UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 17, 2015 (February 16, 2015)
Helix Energy Solutions Group, Inc.
(Exact name of registrant as specified in its charter)
|
Minnesota
(State or other jurisdiction
of incorporation)
|
001-32936
(Commission File Number)
|
95-3409686
(IRS Employer Identification No.)
|
|
|
3505 West Sam Houston Parkway North, Suite 400
Houston, Texas
(Address of principal executive offices)
|
281-618-0400
(Registrant’s telephone number, including area code)
|
77043
(Zip Code)
|
|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On February 16, 2015, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release announcing its fourth quarter results of operations for the period ended December 31, 2014. Attached hereto as Exhibit 99.1, and incorporated by reference herein, is the press release.
Item 7.01 Regulation FD Disclosure.
On February 16, 2015, Helix issued a press release announcing its fourth quarter results of operations for the period ended December 31, 2014. In addition, on February 17, 2015, Helix is making a presentation (with slides) to analysts and investors regarding its financial and operating results. Attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein are the press release and the slides for the Fourth Quarter Earnings Conference Call Presentation issued by Helix. The presentation materials are also available beginning on February 16, 2015 under Investor Relations - Presentations in the For the Investor section of Helix’s website, www.HelixESG.com.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Number Description
----------- ----------------
|
99.1
|
Press Release of Helix Energy Solutions Group, Inc. dated February 16, 2015 reporting financial results for the fourth quarter of 2014.
|
|
99.2
|
Fourth Quarter 2014 Conference Call Presentation.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 17, 2014
| HELIX ENERGY SOLUTIONS GROUP, INC. | |||
|
|
By:
|
/s/ Anthony Tripodo | |
| Anthony Tripodo | |||
| Executive Vice President and Chief Financial Officer | |||
Index to Exhibits
Exhibit No. Description
|
99.1
|
Press Release of Helix Energy Solutions Group, Inc. dated February 16, 2015 reporting financial results for the fourth quarter of 2014.
|
|
99.2
|
Fourth Quarter 2014 Conference Call Presentation.
|
EXHIBIT 99.1
|
|
PRESSRELEASE
www.HelixESG.com
|
Helix Energy Solutions Group, Inc. · 3505 W. Sam Houston Parkway N., Suite 400 · Houston, TX 77043 · 281-618-0400 · fax: 281-618-0505
| For Immediate Release | 15-003 | ||
| Date: February 16, 2015 | Contact: | Terrence Jamerson | |
| Director, Finance & Investor Relations |
Helix Reports Fourth Quarter 2014 Results
HOUSTON, TX – Helix Energy Solutions Group, Inc. (NYSE: HLX) reported net income of $8.0 million, or $0.08 per diluted share, for the fourth quarter of 2014 compared to net income of $36.5 million, or $0.35 per diluted share, for the same period in 2013 and net income of $75.6 million, or $0.71 per diluted share, in the third quarter of 2014. Net income for the year ended December 31, 2014 was $195.0 million, or $1.85 per diluted share, compared with net income of $109.9 million, or $1.04 per diluted share, for the year ended December 31, 2013.
Owen Kratz, President and Chief Executive Officer of Helix, stated, “In addition to the forecasted normal seasonal factors, fourth quarter earnings were adversely impacted by downtime associated with the Q4000 after the vessel was accidentally hit by a nearby supply boat, followed up by mechanical problems related to the redeployment of its intervention riser system. Additionally, work scheduled for the H534 was cancelled on short notice during the quarter. However, it should be noted that despite the disappointing fourth quarter, we achieved record financial performance in 2014 for both our Well Intervention and Robotics businesses.”
* * * * *
Summary of Results
(in thousands, except per share amounts and percentages, unaudited)
|
Three Months Ended
|
Year Ended
|
|||||||||||||||||||
|
12/31/2014
|
12/31/2013
|
9/30/2014
|
12/31/2014
|
12/31/2013
|
||||||||||||||||
|
Revenues
|
$ | 207,160 | $ | 226,837 | $ | 340,837 | $ | 1,107,156 | $ | 876,561 | ||||||||||
|
Gross Profit
|
$ | 32,805 | $ | 71,164 | $ | 126,247 | $ | 344,036 | $ | 260,685 | ||||||||||
| 16 | % | 31 | % | 37 | % | 31 | % | 30 | % | |||||||||||
|
Net Income Applicable to
Common Shareholders
|
||||||||||||||||||||
|
Income from continuing operations
|
$ | 7,960 | $ | 36,503 | $ | 75,586 | $ | 195,047 | $ | 108,849 | ||||||||||
|
Income from discontinued operations
|
- | - | - | - | 1,073 | |||||||||||||||
|
Total
|
$ | 7,960 | $ | 36,503 | $ | 75,586 | $ | 195,047 | $ | 109,922 | ||||||||||
|
Diluted Earnings Per Share
|
||||||||||||||||||||
|
Income from continuing operations
|
$ | 0.08 | $ | 0.35 | $ | 0.71 | $ | 1.85 | $ | 1.03 | ||||||||||
|
Income from discontinued operations
|
- | - | - | - | 0.01 | |||||||||||||||
|
Total
|
$ | 0.08 | $ | 0.35 | $ | 0.71 | $ | 1.85 | $ | 1.04 | ||||||||||
|
Adjusted EBITDA from continuing operations
|
$ | 39,362 | $ | 81,549 | $ | 137,097 | $ | 378,010 | $ | 268,311 | ||||||||||
Segment Information, Operational and Financial Highlights
(in thousands, unaudited)
|
Three Months Ended
|
||||||||||||
|
12/31/2014
|
12/31/2013
|
9/30/2014
|
||||||||||
|
Revenues:
|
||||||||||||
|
Well Intervention
|
$ | 121,792 | $ | 132,559 | $ | 205,139 | ||||||
|
Robotics
|
80,923 | 90,306 | 131,707 | |||||||||
|
Production Facilities
|
21,802 | 19,216 | 24,184 | |||||||||
|
Subsea Construction
|
- | 2,016 | - | |||||||||
|
Intercompany Eliminations
|
(17,357 | ) | (17,260 | ) | (20,193 | ) | ||||||
|
Total
|
$ | 207,160 | $ | 226,837 | $ | 340,837 | ||||||
|
Income from Operations:
|
||||||||||||
|
Well Intervention
|
$ | 10,513 | $ | 37,934 | $ | 80,789 | ||||||
|
Robotics
|
8,092 | 15,141 | 28,397 | |||||||||
|
Production Facilities
|
8,011 | 9,814 | 11,284 | |||||||||
|
Subsea Construction
|
52 | 4,654 | 41 | |||||||||
|
Gain (Loss) on Disposition of Assets
|
(178 | ) | - | - | ||||||||
|
Corporate / Other
|
(16,898 | ) | (12,781 | ) | (14,283 | ) | ||||||
|
Intercompany Eliminations
|
129 | (822 | ) | 103 | ||||||||
|
Total
|
$ | 9,721 | $ | 53,940 | $ | 106,331 | ||||||
Business Segment Results
|
o
|
Well Intervention revenues decreased 41% in the fourth quarter of 2014 from revenues in the third quarter of 2014, due to a substantial decrease in vessel utilization across the fleet. In the Gulf of Mexico, vessel utilization was 64% in the fourth quarter, compared to 95% in the third quarter of 2014, primarily due to the H534 being idle for 39 days; the vessel was also placed out of service for an additional 14 days for regulatory inspection. Additionally, the Q4000 worked at reduced rates while making repairs to the vessel after being struck by a supply boat in late November. The rental intervention riser system, IRS no. 2, was on-hire for the entire fourth quarter of 2014. In the North Sea vessel utilization for the fourth quarter of 2014 was 69%, compared to 99% in the third quarter of 2014. The Skandi Constructor completed its regulatory dry dock during December, and the Seawell entered dry dock for its refit project in December.
|
|
o
|
Robotics revenues decreased 39% in the fourth quarter of 2014 from revenues in the third quarter of 2014, primarily due to a decline in utilized vessel days. For the fourth quarter vessel utilization was 79% versus 90% in the third quarter of 2014. Spot vessel utilization for the fourth quarter decreased 136 days (from 197 to 61 days) over the third quarter of 2014.
|
Other Expenses
|
o
|
Selling, general and administrative expenses were 11.1% of revenue in the fourth quarter of 2014, 5.8% of revenue in the third quarter of 2014 and 7.6% of revenue in the fourth quarter of 2013. Our fourth quarter 2014 expense includes an incremental $3.3 million charge related to an accounting adjustment for our performance-based long-term incentive program.
|
|
o
|
Net interest expense and other increased to $4.0 million in the fourth quarter of 2014 from $3.3 million in the third quarter of 2014. Net interest expense increased by $1.1 million, while there was a $0.4 million gain in other expense in the fourth quarter of 2014. Net interest expense reflects $0.6 million in commitment fees for the new Nordea Term loan put in place during the quarter, while other expense reflects foreign exchange fluctuations in our non-U.S. dollar functional currencies.
|
Financial Condition and Liquidity
|
o
|
Our total liquidity at December 31, 2014 was approximately $1.1 billion, consisting of $476 million in cash and cash equivalents and $584 million in unused capacity under our revolver. Consolidated net debt at December 31, 2014 was $75 million. Net debt to book capitalization at December 31, 2014 was 4%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation below.)
|
|
o
|
We incurred capital expenditures (including capitalized interest) totaling $126 million in the fourth quarter of 2014, compared to $68 million in the third quarter of 2014 and $56 million in the fourth quarter of 2013. For the years ended December 31, 2014 and 2013, capital expenditures totaled $368 million and $370 million, respectively.
|
* * * * *
Conference Call Information
Further details are provided in the presentation for Helix’s quarterly conference call to review its fourth quarter 2014 results (see the “Investor Relations” page of Helix’s website, www.HelixESG.com). The call, scheduled for 9:00 a.m. (CST) on Tuesday, February 17, 2015, will be audio webcast live from the “Investor Relations” page of Helix’s website. Investors and other interested parties wishing to listen to the conference via telephone may join the call by dialing 800-741-4871 for persons in the United States and 1-212-231-2912 for international participants. The passcode is "Tripodo". A replay of the conference will be available under "Investor Relations" by selecting the "Audio Archives" link from the same page beginning approximately two hours after the completion of the conference call.
About Helix
Helix Energy Solutions Group, Inc., headquartered in Houston, Texas, is an international offshore energy company that provides specialty services to the offshore energy industry, with a focus on well intervention and robotics operations. For more information about Helix, please visit our website at www.HelixESG.com.
Reconciliation of Non-GAAP Financial Measures
Management evaluates Company performance and financial condition using certain non-GAAP metrics, primarily Adjusted EBITDA from continuing operations, net debt and net debt to book capitalization. We calculate Adjusted EBITDA from continuing operations as earnings before net interest expense and other, taxes, depreciation and amortization. Net debt is calculated as the sum of financial debt less cash and cash equivalents on hand. Net debt to book capitalization is calculated by dividing net debt by the sum of net debt, convertible preferred stock and shareholders’ 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 EBITDA 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.
Forward-Looking Statements
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 "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any statements regarding our strategy; any statements regarding future utilization; any projections of financial items; future operations expenditures; any statements regarding the plans, strategies and objectives of management for future operations; any statement concerning developments; 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 forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors including but not limited to the performance of contracts by suppliers, customers and partners; actions by governmental and regulatory authorities; operating hazards and delays; our ultimate ability to realize current backlog; employee management issues; complexities of global political and economic developments; geologic risks; volatility of oil and gas prices and other risks described from time to time in our reports filed with the Securities and Exchange Commission ("SEC"), including the Company's most recently filed Annual Report on Form 10-K and in the Company’s other filings with the SEC, which are available free of charge on the SEC’s website at www.sec.gov. We assume no obligation and do not intend to update these forward-looking statements except as required by the securities laws.
Social Media
From time to time we provide information about Helix on Twitter (@Helix_ESG) and LinkedIn (www.linkedin.com).
HELIX ENERGY SOLUTIONS GROUP, INC.
|
Comparative Condensed Consolidated Statements of Operations
|
|
Three Months Ended Dec. 31,
|
Twelve Months Ended Dec. 31,
|
|||||||||||||||
|
(in thousands, except per share data)
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
|||||||||||||||
|
Net revenues
|
$ | 207,160 | $ | 226,837 | $ | 1,107,156 | $ | 876,561 | ||||||||
|
Cost of sales
|
174,355 | 155,673 | 763,120 | 615,876 | ||||||||||||
|
Gross profit
|
32,805 | 71,164 | 344,036 | 260,685 | ||||||||||||
|
Loss on commodity derivative contracts
|
- | - | - | (14,113 | ) | |||||||||||
|
Gain (loss) on disposition of assets, net
|
(178 | ) | - | 10,240 | 14,727 | |||||||||||
|
Selling, general and administrative expenses
|
(22,906 | ) | (17,224 | ) | (92,520 | ) | (82,265 | ) | ||||||||
|
Income from operations
|
9,721 | 53,940 | 261,756 | 179,034 | ||||||||||||
|
Equity in earnings of investments
|
170 | 815 | 879 | 2,965 | ||||||||||||
|
Other income - oil and gas
|
1,222 | 800 | 16,931 | 6,581 | ||||||||||||
|
Net interest expense and other
|
(3,960 | ) | (2,756 | ) | (17,045 | ) | (44,992 | ) | ||||||||
|
Income before income taxes
|
7,153 | 52,799 | 262,521 | 143,588 | ||||||||||||
|
Income tax provision (benefit)
|
(807 | ) | 15,534 | 66,971 | 31,612 | |||||||||||
|
Net income from continuing operations
|
7,960 | 37,265 | 195,550 | 111,976 | ||||||||||||
|
Income from discontinued operations, net of tax
|
- | - | - | 1,073 | ||||||||||||
|
Net income, including noncontrolling interests
|
7,960 | 37,265 | 195,550 | 113,049 | ||||||||||||
|
Less net income applicable to noncontrolling interests
|
- | (762 | ) | (503 | ) | (3,127 | ) | |||||||||
|
Net income applicable to Helix
|
$ | 7,960 | $ | 36,503 | $ | 195,047 | $ | 109,922 | ||||||||
|
Weighted Avg. Common Shares Outstanding:
|
||||||||||||||||
|
Basic
|
105,005 | 105,018 | 105,029 | 105,032 | ||||||||||||
|
Diluted
|
105,005 | 105,159 | 105,045 | 105,184 | ||||||||||||
|
Basic earnings per share of common stock:
|
||||||||||||||||
|
Continuing operations
|
$ | 0.08 | $ | 0.35 | $ | 1.85 | $ | 1.03 | ||||||||
|
Discontinued operations
|
- | - | - | 0.01 | ||||||||||||
|
Net income per share of common stock
|
$ | 0.08 | $ | 0.35 | $ | 1.85 | $ | 1.04 | ||||||||
|
Diluted earnings per share of common stock:
|
||||||||||||||||
|
Continuing operations
|
$ | 0.08 | $ | 0.35 | $ | 1.85 | $ | 1.03 | ||||||||
|
Discontinued operations
|
- | - | - | 0.01 | ||||||||||||
|
Net income per share of common stock
|
$ | 0.08 | $ | 0.35 | $ | 1.85 | $ | 1.04 | ||||||||
|
Comparative Condensed Consolidated Balance Sheets
|
|
ASSETS
|
LIABILITIES & SHAREHOLDERS' EQUITY
|
||||||||||||||||
|
(in thousands)
|
Dec. 31, 2014
|
Dec. 31, 2013
|
(in thousands)
|
Dec. 31, 2014
|
Dec. 31, 2013
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
||||||||||||||||
|
Current Assets:
|
Current Liabilities:
|
||||||||||||||||
|
Cash and equivalents (1)
|
$ | 476,492 | $ | 478,200 |
Accounts payable
|
$ | 83,403 | $ | 72,602 | ||||||||
|
Accounts receivable, net
|
135,300 | 184,165 |
Accrued liabilities
|
104,923 | 96,482 | ||||||||||||
|
Current deferred tax assets
|
31,180 | 51,573 |
Income tax payable
|
9,143 | 760 | ||||||||||||
|
Other current assets
|
51,301 | 29,709 |
Current maturities of L-T debt (1)
|
28,144 | 20,376 | ||||||||||||
|
Total Current Assets
|
694,273 | 743,647 |
Total Current Liabilities
|
225,613 | 190,220 | ||||||||||||
|
Property & equipment, net
|
1,735,384 | 1,532,217 |
Long-term debt (1)
|
523,228 | 545,776 | ||||||||||||
|
Equity investments
|
149,623 | 157,919 |
Deferred tax liabilities
|
260,275 | 265,879 | ||||||||||||
|
Goodwill
|
62,146 | 63,230 |
Other non-current liabilities
|
38,108 | 18,295 | ||||||||||||
|
Other assets, net
|
59,272 | 47,267 |
Shareholders' equity (1)
|
1,653,474 | 1,524,110 | ||||||||||||
|
Total Assets
|
$ | 2,700,698 | $ | 2,544,280 |
Total Liabilities & Equity
|
$ | 2,700,698 | $ | 2,544,280 | ||||||||
|
(1) Net debt to book capitalization - 4% at December 31, 2014. Calculated as total debt less cash and equivalents ($74,880)
|
|||||||||||||||||
|
divided by sum of total net debt and shareholders' equity ($1,728,354).
|
|||||||||||||||||
Helix Energy Solutions Group, Inc.
Reconciliation of Non GAAP Measures
Three and Twelve Months Ended December 31, 2014
|
Earnings Release:
|
||||||||||||||||||||
|
Reconciliation From Net Income from Continuing Operations to Adjusted EBITDA:
|
||||||||||||||||||||
|
Twelve Months
|
||||||||||||||||||||
| 4Q14 | 4Q13 | 3Q14 | 2014 | 2013 | ||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||
|
Net income from continuing operations
|
$ | 7,960 | $ | 37,265 | $ | 75,586 | $ | 195,550 | $ | 111,976 | ||||||||||
|
Adjustments:
|
||||||||||||||||||||
|
Income tax provision (benefit)
|
(807 | ) | 15,534 | 29,832 | 66,971 | 31,612 | ||||||||||||||
|
Net interest expense and other
|
3,960 | 2,756 | 3,258 | 17,045 | 44,992 | |||||||||||||||
|
Depreciation and amortization
|
28,071 | 26,993 | 28,421 | 109,345 | 98,535 | |||||||||||||||
|
EBITDA from continuing operations
|
39,184 | 82,548 | 137,097 | 388,911 | 287,115 | |||||||||||||||
|
Adjustments:
|
||||||||||||||||||||
|
Noncontrolling interests
|
- | (999 | ) | - | (661 | ) | (4,077 | ) | ||||||||||||
|
(Gain) loss on disposition of assets, net
|
178 | - | - | (10,240 | ) | (14,727 | ) | |||||||||||||
|
Adjusted EBITDA from continuing operations
|
$ | 39,362 | $ | 81,549 | $ | 137,097 | $ | 378,010 | $ | 268,311 | ||||||||||
|
We calculate adjusted EBITDA from continuing operations as earnings before net interest expense and other, taxes and depreciation
|
||||||||||||||||||||
|
and amortization. This non-GAAP measure is useful to investors and other internal and external users of our financial statements in
|
||||||||||||||||||||
|
evaluating our operating performance because it is 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 EBITDA 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.
|
||||||||||||||||||||
EXHIBIT 99.2
Fourth Quarter 2014 Conference Call February 17, 2015 Built for success, positioned for growth
Built for success, positioned for growth This presentation 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 "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any statements regarding our strategy; any statements regarding future utilization; any projections of financial items; future operations expenditures; any statements regarding the plans, strategies and objectives of management for future operations; any statement concerning developments; 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 forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors including but not limited to the performance of contracts by suppliers, customers and partners; actions by governmental and regulatory authorities; operating hazards and delays; our ultimate ability to realize current backlog; employee management issues; complexities of global political and economic developments; geologic risks; volatility of oil and gas prices and other risks described from time to time in our reports filed with the Securities and Exchange Commission ("SEC"), including the Company's most recently filed Annual Report on Form 10-K and in the Company’s other filings with the SEC, which are available free of charge on the SEC’s website at www.sec.gov. We assume no obligation and do not intend to update these forward-looking statements except as required by the securities laws. Social Media From time to time we provide information about Helix on Twitter (@Helix_ESG) and LinkedIn (www.linkedin.com/company/helix-energy-solutions-group). * Forward-Looking Statements
Built for success, positioned for growth Executive Summary (pg. 4) Operational Highlights by Segment (pg. 8) Key Balance Sheet Metrics (pg. 13) 2015 Outlook (pg. 16) Non-GAAP Reconciliations (pg. 22) Questions & Answers Work class ROV XLX – 88 * Presentation Outline
Built for success, positioned for growth * Executive Summary Q5000 under construction in Singapore
Built for success, positioned for growth See non-GAAP reconciliations on slide 23. * Executive Summary
Built for success, positioned for growth Q4 2014 earnings per diluted share of $0.08 per diluted share compared to $0.71 per diluted share in Q3 2014 67% utilization of well intervention vessels in the fourth quarter Q4000 at 86% utilization for Q4 primarily due to mechanical problems related to the redeployment of its intervention riser system The vessel also worked at reduced rates after downtime due to repairs incurred after being struck by a supply boat H534 utilized 42% during Q4; vessel was idle for 39 days and out of service an additional 14 days for regulatory inspection Combined utilization of 69% across North Sea well intervention fleet during the quarter Skandi Constructor completed regulatory dry dock Seawell entered dry dock in December, which is expected to continue into April 2015 Robotics vessels and ROVs utilized 79% and 73%, respectively, during the fourth quarter * Executive Summary
Built for success, positioned for growth Balance sheet Liquidity* of $1.1 billion at 12/31/2014 Cash and cash equivalents totaled $476 million at 12/31/2014 Net debt of $75 million at 12/31/2014 See updated debt maturity profile on slide 14 We define liquidity as the total of cash and cash equivalents ($476 million) plus unused capacity under our revolving credit facility ($584 million). * Executive Summary
Built for success, positioned for growth Operational Highlights *
Built for success, positioned for growth 67% utilization for the well intervention fleet Skandi Constructor completes regulatory dry dock; Seawell enters dry dock in December Robotics realized 61 days of utilization from spot vessels in the quarter; total vessel utilization of 79% including long-term chartered vessels * Business Segment Results Helix 534
Built for success, positioned for growth Gulf of Mexico Q4000 was 86% utilized during Q4 due to mechanical problems with its intervention riser system; the vessel also worked at reduced rates while making minor repairs as a result of being struck by a supply boat Helix 534 was 42% utilized during the quarter – vessel was idle for 39 days, plus an additional 14 days out of service for regulatory inspection IRS no. 2 on hire for the entire quarter North Sea Combined utilization of 69% across all three vessels during Q4 on a variety of well intervention projects Seawell fully utilized until entering dry dock in December for refit Skandi Constructor completed its regulatory dry dock in December for recertification Well Enhancer engaged in North Sea projects until departure to Spain for first ever well intervention project in the Mediterranean * Well Intervention NOV tower being installed on the Q5000
Built for success, positioned for growth 79% chartered vessel fleet utilization in Q4 61 days utilized on spot vessels 73% utilization for ROVs, trenchers and ROVDrill Olympic Canyon fully utilized in India during Q4 REM Installer transited to the GOM in October and performed 40 days of ROV support projects for multiple clients during the remainder of the quarter Grand Canyon I completed a cable burial project in the German sector of the North Sea with i-Trencher and T1200; then transited to the Middle East and commenced a multi-month cable burial project offshore Qatar in December Deep Cygnus completed crane maintenance in October, mobilized T1500 and performed 57 days of trenching scopes during the quarter Maersk Responder and Maersk Lifter (spot vessels) completed 2014 trenching campaigns in the North Sea, demobilized and were returned to vessel owners in October * Robotics T-1200 Trencher ROVDrill at Apache 1
Built for success, positioned for growth Olympic Canyon (1) Deep Cygnus (1) Olympic Triton (1,2) Grand Canyon (1) REM Installer (1) Spot vessels (1,3) Seawell Well Enhancer Q4000 Skandi Constructor (1) H534 50 ROVs 2 ROVDrill Units 5 Trenchers Chartered vessel Vessel returned to owner in September 2014. Robotics chartered various spot vessels during Q4 of 2014 for a total of 61 days. * Utilization
Built for success, positioned for growth * Key Balance Sheet Metrics
Built for success, positioned for growth Total funded debt of $572 million at end of Q4 2014: $200 million Convertible Senior Notes – 3.25% (A) ($179 million net of unamortized debt discount) $277 million Term Loan – LIBOR + 2.25% (B) Annual amortization payments of 5% in years 1 and 2, 10% per annum in years 3 through 5 $95 million MARAD Debt – 4.93% Semi-annual amortization payments Convertible Notes Term Loan MARAD Debt Stated maturity 2032. First put / call date is March 2018. We have fixed through October 2016 the LIBOR interest rate on 50% of the Term Loan debt at 0.75% utilizing interest rate swaps. * Debt Instrument Profile
Built for success, positioned for growth Liquidity of approximately $1.1 billion at 12/31/2014 ($ amounts in millions) Includes impact of unamortized debt discount under our convertible senior notes. We define liquidity as the total of cash and cash equivalents ($476 million) plus unused capacity under our revolving credit facility ($584 million). * Debt and Liquidity Profile
Built for success, positioned for growth 2015 Outlook *
Built for success, positioned for growth * 2015 Outlook 2014 in Review 2014 was an outstanding year for Helix, exceeding our own expectations with $378 million of EBITDA Both the Well Intervention and Robotics business segments posted record results Excluding one-time items and the favorable impact of the extraordinary margins earned off of the Skandi Constructor’s “out-of-market” campaigns, a more normalized 2014 EBITDA result would have been closer to $350 million Funded $368 million of capex (mostly growth) internally Moving Ahead to 2015 2015 will be a challenging year as a result of the following factors: Collapse in oil prices drives a reduction in spending by our customers across the supply chain; Helix will not be immune. Our customers are aggressively cutting spending and certain of our customers are seeking to renegotiate contracts, defer contracted work into later periods, as well as seeking to cancel contracts even with cancellation fees. The sharp decline in the U.K. sterling versus the dollar is expected to impact our North Sea based operations by approximately $15 – $20 million (EBITDA) Above average dry docking this year is estimated to impact our results another $30 million in EBITDA (Seawell, Q4000, and H534)
Built for success, positioned for growth * 2015 Outlook Moving Ahead to 2015 – cont’d Lower oil prices will reduce our “tolling” revenues from the Production Facilities business by an estimated $10 million Q5000 expected to be completed in Q1 and available for service in Q3 of 2015 The current market environment with the collapse in oil prices renders the 2015 outlook challenging, as well as impossible to forecast with any degree of clarity. The combination of factors cited above will produce a 2015 year below 2014 results. We caution that the market situation is very dynamic and therefore we cannot quantify with any degree of certainty, but to say that 2015 is likely to be well below 2014 results.
Built for success, positioned for growth Total backlog as of December 31, 2014 was approximately $2.3 billion, of which approximately $2.1 billion is associated with our Well Intervention and Robotics businesses(1) Both the Q4000 (excluding dry dock) and the Well Enhancer are expected to have good utilization in 2015 A recent customer cancellation (with penalty) for the H534 has left a gap in its schedule; however there is work for the vessel in Q2 / Q3 The Seawell and Skandi Constructor are expected to have lower levels of utilization in 2014 * 2015 Outlook (1) This year end number is subject to customer cancellation and other modifications which is more likely in the current industry environment.
Built for success, positioned for growth Robotics market impacted by the same macro conditions impacting energy markets; record 2014 unlikely to be matched in 2015 Olympic Canyon to continue operations offshore India under firm commitment through June, with two 6-month options remaining on current contract with customer in India Grand Canyon I, T1200 and i-Trencher to complete current cable burial project offshore Qatar Q2 2015 and has backlog for several trenching projects during the summer season Lower activity associated with spot market vessels, as the long-term chartered fleet increases to six vessels by Q3 2015 with Grand Canyon II and III entering the fleet Vessels serving this segment of the market are well over-supplied, but our trenching capabilities provide some stability While we don’t expect Robotics to achieve 2014 record performance, 2015 results should still produce decent results, somewhere between 2013 and 2014 numbers * 2015 Outlook
Built for success, positioned for growth 2015 capex budget of approximately $400 million consisting of the following(1): $305 million in growth capital; primarily for newbuilds currently underway, including: $170 million for Q5000 (includes $15 million contingency) $40 million for Q7000 $65 million for Siem Helix #1 and 2 monohull vessels $15 million in Robotics $15 million for new subsea equipment, including jointly owned with OneSubea $35 million remaining on the Seawell refit in 2015 $60 million in maintenance capital $35 million for the Q4000 and H534 dry dock $20 million in IRS maintenance, spares and upgrades $3 million in Robotics maintenance $2 million in other * 2015 Outlook – Capex (1) Although we have budgeted $400 million, we are seeking to reduce aggregate capex in 2015 whenever possible.
Built for success, positioned for growth Non-GAAP Reconciliations *
Built for success, positioned for growth We calculate Adjusted EBITDA from continuing operations as earnings before net interest expense and other, taxes, depreciation and amortization. This non-GAAP measure is useful to investors and other internal and external users of our financial statements in evaluating our operating performance; it is 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 EBITDA from continuing operations should not be considered in isolation or as a substitute for, but instead is supplemental to, income from operations, net income and 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 from this measure. * Non-GAAP Reconciliations
Built for success, positioned for growth Follow Helix on Twitter: @Helix_ESG Join the discussion on LinkedIn: www.linkedin.com/company/helix