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What changed in OCEANEERING INTERNATIONAL INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of OCEANEERING INTERNATIONAL INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+332 added−327 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in OCEANEERING INTERNATIONAL INC's 2023 10-K

332 paragraphs added · 327 removed · 239 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

70 edited+24 added−22 removed73 unchanged
Biggest changeGovernment; • factors affecting the level of activity in our entertainment businesses, including decisions on capital expenditure decisions by entertainment business customers, such as theme park operators; • general economic and business conditions and industry trends, including the ongoing transition to alternative sources of energy to reduce worldwide emissions of carbon dioxide and other “greenhouse gases” and the effects of inflation; • the strength of the industry segments in which we are involved; • the adverse impacts of the COVID-19 pandemic and the governmental, customer, supplier and other responses to the pandemic; • cancellations of contracts, change orders and other contractual modifications and the resulting adjustments to our backlog; • collections from our customers; • the availability and increased costs of chartered vessels; • 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; • our ability to comply with covenants in our credit agreements and other debt instruments and the availability, terms and deployment of capital; • 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 (including pollution and climate change); • the continued availability of qualified personnel and our ability to attract and retain those qualified personnel; • our ability to obtain raw materials and parts on a timely basis and, in some cases, from limited sources; • increases in material costs on long-term projects at prices higher than originally forecast; • 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; • the risks associated with a hybrid and remote workforce; • the risks associated with the use of complex information technology systems, including cybersecurity risks and the risks associated with failures to protect data privacy in accordance with applicable legal requirements and contractual provisions binding upon us; 11 Table of Contents / • 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.
Biggest changeGovernment; • factors affecting the level of activity in our entertainment businesses, including decisions on capital expenditure decisions by entertainment business customers, such as theme park operators; • factors affecting our ability to achieve our growth expectations for our mobile robotics technology products; • general economic and business conditions and industry trends, including the ongoing transition to alternative sources of energy to reduce worldwide emissions of carbon dioxide and other “greenhouse gases,” the effects of inflation and future monetary policies and actions of the Federal Reserve; • the strength of the industry segments in which we are involved; • cancellations of contracts, change orders and other contractual modifications and the resulting adjustments to our backlog; • collections from our customers; • the availability and increased costs of chartered vessels; • 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; 11 Table of Contents / • our ability to comply with covenants in our credit agreements and other debt instruments and the availability, terms and deployment of capital; • 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 (including pollution and climate change); • the continued availability of qualified personnel and our ability to attract and retain those qualified personnel; • our ability to obtain raw materials and parts on a timely basis and, in some cases, from limited sources; • increases in material costs on long-term projects at prices higher than originally forecast; • 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; • the risks associated with the use of complex information technology systems, including cybersecurity risks and the risks associated with failures to protect data privacy in accordance with applicable legal requirements and contractual provisions binding upon us; • 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.
We are also focusing on opportunities to develop and deploy our capabilities to grow business in offshore wind installations (both fixed and floating), nuclear, hydrogen and carbon-capture-and-sequestration (“CCS”) markets and tidal energy solutions, as well as expanding our asset integrity management and digital solutions for those market s. Subsea Robotics.
We are also focusing on opportunities to develop and deploy our capabilities to grow business in mobile robotics, offshore wind installations (both fixed and floating), nuclear, hydrogen and carbon-capture-and-sequestration (“CCS”) markets and tidal energy solutions, as well as expanding our asset integrity management and digital solutions for those market s. Subsea Robotics.
He was appointed to his current position in May 2020. Shaun R. Roedel, Senior Vice President, Manufactured Products, joined Oceaneering in 2009 as Assistant General Manager/Group Project Manager of the umbilical plant in Panama City, Florida, and became Vice President, Subsea Products in 2017. He was appointed to his current position in March 2020. Prior to joining Oceaneering, Mr.
Shaun R. Roedel, Senior Vice President, Manufactured Products, joined Oceaneering in 2009 as Assistant General Manager/Group Project Manager of the umbilical plant in Panama City, Florida, and became Vice President, Subsea Products in 2017. He was appointed to his current position in March 2020. Prior to joining Oceaneering, Mr.
We intend to continue to expand our remote service offerings in this segment given the 2 Table of Contents / potentially significant savings both financially and in CO₂ emissions available from the Liberty and the Isurus TM systems and other E-ROV systems we are developing. Manufactured Products.
We intend to continue to expand our remote service offerings in this segment given the potentially significant savings both financially and in CO₂ emissions available from the Liberty and the Isurus TM systems and other E-ROV and hybrid systems we are developing. 2 Table of Contents / Manufactured Products.
Work-class ROVs are outfitted with manipulators, sonar and video cameras, and can operate specialized tooling packages and other equipment or features to facilitate the performance of specific underwater tasks. As of December 31, 2022, we owned 250 work-class ROVs. We believe we own and operate the largest fleet of work-class ROVs in the world.
Work-class ROVs are outfitted with manipulators, sonar and video cameras, and can operate specialized tooling packages and other equipment or features to facilitate the performance of specific underwater tasks. As of December 31, 2023, we owned 250 work-class ROVs. We believe we own and operate the largest fleet of work-class ROVs in the world.
Beierl, Senior Vice President, Aerospace and Defense Technologies, joined Oceaneering in 2005 and held leadership positions in the Oceaneering Technologies business unit, most recently as its Vice President and General Manager from 2014. Mr. Beierl was appointed as Oceaneering's Senior Vice President, Advanced Technologies in 2018 and to his current position in August 2020.
Philip G. Beierl, Senior Vice President, Aerospace and Defense Technologies, joined Oceaneering in 2005 and held leadership positions in the Oceaneering Technologies business unit, most recently as its Vice President and General Manager from 2014. Mr. Beierl was appointed as Oceaneering's Senior Vice President, Advanced Technologies in 2018 and to his current position in August 2020.
The services and products we provide to the energy industry include remotely operated vehicles, survey and positioning services, specialty subsea hardware, engineering and project management, subsea intervention services, including manned diving, seabed preparation and asset integrity and non-destructive testing services.
The services and products we provide to the energy industry include remotely operated vehicles, survey and positioning services, specialty subsea hardware, engineering and project management, subsea intervention services, including manned diving and asset integrity and non-destructive testing services.
Those forward-looking statements appear in Part I of this report in Item 1—“Business,” Item 2—“Properties” and Item 3—“Legal Proceedings” and in Part II of this report in Item 7—“Management's Discussion and Analysis of Financial Condition and Results of Operations,” Item 7A—“Quantitative and Qualitative Disclosures About Market Risk” and in the Notes to Consolidated Financial 10 Table of Contents / Statements incorporated into Item 8 and elsewhere in this report.
Those forward-looking statements appear in Part I of this report in Item 1—“Business,” Item 2—“Properties” and Item 3—“Legal Proceedings” and in Part II of this report in Item 7—“Management's Discussion and Analysis of Financial Condition and Results of Operations,” Item 7A—“Quantitative and Qualitative Disclosures About Market Risk” and in the Notes to Consolidated Financial Statements incorporated into Item 8 and elsewhere in this report.
Kriendler served in human resources leadership positions from 2006 to 2016 at affiliates of Tyco International Ltd. and successor entities, including most recently as Vice President, Human Resources for The ADT Corporation from 2011. Ms. Kriendler has more than 25 years of experience in human resources management. Benjamin M.
Kriendler served in human resources leadership positions from 2006 to 2016 at affiliates of Tyco International Ltd. and successor entities, including most recently as Vice President, Human Resources for The ADT Corporation from 2011. Ms. Kriendler has more than 25 years of experience in human resources management. 13 Table of Contents / Benjamin M.
We market our engineered products and services primarily to U.S. government agencies and their prime contractors in defense and space exploration activities, as well as commercial space companies. Major Customers. Our top five customers in 2022, 2021 and 2020 accounted for 37%, 36% and 32%, respectively, of our consolidated revenue.
We market our engineered products and services primarily to U.S. government agencies and their prime contractors in defense and space exploration activities, as well as commercial space companies. Major Customers. Our top five customers in 2023, 2022 and 2021 accounted for 36%, 37% and 36%, respectively, of our consolidated revenue.
The European operations of our IMDS segment are also seasonally more active in the second and third 7 Table of Contents / quarters. Revenue in our Subsea Robotics segment is subject to seasonal variations in demand, with our first quarter generally being the low quarter of the year.
The European operations of our IMDS segment are also seasonally more active in the second and third quarters. Revenue in our Subsea Robotics segment is subject to seasonal variations in demand, with our first quarter generally being the low quarter of the year.
We do not know of any arrangement or 12 Table of Contents / understanding between any of the above persons and any other person or persons pursuant to which they were selected or appointed as an officer. Business Experience. The following summarizes the business experience of our executive officers.
We do not know of any arrangement or understanding between any of the above persons and any other person or persons pursuant to which they were selected or appointed as an officer. Business Experience. The following summarizes the business experience of our executive officers.
McDonald 59 Senior Vice President, Subsea Robotics 2015 1989 Shaun R. Roedel 55 Senior Vice President, Manufactured Products 2020 2009 Each executive officer serves at the discretion of our Board of Directors and is subject to reelection or reappointment each year after the annual meeting of our shareholders.
McDonald 60 Senior Vice President, Subsea Robotics 2015 1989 Shaun R. Roedel 56 Senior Vice President, Manufactured Products 2020 2009 Each executive officer serves at the discretion of our Board of Directors and is subject to reelection or reappointment each year after the annual meeting of our shareholders.
She most recently served at Parker Wellbore as Senior Vice President, Chief Administration Officer, General Counsel and Corporate Secretary, a role held since 2020, and Vice President, General Counsel and Corporate Secretary, a role held from 2018 through 2020. Prior to her service with Parker Wellbore, Ms. Simons practiced law with a private law firm. Philip G.
She most recently served at Parker Wellbore as Senior Vice President, Chief Administration Officer, General Counsel and Corporate Secretary, a role held since 2020, and Vice President, General Counsel and Corporate Secretary, a role held from 2018 through 2020. Prior to her service with Parker Wellbore, Ms. Simons practiced law with a private law firm. Catherine E.
Department of Defense, NASA and major government contractors. We work with our customers to understand their specialized requirements, identify and mitigate risks, and provide them value-added, maintainable, safe and certified solutions. The segment's largest customer is the U.S. Government with the U.S. Navy and NASA being the primary agencies supported. For the U.S.
Department of Defense, National Aeronautics and Space Administration (“NASA”) and major government contractors. We work with our customers to understand their specialized requirements, identify and mitigate risks, and provide them value-added, maintainable, safe and certified solutions. The segment's largest customer is the U.S. Government with the U.S. Navy and NASA being the primary agencies supported. For the U.S.
We also believe we are the industry leader in providing ROV services for offshore drill support, with an estimated 59% market share of the contracted floating drilling rigs at the end of 2022.
We also believe we are the industry leader in providing ROV services for offshore drill support, with an estimated 61% market share of the contracted floating drilling rigs at the end of 2023.
Our primary focus over the last several years has been toward increasing our service and product offerings toward our energy customers' operating expenditures and the offshore renewables energy market. We market our Subsea Robotics, Manufactured Products, OPG and IMDS services and products to domestic, international and foreign national energy companies engaged in offshore exploration, development and production.
Over the last several years, one of our focus areas has been to increase our service and product offerings toward our energy customers' operating expenditures and the offshore renewables energy market. We market our Subsea Robotics, Manufactured Products, OPG and IMDS services and products to domestic, international and foreign national energy companies engaged in offshore exploration, development and production.
Government, accounted for 11% and 12%, respectively, of our total consolidated annual revenue, and no other customer accounted for more than 10% of our total consolidated revenue. No individual customer accounted for more than 10% of our consolidated revenue during 2020.
Government, accounted for 10%, 11% and 12%, respectively, of our total consolidated annual revenue, and no other customer accounted for more than 10% of our total consolidated revenue.
In addition, various statements this report contains, including those that express a belief, expectation or intention are forward-looking statements.
In addition, various statements this report contains, including those that express a belief, expectation or intention, or that express a future goal or commitment, are forward-looking statements.
In our digital services, we focus on maritime and energy software offerings and forming key partnerships to expand our capabilities and market reach. IMDS revenue: Amount Percent of Total Revenue (in thousands) 2022 $ 229,884 11 % 2021 241,393 13 % 2020 226,938 12 % Aerospace and Defense Technologies. We provide engineering services and manufacturing to the U.S.
In our digital services, we focus on maritime and energy software offerings and forming key partnerships to expand our capabilities and market reach. IMDS revenue: Amount Percent of Total Revenue (in thousands) 2023 $ 255,282 11 % 2022 229,884 11 % 2021 241,393 13 % Aerospace and Defense Technologies. We provide engineering services and manufacturing to the U.S.
With this optimism comes our firm commitment to maintain our financial and capital discipline. Safety remains our top priority as we continue to focus on generating significant free cash flow and spending capital prudently to leverage our core competencies in new and existing markets.
With this optimism comes our firm commitment to maintain our financial and capital discipline. We continue to focus on generating significant free cash flow and spending capital prudently to leverage our core competencies in new and existing markets.
In 2022, 2021 and 2020, four of our top five customers were oil and gas exploration and production companies served by our Energy business segments, with the other one being the U.S. Government, which is served by our Aerospace and Defense Technologies segment. During 2022 and 2021, revenue from one customer, the U.S.
In 2023, 2022 and 2021, four of our top five customers were oil and gas exploration and production companies served by our Energy business segments, with the other one being the U.S. Government, which is served by our ADTech segment. During 2023, 2022 and 2021, revenue from one customer, the U.S.
These materials are available in print to any stockholder that makes a written request to Oceaneering International, Inc., Attention: Corporate Secretary, 5875 North Sam Houston Parkway West, Suite 400, Houston, Texas 77086. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Executive Officers.
These materials are available in print to any stockholder that makes a written request to Oceaneering International, Inc., Attention: Corporate Secretary, 5875 North Sam Houston Parkway West, Suite 400, Houston, Texas 77086.
The following information relates to our executive officers as of February 17, 2023: NAME AGE POSITION EXECUTIVE OFFICER SINCE EMPLOYEE SINCE Roderick A. Larson 56 President and Chief Executive Officer and Director 2012 2012 Earl F. Childress 57 Senior Vice President and Chief Commercial Officer 2020 2020 Alan R.
The following information relates to our executive officers as of February 16, 2024: NAME AGE POSITION EXECUTIVE OFFICER SINCE EMPLOYEE SINCE Roderick A. Larson 57 President and Chief Executive Officer and Director 2012 2012 Earl F. Childress 58 Senior Vice President and Chief Commercial Officer 2020 2020 Alan R.
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, mobility solutions, digital asset management, and aerospace and defense solutions, as well as managing our 2024 debt maturity. 3 Table of Contents / DESCRIPTION OF BUSINESS Energy Our Energy business consists of the Subsea Robotics, Manufactured Products, Offshore Projects Group and Integrity Management & Digital Solutions segments.
We will continue to develop and deliver technologies to help our customers produce hydrocarbons in a cleaner, safer and more cost-effective manner while increasing our investments into new markets including energy transition, mobility solutions, digital asset management, and aerospace and defense solutions. 3 Table of Contents / DESCRIPTION OF BUSINESS Energy Our Energy business consists of the Subsea Robotics, Manufactured Products, Offshore Projects Group and Integrity Management & Digital Solutions segments.
In the United Kingdom (“ U.K.”), we provide Independent Inspection Authority services for the oil and gas industry, which include first-pass integrity evaluation and assessment and nondestructive testing services. We use a variety of technologies to perform pipeline inspections, both onshore and offshore.
We provide these services principally to customers in the oil and gas, petrochemical and power generation industries. In the United Kingdom (“ U.K.”), we provide Independent Inspection Authority services for the oil and gas industry, which include first-pass integrity evaluation and assessment and nondestructive testing services. We use a variety of technologies to perform pipeline inspections, both onshore and offshore.
Subsea Robotics revenue: Amount Percent of Total Revenue (in thousands) 2022 $ 621,921 30 % 2021 538,515 29 % 2020 493,332 27 % ROV tooling provides an additional operational interface between an ROV and equipment located subsea. We also provide survey services, including hydrographic survey and positioning services and autonomous underwater vehicles for geoscience. Manufactured Products.
Subsea Robotics revenue: Amount Percent of Total Revenue (in thousands) 2023 $ 752,521 31 % 2022 621,921 30 % 2021 538,515 29 % ROV tooling provides an additional operational interface between an ROV and equipment located subsea. We also provide survey services, including hydrographic survey and positioning services and autonomous underwater vehicles for geoscience. Manufactured Products.
Our foreign operations, principally in Africa, Norway, United Kingdom, Brazil, Asia and Australia accounted for approximately 53% of our revenue, or $1.1 billion, for the year ended December 31, 2022.
Our foreign operations, principally in Africa, Asia and Australia, United Kingdom, Brazil, and Norway accounted for approximately 58% of our revenue, or $1.4 billion, for the year ended December 31, 2023.
Roedel was the head of project management for Siemens Dematic from 1997 to 2004 and the head of project management and construction for Vanderlande Industries from 2004 to 2009. Mr. Roedel served in the U.S. Navy from 1990 to 1997. Christopher J.
Roedel was the head of project management for Siemens Dematic from 1997 to 2004 and the head of project management and construction for Vanderlande Industries from 2004 to 2009. Mr. Roedel served in the U.S. Navy from 1990 to 1997. 14 Table of Contents /
Our Manufactured Products segment provides distribution systems, such as production control umbilicals and connection systems made up of specialty subsea hardware, and provides turnkey solutions that include project management, engineering design, fabrication/assembly and installation of autonomous mobile robotic technology to industrial, manufacturing, healthcare, warehousing and commercial theme park markets.
Our Manufactured Products segment provides distribution systems, such as production control umbilicals and connection systems made up of specialty subsea hardware, along with clamp connectors and subsea and topside control valves. We also provide turnkey solutions that include project management, engineering design, fabrication/assembly and installation of autonomous mobile robotic technology to industrial, manufacturing, healthcare, warehousing and commercial theme park markets.
We are expanding our integrity management services into adjacent markets and are developing our digitization services. We believe that our broad geographic sales and operational coverage, long history of operations, technical and safety reputation, application of various inspection technologies and accreditation to international quality standards enable us to compete effectively in our selected asset integrity and inspection services market segments.
We believe that our broad geographic sales and operational coverage, long history of operations, technical and safety reputation, application of various inspection technologies and accreditation to international quality standards enable us to compete effectively in our selected asset integrity and inspection services market segments.
Navy, we perform engineering services, prototype design building services and repair and maintenance services on submarines and surface ships. We support space exploration and technology development by providing our products and services to NASA, aerospace contractors and commercial space companies. Our U.S. Navy and NASA-related activities substantially depend on continued government funding.
Navy, we perform engineering services, prototype design building services and repair and maintenance services on submarines and surface ships. We support space exploration and technology development by providing our products and services to NASA, aerospace contractors and commercial space companies. Our U.S.
In addition to raw materials, we also use the products and services of a number of other providers, such as forge companies, casting foundries, metal fabricators, machine shops and logistics providers, in order to produce and deliver products to our customers. Most of these materials and services are generally available from multiple sources.
In addition to raw materials, we also use the products and services of a number of other providers, such as forge companies, casting foundries, metal fabricators, machine shops and logistics providers, in order to produce and deliver products to our customers.
He held a variety of domestic and international positions of increasing responsibility in our Remotely Operated Vehicles segment and 13 Table of Contents / most recently served as Vice President and General Manager for our ROV operations in the Eastern Hemisphere from 2006 until being appointed Senior Vice President, Remotely Operated Vehicles in 2016.
He held a variety of domestic and international positions of increasing responsibility in our Remotely Operated Vehicles segment and most recently served as Vice President and General Manager for our ROV operations in the Eastern Hemisphere from 2006 until being appointed Senior Vice President, Remotely Operated Vehicles in 2016. He was appointed to his current position in May 2020.
We believe the recent closures or reductions in capacity by some of our competitors should help with balancing a historically over-supplied market. Within our mobility solutions businesses, there are many niche competitors offering specialized services and products, both on a regional and a global basis. Offshore Projects Group. We perform subsea intervention and hardware installation services, principally in the U.S.
We believe the recent closures or reductions in capacity by some of our competitors, coupled with an increase in demand, should help with balancing a historically over-supplied market. Within our mobility solutions and entertainment businesses, there are many niche competitors offering specialized services and products, both on a regional and a global basis. Offshore Projects Group.
Curtis 57 Senior Vice President and Chief Financial Officer 2015 1995 Holly D. Kriendler 58 Senior Vice President and Chief Human Resources Officer 2020 2016 Benjamin M. Laura 44 Senior Vice President and Chief Innovation Officer 2020 2014 Jennifer F. Simons 46 Senior Vice President, Chief Legal Officer and Secretary 2023 2023 Philip G.
Curtis 58 Senior Vice President and Chief Financial Officer 2015 1995 Holly D. Kriendler 59 Senior Vice President and Chief Human Resources Officer 2020 2016 Benjamin M. Laura 45 Senior Vice President and Chief Innovation Officer 2020 2014 Jennifer F. Simons 47 Senior Vice President, Chief Legal Officer and Secretary 2023 2023 Catherine E.
REGULATION Our operations are affected from time to time and in varying degrees by foreign and domestic political developments and foreign, federal and local laws and regulations, including those relating to: • operating from and around offshore drilling, production and marine facilities; • national preference for local equipment and personnel; • marine vessel safety; • protection of the environment, including pollution, GHG emissions and climate change; • workplace health and safety; • data privacy; • taxation; • license requirements for importation and exportation of our equipment and technology; and • currency conversion and repatriation.
REGULATION Our operations are affected from time to time and in varying degrees by foreign and domestic political developments and foreign, federal and local laws and regulations, including those relating to: • operating from and around offshore drilling, production and marine facilities; • national preference for local equipment and personnel; • marine vessel safety; • protection of the environment, including pollution, GHG emissions and climate change; • workplace health and safety; • data privacy; • taxation; • license requirements for importation and exportation of our equipment and technology; and • currency conversion and repatriation. 8 Table of Contents / In addition, our Energy business primarily depends on the demand for our services and products from the oil and gas industry and, therefore, is affected by changing taxes, price controls and other laws and regulations relating to the oil and gas industry generally.
Prior to our segment realignment, he served within our Service and Rental business unit as: Director, Intervention from April 2019; Global Service Line Manager from June 2018; and Service Line Manager from February 2016. Leonardo P.
Prior to that time, he served as Vice President, Offshore Projects Group–Americas from February 2022 and Director, Offshore Projects Group–Americas from May 2020. Prior to our segment realignment, he served within our Service and Rental business unit as: Director, Intervention from April 2019; Global Service Line Manager from June 2018; and Service Line Manager from February 2016. Leonardo P.
Our work-class ROV fleet size was 250 as of December 31, 2022, 2021 and 2020 and included six Isurus TM work-class ROV systems as of December 31, 2022. In 2019, we began deploying our battery-operated Liberty electric ROV (“E-ROV”) system, which we developed to address customer objectives regarding cost efficiencies, safety, personnel shortages and environmental considerations.
Our work-class ROV fleet size was 250 as of December 31, 2023, 2022 and 2021 and included six Isurus TM work-class ROV systems (which are capable of operating in high-current conditions and are ideal for renewables projects and high-speed surveys) and our battery-operated Liberty electric ROV (“E-ROV”) system, which we developed to address customer objectives regarding cost efficiencies, safety, personnel shortages and environmental considerations.
We cannot determine the extent to which new legislation, new regulations or changes in existing laws or regulations may affect our future operations. 8 Table of Contents / Our operations and properties are subject to a wide variety of increasingly complex and stringent foreign, federal, state and local environmental laws and regulations, including those governing discharges into the air and water, the handling and disposal of solid and hazardous wastes, the remediation of soil and groundwater contaminated by hazardous substances and the health and safety of employees.
Our operations and properties are subject to a wide variety of increasingly complex and stringent foreign, federal, state and local environmental laws and regulations, including those governing discharges into the air and water, the handling and disposal of solid and hazardous wastes, the remediation of soil and groundwater contaminated by hazardous substances and the health and safety of employees.
As of December 31, 2022, we had approximately 9,200 employees, of whom approximately 40% were employed in the United States and approximately 60% were employed outside of the United States. Our workforce varies seasonally and typically peaks during the second and third quarters of each year.
As of December 31, 2023, we had approximately 10,100 employees, of whom approximately 38% were employed in the United States and approximately 62% were employed outside of the United States. Our workforce varies seasonally and typically peaks during the second and third quarter of each year.
Gulf of Mexico and offshore Angola, from multiservice deepwater vessels. We are one of many companies that offer these services. In general, our competitors can move their vessels to where we operate from other locations with relative ease. However, some of our competitors’ vessels are not Jones Act-compliant, which requires that vessels operating in the U.S.
We perform subsea intervention and hardware installation services, principally in the U.S. Gulf of Mexico and offshore Angola, from multiservice deepwater vessels. We are one of many companies that offer these services. In general, our competitors can move their vessels to where we operate from other locations with relative ease.
Aerospace and Defense Technologies Engineering services is a very broad market with a large number of competitors. We compete in specialized areas in which we can combine our extensive knowledge of operating in harsh environments, program management experience, mechanical engineering expertise and the capability to continue the development of conceptual project designs into the manufacture of custom equipment for customers.
We compete in specialized areas in which we can combine our extensive knowledge of operating in harsh environments, program management 7 Table of Contents / experience, mechanical engineering expertise and the capability to continue the development of conceptual project designs into the manufacture of custom equipment for customers.
The amounts of backlog orders we believed to be firm as of 2022 and 2021 were as follows (in millions): As of December 31, 2022 As of December 31, 2021 Total 1+ yr (1) Total 1+ yr (1) Energy Subsea Robotics $ 771 $ 313 $ 637 $ 256 Manufactured Products 467 186 318 46 Offshore Projects Group 239 — 158 1 Integrity Management & Digital Solutions 281 126 437 279 Total Energy 1,758 625 1,550 582 Aerospace and Defense Technologies 189 16 149 16 Total $ 1,947 $ 641 $ 1,699 $ 598 (1) Represents amounts that were not expected to be performed within one year.
The amounts of backlog orders we believed to be firm as of 2023 and 2022 were as follows (in millions): As of December 31, 2023 As of December 31, 2022 Total 1+ yr (1) Total 1+ yr (1) Energy Subsea Robotics $ 782 $ 303 $ 771 $ 313 Manufactured Products 622 194 467 186 Offshore Projects Group 355 121 239 — Integrity Management & Digital Solutions 332 148 281 126 Total Energy 2,091 766 1,758 625 Aerospace and Defense Technologies 236 23 189 16 Total $ 2,327 $ 789 $ 1,947 $ 641 (1) Represents amounts that were not expected to be performed within one year.
We design, build, retrofit and upgrade our new and existing ROVs at in-house facilities, the largest of which is in Morgan City, Louisiana.
We design, build, retrofit and upgrade our new and existing ROVs at in-house facilities, the largest of which is in Morgan City, Louisiana. In 2023, we retired eleven of our conventional work-class ROV systems and replaced them with eleven upgraded conventional work-class ROV systems.
We believe that our ability to safely provide a wide range of underwater services and products on a worldwide basis enables us to compete effectively in multiple phases of the offshore oilfield life 6 Table of Contents / cycle.
We compete for contracts with companies that have worldwide operations, as well as numerous others operating locally in various areas. We believe that our ability to safely provide a wide range of underwater services and products on a worldwide basis enables us to compete effectively in multiple phases of the offshore oilfield life cycle.
The relative importance of these factors can vary over time based on market conditions. The ability to develop improved equipment and techniques and to attract, train and retain skilled personnel is also an important competitive factor in our markets. Our survey and positioning services operate in a competitive environment, as one of several companies that provide these services. Manufactured Products.
The ability to develop improved equipment and techniques and to attract, train and retain skilled personnel is also an important competitive factor in our markets. Our survey and positioning services operate in a competitive environment, as one of several companies that provide these services. Additionally, in recent years, we have been targeting increasing our presence in international markets. Manufactured Products.
We also provide software, digital and connectivity solutions for the energy industry and software and analytical solutions for the bulk cargo maritime industry. Aerospace and Defense Technologies. Our Aerospace and Defense Technologies (“ADTech”) segment provides government services and products, including engineering and related manufacturing in defense and space exploration activities, principally to U.S. government agencies and their prime contractors.
Our Aerospace and Defense Technologies (“ADTech”) segment provides government services and products, including engineering and related manufacturing in defense and space exploration activities, principally to U.S. government agencies and their prime contractors.
Gulf of Mexico and offshore Angola, utilizing a fleet consisting of three owned and four chartered dynamically positioned deepwater vessels with integrated high-specification work-class ROVs onboard, and two owned shallow-water diving support and survey vessels, other spot-chartered vessels and other assets. Our owned vessels are Jones Act-compliant.
Our OPG segment provides vessel-based services principally in the U.S. Gulf of Mexico and offshore Angola, utilizing a fleet consisting of three owned and six chartered dynamically positioned deepwater vessels with integrated high-specification work-class ROVs onboard, and one owned survey vessel, other spot-chartered vessels and other assets. Our owned vessels are Jones Act-compliant.
ADTech revenue: Amount Percent of Total Revenue (in thousands) 2022 $ 342,601 16 % 2021 366,995 20 % 2020 341,073 19 % 5 Table of Contents / MARKETING Energy. Energy exploration and development expenditures fluctuate from year to year.
Navy and NASA-related activities substantially depend on continued government funding. 5 Table of Contents / ADTech revenue: Amount Percent of Total Revenue (in thousands) 2023 $ 376,845 16 % 2022 342,601 16 % 2021 366,995 20 % MARKETING Energy. Energy exploration and development expenditures fluctuate from year to year.
Beierl 64 Senior Vice President, Aerospace and Defense Technologies 2018 2005 Christopher J. Dyer 43 Senior Vice President, Offshore Projects Group 2022 2004 Leonardo P. Granato 49 Senior Vice President, Integrity Management and Digital Solutions 2022 2016 Witland J. LeBlanc, Jr. 52 Vice President and Chief Accounting Officer 2019 2010 Martin J.
Dunn 46 Vice President and Chief Accounting Officer 2023 2002 Philip G. Beierl 65 Senior Vice President, Aerospace and Defense Technologies 2018 2005 Christopher J. Dyer 44 Senior Vice President, Offshore Projects Group 2022 2004 Leonardo P. Granato 50 Senior Vice President, Integrity Management and Digital Solutions 2022 2016 Martin J.
Gulf of Mexico and offshore Angola, utilizing owned and chartered vessels; • installation and workover control systems (“IWOCS”) and ROV workover control systems (“RWOCS”); • diving services; • decommissioning services; • project management and engineering; and • drill pipe riser services and systems and wellhead load relief solutions. Our OPG segment provides vessel-based services principally in the U.S.
Our Offshore Projects Group (“OPG”) segment provides a broad portfolio of integrated subsea project capabilities and solutions as follows: • subsea installation and intervention, including riserless light well intervention (“RLWI”) services, IMR services, principally in the United States (“U.S.”) Gulf of Mexico and offshore Angola, utilizing owned and chartered vessels; • installation and workover control systems (“IWOCS”) and ROV workover control systems (“RWOCS”); • diving services; • decommissioning services; • project management and engineering; and • drill pipe riser services and systems and wellhead load relief solutions.
Within our service and rental businesses, there are many competitors offering specialized services and products both on a regional and a global basis. Integrity Management & Digital Solutions. The worldwide asset integrity and inspection markets consist of a wide range of inspection and certification requirements in many industries. We currently compete in only selected portions of this market.
The worldwide asset integrity and inspection markets consist of a wide range of inspection and certification requirements in many industries. We currently compete in only selected portions of this market. We are expanding our integrity management services into adjacent markets and are developing our digitization services.
Dyer, Senior Vice President, Offshore Projects Group, joined Oceaneering in 2004 as a Project Engineer in our Space Systems division. He was appointed to his current position in October 2022. Prior to that time, he served as Vice President, Offshore Projects Group–Americas from February 2022 and Director, Offshore Projects Group–Americas from May 2020.
Before joining Oceaneering, he served in the U.S. Navy for over 25 years. Christopher J. Dyer, Senior Vice President, Offshore Projects Group, joined Oceaneering in 2004 as a Project Engineer in our Space Systems division. He was appointed to his current position in October 2022.
Granato served in roles of increasing responsibility with Baker Hughes Incorporated and Baker Hughes do Brasil, including most recently as Latin America HSE Director from March 2014 to January 2016. 14 Table of Contents /
Prior to that time, he served as Brazil Country Manager since December 2019 and also as Business Development – Managing Director Brazil since July 2018. Prior to joining Oceaneering, Mr. Granato served in roles of increasing responsibility with Baker Hughes Incorporated and Baker Hughes do Brasil, including most recently as Latin America HSE Director from March 2014 to January 2016.
Gulf of Mexico and offshore Angola from multiservice vessels that typically have Oceaneering ROVs, survey and positioning services onboard. Our services include: subsea well tie-backs; pipeline/flowline tie-ins and repairs; pipeline crossings; umbilical and other subsea equipment installations; subsea interventions; and IMR activities. We also provide drill pipe riser services and systems and wellhead load relief solutions.
Our services include: subsea well tie-backs; pipeline/flowline tie-ins and repairs; pipeline crossings; umbilical and other subsea equipment installations; subsea interventions; and IMR activities. We also provide drill pipe riser services and systems and wellhead load relief solutions. We provide RLWI services to support subsea well intervention projects and subsea work packages that facilitate hydrate remediation and well stimulation solutions.
COMPETITION Our businesses operate in highly competitive industry segments. Energy We are one of several companies that provide underwater services and specialty subsea hardware on a worldwide basis. We compete for contracts with companies that have worldwide operations, as well as numerous others operating locally in various areas.
Most of these materials and services are generally available from multiple sources. 6 Table of Contents / COMPETITION Our businesses operate in highly competitive industry segments. Energy We are one of several companies that provide underwater services and specialty subsea hardware on a worldwide basis.
We also provide mobile robotics solutions, including autonomous mobile robot technology, to a variety of industries and turnkey solutions that include program management, engineering design, fabrication/assembly and installation utilizing our autonomous mobile robotic technology to a variety of industries.
We also provide mobile robotics solutions, including autonomous mobile robot technology, and turnkey solutions that include program management, engineering design, fabrication/assembly and installation utilizing our autonomous mobile robotic technology, to a variety of industries. 4 Table of Contents / Manufactured Products revenue: Amount Percent of Total Revenue (in thousands) 2023 $ 493,692 20 % 2022 382,361 19 % 2021 344,251 18 % Offshore Projects Group.
Through our Integrity Management & Digital Solutions (“IMDS”) segment, we provide asset integrity management, corrosion management, inspection and nondestructive testing services, principally to customers in the oil and gas, power generation, and petrochemical industries. We perform these services on both onshore and offshore facilities, both topside and subsea.
These vessels can also carry and install equipment or umbilicals required to bring subsea well completions into production (tie-back to production facilities). Integrity Management & Digital Solutions . Our Integrity Management & Digital Solutions (“IMDS”) segment provides asset integrity management, corrosion management, inspection and nondestructive testing services, principally to customers in the oil and gas, power generation and petrochemical industries.
He began his career in public accounting and transitioned to industry prior to joining Oceaneering. Martin J. McDonald, Senior Vice President, Subsea Robotics, joined Oceaneering in 1989.
Martin J. McDonald, Senior Vice President, Subsea Robotics, joined Oceaneering in 1989.
We intend to continue our strategy of acquiring, as opportunities arise, additional assets or businesses, to improve our market position or expand into related service and product lines.
We intend to continue our strategy of acquiring, as opportunities arise, additional assets or businesses, to improve our market position or expand into related service and product lines. Our ability to generate substantial cash flow over the last several years has allowed us to reduce our consolidated long-term debt balance and, as a result, provides us with more financial flexibility.
ISO 9001 is an internationally recognized system for quality management established by the International Standards Organization, and the 2015 edition emphasizes customer satisfaction, risk assessment and continual improvement.
ISO 9001 is an internationally recognized system for quality management established by the International Standards Organization, and the 2015 edition emphasizes customer satisfaction, risk assessment and continual improvement. 9 Table of Contents / HUMAN CAPITAL RESOURCES Human Capital Programs and Metrics We use a variety of human capital measures, including compensation and benefits program design, workforce composition and diversity metrics, health and safety metrics, talent attraction techniques, and development and management programs.
We provide RLWI services to support subsea well intervention projects and subsea work packages that facilitate hydrate remediation and well stimulation solutions. We also provide IWOCS and RWOCS that support completions, tree installation, workovers, intervention, and decommissioning operations. We provide services for shallow-water projects (depths less than 1,000 feet) in the U.S.
We also provide IWOCS and RWOCS that support completions, tree installation, workovers, intervention, and decommissioning operations. We provide services for shallow-water projects (depths less than 1,000 feet) primarily in the U.S. Gulf of Mexico and offshore Angola with manned diving operations utilizing the traditional diving techniques of air, mixed gas and saturation diving, all of which use surface-supplied breathing gas.
Gulf of Mexico be built and registered in the United States and 75% U.S. owned in order to transport merchandise between points in the United States. We also have many competitors that supply commercial diving services to the oil and gas industry in the U.S. Gulf of Mexico.
However, some of our competitors’ vessels are not Jones Act-compliant, which requires that vessels operating in the U.S. Gulf of Mexico be built and registered in the United States and 75% U.S. owned in order to transport merchandise between points in the United States.
As of December 31, 2022, we owned 250 work-class ROVs. We compete with several major companies on a worldwide basis and with numerous others operating locally in various areas. Competition for ROV services, including ROV tooling, historically has been based on equipment availability, location of or ability to deploy the equipment, quality of service and price.
These regulations may adversely affect our ability to compete. Subsea Robotics. We believe we are the world's largest owner/operator of work-class ROVs employed in energy-related operations. As of December 31, 2023, we owned 250 work-class ROVs. We compete with several major companies on a worldwide basis and with numerous others operating locally in various areas.
OPG revenue: Amount Percent of Total Revenue (in thousands) 2022 $ 489,317 24 % 2021 378,121 20 % 2020 289,127 16 % Integrity Management & Digital Solutions. We offer a wide range of asset integrity services to customers worldwide to help ensure the safety of their facilities onshore and offshore, while reducing their unplanned maintenance and repair costs.
We supply diving services from offshore facilities and chartered vessels. OPG revenue: Amount Percent of Total Revenue (in thousands) 2023 $ 546,366 22 % 2022 489,317 24 % 2021 378,121 20 % Integrity Management & Digital Solutions.
Our primary focus over the last several years has been toward instituting operational efficiency programs to leverage our asset base and capabilities for providing services and products for offshore energy operations and subsea completions, as well as the offshore renewables energy market. Subsea Robotics. ROVs are tethered submersible vehicles remotely operated from the surface.
Our primary focus over the last couple of years has been toward continuing our operational efficiency programs, as well as hiring, training and retaining personnel to meet the increased demands of offshore energy operations and subsea completions, as well as to a lesser extent, the offshore renewables energy market.
We also provide third-party inspections to satisfy contractual structural specifications, internal safety standards or regulatory requirements. We provide these services principally to customers in the oil and gas, petrochemical and power generation industries.
We offer a wide range of asset integrity services to customers worldwide to help ensure the safety of their facilities onshore and offshore, while reducing their unplanned maintenance and repair costs. We also provide third-party inspections to satisfy contractual structural specifications, internal safety standards or regulatory requirements.
In 2022, we worked in approximately 54 countries across six continents and employed people representing over 110 different nationalities. We believe that our future success largely depends on our continued ability to attract and retain highly skilled employees.
In 2023, we worked in approximately 52 countries across six continents and employed people representing over 114 different nationalities. Business Ethics Our Code of Conduct applies to all of our directors, officers and employees.
The primary focus of our Energy business over the last several years has been toward instituting operational efficiency programs that leverage our asset base and capabilities for providing services and products predominantly for offshore energy operations and subsea completions, inclusive of our customers' capital and operating budgets.
The primary focus of our Energy business over the last couple of years has been toward continuing our operational efficiency programs, as well as hiring, training and retaining personnel to meet the increased demands of offshore energy operations.
Removed
In 2022, we retired ten of our conventional work-class ROV systems and replaced them with eight upgraded conventional work-class ROV systems and two Isurus TM work-class ROV systems (which are capable of operating in high-current conditions and are ideal for renewables projects and high-speed surveys), which are currently engaged in renewables work.
Added
Additionally, our newest development is Freedom , a hybrid autonomous underwater vehicle (“AUV”) and ROV that can complete surveys, commissioning, inspections, maintenance, and repairs without the need for a pilot to monitor and control the entire operation.
Removed
Our Offshore Projects Group (“OPG”) segment provides a broad portfolio of integrated subsea project capabilities and solutions as follows: • subsea installation and intervention, including riserless light well intervention (“RLWI”) services, IMR services, principally in the U.S.
Added
We perform these services on both onshore and offshore facilities, both topside and subsea. We also provide software, digital and connectivity solutions for the energy industry and software and analytical solutions for the maritime industry. Aerospace and Defense Technologies.
Removed
These vessels can also carry and install equipment or umbilicals required to bring subsea well completions into production (tie-back to production facilities). We utilize a mix of short-term, spot and long-term charters. Integrity Management & Digital Solutions .
Added
In 2021, we repurchased $100 million of our 4.650% Senior Notes due 2024 (the “2024 Senior Notes”) in open-market transactions and in the fourth quarter of 2023, we completed a private placement of $200 million aggregate principal amount of additional 6.000% Senior Notes due 2028 (the “New 2028 Senior Notes”) and used the proceeds, together with cash on hand, to repurchase all of the remaining $400 million principal amount outstanding of the 2024 Senior Notes.
Removed
Our ability to generate substantial cash flow over the last several years has allowed us to repurchase $100 million of our 4.650% Senior Notes due 2024 (the “2024 Senior Notes”) in 2021 and provides us with significant options, including increasing our capital expenditures in 2023 as compared to the prior year.
Added
The continuing increase in global demand for energy is resulting in improved offshore activity, which in turn leads to more demand for our Energy business services. Subsea Robotics. ROVs are tethered submersible vehicles remotely operated from the surface.
Removed
Manufactured Products revenue: Amount Percent of Total Revenue (in thousands) 2022 $ 382,361 19 % 2021 344,251 18 % 2020 477,419 26 % 4 Table of Contents / Offshore Projects Group. We provide subsea hardware installation, intervention and IMR services for the offshore energy markets. We perform subsea IMR, intervention and hardware installation services, primarily in the U.S.
Added
We provide subsea hardware installation, intervention and IMR services for the offshore energy markets. We perform subsea IMR, intervention and hardware installation services, primarily in the U.S. Gulf of Mexico and offshore Angola from multiservice vessels that typically have Oceaneering ROVs, survey and positioning services onboard.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks associated with our operations in foreign areas include risks of: • regional and global economic downturns; • public health crises, such as COVID-19, Severe Acute Respiratory Syndrome, severe influenza and other highly communicable viruses or diseases, that could limit access to customers', vendors' or our facilities or offices, impose travel restrictions on our personnel or otherwise adversely affect our operations or demand for our services; • disturbances or other risks that may limit or disrupt markets; • expropriation, confiscation or nationalization of assets; • renegotiation or nullification of existing contracts; • foreign exchange restrictions; • foreign currency fluctuations, particularly in countries highly dependent on oil revenue; • foreign taxation, including the application and interpretation of tax laws; • the inability to repatriate earnings or capital; • changing political conditions; • changing foreign and domestic monetary policies; and • social, political, military and economic situations in foreign areas where we do business and the possibilities of civil disturbances, war, other armed conflict, terrorist attacks or acts of piracy. 16 Table of Contents / Additionally, in some jurisdictions we are subject to foreign governmental regulations favoring or requiring the awarding of contracts to local contractors or requiring foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction.
Biggest changeRisks associated with our operations in foreign areas include risks of: • regional and global economic downturns; • public health crises, such as COVID-19, Severe Acute Respiratory Syndrome, severe influenza and other highly communicable viruses or diseases, that could limit our access to customers', vendors' or our facilities or offices, impose travel restrictions on our personnel or otherwise adversely affect our operations or demand for our services; • expropriation, confiscation or nationalization of assets; • renegotiation or nullification of existing contracts; • foreign exchange restrictions; • foreign currency fluctuations, particularly in countries highly dependent on oil revenue; • foreign taxation, including the application and interpretation of tax laws; • the inability to repatriate earnings or capital; 16 Table of Contents / • changing political conditions; • changing foreign and domestic monetary policies; and • social, political, military and economic situations in foreign areas where we do business and the possibilities of civil disturbances, war, other armed conflict, terrorist attacks or acts of piracy.
Finally, if we acquire an entity that has violated or is not in compliance with applicable data privacy and protection laws or regulations (or contractual provisions), we may experience similar adverse consequences. Risks Related to our Organization and Structure We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
Finally, if we acquire an entity that has violated or is not in compliance with applicable data privacy, security and protection laws or regulations (or contractual provisions), we may experience similar adverse consequences. Risks Related to our Organization and Structure We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
The IRA contains several revisions to the Internal Revenue Code, including a 15% corporate minimum tax for taxpayers with adjusted financial statement income in excess of $1 billion and a 1% excise tax on corporate stock repurchases made after December 31, 2022.
The IRA contains several revisions to the Internal Revenue Code, including a 15% corporate minimum tax for taxpayers with adjusted financial statement income in excess of $1.0 billion and a 1% excise tax on corporate stock repurchases made after December 31, 2022.
Although it is not possible at this time to predict the timing and effect of climate-related business trends, any such developments, including the declining cost of renewable energy generation technologies, continued government 15 Table of Contents / subsidies, and the continuing electrification of various technologies that previously used hydrocarbons, could impact the long-term demand for oil and natural gas and, ultimately, the demand for the services and products of our Energy business.
Although it is not possible at this time to predict the timing and effect of climate-related business trends, any such developments, including the declining cost of renewable energy generation technologies, continued government subsidies, and the continuing electrification of various technologies that previously used hydrocarbons, could impact the long-term demand for oil and natural gas and, ultimately, the demand for the services and products of our Energy business.
Ultimately, these risks could result in reduced demand for the services and products of our Energy business, which would adversely impact our revenues, and increased costs that may adversely affect our profitability and cash flows. 18 Table of Contents / In addition, climate change legislation and regulation may subject us to increased competition to develop innovative new products that result in lower emissions.
Ultimately, these risks could result in reduced demand for the services and products of our Energy business, which would adversely impact our revenues, and increased costs that may adversely affect our profitability and cash flows. In addition, climate change legislation and regulation may subject us to increased competition to develop innovative new products that result in lower emissions.
A disruption in the foreign currency markets, including the markets with respect to any particular currencies, could adversely affect our hedging instruments and subject us to additional currency risk exposure. Based on fluctuations in currency, the U.S. dollar value of our backlog may from time to time increase or decrease significantly.
A disruption in the foreign currency markets, including the markets with respect to any particular currencies, could adversely affect our hedging instruments and subject us to additional currency risk exposure. Based on fluctuations in currency, the U.S. dollar value of our 19 Table of Contents / backlog may from time to time increase or decrease significantly.
Some of these systems are managed or provided by third-party service providers, including certain cloud platform or cloud software providers. As a result, our business operations could be negatively impacted by a breach or interruption of systems we rely on that originates from, or compromises, third-party networks or devices outside of our control.
Some of these systems are managed or provided by third-party service providers, including certain cloud platform or cloud software providers. As a result, our business operations could be negatively impacted by a breach or interruption of systems that originates from, or compromises, third-party networks or devices outside of our control.
We may not achieve significant revenue from new service and product investments for a number of years, if at all. Moreover, new services and products may not be profitable, and, even if they are profitable, our operating margins from new services and products may not be as high as the margins we have experienced historically.
We may not achieve significant revenue from new service and product investments for a number of 21 Table of Contents / years, if at all. Moreover, new services and products may not be profitable, and, even if they are profitable, our operating margins from new services and products may not be as high as the margins we have experienced historically.
Permits are required for the operation of various facilities, and those permits are subject to revocation, modification and renewal. Governmental authorities have the power to enforce compliance with their regulations, and violations are subject to 19 Table of Contents / fines, injunctions or both.
Permits are required for the operation of various facilities, and those permits are subject to revocation, modification and renewal. Governmental authorities have the power to enforce compliance with their regulations, and violations are subject to fines, injunctions or both.
While the temporary ban has been lifted, the Biden administration resumed selling leases to drill for oil and gas on federal lands in April 2022, but with an 80% reduction in the number of acres offered and an increase in the royalties companies must pay to drill.
While the temporary ban has been lifted, the Biden administration resumed selling leases to drill for oil and gas on federal lands in April 2022, but with an 80% reduction in the number of acres offered and an increase in the royalties companies must pay to drill. In July 2023, the U.S.
As we strive to develop innovative new product offerings, we aim to address a myriad of challenges facing our customers and the energy industry, including, among many others, energy efficiency, labor shortages, safety and climate change.
As we strive to develop innovative new product offerings, we aim to address a myriad of challenges facing our customers and the industries that we serve, including, among many others, energy efficiency, labor shortages, safety and climate change.
Our operations (both onshore and offshore) are highly dependent on both IT and OT systems and personnel that implement and maintain such systems, including systems that collect, organize, store or use personal information, confidential or proprietary information, and other sensitive information about our customers, employees, suppliers and others.
Our operations (both onshore and offshore) are highly dependent on both IT and OT systems and personnel that implement and maintain such systems, including systems that collect, process, store or use personal information, confidential or proprietary information, and other sensitive information about our business and operations, as well as our customers, employees, suppliers and others.
Some factors that have affected and are likely to continue affecting oil and gas prices and the level of demand for our services and products include the following: • worldwide demand for oil and gas; • general economic and business conditions and industry trends; • the ability of OPEC to set and maintain production levels; • the level of production by non-OPEC countries, including U.S. shale oil; • the ability of oil and gas companies to generate funds for capital expenditures; • the ongoing ability to access external financing from financial institutions or the capital markets; • the cost of exploring for, developing and producing oil and gas as compared to alternative energy sources; • domestic and foreign tax policy; • laws and governmental regulations that restrict exploration and development of oil and gas in various offshore jurisdictions; • technological changes that could lead to competition from new market entrances; • the political environment of oil-producing regions; • the changing environmental and social landscape; • the price and availability of alternative energy; • war, sabotage, terrorism and civil unrest, including the conflict between Russia and Ukraine; and • extreme weather conditions, natural disasters and public health crises, pandemics or epidemics, including the COVID-19 pandemic.
Some factors that have affected and are likely to continue affecting oil and gas prices and the level of demand for our services and products include the following: • worldwide demand for oil and gas; • general economic and business conditions and industry trends; • the ability of OPEC to set and maintain production levels; • the level of production by non-OPEC countries; • the ability of oil and gas companies to generate funds for capital expenditures; • the ongoing ability to access external financing from financial institutions or the capital markets; • the cost of exploring for, developing and producing oil and gas as compared to alternative energy sources; • domestic and foreign tax policy; • laws and governmental regulations that restrict exploration and development of oil and gas in various offshore jurisdictions; • technological changes that could lead to competition from new market entrances; • the political environment of oil-producing regions; • the changing environmental and social landscape; • the price and availability of alternative energy; • war, sabotage, terrorism and civil unrest, including the conflict between Russia and Ukraine and conflict in the Middle East; and • extreme weather conditions, natural disasters, public health crises and pandemics or epidemics, such as COVID-19 and variants thereof. 15 Table of Contents / Our operations could be adversely impacted by the indirect consequences of climate change and climate-related business trends.
Threats to our IT and OT systems associated with cybersecurity risks and cyber incidents or attacks continue to grow.
Threats to our IT and OT systems associated with cybersecurity risks, cyber incidents and cyberattacks continue to grow.
A significant portion of our revenue is attributable to operations in foreign countries. These activities accounted for approximately 53% of our consolidated revenue in 2022.
A significant portion of our revenue is attributable to operations in foreign countries. These activities accounted for approximately 58% of our consolidated revenue in 2023.
Risks associated with these threats include disruptions of certain systems on our vessels or systems utilized to operate our ROVs; other impairments of our ability to conduct our operations; loss of or damage to intellectual property, proprietary information or employee or customer data; disruption of our customers’ operations; loss or damage to our customer data delivery systems; damage to our reputation or customer or other business relationships; inability to comply with our regulatory obligations in a timely manner which could result in regulatory investigations or other actions by governmental authorities and associated costs, fines or penalties; and increased costs to prevent, respond to or mitigate cybersecurity incidents.
Risks associated with these threats include disruptions of certain systems on our vessels or systems utilized to operate our ROVs; other impairments of our ability to conduct our operations; interruption of internal critical services; interruption of external critical services to customers; interruption of ability to bill or collect payment from customers; loss of or damage to intellectual property, proprietary information or employee or customer data; disruption of our customers’ operations; loss or damage to our employee or customer data delivery systems; damage to our reputation or customer or other business relationships; inability to comply with our contractual or regulatory obligations in a timely manner which could result in civil litigation, regulatory investigations or other enforcement actions by governmental authorities and associated costs, fines or penalties; and increased costs to prevent, respond to or mitigate cybersecurity incidents.
It is also possible that these laws and regulations may in the future add significantly to our operating costs or those of our customers or otherwise directly or indirectly affect our operations. On August 16, 2022, President Biden signed the IRA into law.
It is possible that such new laws and regulations, or changes to the application or interpretation of existing laws and regulations, may in the future add significantly to our operating costs or those of our customers or otherwise directly or indirectly affect our operations. On August 16, 2022, President Biden signed the IRA into law.
Changes in data privacy laws, regulations and standards may cause our business to suffer. Personal privacy and data security have become significant regulatory issues and the subject of rapidly evolving laws globally and in the United States.
Changes in data privacy and security laws, regulations and standards may adversely impact our business. Data privacy and security have become significant regulatory issues and the subject of rapidly evolving laws globally and in the United States.
We may be at risk of delays, suspensions and cancellations in the current market environment. Reductions in our backlog due to cancellation by a customer or for other reasons would adversely affect, potentially to a material extent, the revenue and earnings we actually receive from contracts included in our backlog. Many of our ROV contracts have 30-day notice termination clauses.
Reductions in our backlog due to cancellation by a customer or for other reasons would adversely affect, potentially to a material extent, the revenue and earnings we actually receive from contracts included in our backlog. Many of our ROV contracts have 30-day notice termination clauses.
These hazards could result in personal injury and loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage and suspension of operations. We may incur substantial liabilities or losses as a result of these hazards.
These include blowouts, explosions, fires, collisions, capsizings and severe weather conditions. These hazards could result in personal injury and loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage and suspension of operations. We may incur substantial liabilities or losses as a result of these hazards.
Additionally, an acquisition may bring us into businesses we have not previously conducted and expose us to additional business risks that are different from those we have previously experienced. 21 Table of Contents / Our business strategy also includes development and commercialization of new technologies to support our growth.
Additionally, an acquisition may bring us into businesses we have not previously conducted and expose us to additional business risks that are different from those we have previously experienced. Our business strategy also includes development and commercialization of new technologies to support our growth. The development and commercialization of new technologies require capital investment and involve various risks and uncertainties.
The development and commercialization of new technologies require capital investment and involve various risks and uncertainties. Our future growth will depend on our ability to continue to innovate by developing and commercializing new service and product offerings. Investments in new technologies involve varying degrees of uncertainties and risk.
Our future growth will depend on our ability to continue to innovate by developing and commercializing new service and product offerings. Investments in new technologies involve varying degrees of uncertainties and risk.
We also rely on intellectual property we license from third parties. Our failure to protect our intellectual property rights, or our inability to obtain or renew licenses to use intellectual property of third parties, could adversely affect our business.
Our failure to protect our intellectual property rights, or our inability to obtain or renew licenses to use intellectual property of third parties, could adversely affect our business.
Any failure by us to comply with these laws and regulations, including as a result of a security or privacy breach, could result in significant penalties and liabilities for us.
Additionally, any failure by us to comply with these regulations, including as a result of a personal data breach, could result in significant penalties and liabilities for us.
Although the GDPR, UK GDPR and LGPD currently impose similar obligations, interpretations and enforcement of these laws continue to evolve. Changes to interpretations or enforcement of the GDPR, UK GDPR or LGPD could create a range of new compliance obligations, which could cause us to incur additional costs.
Interpretations and enforcement of these laws continue to evolve, and changes to these regulatory interpretations or enforcement of these laws could create a range of new compliance obligations, which could cause us to incur additional costs.
For example, in August 2022, President Biden signed the Inflation Reduction Act (“IRA”) into law, which imposes a charge on methane emissions from certain petroleum and natural gas system facilities and could have an indirect impact on demand for the goods and services of our Energy business.
For example, in August 2022, President Biden signed the Inflation Reduction Act (“IRA”) into law, which imposes a charge on methane emissions from certain petroleum and natural gas system facilities and could have an indirect impact on demand for the goods and services of our Energy business, and on December 2, 2023 during COP28, the EPA announced its final methane rules, which impose several new methane emission requirements on the oil and gas industry.
In a highly inflationary environment, we may be unable to raise pricing for our energy services and products at or above the rate of inflation, which could reduce our profit margins.
In a highly inflationary environment, we may be unable to raise pricing for our energy services and products at or above the rate of inflation, which could reduce our profit margins and our cost of capital, labor and materials could increase, which could have an adverse impact on our business and our financial condition.
Limited access to the capital markets could adversely impact our ability to take advantage of business opportunities or react to changing economic and business conditions and could adversely impact our ability to continue our growth strategy. Ultimately, we could be required to reduce our future capital expenditures substantially.
Limited access to the capital markets could adversely impact our ability to take advantage of business opportunities or react to changing economic and business conditions and could adversely 20 Table of Contents / impact our ability to continue our growth strategy.
Our business and operations could become subject to future legislation, regulatory requirements, and evolving enforcement strategies and regulatory or judicial interpretations beyond those currently proposed, adopted or contemplated in the U.S. and abroad. The cumulative effect of all of the legislation and regulations on our business, operations and profitability remains uncertain.
Our business and operations could become subject to future legislation, regulation, enforcement strategies and regulatory or judicial interpretations beyond those currently proposed, adopted or contemplated in the U.S. and abroad.
Our operations could be adversely impacted by the indirect consequences of climate change and climate-related business trends. Scientific studies have suggested that emissions of certain gases, commonly referred to as “greenhouse gases,” including carbon dioxide and methane, are contributing to warming of the earth’s atmosphere and other climatic changes.
Scientific studies have suggested that emissions of certain gases, commonly referred to as “greenhouse gases,” including carbon dioxide and methane, are contributing to warming of the earth’s atmosphere and other climatic changes.
Finally, laws and regulations we may be subject to governing cybersecurity, such as forthcoming obligations under the Cyber Incident Reporting for Critical Infrastructure (“CIRCIA”) and the SEC’s cybersecurity disclosure rules, pose increasingly complex compliance challenges, and failure to comply with these laws could result in penalties and legal liability.
Finally, laws and regulations we may be subject to governing cybersecurity, such as obligations under the Cyber Incident Reporting for Critical Infrastructure, pose increasingly complex compliance challenges, and failure to 23 Table of Contents / comply with these laws and regulations could result in fines, penalties, legal liability and damage to our reputation and customer or other business relationships.
Such a reduction could have a material adverse effect on our business and our consolidated financial condition, results of operations and cash flows.
Ultimately, we could be required to reduce our future capital expenditures substantially and such a reduction could have a material adverse effect on our business and our consolidated financial condition, results of operations and cash flows.
In addition, effective intellectual property protection may be limited or unavailable in some foreign countries where we operate. Our failure to protect our intellectual property rights may result in the loss of valuable technologies or adversely affect our competitive business position. We rely significantly on proprietary technology, information, processes and know-how that are not subject to patent or copyright protection.
In addition, effective intellectual property protection may be limited or unavailable in some foreign countries where we operate. 22 Table of Contents / Our failure to protect our intellectual property rights may result in the loss of valuable technologies or adversely affect our competitive business position.
In particular, the cost of capital could increase substantially and the availability of funds from the capital markets could diminish significantly. Since the global recession in 2008, credit and capital markets have, from time to time, experienced unusual volatility.
In particular, the cost of capital could increase substantially and the availability of funds from the capital markets could diminish significantly. Since the global recession in 2008, credit and capital markets have, from time to time, experienced volatility. Our ability to access the capital markets in the future could be restricted or available on terms we do not consider favorable.
In addition, our cost of capital, labor and materials could increase, which could have an adverse impact on our business and our financial condition. 20 Table of Contents / Difficulty in obtaining sufficient capital could adversely impact our business and financial condition. A financial crisis or economic recession could have an adverse impact on our business and our financial condition.
As a result, such initiatives could have an adverse impact on our business and our financial condition. Difficulty in obtaining sufficient capital could adversely impact our business and financial condition. A financial crisis or economic recession could have an adverse impact on our business and our financial condition.
Please refer to the risk factor entitled “ Our operations could be adversely impacted by the indirect consequences of climate change and climate-related business trends ” for a discussion of the impact of other climate-related consequences on our business, financial condition, results of operations and cash flows. Our operations could be adversely impacted by the effects of new regulations.
Please refer to the risk factor entitled “ Our operations could be adversely impacted by the indirect consequences of climate change and climate-related business trends ” for a discussion of the impact of other climate-related consequences on our business, financial condition, results of operations and cash flows. 18 Table of Contents / Employee, agent or partner misconduct or our overall failure to comply with laws or regulations could weaken our ability to win contracts, which could result in reduced revenue and profits.
Furthermore, foreign, federal, state and local government bodies or agencies have in the past adopted, and may in the future adopt, more laws and regulations affecting data privacy.
Furthermore, foreign, federal, state and local government bodies or agencies have, in the past, adopted—and may in the future adopt—more laws and regulations affecting data privacy and security. Although these privacy and security laws share similar concepts, each applicable jurisdiction may include important variations, such as differing standards or obligations.
However, it is possible that the tools, techniques, methodologies, programs and components we use to provide our services or products may infringe on the intellectual property rights of others. In the future, we may not be able to obtain necessary licenses on commercially reasonable terms.
In some instances, we have augmented our technology base by licensing the proprietary intellectual property of third parties. However, it is possible that the tools, techniques, methodologies, programs and components we use to provide our services or products may infringe on the intellectual property rights of others.
In the event of an infringement of our intellectual property rights, a breach of a confidentiality agreement or divulgence of proprietary information, we may not have adequate legal remedies to protect our intellectual property. In some instances, we have augmented our technology base by licensing the proprietary intellectual property of third parties.
These agreements and security measures may be inadequate to deter or prevent misappropriation of our confidential information. In the event of an infringement of our intellectual property rights, a breach of a confidentiality agreement or divulgence of proprietary information, we may not have adequate legal remedies to protect our intellectual property.
As a result, we may be subject to a growing patchwork of comprehensive privacy regulation imposed by jurisdictions where we operate, including under the European Union’s General Data Protection Regulation (“GDPR”), the United Kingdom’s Data Protection Act (the “UK GDPR”), Brazil’s General Data Protection Law (“LGPD”) and in the United States, the California Consumer Privacy Act (“CCPA”) as amended by the California Privacy Rights Act (“CPRA”), the Virginia Consumer Data Protection Act (“VCDPA”), and the Colorado Privacy Act (“CPA”), along with implementing regulations, where applicable.
As a result, we may be subject to a growing patchwork of privacy regulation imposed by jurisdictions where we operate, including under the European Union’s and U.K.’s General Data Protection Regulation, Brazil’s General Data Protection Law and in the United States under various state privacy frameworks, such as the California Consumer Privacy Act.
The United States experienced inflationary pricing, rapidly rising interest rates and increasing construction and labor costs in 2022. Continued and sustained inflation could have an adverse impact on our business and our financial condition by increasing costs of materials and labor and interest rates. All of these factors could have a negative impact on customer budgets.
The United States experienced inflationary pricing and increasing construction and labor costs in 2022 and 2023. While the pace of inflation has reduced since 2022, future changes in inflation could have an adverse impact on our business and our financial condition by increasing our costs of materials and labor.
The occurrence of a significant event not fully insured or indemnified against or the failure of a customer to meet its indemnification obligations to us could materially and adversely affect our results of operations and financial condition. 17 Table of Contents / Legal and Regulatory Risks Legislative and regulatory responses to climate change and the ongoing “energy transition” could result in increased operating costs and capital expenditures and changes in demand for the services and products of our Energy business.
The occurrence of a significant event not fully insured or indemnified against or the failure of a customer to meet its indemnification obligations to us could materially and adversely affect our results of operations and financial condition.
If we experience significant project terminations, suspensions or scope adjustments to contracts reflected in our backlog, our financial condition, results of operations and cash flows may be adversely impacted. The impacts and effects of the COVID-19 pandemic have adversely affected, and future public health crises, pandemics or epidemics could adversely affect, our business, financial condition and results of operations.
If we experience significant project terminations, suspensions or scope adjustments to contracts reflected in our backlog, our financial condition, results of operations and cash flows may be adversely impacted. Our offshore oilfield operations involve a variety of operating hazards and risks that could cause losses. Our offshore oilfield operations are subject to the hazards inherent in the offshore oilfield business.
Because of project cancellations or potential changes in the scope or schedule of our customers' projects, we cannot predict with certainty when or if backlog will be realized. Material delays, suspensions, cancellations or payment defaults could materially affect our financial condition, results of operations and cash flows.
There can be no assurance that the revenue included in our backlog will be realized or, if realized, will result in profits. Because of project cancellations or potential changes in the scope or schedule of our customers' projects, we cannot predict with certainty when or if backlog will be realized.
We seek to protect this information through trade secret or confidentiality agreements with our employees, consultants, subcontractors or other parties, as well as through other security measures. These agreements and security measures may be inadequate to deter or prevent misappropriation of our confidential information.
We rely significantly on proprietary technology, information, processes and know-how that are not subject to patent or copyright protection. We seek to protect this information through trade secret or confidentiality agreements with our employees, consultants, subcontractors or other parties, as well as through other security measures.
Royalty payments under licenses from 22 Table of Contents / third parties, if available, or developing non-infringing technologies could materially increase our costs.
In the future, we may not be able to obtain necessary licenses on commercially reasonable terms. Royalty payments under licenses from third parties, if available, or developing non-infringing technologies could materially increase our costs.
These regulations may adversely affect our ability to compete. Our exposure to the risks we described above varies from country to country. There is a risk that a continuation or worsening of these conditions could materially and adversely impact our future business, operations, financial condition and results of operations.
There is a risk that a continuation or worsening of these conditions could materially and adversely impact our future business, operations, financial condition and results of operations. Our backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of our future revenue and earnings.
This factor is significant to our segments' operations, particularly in the operating segments within our Energy business, where capital investment is critical to our ability to compete. Risks Related to Intellectual Property, Information Technology and Data Privacy We rely on intellectual property law and confidentiality agreements to protect our intellectual property.
This factor is significant to our segments' operations, particularly in the operating segments within our Energy business, where capital investment is critical to our ability to compete. Our aspirations, goals, commitment targets and initiatives related to sustainability, including emissions reduction and our public statements and disclosures regarding the same, expose us to numerous risks.
The GDPR, UK GDPR and LGPD apply to activities related to collection, use, disclosure, and transfer of personal data that may be conducted by us, directly or indirectly through vendors or subcontractors, from an establishment in 23 Table of Contents / the EU, UK or Brazil, respectively.
These regulatory frameworks apply to activities related to the collection, use, disclosure, and transfer of personal data that may be conducted by us or directly or indirectly through our vendors or subcontractors. Data privacy and security regulations may significantly impact our business activities and require substantial compliance costs that adversely affect our business, operating results, prospects and financial condition.
Removed
Our backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of our future revenue and earnings. There can be no assurance that the revenue included in our backlog will be realized or, if realized, will result in profits.
Added
Department of the Interior (“DOI”) proposed updates to its onshore oil and gas leasing regulations which could further restrict oil and gas exploration and production on federal lands. DOI expects to issue a final rule in the spring of 2024.
Removed
The COVID-19 pandemic negatively affected our business, financial condition and results of operations, and future public health crises, pandemics or epidemics could adversely affect our business, financial condition and results of operations.
Added
In August 2023, DOI proposed a scaled back offshore lease sale for certain areas in the Gulf of Mexico due to concerns related to an endangered whale population in the area. The exclusion of certain lease blocks from the sale was successfully challenged in court and DOI was ordered to hold the lease sale at its original scale.
Removed
The COVID-19 pandemic at its peak resulted in authorities implementing numerous measures to try to contain the disease, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns, among others.
Added
This decision was upheld by the U.S. Court of Appeals for the Fifth Circuit on November 14, 2023, and the sale was held on December 20, 2023.
Removed
Restrictions of this nature caused, and may in the future as a result of variants of COVID-19 or future public health crises, pandemics or epidemics cause, us, our suppliers and other business counterparties to experience operational delays, delays in the delivery of materials and supplies that are sourced from around the globe, and workforce availability issues.
Added
Additionally, in some jurisdictions we are subject to foreign governmental regulations favoring or requiring the awarding of contracts to local contractors or requiring foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. These regulations may adversely affect our ability to compete. Our exposure to the risks we described above varies from country to country.
Removed
The COVID-19 pandemic related measures continue to impact certain parts of the world.
Added
Material delays, suspensions, cancellations or payment defaults could materially affect our financial condition, results of operations and cash flows. We may be at risk of delays, suspensions and cancellations in the current market environment.
Removed
The ultimate extent of the impact of COVID-19 or other viruses or pandemics on our business, cash flows, liquidity, financial condition and results of operations will depend largely on future developments, including, among others, geographic spread, duration, the ongoing development, availability, distribution and acceptance of vaccines and effective treatments worldwide, and actions taken by governmental authorities, customers, suppliers and other third parties, all of which are highly uncertain and cannot be predicted at this time.
Added
Legal and Regulatory Risks Legislative and regulatory responses to climate change and the ongoing “energy transition” could result in increased operating costs and capital expenditures and changes in demand for the services and products of our Energy business.
Removed
Our offshore oilfield operations involve a variety of operating hazards and risks that could cause losses. Our offshore oilfield operations are subject to the hazards inherent in the offshore oilfield business. These include blowouts, explosions, fires, collisions, capsizings and severe weather conditions.
Added
In addition, the Environmental Protection Agency (“EPA”) has adopted regulations addressing greenhouse gas emissions, including the EPA’s final methane rules, which 17 Table of Contents / impose several new methane emission requirements on the oil and gas industry, announced on December 2, 2023, during the United Nations Climate Change Conference in the United Arab Emirates (“COP28”).
Removed
In addition, the Environmental Protection Agency (“EPA”) has adopted regulations addressing greenhouse gas emissions, including rules requiring the monitoring, reporting and recordkeeping of emissions of carbon dioxide from specified sources in the United States that cover certain onshore and offshore oil and natural gas production facilities. There also have been international efforts seeking legally binding reductions in greenhouse gas emissions.
Added
There also have been international efforts seeking legally binding reductions in greenhouse gas emissions, as well as non-binding efforts, including the non-binding agreement by more than 190 governments at COP28 to transition away from fossil fuels and encourage the growth and expansion of renewable energy.
Removed
During 2010, the U.S. Government established new regulations relating to the design of wells and testing of the integrity of wellbores, the use of drilling fluids, the functionality and testing of well control equipment, including blowout preventers, and other safety and environmental regulations. The U.S. Government requires that operators demonstrate their compliance with those regulations before commencing deepwater drilling operations.
Added
In addition, changing and future monetary policies and actions of the Federal Reserve that result from such adverse market and economic conditions (such as raises to the target federal funds rate) could adversely affect our ability to obtain financing and raise our (or our customers’) cost of capital.
Removed
In addition, as discussed above, increasing attention to issues concerning climate change as a result of the emission of carbon dioxide and other “greenhouse gases” may result in the imposition of additional environmental or other legislation or regulations that seek to restrict, or otherwise impose limitations or costs upon, the emission of greenhouse gases.
Added
Public and investor sentiment regarding ESG matters and our industry could adversely affect our business operations and the trading price of our securities.
Removed
We cannot predict when or whether any of these various legislative and regulatory proposals may be enacted or adopted or what their effects will be on us or our customers, particularly with respect to offshore oil and gas exploration and development projects.
Added
Businesses across all industries are facing increasing scrutiny from investors, governmental authorities, regulatory agencies and the public related to their ESG practices, including practices and disclosures related to climate change, sustainability, diversity, equity and inclusion initiatives and heightened governance standards.
Removed
These and other legislative or regulatory developments could increase costs for us and our customers or, in some cases, prevent projects from going forward, thereby potentially reducing the need for our products and services.
Added
Failure, or a perceived failure, to adequately respond to or meet evolving ESG expectations, concerns and standards may cause us to suffer reputational damage and materially and adversely affect our business or financial condition, or the trading price of our securities.
Removed
Employee, agent or partner misconduct or our overall failure to comply with laws or regulations could weaken our ability to win contracts, which could result in reduced revenue and profits.
Added
In addition, organizations that provide ESG information to investors have developed ratings processes for evaluating a business entity’s approach to ESG matters, and certain members of the broader investment community may consider a business entity’s sustainability score as a reputational or other factor in making an investment decision.
Removed
In particular, as discussed above, increasing attention to issues concerning climate change as a result of the emission of carbon dioxide and other “greenhouse gases” may result in the imposition of additional environmental legislation or regulations that seek to restrict, or otherwise impose limitations or costs upon, the emission of greenhouse gases.
Added
Consequently, a low sustainability score could result in exclusion of our securities from consideration by certain investment funds and a negative perception of our operations by certain investors.
Removed
We cannot predict when or whether any of these various legislative and regulatory proposals may become law or what their effect will be on us or our customers. Such legislation or regulations could increase costs for us and our customers or, in some cases, prevent projects from going forward, thereby potentially reducing the need for our products and services.
Added
In addition, efforts in recent years aimed at the investment community to limit or curtail activities with companies engaged in the extraction of fossil fuel reserves could limit our ability to access the capital markets to the extent the services we provide to such customers engaged in extraction activities constitute a significant portion of our operations.
Removed
Our ability to access the capital markets in the future could be restricted or available on terms we do not consider favorable. Furthermore, if investors or financial institutions shift funding away from companies in the energy industry, our access to capital or the market for our securities could be negatively impacted.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also have an office in Orlando, Florida, which supports our mobile robotics and commercial theme park animation activities. Each of these manufacturing facilities is suitable for its intended purpose and has sufficient capacity to respond to increases in demand for our subsea and mobility solution products and that may be reasonably anticipated in the foreseeable future.
Biggest changeEach of these manufacturing facilities is suitable for its intended purpose and has sufficient capacity to respond to increases in demand that may be reasonably anticipated in the foreseeable future. For a description of the vessels we use in our Offshore Projects Group operations, see the discussion in Item 1.
We have additional regional and operational support offices for our North Sea, Africa, Brazil and Southeast Asia operations in the following locations: • Aberdeen, U.K.; • Stavanger and Bergen, Norway; • Abu Dhabi and Dubai, United Arab Emirates; • Rio de Janeiro and Macaé, Brazil; • Luanda, Angola; • Chandigarh, India; • Perth, Australia; • Kuala Lumpur, Malaysia; • Baku, Azerbaijan; • Newfoundland, Canada; and • Loyang, Singapore.
We have additional regional and operational support offices for our North Sea, Africa, Brazil and Southeast Asia operations in the following locations: • Aberdeen, U.K.; • Stavanger and Bergen, Norway; • Abu Dhabi, United Arab Emirates; • Rio de Janeiro and Macaé, Brazil; • Luanda, Angola; • Chandigarh, India; • Perth, Australia; • Kuala Lumpur, Malaysia; • Baku, Azerbaijan; • Newfoundland, Canada; and • Loyang, Singapore.
Our principal manufacturing and assembly facilities for our Manufactured Products segment are located in or near the following locations: • Houston, Texas; 25 Table of Contents / • Panama City, Florida; • Aberdeen and Rosyth, Scotland; • Nodeland and Stavanger, Norway; • Luanda, Angola; • Utrecht, Netherlands; • Kuala Lumpur, Malaysia; and • Niterói, Brazil.
Our principal manufacturing and assembly facilities for our Manufactured Products segment are located in or near the following locations: • Houston, Texas; • Port Fourchon and Lafayette, Louisiana; • Orlando and Panama City, Florida; • Aberdeen and Rosyth, Scotland; • Nodeland and Stavanger, Norway; • Luanda, Angola; • Utrecht, Netherlands; • Kuala Lumpur, Malaysia; • Niterói, Brazil; and • Stuttgart, Germany.
We have operational support offices in the following locations: • Chesapeake, Virginia; • Bremerton, Washington; • Pearl Harbor, Hawaii; • Cataumet, Massachusetts; and • Charleston, South Carolina. We also have facilities in San Diego, California, to support our services for the U.S. Navy and in and near Houston, Texas, to support our space industry activities.
We have operational support offices in the following locations: • Chesapeake, Virginia; • Houston, Texas; and • Charleston, South Carolina. 27 Table of Contents / We also have facilities to support our services for the U.S. Navy in these locations: San Diego, California; Bremerton, Washington; and Pearl Harbor, Hawaii.
For a description of the vessels we use in our Offshore Projects Group operations, see the discussion in Item 1. “Business” under the heading “ GENERAL DEVELOPMENT OF BUSINESS — Energy— Offshore Projects Group .” Aerospace and Defense Technologies. Our primary facilities for our ADTech segment are offices and workshops in Hanover, Maryland.
“Business” under the heading “ GENERAL DEVELOPMENT OF BUSINESS —Energy— Offshore Projects Group .” Aerospace and Defense Technologies. Our primary facilities for our ADTech segment are offices and workshops in Hanover, Maryland.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. For information regarding legal proceedings, see the discussion under the caption “Litigation” in Note 10—“Commitments and Contingencies” in the Notes to Consolidated Financial Statements included in this report, which discussion we incorporate by reference into this Item. Item 4. Mine Safety Disclosures. Not applicable. 26 Table of Contents / Part II
Biggest changeItem 3. Legal Proceedings. For information regarding legal proceedings, see the discussion under the caption “Litigation” in Note 9—“Commitments and Contingencies” in the Notes to Consolidated Financial Statements included in this report, which discussion we incorporate by reference into this Item.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−1 removed4 unchanged
Biggest changeOn that date, the closing sales price, as quoted on the New York Stock Exchange, was $19.95.
Biggest changeOn that date, the closing sales price, as quoted on the New York Stock Exchange, was $22.05. Although our Board has not declared quarterly dividends since 2017, we review our dividend position on a quarterly basis .
The PHLX Oil Service Sector Index is designed to track the performance of a set of companies involved in the oil services sector. It is assumed in the graph that: (1) $100 was invested in Oceaneering Common Stock, the S&P 500 and the PHLX Oil Service Sector Index on December 31, 2017; and (2) any Oceaneering dividends are reinvested.
The PHLX Oil Service Sector Index is designed to track the performance of a set of companies involved in the oil services sector. It is assumed in the graph that: (1) $100 was invested in Oceaneering Common Stock, the S&P 500 and the PHLX Oil Service Sector Index on December 31, 2018; and (2) any Oceaneering dividends are reinvested.
We have not repurchased any shares under the program since December 2015. 27 Table of Contents / PERFORMANCE GRAPH The following graph compares our total shareholder return to the Standard & Poor's 500 Stock Index (“S&P 500”) and the PHLX Oil Service Sector Index from December 31, 2017 through December 31, 2022.
We have not repurchased any shares under the program since December 2015. 29 Table of Contents / PERFORMANCE GRAPH The following graph compares our total shareholder return to the Standard & Poor's 500 Stock Index (“S&P 500”) and the PHLX Oil Service Sector Index from December 31, 2018 through December 31, 2023.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is listed on the New York Stock Exchange under the symbol OII. Our company website address is www.oceaneering.com. On February 17, 2023, there were approximately 352 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is listed on the New York Stock Exchange under the symbol OII. Our company website address is www.oceaneering.com. On February 16, 2024, there were approximately 322 holders of record of our common stock.
The shareholder return shown is not necessarily indicative of future performance. December 31, 2017 2018 2019 2020 2021 2022 Oceaneering International, Inc. 100.00 57.24 70.53 37.61 53.50 82.73 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 PHLX Oil Service Sector Index 100.00 54.78 54.48 31.56 38.10 61.53 28 Table of Contents /
The shareholder return shown is not necessarily indicative of future performance. December 31, 2018 2019 2020 2021 2022 2023 Oceaneering International, Inc. 100.00 123.22 65.70 93.47 144.55 175.87 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 PHLX Oil Service Sector Index 100.00 99.45 57.60 69.55 112.31 114.47 30 Table of Contents /
Removed
Our Board has not declared quarterly dividends since 2017 and we do not anticipate our Board reinstating a quarterly cash dividend after considering the need to focus our resources on growth and positioning us for the future, although we will continue to review our dividend position on a quarterly basis.
Added
The payment of future dividends will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual and indenture restrictions and other factors deemed relevant by our Board of Directors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe remain committed to maintaining strong liquidity and believe that our cash position, undrawn Revolving Credit Agreement, and debt maturity profile should provide us ample resources and time to address potential future growth opportunities and to improve our returns. 37 Table of Contents / Changes impacting our cash and cash equivalents for the years ended December 31, 2022, 2021 and 2020 are summarized as follows: Year ended December 31, (in thousands) 2022 2021 2020 Changes in Cash: Net Cash Provided by Operating Activities $ 120,883 $ 225,314 $ 136,647 Net Cash Used in Investing Activities (76,865) (34,157) (52,590) Net Cash Used in Financing Activities (1,862) (101,682) (1,699) Effect of exchange rates on cash (11,525) (3,377) (3,997) Net Increase (Decrease) in Cash and Cash Equivalents $ 30,631 $ 86,098 $ 78,361 Operating activities Our primary sources and uses of cash from operating activities for the years ended December 31, 2022, 2021 and 2020 are as follows: Year ended December 31, (in thousands) 2022 2021 2020 Cash Flows from Operating Activities: Net income (loss) $ 25,941 $ (49,307) $ (496,751) Noncash adjustments: Depreciation and amortization, including goodwill impairment 120,969 139,723 528,895 Loss on impairment of long-lived assets — — 70,445 Provision for Evergrande loss, net — 29,549 — Deferred income tax provision (benefit) 829 (1,798) (4,158) Inventory write-downs — — 7,038 Other noncash 7,713 7,475 6,167 Total noncash adjustments 129,511 174,949 608,387 Accounts receivable and contract assets (50,732) 41,099 125,541 Inventory (30,692) 7,313 26,466 Current liabilities 67,253 63,051 (138,932) Other changes (20,398) (11,791) 11,936 Net Cash Provided by Operating Activities $ 120,883 $ 225,314 $ 136,647 Net cash provided by operating activities for the years ended December 31, 2022 and 2021 of $121 million and $225 million, respectively, was affected by the following: • Accounts receivable and contract assets - The decrease in cash related to accounts receivable and contract assets in 2022 reflects the increase in accounts receivable corresponding with the increase in revenue as compared to the prior year, along with the timing of project milestones and customer payments.
Biggest changeOur primary sources and uses of cash from operating activities for the years ended December 31, 2023 and 2022 are as follows: Year ended December 31, (in thousands) 2023 2022 Cash Flows from Operating Activities: Net income (loss) $ 97,403 $ 25,941 Noncash adjustments: Depreciation and amortization 104,960 120,969 Deferred income tax provision (benefit) (26,785) 829 Other noncash 13,415 7,713 Total noncash adjustments 91,590 129,511 Accounts receivable and contract assets (83,075) (50,732) Inventory (25,423) (30,692) Current liabilities 125,695 67,253 Other changes 3,765 (20,398) Net Cash Provided by Operating Activities $ 209,955 $ 120,883 Net cash provided by operating activities for the years ended December 31, 2023 and 2022 of $210 million and $121 million, respectively, was affected by the following: • Accounts receivable and contract assets - The decrease in cash related to accounts receivable and contract assets in 2023 and 2022 reflects the increase in accounts receivable corresponding with the increase in revenue as compared to the prior year, along with the timing of project milestones and customer payments. • Inventory - The decrease in cash related to inventory in 2023 and 2022 corresponds with an increase in our backlog along with the impact of higher inflation in 2023 and 2022. • Current liabilities - The increase in cash related to current liabilities in 2023 and 2022 reflects the timing of vendor payments and increased contract liabilities due to an increase in deferred customer prepayments.
We may borrow under the Revolving Credit Facility at either (1) a base rate, determined as the greatest of (A) the prime rate of Wells Fargo Bank, National Association, (B) the federal funds effective rate plus 1⁄2 of 1% and (C) Adjusted Term SOFR (as defined in the Revolving Credit Agreement for a one-month tenor plus 1%, in each case plus the applicable margin, which varies from 1.25% to 2.25% depending on our Consolidated Net Leverage Ratio (as defined in the Revolving Credit Agreement), or (2) Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus the applicable margin, which varies from 2.25% to 3.25% depending on our Consolidated Net Leverage Ratio.
We may borrow under the Revolving Credit Facility at either (1) a base rate, determined as the greatest of (A) the prime rate of Wells Fargo Bank, National Association, (B) the federal funds effective rate plus 1 ⁄ 2 of 1% and (C) Adjusted Term Secured Overnight Financing Rate (“SOFR”) (as defined in the Revolving Credit Agreement for a one-month tenor plus 1%, in each case plus the applicable margin, which varies from 1.25% to 2.25% depending on our Consolidated Net Leverage Ratio (as defined in the Revolving Credit Agreement), or (2) Adjusted Term SOFR plus the applicable margin, which varies from 2.25% to 3.25% depending on our Consolidated Net Leverage Ratio.
The plan does not obligate us to repurchase any particular number of shares. Because of our significant foreign operations, we are exposed to currency fluctuations and exchange rate risks. A stronger U.S. dollar against any of the foreign currencies where we conduct business could result in lower operating income.
The plan does not obligate us to repurchase any particular number of shares. Foreign Currency Adjustments. Because of our significant foreign operations, we are exposed to currency fluctuations and exchange rate risks. A stronger U.S. dollar against any of the foreign currencies where we conduct business could result in lower operating income.
These costs, net of accumulated amortization, are included as a reduction of long-term debt in our Consolidated Balance Sheets, as they pertain to the Senior Notes, and in other noncurrent assets as they pertain to the Revolving Credit Agreement.
These costs, net of accumulated amortization, are included as a reduction of long-term debt in our Consolidated Balance Sheets, as they pertain to the 2028 Senior Notes, and in other noncurrent assets as they pertain to the Revolving Credit Agreement.
During the year ended December 31, 2022, we retired 10 of our conventional work-class ROV systems and replaced them with eight upgraded conventional work-class ROV systems and two Isurus TM work-class ROV systems (which are capable of operating in severe conditions and are ideal for renewables projects and high-speed surveys), which are currently engaged in renewables work.
During the year ended December 31, 2022, we retired 10 of our conventional work-class ROV systems and replaced them with eight upgraded conventional work-class ROV systems and two Isurus TM work-class ROV systems (which are capable of operating in severe conditions and are ideal for renewables projects and high-speed surveys).
We generally minimize these risks primarily through matching, to the extent possible, revenue and expense in the various currencies in which we operate. Cumulative translation adjustments as of December 31, 2022 relate primarily to our net investments in, including long-term loans to, our foreign subsidiaries.
We generally minimize these risks primarily through matching, to the extent possible, revenue and expense in the various currencies in which we operate. Cumulative translation adjustments as of December 31, 2023 relate primarily to our net investments in, including long-term loans to, our foreign subsidiaries.
Financial Statements and Supplementary Data” elsewhere in this annual report on Form 10-K. For management's discussion and analysis of our financial condition and results of operations for fiscal year 2021 as compared to fiscal year 2020 please refer to Part II, Item 7.
Financial Statements and Supplementary Data” elsewhere in this annual report on Form 10-K. For management's discussion and analysis of our financial condition and results of operations for fiscal year 2022 as compared to fiscal year 2021, please refer to Part II, Item 7.
The program calls for any repurchases to be made in the open market, or in privately 40 Table of Contents / negotiated transactions from time to time, in compliance with applicable laws, rules and regulations, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended, subject to market and business conditions, levels of available liquidity, cash requirements for other purposes, applicable legal requirements and other relevant factors.
The program calls for any repurchases to be made in the open market, or in privately negotiated transactions from time to time, in compliance with applicable laws, rules and regulations, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended, subject to market and business conditions, levels of available liquidity, cash requirements for other purposes, applicable legal requirements and other relevant factors.
We are committed to the research and development of products and services intended to help our Energy business customers to produce energy safely and securely, with decreased risk to humans and sea life and reduced environmental impacts.
We are committed to the research and development of products and services intended to help our Energy business (defined below) customers to produce energy safely and securely, with decreased risk to humans and sea life and reduced environmental impacts.
The Revolving Credit Agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted Consolidated Net Leverage Ratio is initially 4.00 to 1.00 and decreases to 3.25 to 1.00 during the term of the Revolving Credit Facility.
The Revolving Credit Agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted Consolidated Net Leverage Ratio is initially 4.00 to 1.00 and will decrease to 3.25 to 1.00 during the term of the Revolving Credit Facility.
Historically, we built new ROVs to increase the size of our fleet in response to demand to support deepwater drilling and vessel-based IMR and installation work. These vehicles are designed for use around the world in water depths of 10,000 feet or more.
Historically, we built new ROVs to increase the size of our fleet in response to demand to support deepwater drilling and vessel-based IMR and installation work. These vehicles are designed for use around 36 Table of Contents / the world in water depths of 10,000 feet or more.
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 through the use of an undiscounted cash flows analysis of the asset at the lowest level for which 41 Table of Contents / identifiable cash flows exist.
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 through the use of an undiscounted cash flows analysis of the asset at the lowest level for which identifiable cash flows exist.
We did not have any material adjustments during the years ended December 31, 2022, 2021 or 2020, however, should our judgments and estimates regarding the elements of revenue recognition change, it could have a material effect on our results of operations for the periods involved. Impairment of Property and Equipment, Long-lived Intangible Assets and Right-of-Use Operating Lease Assets.
We did not have any material adjustments during the years ended December 31, 2023 and 2022, however, should our judgments and estimates regarding the elements of revenue recognition change, it could have a material effect on our results of operations for the periods involved. Impairment of Property and Equipment, Long-lived Intangible Assets and Right-of-Use Operating Lease Assets.
Also, if market conditions deteriorate significantly, we could be required to record additional impairments, which could have a material adverse impact on our operating results. We did not identify any triggering events and, accordingly, no impairments of long-lived assets were recorded in the years ended December 31, 2022 or 2021.
Also, if market conditions deteriorate significantly, we could be required to record additional impairments, which could have a material adverse impact on our operating results. We did not identify any triggering events and, accordingly, no impairments of long-lived assets were recorded in the years ended December 31, 2023 or 2022. Income Taxes.
Unallocated Expenses. Our unallocated expenses, ( i.e. , those not associated with a specific business segment), within gross margin consist of expenses related to our incentive and deferred compensation plans, including restricted stock units, performance 35 Table of Contents / units and bonuses, as well as other general expenses.
Our unallocated expenses, ( i.e. , those not associated with a specific business segment), within gross margin consist of expenses related to our incentive and deferred compensation plans, including restricted stock units, performance units and bonuses, as well as other general expenses.
At the same time, due to increasing concerns about climate change, there is growing demand for cleaner hydrocarbon-based and renewables energy sources.
At the same time, due to increasing concerns about climate change, there is growing demand for cleaner hydrocarbon-based and renewable energy sources.
Investing activities In 2022, we used $77 million in net investing activities, primarily for capital expenditures of $81 million that included increased spending in our Subsea Robotics segment for ROV upgrades and replacements and other increased 38 Table of Contents / capital expenditures for information technology systems.
In 2022, we used $77 million in net investing activities, primarily for capital expenditures of $81 million that included increased spending in our Subsea Robotics segment for ROV upgrades and replacements and other increased capital expenditures for information technology systems.
As of December 31, 2022, we had no borrowings outstanding under the Revolving Credit Facility and no letters of credit outstanding under the Revolving Credit Agreement.
As of December 31, 2023, we had no borrowings outstanding under the Revolving Credit Facility and no letters of credit outstanding under the Revolving Credit Agreement.
Under this program, in 2015, we repurchased 2.0 million shares of our common stock for $100 million. We have not repurchased any shares under the program since December 2015. As of December 31, 2022, we retained 11 million of the shares we had repurchased through this and a prior repurchase program.
Under this program, in 2015, we repurchased 2.0 million shares of our common stock for $100 million. We have not repurchased any shares under the program since December 2015. As of December 31, 2023, we retained 10 million of the shares we had repurchased through this and a prior repurchase program.
If the current market dynamics are sustained and absent any additional objective negative evidence, we may have sufficient positive evidence in the next twelve months to adjust our valuation allowance position. Exact timing and amount of the adjustment to the valuation allowance is not certain at this time.
If the current market dynamics are sustained and absent any additional objective negative evidence, we may have sufficient positive evidence in the next twelve months to adjust our valuation allowance position for certain jurisdictions. The exact timing and amount of the 44 Table of Contents / adjustment to the valuation allowance is not certain at this time.
Due to the continuing development of economies in developing countries, substantial projected population growth (particularly in developing countries), and the shortage of other sources of affordable, reliable, scalable and efficient energy, as well as rising worldwide demand for a myriad of products made with petrochemicals, we expect that the need for 30 Table of Contents / additional oil and gas exploration and development and IMR activities will continue for decades to come.
Due to the continuing development of economies in developing countries, substantial projected population growth (particularly in developing countries), and the shortage of other sources of affordable, reliable, scalable and efficient energy, as well as rising worldwide demand for a myriad of products made with petrochemicals, we expect that the need for additional oil and gas exploration and development and inspection, maintenance and repair (“IMR”) activities will continue for decades to come.
See Note 1—“Summary of Major Accounting Policies” in the Notes To Consolidated Financial Statements included in this report for discussion of our significant accounting policies. Revenue Recognition.
See Note 1—“Summary of Significant Accounting Policies” in the Notes To Consolidated Financial Statements included in this report for discussion of our significant accounting policies. 43 Table of Contents / Revenue Recognition.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" on Form 10-K for our fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission ("SEC") on February 25, 2022.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission ("SEC") on February 24, 2023.
Our income tax payments for the full year of 2023 are estimated to be in the range of $60 million to $65 million, which includes taxes incurred in countries that impose tax on the basis of in-country revenue, without regard to the profitability of such operations.
Our income tax payments for the full year of 2024 are estimated to be in the range of $80 million to $90 million, which includes taxes incurred in countries that impose tax on the basis of in-country revenue, without regard to the profitability of such operations.
We remain committed to maintaining strong liquidity and believe that our cash position, undrawn revolving credit facility, and debt maturity profile should provide us ample resources and time to address potential future growth opportunities and to improve our returns. Financing activities In 2022 we used $1.9 million of cash in financing activities.
We remain committed to maintaining strong liquidity and believe that our cash position, undrawn revolving credit facility, and debt maturity profile should provide us ample resources and time to address potential future growth opportunities and to improve our returns. Financing activities.
According to industry data published by IHS Petrodata, excluding rigs under construction, at the end of 2022 there were 191 floating drilling rigs in operation or available for work throughout the world, with 141 of those rigs under contract. The average contracted offshore floating rig count in 2022 increased to approximately 137 rigs.
According to industry data published by IHS Petrodata, excluding rigs under construction, at the end of 2023 there were 193 floating drilling rigs in operation or available for work throughout the world, with 146 of those rigs under contract. The average contracted offshore floating rig count in 2023 increased to approximately 147 rigs.
We are amortizing these costs to interest expense through the respective maturity dates for the Senior Notes and the Revolving Credit Agreement using the straight-line method, which approximates the effective interest rate method. As a result, we amortized $2.1 million and $1.3 million for the years ended December 31, 2022 and 2021, respectively.
We are amortizing these costs to interest expense through the respective maturity dates for the Senior Notes and the Revolving Credit Agreement using the straight-line method, which approximates the effective interest rate method. As a result, we amortized $1.6 million and $1.4 million for the years ended December 31, 2023 and 2022, respectively. Share Repurchase Program.
We believe we are the world's largest provider of ROV services and, generally, this business segment has been the largest contributor to our Energy business operating income. Our Subsea Robotics segment revenue reflects the 34 Table of Contents / utilization percentages, fleet sizes and average pricing in the respective periods.
We believe we are the world's largest provider of work-class ROV services and, generally, this business segment has been the largest contributor to our Energy business operating income. Our Subsea Robotics segment revenue reflects the utilization percentages, fleet sizes and average pricing in the respective periods. Our survey services business provides survey and positioning, and geoscience services.
Our Manufactured Products backlog was $467 million as of December 31, 2022, a $149 million, or 47%, increase over December 31, 2021. Our book-to-bill ratio was 1.39 for the year ended December 31, 2022, as compared with a book-to-bill ratio of 1.1 for the year ended December 31, 2021. Offshore Projects Group.
Our Manufactured Products backlog was $622 million as of December 31, 2023, a $155 million, or 33%, increase over December 31, 2022. Our book-to-bill ratio was 1.31 for the year ended December 31, 2023, as compared with a book-to-bill ratio of 1.39 for the year ended December 31, 2022. Offshore Projects Group.
As a result, we amortized $2.2 million to interest expense for the year ended December 31, 2022. We amortized $4.3 million to interest expense, including $1.8 million for the pro-rata write-off of interest rate swap settlement gains associated with the 2024 Senior Notes repurchases discussed above, for the year ended December 31, 2021.
We amortized $4.4 million to interest expense, including $2.7 million for the pro-rata write-off of interest rate swap settlement gains associated with the 2024 Senior Notes repurchases discussed above, for the year ended December 31, 2023. We amortized $2.2 million to interest expense for the year ended December 31, 2022.
In 2022, on a consolidated level, we had a net income of $26 million, or diluted earnings of $0.26 per share, compared to net loss of $49 million, or diluted loss of $0.49 per share, in 2021.
In 2023, on a consolidated level, we had a net income of $97 million, or diluted earnings of $0.95 per share, compared to net income of $26 million, or diluted earnings of $0.26 per share, in 2022.
We added a total of 10, 10 and three ROVs in 2022, 2021 and 2020, respectively, while retiring 23 units over the three-year period. Our ROV fleet size was 250 as of December 31, 2022, 2021 and 2020.
We added a total of 11 and 10 in 2023 and 2022, respectively, while retiring 21 units over the two-year period. Our ROV fleet size was 250 as of December 31, 2023 and 2022.
We have several deepwater vessels under a mix of short-term charters where we can see firm workload and spot charters as market opportunities arise, along with four long-term charters that began in 2022.
We have several deepwater vessels under a mix of short-term charters where we can see firm workload and spot charters as market opportunities arise.
We strive to meet the growing need for lower-carbon energy by assisting customers to reduce their carbon emissions in exploring for, developing and producing oil and natural gas, while also diversifying our business into new strategic growth areas in emerging energy and non-energy markets. We believe this measured approach ensures our resilience in an ever-changing market.
We strive to meet the growing need for 32 Table of Contents / lower-carbon energy by assisting customers to reduce their carbon emissions in exploring for, developing and producing oil and natural gas, while also diversifying our business into new strategic growth areas in emerging energy and non-energy markets.
The effective tax rate for the 12-month periods ended December 31, 2022 and 2021 was different than the federal statutory rate of 21%, primarily due to the geographical mix of revenue and earnings, changes in valuation allowances and uncertain tax positions, and other discrete items; therefore, we do not believe a discussion of the effective tax rate is meaningful.
The effective tax rate for the twelve-month periods ended December 31, 2023 and 2022 was different than the federal statutory rate of 21%, primarily due to the geographical mix of revenue and earnings, changes in valuation allowances and uncertain tax positions, and other discrete items.
These outlays were partially offset in 2022 by $6.5 million of proceeds received from the sale of various assets and in 2021 by $4.5 million of proceeds received from the sale of a portion of our Angolan bonds and $7.1 million of proceeds received from the sale of various assets.
These outlays were partially offset in 2023 by $7.8 million of proceeds received from the sale of various assets and $6.2 million from the sale of the remainder of our Angolan bonds and in 2022 by $6.5 million of proceeds received from the sale of various assets.
In 2022, we retired ten of our conventional work-class ROV systems and replaced them with eight upgraded conventional work-class ROV systems and two Isurus TM work-class ROV systems (which are capable of operating in severe conditions and are ideal for renewables projects and high-speed surveys), which are currently engaged in renewables work.
In 2022, we retired 10 of our conventional work-class ROVs and replaced them with eight upgraded conventional work-class ROV systems and two Isurus TM work-class ROV systems (which are capable of operating in severe conditions and are ideal for renewables projects and high-speed surveys). Our ROV fleet size was 250 as of December 31, 2023 and 2022.
The following table shows average floating rigs under contract and our ROV utilization. 2022 2021 2020 Average number of floating rigs under contract 137 131 139 ROV days on hire (in thousands) 56 53 54 ROV utilization 62% 58% 59% Demand for floating rigs is the primary leading indicator of the strength of the deepwater market.
The following table shows average floating rigs under contract and our ROV utilization. 2023 2022 Average number of floating rigs under contract 147 137 ROV days on hire (in thousands) 62 56 ROV utilization 68 % 62 % Demand for floating rigs is a leading indicator of the strength of the deepwater market.
In connection with entering into the Revolving Credit Agreement, we terminated our Prior Revolving Credit Facility. No borrowings were outstanding under the Prior Revolving Credit Facility. We repaid all accrued fees and expenses in connection with the termination of the Prior Revolving Credit Facility and all commitments thereunder were terminated.
We repaid all accrued fees and expenses in connection with the termination of the Prior Revolving Credit Facility and all commitments thereunder were terminated. No early termination penalties were incurred in connection with the termination of the Prior Revolving Credit Facility.
We apply judgment in estimating project status and the costs necessary to complete projects. For the year ended December 31, 2022, we recognized approximately 93% of our revenue over time and 7% at a point in time.
We apply judgment in estimating project status and the costs necessary to complete projects. For the year ended December 31, 2023, we recognized approximately 19% of our revenue over time using the cost-to-cost input method.
Year Ended December 31, (dollars in thousands) 2022 2021 2020 Revenue $ 2,066,084 $ 1,869,275 $ 1,827,889 Gross Margin 307,377 264,065 163,941 Gross Margin % 15 % 14 % 9 % Operating Income (Loss) 110,863 39,799 (446,079) Operating Income (Loss) % 5 % 2 % (24) % Net Income (Loss) 25,941 (49,307) (496,751) Our business segments are contained within two businesses—services and products provided primarily to the oil and gas industry and, to a lesser extent, the offshore renewables and mobility solutions industry, among others (“Energy”) and services and products provided to non-energy industries (“Aerospace and Defense Technologies” or “ADTech”).
Year Ended December 31, (dollars in thousands) 2023 2022 Revenue $ 2,424,706 $ 2,066,084 Gross Margin 398,971 307,377 Gross Margin % 16 % 15 % Operating Income (Loss) 181,328 110,863 Operating Income (Loss) % 7 % 5 % Net Income (Loss) 97,403 25,941 Our business segments are contained within two businesses—services and products provided primarily to the oil and gas industry and, to a lesser extent, the offshore renewables and mobility solutions industry, among others (“Energy”) and services and products provided to non-energy industries (“Aerospace and Defense Technologies” or “ADTech”).
The following table presents revenue from ROV services as a percentage of total Subsea Robotics revenue: Year ended December 31, 2022 2021 2020 ROV 77% 79 % 81% Other 23% 21 % 19% For the year ended December 31, 2022, our Subsea Robotics operating income increased as compared to 2021, on higher revenue, as a result of higher levels of activity for ROV and tooling, along with the positive impact of new contract pricing and utilization efficiencies in 2022.
The following table presents revenue from ROV services as a percentage of total Subsea Robotics revenue: Year ended December 31, 2023 2022 ROV 77 % 77 % Other 23 % 23 % For the year ended December 31, 2023, our Subsea Robotics operating income increased as compared to 2022, on higher revenue, as a result of higher levels of activity for ROV, survey and tooling and higher average revenue per day in 2023.
The following table sets forth our significant financial statement items below the income (loss) from operations line: Year ended December 31, (dollars in thousands) 2022 2021 2020 Interest income $ 5,708 $ 2,477 $ 3,083 Interest expense (38,215) (38,810) (43,900) Equity earnings (loss) of unconsolidated affiliates 1,707 594 2,268 Other income (expense), net (1,011) (9,769) (14,269) Provision (benefit) for income taxes 53,111 43,598 (2,146) Interest income for the year ended December 31, 2022 as compared to 2021, increased primarily due to higher interest rates.
The following table sets forth our significant financial statement items below the income (loss) from operations line: Year ended December 31, (dollars in thousands) 2023 2022 Interest income $ 15,425 $ 5,708 Interest expense (36,523) (38,215) Equity earnings (loss) of unconsolidated affiliates 2,061 1,707 Other income (expense), net (1,236) (1,011) Provision (benefit) for income taxes 63,652 53,111 Interest income for the year ended December 31, 2023 as compared to 2022, increased primarily due to higher interest rates and increased average amounts of cash invested.
In 2023, we expect our organic capital expenditures to total between $90 million and $110 million, exclusive of business acquisitions, as compared to capital expenditures of $81 million in 2022.
In 2024, we expect our organic capital expenditures to total between $110 million and $130 million, exclusive of business acquisitions, which we expect to fund using our available cash, as compared to capital expenditures of $101 million in 2023.
See Note 4—”Leases” in the Notes to Consolidated Financial Statements included in this report for a description of the scheduled maturities for our operating leases.
For more on our operating leases for land, buildings, vessels and equipment for the operation of our business and their scheduled maturities, see Note 4—”Leases” in the Notes to Consolidated Financial Statements included in this report.
The following table sets forth our Unallocated Expenses for the periods indicated: Year ended December 31, (dollars in thousands) 2022 2021 2020 Gross margin expenses $ (82,528) $ (93,702) $ (80,804) % of revenue 4 % 5 % 4 % Operating expenses (127,402) (131,960) (120,677) % of revenue 6 % 7 % 7 % Our unallocated expenses for the year ended December 31, 2022 decreased compared to 2021, primarily due to lower accruals in 2022 for incentive-based compensation, partially offset by increased information technology costs.
The following table sets forth our Unallocated Expenses for the periods indicated: Year ended December 31, (dollars in thousands) 2023 2022 Gross margin expenses $ (98,955) $ (82,528) % of revenue 4 % 4 % Operating expenses (151,438) (127,402) % of revenue 6 % 6 % Our unallocated expenses for the year ended December 31, 2023 increased compared to 2022, primarily due to higher accruals in 2023 for incentive-based compensation along with increased information technology costs.
No early termination penalties were incurred in connection with the termination of the Prior Revolving Credit Facility. The Revolving Credit Agreement includes a $215 million revolving credit facility (the “Revolving Credit Facility”) with a $100 million sublimit for the issuance of letters of credit.
The Revolving Credit Agreement includes a $215 million revolving credit facility, the Revolving Credit Facility, with a $100 million sublimit for the issuance of letters of credit.
Our tax provision is based on (1) our earnings for the period and other factors affecting the tax provision and (2) the operations of foreign branches and subsidiaries that are subject to local income and withholding taxes. Factors that affect our tax rate include our profitability levels in general and the geographical mix of our results.
We could incur further foreign currency exchange gains (losses) in Angola and in other countries due to foreign currency exchange fluctuations. Our tax provision is based on (1) our earnings for the period and other factors affecting the tax provision and (2) the operations of foreign branches and subsidiaries that are subject to local income and withholding taxes.
In March 2020, we settled both interest rate swaps with the counterparty for cash proceeds of $13 million. The settlement resulted in a $13 million increase to our long-term debt balance that will be amortized to interest expense prospectively through the maturity date for the 2024 Senior Notes using the effective interest method.
The settlement resulted in a $13 million increase to our long-term debt balance that was being amortized as a reduction to interest expense prospectively through the maturity date for the 2024 Senior Notes using the effective interest method. Upon retirement of the 2024 Senior Notes, we wrote off the related unamortized interest rate swaps and debt issuance cost balances.
Our OPG operating results for the year ended December 31, 2022 increased as compared to 2021, on significantly higher revenue, primarily due to improved pricing in the second half of 2022 and increased intervention, installation and controls work in the Gulf of Mexico. Integrity Management & Digital Solutions.
Our OPG operating results for the year ended December 31, 2023 increased as compared to 2022, on higher revenue, primarily due to increased activity levels in the Europe, Middle East and Africa region, partially offset by reduced vessel work in the Gulf of Mexico. Integrity Management & Digital Solutions.
As of December 31, 2022, we had $464 million of total purchase obligations including $324 million payable within the next twelve months and $140 million thereafter. Our purchase obligations include agreements to purchase goods and services as well as commitments for capital assets used in the normal operations of our business.
Our purchase obligations include agreements to purchase goods and services as well as commitments for capital assets used in the normal operations of our business.
As of December 31, 2022, we were in compliance with all the covenants set forth in the Revolving Credit Agreement. We had two interest rate swaps in place relating to a total of $200 million of the 2024 Senior Notes for the period to November 2024.
As of December 31, 2023, there were no 2024 Senior Notes outstanding. We had two interest rate swaps in place relating to a total of $200 million of the 2024 Senior Notes for the period to November 2024. In March 2020, we settled both interest rate swaps with the counterparty for cash proceeds of $13 million.
Outlook Based on our 2022 year-end backlog, the expected meaningful increases in backlog conversion, anticipated 2023 order intake, and current market fundamentals, we are expecting increased revenue in 2023 as compared to 2022 for each of our operating segments, led by Subsea Robotics and Manufactured Products.
Outlook 2024 financial results are expected to improve year-over-year, based on 2023 year-end backlog and ongoing positive indications from market fundamentals. We are expecting increased operating income in 2024 as compared to 2023 for each of our operating segments, led by Subsea Robotics and OPG.
In 2021, we used $34 million in net investing activities, primarily for capital expenditures of $50 million. Our capital expenditures during 2022 and 2021 included $56 million and $28 million, respectively, in our Subsea Robotics segment, principally for upgrades to our ROV fleet and to replace certain units we retired.
Our capital expenditures during 2023 and 2022 included $67 million and $56 million, respectively, in our Subsea Robotics segment, principally for upgrades to our ROV fleet and to replace certain units we retired. We currently plan to add new ROVs only to meet contractual commitments.
During 2022, we generated a substantial majority of our revenue from services and products we provided to the energy industry.
Compared to 2022, our 2023 revenue increased 17% to $2.4 billion, with 33 Table of Contents / revenue growth in all of our operating segments. During 2023, we generated a substantial majority of our revenue from services and products we provided to the energy industry.
As of December 31, 2022, we had working capital of $729 million, including cash and cash equivalents of $569 million. Additionally, as of December 31, 2022, we had $215 million of unused commitments through our senior secured revolving credit agreement (the “Revolving Credit Agreement”) that we entered into in April 2022, which is further described below.
Additionally, as of December 31, 2023, we had $215 million of unused commitments through our senior secured revolving credit agreement that we entered into in April 2022 (as amended by an Agreement and Amendment No. 1 to Credit Agreement, dated September 20, 2023, the “Revolving Credit Agreement”), which is further described below and in Note 8—“Debt” in the Notes to Consolidated Financial Statements included in this report.
The minimum Consolidated Interest Coverage Ratio (as defined in the Revolving Credit Agreement) is 3.00 to 1.00 throughout the term of the Revolving Credit Facility.
As of December 31, 2023, the maximum permitted Consolidated Net Leverage Ratio was 3.25 to 1.00 and will not change during the remaining term of the Revolving Credit Facility. The minimum Consolidated Interest 42 Table of Contents / Coverage Ratio (as defined in the Revolving Credit Agreement) is 3.00 to 1.00 throughout the term of the Revolving Credit Facility.
In 2015, as a result of declining market conditions, we began building fewer ROVs, generally limiting additions to meet contractual commitments.
In 2015, as a result of declining market conditions, we began building fewer ROVs, generally limiting additions to meet contractual commitments. During the year ended December 31, 2023, we retired eleven of our conventional work-class ROV systems and replaced them with eleven upgraded conventional work-class ROV systems.
In the Subsea Robotics section of the table that follows, “ROV Days Available” includes all days from the first day that an ROV is placed in service until the ROV is retired. All days in this period are considered available days, including periods when an ROV is undergoing maintenance or repairs.
Energy. The table that follows sets out revenue and profitability for the business segments within our Energy business. In the Subsea Robotics section of the table that follows, “ROV Days Available” includes all days from the first day that an ROV is placed in service until the ROV is retired.
We are also committed to reducing our own energy consumption and the greenhouse gas emissions attributable to our operations. With the help of a third-party consultant, we are substantially complete with a global review of our assets and operations to identify and estimate our scope 1 and scope 2 emissions.
We are also committed to reducing our own energy consumption and the greenhouse gas emissions attributable to our operations.
As of December 31, 2022, we were in compliance with all the covenants set forth in the credit agreement governing the Revolving Credit Agreement. In November 2014, we completed the public offering of $500 million aggregate principal amount of 4.650% Senior Notes due 2024.
As of December 31, 2023, we were in compliance with all the covenants set forth in the credit agreement governing the Revolving Credit Agreement.
In October 2014, we entered into a credit agreement (as amended, the “Prior Credit Agreement”) with a group of banks. The Prior Credit Agreement initially provided for a $500 million five-year revolving credit facility (the “Prior Revolving Credit Facility”).
In connection with entering into the Revolving Credit Agreement, we terminated our $500 million five-year revolving credit facility entered into in October 2014 (the “Prior Revolving Credit Facility”). No borrowings were outstanding under the Prior Revolving Credit Facility.
Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), and the expected timing thereof; • our backlog, to the extent backlog may be an indicator of future revenue or productivity; • the impacts of the COVID-19 pandemic on our business; • projections relating to floating rig demand and subsea tree installations; • the adequacy of our liquidity, cash flows and capital resources to support our operations and internally generated growth initiatives; • the collectability of accounts receivable and realizability of contract assets at the amounts reflected on our most-recent balance sheet; • our projected capital expenditures for 2023; • the condition of debt markets and our possible future debt repurchases; • our plans for future operations (including planned additions to and retirements from our remotely operated vehicle (“ROV”) fleet; • our ability and intent to redeem Angolan bonds and repatriate cash; • our expectations regarding shares that may be repurchased under our share repurchase plan; • our expectations regarding the implementation of new accounting standards and related policies, procedures and controls; • our expectations about our ROV fleet utilization in the future; • our expectations about the balance between energy transition and energy security; and • our expectations regarding the effect of inflation in the near future.
Certain statements in this annual report on Form 10-K, including, without limitation, statements regarding the following matters, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995: • our business strategy; • industry conditions and commodity pricing; • seasonality; • our expectations about 2024 results of operations, items below the income from operations (“operating income”) line and segment operating results, and the factors underlying those expectations, including our expectations about demand and pricing for our energy services and products as a result of the factors we specify in “ Overview of our Results” and “ Results of Operations” below; • our expectations about the balance between energy transition and energy security; • our emissions reduction targets; • our backlog, to the extent backlog may be an indicator of future revenue or productivity; • projections relating to floating rig demand and subsea tree installations; • our expectations about our ROV fleet utilization in the future; • the adequacy of our sources of liquidity, cash flows and capital resources to support our operations and internally generated growth initiatives; • the collectability of accounts receivable and realizability of contract assets at the amounts reflected on our most-recent balance sheet; • our future working capital needs and our projected capital expenditures for 2024; • transactions we may engage in to manage our outstanding debt prior or maturity; • our plans for future operations (including planned additions to and retirements from our remotely operated vehicle (“ROV”) fleet; • our ability and intent to repatriate cash from Angola and other foreign countries where we have operations; • our expectations regarding shares that may be repurchased under our share repurchase plan; and • our expectations regarding the implementation of new accounting standards and related policies, procedures and controls.
Overview of Our Results The table that follows sets out our revenue and operating results for 2022, 2021 and 2020.
Our capital investments and expenses required to achieve our goals cannot be estimated at this time. Overview of Our Results The table that follows sets out our revenue and operating results for 2023 and 2022.
We have not guaranteed any debt not reflected on our Consolidated Balance Sheets as of December 31, 2022 and 2021, and we do not have any off-balance-sheet arrangements, as defined by SEC rules. In December 2014, our Board of Directors approved a plan to repurchase up to 10 million shares of our common stock on a discretionary basis.
We have not guaranteed any debt not reflected on our Consolidated Balance Sheets as of December 31, 2023 and 2022 and we do not have any off-balance sheet arrangements, as defined by SEC rules. 2024 Senior Notes. In November 2014, we completed the public offering of $500 million aggregate principal amount of 4.650% Senior Notes due 2024.
According to data published by Rystad Energy in December 2022, there are projected to be 339 subsea tree installations in 2023, compared to 322 in 2022, 291 in 2021 and 273 in 2020.
According to data published by a world-leading analysis and consultancy company for the energy sector in December 2023, there are projected to be 288 tree awards and 339 subsea tree installations in 2024, compared to 285 tree awards and 370 installations in 2023 and 260 tree awards and 256 installations in 2022.
Interest expense decreased slightly for the year ended December 31, 2022 as compared to 2021, as a result of our 2021 repurchase of $100 million in aggregate principal amount of the 4.650% Senior Notes due 2024 (the “2024 Senior Notes”). We have not capitalized interest since 2019 and do not anticipate capitalizing interest on any long-lived assets in 2023.
We have not capitalized interest since 2019 and do not anticipate capitalizing interest on any long-lived assets in 2024. Foreign currency transaction gains and losses are the principal component of other income (expense), net for the year ended December 31, 2023.
We pay interest on the 2028 Senior Notes on February 1 and August 1 of each year. The 2028 Senior Notes are scheduled to mature on February 1, 2028. We used the net proceeds from the 2028 Senior Notes to repay our term loan indebtedness described further below.
We pay interest on the Existing 2028 Senior Notes on February 1 and August 1 of each year. The Existing 2028 Senior Notes are scheduled to mature on February 1, 2028. We may redeem some or all of the Existing 2028 Senior Notes at specified redemption prices.
We may, from time to time, complete additional limited repurchases of the 2024 Notes, via open-market or privately negotiated repurchase transactions or otherwise, prior to their maturity date. We can provide no assurances as to the timing of any such additional repurchases or whether we will complete any such repurchases at all.
We can provide no assurances as to the timing of any future repurchases or whether we will complete any repurchases at all.
In February 2018, we entered into Agreement and Amendment No. 4 to the Prior Credit Agreement to, among other things, extend the maturity of the Prior Revolving Credit Facility to January 25, 2023. 39 Table of Contents / On April 8, 2022, we entered into a new senior secured revolving credit agreement with a group of banks that will mature in April 2026.
On April 8, 2022, we entered into a new senior secured revolving credit agreement with a group of banks (as amended by an Agreement and Amendment No. 1 to Credit Agreement, dated September 20, 2023, the Revolving Credit Agreement.
Based on current market conditions, we expect opportunities for improved pricing and margins in our energy-focused businesses and stable pricing and margins in our government-focused businesses. We expect improved results in our Subsea Robotics segment in 2023 as a result of increased ROV days on hire and higher tooling activity, minor favorable shifts in geographic mix and continued pricing improvements.
We expect improved results in our Subsea Robotics segment in 2024 as a result of increased ROV days on hire and continued pricing improvements. Results for tooling-based services are expected to improve, with activity levels generally following ROV days on hire. Survey operating results are expected to improve, with increased activity in geophysical and survey and positioning services.
For the year ended December 31, 2022, compared to 2021, our IMDS operating results and revenue decreased primarily on lower activity levels and the continuing impact of employee wage inflation. Aerospace and Defense Technologies.
For the year ended December 31, 2023, compared to 2022, our IMDS operating results decreased despite higher revenue primarily due to changes in service mix and the costs associated with growth initiatives. Aerospace and Defense Technologies.
Survey operating results are expected to improve as well, with both geophysical and survey and positioning businesses seeing increased international activity. We expect our Manufactured Products segment operating results in 2023 to improve on a significant increase in revenue, primarily based on 2022 order intake in our energy businesses in 2022.
We expect our Manufactured Products segment operating results in 2024 to improve on an increase in revenue, primarily based on 2023 order intake in our energy businesses. We believe that solid bidding activity in our energy businesses will continue during 2024. We are seeing growing prospects to further expand our mobility solutions businesses.
Foreign currency transaction gains and losses are the principal component of other income (expense), net. In the year ended December 31, 2022 and 2021, we incurred foreign currency transaction gains (losses) of less than $(0.1) million and $(8.4) million, respectively.
In the year ended December 31, 2023 and 2022, we incurred foreign currency transaction gains (losses) of $(1.4) million and less than $(0.1) million, respectively. The currency gains (losses) in 2023 were primarily related to increasing (declining) exchange rates for the Angolan kwanza relative to the United States (“U.S.”) dollar.
Our ROVs do not have scheduled maintenance or repair that requires significant time when the ROVs are not available for utilization. 33 Table of Contents / Year ended December 31, (dollars in thousands) 2022 2021 2020 Subsea Robotics Revenue $ 621,921 $ 538,515 $ 493,332 Gross Margin 160,527 112,962 78,952 Gross Margin % 26 % 21 % 16 % Operating Income (Loss) 118,248 76,874 (65,817) Operating Income (Loss)% 19 % 14 % (13) % ROV Days Available 91,250 91,242 91,499 ROV Days Utilized 56,231 53,113 54,411 ROV Utilization % 62 % 58 % 59 % Manufactured Products Revenue 382,361 344,251 477,419 Gross Margin 45,834 63,455 62,962 Gross Margin % 12 % 18 % 13 % Operating Income (Loss) 11,692 (15,876) (88,253) Operating Income (Loss)% 3 % (5) % (18) % Backlog at end of period 467,000 318,000 266,000 Offshore Projects Group Revenue 489,317 378,121 289,127 Gross Margin 78,373 56,338 1,265 Gross Margin % 16 % 15 % — % Operating Income (Loss) 49,256 31,197 (105,680) Operating Income (Loss)% 10 % 8 % (37) % Integrity Management & Digital Solutions Revenue 229,884 241,393 226,938 Gross Margin 36,724 42,417 29,772 Gross Margin % 16 % 18 % 13 % Operating Income (Loss) 14,901 18,572 (121,675) Operating Income (Loss)% 6 % 8 % (54) % Total Energy Revenue $ 1,723,483 $ 1,502,280 $ 1,486,816 Gross Margin 321,458 275,172 172,951 Gross Margin % 19 % 18 % 12 % Operating Income (Loss) 194,097 110,767 (381,425) Operating Income (Loss)% 11 % 7 % (26) % Subsea Robotics.
Year ended December 31, (dollars in thousands) 2023 2022 Subsea Robotics Revenue $ 752,521 $ 621,921 Gross Margin 221,965 160,527 Gross Margin % 29 % 26 % Operating Income (Loss) 174,293 118,248 Operating Income (Loss)% 23 % 19 % ROV Days Available 91,250 91,250 ROV Days Utilized 61,874 56,231 ROV Utilization % 68 % 62 % Manufactured Products Revenue 493,692 382,361 Gross Margin 69,613 45,834 Gross Margin % 14 % 12 % Operating Income (Loss) 35,551 11,692 Operating Income (Loss)% 7 % 3 % Backlog at end of period 622,000 467,000 Offshore Projects Group Revenue 546,366 489,317 Gross Margin 96,940 78,373 Gross Margin % 18 % 16 % Operating Income (Loss) 64,546 49,256 Operating Income (Loss)% 12 % 10 % Integrity Management & Digital Solutions Revenue 255,282 229,884 Gross Margin 38,988 36,724 Gross Margin % 15 % 16 % Operating Income (Loss) 13,373 14,901 Operating Income (Loss)% 5 % 6 % Total Energy Revenue $ 2,047,861 $ 1,723,483 Gross Margin 427,506 321,458 Gross Margin % 21 % 19 % Operating Income (Loss) 287,763 194,097 Operating Income (Loss)% 14 % 11 % Subsea Robotics.
The increases in 2022 operating income and net income as compared to 2021 were primarily due to positive energy markets that spurred increased offshore activity in our Subsea Robotics and OPG segments, which in turn resulted in improved pricing and increased utilization in the second half of the year.
The increases in 2023 operating income and net income as compared to 2022 were primarily due to higher revenue in all of our segments as a result of increased activity in energy markets and related growth in our energy businesses.
Results of Operations Additional information on our business segments is shown in Note 11—“Operations by Business Segment and Geographic Area” in the Notes to Consolidated Financial Statements included in this report. Energy. The table that follows sets out revenue and profitability for the business segments within our Energy business.
While the pace of inflation has moderated since 2022, inflation could have a material impact on our results in the future, including if we are unable to reflect such anticipated inflation in the original price. 35 Table of Contents / Results of Operations Additional information on our business segments is shown in Note 10—“Operations by Business Segment and Geographic Area” in the Notes to Consolidated Financial Statements included in this report.
Revenue, gross margin and operating income information for our ADTech segment are as follows: Year ended December 31, (dollars in thousands) 2022 2021 2020 Revenue $ 342,601 $ 366,995 $ 341,073 Gross Margin 68,447 82,595 71,794 Gross Margin % 20 % 23 % 21 % Operating Income 44,168 60,992 56,023 Operating Income % 13 % 17 % 16 % For the year ended December 31, 2022, compared to 2021, our ADTech segment operating results decreased significantly on lower levels of revenue primarily due to reduced activity in both defense subsea technologies and space systems.
Revenue, gross margin and operating income information for our ADTech segment are as follows: Year ended December 31, (dollars in thousands) 2023 2022 Revenue $ 376,845 $ 342,601 Gross Margin 70,420 68,447 Gross Margin % 19 % 20 % Operating Income 45,003 44,168 Operating Income % 12 % 13 % For the year ended December 31, 2023, compared to 2022, our ADTech segment operating results were slightly higher on increased levels of revenue primarily due to increased activity in all of our government-focused businesses. 37 Table of Contents / Unallocated Expenses.
See Note 9—”Debt” in the Notes to Consolidated Financial Statements included in this report for a description of these interest rate swaps. We incurred $6.9 million and $4.2 million of issuance costs related to the 2024 Senior Notes and the 2028 Senior Notes, respectively, and $4.0 million of new loan costs related to the Revolving Credit Agreement.
We incurred $7.0 million of issuance costs related to the 2028 Senior Notes and $4.0 million of loan costs related to the Revolving Credit Agreement.
We are expecting 32 Table of Contents / sequential improvement in our 2023 operating results as compared to 2022 based on our expectations for: higher operating results in our Subsea Robotics, Manufactured Products and OPG segments; slightly higher operating results in our ADTech segment; and relatively stable operating results in our IMDS segment.
We are expecting sequential improvement in our 2024 operating results as compared to 2023 based on our expectations for continued improvement in pricing and margins in our energy-focused businesses and stable pricing and margins in our government-focused businesses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

15 edited+2 added−5 removed2 unchanged
Biggest changeSee Note 9—“Debt” in the Notes to Consolidated Financial Statements included in this report for a description of our revolving credit agreement and interest rates on our borrowings. We had two interest rate swaps in place relating to a total of $200 million of the 2024 Senior Notes.
Biggest changeWhen we have a significant amount of borrowings, we may manage our exposure to interest rate changes through the use of a combination of fixed- and floating-rate debt. See Note 8—“Debt” in the Notes to Consolidated Financial Statements included in this report for a description of our revolving credit agreement and interest rates on our borrowings.
Foreign currency gains (losses) of $(8.4) million in the year ended December 31, 2021 were primarily related to gains (losses) for the Angolan kwanza of $(4.5) million due to declining exchange rate for the Angolan kwanza relative to the U.S. dollar.
Foreign currency gains (losses) of $(8.4) million in the year ended December 31, 2021 were primarily related to gains (losses) for the Angolan kwanza of $(4.5) million due to declining exchange rates for the Angolan kwanza relative to the U.S. dollar.
Foreign currency transaction losses related to the Angolan kwanza in the years ended December 31, 2021 and 2020 were primarily due to the remeasurement of our Angolan kwanza cash balances to U.S. dollars.
Foreign currency transaction losses related to the Angolan kwanza in the years ended December 31, 2023 and 2021 were primarily due to the remeasurement of our Angolan kwanza cash balances to U.S. dollars.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to certain market risks arising from transactions we enter into in the normal course of business. These risks relate to interest rate changes and fluctuations in foreign exchange rates. Except for our exposure in Angola, we do not believe these risks are material.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to certain market risks arising from transactions we enter into in the normal course of business. These risks relate to interest rate changes and fluctuations in foreign exchange rates. As of December 31, 2023, except for our exposure in Angola, we do not believe these risks are material.
As of December 31, 2022 and 2021, we had the equivalent of approximately $5.6 million and $1.0 million, respectively, of kwanza cash balances in Angola, reflected on our Consolidated Balance Sheets. To mitigate our currency exposure risk in Angola, we have used kwanza to purchase equivalent Angolan central bank (Banco Nacional de Angola) bonds.
As of December 31, 2023 and 2022, we had the equivalent of approximately $8.1 million and $5.6 million, respectively, of kwanza cash balances in Angola, reflected on our Consolidated Balance Sheets. To mitigate our currency exposure risk in Angola, we used kwanza to purchase equivalent Angolan central bank (Banco Nacional de Angola) bonds.
We recorded net adjustments to our equity accounts of $(20) million, $(7.3) million and $(25) million in 2022, 2021 and 2020, respectively. Negative adjustments reflect the net impact of the strengthening of the U.S. dollar against various foreign currencies for locations where the functional currency is not the U.S. dollar.
We recorded net adjustments to our equity accounts of $3.9 million, $(19.6) million and $(7.3) million in 2023, 2022 and 2021, respectively. Negative adjustments reflect the net impact of the strengthening of the U.S. dollar against various foreign currencies for locations where the functional currency is not the U.S. dollar.
We did not sell any of our remaining Angolan bonds in the year ended December 31, 2022. 44 Table of Contents / We estimated the fair market value of the Angolan bonds to be $6.4 million as of December 31, 2022 and 2021, respectively, using quoted market prices.
We did not sell any of our remaining Angolan bonds in the year ended December 31, 2022. We estimated the fair market value of the Angolan bonds to be $6.4 million as of December 31, 2022, using quoted market prices.
We recorded foreign currency transaction gains (losses) related to the Angolan kwanza and Brazilian real as a component of other income (expense), net in our Consolidated Statements of Operations in those respective periods. The Angola kwanza strengthened in value in 2022 by 10%, while Angola devalued its currency by (13)% and (36)% in 2021 and 2020, respectively.
We recorded foreign currency transaction gains (losses) related to the Angolan kwanza as a component of other income (expense), net in our Consolidated Statements of Operations in those respective periods. The Angola kwanza devalued in 2023 by 40%, strengthened in value in 2022 by 10%, and devalued in 2021 by 13%.
As of December 31, 2022 and 2021, we had $0.1 million and $0.2 million, respectively, in unrealized gains, net of tax, related to these bonds as a component of accumulated other comprehensive loss in our Consolidated Balance Sheets.
As of December 31, 2022, we had $0.1 million in unrealized gains, net of tax, related to these bonds as a component of accumulated other comprehensive loss in our Consolidated Balance Sheets. 46 Table of Contents /
Any conversion of cash balances from kwanza to U.S. dollars is controlled by the central bank in Angola. During 2022, we did not repatriate any cash from Angola. In 2021, we were able to repatriate $4.5 million of cash from Angola.
Any conversion of cash balances in Angola from kwanza to U.S. dollars is controlled by the central bank in Angola. During 2023, we repatriated $4.6 million of cash from Angola. During 2022, we did not repatriate any cash from Angola.
Conversely, positive adjustments reflect the effect of a weakening U.S. dollar. Foreign currency gains (losses) in the year ended December 31, 2022 were less than $(0.1) million.
Conversely, positive adjustments reflect the effect of a weakening U.S. dollar. Foreign currency gains (losses) in the year ended December 31, 2023 of $(1.4) million were primarily related to gains (losses) for the Angolan kwanza. Foreign currency gains (losses) in the year ended December 31, 2022 were less than $(0.1) million.
The bonds are denominated as U.S. dollar equivalents, so that, upon payment of semi-annual interest and principal upon maturity, payment is made in kwanza, equivalent to the respective U.S. dollars at the then-current exchange rate. As of December 31, 2022 and 2021, we had $6.2 million, respectively, of U.S. dollar equivalent Angolan bonds.
The bonds were denominated as U.S. dollar equivalents, so that, upon payment of semi-annual interest and principal upon maturity, payment was made in kwanza, equivalent to the respective U.S. dollars at the then-current exchange rate. Our remaining Angolan bonds matured on September 1, 2023, and we received cash proceeds of $6.2 million.
Since the market for the Angolan bonds is not an active market, the fair value of the Angolan bonds is classified within Level 2 in the fair value hierarchy under U.S. GAAP.
Since the market for the Angolan bonds was not an active market, the fair value of the Angolan bonds was classified within Level 2 in the fair value hierarchy under United States Generally Accepted Accounting Principles (“U.S. GAAP”).
During the year ended December 31, 2021, we sold a portion of these bonds for $4.5 million, reducing the balance as of December 31, 2021 to $6.2 million. These bonds mature in 2023 and are classified as available-for-sale securities; accordingly, they are recorded in other current assets on our Consolidated Balance Sheets.
As of December 31, 2022, we had $6.2 million of U.S. dollar equivalent Angolan bonds. These bonds were classified as available-for-sale securities; accordingly, they were recorded at fair market value in other current assets on our Consolidated Balance Sheets as of December 31, 2022.
Because we operate in various regions in the world, we conduct a portion of our business in currencies other than the U.S. dollar. The functional currency for most of our international operations is the applicable local currency. A stronger U.S. dollar against the U.K. pound sterling, the Norwegian kroner and the Brazilian real could result in lower operating income.
We believe significant interest rate changes would not have a material near-term impact on our future earnings or cash flows. Because we operate in various regions in the world, we conduct a portion of our business in currencies other than the U.S. dollar. The functional currency for most of our international operations is the applicable local currency.
Removed
We have not entered into any market-risk-sensitive instruments for speculative or trading purposes. When we have a significant amount of borrowings, we may manage our exposure to interest rate changes through the use of a combination of fixed- and floating-rate debt.
Added
However, with the expansion of our international operations, we could be exposed to additional market risks from fluctuations in foreign currency exchange rates in the future. We have not entered into any market-risk-sensitive instruments for speculative or trading purposes.
Removed
These agreements swapped the fixed interest rate of 4.650% on $100 million of the 2024 Senior Notes to the floating rate of one-month LIBOR plus 2.426% and on another $100 million to one-month LIBOR plus 2.823%. In March 2020, we terminated these interest rate swaps.
Added
A stronger U.S. dollar against the United Kingdom pound sterling, the Norwegian kroner and the Brazilian real could result in lower operating income.
Removed
See Note 9—“Debt” in the Notes to Consolidated Financial Statements included in this report for more information regarding these interest rate swaps. We believe significant interest rate changes would not have a material near-term impact on our future earnings or cash flows.
Removed
Foreign currency gains (losses) of $(14) million in the year ended December 31, 2020 were primarily related to gains (losses) for the Angolan kwanza of $(2.8) million and the Brazilian real of $(7.3) million due to declining exchange rates for the Angolan kwanza and the Brazilian real relative to the U.S. dollar.
Removed
Foreign currency losses related to the Brazilian real in the year ended December 31, 2020 were primarily due to the remeasurement of our U.S. dollar denominated liability balances to the Brazilian real.

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