Helix Reports Second Quarter 2015 Results

HOUSTON--()--Helix Energy Solutions Group, Inc. (NYSE: HLX) reported a net loss of $(2.6) million, or $(0.03) per diluted share, for the second quarter of 2015 compared to net income of $57.8 million, or $0.55 per diluted share, for the same period in 2014 and net income of $19.6 million, or $0.19 per diluted share, for the first quarter of 2015. Net income for the six months ended June 30, 2015 was $17.0 million, or $0.16 per diluted share, compared with net income of $111.5 million, or $1.05 per diluted share, for the six months ended June 30, 2014.

Owen Kratz, President and Chief Executive Officer of Helix, stated, “Our second quarter results are indicative of overall weak industry conditions in the oilfield services sector. Our well intervention business was negatively impacted this quarter by a longer than planned Q4000 regulatory dry-dock and customer delays on the H534; this was partially offset by increased utilization in the North Sea, anchored by the Well Enhancer and the return to work of the Skandi Constructor. This quarter we took delivery of the Q5000 and made the final shipyard payment with proceeds from our Q5000 Term Loan. Additional proceeds from the loan increased our cash position. Helix continues to implement the steps necessary to secure our long term position in this market.”

 

Summary of Results

($ in thousands, except per share amounts, unaudited)
 
    Three Months Ended       Six Months Ended
6/30/2015       6/30/2014       3/31/2015 6/30/2015       6/30/2014
Revenues $ 166,016 $ 305,587 $ 189,641 $ 355,657 $ 559,159
 
Gross Profit $ 24,208 $ 109,138 $ 34,947 $ 59,155 $ 184,984
15 % 36 % 18 % 17 % 33 %
 
Net Income (Loss) Applicable to Common Shareholders $ (2,635 ) $ 57,782 $ 19,642 $ 17,007 $ 111,501
 
Diluted Earnings (Losses) Per Share $ (0.03 ) $ 0.55 $ 0.19 $ 0.16 $ 1.05
 
Adjusted EBITDA1 $ 35,689 $ 109,050 $ 51,364 $ 87,053 $ 201,551
 

1 EBITDA is a non-GAAP measure. See reconciliation below.

 

Segment Information, Operational and Financial Highlights

($ in thousands, unaudited)

           
Three Months Ended
6/30/2015 6/30/2014 3/31/2015
Revenues:
Well Intervention $ 85,675 $ 181,218 $ 104,051
Robotics 75,101 119,704 80,171
Production Facilities 20,293 24,049 18,385
Intercompany Eliminations   (15,053 )   (19,384 )   (12,966 )
Total $ 166,016   $ 305,587   $ 189,641  
 
Income from Operations:
Well Intervention $ 4,135 $ 64,775 $ 14,794
Robotics 4,303 21,877 9,457
Production Facilities 8,444 10,459 4,578
Gain (Loss) on Disposition of Assets - (1,078 ) -
Corporate / Other (9,009 ) (17,322 ) (6,607 )
Intercompany Eliminations   (199 )   45     106  
Total $ 7,674   $ 78,756   $ 22,328  
 

Business Segment Results

  • Well Intervention revenues decreased 18% in the second quarter of 2015 from revenues in the first quarter of 2015 primarily due to lower vessel utilization in the Gulf of Mexico. Vessel utilization in the Gulf of Mexico was 42% in the second quarter compared to 81% in the first quarter of 2015. The Q4000 was in dry-dock for 64 days during the quarter, while the H534 utilization decreased to 55% in the second quarter compared to 71% in the first quarter of 2015. In the North Sea, vessel utilization was 84% in the second quarter, compared to 54% in the first quarter of 2015. The Well Enhancer was fully utilized in the second quarter, while the Skandi Constructor utilization increased to 68% in the second quarter after being dockside most of the first quarter and most of April. The rental intervention riser systems continue to positively contribute to revenues; IRS #2 was on-hire for entire second quarter of 2015, while IRS #1 was deployed in June and on-hire for 25 days.
  • Robotics revenues decreased 6% in the second quarter of 2015 from revenues in the first quarter of 2015 driven by lower selling rates. The robotics chartered vessel fleet utilization decreased to 81% for the quarter from 86% in the first quarter of 2015. During the second quarter we added the Grand Canyon II to our chartered vessel fleet, increasing the fleet to five vessels. ROV utilization remained constant quarter over quarter at 61%.

Other Expenses

  • Selling, general and administrative expenses were 10.0% of revenue in the second quarter of 2015, compared to 6.7% of revenue in the first quarter of 2015. Our second quarter 2015 expenses include $2.5 million of charges associated with the provision for the uncertain collection of a portion of an existing trade receivable. The decrease in SG&A during Q1 primarily reflects a reduction of costs associated with our variable performance-based incentive compensation.
  • Net interest expense and other increased to $10.3 million in the second quarter of 2015 from $5.2 million in the first quarter of 2015. Net interest expense increased to $5.2 million in the second quarter of 2015, reflecting the funding of the Q5000 Term Loan at the end of April. Other expense was $5.0 million in the second quarter of 2015 compared to $1.2 million in the first quarter of 2015, which primarily reflects foreign exchange fluctuations in our non-U.S. dollar functional currencies.

Financial Condition and Liquidity

  • Our total liquidity at June 30, 2015 was approximately $1.0 billion, consisting of $500 million in cash and cash equivalents and $450 million in unused availability under our revolver. Consolidated net debt at June 30, 2015 was $294 million. Net debt to book capitalization at June 30, 2015 was 15%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation below.)
  • We incurred capital expenditures (including capitalized interest) totaling $197 million in the second quarter of 2015, compared to $58 million in the first quarter of 2015. The increase in capital expenditures in the second quarter was driven by the final shipyard payment associated with the delivery of the Q5000 vessel.

Conference Call Information

Further details are provided in the presentation for Helix’s quarterly conference call to review its second quarter 2015 results (see the “Investor Relations” page of Helix’s website, www.HelixESG.com). The call, scheduled for 9:00 a.m. Central Daylight Time on Tuesday, July 21, 2015, 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 800-761-0059 for persons in the United States and 1-212-231-2914 for international participants. The passcode is "Tripodo". A replay of the conference 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 net interest expense and other, income taxes, and depreciation and amortization expense. We deduct the noncontrolling interests related to the adjustment components of EBITDA and the gain or loss on disposition of assets to arrive at our measure of Adjusted EBITDA. Net debt is calculated as the sum of financial debt less cash and cash equivalents on hand. Net debt to book capitalization is calculated by dividing net debt by the sum of net debt and shareholders’ equity. These non-GAAP measures are useful to investors and other internal and external users of our financial statements in evaluating our operating performance because they are widely used by investors in our industry to measure a company’s operating performance without regard to items which can vary substantially from company to company, and help investors meaningfully compare our results from period to period. 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 which 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 future utilization; any projections of financial items; future operations expenditures; any statements regarding the plans, strategies and objectives of management for future operations; any statement 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) 2015 2014 2015 2014
(unaudited) (unaudited)
 
Net revenues $ 166,016 $ 305,587 $ 355,657 $ 559,159
Cost of sales   141,808     196,449     296,502     374,175  
Gross profit 24,208 109,138 59,155 184,984
Gain on disposition of assets, net - (1,078 ) - 10,418
Selling, general and administrative expenses   (16,534 )   (29,304 )   (29,153 )   (49,698 )
Income from operations 7,674 78,756 30,002 145,704
Equity in earnings (losses) of investments (323 ) (507 ) (302 ) 201
Other income - oil and gas 899 1,596 3,825 13,872
Net interest expense and other   (10,271 )   (4,534 )   (15,497 )   (9,827 )
Income (loss) before income taxes (2,021 ) 75,311 18,028 149,950
Income tax provision   614     17,529     1,021     37,946  
Net income (loss), including noncontrolling interests (2,635 ) 57,782 17,007 112,004
Less net income applicable to noncontrolling interests   -     -     -     (503 )
Net income (loss) applicable to common shareholders $ (2,635 ) $ 57,782   $ 17,007   $ 111,501  
 
Earnings (losses) per share of common stock:

Basic

$ (0.03 ) $ 0.55   $ 0.16   $ 1.06  

Diluted

$ (0.03 ) $ 0.55   $ 0.16   $ 1.05  
 
Weighted average common shares outstanding:
Basic   105,357     104,992     105,324     105,059  
Diluted   105,357     105,295     105,324     105,359  
 
Comparative Condensed Consolidated Balance Sheets
                     
ASSETS LIABILITIES & SHAREHOLDERS' EQUITY
(in thousands) Jun. 30, 2015 Dec. 31, 2014 (in thousands) Jun. 30, 2015 Dec. 31, 2014
(unaudited) (unaudited)
Current Assets: Current Liabilities:
Cash and equivalents (1) $ 500,062 $ 476,492 Accounts payable $ 98,804 $ 83,403
Accounts receivable, net 163,978 135,300 Accrued liabilities 66,788 104,923
Current deferred tax assets 32,331 31,180 Income tax payable - 9,143
Other current assets   36,664   51,301 Current maturities of L-T debt (1)   71,497   28,144
Total Current Assets 733,035 694,273 Total Current Liabilities 237,089 225,613
 
 
Property & equipment, net 1,919,973 1,735,384 Long-term debt (1) 722,515 523,228
Equity investments 145,588 149,623 Deferred tax liabilities 257,852 260,275
Goodwill 62,294 62,146 Other non-current liabilities 41,414 38,108
Other assets, net   73,306   59,272 Shareholders' equity (1)   1,675,326   1,653,474
Total Assets $ 2,934,196 $ 2,700,698 Total Liabilities & Equity $ 2,934,196 $ 2,700,698
 

(1) Net debt to book capitalization - 15% at June 30, 2015. Calculated as total debt less cash and equivalents ($293,950) divided by sum of total net debt and shareholders' equity ($1,969,276).

 

Helix Energy Solutions Group, Inc.

Reconciliation of Non-GAAP Measures

Three and Six Months Ended June 30, 2015

         

Earnings Release:

 

Reconciliation From Net Income (Loss) Applicable to Common Shareholders to Adjusted EBITDA:

Six Months
2Q15 2Q14 1Q15 2015 2014

(in thousands)

 
Net income (loss) applicable to common shareholders $ (2,635 ) $ 57,782 $ 19,642 $ 17,007 $ 111,501
Adjustments:
Net income applicable to noncontrolling interests - - - - 503
Income tax provision 614 17,529 407 1,021 37,946
Net interest expense and other 10,271 4,534 5,226 15,497 9,827
Depreciation and amortization   27,439     28,127   26,089   53,528   52,853  

EBITDA

  35,689     107,972   51,364   87,053   212,630  
Adjustments:
Noncontrolling interests - - - - (661 )
(Gain) loss on disposition of assets, net   -     1,078   -   -   (10,418 )
Adjusted EBITDA $ 35,689   $ 109,050 $ 51,364 $ 87,053 $ 201,551  
 

We define EBITDA as earnings before net interest expense and other, income taxes, and depreciation and amortization expense. We deduct the noncontrolling interests related to the adjustment components of EBITDA and the gain or loss on disposition of assets to arrive at our measure of Adjusted EBITDA. These non-GAAP measures are useful to investors and other internal and external users of our financial statements in evaluating our operating performance because they are widely used by investors in our industry to measure a company's operating performance without regard to items which can vary substantially from company to company and help investors meaningfully compare our results from period to period. 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 which are excluded from these measures.

Contacts

Helix Energy Solutions Group, Inc.
Erik Staffeldt, 281-618-0400
Finance & Treasury Director

Release Summary

Helix Reports Second Quarter 2015 Results

Contacts

Helix Energy Solutions Group, Inc.
Erik Staffeldt, 281-618-0400
Finance & Treasury Director