Helix Energy Solutions Group, Inc. ("Helix") (NYSE: HLX)
reported net income of $7.1 million, or $0.05 per diluted share,
for the second quarter 2023 compared to a net loss of $5.2 million,
or $(0.03) per diluted share, for the first quarter 2023 and a net
loss of $29.7 million, or $(0.20) per diluted share, for the second
quarter 2022. Helix reported adjusted EBITDA1 of $71.3 million for
the second quarter 2023 compared to $35.1 million for the first
quarter 2023 and $16.8 million for the second quarter 2022.
For the six months ended June 30, 2023, Helix reported net
income of $1.9 million, or $0.01 per diluted share, compared to a
net loss of $71.7 million, or $(0.47) per diluted share, for the
six months ended June 30, 2022. Adjusted EBITDA for the six months
ended June 30, 2023 was $106.4 million compared to $19.3 million
for the six months ended June 30, 2022. The table below summarizes
our results of operations:
Summary
of Results
($ in thousands, except per
share amounts, unaudited)
Three Months Ended Six Months Ended
6/30/2023 6/30/2022 3/31/2023 6/30/2023
6/30/2022 Revenues
$
308,817
$
162,612
$
250,084
$
558,901
$
312,737
Gross Profit (Loss)
$
55,349
$
(1,354
)
$
15,184
$
70,533
$
(19,963
)
18
%
(1
)%
6
%
13
%
(6
)%
Net Income (Loss)
$
7,100
$
(29,699
)
$
(5,165
)
$
1,935
$
(71,730
)
Diluted Earnings (Loss) Per Share
$
0.05
$
(0.20
)
$
(0.03
)
$
0.01
$
(0.47
)
Adjusted EBITDA1
$
71,292
$
16,759
$
35,094
$
106,386
$
19,285
Cash and Cash Equivalents2
$
182,651
$
260,595
$
166,674
$
182,651
$
260,595
Net Debt1
$
78,317
$
4,010
$
91,278
$
78,317
$
4,010
Cash Flows from Operating Activities
$
31,501
$
(5,841
)
$
(5,392
)
$
26,109
$
(23,254
)
Free Cash Flow1
$
30,246
$
(7,405
)
$
(11,692
)
$
18,554
$
(25,441
)
1 Adjusted EBITDA, Net Debt and Free Cash
Flow are non-GAAP measures; see reconciliations below
2 Excludes restricted cash of $2.5 million
as of 3/31/23 and 6/30/22
Owen Kratz, President and Chief Executive Officer of Helix,
stated, “The offshore energy services markets continue to improve
with the oil and gas and the renewables markets driving increased
activity globally and across all our business segments. Our second
quarter results improved sequentially, as we benefitted from the
seasonal pick-up in activity in our Robotics and Shallow Water
Abandonment segments and strong utilization in our Well
Intervention segment with the Q7000 commencing operations in the
Asia Pacific region. Our Robotics segment benefited from strong
vessel and trenching activity, with trenching projects in the
quarter performed in Europe, the U.S. east coast and Asia Pacific.
With improved global activity, the Robotics segment achieved its
highest quarterly revenues since 2015. In our Shallow Water
Abandonment segment, Helix Alliance operations improved with the
commencement of seasonal activity of the Epic Hedron heavy lift
barge. Given our overall strong performance during the second
quarter and the strength in our outlook for the second half of the
year, we increased our guidance for 2023. Additionally, we amended
our ABL facility, increasing our facility size by $20 million, and
continued to buy back shares under our share repurchase
program.”
Segment
Information, Operational and Financial Highlights
($ in thousands,
unaudited)
Three Months Ended Six Months Ended
6/30/2023 6/30/2022 3/31/2023 6/30/2023
6/30/2022 Revenues: Well Intervention
$
154,221
$
106,291
$
142,438
$
296,659
$
212,658
Robotics
70,050
49,850
49,222
119,272
87,201
Shallow Water Abandonment1
76,306
-
49,381
125,687
-
Production Facilities
23,128
17,678
20,905
44,033
35,972
Intercompany Eliminations
(14,888
)
(11,207
)
(11,862
)
(26,750
)
(23,094
)
Total
$
308,817
$
162,612
$
250,084
$
558,901
$
312,737
Income (Loss) from Operations: Well Intervention
$
3,380
$
(22,548
)
$
(8,143
)
$
(4,763
)
$
(54,306
)
Robotics
17,467
9,666
5,094
22,561
11,146
Shallow Water Abandonment1
19,762
-
6,822
26,584
-
Production Facilities
7,774
6,045
5,157
12,931
11,896
Change in Fair Value of Contingent Consideration
(10,828
)
-
(3,992
)
(14,820
)
-
Corporate / Other / Eliminations
(17,350
)
(12,139
)
(13,241
)
(30,591
)
(20,689
)
Total
$
20,205
$
(18,976
)
$
(8,303
)
$
11,902
$
(51,953
)
1 Shallow Water Abandonment includes the results of Helix Alliance
beginning July 1, 2022, the date of acquisition
Segment Results
Well Intervention
Well Intervention revenues increased $11.8 million, or 8%,
during the second quarter 2023 compared to the prior quarter. Our
second quarter 2023 revenues increased primarily due to higher
revenue on the Q7000, as well as higher utilization on the Q5000
and the North Sea vessels following their completion of scheduled
regulatory inspections and maintenance during the first quarter.
The revenue increases were offset in part by lower utilization on
the Q4000, which commenced its regulatory dry dock during the
quarter. During the second quarter 2023, the Q7000 recognized
revenues over approximately 27 days following its paid transit and
mobilization to New Zealand. During the prior quarter, the Q7000
recognized no revenue as it had 53 days of dry dock and 37 days of
paid transit and mobilization to New Zealand for which all revenues
were deferred. Overall Well Intervention vessel utilization
increased to 84% during the second quarter 2023 compared to 80%
during the prior quarter. Well Intervention generated operating
income of $3.4 million during the second quarter 2023 compared to
operating losses of $8.1 million during the prior quarter. The
improvement in operating results was primarily due to higher
revenues during the second quarter.
Well Intervention revenues increased $47.9 million, or 45%,
during the second quarter 2023 compared to the second quarter 2022.
The increase was primarily due to higher revenues in the North Sea,
Brazil and on the Q7000, offset in part by lower utilization on the
Q4000 during the second quarter 2023. North Sea revenues improved
during the second quarter 2023 with stronger utilization and rates
compared to the second quarter 2022, and revenues in Brazil
increased primarily due to higher rates as both vessels commenced
long-term contracts with improved day rates at the end of 2022.
During the second quarter 2023, the Q7000 recognized revenues over
approximately 27 days following its paid transit and mobilization
to New Zealand, compared to the second quarter 2022 when the vessel
had only 2 days of utilization before conducting scheduled
regulatory maintenance during the remainder of the quarter. The
second quarter 2023 revenue increases were offset in part by lower
utilization on the Q4000, which commenced its regulatory dry dock
during the second quarter 2023. Overall Well Intervention vessel
utilization increased to 84% during the second quarter 2023
compared to 67% during the second quarter 2022. Well Intervention
generated operating income of $3.4 million during the second
quarter 2023 compared to operating losses of $22.5 million during
the second quarter 2022. The improvement in operating results was
primarily due to higher revenues during 2023.
Robotics
Robotics revenues increased $20.8 million, or 42%, during the
second quarter 2023 compared to the prior quarter. The increase in
revenues was due to higher utilization and rates on ROVs, trenchers
and vessels during the second quarter 2023 compared to the prior
quarter. Chartered vessel activity increased to 435 days compared
to 295 days, and vessel utilization increased to 96% during the
second quarter 2023 compared to 91% during the prior quarter.
Vessel days included 113 spot vessel days during the second quarter
2023 compared to 13 spot vessel days during the prior quarter. ROV
and trencher utilization increased to 58% during the second quarter
2023 compared to 56% during the prior quarter. Integrated vessel
trenching days increased to 194 days during the second quarter 2023
compared to 66 days during the prior quarter. Trenching activity
during the second quarter also included 58 days of utilization of
the i-Plough as a stand-alone trencher performing site clearance on
a third-party vessel compared to 90 days during the prior quarter.
The IROV boulder grab, included in ROV utilization, had 83 days of
utilization during the second quarter 2023 performing seabed
clearance operations on the U.S. east coast compared to no
utilization during the prior quarter. Robotics operating income
increased $12.4 million during the second quarter 2023 compared to
the prior quarter due to higher revenues.
Robotics revenues increased $20.2 million, or 41%, during the
second quarter 2023 compared to the second quarter 2022. The
increase in revenues was primarily due to higher utilization and
rates on ROVs, trenchers and vessels during the second quarter 2023
compared to the second quarter 2022. Chartered vessel days and
utilization increased to 435 days and 96%, respectively, during the
second quarter 2023 compared to 370 days and 94%, respectively,
during the second quarter 2022. Vessel days included 113 spot
vessel days during the second quarter 2023 compared to 116 spot
vessel days during the second quarter 2022. ROV and trencher
utilization increased to 58% during the second quarter 2023
compared to 53% during the second quarter 2022. The second quarter
2023 included 194 days of integrated vessel trenching compared to
81 days of integrated vessel trenching during the second quarter
2022. The second quarter 2023 included 58 days of stand-alone
trencher activities on the i-Plough trencher and 83 days of
utilization on the IROV boulder grab, both of which were acquired
subsequent to the second quarter 2022. Robotics operating income
increased $7.8 million during the second quarter 2023 compared to
the second quarter 2022 primarily due to higher revenues.
Shallow Water Abandonment
Shallow Water Abandonment revenues increased $26.9 million, or
55%, during the second quarter 2023 compared to the previous
quarter. The increase in revenues reflected higher seasonal
activity, with increases in vessel and system utilization including
high utilization on the Epic Hedron. Overall vessel utilization was
78% during the second quarter 2023 compared to 58% during the prior
quarter. Plug and Abandonment and Coiled Tubing systems achieved
1,554 days of utilization, or 81%, during the second quarter 2023
compared to 1,277 days of utilization, or 68%, during the prior
quarter. The Epic Hedron heavy lift barge commenced seasonal
operations and achieved 72 days of utilization, or 79%, during the
second quarter 2023 compared to 13 days, or 14%, during the prior
quarter. Shallow Water Abandonment operating income increased $12.9
million during the second quarter 2023 compared to the prior
quarter primarily due to higher revenue during the second
quarter.
Production Facilities
Production Facilities revenues increased $2.2 million, or 11%,
during the second quarter 2023 compared to the prior quarter due to
higher oil and gas production on the Thunder Hawk wells, which were
shut-in for planned maintenance during the prior quarter.
Production Facilities operating income increased $2.6 million
during the second quarter 2023 compared to the prior quarter due to
higher revenues.
Production Facilities revenues increased $5.5 million, or 31%,
during the second quarter 2023 compared to the second quarter 2022
primarily due to higher oil and gas production with the
contribution from our interest in the Thunder Hawk field, which was
acquired during the third quarter 2022. The increase in revenue was
offset in part by lower commodity prices realized on the Droshky
wells during the second quarter 2023 compared to the second quarter
2022. Production Facilities operating income increased $1.7 million
during the second quarter 2023 due primarily to higher
revenues.
Selling, General and Administrative and
Other
Share Repurchases
Cash flows during the second quarter 2023 included $5.1 million
for repurchases of 750,000 Helix common shares pursuant to our
share repurchase program, an average purchase price of $6.77 per
share. Year-to-date cash flows include $10.1 million for
repurchases of 1,410,000 Helix common shares, an average purchase
price of $7.13 per share.
Selling, General and Administrative
Selling, general and administrative expenses were $24.0 million,
or 7.8% of revenue, during the second quarter 2023 compared to
$19.6 million, or 7.8% of revenue, during the prior quarter. The
increase during the second quarter was primarily due to higher
compensation costs compared to the prior quarter.
Acquisition and Integration Costs
Acquisition and integration costs were $0.3 million during the
second quarter 2023 compared to $0.2 million during the prior
quarter and included primarily financial and operational
integration costs related to our acquisition of the Alliance group
of companies, which closed on July 1, 2022.
Change in Fair Value of Contingent Consideration
Change in fair value of contingent consideration related to our
acquisition of Alliance was $10.8 million during the second quarter
2023 and reflects an increase in the fair value of the estimated
earn-out payable in 2024.
Other Income and Expenses
Other expense, net was $5.7 million during the second quarter
2023 compared to other income of $3.4 million during the prior
quarter. Other expense, net during the second quarter 2023 includes
primarily foreign currency losses of $11.7 million related to the
approximate 39% devaluation of the Nigerian naira on our naira cash
holdings, which approximated $16.2 million at quarter end. The
losses on the naira were offset in part by the approximate 3%
strengthening of the British pound primarily on U.S. dollar
denominated intercompany debt in our U.K. entities.
Cash Flows
Operating cash flows were $31.5 million during the second
quarter 2023 compared to $(5.4) million during the prior quarter
and $(5.8) million during the second quarter 2022. The increases in
operating cash flows quarter over quarter and year over year were
primarily due to higher earnings, offset in part by higher
regulatory certification costs for our vessels and systems during
the second quarter 2023 compared to the prior quarter and to the
second quarter 2022. Cash paid for regulatory recertifications for
our vessels and systems, which are included in operating cash
flows, were $24.2 million during the second quarter 2023 compared
to $17.2 million during the prior quarter and $9.3 million during
the second quarter 2022.
Capital expenditures, which are included in investing cash
flows, totaled $1.3 million during the second quarter 2023 compared
to $6.7 million during the prior quarter and $1.6 million during
the second quarter 2022.
Free Cash Flow was $30.2 million during the second quarter 2023
compared to $(11.7) million during the prior quarter and $(7.4)
million during the second quarter 2022. The increase in Free Cash
Flow quarter over quarter and year over year was due to higher
operating cash flows and lower capital expenditures during the
first quarter 2023. (Free Cash Flow is a non-GAAP measure. See
reconciliation below.)
Financial Condition and Liquidity
Cash and cash equivalents were $182.7 million at June 30, 2023.
Available capacity under our ABL facility at June 30, 2023 was
$102.5 million, resulting in total liquidity of $285.2 million. At
June 30, 2023 we had $261.0 million of long-term debt and Net Debt
of $78.3 million. (Net Debt is a non-GAAP measure. See
reconciliation below.)
Conference Call Information
Further details are provided in the presentation for Helix’s
quarterly teleconference to review its second quarter 2023 results
(see the "For the Investor" page of Helix's website,
www.helixesg.com). The teleconference, scheduled for Thursday, July
27, 2023, at 9:00 a.m. Central Time, will be audio webcast live
from the "For the Investor" page of Helix’s website. Investors and
other interested parties wishing to participate in the
teleconference may join by dialing 1-877-224-1468 for participants
in the United States and 1-312-546-6631 for international
participants. The passcode is "Staffeldt." A replay of the webcast
will be available on the "For the Investor" page of Helix's website
by selecting the "Audio Archives" link beginning approximately two
hours after the completion of the event.
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, robotics and full field decommissioning
operations. Our services are centered on a three-legged business
model well positioned for a global energy transition by maximizing
production of existing oil and gas reserves, supporting renewable
energy developments and decommissioning end-of-life oil and gas
fields. For more information about Helix, please visit our website
at www.helixesg.com.
Non-GAAP Financial Measures
Management evaluates operating performance and financial
condition using certain non-GAAP measures, primarily EBITDA,
Adjusted EBITDA, Free Cash Flow and Net Debt. We define EBITDA as
earnings before income taxes, net interest expense, gains or losses
on extinguishment of long-term debt, gains and losses on equity
investments, net other income or expense, and depreciation and
amortization expense. Non-cash impairment losses on goodwill and
other long-lived assets are also added back if applicable. To
arrive at our measure of Adjusted EBITDA, we exclude the gain or
loss on disposition of assets, acquisition and integration costs,
the change in fair value of the contingent consideration and the
general provision (release) for current expected credit losses, if
any. We define Free Cash Flow as cash flows from operating
activities less capital expenditures, net of proceeds from sale of
assets. Net Debt is calculated as long-term debt including current
maturities of long-term debt less cash and cash equivalents and
restricted cash.
We use EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt 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 and 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
measures of EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt
provide useful information to the public regarding our operating
performance and ability to service debt and fund capital
expenditures and may help our investors understand and compare our
results to other companies that have different financing, capital
and tax structures. Other companies may calculate their measures of
EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt differently
from the way we do, which may limit their usefulness as comparative
measures. EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt
should not be considered in isolation or as a substitute for, but
instead are supplemental to, income from operations, net income,
cash flows from operating activities, or other income or cash flow
data prepared in accordance with GAAP. Users of this financial
information should consider the types of events and transactions
that are excluded from these measures. See reconciliation of the
non-GAAP financial information presented in this press release to
the most directly comparable financial information presented in
accordance with GAAP.
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 plans, strategies and objectives for future operations;
visibility and future utilization; energy transition or energy
security; any projections of financial items including projections
as to guidance and other outlook information; our share repurchase
authorization or program; our ability to identify, effect and
integrate acquisitions, joint ventures or other transactions,
including the integration of the Alliance acquisition; oil price
volatility and its effects and results; our protocols and plans;
our current work continuing; the spot market; our spending and cost
management efforts and our ability to manage changes; future
operations expenditures; our ability to enter into, renew and/or
perform commercial contracts; developments; our environmental,
social and governance (“ESG”) initiatives; future economic
conditions or performance; any statements of expectation or belief;
and any statements of assumptions underlying any of the foregoing.
Forward-looking statements are subject to a number of known and
unknown risks, uncertainties and other factors that could cause
results to differ materially from those in the forward-looking
statements, including but not limited to market conditions; results
from acquired properties; demand for our services; the performance
of contracts by suppliers, customers and partners; actions by
governmental and regulatory authorities; operating hazards and
delays, which include delays in delivery, chartering or customer
acceptance of assets or terms of their acceptance; our ability to
secure and realize backlog; the effectiveness of our ESG
initiatives and disclosures; human capital 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 filings with the Securities and
Exchange Commission ("SEC"), including our most recently filed
Annual Report on Form 10-K, 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, which speak
only as of their respective dates, except as required by law.
HELIX ENERGY SOLUTIONS GROUP, INC. Comparative Condensed
Consolidated Statements of Operations
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except per share data)
2023
2022
2023
2022
(unaudited) (unaudited) Net revenues
$
308,817
$
162,612
$
558,901
$
312,737
Cost of sales
253,468
163,966
488,368
332,700
Gross profit (loss)
55,349
(1,354
)
70,533
(19,963
)
Gain on disposition of assets, net
-
-
367
-
Acquisition and integration costs
(309
)
(1,587
)
(540
)
(1,587
)
Change in fair value of contingent consideration
(10,828
)
-
(14,820
)
-
Selling, general and administrative expenses
(24,007
)
(16,035
)
(43,638
)
(30,403
)
Income (loss) from operations
20,205
(18,976
)
11,902
(51,953
)
Equity in earnings of investment
-
8,184
-
8,184
Net interest expense
(4,228
)
(4,799
)
(8,415
)
(9,973
)
Other expense, net
(5,740
)
(13,471
)
(2,296
)
(17,352
)
Royalty income and other
175
797
2,038
2,938
Income (loss) before income taxes
10,412
(28,265
)
3,229
(68,156
)
Income tax provision
3,312
1,434
1,294
3,574
Net income (loss)
$
7,100
$
(29,699
)
$
1,935
$
(71,730
)
Earnings (loss) per share of common stock: Basic
$
0.05
$
(0.20
)
$
0.01
$
(0.47
)
Diluted
$
0.05
$
(0.20
)
$
0.01
$
(0.47
)
Weighted average common shares outstanding: Basic
150,791
151,205
151,275
151,174
Diluted
153,404
151,205
153,873
151,174
Comparative Condensed Consolidated Balance Sheets
June 30, 2023 Dec. 31, 2022 (in thousands)
(unaudited)
ASSETS Current Assets: Cash and
cash equivalents
$
182,651
$
186,604
Restricted cash
-
2,507
Accounts receivable, net
253,147
212,779
Other current assets
76,212
58,699
Total Current Assets
512,010
460,589
Property and equipment, net
1,608,988
1,641,615
Operating lease right-of-use assets
177,942
197,849
Deferred recertification and dry dock costs, net
77,243
38,778
Other assets, net
47,662
50,507
Total Assets
$
2,423,845
$
2,389,338
LIABILITIES AND SHAREHOLDERS' EQUITY Current
Liabilities: Accounts payable
$
145,937
$
135,267
Accrued liabilities
142,609
73,574
Current maturities of long-term debt
38,499
38,200
Current operating lease liabilities
55,667
50,914
Total Current Liabilities
382,712
297,955
Long-term debt
222,469
225,875
Operating lease liabilities
131,175
154,686
Deferred tax liabilities
99,864
98,883
Other non-current liabilities
55,697
95,230
Shareholders' equity
1,531,928
1,516,709
Total Liabilities and Equity
$
2,423,845
$
2,389,338
Helix Energy Solutions Group, Inc. Reconciliation of
Non-GAAP Measures Three Months Ended
Six Months Ended (in thousands, unaudited)
6/30/2023
6/30/2022 3/31/2023 6/30/2023 6/30/2022
Reconciliation from Net Income
(Loss) to Adjusted EBITDA: Net income (loss)
$
7,100
$
(29,699
)
$
(5,165
)
$
1,935
$
(71,730
)
Adjustments: Income tax provision (benefit)
3,312
1,434
(2,018
)
1,294
3,574
Net interest expense
4,228
4,799
4,187
8,415
9,973
Other (income) expense, net
5,740
13,471
(3,444
)
2,296
17,352
Depreciation and amortization
39,227
33,158
37,537
76,764
66,646
Gain on equity investment
-
(8,184
)
-
-
(8,184
)
EBITDA
59,607
14,979
31,097
90,704
17,631
Adjustments: Gain on disposition of assets, net
-
-
(367
)
(367
)
-
Acquisition and integration costs
309
1,587
231
540
1,587
Change in fair value of contingent consideration
10,828
-
3,992
14,820
-
General provision for current expected credit losses
548
193
141
689
67
Adjusted EBITDA
$
71,292
$
16,759
$
35,094
$
106,386
$
19,285
Free Cash Flow:
Cash flows from operating activities
$
31,501
$
(5,841
)
$
(5,392
)
$
26,109
$
(23,254
)
Less: Capital expenditures, net of proceeds from sale of assets
(1,255
)
(1,564
)
(6,300
)
(7,555
)
(2,187
)
Free Cash Flow
$
30,246
$
(7,405
)
$
(11,692
)
$
18,554
$
(25,441
)
Net Debt:
Long-term debt including current maturities
$
260,968
$
267,110
$
260,460
$
260,968
$
267,110
Less: Cash and cash equivalents and restricted cash
(182,651
)
(263,100
)
(169,182
)
(182,651
)
(263,100
)
Net Debt
$
78,317
$
4,010
$
91,278
$
78,317
$
4,010
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726624967/en/
Erik Staffeldt, Executive Vice President and CFO email:
estaffeldt@helixesg.com Ph: 281-618-0465
Helix Energy Solutions (NYSE:HLX)
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