Helix Energy Solutions Group, Inc. (NYSE: HLX) reported net
income of $2.3 million, or $0.02 per diluted share, for the third
quarter of 2017 compared to net income of $11.5 million, or $0.10
per diluted share, for the same period in 2016 and a net loss of
$6.4 million, or $(0.04) per diluted share, for the second quarter
of 2017. The net loss for the nine months ended September 30, 2017
was $20.5 million, or $(0.14) per diluted share, compared to a net
loss of $27.0 million, or $(0.25) per diluted share, for the nine
months ended September 30, 2016. Helix reported Adjusted EBITDA1 of
$30.5 million for the third quarter of 2017 compared to $46.7
million for the third quarter of 2016 and $29.7 million for the
second quarter of 2017. Adjusted EBITDA for the nine months ended
September 30, 2017 was $74.8 million compared to $62.7 million for
the nine months ended September 30, 2016. The table below
summarizes our results of operations:
Summary of
Results
($ in thousands, except per share
amounts, unaudited)
Three Months Ended
Nine Months Ended 9/30/2017
9/30/2016 6/30/2017 9/30/2017
9/30/2016 Revenues $ 163,260 $ 161,245 $
150,329 $ 418,117 $ 359,551 Gross Profit $ 21,141 $ 40,184 $
18,367 $ 38,683 $ 28,912 13 % 25 % 12 % 9 % 8 % Net Income
(Loss) $ 2,290 $ 11,462 $ (6,403 ) $ (20,528 ) $ (27,032 )
Diluted Earnings (Loss) Per Share $ 0.02 $ 0.10 $ (0.04 ) $ (0.14 )
$ (0.25 ) Adjusted EBITDA1 $ 30,452 $ 46,701 $ 29,727 $
74,801 $ 62,655
1Adjusted EBITDA is a non-GAAP measure. See reconciliation
below.
Owen Kratz, President and Chief Executive Officer of Helix,
stated, “Our third quarter results were negatively impacted by some
operational downtime experienced by the Well Enhancer in the North
Sea and some idle time on the Q5000 between projects. These
negative impacts were partially offset by improvements in our
Brazilian well intervention operations for the quarter with the
Siem Helix 1 completing its first full quarter of operations. We
continue to expand our operations in Brazil as the Siem Helix 2 is
currently expected to commence commercial operations late in the
fourth quarter.”
Segment
Information, Operational and Financial Highlights
($ in thousands, unaudited)
Three Months Ended
9/30/2017 9/30/2016
6/30/2017 Revenues: Well Intervention $ 111,522 $
108,287 $ 113,076 Robotics 47,049 48,897 33,061 Production
Facilities 16,380 17,128 15,210 Intercompany Eliminations
(11,691 ) (13,067
) (11,018 ) Total
$ 163,260 $
161,245 $ 150,329
Income (Loss) from Operations: Well
Intervention $ 16,906 $ 24,413 $ 19,032 Robotics (9,365 ) (94 )
(11,642 ) Production Facilities 7,660 8,312 6,140 Corporate / Other
(10,633 ) (10,288 ) (8,701 ) Intercompany Eliminations
199 (873 )
221 Total
$
4,767 $ 21,470
$ 5,050
Business Segment Results
- Well Intervention revenues decreased
$1.6 million, or 1%, in the third quarter of 2017 from the second
quarter of 2017 primarily due to lower day rates in the Gulf of
Mexico, offset in part by a full quarter of revenue in Brazil at
higher rates than the second quarter. Overall Well Intervention
vessel utilization decreased slightly to 88% in the third quarter
of 2017 from 90% in the second quarter of 2017. In the North Sea,
vessel utilization in the third quarter of 2017 decreased to 90%
from 100% in the second quarter of 2017. The Well Enhancer
utilization decreased to 84% in the third quarter of 2017 from 100%
in the second quarter of 2017 primarily due to mechanical downtime.
The Seawell utilization decreased to 97% in the third quarter of
2017 from 100% in the second quarter of 2017. Vessel utilization in
the Gulf of Mexico increased to 80% from 77% in the second quarter
of 2017. The Q4000 utilization increased to 86% in the third
quarter of 2017 from 63% in the second quarter of 2017. The
increase is attributable to 34 days of drydock in the second
quarter of 2017, but was partially offset by idle time during the
third quarter of 2017. The Q5000 utilization decreased to 75% in
the third quarter of 2017 from 91% in the second quarter of 2017
due to idle days between projects during the third quarter of 2017.
The Siem Helix 1 was utilized 96% in the third quarter of 2017
compared to 95% in the second quarter of 2017. The rental
intervention riser system was idle during the third quarter of
2017.
- Robotics revenues increased 42% in the
third quarter of 2017 from the second quarter of 2017 primarily
attributable to increased vessel days from our four chartered
vessels as well as 34 additional spot vessel days quarter over
quarter. Chartered vessel utilization increased to 80% in the third
quarter of 2017 from 57% in the second quarter of 2017, and ROV
asset utilization increased to 46% in the third quarter of 2017
from 42% in the second quarter of 2017.
- Production Facilities revenues
increased 8% in the third quarter of 2017 from the second quarter
of 2017, primarily reflecting the HFRS at full rates during the
third quarter of 2017 compared to reduced rates in the second
quarter of 2017 as a result of the Q4000 dry-dock.
Other Expenses
- Selling, general and administrative
expenses were $16.4 million, 10.0% of revenue, in the third quarter
of 2017 compared to $13.3 million, 8.9% of revenue, in the second
quarter of 2017. The increase was primarily attributable to
increased costs associated with our share-based compensation
plans.
- Net interest expense decreased to $3.6
million in the third quarter of 2017 from $6.6 million in the
second quarter of 2017. In the second quarter of 2017, we recorded
a $1.6 million charge to accelerate a pro-rata portion of the debt
issuance costs associated with the amendment and restatement of our
revolving credit facility. The remaining decrease was primarily
attributable to reduced debt levels.
- Other expense was $0.5 million in the
third quarter of 2017 compared to other income of $0.5 million in
the second quarter of 2017. The change was primarily driven by
foreign currency transaction losses partially offset by gains from
our foreign currency exchange contracts that are not designated as
hedges.
Financial Condition and
Liquidity
- Cash and cash equivalents at September
30, 2017 was approximately $357 million. Consolidated long-term
debt decreased to $504 million at September 30, 2017 from $515
million at June 30, 2017. Consolidated net debt at September 30,
2017 was $147 million. Net debt to book capitalization at September
30, 2017 was 9%. (Net debt and net debt to book capitalization are
non-GAAP measures. See reconciliation below.)
- We incurred capital expenditures
(including capitalized interest) totaling $43 million in the third
quarter of 2017 compared to $47 million in the second quarter of
2017 and $99 million in the third quarter of 2016. In addition, we
incurred mobilization costs for the Siem Helix 2 of $14 million in
the third quarter of 2017 and $10 million in the second quarter of
2017.
Conference Call Information
Further details are provided in the presentation for Helix’s
quarterly conference call to review its third 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, October 23, 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 1-800-940-6895 for
persons in the United States and 1-212-231-2900 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
Sep. 30,
Nine Months Ended Sep. 30,
(in thousands, except per share data)
2017
2016 2017 2016 (unaudited)
(unaudited) Net revenues $ 163,260 $ 161,245 $ 418,117 $
359,551 Cost of sales 142,119 121,061
379,434 330,639 Gross profit 21,141
40,184 38,683 28,912 Loss on disposition of assets, net - - (39 ) -
Selling, general and administrative expenses (16,374 )
(18,714 ) (46,532 ) (47,493 ) Income (loss)
from operations 4,767 21,470 (7,888 ) (18,581 ) Equity in losses of
investment (153 ) (122 ) (457 ) (366 ) Net interest expense (3,615
) (6,843 ) (15,480 ) (25,007 ) Gain (loss) on early extinguishment
of long-term debt - 244 (397 ) 546 Other income (expense), net (551
) 830 (619 ) 4,018 Other income (expense) - oil and gas 303
(468 ) 3,196 2,500 Income
(loss) before income taxes 751 15,111 (21,645 ) (36,890 ) Income
tax provision (benefit) (1,539 ) 3,649
(1,117 ) (9,858 ) Net income (loss) $ 2,290 $ 11,462
$ (20,528 ) $ (27,032 ) Earnings (loss) per share of
common stock:
Basic
$ 0.02 $ 0.10 $ (0.14 ) $ (0.25 )
Diluted
$ 0.02 $ 0.10 $ (0.14 ) $ (0.25 ) Weighted
average common shares outstanding: Basic 145,958
113,680 145,057 109,135
Diluted 145,958 113,680 145,057
109,135
Comparative
Condensed Consolidated Balance Sheets ASSETS
LIABILITIES &
SHAREHOLDERS' EQUITY (in thousands)
Sep. 30, 2017
Dec. 31, 2016 (in thousands)
Sep. 30, 2017 Dec. 31, 2016 (unaudited)
(unaudited) Current Assets: Current Liabilities: Cash and cash
equivalents (1) $ 356,889 $ 356,647 Accounts payable $ 91,412 $
60,210 Accounts receivable, net 136,296 112,153 Accrued liabilities
60,761 58,614 Current deferred tax assets (2) - 16,594 Income tax
payable 1,756 - Other current assets 38,172 37,388
Current maturities of long-term debt (1) 108,611
67,571 Total Current Assets 531,357 522,782 Total Current
Liabilities 262,540 186,395 Long-term debt (1)
395,345 558,396 Deferred tax liabilities (2) 154,158 167,351
Property & equipment, net 1,734,159 1,651,610 Other non-current
liabilities 42,736 52,985 Other assets, net 100,974
72,549 Shareholders' equity (1) 1,511,711 1,281,814
Total Assets $ 2,366,490 $ 2,246,941 Total Liabilities & Equity
$ 2,366,490 $ 2,246,941
(1) Net debt to book capitalization - 9% at September 30,
2017. Calculated as net debt (total long-term debt less cash and
cash equivalents - $147,067) divided by the sum of net debt and
shareholders' equity ($1,658,778). (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 September 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 Income (Loss) to Adjusted EBITDA:
Three Months Ended Nine Months
Ended 9/30/2017 9/30/2016
6/30/2017 9/30/2017
9/30/2016 (in thousands) Net income (loss) $ 2,290 $
11,462 $ (6,403 ) $ (20,528 ) $ (27,032 ) Adjustments: Income tax
provision (benefit) (1,539 ) 3,649 5,023 (1,117 ) (9,858 ) Net
interest expense 3,615 6,843 6,639 15,480 25,007 (Gain) loss on
early extinguishment of long-term debt - (244 ) 397 397 (546 )
Other (income) expense, net 551 (830 ) (467 ) 619 (4,018 )
Depreciation and amortization 26,293 27,607
25,519 82,670 84,846
EBITDA 31,210 48,487
30,708 77,521 68,399
Adjustments: Loss on disposition of assets, net - - - 39 -
Realized losses from cash settlements of
ineffective
foreign currency exchange contracts
(758 ) (1,786 ) (981 ) (2,759 )
(5,744 ) Adjusted EBITDA $ 30,452 $ 46,701 $ 29,727
$ 74,801 $ 62,655
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/20171022005035/en/
Helix Energy Solutions Group, Inc.Erik Staffeldt,
281-618-0400Senior Vice President & CFO
Helix Energy Solutions (NYSE:HLX)
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