Helix Energy Solutions Group, Inc. (NYSE:HLX) reported a net
loss of $16.4 million, or $(0.11) per diluted share, for the first
quarter of 2017 compared to a net loss of $27.8 million, or $(0.26)
per diluted share, for the same period in 2016 and a net loss of
$54.4 million, or $(0.46) per diluted share, for the fourth quarter
of 2016.
Helix reported Adjusted EBITDA1 of $14.6 million for the first
quarter of 2017 compared to $1.0 million for the first quarter of
2016 and $26.9 million for the fourth quarter of 2016.
Owen Kratz, President and Chief Executive Officer of Helix,
stated, “Our first quarter results for 2017, as compared to the
prior year, benefited from a rebound in activity levels in the
North Sea Well Intervention business and high utilization for the
Q5000 in the Gulf of Mexico. The robotics business still suffers
from weak market conditions reflecting a lack of subsea
infrastructure spending. As we were pleased to announce last week,
the Siem Helix 1 commenced operations in Brazil in mid-April after
a prolonged acceptance and inspection process.”
1Adjusted EBITDA is a non-GAAP measure. See reconciliation
below.
Summary of
Results($ in thousands, except per share amounts,
unaudited)
Three Months Ended
3/31/2017 3/31/2016
12/31/2016 Revenues $ 104,528 $ 91,039
$ 128,031 Gross Profit (Loss) $ (825 ) $ (16,930 ) $ 17,604
-1 % -19 % 14 % Goodwill Impairment $ - $ - $ (45,107 )
Non-cash Losses on Equity Investment $ - $ - $ (1,674 )
Net Loss $ (16,415 ) $ (27,823 ) $ (54,413 ) Diluted
Loss Per Share $ (0.11 ) $ (0.26 ) $ (0.46 ) Adjusted
EBITDA1 $ 14,622 $ 1,022 $ 26,889 1Adjusted EBITDA is a
non-GAAP measure. See reconciliation below.
Segment
Information, Operational and Financial Highlights($
in thousands, unaudited)
Three Months Ended
3/31/2017 3/31/2016
12/31/2016 Revenues: Well
Intervention $ 74,621 $ 46,056 $ 79,738 Robotics 21,968 31,994
40,775 Production Facilities 16,375 18,482 17,791 Intercompany
Eliminations
(8,436 )
(5,493 ) (10,273
) Total
$ 104,528
$ 91,039 $
128,031 Income (Loss) from
Operations: Well Intervention $ 1,418 $ (16,688 ) $ 7,723
Robotics (16,306 ) (12,750 ) (5,476 ) Production Facilities 6,924
7,183 8,636 Goodwill Impairment - - (45,107 ) Corporate / Other
(9,962 ) (8,669 ) (10,600 ) Intercompany Eliminations
221 168
170 Total
$ (17,705
) $ (30,756 )
$ (44,654 )
Business Segment Results
- Well Intervention revenues decreased 6%
in the first quarter of 2017 from the fourth quarter of 2016 and
overall Well Intervention vessel utilization in the first quarter
of 2017 decreased to 59% from 62% in the fourth quarter of 2016.
The Q4000 utilization decreased to 83% in the first quarter of 2017
from 100% in the fourth quarter of 2016. The vessel began dry-dock
activities mid-March and was out of service the last 15 days of the
quarter. The Q5000 utilization increased to 97% in the first
quarter of 2017 from 84% in the fourth quarter of 2016. In the
North Sea, the Well Enhancer utilization was 60% in the first
quarter of 2017 compared to 78% in the fourth quarter of 2016. The
Seawell utilization increased to 53% in the first quarter of 2017
from 47% in the fourth quarter of 2016. The Skandi Constructor
remained idle in the first quarter of 2017 and the charter term
expired at the end of the quarter. The rental intervention riser
system was on-hire for 38 days, 42% utilized, during the first
quarter of 2017.
- Robotics revenues decreased 46% in the
first quarter of 2017 from the fourth quarter of 2016. The decrease
in revenue was primarily driven by overall weak market activity in
addition to low seasonal activity in the North Sea. Chartered
vessel utilization decreased to 37% in the first quarter of 2017
from 68% in the fourth quarter of 2016, and ROV asset utilization
decreased to 36% in the first quarter of 2017 from 47% in the
fourth quarter of 2016.
- Production Facilities revenues
decreased 8% in the first quarter of 2017 from the fourth quarter
of 2016, reflecting the reduced retainer fees from the amended and
extended HFRS agreement that became effective February 1,
2017.
Other Expenses
- Selling, general and administrative
expenses were $16.8 million, 16.1% of revenue, in the first quarter
of 2017 compared to $18.4 million, 14.4% of revenue, in the fourth
quarter of 2016. The decrease was primarily attributable to charges
associated with the provision for the uncertain collection of a
portion of existing trade and note receivables that amounted to
$1.2 million and $3.2 million, respectively, for the first quarter
of 2017 and the fourth quarter of 2016, offset in part by increased
costs associated with our stock compensation plans.
- Net interest expense decreased to $5.2
million in the first quarter of 2017 from $6.2 million in the
fourth quarter of 2016. The decrease was primarily associated with
lower debt levels and higher capitalized interest on our capital
projects.
- Other expense, which primarily captures
our foreign currency exchange contracts and foreign currency
transaction fluctuations, remained constant at $0.5 million in both
first quarter of 2017 and fourth quarter of 2016.
Financial Condition and
Liquidity
- In January 2017, we completed a public
offering of 26,450,000 shares of our common stock at a 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.
- Our total liquidity at March 31, 2017
was approximately $594 million, consisting of $538 million in cash
and cash equivalents and $56 million in available capacity under
our revolver. Consolidated long-term debt decreased to $609 million
in the first quarter of 2017 from $626 million in the fourth
quarter of 2016. Consolidated net debt at March 31, 2017 was $72
million. Net debt to book capitalization at March 31, 2017 was 5%.
(Net debt and net debt to book capitalization are non-GAAP
measures. See reconciliation below.)
- We incurred capital expenditures
(including capitalized interest) totaling $63 million in the first
quarter of 2017 compared to $37 million in the fourth quarter of
2016 and $21 million in the first quarter of 2016. In addition, we
incurred $13 million in mobilization costs for the Siem Helix 1 and
approximately $6 million in mobilization costs for the Siem Helix 2
in the first quarter of 2017 compared to $17 million for the Siem
Helix 1 in the fourth quarter of 2016.
Conference Call Information
Further details are provided in the presentation for Helix’s
quarterly conference call to review its first 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 Savings Time Monday, April 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 800-747-0367
for persons in the United States and 1-212-231-2931 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. Non-cash goodwill impairment
charge and non-cash losses on equity investment 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 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 Mar. 31, (in
thousands, except per share data)
2017
2016 (unaudited) Net revenues $ 104,528
$ 91,039 Cost of sales 105,353 107,969
Gross loss (825 ) (16,930 ) Loss on disposition of assets, net (39
) - Selling, general and administrative expenses (16,841 )
(13,826 ) Loss from operations (17,705 ) (30,756 ) Equity in
losses of investment (152 ) (123 ) Net interest expense (5,226 )
(10,684 ) Other income (expense), net (535 ) 1,880 Other income -
oil and gas 2,602 2,572 Loss before
income taxes (21,016 ) (37,111 ) Income tax benefit (4,601 )
(9,288 ) Net loss $ (16,415 ) $ (27,823 ) Loss per
share of common stock:
Basic
$ (0.11 ) $ (0.26 )
Diluted
$ (0.11 ) $ (0.26 ) Weighted average common shares
outstanding: Basic 143,244 105,908
Diluted 143,244 105,908
Comparative Condensed Consolidated
Balance Sheets
ASSETS
LIABILITIES & SHAREHOLDERS' EQUITY
(in thousands)
Mar. 31, 2017 Dec. 31, 2016 (in
thousands)
Mar. 31, 2017 Dec. 31,
2016 (unaudited) (unaudited) Current Assets: Current
Liabilities: Cash and cash equivalents (1) $ 537,726 $ 356,647
Accounts payable $ 74,714 $ 60,210 Accounts receivable, net 76,725
112,153 Accrued liabilities 58,020 58,614 Current deferred tax
assets (2) - 16,594 Current maturities of long-term debt (1)
67,724 67,571 Other current assets 43,439
37,388 Total Current Liabilities 200,458 186,395 Total Current
Assets 657,890 522,782 Long-term debt (1) 541,664 558,396
Deferred tax liabilities (2) 148,187 167,351 Property &
equipment, net 1,687,835 1,651,610 Other non-current liabilities
49,942 52,985 Other assets, net 86,565 72,549
Shareholders' equity (1) 1,492,039 1,281,814 Total
Assets $ 2,432,290 $ 2,246,941 Total Liabilities & Equity $
2,432,290 $ 2,246,941
(1) Net debt to book capitalization - 5%
at March 31, 2017. Calculated as net debt (total long-term debt
less cash and cash equivalents - $71,662) divided by the sum of net
debt and shareholders' equity ($1,563,701).
(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 at March 31, 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 3/31/2017
3/31/2016 12/31/2016
(in thousands)
Net loss $ (16,415 ) $ (27,823 ) $ (54,413 ) Adjustments:
Income tax benefit (4,601 ) (9,288 ) (2,612 ) Net interest expense
5,226 10,684 6,232 Loss on repurchase of long-term debt - - 4,086
Other (income) expense, net 535 (1,880 ) 508 Depreciation and
amortization 30,858 31,565 29,341 Goodwill impairment - - 45,107
Non-cash losses on equity investment - -
1,674 EBITDA 15,603 3,258
29,923 Adjustments: (Gain) loss on disposition
of assets, net 39 - (1,290 ) Realized losses from cash settlements
of ineffective foreign currency exchange contracts (1,020 )
(2,236 ) (1,744 ) Adjusted EBITDA $ 14,622 $
1,022 $ 26,889
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. Non-cash goodwill impairment charge and
non-cash losses on equity investment 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 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/20170423005045/en/
Helix Energy Solutions Group, Inc.Erik Staffeldt,
281-618-0400Vice President - Finance &
Accounting
Helix Energy Solutions (NYSE:HLX)
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