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	March 31, ~~2021~~2022


¨			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.)

11911 FM 529
Houston,	Texas	77041
(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 April ~~23, 2021: 99,752,541~~22, 2022: 100,253,589

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 6.	Exhibits

Signatures

Table of ~~Content~~sContents

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


		Mar 31, 2021			Dec 31, 2020			Mar 31, 2022		Dec 31, 2021
(in thousands, except share data)	(in thousands, except share data)			(in thousands, except share data)
				(unaudited)						(unaudited)
ASSETS	ASSETS						ASSETS
Current Assets:	Current Assets:						Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	442,743		$	452,016	Cash and cash equivalents	$	438,019	$	538,114
Accounts receivable, net	Accounts receivable, net	284,480			296,214		Accounts receivable, net	303,436		262,960
Contract assets, net	Contract assets, net	245,347			221,997		Contract assets, net	171,951		164,847
Inventory, net	Inventory, net	130,612			141,241		Inventory, net	162,261		153,682
Other current assets	Other current assets	58,335			58,795		Other current assets	67,054		68,400
Total Current Assets	Total Current Assets	1,161,517			1,170,263		Total Current Assets	1,142,721		1,188,003
Property and equipment, at cost	Property and equipment, at cost	2,448,726			2,456,602		Property and equipment, at cost	2,476,639		2,452,421
Less accumulated depreciation	Less accumulated depreciation	1,887,076			1,865,495		Less accumulated depreciation	1,996,380		1,962,825
Net property and equipment	Net property and equipment	561,650			591,107		Net property and equipment	480,259		489,596
Other Assets:	Other Assets:						Other Assets:
Goodwill	Goodwill	35,065			35,016		Goodwill	34,940		34,908
Other noncurrent assets	Other noncurrent assets	107,829			108,250		Other noncurrent assets	101,986		104,255
Right-of-use operating lease assets	Right-of-use operating lease assets	137,463			141,206		Right-of-use operating lease assets	142,091		146,097
Total other assets	Total other assets	280,357			284,472		Total other assets	279,017		285,260
Total Assets	Total Assets	$	2,003,524		$	2,045,842	Total Assets	$	1,901,997	$	1,962,859
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY						LIABILITIES AND EQUITY
Current Liabilities:	Current Liabilities:						Current Liabilities:
Accounts payable	Accounts payable	$	92,515		$	94,207	Accounts payable	$	108,015	$	122,327
Accrued liabilities	Accrued liabilities	276,322			292,863		Accrued liabilities	272,651		290,659
Contract liabilities	Contract liabilities	47,906			50,046		Contract liabilities	84,769		88,175
Total current liabilities	Total current liabilities	416,743			437,116		Total current liabilities	465,435		501,161
Long-term debt	Long-term debt	804,888			805,251		Long-term debt	701,808		702,067
Long-term operating lease liabilities	Long-term operating lease liabilities	150,229			156,074		Long-term operating lease liabilities	153,113		158,503
Other long-term liabilities	Other long-term liabilities	83,319			89,244		Other long-term liabilities	79,586		90,104
Commitments and contingencies	Commitments and contingencies	0			0		Commitments and contingencies	0		0
Equity:	Equity:						Equity:
Common stock, par value $0.25 per share; 360,000,000 shares authorized; 110,834,088 shares issued	Common stock, par value $0.25 per share; 360,000,000 shares authorized; 110,834,088 shares issued	27,709			27,709		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	Additional paid-in capital	168,411			192,492		Additional paid-in capital	148,060		173,608
Treasury stock; 11,081,546 and 11,525,725 shares, at cost		(634,585)			(660,021)
Treasury stock; 10,580,499 and 11,033,098 shares, at cost							Treasury stock; 10,580,499 and 11,033,098 shares, at cost	(605,893)		(631,811)
Retained earnings	Retained earnings	1,341,855			1,351,220		Retained earnings	1,282,703		1,301,913
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(361,108)			(359,306)		Accumulated other comprehensive loss	(356,587)		(366,458)
Oceaneering shareholders' equity	Oceaneering shareholders' equity	542,282			552,094		Oceaneering shareholders' equity	495,992		504,961
Noncontrolling interest	Noncontrolling interest	6,063			6,063		Noncontrolling interest	6,063		6,063
Total equity	Total equity	548,345			558,157		Total equity	502,055		511,024
Total Liabilities and Equity	Total Liabilities and Equity	$	2,003,524		$	2,045,842	Total Liabilities and Equity	$	1,901,997	$	1,962,859

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

Table of ~~Content~~sContents

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


			Three Months Ended March 31,					Three Months Ended March 31,
(in thousands, except per share data)	(in thousands, except per share data)		2021		2020		(in thousands, except per share data)		2022		2021
Revenue	Revenue		$	437,553	$	536,668	Revenue		$	446,159	$	437,553
Cost of services and products	Cost of services and products		380,896		489,916		Cost of services and products		400,679		380,896
		Gross margin	56,657		46,752			Gross margin	45,480		56,657
Selling, general and administrative expense	Selling, general and administrative expense		42,874		55,741		Selling, general and administrative expense		46,519		42,874
Long-lived assets impairments			0		68,763
Goodwill impairment			0		303,005

		Income (loss) from operations	13,783		(380,757)			Income (loss) from operations	(1,039)		13,783
Interest income	Interest income		519		1,277		Interest income		796		519
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized		(10,407)		(12,462)		Interest expense, net of amounts capitalized		(9,443)		(10,407)
Equity in income (losses) of unconsolidated affiliates	Equity in income (losses) of unconsolidated affiliates		534		1,197		Equity in income (losses) of unconsolidated affiliates		294		534
Other income (expense), net	Other income (expense), net		(1,453)		(7,128)		Other income (expense), net		444		(1,453)
		Income (loss) before income taxes	2,976		(397,873)			Income (loss) before income taxes	(8,948)		2,976
Provision (benefit) for income taxes	Provision (benefit) for income taxes		12,341		(30,275)		Provision (benefit) for income taxes		10,262		12,341
		Net Income (Loss)	$	(9,365)	$	(367,598)		Net Income (Loss)	$	(19,210)	$	(9,365)

Weighted-average shares outstanding	Weighted-average shares outstanding						Weighted-average shares outstanding
Basic	Basic		99,461		99,055		Basic		99,963		99,461
Diluted	Diluted		99,461		99,055		Diluted		99,963		99,461
Earnings (loss) per share	Earnings (loss) per share						Earnings (loss) per share
Basic	Basic		$	(0.09)	$	(3.71)	Basic		$	(0.19)	$	(0.09)
Diluted	Diluted		$	(0.09)	$	(3.71)	Diluted		$	(0.19)	$	(0.09)

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

Table of ~~Content~~sContents

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)


			Three Months Ended March 31,					Three Months Ended March 31,
(in thousands)	(in thousands)		2021		2020		(in thousands)		2022		2021
Net income (loss)	Net income (loss)		$	(9,365)	$	(367,598)	Net income (loss)		$	(19,210)	$	(9,365)
Other Comprehensive Income (Loss):	Other Comprehensive Income (Loss):						Other Comprehensive Income (Loss):
		Foreign currency translation adjustments	(2,856)		(70,325)			Foreign currency translation adjustments	9,871		(2,856)
		Change in unrealized gains for available-for-sale debt securities (1)	1,054		—			Change in unrealized gains for available-for-sale debt securities (1)	—		1,054
Total other comprehensive income (loss)	Total other comprehensive income (loss)		(1,802)		(70,325)		Total other comprehensive income (loss)		9,871		(1,802)
		Comprehensive income (loss)	$	(11,167)	$	(437,923)		Comprehensive income (loss)	$	(9,339)	$	(11,167)

(1)	(1)	There is no income tax expense associated with the three months ended March 31, 2021 due to reversal of a valuation allowance.					(1)	There is no income tax expense or benefit associated with the three months ended March 31, 2022 and 2021 due to an offsetting valuation allowance.

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

Table of ~~Content~~sContents

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income (loss)	Net income (loss)	$	(9,365)	$	(367,598)	Net income (loss)	$	(19,210)	$	(9,365)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization, including goodwill impairment		36,471		356,196
Loss on impairment of long-lived assets		0		68,763
Depreciation and amortization						Depreciation and amortization	32,019		36,471

Deferred income tax provision (benefit)	Deferred income tax provision (benefit)	(1,136)		(8,405)		Deferred income tax provision (benefit)	(168)		(1,136)

Net loss (gain) on sales of property and equipment	Net loss (gain) on sales of property and equipment	152		16		Net loss (gain) on sales of property and equipment	(36)		152
Noncash compensation	Noncash compensation	3,161		3,116		Noncash compensation	2,572		3,161
Noncash impact of lease accounting	Noncash impact of lease accounting	(2,542)		647		Noncash impact of lease accounting	(1,776)		(2,542)
Excluding the effects of acquisitions, increase (decrease) in cash from:	Excluding the effects of acquisitions, increase (decrease) in cash from:					Excluding the effects of acquisitions, increase (decrease) in cash from:
Accounts receivable and contract assets	Accounts receivable and contract assets	(11,616)		30,303		Accounts receivable and contract assets	(47,580)		(11,616)
Inventory	Inventory	10,628		8,384		Inventory	(8,578)		10,628
Proceeds from interest rate swaps		0		12,840

Other operating assets	Other operating assets	(1,672)		(11,504)		Other operating assets	2,948		(1,672)
Currency translation effect on working capital, excluding cash	Currency translation effect on working capital, excluding cash	(670)		(9,302)		Currency translation effect on working capital, excluding cash	5,359		(670)
Current liabilities	Current liabilities	(20,373)		(102,784)		Current liabilities	(35,726)		(20,373)
Other operating liabilities	Other operating liabilities	(4,761)		(12,822)		Other operating liabilities	(10,325)		(4,761)
Total adjustments to net income (loss)	Total adjustments to net income (loss)	7,642		335,448		Total adjustments to net income (loss)	(61,291)		7,642
Net Cash Provided by (Used in) Operating Activities	Net Cash Provided by (Used in) Operating Activities	(1,723)		(32,150)		Net Cash Provided by (Used in) Operating Activities	(80,501)		(1,723)
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Purchases of property and equipment	Purchases of property and equipment	(10,699)		(27,229)		Purchases of property and equipment	(19,319)		(10,699)

Proceeds from redemption of investments in Angolan bonds	Proceeds from redemption of investments in Angolan bonds	2,361		0		Proceeds from redemption of investments in Angolan bonds	—		2,361

Distributions of capital from unconsolidated affiliates	Distributions of capital from unconsolidated affiliates	1,195		405		Distributions of capital from unconsolidated affiliates	—		1,195
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	2,136		118		Proceeds from sale of property and equipment	36		2,136

Net Cash Provided by (Used in) Investing Activities	Net Cash Provided by (Used in) Investing Activities	(5,007)		(26,706)		Net Cash Provided by (Used in) Investing Activities	(19,283)		(5,007)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:

Other financing activities	Other financing activities	(1,806)		(1,668)		Other financing activities	(2,202)		(1,806)
Net Cash Provided by (Used in) Financing Activities	Net Cash Provided by (Used in) Financing Activities	(1,806)		(1,668)		Net Cash Provided by (Used in) Financing Activities	(2,202)		(1,806)
Effect of exchange rates on cash	Effect of exchange rates on cash	(737)		(5,671)		Effect of exchange rates on cash	1,891		(737)
Net Increase (Decrease) in Cash and Cash Equivalents	Net Increase (Decrease) in Cash and Cash Equivalents	(9,273)		(66,195)		Net Increase (Decrease) in Cash and Cash Equivalents	(100,095)		(9,273)
Cash and Cash Equivalents—Beginning of Period	Cash and Cash Equivalents—Beginning of Period	452,016		373,655		Cash and Cash Equivalents—Beginning of Period	538,114		452,016
Cash and Cash Equivalents—End of Period	Cash and Cash Equivalents—End of Period	$	442,743	$	307,460	Cash and Cash Equivalents—End of Period	$	438,019	$	442,743

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

Table of ~~Content~~sContents

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)																																	(in thousands)
Balance, December 31, 2021																																	Balance, December 31, 2021			$	27,709						$	173,608			$	(631,811)				$	1,301,913						$	(366,458)						$	504,961		$	6,063			$	511,024
Net income (loss)																																	Net income (loss)			—				—					—					(19,210)					—							(19,210)				—			(19,210)
Other comprehensive income (loss)																																	Other comprehensive income (loss)			—				—					—					—					9,871							9,871				—			9,871
Restricted stock unit activity																																	Restricted stock unit activity			—				(19,082)					19,452					—					—							370				—			370
Restricted stock activity																																	Restricted stock activity			—				(6,466)					6,466					—					—							—				—			—

Balance, March 31, 2022																																	Balance, March 31, 2022			$	27,709			$	148,060				$	(605,893)				$	1,282,703				$	(356,587)						$	495,992			$	6,063		$	502,055


		Common Stock		Additional Paid-in Capital				Treasury Stock				Retained Earnings				Accumulated Other Comprehensive Income (Loss)								Oceaneering Shareholders' Equity			Non-controlling Interest				Total Equity					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)	(in thousands)																									(in thousands)
Balance, December 31, 2020	Balance, December 31, 2020	$	27,709			$	192,492			$	(660,021)			$	1,351,220					$	(359,306)								$	552,094							$	6,063					$	558,157	Balance, December 31, 2020				$	27,709				$	192,492			$	(660,021)		$	1,351,220			$	(359,306)						$	552,094		$	6,063	$	558,157

Net income (loss)	Net income (loss)	—		—				—				(9,365)				—										(9,365)			—				(9,365)		Net income (loss)				—				—				—					(9,365)					—							(9,365)				—			(9,365)
Other comprehensive income (loss)	Other comprehensive income (loss)	—		—				—				—				(1,802)								(1,802)			—				(1,802)		Other comprehensive income (loss)			—				—					—					—					(1,802)							(1,802)				—			(1,802)
Restricted stock unit activity	Restricted stock unit activity	—		(13,642)				14,997				—				—								1,355			—				1,355		Restricted stock unit activity			—				(13,642)					14,997					—					—							1,355				—			1,355
Restricted stock activity	Restricted stock activity	—		(10,439)				10,439				—				—								—			—				—		Restricted stock activity			—				(10,439)					10,439					—					—							—				—			—

Balance, March 31, 2021	Balance, March 31, 2021	$	27,709	$	168,411			$	(634,585)			$	1,341,855			$	(361,108)							$	542,282		$	6,063			$	548,345	Balance, March 31, 2021			$	27,709			$	168,411				$	(634,585)				$	1,341,855				$	(361,108)						$	542,282			$	6,063		$	548,345

		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, 2019		$	27,709					$	207,130			$	(681,640)					$	1,850,244			$	(334,097)										$	1,069,346			$	6,063			$	1,075,409
Cumulative effect of ASC 326 adoption		—		—				—				(2,273)				—								(2,273)			—						(2,273)
Net income (loss)		—		—				—				(367,598)				—								(367,598)			—				(367,598)
Other comprehensive income (loss)		—		—				—				—				(70,325)								(70,325)			—				(70,325)
Restricted stock unit activity		—		(11,816)				13,262				—				—								1,446			—				1,446
Restricted stock activity		—		(5,992)				5,992				—				—								—			—				—

Balance, March 31, 2020		$	27,709	$	189,322			$	(662,386)			$	1,480,373			$	(404,422)							$	630,596		$	6,063			$	636,659

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

Table of ~~Content~~sContents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF MAJOR ACCOUNTING POLICIES

Basis of Presentation. Oceaneering International, Inc. (“Oceaneering,” “we” 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 March 31, ~~2021~~2022 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, ~~2020.~~2021. 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~~We eliminate intercompany transactions and 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.

~~Recasting of Certain Prior Period Information.~~ In the third quarter of 2020, we changed our organizational structure as part of the transformation to realign our businesses to achieve greater cost efficiencies and to bring together business units that frequently work together and promote increased synergies in bidding, project management and the use of offshore technicians. As a result, information that our chief operating decision maker regularly reviews changed. Therefore, for the three-month period ended March 31, 2021, we are reporting our financial results consistent with our newly realigned operating segments and have recast certain prior period amounts to conform to the way we now manage our businesses and monitor segment performance as described in Note 3–“Revenue” and Note 10–“Business Segment Information.” We also changed our reporting units to realign with the changes in our operating segments and reassessed impairments for long-lived assets and goodwill as described in Note 4–“Impairments.”

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.

Allowances for Credit Loss—Financial Assets Measured at Amortized Costs. We identify allowances for credit loss based on future expected losses when accounts receivable, contract assets or held-to-maturity loan receivables are created rather than when losses are probable.

We use the loss-rate method in developing the allowance for credit losses, which involves identifying pools of assets with similar risk characteristics, reviewing historical losses within the last five years and consideration of reasonable supportable forecasts of economic indicators. Changes in estimates, developing trends and other new information could have material effects on future evaluations.

We monitor the credit quality of our accounts receivable and other financing receivable amounts by frequent customer interaction, following economic and industry trends and reviewing specific customer data. Our other receivable amounts include contract assets and held-to-maturity loans receivable, which we consider to have a low risk of loss.

We are monitoring the impacts from the coronavirus ~~(COVID-19)~~(“COVID-19”) outbreak, the Russia-Ukraine conflict and volatility in the oil and natural gas markets on our customers and various counterparties. We have considered the current and expected economic and

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market conditions, as a result of COVID-19 and the Russia-Ukraine conflict, in ~~determining~~calculating credit loss expense for the three-month periods ended March 31, 2022 and 2021 and ~~2020.~~determined the impacts are de minimis.

As of March 31, ~~2021,~~2022, our allowance for credit losses was ~~$1.5~~$0.7 million for accounts receivable and ~~$0.6~~$0.3 million for other receivables.

Financial assets are written off when deemed uncollectible and there is no reasonable expectation of recovering the contractual cash flows. During the three-month period ended March 31, ~~2021,~~2022, we ~~wrote~~did not write off ~~accounts receivable~~any financial assets.

Table of ~~$2.4 million that previously had been reserved.~~Contents

We have elected to apply the practical expedient available under Accounting ~~Series~~Standards Codification (“ASC”) ~~326~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as amended (“ASC 326”), to exclude the accrued interest receivable balance that is included in our held-to-maturity loans receivable. The amount excluded as of March 31, 2022 and December 31, 2021 was ~~$1.3~~$1.2 million.

Accounts receivable are considered to be past-due after the end of the contractual terms agreed to with the customer. There were no material past-due amounts that we consider uncollectible for our financial assets as of March 31, ~~2021.~~2022. We generally do not require collateral from our customers.

Inventory. Inventory is valued at the lower of cost or net realizable value. We determine cost using the weighted-average method. We periodically review the value of items in inventory and record write-downs or write-offs of inventory based on our assessment of market conditions. Write-downs and write-offs are charged to cost of services and products. We did not record any write-downs or write-offs of inventory in the ~~in the~~ three-month periods ended March 31, ~~2021~~2022 and ~~2020.~~2021.

Property and Equipment, Long-Lived Intangible Assets and Right-of-Use Operating Lease Assets. We provide for depreciation of property and equipment on the straight-line method over estimated useful lives. We charge the costs of repair and maintenance of property and equipment to operations as incurred, and we capitalize the costs of improvements that extend asset lives or functionality. Upon the disposition of property and equipment, the related cost and accumulated depreciation accounts are relieved, and any resulting gain or loss is included as an adjustment to cost of services and products.

We capitalize interest on assets where the construction period is anticipated to be more than three months. We did not capitalize interest in the three-month periods ended March 31, ~~2021~~2022 and ~~2020.~~2021. We do not allocate general administrative costs to capital projects.

Long-lived intangible assets, primarily acquired in connection with business combinations, include trade names, intellectual property and customer relationships and are being amortized over their respective estimated useful lives.

Our management periodically, and upon the occurrence of a triggering event, reviews the realizability of our property and equipment, long-lived intangible assets and right-of-use operating lease assets to determine whether any events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. For long-lived assets to be held and used, we base our evaluation on impairment indicators such as the nature of the assets, the future economic benefits of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of an asset may not be recoverable, we determine whether an impairment has occurred through the use of an undiscounted cash flows analysis of the asset at the lowest level for which identifiable cash flows exist. If an impairment has occurred, we recognize a loss for the difference between the carrying amount and the fair value of the asset. For additional information regarding write-downs and write-offs of property and equipment, long-lived intangible assets and right-of-use operating lease assets in the three-month period ended March 31, 2020, see Note 4—“Impairments” and Note 10—“Business Segment Information.” We did not identify indicators of impairment for property and equipment, long-lived intangible assets ~~and~~or right-of-use operating lease assets for the three-month ~~period~~periods ended March 31, 2022 and 2021.

For assets held for sale or disposal, the fair value of the asset is measured using fair market value less estimated costs to sell. Assets are classified as held for sale when we have a plan for disposal of certain assets and those assets meet the held for sale criteria.

For additional information regarding right-of-use operating lease assets, see “Leases” below.

Goodwill. Our goodwill is evaluated for impairment annually and whenever we identify certain triggering events or circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

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In our annual evaluation of goodwill, we perform a qualitative or quantitative impairment test. Under the qualitative approach, if we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we are required to perform the quantitative analysis to determine the fair value for the reporting unit. We then compare the fair value of the reporting unit with its carrying amount and recognize an impairment loss for the amount by which the carrying amount exceeds the fair value of the reporting unit. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. We also consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ~~For additional information regarding impairments of goodwill three-month period ended March 31, 2020, see Note 4—“Impairments” and Note 10—“Business Segment Information.”~~ We did not identify indicators of impairment for goodwill for the three-month ~~period~~periods ended March 31, 2022 and 2021.

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Foreign Currency Translation. The functional currency for most of our foreign subsidiaries is the applicable local currency. Results of operations for foreign subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using average exchange rates during the period. Assets and liabilities of these foreign subsidiaries are translated into U.S. dollars using the exchange rates in effect as of the balance sheet date, and the resulting translation adjustments are recognized, net of tax, in accumulated other comprehensive income (loss) as a component of shareholders' equity. All foreign currency transaction gains and losses are recognized currently in the Consolidated Statements of Operations. We recorded ~~$(1.9)~~$0.4 million and ~~$(7.1)~~$(1.9) million of foreign currency transaction gains (losses) in the three-month periods ended March 31, 2022 and 2021, ~~and 2020, respectively, and those~~respectively. Those amounts are included as a component of other income (expense), net in our Consolidated Statement of Operations.

Revenue Recognition. All our revenue is realized through contracts with customers. We recognize our revenue according to the contract type. On a daily basis, we recognize service revenue over time for contracts that provide for specific time, material and equipment charges, which we bill periodically, ranging from weekly to monthly. We use ~~the~~an input method to ~~faithfully depict~~recognize revenue, ~~recognition,~~ because each day of service provided represents value to the customer. The performance obligations in these contracts are satisfied, and revenue is recognized, as the work is performed. When appropriate, we apply the practical expedient to recognize revenue for the amount invoiced when the invoice corresponds directly to the value of our performance to date.

We account for significant fixed-price contracts, mainly relating to our Manufactured Products segment, and to a lesser extent in our Offshore Projects Group (“OPG”) and Aerospace and Defense Technologies (“ADTech”) segments, by recognizing revenue over time using an input, cost-to-cost measurement percentage-of-completion method. ~~We use the input cost-to-cost method to faithfully depict revenue recognition.~~ This commonly used method allows appropriate calculation of progress on our contracts. A performance obligation is satisfied as we create a product on behalf of the customer over the life of the contract. The remainder of our revenue is recognized at the point in time when control transfers to the customer, thus satisfying the performance obligation.

We have elected to recognize the cost for freight and shipping as an expense when incurred. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, and that are collected by us from customers, are excluded from revenue.

In our service-based business lines, we principally charge on a dayrate basis for services provided. In our product-based business lines, predominantly in our Manufactured Products segment, we recognize revenue and profit using the percentage-of-completion method and exclude uninstalled materials and significant inefficiencies from the measure of progress.

We apply judgment in the determination and allocation of transaction price to performance obligations, and the subsequent recognition of revenue, based on the facts and circumstances of each contract. We routinely review estimates related to our contracts and, when required, reflect revisions to profitability in earnings immediately. If an element of variable consideration has the potential for a significant future reversal of revenue, we will constrain that variable consideration to a level intended to remove the potential future reversal. If a current estimate of total contract cost indicates an ultimate loss on a contract, we recognize the projected loss in full when we determine it. ~~In prior years, we have recorded adjustments to earnings as a result of revisions to contract estimates; however, we~~We did not have any material adjustments to transaction prices during the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. There could be significant adjustments to overall contract costs in the future, due to changes in facts and circumstances.

In general, our payment terms consist of those services billed regularly as provided and those products delivered at a point in time, which are invoiced after the performance obligation is satisfied. Our product and service contracts with milestone payments due at agreed progress points during the contract are invoiced when those milestones are

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reached, which may differ from the timing of revenue recognition. Our payment terms generally do not provide financing of contracts to customers, nor do we receive financing from customers as a result of these terms.

See Note 3—“Revenue” for more information on our revenue from contracts with customers.

Leases. We determine whether a contract is or contains a lease at inception, whether as a lessee or a lessor. We take into consideration the elements of an identified asset, right to control and the receipt of economic benefit in making those determinations.

As a lessor, we lease certain types of equipment along with the provision of services and utilize the expedient allowing us to combine the lease and non-lease components into a combined component that is accounted for (1) under “Leases” (“ASC 842”), when the lease component is predominant, and (2) under the accounting standard

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“Revenue from Contracts with Customers” (“ASC 606”), when the service component is predominant. In general, when we have a service component, it is typically the predominant element and leads to accounting under ASC 606.

As a lessor, we lease certain types of equipment, often providing services at the same time. These leases can be priced on a dayrate or lump-sum basis for periods ranging from a few days to multi-year contracts. These leases are negotiated on commercial terms at market rates and many carry standard options to extend or terminate at our customer's discretion. These leases generally do not contain options to purchase, material restrictions or covenants that impact our accounting for leases.

As a lessee, we lease land, buildings, vessels and equipment for the operation of our business and to support some of our service line revenue streams. These generally carry lease terms that range from days for operational and support equipment to 15 years for land and buildings. These leases are negotiated on commercial terms at market rates and many carry standard options to extend or terminate at our discretion. When the exercise of those options is reasonably certain, we include them in the lease assessment. Our leases do not contain material restrictions or covenants that impact our accounting for them, nor do we provide residual value guarantees.

As a lessee, we utilize the practical expedients to not recognize leases with an initial lease term of 12 months or less on the balance sheet and to combine lease and non-lease components together and account for the combined component as a lease for all asset classes, except real estate.

Right-of-use operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement or modification date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, based on the information available at commencement or modification date in determining the present value of future payments. In determining the incremental borrowing rate, we considered our external credit ratings, bond yields for us and our identified peers, the risk-free rate in geographic regions where we operate, and the impact associated with providing collateral over a similar term as the lease for an amount equal to the future lease payments. Our right-of-use operating lease assets also include any lease prepayments made and exclude lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

2. ACCOUNTING STANDARDS UPDATE

Recently ~~Adopted Accounting Standards~~. ~~On January 1, 2021, we adopted Accounting Standards Update (“ASU”) No. 2019-12, “Simplifying the Accounting for Income Taxes”~~ ~~(“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within Accounting Standards Codification 740 (“ASC 740”), “Income Taxe~~s,” and clarifies certain aspects of the current guidance to promote consistency among reporting entities. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. Our adoption of ASU 2019-12 on January 1, 2021, did not have a material impact on our consolidated financial statements.

~~Recently~~ Issued Accounting Standards. In March 2020, the Financial Accounting Standards Board issued ~~ASU~~Accounting Standards Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides temporary optional expedients and exceptions to existing guidance on applying contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as the London Interbank Offered Rate (“LIBOR”), which is scheduled to be phased out in June 2023, to alternate rates such as the Secured Overnight Financing Rate (“SOFR”). This ASU was effective upon issuance and can be applied

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prospectively through December 31, 2022. Our prior five-year revolving credit facility, which has been replaced, referenced LIBOR-based rates. We ~~continue to evaluate~~will apply this guidance in connection with our entry into our new senior secured credit facility in April 2022, which references SOFR rates. See Note 10—“Subsequent Event” for information on the ~~impact~~retirement of our prior revolving credit facility and entry into our new senior secured credit facility in April 2022. We do not expect this ASU to have a material impact on our consolidated financial ~~statements.~~statements, but will continue to monitor potential impacts until the transition to this standard is complete.

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3. REVENUE

Revenue by Category

The following tables presents revenue disaggregated by business segment, geographical region, and timing of transfer of goods or services.


				Three Months Ended					Three Months Ended
(in thousands)	(in thousands)			Mar 31, 2021		Mar 31, 2020 *				(in thousands)			Mar 31, 2022		Mar 31, 2021
Business Segment:	Business Segment:									Business Segment:
		Energy Services and Products									Energy Services and Products
			Subsea Robotics	$	119,119	$	139,770					Subsea Robotics	$	127,989	$	119,119
			Manufactured Products	86,825		166,534						Manufactured Products	82,692		86,825
			Offshore Projects Group	89,234		74,254						Offshore Projects Group	97,397		89,234
			Integrity Management & Digital Solutions	54,048		64,729						Integrity Management & Digital Solutions	56,570		54,048
		Total Energy Services and Products		349,226		445,287					Total Energy Services and Products		364,648		349,226
		Aerospace and Defense Technologies		88,327		91,381					Aerospace and Defense Technologies		81,511		88,327
			Total	$	437,553	$	536,668					Total	$	446,159	$	437,553

		*	Recast to reflect segment changes.

				Three Months Ended
(in thousands)				Mar 31, 2021		Mar 31, 2020
Geographic Operating Areas:	Geographic Operating Areas:							Geographic Operating Areas:
		Foreign:									Foreign:
			Africa	$	62,792	$	63,417					Africa	$	63,409	$	62,792
			Norway	52,294		52,184						Asia and Australia	49,561		37,547
			United Kingdom	43,180		60,787						Norway	45,277		52,294
			Asia and Australia	37,547		45,680						United Kingdom	38,757		43,180
			Brazil	20,653		26,489						Brazil	30,351		20,653
			Other	20,435		24,659						Other	23,048		20,435
		Total Foreign		236,901		273,216					Total Foreign		250,403		236,901
		United States		200,652		263,452					United States		195,756		200,652
Total	Total			$	437,553	$	536,668			Total			$	446,159	$	437,553

Timing of Transfer of Goods or Services:	Timing of Transfer of Goods or Services:									Timing of Transfer of Goods or Services:
		Revenue recognized over time		$	408,173	$	498,307				Revenue recognized over time		$	417,003	$	408,173
		Revenue recognized at a point in time		29,380		38,361					Revenue recognized at a point in time		29,156		29,380
Total	Total			$	437,553	$	536,668			Total			$	446,159	$	437,553

Contract Balances

Our contracts with milestone payments have, in the aggregate, a significant impact on the contract asset and the contract liability balances. Milestones are contractually agreed with customers and relate to significant events across the contract lives. Some milestones are achieved before revenue is recognized, resulting in a contract liability, while other milestones are achieved after revenue is recognized, resulting in a contract asset.

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The following table provides information about contract assets and contract liabilities from contracts with customers.

Three months ended
(in thousands) Mar 31, 2021 Mar 31, 2020
Total contract assets, beginning of period $ 221,997 $ 221,288
Revenue accrued 411,653 455,014
Amounts billed (388,303) (439,195)
Total contract assets, end of period $ 245,347 $ 237,107
Total contract liabilities, beginning of period $ 50,046 $ 117,342
Deferrals of milestone payments 24,637 10,625
Recognition of revenue for goods and services (26,777) (66,038)
Total contract liabilities, end of period $ 47,906 $ 61,929

Our payment terms consist of those services billed regularly as provided and those products delivered at a point in time, which are invoiced after the performance obligation is satisfied. Our product and service contracts with milestone payments due at agreed progress points during the contract are invoiced when those milestones are reached, which may differ from the timing of revenue recognition.


	Three months ended
(in thousands)	Mar 31, 2022		Mar 31, 2021
Total contract assets, beginning of period	$	164,847	$	221,997
Revenue accrued	414,636		411,653
Amounts billed	(407,532)		(388,303)
Total contract assets, end of period	$	171,951	$	245,347


Total contract liabilities, beginning of period	$	88,175	$	50,046
Deferrals of milestone payments	27,101		24,637
Recognition of revenue for goods and services	(30,507)		(26,777)
Total contract liabilities, end of period	$	84,769	$	47,906

Performance Obligations

As of March 31, ~~2021,~~2022, the aggregate amount of the transaction price allocated to remaining performance obligations that were unsatisfied (or partially unsatisfied) was ~~$188~~$229 million. In arriving at this value, we have used two ~~practical~~ expedients available to us and are not disclosing amounts in relation to performance obligations: (1) that are part of contracts with an original expected duration of one year or less; or (2) on contracts where we recognize revenue in line with the billing. Of this amount, we expect to recognize revenue of ~~$144~~$190 million over the next 12 months, and we expect to recognize substantially all of the remaining balance of ~~$44~~$39 million within the next 24 months.

Due to the nature of our service contracts in our Subsea Robotics, OPG, Integrity Management & Digital Solutions (“IMDS”) and ADTech segments, the majority of our contracts either have initial contract terms of one year or less or have customer option cancellation clauses that lead us to consider the original expected duration of one year or less.

In our Manufactured Products and ADTech segments, we have long-term contracts that extend beyond one year, and these make up the majority of the performance obligations balance reported as of March 31, ~~2021.~~2022. We also have shorter-term product contracts with an expected original duration of one year or less that have been excluded.

Where appropriate, we have made estimates within the transaction price of elements of variable consideration within the contracts and constrained those amounts to a level where we consider it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The amount of revenue recognized in the three months ended March 31, 2022 and 2021 that was associated with performance obligations completed or partially completed in prior periods was not significant.

As of March 31, ~~2021,~~2022, there were no significant outstanding liability balances for refunds or returns due to the nature of our contracts and the services and products we provide. Our warranties are limited to assurance warranties that are of a standard length and are not considered to be material rights. The majority of our contracts consist of a single performance obligation. When there are multiple obligations, we look for observable evidence of stand-alone selling prices on which to base the allocation. This involves judgment as to the appropriateness of the observable evidence relating to the facts and circumstances of the contract. If we do not have observable evidence, we estimate stand-alone selling prices by taking a cost-plus-margin approach, using typical margins from the type of product or service, customer and regional geography involved.

Costs to Obtain or Fulfill a Contract

In line with the available practical expedient, we capitalize costs to obtain a contract when those amounts are significant and the contract is expected at inception to exceed one year in duration. Otherwise, the costs are expensed in the period when incurred. Costs to obtain a contract primarily consist of bid and proposal costs, which

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are incremental to our fixed costs. There were no balances or amortization of costs to obtain a contract in the current reporting periods.

Costs to fulfill a contract primarily consist of certain mobilization costs incurred to provide services or products to our customers. These costs are deferred and amortized over the period of contract performance. The closing balance of

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costs to fulfill a contract was ~~$8.1~~$8.6 million and ~~$8.3~~$7.8 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. For the three-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, we recorded amortization expense of ~~$1.0~~$1.8 million and ~~$1.9~~$1.0 million, respectively. No impairment costs were recognized.

4. ~~IMPAIRMENTS~~

~~Goodwill~~

~~We did not identify any triggering events and, accordingly, no impairments of goodwill were recorded in the three-month period ended March 31, 2021.~~

During the first quarter of 2020, due to the protracted energy downturn compounded by demand destruction resulting from the adverse impacts of the COVID-19 pandemic and insufficient control of crude oil supply levels during the quarter, as well as our customers' continued focus on cost discipline, we determined that impairment indicators were present and we were required to perform a quantitative analysis for our Subsea Products–Service, Technology and Rentals (“ST&R”), Subsea Products–Manufactured Products, Subsea Projects, Asset Integrity and Advanced Technologies–Commercial reporting units. Based on these quantitative analyses, the fair value was determined to be less than the carrying value for each of those reporting units, with the exception of Subsea Products–Manufactured Products. As a result, for our Subsea Products–ST&R, Subsea Projects, Asset Integrity and Advanced Technologies–Commercial reporting units, we recorded pre-tax goodwill impairment losses of $51 million, $130 million, $111 million and $11 million, respectively. For our Remotely Operated Vehicles (“ROV”) and Advanced Technologies–Government reporting units, qualitative assessments were performed; and we concluded that it was more likely than not the fair value of each of those reporting units was more than the carrying value of the reporting unit and, therefore, no impairments were recorded for those reporting units.

Our estimates of fair values for our reporting units determined in the first quarter of 2020 required us to use significant unobservable inputs, classified as Level 3 fair value measurements, including assumptions related to future performance, risk-adjusted discount rates, future commodity prices and demand for our services and estimates of expected realizable values. For our cash flow projections for the three-months ended March 31, 2020, we utilized a weighted-average cost of capital ranging from 11% to 15% and a terminal value based on the Gordon Growth Model, assuming an expected long-term growth rate of 2%.

Our third quarter 2020 change in our operating segments resulted in one reporting unit for each of our new segments. The following table reflects goodwill impairments as recorded in the three-month period ended March 31, 2020, and allocated, based on historical cost, to the new reporting segments determined in the third quarter of 2020:

Three Months Ended March 31, 2020
(in thousands) As originally recorded As recast to reflect segment changes
Segment/Reporting Unit Goodwill Impairment Subsea Robotics Manufactured Products OPG IMDS Total
Subsea Products/ST&R $ 51,302 $ 17,457 $ — $ 33,845 $ — $ 51,302
Subsea Projects/Subsea Projects 129,562 84,661 — 32,440 12,461 129,562
Asset Integrity/Asset Integrity 110,753 — — — 110,753 110,753
Advanced Technologies/Commercial 11,388 — 11,388 — — 11,388
Total goodwill impairment $ 303,005 $ 102,118 $ 11,388 $ 66,285 $ 123,214 $ 303,005

~~Aside from the goodwill impairments discussed above, the changes in our reporting units' goodwill balances during the periods presented are from currency exchange rate changes.~~

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~~For further information regarding goodwill by business segment, see Note 10–“Business Segment Information.”~~

~~Property and Equipment and Intangible Assets~~

~~We did not identify any triggering events and, accordingly, no impairments of long-lived assets were recorded in the three-month period ended March 31, 2021.~~

•~~Subsea Distribution Solutions U.K. - We utilized the cost approach and considered economic obsolescence under the income approach to determine fair value of the property and equipment.~~

•~~Subsea Distribution Solutions Brazil and Angola - We utilized a combination of market and cost approaches to measure fair values.~~

•~~Shallow Water vessels - We utilized the cost approach and considered historical, current and anticipated dayrates and utilization to measure market value.~~

•~~Renewables and Special Projects - We utilized a combination of market and cost approaches to measure fair values.~~

•~~Oceaneering Entertainment Systems and Oceaneering Automated Guided Vehicles (“AGV”) Systems - We utilized a combination of market and cost approaches to measure fair value.~~

Our estimates of fair value for these asset groups determined in the first quarter of 2020 required us to use significant unobservable inputs, classified as Level 3 fair value measurements, including assumptions related to future performance, risk-adjusted discount rates, future commodity prices and demand for our services and estimates of expected realizable value. Our cash flow projections utilized a weighted-average cost of capital ranging from 12% to 15% and a terminal value based on the Gordon Growth Model, assuming an expected long-term growth rate of 2%.

As a result, we determined that the carrying values exceeded the estimated fair values and recorded impairments as noted below. Our third quarter 2020 change in operating segments did not result in any changes in our asset groups. The following table reflects long-lived asset impairments as recorded in the three-month period ended March 31, 2020, and assigned to the new reporting segments determined in the third quarter of 2020:

Three Months Ended March 31, 2020
(in thousands) As originally recorded As recast to reflect segment changes
Segment/Reporting Unit Long-lived Asset Impairments Manufactured Products OPG IMDS Total
Subsea Products
Subsea Distribution Solutions U.K. $ 6,543 $ 6,543 $ — $ — $ 6,543
Subsea Distribution Solutions Brazil 9,834 9,834 9,834
Subsea Distribution Solutions Angola 38,482 38,482 38,482
Subsea Projects
Shallow Water vessels 3,894 3,894 3,894
Renewables and Special Projects Group 3,628 3,628 3,628
Global Data Solutions 167 167 167
Advanced Technologies
Oceaneering Entertainment Systems 5,065 5,065 5,065
Oceaneering AGV Systems 1,150 1,150 1,150
Total long-lived asset impairments $ 68,763 $ 61,074 $ 7,522 $ 167 $ 68,763

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5. INCOME TAXES

Our tax provision is based on (1) our earnings for the period and other factors affecting the tax provision and (2) the operations of foreign branches and subsidiaries that are subject to local income and withholding taxes. Factors that affect our tax rate include our profitability levels in general and the geographical mix ~~from the sources~~ of our results. The effective tax rate for the three-month periods ended March 31, ~~2021~~2022 and ~~2020~~2021 was different than the U.S. federal statutory rate of 21%, primarily due to the geographical mix of ~~operating~~ revenue and ~~results,~~earnings, changes in valuation allowances and uncertain tax positions, and other discrete ~~items. We~~items; therefore, we do not believe a discussion of the ~~annual~~ effective tax rate is meaningful. We continue to make an assertion to indefinitely reinvest the unrepatriated earnings of any foreign subsidiary that would incur incremental tax consequences upon the distribution of such ~~earnings or deferred taxes related to balance sheet translation gains or losses.~~earnings.

On March 27, 2020, the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law in the United States. In accordance with the ~~recently established~~ rules and procedures under the CARES Act, we filed ~~a 2014~~certain refund ~~claim~~claims to carry back a portion of our U.S. net operating ~~loss generated in 2019 and amended our 2012 and 2013 federal income tax returns impacted by the net operating loss carryback.~~loss. Prior to ~~the~~ enactment of the CARES Act, such net operating losses could only be carried forward. As a result, we expect to receive combined refunds of approximately $33 million, of which we have received ~~$5.6~~$10 million as of March 31, ~~2021.~~2022. The remaining refunds are classified as accounts receivable, net, in our consolidated balance sheet as of March 31, ~~2021. We also realized a non-cash tax benefit of $8.4 million due to the carryback provision of the CARES Act recognized as a reduction in long-term liabilities.~~2022.

We conduct our international operations in jurisdictions that have varying laws and regulations regarding income and other taxes, some of which are subject to interpretation. We recognize the expense or benefit for an uncertain tax position if it is more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the uncertain tax position is then measured and recognized at the largest amount that we believe is greater than 50% likely of being realized upon ultimate settlement.

We have accrued a net total of ~~$14~~$15 million and ~~$15~~$12 million in other long-term liabilities on our balance sheet for worldwide unrecognized tax liabilities as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. We account for any applicable interest and penalties related to uncertain tax positions as a component of our provision for income taxes in our consolidated financial statements. Changes in our management's judgment related to those liabilities would affect our effective income tax rate in the periods of change.

Our tax returns are subject to audit by taxing authorities in multiple jurisdictions. These audits often take years to complete and settle. The following table lists the earliest tax years open to examination by tax authorities where we have significant operations:


Jurisdiction						Periods
United States						2014
United Kingdom						2019
Norway						~~2016~~2017
Angola						2013
Brazil						~~2016~~2017
Australia						~~2015~~2017

We have ongoing tax audits in various jurisdictions. The outcome of these audits may have an impact on uncertain tax positions for income tax returns subsequently filed in those jurisdictions.

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6.5. SELECTED BALANCE SHEET INFORMATION

The following is information regarding selected balance sheet accounts:


(in thousands)	(in thousands)		Mar 31, 2021		Dec 31, 2020		(in thousands)		Mar 31, 2022		Dec 31, 2021
Inventory:	Inventory:						Inventory:
		Remotely operated vehicle parts and components	$	64,700	$	62,788		Remotely operated vehicle parts and components	$	73,411	$	72,572
		Other inventory, primarily raw materials	65,912		78,453			Other inventory, primarily raw materials	88,850		81,110
		Total	$	130,612	$	141,241		Total	$	162,261	$	153,682

Other current assets:	Other current assets:						Other current assets:
		Prepaid expenses	$	49,171	$	48,616		Prepaid expenses	$	60,825	$	62,171
		Angolan bonds	9,164		10,179			Angolan bonds	6,229		6,229
		Total	$	58,335	$	58,795		Total	$	67,054	$	68,400

Accrued liabilities:	Accrued liabilities:						Accrued liabilities:
		Payroll and related costs	$	106,111	$	135,042		Payroll and related costs	$	108,132	$	134,538
		Accrued job costs	50,193		47,721			Accrued job costs	51,022		49,032
		Income taxes payable	44,015		35,929			Income taxes payable	39,395		35,826
		Current operating lease liability	18,975		18,798			Current operating lease liability	20,021		18,781
		Other	57,028		55,373			Other	54,081		52,482
		Total	$	276,322	$	292,863		Total	$	272,651	$	290,659

7.6. DEBT

Long-term debt consisted of the following:


		(in thousands)	Mar 31, 2021		Dec 31, 2020			(in thousands)	Mar 31, 2022		Dec 31, 2021
4.650% Senior Notes due 2024	4.650% Senior Notes due 2024		$	500,000	$	500,000	4.650% Senior Notes due 2024		$	400,000	$	400,000
6.000% Senior Notes due 2028	6.000% Senior Notes due 2028		300,000		300,000		6.000% Senior Notes due 2028		300,000		300,000

Interest rate swap settlements	Interest rate swap settlements		10,224		10,870		Interest rate swap settlements		6,037		6,572
Unamortized debt issuance costs	Unamortized debt issuance costs		(5,336)		(5,619)		Unamortized debt issuance costs		(4,229)		(4,505)

Long-term debt	Long-term debt		$	804,888	$	805,251	Long-term debt		$	701,808	$	702,067

In November 2014, we completed the public offering of $500 million aggregate principal amount of 4.650% Senior Notes due 2024 (the “2024 Senior Notes”). We pay interest on the 2024 Senior Notes on May 15 and November 15 of each year. The 2024 Senior Notes are scheduled to mature on November 15, 2024.

In February 2018, we completed the public offering of $300 million aggregate principal amount of 6.000% Senior Notes due 2028 (the “2028 Senior Notes”). We pay interest on the 2028 Senior Notes on February 1 and August 1 of each year. The 2028 Senior Notes are scheduled to mature on February 1, 2028. We used the net proceeds from the 2028 Senior Notes to repay our term loan indebtedness described further below.

We may redeem some or all of the 2024 Senior Notes and 2028 Senior Notes (collectively, the “Senior Notes”) at specified redemption prices. In the three months ended March 31, 2022 and 2021, we did not repurchase any of the Senior Notes.

In October 2014, we entered into a credit agreement (as amended, the ~~“Credit~~“Prior Credit Agreement”) with a group of banks. The Prior Credit Agreement initially provided for a $500 million ~~five-year~~five-year revolving credit facility (the ~~“Revolving~~“Prior Revolving Credit Facility”). Subject to certain conditions, the aggregate commitments under the Revolving Credit Facility may be increased by up to $300 million at any time upon agreement between us and existing or additional lenders. Borrowings under the Revolving Credit Facility may be used for general corporate purposes. The Prior Credit Agreement also provided for a $300 million term loan, which we repaid in full in February 2018, using net proceeds from the issuance of our 2028 Senior Notes referred to above, and cash on hand.

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In February 2018, we entered into Agreement and Amendment No. 4 to the Prior Credit Agreement ("Amendment No. 4"). Amendment No. 4 amended the Prior Credit Agreement to, among other things, extend the maturity of the Prior Revolving Credit Facility to January 25, 2023 with the extending lenders, which represent 90% of the existing commitments of the lenders, such that the total commitments for the Revolving Credit Facility will be $500 million until October 25, 2021, and thereafter $450 million until January 25, 2023. As of March 31, ~~2021,~~2022, we had no borrowings outstanding under the Prior Revolving Credit Facility.

~~Borrowings under~~ See Note 10—“Subsequent Event” for information on the retirement of our Prior Revolving Credit Facility ~~bear interest at an Adjusted Base Rate or the Eurodollar Rate (both as defined~~and entry into a new senior secured credit facility in the Credit Agreement), at our option, plus an applicable margin based on our Leverage Ratio (as defined in the Credit Agreement) and, at our election, based on the ratings of our senior unsecured debt by designated ratings services, thereafter to be based on such debt ratings. The applicable margin varies: (1) in the case of advances bearing interest at the Adjusted Base Rate, from 0.125% to 0.750%; and (2) in the case of advances bearing interest at the Eurodollar Rate, from 1.125% to 1.750%. The Adjusted Base Rate is the highest of (1) the per annum rate established by the administrative agent as its prime rate, (2) the federal funds rate plus 0.50% and (3) the daily one-month LIBOR plus 1%. We pay a commitment fee ranging from 0.125% to 0.300% on the unused portion of the Revolving Credit Facility, depending on our Leverage Ratio. The commitment fees are included as interest expense in our consolidated financial statements.

The Credit Agreement contains various covenants that we believe are customary for agreements of this nature, including, but not limited to, restrictions on our ability and the ability of each of our subsidiaries to incur debt, grant liens, make certain investments, make distributions, merge or consolidate, sell assets and enter into certain restrictive agreements. We are also subject to a maximum adjusted total Capitalization Ratio (as defined in the Credit Agreement and which stipulates, that among other items, we exclude any impacts associated with current and prior period impairments) of 55%. The Credit Agreement includes customary events of default and associated remedies.April 2022. As of March 31, ~~2021,~~2022, we were in compliance with all the covenants set forth in the Prior Credit Agreement.

We had two interest rate swaps in place relating to a total of $200 million of the 2024 Senior Notes for the period to November 2024. The agreements swapped the fixed interest rate of 4.65% on $100 million of the 2024 Senior Notes to the floating rate of one-month LIBOR plus 2.426% and on another $100 million to one-month LIBOR plus 2.823%. In March 2020, we settled both interest rate swaps with the counterparty for cash proceeds of $13 million. The settlement resulted in a $13 million increase to our long-term debt balance that will be amortized to interest expense prospectively through the maturity date for the 2024 Senior Notes using the effective interest method. As a result, we amortized $0.5 million and $0.6 million, respectively, to interest expense for the in the three-month ~~period~~periods ended March 31, 2022 and 2021.

We incurred $6.9 million and $4.2 million of issuance costs related to the 2024 Senior Notes and the 2028 Senior Notes, respectively, and $3.0 million of new loan costs, including costs of the amendments prior to Amendment No. 4, related to the Prior Credit Agreement. These costs, net of accumulated amortization, are included as a reduction of long-term debt on our Consolidated Balance Sheets, as they pertain to the Senior Notes, and in other noncurrent assets, as they pertain to the Prior Credit Agreement. We are amortizing these costs to interest expense through the respective maturity dates for the Senior Notes and ~~to January 2023 for~~ the Prior Credit Agreement using the straight-line method, which approximate the effective interest rate method. See Note 10—“Subsequent Event” for information on the retirement of the Prior Revolving Credit Facility and entry into a new senior secured credit facility in April 2022.

8.7. COMMITMENTS AND CONTINGENCIES

Litigation. In the ordinary course of business, we are, from time to time, involved in litigation or subject to disputes, governmental investigations or claims related to our business activities, including, among other things:

•performance- or warranty-related matters under our customer and supplier contracts and other business arrangements; and

•workers’ compensation claims, Jones Act claims, occupational hazard claims, premises liability claims and other claims.

Although we cannot predict the ultimate outcome of these matters, we believe that our ultimate liability, if any, that may result from these other actions and claims will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows. However, because of the inherent uncertainty of litigation and other dispute resolution proceedings and, in some cases, the availability and amount of potentially available insurance, we can provide no assurance that the resolution of any particular claim or proceeding to which we are a party will

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not have a material effect on our consolidated financial condition, results of operations or cash flows for the fiscal period in which that resolution occurs.

Financial Instruments and Risk Concentration. In the normal course of business, we manage risks associated with foreign exchange rates and interest rates through a variety of strategies, including the use of hedging transactions. As a matter of policy, we do not use derivative instruments unless we have an underlying exposure. Other financial instruments that potentially subject us to concentrations of credit risk are principally cash and cash equivalents and accounts receivable.

The carrying values of cash and cash equivalents approximate their fair values due to the short-term maturity of the underlying instruments. Accounts receivable are generated from a broad group of customers, primarily from within the energy industry, which is our major source of revenue. Due to their short-term nature, carrying values of our accounts receivable and accounts payable approximate fair market values.

We estimated the aggregate fair market value of the Senior Notes to be ~~$779~~$688 million as of March 31, ~~2021,~~2022, based on quoted prices. Since the market for the Senior Notes is not an active market, the fair value of the Senior Notes is classified within Level 2 in the fair value hierarchy under U.S. GAAP (inputs other than quoted prices in active

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markets for similar assets and liabilities that are observable or can be corroborated by observable market data for substantially the full terms for the assets or liabilities).

Foreign currency gains (losses) related to the Angolan kwanza of ~~$(1.4)~~$0.9 million and ~~$(1.9)~~$(1.4) million in the three-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively, were primarily ~~due~~related to increasing (declining) exchange rates for the Angolan kwanza relative to the ~~remeasurement of our Angolan kwanza cash balances to~~ U.S. dollars. Foreign currency gain (losses) related to the Brazilian real of $(0.1) million and $(4.0) million in the three-month periods ended March 31, 2021 and 2020, respectively, were primarily due to the remeasurement of our U.S. dollar denominated liability balances to the Brazilian real.dollar. We recorded foreign currency transaction ~~losses~~gains (losses) related to the Angolan kwanza ~~and Brazilian real~~ as a component of other income (expense), net in our Consolidated Statements of Operations.

Any conversion of cash balances from kwanza to U.S. dollars is controlled by the central bank in Angola. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had the equivalent of approximately ~~$3.3~~$1.7 million and ~~$4.7~~$1.0 million, respectively, of kwanza cash balances in Angola reflected on our Consolidated Balance Sheets.

To mitigate our currency exposure risk in Angola, we have used kwanza to purchase equivalent Angolan central bank (Banco Nacional de Angola) bonds. The bonds are denominated as U.S. dollar equivalents, so that, upon payment of semi-annual interest and principal upon maturity, payment is made in kwanza, equivalent to the respective U.S. dollars at the then-current exchange rate. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$9.2 million and $10~~$6.2 million, respectively, of Angolan bonds on our Consolidated Balance Sheets. Because we intend to sell the bonds if we are able to repatriate the proceeds, we have classified these bonds as available-for-sale securities, and they are recorded in other current assets in our Consolidated Balance Sheets. During the three-month period ended March 31, 2021, we sold a portion of these bonds for $2.4 million and recognized a gain of $0.3 million as a component of other income (expense), net in our Consolidated Statement of Operations. We did not sell any of our Angolan bonds in the three-month period ended March 31, 2022.

We estimated the fair market value of the Angolan bonds to be ~~$9.2 million and $10~~$6.4 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, using quoted market prices. Since the market for the Angolan bonds is not an active market, the fair value of the Angolan bonds is classified within Level 2 in the fair value hierarchy under U.S. GAAP. As of March 31, 2022 and December 31, 2021, we have ~~$1.1~~$0.2 million in unrealized gains, net of tax, related to these bonds as a component of accumulated other comprehensive loss in our Consolidated Balance Sheets.

~~Due to~~In the ~~ongoing impact of COVID-19, certain projects that~~three-month period ended June 30, 2021, we were ~~in process have been delayed~~notified by a customer in our ~~Manufacturing~~Manufactured Products ~~segment.~~segment that it was suspending a contract that was substantially complete. Specific to this contract, we billed and received $18 million of accounts receivable in the first quarter of 2022. As of March 31, ~~2021 and December 31, 2020,~~2022, we had outstanding ~~accounts receivable and contracts~~contract assets of approximately ~~$51~~$17 million for ~~these projects.~~the contract and contract liabilities of $5.8 million prepaid for storage of components. As of December 31, 2021, we had outstanding contract assets of approximately $33 million for the contract and contract liabilities of $11 million prepaid for storage of components. We are in discussions with the customer concerning the timing of remaining payments. We continue to believe that we will realize these ~~accounts receivable and~~ contract assets ~~are realizable and~~at their book values, although we can provide no assurance as to the ~~projects will resume.~~timing of receipt of the remaining payments.

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9.8. EARNINGS (LOSS) PER SHARE, SHARE-BASED COMPENSATION AND SHARE REPURCHASE PLAN

Earnings (Loss) per Share. For each period presented, the only difference between our calculated weighted-average basic and diluted number of shares outstanding is the effect of outstanding restricted stock units. In periods where we have a net loss, the effect of our outstanding restricted stock units is anti-dilutive, and therefore does not increase our diluted shares outstanding.

For each period presented, our net income (loss) allocable to both common shareholders and diluted common shareholders is the same as our net income (loss) in our consolidated statements of operations.

Share-Based Compensation. ~~We have no outstanding stock options and, therefore, no share-based compensation to be recognized pursuant to stock option grants.~~

~~During 2019, 2020 and through March 31, 2021, we~~Annually, the Compensation Committee granted restricted units of our common stock to certain of our key executives and ~~employees. During 2019, 2020~~employees and ~~through March 31, 2021, our Board of Directors granted~~ restricted common stock to our nonemployee directors. The restricted stock units granted to our key executives and key employees generally vest in full on the third anniversary of the award date, conditional on continued employment. The restricted stock unit grants can vest pro rata over three years, provided the individual meets certain age and years-of-service requirements. The ~~shares~~grants of restricted stock ~~we grant~~ to our nonemployee directors were scheduled to vest in full on the first anniversary of the award date, conditional onupon continued service as a ~~director.~~ director, except for the 2021 grant to one director who retired from our board of directors as of the date of our annual meeting of shareholders in May 2021, which vested on that date.

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Each grantee of shares of restricted stock is deemed to be the record owner of those shares during the restriction period, with the right to vote and receive any dividends on those shares. The restricted stock units outstanding have no voting or dividend rights.

For each of the restricted stock units granted in ~~2019~~2020 through March 31, ~~2021,~~2022, at the earlier of three years after grant or at termination of employment or service, the grantee will be issued one share of our common stock for each unit vested. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respective totals of ~~2,747,341~~2,653,723 and ~~1,955,346~~2,447,259 shares of restricted stock and restricted stock units were outstanding.

We estimate that share-based compensation cost not yet recognized related to shares of restricted stock or restricted stock units, based on their grant-date fair values, was $20 million as of March 31, ~~2021.~~2022. This expense is being recognized on a graded-vesting basis over three years for awards attributable to individuals meeting certain age and years-of-service requirements, and on a straight-line basis over the applicable vesting period of one or three years for the other awards.

Share Repurchase Plan. In December 2014, our Board of Directors approved a share repurchase program under which we may repurchase up to 10 million shares of our common stock on a discretionary basis. Under the program, which has no expiration date, we had repurchased 2.0 million shares for $100 million through December 31, 2015. We have not repurchased any shares under this plan since ~~December 31, 2015.~~2015, and are not obligated to make any future repurchases. We account for the shares we hold in treasury under the cost method, at average cost.

~~10.~~9. BUSINESS SEGMENT INFORMATION

We are a global ~~provider of~~technology company delivering engineered services and products ~~primarily~~and robotic solutions to the offshore energy, ~~industry. Through the use of our applied technology expertise, we also serve the~~ defense, aerospace, manufacturing and ~~commercial theme park~~entertainment industries.

In the third quarter of 2020, we changed our organizational structure as part of the transformation to realign our businesses to achieve greater cost efficiencies and to bring together business units that frequently work together and promote increased synergies in bidding, project management and the use of offshore technicians. As a result, information that our chief operating decision maker regularly reviews changed. Therefore, beginning with results for the three months ended September 30, 2020, we are reporting our financial results consistent with our newly realigned operating segments and have recast certain prior period amounts to conform to the way we internally manage our businesses and monitor segment performance. Our new structure aligns our company around five reportable segments: (1) Subsea Robotics; (2) Manufactured Products; (3) Offshore Projects Group; (4) Integrity Management & Digital Solutions; and (5) Aerospace and Defense Technologies.

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Our Energy Services and Products business leverages our asset base and capabilities for providing services and products ~~predominantly~~ for offshore energy operations, inclusive of the offshore renewable energy market. Our Energy Services and Products segments are:

•Subsea Robotics—Our Subsea Robotics segment ~~consists of~~ ~~our prior ROV segment, plus ROV tooling (previously in our Subsea Products segment) and survey services (previously in our Subsea Projects segment). Our Subsea Robotics segment~~ provides the following:

◦~~ROVs~~Remotely Operated Vehicles (“ROVs”) for ~~drilling~~drill support and vessel-based services, including subsea hardware installation, construction, pipeline inspection, survey and facilities inspection, maintenance and repair;

◦ROV tooling; and

◦survey services, including hydrographic survey and positioning services and autonomous underwater vehicles for geoscience.

•Manufactured Products—Our Manufactured Products segment consists of our prior Manufactured Products Business unit (previously in our Subsea Products segment) plus commercial theme park entertainment systems and AGV technology (both previously in our Advanced Technologies segment). Our Manufactured Products segment provides the following:

◦distribution and connection systems including production control umbilicals and field development hardware and pipeline connection and repair systems to the energy industry; and

◦~~AGV~~autonomous mobile robot technology and entertainment systems to a variety of industries.

•Offshore Projects Group—Our OPG segment consists of our prior Subsea Projects segment less survey services, maritime shipping and global data solutions (“GDS”) plus our Service and Rental business unit (previously in our Subsea Products segment). Our OPG segment provides the following:

◦subsea installation and intervention, including riserless light well intervention services, inspection, maintenance and repair (“IMR”) services, principally in the U.S. Gulf of Mexico and offshore Angola, utilizing owned and charter vessels;

◦installation and workover control systems and ROV workover control systems;

◦project management and engineering; and

◦~~seabed preparation, route clearance~~drill pipe riser services and ~~trenching services for submarine cables for the renewable energy markets.~~systems and wellhead load relief solutions.

•Integrity Management & Digital Solutions—Our IMDS segment ~~consists of our prior Asset Integrity segment plus GDS and maritime shipping (both previously in our Subsea Projects segment). Our IMDS segment~~ provides the following:

◦asset integrity management services;

◦software and analytical solutions for the bulk cargo maritime industry; and

◦software, digital and connectivity solutions for the energy industry.

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Our Aerospace and Defense Technologies segment ~~consists of our prior Government business unit (previously in our Advanced Technologies segment). Our ADTech segment~~ provides services and products, ~~include~~including engineering and related manufacturing in defense and space exploration activities, principally to U.S. Government agencies and their prime contractors.

Unallocated Expenses are those not associated with a specific business segment. These consist of expenses related to our incentive and deferred compensation plans, including restricted stock and bonuses, as well as other general expenses, including corporate administrative expenses.

~~Table~~There are no differences in the basis of ~~Content~~ssegmentation or in the basis of measurement of segment profit or loss from

those used in our consolidated financial statements for the year ended December 31, 2021.

The table that follows presents revenue, income (loss) from operations and depreciation and amortization expense, by business segment:


		Three Months Ended						Three Months Ended
(in thousands)	(in thousands)	Mar 31, 2021		Mar 31, 2020 *		Dec 31, 2020			(in thousands)	Mar 31, 2022		Mar 31, 2021		Dec 31, 2021
Revenue	Revenue								Revenue
Energy Services and Products	Energy Services and Products								Energy Services and Products
Subsea Robotics	Subsea Robotics	$	119,119	$	139,770	$	114,711		Subsea Robotics	$	127,989	$	119,119	$	134,315
Manufactured Products	Manufactured Products	86,825		166,534		99,899			Manufactured Products	82,692		86,825		102,940
Offshore Projects Group	Offshore Projects Group	89,234		74,254		67,821			Offshore Projects Group	97,397		89,234		85,356
Integrity Management & Digital Solutions	Integrity Management & Digital Solutions	54,048		64,729		54,307			Integrity Management & Digital Solutions	56,570		54,048		60,469
Total Energy Services and Products	Total Energy Services and Products	349,226		445,287		336,738			Total Energy Services and Products	364,648		349,226		383,080
Aerospace and Defense Technologies	Aerospace and Defense Technologies	88,327		91,381		87,524			Aerospace and Defense Technologies	81,511		88,327		83,629
Total	Total	$	437,553	$	536,668	$	424,262		Total	$	446,159	$	437,553	$	466,709
Income (Loss) from Operations	Income (Loss) from Operations								Income (Loss) from Operations
Energy Services and Products	Energy Services and Products								Energy Services and Products
Subsea Robotics	Subsea Robotics	$	14,619	$	(94,083)	$	14,477		Subsea Robotics	$	11,552	$	14,619	$	21,012
Manufactured Products	Manufactured Products	2,753		(66,138)		12,218			Manufactured Products	2,643		2,753		(20,228)
Offshore Projects Group	Offshore Projects Group	8,813		(79,323)		(9,940)			Offshore Projects Group	666		8,813		6,754
Integrity Management & Digital Solutions	Integrity Management & Digital Solutions	2,474		(121,535)		892			Integrity Management & Digital Solutions	3,508		2,474		6,015
Total Energy Services and Products	Total Energy Services and Products	28,659		(361,079)		17,647			Total Energy Services and Products	18,369		28,659		13,553
Aerospace and Defense Technologies	Aerospace and Defense Technologies	16,839		12,971		16,525			Aerospace and Defense Technologies	11,844		16,839		10,562
Unallocated Expenses	Unallocated Expenses	(31,715)		(32,649)		(33,692)			Unallocated Expenses	(31,252)		(31,715)		(36,687)
Total	Total	$	13,783	$	(380,757)	$	480		Total	$	(1,039)	$	13,783	$	(12,572)
Depreciation and Amortization, including Goodwill Impairment
Depreciation and Amortization									Depreciation and Amortization
Energy Services and Products	Energy Services and Products								Energy Services and Products
Subsea Robotics	Subsea Robotics	$	22,952	$	139,187	$	23,210		Subsea Robotics	$	19,001	$	22,952	$	21,029
Manufactured Products	Manufactured Products	3,227		15,964		3,193			Manufactured Products	3,072		3,227		3,111
Offshore Projects Group	Offshore Projects Group	7,125		74,907		16,979			Offshore Projects Group	7,297		7,125		7,405
Integrity Management & Digital Solutions	Integrity Management & Digital Solutions	1,124		124,343		1,255			Integrity Management & Digital Solutions	1,030		1,124		1,091
Total Energy Services and Products	Total Energy Services and Products	34,428		354,401		44,637			Total Energy Services and Products	30,400		34,428		32,636
Aerospace and Defense Technologies	Aerospace and Defense Technologies	1,276		687		667			Aerospace and Defense Technologies	656		1,276		676
Unallocated Expenses	Unallocated Expenses	767		1,108		1,146			Unallocated Expenses	963		767		474
Total	Total	$	36,471	$	356,196	$	46,450		Total	$	32,019	$	36,471	$	33,786

* Recast to reflect segment changes.

We determine Income (Loss) from Operations for each business segment before interest income or expense, other income (expense) and provision for income taxes. We do not consider an allocation of these items to be practical.

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Income (Loss) from Operations

~~Three Months Ended March 31, 2021—~~During the three-month period ended March 31, 2021 and December 31, 2021, we recorded adjustments attributable to each of our reporting segments as follows:


			For the Three Months Ended March 31, 2021
(in thousands)			Subsea Robotics		Manufactured Products		OPG		IMDS		ADTech		Unallocated Expenses		Total
Adjustments for the effects of:




	Other		$	395	$	537	$	149	$	217	$	10	$	—	$	1,308
		Total of adjustments	$	395	$	537	$	149	$	217	$	10	$	—	$	1,308

~~Three Months Ended March 31, 2020—During~~


			For the Three Months Ended December 31, 2021
(in thousands)			Subsea Robotics		Manufactured Products		OPG		IMDS		ADTech		Unallocated Expenses		Total
Adjustments for the effects of:




	Provision for Evergrande losses, net		$	—	$	29,549	$	—	$	—	$	—	$	—	29,549

		Total of adjustments	$	—	$	29,549	$	—	$	—	$	—	$	—	$	29,549

There were no adjustments of a similar nature during the three-month period ended March 31, ~~2020, we recorded adjustments attributable to each of our reporting segments as follows:~~2022.

For the Three Months Ended March 31, 2020
(in thousands) Subsea Robotics Manufactured Products OPG IMDS ADTech Unallocated Expenses Total
Adjustments for the effects of:
Long-lived assets impairments $ — $ 61,074 $ 7,522 $ 167 $ — $ — $ 68,763
Long-lived assets write-offs 7,328 — — — — — 7,328
Goodwill impairment 102,118 11,388 66,285 123,214 — — 303,005
Other 919 1,984 1,216 2,231 — 280 6,630
Total of adjustments $ 110,365 $ 74,446 $ 75,023 $ 125,612 $ 0 $ 280 $ 385,726
0Depreciation and Amortization

~~Three Months Ended December 31, 2020—~~
~~During the three-month period ended December 31, 2020, we recorded adjustments attributable to each of our reporting segments as follows:~~

For the Three Months Ended December 31, 2020
(in thousands) Subsea Robotics Manufactured Products OPG IMDS ADTech Unallocated Expenses Total
Adjustments for the effects of:
Long-lived assets impairments — $ — $ 1,304 $ 378 $ — $ — $ 1,682
Long-lived assets write-offs — — 9,401 170 — — 9,571
Other 221 (3,489) 643 422 27 — (2,176)
Total of adjustments $ 221 $ (3,489) $ 11,348 $ 970 $ 27 $ 0 $ 9,077

~~Depreciation and Amortization, including Goodwill Impairment~~

Depreciation expense on property and equipment, reflected in Depreciation and Amortization, ~~including Goodwill Impairment in the table above,~~ was $30 million, $35 million ~~$43 million~~ and ~~$46~~$33 million in the three-month periods ended March 31, ~~2021~~2022 and ~~2020~~2021 and December 31, ~~2020,~~2021, respectively.

Amortization expense on long-lived intangible assets, reflected in Depreciation and Amortization, ~~including Goodwill Impairment in the table above,~~ was $1.6 million, $1.3 million ~~$2.6 million~~ and ~~less than $1.0~~$0.9 million in the three-month periods ended March 31, ~~2021~~2022 and ~~2020~~2021 and December 31, ~~2020,~~2021, respectively.

Goodwill impairment expense, reflected in Depreciation and Amortization, including Goodwill Impairment in the table above, was $303 million in the three-month period ended March 31, 2020. For further information regarding goodwill impairment expense, see Note 4–“Impairments.”

Long-lived asset write-offs, reflected in Depreciation and Amortization, including Goodwill Impairment in the table above, were $7.3 million and $9.6 million in the three-month periods ended March 31, 2020 and December 31, 2020, respectively. For further information regarding our long-lived assets write-offs, see Note 4– “Impairments.”

10. SUBSEQUENT EVENT

On April 8, 2022, we entered into a new senior secured revolving credit facility with a group of banks (“Revolving Credit Facility”) that will mature in April 2026.

The Revolving Credit Facility provides a borrowing base of $215 million and includes a $100 million sublimit for the issuance of letters of credit. The Revolving Credit Facility matures in April 2026. Our obligations under the credit agreement are guaranteed by our subsidiaries Grayloc Products, L.L.C., Marine Production Systems, Ltd. and Oceaneering Canada Limited (collectively, the “Guarantors”). Obligations under the Revolving Credit Facility are secured by first priority liens on certain of our assets and those of the Guarantors, including, among other things, intellectual property, inventory, accounts receivable, equipment and equity interests in subsidiaries.

We may borrow under the Revolving Credit Facility at either (1) a base rate, determined as the greatest of (A) the prime rate of Wells Fargo Bank, National Association, (B) the federal funds effective rate plus 1⁄2 of 1% and (C) Adjusted Term SOFR (as defined in the credit agreement governing the Revolving Credit Facility) for a one-month tenor plus 1%, in each case plus the applicable margin, which varies from 1.25% to 2.25% depending on our Consolidated Net Leverage Ratio (as defined in the credit agreement governing the Revolving Credit Facility), or (2) Adjusted Term SOFR plus the applicable margin, which varies from 2.25% to 3.25% depending on our Consolidated Net Leverage Ratio. We will also pay a facility fee based on the amount of the underlying commitment that is being utilized, which fee varies from 0.300% to 0.375%, with the higher rate owed when we use the facility less.

The Revolving Credit Facility includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted Consolidated Net Leverage Ratio is initially 4.00 to 1.00 and decreases to 3.25 to 1.00 during the term of the facility. The minimum Consolidated Interest Coverage Ratio (as defined in the credit agreement governing the Revolving Credit Facility) is 3.00 to 1.00 throughout the term of the facility. In addition, the Revolving Credit Facility contains various covenants

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that we believe are customary for agreements of this nature, including, but not limited to, restrictions on our ability and the ability of each of our subsidiaries to incur debt, grant liens, make certain investments, make distributions, merge or consolidate, sell assets and enter into certain restrictive agreements.

In connection with entering into the Revolving Credit Facility, on April 8, 2022, we terminated our Prior Revolving Credit Facility. No borrowings were outstanding under the Prior Revolving Credit Facility. We repaid all accrued fees and expenses in connection with the termination of the Prior Revolving Credit Facility and all commitments thereunder were terminated. No early termination penalties were incurred in connection with the termination of the Prior Revolving Credit Facility.

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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain statements we make in this quarterly report on Form 10-Q are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding our expectations about:

•the impacts of the coronavirus (“COVID-19”) pandemic and the Russia-Ukraine conflict on the ~~U.S.~~United States and the global economy, as well as on our business;

•our ~~second quarter 2021~~second-quarter 2022 operating results and the contributions from our segments to those results, as well as the amount of Unallocated Expenses for the second quarter;

•tax refunds under the U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and other tax refunds;

•our cash tax payments and projected capital expenditures for ~~2021;~~2022;

•free cash flow, which we define as net cash provided by operating activities less cash paid for purchases of property and equipment, in ~~2021~~2022 and in future periods;

•increased costs to operate our business, including the availability and market for our chartered vessels;

•future demand, order intake and business activity levels;

•the collectability of accounts receivable and realizability of contract assets at the amounts reflected on our most-recent balance sheet;

•the backlog of our Manufactured Products segment, to the extent backlog may be an indicator of future revenue or productivity;

•the adequacy of our liquidity, cash flows and capital resources;

•the condition of debt markets and our possible future debt repurchases;

•shares to be repurchased under our share repurchase plan;

•the implementation of new accounting standards and related policies, procedures and controls;

•our expectations about growth in the area of energy transition;

•seasonality; and

•industry conditions.

These forward-looking statements are subject to various risks, uncertainties and assumptions, including those we have referred to under the headings “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” in Part I of our annual report on Form 10-K for the year ended December 31, ~~2020.~~2021. Although we believe that the expectations reflected in such forward-looking statements are reasonable, because of the inherent limitations in the forecasting process, as well as the relatively volatile nature of the industries in which we operate, we can give no assurance that those expectations will prove to have been correct. Accordingly, evaluation of our future prospects must be made with caution when relying on forward-looking information.

The following discussion should be read in conjunction with “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our annual report on Form 10-K for the year ended December 31, ~~2020.~~

~~Realignment of Reportable Segments~~

As described in Note 10—“Business Segment Information” in the Notes to Consolidated Financial Statements included in this report, in the third quarter of 2020, we changed our organizational structure as part of the transformation to realign our businesses to achieve greater cost efficiencies and to bring together business units that frequently work together and promote increased synergies in bidding, project management and the use of offshore technicians. As a result, information that our chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance changed. Therefore, for the three months ended March 31, 2021 and 2020, we are reporting our financial results consistent with our newly realigned operating segments and have recast certain prior period amounts to conform to the way we internally manage our businesses and monitor segment performance. Our new structure aligns our company around five reportable segments: (1) Subsea Robotics; (2) Manufactured Products; (3) Offshore Projects Group (“OPG”); (4) Integrity Management & Digital Solutions (“IMDS”); and (5) Aerospace and Defense Technologies (“ADTech”).2021.

Overview of our Results and Guidance

Our diluted earnings (loss) per share for the three-month period ended March 31, ~~2021~~2022 were ~~$(0.09)~~$(0.19), as compared to ~~$(0.25)~~$(0.39) in the immediately preceding quarter and ~~$(3.71)~~$(0.09) for the corresponding period of the prior year. ~~We have continued to improve~~The three months ended March 31, 2022 operating results unfolded largely as expected, with higher costs for hiring and training of personnel and mobilization of equipment, as we prepared for significant activity increases which are expected for the remainder of 2022. These additional costs negatively impacted our ~~operating performance by driving operational efficiency, led by focusing on safety, quality~~

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~~and value-based solutions for~~2022, mostly within our ~~customers. Each~~energy segments, but each of our operating segments ~~reported~~still generated positive ~~adjusted~~ operating income in the first quarter of ~~2021.~~2022. In addition to these preparatory costs, our Offshore Projects Group (“OPG”) segment experienced cost overruns on a project and schedule changes that affected the timing of project work. The OPG shortfall was largely offset by lower Unallocated Expenses and slightly improved results from our Aerospace and Defense Technologies (“ADTech”) segment.

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During the first quarter of ~~2021,~~2022, we utilized ~~$1.7~~$81 million of cash in operating activities, primarily due to an increase in working capital associated with accounts receivable reflecting higher project milestones and customers payments in the fourth quarter of 2021 that were not replicated in the first quarter of 2022, along with cash utilized in the first quarter of 2022 for increased operating costs as we prepare for higher expected activity levels in the ~~payment~~remainder of 2022 and payments for accrued employee incentive payments related to attainment of specific performance goals in prior ~~periods was mostly offset by good operating performance.~~periods. In addition, ~~$11~~$19 million of cash was used for maintenance and growth capital expenditures. These ~~two~~ items were the largest contributors to our ~~$9.3~~$100 million cash reduction during the first quarter of ~~2021.~~2022.

~~Looking forward, we~~We believe ~~our consolidated~~market conditions continue to be supportive of a robust ramp-up in activity and pricing improvements, beginning in the second quarter ~~2021 results will improve sequentially on higher revenue. We anticipate~~of 2022 and continuing for the remainder of the year. In the second quarter of 2022, we expect significantly higher activity levels and operating results improvement in our Subsea Robotics and OPG segments, ~~higher~~increased activity levels and ~~relatively flat~~ operating results improvement in our ~~IMDS~~Integrity Management & Digital Solutions (“IMDS”) and ADTech segments, and ~~lower~~higher activity levels ~~and lower operating results~~ in our Manufactured Products segment. Unallocated Expenses are expected to average in the ~~low- to~~ mid-$30 million range.

On March 27, 2020, the CARES Act was signed into law in the United States. In accordance with the recently established rules and procedures under the CARES Act, we filed a 2014 refund claim to carry back our U.S. net operating loss generated in 2019 and amended our 2012 and 2013 federal income tax returns impacted by the net operating loss carryback. Prior to the enactment of the CARES Act, such net operating losses could only be carried forward. As a result, we expect to receive combined refunds of approximately $33 million, of which we have received $5.6 million as of March 31, 2021. The remaining refunds are classified as accounts receivable, net, in our consolidated balance sheet as of March 31, 2021.

Our cash tax payments for the full year of 2021 are estimated to be in the range of $40 million to $45 million, primarily due to taxes incurred in countries that impose tax on the basis of in-country revenue, without regard to the profitability of such operations. These cash tax payments do not include the impact of approximately $28 million of CARES Act tax refunds expected to be received in 2021.

We affirm our guidance range of $50 million to $70 million for capital expenditures for the full year of 2021. We remain committed to maintaining strong liquidity for the full year of 2021 and believe that our cash position, undrawn revolving credit facility, and debt maturity profile should provide us ample resources and time

~~to address potential opportunities to improve our returns.~~

Results of Operations

We operate in five business segments. ~~The~~Our segments are contained within two ~~businesses —~~ businesses—services and products provided primarily to the oil and gas industry, and to a lesser extent, the offshore renewables ~~and mobility solutions industries~~industry (“Energy Services and Products”), and services and products provided to non-energy industries ~~(“Aerospace~~(ADTech). Our four business segments within the Energy Services and ~~Defense Technologies”).~~Products business are Subsea Robotics, Manufactured Products, OPG and IMDS. We report our ADTech business as one segment. Our Unallocated Expenses are those not associated with a specific business segment.

Consolidated revenue and profitability information are as follows:


		Three Months Ended										Three Months Ended
(dollars in thousands)	(dollars in thousands)	Mar 31, 2021			Mar 31, 2020			Dec 31, 2020			(dollars in thousands)		Mar 31, 2022			Mar 31, 2021			Dec 31, 2021
Revenue	Revenue	$	437,553		$	536,668		$	424,262		Revenue		$	446,159		$	437,553		$	466,709
Gross Margin	Gross Margin	56,657			46,752			45,001			Gross Margin		45,480			56,657			79,163
Gross Margin %	Gross Margin %	13		%	9		%	11		%	Gross Margin %		10		%	13		%	17		%
Operating Income (Loss)	Operating Income (Loss)	13,783			(380,757)			480			Operating Income (Loss)		(1,039)			13,783			(12,572)
Operating Income (Loss) %	Operating Income (Loss) %	3		%	(71)		%	—		%	Operating Income (Loss) %		—		%	3		%	(3)		%

We generate a material amount of our consolidated revenue from contracts for services in the U.S. Gulf of Mexico in our OPG segment, which is usually more active in the second and third quarters, as compared to the rest of the year. The European operations of our IMDS segment are also seasonally more active in the second and third quarters. Revenue in our Subsea Robotics segment is subject to seasonal variations in demand, with our first quarter generally being the low quarter of the year. The level of our Subsea Robotics seasonality depends on the number of Remotely Operated Vehicles (“ROVs”) we have engaged in vessel-based subsea infrastructure

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inspection, maintenance, repair and installation, which is more seasonal than drilling support. Revenue in each of our Manufactured Products and ADTech segments generally has not been seasonal.

We had operating income (losses) of $(1.0) million, $14 million ~~$(381) million~~ and ~~$0.5~~$(13) million in the three-month periods ended March 31, ~~2021,~~2022, March 31, ~~2020~~2021 and December 31, ~~2020,~~2021, respectively. Included in our operating income (losses) for the three months ended March 31, 2021 ~~March 31, 2020 and December 31, 2020~~ were charges of $1.3 million ~~$386 million and $9.1 million, respectively, primarily due to market conditions requiring impairment of certain of our assets along with~~for other costs we recognized as we adapted our geographic footprint and staffing levels to the conditions of the markets we serve. Included in our operating income (losses) for the three months ended December 31, 2021 were charges of $30 million primarily due to the net loss related to the termination of a number of entertainment ride systems contracts with the financially embattled developer, China Evergrande Group and its affiliated companies (collectively, “Evergrande”). Charges included in the three months ended March 31, 2021 ~~March 31, 2020~~ and December 31, ~~2020~~2021 are summarized as follows:

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			For the three months ended March 31, 2021
(in thousands)			Subsea Robotics		Manufactured Products		Offshore Projects Group		Integrity Management & Digital Solutions		Aerospace and Defense Technologies		Unallocated Expenses		Total
Charges for the effects of:




	Other		$	395	$	537	$	149	$	217	$	10	$	—	$	1,308
		Total charges	$	395	$	537	$	149	$	217	$	10	$	—	$	1,308


			For the three months ended December 31, 2021
(in thousands)			Subsea Robotics		Manufactured Products		Offshore Projects Group		Integrity Management & Digital Solutions		Aerospace and Defense Technologies		Unallocated Expenses		Total
Charges for the effects of:



	Provision for Evergrande losses, net		$	—	$	29,549	$	—	$	—	$	—	$	—	$	29,549

		Total charges	$	—	$	29,549	$	—	$	—	$	—	$	—	$	29,549

For the three months ended March 31, 2020
(in thousands) Subsea Robotics Manufactured Products Offshore Projects Group Integrity Management & Digital Solutions Aerospace and Defense Technologies Unallocated Expenses Total
Charges for the effects of:
Long-lived assets impairments $ — $ 61,074 $ 7,522 $ 167 $ — $ — $ 68,763
Long-lived assets write-offs 7,328 — — — — — 7,328
Goodwill impairment 102,118 11,388 66,285 123,214 — — 303,005
Other 919 1,984 1,216 2,231 — 280 6,630
Total charges $ 110,365 $ 74,446 $ 75,023 $ 125,612 $ — $ 280 $ 385,726
There were no such charges of a similar nature during the three-month period ended March 31, 2022.

For the three months ended December 31, 2020
(in thousands) Subsea Robotics Manufactured Products Offshore Projects Group Integrity Management & Digital Solutions Aerospace and Defense Technologies Unallocated Expenses Total
Charges for the effects of:
Long-lived assets impairments $ — $ — $ 1,304 $ 378 $ — $ — $ 1,682
Long-lived assets write-offs — — 9,401 170 — — 9,571
Other 221 (3,489) 643 422 27 — (2,176)
Total charges $ 221 $ (3,489) $ 11,348 $ 970 $ 27 $ — $ 9,077

Energy Services and Products

The primary focus of our Energy Services and Products business over the last several years has been toward ~~leveraging~~instituting operational efficiency programs that leverage our asset base and capabilities for providing services and products predominantly for offshore energy

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operations and subsea completions, inclusive of our customers’ capital and operating ~~expenses~~budgets. Increasingly, our efforts in our Energy Services business have focused on assisting our customers to reduce their carbon emissions in exploring for, developing and producing oil and natural gas and in addressing the ongoing energy transition. We are also focused on opportunities to develop and deploy our capabilities to grow business in offshore ~~renewable~~wind installations (both fixed and floating) and tidal energy ~~market.~~solutions and to utilize our core competencies to provide engineered solutions to the wind, hydrogen and carbon-capture-and-sequestration (“CCS”) markets, as well as expanding our asset integrity management and digital solutions for those markets.

The table that follows sets out ~~the~~ revenue and profitability for the business segments within our Energy Services and Products business. In the Subsea Robotics section of the table that follows, “ROV days available” includes all days from the first day that an ROV is placed into service until the ROV is retired. All days in this period are considered available days, including periods when an ROV is undergoing maintenance or repairs. Our ROVs do not have scheduled maintenance or repair that requires significant time when the ROVs are not available for utilization.

Three Months Ended
(dollars in thousands) Mar 31, 2021 Mar 31, 2020 * Dec 31, 2020
Subsea Robotics
Revenue $ 119,119 $ 139,770 $ 114,711
Gross Margin 24,078 19,473 24,777
Operating Income (Loss) 14,619 (94,083) 14,477
Operating Income (Loss) % 12 % (67) % 13 %
ROV Days Available 22,469 22,750 22,999
ROV Days Utilized 11,887 14,853 12,456
ROV Utilization 53 % 65 % 54 %

Manufactured Products
Revenue 86,825 166,534 99,899
Gross Margin 10,004 17,949 20,092
Operating Income (Loss) 2,753 (66,138) 12,218
Operating Income (Loss) % 3 % (40) % 12 %
Backlog at End of Period 248,000 419,000 266,000
Offshore Projects Group
Revenue 89,234 74,254 67,821
Gross Margin 15,111 2,095 (2,367)
Operating Income (Loss) 8,813 (79,323) (9,940)
Operating Income (Loss) % 10 % (107) % (15) %
Integrity Management & Digital Solutions
Revenue 54,048 64,729 54,307
Gross Margin 8,209 9,792 7,396
Operating Income (Loss) 2,474 (121,535) 892
Operating Income (Loss) % 5 % (188) % 2 %
Total Energy Services and Products
Revenue $ 349,226 $ 445,287 $ 336,738
Gross Margin 57,402 49,309 49,898
Operating Income (Loss) 28,659 (361,079) 17,647
Operating Income (Loss) % 8 % (81) % 5 %
* Recast to reflect segment changes.

In general, our Energy Services and Products business focuses on supplying services and products to the oil and gas industry, and to a lesser extent, the offshore renewables and mobility solutions industries. The adverse impacts of the COVID-19 pandemic and the associated supply and demand imbalance along with lower crude oil prices

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have resulted in lower levels of activity and profitability. As we expect a recovery will take time to restore profitability and generate satisfactory returns, we have been reviewing our cost structure and aggressively implementing cost improvement initiatives.


		Three Months Ended
(dollars in thousands)		Mar 31, 2022			Mar 31, 2021			Dec 31, 2021
Subsea Robotics
	Revenue	$	127,989		$	119,119		$	134,315
	Gross Margin	21,958			24,078			28,199
	Operating Income (Loss)	11,552			14,619			21,012
	Operating Income (Loss) %	9		%	12		%	16		%
	ROV Days Available	22,500			22,469			23,021
	ROV Days Utilized	11,842			11,887			12,747
	ROV Utilization	53		%	53		%	55		%

Manufactured Products
	Revenue	82,692			86,825			102,940
	Gross Margin	11,002			10,004			36,516
	Operating Income (Loss)	2,643			2,753			(20,228)
	Operating Income (Loss) %	3		%	3		%	(20)		%
	Backlog at End of Period	334,000			248,000			318,000

Offshore Projects Group
	Revenue	97,397			89,234			85,356
	Gross Margin	7,737			15,111			12,846
	Operating Income (Loss)	666			8,813			6,754
	Operating Income (Loss) %	1		%	10		%	8		%

Integrity Management & Digital Solutions
	Revenue	56,570			54,048			60,469
	Gross Margin	9,199			8,209			12,416
	Operating Income (Loss)	3,508			2,474			6,015
	Operating Income (Loss) %	6		%	5		%	10		%

Total Energy Services and Products
	Revenue	$	364,648		$	349,226		$	383,080
	Gross Margin	49,896			57,402			89,977
	Operating Income (Loss)	18,369			28,659			13,553
	Operating Income (Loss) %	5		%	8		%	4		%

Subsea Robotics. We believe we are the world's largest provider of work-class ROV services and, generally, this business segment has been the largest contributor to our Energy Services and Products business operating income. Our Subsea Robotics segment revenue reflects the utilization percentages, fleet sizes and average pricing in the respective periods. Our survey services business provides survey and positioning, and geoscience services. The following table presents revenue from ROV as a percentage of total Subsea Robotics revenue:


		Three Months Ended							Three Months Ended
		Mar 31, 2021		Mar 31, 2020 *		Dec 31, 2020				Mar 31, 2022		Mar 31, 2021		Dec 31, 2021
ROV	ROV	78	%	80	%	80	%	ROV		76	%	78	%	77	%

Other	Other	22	%	20	%	20	%	Other		24	%	22	%	23	%

* Recast to reflect segment changes.

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During the first quarter of ~~2021,~~2022, Subsea Robotics operating income ~~was flat~~decreased on ~~slightly higher~~lower revenue as compared to the immediately preceding quarter, primarily due to seasonal factors resulting in reduced ROV and increased costs associated with hiring, training and asset preparedness for higher ~~ROV drill support days and survey activity.~~expected activity levels in the remainder of 2022. Pricing for the various Subsea Robotics services remained stable during the first quarter of ~~2021.~~2022. Subsea Robotics operating income for the first quarter of 2021 increased as compared to the corresponding period of the prior year, due to charges of $110 million in the first quarter of 2020 for goodwill impairment, write-offs of certain equipment, and other expenses. Exclusive of those charges, Subsea Robotics operating income for the first quarter of 20212022 decreased on higher revenue as compared to the corresponding period of the prior year, as a result of ~~fewer ROV days on hire.~~increased costs in 2022 associated with hiring, training and asset preparedness for higher expected activity levels in the remainder of 2022.

For the three-month period ended March 31, 2022, days on hire were lower when compared to the immediately preceding quarter, due to typical lower seasonal activity. Fleet utilization ~~decreased~~was to 53% in the three-month period ended March 31, ~~2021 from 54%~~2022 as compared to 55% and ~~65%~~53% for the three-month periods ended December 31, ~~2020~~2021 and March 31, ~~2020,~~2021, respectively. We ~~added~~retired four of our conventional work-class ROV systems and replaced them with three ~~new ROVs to our fleet~~upgraded conventional work-class ROV systems and one IsurusTM work-class ROV system (which is capable of operating in high-current conditions and is ideal for renewables projects and high-speed surveys) during the three months ended March 31, ~~2021 and retired three,~~2022, resulting in a total of 250 ROVs in our ROV fleet as of both March 31, ~~2021~~2022 and March 31, ~~2020.~~2021.

Manufactured Products. Our Manufactured Products segment provides distribution systems such as production control umbilicals and connection systems made up of specialty subsea hardware, and provides turnkey solutions that include program management, engineering design, fabrication/assembly and installation of autonomous mobile robot technology to the commercial theme park industry and ~~mobile robotics solutions, including automated guided vehicle (“AGV”) technology to~~ a variety of other industries.

Our Manufactured Products operating results in the first quarter of ~~2021~~2022 were ~~lower~~higher than those of the immediately preceding quarter, ~~on lower revenue. First quarter~~due to $30 million of ~~2021 operating results did not benefit from favorable contract close-outs and negotiated supply chain savings that occurred~~charges in the fourth quarter of ~~2020. Activity~~2021 for the net loss related to the termination of a number of entertainment ride systems contracts with Evergrande. The net loss in 2021 related to Evergrande included a reserve of $49 million in receivables and contract assets partially offset by the reclassification of $20 million of contract assets into salable inventory. Exclusive of those charges, our Manufactured Products operating results were lower in the three-month period ended March 31, 2022 as compared to the corresponding period in the prior year, primarily due to the inability to fully absorb the fixed costs of the segment over a reduced revenue base. Our energy products businesses experienced good order intake while activity in our mobility solutions businesses remained weak during the first quarter of ~~2021.~~2022. Manufactured Products operating income for the first quarter of ~~2021 increased~~2022 was relatively flat as compared to the corresponding period of the prior year due to charges of $74 million in the first quarter of 2020 for long-lived asset and goodwill impairments, and other expenses. Exclusive of those charges, Manufactured Products operating income decreased as compared to the corresponding period of the prior year as a result of increased activity in subsea umbilical and hardware throughput in the first quarter of 2020 that did not occur in the first quarter of 2021.on lower revenue.

Our Manufactured Products backlog was ~~$248~~$334 million as of March 31, ~~2021~~2022 compared to ~~$266~~$318 million as of December 31, 2020. The backlog decrease was attributable to reduced levels of bookings in 2021 in both our energy-related and non-energy related operations. Many of our energy-related Manufactured Products customers have delayed investment decisions due to low oil demand and pricing through much of 2020, while many of our non-energy-related customers have delayed investment decisions due to uncertainties regarding COVID-19 and the related potential operating risks.2021. Our book-to-bill ratio was ~~0.6~~1.2 for the trailing 12 months, as compared with a book-to-bill ratio of ~~0.4~~1.1 for the year ended December 31, ~~2020.~~2021.

Offshore Projects Group. Our OPG segment provides a broad portfolio of integrated subsea project capabilities and ~~solutions, including~~ solution as follows:

•subsea installation and mechanical and hydraulic intervention, including riserless light well intervention

(“RLWI”) services and inspection, maintenance and repair (“IMR”) services, utilizing owned and chartered vessels;

•installation and workover control systems (“IWOCS”)

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and ROV workover control systems (“RWOCS”), ;

•project management and ~~engineering,~~engineering; and ~~seabed preparation, route clearance~~

•drill pipe riser services and ~~trenching services.~~systems and wellhead load relief solutions.

Our OPG operating results ~~improved~~were lower in the first quarter of 2021 as compared to the immediately preceding quarter, due to fourth quarter charges of $11 million for asset impairments and write-offs and other expenses. Exclusive of those charges, our OPG operating results increased in the first quarter of 20212022 as compared to the immediately preceding quarter, on higher revenue, primarily due to cost overruns on a project and lower-than-expected vessel utilization resulting from schedule changes that affected the ~~start-up~~timing of ~~field activities on~~project work. As with our other offshore service businesses, we also experienced higher costs in the ~~riserless light well intervention project~~first quarter of 2022 associated with hiring and equipment readiness in ~~Angola.~~preparation for expected increased activity in the remainder of 2022. Our OPG operating results ~~improved~~were lower in the three months ended March 31, 2021 compared to the corresponding period of the prior year, due to first quarter 2020 charges of $75 million for goodwill and asset impairments and other expenses. Exclusive of those charges, our OPG operating results were higher in the three-month period ended March 31, 2021 as2022 compared to the corresponding period of the prior year, primarily due to activity on the ~~year-over-year contribution from our~~ Angola riserless light well intervention ~~campaign discussed above.~~project in the first quarter of 2021 with no comparable activity in the first quarter of 2022.

Integrity Management & Digital Solutions. Through our IMDS segment we provide asset integrity management, corrosion management, inspection and nondestructive testing services, principally to customers in the oil and gas,

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power generation and petrochemical industries. We perform these services on both onshore and offshore facilities, both topside and subsea. We also provide software, digital and connectivity ~~solution~~solutions for the energy industry and software and analytical solutions for the bulk cargo maritime industry.

Our IMDS operating results for the first quarter of ~~2021 improved,~~2022 were lower, as compared to the immediately preceding quarter, ~~on flat revenue,~~ primarily due to ~~improved execution.~~a seasonal decrease in revenue combined with less efficient absorption of fixed costs. IMDS operating results for the three-month period ended March 31, ~~2021~~2022 as compared to the corresponding period of the prior year, improved primarily due to charges in the first quarter of 2020 of $126 million for goodwill and asset impairments and other expenses. Exclusive of those charges, operating results for the three-month period ended March 31, 2021 were lower as compared to the corresponding period of the prior year, due toon higher ~~pre-COVID~~ activity ~~levels in the first quarter of 2020.~~levels.

Aerospace and Defense Technologies. Our ADTech segment provides government services and products, including engineering and related manufacturing in defense and space exploration activities, principally to U.S. government agencies and their prime contractors.

Revenue, gross margin and operating income (loss) information for our ADTech segment are as follows:


		Three Months Ended										Three Months Ended
(dollars in thousands)	(dollars in thousands)	Mar 31, 2021			Mar 31, 2020 *			Dec 31, 2020			(dollars in thousands)		Mar 31, 2022			Mar 31, 2021			Dec 31, 2021
Revenue	Revenue	$	88,327		$	91,381		$	87,524		Revenue		$	81,511		$	88,327		$	83,629
Gross Margin	Gross Margin	22,110			17,485			20,328			Gross Margin		16,870			22,110			15,863
Operating Income (Loss)	Operating Income (Loss)	16,839			12,971			16,525			Operating Income (Loss)		11,844			16,839			10,562
Operating Income (Loss) %	Operating Income (Loss) %	19		%	14		%	19		%	Operating Income (Loss) %		15		%	19		%	13		%

* Recast to reflect segment changes.

Our ADTech segment operating results for the first quarter of ~~2021~~2022 were ~~marginally~~slightly higher as compared to the immediately preceding quarter, on ~~flat revenue.~~slightly lower revenue, due to a favorable project mix. ADTech operating results for the three-month period ended March 31, ~~2021~~2022 were ~~slightly higher~~lower when compared to the corresponding period of the prior year, on ~~slightly~~ lower revenue due to ~~increased~~decreased activity in both defense subsea technologies and space systems.

Unallocated Expenses

Our Unallocated Expenses (i.e., those not associated with a specific business segment) within gross margin consist of expenses related to our incentive and deferred compensation plans, including restricted stock units, performance units and bonuses, as well as other general expenses. Our Unallocated Expenses within operating expense consist of those expenses within gross margin plus general and administrative expenses related to corporate functions.

~~Table of Content~~s

The following table sets forth our Unallocated Expenses for the periods indicated:


		Three Months Ended									Three Months Ended
(dollars in thousands)	(dollars in thousands)	Mar 31, 2021			Mar 31, 2020			Dec 31, 2020		(dollars in thousands)		Mar 31, 2022			Mar 31, 2021			Dec 31, 2021
Gross margin expenses	Gross margin expenses	$	(22,855)		$	(20,042)		(25,225)		Gross margin expenses		$	(21,286)		$	(22,855)		(26,677)
% of revenue	% of revenue	5		%	4		%	6	%	% of revenue		5		%	5		%	6	%
Operating expenses	Operating expenses	(31,715)			(32,649)			(33,692)		Operating expenses		(31,252)			(31,715)			(36,687)
Operating expenses % of revenue	Operating expenses % of revenue	7		%	6		%	8	%	Operating expenses % of revenue		7		%	7		%	8	%

Our unallocated operating expenses for the first quarter of 2022 were lower as compared to the immediately preceding quarter primarily due to lower accruals in 2022 for incentive-based compensation. Our Unallocated operating expenses for the first quarter of 2021 were lower as compared to the immediately preceding quarter due to lower expenses for information technology-related projects resulting from timing delays. Our Unallocated operating expenses for the first quarter of 20212022 were relatively flat as compared to the corresponding period of the prior year.

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Other

The following table sets forth our significant financial statement items below the income (loss) from operations line.


		Three Months Ended							Three Months Ended
(in thousands)	(in thousands)	Mar 31, 2021		Mar 31, 2020		Dec 31, 2020		(in thousands)		Mar 31, 2022		Mar 31, 2021		Dec 31, 2021
Interest income	Interest income	$	519	$	1,277	$	881	Interest income		$	796	$	519	$	613
Interest expense, net of amounts capitalized	Interest expense, net of amounts capitalized	(10,407)		(12,462)		(10,577)		Interest expense, net of amounts capitalized		(9,443)		(10,407)		(9,058)
Equity in income (losses) of unconsolidated affiliates	Equity in income (losses) of unconsolidated affiliates	534		1,197		266		Equity in income (losses) of unconsolidated affiliates		294		534		(507)
Other income (expense), net	Other income (expense), net	(1,453)		(7,128)		(645)		Other income (expense), net		444		(1,453)		(5,547)
Provision (benefit) for income taxes	Provision (benefit) for income taxes	12,341		(30,275)		15,405		Provision (benefit) for income taxes		10,262		12,341		11,742

In addition to interest on borrowings, interest expense, net of amounts capitalized, includes amortization of loan costs and ~~hedge accounting adjustments,~~interest rate swap gains, fees for lender commitments under our revolving credit agreement and fees for standby letters of credit and bank guarantees that banks issue on our behalf for performance bonds, bid bonds and self-insurance requirements.

Foreign currency transaction gains and losses are the principal component of other income (expense), net. In the three-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, we incurred foreign currency transaction gains (losses) of ~~$(1.9)~~$0.4 million and ~~$(7.1)~~$(1.9) million, respectively. The currency ~~losses~~gains (losses) in the ~~2021~~2022 and ~~2020~~2021 periods were primarily related to ~~declining~~increasing (declining) exchange rates for the Angolan kwanza ~~and the Brazilian real~~ relative to the U.S. dollar. We could incur further foreign currency exchange losses in Angola ~~and Brazil~~ if further currency devaluations occur.

Our tax provision is based on (1) our earnings for the period and other factors affecting the tax provision and (2) the operations of foreign branches and subsidiaries that are subject to local income and withholding taxes. Factors that affect our tax rate include our profitability levels in general and the geographical mix of our results. The effective tax rate for the three-month periods ended March 31, ~~2021~~2022 and ~~2020~~2021 was different than the federal statutory rate of 21%, primarily due to the geographical mix of ~~operating~~ revenue and ~~results,~~earnings, changes in valuation allowances and uncertain tax positions, and other discrete ~~items. Therefore,~~items; therefore, we do not believe a discussion of the ~~annual~~ effective tax rate is meaningful. We continue to make an assertion to indefinitely reinvest the unrepatriated earnings of any foreign subsidiary that would incur incremental tax consequences upon the distribution of such earnings.

On March 27, 2020, the CARES Act was signed into law in the United States. In accordance with the ~~recently established~~ rules and procedures under the CARES Act, we filed a 2014 refund claim to carry back our U.S. net operating loss generated in 2019 and amended our ~~2012 and~~ 2013 federal income tax ~~returns~~return impacted by the net

operating loss carryback. Prior to enactment of the CARES Act, such net operating losses could only be carried forward. As a result, we ~~expect~~expected to receive combined refunds of approximately $33 million, of which we have received ~~$5.6~~$10 million as of March 31, ~~2021.~~2022. The remaining refunds are classified as accounts receivable, net, in our consolidated balance sheet as of March 31, ~~2021.~~2022.

~~Table~~Our income tax payments for the full year of ~~Content~~s

2022 are estimated to be in the range of $40 million to $45 million, which includes taxes incurred in countries that impose tax on the basis of in-country revenue, without regard to the profitability of such operations. These cash tax payments do not include expected refunds of approximately $23 million under the CARES Act.

Liquidity and Capital Resources

We consider our liquidity ~~cash flows~~ and capital resources adequate to support our operations, capital commitments and growth initiatives. As of March 31, ~~2021,~~2022, we had working capital of ~~$745~~$677 million, including ~~$443 million of~~ cash and cash ~~equivalents.~~equivalents of $438 million. Additionally, as of March 31, 2022, we had ~~$500~~$450 million available through our prior revolving credit facility ~~under~~(“Prior Revolving Credit Facility”). In April 2022, we entered into a new senior secured revolving credit ~~agreement further described below.~~facility (the “Revolving Credit Facility”) that replaced our Prior Revolving Credit Facility. The Revolving Credit Facility provides a borrowing base of $215 million and includes a $100 million sublimit for the issuance of letters of credit. We remain committed to maintaining strong liquidity for the full year of 2022 and believe that our cash position, undrawn Revolving Credit Facility, and debt maturity profile should provide us ample resources and time to address potential opportunities to improve our returns. See Note 10—“Subsequent Event” in

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the Notes to Consolidated Financial Statements in this quarterly report for information on the retirement of our Prior Revolving Credit Facility and entry into a new senior secured credit facility in April 2022.

Amendment No. 4 to the Credit Agreement (as defined below) provides for a $500 million revolving credit facility until October 25, 2021 and thereafter $450 million until January 25, 2023 with a group of banks. Our ~~revolving credit facility provided under the Credit Agreement was undrawn as of March 31, 2021, and remains undrawn as of the date of this report, and our~~ nearest maturity of indebtedness is our ~~$500~~$400 million of 2024 Notes (as defined below) due in November 2024. ~~Given that~~In 2021, we repurchased $100 million in aggregate principal amount of the 2024 Senior Notes ~~are currently trading at market discount to principal amount, we~~in open-market transactions. We may, from time to time, complete additional limited repurchases of the 2024 Notes, via open-market or privately negotiated repurchase transactions or otherwise, prior to their maturity date. We can provide no assurances as to the timing of any such additional repurchases or whether we will complete any such repurchases at all. We do not intend to disclose further information regarding any such repurchase transactions, except to the extent required in our subsequent periodic filings on Forms 10-K or 10-Q, or unless otherwise required by applicable law.

Cash flows for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are summarized as follows:

Three Months Ended
(in thousands) Mar 31, 2021 Mar 31, 2020
Changes in Cash:
Net Cash Used in Operating Activities $ (1,723) $ (32,150)
Net Cash Used in Investing Activities (5,007) (26,706)
Net Cash Used in Financing Activities (1,806) (1,668)
Effect of exchange rates on cash (737) (5,671)
Net Increase (Decrease) in Cash and Cash Equivalents $ (9,273) $ (66,195)



		Three Months Ended
	(in thousands)	Mar 31, 2022		Mar 31, 2021
Changes in Cash:
	Net Cash Used in Operating Activities	$	(80,501)	$	(1,723)
	Net Cash Used in Investing Activities	(19,283)		(5,007)
	Net Cash Used in Financing Activities	(2,202)		(1,806)
	Effect of exchange rates on cash	1,891		(737)
	Net Increase (Decrease) in Cash and Cash Equivalents	$	(100,095)	$	(9,273)

Operating activities

Our primary sources and uses of cash flows from operating activities for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are as follows:

Three Months Ended
(in thousands) Mar 31, 2021 Mar 31, 2020
Cash Flows from Operating Activities:
Net income (loss) $ (9,365) $ (367,598)
Non-cash items, net 36,106 420,333
Accounts receivable and contract assets (11,616) 30,303
Inventory 10,628 8,384
Current liabilities (20,373) (102,784)
Other changes (7,103) (20,788)
Net Cash Provided by (Used in) Operating Activities $ (1,723) $ (32,150)



		Three Months Ended
	(in thousands)	Mar 31, 2022		Mar 31, 2021
Cash Flows from Operating Activities:
	Net income (loss)	$	(19,210)	$	(9,365)
	Non-cash items, net	32,611		36,106
	Accounts receivable and contract assets	(47,580)		(11,616)
	Inventory	(8,578)		10,628
	Current liabilities	(35,726)		(20,373)
	Other changes	(2,018)		(7,103)
	Net Cash Provided by (Used in) Operating Activities	$	(80,501)	$	(1,723)

The decrease in cash related to accounts receivable and contract assets in the three months ended March 31, ~~2021~~2022 reflects the timing of project milestones and customer payments. The ~~increase~~decrease in cash related to inventory in the three months ended March 31, ~~2021~~2022 corresponds with ~~a decrease~~an increase in our backlog. The decrease in cash related to current liabilities in the three months ended March 31, ~~2021~~2022 reflects the timing of vendor payments and the annual employee incentive payments related to attainment of specific performance goals in prior periods.

~~Table of Content~~s

Investing activities

Our capital expenditures of ~~$11~~$19 million were ~~lower~~higher during the first three months of ~~2021,~~2022, as compared to ~~$27~~$11 million in the first three months of ~~2020, as a result~~2021, primarily due to increased spending in our Subsea Robotics segment to upgrade our fleet of ~~actions we have taken in 2021 and 2020 to reduce costs and preserve liquidity.~~work-class ROVs along with increased unallocated capital expenditures for information technology systems.

For ~~2021,~~2022, we expect our organic capital expenditures to be in the range of ~~$50~~$70 million to ~~$70~~$90 million. This includes approximately ~~$35~~$40 million to ~~$40~~$45 million of maintenance capital expenditures and ~~$15~~$30 million to ~~$30~~$45 million of growth capital expenditures.

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We ~~previously had~~have several deepwater vessels under a mix of short-term charters where we can see firm workload and spot charters as market opportunities arise, along with one long-term ~~charter. The last of our long-term charters expired~~charter that began in the three-months ended March ~~2018.~~31, 2022. With the current market conditions, ~~our philosophy is to attempt to~~we anticipate adding additional charter vessels ~~for specific projects on a back-to-back basis or short-term time charter party arrangements with~~throughout the ~~vessel owners. This generally minimizes our contract exposure by closely matching our obligations~~year to align with our ~~revenue.~~strategy that balances vessel cost, availability and capability to capture work. We expect to do this through the continued utilization of a mix of short-term, spot and long-term charters.

Financing activities

In the three months ended March 31, ~~2021,~~2022, we used ~~$1.8~~$2.2 million of cash in financing activities. In the three months ended March 31, ~~2020,~~2021, we used ~~$1.7~~$1.8 million in financing activities.

As of March 31, ~~2021,~~2022, we had long-term debt in the principal amount of ~~$800~~$700 million outstanding and ~~$500~~$450 million available under our ~~revolving~~Prior Revolving Credit Facility. See Note 10—“Subsequent Event” in the Notes to Consolidated Financial Statements in this quarterly report for information on the retirement of our Prior Revolving Credit Facility and entry into a new senior secured credit facility ~~provided under~~in April 2022. As of March 31, 2022, we were in compliance with all the covenants set forth in the Prior Credit Agreement.

In October 2014, we entered into a credit agreement (as amended, the “Credit Agreement”) with a group of banks. The Credit Agreement initially provided for a $500 million five-year revolving credit facility (the “Revolving Credit Facility”). Subject to certain conditions, the aggregate commitments under the Revolving Credit Facility may be increased by up to $300 million at any time upon agreement between us and existing or additional lenders. Borrowings under the Revolving Credit Facility may be used for general corporate purposes. The Credit Agreement also provided for a $300 million term loan, which we repaid in full in February 2018, using net proceeds from the issuance of our 2028 Senior Notes (as defined and discussed below), and cash on hand.

In February 2018, we entered into Agreement and Amendment No. 4 to the Credit Agreement (“Amendment No. 4”). Amendment No. 4 amended the Credit Agreement to, among other things, extend the maturity of the Revolving Credit Facility to January 25, 2023 with the extending lenders, which represent 90% of the existing commitments of the lenders, such that the total commitments for the Revolving Credit Facility will be $500 million until October 25, 2021, and thereafter $450 million until January 25, 2023.

Borrowings under the Revolving Credit Facility bear interest at an Adjusted Base Rate or the Eurodollar Rate (both as defined in the Credit Agreement), at our option, plus an applicable margin based on our Leverage Ratio (as defined in the Credit Agreement) and, at our election, based on the ratings of our senior unsecured debt by designated ratings services, thereafter to be based on such debt ratings. The applicable margin varies: (1) in the case of advances bearing interest at the Adjusted Base Rate, from 0.125% to 0.750%; and (2) in the case of advances bearing interest at the Eurodollar Rate, from 1.125% to 1.750%. The Adjusted Base Rate is the highest of (1) the per annum rate established by the administrative agent as its prime rate, (2) the federal funds rate plus 0.50% and (3) the daily one-month LIBOR plus 1%. We pay a commitment fee ranging from 0.125% to 0.300% on the unused portion of the Revolving Credit Facility, depending on our Leverage Ratio. The commitment fees are included as interest expense in our consolidated financial statements.

~~Table of Content~~s

We may redeem some or all of the 2024 Senior Notes and 2028 Senior Notes at specified redemption prices. In 2021, we repurchased $100 million in aggregate principal amount of the 2024 Senior Notes in open-market transactions.

In December 2014, our Board of Directors approved a plan to repurchase up to 10 million shares of our common stock. In 2015, we repurchased 2.0 million shares under this plan. We have not repurchased any shares under this plan since December 2015. We account for the shares we hold in treasury under the cost method, at average cost. The timing and amount of any future repurchases will be determined by our management. We expect that any additional shares repurchased under the plan will be held as treasury stock for possible future use. The plan does not obligate us to repurchase any particular number of shares.

Off-Balance Sheet Arrangements

We have not guaranteed any debt not reflected on our Consolidated Balance Sheets as of March 31, ~~2021,~~2022, and we do not have any off-balance sheet arrangements, as defined by ~~SEC~~Securities and Exchange Commission's rules.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States. These principles require us to make various estimates, judgments and assumptions that affect the reported amounts in our financial statements and accompanying notes. We disclose our significant accounting policies in Notes to Consolidated Financial Statements—Note 1—“Summary of Major Accounting Policies” in this quarterly report and in our annual report on Form 10-K for the year ended December 31, ~~2020,~~2021, in Part II. Item 7. “Financial Statements and Supplementary Data—Note 1—Summary of Major Accounting Policies.”

For information about our critical accounting policies and estimates, see Part II. Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our annual report on Form 10-K for the year ended December 31, ~~2020.~~2021. As of March 31, ~~2021,~~2022, there have been no material changes to the judgments, assumptions and estimates upon which our critical accounting policies and estimates are based.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

We are currently exposed to certain market risks arising from transactions we have entered into in the normal course of business. These risks relate to interest rate changes and fluctuations in foreign exchange rates. Except for our exposure in Angola, we do not believe these risks are material. We have not entered into any market-risk-sensitive instruments for speculative or trading purposes. When we have a significant amount of borrowings, we typically manage our exposure to interest rate changes through the use of a combination of fixed- and floating-rate debt. See Note 7—“Debt” in the Notes to Consolidated Financial Statements in this quarterly report for a description of our revolving credit facility and interest rates on our ~~borrowings. We had two interest rate swaps~~borrowings and Note 10—“Subsequent Event” in ~~place relating to a total of $200 million of~~ the ~~2024 Senior Notes. These agreements swapped the fixed interest rate of 4.650% on $100 million of the 2024 Senior~~ Notes to Consolidated Financial Statements in this quarterly report for information on the ~~floating rate~~retirement of ~~one-month LIBOR plus 2.426%~~our Prior Revolving Credit Facility and ~~on another $100 million to one-month LIBOR plus 2.823%. In March 2020, we terminated these interest rate swaps.~~entry into a new senior secured revolving credit facility in April 2022. We believe significant interest rate changes would not have a material near-term impact on our future earnings or cash flows.

Because we operate in various regions in the world, we conduct a portion of our business in currencies other than the U.S. dollar. The functional currency for most of our international operations is the applicable local currency. A stronger U.S. dollar against the United Kingdom pound sterling, the Norwegian kroner and the Brazilian real could result in lower operating income. We manage our exposure to changes in foreign exchange rates principally through arranging compensation in U.S. dollars or freely convertible currency and, to the extent possible, by limiting compensation received in other currencies to amounts necessary to meet obligations denominated in those currencies. We use the exchange rates in effect as of the balance sheet date to translate assets and liabilities when the functional currency is the local currency, resulting in translation adjustments that we reflect as accumulated other comprehensive income or loss in the equity section of our Consolidated Balance Sheets. We recorded net adjustments to our equity accounts of ~~$(2.9)~~$9.9 million and ~~$(70)~~$(2.9) million in the three-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Negative adjustments reflect the net impact of the strengthening of the U.S. dollar against various foreign currencies for locations where the functional currency is not the U.S. dollar. Conversely, positive adjustments reflect the effect of a weakening U.S. dollar.

We recorded foreign currency transaction gains (losses) of ~~$(1.9)~~$0.4 million and ~~$(7.1)~~$(1.9) million in the three-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. We recorded foreign currency transaction ~~losses~~gains (losses) related to the Angolan kwanza ~~and Brazilian real~~ as a component of other income (expense), net in our Consolidated Statements of Operations in those respective periods. Foreign currency gains (losses) related to the Brazilian real of $(0.1) million and $(4.0) million in the three-month periods ended March 31, 2021 and 2020, respectively, were primarily due to the remeasurement of our U.S. dollar denominated liability balances to the Brazilian real. Foreign currency transaction gains (losses) related to the Angolan kwanza of ~~$(1.4)~~$0.9 million and ~~$(1.9)~~$(1.4) million in three-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively, were primarily due to the remeasurement of our Angolan kwanza cash balances to U.S. dollars. Any conversion of cash balances from kwanza to U.S. dollars is controlled by the central bank in Angola. During ~~2020,~~2021, we were able to repatriate ~~$11~~$4.5 million of cash from Angola.

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had the equivalent of approximately ~~$3.3~~$1.7 million and ~~$4.7~~$1.0 million, respectively, of kwanza cash balances in Angola reflected inon our Consolidated Balance Sheets.

To mitigate our currency exposure risk in Angola, we have used kwanza to purchase equivalent Angolan central bank (Banco Nacional de Angola) bonds. The bonds are denominated as U.S. dollar equivalents, so that, upon payment of semi-annual interest and principal upon maturity, payment is made in kwanza, equivalent to the respective U.S. dollars at the then-current exchange rate. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$9.2~~$6.2 million ~~and $10 million, respectively,~~ of Angolan bonds on our Consolidated Balance Sheets. During the three-month period ended March 31, 2021, we sold a portion of these bonds for $2.4 million. Because we intend to sell the bonds if we are able to repatriate the proceeds, we have classified these bonds as available-for-sale securities, and they are recorded in other current assets inon our Consolidated Balance Sheets. We did not sell any of our Angolan bonds in the three- month period ended March 31, 2022.

We estimated the fair market value of the Angolan bonds to be ~~$9.2 million and $10~~$6.4 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, using quoted market prices. Since the market for the Angolan bonds is not an active market, the fair value of the Angolan bonds is classified within Level 2 in the fair value hierarchy under U.S. GAAP. As of March 31, ~~2021,~~2022, we have ~~$1.1~~$0.2 million in unrealized gains, net of tax, related to these bonds as a component of accumulated other comprehensive loss inon our Consolidated Balance Sheets.

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Item 4. Controls and Procedures

In accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, ~~2021~~2022 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

There has been no change in our internal control over financial reporting that occurred during the three months ended March 31, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.Legal ~~Proceedings†~~Proceedings

For information regarding legal proceedings, see the discussion under the caption “Litigation” in Note 8—7—“Commitments and Contingencies” in the Notes to Consolidated Financial Statements included in this report, which discussion we incorporate by reference into this Item.

Item 6. Exhibits

Index to Exhibits
Registration or File Number Form of Report Report Date Exhibit Number
* 3.01
Restated Certificate of Incorporation
1-10945 10-K Dec. 2000 3.01
* 3.02
Certificate of Amendment to Restated Certificate of Incorporation
1-10945 8-K May 2008 3.1
* 3.03
Certificate of Amendment to Restated Certificate of Incorporation
1-10945 8-K May 2014 3.1
* 3.04
Amended and Restated Bylaws
1-10945 8-K Aug. 2020 3.01
* 10.01†
Form of 2021 Performance Unit Agreement
1-10945 8-K Feb. 2021 10.1
* 10.02†
Form of 2021 Restricted Stock Unit Agreement
1-10945 8-K Feb. 2021 10.2
* 10.03†
Form of 2021 Nonemployee Director Restricted Stock Agreement
1-10945 8-K Feb. 2021 10.3
* 10.04†
2021 Nonemployee Director Restricted Stock Agreement for Mr. Huff
1-10945 8-K Feb. 2021 10.4
* 10.05†
2021 Annual Cash Bonus Award Program Summary
1-10945 8-K Feb. 2021 10.5
31.01
Rule 13a – 14(a)/15d – 14(a) certification of principal executive officer
31.02
Rule 13a – 14(a)/15d – 14(a) certification of principal financial officer
32.01
Section 1350 certification of principal executive officer
32.02
Section 1350 certification of principal financial officer
101.INS
Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference.
† Management contract or compensatory plan or arrangement.

Index to Exhibits

Registration or File Number

Form of Report

Report Date

Exhibit Number

3.01

Restated Certificate of Incorporation

1-10945

10-K

Dec. 2000

3.01

3.02

Certificate of Amendment to Restated Certificate of Incorporation

1-10945

8-K

May 2008

3.1

3.03

Certificate of Amendment to Restated Certificate of Incorporation

1-10945

8-K

May 2014

3.1

3.04

Amended and Restated Bylaws

1-10945

8-K

Aug. 2020

3.01

10.01†

Form of 2022 Restricted Stock Unit Agreement

1-10945

8-K

Mar. 2022

10.1

10.02†

Form of 2022 Performance Unit Agreement

1-10945

8-K

Mar. 2022

10.2

10.03†

Form of 202 2 Nonemployee Director Restricted Stock Agreement

1-10945

8-K

Mar. 2022

10.3

10.05†

2022 Annual Cash Bonus Award Program Summary

1-10945

8-K

Mar. 2022

10.4

10.06

Credit Agreement, dated as of April 8, 2022, among Oceaneering International, Inc., as borrower, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent.

1-10945

8-K

Apr. 2022

10.1

31.01

Rule 13a – 14(a)/15d – 14(a) certification of principal executive officer

31.02

Rule 13a – 14(a)/15d – 14(a) certification of principal financial officer

32.01

Section 1350 certification of principal executive officer

32.02

Section 1350 certification of principal financial officer

101.INS

Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference.

†

Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



April ~~30, 2021~~29, 2022						/S/ RODERICK A. LARSON
Date						Roderick A. Larson
						President and Chief Executive Officer
						(Principal Executive Officer)


April ~~30, 2021~~29, 2022						/S/ ALAN R. CURTIS
Date						Alan R. Curtis
						Senior Vice President and Chief Financial Officer
						(Principal Financial Officer)


April ~~30, 2021~~29, 2022						/S/ WITLAND J. LEBLANC, JR.
Date						Witland J. LeBlanc, Jr.
						Vice President and Chief Accounting Officer
						(Principal Accounting Officer)

3633


		Three Months Ended March 31, 2020
(in thousands)		As originally recorded		As recast to reflect segment changes
Segment/Reporting Unit		Goodwill Impairment		Subsea Robotics		Manufactured Products		OPG		IMDS		Total
Subsea Products/ST&R		$	51,302	$	17,457	$	—	$	33,845	$	—	$	51,302
Subsea Projects/Subsea Projects		129,562		84,661		—		32,440		12,461		129,562
Asset Integrity/Asset Integrity		110,753		—		—		—		110,753		110,753
Advanced Technologies/Commercial		11,388		—		11,388		—		—		11,388
	Total goodwill impairment	$	303,005	$	102,118	$	11,388	$	66,285	$	123,214	$	303,005