oii-20230630

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	June 30, 2023


¨			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)


Delaware		95-2628227
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5875 North Sam Houston Parkway West, Suite 400
Houston,	Texas	77086
(Address of principal executive offices)		(Zip Code)

(713) 329-4500

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed from last report)

____________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.25 per share	OII	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	þ	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes þ No

Number of shares of Common Stock outstanding as of July 21, 2023: 100,779,554

Oceaneering International, Inc.

Form 10-Q

Table of Contents


Part I	Financial Information

Item 1.	Financial Statements
		Consolidated Balance Sheets
		Consolidated Statements of Operations
		Consolidated Statements of Comprehensive Income (Loss)
		Consolidated Statements of Cash Flows
		Consolidated Statements of Equity
		Notes to Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures

Part II	Other Information

Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 5.	Other Information
Item 6.	Exhibits

Signatures

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	Jun 30, 2023		Dec 31, 2022
(in thousands, except share data)
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	504,019	$	568,745
Accounts receivable, net	369,841		296,554
Contract assets, net	215,006		184,847
Inventory, net	208,827		184,375
Other current assets	77,628		62,539
Total Current Assets	1,375,321		1,297,060
Property and equipment, at cost	2,446,047		2,435,840
Less accumulated depreciation	2,019,993		1,997,391
Net property and equipment	426,054		438,449
Other Assets:
Goodwill	34,062		34,339
Other noncurrent assets	102,218		122,224
Right-of-use operating lease assets	227,213		139,611
Total other assets	363,493		296,174
Total Assets	$	2,164,868	$	2,031,683
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	151,062	$	148,018
Accrued liabilities	344,961		307,446
Contract liabilities	119,021		112,950
Total current liabilities	615,044		568,414
Long-term debt	700,404		700,973
Long-term operating lease liabilities	212,538		151,842
Other long-term liabilities	85,400		84,650
Commitments and contingencies
Equity:
Common stock, par value $0.25 per share; 360,000,000 shares authorized; 110,834,088 shares issued	27,709		27,709
Additional paid-in capital	127,552		155,858
Treasury stock; 10,054,534 and 10,574,563 shares, at cost	(575,773)		(605,553)
Retained earnings	1,350,916		1,327,854
Accumulated other comprehensive loss	(384,985)		(386,127)
Oceaneering shareholders' equity	545,419		519,741
Noncontrolling interest	6,063		6,063
Total equity	551,482		525,804
Total Liabilities and Equity	$	2,164,868	$	2,031,683

The accompanying Notes are an integral part of these Consolidated Financial Statements.

Table of Contents

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)		2023		2022		2023		2022
Revenue		$	597,910	$	524,031	$	1,134,897	$	970,190
Cost of services and products		496,830		447,990		956,252		848,669
	Gross margin	101,080		76,041		178,645		121,521
Selling, general and administrative expense		51,881		53,191		102,696		99,710


	Income (loss) from operations	49,199		22,850		75,949		21,811
Interest income		4,154		767		8,620		1,563
Interest expense		(9,517)		(9,619)		(18,800)		(19,062)
Equity in income (losses) of unconsolidated affiliates		479		318		1,118		612
Other income (expense), net		(5,846)		583		(5,768)		1,027
	Income (loss) before income taxes	38,469		14,899		61,119		5,951
Provision (benefit) for income taxes		19,467		11,179		38,057		21,441
	Net Income (Loss)	$	19,002	$	3,720	$	23,062	$	(15,490)



Weighted-average shares outstanding
Basic		100,776		100,256		100,610		100,110
Diluted		102,004		101,430		102,017		100,110
Earnings (loss) per share
Basic		$	0.19	$	0.04	$	0.23	$	(0.15)
Diluted		$	0.19	$	0.04	$	0.23	$	(0.15)

The accompanying Notes are an integral part of these Consolidated Financial Statements.

Table of Contents

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)



		Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)		2023		2022		2023		2022
Net income (loss)		$	19,002	$	3,720	$	23,062	$	(15,490)
Other Comprehensive Income (Loss):
	Foreign currency translation adjustments	3,123		(31,026)		1,177		(21,155)
	Change in unrealized gains for available-for-sale debt securities (1)	(35)		(641)		(35)		(641)
Total other comprehensive income (loss)		3,088		(31,667)		1,142		(21,796)
	Comprehensive income (loss)	$	22,090	$	(27,947)	$	24,204	$	(37,286)

(1)	There is no income tax expense or benefit associated with the three and six months ended June 30, 2023 and 2022, due to an offsetting valuation allowance.

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Six Months Ended June 30,
(in thousands)	2023		2022
Cash Flows from Operating Activities:
Net income (loss)	$	23,062	$	(15,490)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	53,867		62,879


Deferred income tax provision (benefit)	(871)		140

Net loss (gain) on sales of property and equipment	74		(2,828)
Noncash compensation	6,814		5,051
Noncash impact of lease accounting	(3,282)		(983)
Excluding the effects of acquisitions, increase (decrease) in cash from:
Accounts receivable and contract assets	(103,446)		(105,397)
Inventory	(24,452)		(15,562)

Other operating assets	2,306		(6,576)
Currency translation effect on working capital, excluding cash	(996)		(3,657)
Current liabilities	22,390		(28,422)
Other operating liabilities	2,066		(13,637)
Total adjustments to net income (loss)	(45,530)		(108,992)
Net Cash Provided by (Used in) Operating Activities	(22,468)		(124,482)
Cash Flows from Investing Activities:
Purchases of property and equipment	(40,736)		(35,814)



Distributions of capital from unconsolidated affiliates	2,520		134
Proceeds from sale of property and equipment	4		3,585
Other investing activities	1,346		(3,000)
Net Cash Provided by (Used in) Investing Activities	(36,866)		(35,095)
Cash Flows from Financing Activities:



Other financing activities	(5,340)		(2,062)
Net Cash Provided by (Used in) Financing Activities	(5,340)		(2,062)
Effect of exchange rates on cash	(52)		(8,063)
Net Increase (Decrease) in Cash and Cash Equivalents	(64,726)		(169,702)
Cash and Cash Equivalents—Beginning of Period	568,745		538,114
Cash and Cash Equivalents—End of Period	$	504,019	$	368,412

The accompanying Notes are an integral part of these Consolidated Financial Statements.

Table of Contents

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)



	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Oceaneering Shareholders' Equity		Non-controlling Interest		Total Equity
(in thousands)
Balance, December 31, 2022	$	27,709	$	155,858	$	(605,553)	$	1,327,854	$	(386,127)	$	519,741	$	6,063	$	525,804
Net income (loss)	—		—		—		4,060		—		4,060		—		4,060
Other comprehensive income (loss)	—		—		—		—		(1,946)		(1,946)		—		(1,946)
Restricted stock unit activity	—		(26,963)		25,351		—		—		(1,612)		—		(1,612)
Restricted stock activity	—		(3,884)		3,884		—		—		—		—		—

Balance, March 31, 2023	27,709		125,011		(576,318)		1,331,914		(388,073)		520,243		6,063		526,306
Net income (loss)	—		—		—		19,002		—		19,002		—		19,002
Other comprehensive income (loss)	—		—		—		—		3,088		3,088		—		3,088
Restricted stock unit activity	—		2,807		279		—		—		3,086		—		3,086
Restricted stock activity	—		(266)		266		—		—		—		—		—

Balance, June 30, 2023	$	27,709	$	127,552	$	(575,773)	$	1,350,916	$	(384,985)	$	545,419	$	6,063	$	551,482







	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Oceaneering Shareholders' Equity		Non-controlling Interest		Total Equity
(in thousands)
Balance, December 31, 2021	$	27,709	$	173,608	$	(631,811)	$	1,301,913	$	(366,458)	$	504,961	$	6,063	$	511,024

Net income (loss)	—		—		—		(19,210)		—		(19,210)		—		(19,210)
Other comprehensive income (loss)	—		—		—		—		9,871		9,871		—		9,871
Restricted stock unit activity	—		(19,082)		19,452		—		—		370		—		370
Restricted stock activity	—		(6,466)		6,466		—		—		—		—		—

Balance, March 31, 2022	27,709		148,060		(605,893)		1,282,703		(356,587)		495,992		6,063		502,055
Net income (loss)	—		—		—		3,720		—		3,720		—		3,720
Other comprehensive income (loss)	—		—		—		—		(31,667)		(31,667)		—		(31,667)
Restricted stock unit activity	—		2,479		141		—		—		2,620		—		2,620


Balance, June 30, 2022	$	27,709	$	150,539	$	(605,752)	$	1,286,423	$	(388,254)	$	470,665	$	6,063	$	476,728

The accompanying Notes are an integral part of these Consolidated Financial Statements.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF MAJOR ACCOUNTING POLICIES

Basis of Presentation. Oceaneering International, Inc. (“Oceaneering,” “we” “our” or “us”) has prepared these unaudited consolidated financial statements pursuant to instructions for quarterly reports on Form 10-Q, which we are required to file with the United States Securities and Exchange Commission (the “SEC”). These financial statements do not include all information and footnotes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These financial statements reflect all adjustments that we believe are necessary to present fairly our financial position as of June 30, 2023, and our results of operations and cash flows for the periods presented. Except as otherwise disclosed herein, all such adjustments are of a normal and recurring nature. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2022. The results for interim periods are not necessarily indicative of annual results.

Principles of Consolidation. The consolidated financial statements include the accounts of Oceaneering and our 50% or more owned and controlled subsidiaries. We also consolidate entities that are determined to be variable interest entities if we determine that we are the primary beneficiary; otherwise, we account for those entities using the equity method of accounting. We use the equity method to account for our investments in unconsolidated affiliated companies of which we own an equity interest of between 20% and 50% and as to which we have significant influence, but not control, over operations. We use the cost method for all other long-term investments. Investments in entities that we do not consolidate are reflected on our balance sheet in other noncurrent assets. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires that our management make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Reclassifications. Certain amounts from prior periods have been reclassified to conform with the current period presentation.

Cash and Cash Equivalents. Cash and cash equivalents include demand deposits and highly liquid investments with original maturities of three months or less from the date of investment.

SEC Form 10-Q filed by Oceaneering International Inc.