Financial Data and Key Metrics Changes - The company increased its cash position by $141 million during Q4 2022, ending the year with a cash balance of $569 million [1][24] - Consolidated revenue for Q4 2022 was $536 million, a 4% decrease from Q3 2022, while consolidated adjusted EBITDA was $70 million, slightly above the midpoint of guidance [45][46] - For the full year 2022, consolidated revenue increased by 11% to $2.1 billion, with adjusted operating income of $111 million and adjusted EBITDA of $233 million, reflecting significant gains in SSR and OPG segments [22][23] Business Segment Data and Key Metrics Changes - SSR segment operating income improved sequentially despite lower revenue, with an EBITDA margin of 35% in Q4 2022, up from 31% in Q3 2022 [5][6] - Manufactured Products revenue increased by 7% to $100 million in Q4 2022, with an operating income margin of 6% [9] - OPG segment experienced a 20% revenue decline in Q4 2022, resulting in a decrease in operating income margin from 13% to 9% [11] - IMDS segment saw a sequential improvement in operating income margin from 5% to 9% despite a 5% decrease in revenue [12] Market Data and Key Metrics Changes - The average ROV revenue per day on hire increased by 6% to $8,967 in Q4 2022, while ROV days on hire decreased by 7% [7][6] - The company maintained a fleet count of 250 ROV systems, with 59% of floating rigs under contract [8] - The backlog for manufactured products grew from $365 million to $467 million from Q3 to Q4 2022, with a book-to-bill ratio of 1.39 for the full year [10] Company Strategy and Development Direction - The company aims to leverage its core robotics expertise across various markets, including traditional and renewable energy, aerospace and defense, and mobility solutions [49][50] - The focus for 2023 includes generating positive free cash flow and ensuring liquidity for upcoming debt maturities while pursuing strategic growth [71] - The company anticipates a 10% revenue growth in 2023 across all operating segments, driven by increased demand and improved pricing [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023, citing strong market signals and expected increases in offshore activity and capital spending [35][38] - The company expects to generate $260 million to $310 million in EBITDA for 2023, representing a 23% increase over 2022 adjusted EBITDA [52] - Management highlighted the importance of energy security and the growing demand for various energy sources as key drivers for future growth [48][38] Other Important Information - The company achieved a record low total recordable incident rate of 0.28 for the year, emphasizing its commitment to safety [28] - Sustainability initiatives are a core focus, with progress made on environmental, social, and governance (ESG) efforts [31][34] Q&A Session Summary Question: ROV dynamics and pricing - Management acknowledged pushback on pricing but noted isolated incidents of achieving 2014 pricing levels for ROVs, indicating potential for higher rates as the fleet is repriced [81] Question: Manufactured Products margins - Management indicated that pricing remains a major opportunity for margin improvement, with expectations for better margins in 2024 and 2025 due to a mix shift in products [82][84] Question: Free cash flow generation and capital deployment - Management provided guidance for free cash flow in the range of $75 million to $125 million for 2023, targeting over $100 million, and emphasized investment in high-growth markets [86][88] Question: ROV fleet count and expansion - Management stated a disciplined approach to fleet expansion, considering a utilization threshold of 70% to 75% before adding new assets [99] Question: Book-to-bill ratio and project timing - Management indicated expectations for the book-to-bill ratio to exceed 1.0, with typical timing for project awards occurring three to four months after FID [104][105]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-10945 ____________________________________________ OCEANEERING INTERNATIONAL, INC. (Exact name of registrant as specified in its charter ...

Financial Data and Key Metrics Changes - Oceaneering reported its third quarter 2022 results, with a focus on future financial performance and business strategy [4][5] - The company provided initial thoughts on its 2023 outlook during the call [7] Business Line Data and Key Metrics Changes - Specific details regarding changes in various business lines were not provided in the available content Market Data and Key Metrics Changes - Information on market data and key metrics changes was not included in the available content Company Strategy and Development Direction and Industry Competition - Oceaneering is initiating discussions about its 2023 outlook, indicating a proactive approach to future planning [7] Management's Comments on Operating Environment and Future Prospects - Management emphasized the importance of forward-looking statements regarding financial performance and industry conditions [4] Other Important Information - The call included a reminder about the use of non-GAAP financial measures, with additional details available in the press release [5] Q&A Session All Questions and Answers - No specific questions and answers from the Q&A session were provided in the available content

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%20Financial%20Information) This section presents the unaudited consolidated financial information, including financial statements, management's discussion, market risk, and controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Oceaneering International, Inc. and its subsidiaries for the periods ended June 30, 2022, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and equity, along with detailed notes on accounting policies, revenue, debt, and segment information [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity as of June 30, 2022, and December 31, 2021 | (in thousands) | Jun 30, 2022 | Dec 31, 2021 | | :----------------------- | :----------- | :----------- | | **ASSETS** | | | | Cash and cash equivalents | $368,412 | $538,114 | | Accounts receivable, net | 344,533 | 262,960 | | Contract assets, net | 188,672 | 164,847 | | Inventory, net | 169,245 | 153,682 | | Total Current Assets | 1,147,764 | 1,188,003 | | Net property and equipment | 455,304 | 489,596 | | Total Assets | $1,872,423 | $1,962,859 | | **LIABILITIES AND EQUITY** | | | | Accounts payable | $129,594 | $122,327 | | Accrued liabilities | 286,582 | 290,659 | | Contract liabilities | 56,563 | 88,175 | | Total current liabilities | 472,739 | 501,161 | | Long-term debt | 701,539 | 702,067 | | Total equity | 476,728 | 511,024 | | Total Liabilities and Equity | $1,872,423 | $1,962,859 | - Total Assets decreased from **$1,962,859 thousand** at December 31, 2021, to **$1,872,423 thousand** at June 30, 2022[9](index=9&type=chunk) - Cash and cash equivalents decreased significantly from **$538,114 thousand** to **$368,412 thousand**[9](index=9&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income (loss) for the three and six months ended June 30, 2022 and 2021 | (in thousands, except per share data) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $524,031 | $498,199 | $970,190 | $935,752 | | Gross margin | 76,041 | 68,397 | 121,521 | 125,054 | | Income (loss) from operations | 22,850 | 22,819 | 21,811 | 36,602 | | Net Income (Loss) | $3,720 | $6,241 | $(15,490) | $(3,124) | | Basic Earnings (loss) per share | $0.04 | $0.06 | $(0.15) | $(0.03) | | Diluted Earnings (loss) per share | $0.04 | $0.06 | $(0.15) | $(0.03) | - Revenue for the three months ended June 30, 2022, increased to **$524,031 thousand** from **$498,199 thousand** in the prior year period[11](index=11&type=chunk) - Net Income (Loss) for the three months ended June 30, 2022, decreased to **$3,720 thousand** from **$6,241 thousand** in the prior year period[11](index=11&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section presents the company's net income (loss) adjusted for other comprehensive income (loss) items, such as foreign currency translation adjustments | (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $3,720 | $6,241 | $(15,490) | $(3,124) | | Foreign currency translation adjustments | (31,026) | 6,468 | (21,155) | 3,612 | | Total other comprehensive income (loss) | (31,667) | 6,099 | (21,796) | 4,297 | | Comprehensive income (loss) | $(27,947) | $12,340 | $(37,286) | $1,173 | - Comprehensive income (loss) for the three months ended June 30, 2022, was **$(27,947) thousand**, a significant decrease from **$12,340 thousand** in the prior year, primarily due to negative foreign currency translation adjustments[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2022 and 2021 | (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--------------- | :----------------------------- | :----------------------------- | | Net Cash Provided by (Used in) Operating Activities | $(124,482) | $48,823 | | Net Cash Provided by (Used in) Investing Activities | $(35,095) | $(12,157) | | Net Cash Provided by (Used in) Financing Activities | $(2,062) | $(32,284) | | Net Increase (Decrease) in Cash and Cash Equivalents | $(169,702) | $4,071 | | Cash and Cash Equivalents—End of Period | $368,412 | $456,087 | - Net cash used in operating activities was **$(124,482) thousand** for the six months ended June 30, 2022, a significant decrease from **$48,823 thousand** provided in the prior year period[16](index=16&type=chunk) - Cash and cash equivalents at the end of the period decreased to **$368,412 thousand** from **$456,087 thousand** year-over-year[16](index=16&type=chunk) [Consolidated Statements of Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Equity) This section details changes in the company's equity components, including common stock, retained earnings, and accumulated other comprehensive income (loss) | (in thousands) | Balance, Dec 31, 2021 | Balance, Mar 31, 2022 | Balance, Jun 30, 2022 | | :--------------- | :-------------------- | :-------------------- | :-------------------- | | Common Stock | $27,709 | $27,709 | $27,709 | | Additional Paid-in Capital | $173,608 | $148,060 | $150,539 | | Treasury Stock | $(631,811) | $(605,893) | $(605,752) | | Retained Earnings | $1,301,913 | $1,282,703 | $1,286,423 | | Accumulated Other Comprehensive Income (Loss) | $(366,458) | $(356,587) | $(388,254) | | Oceaneering Shareholders' Equity | $504,961 | $495,992 | $470,665 | | Total Equity | $511,024 | $502,055 | $476,728 | - Total equity decreased from **$511,024 thousand** at December 31, 2021, to **$476,728 thousand** at June 30, 2022[19](index=19&type=chunk) - Accumulated other comprehensive loss increased from **$(366,458) thousand** to **$(388,254) thousand**, reflecting negative other comprehensive income (loss) during the period[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies, revenue, debt, and segment information [1. Summary of Major Accounting Policies](index=8&type=section&id=1.%20SUMMARY%20OF%20MAJOR%20ACCOUNTING%20POLICIES) This section outlines the key accounting principles and methods used in preparing the consolidated financial statements, including basis of presentation, consolidation principles, use of estimates, cash and cash equivalents, allowances for credit loss, inventory valuation, property and equipment depreciation, goodwill impairment, foreign currency translation, revenue recognition, and lease accounting - The financial statements are prepared in accordance with U.S. GAAP and reflect all necessary adjustments for fair presentation, to be read in conjunction with the annual 10-K report[22](index=22&type=chunk) - The company uses the loss-rate method for credit loss allowances, considering historical losses and economic forecasts, and determined COVID-19 and Russia-Ukraine conflict impacts on credit loss expense to be de minimis[26](index=26&type=chunk)[28](index=28&type=chunk) - Revenue is recognized over time for service contracts (dayrate, time & material) and fixed-price contracts (percentage-of-completion), and at a point in time for other product sales[41](index=41&type=chunk)[42](index=42&type=chunk)[44](index=44&type=chunk) [2. Accounting Standards Update](index=11&type=section&id=2.%20ACCOUNTING%20STANDARDS%20UPDATE) This section discusses the adoption of ASU No. 2020-04, "Reference Rate Reform (Topic 848)," which provides temporary expedients for the transition from LIBOR to alternative rates like SOFR. The company applied this guidance in connection with its new senior secured revolving credit agreement in April 2022 and does not expect a material impact - The company adopted ASU No. 2020-04 for reference rate reform, applying it to a new SOFR-referenced revolving credit agreement in April 2022[54](index=54&type=chunk) - No material impact on consolidated financial statements is expected from the ASU adoption[54](index=54&type=chunk) [3. Revenue](index=12&type=section&id=3.%20REVENUE) This note provides disaggregated revenue data by business segment, geographical region, and timing of transfer of goods or services. It also details contract balances, performance obligations, and costs to obtain or fulfill contracts Revenue by Business Segment (in thousands) | Revenue by Business Segment (in thousands) | Three Months Ended Jun 30, 2022 | Three Months Ended Jun 30, 2021 | Six Months Ended Jun 30, 2022 | Six Months Ended Jun 30, 2021 | | :----------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Subsea Robotics | $157,123 | $141,371 | $285,112 | $260,490 | | Manufactured Products | 105,456 | 79,127 | 188,148 | 165,952 | | Offshore Projects Group | 116,457 | 107,951 | 213,854 | 197,185 | | Integrity Management & Digital Solutions | 59,438 | 64,070 | 116,008 | 118,118 | | Aerospace and Defense Technologies | 85,557 | 105,680 | 167,068 | 194,007 | | Total Revenue | $524,031 | $498,199 | $970,190 | $935,752 | Revenue by Geographic Operating Areas (in thousands) | Revenue by Geographic Operating Areas (in thousands) | Three Months Ended Jun 30, 2022 | Three Months Ended Jun 30, 2021 | Six Months Ended Jun 30, 2022 | Six Months Ended Jun 30, 2021 | | :--------------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Total Foreign | $270,567 | $270,238 | $520,970 | $507,139 | | United States | 253,464 | 227,961 | 449,220 | 428,613 | | Total Revenue | $524,031 | $498,199 | $970,190 | $935,752 | - As of June 30, 2022, the aggregate amount of transaction price allocated to remaining performance obligations was **$189 million**, with **$170 million** expected to be recognized in the next 12 months[61](index=61&type=chunk) [4. Income Taxes](index=14&type=section&id=4.%20INCOME%20TAXES) This section details the company's income tax provision, influenced by profitability levels and geographical mix of earnings. It also discusses the impact of the CARES Act on U.S. net operating loss refunds and the accrual for worldwide unrecognized tax liabilities - The effective tax rate differs from the U.S. federal statutory rate of **21%** due to geographical mix of revenue and earnings, changes in valuation allowances, and uncertain tax positions[69](index=69&type=chunk) - The company expects to receive approximately **$33 million** in CARES Act tax refunds, with **$10 million** received as of June 30, 2022, and the remainder classified as accounts receivable[70](index=70&type=chunk) - Accrued net total of **$12 million** for worldwide unrecognized tax liabilities as of June 30, 2022, down from **$15 million** at December 31, 2021[72](index=72&type=chunk) [5. Selected Balance Sheet Information](index=15&type=section&id=5.%20SELECTED%20BALANCE%20SHEET%20INFORMATION) This section provides a breakdown of specific balance sheet accounts, including inventory, other current assets, and accrued liabilities, highlighting changes between June 30, 2022, and December 31, 2021 | (in thousands) | Jun 30, 2022 | Dec 31, 2021 | | :--------------- | :----------- | :----------- | | **Inventory:** | | | | ROV parts and components | $73,842 | $72,572 | | Other inventory | 95,403 | 81,110 | | Total Inventory | $169,245 | $153,682 | | **Other current assets:** | | | | Prepaid expenses | $71,128 | $61,984 | | Angolan bonds | 5,774 | 6,416 | | Total Other current assets | $76,902 | $68,400 | | **Accrued liabilities:** | | | | Payroll and related costs | $124,723 | $134,538 | | Accrued job costs | 48,683 | 49,032 | | Income taxes payable | 39,382 | 35,826 | | Total Accrued liabilities | $286,582 | $290,659 | - Total inventory increased to **$169,245 thousand** at June 30, 2022, from **$153,682 thousand** at December 31, 2021[75](index=75&type=chunk) - Accrued liabilities decreased slightly to **$286,582 thousand** at June 30, 2022, from **$290,659 thousand** at December 31, 2021, primarily due to a decrease in payroll and related costs[75](index=75&type=chunk) [6. Debt](index=15&type=section&id=6.%20DEBT) This section details the company's long-term debt, including Senior Notes due 2024 and 2028, and the new senior secured revolving credit agreement entered into in April 2022. It also covers debt repurchases, interest rate swaps, and compliance with financial covenants | (in thousands) | Jun 30, 2022 | Dec 31, 2021 | | :--------------- | :----------- | :----------- | | 4.650% Senior Notes due 2024 | $400,000 | $400,000 | | 6.000% Senior Notes due 2028 | 300,000 | 300,000 | | Long-term debt | $701,539 | $702,067 | - The company entered into a new **$215 million** senior secured revolving credit agreement in April 2022, replacing the prior facility, with no outstanding borrowings as of June 30, 2022[81](index=81&type=chunk)[82](index=82&type=chunk) - The company was in compliance with all financial covenants of the Revolving Credit Agreement as of June 30, 2022[83](index=83&type=chunk) [7. Commitments and Contingencies](index=16&type=section&id=7.%20COMMITMENTS%20AND%20CONTINGENCIES) This section addresses potential liabilities from litigation, financial instruments, and risk concentration, particularly related to foreign exchange rates and Angolan kwanza balances. It also discusses the fair value of Senior Notes and Angolan bonds - The company is involved in various litigation and claims but believes the ultimate liability will not have a material adverse effect on its financial condition[87](index=87&type=chunk) - Foreign currency transaction gains related to the Angolan kwanza were **$1.2 million** for the three months ended June 30, 2022, compared to a loss of **$(0.5) million** in the prior year period[91](index=91&type=chunk) - As of June 30, 2022, the company held **$3.5 million** in kwanza cash balances and **$6.2 million** in U.S. dollar equivalent Angolan bonds to mitigate currency exposure[92](index=92&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) [8. Earnings (Loss) Per Share, Share-Based Compensation and Share Repurchase Plan](index=18&type=section&id=8.%20EARNINGS%20%28LOSS%29%20PER%20SHARE%2C%20SHARE-BASED%20COMPENSATION%20AND%20SHARE%20REPURCHASE%20PLAN) This section provides details on earnings per share calculations, share-based compensation for executives and directors, and the company's share repurchase plan, including outstanding restricted stock units and unrecognized compensation costs - Basic and diluted earnings (loss) per share are the same in periods of net loss due to the anti-dilutive effect of restricted stock units[95](index=95&type=chunk) - As of June 30, 2022, **2,602,915 shares** of restricted stock and restricted stock units were outstanding, with **$17 million** in unrecognized share-based compensation cost[98](index=98&type=chunk)[99](index=99&type=chunk) - The company has a share repurchase program approved in 2014 for up to **10 million shares**, but no shares have been repurchased under this plan since 2015[100](index=100&type=chunk)[152](index=152&type=chunk) [9. Business Segment Information](index=18&type=section&id=9.%20BUSINESS%20SEGMENT%20INFORMATION) This section describes the company's business segments: Energy Services and Products (Subsea Robotics, Manufactured Products, Offshore Projects Group, Integrity Management & Digital Solutions) and Aerospace and Defense Technologies. It provides detailed financial performance data for each segment, including revenue, operating income (loss), and depreciation and amortization - The company operates in two main businesses: Energy Services and Products (offshore energy, renewables) and Aerospace and Defense Technologies (defense, space exploration)[101](index=101&type=chunk)[103](index=103&type=chunk) Segment Revenue (in thousands) | Segment Revenue (in thousands) | Three Months Ended Jun 30, 2022 | Three Months Ended Jun 30, 2021 | Six Months Ended Jun 30, 2022 | Six Months Ended Jun 30, 2021 | | :----------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Subsea Robotics | $157,123 | $141,371 | $285,112 | $260,490 | | Manufactured Products | 105,456 | 79,127 | 188,148 | 165,952 | | Offshore Projects Group | 116,457 | 107,951 | 213,854 | 197,185 | | IMDS | 59,438 | 64,070 | 116,008 | 118,118 | | ADTech | 85,557 | 105,680 | 167,068 | 194,007 | | Total | $524,031 | $498,199 | $970,190 | $935,752 | Segment Operating Income (Loss) (in thousands) | Segment Operating Income (Loss) (in thousands) | Three Months Ended Jun 30, 2022 | Three Months Ended Jun 30, 2021 | Six Months Ended Jun 30, 2022 | Six Months Ended Jun 30, 2021 | | :--------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Subsea Robotics | $25,938 | $21,710 | $37,490 | $36,329 | | Manufactured Products | (1,365) | 790 | 1,278 | 3,543 | | Offshore Projects Group | 17,535 | 7,996 | 18,201 | 16,809 | | IMDS | 3,436 | 4,721 | 6,944 | 7,195 | | ADTech | 8,961 | 19,340 | 20,805 | 36,179 | | Unallocated Expenses | (31,655) | (31,738) | (62,907) | (63,453) | | Total | $22,850 | $22,819 | $21,811 | $36,602 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook. It covers consolidated results, segment-specific performance, liquidity, capital resources, and critical accounting policies, highlighting the impact of seasonal demand and operational challenges [Overview of our Results](index=22&type=section&id=Overview%20of%20our%20Results) The company's second quarter 2022 results showed significant improvement over the first quarter, driven by a resurgence in seasonal offshore demand for Subsea Robotics and OPG, despite challenges in hiring offshore personnel and negative impacts on ADTech's revenue mix - Diluted earnings per share for Q2 2022 was **$0.04**, up from **$(0.19)** in Q1 2022, but down from **$0.06** in Q2 2021[113](index=113&type=chunk) - Subsea Robotics and OPG segments achieved some of their highest revenue and operating income levels since early 2018 due to increased offshore activity[114](index=114&type=chunk) - Cash used in operating activities was **$124 million** in H1 2022, primarily due to increased accounts receivable and higher operating costs in anticipation of future activity[116](index=116&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes consolidated revenue and profitability, detailing performance across Energy Services and Products segments (Subsea Robotics, Manufactured Products, Offshore Projects Group, Integrity Management & Digital Solutions) and Aerospace and Defense Technologies, along with unallocated expenses and other financial items | (dollars in thousands) | Three Months Ended Jun 30, 2022 | Three Months Ended Jun 30, 2021 | Six Months Ended Jun 30, 2022 | Six Months Ended Jun 30, 2021 | | :--------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Revenue | $524,031 | $498,199 | $970,190 | $935,752 | | Gross Margin | 76,041 | 68,397 | 121,521 | 125,054 | | Gross Margin % | 15 % | 14 % | 13 % | 13 % | | Operating Income (Loss) | 22,850 | 22,819 | 21,811 | 36,602 | | Operating Income (Loss) % | 4 % | 5 % | 2 % | 4 % | - Subsea Robotics revenue increased to **$157,123 thousand** in Q2 2022 from **$141,371 thousand** in Q2 2021, with ROV utilization at **64%** (Q2 2022) vs **62%** (Q2 2021)[124](index=124&type=chunk) - Manufactured Products backlog was **$335 million** as of June 30, 2022, up from **$315 million** in the prior year, with a trailing 12-month book-to-bill ratio of **1.25**[124](index=124&type=chunk)[128](index=128&type=chunk) - ADTech operating income for the six months ended June 30, 2022, decreased to **$20,805 thousand** from **$36,179 thousand** in the prior year, due to decreased activity in defense subsea technologies and space systems[132](index=132&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations and fund growth, detailing working capital, available credit, cash flow activities (operating, investing, financing), and capital expenditure plans. It also addresses off-balance sheet arrangements and critical accounting policies - As of June 30, 2022, the company had **$675 million** in working capital, including **$368 million** in cash and cash equivalents, and **$215 million** available under its Revolving Credit Agreement[141](index=141&type=chunk) | (in thousands) | Six Months Ended Jun 30, 2022 | Six Months Ended Jun 30, 2021 | | :--------------- | :---------------------------- | :---------------------------- | | Net Cash Provided by (Used in) Operating Activities | $(124,482) | $48,823 | | Net Cash Used in Investing Activities | $(35,095) | $(12,157) | | Net Cash Used in Financing Activities | $(2,062) | $(32,284) | - Organic capital expenditures for 2022 are projected to be **$70 million to $80 million**, including **$30 million to $35 million** for growth[145](index=145&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily from interest rate changes and foreign exchange rate fluctuations, particularly concerning the Angolan kwanza. It outlines strategies for managing these risks and their impact on financial results - The company is exposed to market risks from interest rate changes and foreign exchange rate fluctuations, with significant exposure in Angola[155](index=155&type=chunk) - Foreign currency translation adjustments resulted in a net negative impact of **$(31) million** on equity for the three months ended June 30, 2022, due to a strengthening U.S. dollar[156](index=156&type=chunk) - Foreign currency transaction gains related to the Angolan kwanza were **$1.2 million** for the three months ended June 30, 2022, compared to a loss of **$(0.5) million** in the prior year period[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2022, based on an evaluation by management, including the principal executive and financial officers. It also states that there have been no material changes to internal control over financial reporting - Disclosure controls and procedures were effective as of June 30, 2022, providing reasonable assurance for timely and accurate reporting[161](index=161&type=chunk) - No material changes to internal control over financial reporting occurred during the three months ended June 30, 2022[162](index=162&type=chunk) [PART II – OTHER INFORMATION](index=33&type=section&id=Part%20II%20Other%20Information) This section includes information on legal proceedings, exhibits filed with the report, and the required signatures of the company's officers [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the discussion of legal proceedings from Note 7—"Commitments and Contingencies" in the Notes to Consolidated Financial Statements, which addresses various litigation and claims the company is involved in during the ordinary course of business - Information regarding legal proceedings is incorporated by reference from Note 7—"Commitments and Contingencies"[165](index=165&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Form 10-Q, including corporate organizational documents, credit agreements, and certifications by executive officers, along with XBRL taxonomy documents - The exhibit list includes the Restated Certificate of Incorporation, Amended and Restated Bylaws, and the Credit Agreement dated April 8, 2022[166](index=166&type=chunk) - Certifications by the principal executive and financial officers (Rule 13a-14(a)/15d-14(a) and Section 1350) are included[166](index=166&type=chunk) [Signatures](index=34&type=section&id=Signatures) This section contains the signatures of the company's authorized officers, including the President and Chief Executive Officer, Senior Vice President and Chief Financial Officer, and Vice President and Chief Accounting Officer, certifying the filing of the report - The report is signed by Roderick A. Larson (President and CEO), Alan R. Curtis (SVP and CFO), and Witland J. LeBlanc, Jr. (VP and Chief Accounting Officer) on July 29, 2022[168](index=168&type=chunk)

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $53.5 million for Q2 2022, reflecting a significant increase compared to Q1 2022, with a sequential revenue growth of 17% [13][16] - Cash balance declined by $70 million to $368 million, primarily due to an increase in receivables, but the company expects positive free cash flow generation for 2022, revising guidance to $25 million to $75 million [15][49] - Adjusted EBITDA guidance for the full year 2022 has been updated to a range of $210 million to $240 million [10][50] Business Segment Data and Key Metrics Changes - Subsea Robotics (SSR) segment saw significant revenue and operating income increases, with an EBITDA margin of 28%, up from the previous quarter [18][19] - The Offshore Project Group (OPG) segment also reported significant revenue and operating income growth, with operating income margin increasing from 1% in Q1 to 15% in Q2 2022 [24][25] - The Aerospace and Defense Technologies (ADTech) segment experienced a decline in operating income margin from 15% in Q1 to 10% in Q2, despite a 5% increase in revenue [27] Market Data and Key Metrics Changes - The company noted strong market dynamics supporting robust activity in offshore markets, particularly in the Gulf of Mexico, with expectations for high seasonal IMR and installation activity [30][41] - ROV days on hire increased to 14,631 in Q2 from 11,842 in Q1, with fleet utilization rising to 64% from 53% [20][21] - The company maintained a 58% market share for ROV contracts on floating rigs, an improvement from 55% in the previous quarter [22] Company Strategy and Development Direction - The company is focused on energy transition and transforming its businesses to thrive in evolving market conditions, with expectations for increased activity levels over the next several years [51] - The company aims to retain and attract top talent, ensure appropriate pricing, and deliver value-added solutions with high quality and safety [52] - The company is reducing its estimates for 2022 organic capital expenditures to align with free cash flow expectations, indicating a focus on financial prudence [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the returning offshore industry, emphasizing the importance of energy security and dependable energy sources [11][50] - The company anticipates a significant increase in revenue and operating results for OPG, with operating margins expected to remain in the mid-teens range [30][41] - Management acknowledged inflationary pressures on direct costs but is working to mitigate margin deterioration through cost improvements and contractual price increases [43] Other Important Information - The company entered into a new revolving credit facility in Q2 2022, providing substantial liquidity through April 2026 [48] - The anticipated entertainment-related product sale is now projected to conclude in the second half of 2022, potentially impacting Q4 results positively [39] Q&A Session Summary Question: Subsea Robotics margin guidance and pricing opportunities - Management clarified that the margin guidance for SSR remains in the high 20% range, with pricing adjustments being more immediate in OPG compared to ROV, which is tied to longer contracts [56][57] Question: Fourth quarter EBITDA expectations - Management explained that improvements in ADTech projects and a longer season in OPG contribute to the stronger Q4 expectations, alongside anticipated ROV pricing improvements [59][60] Question: Concerns regarding receivables and potential write-downs - Management indicated that the issues with receivables are more about timing and processing rather than credit risk, assuring that customers have the cash to pay [66][69]

Financial Data and Key Metrics Changes - For Q1 2022, the company reported a net loss of $19.2 million or $0.19 per share on revenue of $446 million, with an adjusted net loss of $6.4 million or $0.06 per share [8][9] - Consolidated adjusted EBITDA for Q1 2022 was $31.5 million, a significant decrease from the prior quarter [10] - The company maintained its original EBITDA guidance of $225 million to $275 million for the full year of 2022 [6][31] Business Segment Data and Key Metrics Changes - Subsea Robotics (SSR) operating income was significantly lower with a modest decrease in revenue, resulting in an EBITDA margin of 24% for Q1 2022 [11] - Manufactured Products segment saw a 20% decrease in revenue, with operating income margin declining to 3% from 9% in the previous quarter [14] - Offshore Projects Group (OPG) operating income margin declined to 1% in Q1 2022 from 8% in the previous quarter due to cost overruns [15] - Aerospace and Defense Technologies (AdTech) operating income margin improved to 15% from 13% in the previous quarter despite slightly lower revenue [16] Market Data and Key Metrics Changes - ROV days on hire were 11,842 in Q1 2022, down from 12,747 in Q4 2021, with fleet utilization at 53%, slightly down from 55% [12][13] - The book-to-bill ratio was 1.2 for the trailing 12 months, compared to 1.1 for the year ended December 31, 2021 [15] Company Strategy and Development Direction - The company is focused on increasing activity levels and pricing improvements, with expectations for a robust ramp-up in activity throughout 2022 [6][31] - There is a continued emphasis on expanding into new geographies and adding new customers, particularly in the IMBS segment [26] - The company is pursuing opportunities in energy transition and non-energy markets to support sustainable growth [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the macro drivers supporting increased activity and pricing improvements, with expectations for significant improvement in Q2 2022 [6][18] - The company anticipates higher revenue and operating results across various segments, particularly in SSR and OPG, due to seasonal activity increases [20][21] - Management acknowledged challenges such as inflation, hiring, and supply chain issues but emphasized effective management of these challenges [32] Other Important Information - The company reported a cash reduction of $100 million in Q1 2022, ending the quarter with $438 million in cash and cash equivalents [17][29] - The company replaced its credit facility with a new $215 million senior secured revolving credit facility, enhancing financial flexibility [29] Q&A Session Summary - No questions were raised during the Q&A session, and the call concluded without further inquiries [34][35]

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Oceaneering International, Inc. as of March 31, 2022, and for the three-month period then ended [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows a slight decrease in total assets to **$1.90 billion** as of March 31, 2022, from **$1.96 billion** at year-end 2021, driven by a reduction in cash and cash equivalents, with total equity also decreasing marginally from **$511.0 million** to **$502.1 million** Consolidated Balance Sheet Data (in thousands) | (in thousands) | Mar 31, 2022 (unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $1,142,721 | $1,188,003 | | **Total Assets** | **$1,901,997** | **$1,962,859** | | **Total Current Liabilities** | $465,435 | $501,161 | | **Long-term debt** | $701,808 | $702,067 | | **Total Liabilities** | $1,399,942 | $1,451,835 | | **Total Equity** | **$502,055** | **$511,024** | | **Total Liabilities and Equity** | **$1,901,997** | **$1,962,859** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2022, the company reported a net loss of **$19.2 million**, or **($0.19)** per share, on revenue of **$446.2 million**, with gross margin decreasing and an operating loss of **$1.0 million** compared to an operating income in the prior year Consolidated Statements of Operations Data (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | **Revenue** | $446,159 | $437,553 | | **Gross margin** | $45,480 | $56,657 | | **Income (loss) from operations** | $(1,039) | $13,783 | | **Net Income (Loss)** | **$(19,210)** | **$(9,365)** | | **Diluted Earnings (loss) per share** | **$(0.19)** | **$(0.09)** | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows from operating activities resulted in an **$80.5 million** net use in Q1 2022, a significant change from the prior year, primarily due to working capital changes, leading to a **$100.1 million** decrease in cash and cash equivalents Consolidated Statements of Cash Flows Data (in thousands) | (in thousands) | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | **Net Cash Provided by (Used in) Operating Activities** | $(80,501) | $(1,723) | | **Net Cash Provided by (Used in) Investing Activities** | $(19,283) | $(5,007) | | **Net Cash Provided by (Used in) Financing Activities** | $(2,202) | $(1,806) | | **Net Increase (Decrease) in Cash and Cash Equivalents** | $(100,095) | $(9,273) | | **Cash and Cash Equivalents—End of Period** | $438,019 | $442,743 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on revenue recognition, segment performance, debt structure, commitments, and a significant subsequent event regarding a new credit facility, essential for understanding the company's financial health - Total revenue for Q1 2022 was **$446.2 million**, with Energy Services and Products contributing **$364.6 million** and Aerospace and Defense Technologies contributing **$81.5 million**, and the majority of revenue (**$417.0 million**) is recognized over time[57](index=57&type=chunk) - As of March 31, 2022, the company had total long-term debt of **$701.8 million**, primarily consisting of **$400 million** in 4.650% Senior Notes due 2024 and **$300 million** in 6.000% Senior Notes due 2028[77](index=77&type=chunk) - The Energy Services and Products business generated operating income of **$18.4 million** in Q1 2022, a decrease from **$28.7 million** in Q1 2021, and the Aerospace and Defense Technologies segment's operating income also decreased to **$11.8 million** from **$16.8 million** year-over-year[105](index=105&type=chunk) - Subsequent to the quarter's end, on April 8, 2022, the company entered into a new senior secured revolving credit facility of **$215 million**, maturing in April 2026, which replaced the prior credit facility[109](index=109&type=chunk)[110](index=110&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 financial results, attributing the operating loss to higher preparatory costs for anticipated activity ramp-up, covering segment performance, liquidity, capital expenditure plans, and debt profile [Overview of Results and Guidance](index=23&type=section&id=Overview%20of%20Results%20and%20Guidance) Q1 2022 resulted in a diluted loss per share of **($0.19)**, impacted by higher costs for hiring, training, and equipment mobilization, though all operating segments generated positive income, with a robust ramp-up in activity and pricing expected for the remainder of 2022 - Q1 2022 diluted loss per share was **$(0.19)**, compared to **$(0.09)** in Q1 2021[117](index=117&type=chunk) - Results were negatively impacted by higher costs for hiring, training, and equipment mobilization in preparation for significant expected activity increases for the remainder of 2022[117](index=117&type=chunk) - A robust ramp-up in activity and pricing improvements are expected starting in Q2 2022, with significantly higher activity anticipated in Subsea Robotics and OPG segments[119](index=119&type=chunk) [Results of Operations by Segment](index=24&type=section&id=Results%20of%20Operations%20by%20Segment) Consolidated operating loss was **$1.0 million** in Q1 2022, with Energy Services and Products operating income falling to **$18.4 million** due to lower OPG results and higher preparatory costs, while ADTech segment's operating income also declined Operating Income (Loss) by Segment (in thousands) | Operating Income (Loss) by Segment (in thousands) | Mar 31, 2022 | Mar 31, 2021 | Dec 31, 2021 | | :--- | :--- | :--- | :--- | | Subsea Robotics | $11,552 | $14,619 | $21,012 | | Manufactured Products | $2,643 | $2,753 | $(20,228) | | Offshore Projects Group | $666 | $8,813 | $6,754 | | Integrity Management & Digital Solutions | $3,508 | $2,474 | $6,015 | | **Total Energy Services and Products** | **$18,369** | **$28,659** | **$13,553** | | Aerospace and Defense Technologies | $11,844 | $16,839 | $10,562 | | Unallocated Expenses | $(31,252) | $(31,715) | $(36,687) | | **Total Operating Income (Loss)** | **$(1,039)** | **$13,783** | **$(12,572)** | - Subsea Robotics ROV utilization was stable at **53%** year-over-year, but operating income decreased due to increased costs for hiring, training, and asset preparedness[126](index=126&type=chunk)[128](index=128&type=chunk) - Manufactured Products backlog increased to **$334 million** from **$318 million** at the end of 2021, with a trailing 12-month book-to-bill ratio of **1.2**[131](index=131&type=chunk) - Offshore Projects Group (OPG) operating results were significantly lower due to cost overruns on a project and schedule changes affecting vessel utilization[131](index=131&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains adequate liquidity with **$438 million** in cash and a new **$215 million** revolving credit facility, despite operating activities using **$80.5 million** in cash in Q1 2022, with projected 2022 capital expenditures between **$70 million** and **$90 million** - As of March 31, 2022, the company had working capital of **$677 million**, including **$438 million** in cash and cash equivalents[145](index=145&type=chunk) - Net cash used in operating activities was **$80.5 million**, driven by increases in accounts receivable and inventory, and decreases in current liabilities reflecting timing of payments[148](index=148&type=chunk)[149](index=149&type=chunk) - In April 2022, the company replaced its prior credit facility with a new **$215 million** senior secured revolving credit facility maturing in 2026[145](index=145&type=chunk) - Projected organic capital expenditures for the full year 2022 are estimated to be in the range of **$70 million** to **$90 million**[151](index=151&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate changes and foreign currency fluctuations, primarily related to the Angolan kwanza, which is mitigated by holding U.S. dollar-equivalent Angolan central bank bonds - The company is exposed to market risks from interest rate changes and foreign exchange rates, but does not believe these risks are material, except for its exposure in Angola[161](index=161&type=chunk) - Foreign currency transaction gains in Q1 2022 were **$0.4 million**, primarily related to the Angolan kwanza, which compares to a loss of **$(1.9) million** in Q1 2021[163](index=163&type=chunk) - To mitigate currency risk in Angola, the company holds **$6.2 million** in U.S. dollar-equivalent Angolan central bank bonds[165](index=165&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[167](index=167&type=chunk) - No changes occurred in the company's internal control over financial reporting during the first quarter of 2022 that have materially affected, or are reasonably likely to materially affect, these controls[168](index=168&type=chunk) [Part II - Other Information](index=35&type=section&id=Part%20II%20-%20Other%20Information) [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, with management believing that the ultimate liability will not materially affect its consolidated financial condition, results of operations, or cash flows - The company is, from time to time, involved in litigation or subject to disputes related to its business activities, including performance-related matters and various claims[84](index=84&type=chunk)[171](index=171&type=chunk) - Management believes that the ultimate liability from these actions will not have a material adverse effect on the company's financial condition, results of operations, or cash flows[84](index=84&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with or incorporated by reference into the Form 10-Q report, including corporate governance documents, material contracts, and officer certifications - This section lists the exhibits filed with the report, including the Restated Certificate of Incorporation, Bylaws, various compensation agreements, the new Credit Agreement dated April 8, 2022, and officer certifications[172](index=172&type=chunk) [Signatures](index=36&type=section&id=Signatures) The report is formally concluded with the signatures of the company's authorized officers, affirming the report's contents as per the requirements of the Securities Exchange Act of 1934 - The report was duly signed on April 29, 2022, by Roderick A. Larson (President and CEO), Alan R. Curtis (SVP and CFO), and Witland J. LeBlanc, Jr. (VP and Chief Accounting Officer)[175](index=175&type=chunk)[176](index=176&type=chunk)

Industry Risks - The company is subject to various risks affecting the energy industry, including global demand and prices for oil and natural gas, which can significantly impact financial performance [77] - The offshore oil and gas industry is historically cyclical, significantly affected by oil and gas price volatility, which impacts exploration and development activities [101] - Approximately 57% of the company's consolidated revenue in 2021 was attributable to international operations, exposing it to additional risks [108] - The company faces uncertainty regarding the long-term outlook for the U.S. Gulf of Mexico due to a temporary ban on leasing federal lands [101] - Economic conditions, political instability, and civil unrest in regions such as Africa and Azerbaijan are major concerns that could adversely impact future business operations [111] - The ongoing COVID-19 pandemic and volatility in oil and natural gas markets create uncertainties that could impact cash flows and financial performance [107] Operational Challenges - The company has experienced challenges related to the COVID-19 pandemic, affecting customer responses and operational adjustments [77] - The availability and increased costs of chartered vessels are impacting operational efficiency and financial outcomes [77] - The backlog of contracts is subject to unexpected adjustments and cancellations, which could materially affect future revenue and earnings [112] - The company has modified business practices to enhance safety and productivity in response to COVID-19, but increased absenteeism could harm operations [105] - The company faces potential reductions in backlog due to project cancellations or changes in customer project scopes, which could materially affect future revenue and earnings [112] - The company has implemented new protocols to enhance employee safety and may take further actions as required by government authorities [105] Regulatory and Compliance Issues - The company has established a code of ethics and corporate governance guidelines to ensure compliance and ethical conduct [81] - Climate change regulations may increase operating costs and capital expenditures, potentially reducing demand for the company's services [115] - Environmental laws and regulations may impose significant costs and liabilities, affecting operational compliance and financial condition [125] - The U.S. Government established new regulations in 2010 that could increase operational costs and impact offshore oil and gas exploration projects [122] - The company faces increased regulatory scrutiny and potential penalties due to the complexity of new data privacy regulations [154] - Future legislation could impose additional compliance burdens, affecting operational costs and profitability [155] Financial Performance and Risks - Significant changes in currency exchange rates could adversely affect the company's financial results [77] - Foreign exchange risks may affect profitability, particularly for long-term contracts, due to fluctuations in currency values [127] - Significant inflation and higher interest rates could increase costs of materials and labor, adversely affecting profit margins [129] - The phase-out of LIBOR may lead to higher interest rates on borrowings, increasing the company's cost of capital [130] - A global financial crisis could restrict the company's access to capital markets, adversely affecting growth strategies and future capital expenditures [132] - The company’s financial performance could be negatively impacted by increased compliance costs related to environmental laws and regulations [126] Human Resources and Talent Management - The company emphasizes the importance of attracting and retaining qualified personnel to maintain competitive advantage [77] - The loss of key personnel or inability to attract trained employees could disrupt operations and result in revenue loss [140] - The company has experienced limited absenteeism among employees required to be on-site, but this may increase in the future [105] Technology and Cybersecurity - Cybersecurity risks pose a threat to information technology systems, which are essential for operations and could lead to significant financial impacts if breached [147] - The company is exposed to potential cybersecurity breaches due to increased reliance on remote access to information systems [105] - The company relies on intellectual property law and confidentiality agreements to protect its proprietary information, which is critical for its competitive position [143] - Significant reliance on proprietary technology and trade secrets that are not patent-protected, increasing vulnerability to misappropriation [144] Growth and Strategic Development - The company is focused on integrating acquired businesses, which presents both opportunities and risks [83] - Future acquisitions may require additional financing, which could be unavailable on favorable terms, impacting growth strategy [136] - Development and commercialization of new technologies are critical for future growth, but involve uncertainties and risks related to costs and market acceptance [139] - The company may pursue growth through acquisitions, which involve risks such as the need for additional financing and potential integration challenges [136] Financial Reporting and Internal Controls - The company’s internal controls may not fully achieve stated objectives, leading to potential financial reporting inaccuracies [159] - The use of estimates in financial reporting could result in future adjustments to assets and liabilities, impacting financial results [160] - Internal controls may not achieve all stated goals, leading to potential adjustments in reported financial results [159]

Financial Data and Key Metrics Changes - For the full year 2021, the company achieved adjusted EBITDA of $211 million, exceeding the guidance midpoint by 14% [5][19] - The cash position increased by $86 million to $538 million by the end of 2021, with $126 million of free cash flow generated in Q4 2021 [5][19] - The net debt-to-adjusted EBITDA ratio decreased from 1.9 at the end of 2020 to 0.8 at the end of 2021 [25] Business Segment Data and Key Metrics Changes - Subsea Robotics (SSR) operating income improved sequentially despite lower revenue, with an EBITDA margin of 31% in Q4 2021, up from 29% in Q3 2021 [10][11] - Manufactured Products revenue for Q4 2021 was $103 million, a 37% increase from Q3 2021, with an adjusted operating income margin of 9% [13] - Offshore Projects Group (OPG) revenue declined by 11% in Q4 2021 due to seasonality, but operating income margin remained consistent at 8% [14] - Integrity Management and Digital Solutions (IMDS) saw an increase in operating income margin to 10% in Q4 2021 from 9% in Q3 2021 [15] - Aerospace and Defense Technologies (ADTech) experienced a decline in operating income margin to 13% due to changes in project mix [16] Market Data and Key Metrics Changes - Brent pricing forecasted to reach nearly $90 per barrel in 2022, supporting increased E&P, OpEx, and CapEx spending [29][30] - Rystad forecasts a 55% increase in tree awards in 2022, indicating growing demand in the offshore sector [29] - Offshore wind CapEx and OpEx spending projected to average around $50 billion per year in 2022 and 2023, an 85% increase from previous years [30] Company Strategy and Development Direction - The company aims to generate positive free cash flow of $75 million to $125 million in 2022, with EBITDA projected between $225 million and $275 million [6][33] - Focus on developing technologies for cleaner and safer hydrocarbon production while increasing investments in new markets, including energy transition and digital asset management [33] - The company plans to maintain capital discipline with organic capital expenditures projected between $70 million and $90 million for 2022 [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about market fundamentals driving increased activity across all segments in 2022 [5][6] - The first quarter of 2022 is expected to be significantly lower compared to Q4 2021 due to seasonality and uncertainties regarding U.S. government appropriations [31][40] - Management highlighted the importance of maintaining competitive advantages in ROV services through reverse compatibility and efficient capital use [52] Other Important Information - The company reported a total recordable incident rate (TRIR) of 0.4 for 2021, consistent with record performance in 2020 [24] - Sustainability initiatives include hiring an environmental consulting firm to gather greenhouse gas emissions data and establishing a baseline for future emissions reductions [26][27] Q&A Session Summary Question: How realistic is the guidance given the macro environment? - Management acknowledged potential upside if oil prices remain high, but noted challenges related to equipment availability [50] Question: What is the capital intensity of maintaining competitive dominance in ROV services? - Management emphasized the ability to upgrade existing ROVs at lower costs due to high levels of equipment reuse [52] Question: What is the outlook for shareholder distributions? - Management indicated that decisions on shareholder distributions are currently TBD, focusing on growth opportunities first [62] Question: Will more discrete contract project work be needed for OPG to meet 2022 outlook? - Management stated that both speculative work and discrete opportunities are necessary for robust activity in OPG [65]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-10945 OCEANEERING INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporati ...