Summary of Results (in thousands, except per share amounts and percentages) Second Quarter First Quarter Six Months 2006 2005 2006 2006 2005 Revenues $305,013 $166,531 $291,648 $596,661 $326,106 Gross Profit 131,692 52,419 102,266 233,958 104,292 43% 31% 35% 39% 32% Net Income 69,139 26,027 55,389 124,528 51,437 23% 16% 19% 21% 16% Diluted Earnings Per Share 0.83 0.32 0.67 1.51 0.64
Owen Kratz, Chairman and Chief Executive Officer of Helix, stated, "We are delighted to have once again posted a record quarter on the back of continuing improvement in the market place for our contracting services. It is very notable that those services contributed 61% of our EBITDA in the quarter compared with 44% last year.
"During Q3 we are looking forward to further improvement and the first contribution from the recently closed Remington acquisition. As announced in early July we now expect full year 2006 earnings to fall in the higher range of $3.20 - $3.70 per diluted share.
"We also take this opportunity to announce that our Shelf construction subsidiary, Cal Dive, has completed the acquisition of Singapore based Fraser Diving to expand its operating presence in the Middle Eastern and Asia Pacific regions. Further details of this relatively small but strategic acquisition are included in the quarterly earnings presentation."
- Revenues: The $138.5 million increase in year-over-year second 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.
- Margins: 43% is twelve points better than the year ago quarter driven by the improved market conditions for contracting services. Margins in second quarter 2005 were impacted by asset impairments totaling $3.5 million pre-tax. Without this charge, margins would have been 34% in the prior year.
- SG&A: $27.4 million increased $14.6 million from the same period a year ago due primarily to increased overhead to support the Company's growth. This level of SG&A was 9% of second quarter revenues, compared to 8% in the year ago quarter.
- Equity in Earnings: $4.5 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: The Company's effective tax rate for the quarter was 34% which is less than the 36% rate in last year's second quarter due primarily to the Company's ability to realize foreign tax credits due to improved profitability both domestically and in foreign jurisdictions.
- Balance Sheet: Total debt as of June 30, 2006 was $444 million. This represents 35% debt to book capitalization and with $502 million of EBITDA during the last twelve months, this represents 0.9 times trailing twelve month EBITDA.
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 Daylight Time on Wednesday, August 2, 2006, will be webcast live. A replay will be available from the Audio Archives page.
Helix Energy Solutions, headquartered in Houston, Texas, is an energy services company that provides innovative solutions to the oil and gas industry worldwide for marginal field development, alternative development plans, field life extension and abandonment, with service lines including diving services, shelf and deepwater construction, robotics, well operations, well engineering and subsurface consulting services, platform ownership and oil and gas production.
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; any statements regarding the anticipated results (financial or otherwise) of the merger of Remington Oil and Gas Corporation into a wholly-owned subsidiary of Helix; 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, with respect to the Remington merger, actual results could differ materially from Helix's expectations depending on factors such as the combined company's cost of capital, the ability of the combined company to identify and implement cost savings, synergies and efficiencies in the time frame needed to achieve these expectations, prior contractual commitments of the combined companies and their ability to terminate these commitments or amend, renegotiate or settle the same, the combined company's actual capital needs, the absence of any material incident of property damage or other hazard that could affect the need to effect capital expenditures, any unforeseen merger or acquisition opportunities that could affect capital needs, the costs incurred in implementing synergies and the factors that generally affect both Helix's and Remington's respective businesses. Actual actions that the combined company may take may differ from time to time as the combined company may deem necessary or advisable in the best interest of the combined company and its shareholders to attempt to achieve the successful integration of the companies, the synergies needed to make the transaction a financial success and to react to the economy and the combined company's market for its exploration and production. We assume no obligation and do not intend to update these forward-looking statements.
As previously announced, Cal Dive has filed with the Securities and Exchange Commission a Form S-1 for its planned initial public offering (IPO) of a minority interest in Cal Dive's common stock.
The offering will be made only by means of a prospectus. Once available, preliminary prospectuses may be obtained from Cal Dive International, Inc., 400 North Sam Houston Parkway E., Houston, Texas 77060 or by calling (281) 618-0400.
A registration statement relating to the IPO of Cal Dive stock has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of Cal Dive common stock in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. There can be no assurance of if or when this offering will be completed.
HELIX ENERGY SOLUTIONS GROUP, INC. Comparative Condensed Consolidated Statements of Operations Three Months Ended Six Months Ended Jun. 30, Jun. 30, (in thousands, except per share data) 2006 2005 2006 2005 (Unaudited) Net revenues $305,013 $166,531 $596,661 $326,106 Cost of sales 173,321 114,112 362,703 221,814 Gross profit 131,692 52,419 233,958 104,292 Gain on sale of assets, net 16 --- 283 925 Selling and administrative 27,414 12,858 48,442 25,696 Income from operations 104,294 39,561 185,799 79,521 Equity in earnings of investments 4,520 2,708 10,756 4,437 Net interest expense and other 2,983 913 5,440 2,102 Income before income taxes 105,831 41,356 191,115 81,856 Income tax provision 35,887 14,779 64,978 29,319 Net income 69,944 26,577 126,137 52,537 Preferred stock dividends 805 550 1,609 1,100 Net income applicable to common shareholders $69,139 $26,027 $124,528 $51,437 Other Financial Data: Net income applicable to common shareholders $69,139 $26,027 $124,528 $51,437 Preferred stock dividends 805 550 1,609 1,100 Income tax provision 35,887 14,779 64,978 29,319 Net Interest expense and other 2,983 913 5,440 2,102 Non-cash stock compensation expense 2,251 204 3,816 397 Depreciation and amortization 34,346 29,247 88,318 55,969 Share of equity investments: Depreciation 1,242 997 2,482 2,007 Interest expense, net 75 --- 174 1,419 EBITDA (A) $146,728 $72,717 $291,345 $143,750 Weighted Avg. Shares Outstanding: Basic 78,462 77,444 78,216 77,294 Diluted 83,965 81,963 83,659 81,850 Earnings Per Share: Basic $0.88 $0.34 $1.59 $0.67 Diluted $0.83 $0.32 $1.51 $0.64 (A) The Company calculates EBITDA as earnings before net interest expense, taxes, depreciation and amortization (which includes non- cash asset impairments), non-cash stock compensation expense and the Company's share of depreciation, net interest expense and taxes from its equity investments. EBITDA and EBITDA margin (defined as EBITDA 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) Jun. 30, 2006 Dec. 31, 2005 (unaudited) Current Assets: Cash and equivalents $38,278 $91,080 Accounts receivable 284,278 228,058 Other current assets 58,105 52,915 Total Current Assets 380,661 372,053 Net Property & Equipment: Marine Contracting 640,697 524,890 Oil and Gas Production 453,606 391,472 Equity Investments 203,198 179,844 Goodwill 105,012 101,731 Other assets, net 97,413 90,874 Total Assets $1,880,587 $1,660,864 LIABILITIES & SHAREHOLDERS' EQUITY Jun. 30, 2006 Dec. 31, 2005 (unaudited) Current Liabilities: Accounts payable $138,006 $99,445 Accrued liabilities 135,633 145,752 Current mat of L-T debt (B) 6,316 6,468 Total Current Liabilities 279,955 251,665 Long-term debt (B) 437,970 440,703 Deferred income taxes 203,419 167,295 Decommissioning liabilities 110,757 106,317 Other long-term liabilities 8,984 10,584 Convertible preferred stock (B) 55,000 55,000 Shareholders' equity (B) 784,502 629,300 Total Liabilities & Equity $1,880,587 $1,660,864 (B) Debt to book capitalization - 35% at June 30, 2006. Calculated as total debt ($444,286) divided by sum of total debt, convertible preferred stock and shareholders' equity ($1,283,788).
Source: Helix Energy Solutions Group, Inc.