HOUSTON, Feb. 26 /PRNewswire-FirstCall/ -- Helix Energy Solutions (NYSE: HLX) reported net income for the year ended December 31, 2006 of $344.0 million, or $3.87 per share. In December 2006 we completed a carve-out IPO of our Shelf Contracting segment ("Cal Dive") selling 27% of that business. Removing the total impact of executing this transaction (i.e., gain on sale net of tax effect, incremental SG&A) annual results would have been net income of approximately $253 million, or $2.85 per share. Net income for the fourth quarter was $162.5 million, or $1.73 per share, which included a gain from the Cal Dive IPO of $97 million net of tax, or $1.02 per share.
Summary of Results (in thousands, except per share amounts and percentages) Fourth Quarter Third Quarter Twelve Months 2006 2005 2006 2006 2005 Revenues $395,839 $264,028 $374,424 $1,366,924 $799,472 Gross Profit 150,980 95,852 130,470 515,408 283,072 38% 36% 35% 38% 35% Net Income 162,479 56,006 57,029 344,036 150,114 41% 21% 15% 25% 19% Diluted Earnings Per Share 1.73 0.69 0.60 3.87 1.86
Martin Ferron, President and Chief Executive Officer of Helix, stated, "2006 was a very notable year for the evolution of our unique business model. We not only grew earnings by 53% over 2005 levels, but also set the foundation for further growth over the medium term by taking key strategic steps for the two strands of our business: contracting services and oil/gas production. These initiatives are highlighted in the slide presentation that will be used as the basis of our earnings conference call tomorrow.
"While 2006 was a busy year for acquisitions and organic growth investments, the theme for 2007 will very much be strong execution. Our focus is on delivering our projected operating results and managing the important capital projects that will enhance our future returns. I am confident that the very talented personnel of Helix will once again rise to this challenge.
"In December, we provided 2007 Earnings Guidance in a range of $3.35 - $4.75 and stated that this included 100% of Cal Dive's results. Our outlook for the year hasn't changed. However, we are now able, along with Cal Dive, to provide specific guidance on that business. We estimate Cal Dive's net income for 2007 will be between $118 million and $136 million. Accordingly, we are adjusting our guidance to $3.02 to $4.37 per share to reflect the minority interest (27%) in Cal Dive's earnings. As discussed in December, we estimate approximately 40% of our 2007 earnings will be in the first half of the year with 60% in the second half."
- Gain on Sale: In December 2006, we completed a carve-out IPO of our Shelf Contracting segment (Cal Dive) selling 27% of that business for net proceeds of $265 million. Cal Dive also borrowed $200 million and distributed it to us as a dividend in December. We recognized a book gain of $236 million ($97 million after taxes) as a result of these transactions.
- Revenues: The $131.8 million increase in year-over-year fourth quarter revenues was driven primarily by significant improvements in contracting services revenues due to the introduction of newly acquired assets and much better market conditions. In addition, Oil and Gas sales increased $53.8 million due primarily to the production added from the Remington acquisition.
- Margins: 38% is two points higher than the year ago quarter, and three points better than last quarter, due primarily to the aforementioned improvements in contracting services market conditions. In our Oil and Gas segment, reduced facility repair costs in 4Q 2006 versus 4Q 2005 offset the margin impact of lower realized gas prices.
- SG&A: $40.8 million increased $19.6 million from the same period a year ago due primarily to increased overhead to support the Company's growth and bonus accruals in 4Q as financial targets were exceeded. This level of SG&A was 10% of fourth quarter revenues, compared to 8% in the year ago quarter.
- Equity in Earnings: $5.5 million reflects primarily our share of Deepwater Gateway, L.L.C.'s earnings for the quarter relating to the Marco Polo facility.
- Income Tax Provision: Backing out the impact of the IPO, the Company's effective tax rate for the quarter was 34% which is higher than the 27% rate in last year's fourth quarter which included some adjustments due primarily to the Company's ability to realize foreign tax credits due to improved profitability both domestically and in foreign jurisdictions.
- Shares Outstanding: On July 1, 2006, Helix acquired Remington Oil & Gas Corporation for approximately $1.4 billion paying approximately 58% with cash and 42% with Helix stock. The additional shares were the primary cause of total diluted shares outstanding increasing to 94.5 million for the fourth quarter 2006 from 82.9 million in the fourth quarter 2005. This increase was partially offset by the Company buying back $50 million (1.7 million shares) of its stock in the open market during the fourth quarter.
- Balance Sheet: Total consolidated debt as of December 31, 2006 was $1.5 billion. This includes $201 million under Cal Dive's new revolving facility which is non-recourse to Helix. We had $492 million of cash and liquid investments on hand as of December 31, 2006. This represents 38% net debt to book capitalization and with $889 million of EBITDAX in 2006, this represents 1.7 times trailing twelve month EBITDAX.
Further details are provided in the presentation for Helix's quarterly conference call (see the Investor Relations page of http://www.HelixESG.com ). In addition, reconciliations of non-GAAP measures are included on the Investor Relations page of our website. The call, scheduled for 9:00 a.m. Central Standard Time on Tuesday, February 27, 2007, will be webcast live. A replay will be available from the Audio Archives page.
Helix Energy Solutions, headquartered in Houston, Texas, is an international offshore energy company that provides development solutions and other key life of field services to the open energy market as well as to our own reservoirs. Our oil and gas business is a prospect generation, exploration, development and production company. Employing our own key services and methodologies, we seek to lower finding and development costs, relative to industry norms.
This press release and attached presentation contain 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 statements that could be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any projections of revenue, gross margin, expenses, earnings or losses from operations, or other financial items; future production volumes, results of exploration, exploitation, development, acquisition and operations expenditures, and prospective reserve levels of property or wells; any statements of the plans, strategies and objectives of management for future operations; any statement concerning developments, performance or industry rankings relating to services; 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 risks, uncertainties and assumptions referred to above include the performance of contracts by suppliers, customers and partners; employee management issues; complexities of global political and economic developments, geologic risks and other risks described from time to time in our reports filed with the Securities and Exchange Commission ("SEC"), including the Company's Annual Report on Form 10-K for the year ending December 31, 2005 and subsequent quarterly reports on Form 10-Q. We assume no obligation and do not intend to update these forward-looking statements.
HELIX ENERGY SOLUTIONS GROUP, INC. Comparative Condensed Consolidated Statements of Operations Three Months Ended Twelve Months Ended (in thousands, except per Dec. 31, Dec. 31, share data) 2006 2005 2006 2005 (Unaudited) Net revenues $395,839 $264,028 $1,366,924 $799,472 Cost of sales 244,859 168,176 851,516 516,400 Gross profit 150,980 95,852 515,408 283,072 Gain on sale of assets, net 247 151 2,817 1,405 Selling and administrative 40,829 21,202 119,580 62,790 Income from operations 110,398 74,801 398,645 221,687 Equity in earnings of investments 5,477 5,301 18,130 13,459 Gain on subsidiary equity transactions 223,134 0 223,134 0 Net interest expense and other 14,091 2,691 34,634 7,559 Income before income taxes 324,918 77,411 605,275 227,587 Income tax provision 160,769 20,601 257,156 75,019 Minority interest 725 0 725 0 Net income 163,424 56,810 347,394 152,568 Preferred stock dividends 945 804 3,358 2,454 Net income applicable to common shareholders $162,479 $56,006 $344,036 $150,114 Other Financial Data: Net income applicable to common shareholders $162,479 $56,006 $344,036 $150,114 Preferred stock dividends 945 804 3,358 2,454 Income tax provision 160,769 20,601 257,156 75,019 Net Interest expense and other 13,981 2,691 34,524 7,559 Non-cash stock compensation expense 2,797 673 8,523 1,381 Depreciation and amortization 61,754 26,758 193,205 110,683 Non-cash impairment --- --- --- 790 Dry hole expense 720 --- 38,335 --- Exploration expense 1,100 515 4,780 6,465 Share of equity investments: Depreciation 1,240 1,220 4,960 4,427 Interest expense, net 36 46 289 1,608 EBITDAX(1) $405,821 $109,314 $889,166 $360,500 Weighted Avg. Shares Outstanding: Basic 90,273 77,659 84,613 77,444 Diluted 94,461 82,876 89,874 82,205 Earnings Per Share: Basic $1.80 $0.72 $4.07 $1.94 Diluted $1.73 $0.69 $3.87 $1.86 (1) The Company calculates EBITDAX as earnings before net interest expense, taxes, depreciation and amortization, dry hole and non-cash impairments, exploration expense, non-cash stock compensation expense and the Company's share of depreciation, net interest expense and taxes from its equity investments. EBITDAX and EBITDAX margin (defined as EBITDAX divided by net revenues) are supplemental non- GAAP financial measurements used by the Company and investors in the energy industry in the evaluation of its business due to the measurements being similar to income from operations. Comparative Condensed Consolidated Balance Sheets ASSETS (000's omitted) Dec. 31, 2006 Dec. 31, 2005 (unaudited) Current Assets: Cash and equivalents $206,264 $91,080 Short term investments 285,395 Accounts receivable 370,709 228,058 Other current assets 61,532 52,915 Total Current Assets 923,900 372,053 Net Property & Equipment: Contracting Services 800,503 524,890 Oil and Gas 1,411,955 391,472 Equity Investments 213,362 179,844 Goodwill 822,556 101,731 Other assets, net 117,911 90,874 Total Assets $4,290,187 $1,660,864 LIABILITIES & SHAREHOLDERS' EQUITY Dec. 31, 2006 Dec. 31, 2005 (unaudited) Current Liabilities: Accounts payable $240,067 $99,445 Accrued liabilities 199,650 138,464 Income taxes payable 147,772 7,288 Current mat of L-T debt (2) 25,887 6,468 Total Current Liabilities 613,376 251,665 Long-term debt (2) 1,454,469 440,703 Deferred income taxes 436,544 167,295 Decommissioning liabilities 138,905 106,317 Other long-term liabilities 6,143 10,584 Minority interest 59,802 --- Convertible preferred stock (2) 55,000 55,000 Shareholders' equity (2) 1,525,948 629,300 Total Liabilities & Equity $4,290,187 $1,660,864 (2) Debt to book capitalization - 48% at December 31, 2006. Calculated as total debt ($1,480,356) divided by sum of total debt, convertible preferred stock and shareholders' equity ($3,061,304).
SOURCE Helix Energy Solutions Group, Inc.
CONTACT: Wade Pursell, Chief Financial Officer of Helix Energy Solutions Group, Inc., +1-281-618-0400, or fax, +1-281-618-0505