prior year. In the second quarter of 2024, activity levels in our energy-related businesses increased, led by our Subsea Robotics segment. Compared to the same quarter in the prior year, our second quarter of 2024 operating income was 23% higher on a 12% increase in revenue, with higher revenue in all of our operating segments and improved operating results in our Subsea Robotics and Manufactured Products segments.

Current wording

Our diluted earnings per share for the three- and nine-month periods ended September 30, 2024 were $0.40 and $0.89, respectively, as compared to $0.29 and $0.52, respectively, for the corresponding periods of the prior year. In the third quarter of 2024, activity levels in our energy-focused businesses remained steady year-over-year, with notable operating performance improvements year-over-year in our Subsea Robotics and Manufactured Products segments. Compared to the same periods in the prior year, our operating income was 23% higher on a 7% increase in revenue and our operating income for the nine-month period ended September 30, 2024, was 26% higher on a 10% increase in revenue.

Previous 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.

Current wording

In the nine-month period ended September 30, 2024, we utilized $36 million of cash for maintenance capital expenditures and $37 million for growth capital expenditures, which was funded from our $75 million of cash provided by operating activities. We also repurchased shares of our common stock for approximately $10 million. These items along with the sale of an equity investment and assets and purchase of debt securities were contributors to our $9.7 million cash reduction during the first nine 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,

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, Manufactured Products, Offshore Projects Group (“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.

Previous 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.

Current wording

Subsea Robotics operating income for the three- and nine-month periods ended September 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 ROV pricing.

Previous wording

Fleet utilization was 70% in the three-month period ended June 30, 2024, as compared to 70% for the corresponding period of the prior year. Fleet utilization remained stable at 67% for the six-month period ended June 30, 2024 and 2023. We retired four of our conventional work-class ROV systems and replaced them with four upgraded conventional work-class ROV systems during the six months ended June 30, 2024, resulting in a total of 250 ROVs in our ROV fleet as of both June 30, 2024 and 2023.

Current wording

Fleet utilization was 69% for the three-month periods ended September 30, 2024 and 2023. Fleet utilization decreased slightly to 67% for the nine-month period ended September 30, 2024 as compared to 68% for the nine-month period ended September 30, 2023. We retired five of our conventional work-class ROV systems and replaced them with five upgraded conventional work-class ROV systems during the nine months ended September 30, 2024, resulting in a total of 250 ROVs in our ROV fleet as of both September 30, 2024 and 2023.

Previous wording

Our Manufactured Products revenue and operating results increased for the three- and six-month periods ended June 30, 2024, as compared to the corresponding periods of the prior year. Revenue was higher in the three- and six-month periods ended June 30, 2024, primarily due to increased order intake in 2022 and 2023 leading to increased activity in the first six months of 2024. Operating results were improved in the three- and six-month periods ended June 30, 2024, as compared to the corresponding periods of the prior year, primarily due to an improved project mix and our ability to leverage our existing cost base.

Current wording

Our Manufactured Products revenue and operating results increased for the three- and nine-month periods ended September 30, 2024, as compared to the corresponding periods of the prior year. Revenue was higher in the three- and nine-month periods ended September 30, 2024, primarily due to increased order intake in 2022 and 2023 leading to increased activity in the first nine months of 2024. Operating results were improved in the three- and nine-month periods ended September 30, 2024, as compared to the corresponding periods of the prior year, primarily due to an improved project mix and our ability to leverage our existing cost base.

Previous 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.

Current wording

Our Manufactured Products backlog was $671 million as of September 30, 2024, compared to $622 million and $556 million as of as of December 31, 2023 and September 30, 2023, respectively. Our book-to-bill ratio was 1.21 for the trailing 12 months ended September 30, 2024, as compared to 1.31 for the year ended December 31, 2023, and 1.41 for the trailing 12 months ended September 30, 2023.

Previous 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.

Current wording

Our OPG operating results decreased on lower revenue for the three-month period ended September 30, 2024, as compared to the corresponding periods of the prior year, primarily due to changes in project mix in our international markets, vessel crane repair costs and associated vessel downtime in the third quarter of 2024. Our OPG operating results decreased on higher revenue for the nine-month period ended September 30, 2024, as compared to the corresponding period of the prior year, primarily due to changes in the project mix and drydock expenses incurred during the first quarter of 2024.

Previous wording

Integrity Management & Digital Solutions. Our IMDS segment provides asset integrity management, corrosion management, inspection and nondestructive testing services, principally to customers in the oil and gas, power generation and petrochemical industries. We perform these services on both onshore and offshore facilities, both topside and subsea. We also provide software, digital and connectivity solutions for the energy industry and software and analytical solutions for the bulk cargo maritime industry.

Current wording

Integrity Management & Digital Solutions. Our IMDS segment provides asset integrity management, corrosion management, inspection and nondestructive testing services, principally to customers in the oil and gas, power generation and petrochemical industries. We perform these services on both onshore and offshore facilities, both topside and subsea. We also provide software, digital and connectivity solutions for the energy industry.

Previous 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.

Current wording

Our IMDS operating results for the three- and nine-month periods ended September 30, 2024 decreased on higher revenue as compared to the corresponding periods of the prior year, primarily due to increased revenue and operating results for our integrity management business while our energy businesses were relatively flat. The decline in operating income was the result of a one-time, non-cash charge associated with the divestiture of our Maritime Intelligence division in September 2024.

Previous wording

Aerospace and Defense Technologies. Our ADTech segment provides government services and products, including engineering and related manufacturing in defense and space exploration activities, principally to U.S. government agencies and their prime contractors. Many of the services and products utilized in ADTech are applied technologies based on our core competencies and knowledge derived from decades of working in the offshore markets and solving complex problems in harsh environments.

Current wording

Our ADTech segment provides government services and products, including engineering and related manufacturing in defense and space exploration activities, principally to U.S. government agencies and their prime contractors. Many of the services and products utilized in ADTech are applied technologies based on our core competencies and knowledge derived from decades of working in the offshore markets and solving complex problems in harsh environments.

Previous 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.

Current wording

ADTech operating results for the three-month period ended September 30, 2024, declined on relatively flat revenue when compared to the corresponding periods of the prior year, primarily due to increased project proposal costs and changes in project mix. ADTech operating results for the nine-month period ended September 30, 2024, declined on higher revenue when compared to the corresponding periods of the prior year. While ADTech experienced increased activity and margins in our defense subsea technologies business, such increase was 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 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.

Current wording

Our Unallocated Expenses for the three-month period ended September 30, 2024, decreased as compared to the corresponding period of the prior year primarily due to lower professional fees. Our Unallocated Expenses for the nine-month period ended September 30, 2024, were higher as compared to the corresponding periods of the prior year primarily due to higher information technology costs relating primarily to increased cybersecurity protection costs.

Previous wording

The following table sets forth our significant financial statement items below the income (loss) from operations line.

Current wording

The following table sets forth our significant financial statement items below the operating income (loss) line.

Previous 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.

Current wording

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

Previous 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.

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 nine-month periods ended September 30, 2024, as compared to the three- and nine-month periods ended September 30, 2023, was slightly lower.

Previous 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.

Current wording

Foreign currency transaction gains and losses are the principal component of other income (expense), net. In the three-month periods ended September 30, 2024 and 2023, we incurred foreign currency transaction gains (losses) of $0.4 million and $0.9 million, respectively. In the nine-month periods ended September 30, 2024 and 2023, we incurred foreign currency transaction gains (losses) of $3.7 million and $(3.6) 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- 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.

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 nine-month periods ended September 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 nine-month periods ended September 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 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.

Current wording

During the nine-month period ended September 30, 2023, we received refunds of $23 million, including interest of $1.7 million, which was recorded as a tax benefit under the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). We classified $20 million of the $23 million total refund as other noncurrent assets on our consolidated balance sheet as of December 31, 2022.

Previous wording

Our income tax payments for the full year of 2024 are estimated to be in the range of $80 million to $90 million, which includes taxes incurred in countries that impose tax on the basis of in-country revenue, without regard to the profitability of such operations.

Current wording

Our income tax payments for the full year of 2024 are estimated to be in the range of $85 million to $95 million, which includes taxes incurred in countries that impose tax on the basis of in-country revenue, without regard to the profitability of such operations.

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 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).

Current wording

We consider our liquidity and capital resources adequate to support our operations, capital commitments (including future share repurchases) 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 September 30, 2024, we had net working capital of $611 million, including cash and cash equivalents of $452 million. Additionally, as of September 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 (defined below) 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 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.

Current wording

Our nearest maturity of indebtedness is $500 million of our 2028 Senior Notes scheduled to mature on February 1, 2028 (the “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 six months ended June 30, 2024 and 2023, are summarized as follows:

Current wording

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

Previous 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:

Current wording

Operating activities. Our primary sources and uses of cash flows from operating activities for the nine months ended September 30, 2024 and 2023, are as follows:

Previous 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.

Current wording

The decrease in cash related to accounts receivable and contract assets in the nine months ended September 30, 2024, reflects the timing of project milestones and customer payments. The decrease in cash related to inventory in the nine months ended September 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 nine months ended September 30, 2024, reflects the timing of vendor payments.

Previous 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.

Current wording

Investing activities. In the nine months ended September 30, 2024, we used $63 million in net investing activities, primarily for capital expenditures of $73 million with over half being in our Subsea Robotics segment. Capital expenditures were higher during the first nine months of 2024, as compared to $67 million in the first nine 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. These increased capital expenditures were partially offset by lower capital expenditures in our IMDS segment.

Previous 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.

Current wording

Financing activities. In the nine months ended September 30, 2024 and 2023, we used $17 million and $5.1 million, respectively, of cash in financing activities primarily due to the repurchase of 0.4 million shares of our common stock for approximately $10 million in the three months ended September 30, 2024, and payment of tax withholding related to vesting of stock awards.

Previous 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.

Current wording

As of September 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 nine months ended September 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

Share Repurchase Program. In December 2014, our Board of Directors approved a plan to repurchase up to 10 million shares of our common stock on a discretionary basis. Under this program, in 2015, we repurchased 2.0 million shares of our common stock for $100 million. We have not repurchased any shares under this plan since December 2015. We account for the shares we hold in treasury under the cost method, at average cost. The timing and amount of any future repurchases will be determined by our management. We expect that any additional shares repurchased under the plan will be held as treasury stock for possible future use. The plan does not obligate us to repurchase any particular number of shares.

Current wording

In December 2014, our Board of Directors approved a plan to repurchase up to 10 million shares of our common stock on a discretionary basis. Under this program, in 2015, we repurchased 2.0 million shares of our common stock for $100 million. During the three-month period ended September 30, 2024, we repurchased 0.4 million shares for approximately $10 million. We account for the shares we hold in treasury under the cost method, at average cost. The timing and amount of any future repurchases will be determined by our management. We expect that any additional shares repurchased under the plan will be held as treasury stock for possible future use. The plan does not obligate us to repurchase any particular number of shares.

Previous wording

We have not guaranteed any debt not reflected on our Consolidated Balance Sheets as of June 30, 2024, and we do not have any off-balance sheet arrangements, as defined by Securities and Exchange Commission's rules.

Current wording

We have not guaranteed any debt not reflected on our consolidated balance sheet as of September 30, 2024, and we do not have any off-balance sheet arrangements, as defined by Securities and Exchange Commission's rules.