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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170723005047/en/
Helix Energy Solutions Group, Inc.Erik Staffeldt,
281-618-0400Senior Vice President & CFO
Helix Energy Solutions (NYSE:HLX)
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