Oceaneering Reports Fourth Quarter and Full Year 2021 Results
HOUSTON, February 24, 2022 – 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
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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
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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
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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
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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
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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.
Contact:
Mark Peterson
Vice President, Corporate Development and Investor Relations
Oceaneering International, Inc.
713-329-4507
investorrelations@oceaneering.com
- Tables follow on next page -
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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.
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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.
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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.
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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.
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RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
11
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
12
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
%
13
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
14
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
%
15
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
%
16
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
%
17
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
%
`
18
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
%
19
RECONCILIATIONS OF NON-GAAP TO GAAP FINANCIAL INFORMATION
(continued)
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
