Oceaneering International Inc: Form 10-Q for the period ended Sep 30, 2026

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 balance sheet;
• 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 2026;
• 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 United States (“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, 2025. 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, 2025.

Overview of our Results

Our diluted earnings (loss) per share for the three- and nine-month periods ended September 30, 2026 were $0.52 and $1.53, respectively, as compared to $0.71 and $1.74, respectively, for the corresponding periods of the prior year. Our operating results for the three months ended September 30, 2026, as compared to the corresponding period of the prior year, increased by 7% on a 6% increase in revenue. These positive results were driven by improved results in Subsea Robotics and continued improved performance from our Offshore Projects Group (“OPG”). More broadly, our results demonstrate continued strength across our portfolio. All of our segments generated increased revenue and operating income, except for Integrity Management & Digital Solutions (“IMDS”), which was partially impacted by the ongoing Middle East conflict and Aerospace and Defense Technologies (“ADTech”), which was impacted by changes in contract mix, additional project-related costs and a one-time accrual recorded in connection with a previously disclosed contract dispute. Our operating results for the nine months ended September 30, 2026, as compared to the corresponding period of the prior year, were relatively flat on a 6% increase in revenue, driven by lower results in our IMDS segment, which was impacted by the ongoing conflict in the Middle East, and the unusually strong first quarter of 2025 for our OPG segment, partially offset by improved results on increased activity in our Manufactured Products and Subsea Robotics segments.

In the three- and nine-month periods ended September 30, 2026, we generated $163 million and $159 million, respectively, from operating activities. That compares to $101 million and $98 million, respectively, in the corresponding periods of the prior year. Partially offsetting this cash growth, we utilized approximately $39 million of cash for maintenance capital expenditures and approximately $22 million for growth capital expenditures in the first nine months of 2026 along with $18 million related to our third quarter debt refinancing, $15 million for the repurchase of our common stock and $8.6 million for payment of tax withholding related to vesting of stock awards. These items were the largest contributors to our $55 million increase in cash and restricted cash during the first nine months of 2026, as compared to a cash increase of $8.5 million during the first nine months of 2025.

During the third quarter of 2026, we completed a series of financing transactions that strengthened our capital structure, including the issuance of $500 million aggregate principal amount of 6.875% senior notes due 2034 (the “2034 Senior Notes”) and the amendment and extension of our senior secured revolving credit facility, which increased commitments to $345 million and extended the facility’s maturity to July 2031. These actions extended our debt maturity profile, reduced refinancing risk, and enhanced our long-term financial flexibility.

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 IMDS. We report our ADTech business as one segment. Our Unallocated Expenses are those not directly associated with a specific business segment. These consist of expenses related to our incentive and deferred compensation plans, including restricted stock units, performance units, performance stock units, and bonuses, as well as other general expenses, including corporate administrative expenses.

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 in our OPG segment, which is usually more active in the second and third quarters, as compared to the rest of the year. Similarly, 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 remotely operated vehicles (“ROVs”) we have engaged in vessel-based subsea infrastructure inspection, maintenance, repair and installation, which is more seasonal than drill 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 build on positive operational momentum associated with the operational efficiency programs that leverage our asset base and capabilities for providing services and products for offshore energy operations and subsea completions. These efforts position us to benefit from supportive offshore market conditions while continuing to provide safe, reliable and cost-effective solutions to our customers. We are also focused on deploying our capabilities to grow our business in integrity management, survey services, mobile robotics, offshore wind installations, nuclear and other clean energy solutions.

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 repairs that require 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 ROV services and this business segment is 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 additional operational interface between an ROV and equipment located subsea. Our survey services business provides survey, positioning, and geoscience services. The following table presents revenue from ROV services as a percentage of total Subsea Robotics revenue:

During the third quarter of 2026, Subsea Robotics revenue and operating income increased as compared to the corresponding period of the prior year primarily due to higher average ROV revenue per day utilized in 2026, reflecting a mix of improved pricing, and increased activity in our survey business. Subsea Robotics revenue and operating income increased for the nine-month period ended September 30, 2026, as compared to the corresponding period of the prior year primarily due to higher average revenue per day in 2026, reflecting a mix of improved pricing and the impact of non-recurring benefits and increased activity in our survey business, partially offset by a decrease in ROV utilization.

ROV fleet utilization was stable at 65% for the three-month period ended September 30, 2026 and 2025 as higher activity levels in Europe, Guyana and West Africa largely offset lower activity in the U.S. Gulf. Fleet utilization was 64% in the nine-month period ended September 30, 2026 as compared to 66% for the nine-month period ended September 30, 2025. For the nine-month period ended September 30, 2026, there was a decrease in ROV days utilized, primarily in the U.S. Gulf, when compared to the corresponding period in the prior year. Our ROV fleet use during the nine-month period ended September 30, 2026 was 64% in drill support and 36% in vessel-based activity, as compared to 63% in drill support and 37% 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, 2026 were relatively flat on higher revenue primarily due to the final resolution of a legacy mobility solutions project, resulting in the recognition of previously unresolved contract value, together with relatively stable activity in our umbilicals business, offset by lower activity and profitability in our clamp connector business. Our Manufactured Products operating results for the nine-month period ended September 30, 2026 improved on higher revenue as compared to the corresponding periods of the prior year primarily due to continued execution of higher margin backlog, increased profitability in our umbilicals and Rotator businesses and improved results in our mobility solutions product lines. Additionally, in the nine-month period ended September 30, 2026, we recorded an increase to our inventory reserve of $7.5 million and in the nine-month period ended September 30, 2025, we recorded an increase to our inventory reserve of $13 million related to our theme park ride business.

Our Manufactured Products backlog was $435 million as of September 30, 2026 compared to $568 million as of September 30, 2025, with the decrease reflecting the timing of awards. Our book-to-bill ratio was 0.77 for the trailing 12 months ended September 30, 2026, as compared to 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 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 revenue and operating results were relatively flat in the third quarter of 2026 as compared to the corresponding period of the prior year primarily due to benefits from international installation projects, which were partially offset by lower activity in West Africa and a less favorable project mix in the U.S. Gulf. Our OPG operating results decreased on higher revenue in the nine-month period ended September 30, 2026 as compared to the corresponding period of the prior year primarily due to an unusually strong first quarter of 2025, with the first nine months of 2026 reflecting more typical seasonality in the U.S. Gulf.

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 five long-term charters as of September 30, 2026: one that began in 2024, two that began in 2023, and two that began in 2022. We signed extensions in the third quarter of 2025 for three of these long-term vessel charters that began in the first quarter of 2026. These charters have staggered maturity dates ranging from the first quarter of 2027 to 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 revenue was higher for the three-month period ended September 30, 2026, while operating results were relatively flat as compared to the corresponding period of the prior year, primarily due to increased activity levels in the Middle East, Europe and the U.S. Gulf, which was partially offset by lower activity in West Africa, a shift in project mix, and increased costs in the Middle East. Our IMDS operating results for the nine-month period ended September 30, 2026 were lower on decreased revenue, as compared to the corresponding period of the prior year primarily due to lower activity levels and related cost absorption, change in project mix, as well as increased personnel-related costs, primarily in the Americas and the Middle East.

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.

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

(dollars in thousands)

Our ADTech segment revenue for the third quarter of 2026 increased as compared to the corresponding period of the prior year primarily due to increased activity in our Oceaneering Technologies (“OTECH”) business. Our ADTech segment operating results for the third quarter of 2026 decreased as compared to the corresponding period of the prior year primarily due to increases in pass-through activities during 2026 and changes in contract mix. Our ADTech segment revenue for the nine-month period ended September 30, 2026, increased as compared to the corresponding period of the prior year primarily due to increased activity in OTECH and our Marine Services Division. Our ADTech segment operating results for the nine-month period ended September 30, 2026 decreased as compared to the corresponding period of the prior year primarily due to a one-time accrual recorded in connection with an agreement in principle with an ADTech customer to resolve a previously disclosed contract dispute along with changes in program cost mix. In the first quarter of 2026, we recorded $6.8 million in expense and recognized related current and long‑term liabilities based on the proposed repayment schedule. Offsetting this amount was the release of a $1.3 million accrual that was recorded in a previous period related to the same matter. Although the agreement is subject to final approval by both parties, based on the information currently available, we do not expect any additional material obligations related to this matter. We anticipate settling our obligation over the life of the associated multi-year contract.

Unallocated Expenses

Our Unallocated Expenses (i.e., those not directly 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, performance stock 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-month and nine-month periods ended September 30, 2026 were higher as compared to the corresponding periods of the prior year primarily due to 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, 2026 as compared to the corresponding periods of the prior year increased primarily due to higher average interest-earning cash balances in 2026.

In addition to interest on borrowings, interest expense includes amortization of loan costs and debt discount, 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 decreased for the three- and nine-month periods ended September 30, 2026 as compared to the corresponding periods of the prior year primarily due to the increase in capitalized interest along with a reduction in loan costs amortization and standby letter of credit fees. We recorded capitalized interest of $0.6 million and $1.4 million, respectively, in the three- and nine-month periods ended September 30, 2026 and $0.1 million and $0.2 million, respectively in the three- and nine-month periods ended September 30, 2025, related to the planned implementation of our new enterprise resource planning system.

In the three- and nine-month periods ended September 30, 2026, we recorded $19 million for loss on extinguishment of debt related to the repurchase of approximately $397 million principal amount of our 2028 Senior Notes. The redemption price was equal to 100% of the principal amount of the 2028 Senior Notes plus accrued and unpaid interest up to but not including the Redemption Date plus a “make-whole premium.” The make-whole premium of $1.9 million, costs associated with the Tender Offer of $7.3 million and the write-off of the unamortized discount and debt issuance costs of $9.8 million were recognized during the third quarter of 2026 related to the July 2026 debt repurchase, Tender Offer and redemption. These amounts were recorded in Loss on Extinguishment of Debt in our consolidated statements of operations during the three-month period ended September 30, 2026.

Foreign currency transaction gains and losses are the principal component of other income (expense), net. In the three- and nine-month periods ended September 30, 2026, we incurred foreign currency transaction gains (losses) of $(2.1) million and $(0.3) million, respectively, and 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. 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, 2026 and 2025 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, changes in permanent book and tax differences, 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 ending December 31, 2026 are estimated to be in the range of $95 million to $105 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.

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, 2026, we had working capital of $921 million, including cash and cash equivalents of $735 million. Additionally, as of September 30, 2026, we had $345 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, and Amendment No. 2, dated July 6, 2026, the “Revolving Credit Agreement”). Availability under our 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.

As of September 30, 2026, our nearest maturity of indebtedness was $500 million of our 2034 Senior Notes. 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 assurance as to the timing of any such repurchases or whether we will complete any such repurchases at all. We do not intend to disclose further information regarding any such repurchase 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, 2026 and 2025 are summarized as follows:

(in thousands)

31

Operating activities

Our primary sources and uses of cash flows from operating activities for the nine months ended September 30, 2026 and 2025 are as follows:

(in thousands)

The decrease in cash related to accounts receivable and contract assets in the nine months ended September 30, 2026 reflects the timing of project milestones and customer payments. The increase in cash related to inventory in the nine months ended September 30, 2026 was primarily due to related reductions in our Manufactured Products inventory, exclusive of the $7.5 million write-down in the nine months ended September 30, 2026 associated with our theme park ride business and write-downs associated with inventory deemed to be obsolete. The increase in cash related to current liabilities in the nine months ended September 30, 2026 reflects the timing of vendor payments.

Investing activities

Our capital expenditures of $62 million were lower during the nine months ended September 30, 2026, as compared to $81 million in the nine months ended September 30, 2025, primarily due to higher capital expenditures in our Subsea Robotics segment in the nine months ended September 30, 2025 for ROV upgrades and replacements, as well as for growth in our OPG segment.

For the year ended December 31, 2026, we expect our organic capital expenditures to total between $105 million to $115 million, exclusive of business acquisitions, which we expect to fund using our available cash.

Financing activities

In the nine months ended September 30, 2026 and 2025, we used $45 million and $36 million, respectively, of cash in financing activities. In the nine months ended September 30, 2026, we received net proceeds of $491 million due to the issuance of our 2034 Senior Notes. These proceeds were reduced by $509 million used for the repurchase and redemption of $500 million of our 2028 Senior Notes (as defined below), $15 million used for the repurchase of 0.4 million shares of our common stock, along with $8.6 million for the payment of tax withholding related to vesting of stock award in the nine months ended September 30, 2026. In the nine months ended September 30, 2025, we used $30 million for the repurchase of 1.4 million shares of our common stock along with $5.5 million for the payment of tax withholding related to vesting of stock awards.

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”). On July 6, 2026, we completed a private placement of $500 million aggregate principal amount of the 2034 Senior Notes and we used the net proceeds from the 2034 Senior Notes, together with cash on hand, to fund our offer to purchase (the “Tender Offer”) for cash any and all of the $500 million principal amount outstanding of the 2028 Senior Notes. We repurchased approximately $400 million principal amount of the 2028 Senior Notes for approximately $415 million. The consummation of the Tender Offer was contingent upon the completion of the offering discussed above, which was satisfied on July 6, 2026. As of September 30, 2026, we had long-term debt in the principal amount of $500 million outstanding consisting of our 2034 Senior Notes. In the nine months ended September 30, 2025, we did not repurchase or redeem any of the 2028 Senior Notes. For more on the 2028 or 2034 Senior Notes, see Note 6—“Debt” in the Notes to Consolidated Financial Statements included in this quarterly report.

As of September 30, 2026, we had $345 million of unused commitments under our Revolving Credit Facility. As of September 30, 2026, we were in compliance with all of the financial covenants set forth in the Revolving Credit Agreement. For more on our Revolving Credit Facility (including the financial covenants thereunder and Amendment No. 2 thereto), 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 plan to repurchase up to 10 million shares of our common stock on a discretionary basis. Under this program, which has no expiration date, we repurchased 2.8 million shares of our common stock for $121 million through December 31, 2024. In the year ended December 31, 2025, we repurchased 1.8 million shares for $40 million. During the three- and nine-month periods ended September 30, 2026, we repurchased 0.1 million shares for $5.0 million and 0.4 million shares for $15 million, respectively. As of September 30, 2026, we retained 11 million of the shares we 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, 2026, 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, 2025, in Part II. Item 8. “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, 2025. As of September 30, 2026, 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, 2026, 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 typically manage our exposure to interest rate changes using 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 flow.

Because we operate in various regions in the world, we conduct a portion of our business in currencies other than the United States (“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 Brazilian real, Norwegian kroner and United Kingdom pound sterling 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 $5.2 million and $5.9 million, respectively, in the three- and nine-month periods ended September 30, 2026, and $0.5 million and $42 million, respectively, in the three- and nine-month periods ended September 30, 2025. 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 $(2.1) million and $(0.3) million, respectively, in the three- and nine-month periods ended September 30, 2026, and $(1.0) million and $5.5 million, respectively, in the three- and nine-month periods ended September 30, 2025. 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, 2026 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.

There has been no change in our internal control over financial reporting that occurred during the three months ended September 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.