Helix Reports Third Quarter 2017 Results
HOUSTON–(BUSINESS WIRE)–Helix Energy Solutions Group, Inc. (NYSE: HLX) reported net income of
$2.3 million, or $0.02 per diluted share, for the third quarter of 2017
compared to net income of $11.5 million, or $0.10 per diluted share, for
the same period in 2016 and a net loss of $6.4 million, or $(0.04) per
diluted share, for the second quarter of 2017. The net loss for the nine
months ended September 30, 2017 was $20.5 million, or $(0.14) per
diluted share, compared to a net loss of $27.0 million, or $(0.25) per
diluted share, for the nine months ended September 30, 2016. Helix
reported Adjusted EBITDA1 of $30.5 million for the third
quarter of 2017 compared to $46.7 million for the third quarter of 2016
and $29.7 million for the second quarter of 2017. Adjusted EBITDA for
the nine months ended September 30, 2017 was $74.8 million compared to
$62.7 million for the nine months ended September 30, 2016. The table
below summarizes our results of operations:
|
Summary of Results ($ in thousands, except per share amounts, unaudited) |
|||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| 9/30/2017 | 9/30/2016 | 6/30/2017 | 9/30/2017 | 9/30/2016 | |||||||||
| Revenues | $ | 163,260 | $ | 161,245 | $ | 150,329 | $ | 418,117 | $ | 359,551 | |||
| Gross Profit | $ | 21,141 | $ | 40,184 | $ | 18,367 | $ | 38,683 | $ | 28,912 | |||
| 13 | % | 25 | % | 12 | % | 9 | % | 8 | % | ||||
| Net Income (Loss) | $ | 2,290 | $ | 11,462 | $ | (6,403 | ) | $ | (20,528 | ) | $ | (27,032 | ) |
| Diluted Earnings (Loss) Per Share | $ | 0.02 | $ | 0.10 | $ | (0.04 | ) | $ | (0.14 | ) | $ | (0.25 | ) |
| Adjusted EBITDA1 | $ | 30,452 | $ | 46,701 | $ | 29,727 | $ | 74,801 | $ | 62,655 | |||
1Adjusted EBITDA is a non-GAAP measure. See reconciliation
below.
Owen Kratz, President and Chief Executive Officer of Helix, stated, “Our
third quarter results were negatively impacted by some operational
downtime experienced by the Well Enhancer in the North Sea and
some idle time on the Q5000 between projects. These negative
impacts were partially offset by improvements in our Brazilian well
intervention operations for the quarter with the Siem Helix 1
completing its first full quarter of operations. We continue to expand
our operations in Brazil as the Siem Helix 2 is currently
expected to commence commercial operations late in the fourth quarter.”
|
Segment Information, Operational and ($ in thousands, unaudited) |
||||||
| Three Months Ended | ||||||
| 9/30/2017 | 9/30/2016 | 6/30/2017 | ||||
| Revenues: | ||||||
| Well Intervention | $ | 111,522 | $ | 108,287 | $ | 113,076 |
| Robotics | 47,049 | 48,897 | 33,061 | |||
| Production Facilities | 16,380 | 17,128 | 15,210 | |||
| Intercompany Eliminations | (11,691 | ) | (13,067 | ) | (11,018 | ) |
| Total | $ | 163,260 | $ | 161,245 | $ | 150,329 |
| Income (Loss) from Operations: | ||||||
| Well Intervention | $ | 16,906 | $ | 24,413 | $ | 19,032 |
| Robotics | (9,365 | ) | (94 | ) | (11,642 | ) |
| Production Facilities | 7,660 | 8,312 | 6,140 | |||
| Corporate / Other | (10,633 | ) | (10,288 | ) | (8,701 | ) |
| Intercompany Eliminations | 199 | (873 | ) | 221 | ||
| Total | $ | 4,767 | $ | 21,470 | $ | 5,050 |
Business Segment Results
-
Well Intervention revenues decreased $1.6 million, or 1%, in the third
quarter of 2017 from the second quarter of 2017 primarily due to lower
day rates in the Gulf of Mexico, offset in part by a full quarter of
revenue in Brazil at higher rates than the second quarter. Overall
Well Intervention vessel utilization decreased slightly to 88% in the
third quarter of 2017 from 90% in the second quarter of 2017. In the
North Sea, vessel utilization in the third quarter of 2017 decreased
to 90% from 100% in the second quarter of 2017. The Well Enhancer
utilization decreased to 84% in the third quarter of 2017 from 100% in
the second quarter of 2017 primarily due to mechanical downtime. The Seawell
utilization decreased to 97% in the third quarter of 2017 from 100% in
the second quarter of 2017. Vessel utilization in the Gulf of Mexico
increased to 80% from 77% in the second quarter of 2017. The Q4000
utilization increased to 86% in the third quarter of 2017 from 63% in
the second quarter of 2017. The increase is attributable to 34 days of
drydock in the second quarter of 2017, but was partially offset by
idle time during the third quarter of 2017. The Q5000
utilization decreased to 75% in the third quarter of 2017 from 91% in
the second quarter of 2017 due to idle days between projects during
the third quarter of 2017. The Siem Helix 1 was utilized 96% in
the third quarter of 2017 compared to 95% in the second quarter of
2017. The rental intervention riser system was idle during the third
quarter of 2017. -
Robotics revenues increased 42% in the third quarter of 2017 from the
second quarter of 2017 primarily attributable to increased vessel days
from our four chartered vessels as well as 34 additional spot vessel
days quarter over quarter. Chartered vessel utilization increased to
80% in the third quarter of 2017 from 57% in the second quarter of
2017, and ROV asset utilization increased to 46% in the third quarter
of 2017 from 42% in the second quarter of 2017. -
Production Facilities revenues increased 8% in the third quarter of
2017 from the second quarter of 2017, primarily reflecting the HFRS at
full rates during the third quarter of 2017 compared to reduced rates
in the second quarter of 2017 as a result of the Q4000 dry-dock.
Other Expenses
-
Selling, general and administrative expenses were $16.4 million, 10.0%
of revenue, in the third quarter of 2017 compared to $13.3 million,
8.9% of revenue, in the second quarter of 2017. The increase was
primarily attributable to increased costs associated with our
share-based compensation plans. -
Net interest expense decreased to $3.6 million in the third quarter of
2017 from $6.6 million in the second quarter of 2017. In the second
quarter of 2017, we recorded a $1.6 million charge to accelerate a
pro-rata portion of the debt issuance costs associated with the
amendment and restatement of our revolving credit facility. The
remaining decrease was primarily attributable to reduced debt levels. -
Other expense was $0.5 million in the third quarter of 2017 compared
to other income of $0.5 million in the second quarter of 2017. The
change was primarily driven by foreign currency transaction losses
partially offset by gains from our foreign currency exchange contracts
that are not designated as hedges.
Financial Condition and Liquidity
-
Cash and cash equivalents at September 30, 2017 was approximately $357
million. Consolidated long-term debt decreased to $504 million at
September 30, 2017 from $515 million at June 30, 2017. Consolidated
net debt at September 30, 2017 was $147 million. Net debt to book
capitalization at September 30, 2017 was 9%. (Net debt and net debt to
book capitalization are non-GAAP measures. See reconciliation below.)
-
We incurred capital expenditures (including capitalized interest)
totaling $43 million in the third quarter of 2017 compared to $47
million in the second quarter of 2017 and $99 million in the third
quarter of 2016. In addition, we incurred mobilization costs for the Siem
Helix 2 of $14 million in the third quarter of 2017 and $10
million in the second quarter of 2017.
Conference Call Information
Further details are provided in the presentation for Helix’s quarterly
conference call to review its third quarter 2017 results (see the
“Investor Relations” page of Helix’s website, www.HelixESG.com).
The call, scheduled for 9:00 a.m. Central Daylight Time Monday, October
23, 2017, 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
1-800-940-6895 for persons in the United States and 1-212-231-2900 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. To arrive at our measure of Adjusted EBITDA, we
exclude gain or loss on disposition of assets. In addition, we include
realized losses from the cash settlements of our ineffective foreign
currency exchange contracts, 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
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 Sep. 30, |
Nine Months Ended Sep. 30, |
|||||||||
| (in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | ||||||
| (unaudited) | (unaudited) | |||||||||
| Net revenues | $ | 163,260 | $ | 161,245 | $ | 418,117 | $ | 359,551 | ||
| Cost of sales | 142,119 | 121,061 | 379,434 | 330,639 | ||||||
| Gross profit | 21,141 | 40,184 | 38,683 | 28,912 | ||||||
| Loss on disposition of assets, net | – | – | (39 | ) | – | |||||
| Selling, general and administrative expenses | (16,374 | ) | (18,714 | ) | (46,532 | ) | (47,493 | ) | ||
| Income (loss) from operations | 4,767 | 21,470 | (7,888 | ) | (18,581 | ) | ||||
| Equity in losses of investment | (153 | ) | (122 | ) | (457 | ) | (366 | ) | ||
| Net interest expense | (3,615 | ) | (6,843 | ) | (15,480 | ) | (25,007 | ) | ||
| Gain (loss) on early extinguishment of long-term debt | – | 244 | (397 | ) | 546 | |||||
| Other income (expense), net | (551 | ) | 830 | (619 | ) | 4,018 | ||||
| Other income (expense) – oil and gas | 303 | (468 | ) | 3,196 | 2,500 | |||||
| Income (loss) before income taxes | 751 | 15,111 | (21,645 | ) | (36,890 | ) | ||||
| Income tax provision (benefit) | (1,539 | ) | 3,649 | (1,117 | ) | (9,858 | ) | |||
| Net income (loss) | $ | 2,290 | $ | 11,462 | $ | (20,528 | ) | $ | (27,032 | ) |
| Earnings (loss) per share of common stock: | ||||||||||
|
Basic |
$ | 0.02 | $ | 0.10 | $ | (0.14 | ) | $ | (0.25 | ) |
|
Diluted |
$ | 0.02 | $ | 0.10 | $ | (0.14 | ) | $ | (0.25 | ) |
| Weighted average common shares outstanding: | ||||||||||
| Basic | 145,958 | 113,680 | 145,057 | 109,135 | ||||||
| Diluted | 145,958 | 113,680 | 145,057 | 109,135 | ||||||
| Comparative Condensed Consolidated Balance Sheets | |||||||||
| ASSETS | LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||
| (in thousands) | Sep. 30, 2017 | Dec. 31, 2016 | (in thousands) | Sep. 30, 2017 | Dec. 31, 2016 | ||||
| (unaudited) | (unaudited) | ||||||||
| Current Assets: | Current Liabilities: | ||||||||
| Cash and cash equivalents (1) | $ | 356,889 | $ | 356,647 | Accounts payable | $ | 91,412 | $ | 60,210 |
| Accounts receivable, net | 136,296 | 112,153 | Accrued liabilities | 60,761 | 58,614 | ||||
| Current deferred tax assets (2) | – | 16,594 | Income tax payable | 1,756 | – | ||||
| Other current assets | 38,172 | 37,388 | Current maturities of long-term debt (1) | 108,611 | 67,571 | ||||
| Total Current Assets | 531,357 | 522,782 | Total Current Liabilities | 262,540 | 186,395 | ||||
| Long-term debt (1) | 395,345 | 558,396 | |||||||
| Deferred tax liabilities (2) | 154,158 | 167,351 | |||||||
| Property & equipment, net | 1,734,159 | 1,651,610 | Other non-current liabilities | 42,736 | 52,985 | ||||
| Other assets, net | 100,974 | 72,549 | Shareholders' equity (1) | 1,511,711 | 1,281,814 | ||||
| Total Assets | $ | 2,366,490 | $ | 2,246,941 | Total Liabilities & Equity | $ | 2,366,490 | $ | 2,246,941 |
| (1) |
Net debt to book capitalization – 9% at September 30, 2017. Calculated as net debt (total long-term debt less cash and cash equivalents – $147,067) divided by the sum of net debt and shareholders' equity ($1,658,778). |
| (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 September 30, 2017 were presented net of current deferred tax assets. |
| Helix Energy Solutions Group, Inc. | |||||||||||||
| Reconciliation of Non-GAAP Measures | |||||||||||||
|
Earnings Release: |
|||||||||||||
|
Reconciliation from Net Income (Loss) to |
|||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| 9/30/2017 | 9/30/2016 | 6/30/2017 | 9/30/2017 | 9/30/2016 | |||||||||
| (in thousands) | |||||||||||||
| Net income (loss) | $ | 2,290 | $ | 11,462 | $ | (6,403 | ) | $ | (20,528 | ) | $ | (27,032 | ) |
| Adjustments: | |||||||||||||
| Income tax provision (benefit) | (1,539 | ) | 3,649 | 5,023 | (1,117 | ) | (9,858 | ) | |||||
| Net interest expense | 3,615 | 6,843 | 6,639 | 15,480 | 25,007 | ||||||||
| (Gain) loss on early extinguishment of long-term debt | – | (244 | ) | 397 | 397 | (546 | ) | ||||||
| Other (income) expense, net | 551 | (830 | ) | (467 | ) | 619 | (4,018 | ) | |||||
| Depreciation and amortization | 26,293 | 27,607 | 25,519 | 82,670 | 84,846 | ||||||||
| EBITDA | 31,210 | 48,487 | 30,708 | 77,521 | 68,399 | ||||||||
| Adjustments: | |||||||||||||
| Loss on disposition of assets, net | – | – | – | 39 | – | ||||||||
|
Realized losses from cash settlements of ineffective foreign currency exchange contracts |
(758 | ) | (1,786 | ) | (981 | ) | (2,759 | ) | (5,744 | ) | |||
| Adjusted EBITDA | $ | 30,452 | $ | 46,701 | $ | 29,727 | $ | 74,801 | $ | 62,655 | |||
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. To arrive at our
measure of Adjusted EBITDA, we exclude gain or loss on disposition of
assets. In addition, we include realized losses from the cash
settlements of our ineffective foreign currency exchange contracts,
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
