Helix Energy Solutions Group, Inc. (NYSE:HLX) reported a net
loss of $54.4 million, or $(0.46) per diluted share, for the fourth
quarter of 2016 compared to a net loss of $403.9 million, or
$(3.83) per diluted share, for the same period in 2015 and net
income of $11.5 million, or $0.10 per diluted share, for the third
quarter of 2016. The fourth quarter 2016 results were impacted by
non-cash pretax charges of $50.9 million ($48.9 million after tax),
including a $45.1 million goodwill impairment charge associated
with our robotics business and a $4.1 million loss associated with
the repurchase of $125 million of Convertible Notes due 2032. The
net loss for the year ended December 31, 2016 was $81.4 million, or
$(0.73) per diluted share, compared to a net loss of $377.0
million, or $(3.58) per diluted share, for the year ended December
31, 2015.
Helix reported adjusted EBITDA1 of $26.9 million for the fourth
quarter of 2016 compared to $34.2 million for the fourth quarter of
2015 and $46.7 million for the third quarter of 2016. Adjusted
EBITDA for the year ended December 31, 2016 was $89.5 million
compared to $172.7 million for the year ended December 31,
2015.
Owen Kratz, President and Chief Executive Officer of Helix,
stated, “The fourth quarter reflected a continuation of overall
industry weakness that persisted throughout the year. However,
higher oil prices bode well for an improving overall industry
environment going forward. As we look forward to 2017, our focus
will be on a successful startup of Brazil operations for both Siem
Helix 1 and Siem Helix 2.”
1Adjusted EBITDA is a non-GAAP measure. See reconciliation
below.
Summary of
Results
($ in thousands, except per share amounts, unaudited)
Three Months Ended Twelve Months Ended
12/31/2016
12/31/2015
9/30/2016
12/31/2016
12/31/2015
Revenues $ 128,031 $ 157,683 $ 161,245 $ 487,582 $ 695,802
Gross Profit (Loss) $ 17,604 $ 20,112 $ 40,184 $ 46,516 $ 111,236
14 % 13 % 25 % 10 % 16 % Asset Impairments -
(345,010 ) - - (345,010 ) Total
$ 17,604 $ (324,898 ) $ 40,184 $ 46,516 $ (233,774 )
Goodwill Impairments $ (45,107 ) $ (16,399 ) $ - $ (45,107 ) $
(16,399 ) Non-cash Losses on Equity Investments $ (1,674 ) $
(122,765 ) $ - $ (1,674 ) $ (122,765 ) Net Income (Loss) $
(54,413 ) $ (403,867 ) $ 11,462 $ (81,445 ) $ (376,980 )
Diluted Earnings (Loss) Per Share $ (0.46 ) $ (3.83 ) $ 0.10 $
(0.73 ) $ (3.58 ) Adjusted EBITDA1 $ 26,889 $ 34,186 $
46,701 $ 89,544 $ 172,736
1Adjusted EBITDA is a non-GAAP measure.
See reconciliation below.
Segment
Information, Operational and Financial Highlights
($ in thousands, unaudited)
Three Months Ended
12/31/2016
12/31/2015
9/30/2016
Revenues:
Well Intervention $ 79,738 $ 88,680 $ 108,287 Robotics 40,775
62,444 48,897 Production Facilities 17,791 18,137 17,128
Intercompany Eliminations
(10,273
) (11,578 )
(13,067 ) Total
$
128,031 $ 157,683
$ 161,245
Income (Loss) from Operations:
Well Intervention $ 7,723 $ 8,433 $ 24,413 Robotics (5,476 ) (257 )
(94 ) Production Facilities 8,636 6,626 8,312 Non-cash Impairment
Charges (45,107 ) (361,409 ) - Corporate / Other (10,600 ) (9,285 )
(10,288 ) Intercompany Eliminations
170
158 (873
) Total
$ (44,654
) $ (355,734 )
$ 21,470
Business Segment Results
- Well Intervention revenues decreased
26% in the fourth quarter of 2016 from third quarter of 2016.
Overall Well Intervention vessel utilization in the fourth quarter
of 2016 decreased to 62% from 76% in the third quarter of 2016. The
Q4000 utilization was 100% in the fourth quarter of 2016 compared
to 93% in the third quarter of 2016. The Q5000 utilization remained
constant at 84% for both fourth quarter and third quarter of 2016.
In addition, third quarter revenues included a payment received due
to a work scope cancellation on a 42-day “take or pay” contract
originally scheduled for the fourth quarter. In the North Sea, the
Well Enhancer utilization was 78% in the fourth quarter of 2016
compared to 91% in the third quarter of 2016. The Seawell
utilization decreased to 47% in the fourth quarter of 2016 from 98%
in the third quarter of 2016. The Skandi Constructor was idle in
the fourth quarter of 2016 compared to 15% utilization in the third
quarter of 2016. The rental intervention riser systems remained
idle in the fourth quarter of 2016.
- Robotics revenues decreased 17% in the
fourth quarter of 2016 from third quarter of 2016. Chartered vessel
utilization decreased to 68% in the fourth quarter of 2016 from 81%
in the third quarter of 2016, and ROV asset utilization decreased
to 47% in the fourth quarter of 2016 from 57% in the third quarter
of 2016. The decrease in revenue was primarily driven by low
seasonal activity in the North Sea.
Other Expenses
- Selling, general and administrative
expenses were $18.4 million, 14.4% of revenue, in the fourth
quarter of 2016 compared to $18.7 million, 11.6% of revenue, in the
third quarter of 2016. Our fourth quarter 2016 expenses included a
$3.2 million charge associated with the provision for the uncertain
collection of a portion of existing trade and note receivables
compared to a $2.7 million charge in the third quarter of 2016. The
remaining decrease of $0.8 million is primarily due to decreased
costs associated with our variable performance-based stock
compensation plans.
- Net interest expense decreased slightly
to $6.2 million in the fourth quarter of 2016 from $6.8 million in
the third quarter of 2016. The decrease is primarily associated
with higher capitalized interest on our capital projects.
- We recorded a $4.1 million loss
associated with the repurchase of $125 million of our Convertible
Notes due 2032.
- Other expense was $0.5 million in the
fourth quarter of 2016 compared to a benefit of $0.8 million in the
third quarter of 2016. The decrease was primarily driven by
unrealized losses on our foreign currency exchange contracts that
are not designated as hedges, offset in part by foreign currency
gains.
Financial Condition and
Liquidity
- In November 2016, we refinanced $125
million of our Convertible Notes due 2032 with the issuance of our
new Convertible Notes due 2022.
- Our total liquidity at December 31,
2016 was approximately $376 million, consisting of $357 million in
cash and cash equivalents and $19 million in available capacity
under our revolver. Consolidated long-term debt decreased to $626
million in the fourth quarter of 2016 from $678 million in the
third quarter of 2016. Consolidated net debt at December 31, 2016
was $269 million. Net debt to book capitalization at December 31,
2016 was 17%. (Net debt and net debt to book capitalization are
non-GAAP measures. See reconciliation below.)
- In January 2017, we completed an
underwritten public offering of 26,450,000 shares of our common
stock at a public offering price of $8.65 per share. The net
proceeds from the offering approximated $220 million, after
deducting underwriting discounts and commissions and estimated
offering expenses.
- We incurred capital expenditures
(including capitalized interest) totaling $37 million in the fourth
quarter of 2016 compared to $99 million in the third quarter of
2016 and $42 million in the fourth quarter of 2015. In addition, we
incurred $17 million in mobilization costs of the Siem Helix 1 in
the fourth quarter of 2016 compared to $13 million in the third
quarter of 2016. Our third quarter capital expenditures included a
shipyard invoice for the Q7000 of approximately $69 million that
was paid in October 2016.
* * * * *
Conference Call Information
Further details are provided in the presentation for Helix’s
quarterly conference call to review its fourth quarter 2016 results
(see the “Investor Relations” page of Helix’s website,
www.HelixESG.com). The call, scheduled for 9:00 a.m. Central
Daylight Time Tuesday, February 21, 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 800-748-2715
for persons in the United States and 1-212-231-2930 for
international participants. The passcode is "Tripodo". 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
repurchase of long-term debt, net other income or expense, and
depreciation and amortization expense. We separately disclose our
non-cash asset impairment charges, which, if not material, would be
reflected as a component of our depreciation and amortization
expense. Because these impairment charges are material to our 2015
results of operations, we have reported them as a separate line
item. Non-cash goodwill impairment charges and non-cash losses on
equity investments are also added back if applicable. 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 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 Dec. 31, Twelve Months Ended Dec. 31,
(in thousands, except per share data)
2016 2015 2016 2015 (unaudited)
(unaudited) Net revenues $ 128,031 $ 157,683 $ 487,582 $
695,802 Cost of sales 110,427 137,571 441,066 584,566 Asset
impairments - 345,010 -
345,010 Gross profit (loss) 17,604 (324,898 ) 46,516
(233,774 ) Goodwill impairment (45,107 ) (16,399 ) (45,107 )
(16,399 ) Gain on disposition of assets, net 1,290 92 1,290 92
Selling, general and administrative expenses (18,441 )
(14,529 ) (65,934 ) (57,279 ) Loss from
operations (44,654 ) (355,734 ) (63,235 ) (307,360 ) Equity in
losses of investments (1,800 ) (123,792 ) (2,166 ) (124,345 ) Net
interest expense (6,232 ) (8,896 ) (31,239 ) (26,914 ) Loss on
repurchase of long-term debt (4,086 ) - (3,540 ) - Other income
(expense), net (508 ) (18,113 ) 3,510 (24,310 ) Other income - oil
and gas 255 363 2,755
4,759 Loss before income taxes (57,025 ) (506,172 )
(93,915 ) (478,170 ) Income tax benefit (2,612 )
(102,305 ) (12,470 ) (101,190 ) Net loss $ (54,413 )
$ (403,867 ) $ (81,445 ) $ (376,980 ) Loss per share of
common stock:
Basic
$ (0.46 ) $ (3.83 ) $ (0.73 ) $ (3.58 )
Diluted
$ (0.46 ) $ (3.83 ) $ (0.73 ) $ (3.58 ) Weighted average
common shares outstanding: Basic 118,987
105,574 111,612 105,416 Diluted
118,987 105,574 111,612
105,416
Comparative Condensed
Consolidated Balance Sheets
ASSETS
LIABILITIES & SHAREHOLDERS' EQUITY (in
thousands)
Dec. 31, 2016 Dec. 31, 2015
(in thousands)
Dec. 31, 2016 Dec. 31,
2015 (unaudited) (unaudited) Current Assets: Current
Liabilities: Cash and cash equivalents (1) $ 356,647 $ 494,192
Accounts payable $ 60,210 $ 65,370 Accounts receivable, net 112,153
96,752 Accrued liabilities 58,614 71,641 Current deferred tax
assets 16,594 53,573 Income tax payable - 2,261 Other current
assets 37,388 39,518 Current maturities of long-term
debt (1) 67,571 71,640 Total Current Assets 522,782
684,035 Total Current Liabilities 186,395 210,912
Property & equipment, net 1,651,610 1,603,009 Long-term debt
(1) 558,396 677,695 Equity investments - 26,200 Deferred tax
liabilities 167,351 180,974 Goodwill - 45,107 Other non-current
liabilities 52,985 51,415 Other assets, net 72,549
41,608 Shareholders' equity (1) 1,281,814 1,278,963
Total Assets $ 2,246,941 $ 2,399,959 Total Liabilities & Equity
$ 2,246,941 $ 2,399,959
(1) Net debt to book capitalization - 17%
at December 31, 2016. Calculated as net debt (total long-term debt
lesscash and cash equivalents - $269,320) divided by the sum of net
debt and shareholders' equity ($1,551,134).
Helix Energy Solutions Group,
Inc.
Reconciliation of Non-GAAP
Measures
Earnings
Release:
Reconciliation
from Net Income (Loss) to Adjusted EBITDA:
Three Months Ended Twelve Months Ended
12/31/2016 12/31/2015 9/30/2016
12/31/2016 12/31/2015 (in thousands) Net
income (loss) $ (54,413 ) $ (403,867 ) $ 11,462 $ (81,445 ) $
(376,980 ) Adjustments: Income tax provision (benefit) (2,612 )
(102,305 ) 3,649 (12,470 ) (101,190 ) Net interest expense 6,232
8,896 6,843 31,239 26,914 (Gain) loss on repurchase of long-term
debt 4,086 - (244 ) 3,540 - Other (income) expense, net 508 18,113
(830 ) (3,510 ) 24,310 Depreciation and amortization 29,341 34,068
27,607 114,187 120,401 Asset impairments - 345,010 - - 345,010
Goodwill impairments 45,107 16,399 - 45,107 16,399 Non-cash losses
on equity investments 1,674 122,765
- 1,674 122,765 EBITDA
29,923 39,079 48,487
98,322 177,629 Adjustments: Gain on
disposition of assets, net (1,290 ) (92 ) - (1,290 ) (92 ) Realized
losses from cash settlements of ineffective foreign currency
exchange contracts (1,744 ) (4,801 ) (1,786 )
(7,488 ) (4,801 ) Adjusted EBITDA $ 26,889 $
34,186 $ 46,701 $ 89,544 $ 172,736
We define EBITDA as earnings before income
taxes, net interest expense, gain or loss on repurchase of
long-term debt, net other income or expense, and depreciation and
amortization expense. We separately disclose our non-cash asset
impairment charges, which, if not material, would be reflected as a
component of our depreciation and amortization
expense. Because these impairment charges are material
to our 2015 results of operations, we have reported them as a
separate line item. Non-cash goodwill impairment charges
and non-cash losses on equity investments are also added back if
applicable. 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 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.
Reconciliation of Significant Charges
Earnings Release: Reconciliation of
Significant Charges: Three Months
Ended 12/31/2016 (in thousands,except per share
data) Goodwill impairment and other non-cash charges: Goodwill
impairment $ 45,107 Non-cash loss on equity investments 1,674 Loss
on repurchase of long-term debt 4,086 Tax benefit associated with
the above (2,016 ) Goodwill impairment and other charges,
net $ 48,851 Diluted shares 118,987 Net after
income tax effect per share $ 0.41
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170220005714/en/
Helix Energy Solutions Group, Inc.Erik Staffeldt,
281-618-0400Vice President - Finance & Accounting
Helix Energy Solutions (NYSE:HLX)
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