oii-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	June 30, 2024


¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission File Number: 1-10945

____________________________________________

OCEANEERING INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


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

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

(713) 329-4500

(Registrant's telephone number, including area code)

Not Applicable

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

____________________________________________

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


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

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

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

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


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

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

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

☐ Yes þ No

Number of shares of Common Stock outstanding as of July 19, 2024: 101,481,447

Oceaneering International, Inc.

Form 10-Q

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Part I	Financial Information

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

Part II	Other Information

Item 1.	Legal Proceedings
Item 6.	Exhibits

Signatures

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PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	Jun 30, 2024		Dec 31, 2023
(in thousands, except share data)
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	382,873	$	461,566
Accounts receivable, net	405,072		331,326
Contract assets, net	224,475		234,505
Inventory, net	231,305		209,798
Other current assets	93,405		68,464
Total Current Assets	1,337,130		1,305,659
Property and equipment, at cost	2,268,671		2,285,896
Less accumulated depreciation	1,852,181		1,861,603
Net property and equipment	416,490		424,293
Other Assets:
Goodwill	34,033		34,214
Other noncurrent assets	138,498		137,286
Right-of-use operating lease assets	378,715		337,554
Total other assets	551,246		509,054
Total Assets	$	2,304,866	$	2,239,006
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	172,672	$	156,064
Accrued liabilities	423,216		411,781
Contract liabilities	181,057		164,631
Total current liabilities	776,945		732,476
Long-term debt	479,378		477,058
Long-term operating lease liabilities	295,294		293,482
Other long-term liabilities	96,154		101,907
Commitments and contingencies
Equity:
Common stock, par value $0.25 per share; 360,000,000 shares authorized; 110,834,088 shares issued	27,709		27,709
Additional paid-in capital	92,341		131,774
Treasury stock; 9,352,641 and 10,030,200 shares, at cost	(535,579)		(574,380)
Retained earnings	1,475,389		1,425,257
Accumulated other comprehensive loss	(408,828)		(382,340)
Oceaneering shareholders' equity	651,032		628,020
Noncontrolling interest	6,063		6,063
Total equity	657,095		634,083
Total Liabilities and Equity	$	2,304,866	$	2,239,006

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

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OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)		2024		2023		2024		2023
Revenue		$	668,808	$	597,910	$	1,267,900	$	1,134,897
Cost of services and products		548,597		496,830		1,055,305		956,252
	Gross margin	120,211		101,080		212,595		178,645
Selling, general and administrative expense		59,847		51,881		115,538		102,696


	Income (loss) from operations	60,364		49,199		97,057		75,949
Interest income		2,402		4,154		5,442		8,620
Interest expense		(9,516)		(9,517)		(18,720)		(18,800)
Equity in income (losses) of unconsolidated affiliates		295		479		464		1,118
Other income (expense), net		1,759		(5,846)		3,239		(5,768)
	Income (loss) before income taxes	55,304		38,469		87,482		61,119
Provision (benefit) for income taxes		20,307		19,467		37,350		38,057
	Net Income (Loss)	$	34,997	$	19,002	$	50,132	$	23,062



Weighted-average shares outstanding
Basic		101,441		100,776		101,233		100,610
Diluted		102,472		102,004		102,361		102,017
Earnings (loss) per share
Basic		$	0.34	$	0.19	$	0.50	$	0.23
Diluted		$	0.34	$	0.19	$	0.49	$	0.23

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

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OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)



		Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)		2024		2023		2024		2023
Net income (loss)		$	34,997	$	19,002	$	50,132	$	23,062
Other Comprehensive Income (Loss):
	Foreign currency translation adjustments	(10,525)		3,123		(26,488)		1,177
	Change in unrealized gains for available-for-sale debt securities (1)	—		(35)		—		(35)
Total other comprehensive income (loss)		(10,525)		3,088		(26,488)		1,142
	Comprehensive income (loss)	$	24,472	$	22,090	$	23,644	$	24,204

(1)	We have no available-for-sale debt securities for the three- and six-month periods ended June 30, 2024. There was no income tax expense or benefit associated with the three- and six month periods ended June 30, 2023 due to an offsetting valuation allowance.

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

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OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Six Months Ended June 30,
(in thousands)	2024		2023
Cash Flows from Operating Activities:
Net income (loss)	$	50,132	$	23,062
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	53,038		53,867


Deferred income tax provision (benefit)	(2,950)		(871)

Net loss (gain) on sales of property and equipment	(39)		74
Noncash compensation	6,214		6,814
Noncash impact of lease accounting	1,201		(3,282)
Excluding the effects of acquisitions, increase (decrease) in cash from:
Accounts receivable and contract assets	(63,716)		(103,446)
Inventory	(21,507)		(24,452)

Other operating assets	(29,502)		2,306
Currency translation effect on working capital, excluding cash	(8,450)		(996)
Current liabilities	3,901		22,390
Other operating liabilities	(5,416)		2,066
Total adjustments to net income (loss)	(67,226)		(45,530)
Net Cash Provided by (Used in) Operating Activities	(17,094)		(22,468)
Cash Flows from Investing Activities:
Purchases of property and equipment	(48,376)		(40,736)



Distributions of capital from unconsolidated affiliates	3,182		2,520
Proceeds from sale of property and equipment	—		4
Other investing activities	1,983		1,346
Net Cash Provided by (Used in) Investing Activities	(43,211)		(36,866)
Cash Flows from Financing Activities:

Employer tax withholding on settlement of shares	(6,846)		(5,340)

Other financing activities	(156)		—
Net Cash Provided by (Used in) Financing Activities	(7,002)		(5,340)
Effect of exchange rates on cash	(11,386)		(52)
Net Increase (Decrease) in Cash and Cash Equivalents	(78,693)		(64,726)
Cash and Cash Equivalents—Beginning of Period	461,566		568,745
Cash and Cash Equivalents—End of Period	$	382,873	$	504,019

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

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OCEANEERING INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)



	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Oceaneering Shareholders' Equity		Non-controlling Interest		Total Equity
(in thousands)
Balance, December 31, 2023	$	27,709	$	131,774	$	(574,380)	$	1,425,257	$	(382,340)	$	628,020	$	6,063	$	634,083
Net income (loss)	—		—		—		15,135		—		15,135		—		15,135
Other comprehensive income (loss)	—		—		—		—		(15,963)		(15,963)		—		(15,963)
Restricted stock unit activity	—		(37,504)		33,392		—		—		(4,112)		—		(4,112)


Balance, March 31, 2024	27,709		94,270		(540,988)		1,440,392		(398,303)		623,080		6,063		629,143
Net income (loss)	—		—		—		34,997		—		34,997		—		34,997
Other comprehensive income (loss)	—		—		—		—		(10,525)		(10,525)		—		(10,525)
Restricted stock unit activity	—		2,319		1,161		—		—		3,480		—		3,480
Restricted stock activity	—		(4,248)		4,248		—		—		—		—		—

Balance, June 30, 2024	$	27,709	$	92,341	$	(535,579)	$	1,475,389	$	(408,828)	$	651,032	$	6,063	$	657,095







	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Oceaneering Shareholders' Equity		Non-controlling Interest		Total Equity
(in thousands)
Balance, December 31, 2022	$	27,709	$	155,858	$	(605,553)	$	1,327,854	$	(386,127)	$	519,741	$	6,063	$	525,804

Net income (loss)	—		—		—		4,060		—		4,060		—		4,060
Other comprehensive income (loss)	—		—		—		—		(1,946)		(1,946)		—		(1,946)
Restricted stock unit activity	—		(26,963)		25,351		—		—		(1,612)		—		(1,612)
Restricted stock activity	—		(3,884)		3,884		—		—		—		—		—

Balance, March 31, 2023	27,709		125,011		(576,318)		1,331,914		(388,073)		520,243		6,063		526,306
Net income (loss)	—		—		—		19,002		—		19,002		—		19,002
Other comprehensive income (loss)	—		—		—		—		3,088		3,088		—		3,088
Restricted stock unit activity	—		2,807		279		—		—		3,086		—		3,086
Restricted stock activity	—		(266)		266		—		—		—		—		—
Balance, June 30, 2023	$	27,709	$	127,552	$	(575,773)	$	1,350,916	$	(384,985)	$	545,419	$	6,063	$	551,482

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. Oceaneering International, Inc. (“Oceaneering,” “we” “our” or “us”) has prepared these unaudited consolidated financial statements pursuant to instructions for quarterly reports on Form 10-Q, which we are required to file with the United States Securities and Exchange Commission (the “SEC”). These financial statements do not include all information and footnotes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These financial statements reflect all adjustments that we believe are necessary to present fairly our financial position as of June 30, 2024, and our results of operations and cash flows for the periods presented. Except as otherwise disclosed herein, all such adjustments are of a normal and recurring nature. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2023. The results for interim periods are not necessarily indicative of annual results.

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

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

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

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

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

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

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

We consider macroeconomic conditions when assessing our credit risk exposure, including any impacts from the conflicts in Russia and Ukraine and in the Middle East, volatility in the financial services industry and the oil and natural gas markets, and the effects thereof on our customers and various counterparties. We have determined the impacts to our credit loss expense are de minimis for the three- and six-month periods ended June 30, 2024 and 2023.

As of June 30, 2024, our allowance for credit losses was $1.9 million for accounts receivable and $0.7 million for other receivables. As of December 31, 2023, our allowance for credit losses was $2.2 million for accounts

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receivable and $0.6 million for other receivables. Our allowance for credit losses as of June 30, 2024, as compared to the same period in the prior year, were relatively flat.

Financial assets are written off when deemed uncollectible and there is no reasonable expectation of recovering the contractual cash flows. During the three-month period ended June 30, 2024, we did not write off any financial assets and during the six-month period ended June 30, 2024, we wrote off $0.1 million in financial assets. During the three- and six-month periods ended June 30, 2023, we did not write off any financial assets.

Accounts receivable are considered to be past due after the end of the contractual terms agreed to with the customer. There were no material past due amounts that we consider uncollectible for our financial assets as of June 30, 2024. We generally do not require collateral from our customers.

Inventory. Inventory is valued at the lower of cost or net realizable value. We determine cost using the weighted-average method. We periodically review the value of items in inventory and record write-downs or write-offs of inventory based on our assessment of market conditions. Write-downs and write-offs are charged to cost of services and products. We did not record any write-downs or write-offs of inventory in the three- and six-month periods ended June 30, 2024 and 2023.

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

We capitalize interest on assets where the construction period is anticipated to be more than three months. We did not capitalize interest in the three- and six-month periods ended June 30, 2024 and 2023. We do not allocate general administrative costs to capital projects.

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

Our management periodically, and upon the occurrence of a triggering event, reviews the realizability of our property and equipment, long-lived intangible assets and right-of-use operating lease assets to determine whether any events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. For long-lived assets to be held and used, we base our evaluation on impairment indicators such as the nature of the assets, the future economic benefits of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of an asset may not be recoverable, we determine whether an impairment has occurred using an undiscounted cash flows analysis of the asset at the lowest level for which identifiable cash flows exist. If an impairment has occurred, we recognize a loss for the difference between the carrying amount and the fair value of the asset. We did not identify indicators of impairment for property and equipment, long-lived intangible assets or right-of-use operating lease assets for the three- and six-month periods ended June 30, 2024 and 2023.

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

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

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

In our annual evaluation of goodwill, we perform a qualitative or quantitative impairment test. Under the qualitative approach, if we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we are required to perform the quantitative analysis to determine the fair value for the reporting unit. We then compare the fair value of the reporting unit with its carrying amount and recognize an impairment loss for the amount by which the carrying amount exceeds the fair value of the reporting unit. The loss recognized should not

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exceed the total amount of goodwill allocated to the reporting unit. We also consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. We did not identify indicators of impairment for goodwill for the three- and six-month periods ended June 30, 2024 and 2023.

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

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

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

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

We apply judgment in the determination and allocation of transaction price to performance obligations, and the subsequent recognition of revenue, based on the facts and circumstances of each contract. We routinely review estimates related to our contracts and, when required, reflect revisions to profitability in earnings immediately. If an element of variable consideration has the potential for a significant future reversal of revenue, we will constrain that variable consideration to a level intended to remove the potential future reversal. If a current estimate of total contract cost indicates an ultimate loss on a contract, we recognize the projected loss in full when we determine it. During the three- and six-month periods ended June 30, 2024, we did not have any material adjustments to transaction prices. During the three- and six-month periods ended June 30, 2023, we recognized projected losses of $2.9 million for entertainment business contracts in our Manufactured Products segment. There could be significant adjustments to overall contract costs in the future, due to changes in facts and circumstances.

In general, our payment terms consist of those services billed regularly as provided and those products delivered at a point in time, which are invoiced after the performance obligation is satisfied. Our product and service contracts with milestone payments due at agreed progress points during the contract are invoiced when those milestones are reached, which may differ from the timing of revenue recognition. Our payment terms generally do not provide financing of contracts to customers, nor do we receive financing from customers as a result of these terms.

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

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

As a lessor, we lease certain types of equipment along with the provision of services and utilize the expedient allowing us to combine the lease and non-lease components into a combined component that is accounted for (1) under the accounting standard “Leases” (“ASC 842”), when the lease component is predominant, and (2) under the accounting standard “Revenue from Contracts with Customers” (“ASC 606”), when the service component is predominant. In general, when we have a service component, it is typically the predominant element and leads to accounting under ASC 606.

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

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

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

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

Foreign Currency Translation. The functional currency for most of our foreign subsidiaries is the applicable local currency. Results of operations for foreign subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using average exchange rates during the period. Assets and liabilities of these foreign subsidiaries are translated into U.S. dollars using the exchange rates in effect as of the balance sheet date, and the resulting translation adjustments are recognized, net of tax, in accumulated other comprehensive income (loss) as a component of shareholders' equity. All foreign currency transaction gains and losses are recognized currently in the Consolidated Statements of Operations. We recorded $1.0 million and $3.2 million of foreign currency transaction gains (losses) in the three- and six-month periods ended June 30, 2024, respectively. We recorded $(4.9) million and $(4.6) million of foreign currency transaction gains (losses) in the three- and six-month periods ended June 30, 2023, respectively. Those amounts are included as a component of other income (expense), net in our Consolidated Statement of Operations.

2. ACCOUNTING STANDARDS UPDATE

Recently Issued Accounting Standards. In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“Topic 280”), which requires enhanced disclosures about significant segment expenses. Under Topic 280, companies are required to disclose, on an annual and interim basis, any significant segment expense that is regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss. The title and position of the CODM must be disclosed plus an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Topic 280 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and must be applied retrospectively to all prior periods presented in the

financial statements. We anticipate that Topic 280 will impact only our disclosures and therefore do not expect that Topic 280 will have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“Topic 740”), which applies to all entities subject to income taxes. Topic 740 requires disaggregated information about a reporting entity’s effective tax rate reconciliation, including percentages and amounts, as well as

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information on income taxes paid, net of refunds disaggregated by federal, state, local and foreign and by jurisdiction if the amount is 5% or more of total income tax payments, net of refunds. Topic 740 is effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. We anticipate that Topic 740 will impact only our disclosures and therefore, do not expect that Topic 740 will have a material impact on our consolidated financial statements.

3. REVENUE

Revenue by Category

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


			Three Months Ended				Six Months Ended
(in thousands)			Jun 30, 2024		Jun 30, 2023		Jun 30, 2024		Jun 30, 2023
Business Segment:
	Energy
		Subsea Robotics	$	214,985	$	186,512	$	401,917	$	355,673
		Manufactured Products	139,314		124,882		268,767		237,821
		Offshore Projects Group	144,058		130,547		259,112		234,854
		Integrity Management & Digital Solutions	73,492		63,166		143,182		123,249
	Total Energy		571,849		505,107		1,072,978		951,597
	Aerospace and Defense Technologies		96,959		92,803		194,922		183,300
Total			$	668,808	$	597,910	$	1,267,900	$	1,134,897



Geographic Operating Areas:
	Foreign:
		Africa	$	114,055	$	78,247	$	201,294	$	161,975
		Norway	60,066		48,508		117,790		93,448
		United Kingdom	63,990		54,268		114,189		94,633
		Brazil	54,620		47,993		111,672		88,608
		Asia and Australia	53,505		57,690		102,889		110,584
		Other	38,490		43,848		73,377