Helix Energy Solutions Group, Inc. ("Helix") (NYSE: HLX)
reported a net loss of $5.2 million, or $(0.03) per diluted share,
for the first quarter 2023 compared to net income of $2.7 million,
or $0.02 per diluted share, for the fourth quarter 2022 and a net
loss of $42.0 million, or $(0.28) per diluted share, for the first
quarter 2022.
Helix reported adjusted EBITDA1 of $35.1 million for the first
quarter 2023 compared to $49.2 million for the fourth quarter 2022
and $2.5 million for the first quarter 2022. The table below
summarizes our results of operations:
Summary
of Results
($ in thousands, except per
share amounts, unaudited)
Three Months Ended 3/31/2023 3/31/2022
12/31/2022 Revenues
$
250,084
$
150,125
$
287,816
Gross Profit (Loss)
$
15,184
$
(18,609
)
$
31,364
6
%
(12
)%
11
%
Net Income (Loss)
$
(5,165
)
$
(42,031
)
$
2,709
Diluted Earnings (Loss) Per Share
$
(0.03
)
$
(0.28
)
$
0.02
Adjusted EBITDA1
$
35,094
$
2,526
$
49,169
Cash and Cash Equivalents2
$
166,674
$
229,744
$
186,604
Net Debt1
$
91,278
$
(1,065
)
$
74,964
Cash Flows from Operating Activities
$
(5,392
)
$
(17,413
)
$
49,712
Free Cash Flow1
$
(11,692
)
$
(18,036
)
$
21,198
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 12/31/22 and $72.9 million as of 3/31/22
Owen Kratz, President and Chief Executive Officer of Helix,
stated, “Our 2023 performance has started out as we expected, with
the Q7000 transiting to the Asia Pacific region, the Q5000
undergoing regulatory inspections, scheduled maintenance on our
North Sea intervention vessels and seasonally slower Gulf of Mexico
shelf and North Sea robotics activities. Nonetheless, we performed
well, including both Siem Helix vessels operating a full quarter on
their long-term contracts in Brazil that commenced late in the
fourth quarter 2022, seasonally strong North Sea intervention
vessels utilization, good utilization and rates on the Q4000, and
continued expansion of our robotics capabilities with a full
quarter of operations on our newly acquired i-Plough trencher. Our
outlook for the remainder of the year is strong. The Q7000 should
commence its New Zealand decommissioning project during the second
quarter. We anticipate solid utilization in the North Sea and Gulf
of Mexico Well Intervention businesses for the remainder of the
year following the Q4000 completing its dry docking during the
second quarter. Our Shallow Water Abandonment and Robotics
businesses are expected to continue to have higher seasonal
activity levels. We have contracted one of our new intervention
riser systems on a long-term project offshore Australia, and we
expect to commence our first trenching campaign in Taiwan during
the second quarter. With this robust outlook for the remainder of
the year, we began executing on our recently announced share
repurchase program in the first quarter and expect to continue
doing so this year, aligning with our cash generation.”
Segment
Information, Operational and Financial Highlights
($ in thousands,
unaudited)
Three Months Ended 3/31/2023 3/31/2022
12/31/2022 Revenues: Well Intervention
$
142,438
$
106,367
$
167,658
Robotics
49,222
37,351
48,538
Shallow Water Abandonment1
49,381
-
57,409
Production Facilities
20,905
18,294
27,895
Intercompany Eliminations
(11,862
)
(11,887
)
(13,684
)
Total
$
250,084
$
150,125
$
287,816
Income (Loss) from Operations: Well Intervention
$
(8,143
)
$
(31,758
)
$
2,554
Robotics
5,094
1,480
7,127
Shallow Water Abandonment1
6,822
-
5,864
Production Facilities
5,157
5,851
9,237
Change in Fair Value of Contingent Consideration
(3,992
)
-
(13,390
)
Corporate / Other / Eliminations
(13,241
)
(8,550
)
(16,520
)
Total
$
(8,303
)
$
(32,977
)
$
(5,128
)
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 decreased $25.2 million, or 15%,
during the first quarter 2023 compared to the prior quarter. Our
first quarter 2023 revenues decreased primarily due to lower
revenue on the Q7000, as well as lower utilization on the Q5000 and
the North Sea vessels due to scheduled regulatory inspections and
maintenance during the first quarter. The revenue decreases were
offset in part by higher spot rates on the Q4000 and a full quarter
of operations of the Siem Helix 1 and Siem Helix 2 on their
long-term contracts at improved rates in Brazil. During the first
quarter 2023, the Q7000 had 53 days of dry dock during which it
generated no revenue and 37 days of paid transit and mobilization
to Asia Pacific for which all revenues have been deferred. During
the prior quarter, the Q7000 realized revenue over 71 days. During
the first quarter 2023, the Q5000 underwent its periodic class
certification, and the North Sea vessels performed collectively
approximately one month of routine scheduled maintenance. Overall
Well Intervention vessel utilization decreased to 80% during the
first quarter 2023 compared to 97% during the prior quarter. Well
Intervention generated operating losses of $8.1 million during the
first quarter 2023 compared to operating income of $2.6 million
during the prior quarter primarily due to lower revenues and higher
cost deferrals during the first quarter.
Well Intervention revenues increased $36.1 million, or 34%,
during the first quarter 2023 compared to the first quarter 2022.
The increase was primarily due to higher utilization in the North
Sea and higher rates in the Gulf of Mexico and Brazil, offset in
part by lower revenue on the Q7000 during the first quarter 2023.
North Sea revenues improved with strong winter season activity,
generating 81% utilization compared to the first quarter 2022,
which generated 13% utilization. Gulf of Mexico revenues also
benefitted from an improved day rate environment year over year,
and revenues in Brazil increased during the first quarter 2023
primarily due to improved rates as both vessels commenced long-term
contracts with improved rates at the end of 2022. During the first
quarter 2023, all transit and mobilization fees were deferred on
the Q7000’s paid transit to its contracted work in Asia Pacific.
Overall Well Intervention vessel utilization increased to 80%
during the first quarter 2023 compared to 67% during the first
quarter 2022. Well Intervention generated operating losses of $8.1
million during the first quarter 2023 compared to losses of $31.8
million during the first quarter 2022 primarily due to higher
revenues.
Robotics
Robotics revenues increased $0.7 million, or 1%, during the
first quarter 2023 compared to the prior quarter. The increase in
revenues was due to higher overall rates on ROVs and vessels during
the first quarter, offset in part by a slight reduction in vessel,
ROV and trenching utilization during the first quarter. Chartered
vessel activity decreased to 295 days compared to 332 days with
fewer spot vessel days, and vessel utilization decreased to 91%
compared to 96%, during the first quarter 2023 compared the prior
quarter. Vessel days included 13 spot vessel days during the first
quarter 2023 compared to 68 spot vessel days during the prior
quarter. ROV and trencher utilization decreased to 56% during the
first quarter 2023 compared to 58% during the prior quarter.
Integrated vessel trenching days decreased to 66 days during the
first quarter 2023, compared to 160 days during the prior quarter.
Trenching activity during the first quarter also included 90 days’
utilization of the i-Plough as a stand-alone trencher performing
site clearance on a third-party vessel. The IROV boulder grab had
no utilization during the first quarter compared to 41 days’
utilization during the prior quarter completing seabed clearance
operations on the U.S. east coast. Robotics operating income
decreased $2.0 million during the first quarter 2023 compared to
the prior quarter due to higher project costs.
Robotics revenues increased $11.9 million, or 32%, during the
first quarter 2023 compared to the first quarter 2022. The increase
in revenues was primarily due to higher ROV and trenching
activities, offset in part by fewer vessel days year over year. ROV
and trencher utilization increased to 56% during the first quarter
2023 from 35% during the first quarter 2022 and included 66 days of
integrated vessel trenching in both the first quarters 2023 and
2022, as well as 90 days of stand-alone trencher activities during
the first quarter 2023. Chartered vessel days decreased to 295 days
compared to 323 days, and vessel utilization remained relatively
flat at 91% during the first quarter 2023 compared to 90% during
the first quarter 2022, due to fewer spot vessel days during the
first quarter 2023 performing site clearance work in the North Sea.
Robotics operating income increased $3.6 million during the first
quarter 2023 compared to the first quarter 2022 primarily due to
higher revenues.
Shallow Water Abandonment
Shallow Water Abandonment revenues decreased $8.0 million, or
14%, during the first quarter 2023 compared to the previous
quarter. The decrease in revenues reflected generally lower winter
seasonal activity in the Gulf of Mexico with a reduction in vessel
utilization and fewer reimbursable revenues, offset in part by an
increase in system utilization and increased heavy lift barge
utilization, during the first quarter 2023. Overall vessel
utilization was 58% during the first quarter 2023 compared to 67%
during the prior quarter. Plug and abandonment and coiled tubing
systems achieved 1,277 days utilization, or 68% based on 21
marketable systems, during the first quarter 2023 compared to 1,247
days utilization, or 65%, during the prior quarter, and the Epic
Hedron heavy lift barge achieved 13 days utilization, or 14%,
during the first quarter 2023 compared to being idle during the
prior quarter. Shallow Water Abandonment operating income increased
$1.0 million during the first quarter 2023 compared to the fourth
quarter 2022 primarily due to improved margins with lower
reimbursable revenues and costs.
Production Facilities
Production Facilities revenues decreased $7.0 million, or 25%,
during the first quarter 2023 compared to the prior quarter due to
lower oil and gas production with the Thunder Hawk wells being
shut-in for planned maintenance during the current quarter as well
as a retroactive rate adjustment during the prior quarter pursuant
to our production contract with the Helix Producer I. Production
Facilities operating income decreased $4.1 million during the first
quarter 2023 compared to the prior quarter due to lower
revenues.
Production Facilities revenues increased $2.6 million, or 14%,
compared to the first quarter 2022 primarily due to higher oil and
gas production with the contribution from our interest in the
Thunder Hawk field acquired during the third quarter 2022 and
improved rates on our Helix Producer I production contract.
Production Facilities operating income decreased $0.7 million
during the first quarter 2023 due to higher oil and gas operating
costs following the Thunder Hawk field acquisition compared to the
prior year.
Selling, General and Administrative and
Other
Share Repurchases
Cash flows during the first quarter 2023 included $5.0 million
for share repurchases pursuant to our recently announced share
repurchase program.
Selling, General and Administrative
Selling, general and administrative expenses were $19.6 million,
or 7.8% of revenue, during the first quarter 2023 compared to $22.8
million, or 7.9% of revenue, during the prior quarter. The decrease
during the first quarter was primarily due to lower incentive
compensation costs compared to the prior quarter.
Acquisition and Integration Costs
Acquisition and integration costs were $0.2 million during the
first quarter 2023, a decrease of $0.1 million compared to the
prior quarter and included primarily professional fees and
financial and operational integration costs related to our
acquisition of Alliance, which closed on July 1, 2022.
Change in Fair Value of Contingent Consideration
Change in fair value of contingent consideration was $4.0
million during the first quarter 2023 and reflects an increase in
the fair value of the estimated earn-out payable in 2024 to the
seller of Alliance.
Other Income and Expenses
Other income, net was $3.4 million during the first quarter 2023
compared to $14.3 million during the prior quarter. Other income,
net includes predominantly unrealized non-cash foreign currency
gains related to the approximate 2% and 8% strengthening of the
British pound during the first quarter 2023 and fourth quarter
2022, respectively, on U.S. dollar denominated intercompany debt in
our U.K. entities.
Cash Flows
Operating cash flows were $(5.4) million during the first
quarter 2023 compared to $49.7 million during the prior quarter and
$(17.4) million during the first quarter 2022. The reduction in
operating cash flows quarter over quarter was primarily due to
lower earnings and higher regulatory certification costs for our
vessels and systems and higher working capital outflows during the
first quarter 2023 compared to the prior quarter. The improvement
in operating cash flows year over year was primarily due to higher
earnings, offset in part by higher regulatory recertification costs
for our vessels and systems and higher working capital outflows
during the first quarter 2023 compared to the first quarter 2022.
Cash paid for regulatory recertifications for our vessels and
systems, which are included in operating cash flows, were $17.2
million during the first quarter 2023 compared to $3.9 million
during the prior quarter and $5.5 million during the first quarter
2022.
Capital expenditures, which are included in investing cash
flows, totaled $6.7 million during the first quarter 2023 compared
to $28.5 million during the prior quarter and $0.6 million during
the first quarter 2022. Capital expenditures during the fourth
quarter 2022 included our acquisitions of three trenchers and an
interest in two subsea intervention systems.
Free Cash Flow was $(11.7) million during the first quarter 2023
compared to $21.2 million during the prior quarter and $(18.0)
million during the first quarter 2022. The decrease in Free Cash
Flow quarter over quarter was primarily due to lower operating cash
flows, offset in part by lower capital expenditures during the
first quarter 2023. The improvement in Free Cash Flow year over
year was primarily due to improved earnings 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 $166.7 million at March 31, 2023,
excluding $2.5 million of restricted cash. Available capacity under
our ABL facility at March 31, 2023 was $80.0 million, resulting in
total liquidity of $246.7 million. At March 31, 2023 we had $260.5
million of long-term debt and Net Debt of $91.3 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 first quarter 2023 results
(see the "For the Investor" page of Helix's website,
www.helixesg.com). The teleconference, scheduled for Tuesday, April
25, 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 1-800-749-1342 for participants
in the United States and 1-212-231-2919 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 remaining 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; the COVID-19
pandemic and oil price volatility and their respective 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; the results and effects of the COVID-19
pandemic and actions by governments, customers, suppliers and
partners with respect thereto; 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 Mar. 31, (in thousands, except per share data)
2023
2022
(unaudited) Net revenues
$
250,084
$
150,125
Cost of sales
234,900
168,734
Gross profit (loss)
15,184
(18,609
)
Gain on disposition of assets, net
367
-
Acquisition and integration costs
(231
)
-
Change in fair value of contingent consideration
(3,992
)
-
Selling, general and administrative expenses
(19,631
)
(14,368
)
Loss from operations
(8,303
)
(32,977
)
Net interest expense
(4,187
)
(5,174
)
Other income (expense), net
3,444
(3,881
)
Royalty income and other
1,863
2,141
Loss before income taxes
(7,183
)
(39,891
)
Income tax provision (benefit)
(2,018
)
2,140
Net loss
$
(5,165
)
$
(42,031
)
Loss per share of common stock: Basic
$
(0.03
)
$
(0.28
)
Diluted
$
(0.03
)
$
(0.28
)
Weighted average common shares outstanding: Basic
151,764
151,142
Diluted
151,764
151,142
Comparative Condensed Consolidated Balance Sheets
Mar. 31, 2023 Dec. 31, 2022 (in thousands)
(unaudited)
ASSETS Current Assets: Cash and
cash equivalents
$
166,674
$
186,604
Restricted cash
2,508
2,507
Accounts receivable, net
216,946
212,779
Other current assets
63,228
58,699
Total Current Assets
449,356
460,589
Property and equipment, net
1,626,151
1,641,615
Operating lease right-of-use assets
191,051
197,849
Deferred recertification and dry dock costs, net
53,697
38,778
Other assets, net
49,079
50,507
Total Assets
$
2,369,334
$
2,389,338
LIABILITIES AND SHAREHOLDERS' EQUITY Current
Liabilities: Accounts payable
$
134,363
$
135,267
Accrued liabilities
60,811
73,574
Current maturities of long-term debt
38,452
38,200
Current operating lease liabilities
54,407
50,914
Total Current Liabilities
288,033
297,955
Long-term debt
222,008
225,875
Operating lease liabilities
145,186
154,686
Deferred tax liabilities
97,577
98,883
Other non-current liabilities
100,810
95,230
Shareholders' equity
1,515,720
1,516,709
Total Liabilities and Equity
$
2,369,334
$
2,389,338
Helix Energy Solutions Group, Inc. Reconciliation of
Non-GAAP Measures Three Months Ended (in
thousands, unaudited)
3/31/2023 3/31/2022
12/31/2022 Reconciliation
from Net Income (Loss) to Adjusted EBITDA: Net income
(loss)
$
(5,165
)
$
(42,031
)
$
2,709
Adjustments: Income tax provision (benefit)
(2,018
)
2,140
2,529
Net interest expense
4,187
5,174
4,333
Other (income) expense, net
(3,444
)
3,881
(14,293
)
Depreciation and amortization
37,537
33,488
40,096
EBITDA
31,097
2,652
35,374
Adjustments: Gain on disposition of assets, net
(367
)
-
-
Acquisition and integration costs
231
-
315
Change in fair value of contingent consideration
3,992
-
13,390
General provision (release) for current expected credit losses
141
(126
)
90
Adjusted EBITDA
$
35,094
$
2,526
$
49,169
Free Cash Flow:
Cash flows from operating activities
$
(5,392
)
$
(17,413
)
$
49,712
Less: Capital expenditures, net of proceeds from sale of assets
(6,300
)
(623
)
(28,514
)
Free Cash Flow
$
(11,692
)
$
(18,036
)
$
21,198
Net Debt:
Long-term debt including current maturities
$
260,460
$
301,613
$
264,075
Less: Cash and cash equivalents and restricted cash
(169,182
)
(302,678
)
(189,111
)
Net Debt
$
91,278
$
(1,065
)
$
74,964
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230424005909/en/
Erik Staffeldt Executive Vice President and CFO Ph: 281-618-0465
email: estaffeldt@helixesg.com
Helix Energy Solutions (NYSE:HLX)
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