Press Releases
HOUSTON--(BUSINESS WIRE)--July 30, 2008--Helix Energy Solutions (NYSE:HLX) reported second quarter net income of $90.9 million, or $0.96 per diluted share. This compares to net income of $57.7 million, or $0.61 per diluted share, reported for the second quarter of 2007, and net income of $74.3 million, or $0.79 per diluted share, in the first quarter of 2008. Net income for the six months ended June 30, 2008 was $165.2 million, or $1.75 per diluted share, compared to $113.5 million, or $1.21 per diluted share, for the six months ended June 30, 2007.
The Company realized pre-tax gains of approximately $19 million on asset sales of oil and gas properties during the quarter, which compares to approximately $61 million of asset sale gains recorded in the first quarter of 2008. Excluding the impact of these gains, earnings per share for the second and first quarters of 2008 would have been $0.86 and $0.37, respectively. Net income for the second quarter of 2007 was negatively impacted by three non-recurring items recorded by Helix's majority owned subsidiary, Cal Dive International, Inc. Excluding these items, net income for the second quarter of 2007 was $65.8 million, or $0.70 per share.
Summary of Results (in thousands, except per share amounts and percentages) ---------------------------------------------------------------------- Quarter Ended Six Months Ended ----------------------------- ------------------- June 30 March 31 June 30 ------------------- --------- ------------------- 2008 2007 2008 2008 2007 --------- --------- --------- --------- --------- Revenues $540,494 $410,574 $450,737 $991,231 $806,629 Gross Profit 192,414 141,765 120,879 313,293 277,380 36% 35% 27% 32% 34% Net Income 90,902 57,702 74,335 165,237 113,522 Diluted Earnings per Share $ 0.96 $ 0.61 $ 0.79 $ 1.75 $ 1.21 Adjusted EBITDAX* $241,181 $186,206 $238,764 $479,945 $352,667 *Non-GAAP measure. See reconciliation attached hereto.
Owen Kratz, President and Chief Executive Officer of Helix, stated, "During the second quarter, we achieved record quarterly revenues and gross profit, with quarterly revenue increases across all of our segments. Continued strong demand for our specialty deepwater assets, along with seasonal upswing in our shelf contracting business, resulted in improvements in revenue and operating income over the prior quarter. Our oil and gas operations benefited from a favorable commodity price environment during the quarter which offset minor production declines.
"During the quarter we continued to focus on the execution of our strategic plan, completing the sale of an additional 10% working interest in our Bushwood field, completing the sale of all of our onshore oil and gas properties, and returning the Q4000 to service. Our major capital initiatives are continuing to progress and we expect to begin to realize the benefits of these investments starting in the third quarter with first production at Bushwood."
Segment Information, Operational and Financial Highlights (in thousands, Unaudited) Quarter Ended ----------------------------- June 30 March 31 ------------------- --------- 2008 2007 2008 --------- --------- --------- Revenues: ----------------------------------------- Contracting Services $228,351 $154,719 $183,789 Shelf Contracting 171,970 135,258 144,571 Oil and Gas 194,161 142,082 171,051 Intercompany Elim. (53,988) (21,485) (48,674) --------- --------- --------- Total $540,494 $410,574 $450,737 ========= ========= ========= Income from Operations: ----------------------------------------- Contracting Services $ 37,993 $ 31,987 $ 20,911 Shelf Contracting 29,498 36,142 7,548 Production Facilities & Equity Investments (156) (145) (138) Oil and Gas (1) 104,202 48,685 109,917 Intercompany Elim. (4,241) (2,608) (4,030) --------- --------- --------- Total $167,296 $114,061 $134,208 ========= ========= ========= Equity in earnings of equity investments (2) $ 6,155 $ 7,045 $ 10,923 ========= ========= =========
(1) Included pre-tax gains on sales of assets of $18.6 million and $61.1 million for the three months ended June 30, 2008 and March 31, 2008, respectively. (2) Equity in earnings of equity investments for the three months ended June 30, 2007 excluded the impact of a $11.8 million loss recorded by our Cal Dive subsidiary related to the impairment of its 40% equity investment in Offshore Technology Solutions Limited.
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Contracting Services
- Contracting Services revenues and operating income for the three months ended June 30, 2008 increased from the first quarter of 2008 as a result of strong performance from our robotics subsidiary (Canyon) which had 6 vessels under charter during the second quarter, as well as significantly higher utilization from the Seawell.
- Contracting Services revenues and operating income for the three months ended June 30, 2008 increased from the second quarter of 2007 as a result of the increased assets in service, and an increase in utilization of our deepwater pipelay assets. These increases offset the declines in well operations as a result of the Q4000 being out of service for the majority of the second quarter of 2008.
- Gross profit margins for the Contracting Services segment declined compared to the second quarter of 2007 as a result of the Q4000 drydock and lower margins on international deepwater pipelay projects during the quarter.
- Shelf Contracting
- Shelf Contracting revenues, gross profit and net income increased significantly compared to first quarter as a result of seasonal improvement in demand for its vessels, with nearly all assets deployed at the end of the second quarter.
- Shelf Contracting revenues for the quarter ended June 30, 2008 were higher than the second quarter of 2007 as a result of vessel additions from the Horizon acquisition in December 2007, partially offset by lower utilization resulting from harsh weather conditions in the Gulf of Mexico. Gross profit margins were down compared to the second quarter of 2007 due to unplanned maintenance downtime on two vessels, combined with slower than expected demand due to weather conditions as described above.
- Oil and Gas
- Oil and Gas revenues for the three months ended June 30, 2008 increased significantly compared to the first quarter of 2008 and the second quarter of 2007 primarily as a result of higher realized commodity prices.
- During the quarter, the Company realized a pre-tax gain of approximately $19 million from oil and gas property sales, comprised of a gain from the sale of an additional 10% working interest in its Bushwood field and certain other shelf properties, partially offset by a loss from the disposition of all of the Company's onshore oil and gas properties. Gains in the first quarter of 2008 totaled approximately $61 million.
- Production for the three months ended June 30, 2008 was 14.9 Bcfe, compared to 15.8 Bcfe in the second quarter of 2007. The year-over-year production declines were a result of the loss of production at the Tiger deepwater field in late 2007, along with a natural decline in shelf production as a result of a reduction in capital allocated to shelf exploration.
- Other Expenses
- Selling, general and administrative expenses for the quarter were 8.1% of revenue, compared to 10.6% in the first quarter of 2008, and 8.1% for the quarter ended June 30, 2007. The improvement over the first quarter was a result of achieving operating leverage on higher revenues across all segments. Total SG&A expenses are higher compared to prior year primarily as a result of the Horizon acquisition by Cal Dive in December 2007.
- Net interest expense and other increased $4.4 million in second quarter 2008 compared to the prior year period due to overall higher levels of indebtedness as a result of our Senior Unsecured Notes and Cal Dive's term loan, which both closed in December 2007.
- Financial Condition
- Consolidated net debt at June 30, 2008 increased to $1.84 billion from $1.71 billion as of March 31, 2008. $344.5 million of our total indebtedness relates to Cal Dive's borrowings under its senior credit facilities, which are non-recourse to Helix. Net debt to book capitalization as of June 30, 2008 was 47%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation attached hereto.)
- During the quarter the Company increased available capacity under its revolving credit facility to $420 million from $300 million. As of June 30, 2008, the Company had borrowings and L/Cs outstanding under the facility totaling $143.8 million, with $276.2 million available to be drawn under the facility.
- Year-to-date capital expenditures (excluding $41 million related to Cal Dive) total $514 million. Helix's projected capital expenditures for 2008 (excluding Cal Dive) will range from $875 to $925 million.
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 Daylight Time on Thursday, July 31, 2008, will be webcast live. If you wish to dial in to the call the telephone number is 800 475 0212 (Domestic) or 1-210-234-0002 (International). The pass code is Tripodo. 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.
Management evaluates Company performance and financial condition using certain non-GAAP metrics, primarily Adjusted EBITDAX, net debt and net debt to book capitalization. We calculate Adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and amortization and exploration expense. Further, we reduce Adjusted EBITDAX for the minority interest in Cal Dive that we do not own. Net debt is calculated as the sum of financial debt less cash on hand. Net debt to book capitalization is calculated by dividing net debt by the sum net debt, preferred stock and stockholders' equity. 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.
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, 2007. 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 June 30, Six Months Ended June 30, (in thousands, except per share data) 2008 2007 2008 2007 ---------------- ----------- --------------- ----------- ------------- (unaudited) (unaudited) Net revenues: Contracting services $346,333 $268,492 $626,019 $533,580 Oil and gas 194,161 142,082 365,212 273,049 ----------- --------------- ----------- ------------- 540,494 410,574 991,231 806,629 Cost of sales: Contracting services 252,269 182,464 472,455 360,519 Oil and gas 95,811 86,345 205,483 168,730 ----------- --------------- ----------- ------------- 348,080 268,809 677,938 529,249 Gross profit 192,414 141,765 313,293 277,380 Gain on sale of assets, net 18,803 5,684 79,916 5,684 Selling and administrative expenses 43,921 33,388 91,705 63,988 ----------- --------------- ----------- ------------- Income from operations 167,296 114,061 301,504 219,076 Equity in earnings of investments 6,155 (4,748) 17,078 1,356 Net interest expense and other 18,668 14,286 44,714 27,298 ----------- --------------- ----------- ------------- Income before income taxes 154,783 95,027 273,868 193,134 Provision for income taxes 55,925 33,261 99,557 66,384 Minority interest 7,076 3,119 7,313 11,338 ----------- --------------- ----------- ------------- Net income 91,782 58,647 166,998 115,412 Preferred stock dividends 880 945 1,761 1,890 ----------- --------------- ----------- ------------- Net income applicable to common shareholders $ 90,902 $ 57,702 $165,237 $113,522 =========== =============== =========== ============= Weighted Avg. Common Shares Outstanding: Basic 90,519 90,047 90,511 90,021 =========== =============== =========== ============= Diluted 95,928 95,991 95,652 95,262 =========== =============== =========== ============= Earnings Per Common Share: Basic $ 1.00 $ 0.64 $ 1.83 $ 1.26 =========== =============== =========== ============= Diluted $ 0.96 $ 0.61 $ 1.75 $ 1.21 =========== =============== =========== =============
---------------------------------------------------------------------- Comparative Condensed Consolidated Balance Sheets ---------------------------------------------------------------------- ASSETS (in thousands) Jun. 30, 2008 Dec. 31, 2007 --------------------------------------------------------------------- (unaudited) Current Assets: Cash and equivalents $ 23,148 $ 89,555 Short term investments - - Accounts receivable 512,737 512,132 Other current assets 162,199 125,582 --------------------------------------------------------------------- Total Current Assets 698,084 727,269 Net Property & Equipment: Contracting Services 1,791,090 1,507,463 Oil and Gas 1,744,962 1,737,225 Equity investments 202,501 213,429 Goodwill 1,084,711 1,089,758 Other assets, net 213,097 177,209 --------------------------------------------------------------------- Total Assets $5,734,445 $5,452,353 ===================================================================== LIABILITIES & SHAREHOLDERS' EQUITY (in thousands) Jun. 30, 2008 Dec. 31, 2007 --------------------------------------------------------------------- (unaudited) Current Liabilities: Accounts payable $ 324,961 $ 382,767 Accrued liabilities 246,567 221,366 Income taxes payable 95,688 - Current mat of L-T debt (1) 163,656 74,846 --------------------------------------------------------------------- Total Current Liabilities 830,872 678,979 Long-term debt (1) 1,697,797 1,725,541 Deferred income taxes 599,458 625,508 Decommissioning liabilities 185,828 193,650 Other long-term liabilities 68,550 63,183 Minority interest 275,121 263,926 Convertible preferred stock (1) 55,000 55,000 Shareholders' equity (1) 2,021,819 1,846,566 --------------------------------------------------------------------- Total Liabilities & Equity $5,734,445 $5,452,353 ===================================================================== (1) Net debt to book capitalization - 47% at June 30, 2008. Calculated as total debt less cash and equivalents ($1,838,305) divided by sum of total net debt, convertible preferred stock and shareholders' equity ($3,915,124).
Helix Energy Solutions Group, Inc. Reconciliation of Non GAAP Measures Three and Six Months Ended June 30, 2008 Earnings Release: ------------------------- Reconciliation From Net Income to Adjusted EBITDAX: -------------------------- 2Q08 2Q07 1Q08 2008 2007 -------------------------------------------- (in thousands) Net income applicable to common shareholders $ 90,902 $ 57,702 $ 74,335 $165,237 $113,522 Non-cash impairment and other unusual items - 8,602 - - 8,602 Preferred stock dividends 880 945 881 1,761 1,890 Income tax provision 52,753 30,456 43,523 96,276 59,073 Net interest expense and other 16,572 13,605 23,236 39,808 25,936 Depreciation and amortization 78,600 71,918 94,901 173,501 139,476 Exploration expense 1,474 2,978 1,888 3,362 4,168 -------------------------------------------- Adjusted EBITDAX $241,181 $186,206 $238,764 $479,945 $352,667 ============================================ We calculate adjusted EBITDAX as earnings before net interest expense, taxes, depreciation and amortization, and exploration expense. Further, we reduce adjusted EBITDAX for the minority interest in Cal Dive that we do not own. 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
Chief Financial Officer
Tony Tripodo, 281-618-0400
SOURCE: Helix Energy Solutions