Oceaneering International(OII) - 2022 Q1 - Quarterly Report

Part I - Financial Information Financial Statements 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 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 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 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 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] - 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] - 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] - 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][110] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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] - 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] Results of Operations by Segment 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][128] - 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] - Offshore Projects Group (OPG) operating results were significantly lower due to cost overruns on a project and schedule changes affecting vessel utilization[131] Liquidity and Capital Resources 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] - 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][149] - In April 2022, the company replaced its prior credit facility with a new $215 million senior secured revolving credit facility maturing in 2026[145] - Projected organic capital expenditures for the full year 2022 are estimated to be in the range of $70 million to $90 million[151] Quantitative and Qualitative Disclosures About Market Risk 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] - 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] - To mitigate currency risk in Angola, the company holds $6.2 million in U.S. dollar-equivalent Angolan central bank bonds[165] Controls and Procedures 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] - 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] Part II - Other Information Legal Proceedings 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][171] - 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] Exhibits 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] 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][176]