Oceaneering International(OII) - 2021 Q4 - Annual Report

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]