News

Helix Reports Second Quarter 2017 Results




HOUSTON–(BUSINESS WIRE)–Helix Energy Solutions Group, Inc. (NYSE: HLX) reported a net loss of
$6.4 million, or $(0.04) per diluted share, for the second quarter of
2017 compared to a net loss of $10.7 million, or $(0.10) per diluted
share, for the same period in 2016 and a net loss of $16.4 million, or
$(0.11) per diluted share, for the first quarter of 2017. The net loss
for the six months ended June 30, 2017 was $22.8 million, or $(0.16) per
diluted share, compared to a net loss of $38.5 million, or $(0.36) per
diluted share, for the six months ended June 30, 2016. Helix reported
Adjusted EBITDA1 of $29.7 million for the second quarter of
2017 compared to $14.9 million for the second quarter of 2016 and $14.6
million for the first quarter of 2017. Adjusted EBITDA for the six
months ended June 30, 2017 was $44.3 million compared to $16.0 million
for the six months ended June 30, 2016. The table below summarizes our
results of operations:

 

Summary of Results

($ in thousands, except per share amounts, unaudited)

   
Three Months Ended Six Months Ended
6/30/2017  

6/30/2016

  3/31/2017 6/30/2017   6/30/2016
Revenues $ 150,329 $ 107,267 $ 104,528 $ 254,857 $ 198,306
 
Gross Profit (Loss) $ 18,367 $ 5,658 $ (825 ) $ 17,542 $ (11,272 )

12

% 5 % -1 % 7 % -6 %
 
Net Loss $ (6,403 ) $ (10,671 ) $ (16,415 ) $ (22,818 ) $ (38,494 )
 
Diluted Loss Per Share $ (0.04 ) $ (0.10 ) $ (0.11 ) $ (0.16 ) $ (0.36 )
 
Adjusted EBITDA1 $ 29,727 $ 14,932 $ 14,622 $ 44,349 $ 15,954

 

1Adjusted EBITDA is a non-GAAP measure. See reconciliation
below.

Owen Kratz, President and Chief Executive Officer of Helix, stated, “Our
second quarter results benefited from a strong quarter for our well
intervention business in the North Sea and the Gulf of Mexico.
Specifically, we are encouraged by the rebound this year in the North
Sea well intervention market. We expect both the Well Enhancer
and Seawell to have strong utilization into the fourth quarter of
2017. As we previously announced, the Siem Helix 1 commenced
operations in Brazil in mid-April. The vessel performed successful
operations on three wells during the quarter. We have seen improvements
in the vessel’s financial results since it began commercial operations.”

 

Segment Information, Operational and
Financial Highlights

($ in thousands, unaudited)

 
Three Months Ended
6/30/2017  

6/30/2016

  3/31/2017
Revenues:
Well Intervention $ 113,076 $ 59,919 $ 74,621
Robotics 33,061 38,914 21,968
Production Facilities 15,210 18,957 16,375
Intercompany Eliminations   (11,018 )   (10,523 )   (8,436 )
Total $ 150,329   $ 107,267   $ 104,528  
 
Income (Loss) from Operations:
Well Intervention $ 19,032 $ (538 ) $ 1,418
Robotics (11,642 ) (8,823 ) (16,306 )
Production Facilities 6,140 9,730 6,924
Corporate / Other (8,701 ) (9,827 ) (9,962 )
Intercompany Eliminations   221     163     221  
Total $ 5,050   $ (9,295 ) $ (17,705 )

 

Business Segment Results

  • Well Intervention revenues increased 52% in the second quarter of 2017
    from the first quarter of 2017 and overall Well Intervention vessel
    utilization in the second quarter of 2017 increased to 90% from 59% in
    the first quarter of 2017. The Siem Helix 1 was utilized 95% in
    the second quarter of 2017 after commencing commercial operations in
    mid-April. The Q4000 began dry-dock activities mid-March and
    was out of service for 34 days during the second quarter of 2017;
    vessel utilization decreased to 63% in the second quarter of 2017 from
    83% in the first quarter of 2017. The Q5000 utilization
    decreased to 91% in the second quarter of 2017 from 97% in the first
    quarter of 2017. Both of our vessels in the North Sea were fully
    utilized in the second quarter of 2017 primarily due to the normal
    seasonal pickup. The Well Enhancer utilization increased to
    100% from 60% in the first quarter of 2017 and the Seawell
    utilization increased to 100% from 53% in the first quarter of 2017.
    The rental intervention riser system was idle during the second
    quarter of 2017.
  • Robotics revenues increased 50% in the second quarter of 2017 from the
    first quarter of 2017. The increase in revenues was primarily driven
    by increased seasonal activity in the North Sea. Chartered vessel
    utilization increased to 57% in the second quarter of 2017 from 37% in
    the first quarter of 2017, and ROV asset utilization increased to 42%
    in the second quarter of 2017 from 36% in the first quarter of 2017.
    The Grand Canyon III entered the fleet in May.
  • Production Facilities revenues decreased 7% in the second quarter of
    2017 from the first quarter of 2017, primarily reflecting HFRS at
    reduced rates as a result of the Q4000 dry-dock.

Other Expenses and Taxes

  • Selling, general and administrative expenses were $13.3 million, 8.9%
    of revenue, in the second quarter of 2017 compared to $16.8 million,
    16.1% of revenue, in the first quarter of 2017. The decrease was
    primarily attributable to decreased costs associated with our
    incentive and stock-based compensation plans. In addition, the first
    quarter of 2017 included a $1.2 million charge associated with the
    provision for the uncertain collection of a portion of existing trade
    and note receivables.
  • Net interest expense increased to $6.6 million in the second quarter
    of 2017 from $5.2 million in the first quarter of 2017. We recorded a
    $1.6 million charge to interest expense to accelerate a pro-rata
    portion of the debt issuance costs associated with the amendment and
    restatement of our revolving credit facility.
  • We recorded a $0.4 million loss associated with the unamortized debt
    issuance costs related to the early extinguishment of $180 million of
    our previous term loan.
  • Other income was $0.5 million in the second quarter of 2017 compared
    to other expense of $0.5 million in the first quarter of 2017. The
    change was primarily driven by foreign currency transaction gains as
    well as unrealized gains from our foreign currency exchange contracts
    that are not designated as hedges.
  • In the second quarter of 2017, Helix recorded a tax charge of $6.3
    million, comprised of a $2.8 million valuation allowance attributable
    to a foreign tax credit carryforward from 2015 and a $3.5 million
    charge attributable to the decision to deduct foreign taxes related to
    2016 and 2017. This change in tax position is due to weaker near term
    outlook and financial results primarily associated with our Robotics
    segment.

Financial Condition and Liquidity

  • On June 30, 2017, Helix entered into an amended and restated credit
    agreement with a group of lenders, which is comprised of a $150
    million revolving credit facility and a $100 million term loan. The
    proceeds from the term loan as well as cash on hand were used to repay
    the approximately $180 million term loan then outstanding under the
    credit agreement prior to its amendment and restatement.
  • Cash and cash equivalents at June 30, 2017 was approximately $390
    million. Consolidated long-term debt decreased to $515 million at June
    30, 2017 from $609 million at March 31, 2017. Consolidated net debt at
    June 30, 2017 was $125 million. Net debt to book capitalization at
    June 30, 2017 was 8%. (Net debt and net debt to book capitalization
    are non-GAAP measures. See reconciliation below.)
  • We incurred capital expenditures (including capitalized interest)
    totaling $47 million in the second quarter of 2017 compared to $63
    million in the first quarter of 2017 and $32 million in the second
    quarter of 2016. In addition, we incurred mobilization costs for the Siem
    Helix 1
    of $1 million, $13 million and $2 million in the second
    quarter of 2017, first quarter of 2017 and second quarter of 2016,
    respectively. Mobilization costs for the Siem Helix 2 were $10
    million and $6 million in the second quarter of 2017 and first quarter
    of 2017, respectively.

Other

  • On July 18, 2017, the Board of Directors elected to separate the
    positions of Chairman of the Board and Chief Executive Officer, and
    appointed William L. Transier, who has been a director since 2000 and
    has served as Lead Independent Director since March of 2016, as
    Chairman of the Board.

Conference Call Information

Further details are provided in the presentation for Helix’s quarterly
conference call to review its second quarter 2017 results (see the
“Investor Relations” page of Helix’s website, www.HelixESG.com).
The call, scheduled for 9:00 a.m. Central Daylight Time Monday, July 24,
2017, will be audio webcast live from the “Investor Relations” page of
Helix’s website. Investors and other interested parties wishing to
listen to the conference via telephone may join the call by dialing
800-763-5615 for persons in the United States and 1-212-231-2922 for
international participants. The passcode is “Staffeldt”. A replay of the
conference call will be available under “Investor Relations” by
selecting the “Audio Archives” link from the same page beginning
approximately two hours after the completion of the conference call.

About Helix

Helix Energy Solutions Group, Inc., headquartered in Houston, Texas, is
an international offshore energy services company that provides
specialty services to the offshore energy industry, with a focus on well
intervention and robotics operations. For more information about Helix,
please visit our website at www.HelixESG.com.

Reconciliation of Non-GAAP Financial Measures

Management evaluates Company performance and financial condition using
certain non-GAAP metrics, primarily EBITDA, Adjusted EBITDA, net debt
and net debt to book capitalization. We define EBITDA as earnings before
income taxes, net interest expense, gain or loss on early extinguishment
of long-term debt, net other income or expense, and depreciation and
amortization expense. To arrive at our measure of Adjusted EBITDA, we
exclude gain or loss on disposition of assets. In addition, we include
realized losses from the cash settlements of our ineffective foreign
currency exchange contracts, which are excluded from EBITDA as a
component of net other income or expense. Net debt is calculated as
total long-term debt less cash and cash equivalents. Net debt to book
capitalization is calculated by dividing net debt by the sum of net debt
and shareholders’ equity. We use EBITDA to monitor and facilitate
internal evaluation of the performance of our business operations, to
facilitate external comparison of our business results to those of
others in our industry, to analyze and evaluate financial strategic
planning decisions regarding future investments and acquisitions, to
plan and evaluate operating budgets, and in certain cases, to report our
results to the holders of our debt as required by our debt covenants. We
believe that our measure of EBITDA provides useful information to the
public regarding our ability to service debt and fund capital
expenditures and may help our investors understand our operating
performance and compare our results to other companies that have
different financing, capital and tax structures. Other companies may
calculate their measures of EBITDA and Adjusted EBITDA differently from
the way we do, which may limit their usefulness as comparative measures.
EBITDA and Adjusted EBITDA should not be considered in isolation or as a
substitute for, but instead are supplemental to, income from operations,
net income or other income data prepared in accordance with GAAP.
Non-GAAP financial measures should be viewed in addition to, and not as
an alternative to, our reported results prepared in accordance with
GAAP. Users of this financial information should consider the types of
events and transactions that are excluded from these measures.

Forward-Looking Statements

This press release contains forward-looking statements that involve
risks, uncertainties and assumptions that could cause our results to
differ materially from those expressed or implied by such
forward-looking statements. All statements, other than statements of
historical fact, are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995, including, without
limitation, any statements regarding our strategy; any statements
regarding visibility and future utilization; any projections of
financial items; any statements regarding future operations
expenditures; any statements regarding the plans, strategies and
objectives of management for future operations; any statements
concerning developments; any statements regarding future economic
conditions or performance; any statements of expectation or belief; and
any statements of assumptions underlying any of the foregoing. The
forward-looking statements are subject to a number of known and unknown
risks, uncertainties and other factors including but not limited to the
performance of contracts by suppliers, customers and partners; actions
by governmental and regulatory authorities; operating hazards and
delays; our ultimate ability to realize current backlog; employee
management issues; complexities of global political and economic
developments; geologic risks; volatility of oil and gas prices and other
risks described from time to time in our reports filed with the
Securities and Exchange Commission (“SEC”), including the Company’s most
recently filed Annual Report on Form 10-K and in the Company’s other
filings with the SEC, which are available free of charge on the SEC’s
website at www.sec.gov.
We assume no obligation and do not intend to update these
forward-looking statements except as required by the securities laws.

Social Media

From time to time we provide information about Helix on Twitter (@Helix_ESG)
and LinkedIn (www.linkedin.com/company/helix-energy-solutions-group).

 

HELIX ENERGY SOLUTIONS GROUP, INC.

               
Comparative Condensed Consolidated Statements of Operations
                   
Three Months Ended Jun. 30, Six Months Ended Jun. 30,
(in thousands, except per share data) 2017 2016 2017 2016
(unaudited) (unaudited)
 
Net revenues $ 150,329 $ 107,267 $ 254,857 $

198,306

Cost of sales

  131,962     101,609     237,315     209,578  
Gross profit (loss) 18,367 5,658 17,542 (11,272

)

Loss on disposition of assets, net (39 )
Selling, general and administrative expenses   (13,317 )   (14,953 )   (30,158 )   (28,779 )
Income (loss) from operations 5,050 (9,295 ) (12,655 ) (40,051 )
Equity in losses of investment (152 ) (121 ) (304 ) (244 )
Net interest expense (6,639 ) (7,480 ) (11,865 ) (18,164 )
Gain (loss) on early extinguishment of long-term debt (397 ) 302 (397 ) 302
Other income (expense), net 467 1,308 (68 ) 3,188
Other income – oil and gas   291     396     2,893     2,968  
Loss before income taxes (1,380 ) (14,890 ) (22,396 ) (52,001 )
Income tax provision (benefit)   5,023     (4,219 )   422     (13,507 )
Net loss $ (6,403 ) $ (10,671 ) $ (22,818 ) $ (38,494 )
 
Loss per share of common stock:

Basic

$ (0.04 ) $ (0.10 ) $ (0.16 ) $ (0.36 )

Diluted

$ (0.04 ) $ (0.10 ) $ (0.16 ) $ (0.36 )
 
Weighted average common shares outstanding:
Basic   145,940     107,767     144,599     106,838  
Diluted   145,940     107,767     144,599     106,838  
 
 
                                 
Comparative Condensed Consolidated Balance Sheets
 

ASSETS

LIABILITIES & SHAREHOLDERS’ EQUITY
(in thousands) Jun. 30, 2017 Dec. 31, 2016 (in thousands) Jun. 30, 2017 Dec. 31, 2016
(unaudited)

 

(unaudited)
Current Assets:

Current Liabilities:

Cash and cash equivalents (1) $ 390,435 $ 356,647

Accounts payable

$ 86,601 $ 60,210
Accounts receivable, net 123,867 112,153 Accrued liabilities 60,119 58,614
Current deferred tax assets (2) 16,594 Current maturities of long-term debt (1)   107,205     67,571  
Other current assets   40,206   37,388 Total Current Liabilities 253,925 186,395
Total Current Assets 554,508 522,782
 
 
Long-term debt (1) 408,250 558,396
Deferred tax liabilities (2) 154,826 167,351
Property & equipment, net 1,711,403 1,651,610 Other non-current liabilities 46,926 52,985
Other assets, net   95,651   72,549

Shareholders’ equity (1)

  1,497,635     1,281,814  
Total Assets $ 2,361,562 $ 2,246,941 Total Liabilities & Equity $ 2,361,562   $ 2,246,941  
 

(1)  Net debt to book capitalization – 8% at June 30, 2017.
Calculated as net debt (total long-term debt less cash and cash
equivalents – $125,020) divided by the sum of net debt and
shareholders’ equity ($1,622,655).

 

(2)  We elected to prospectively adopt the new FASB guidance
with respect to balance sheet classification of deferred taxes in
the first quarter of 2017. As a result, deferred tax liabilities
as of June 30, 2017 were presented net of current deferred tax
assets.

 
Helix Energy Solutions Group, Inc.
Reconciliation of Non-GAAP Measures
                     
         

Earnings Release:

 

Reconciliation from Net Loss to Adjusted
EBITDA:

 
Three Months Ended Six Months Ended
6/30/2017 6/30/2016 3/31/2017 6/30/2017 6/30/2016

(in thousands)

 
Net loss $ (6,403 ) $ (10,671 ) $ (16,415 ) $ (22,818 ) $ (38,494 )
Adjustments:
Income tax provision (benefit) 5,023 (4,219 ) (4,601 ) 422 (13,507 )
Net interest expense 6,639 7,480 5,226 11,865 18,164
(Gain) loss on early extinguishment of long-term debt 397 (302 ) 397 (302 )
Other (income) expense, net (467 ) (1,308 ) 535 68 (3,188 )
Depreciation and amortization   25,519     25,674     30,858     56,377     57,239  
EBITDA   30,708     16,654     15,603     46,311     19,912  
Adjustments:
Loss on disposition of assets, net 39 39
Realized losses from cash settlements of ineffective foreign
currency exchange contracts
  (981 )   (1,722 )   (1,020 )   (2,001 )   (3,958 )
Adjusted EBITDA $ 29,727   $ 14,932   $ 14,622   $ 44,349   $ 15,954  
We define EBITDA as earnings before income taxes, net interest
expense, gain or loss on early extinguishment of long-term debt, net
other income or expense, and depreciation and amortization expense.
To arrive at our measure of Adjusted EBITDA, we exclude gain or loss
on disposition of assets. In addition, we include realized losses
from the cash settlements of our ineffective foreign currency
exchange contracts, which are excluded from EBITDA as a component of
net other income or expense. We use EBITDA to monitor and facilitate
internal evaluation of the performance of our business operations,
to facilitate external comparison of our business results to those
of others in our industry, to analyze and evaluate financial
strategic planning decisions regarding future investments and
acquisitions, to plan and evaluate operating budgets, and in certain
cases, to report our results to the holders of our debt as required
by our debt covenants. We believe that our measure of EBITDA
provides useful information to the public regarding our ability to
service debt and fund capital expenditures and may help our
investors understand our operating performance and compare our
results to other companies that have different financing, capital
and tax structures. Other companies may calculate their measures of
EBITDA and Adjusted EBITDA differently from the way we do, which may
limit their usefulness as comparative measures. EBITDA and Adjusted
EBITDA should not be considered in isolation or as a substitute for,
but instead are supplemental to, income from operations, net income
or other income data prepared in accordance with GAAP. Non-GAAP
financial measures should be viewed in addition to, and not as an
alternative to, our reported results prepared in accordance with
GAAP. Users of this financial information should consider the types
of events and transactions that are excluded from these measures.
 






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