Oceaneering Reports Fourth Quarter and Full Year 2021 Results

Oceaneering International, Inc. ("Oceaneering") (NYSE:OII) today reported a net loss of $38.8 million, or $(0.39) per share, on revenue of $467 million for the three months ended December 31, 2021. Adjusted net income was $5.0 million, or $0.05 per share, reflecting the impact of $30.6 million of pre-tax adjustments associated with the write-off of certain uncollectible accounts and foreign exchange losses recognized during the quarter and $19.6 million of discrete tax adjustments, primarily due to changes in valuation allowances.

During the prior quarter ended September 30, 2021, Oceaneering reported net loss of $7.4 million, or $(0.07) per share, on revenue of $467 million. Adjusted net loss was $1.4 million, or $(0.01) per share, reflecting the impact of $0.3 million of pre-tax adjustments associated with foreign exchange losses recognized during the quarter and $5.8 million of discrete tax adjustments, primarily due to changes in valuation allowances.

Adjusted operating income (loss), operating margins, net income (loss) and earnings (loss) per share, EBITDA and adjusted EBITDA (as well as EBITDA and adjusted EBITDA margins), and free cash flow are non-GAAP measures that exclude the impacts of certain identified items. Reconciliations to the corresponding GAAP measures are shown in the tables Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS), EBITDA and Adjusted EBITDA and Margins, Free Cash Flow, 2022 Adjusted EBITDA and Free Cash Flow Estimates, Adjusted Operating Income (Loss) and Margins by Segment, and EBITDA and Adjusted EBITDA and Margins by Segment. These tables are included below under the caption Reconciliations of Non-GAAP to GAAP Financial Information.

Summary of Results
(in thousands, except per share amounts)
		For the Three Months Ended												For the Year Ended
		Dec 31,								Sep 30,				Dec 31,
			2021				2020				2021				2021				2020
Revenue		$	466,709			$	424,262			$	466,814			$	1,869,275			$	1,827,889
Gross Margin			79,163				45,001				59,848				264,065				163,941
Income (Loss) from Operations			(12,572	)			480				15,769				39,799				(446,079	)
Net Income (Loss)			(38,813	)			(25,000	)			(7,370	)			(49,307	)			(496,751	)
Diluted Earnings (Loss) Per Share		$	(0.39	)		$	(0.25	)		$	(0.07	)		$	(0.49	)		$	(5.01	)

For the fourth quarter of 2021:

• Cash flow generated from operations was $140 million yielding free cash flow of $126 million
• Consolidated Adjusted EBITDA was $46.7 million
• Consolidated Adjusted Operating Income was $17.0 million
• Cash position increased by $90.4 million, from $448 million to $538 million
• Repurchased $37.0 million of our 2024 senior notes through open-market transactions

As of December 31, 2021:

• Remotely Operated Vehicles (ROV): fleet count was 250; Q4 utilization was 55%; and Q4 average revenue per day on hire was $8,162
• Manufactured Products backlog was $318 million

Guidance for 2022:

• Consolidated EBITDA of $225 million to $275 million
• Continued significant free cash flow generation in the range of $75 million to $125 million
• Increased growth capital expenditures as compared to 2021

Roderick A. Larson, President and Chief Executive Officer of Oceaneering, stated, "I am pleased with our achievements in 2021 as our $211 million of adjusted EBITDA achieved the top end of the adjusted EBITDA guidance range provided at the beginning of the year and exceeded the guidance mid-point by 14%. Except for Manufactured Products, which is tied to longer-cycle market drivers, all of our operating segments delivered improved sequential annual operating results in 2021. We delivered robust free cash flow in 2021, which supported our ability to repurchase $100 million of our 2024 senior notes and increased our cash position by $86 million during the year to $538 million on December 31, 2021. I am encouraged by the supportive market fundamentals that emerged in 2021 and expect this to drive increased activity across all our segments in 2022.

“Turning to fourth quarter 2021 results, we produced consolidated adjusted EBITDA of $46.7 million, within the guidance range provided at the beginning of the quarter. In addition to typical seasonality, the quarterly operating results, and associated EBITDA, were also impacted by a material increase in medical and information technology costs recognized during the quarter and additional incentive compensation accruals tied to our strong free cash flow and annual results. Consolidated revenue of $467 million was flat with the third quarter, as a substantial revenue increase in Manufactured Products offset lower revenue in each of our other segments. Cash generated by operations of $140 million led to strong free cash flow of $126 million.

“We made the decision during the fourth quarter to terminate a number of entertainment ride systems contracts with the financially embattled developer, China Evergrande Group and its affiliated companies (Evergrande). As a result, we recorded a net loss of $30 million in connection with these Evergrande contracts in our fourth quarter financial results. In conjunction with this termination, we reclassified $20 million of contract assets into salable inventory.

Segment Results:

"Our fourth quarter 2021 Subsea Robotics (SSR) operating income improved sequentially, despite lower revenue. The performance was led by improved pricing in our ROV and tooling businesses. SSR EBITDA margin of 31% during the fourth quarter improved as compared to the 29% achieved during the third quarter of 2021 and was consistent with the average margin achieved during the first nine months of 2021.

"Fourth quarter 2021 ROV days on hire declined 12% as compared to the third quarter 2021 due primarily to typical lower seasonal vessel activity. Fleet utilization declined to 55% in the fourth quarter of 2021 from 63% in the third quarter of 2021. Our fleet use during the quarter was 62% in drill support and 38% in vessel-based services, compared to 57% and 43%, respectively, during the third quarter. Fourth quarter 2021 average ROV revenue per day on hire of $8,162 was 4% higher than in the third quarter of 2021.

"Manufactured Products fourth quarter 2021 revenue of $103 million was 37% higher than in the third quarter of 2021. Adjusted operating income and adjusted operating income margin of 9% were substantially higher sequentially, primarily due to better absorption of fixed costs and favorable project mix. Our Manufactured Products backlog on December 31, 2021 was $318 million, compared to our September 30, 2021 backlog of $334 million. The backlog decline in the fourth quarter of 2021 reflects a $38 million reduction associated with the Evergrande contract terminations. Our book-to-bill ratio was 1.1 for the full year of 2021, as compared with the trailing 12-month book-to-bill of 1.0 on September 30, 2021.

"Sequentially, our fourth quarter 2021 Offshore Projects Group (OPG) operating income decreased on lower revenue. Revenue declined 11% due to seasonality in the Gulf of Mexico (GoM) and the third quarter completion of the Angola riserless light well intervention project. Fourth quarter 2021 operating income margin of 8% remained consistent with the third quarter of 2021 as improved margins from intervention, maintenance and repair (IMR) activity positively offset the fixed cost margin effects of lower revenue.

"Integrity Management and Digital Solutions (IMDS) fourth quarter 2021 operating income increased sequentially on slightly lower revenue. Operating income margin improved to 10% in the fourth quarter of 2021 from 9% in the third quarter of 2021, as the business continued to benefit from operational improvements implemented since the beginning of 2020.

"Aerospace and Defense Technologies (ADTech) fourth quarter 2021 operating income declined from the third quarter of 2021, on a 6% decrease in revenue. Operating income margin declined, as expected, to 13%, due to changes in project mix. At the corporate level, fourth quarter 2021 Unallocated Expenses of $36.7 million were higher than the third quarter of 2021 due to a combination of increased accruals for incentive-based compensation, higher than expected health care costs, and increased information technology costs.

Full Year Results:

"For the year, consolidated adjusted operating income improved on a slight revenue increase as compared to 2020. Adjusted operating income in our energy segments improved and operating income margin improved by 376 basis points over 2020 results, to 9%. The improved results were a result of a shift in the mix of revenue and a continued focus on operational excellence programs. Our ADTech segment continued to be a steady performer, delivering another record year of operating income and margins consistent with 2020.

"Compared to 2020, our 2021 consolidated revenue increased 2% to $1.9 billion, with revenue increases in our SSR, OPG, IMDS, and ADTech segments being partially offset by a decline in our Manufactured Products revenue. Consolidated 2021 adjusted operating income and adjusted EBITDA improved, led by our OPG and SSR segments. In 2021, each of our operating segments contributed positive adjusted operating income and positive adjusted EBITDA. We generated $225 million in cash flow from operations and invested $50.2 million in capital expenditures. Significant free cash flow of $175 million allowed us to repurchase $100 million of our 2024 senior notes while increasing our cash balance by $86 million to $538 million.

2022 Guidance:

"As a result of first quarter seasonality in our energy businesses, uncertainties regarding US Government appropriations due to the continuing resolution, and anticipated expenses needed to prepare for higher activity in 2022, we expect our first quarter 2022 financial results to be significantly lower as compared to the fourth quarter of 2021. However, based on year-end 2021 backlog, projected start dates of new contracts, anticipated 2022 order intake, and supportive market fundamentals, we project a greater than commensurate ramp-up in second quarter activity and financial results which are expected to be sustained throughout the remainder of the year. We are projecting our 2022 consolidated revenue to grow more than 10%, with increased revenue in each of our operating segments, led by Manufactured Products. We expect sequential improvement in our 2022 financial results based on our expectation for higher operating income and higher margins in each of our energy segments, led by SSR and OPG, and higher operating income and stable margins in our ADTech segment. For the year, we anticipate generating $225 million to $275 million of EBITDA, with increased contributions from each of our segments. At the midpoint of this range, our EBITDA for 2022 would represent an 18% increase over 2021 adjusted EBITDA. We anticipate our full year 2022 to yield positive free cash flow of $75 million to $125 million. These expectations assume the continuing trend of supportive commodity prices and no significant incremental COVID-19 impacts.

"For SSR, our expectation for improved results is based on increased ROV days on hire, minor shifts in geographic mix, and stable to improving pricing. Results for tooling-based services are expected to improve, with activity levels generally following ROV days on hire. Survey results are projected to improve on higher survey and positioning activity. We expect revenue growth in the high-single-digit range and EBITDA margins to average in the low 30% range for the full year.

"We expect Manufactured Products segment performance to improve on a significant increase in revenue, primarily as a result of increased order intake in our energy businesses during 2021. We are seeing increasing interest in our mobility solutions businesses, and currently expect to see marginally higher activity from these businesses in 2022 and see an opportunity to build backlog for a more meaningful contribution in 2023. We forecast our operating income margins to be in the mid-single-digit range for the year.

"OPG operating results are expected to improve in 2022, on a marginal increase in revenue. This expectation is based on better anticipated pricing, improved vessel utilization, and increased diving activities more than offsetting lower revenue from riserless light well intervention activities. Overall, for 2022, we expect operating income margins to average in the high-single- to low-double-digit range.

"IMDS results are forecast to improve on higher revenue, continuing the trend seen over the last several years. We believe customers continue to see value in our service offerings and see good global opportunities for renewals and business expansion, particularly in the UK and West Africa. Operating income margin is expected to remain in the high-single-digit range for the year.

"Our 2022 ADTech revenue is expected to be higher, producing improved operating results. We anticipate growth in all three of our government-focused businesses. Operating income margins are expected to average in the mid-teens range for the year.

"For 2022, we anticipate Unallocated Expenses to average in the mid-$30 million range per quarter.

"Interest expense, net of interest income, is expected to be approximately $38 million, and we expect our 2022 cash tax payments to be in the range of $40 million to $45 million.

First Quarter 2022 Guidance:

"Sequentially, as previously noted, we forecast our first quarter 2022 EBITDA to be significantly lower on lower revenue. As compared to the fourth quarter of 2021, we anticipate lower revenue and operating results in our energy segments, and relatively flat revenue and lower operating results in our ADTech segment. In the first quarter of 2022, we anticipate incurring higher costs for hiring and training of personnel, mobilization of equipment, and inflation as we prepare for a significant increase in activity forecast for the remainder of 2022.

Growth and Capital Discipline:

"Our ability to generate substantial free cash flow over the last several years has allowed us to de-risk the pending maturity of our 2024 senior notes. Our focus has turned to growth, where we will continue to develop and deliver technologies to help our customers produce hydrocarbons in a cleaner, safer manner while increasing our investments into new markets including energy transition, digital asset management, aerospace and defense solutions, and mobility solutions. We forecast our capital expenditures will total between $70 million to $90 million in 2022. We anticipate commodity prices to support growth and free cash generation in our traditional businesses during 2022 to underpin these investments."

This release contains "forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs, future expected business and financial performance and prospects of Oceaneering. More specifically, the forward-looking statements in this press release include the statements concerning Oceaneering’s: expectations regarding 2022 results, including consolidated EBITDA range, free cash flow generation range, and anticipated capital expenditures, as well as the reasons underlying these expectations; expectation that market fundamentals that emerged in 2021 will drive increased activity across all its businesses in 2022; references to backlog, to the extent backlog may be an indicator of future revenue, profitability or cash flows; expectations regarding first quarter 2022 financial results as compared to the fourth quarter of 2021; projections regarding second quarter activity and financial results and expectations these will be sustained throughout 2022; projection of 2022 consolidated revenue growth and revenue from each operating segment; expectations regarding operating income and margins in each operating segment; anticipated full year EBITDA contributions from each operating segment; anticipation that 2022 will yield positive free cash flow; assumptions and characterizations of the trend of commodity prices and COVID-19 impacts; expectations regarding 2022 segment financial results, including anticipated 2022 order intake and its timing, expected segment activity and its basis, anticipated revenue, operating income, and operating income margins, and the associated comparisons and explanations; expected average 2022 quarterly Unallocated Expenses; estimated interest expense, net of interest income, and cash tax payments; forecasted first quarter 2022 segment financial results, including expected segment activity and its basis, anticipated revenue, operating income, and operating income margins, EBITDA, and the associated comparisons and explanations; anticipated first quarter 2022 incurred costs in preparation for forecasted activity for the remainder of 2022; characterization of its pending debt maturity as de-risked; development and delivery of technologies for cleaner, safer hydrocarbon production; its intention to increase investments into new markets with the support of commodity prices and its free cash generation; forecasted 2022 capital expenditures range; anticipation of commodity prices to support its growth, and free cash generation from its traditional businesses during 2022 will underpin expected capital expenditures; and characterization of demand, activity levels, market fundamentals, and financials as seasonal, strong, or supportive.

The forward-looking statements included in this release are based on our current expectations and are subject to certain risks, assumptions, trends and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Among the factors that could cause actual results to differ materially include: factors affecting the level of activity in the oil and gas industry, including worldwide demand for and prices of oil and natural gas, oil and natural gas production growth and the supply and demand of offshore drilling rigs; actions by members of OPEC and other oil exporting countries; decisions about offshore developments to be made by oil and gas exploration, development and production companies; the use of subsea completions and our ability to capture associated market share; general economic and business conditions and industry trends; the strength of the industry segments in which we are involved; the continuing effects of the COVID-19 pandemic and the governmental, customer, supplier, and other responses thereto; cancellations of contracts, change orders and other contractual modifications, force majeure declarations and the exercise of contractual suspension rights and the resulting adjustments to our backlog; collections from our customers; our future financial performance, including as a result of the availability, terms and deployment of capital; the consequences of significant changes in currency exchange rates; the volatility and uncertainties of credit markets; changes in tax laws, regulations and interpretation by taxing authorities; changes in, or our ability to comply with, other laws and governmental regulations, including those relating to the environment; the continued availability of qualified personnel; our ability to obtain raw materials and parts on a timely basis and, in some cases, from limited sources; operating risks normally incident to offshore exploration, development and production operations; hurricanes and other adverse weather and sea conditions; cost and time associated with drydocking of our vessels; the highly competitive nature of our businesses; adverse outcomes from legal or regulatory proceedings; the risks associated with integrating businesses we acquire; rapid technological changes; and social, political, military and economic situations in foreign countries where we do business and the possibilities of civil disturbances, war, other armed conflicts or terrorist attacks. For a more complete discussion of these and other risk factors, please see Oceaneering’s latest annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements. Except to the extent required by applicable law, Oceaneering undertakes no obligation to update or revise any forward-looking statement.

Oceaneering is a global technology company delivering engineered services and products and robotic solutions to the offshore energy, defense, aerospace, manufacturing, and entertainment industries.

For more information on Oceaneering, please visit www.oceaneering.com.

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
																					Dec 31, 2021				Dec 31, 2020
																					(in thousands)
ASSETS
	Current assets (including cash and cash equivalents of $538,114 and $452,016)																				$	1,188,003			$	1,170,263
	Net property and equipment																					489,596				591,107
	Other assets																					285,260				284,472
			Total Assets																		$	1,962,859			$	2,045,842
LIABILITIES AND EQUITY
	Current liabilities																				$	501,161			$	437,116
	Long-term debt																					702,067				805,251
	Other long-term liabilities																					248,607				245,318
	Equity																					511,024				558,157
			Total Liabilities and Equity																		$	1,962,859			$	2,045,842
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
									For the Three Months Ended												For the Year Ended
									Dec 31, 2021				Dec 31, 2020				Sep 30, 2021				Dec 31, 2021				Dec 31, 2020
									(in thousands, except per share amounts)
	Revenue								$	466,709			$	424,262			$	466,814			$	1,869,275			$	1,827,889
	Cost of services and products									387,546				379,261				406,966				1,605,210				1,663,948
		Gross margin								79,163				45,001				59,848				264,065				163,941
	Selling, general and administrative expense									91,735				42,839				44,079				224,266				195,695
	Long-lived assets impairments									—				1,682				—				—				70,445
	Goodwill impairment									—				—				—				—				343,880
		Income (loss) from operations								(12,572	)			480				15,769				39,799				(446,079	)
	Interest income									613				881				662				2,477				3,083
	Interest expense, net of amounts capitalized									(9,058	)			(10,577	)			(9,616	)			(38,810	)			(43,900	)
	Equity in income (losses) of unconsolidated affiliates									(507	)			266				189				594				2,268
	Other income (expense), net									(5,547	)			(645	)			(814	)			(9,769	)			(14,269	)
		Income (loss) before income taxes								(27,071	)			(9,595	)			6,190				(5,709	)			(498,897	)
	Provision (benefit) for income taxes									11,742				15,405				13,560				43,598				(2,146	)
		Net Income (Loss)							$	(38,813	)		$	(25,000	)		$	(7,370	)		$	(49,307	)		$	(496,751	)
Weighted average diluted shares outstanding										99,799				99,306				99,797				99,706				99,233
Diluted earnings (loss) per share									$	(0.39	)		$	(0.25	)		$	(0.07	)		$	(0.49	)		$	(5.01	)
The above Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations should be read in conjunction with the Company's latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

SEGMENT INFORMATION
						For the Three Months Ended												For the Year Ended
						Dec 31, 2021				Dec 31, 2020				Sep 30, 2021				Dec 31, 2021				Dec 31, 2020
					($ in thousands)
Subsea Robotics
			Revenue			$	134,315			$	114,711			$	143,710			$	538,515			$	493,332
	Gross margin					$	28,199			$	24,777			$	28,918			$	112,962			$	78,952
Operating income (loss)						$	21,012			$	14,477			$	19,533			$	76,874			$	(65,817	)
Operating income (loss) %							16	%			13	%			14	%			14	%			(13	)%
	ROV days available						23,021				22,999				23,002				91,242				91,499
	ROV days utilized						12,747				12,456				14,474				53,113				54,411
	ROV utilization						55	%			54	%			63	%			58	%			59	%
Manufactured Products
			Revenue			$	102,940			$	99,899			$	75,359			$	344,251			$	477,419
	Gross margin					$	36,516			$	20,092			$	8,544			$	63,455			$	62,962
Operating income (loss)						$	(20,228	)		$	12,218			$	809			$	(15,876	)		$	(88,253	)
Operating income (loss) %							(20	)%			12	%			1	%			(5	)%			(18	)%
Backlog at end of period						$	318,000			$	266,000			$	334,000			$	318,000			$	266,000
Offshore Projects Group
			Revenue			$	85,356			$	67,821			$	95,580			$	378,121			$	289,127
	Gross margin					$	12,846			$	(2,367	)		$	13,815			$	56,338			$	1,265
Operating income (loss)						$	6,754			$	(9,940	)		$	7,634			$	31,197			$	(105,680	)
Operating income (loss) %							8	%			(15	)%			8	%			8	%			(37	)%
Integrity Management & Digital Solutions
			Revenue			$	60,469			$	54,307			$	62,806			$	241,393			$	226,938
	Gross margin					$	12,416			$	7,396			$	11,330			$	42,417			$	29,772
Operating income (loss)						$	6,015			$	892			$	5,362			$	18,572			$	(121,675	)
Operating income (loss) %							10	%			2	%			9	%			8	%			(54	)%
Aerospace and Defense Technologies
			Revenue			$	83,629			$	87,524			$	89,359			$	366,995			$	341,073
	Gross margin					$	15,863			$	20,328			$	20,019			$	82,595			$	71,794
Operating income (loss)						$	10,562			$	16,525			$	14,251			$	60,992			$	56,023
Operating income (loss) %							13	%			19	%			16	%			17	%			16	%
Unallocated Expenses
	Gross margin					$	(26,677	)		$	(25,225	)		$	(22,778	)		$	(93,702	)		$	(80,804	)
Operating income (loss)						$	(36,687	)		$	(33,692	)		$	(31,820	)		$	(131,960	)		$	(120,677	)
Total
			Revenue			$	466,709			$	424,262			$	466,814			$	1,869,275			$	1,827,889
	Gross margin					$	79,163			$	45,001			$	59,848			$	264,065			$	163,941
Operating income (loss)						$	(12,572	)		$	480			$	15,769			$	39,799			$	(446,079	)
Operating income (loss) %							(3	)%			—	%			3	%			2	%			(24	)%
The above Segment Information does not include adjustments for non-recurring transactions. See the tables below under the caption "Reconciliations of Non-GAAP to GAAP Financial Information" for financial measures that our management considers in evaluating our ongoing operations.

SELECTED CASH FLOW INFORMATION
						For the Three Months Ended									For the Year Ended
						Dec 31, 2021			Dec 31, 2020			Sep 30, 2021			Dec 31, 2021			Dec 31, 2020
						(in thousands)
Capital Expenditures, including Acquisitions						$	14,383		$	14,847		$	12,488		$	50,199		$	60,687
Depreciation and amortization:
Energy Services and Products
	Subsea Robotics					$	21,029		$	23,210		$	21,483		$	87,900		$	212,621
	Manufactured Products						3,111			3,193			3,202			12,788			66,772
	Offshore Projects Group						7,405			16,979			6,781			28,173			115,288
	Integrity Management & Digital Solutions						1,091			1,255			1,114			4,420			127,221
Total Energy Services and Products							32,636			44,637			32,580			133,281			521,902
Aerospace and Defense Technologies							676			667			1,427			4,783			2,666
Unallocated Expenses							474			1,146			234			1,659			4,327
	Total Depreciation and Amortization					$	33,786		$	46,450		$	34,241		$	139,723		$	528,895
In the three months ended December 31, 2020, goodwill and long-lived asset impairment expense, reflected in the depreciation and amortization expense above, was $9.6 million. In the year ended December 31, 2020, goodwill and long-lived asset impairment expense, reflected in the depreciation and amortization expense above, was $368 million.

RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION

In addition to financial results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), this Press Release also includes non-GAAP financial measures (as defined under SEC Regulation G). We have included Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share, each of which excludes the effects of certain specified items, as set forth in the tables that follow. As a result, these amounts are non-GAAP financial measures. We believe these are useful measures for investors to review because they provide consistent measures of the underlying results of our ongoing business. Furthermore, our management uses these measures as measures of the performance of our operations. We have also included disclosures of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), EBITDA Margins, 2022 Adjusted EBITDA Estimates, and Free Cash Flow, as well as the following by segment: Adjusted Operating Income and Margins, EBITDA, EBITDA Margins, Adjusted EBITDA and Adjusted EBITDA Margins. We define EBITDA Margin as EBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margins as well as Adjusted Operating Income and Margin and related information by segment exclude the effects of certain specified items, as set forth in the tables that follow. EBITDA and EBITDA Margins, Adjusted EBITDA and Adjusted EBITDA Margins, and Adjusted Operating Income and Margin and related information by segment are each non-GAAP financial measures. We define Free Cash Flow as cash flow provided by operating activities less organic capital expenditures (i.e., purchases of property and equipment other than those in business acquisitions). We have included these disclosures in this press release because EBITDA, EBITDA Margins and Free Cash Flow are widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry, and the adjusted amounts thereof (as well as Adjusted Operating Income and Margin by Segment) provide more consistent measures than the unadjusted amounts. Furthermore, our management uses these measures for purposes of evaluating our financial performance. Our presentation of EBITDA, EBITDA Margins and Free Cash Flow (and the Adjusted amounts thereof) may not be comparable to similarly titled measures other companies report. Non-GAAP financial measures should be viewed in addition to and not as substitutes for our reported operating results, cash flows or any other measure prepared and reported in accordance with GAAP. The tables that follow provide reconciliations of the non-GAAP measures used in this press release to the most directly comparable GAAP measures.

Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS)
					For the Three Months Ended
					Dec 31, 2021								Dec 31, 2020								Sep 30, 2021
					Net Income (Loss)				Diluted EPS				Net Income (Loss)				Diluted EPS				Net Income (Loss)				Diluted EPS
					(in thousands, except per share amounts)
Net income (loss) and diluted EPS as reported in accordance with GAAP					$	(38,813	)		$	(0.39	)		$	(25,000	)		$	(0.25	)		$	(7,370	)		$	(0.07	)
Pre-tax adjustments for the effects of:
	Long-lived assets impairments					—								1,682								—
	Long-lived assets write-offs					—								9,571								—
	Provision for Evergrande losses, net					29,549								—								—
	Restructuring expenses and other					—								(2,176	)							—
	Foreign currency (gains) losses					1,082								720								289
Total pre-tax adjustments						30,631								9,797								289
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods						(6,388	)							7,432								(152	)
Discrete tax items:
Share-based compensation						(2	)							13								(29	)
Uncertain tax positions						111								3,033								(123	)
Valuation allowances						16,887								5,635								5,898
Other						2,593								889								77
	Total discrete tax adjustments					19,589								9,570								5,823
	Total of adjustments					43,832								26,799								5,960
Adjusted Net Income (Loss)					$	5,019			$	0.05			$	1,799			$	0.02			$	(1,410	)		$	(0.01	)
Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)										101,206								99,712								99,797

Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share (EPS)
									For the Year Ended
									Dec 31, 2021								Dec 31, 2020
									Net Income (Loss)				Diluted EPS				Net Income (Loss)				Diluted EPS
									(in thousands, except per share amounts)
Net income (loss) and diluted EPS as reported in accordance with GAAP									$	(49,307	)		$	(0.49	)		$	(496,751	)		$	(5.01	)
Pre-tax adjustments for the effects of:
	Long-lived assets impairments									—								70,445
	Long-lived assets write-offs									—								24,142
	Inventory write-downs									—								7,038
	Goodwill impairment									—								343,880
	Provision for Evergrande losses, net									29,549								—
	Loss on sale of asset									1,415								—
	Restructuring expenses and other									1,308								21,210
	Foreign currency (gains) losses									5,032								14,140
Total pre-tax adjustments										37,304								480,855
Tax effect on pre-tax adjustments at the applicable jurisdictional statutory rate in effect for respective periods										(7,819	)							(53,465	)
Discrete tax items:
Share-based compensation										542								1,032
Uncertain tax positions										158								(5,939	)
U.S. CARES Act										—								(32,625	)
Valuation allowances										33,068								80,687
Other										2,809								(326	)
	Total discrete tax adjustments									36,577								42,829
	Total of adjustments									66,062								470,219
Adjusted Net Income (Loss)									$	16,755			$	0.17			$	(26,532	)		$	(0.27	)
Weighted average diluted shares outstanding utilized for Adjusted Net Income (Loss)														100,895								99,233

EBITDA and Adjusted EBITDA and Margins
					For the Three Months Ended												For the Year Ended
					Dec 31, 2021				Dec 31, 2020				Sep 30, 2021				Dec 31, 2021				Dec 31, 2020
					($ in thousands)
Net income (loss)					$	(38,813	)		$	(25,000	)		$	(7,370	)		$	(49,307	)		$	(496,751	)
Depreciation and amortization						33,786				46,450				34,241				139,723				528,895
	Subtotal					(5,027	)			21,450				26,871				90,416				32,144
Interest expense, net of interest income						8,445				9,696				8,954				36,333				40,817
Amortization included in interest expense						865				322				875				2,950				639
Provision (benefit) for income taxes						11,742				15,405				13,560				43,598				(2,146	)
	EBITDA					16,025				46,873				50,260				173,297				71,454
Adjustments for the effects of:
	Long-lived assets impairments					—				1,682				—				—				70,445
	Inventory write-downs					—				—				—				—				7,038
	Provision for Evergrande losses, net					29,549				—				—				29,549				—
	Loss on sale of asset					—				—				—				1,415				—
	Restructuring expenses and other					—				(2,176	)			—				1,308				21,210
	Foreign currency (gains) losses					1,082				720				289				5,032				14,140
		Total of adjustments				30,631				226				289				37,304				112,833
	Adjusted EBITDA				$	46,656			$	47,099			$	50,549			$	210,601			$	184,287
Revenue					$	466,709			$	424,262			$	466,814			$	1,869,275			$	1,827,889
EBITDA margin %						3	%			11	%			11	%			9	%			4	%
Adjusted EBITDA margin %						10	%			11	%			11	%			11	%			10	%

Free Cash Flow
			For the Three Months Ended												For the Year Ended
			Dec 31, 2021				Dec 31, 2020				Sep 30, 2021				Dec 31, 2021				Dec 31, 2020
			(in thousands)
Net Income (loss)			$	(38,813	)		$	(25,000	)		$	(7,370	)		$	(49,307	)		$	(496,751	)
Non-cash adjustments:
	Depreciation and amortization, including goodwill impairment			33,786				46,450				34,241				139,723				528,895
	Long-lived asset impairments			—				1,682				—				—				70,445
	Other non-cash			31,244				4,209				5,641				35,226				9,047
Other increases (decreases) in cash from operating activities				113,778				76,943				3,984				99,672				25,011
Cash flow provided by (used in) operating activities				139,995				104,284				36,496				225,314				136,647
Purchases of property and equipment				(14,383	)			(14,847	)			(12,488	)			(50,199	)			(60,687	)
Free Cash Flow			$	125,612			$	89,437			$	24,008			$	175,115			$	75,960
2022 Adjusted EBITDA Estimate
															For the Year Ended
															December 31, 2022
															Low				High
															(in thousands)
Income (loss) before income taxes															$	62,000			$	102,000
Depreciation and amortization																125,000				135,000
	Subtotal															187,000				237,000
Interest expense, net of interest income																38,000				38,000
	Adjusted EBITDA														$	225,000			$	275,000
2022 Free Cash Flow Estimate
															For the Year Ended
															December 31, 2022
															Low				High
															(in thousands)
Net income (loss)															$	27,000			$	44,000
Depreciation and amortization																125,000				135,000
Other increases (decreases) in cash from operating activities																(7,000	)			36,000
Cash flow provided by (used in) operating activities																145,000				215,000
Purchases of property and equipment																(70,000	)			(90,000	)
Free Cash Flow															$	75,000			$	125,000

Adjusted Operating Income (Loss) and Margins by Segment
				For the Three Months Ended December 31, 2021
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	21,012			$	(20,228	)		$	6,754			$	6,015			$	10,562			$	(36,687	)		$	(12,572	)
Adjustments for the effects of:
	Provision for Evergrande losses, net				—				29,549				—				—				—				—				29,549
		Total of adjustments			—				29,549				—				—				—				—				29,549
Adjusted Operating Income (Loss)				$	21,012			$	9,321			$	6,754			$	6,015			$	10,562			$	(36,687	)		$	16,977
Revenue				$	134,315			$	102,940			$	85,356			$	60,469			$	83,629							$	466,709
Operating income (loss) % as reported in accordance with GAAP					16	%			(20	)%			8	%			10	%			13	%							(3	)%
Operating income (loss) % using adjusted amounts					16	%			9	%			8	%			10	%			13	%							4	%
				For the Three Months Ended December 31, 2020
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	14,477			$	12,218			$	(9,940	)		$	892			$	16,525			$	(33,692	)		$	480
Adjustments for the effects of:
	Long-lived assets impairments				—				—				1,304				378				—				—				1,682
	Long-lived assets write-offs				—				—				9,401				170				—				—				9,571
	Restructuring expenses and other				221				(3,489	)			643				422				27				—				(2,176	)
		Total of adjustments			221				(3,489	)			11,348				970				27				—				9,077
Adjusted Operating Income (Loss)				$	14,698			$	8,729			$	1,408			$	1,862			$	16,552			$	(33,692	)		$	9,557
Revenue				$	114,711			$	99,899			$	67,821			$	54,307			$	87,524							$	424,262
Operating income (loss) % as reported in accordance with GAAP					13	%			12	%			(15	)%			2	%			19	%							—	%
Operating income (loss) % using adjusted amounts					13	%			9	%			2	%			3	%			19	%							2	%

Adjusted Operating Income (Loss) and Margins by Segment
				For the Three Months Ended September 30, 2021
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	19,533			$	809			$	7,634			$	5,362			$	14,251			$	(31,820	)		$	15,769
Adjusted Operating Income (Loss)				$	19,533			$	809			$	7,634			$	5,362			$	14,251			$	(31,820	)		$	15,769
Revenue				$	143,710			$	75,359			$	95,580			$	62,806			$	89,359							$	466,814
Operating income (loss) % as reported in accordance with GAAP					14	%			1	%			8	%			9	%			16	%							3	%
Operating income (loss) % using adjusted amounts					14	%			1	%			8	%			9	%			16	%							3	%

Adjusted Operating Income (Loss) and Margins by Segment
				For the Year Ended December 31, 2021
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	76,874			$	(15,876	)		$	31,197			$	18,572			$	60,992			$	(131,960	)		$	39,799
Adjustments for the effects of:
	Provision for Evergrande losses, net				—				29,549				—				—				—				—				29,549
	Loss on sale of asset				—				—				—				—				—				1,415				1,415
	Restructuring expenses and other				395				537				149				217				10				—				1,308
		Total of adjustments			395				30,086				149				217				10				1,415				32,272
Adjusted Operating Income (Loss)				$	77,269			$	14,210			$	31,346			$	18,789			$	61,002			$	(130,545	)		$	72,071
Revenue				$	538,515			$	344,251			$	378,121			$	241,393			$	366,995							$	1,869,275
Operating income (loss) % as reported in accordance with GAAP					14	%			(5	)%			8	%			8	%			17	%							2	%
Operating income (loss) % using adjusted amounts					14	%			4	%			8	%			8	%			17	%							4	%
				For the Year Ended December 31, 2020
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	(65,817	)		$	(88,253	)		$	(105,680	)		$	(121,675	)		$	56,023			$	(120,677	)		$	(446,079	)
Adjustments for the effects of:
	Long-lived assets impairments				—				61,074				8,826				545				—				—				70,445
	Long-lived assets write-offs				7,328				—				16,644				170				—				—				24,142
	Inventory write-downs				7,038				—				—				—				—				—				7,038
	Goodwill impairment				102,118				52,263				66,285				123,214				—				—				343,880
	Restructuring expenses and other				5,055				2,266				8,590				4,272				572				455				21,210
		Total of adjustments			121,539				115,603				100,345				128,201				572				455				466,715
Adjusted Operating Income (Loss)				$	55,722			$	27,350			$	(5,335	)		$	6,526			$	56,595			$	(120,222	)		$	20,636
Revenue				$	493,332			$	477,419			$	289,127			$	226,938			$	341,073							$	1,827,889
Operating income (loss) % as reported in accordance with GAAP					(13	)%			(18	)%			(37	)%			(54	)%			16	%							(24	)%
Operating income (loss) % using adjusted amounts					11	%			6	%			(2	)%			3	%			17	%							1	%

EBITDA and Adjusted EBITDA and Margins by Segment
				For the Three Months Ended December 31, 2021
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	21,012			$	(20,228	)		$	6,754			$	6,015			$	10,562			$	(36,687	)		$	(12,572	)
Adjustments for the effects of:
	Depreciation and amortization				21,029				3,111				7,405				1,091				676				474				33,786
	Other pre-tax				—				—				—				—				—				(5,189	)			(5,189	)
	EBITDA				42,041				(17,117	)			14,159				7,106				11,238				(41,402	)			16,025
Adjustments for the effects of:
	Provision for Evergrande losses, net				—				29,549				—				—				—				—				29,549
	Foreign currency (gains) losses				—				—				—				—				—				1,082				1,082
		Total of adjustments			—				29,549				—				—				—				1,082				30,631
Adjusted EBITDA				$	42,041			$	12,432			$	14,159			$	7,106			$	11,238			$	(40,320	)		$	46,656
Revenue				$	134,315			$	102,940			$	85,356			$	60,469			$	83,629							$	466,709
Operating income (loss) % as reported in accordance with GAAP					16	%			(20	)%			8	%			10	%			13	%							(3	)%
EBITDA Margin					31	%			(17	)%			17	%			12	%			13	%							3	%
Adjusted EBITDA Margin					31	%			12	%			17	%			12	%			13	%							10	%
				For the Three Months Ended December 31, 2020
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	14,477			$	12,218			$	(9,940	)		$	892			$	16,525			$	(33,692	)		$	480
Adjustments for the effects of:
	Depreciation and amortization				23,210				3,193				16,979				1,255				667				1,146				46,450
	Other pre-tax				—				—				—				—				—				(57	)			(57	)
	EBITDA				37,687				15,411				7,039				2,147				17,192				(32,603	)			46,873
Adjustments for the effects of:
	Long-lived assets impairments				—				—				1,304				378				—				—				1,682
	Restructuring expenses and other				221				(3,489	)			643				422				27				—				(2,176	)
	Foreign currency (gains) losses				—				—				—				—				—				720				720
		Total of adjustments			221				(3,489	)			1,947				800				27				720				226
Adjusted EBITDA				$	37,908			$	11,922			$	8,986			$	2,947			$	17,219			$	(31,883	)		$	47,099
Revenue				$	114,711			$	99,899			$	67,821			$	54,307			$	87,524							$	424,262
Operating income (loss) % as reported in accordance with GAAP					13	%			12	%			(15	)%			2	%			19	%							—	%
EBITDA Margin					33	%			15	%			10	%			4	%			20	%							11	%
Adjusted EBITDA Margin					33	%			12	%			13	%			5	%			20	%							11	%

EBITDA and Adjusted EBITDA and Margins by Segment
				For the Three Months Ended September 30, 2021
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	19,533			$	809			$	7,634			$	5,362			$	14,251			$	(31,820	)		$	15,769
Adjustments for the effects of:
	Depreciation and amortization				21,483				3,202				6,781				1,114				1,427				234				34,241
	Other pre-tax				—				—				—				—				—				250				250
	EBITDA				41,016				4,011				14,415				6,476				15,678				(31,336	)			50,260
Adjustments for the effects of:
	Foreign currency (gains) losses				—				—				—				—				—				289				289
		Total of adjustments			—				—				—				—				—				289				289
Adjusted EBITDA				$	41,016			$	4,011			$	14,415			$	6,476			$	15,678			$	(31,047	)		$	50,549
Revenue				$	143,710			$	75,359			$	95,580			$	62,806			$	89,359							$	466,814
Operating income (loss) % as reported in accordance with GAAP					14	%			1	%			8	%			9	%			16	%							3	%
EBITDA Margin					29	%			5	%			15	%			10	%			18	%							11	%
Adjusted EBITDA Margin					29	%			5	%			15	%			10	%			18	%							11	%

EBITDA and Adjusted EBITDA and Margins by Segment
				For the Year Ended December 31, 2021
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	76,874			$	(15,876	)		$	31,197			$	18,572			$	60,992			$	(131,960	)		$	39,799
Adjustments for the effects of:
	Depreciation and amortization				87,900				12,788				28,173				4,420				4,783				1,659				139,723
	Other pre-tax				—				—				—				—				—				(6,225	)			(6,225	)
	EBITDA				164,774				(3,088	)			59,370				22,992				65,775				(136,526	)			173,297
Adjustments for the effects of:
	Provision for Evergrande losses, net				—				29,549				—				—				—				—				29,549
	Loss on sale of asset				—				—				—				—				—				1,415				1,415
	Restructuring expenses and other				395				537				149				217				10				—				1,308
	Foreign currency (gains) losses				—				—				—				—				—				5,032				5,032
		Total of adjustments			395				30,086				149				217				10				6,447				37,304
Adjusted EBITDA				$	165,169			$	26,998			$	59,519			$	23,209			$	65,785			$	(130,079	)		$	210,601
Revenue				$	538,515			$	344,251			$	378,121			$	241,393			$	366,995							$	1,869,275
Operating income (loss) % as reported in accordance with GAAP					14	%			(5	)%			8	%			8	%			17	%							2	%
EBITDA Margin					31	%			(1	)%			16	%			10	%			18	%							9	%
Adjusted EBITDA Margin					31	%			8	%			16	%			10	%			18	%							11	%
				For the Year Ended December 31, 2020
				SSR				MP				OPG				IMDS				ADTech				Unallocated Expenses and other				Total
				($ in thousands)
Operating Income (Loss) as reported in accordance with GAAP				$	(65,817	)		$	(88,253	)		$	(105,680	)		$	(121,675	)		$	56,023			$	(120,677	)		$	(446,079	)
Adjustments for the effects of:
	Depreciation and amortization				212,621				66,772				115,288				127,221				2,666				4,327				528,895
	Other pre-tax				—				—				—				—				—				(11,362	)			(11,362	)
	EBITDA				146,804				(21,481	)			9,608				5,546				58,689				(127,712	)			71,454
Adjustments for the effects of:
	Long-lived assets impairments				—				61,074				8,826				545				—				—				70,445
	Inventory write-downs				7,038				—				—				—				—				—				7,038
	Restructuring expenses and other				5,055				2,266				8,590				4,272				572				455				21,210
	Foreign currency (gains) losses				—				—				—				—				—				14,140				14,140
		Total of adjustments			12,093				63,340				17,416				4,817				572				14,595				112,833
Adjusted EBITDA				$	158,897			$	41,859			$	27,024			$	10,363			$	59,261			$	(113,117	)		$	184,287
Revenue				$	493,332			$	477,419			$	289,127			$	226,938			$	341,073							$	1,827,889
Operating income (loss) % as reported in accordance with GAAP					(13	)%			(18	)%			(37	)%			(54	)%			16	%							(24	)%
EBITDA Margin					30	%			(4	)%			3	%			2	%			17	%							4	%
Adjusted EBITDA Margin					32	%			9	%			9	%			5	%			17	%							10	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220224005078/en/