HOUSTON, Oct. 31 /PRNewswire-FirstCall/ -- Helix Energy Solutions (NYSE: HLX) reported third quarter net income of $82.8 million, or $0.88 per diluted share. This level of earnings per share, which represents an all time record for the company, is 47% better than last year's third quarter results.
Summary of Results (in thousands, except per share amounts and percentages) Third Quarter Second Quarter 2007 2006 2007 Revenues $460,573 $374,424 $410,574 Gross Profit 166,318 130,470 141,765 36% 35% 35% Net Income 82,828 57,029 65,786(1) 18% 15% 16%(1) Diluted Earnings Per Share 0.88 0.60 0.70(1) (1) Excludes impact of non-recurring items: OTSL impairment, DOJ settlement and sale of diving asset.
Martin Ferron, President and Chief Executive Officer of Helix, stated, "During the Q2 earnings conference call we predicted that our contracting services group would have a strong second half of the year; we would bring several key shelf development projects onstream in the same time frame; and we might monetize some of the forward value created in our deepwater production portfolio.
"Taking each of these predictions in turn: we achieved significantly better than expected results in our contracting services business, with much of the improvement being attained in our rapidly growing deepwater segments; our production and field development efforts were hampered by approximately 20 days of precautionary stand-downs related to approaching tropical weather systems; and we successfully sold down a minority interest in the Phoenix project on favorable terms.
"The net effect of these operating factors was that we achieved a record quarter for both earnings and EBITDAX. Looking forward we expect a seasonally slower Q4 for contracting services and a full quarter of upgrade time for the Q4000. These factors should be more than offset by enhanced production performance as the field start-ups, delayed in Q3, come on line, and lower operating costs linked to the hurricanes of 2005. All things considered we expect Q4 earnings to be in the range of $0.85 -- $1.05, which could lead to another record for performance."
- Revenues: The $86.1 million increase in year-over-year third quarter revenues was driven entirely by Contracting Services increases, due primarily to extra capacity on the shelf (Cal Dive) and continued escalating market demand in the deepwater. On the oil and gas side we were able to sell a 30% working interest in the Phoenix oilfield resulting in $18.8 million of operating income during the quarter.
- Margins: 36% is slightly better than 35% in the third quarter of 2006 as this year's results included approximately $11.6 million of charges, net of insurance proceeds, for the clean up and removal of facilities damaged during the 2005 hurricanes, while the 2006 third quarter results included approximately $16 million of charges for two deep shelf dry holes.
- SG&A: $42.1 million increased $11.8 million from the same period a year ago due primarily to increased overhead to support our growth. This level of SG&A was 9% of third quarter revenues, compared to 8% in the year ago quarter.
- Equity in Earnings: $7.9 million is comprised of our share of earnings for the quarter relating to the Marco Polo facility and the Independence Hub facility.
- Income Tax Provision: The Company's effective tax rate for the quarter was 33%, compared to 35% for last year's third quarter due primarily to increased earnings in lower rate foreign jurisdictions and increased deductions relating to increased oil and gas sales.
- Balance Sheet: Total consolidated debt as of September 30, 2007 was $1.5 billion. This includes $117 million under Cal Dive's revolving facility which is non-recourse to Helix. This represents 44% net debt to book capitalization and with $771.8 million of adjusted EBITDAX during the last twelve months, this represents 1.8 times trailing twelve month adjusted EBITDAX.
Further details are provided in the presentation for Helix's quarterly conference call (see the Investor Relations page of http://www.HelixESG.com). The call, scheduled for 9:00 a.m. Central Daylight Time on Thursday, November 1, 2007, will be webcast live. If you wish to dial in to the call the telephone number is 888-928-9122 (Domestic) or 517-623-4000 (International). The passcode is Pursell. 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. That business unit 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 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 Nine Months Ended Sep. 30, Sep. 30, (in thousands, except per share data) 2007 2006 2007 2006 (Unaudited) Net revenues $460,573 $374,424 $1,267,202 $971,085 Cost of sales 294,255 243,954 823,504 606,657 Gross profit 166,318 130,470 443,698 364,428 Gain on sale of assets, net 20,701 2,287 26,385 2,570 Selling and administrative 42,146 30,309 106,134 78,751 Income from operations 144,873 102,448 363,949 288,247 Equity in earnings of investments 7,889 1,897 9,245 12,653 Net interest expense and other 13,467 15,103 40,765 20,543 Income before income taxes 139,295 89,242 332,429 280,357 Income tax provision 45,327 31,409 111,711 96,387 Minority interest 10,195 - 21,533 - Net income 83,773 57,833 199,185 183,970 Preferred stock dividends 945 804 2,835 2,413 Net income applicable to common shareholders $82,828 $57,029 $196,350 $181,557 Weighted Avg. Shares Outstanding: Basic 90,111 91,531 90,051 82,706 Diluted 95,649 96,918 96,087 88,209 Earnings Per Share: Basic $0.92 $0.62 $2.18 $2.20 Diluted $0.88 $0.60 $2.07 $2.09 COMPARATIVE CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS (in thousands) Sep. 30, 2007 Dec. 31, 2006 (Unaudited) Current Assets: Cash and equivalents $50,436 $206,264 Short term investments - 285,395 Accounts receivable 407,725 370,709 Other current assets 155,052 61,532 Total Current Assets 613,213 923,900 Net Property & Equipment: Contracting Services 1,040,671 800,503 Oil and Gas 1,711,171 1,411,955 Equity investments 212,975 213,362 Goodwill 835,073 822,556 Other assets, net 132,937 117,911 Total Assets $4,546,040 $4,290,187 LIABILITIES & SHAREHOLDERS' EQUITY (in thousands) Sep. 30, 2007 Dec. 31, 2006 (Unaudited) Current Liabilities: Accounts payable $261,569 $240,067 Accrued liabilities 269,289 199,650 Income taxes payable 33,079 147,772 Current mat of L-T debt (1) 25,978 25,887 Total Current Liabilities 589,915 613,376 Long-term debt (1) 1,444,649 1,454,469 Deferred income taxes 488,634 436,544 Decommissioning liabilities 149,602 138,905 Other long-term liabilities 6,770 6,143 Minority interest 80,091 59,802 Convertible preferred stock (1) 55,000 55,000 Shareholders' equity (1) 1,731,379 1,525,948 Total Liabilities & Equity $4,546,040 $4,290,187 (1) Net debt to book capitalization -- 44% at September 30, 2007. Calculated as total debt less cash and equivalents and short-term investments $1,420,191 divided by sum of total debt less cash and equivalents and short-term investments, convertible preferred stock and shareholders' equity $3,206,570. Helix Energy Solutions Group, Inc. Reconciliation of Non GAAP Measures Three and Nine Months Ended September 30, 2007 Earnings Release: Balance Sheet: "... 1.8 times trailing twelve month adjusted EBITDAX." Reconciliation From Net Income to Adjusted EBITDAX (excluding gain on sale of Cal Dive IPO in 4Q06 and non-recurring items: OTSL impairment, DOJ accrual, and sale of diving asset in 2Q07): 3Q07 2Q07 1Q07 4Q06 3Q06 (in thousands, except ratio) Net income applicable to common shareholders $82,828 $57,702 $55,820 $65,948 57,029 Preferred stock dividends 945 945 945 945 804 Income tax provision 40,626 30,456 28,617 34,166 31,409 Net interest expense and other 12,971 13,605 12,331 13,981 15,103 Non-cash stock compensation expense 3,147 3,546 3,267 2,797 1,910 Depreciation and amortization 83,564 71,918 67,558 61,809 63,879 Exploration expense 1,476 2,978 1,190 1,820 19,520 Non-recurring items - 8,602 - - - Share of equity investments: Depreciation 1,723 1,965 1,004 1,004 1,004 Interest expense, net (258) (38) (57) (70) (59) Adjusted EBITDAX $227,022 $191,679 $170,675 $182,400 $190,599 Trailing Twelve Months Adjusted EBITDAX $771,776 Net Debt at September 30, 2007 (a) $1,420,191 Ratio 1.8
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.
(a) Total debt less cash, cash equivalents and short term investments
SOURCE Helix Energy Solutions
CONTACT: Wade Pursell, Chief Financial Officer of Helix Energy Solutions Group, Inc., +1-281-618-0400