Helix Reports First Quarter 2018 Results

HOUSTON–(BUSINESS WIRE)–Helix Energy Solutions Group, Inc. (NYSE: HLX) reported a net loss of
$2.6 million, or $(0.02) per diluted share, for the first quarter of
2018 compared to a net loss of $16.4 million, or $(0.11) per diluted
share, for the same period in 2017 and net income of $50.6 million, or
$0.34 per diluted share, for the fourth quarter of 2017. Net income in
the fourth quarter of 2017 includes a non-cash benefit of approximately
$51.6 million, or $0.35 per diluted share, related to the U.S. tax law
changes enacted in December 2017.

Helix reported Adjusted EBITDA1 of $27.6 million for the
first quarter of 2018 compared to $14.6 million for the first quarter of
2017 and $32.4 million for the fourth quarter of 2017. The table below
summarizes our results of operations:

Summary of Results

($ in thousands, except per share amounts, unaudited)

As of and for the Three Months Ended

3/31/2018 3/31/2017 12/31/2017
Revenues $ 164,262 $ 104,528 $ 163,266
Gross Profit (Loss) $ 12,983 $ (825 ) $ 23,483
8 % -1 % 14 %
Net Income (Loss) $ (2,560 ) $ (16,415 ) $ 50,580
Diluted Earnings (Loss) Per Share $ (0.02 ) $ (0.11 ) $ 0.34
Adjusted EBITDA1 $ 27,566 $ 14,622 $ 32,415
Cash and cash equivalents $ 273,985 $ 537,726 $ 266,592
Cash flow from operating activities $ 41,046 $ 28,849 $ 20,315

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

Owen Kratz, President and Chief Executive Officer of Helix, stated, “Our
first quarter 2018 results reflect strong operational execution by our
team. In the GOM, we successfully introduced the 15K IRS system to the
market, and the Q5000, Q4000, and Grand Canyon II
were on contract for substantially all of the quarter. Our results in
Brazil improved, reflecting the first full quarter of operations for the Siem
Helix 2 and continued strong performance for the Siem Helix 1.
In the North Sea, we maintained tight cost control measures until
seasonal activity picked up in March. We will continue to focus on
operational execution and maximizing our financial performance.”

Segment Information, Operational and
Financial Highlights

($ in thousands, unaudited)

Three Months Ended
3/31/2018 3/31/2017 12/31/2017
Revenues:
Well Intervention $ 129,569 $ 74,621 $ 107,122
Robotics 27,169 21,968 50,677
Production Facilities 16,321 16,375 16,387
Intercompany Eliminations (8,797 ) (8,436 ) (10,920 )
Total $ 164,262 $ 104,528 $ 163,266
Income (Loss) from Operations:
Well Intervention $ 13,877 $ 1,418 $ 15,377
Robotics (14,317 ) (16,306 ) (4,976 )
Production Facilities 7,359 6,924 7,448
Corporate / Other (8,256 ) (9,962 ) (11,334 )
Intercompany Eliminations 221 221 243
Total $ (1,116 ) $ (17,705 ) $ 6,758

Business Segment Results

  • Well Intervention revenues increased $22.4 million, or 21%, in the
    first quarter of 2018 from the fourth quarter of 2017 primarily due to
    a full quarter of Siem Helix 2 operations for Petrobras, full
    utilization of the Q4000, improved utilization of our 10K
    intervention riser system (“IRS”) rental unit and commencement of our
    15K IRS rental unit, offset in part by lower utilization of our North
    Sea vessels and the Q5000 as compared to the fourth quarter of
    2017. Overall, although Well Intervention vessel utilization decreased
    slightly to 73% in the first quarter of 2018 from 74% in the fourth
    quarter of 2017, revenues increased in the first quarter of 2018 as
    total utilized vessel days increased by 38 days compared to the fourth
    quarter of 2017, primarily due to the commencement of operations on
    the Siem Helix 2 in mid-December 2017.

The first quarter of 2018 experienced the typical seasonal slowdown in
the North Sea. Vessel utilization in the first quarter of 2018 decreased
to 31% from 55% in the fourth quarter of 2017. The Well Enhancer
utilization decreased to 34% in the first quarter of 2018 from 51% in
the fourth quarter of 2017. The Seawell utilization decreased to
28% in the first quarter of 2018 from 60% in the fourth quarter of 2017.
Both vessels were operational beginning in early March and were working
at the end of the quarter.

Vessel utilization in the Gulf of Mexico in the first quarter of 2018
increased to 93% from 83% in the fourth quarter of 2017. The Q4000
was fully utilized in the first quarter of 2018 compared to 66%
utilization in the fourth quarter of 2017. The Q5000 utilization
decreased to 87% in the first quarter of 2018 from 100% in the fourth
quarter of 2017 due to unscheduled downtime. The 15K IRS rental unit
commenced operations in January 2018 and was 86% utilized during the
quarter. The 10K IRS rental unit was fully utilized during the quarter
compared to 29% utilization in the fourth quarter of 2017.

The Siem Helix 1 was utilized 99% in the first quarter of 2018
compared to 98% in the fourth quarter of 2017. The Siem Helix 2
commenced operations in mid-December 2017 and was utilized 88% in the
first quarter of 2018, with monthly utilization improvements during the
quarter.

  • Robotics revenues decreased 46% in the first quarter of 2018 from the
    fourth quarter of 2017. The decrease was driven primarily by normal
    reductions in activity in the North Sea during the winter months.
    Chartered vessel utilization decreased to 56%, including 42 spot
    vessel days, in the first quarter of 2018 from 85%, including 99 spot
    vessel days, in the fourth quarter of 2017. ROV asset utilization
    decreased to 30% in the first quarter of 2018 from 41% in the fourth
    quarter of 2017.

Other Expenses

  • Selling, general and administrative expenses were $14.1 million, or
    8.6% of revenue, in the first quarter of 2018 compared to $16.7
    million, or 10.2% of revenue, in the fourth quarter of 2017. The
    decrease was primarily attributable to decreased costs associated with
    our long-term incentive compensation plans.
  • Net interest expense increased to $3.9 million in the first quarter of
    2018 from $3.3 million in the fourth quarter of 2017 primarily due to
    decreased capitalized interest as a result of the completion of the Siem
    Helix 2 in mid-December 2017.
  • We recorded a $1.1 million loss primarily associated with the
    acceleration of debt issuance costs related to a partial early
    prepayment of $61 million of our Term Loan.
  • Other income was $0.9 million in the first quarter of 2018 compared to
    other expense of $0.8 million in the fourth quarter of 2017. The
    change was primarily driven by foreign currency transaction gains as
    well as unrealized gains from our foreign currency exchange contracts
    that are not designated as hedges. Offsetting these gains was a $1.1
    million loss related to the write-down of a note receivable.

Financial Condition and Liquidity

  • In March 2018 we issued $125 million of Convertible Senior Notes due
    2023 (2023 Notes). We used the proceeds to fund the required
    repurchase of $59.3 million of our Convertible Senior Notes due 2032
    (2032 Notes). We are redeeming the remaining 2032 Notes of $0.8
    million in the second quarter of 2018. The remaining proceeds from the
    2023 Notes’ issuance were used to prepay $61 million of our Term Loan.
  • Cash and cash equivalents at March 31, 2018 were approximately $274
    million. Consolidated long-term debt decreased to $467 million at
    March 31, 2018 from $496 million at December 31, 2017. Consolidated
    net debt at March 31, 2018 was $193 million. Net debt to book
    capitalization at March 31, 2018 was 11%. (Net debt and net debt to
    book capitalization are non-GAAP measures. See reconciliation below.)
  • Capital additions (including capitalized interest and dry dock costs)
    totaled $17 million in the first quarter of 2018 compared to $95
    million in the fourth quarter of 2017 and $63 million in the first
    quarter of 2017. Our capital additions in the fourth quarter of 2017
    included a $69 million installment payment to the shipyard for the Q7000.
  • Operating cash flow increased to $41 million in the first quarter of
    2018 compared to $20 million in the fourth quarter of 2017 primarily
    due to improvements in working capital. Operating cash flow increased
    by $12 million year over year due primarily to lower operating loss in
    the first quarter of 2018. Free cash flow was $20 million in the first
    quarter of 2018 compared to $(80) million in the fourth quarter of
    2017 due to higher operating cash flow and reduced capital
    expenditures following the $69 million Q7000 shipyard payment
    in December 2017. Free cash flow increased $39 million year over year
    due to higher operating cash flow in the first quarter of 2018 and
    reduced capital expenditures associated with the Siem Helix 1
    and Siem Helix 2 vessels, which were completed during 2017.

Conference Call Information

Further details are provided in the presentation for Helix’s quarterly
conference call to review its first quarter 2018 results (see the
“Investor Relations” page of Helix’s website, www.HelixESG.com).
The call, scheduled for Tuesday, April 24, 2018 at 9:00 a.m. Central
Time, 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
1-800-786-6596 for persons in the United States and 1-212-231-2919 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,
net debt to book capitalization and free cash flow. We define EBITDA as
earnings before income taxes, net interest expense, gain or loss on
extinguishment of long-term debt, net other income or expense, and
depreciation and amortization expense. Non-cash losses on equity
investments 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 foreign currency exchange
contracts not designated as hedging instruments and other than temporary
loss on note receivable, 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 define free cash flow as cash flow from
operating activities less capital expenditures, net of proceeds from
sale of assets.

We use EBITDA and free cash flow 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 measures of EBITDA and free cash flow provide 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, Adjusted EBITDA and free cash flow
differently from the way we do, which may limit their usefulness as
comparative measures. EBITDA, Adjusted EBITDA and free cash flow 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 regarding
our ability to enter into and/or perform commercial contracts; 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 that could
cause results to differ materially from those in the forward-looking
statements, including but not limited to 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 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)

2018 2017
(unaudited)
Net revenues $ 164,262 $ 104,528
Cost of sales 151,279 105,353
Gross profit (loss) 12,983 (825 )
Loss on disposition of assets, net (39 )
Selling, general and administrative expenses (14,099 ) (16,841 )
Loss from operations (1,116 ) (17,705 )
Equity in losses of investment (136 ) (152 )
Net interest expense (3,896 ) (5,226 )
Loss on extinguishment of long-term debt (1,105 )
Other income (expense), net 925 (535 )
Other income – oil and gas 2,855 2,602
Loss before income taxes (2,473 ) (21,016 )
Income tax provision (benefit) 87 (4,601 )
Net loss $ (2,560 ) $ (16,415 )
Loss per share of common stock:

Basic

$ (0.02 ) $ (0.11 )

Diluted

$ (0.02 ) $ (0.11 )
Weighted average common shares outstanding:
Basic 146,653 143,244
Diluted 146,653 143,244
Comparative Condensed Consolidated Balance Sheets
ASSETS LIABILITIES & SHAREHOLDERS' EQUITY
(in thousands) Mar. 31, 2018 Dec. 31, 2017 (in thousands) Mar. 31, 2018 Dec. 31, 2017
(unaudited) (unaudited)
Current Assets: Current Liabilities:
Cash and cash equivalents (1) $ 273,985 $ 266,592 Accounts payable $ 71,722 $ 81,299
Accounts receivable, net 121,309 143,283 Accrued liabilities 64,396 71,680
Other current assets 46,236 41,768 Income tax payable 2,799
Total Current Assets 441,530 451,643 Current maturities of long-term debt (1) 46,492 109,861
Total Current Liabilities 182,610 265,639
Long-term debt (1) 420,878 385,766
Deferred tax liabilities 108,546 103,349
Property & equipment, net 1,802,226 1,805,989 Other non-current liabilities 38,096 40,690
Other assets, net 95,392 105,205 Shareholders' equity (1) 1,589,018 1,567,393
Total Assets $ 2,339,148 $ 2,362,837 Total Liabilities & Equity $ 2,339,148 $ 2,362,837
(1) Net debt to book capitalization – 11% at March 31, 2018.
Calculated as net debt (total long-term debt less cash and cash
equivalents – $193,385) divided by the sum of net debt and
shareholders' equity ($1,782,403).
Helix Energy Solutions Group, Inc.
Reconciliation of
Non-GAAP Measures

Earnings Release:

Three Months Ended
3/31/2018 3/31/2017 12/31/2017
(in thousands)

Reconciliation from Net Income (Loss) to
Adjusted EBITDA:

Net income (loss) $ (2,560 ) $ (16,415 ) $ 50,580
Adjustments:
Income tax provision (benefit) 87 (4,601 ) (49,307 )
Net interest expense 3,896 5,226 3,298
Loss on extinguishment of long-term debt 1,105
Other (income) expense, net (925 ) 535 815
Depreciation and amortization 27,782 30,858 26,075
Non-cash losses on equity investment 1,800
EBITDA 29,385 15,603 33,261
Adjustments:
Loss on disposition of assets, net 39
Realized losses from foreign exchange contracts not designated as
hedging instruments
(690 ) (1,020 ) (846 )
Other than temporary loss on note receivable (1,129 )
Adjusted EBITDA $ 27,566 $ 14,622 $ 32,415

Free Cash Flow:

Cash flow from operating activities $ 41,046 $ 28,849 $ 20,315
Less: Capital expenditures, net of proceeds from sale of assets (21,214 ) (48,000 ) (99,699 )
Free cash flow $ 19,832 $ (19,151 ) $ (79,384 )

We define EBITDA as earnings before income taxes, net interest expense,
gain or loss on extinguishment of long-term debt, net other income or
expense, and depreciation and amortization expense. Non-cash losses on
equity investments 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 foreign currency
exchange contracts not designated as hedging instruments and other than
temporary loss on note receivable, which are excluded from EBITDA as a
component of net other income or expense. We define free cash flow as
cash flow from operating activities less capital expenditures, net of
proceeds from sale of assets. We use EBITDA and free cash flow 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 measures of EBITDA and free cash
flow provide 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, Adjusted EBITDA
and free cash flow differently from the way we do, which may limit their
usefulness as comparative measures. EBITDA, Adjusted EBITDA and free
cash flow 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.

Contacts

Helix Energy Solutions Group, Inc.
Erik Staffeldt,
281-618-0400
Senior Vice President & CFO