Helix Reports Fourth Quarter 2017 Results
HOUSTON–(BUSINESS WIRE)–Helix Energy Solutions Group, Inc. (NYSE: HLX) reported net income of
$50.6 million, or $0.34 per diluted share, for the fourth quarter of
2017 compared to a net loss of $54.4 million, or $(0.46) per diluted
share, for the same period in 2016 and net income of $2.3 million, or
$0.02 per diluted share, for the third quarter of 2017. The net income
for the year ended December 31, 2017 was $30.1 million, or $0.20 per
diluted share, compared to a net loss of $81.4 million, or $(0.73) per
diluted share, for the year ended December 31, 2016. 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 $32.4 million for the
fourth quarter of 2017 compared to $26.9 million for the fourth quarter
of 2016 and $30.5 million for the third quarter of 2017. Adjusted EBITDA
for the year ended December 31, 2017 was $107.2 million compared to
$89.5 million for the year ended December 31, 2016. The table below
summarizes our results of operations:
|
Summary of Results ($ in thousands, except per share amounts, unaudited) |
||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||
| 12/31/2017 | 12/31/2016 | 9/30/2017 | 12/31/2017 | 12/31/2016 | ||||||||||
| Revenues | $ | 163,266 | $ | 128,031 | $ | 163,260 | $ | 581,383 | $ | 487,582 | ||||
| Gross Profit | $ | 23,483 | $ | 17,604 | $ | 21,141 | $ | 62,166 | $ | 46,516 | ||||
| 14 | % | 14 | % | 13 | % | 11 | % | 10 | % | |||||
| Goodwill Impairment | $ | – | $ | (45,107 | ) | $ | – | $ | – | $ | (45,107 | ) | ||
| Non-cash Losses on Equity Investment | $ | (1,800 | ) | $ | (1,674 | ) | $ | – | $ | (1,800 | ) | $ | (1,674 | ) |
| Net Income (Loss) | $ | 50,580 | $ | (54,413 | ) | $ | 2,290 | $ | 30,052 | $ | (81,445 | ) | ||
| Diluted Earnings (Loss) Per Share | $ | 0.34 | $ | (0.46 | ) | $ | 0.02 | $ | 0.20 | $ | (0.73 | ) | ||
| Adjusted EBITDA1 | $ | 32,415 | $ | 26,889 | $ | 30,452 | $ | 107,216 | $ | 89,544 | ||||
1 Adjusted EBITDA is a non-GAAP measure. See reconciliation
below.
Owen Kratz, President and Chief Executive Officer of Helix, stated, “We
finished the year with solid results in the fourth quarter. We were able
to mitigate the seasonal downturn in the North Sea Well Intervention
market with a strong quarter in the Gulf of Mexico and continued
operational improvements in Brazil, including the commencement of
commercial operations of the Siem Helix 2 in December. Our
Robotics results showed slight improvements over the third quarter
results, primarily from trenching work. We look forward to the full year
contribution in 2018 of the Siem Helix 1 and Siem Helix 2,
both with long-term contracts.”
|
Segment Information, Operational and ($ in thousands, unaudited) |
|||||||
| Three Months Ended | |||||||
| 12/31/2017 | 12/31/2016 | 9/30/2017 | |||||
| Revenues: | |||||||
| Well Intervention | $ | 107,122 | $ | 79,738 | $ | 111,522 | |
| Robotics | 50,677 | 40,775 | 47,049 | ||||
| Production Facilities | 16,387 | 17,791 | 16,380 | ||||
| Intercompany Eliminations | (10,920 | ) | (10,273 | ) | (11,691 | ) | |
| Total | $ | 163,266 | $ | 128,031 | $ | 163,260 | |
| Income (Loss) from Operations: | |||||||
| Well Intervention | $ | 15,377 | $ | 7,723 | $ | 16,906 | |
| Robotics | (4,976 | ) | (5,476 | ) | (9,365 | ) | |
| Production Facilities | 7,448 | 8,636 | 7,660 | ||||
| Goodwill Impairment | – | (45,107 | ) | – | |||
| Corporate / Other | (11,334 | ) | (10,600 | ) | (10,633 | ) | |
| Intercompany Eliminations | 243 | 170 | 199 | ||||
| Total | $ | 6,758 | $ | (44,654 | ) | $ | 4,767 |
Business Segment Results
-
Well Intervention revenues decreased $4.4 million, or 4%, in the
fourth quarter of 2017 from the third quarter of 2017 primarily due to
lower utilization of the Q4000 and our vessels in the
North Sea, offset in part by a full quarter of Q5000 operations
for BP, commencement of the Siem Helix 2 and utilization of our
10K intervention riser system rental unit in December. Overall, Well
Intervention vessel utilization decreased to 74% in the fourth quarter
of 2017 from 88% in the third quarter of 2017.
In the North Sea, vessel utilization in the fourth quarter of 2017
decreased to 55% from 90% in the third quarter of 2017. The Well
Enhancer utilization decreased to 51% in the fourth quarter of 2017
from 84% in the third quarter of 2017. The Seawell utilization
decreased to 60% in the fourth quarter of 2017 from 97% in the third
quarter of 2017 driven by typical seasonal reduction in activity. Both
vessels were warm stacked at the end of the fourth quarter.
Vessel utilization in the Gulf of Mexico in the fourth quarter of 2017
increased to 83% from 80% in the third quarter of 2017. The Q4000
utilization decreased to 66% in the fourth quarter of 2017 from 86% in
the third quarter of 2017. The decrease is attributable to idle time
early in the fourth quarter. The Q5000 utilization increased to
100% in the fourth quarter of 2017 from 75% in the third quarter of 2017
due to a full quarter of operations for BP. The 10K intervention riser
system rental unit was utilized 29% during the fourth quarter of 2017
after commencing a project early December compared to being idle in the
third quarter of 2017.
The Siem Helix 1 was utilized 98% in the fourth quarter of 2017
compared to 96% in the third quarter of 2017. The Siem Helix 2
commenced operations mid-December and was utilized 53% during the
period. The vessel experienced some start up downtime, but was on
operational rates at the end of the quarter.
Robotics revenues increased 8% in the fourth quarter of 2017 from the
third quarter of 2017. Chartered vessel utilization increased to 85%,
including 99 spot vessel days, in the fourth quarter of 2017 from 80%,
including 51 spot vessel days, in the third quarter of 2017. ROV asset
utilization decreased to 41% in the fourth quarter of 2017 from 46% in
the third quarter of 2017. Five ROVs were retired at the beginning of
the fourth quarter of 2017.
Other Expenses
-
Selling, general and administrative expenses were $16.7 million, or
10.2% of revenue, in the fourth quarter of 2017 compared to $16.4
million, or 10.0% of revenue, in the third quarter of 2017. The
increase was primarily attributable to costs associated with our
incentive compensation plans. -
The Tax Cuts and Jobs Act of 2017 became effective on December 22,
2017 and significantly modified U.S. corporate income tax law. The new
law reduces the U.S. corporate income tax rate to 21% and establishes
a territorial tax system, which includes a one-time mandatory tax on
previously deferred foreign earnings of certain non-U.S. subsidiaries.
As a result of the tax law changes, Helix recognized an estimated
$51.6 million net deferred tax benefit in the fourth quarter of 2017.
This amount consists of a $59.7 million deferred tax benefit related
to the remeasurement of Helix’s net deferred tax liabilities in the
U.S. at the new lower corporate income tax rate and an $8.1 million
deferred tax expense related to the mandatory tax on previously
unremitted earnings of certain foreign subsidiaries. Helix is
continuing to analyze the impact of the tax law changes, and the
estimated amount may change.
Financial Condition and Liquidity
-
Cash and cash equivalents at December 31, 2017 were approximately $267
million. Consolidated long-term debt decreased to $496 million at
December 31, 2017 from $504 million at September 30, 2017.
Consolidated net debt at December 31, 2017 was $229 million. Net debt
to book capitalization at December 31, 2017 was 13%. (Net debt and net
debt to book capitalization are non-GAAP measures. See reconciliation
below.) -
We incurred capital expenditures (including capitalized interest)
totaling $95 million in the fourth quarter of 2017 compared to $43
million in the third quarter of 2017 and $37 million in the fourth
quarter of 2016. Our capital expenditures in the fourth quarter of
2017 included a $69 million installment payment to the shipyard for
the Q7000. In addition, we incurred mobilization costs for the Siem
Helix 2 of $15 million in the fourth quarter of 2017 and $14
million in the third quarter of 2017.
Conference Call Information
Further details are provided in the presentation for Helix’s quarterly
conference call to review its fourth quarter 2017 results (see the
“Investor Relations” page of Helix’s website, www.HelixESG.com).
The call, scheduled for 9:00 a.m. Central Time, Tuesday, February 20,
2018, 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
1-800-894-8917 for persons in the United States and 1-212-231-2928 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. Non-cash goodwill impairment charges and 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, 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 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 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 Dec. 31, | Twelve Months Ended Dec. 31, | |||||||||
| (in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | ||||||
|
(unaudited) |
(unaudited) | |||||||||
| Net revenues | $ | 163,266 | $ | 128,031 | $ | 581,383 | $ | 487,582 | ||
| Cost of sales | 139,783 | 110,427 | 519,217 | 441,066 | ||||||
| Gross profit | 23,483 | 17,604 | 62,166 | 46,516 | ||||||
| Goodwill impairment | – | (45,107 | ) | – | (45,107 | ) | ||||
| Gain (loss) on disposition of assets, net | – | 1,290 | (39 | ) | 1,290 | |||||
| Selling, general and administrative expenses | (16,725 | ) | (18,441 | ) | (63,257 | ) | (65,934 | ) | ||
| Income (loss) from operations | 6,758 | (44,654 | ) | (1,130 | ) | (63,235 | ) | |||
| Equity in losses of investment | (1,911 | ) | (1,800 | ) | (2,368 | ) | (2,166 | ) | ||
| Net interest expense | (3,298 | ) | (6,232 | ) | (18,778 | ) | (31,239 | ) | ||
| Loss on early extinguishment of long-term debt | – | (4,086 | ) | (397 | ) | (3,540 | ) | |||
| Other income (expense), net | (815 | ) | (508 | ) | (1,434 | ) | 3,510 | |||
| Other income – oil and gas | 539 | 255 | 3,735 | 2,755 | ||||||
| Income (loss) before income taxes | 1,273 | (57,025 | ) | (20,372 | ) | (93,915 | ) | |||
| Income tax benefit | (49,307 | ) | (2,612 | ) | (50,424 | ) | (12,470 | ) | ||
| Net income (loss) | $ | 50,580 | $ | (54,413 | ) | $ | 30,052 | $ | (81,445 | ) |
| Earnings (loss) per share of common stock: | ||||||||||
|
Basic |
$ | 0.34 | $ | (0.46 | ) | $ | 0.20 | $ | (0.73 | ) |
|
Diluted |
$ | 0.34 | $ | (0.46 | ) | $ | 0.20 | $ | (0.73 | ) |
| Weighted average common shares outstanding: | ||||||||||
| Basic | 146,001 | 118,987 | 145,295 | 111,612 | ||||||
| Diluted | 146,081 | 118,987 | 145,300 | 111,612 | ||||||
| Comparative Condensed Consolidated Balance Sheets | ||||||||||
| ASSETS | LIABILITIES & SHAREHOLDERS' EQUITY | |||||||||
| (in thousands) | Dec. 31, 2017 | Dec. 31, 2016 | (in thousands) | Dec. 31, 2017 | Dec. 31, 2016 | |||||
| (unaudited) | (unaudited) | |||||||||
| Current Assets: | Current Liabilities: | |||||||||
| Cash and cash equivalents (1) | $ | 266,592 | $ | 356,647 | Accounts payable | $ | 81,299 | $ | 60,210 | |
| Accounts receivable, net | 143,283 | 112,153 | Accrued liabilities | 71,680 | 58,614 | |||||
| Current deferred tax assets (2) | – | 16,594 |
Income tax payable |
2,799 | – | |||||
| Other current assets | 41,768 | 37,388 | Current maturities of long-term debt (1) | 109,861 | 67,571 | |||||
| Total Current Assets | 451,643 | 522,782 | Total Current Liabilities | 265,639 | 186,395 | |||||
| Long-term debt (1) | 385,766 | 558,396 | ||||||||
| Deferred tax liabilities (2) | 103,349 | 167,351 | ||||||||
| Property & equipment, net | 1,805,989 | 1,651,610 | Other non-current liabilities | 40,690 | 52,985 | |||||
| Other assets, net | 105,205 | 72,549 | Shareholders' equity (1) | 1,567,393 | 1,281,814 | |||||
| Total Assets | $ | 2,362,837 | $ | 2,246,941 | Total Liabilities & Equity | $ | 2,362,837 | $ | 2,246,941 | |
| (1) |
Net debt to book capitalization – 13% at December 31, 2017. Calculated as net debt (total long-term debt less cash and cash equivalents – $229,035) divided by the sum of net debt and shareholders' equity ($1,796,428). |
| (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 December 31, 2017 were presented net of current deferred tax assets. |
|
Helix Energy Solutions Group, Inc. Reconciliation of Non-GAAP Measures |
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|
Earnings Release: |
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|
Reconciliation from Net Income (Loss) to |
||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||
| 12/31/2017 | 12/31/2016 | 9/30/2017 | 12/31/2017 | 12/31/2016 | ||||||||
| (in thousands) | ||||||||||||
| Net income (loss) | $ | 50,580 | $ | (54,413 | ) | $ | 2,290 | $ | 30,052 | $ | (81,445 | ) |
| Adjustments: | ||||||||||||
| Income tax benefit | (49,307 | ) | (2,612 | ) | (1,539 | ) | (50,424 | ) | (12,470 | ) | ||
| Net interest expense | 3,298 | 6,232 | 3,615 | 18,778 | 31,239 | |||||||
| Loss on early extinguishment of long-term debt | – | 4,086 | – | 397 | 3,540 | |||||||
| Other (income) expense, net | 815 | 508 | 551 | 1,434 | (3,510 | ) | ||||||
| Depreciation and amortization | 26,075 | 29,341 | 26,293 | 108,745 | 114,187 | |||||||
| Goodwill impairment | – | 45,107 | – | – | 45,107 | |||||||
| Non-cash losses on equity investment | 1,800 | 1,674 | – | 1,800 | 1,674 | |||||||
| EBITDA | 33,261 | 29,923 | 31,210 | 110,782 | 98,322 | |||||||
| Adjustments: | ||||||||||||
| (Gain) loss on disposition of assets, net | – | (1,290 | ) | – | 39 | (1,290 | ) | |||||
|
Realized losses from foreign currency exchange contracts not designated as hedging instruments |
(846 | ) | (1,744 | ) | (758 | ) | (3,605 | ) | (7,488 | ) | ||
| Adjusted EBITDA | $ | 32,415 | $ | 26,889 | $ | 30,452 | $ | 107,216 | $ | 89,544 | ||
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. Non-cash goodwill
impairment charge and non-cash losses on equity investment 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, 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.
Contacts
Helix Energy Solutions Group, Inc.
Erik Staffeldt, 281-618-0400
Senior
Vice President & CFO
