OCEANEERING INTERNATIONAL, INC.
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 on the United States and
the global economy, as well as on our business;
•our fourth-quarter 2021 operating results and the contributions from our
segments to those results, as well as the amount of Unallocated Expenses for the
fourth 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;
•free cash flow, which we define as net cash provided by operating activities
less cash paid for purchases of property and equipment, in 2021 and in future
periods;
•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;
•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 .
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
Overview of our Results and Guidance
Our diluted earnings (loss) per share for the three- and nine-month periods endedSeptember 30, 2021 were$(0.07) and$(0.11) , respectively, as compared to$(0.80) and$(4.76) for the corresponding periods of the prior year. These operating results met our expectations, and each of our operating segments in the three- and nine-month periods endedSeptember 30, 2021 contributed operating income. Our planning and preparation were instrumental in our team's ability to navigate through the challenges presented during the third quarter, which included hurricanes, inflation, a tightening labor market, and a constrained global supply chain. As expected, our operating results declined in the third quarter of 2021, as compared to the second quarter of 2021. Offshore work in our energy-focused businesses remained seasonally active during the third quarter. However, our operations in theGulf of Mexico were impacted by Hurricane Ida and high loop currents. During the first nine months of 2021, our cash decreased$4.3 million , primarily from the repurchase of$63 million in aggregate principal amount of our 2024 Senior Notes (as defined below in Liquidity and Capital Resources) through open market repurchases and$36 million for maintenance and growth capital expenditures, partially offset by the 23 -------------------------------------------------------------------------------- Table of Contents$85 million of cash generated from operating activities. As ofSeptember 30, 2021 , with our cash balance of$448 million and an outstanding balance of$437 million on our 4.650% Senior Notes, we are well positioned to deal with this pending debt maturity. While we will continue to be prudent with our capital spending, we are focused on developing and delivering technologies to grow our businesses in the keys areas of energy transition, digital asset management, aerospace and defense, and mobile robotics, while also continuing to deploy technologies that help our customers produce hydrocarbons in the cleanest and safest manner. We believe that the technologies we deliver today, and are focused on developing in the future, will provide us with ample opportunities to grow and transform our business over the coming years. Looking forward, we believe our consolidated fourth-quarter 2021 results will be similar to our third-quarter 2021 results on slightly higher revenue. We expect significantly higher revenue and operating profitability in our Manufactured Products segment, relatively flat activity and operating profitability in our Subsea Robotics and Integrity Management & Digital Solutions ("IMDS") segments, relatively flat revenue with lower operating profitability in our Aerospace and Defense Technologies ("ADTech") segment, and substantially lower seasonal activity and operating profitability in ourOffshore Projects Group ("OPG") segment. Unallocated Expenses are expected to be in the mid-$30 million range, due primarily to increased information technology infrastructure costs. OnMarch 27, 2020 , the CARES Act was signed into law inthe United States . In accordance with the rules and procedures under the CARES Act, we filed a 2014 refund claim to carry back ourU.S. net operating loss generated in 2019 and filed an amended 2013 income tax return that was 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 expected to receive combined refunds of approximately$33 million , of which we have received$10 million as ofSeptember 30, 2021 . The remaining refunds are classified as accounts receivable, net, in our consolidated balance sheet as ofSeptember 30, 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$4.7 million of the CARES Act tax refunds received during the third quarter of 2021 and the remaining$23 million of the CARES Act tax refunds expected to be received in 2021 or 2022. We are narrowing our guidance for capital expenditure to be in the range of$45 million to$55 million 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. For 2022, we expect our capital expenditures will be higher than 2021, as we intend to refocus our efforts on growth.
Results of Operations
We operate in five business segments. The segments are contained within two
businesses - services and products provided primarily to the oil and gas
industry, and to a lesser extent, the offshore renewables and mobility solutions
industries ("Energy Services and Products") and services and products provided
to non-energy industries ("Aerospace and Defense Technologies"). Our Unallocated
Expenses are those not associated with a specific business segment.
Consolidated revenue and profitability information are as follows:
Three Months Ended Nine Months Ended
(dollars in thousands) Sep 30, 2021 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020
Revenue $ 466,814 $ 439,743 $ 498,199 $ 1,402,566 $ 1,403,627
Gross Margin 59,848 29,651 68,397 184,902 118,940
Gross Margin % 13 % 7 % 14 % 13 % 8 %
Operating Income (Loss) 15,769 (60,620) 22,819 52,371 (446,559)
Operating Income (Loss) % 3 % (14) % 5 % 4 % (32) %
24-------------------------------------------------------------------------------- Table of Contents We generate a material amount of our consolidated revenue from contracts for services in theU.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 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 of$16 million ,$23 million and$52 million in the three-month periods endedSeptember 30, 2021 andJune 30, 2021 , and the nine-month period endedSeptember 30, 2021 , respectively. We had operating losses of$61 million and$447 million in the three- and nine-month periods endedSeptember 30, 2020 , respectively. We did not have significant certain changes included in our operating income and loss for the three months endedSeptember 30, 2021 . Included in our operating income and loss for the three months endedSeptember 30, 2020 andJune 30, 2021 were certain charges of$66 million and$1.4 million , respectively. Included in our operating income and loss for the nine months endedSeptember 30, 2021 and 2020, were certain charges of$2.7 million and$458 million , respectively. These charges were primarily due to market conditions requiring impairment of certain of our assets along with other costs we recognized as we adapted our geographic footprint and staffing levels to the conditions of the markets we serve and are summarized as follows: For the three months ended September 30, 2020 Integrity Offshore Management & Manufactured Projects Digital Aerospace and Unallocated (in thousands) Subsea Robotics Products Group Solutions Defense Technologies Expenses Total
Charges for the effects of:
Long-lived assets write-offs $ - $ - $ 7,243 $ - $ - $ - $ 7,243
Inventory write-downs 7,038 - - - - - 7,038
Goodwill impairment - 40,875 - - - - 40,875
Other 2,535 2,559 5,326 83 545 - 11,048
Total charges $ 9,573 $ 43,434 $ 12,569 $ 83 $ 545 $ - $ 66,204
For the three months ended June 30, 2021
Integrity
Management & Aerospace and
Subsea Manufactured Offshore Projects Digital Defense Unallocated
(in thousands) Robotics Products Group Solutions Technologies Expenses Total
Charges for the effects of:
Loss on sale of asset $ - $ - $ - $ - $ - $ 1,415 $ 1,415
Total charges $ - $ - $ - $ - $ - $ 1,415 $ 1,415
For the nine months ended September 30, 2021
Integrity
Management & Aerospace and
Manufactured Offshore Digital Defense Unallocated
(in thousands) Subsea Robotics Products Projects Group Solutions Technologies Expenses Total
Charges for the effects of:
Loss on sale of asset $ - $ - $ - $ - $ - $ 1,415 $ 1,415
Other 395 537 149 217 10 - 1,308
Total charges $ 395 $ 537 $ 149 $ 217 $ 10 $ 1,415 $ 2,723
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For the nine months ended September 30, 2020
Integrity
Offshore Management &
Subsea Manufactured Projects Digital Aerospace and Unallocated
(in thousands) Robotics Products Group Solutions Defense Technologies Expenses TotalCharges for the effects of:
Long-lived assets impairments $ - $ 61,074 $ 7,522 $ 167 $ - $ - $ 68,763
Long-lived assets write-offs 7,328 - 7,243 - - - 14,571
Inventory write-downs 7,038 - - - - - 7,038
Goodwill impairment 102,118 52,263 66,285 123,214 - - 343,880
Other 4,834 5,755 7,947 3,850 545 455 23,386
Total charges $ 121,318 $ 119,092 $ 88,997 $ 127,231 $ 545 $ 455 $ 457,638
Energy Services and Products
The primary focus of our Energy Services and Products business over the last
several years has been toward leveraging our asset base and capabilities for
providing services and products predominantly for offshore energy operations and
subsea completions, inclusive of our customers' operating expenses and the
offshore renewable energy market.
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.
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Three Months Ended Nine Months Ended
(dollars in thousands) Sep 30, 2021 Sep 30, 2020
Revenue $ 143,710 $ 119,617 $ 141,371 $ 404,200 $ 378,621
Gross Margin 28,918 13,378 31,767 84,763 54,175
Operating Income
(Loss) 19,533 2,127 21,710 55,862 (80,294)
Operating Income
(Loss) % 14 % 2 % 15 % 14 % (21) %
ROV Days Available 23,002 23,000 22,750 68,221 68,500
ROV Days Utilized 14,474 13,601 14,005 40,366 41,955
ROV Utilization 63 % 59 % 62 % 59 % 61 %
Manufactured Products
Revenue 75,359 110,416 79,127 241,311 377,520
Gross Margin 8,544 11,242 8,391 26,939 42,870
Operating Income
(Loss) 809 (38,198) 790 4,352 (100,471)
Operating Income
(Loss) % 1 % (35) % 1 % 2 % (27) %
Backlog at End of
Period 334,000 318,000 315,000 334,000 318,000
Revenue 95,580 73,212 107,951 292,765 221,306
Gross Margin 13,815 (1,633) 14,566 43,492 3,632
Operating Income
(Loss) 7,634 (12,282) 7,996 24,443 (95,740)
Operating Income
(Loss) % 8 % (17) % 7 % 8 % (43) %
Integrity Management & Digital
Solutions
Revenue 62,806 53,933 64,070 180,924 172,631
Gross Margin 11,330 7,129 10,462 30,001 22,376
Operating Income
(Loss) 5,362 793 4,721 12,557 (122,567)
Operating Income
(Loss) % 9 % 1 % 7 % 7 % (71) %
Total Energy Services and Products
Revenue $ 377,455 $ 357,178 $ 392,519 $ 1,119,200 $ 1,150,078
Gross Margin 62,607 30,116 65,186 185,195 123,053
Operating Income
(Loss) 33,338 (47,560) 35,217 97,214 (399,072)
Operating Income
(Loss) % 9 % (13) % 9 % 9 % (35) %
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 have
resulted in periods of lower levels of activity and profitability. In response,
we continue to take action and implement cost efficiency initiatives.
Additionally, we believe our energy businesses are positioned to benefit from
improved global markets for our services and products.
Subsea Robotics. We believe we are the world's largest provider of 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:
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Three Months Ended Nine Months Ended
Sep 30, 2021 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020
ROV 79 % 83 % 80 % 79 % 82 %
Other 21 % 17 % 20 % 21 % 18 %
During the third quarter of 2021, Subsea Robotics revenue increased slightly as
compared to the immediately preceding quarter, primarily due to favorable
offshore activity levels as compared with the second quarter of 2021. Operating
income for the third quarter of 2021 decreased as compared to the immediately
preceding quarter, primarily due to lower margins for ROV services attributed to
changes in geographic mix and a special bonus that recognized technicians for
enduring extended work rotations throughout 2021 due to COVID-19 challenges. Our
Subsea Robotics operating income increased as compared to the corresponding
period of the prior year, primarily due to charges of $9.6 million in the
three-month period ended September 30, 2020 for write-downs of inventory and
other expenses. Exclusive of those charges, Subsea Robotics operating income for
the third quarter of 2021 increased, as compared to the corresponding period of
the prior year, as a result of increased days on hire and higher average revenue
per day on hire. Subsea Robotics operating income for the nine-month period
ended September 30, 2021 increased as compared to the corresponding period of
the prior year due to charges of $121 million in the nine-month period ended
September 30, 2020 for goodwill impairment, write-downs and write-offs of
certain intangibles and inventory, and other expenses. Exclusive of those
charges, Subsea Robotics operating income for the nine-month period ended
September 30, 2021 increased on higher revenue, as compared to the corresponding
period of the prior year as a result of higher average revenue per day in the
nine months of 2021.
Fleet utilization was 63% for the three months ended September 30, 2021 as
compared to 59% for the corresponding period of the prior year. Fleet
utilization decreased to 59% from 61% for the nine-month periods ended
September 30, 2021 and September 30, 2020 , respectively. During the nine months
ended September 30, 2021 , we retired eight of our conventional workclass ROV
systems and replaced them with five upgraded conventional workclass ROV systems
and three IsurusTM workclass ROV systems (which are capable of operating in
severe conditions and are ideal for renewables projects and high-speed surveys)
that are currently engaged in renewables work, resulting in a total of 250 ROVs
in our ROV fleet as of September 30, 2021 and September 30, 2020 .
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 to the
commercial theme park industry and mobile robotics solutions, including
automated guided vehicle ("AGV") technology to a variety of industries.
Our Manufactured Products operating results in the third quarter of 2021 were
essentially flat when compared to the immediately preceding quarter, as
marginally lower revenue continued to challenge our ability to leverage the cost
base of this business. Our Manufactured Products operating results in the third
quarter of 2021 were higher than those of the corresponding period of the prior
year, primarily due to charges of $43 million in the three-month period ended
September 30, 2020 for goodwill impairment and other expenses. Exclusive of
those charges, Manufactured Products operating results decreased in the third
quarter of 2021, as compared to the corresponding period of the prior year,
primarily as a result of decreased activity in subsea umbilical and hardware
throughput in the third quarter of 2021 as compared to the third quarter of
2021. Manufactured Products operating results were higher for the nine-month
period ended September 30, 2021 , when compared to the corresponding period of
the prior year, as a result of $119 million in charges in the nine-month period
ended September 30, 2020 for asset and goodwill impairments and other expenses.
Exclusive of those charges, operating results decreased as compared to the
corresponding period of the prior year as a result of decreased activity in
subsea umbilical, connection systems and the commercial theme park entertainment
systems businesses in the first nine months of 2021.
Our Manufactured Products backlog was $334 million as of September 30, 2021 ,
compared to $266 million as of December 31, 2020 . The backlog increase was
primarily attributable to increased levels of bookings in 2021 in our
energy-related operations. Recent award activity has been encouraging in our
energy products businesses; however, activity has continued to lag in our
mobility solutions businesses. Many of our non-energy-related customers have
delayed investment decisions due to uncertainties regarding COVID-19 and the
related potential operating risks. Due to the financial deterioration of one of
our customers in our Manufactured Products segment that is a subsidiary of a
China -based company that has been and remains subject to well-published
financial challenges, certain projects that were in process for that customer
have been delayed. As of September 30, 2021
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and December 31, 2020 , we had contract assets of $38 million and $40 million ,
respectively for those projects. We continue to closely monitor the contract
along with the related contract assets, while working with our customer to
complete these projects. The recoverability of these amounts could be materially
impacted by possible future events such as our customer's project modifications,
cancellations or bankruptcy. Our book-to-bill ratio was 1.0 for the trailing 12
months, as compared with a book-to-bill ratio of 0.4 for the year ended December
31, 2020 .
Our OPG operating results were relatively flat in the third quarter of 2021, as
compared to the immediately preceding quarter, on lower revenue. Our OPG revenue
in the third quarter of 2021 benefited from ongoing seasonal activity in
inspection, maintenance and repair ("IMR") work in the Gulf of Mexico , despite
some work delays caused by Hurricane Ida and high loop currents; however, the
conclusion of field activities on several projects in Angola was the primary
driver for lower revenue in the third quarter of 2021 as compared to the
immediately preceding quarter. Our OPG operating results were higher in the
three months ended September 30, 2021 , compared to the corresponding period of
the prior year, primarily due to charges of $13 million for asset write-offs and
other expenses. Exclusive of those charges, our OPG operating results improved
in the third quarter of 2021 on higher revenue, primarily due to activity on the
riserless light well intervention project in Angola with no comparable activity
in the third quarter of 2020. Our OPG operating results were higher in the nine
months ended September 30, 2021 compared to the corresponding period of the
prior year, due to charges of $89 million recorded in the first nine months of
2020 for asset impairments and write-offs, goodwill impairment and other
charges. Exclusive of those charges, our OPG operating results were higher in
the nine-month period ended September 30, 2021 as compared to the corresponding
period of the prior year, primarily due to the year-over-year contribution from
our Angola riserless light well intervention campaign discussed above and higher
vessel utilization.
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, 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 solutions for the energy industry and software and analytical
solutions for the bulk cargo maritime industry.
Our IMDS revenue and operating results for the third quarter of 2021 were higher
as compared to the immediately preceding quarter on relatively flat revenue,
primarily due to incremental benefits from ongoing efficiency improvements. IMDS
operating results for the three-month period ended September 30, 2021 , as
compared to the corresponding period of the prior year, were higher due to
nonrecurring costs on certain completed projects and lower activity levels in
the third quarter of 2020. IMDS operating results for the nine-month period
ended September 30, 2021 , as compared to the corresponding period of the prior
year, improved due to charges of $127 million recorded in the first nine months
of 2020. Exclusive of those charges, operating results for the nine-month period
ended September 30, 2021 were higher, as compared to the corresponding period of
the prior year, due to the start-up of several new customer contracts and
realization of cost improvements in 2021, and nonrecurring costs on certain
projects completed in the first nine months of 2020 and lower activity levels in
the first nine months of 2020.
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
Revenue, gross margin and operating income (loss) information for our ADTech segment are as follows:
Three Months Ended Nine Months Ended
(dollars in thousands) Sep 30, 2021 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020
Revenue $ 89,359 $ 82,565 $ 105,680 $ 283,366 $ 253,549
Gross Margin 20,019 16,668 24,603 66,732 51,466
Operating Income (Loss) 14,251 13,097 19,340 50,430 39,498
Operating Income (Loss) % 16 % 16 % 18 % 18 % 16 %
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Our ADTech segment operating results for the third quarter of 2021 were lower, as compared to the immediately preceding quarter, on lower revenue due to a higher component of lower margin manpower activities. Our ADTech segment operating results for the three-month period endedSeptember 30, 2021 were higher, when compared to the corresponding period of the prior year, on higher revenue due to increased activity in defense subsea technologies. Our ADTech operating results for the nine-month period endedSeptember 30, 2021 increased on higher levels of revenue, when compared to the corresponding period of the prior year, due to increased activity in defense subsea technologies. 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.
Unallocated Expenses information is as follows:
Three Months Ended Nine Months Ended
(dollars in thousands) Sep 30, 2021 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020
Gross margin expenses $ (22,778) $ (17,133) $ (21,392) $ (67,025) $ (55,579)
% of revenue 5 % 4 % 4 % 5 % 4 %
Operating expenses (31,820) (26,157) (31,738) (95,273) (86,985)
Operating expenses % of revenue 7 % 6 % 6 % 7 % 6 %
Our Unallocated Expenses for the third quarter of 2021 were slightly higher, as
compared to the immediately preceding quarter. Our Unallocated Expenses for the
three- and nine-month periods ended September 30, 2021 were higher, as compared
to the corresponding periods of the prior year, primarily as a result of
increased accruals for incentive-based compensation.
Other
The following table sets forth our significant financial statement items below the income (loss) from operations line.
Three Months Ended Nine Months Ended
(in thousands) Sep 30, 2021 Sep 30, 2020 Jun 30, 2021 Sep 30, 2021 Sep 30, 2020
Interest income $ 662 $ 414 $ 683 $ 1,864 $ 2,202
Interest expense,
net of amounts
capitalized (9,616) (9,250) (9,729) (29,752) (33,323)
Equity in income
(losses) of
unconsolidated
affiliates 189 131 378 1,101 2,002
Other income
(expense), net (814) (2,836) (1,955) (4,222) (13,624)
Provision (benefit)
for income taxes 13,560 7,204 5,955 31,856 (17,551)
In addition to interest on borrowings, interest expense, net of amounts
capitalized, includes amortization of loan costs and 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 generally the principal
component of other income (expense), net. In the three- and nine-month periods
ended September 30, 2021 , we incurred foreign currency transaction gains
(losses) of $(0.3) million and $(4.0) million , respectively. In the three- and
nine-month periods ended September 30, 2020 , we incurred foreign currency
transaction gains (losses) of $(2.5) million and $(13) million , respectively.
Foreign currency gains (losses) in the first nine months of 2021 were primarily
related to declining exchange rates for multiple currencies, none that were
significant, relative to the U.S. dollar. Foreign currency gain (losses) in the
first nine months of 2020 were primarily related to declining exchange rate for
the Angolan kwanza
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and the Brazilian real relative to the
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 nine-month periods endedSeptember 30, 2021 and 2020 was different than the federal statutory rate of 21%, primarily due to the geographical mix of operating revenue and results, changes in valuation allowances and uncertain tax positions, and other discrete items; therefore, we do not believe a discussion of the 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. OnMarch 27, 2020 , the CARES Act was signed into law inthe United States . In accordance with the rules and procedures under the CARES Act, we filed a 2014 refund claim to carry back ourU.S. net operating loss generated in 2019 and amended our 2013 federal income tax 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 expected to receive combined refunds of approximately$33 million , of which we have received$10 million as ofSeptember 30, 2021 . The remaining refunds are classified as accounts receivable, net, in our consolidated balance sheet as ofSeptember 30, 2021 .
Liquidity and Capital Resources
We consider our liquidity, cash flows and capital resources adequate to support our operations, capital commitments and growth initiatives. As ofSeptember 30, 2021 , we had working capital of$734 million , including$448 million of cash and cash equivalents. Additionally, we had$500 million available through our revolving credit facility under a credit agreement further described below. Amendment No. 4 to the Credit Agreement (as defined below) provides for a$500 million revolving credit facility untilOctober 25, 2021 and thereafter$450 million untilJanuary 25, 2023 with a group of banks. Our revolving credit facility provided under the Credit Agreement was undrawn as ofSeptember 30, 2021 , and remains undrawn as of the date of this report, and our nearest maturity of indebtedness is our$437 million of our 4.650% Senior Notes due inNovember 2024 (the "2024 Senior Notes"). We may, from time to time, complete additional, limited repurchases of our 2024 Senior 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 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 nine months endedSeptember 30, 2021 and 2020 are summarized as follows: Nine Months Ended (in thousands) Sep 30, 2021 Sep 30, 2020
Changes in Cash:
Net Cash Provided by Operating Activities $ 85,319 $ 32,363
Net Cash Used in Investing Activities (22,936) (38,714)
Net Cash Used in Financing Activities (64,737) (1,725)
Effect of exchange rates on cash (1,937) (6,802)
Net Increase (Decrease) in Cash and Cash Equivalents $ (4,291) $ (14,878)
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Operating activities
Our primary sources and uses of cash flows from operating activities for the
nine months ended
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