Press Releases
HOUSTON--(BUSINESS WIRE)--Feb. 28, 2008--Helix Energy Solutions (NYSE:HLX) reported fourth quarter net income of $120.4 million, or $1.25 per diluted share. These results included a $151.7 million pre-tax gain ($1.02 per diluted share) related to our majority owned investment in Cal Dive. This non cash gain results from the acquisition by Cal Dive during the fourth quarter of Horizon Offshore using cash and shares of Cal Dive common stock, resulting in an adjustment in our investment in Cal Dive. During the quarter we also recorded oil and gas impairments / dry hole costs totaling $91.0 million and other net non-recurring charges of $3.4 million (see details on slide 7 of attached presentation). These impairments included $20.9 million pre-tax for the write-off of Devil's Island as a result of drilling a well in Q1 2008 which found no additional hydrocarbons (the additional $13 million cost of drilling the well will be expensed, as required, in Q1 2008). The net result of these unusual items in Q4 2007 is $0.38 per diluted share. Absent these items, net income for the fourth quarter of 2007 was $83.2 million, or $0.87 per diluted share. This compares to $0.71 per share generated in the fourth quarter of 2006 before the $1.02 per share gain realized in that quarter from the carve-out IPO of our Shelf Contracting segment ("Cal Dive").
Summary of Results ---------------------------------------------------------------------- (in thousands, except per share amounts and percentages) Fourth Quarter Third Quarter Full Year ------------------- ------------- ----------------------- 2007 2006 2007 2007 2006 --------- --------- ------------- ----------- ----------- Revenues $500,243 $395,839 $460,573 $1,767,445 $1,366,924 Gross Profit 70,058 150,980 166,318 513,756 515,408 14% 38% 36% 29% 38% Net Income 120,412 162,479 82,828 316,762 344,036 24% 41% 18% 18% 25% Diluted Earnings Per Share $ 1.25 $ 1.73 $ 0.88 $ 3.34 $ 3.87 Adjusted EBITDAX $233,106 $182,400 $227,212 $ 823,576 $ 674,032
Owen Kratz, President and Chief Executive Officer of Helix, stated, "We are very pleased with the strength in our business units and the value creation inherent in the company. Helix personnel continue to handle the growth with continued quality improvements. We look forward to 08 as a settling out year during in which the value that has been created can begin to be unlocked."
Financial Highlights
- Revenues: The $104 million increase in year-over-year fourth quarter revenues was driven by both Oil and Gas production and Contracting Services increases, due primarily to extra capacity on the shelf (Cal Dive) and continued escalating market demand in the deepwater. The increase in oil and gas revenues was due primarily to a 16% increase in year-over-year production. In addition, on the oil and gas side the sale of a 30% working interest in the Phoenix oilfield last quarter resulted in over $20 million of operating income during the fourth quarter.
- Margins: Absent the oil and gas impairments / dry hole costs, despite the fact that gross profit was higher by $10 million, margins for the fourth quarter 2007 were 32%, which were six points lower than 38% in the fourth quarter of 2006 as Cal Dive experienced a seasonal margin decline, the Q4000 was out of service for upgrades, and a significant project during the quarter utilized a chartered vessel.
- SG&A: $45.2 million increased $4.4 million over the same period a year ago due primarily to increased overhead to support our growth. This level of SG&A was 9% of fourth quarter revenues, compared to 10% in the year ago quarter.
- Equity in Earnings: $10.5 million is comprised of our share of earnings for the quarter relating to the Marco Polo facility and the Independence Hub facility.
- Gain on subsidiary equity transactions: In December, 2007, Cal Dive (CDI) closed its acquisition of Horizon. CDI issued an aggregate of approximately 20.3 million shares of common stock and paid approximately $300 million in cash in the merger. The cash portion of the merger consideration was paid from CDI's cash on hand and from borrowings under its new $675 million credit facility consisting of a $375 million senior secured term loan and a $300 million senior secured revolving credit facility, each of which is non-recourse to Helix. As a result of CDI's equity issued, we recorded a $151.7 million pre-tax gain. The gain was calculated as the difference in the value of our investment in CDI immediately before and after CDI's stock issuance.
- Income Tax Provision: The Company's effective tax rate for the quarter was 33%, just below the 34% effective rate for last year's fourth quarter backing out the impact of the Cal Dive IPO.
- Balance Sheet: Total consolidated debt as of December 31, 2007 was $1.8 billion. This includes $375 million outstanding under Cal Dive's term loan that was used to fund the cash portion of its acquisition of Horizon Offshore and is non-recourse to Helix. Total consolidated debt as of December 31, 2007 represents 49% debt to book capitalization and an adjusted leverage ratio 2.2 times adjusted EBITDAX of $824 million.
- 2008 Outlook: Included in the presentation is information, including estimates with respect to certain key variables, relating to our views on 2008 which we will discuss on the conference call described below.
Further details are provided in the presentation for Helix's quarterly conference call (see the Investor Relations page of www.HelixESG.com). The call, scheduled for 9:00 a.m. Central Standard Time on Friday, February 29, 2008, will be webcast live. If you wish to dial in to the call the telephone number is 888-577-8990 (Domestic) or 1-210-234-0002 (International). The passcode is 2389610. A replay will be available from the Audio Archives page on our website.
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 oil and gas business unit.
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 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, 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, 2006, as amended. 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 Dec. 31, Dec. 31, (in thousands, except per share data) 2007 2006 2007 2006 ----------------------------- --------- -------- ---------- ---------- (Unaudited) Net revenues: Contracting services $330,550 $272,687 $1,182,882 $ 937,317 Oil and gas 169,693 123,152 584,563 429,607 --------- -------- ---------- ---------- 500,243 395,839 1,767,445 1,366,924 Cost of sales: Contracting services 233,442 175,376 789,988 584,295 Oil and gas 196,743 69,483 463,701 267,221 --------- -------- ---------- ---------- 430,185 244,859 1,253,689 851,516 Gross profit 70,058 150,980 513,756 515,408 Gain on sale of assets, net 23,983 247 50,368 2,817 Selling and administrative 45,246 40,829 151,380 119,580 --------- -------- ---------- ---------- Income from operations 48,795 110,398 412,744 398,645 Equity in earnings of investments 10,453 5,477 19,698 18,130 Gain on subsidiary equity transactions 151,696 223,134 151,696 223,134 Net interest expense and other 18,679 14,091 59,444 34,634 --------- -------- ---------- ---------- Income before income taxes 192,265 324,918 524,694 605,275 Income tax provision 63,217 160,769 174,928 257,156 Minority interest 7,755 725.00 29,288 725.00 --------- -------- ---------- ---------- Net income 121,293 163,424 320,478 347,394 Preferred stock dividends 881 945 3,716 3,358 --------- -------- ---------- ---------- Net income applicable to common shareholders $120,412 $162,479 $ 316,762 $ 344,036 ========= ======== ========== ========== Weighted Avg. Shares Outstanding: Basic 90,189 90,273 90,086 84,613 ========= ======== ========== ========== Diluted 96,880 94,461 95,938 89,874 ========= ======== ========== ========== Earnings Per Share: Basic $ 1.34 $ 1.80 $ 3.52 $ 4.07 ========= ======== ========== ========== Diluted $ 1.25 $ 1.73 $ 3.34 $ 3.87 ========= ======== ========== ==========
Comparative Condensed Consolidated Balance Sheets ---------------------------------------------------------------------- ASSETS (in thousands) Dec. 31, 2007 Dec. 31, 2006 --------------------------------------------------------------------- (unaudited) Current Assets: Cash and equivalents $ 89,555 $ 206,264 Short term investments - 285,395 Accounts receivable 512,132 370,709 Other current assets 125,582 61,532 --------------------------------------------------------------------- Total Current Assets 727,269 923,900 Net Property & Equipment: Contracting Services 1,507,463 800,503 Oil and Gas 1,737,225 1,411,955 Equity investments 213,429 213,362 Goodwill 1,089,758 822,556 Other assets, net 177,209 117,911 --------------------------------------------------------------------- Total Assets $ 5,452,353 $4,290,187 ===================================================================== LIABILITIES & SHAREHOLDERS' EQUITY (in thousands) Dec. 31, 2007 Dec. 31, 2006 --------------------------------------------------------------------- (unaudited) Current Liabilities: Accounts payable $ 382,767 $ 240,067 Accrued liabilities 221,366 199,650 Income taxes payable - 147,772 Current mat of L-T debt (1) 74,846 25,887 --------------------------------------------------------------------- Total Current Liabilities 678,979 613,376 Long-term debt (1) 1,725,541 1,454,469 Deferred income taxes 625,508 436,544 Decommissioning liabilities 193,650 138,905 Other long-term liabilities 63,183 6,143 Minority interest 263,926 59,802 Convertible preferred stock (1) 55,000 55,000 Shareholders' equity (1) 1,846,566 1,525,948 --------------------------------------------------------------------- Total Liabilities & Equity $5,452,353 $4,290,187 =====================================================================
(1) Debt to book capitalization - 49% at December 31, 2007. Calculated as total debt $1,800,387 divided by sum of total debt, convertible preferred stock and shareholders' equity $3,701,953.
Helix Energy Solutions Group, Inc. Reconciliation of Non GAAP Measures Three and Twelve Months Ended December 31, 2007 ---------------------------------------------------------------------- Earnings Release: ----------------- Balance Sheet: "...2.2 times trailing twelve month adjusted EBITDAX." Reconciliation From Net Income to Adjusted EBITDAX (excluding noncash gain on Cal Dive investment in 4Q07, gain on sale of Cal Dive IPO in 4Q06 and non-recurring items: OTSL impairment, DOJ accrual, and sale of diving assets in 2Q07): ------------------------------------------------------------- 4Q07 3Q07 2Q07 1Q07 4Q06 ----------- --------- --------- --------- --------- (in thousands, except ratio) Net income applicable to common shareholders $ 21,810 $ 82,828 $ 57,702 $ 55,820 65,948 Preferred stock dividends 881 945 945 945 945 Income tax provision 6,420 40,626 30,456 28,617 34,166 Net interest expense and other 17,796 12,971 13,605 12,331 13,981 Non-cash stock compensation expense 3,100 3,147 3,546 3,267 2,797 Depreciation and amortization 97,195 83,564 71,918 67,558 61,809 Non-cash impairment 73,046 - 904 - - Exploration expense 11,203 1,476 2,978 1,190 1,820 Non-recurring items - - 8,602 - - Share of equity investments: Depreciation 1,731 1,723 1,965 1,004 1,004 Interest expense (income) (76) (68) (38) (57) (70) --------------------------------------------------- Adjusted EBITDAX $ 233,106 $227,212 $192,583 $170,675 $182,400 =================================================== Trailing Twelve Months Adjusted EBITDAX $ 823,576 =========== Debt at December 31, 2007 $1,800,387 =========== Ratio 2.2 ===========
We calculate adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and amortization, exploration expense, non-cash stock compensation expense and our share of depreciation, net interest expense and taxes from our equity investments. Further, we reduce adjusted EBITDAX for the minority interest in Cal Dive that we do not own. Adjusted EBITDAX margin is defined as adjusted EBITDAX divided by net revenues. 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. Adjusted EBITDAX should not be considered in isolation or as a substitute for, but instead is 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.
CONTACT: Helix Energy Solutions, Houston
Wade Pursell, 281-618-0400
Chief Financial Officer
SOURCE: Helix Energy Solutions