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 U.S. and the global
economy, as well as on our business;
•our second quarter 2021 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;
•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 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;
•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 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").

Overview of our Results and Guidance



Our diluted earnings (loss) per share for the three-month period ended March 31,
2021 were $(0.09), as compared to $(0.25) in the immediately preceding quarter
and $(3.71) for the corresponding period of the prior year. We have continued to
improve our operating performance by driving operational efficiency, led by
focusing on safety, quality
                                       23
--------------------------------------------------------------------------------
  Table of Content    s
and value-based solutions for our customers. Each of our operating segments
reported positive adjusted operating income in the first quarter of 2021.
During the first quarter of 2021, we utilized $1.7 million of cash in operating
activities, as the payment of accrued employee incentive payments related to
attainment of specific performance goals in prior periods was mostly offset by
good operating performance. In addition, $11 million of cash was used for
maintenance and growth capital expenditures. These two items were the largest
contributors to our $9.3 million cash reduction during the first quarter of
2021.
Looking forward, we believe our consolidated second quarter 2021 results will
improve sequentially on higher revenue. We anticipate higher activity levels and
operating results in our Subsea Robotics and OPG segments, higher activity
levels and relatively flat operating results in our IMDS and ADTech segments and
lower 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 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


        (dollars in thousands)             Mar 31, 2021       Mar 31, 2020       Dec 31, 2020
        Revenue                           $    437,553       $    536,668       $    424,262
        Gross Margin                            56,657             46,752             45,001
        Gross Margin %                              13  %               9  %              11  %
        Operating Income (Loss)                 13,783           (380,757)               480
        Operating Income (Loss) %                    3  %             (71) %               -  %



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
                                       24
--------------------------------------------------------------------------------
  Table of Content    s
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 $14 million, $(381) million and $0.5 million
in the three-month periods ended March 31, 2021, March 31, 2020 and December 31,
2020, 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 other
costs we recognized as we adapted our geographic footprint and staffing levels
to the conditions of the markets we serve. Charges included in the three months
ended March 31, 2021, March 31, 2020 and December 31, 2020 are summarized as
follows:

                                                                                                            For the three months ended March 31, 2021
                                                                                                                              Integrity
                                                                                                                            Management &         Aerospace and
                                                            Subsea              Manufactured             Offshore              Digital              Defense              Unallocated
(in thousands)                                             Robotics               Products            Projects Group          Solutions          Technologies              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 March 31, 2020
                                                                                                                                  Integrity
                                                                                                             Offshore            Management &          Aerospace and
                                                                  Subsea             Manufactured            Projects              Digital                Defense             Unallocated
(in thousands)                                                   Robotics              Products                Group              Solutions            Technologies             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



                                                                                                                  For the three months ended December 31, 2020
                                                                                                                                      Integrity
                                                                                                                  Offshore          Management &         Aerospace and
                                                                                          Manufactured            Projects             Digital              Defense              Unallocated
(in thousands)                                                  Subsea Robotics             Products                Group             Solutions          Technologies              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 our asset base and capabilities for
providing services and products predominantly for offshore energy
                                       25

--------------------------------------------------------------------------------

Table of Content s 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.
                                                               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
                                       26
--------------------------------------------------------------------------------
  Table of Content    s
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.

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:

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

 Other                                                     22  %               20  %             20  %

* Recast to reflect segment changes.





During the first quarter of 2021, Subsea Robotics operating income was flat on
slightly higher revenue as compared to the immediately preceding quarter,
primarily due to higher ROV drill support days and survey activity. Pricing for
the various Subsea Robotics services remained stable during the first quarter of
2021. 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 2021 decreased as compared to
the corresponding period of the prior year as a result of fewer ROV days on
hire.

Fleet utilization decreased to 53% in the three-month period ended March 31,
2021 from 54% and 65% for the three-month periods ended December 31, 2020 and
March 31, 2020, respectively. We added three new ROVs to our fleet during the
three months ended March 31, 2021 and retired three, resulting in a total of 250
ROVs in our ROV fleet as of both March 31, 2021 and March 31, 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 first quarter of 2021 were
lower than those of the immediately preceding quarter, on lower revenue. First
quarter of 2021 operating results did not benefit from favorable contract
close-outs and negotiated supply chain savings that occurred in the fourth
quarter of 2020. Activity in our mobility solutions businesses remained weak
during the first quarter of 2021. Manufactured Products operating income for the
first quarter of 2021 increased 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.

Our Manufactured Products backlog was $248 million as of March 31, 2021 compared
to $266 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. Our book-to-bill ratio was 0.6 for the trailing 12 months, as
compared with a book-to-bill ratio of 0.4 for the year ended December 31, 2020.

Offshore Projects Group. Our OPG segment provides a broad portfolio of integrated subsea project capabilities and solutions, including subsea installation and intervention, installation and workover control systems ("IWOCS")


                                       27
--------------------------------------------------------------------------------
  Table of Content    s
and ROV workover control systems ("RWOCS"), project management and engineering,
and seabed preparation, route clearance and trenching services.

Our OPG operating results improved 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 2021 as
compared to the immediately preceding quarter, on higher revenue, primarily due
to the start-up of field activities on the riserless light well intervention
project in Angola. Our OPG operating results improved 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 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.

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 solution 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, as compared
to the immediately preceding quarter, on flat revenue, primarily due to improved
execution. IMDS operating results for the three-month period ended March 31,
2021 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 to higher pre-COVID
activity levels in the first quarter 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 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
  (dollars in thousands)                        Mar 31, 2021       Mar 31, 2020 *      Dec 31, 2020
  Revenue                                      $     88,327       $      91,381       $     87,524
  Gross Margin                                       22,110              17,485             20,328
  Operating Income (Loss)                            16,839              12,971             16,525
  Operating Income (Loss) %                              19  %               14  %              19  %

* Recast to reflect segment changes.





Our ADTech segment operating results for the first quarter of 2021 were
marginally higher as compared to the immediately preceding quarter, on flat
revenue. ADTech operating results for the three-month period ended March 31,
2021 were slightly higher when compared to the corresponding period of the prior
year, on slightly lower revenue due to increased 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.

                                       28

--------------------------------------------------------------------------------

Table of Content s The following table sets forth our Unallocated Expenses for the periods indicated:


                                                               Three Months 

Ended


     (dollars in thousands)                    Mar 31, 2021       Mar 31, 

2020 Dec 31, 2020


     Gross margin expenses                    $    (22,855)      $    

(20,042) (25,225)


     % of revenue                                        5  %               4  %              6  %
     Operating expenses                            (31,715)           

(32,649) (33,692)


     Operating expenses % of revenue                     7  %               6  %              8  %



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 2021 were relatively
flat as compared to the corresponding period of the prior year.

Other

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


                                                                  Three Months Ended
 (in thousands)                                   Mar 31, 2021      Mar 31, 2020       Dec 31, 2020
 Interest income                                 $        519      $       1,277      $         881

Interest expense, net of amounts capitalized (10,407) (12,462)

           (10,577)

Equity in income (losses) of unconsolidated


 affiliates                                               534              1,197                266
 Other income (expense), net                           (1,453)            (7,128)              (645)
 Provision (benefit) for income taxes                  12,341            (30,275)            15,405



In addition to interest on borrowings, interest expense, net of amounts
capitalized, includes amortization of loan costs and hedge accounting
adjustments, 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 and
2020, we incurred foreign currency transaction gains (losses) of $(1.9) million
and $(7.1) million, respectively. The currency losses in the 2021 and 2020
periods were primarily related to 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 and 2020 was different than the federal statutory
rate of 21%, primarily due to the geographical mix of operating revenue and
results, changes in uncertain tax positions and other discrete 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
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 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.

                                       29
--------------------------------------------------------------------------------
  Table of Content    s
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, we had working capital of $745 million, including $443 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 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 million of 2024 Notes (as defined below) due in
November 2024. Given that the 2024 Notes are currently trading at market
discount to principal amount, we may, from time to time, complete 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 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 and 2020 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)



Operating activities

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

© Edgar Online, source Glimpses