Oceaneering International Inc: Form 10-Q for the period ended Sep 30, 2025

Certain statements we make in this quarterly report on Form 10-Q are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding our expectations about:

• increased costs to operate our business, including the availability and market for our chartered vessels;
• future demand, order intake and business activity levels;
• the collectability of accounts receivable and realizability of contract assets at the amounts reflected on our most recent consolidated balance sheets;
• the potential effects of the ongoing United States (“U.S.”) government shutdown on our ADTech segment;
• the backlog of our Manufactured Products segment, to the extent backlog may be an indicator of future revenue or productivity;
• our tax payments and projected capital expenditures for 2025, and the potential impacts of the recent One Big Beautiful Bill Act;
• the adequacy of our liquidity, cash flows and capital resources to support our operations and internally generated growth initiatives;
• increased costs and other effects of tariffs imposed by the U.S. government, and any effects on trading relationships among the U.S. and other countries;
• transactions we may engage in to manage our outstanding debt prior to maturity;
• shares that may be repurchased under our share repurchase plan;
• seasonality; and
• industry conditions.

These forward-looking statements are subject to various risks, uncertainties and assumptions, including those we have referred to under the headings “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors” in Part I of our annual report on Form 10-K for the year ended December 31, 2024. Although we believe that the expectations reflected in such forward-looking statements are reasonable, because of the inherent limitations in the forecasting process, as well as the relatively volatile nature of the industries in which we operate, we can give no assurance that those expectations will prove to have been correct. Accordingly, evaluation of our future prospects must be made with caution when relying on forward-looking information.

The following discussion should be read in conjunction with “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our annual report on Form 10-K for the year ended December 31, 2024.

Recent Developments

One Big Beautiful Bill Act

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions that impact the timing and magnitude of certain tax deductions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We have incorporated the provisions that were effective during the third quarter of 2025 and assessed that the impacts did not have a material impact on our consolidated financial statements. We continue to assess any future impacts on our consolidated financial statements and will recognize the income tax effects beginning in the period in which they are effective.

Tariffs and Trading Relationships

Since the initial U.S. government announcement regarding tariffs in April 2025, the U.S. government has subsequently announced and modified, delayed or rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Current uncertainties about tariffs and their effects on trading relationships may affect costs for and availability of raw materials or contribute to inflation in the markets in which we operate. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs and retaliatory tariffs remain uncertain pending their implementation.

U.S. Government Shutdown

On October 1, 2025, the U.S. government shut down due to the failure of the U.S. Congress to pass an appropriations bill, or any continuing resolutions to maintain funding at existing levels, for the U.S. government’s current fiscal year. We have not experienced any material impacts to our operations or financials but continue to monitor the impacts, if any, of this shut down.

Overview of our Results

Our operating income for the three- and nine-month periods ended September 30, 2025, was $87 million and $239 million, respectively, as compared to $71 million and $168 million, respectively, for the corresponding periods of the prior year. Our improved operating results for the three-month period ended September 30, 2025, are primarily the result of the ongoing conversion of higher-quality backlog in Manufactured Products, a continued favorable project mix and strong vessel utilization in our Offshore Projects Group (“OPG”), sustained resilience of our Subsea Robotic’s average revenue per day utilized and continued progression in our Aerospace and Defense Technologies (“ADTech”) segment, as they onboard personnel and subcontractors to support large-scale programs. Compared to the corresponding period of the prior year, the consolidated first nine months of 2025 operating results were 42% higher on a 9% increase in revenue driven primarily by strong performances from our OPG and Subsea Robotics segments. Our diluted earnings (loss) per share for the three- and nine-month periods ended September 30, 2025 increased to $0.71 and $1.74, respectively, as compared to $0.40 and $0.89, respectively, for the corresponding periods of the prior year, due to our improved operating results coupled with a lower effective tax rate.

During the nine-month period ended September 30, 2025, our cash balance increased $8.5 million. We generated $98 million from operating activities, a $15 million increase resulting from the effect of exchange rates and $8.1 million primarily from the sale of a vessel. Partially offsetting these increases were $49 million used for maintenance capital expenditures, $32 million used for growth capital expenditures and $30 million for the repurchases of shares of our common stock.

Results of Operations

We operate in five business segments. Our segments are contained within two businesses—services and products provided primarily to the oil and gas industry, and to a lesser extent, the mobility solutions and offshore renewables industries, among others (“Energy”), and services and products provided to non-energy industries (ADTech). Our four business segments within the Energy business are Subsea Robotics, Manufactured Products, OPG and Integrity Management & Digital Solutions (“IMDS”). We report our ADTech business as one segment. Our Unallocated Expenses are those not associated with a specific business segment.

Consolidated revenue and profitability information are as follows:

(dollars in thousands)

We generate a material amount of our consolidated revenue from contracts for services in the U.S. Gulf of Mexico within our OPG segment. This segment typically experiences higher activity levels during the second and third quarters, as compared to the rest of the year. Despite the usual seasonal variations, our OPG segment achieved significant year-over-year improvements in revenue and operating results in the first quarter of 2025 (see “Offshore Projects Group” below), contributing to a strong first nine months of 2025. Revenue in our Subsea Robotics segment is subject to seasonal variations in demand, with our first quarter generally being the low quarter of the year. The level of our Subsea Robotics seasonality depends on the number of ROVs we have engaged in vessel-based subsea infrastructure inspection, maintenance, repair and installation, which is more seasonal than drilling support. Revenue in each of our Manufactured Products, IMDS and ADTech segments generally has not been seasonal.

Energy

The primary focus of our Energy business is to deliver solutions for our customers, utilizing our core competencies, to provide services and products for offshore energy operations and subsea completions. Despite recent macroeconomic uncertainty, including as a result of U.S. tariff policy and retaliatory tariffs, we believe that ongoing global demand for energy will continue to benefit our Energy business. We are also focused on deploying our capabilities to grow our business and increase profitability primarily in integrity management, survey services and mobile robotics.

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 utilized” is the number of ROV days for which we earn revenue during a specified period. “ROV days available” includes all days from the first day that a ROV is placed into service until the ROV is retired. All days in this period are considered available days, including periods when a ROV is undergoing maintenance or repairs. Our ROVs do not have scheduled maintenance or repair that requires significant time during which the ROVs are not available for utilization. “ROV utilization” percentage is defined as “ROV days utilized” divided by “ROV days available.”

(dollars in thousands)

Subsea Robotics. 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 ROV business, within our Subsea Robotics segment, reflects the utilization percentages, fleet sizes and average pricing in the respective periods. Our ROV tooling provides an operational interface between an ROV and equipment located subsea. Our survey services business provides survey and positioning, and geoscience services. The following table presents revenue from ROV services as a percentage of total Subsea Robotics revenue:

Subsea Robotics operating income and revenue for the three-month period ended September 30, 2025, was relatively flat as compared to the corresponding periods of the prior year, primarily as a result of higher average revenue per day in 2025 partially offset by a decrease in days utilized. Subsea Robotics operating income for the nine-month period ended September 30, 2025, increased on higher revenue primarily as a result higher average revenue per day in 2025 partially offset by a decrease in days utilized.

Fleet utilization was 65% in the three-month period ended September 30, 2025 as compared to 69% for the three-month period ended September 30, 2024, resulting from a decrease in ROV days utilized when compared to the corresponding period in the prior year. Fleet utilization was slightly lower at 66% for the nine-month period ended September 30, 2025, as compared to 67% for the corresponding period of the prior year. Our ROV fleet use during the nine-month period ended September 30, 2025, was 63% in drill support and 37% in vessel-based activity, as compared to 65% in drill support and 35% in vessel-based activity in the corresponding period of the prior year. For each of the periods presented, we had a fleet of 250 work-class ROVs.

Manufactured Products. 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 and warehousing markets.

Our Manufactured Products operating results for the three-month period ended September 30, 2025, increased on higher revenue as compared to the corresponding period of the prior year primarily due to execution of higher-margin backlog through our umbilical manufacturing plants, along with improved pricing in our valve and clamp businesses. Our Manufactured Products operating results for the nine-month period ended September 30, 2025, increased on higher revenue as compared to the corresponding period of the prior year primarily due to increased activity in our energy-related businesses and execution of higher-margin backlog through our umbilical manufacturing plants, partially offset by an inventory reserve of $13 million recorded in the first nine months of 2025 related to our theme park ride business.

Our Manufactured Products backlog was $568 million as of September 30, 2025 compared to $604 million and $671 million as of December 31, 2024 and September 30, 2024, respectively. Our book-to-bill ratio was 0.82 for the trailing 12 months ended September 30, 2025.

Offshore Projects Group. Our 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, inspection, maintenance and repair (“IMR”) services, principally in the U.S. Gulf of Mexico and offshore Africa, 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 operating results for the three- and nine-month periods ended September 30, 2025, increased on higher revenue as compared to the corresponding periods of the prior year, primarily due to improved vessel utilization in the U.S. Gulf of Mexico and a favorable mix of well intervention and well stimulation projects in international locations. For the nine-month period ended September 30, 2025, as compared to the corresponding period of the prior year, revenue and margins were also positively impacted by the reduction in drydock expense and the associated loss of vessel days that impacted the first quarter of 2024, along with improved project mix in 2025.

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 have a total of six long-term charters at September 30, 2025: one that began in 2024, two that began in 2023, and three that began in 2022. We signed extensions for three of these long-term vessel charters in the third quarter of 2025. These charters have staggered maturity dates with one expiring in the fourth quarter of 2025 that we do not currently plan to renew and none extending past the first quarter of 2029. Depending on market conditions, we may add additional chartered vessels throughout the year to align with our strategy that balances vessel cost, availability and capability to capture work. We expect to do this through the continued utilization of a mix of short-term, spot and long-term charters.

Integrity Management & Digital Solutions. Our 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. 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. Our IMDS operating results increased for the three- and nine-month periods ended September 30, 2025, on lower and relatively flat revenue, respectively, as compared to the corresponding periods of the prior year, primarily due to the absence of a one-time, non-cash charge associated with the divestiture of our Maritime Intelligence division in September 2024.

Aerospace and Defense Technologies. Our ADTech segment provides services and products, including engineering and related manufacturing in defense and space exploration activities, principally to U.S. government agencies and their prime contractors. Many of the services and products utilized in ADTech are applied technologies based on our core competencies and knowledge derived from decades of working in the offshore markets and solving complex problems in harsh environments. We are focused on expanding our robotic and autonomous offerings to enable human interface in harsh environments, while continuing to leverage our offshore energy robotics expertise in this segment.

Revenue and operating income (loss) information for our ADTech segment are as follows:

(dollars in thousands)

Our ADTech segment operating results for the three- and nine-month periods ended September 30, 2025, increased on higher revenue as compared to the corresponding periods of the prior year primarily due to increased activity and margins in our defense subsea technologies business and the absence of a reserve taken during the second quarter of 2024 for a contract dispute.

Unallocated Expenses

Our unallocated expenses (i.e., those not associated with a specific business segment) within operating expense 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 plus general and administrative expenses related to corporate functions.

The following table sets forth our unallocated expenses for the periods indicated:

(dollars in thousands)

Our unallocated operating expenses for the three- and nine-month periods ended September 30, 2025, were higher as compared to the corresponding periods of the prior year primarily due to increased accruals in 2025 for incentive-based compensation along with higher information technology costs.

Other

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

(in thousands)

Interest income for the three- and nine-month periods ended September 30, 2025 as compared to the three- and nine-month periods ended September 30, 2024, increased primarily due to higher average interest-earning cash balances in the U.S. in 2025.

In addition to interest on borrowings, interest expense includes amortization of loan costs and debt discount, benefit from the interest rate swap settlements, and fees for lender commitments under our senior secured revolving credit agreement and standby letters of credit and bank guarantees that banks issue on our behalf for performance bonds, bid bonds and self-insurance requirements. Interest expense for the three- and nine-month periods ended September 30, 2025 as compared to the corresponding periods of the prior year was relatively flat.

Foreign currency transaction gains and losses are a component of other income (expense), net. In the three- and nine-month periods ended September 30, 2025, we incurred foreign currency transaction gains (losses) of $(1.0) million and $5.5 million, respectively, and in the three- and nine-month periods ended September 30, 2024, we incurred foreign currency transaction gains (losses) of $0.4 million and $3.7 million, respectively. These gains (losses) primarily resulted from foreign currency fluctuations in multiple countries. We could incur further foreign currency exchange gains (losses) in countries where we operate 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. Factors that affect our tax rate include our profitability levels in general and the geographical mix of our results. The effective tax rate for the three- and nine-month periods ended September 30, 2025 and 2024 was different than the U.S. 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. We continue to make an assertion to indefinitely reinvest the unrepatriated earnings of any foreign subsidiary that would incur material tax consequences upon the distribution of such earnings.

Our income tax payments for the full year of 2025 are estimated to be in the range of $110 million to $120 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. On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions that impact the timing and magnitude of certain tax deductions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We have incorporated the provisions that were effective during the third quarter of 2025 and assessed that the impacts did not have a material impact on our consolidated financial statements. We continue to assess any future impacts on our consolidated financial statements and will recognize the income tax effects beginning in the period in which they are effective.

Liquidity and Capital Resources

We consider our liquidity and capital resources adequate to support our operations, capital commitments and strategic growth initiatives, as well as any opportunistic returns of capital to shareholders. Our material cash commitments consist primarily of obligations for long-term debt, purchase obligations as part of normal operations, and operating leases for land, buildings, vessels and equipment for the support and operation 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. We are committed to maintaining strong liquidity and believe that our cash position, undrawn Revolving Credit Agreement (as defined below) and long-term debt maturity profile provide us with ample resources and time to address our liquidity needs, including potential future growth opportunities and working capital needs.

As of September 30, 2025, we had net working capital of $738 million, including cash and cash equivalents of $506 million. Additionally, as of September 30, 2025, 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”). Availability under the $215 million revolving credit facility (“Revolving Credit Facility”) may be limited by certain financial covenants and the requirement that any borrowing under the Revolving Credit Facility not require the granting of any liens to secure any senior notes issued by us. The indentures governing the 2028 Senior Notes (defined below) generally limit our ability to incur secured debt for borrowed money (such as borrowings under the Revolving Credit Facility) to 15% of our Consolidated Net Tangible Assets (as defined in such indentures).

Our nearest maturity of indebtedness is $500 million of our 2028 Senior Notes (defined below). From time to time, we may engage in certain transactions in order to manage our outstanding debt prior to maturity, including repurchases via open-market or privately negotiated transactions, redemptions, exchanges, tender offers or otherwise. We can provide no assurances as to the timing of any such transactions or whether we will complete any such transactions at all. We do not intend to disclose further information regarding any such transactions, except to the extent required in our subsequent periodic filings on Forms 10-K or 10-Q, or unless otherwise required by applicable law.

Cash flows for the nine months ended September 30, 2025 and 2024 are summarized as follows:

(in thousands)

Operating activities

Our primary sources and uses of cash flows from operating activities for the nine months ended September 30, 2025 and 2024 are as follows:

(in thousands)

The decrease in cash related to accounts receivable and contract assets in the nine months ended September 30, 2025 reflects the timing of project milestones and customer payments. The decrease in cash related to inventory in the nine months ended September 30, 2025, was primarily due to related increases in our Manufactured Products inventory, exclusive of the $13 million write-down in the nine months ended September 30, 2025 associated with our theme park ride business. The decrease in cash related to current liabilities in the nine months ended September 30, 2025 reflects the timing of vendor payments and payout of incentive compensation accruals.

In 2025, we expect our capitalized cloud-based service contract implementation costs to total between $15 million and $20 million.

Investing activities

In the nine months ended September 30, 2025 and 2024, we used $69 million and $63 million, respectively, in net investing activities, primarily due to capital expenditures. Our capital expenditures of $81 million during the first nine months of 2025 increased as compared to $73 million in the first nine months of 2024, primarily due to higher capital expenditures in our Subsea Robotics for ROV upgrades and replacements, as well as for additional capabilities and growth in our OPG segment. These increases were partially offset by lower expenditures in our Manufactured Products segment. In 2025, we expect our organic capital expenditures to total between $115 million to $120 million, exclusive of business acquisitions, which we expect to fund using our available cash.

Financing activities

In the nine months ended September 30, 2025 and 2024, we used $36 million and $17 million, respectively, in financing activities primarily due to the repurchase of approximately 1.4 million shares of our common stock for approximately $30 million in the nine months ended September 30, 2025, and approximately 0.4 million shares of our common stock for approximately $10 million in the nine months ended September 30, 2024, along with payment of tax withholding related to vesting of stock awards in 2025 and 2024.

In February 2018, we completed the public offering of $300 million aggregate principal amount of 6.000% Senior Notes due 2028 (the “Existing 2028 Senior Notes”) and on October 2, 2023, we completed a private placement of $200 million aggregate principal amount of additional 2028 Senior Notes (the “New 2028 Senior Notes” and, together with the Existing 2028 Senior Notes, the “2028 Senior Notes”). As of September 30, 2025, we had long-term debt in the principal amount of $500 million outstanding consisting of our 2028 Senior Notes. We pay interest on the 2028 Senior Notes on February 1 and August 1 of each year, and the 2028 Senior Notes are scheduled to mature on February 1, 2028. In the nine months ended September 30, 2025 and 2024, we did not repurchase or redeem any of the 2028 Senior Notes. For more on the 2028 Senior Notes, see Note 6—”Debt” in the Notes to Consolidated Financial Statements included in this quarterly report.

As of September 30, 2025, we had $215 million of unused commitments under our Revolving Credit Facility. As of September 30, 2025, we were in compliance with all of the financial covenants set for in the Revolving Credit Agreement. For more on our Revolving Credit Facility (including the financial covenants thereunder), see Note 6—”Debt” in the Notes to Consolidated Financial Statements included in this quarterly report.

Share Repurchase Program. In December 2014, our Board of Directors approved a share repurchase program under which we may repurchase up to 10 million shares of our common stock on a discretionary basis. Under this program, which has no expiration date, we repurchased 2.0 million shares of our common stock for approximately $100 million in 2015. We did not repurchase any shares from January 2016 through August 2024. In the year ended December 31, 2024, we repurchased approximately 0.8 million shares for approximately $20 million. During the nine-month periods ended September 30, 2025, we repurchased approximately 1.4 million shares for approximately $30 million. From the inception of this program through September 30, 2025, we have repurchased approximately 4.2 million shares of our common stock for a total cost of approximately $151 million. As of September 30, 2025, we retained 11 million of the shares we had repurchased through this and a prior repurchase program. We account for the shares we hold in treasury under the cost method, at average cost. The timing and amount of any future repurchases will be determined by our management. We expect that any additional shares repurchased under the plan will be held as treasury stock for possible future use. The plan does not obligate us to repurchase any particular number of shares.

Off-Balance Sheet Arrangements

We have not guaranteed any debt not reflected on our Consolidated Balance Sheets as of September 30, 2025, and we do not have any off-balance sheet arrangements, as defined by Securities and Exchange Commission's rules.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States. These principles require us to make various estimates, judgments and assumptions that affect the reported amounts in our financial statements and accompanying notes. We disclose our significant accounting policies in Notes to Consolidated Financial Statements—Note 1—“Summary of Significant Accounting Policies” in this quarterly report and in our annual report on Form 10-K for the year ended December 31, 2024, in Part II. Item 7. “Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies.”

For information about our critical accounting policies and estimates, see Part II. Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our annual report on Form 10-K for the year ended December 31, 2024. As of September 30, 2025, there have been no material changes to the judgments, assumptions and estimates upon which our critical accounting policies and estimates are based.

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 September 30, 2025, we do not believe these risks are material. 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. 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. See Note 6—“Debt” in the Notes to Consolidated Financial Statements included in this quarterly report for a description of our revolving credit agreement and interest rates on our borrowings. 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. A stronger or weaker U.S. dollar against the United Kingdom pound sterling, the Norwegian kroner and the Brazilian real could impact our operating income. We manage our exposure to changes in foreign exchange rates by primarily denominating our contracts and providing for collections from our customers in U.S. dollars or freely convertible currency and endeavoring to match our contract costs with the denominated contractual currency. We use the exchange rates in effect as of the balance sheet date to translate assets and liabilities when the functional currency is the local currency, resulting in translation adjustments that we reflect as accumulated other comprehensive income or loss in the equity section of our Consolidated Balance Sheets. We recorded net adjustments to our equity accounts of $0.5 million and $42 million, respectively, in the three- and nine-month periods ended September 30, 2025 and $13 million and $(14) million, respectively, in the three- and nine-month periods ended September 30, 2024. 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. Conversely, positive adjustments reflect the effect of a weakening U.S. dollar.

Foreign currency gains (losses) were $(1.0) million and $5.5 million, respectively, in the three- and nine-month periods ended September 30, 2025 and $0.4 million and $3.7 million, respectively, in the three- and nine-month periods ended 2024 We recorded foreign currency transaction gains (losses) as a component of other income (expense), net in our consolidated statements of operations in those respective periods.

In accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2025, to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

During the nine months ended September 30, 2025, we implemented a new software application for our Aerospace and Defense Technologies (“ADTech”) segment to augment our government contracting requirements and provide enhanced functionality related to invoicing, revenue recognition and supply planning. We continue to operate our existing enterprise resource planning (“ERP”) system for other accounting functions and the general ledger, as well as for our four other business segments. As a result of this implementation, we modified certain existing controls and implemented new controls and procedures related to the new software application to maintain appropriate internal control over financial reporting during and after the change. There have been no other changes in our internal control over financial reporting that occurred during the three months ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, any of our internal control over financial reporting.