Exhibit 99.1


Oceaneering Reports Third Quarter 2018 Results

HOUSTON, October 24, 2018 – Oceaneering International, Inc. ("Oceaneering") (NYSE:OII) today reported a net loss of $66.0 million, or $(0.67) per share, on revenue of $519 million for the three months ended September 30, 2018. Adjusted net loss was $13.9 million, or $(0.14) per share, excluding the impact of $56.5 million of certain tax adjustments, the after-tax effects of a $9.3 million gain realized on the sale of a minority interest investment, and $3.7 million of foreign currency exchange losses.

During the prior quarter ended June 30, 2018, Oceaneering reported a net loss of $33.1 million, or $(0.34) per share, on revenue of $479 million, and an adjusted net loss of $23.0 million, or $(0.23) per share.

Adjusted operating income (loss) and margins, adjusted net income (loss) and diluted earnings (loss) per share, EBITDA and adjusted EBITDA (as well as EBITDA and adjusted EBITDA margins and forecasted 2018 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, EBITDA and EBITDA Margins, 2018 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
 
Nine Months Ended
 
 
Sep 30,
 
Jun 30,
 
Sep 30,
 
 
 
 
 
 
 
 
 
2018
 
2017
 
2018
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
519,300

 
$
476,120

 
$
478,674

 
$
1,414,387

 
$
1,437,332

Gross Margin
 
47,635

 
54,885

 
29,728

 
96,191

 
153,311

Income (Loss) from Operations
 
(1,552
)
 
10,531

 
(19,637
)
 
(48,338
)
 
19,771

Net Income (Loss)
 
(65,979
)
 
(1,768
)
 
(33,076
)
 
(148,188
)
 
(7,170
)
 
 
 
 
 
 
 
 
 
 
 
Diluted Earnings (Loss) Per Share
 
$
(0.67
)
 
$
(0.02
)
 
$
(0.34
)
 
$
(1.50
)
 
$
(0.07
)
 
 
 
 
 

Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, "Our consolidated third quarter 2018 operating results met our expectations. However, from a segment perspective, these results were not achieved in the manner we initially anticipated.

"Compared to our adjusted second quarter 2018 results, operating results for the third quarter 2018 improved by $10.4 million, mainly due to favorable profit contributions from Subsea Projects and Subsea Products, and lower Unallocated expenses, partially offset by lower profitability in our Remotely Operated Vehicle (ROV) segment.

"We are pleased that each of our operating segments was profitable and on a consolidated basis we generated adjusted EBITDA of $47.2 million. Our cash position increased to $367 million as of September 30, 2018.






"Operationally, for the third quarter 2018, ROV days on hire increased 4% as our fleet utilization improved to 56% from 54% in the second quarter. Average ROV revenue per day on hire was lower, as expected, and declined 6% sequentially, as we experienced a geographic shift in activity to lower day rate operating areas, notably Europe and Brazil. Operating income declined more than expected due to operational inefficiencies associated with the reactivation of equipment and crews. Consequently, ROV EBITDA margin declined to 27%, from the approximately 30% that was expected.

"Our fleet use mix during the quarter was 59% in drill support and 41% in vessel-based activity, compared to 62% and 38% for the prior quarter. At the end of September, we had ROVs on 91, or 61%, of the 150 floating rigs under contract. At the end of June 30, 2018, we had ROVs on 92, or 60%, of the 154 floating rigs. At the end of September 2018, our fleet size remained at 279 vehicles.

"Subsea Product's operating income during the third quarter 2018 was better than expected, on a 13% increase in quarterly revenues. The improved operating results were due to increased throughput in our manufactured products businesses. Our Subsea Products backlog at September 30, 2018 was $333 million, compared to our June 30, 2018 backlog of $245 million. The backlog improvement was largely attributable to an increase in order intake for our service and rental business offerings. Our book-to-bill ratio year-to-date was 1.2 and the past twelve months has been 1.1.

"Sequentially, Subsea Projects achieved a return to profitability, as expected, and generated $6.1 million of operating income during the third quarter 2018, on a 35% increase in quarterly revenues. These results were mainly driven by higher levels of seasonal utilization and pricing in the U.S. Gulf of Mexico deepwater vessel and diving services, and an increase in survey services. Ecosse results were lower than projected due to equipment modifications and field trials that delayed execution. Asset Integrity operating income was down, due to delays in anticipated project awards by customers.

"For our non-energy segment, Advanced Technologies, third quarter 2018 operating income was slightly better than expected, due to increased project throughput in our commercial theme park unit. Unallocated Expenses for the third quarter 2018 were lower than the second quarter 2018 as performance-based compensation expenses were reduced based on our expected level of results relative to the respective plan targets.

"Our third quarter 2018 tax provision of $61.1 million included $56.5 million of discrete tax items.  The largest discrete item of $39.1 million related to valuation allowances recorded for certain tax benefits recognized in prior years that may not be realizable in certain foreign jurisdictions.  Other discrete items included: $7.9 million to reflect recently issued proposed regulations relating to the U.S. tax reform legislation adopted in December 2017; $3.6 million related to uncertain tax positions; and $5.9 million associated with various other issues. We expect the above tax provision for discrete items will have minimal cash tax implications for the foreseeable future. During the nine months ended September 30, 2018, our cash taxes paid totaled $25.8 million as compared to the $30.0 million paid during the same period of 2017.

"Looking forward, we believe our fourth quarter 2018 results will be lower than our adjusted third quarter results due to the onset of seasonality leading to reduced levels of offshore energy activity. Sequentially, we expect lower operating income from each of our energy segments, with most of the decline expected to be in Subsea Products and Subsea Projects segments. Additionally, in our Subsea Products segment we are expecting an unfavorable impact at our manufacturing facility in Panama City, Florida due to damage caused by Hurricane Michael in mid-October 2018. For our non-energy segment, Advanced Technologies, we are projecting a quarterly improvement in operating income. Unallocated Expenses are expected to be in the upper-$20 million range.






"For the full year of 2018, we currently expect our adjusted EBITDA to be in the lower half of the guidance range of $140 million to $160 million. And, we continue to expect each of our operating segments will contribute positive EBITDA.

"We are encouraged that the long-term fundamentals for the offshore energy industry have stabilized and we believe we are now in the early stages of a recovery in activity in general, and in our businesses. We expect a recovery will take time, and only after a sustained higher level of activity can prices for our services and products be increased enough to generate satisfactory returns.

"Accordingly, looking into 2019, we are projecting increased activity levels in each of our segments, likely led by revenue gains in our Subsea Products manufacturing business unit. However, the pace of recovery is still difficult to determine, and at this time we are not prepared to offer more detailed guidance on 2019."

This release contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected business, financial performance and prospects of Oceaneering. More specifically, the forward-looking statements in this press release include the statements concerning Oceaneering’s: overall view of the markets; backlog; expectation that the tax provision for discrete items will have minimal cash tax implications for the foreseeable future; outlook and EBITDA guidance for the fourth quarter and full year of 2018; expected fourth quarter Unallocated Expenses; expected contributions of its segments to fourth quarter and 2018 operating results; outlook for the full year of 2018; anticipated adjusted EBITDA and EBITDA contributions from each of its segments; statements about long-term industry fundamentals and recovery; statement about a sustained higher level of activity being required before prices for our services and products can be increased enough to generate satisfactory returns; and outlook for 2019 and expectations for increased activity levels in each of its segments. The forward-looking statements included in this release are based on our current expectations and are subject to certain risks, assumptions, trends and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Among the factors that could cause actual results to differ materially include: factors affecting the level of activity in the oil and gas industry; supply and demand of drilling rigs; oil and natural gas demand and production growth; oil and natural gas prices; fluctuations in currency markets worldwide; future global economic conditions; the loss of major contracts or alliances; future performance under our customer contracts; and the effects of competition. For a more complete discussion of these and other risk factors, please see Oceaneering’s latest annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.

Oceaneering is a global provider of engineered services and products, primarily to the offshore energy industry. Through the use of its applied technology expertise, Oceaneering also serves the defense, entertainment, and aerospace industries.
For more information on Oceaneering, please visit www.oceaneering.com.

Contact:
Suzanne Spera
Director, Investor Relations
Oceaneering International, Inc.
713-329-4707
investorrelations@oceaneering.com



Tables follow on next page -





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sep 30, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets (including cash and cash equivalents of $367,150 and $430,316)
 
 
 
$
1,189,836

 
$
1,187,402

 
Net Property and Equipment
 
 
 
 
 
 
993,514

 
1,064,204

 
Other Assets
 
 
 
 
 
 
 
 
 
740,349

 
772,344

 
 
 
TOTAL ASSETS
 
 
 
 
 
$
2,923,699

 
$
3,023,950

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
 
 
$
476,314

 
$
435,797

 
Long-term Debt
 
 
 
 
 
 
 
 
 
782,190

 
792,312

 
Other Long-term Liabilities
 
 
 
 
 
163,722

 
131,323

 
Equity
 
 
 
 
 
 
 
 
 
1,501,473

 
1,664,518

 
 
 
TOTAL LIABILITIES AND EQUITY
 
 
 
 
 
$
2,923,699

 
$
3,023,950

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
 
 
 
 
 
 
 
Sep 30, 2018
 
Sep 30, 2017
 
Jun 30, 2018
 
Sep 30, 2018
 
Sep 30, 2017
 
 
 
 
 
 
 
 
 
(in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
$
519,300

 
$
476,120

 
$
478,674

 
$
1,414,387

 
$
1,437,332

 
Cost of services and products
 
471,665

 
421,235

 
448,946

 
1,318,196

 
1,284,021

 
 
Gross Margin
 
47,635

 
54,885

 
29,728

 
96,191

 
153,311

 
Selling, general and administrative expense
 
49,187

 
44,354

 
49,365

 
144,529

 
133,540

 
 
Income (loss) from Operations
 
 
 
(1,552
)
 
10,531

 
(19,637
)
 
(48,338
)
 
19,771

 
Interest income
 
 
 
 
 
2,645

 
1,997

 
2,950

 
8,187

 
5,379

 
Interest expense
 
 
 
 
 
(9,885
)
 
(8,650
)
 
(8,802
)
 
(28,058
)
 
(22,517
)
 
Equity losses of unconsolidated affiliates
 
(1,684
)
 
(424
)
 
(737
)
 
(3,264
)
 
(1,798
)
 
Other income (expense), net
 
5,632

 
(1,287
)
 
(3,556
)
 
(6,398
)
 
(3,901
)
 
 
Income (loss) before Income Taxes
 
(4,844
)
 
2,167

 
(29,782
)
 
(77,871
)
 
(3,066
)
 
Provision (benefit) for income taxes
 
61,135

 
3,935

 
3,294

 
70,317

 
4,104

 
 
Net Income (Loss)
 
$
(65,979
)
 
$
(1,768
)
 
$
(33,076
)
 
$
(148,188
)
 
$
(7,170
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding
 
98,533

 
98,270

 
98,531

 
98,483

 
98,224

Diluted Earnings (Loss) per Share
 
$
(0.67
)
 
$
(0.02
)
 
$
(0.34
)
 
$
(1.50
)
 
$
(0.07
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 Nine Months Ended
 
 
 
 
 
 
Sep 30, 2018
 
Sep 30, 2017
 
Jun 30, 2018
 
Sep 30, 2018
 
Sep 30, 2017
 
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
Remotely Operated Vehicles
 
Revenue
 
 
$
105,045

 
$
104,617

 
$
107,426

 
$
298,065

 
$
302,071

 
Gross Margin
 
 
$
8,757

 
$
12,102

 
$
12,176

 
$
25,888

 
$
41,783

Operating Income
 
 
$
772

 
$
5,009

 
$
4,542

 
$
2,916

 
$
21,310

Operating Income %
 
 
1
%
 
5
%
 
4
 %
 
1
 %
 
7
%
 
Days available
 
 
25,668

 
25,695

 
25,386

 
76,192

 
76,214

 
Days utilized
 
 
14,249

 
12,742

 
13,654

 
38,937

 
36,497

 
Utilization
 
 
56
%
 
50
%
 
54
 %
 
51
 %
 
48
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Products
 
Revenue
 
 
$
137,099

 
$
143,583

 
$
121,704

 
$
385,491

 
$
469,115

 
Gross Margin
 
 
$
18,748

 
$
24,949

 
$
16,075

 
$
49,828

 
$
72,702

Operating Income
 
 
$
5,367

 
$
12,383

 
$
2,295

 
$
9,417

 
$
34,418

Operating Income %
 
 
4
%
 
9
%
 
2
 %
 
2
 %
 
7
%
Backlog at end of period
 
 
$
333,000

 
$
284,000

 
$
245,000

 
$
333,000

 
$
284,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsea Projects
 
Revenue
 
 
$
104,972

 
$
80,116

 
$
78,036

 
$
239,868

 
$
218,617

 
Gross Margin
 
 
$
10,829

 
$
10,187

 
$
(5,145
)
 
$
6,801

 
$
20,673

Operating Income (Loss)
 
 
$
6,088

 
$
6,512

 
$
(10,358
)
 
$
(6,629
)
 
$
9,699

Operating Income (Loss) %
 
 
6
%
 
8
%
 
(13
)%
 
(3
)%
 
4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Integrity
 
Revenue
 
 
$
62,346

 
$
61,098

 
$
67,422

 
$
191,056

 
$
171,948

 
Gross Margin
 
 
$
9,430

 
$
9,754

 
$
9,461

 
$
26,909

 
$
28,139

Operating Income
 
 
$
2,275

 
$
3,050

 
$
3,357

 
$
7,311

 
$
9,072

Operating Income %
 
 
4
%
 
5
%
 
5
 %
 
4
 %
 
5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advanced Technologies
 
Revenue
 
 
$
109,838

 
$
86,706

 
$
104,086

 
$
299,907

 
$
275,581

 
Gross Margin
 
 
$
14,824

 
$
11,833

 
$
13,999

 
$
36,645

 
$
36,038

Operating Income
 
 
$
8,960

 
$
6,602

 
$
7,886

 
$
18,514

 
$
19,260

Operating Income %
 
 
8
%
 
8
%
 
8
 %
 
6
 %
 
7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Margin
 
 
$
(14,953
)
 
$
(13,940
)
 
$
(16,838
)
 
$
(49,880
)
 
$
(46,024
)
Operating Expense
 
 
$
(25,014
)
 
$
(23,025
)
 
$
(27,359
)
 
$
(79,867
)
 
$
(73,988
)
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
 
Revenue
 
 
$
519,300

 
$
476,120

 
$
478,674

 
$
1,414,387

 
$
1,437,332

 
Gross Margin
 
 
$
47,635

 
$
54,885

 
$
29,728

 
$
96,191

 
$
153,311

Operating Income (Loss)
 
 
$
(1,552
)
 
$
10,531

 
$
(19,637
)
 
$
(48,338
)
 
$
19,771

Operating Income (Loss) %
 
 
%
 
2
%
 
(4
)%
 
(3
)%
 
1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





SELECTED CASH FLOW INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
 
 
 
 
Sep 30, 2018
 
Sep 30, 2017
 
Jun 30, 2018
 
Sep 30, 2018
 
Sep 30, 2017
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures, including acquisitions
 
 
$
30,389

 
$
29,878

 
$
27,798

 
$
152,317

 
$
71,178

 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and Amortization:
 
 
 
 
 
 
 
 
 
 
 
Energy Services and Products
 
 
 
 
 
 
 
 
 
 
 
 
Remotely Operated Vehicles
 
 
$
27,428

 
$
28,269

 
$
28,269

 
$
83,339

 
$
86,534

 
Subsea Products
 
 
12,349

 
13,340

 
14,914

 
41,288

 
39,124

 
Subsea Projects
 
 
7,464

 
7,881

 
13,053

 
28,830

 
23,742

 
Asset Integrity
 
 
1,635

 
2,139

 
1,836

 
5,319

 
5,379

Total Energy Services and Products
 
 
48,876

 
51,629

 
58,072

 
158,776

 
154,779

Advanced Technologies
 
 
792

 
796

 
737

 
2,295

 
2,377

Unallocated Expenses
 
 
1,035

 
1,088

 
1,034

 
3,603

 
3,324

Total Depreciation and Amortization
 
 
$
50,703

 
$
53,513

 
$
59,843

 
$
164,674

 
$
160,480

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





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 and Diluted Earnings 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 as measures of operational performance. We have also included disclosures of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), EBITDA Margin, 2018 Adjusted EBITDA Estimates and Free Cash Flow, as well as the following by segment: Adjusted Operating Income and Margin, EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin. We define EBITDA Margin as EBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margin 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 Margin, Adjusted EBITDA and Adjusted EBITDA Margin, 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 Margin 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 Margin and Free Cash Flow (and the Adjusted amounts thereof) may not be comparable to similarly titled measures other companies report. Non-GAAP financial measures should be viewed in addition to and not as substitutes for our reported operating results, cash flows or any other measure prepared and reported in accordance with GAAP. The tables that follow provide reconciliations of the non-GAAP measures used in this press release to the most directly comparable GAAP measures.




RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
 
 
 
 
Sep 30, 2018
Sep 30, 2017
Jun 30, 2018
 
 
 
 
 
Net Income
 
Diluted EPS
 
Net Income
 
Diluted EPS
 
Net Income
 
Diluted EPS
 
 
 
 
 
(in thousands, except per share amounts)
 
 
 
 
 
 
 
Net Income (Loss) and Diluted EPS as reported in accordance with GAAP
 
$
(65,979
)
 
$
(0.67
)
 
$
(1,768
)
 
$
(0.02
)
 
$
(33,076
)
 
$
(0.34
)
Pre-tax adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge related to prior year non-income related taxes
 

 
 
 
1,500

 
 
 

 
 
 
Property & equipment write-offs
 

 
 
 

 
 
 
4,233

 
 
 
Intangible asset write-offs
 

 
 
 

 
 
 
3,458

 
 
 
Gain on sale of investment
 
(9,293
)
 
 
 

 
 
 

 
 
 
Foreign currency losses
 
3,745

 
 
 
1,273

 
 
 
3,418

 
 
Total pre-tax adjustments
 
(5,548
)
 
 
 
2,773

 
 
 
11,109

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods
 
1,165

 
 
 
(971
)
 
 
 
(2,173
)
 
 
Discrete tax adjustments:
 

 
 
 
 
 
 
 
 
 
 
 
Uncertain tax positions
 
3,571

 
 
 
1,419

 
 
 
1,358

 
 
 
Tax reform
 
7,932

 
 
 

 
 
 

 
 
 
Valuation allowances
 
39,136

 
 
 

 
 
 

 
 
 
Other
 
5,853

 
 
 
994

 
 
 
(178
)
 
 
Total discrete tax adjustments
 
56,492

 
 
 
2,413

 
 
 
1,180

 
 
Difference in tax provision on income before taxes in accordance with GAAP (1)
 

 
 
 
763

 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total of adjustments
 
52,109

 
 
 
4,978

 
 
 
10,116

 
 
Adjusted Net Income (Loss) and Adjusted Diluted EPS
 
$
(13,870
)
 
$
(0.14
)
 
$
3,210

 
$
0.03

 
$
(22,960
)
 
$
(0.23
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding utilized for Adjusted Diluted EPS
 
 
 
98,533

 
 
 
98,797

 
 
 
98,531

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended
 
 
Sep 30, 2018
Sep 30, 2017
 
 
Net Income
 
Diluted EPS
 
Net Income
 
Diluted EPS
 
 
(in thousands, except per share amounts)
 
 
 
 
 
 
 
Net Income (Loss) and Diluted EPS as reported in accordance with GAAP
 
$
(148,188
)
 
$
(1.50
)
 
$
(7,170
)
 
$
(0.07
)
Pre-tax adjustments for the effects of:
 
 
 
 
 
 
 
 
 
Charge related to prior year non-income related taxes
 

 
 
 
1,500

 
 
 
Property & equipment write-offs
 
4,233

 
 
 

 
 
 
Intangible asset write-offs
 
3,458

 
 
 

 
 
 
Gain on sale of investment
 
(9,293
)
 
 
 

 
 
 
Foreign currency losses
 
15,478

 
 
 
3,406

 
 
Total pre-tax adjustments
 
 
 
 
 
13,876

 
 
 
4,906

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods
 
(2,754
)
 
 
 
(1,718
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discrete tax adjustments:
 

 
 
 
 
 
 
 
Share-based compensation
 
1,820

 
 
 
2,900

 
 
 
Uncertain tax positions
 
4,833

 
 
 
195

 
 
 
Tax reform
 
7,932

 
 
 

 
 
 
Valuation allowances
 
39,136

 
 
 

 
 
 
Other
 
6,351

 
 
 
1,424

 
 
Total discrete tax adjustments
 
60,072

 
 
 
4,519

 
 
Difference in tax provision on income before taxes in accordance with GAAP (1)
 

 
 
 
658

 
 
 
Total of adjustments
 
 
 
 
 
71,194

 
 
 
8,365

 
 
Adjusted Net Income (Loss) and Adjusted Diluted EPS
 
$
(76,994
)
 
$
(0.78
)
 
$
1,195

 
$
0.01

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding utilized for Adjusted Diluted EPS
 
 
 
 
 
 
 
98,483

 
 
 
98,735

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
(1)
For consistency in presentation, the difference in tax provision on income before taxes is computed using the U.S. statutory rate of 35% for 2017, in determining Adjusted Net Income (Loss) for the respective periods. This is not calculated for the three months and nine months ended September 30, 2018, and three months ended June 30, 2018 due to changes in U.S. tax law.




RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA and EBITDA Margins
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
 
 
 
 
 
Sep 30, 2018
 
Sep 30, 2017
 
Jun 30, 2018
 
Sep 30, 2018
 
Sep 30, 2017
 
 
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
 
 
$
(65,979
)
 
$
(1,768
)
 
$
(33,076
)
 
$
(148,188
)
 
$
(7,170
)
Depreciation and Amortization
 
 
 
50,703

 
53,513

 
59,843

 
164,674

 
160,480

 
Subtotal
 
 
 
(15,276
)
 
51,745

 
26,767

 
16,486

 
153,310

Interest Expense, net of Interest Income
 
7,240

 
6,653

 
5,852

 
19,871

 
17,138

Amortization included in Interest Expense
 
(332
)
 
(283
)
 
(333
)
 
(1,439
)
 
(849
)
Provision (Benefit) for Income Taxes
 
 
 
61,135

 
3,935

 
3,294

 
70,317

 
4,104

 
EBITDA
 
 
 
$
52,767

 
$
62,050

 
$
35,580

 
$
105,235

 
$
173,703

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
$
519,300

 
$
476,120

 
$
478,674

 
$
1,414,387

 
$
1,437,332

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EBITDA Margin %
 
 
 
10
%
 
13
%
 
7
%
 
7
%
 
12
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2018 Adjusted EBITDA Estimates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Low
 
High
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Loss before income taxes, as adjusted
 
 
 
 
 
 
$
(95,000
)
 
(75,000
)
 
Depreciation and amortization, as adjusted
 
 
 
 
 
 
208,000

 
208,000

 
 
 
Subtotal
 
 
 
 
 
 
113,000

 
133,000

 
Interest expense, net of interest income
 
 
 
 
 
 
27,000

 
27,000

 
 
 
Adjusted EBITDA
 
 
 
 
 
 
$
140,000

 
$
160,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Free Cash Flow
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended
 
 
 
 
 
 
 
 
 
 
Sep 30, 2018
 
Sep 30, 2017
 
 
 
 
 
 
 
 
(in thousands)
 
Net Loss
 
 
 
 
 
 
$
(148,188
)
 
$
(7,170
)
 
Depreciation and amortization
 
 
 
 
 
 
164,674

 
160,480

 
Other increases (decreases) in cash from operating activities
 
 
 
 
 
 
19,170

 
(9,296
)
 
Cash flow provided by operating activities
 
 
 
 
 
 
35,656

 
144,014

 
Purchases of property and equipment
 
 
 
 
 
 
(83,919
)
 
(59,900
)
 
Free Cash Flow
 
 
 
 
 
 
$
(48,263
)
 
$
84,114

 






RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
Adjusted Operating Income (Loss) and Margins by Segment
 
 
 
 
 
For the Three Months Ended September 30, 2018
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unalloc. Expenses
 
Total
 
 
 
 
($ in thousands)
Operating income (loss) as reported in accordance with GAAP
 
$
772

 
$
5,367

 
$
6,088

 
$
2,275

 
$
8,960

 
$
(25,014
)
 
$
(1,552
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted operating income (loss)
 
$
772

 
$
5,367

 
$
6,088

 
$
2,275

 
$
8,960

 
$
(25,014
)
 
$
(1,552
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
105,045

 
$
137,099

 
$
104,972

 
$
62,346

 
$
109,838

 
 
 
$
519,300

Operating income (loss) % as reported in accordance with GAAP
 
1
%
 
4
%
 
6
%
 
4
%
 
8
%
 
 
 
 %
Operating income (loss) % using adjusted amounts
 
1
%
 
4
%
 
6
%
 
4
%
 
8
%
 
 
 
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended September 30, 2017
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unalloc. Expenses
 
Total
 
 
 
 
($ in thousands)
Operating income (loss) as reported in accordance with GAAP
 
$
5,009

 
$
12,383

 
$
6,512

 
$
3,050

 
$
6,602

 
$
(23,025
)
 
$
10,531

Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge related to prior year non-income related taxes
 
1,275

 
225

 

 

 

 

 
1,500

 
 
Total of adjustments
 
1,275

 
225

 

 

 

 

 
1,500

Adjusted operating income (loss)
 
$
6,284

 
$
12,608

 
$
6,512

 
$
3,050

 
$
6,602

 
$
(23,025
)
 
$
12,031

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
104,617

 
$
143,583

 
$
80,116

 
$
61,098

 
$
86,706

 
 
 
$
476,120

Operating income % as reported in accordance with GAAP
 
5
%
 
9
%
 
8
%
 
5
%
 
8
%
 
 
 
2
 %
Operating income % using adjusted amounts
 
6
%
 
9
%
 
8
%
 
5
%
 
8
%
 
 
 
3
 %
 




RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
Adjusted Operating Income (Loss) and Margins by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30, 2018
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unalloc. Expenses
 
Total
 
 
 
 
($ in thousands)
Operating income (loss) as reported in accordance with GAAP
 
$
4,542

 
$
2,295

 
$
(10,358
)
 
$
3,357

 
$
7,886

 
$
(27,359
)
 
$
(19,637
)
Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property & equipment write-offs
 
617

 
1,531

 
2,085

 

 

 

 
4,233

 
Intangible asset write-offs
 

 

 
3,458

 

 

 

 
3,458

 
 
Total of adjustments
 
617

 
1,531

 
5,543

 

 

 

 
7,691

Adjusted operating income (loss)
 
$
5,159

 
$
3,826

 
$
(4,815
)
 
$
3,357

 
$
7,886

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

 
$
121,704

 
$
78,036

 
$
67,422

 
$
104,086

 
 
 
$
478,674

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





RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
 
 
 
Adjusted Operating Income (Loss) and Margins by Segment
 
 
 
 
 
For the Nine Months Ended September 30, 2018
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unalloc. Expenses
 
Total
 
 
 
 
($ in thousands)
Operating income (loss) as reported in accordance with GAAP
 
$
2,916

 
$
9,417

 
$
(6,629
)
 
$
7,311

 
$
18,514

 
$
(79,867
)
 
$
(48,338
)
Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property & equipment write-offs
 
617

 
1,531

 
2,085

 

 

 

 
4,233

 
Intangible asset write-offs
 

 

 
3,458

 

 

 

 
3,458

 
 
Total of adjustments
 
617

 
1,531

 
5,543

 

 

 

 
7,691

Adjusted operating income (loss)
 
$
3,533

 
$
10,948

 
$
(1,086
)
 
$
7,311

 
$
18,514

 
$
(79,867
)
 
$
(40,647
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
298,065

 
$
385,491

 
$239,868
 
$
191,056

 
$
299,907

 
 
 
$1,414,387
Operating income (loss) % as reported in accordance with GAAP
 
1
%
 
2
%
 
(3
)%
 
4
%
 
6
%
 
 
 
(3
)%
Operating income (loss)% using adjusted amounts
 
1
%
 
3
%
 
 %
 
4
%
 
6
%
 
 
 
(3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended September 30, 2017
 
 
 
 
Remotely Operated Vehicles
 
Subsea Products
 
Subsea Projects
 
Asset Integrity
 
Advanced Tech.
 
Unalloc. Expenses
 
Total
 
 
 
 
($ in thousands)
Operating income as reported in accordance with GAAP
 
$
21,310

 
$
34,418

 
$
9,699

 
$
9,072

 
$
19,260

 
$
(73,988
)
 
$
19,771

Adjustments for the effects of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge related to prior year non-income related taxes
 
1,275

 
225

 

 

 

 

 
1,500

 
 
Total of adjustments
 
1,275

 
225

 

 

 

 

 
1,500

Adjusted operating income (loss)
 
$