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): October 19, 2016
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) | 77043 (Zip Code) | |
281-618-0400 (Registrant's telephone number, including area 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 October 19, 2016, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release announcing its third quarter results of operations for the period ended September 30, 2016. Attached hereto as Exhibit 99.1, and incorporated by reference herein, is the press release.
Item 7.01 Regulation FD Disclosure.
On October 19, 2016, Helix issued a press release announcing its third quarter results of operations for the period ended September 30, 2016. In addition, on October 20, 2016, 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 Third Quarter Earnings Conference Call Presentation issued by Helix. The presentation materials are also available beginning on October 19, 2016 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 October 19, 2016 reporting financial results for the third quarter of 2016. |
99.2 | Third Quarter 2016 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: October 19, 2016
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 October 19, 2016 reporting financial results for the third quarter of 2016. |
99.2 | Third Quarter 2016 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 | 16-017 | ||
Date: October 19, 2016 | Contact: | Erik Staffeldt | |
Vice President - Finance & Accounting | |||
Helix Reports Third Quarter 2016 Results
HOUSTON, TX - Helix Energy Solutions Group, Inc. (NYSE: HLX) reported net income of $11.5 million, or $0.10 per diluted share, for the third quarter of 2016 compared to net income of $9.9 million, or $0.09 per diluted share, for the same period in 2015 and a net loss of $10.7 million, or $(0.10) per diluted share, for the second quarter of 2016. The net loss for the nine months ended September 30, 2016 was $27.0 million, or $(0.25) per diluted share, compared to net income of $26.9 million, or $0.25 per diluted share, for the nine months ended September 30, 2015.
Helix reported adjusted EBITDA1 of $46.7 million for the third quarter of 2016 compared to $51.5 million for the third quarter of 2015 and $14.9 million for the second quarter of 2016. Adjusted EBITDA for the nine months ended September 30, 2016 was $62.7 million compared to $138.6 million for the nine months ended September 30, 2015.
Owen Kratz, President and Chief Executive Officer of Helix, stated, “We realized a significant improvement in financial results across our business units primarily resulting from a combination of higher vessel utilization and seasonal factors. However, industry conditions remain challenging.”
1 Adjusted EBITDA is a non-GAAP measure. See reconciliation below.
Summary of Results
($ in thousands, except per share amounts, unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
9/30/2016 | 9/30/2015 | 6/30/2016 | 9/30/2016 | 9/30/2015 | |||||||||||||||
Revenues | $ | 161,245 | $ | 182,462 | $ | 107,267 | $ | 359,551 | $ | 538,119 | |||||||||
Gross Profit | $ | 40,184 | $ | 31,969 | $ | 5,658 | $ | 28,912 | $ | 91,124 | |||||||||
25 | % | 18 | % | 5 | % | 8 | % | 17 | % | ||||||||||
Net Income (Loss) | $ | 11,462 | $ | 9,880 | $ | (10,671 | ) | $ | (27,032 | ) | $ | 26,887 | |||||||
Diluted Earnings (Loss) Per Share | $ | 0.10 | $ | 0.09 | $ | (0.10 | ) | $ | (0.25 | ) | $ | 0.25 | |||||||
Adjusted EBITDA 1 | $ | 46,701 | $ | 51,497 | $ | 14,932 | $ | 62,655 | $ | 138,550 | |||||||||
1 Adjusted EBITDA is a non-GAAP measure. See reconciliation below.
Segment Information, Operational and Financial Highlights
($ in thousands, unaudited)
Three Months Ended | |||||||||||
9/30/2016 | 9/30/2015 | 6/30/2016 | |||||||||
Revenues: | |||||||||||
Well Intervention | $ | 108,287 | $ | 94,895 | $ | 59,919 | |||||
Robotics | 48,897 | 83,310 | 38,914 | ||||||||
Production Facilities | 17,128 | 19,133 | 18,957 | ||||||||
Intercompany Eliminations | (13,067 | ) | (14,876 | ) | (10,523 | ) | |||||
Total | $ | 161,245 | $ | 182,462 | $ | 107,267 | |||||
Income (Loss) from Operations: | |||||||||||
Well Intervention | $ | 24,413 | $ | 6,233 | $ | (538 | ) | ||||
Robotics | (94 | ) | 14,329 | (8,823 | ) | ||||||
Production Facilities | 8,312 | 6,938 | 9,730 | ||||||||
Corporate / Other | (10,288 | ) | (8,965 | ) | (9,827 | ) | |||||
Intercompany Eliminations | (873 | ) | (163 | ) | 163 | ||||||
Total | $ | 21,470 | $ | 18,372 | $ | (9,295 | ) | ||||
Business Segment Results
Ÿ | Well Intervention revenues increased 81% in the third quarter of 2016 from revenues in the second quarter of 2016. Overall Well Intervention vessel utilization in the third quarter of 2016 increased to 76% from 54% in the second quarter of 2016. The Q4000 utilization was 93% in the third quarter of 2016 compared to 99% in the second quarter of 2016. The Q5000 utilization was 84% in the third quarter of 2016 compared to 100% in the second quarter of 2016 after going on contracted rates mid-May. In addition, third quarter revenues included a payment received due to a work scope cancellation on a 42 day “take or pay” contract originally scheduled for the fourth quarter. In the North Sea, the Well Enhancer utilization was 91% in the third quarter of 2016 compared to 75% in the second quarter of 2016. The Seawell utilization increased to 98% in the third quarter of 2016 compared to 23% in the second quarter of 2016 after its reactivation in early June 2016. The Skandi Constructor utilization was 15% in the third quarter of 2016 compared to being idle the entire second quarter of 2016. The two rental intervention riser systems remained idle in the third quarter of 2016. |
Ÿ | Robotics revenues increased 26% in the third quarter of 2016 compared to the second quarter of 2016. Chartered vessel utilization increased to 81% in the third quarter of 2016 from 61% in the second quarter of 2016, and ROV asset utilization increased to 57% in the third quarter of 2016 from 48% in the second quarter of 2016. The increase in revenue was primarily driven by increased seasonal activity in the North Sea. |
Other Expenses
Ÿ | Selling, general and administrative expenses were $18.7 million, 11.6% of revenue, in the third quarter of 2016 compared to $15.0 million, 13.9% of revenue, in the second quarter of 2016. Our third quarter 2016 expenses includes a $2.7 million charge associated with the provision for the uncertain collection of a portion of an existing trade receivable. The remaining increase of $1.0 million is primarily driven by increased costs associated with our variable stock compensation plans and increased start-up costs associated with the Petrobras contract. |
Ÿ | Net interest expense decreased slightly to $6.8 million in the third quarter of 2016 from $7.5 million in the second quarter of 2016. The decrease in net interest expense is primarily associated with higher capitalized interest on our capital projects. |
Ÿ | We recorded a $0.2 million gain associated with the repurchase in July 2016 of $7.6 million in aggregate principal amount of our Convertible Senior Notes due 2032. |
Ÿ | Other income decreased to $0.8 million in the third quarter of 2016 from $1.3 million in the second quarter of 2016. The decrease was primarily driven by foreign currency losses associated with our non-U.S. dollar functional currencies, offset in part by unrealized gains on our foreign currency derivative contracts that are not designated as hedges. |
Financial Condition and Liquidity
Ÿ | In August 2016, we completed our first $50 million at-the-market (“ATM”) program with the sale of the remaining $9.5 million of common stock. |
Ÿ | In August 2016, we launched a second ATM program for the sale of an additional $50 million of common stock. We completed this program on September 28, 2016 and sold a total of 6,709,377 shares of our common stock under this ATM program at an average of $7.45 per share. The proceeds from this ATM program totaled $48.8 million, net of transaction costs. |
Ÿ | Our total liquidity at September 30, 2016 was approximately $499 million, consisting of $482 million in cash and cash equivalents and $17 million in available capacity under our revolver. Consolidated long-term debt decreased to $678 million in the third quarter of 2016 from $711 million in the second quarter of 2016. Consolidated net debt at September 30, 2016 was $196 million. Net debt to book capitalization at September 30, 2016 was 13%. (Net debt and net debt to book capitalization are non-GAAP measures. See reconciliation below.) |
Ÿ | We incurred capital expenditures (including capitalized interest) totaling $99 million in the third quarter of 2016 compared to $32 million in the second quarter of 2016 and $55 million in the third quarter of 2015. In addition, we incurred $13 million in mobilization costs of the Siem Helix 1. Our third quarter capital expenditures include a shipyard invoice for the Q7000 of approximately $69 million that was paid in October 2016. |
* * * * *
Conference Call Information
Further details are provided in the presentation for Helix’s quarterly conference call to review its third quarter 2016 results (see the “Investor Relations” page of Helix’s website, www.HelixESG.com). The call, scheduled for 9:00 a.m. Central Daylight Time Thursday, October 20, 2016, 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 800-618-4645 for persons in the United States and 1-303-223-4398 for international participants. The passcode is “Tripodo”. A replay of the conference call 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 services 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 EBITDA, Adjusted EBITDA, net debt and net debt to book capitalization. We define EBITDA as earnings before income taxes, net interest expense, gain on repurchase of long-term debt, net other income or expense, and depreciation and amortization expense. To arrive at our measure of Adjusted EBITDA, we include realized losses from the cash settlements of our ineffective foreign currency derivative contracts, which are excluded from EBITDA as a component of net other income or expense. Net debt is calculated as total long-term debt less cash and cash equivalents. Net debt to book capitalization is calculated by dividing net debt by the sum of net debt and shareholders’ equity. We use EBITDA to monitor and facilitate external comparison of our business results to those of others in our industry, to analyze and evaluate financial strategic planning decisions regarding future investments and acquisitions, to plan and evaluate operating budgets, and in certain cases, to report our results to the holders of our debt as required by our debt covenants. We believe that our measure of EBITDA provides useful information to the public regarding our ability to service debt and fund capital expenditures and may help our investors understand our operating performance and compare our results to other companies that have different financing, capital and tax structures. Other companies may calculate their measures of EBITDA and Adjusted EBITDA differently from the way we do, which may limit their usefulness as comparative measures. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for, but instead are 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 that are excluded from these measures.
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 visibility and future utilization; any projections of financial items; future operations expenditures; any statements regarding the plans, strategies and objectives of management for future operations; any statements 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).
HELIX ENERGY SOLUTIONS GROUP, INC.
Comparative Condensed Consolidated Statements of Operations |
Three Months Ended Sep. 30, | Nine Months Ended Sep. 30, | |||||||||||||||
(in thousands, except per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net revenues | $ | 161,245 | $ | 182,462 | $ | 359,551 | $ | 538,119 | ||||||||
Cost of sales | 121,061 | 150,493 | 330,639 | 446,995 | ||||||||||||
Gross profit | 40,184 | 31,969 | 28,912 | 91,124 | ||||||||||||
Selling, general and administrative expenses | (18,714 | ) | (13,597 | ) | (47,493 | ) | (42,750 | ) | ||||||||
Income (loss) from operations | 21,470 | 18,372 | (18,581 | ) | 48,374 | |||||||||||
Equity in losses of investments | (122 | ) | (251 | ) | (366 | ) | (553 | ) | ||||||||
Net interest expense | (6,843 | ) | (8,713 | ) | (25,007 | ) | (18,018 | ) | ||||||||
Gain on repurchase of long-term debt | 244 | — | 546 | — | ||||||||||||
Other income (expense), net | 830 | (5 | ) | 4,018 | (6,197 | ) | ||||||||||
Other income (expense) - oil and gas | (468 | ) | 571 | 2,500 | 4,396 | |||||||||||
Income (loss) before income taxes | 15,111 | 9,974 | (36,890 | ) | 28,002 | |||||||||||
Income tax provision (benefit) | 3,649 | 94 | (9,858 | ) | 1,115 | |||||||||||
Net income (loss) | $ | 11,462 | $ | 9,880 | $ | (27,032 | ) | $ | 26,887 | |||||||
Earnings (loss) per share of common stock: | ||||||||||||||||
Basic | $ | 0.10 | $ | 0.09 | $ | (0.25 | ) | $ | 0.25 | |||||||
Diluted | $ | 0.10 | $ | 0.09 | $ | (0.25 | ) | $ | 0.25 | |||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 113,680 | 105,438 | 109,135 | 105,362 | ||||||||||||
Diluted | 113,680 | 105,438 | 109,135 | 105,362 | ||||||||||||
Comparative Condensed Consolidated Balance Sheets |
ASSETS | LIABILITIES & SHAREHOLDERS' EQUITY | |||||||||||||||||
(in thousands) | Sep. 30, 2016 | Dec. 31, 2015 | (in thousands) | Sep. 30, 2016 | Dec. 31, 2015 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||
Current Assets: | Current Liabilities: | |||||||||||||||||
Cash and cash equivalents (1) | $ | 482,106 | $ | 494,192 | Accounts payable | $ | 127,733 | $ | 65,370 | |||||||||
Accounts receivable, net | 117,565 | 96,752 | Accrued liabilities | 69,904 | 71,641 | |||||||||||||
Current deferred tax assets | 15,706 | 53,573 | Income tax payable | — | 2,261 | |||||||||||||
Income tax receivable | 9,569 | — | Current maturities of long-term debt (1) | 70,905 | 71,640 | |||||||||||||
Other current assets | 54,064 | 39,518 | Total Current Liabilities | 268,542 | 210,912 | |||||||||||||
Total Current Assets | 679,010 | 684,035 | ||||||||||||||||
Property & equipment, net | 1,649,484 | 1,603,009 | Long-term debt (1) | 607,502 | 677,695 | |||||||||||||
Equity investments | — | 26,200 | Deferred tax liabilities | 173,901 | 180,974 | |||||||||||||
Goodwill | 45,107 | 45,107 | Other non-current liabilities | 44,425 | 51,415 | |||||||||||||
Other assets, net | 57,945 | 41,608 | Shareholders' equity (1) | 1,337,176 | 1,278,963 | |||||||||||||
Total Assets | $ | 2,431,546 | $ | 2,399,959 | Total Liabilities & Equity | $ | 2,431,546 | $ | 2,399,959 | |||||||||
(1) | Net debt to book capitalization - 13% at September 30, 2016. Calculated as net debt (total long-term debt less cash and cash equivalents - $196,301) divided by the sum of net debt and shareholders' equity ($1,533,477). |
Helix Energy Solutions Group, Inc.
Reconciliation of Non-GAAP Measures
Earnings Release: | ||||||||||||||||||||||
Reconciliation from Net Income (Loss) to Adjusted EBITDA: | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
9/30/2016 | 9/30/2015 | 6/30/2016 | 9/30/2016 | 9/30/2015 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||
Net income (loss) | $ | 11,462 | $ | 9,880 | $ | (10,671 | ) | $ | (27,032 | ) | $ | 26,887 | ||||||||||
Adjustments: | ||||||||||||||||||||||
Income tax provision (benefit) | 3,649 | 94 | (4,219 | ) | (9,858 | ) | 1,115 | |||||||||||||||
Net interest expense | 6,843 | 8,713 | 7,480 | 25,007 | 18,018 | |||||||||||||||||
Gain on repurchase of long-term debt | (244 | ) | — | (302 | ) | (546 | ) | — | ||||||||||||||
Other (income) expense, net | (830 | ) | 5 | (1,308 | ) | (4,018 | ) | 6,197 | ||||||||||||||
Depreciation and amortization | 27,607 | 32,805 | 25,674 | 84,846 | 86,333 | |||||||||||||||||
EBITDA | 48,487 | 51,497 | 16,654 | 68,399 | 138,550 | |||||||||||||||||
Adjustments: | ||||||||||||||||||||||
Realized losses from cash settlements of ineffective foreign currency derivative contracts | (1,786 | ) | — | (1,722 | ) | (5,744 | ) | — | ||||||||||||||
Adjusted EBITDA | $ | 46,701 | $ | 51,497 | $ | 14,932 | $ | 62,655 | $ | 138,550 | ||||||||||||
We define EBITDA as earnings before income taxes, net interest expense, gain on repurchase of long-term debt, net other income or expense, and depreciation and amortization expense. To arrive at our measure of Adjusted EBITDA, we include realized losses from the cash settlements of our ineffective foreign currency derivative contracts, which are excluded from EBITDA as a component of net other income or expense. We use EBITDA to monitor and facilitate external comparison of our business results to those of others in our industry, to analyze and evaluate financial strategic planning decisions regarding future investments and acquisitions, to plan and evaluate operating budgets, and in certain cases, to report our results to the holders of our debt as required by our debt covenants. We believe that our measure of EBITDA provides useful information to the public regarding our ability to service debt and fund capital expenditures and may help our investors understand our operating performance and compare our results to other companies that have different financing, capital and tax structures. Other companies may calculate their measures of EBITDA and Adjusted EBITDA differently from the way we do, which may limit their usefulness as comparative measures. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for, but instead are 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 that are excluded from these measures.
EXHIBIT 99.2
