UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction | (Commission | (IRS Employer |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
NOT APPLICABLE
(Former name or former address, if changed since last report)
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:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On July 26, 2023, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release reporting its financial results for the second quarter 2023. The press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On July 26, 2023, Helix issued a press release reporting its financial results for the second quarter 2023. In addition, on July 27, 2023, Helix is making a presentation (with slides) to analysts and investors regarding its financial and operating results. Furnished herewith as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference, are the press release and the slides for the Second Quarter 2023 Conference Call Presentation issued by Helix. The presentation materials are also available on the “For the Investor” page of Helix’s website, www.helixesg.com.
The information furnished pursuant to Items 2.02 and 7.01, including Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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: July 26, 2023 |
| ||
HELIX ENERGY SOLUTIONS GROUP, INC. | |||
By: | /s/ Erik Staffeldt | ||
Erik Staffeldt | |||
Executive Vice President and | |||
EXHIBIT 99.1
| | | | | | | | |
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 | | | | | | | 23-010 | |
| | | | | | | | |
Date: July 26, 2023 | Contact: | Erik Staffeldt | | | | | ||
| | | Executive Vice President & CFO | | | |||
| | | | | | | | |
Helix Reports Second Quarter 2023 Results
HOUSTON, TX – Helix Energy Solutions Group, Inc. (“Helix”) (NYSE: HLX) reported net income of $7.1 million, or $0.05 per diluted share, for the second quarter 2023 compared to a net loss of $5.2 million, or $(0.03) per diluted share, for the first quarter 2023 and a net loss of $29.7 million, or $(0.20) per diluted share, for the second quarter 2022. Helix reported adjusted EBITDA1 of $71.3 million for the second quarter 2023 compared to $35.1 million for the first quarter 2023 and $16.8 million for the second quarter 2022.
For the six months ended June 30, 2023, Helix reported net income of $1.9 million, or $0.01 per diluted share, compared to a net loss of $71.7 million, or $(0.47) per diluted share, for the six months ended June 30, 2022. Adjusted EBITDA for the six months ended June 30, 2023 was $106.4 million compared to $19.3 million for the six months ended June 30, 2022. The table below summarizes our results of operations:
Summary of Results
($ in thousands, except per share amounts, unaudited)
|
| Three Months Ended |
| Six Months Ended |
| |||||||||||
| | 6/30/2023 | | 6/30/2022 | | 3/31/2023 | | 6/30/2023 | | 6/30/2022 |
| |||||
Revenues | | $ | 308,817 | | $ | 162,612 | | $ | 250,084 | | $ | 558,901 | | $ | 312,737 | |
Gross Profit (Loss) | | $ | 55,349 | | $ | (1,354) | | $ | 15,184 | | $ | 70,533 | | $ | (19,963) | |
| |
| 18 | % |
| (1) | % |
| 6 | % |
| 13 | % |
| (6) | % |
Net Income (Loss) | | $ | 7,100 | | $ | (29,699) | | $ | (5,165) | | $ | 1,935 | | $ | (71,730) | |
Diluted Earnings (Loss) Per Share | | $ | 0.05 | | $ | (0.20) | | $ | (0.03) | | $ | 0.01 | | $ | (0.47) | |
Adjusted EBITDA1 | | $ | 71,292 | | $ | 16,759 | | $ | 35,094 | | $ | 106,386 | | $ | 19,285 | |
Cash and Cash Equivalents2 | | $ | 182,651 | | $ | 260,595 | | $ | 166,674 | | $ | 182,651 | | $ | 260,595 | |
Net Debt1 | | $ | 78,317 | | $ | 4,010 | | $ | 91,278 | | $ | 78,317 | | $ | 4,010 | |
Cash Flows from Operating Activities | | $ | 31,501 | | $ | (5,841) | | $ | (5,392) | | $ | 26,109 | | $ | (23,254) | |
Free Cash Flow1 | | $ | 30,246 | | $ | (7,405) | | $ | (11,692) | | $ | 18,554 | | $ | (25,441) | |
Owen Kratz, President and Chief Executive Officer of Helix, stated, “The offshore energy services markets continue to improve with the oil and gas and the renewables markets driving increased activity globally and across all our business segments. Our second quarter results improved sequentially, as we benefitted from the seasonal pick-up in activity in our Robotics and Shallow Water Abandonment segments and strong utilization in our Well Intervention segment with the Q7000 commencing operations in the Asia Pacific region. Our Robotics segment benefited from strong vessel and trenching activity, with trenching projects in the quarter performed in Europe, the U.S. east coast and Asia Pacific. With improved global activity, the Robotics segment achieved its highest quarterly revenues since 2015. In our Shallow Water Abandonment segment, Helix Alliance operations improved with the commencement of seasonal activity of the Epic Hedron heavy lift barge. Given our overall strong performance during the second quarter and the strength in our outlook for the second half of the year, we increased our guidance for 2023. Additionally, we amended our ABL facility, increasing our facility size by $20 million, and continued to buy back shares under our share repurchase program.”
|
1 Adjusted EBITDA, Net Debt and Free Cash Flow are non-GAAP measures; see reconciliations below |
2 Excludes restricted cash of $2.5 million as of 3/31/23 and 6/30/22 |
Segment Information, Operational and Financial Highlights
($ in thousands, unaudited)
|
| Three Months Ended |
| Six Months Ended | |||||||||||
| | 6/30/2023 | | 6/30/2022 | | 3/31/2023 | | 6/30/2023 | | 6/30/2022 | |||||
Revenues: |
| |
|
| |
|
| |
|
| |
|
| |
|
Well Intervention | | $ | 154,221 | | $ | 106,291 | | $ | 142,438 | | $ | 296,659 | | $ | 212,658 |
Robotics | |
| 70,050 | |
| 49,850 | |
| 49,222 | |
| 119,272 | |
| 87,201 |
Shallow Water Abandonment1 | | | 76,306 | | | — | | | 49,381 | | | 125,687 | | | — |
Production Facilities | |
| 23,128 | |
| 17,678 | |
| 20,905 | |
| 44,033 | |
| 35,972 |
Intercompany Eliminations | |
| (14,888) | |
| (11,207) | |
| (11,862) | |
| (26,750) | |
| (23,094) |
Total | | $ | 308,817 | | $ | 162,612 | | $ | 250,084 | | $ | 558,901 | | $ | 312,737 |
| | | | | | | | | | | | | | | |
Income (Loss) from Operations: | | | | | | | | | | | | | | | |
Well Intervention | | $ | 3,380 | | $ | (22,548) | | $ | (8,143) | | $ | (4,763) | | $ | (54,306) |
Robotics | |
| 17,467 | |
| 9,666 | |
| 5,094 | |
| 22,561 | |
| 11,146 |
Shallow Water Abandonment1 | | | 19,762 | | | — | | | 6,822 | | | 26,584 | | | — |
Production Facilities | |
| 7,774 | |
| 6,045 | |
| 5,157 | |
| 12,931 | |
| 11,896 |
Change in Fair Value of Contingent Consideration | |
| (10,828) | |
| — | |
| (3,992) | |
| (14,820) | |
| — |
Corporate / Other / Eliminations | |
| (17,350) | |
| (12,139) | |
| (13,241) | |
| (30,591) | |
| (20,689) |
Total | | $ | 20,205 | | $ | (18,976) | | $ | (8,303) | | $ | 11,902 | | $ | (51,953) |
1 Shallow Water Abandonment includes the results of Helix Alliance beginning July 1, 2022, the date of acquisition
Segment Results
Well Intervention
Well Intervention revenues increased $11.8 million, or 8%, during the second quarter 2023 compared to the prior quarter. Our second quarter 2023 revenues increased primarily due to higher revenue on the Q7000, as well as higher utilization on the Q5000 and the North Sea vessels following their completion of scheduled regulatory inspections and maintenance during the first quarter. The revenue increases were offset in part by lower utilization on the Q4000, which commenced its regulatory dry dock during the quarter. During the second quarter 2023, the Q7000 recognized revenues over approximately 27 days following its paid transit and mobilization to New Zealand. During the prior quarter, the Q7000 recognized no revenue as it had 53 days of dry dock and 37 days of paid transit and mobilization to New Zealand for which all revenues were deferred. Overall Well Intervention vessel utilization increased to 84% during the second quarter 2023 compared to 80% during the prior quarter. Well Intervention generated operating income of $3.4 million during the second quarter 2023 compared to operating losses of $8.1 million during the prior quarter. The improvement in operating results was primarily due to higher revenues during the second quarter.
Well Intervention revenues increased $47.9 million, or 45%, during the second quarter 2023 compared to the second quarter 2022. The increase was primarily due to higher revenues in the North Sea, Brazil and on the Q7000, offset in part by lower utilization on the Q4000 during the second quarter 2023. North Sea revenues improved during the second quarter 2023 with stronger utilization and rates compared to the second quarter 2022, and revenues in Brazil increased primarily due to higher rates as both vessels commenced long-term contracts with improved day rates at the end of 2022. During the second quarter 2023, the Q7000 recognized revenues over approximately 27 days following its paid transit and mobilization to New Zealand, compared to the second quarter 2022 when the vessel had only 2 days of utilization before conducting scheduled regulatory maintenance during the remainder of the quarter. The second quarter 2023 revenue increases were offset in part by lower utilization on the Q4000, which commenced its regulatory dry dock during the second quarter 2023. Overall Well Intervention vessel utilization increased to 84% during the second quarter 2023 compared to 67% during the second quarter 2022. Well Intervention generated operating income of $3.4 million during the second quarter 2023 compared to operating losses of $22.5 million during the second quarter 2022. The improvement in operating results was primarily due to higher revenues during 2023.
Robotics
Robotics revenues increased $20.8 million, or 42%, during the second quarter 2023 compared to the prior quarter. The increase in revenues was due to higher utilization and rates on ROVs, trenchers and vessels during the second quarter 2023 compared to the prior quarter. Chartered vessel activity increased to 435 days compared to 295 days, and vessel utilization increased to 96% during the second quarter 2023 compared to 91% during the prior quarter. Vessel days included 113 spot vessel days during the second quarter 2023 compared to 13 spot vessel days during the prior quarter. ROV and trencher utilization increased to 58% during the second quarter 2023 compared to 56% during the prior quarter. Integrated vessel trenching days increased to 194 days during the second quarter 2023 compared to 66 days during the prior quarter. Trenching activity during the second quarter also included 58 days of utilization of the i-Plough as a stand-alone trencher performing site clearance on a third-party vessel compared to 90 days during the prior quarter. The IROV boulder grab, included in ROV utilization, had 83 days of utilization during the second quarter 2023 performing seabed clearance operations on the U.S. east coast compared to no utilization during the prior quarter. Robotics operating income increased $12.4 million during the second quarter 2023 compared to the prior quarter due to higher revenues.
Robotics revenues increased $20.2 million, or 41%, during the second quarter 2023 compared to the second quarter 2022. The increase in revenues was primarily due to higher utilization and rates on ROVs, trenchers and vessels during the second quarter 2023 compared to the second quarter 2022. Chartered vessel days and utilization increased to 435 days and 96%, respectively, during the second quarter 2023 compared to 370 days and 94%, respectively, during the second quarter 2022. Vessel days included 113 spot vessel days during the second quarter 2023 compared to 116 spot vessel days during the second quarter 2022. ROV and trencher utilization increased to 58% during the second quarter 2023 compared to 53% during the second quarter 2022. The second quarter 2023 included 194 days of integrated vessel trenching compared to 81 days of integrated vessel trenching during the second quarter 2022. The second quarter 2023 included 58 days of stand-alone trencher activities on the i-Plough trencher and 83 days of utilization on the IROV boulder grab, both of which were acquired subsequent to the second quarter 2022. Robotics operating income increased $7.8 million during the second quarter 2023 compared to the second quarter 2022 primarily due to higher revenues.
Shallow Water Abandonment
Shallow Water Abandonment revenues increased $26.9 million, or 55%, during the second quarter 2023 compared to the previous quarter. The increase in revenues reflected higher seasonal activity, with increases in vessel and system utilization including high utilization on the Epic Hedron. Overall vessel utilization was 78% during the second quarter 2023 compared to 58% during the prior quarter. Plug and Abandonment and Coiled Tubing systems achieved 1,554 days of utilization, or 81%, during the second quarter 2023 compared to 1,277 days of utilization, or 68%, during the prior quarter. The Epic Hedron heavy lift barge commenced seasonal operations and achieved 72 days of utilization, or 79%, during the second quarter 2023 compared to 13 days, or 14%, during the prior quarter. Shallow Water Abandonment operating income increased $12.9 million during the second quarter 2023 compared to the prior quarter primarily due to higher revenue during the second quarter.
Production Facilities
Production Facilities revenues increased $2.2 million, or 11%, during the second quarter 2023 compared to the prior quarter due to higher oil and gas production on the Thunder Hawk wells, which were shut-in for planned maintenance during the prior quarter. Production Facilities operating income increased $2.6 million during the second quarter 2023 compared to the prior quarter due to higher revenues.
Production Facilities revenues increased $5.5 million, or 31%, during the second quarter 2023 compared to the second quarter 2022 primarily due to higher oil and gas production with the contribution from our interest in the Thunder Hawk field, which was acquired during the third quarter 2022. The increase in revenue was offset in part by lower commodity prices realized on the Droshky wells during the second quarter 2023 compared to the second quarter 2022. Production Facilities operating income increased $1.7 million during the second quarter 2023 due primarily to higher revenues.
Selling, General and Administrative and Other
Share Repurchases
Cash flows during the second quarter 2023 included $5.1 million for repurchases of 750,000 Helix common shares pursuant to our share repurchase program, an average purchase price of $6.77 per share. Year-to-date cash flows include $10.1 million for repurchases of 1,410,000 Helix common shares, an average purchase price of $7.13 per share.
Selling, General and Administrative
Selling, general and administrative expenses were $24.0 million, or 7.8% of revenue, during the second quarter 2023 compared to $19.6 million, or 7.8% of revenue, during the prior quarter. The increase during the second quarter was primarily due to higher compensation costs compared to the prior quarter.
Acquisition and Integration Costs
Acquisition and integration costs were $0.3 million during the second quarter 2023 compared to $0.2 million during the prior quarter and included primarily financial and operational integration costs related to our acquisition of the Alliance group of companies, which closed on July 1, 2022.
Change in Fair Value of Contingent Consideration
Change in fair value of contingent consideration related to our acquisition of Alliance was $10.8 million during the second quarter 2023 and reflects an increase in the fair value of the estimated earn-out payable in 2024.
Other Income and Expenses
Other expense, net was $5.7 million during the second quarter 2023 compared to other income of $3.4 million during the prior quarter. Other expense, net during the second quarter 2023 includes primarily foreign currency losses of $11.7 million related to the approximate 39% devaluation of the Nigerian naira on our naira cash holdings, which approximated $16.2 million at quarter end. The losses on the naira were offset in part by the approximate 3% strengthening of the British pound primarily on U.S. dollar denominated intercompany debt in our U.K. entities.
Cash Flows
Operating cash flows were $31.5 million during the second quarter 2023 compared to $(5.4) million during the prior quarter and $(5.8) million during the second quarter 2022. The increases in operating cash flows quarter over quarter and year over year were primarily due to higher earnings, offset in part by higher regulatory certification costs for our vessels and systems during the second quarter 2023 compared to the prior quarter and to the second quarter 2022. Cash paid for regulatory recertifications for our vessels and systems, which are included in operating cash flows, were $24.2 million during the second quarter 2023 compared to $17.2 million during the prior quarter and $9.3 million during the second quarter 2022.
Capital expenditures, which are included in investing cash flows, totaled $1.3 million during the second quarter 2023 compared to $6.7 million during the prior quarter and $1.6 million during the second quarter 2022.
Free Cash Flow was $30.2 million during the second quarter 2023 compared to $(11.7) million during the prior quarter and $(7.4) million during the second quarter 2022. The increase in Free Cash Flow quarter over quarter and year over year was due to higher operating cash flows and lower capital expenditures during the first quarter 2023. (Free Cash Flow is a non-GAAP measure. See reconciliation below.)
Financial Condition and Liquidity
Cash and cash equivalents were $182.7 million at June 30, 2023. Available capacity under our ABL facility at June 30, 2023 was $102.5 million, resulting in total liquidity of $285.2 million. At June 30, 2023 we had $261.0 million of long-term debt and Net Debt of $78.3 million. (Net Debt is a non-GAAP measure. See reconciliation below.)
* * * * *
Conference Call Information
Further details are provided in the presentation for Helix’s quarterly teleconference to review its second quarter 2023 results (see the “For the Investor” page of Helix’s website, www.helixesg.com). The teleconference, scheduled for Thursday, July 27, 2023, at 9:00 a.m. Central Time, will be audio webcast live from the “For the Investor” page of Helix’s website. Investors and other interested parties wishing to participate in the teleconference may join by dialing 1-877-224-1468 for participants in the United States and 1-312-546-6631 for international participants. The passcode is “Staffeldt.” A replay of the webcast will be available on the “For the Investor” page of Helix’s website by selecting the “Audio Archives” link beginning approximately two hours after the completion of the event.
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, robotics and full field decommissioning operations. Our services are centered on a three-legged business model well positioned for a global energy transition by maximizing production of existing oil and gas reserves, supporting renewable energy developments and decommissioning end-of-life oil and gas fields. For more information about Helix, please visit our website at www.helixesg.com.
Non-GAAP Financial Measures
Management evaluates operating performance and financial condition using certain non-GAAP measures, primarily EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt. We define EBITDA as earnings before income taxes, net interest expense, gains or losses on extinguishment of long-term debt, gains and losses on equity investments, net other income or expense, and depreciation and amortization expense. Non-cash impairment losses on goodwill and other long-lived assets are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude the gain or loss on disposition of assets, acquisition and integration costs, the change in fair value of the contingent consideration and the general provision (release) for current expected credit losses, if any. We define Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets. Net Debt is calculated as long-term debt including current maturities of long-term debt less cash and cash equivalents and restricted cash.
We use EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt to monitor and facilitate internal evaluation of the performance of our business operations, to facilitate external comparison of our business results to those of others in our industry, to analyze and evaluate financial and 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 measures of EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt provide useful information to the public regarding our operating performance and ability to service debt and fund capital expenditures and may help our investors understand and compare our results to other companies that have different financing, capital and tax structures. Other companies may calculate their measures of EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt differently from the way we do, which may limit their usefulness as comparative measures. EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt should not be considered in isolation or as a substitute for, but instead are supplemental to, income from operations, net income, cash flows from operating activities, or other income or cash flow data prepared in accordance with GAAP. Users of this financial information should consider the types of events and transactions that are excluded from these measures. See reconciliation of the non-GAAP financial information presented in this press release to the most directly comparable financial information presented in accordance with GAAP.
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 plans, strategies and objectives for future operations; visibility and future utilization; energy transition or energy security; any projections of financial items including projections as to guidance and other outlook information; our share repurchase authorization or program; our ability to identify, effect and integrate acquisitions, joint ventures or other transactions, including the integration of the Alliance acquisition; oil price volatility and its effects and results; our protocols and plans; our current work continuing; the spot market; our spending and cost management efforts and our ability to manage changes; future operations expenditures; our ability to enter into, renew and/or perform commercial contracts; developments; our environmental, social and governance (“ESG”) initiatives; future economic conditions or performance; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors that could cause results to differ materially from those in the forward-looking statements, including but not limited to market conditions; results from acquired properties; demand for our services; the performance of contracts by suppliers, customers and partners; actions by governmental and regulatory authorities; operating hazards and delays, which include delays in delivery, chartering or customer acceptance of assets or terms of their acceptance; our ability to secure and realize backlog; the effectiveness of our ESG initiatives and disclosures; human capital 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 filings with the Securities and Exchange Commission (“SEC”), including our most recently filed Annual Report on Form 10-K, 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, which speak only as of their respective dates, except as required by law.
HELIX ENERGY SOLUTIONS GROUP, INC.
| |
| Three Months Ended June 30, |
| Six Months Ended June 30, | ||||||||
(in thousands, except per share data) | | | 2023 | | 2022 | | 2023 | | 2022 | ||||
| | | (unaudited) | | (unaudited) | ||||||||
| | | | | | | | | | | | | |
Net revenues | | | $ | 308,817 | | $ | 162,612 | | $ | 558,901 | | $ | 312,737 |
Cost of sales | | |
| 253,468 | |
| 163,966 | |
| 488,368 | |
| 332,700 |
Gross profit (loss) | | |
| 55,349 | |
| (1,354) | |
| 70,533 | |
| (19,963) |
Gain on disposition of assets, net | |
| — | |
| — | |
| 367 | |
| — | |
Acquisition and integration costs | | | (309) | | | (1,587) | | | (540) | | | (1,587) | |
Change in fair value of contingent consideration | | | (10,828) | | | — | | | (14,820) | | | — | |
Selling, general and administrative expenses | |
| (24,007) | |
| (16,035) | |
| (43,638) | |
| (30,403) | |
Income (loss) from operations | |
| 20,205 | |
| (18,976) | |
| 11,902 | |
| (51,953) | |
Equity in earnings of investment | |
| — | |
| 8,184 | |
| — | |
| 8,184 | |
Net interest expense | | |
| (4,228) | |
| (4,799) | |
| (8,415) | |
| (9,973) |
Other expense, net | |
| (5,740) | |
| (13,471) | |
| (2,296) | |
| (17,352) | |
Royalty income and other | |
| 175 | |
| 797 | |
| 2,038 | |
| 2,938 | |
Income (loss) before income taxes | |
| 10,412 | |
| (28,265) | |
| 3,229 | |
| (68,156) | |
Income tax provision | |
| 3,312 | |
| 1,434 | |
| 1,294 | |
| 3,574 | |
Net income (loss) | | | $ | 7,100 | | $ | (29,699) | | $ | 1,935 | | $ | (71,730) |
| | | | | | | | | | | | | |
Earnings (loss) per share of common stock: | | | | | | | | | | | | | |
Basic | | | $ | 0.05 | | $ | (0.20) | | $ | 0.01 | | $ | (0.47) |
Diluted | | | $ | 0.05 | | $ | (0.20) | | $ | 0.01 | | $ | (0.47) |
| | | | | | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | | | | | |
Basic | | |
| 150,791 | |
| 151,205 | |
| 151,275 | |
| 151,174 |
Diluted | | |
| 153,404 | |
| 151,205 | |
| 153,873 | |
| 151,174 |
| |
| June 30, 2023 |
| Dec. 31, 2022 | ||
(in thousands) | | | (unaudited) | | | | |
| | | | | | | |
ASSETS | |
| |
|
| |
|
| | | | | | | |
Current Assets: | |
| |
|
| |
|
Cash and cash equivalents | | | $ | 182,651 | | $ | 186,604 |
Restricted cash | | |
| — | |
| 2,507 |
Accounts receivable, net | | |
| 253,147 | |
| 212,779 |
Other current assets | | |
| 76,212 | |
| 58,699 |
Total Current Assets | | |
| 512,010 | |
| 460,589 |
| | | | | | | |
Property and equipment, net | | |
| 1,608,988 | |
| 1,641,615 |
Operating lease right-of-use assets | | |
| 177,942 | |
| 197,849 |
Deferred recertification and dry dock costs, net | | | 77,243 | | | 38,778 | |
Other assets, net | | |
| 47,662 | |
| 50,507 |
Total Assets | | | $ | 2,423,845 | | $ | 2,389,338 |
| | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | |
| | | | | | | |
Current Liabilities: | | | | | | | |
Accounts payable | | | $ | 145,937 | | $ | 135,267 |
Accrued liabilities | | |
| 142,609 | |
| 73,574 |
Current maturities of long-term debt | | |
| 38,499 | |
| 38,200 |
Current operating lease liabilities | | |
| 55,667 | |
| 50,914 |
Total Current Liabilities | | |
| 382,712 | |
| 297,955 |
| | | | | | | |
Long-term debt | | |
| 222,469 | |
| 225,875 |
Operating lease liabilities | | |
| 131,175 | |
| 154,686 |
Deferred tax liabilities | | |
| 99,864 | |
| 98,883 |
Other non-current liabilities | | |
| 55,697 | |
| 95,230 |
Shareholders' equity | | |
| 1,531,928 | |
| 1,516,709 |
Total Liabilities and Equity | | | $ | 2,423,845 | | $ | 2,389,338 |
Helix Energy Solutions Group, Inc.
Reconciliation of Non-GAAP Measures
| | |
| Three Months Ended |
| Six Months Ended | |||||||||||
(in thousands, unaudited) | | | | 6/30/2023 | | 6/30/2022 | | 3/31/2023 | | 6/30/2023 | | 6/30/2022 | |||||
| | | | | | | | | | | | | | | | | |
Reconciliation from Net Income (Loss) to Adjusted EBITDA: | |
| |
|
| |
|
| |
|
| |
|
| |
| |
Net income (loss) | | | | $ | 7,100 | | $ | (29,699) | | $ | (5,165) | | $ | 1,935 | | $ | (71,730) |
Adjustments: | | | | | | | | | | | | | | | | | |
Income tax provision (benefit) | | | |
| 3,312 | |
| 1,434 | |
| (2,018) | |
| 1,294 | |
| 3,574 |
Net interest expense | | | |
| 4,228 | |
| 4,799 | |
| 4,187 | |
| 8,415 | |
| 9,973 |
Other (income) expense, net | | | |
| 5,740 | |
| 13,471 | |
| (3,444) | |
| 2,296 | |
| 17,352 |
Depreciation and amortization | | | |
| 39,227 | |
| 33,158 | |
| 37,537 | |
| 76,764 | |
| 66,646 |
Gain on equity investment | |
| — | |
| (8,184) | |
| — | |
| — | |
| (8,184) | ||
EBITDA | | | |
| 59,607 | |
| 14,979 | |
| 31,097 | |
| 90,704 | |
| 17,631 |
Adjustments: | | | | | | | | | | | | | | | | | |
Gain on disposition of assets, net | | |
| — | |
| — | |
| (367) | |
| (367) | |
| — | |
Acquisition and integration costs | | | | 309 | | | 1,587 | | | 231 | | | 540 | | | 1,587 | |
Change in fair value of contingent consideration | | | | 10,828 | | | — | | | 3,992 | | | 14,820 | | | — | |
General provision for current expected credit losses | |
| 548 | |
| 193 | |
| 141 | |
| 689 | |
| 67 | ||
Adjusted EBITDA | | | | $ | 71,292 | | $ | 16,759 | | $ | 35,094 | | $ | 106,386 | | $ | 19,285 |
| | | | | | | | | | | | | | | | | |
Free Cash Flow: | | | | | | | | | | | | | | | | | |
Cash flows from operating activities | | | $ | 31,501 | | $ | (5,841) | | $ | (5,392) | | $ | 26,109 | | $ | (23,254) | |
Less: Capital expenditures, net of proceeds from sale of assets | |
| (1,255) | |
| (1,564) | |
| (6,300) | |
| (7,555) | |
| (2,187) | ||
Free Cash Flow | | | | $ | 30,246 | | $ | (7,405) | | $ | (11,692) | | $ | 18,554 | | $ | (25,441) |
| | | | | | | | | | | | | | | | | |
Net Debt: | | | | | | | | | | | | | | | | | |
Long-term debt including current maturities | | | $ | 260,968 | | $ | 267,110 | | $ | 260,460 | | $ | 260,968 | | $ | 267,110 | |
Less: Cash and cash equivalents and restricted cash | |
| (182,651) | |
| (263,100) | |
| (169,182) | |
| (182,651) | |
| (263,100) | ||
Net Debt | | | | $ | 78,317 | | $ | 4,010 | | $ | 91,278 | | $ | 78,317 | | $ | 4,010 |
| July 27, 2023 Second Quarter Conference Call 2023 |
| 2 2 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 plans, strategies and objectives for future operations; visibility and future utilization; energy transition or energy security; any projections of financial items including projections as to guidance and other outlook information; our share repurchase authorization or program; our ability to identify, effect and integrate acquisitions, joint ventures or other transactions, including the integration of the Alliance acquisition; oil price volatility and its effects and results; our protocols and plans; our current work continuing; the spot market; our spending and cost management efforts and our ability to manage changes; future operations expenditures; our ability to enter into, renew and/or perform commercial contracts; developments; our environmental, social and governance (“ESG”) initiatives; future economic conditions or performance; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors that could cause results to differ materially from those in the forward-looking statements, including but not limited to market conditions; results from acquired properties; demand for our services; the performance of contracts by suppliers, customers and partners; actions by governmental and regulatory authorities; operating hazards and delays, which include delays in delivery, chartering or customer acceptance of assets or terms of their acceptance; our ability to secure and realize backlog; the effectiveness of our ESG initiatives and disclosures; human capital 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 filings with the Securities and Exchange Commission ("SEC"), including our most recently filed Annual Report on Form 10-K, 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, which speak only as of their respective dates, except as required by law. INTRODUCTION Forward-Looking Statements |
| At Helix, our purpose is to enable energy transition through: Maximizing Existing Reserves Enhancing remaining production from mature oil and gas wells Lowering Decommissioning Costs Safely returning the seabed to its original state Offshore Renewables & Wind Farms Transitioning our energy economy to a sustainable model |
| 4 4 • Executive Summary (pg. 5) • Operational Highlights (pg. 10) • Key Financial Metrics (pg. 20) • 2023 Outlook (pg. 23) • Sustainability and ESG (pg. 30) • Non-GAAP Reconciliations (pg. 33) • Questions and Answers PRESENTATION OUTLINE Agenda |
| 5 Executive Summary |
| 6 6 EXECUTIVE SUMMARY Summary of Results ($ in millions, except per share amounts, unaudited) Three Months Ended 6/30/23 6/30/22 3/31/23 6/30/23 6/30/22 Revenues 309 $ 163 $ 250 $ 559 $ 313 $ Gross profit (loss) 55 $ (1) $ 15 $ 71 $ (20) $ 18% (1)% 6% 13% (6)% Net income (loss) 7 $ (30) $ (5) $ 2 $ (72) $ Diluted earnings (loss) per share 0.05 $ (0.20) $ (0.03) $ 0.01 $ (0.47) $ Adjusted EBITDA1 Business segments 88 $ 26 $ 46 $ 134 $ 36 $ Corporate, eliminations and other (16) (10) (11) (27) (16) Adjusted EBITDA1 $ 17 71 $ 35 $ 106 $ 19 $ Cash and cash equivalents2 $ 261 183 $ 167 $ 183 $ 261 $ Net Debt1 $ 4 78 $ 91 $ 78 $ 4 $ Cash flows from operating activities 32 $ (6) $ (5) $ 26 $ (23) $ Free Cash Flow1 $ (7) 30 $ (12) $ 19 $ (25) $ Six Months Ended 1 Adjusted EBITDA, Net Debt and Free Cash Flow are non-GAAP financial measures; see non-GAAP reconciliations below 2 Excludes restricted cash of $3 million as of 3/31/23 and 6/30/22 Amounts may not add due to rounding |
| 7 7 Financial Results • Net income of $7 million, $0.05 per diluted share • Adjusted EBITDA1 of $71 million • Operating cash flows of $32 million • Free Cash Flow1 of $30 million Operations • Q7000 commenced decommissioning operations offshore New Zealand • Well Intervention achieved near-full utilization with the exception of the Q4000, which entered dry dock during Q2 • Robotics achieved strong utilization and operating results with high trenching and vessel activities during Q2 • Strong contribution from Helix Alliance with the commencement of Epic Hedron operations earlier than expected • Solid cash generation and positive Free Cash Flow despite concentration of capital spending Awards • Helix Alliance awarded 39-well full-field decommissioning contract in Gulf of Mexico EXECUTIVE SUMMARY Second Quarter 2023 Highlights 1 Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures; see non-GAAP reconciliations below Production Maximization $102 million 33% Decommissioning $170 million 55% Renewables $35 million 11% Other $2 million 1% Revenue by Core Market Quarter Ended June 30, 2023 |
| 8 8 Well Intervention • Well Intervention vessel fleet utilization 84% • 53% in the GOM • 97% in the North Sea and Asia Pacific • 97% in Brazil • 15K IRS idle during quarter; 10K IRS mobilizing for contract offshore Australia Robotics • Robotics chartered vessels utilization 96% • 435 total vessel days (113 spot vessel days) • 194 days vessel trenching; 58 days i-Plough trenching on third party vessel • ROV and trencher utilization 58% Shallow Water Abandonment • 78% liftboat, OSV and crewboat combined utilization • 53% diving support vessel (DSV) utilization • 79% utilization on the Epic Hedron heavy lift barge • 1,554 days P&A and coiled tubing (CT) systems utilization, 81% utilization on 15 P&A systems and six CT systems Production Facilities • Helix Producer I operated at full rates during quarter • Increased oil and gas production following scheduled maintenance in the Thunder Hawk field during Q1 EXECUTIVE SUMMARY Second Quarter 2023 Segments |
| 9 9 Q2 2023 • Cash and cash equivalents of $183 million • Liquidity1 of $285 million • Long-term debt2 of $261 million • Net Debt3 of $78 million Share Repurchases • Acquired 750,000 Helix common shares for approximately $5.1 million, average $6.77 per share, under our repurchase program in Q2 • Year to date repurchases of 1,410,000 shares for approximately $10.1 million, average $7.13 per share EXECUTIVE SUMMARY Balance Sheet 1 Liquidity at is calculated as the sum of cash and cash equivalents and availability under Helix’s ABL facility, which was amended in Q2 to, among other things, expand the capacity of the ABL facility to $120 million 2 Net of unamortized issuance costs 3 Net Debt is a non-GAAP financial measure; see non-GAAP reconciliations below |
| 10 Operational Highlights |
| 11 11 OPERATIONAL HIGHLIGHTS Segment Results ($ in millions, unaudited) Three Months Ended Six Months Ended 6/30/23 6/30/22 3/31/23 6/30/23 6/30/22 Revenues Well Intervention 154 $ 106 $ 142 $ 297 $ 213 $ Robotics 70 50 49 119 87 Shallow Water Abandonment1 - 76 49 126 - Production Facilities 23 18 21 44 36 Intercompany eliminations (15) (11) (12) (27) (23) Total 309 $ 163 $ 250 $ 559 $ 313 $ Gross profit (loss) % Well Intervention 7 $ 5% $ (19) (18)% $ (4) (3)% $ 3 1% $ (48) (22)% Robotics 20 28% 12 23% 7 14% 27 22% 15 17% Shallow Water Abandonment1 21 28% 7 - 15% 28 23% - Production Facilities 9 37% 7 38% 6 28% 14 33% 13 37% Eliminations and other (1) - (1) (2) (1) Total 55 $ 18% $ (1) (1)% $ 15 6% $ 71 13% $ (20) (6)% Utilization Well Intervention vessels 84% 67% 80% 82% 67% Robotics vessels 96% 94% 91% 94% 92% Robotics assets (ROVs and trenchers) 58% 53% 56% 57% 44% Shallow Water Abandonment vessels1 78% - 58% 68% - Shallow Water Abandonment systems1 81% - 68% 74% - 1 Shallow Water Abandonment includes the results of Helix Alliance beginning July 1, 2022, the date of acquisition Amounts may not add due to rounding |
| 12 12 • Q5000 – 99% utilized in Q2; performed a combination of production enhancement and abandonment scopes on five wells under a multi-year campaign for Shell • Q4000 – 7% utilized in Q2; completed a decommissioning campaign for one customer and subsequently underwent scheduled regulatory dry dock for the remainder of the quarter • 15K IRS rental unit – idle in Q2 • 10K IRS units – one system mobilizing for an 18- month contract offshore Australia OPERATIONAL HIGHLIGHTS Well Intervention - Gulf of Mexico |
| 13 13 • Well Enhancer – 100% utilized in Q2; worked for four customers performing production enhancement operations on six wells and decommissioning operations on one well • Seawell – 100% utilized in Q2; worked for three customers performing decommissioning operations on nine wells and production enhancement work on three wells • Q7000 – completed paid transit to New Zealand and commenced decommissioning operations during the quarter; 91% utilization includes 55 days paid transit and mobilization with related fees and costs deferred OPERATIONAL HIGHLIGHTS Well Intervention - North Sea & Asia Pacific |
| 14 14 • Siem Helix 1 – 94% utilized in Q2; performed decommissioning scopes on five wells in the Campos basin for Trident Energy • Siem Helix 2 – 100% utilized in Q2; performed production enhancement scope on two wells and decommissioning scopes on two wells in the Campos basin for Petrobras OPERATIONAL HIGHLIGHTS Well Intervention - Brazil |
| 15 15 OPERATIONAL HIGHLIGHTS Well Intervention Utilization 93% 92% 83% 88% 58% 74% 89% 86% 80% 88% 97% 79% 53% 40% 31% 9% 38% 63% 71% 38% 42% 44% 79% 99% 68% 99% 99% 98% 100% 100% 97% 72% 52% 87% 88% 99% 92% 97% 97% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Gulf of Mexico¹ North Sea & West Africa / Asia Pacific² Brazil³ All Well Intervention Vessels 1 Gulf of Mexico includes the Q4000 and Q5000 2 North Sea & West Africa / Asia Pacific includes the Seawell, Well Enhancer and Q7000 3 Brazil includes the Siem Helix 1 and Siem Helix 2 |
| 16 16 • Grand Canyon II (Asia Pacific) – 100% utilized in Q2 performing long-term decommissioning project offshore Thailand • Grand Canyon III (North Sea) – 89% utilized in Q2 performing two separate renewables trenching projects for one client • Shelia Bordelon (GOM) – 91% utilized in Q2 performing ROV seismic node installation services for one customer • Glomar Wave (North Sea) – 68 days operational in Q2 performing site clearance operations • Spot Vessels – 113 days of spot vessel operations during Q2 • 48 days for the Horizon Enabler performing renewables trenching projects for two customers and oil and gas trenching for another client • 65 days on the Siem Topaz performing a renewables trenching project offshore Taiwan • Trenching – 194 integrated vessel trenching days on oil and gas and renewables projects on the Grand Canyon III, Horizon Enabler and Siem Topaz and 58 days trenching with the i-Plough trencher on a third-party vessel performing boulder clearance operations OPERATIONAL HIGHLIGHTS Robotics |
| 17 17 OPERATIONAL HIGHLIGHTS Robotics Utilization 499 450 336 165 236 358 419 323 370 376 332 295 435 119 154 92 72 84 90 90 66 81 176 160 156 34% 252 37% 32% 24% 36% 43% 38% 35% 53% 66% 58% 56% 58% - 50 100 150 200 250 300 350 400 450 500 0% 10% 20% 30% 40% 50% 60% 70% Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Vessel Days Trenching Days¹ ROV utilization (%)² 1 Trenching days represent integrated vessel trenching activities on Helix-chartered vessels except for stand-alone trenching operations on third-party vessels of 69 days, 92 days, 90 days and 58 days during Q2 2020, Q3 2020, Q1 2023 and Q2 2023, respectively 2 ROV utilization included 44, 42, 40 and 39 work class ROVs during 2020, 2021, 2022 and 2023, respectively and four trenchers during 2020 and 2021; IROV boulder grab placed into service end of Q3 2022 and two trenchers placed into service late Q4 2022 Utilization Days |
| 18 18 Offshore • Liftboats – nine liftboats with combined utilization of 88% in Q2 performing make safe, well abandonment, pipeline abandonment, CT, wireline, construction support, production support and dive support operations • OSVs – six OSVs and one crew boat with combined utilization of 76% in Q2 Energy Services • P&A Systems – 1,250 days of utilization, or 92%, over 15 P&A systems in Q2 • CT systems – 304 days of utilization, or 56%, over six CT systems in Q2 Diving & Heavy Lift • Epic Hedron – heavy lift barge utilization of 79% during Q2 • DSVs – three diving support vessels with combined utilization of 53% in Q2 OPERATIONAL HIGHLIGHTS Shallow Water Abandonment |
| 19 19 OPERATIONAL HIGHLIGHTS Shallow Water Abandonment Utilization 1 Liftboat utilization includes nine liftboats during Q1-Q2 2023 and ten liftboats during Q3-Q4 2022 2 Systems utilization includes six coiled tubing systems and 14 marketable P&A systems during Q3 2022, and 15 P&A systems and six coiled tubing systems during Q4 2022 and Q1-Q2 2023 72% 95% 86% 41% 71% 30% 69% 74% 63% 0% 80% 26% 86% 39% 31% 14% 77% 44% 88% 76% 53% 79% 92% 56% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Liftboats¹ OSVs and Crew Boat Diving Vessels Heavy Lift Derrick Barge P&A Systems² Coiled Tubing Systems² Q3 22 Q4 22 Q1 23 Q2 23 The graph below presents the utilization statistics of the Helix Alliance vessels and equipment following their acquisition on July 1, 2022 |
| 20 Key Financial Metrics |
| 21 21 Total funded debt1 of $267 million at 6/30/23 • $30 million Convertible Senior Notes due 2023 – 4.125% • Final maturity September 15, 2023 • $200 million Convertible Senior Notes due 2026 – 6.75% • $37 million MARAD Debt – 4.93% • Semi-annual amortization payments through maturity in Q1 2027 KEY FINANCIAL METRICS Debt Instrument Profile $0 $50 $100 $150 $200 $250 2023 2024 2025 2026 2027 Principal Payment Schedule at 6/30/23 ($ in millions) CSN 2023 CSN 2026 MARAD $34 1 Excludes $6 million of remaining unamortized debt issuance costs $9 $210 $9 $5 |
| 22 22 $267 $279 $208 $291 $254 $187 $183 $(496) $(440) $(406) $(350) $(305) $(264) $(261) $348 $426 $380 $452 $305 $285 $285 $(229) $(161) $(143) $(58) $22 $(75) $(78) ($500) ($400) ($300) ($200) ($100) $0 $100 $200 $300 $400 $500 Cash¹ Long-term debt² Liquidity³ Net Debt⁴ KEY FINANCIAL METRICS Debt & Liquidity Profile ($ in millions) 1 Cash includes cash and cash equivalents but excludes restricted cash at December 31, 2019 of $54 million, December 31, 2021 of $74 million and December 31, 2022 of $3 million 2 Long-term debt through December 31, 2020 was net of unamortized discounts and issuance costs; beginning January 1, 2021, long-term debt is net of issuance costs only 3 Liquidity is calculated as the sum of cash and cash equivalents and available capacity under Helix’s ABL facility and excludes restricted cash 4 Net Debt is a non-GAAP financial measure; see non-GAAP reconciliations below 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 6/30/23 |
| 23 2023 Outlook |
| 24 24 2023 OUTLOOK Forecast ($ in millions) 2023 2022 Outlook Actual1 Revenues $ 1,175 - 1,250 873 $ Adjusted EBITDA2 240 - 270 121 Free Cash Flow2 130 - 170 18 Capital Additions3 65 - 80 69 Revenue Split: Well Intervention $ 680 - 720 524 $ Robotics 235 - 245 192 Shallow Water Abandonment1 230 - 250 125 Production Facilities1 85 - 90 82 Eliminations (55) (50) Total Revenue $ 1,175 - 1,250 873 $ 1 2022 Actual includes the results of Helix Alliance in the Shallow Water Abandonment segment beginning July 1, 2022, and Thunder Hawk field production in the Production Facilities segment beginning August 25, 2022 2 Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures; see non-GAAP reconciliations below 3 Capital Additions include regulatory certification costs for our vessels and systems as well as other capital expenditures |
| 25 25 • Q4000 (Gulf of Mexico) – expected to complete regulatory dry dock late-July followed by contracted work into Q4 with identified opportunities for remainder of 2023 • Q5000 (Gulf of Mexico) – ongoing multi-year campaign with Shell followed by contracted work into late Q4 with expected strong utilization for remainder of 2023 • IRS rental units (Global) – 15K IRS has visibility for Q4; 10K IRS on 18-month contract offshore Australia through Q3 2024 • Well Enhancer (North Sea) – contracted work through late-December 2023 and strong utilization expected through remainder of 2023 and backlog into 2024 • Seawell (North Sea and Europe) – contracted work through remainder of 2023 and into Q2 2024 • Q7000 (Asia Pacific) – decommissioning operations offshore New Zealand during Q3 followed by contracted work in Australia expected to continue into 2024 • Siem Helix 1 (Brazil) – under decommissioning contract for Trident Energy in the Campos Basin offshore Brazil through remainder of 2023 • Siem Helix 2 (Brazil) – contracted decommissioning and production enhancement work for Petrobras in various basins offshore Brazil through remainder of 2023 2023 OUTLOOK Well Intervention |
| 26 26 • Grand Canyon II (Asia Pacific) – performing contracted decommissioning and ROV support work offshore Thailand with full utilization expected during Q3; vessel expected to be nearly fully utilized for remainder of 2023 • Grand Canyon III (North Sea) – continuing North Sea trenching campaign which is expected to keep vessel nearly fully utilized for remainder of 2023 • Shelia Bordelon (U.S.) – performing ROV survey support project expected to continue though Q3; subsequently in spot market and expected to have strong utilization over remainder of 2023 with visibility in the Gulf of Mexico and on the U.S. east coast for possible wind farm projects • Siem Topaz (Taiwan) – seasonal charter currently expected into November 2023; vessel working on offshore windfarm project utilizing T1400-1 trencher • Horizon Enabler (North Sea) – spot vessel performing seasonal trenching campaign into Q4; identified projects in Q4 in Mediterranean and North Seas with expected utilization for remainder of 2023 • Glomar Wave (North Sea) – vessel under flexible charter with committed and optional days, currently performing UXO survey for one customer on offshore windfarm project expected to continue into Q3 2023 with visibility during the remainder of 2023 • Trenchers (Global) – seven trenchers with expected ongoing three working trencher spreads, two in the North Sea and one in Asia Pacific; remaining trenchers in spot market available to work on third-party vessels including the i-Plough trenching system for U.S. east coast operations; expect good seasonal utilization on five trenchers during 2023 • ROVs (Global) – expect seasonally strong utilization in all three regions during 2023 2023 OUTLOOK Robotics |
| 27 27 • Offshore • Liftboats – expected high utilization on eight of nine liftboats for the remainder of 2023; one liftboat undergoing regulatory out of service period in Q3 and one in Q4 • OSVs – expected strong Q3 utilization and seasonal slowdown in Q4 • Energy Services • P&A Systems – expected strong utilization for 12 to 15 P&A systems during remainder of 2023 • Coiled Tubing Systems – expected strong utilization on two to three coiled tubing systems during remainder of 2023 • Diving & Heavy Lift • DSVs – saturation diving vessel Triton Explorer expected to have high utilization into late Q4; two surface diving vessels expected to have high utilization into late Q3 followed by seasonal slow down in Q4 • Epic Hedron – heavy lift barge expected to have high utilization into late Q3 2023 OUTLOOK Shallow Water Abandonment |
| 28 28 2023 Capital additions are forecasted at approximately $65 – $80 million: • Primarily maintenance capex related to regulatory recertification costs of our vessels and systems, which are reported in operating cash flows • Capital additions1 during Q2 approximated $29 million and included: • Approximately $28 million of regulatory certification costs • Approximately $1 million of capital expenditures • Capital additions during the remainder of 2023 are expected to be approximately $10 – $25 million Balance Sheet • Our total funded debt2 is expected to decrease by $34 million (from $267 million at June 30, 2023 to $233 million at December 31, 2023) • Remaining principal payment of $30 million of convertible senior notes due September 2023 • Semi-annual principal payment of $4 million of MARAD Debt due August 2023 Share Repurchase Program • Repurchased 750,000 shares for $5.1 million during Q2, average $6.77 per share • YTD repurchases of 1,410,000 shares for $10.1 million, average $7.13 per share 2023 OUTLOOK Capital Additions & Balance Sheet 1 Capital additions represents total accrued capital additions; total cash capital spending was approximately $25 million during Q2 2 Excludes unamortized issuance costs |
| 29 29 We plan to continue momentum on the three legs of our Energy Transition business model: production maximization, renewables and decommissioning • Expected continued strong operating and free cash flows in this environment • Annual maintenance capex anticipated to average approximately $50 million for foreseeable future Well Intervention • Seawell and Well Enhancer contracted backlog into 2024 with rate improvements and expected good utilization • Q7000 under decommissioning contract with Shell in Brazil in 2024 • Expect continued existing operations with incremental rate improvements in Brazil in 2024: • Siem Helix 1 on long-term contract with Trident in Brazil into Q4 2024, with options to extend • Siem Helix 2 on long-term contract with Petrobras through late 2024 • Approximately 200 fewer days scheduled maintenance in 2024 vs. 2023 Robotics • Anticipate continued strong renewables trenching market • Expect continued renewables site clearance project opportunities, including in the U.S. markets • Continued tight ROV market • New Robotics assets: second IROV boulder grab and T-1400-2 jet trencher expected to be available during 2024 Shallow Water Abandonment • Expected strong Gulf of Mexico shallow water decommissioning market for foreseeable future Balance Sheet • No significant debt maturities until 2026 • $120 million revolving credit facility available through 2025 • Alliance earn-out first half of 2024 • Continued execution of share repurchase program 2023 OUTLOOK Beyond 2023 |
| 30 Sustainability and ESG |
| 31 31 “Safety, Sustainability and Value Creation – our core goals – support our vision as a preeminent offshore energy transition Company.” Owen Kratz, President and Chief Executive Officer Sustainability continues to drive our business strategy and decision-making with a focus on our commitment to and participation in the world’s energy transition. Through production maximization, renewable energy support and decommissioning, our services lay the foundation for this transformation. Our 2022 Corporate Sustainability Report (available here) details our Greenhouse Gas reduction targets and the progress we have made year over year beginning with the baseline year of 2019 with a nearly 8% decrease in our Scope 1 emissions, a 30% decrease in our Scope 2 emissions and a nearly 43% decrease in our Scope 3 emissions. We focus on the risks and opportunities that climate change presents our Company and delve into the core of our business, our human capital. The disclosures in the 2022 Corporate Sustainability Report reflect our commitment to a more sustainable future and furthering our accountability to our investors, customers and employees. Corporate Sustainability SUSTAINABILITY AND ESG |
| 32 32 Environmental, Social and Governance Environmental • Our business supports the responsible transition from a carbon-based economy through a three-pronged strategy of maximizing existing oil and gas reserves, applying the techniques and technologies proven in offshore oil and gas fields to offshore renewables and wind farms, and abandoning and decommissioning end of life wells. These efforts are published in greater detail in our 2022 Corporate Sustainability Report, a copy of which is available on our website at https://www.helixesg.com/about-helix/our-company/corporate-sustainability/. Social • Human capital management is a priority at Helix. Investment in our human capital through competitive compensation and attractive benefits, including training and development is necessary to attract and retain talent Governance • Our Board is actively engaged on ESG strategy including health, safety, social, environmental and climate change issues through an open dialogue with management coupled with regular reports from key team members • Our Board has been significantly refreshed over the past four years adding five new members with increased gender and ethnic diversity SUSTAINABILITY AND ESG |
| 33 Non-GAAP Reconciliations |
| 34 34 NON-GAAP RECONCILIATIONS Non-GAAP Reconciliations Year Ended ($ in thousands, unaudited) 6/30/23 6/30/22 3/31/23 6/30/23 6/30/22 12/31/2022 Reconciliation from Net Income (Loss) to Adjusted EBITDA: Net income (loss) 7,100 $ (29,699) $ (5,165) $ 1,935 $ (71,730) $ (87,784) $ Adjustments: Income tax provision (benefit) 3,312 1,434 (2,018) 1,294 3,574 12,603 Net interest expense 4,228 4,799 4,187 8,415 9,973 18,950 Other (income) expense, net 5,740 13,471 (3,444) 2,296 17,352 23,330 Depreciation and amortization 39,227 33,158 37,537 76,764 66,646 142,686 Gain on equity investment - (8,184) - - (8,184) (8,262) EBITDA 59,607 14,979 31,097 90,704 17,631 101,523 Adjustments: Gain on disposition of assets - - (367) (367) - - General provision for current expected credit losses 548 193 141 689 67 781 Change in fair value of contingent consideration 10,828 - 3,992 14,820 - 16,054 Acquisition and integtation costs 309 1,587 231 540 1,587 2,664 Adjusted EBITDA 71,292 $ 16,759 $ 35,094 $ 106,386 $ 19,285 $ 121,022 $ Free Cash Flow: Cash flows from operating activities 31,501 $ (5,841) $ (5,392) $ 26,109 $ (23,254) $ 51,108 $ Less: Capital expenditures, net of proceeds from sale of assets (1,255) (1,564) (6,300) (7,555) (2,187) (33,504) Free Cash Flow 30,246 $ (7,405) $ (11,692) $ 18,554 $ (25,441) $ 17,604 $ Net Debt: Long-term debt and current maturities of long-term debt 260,968 $ 267,110 $ 260,460 $ 260,968 $ 267,110 $ 264,075 $ Less: Cash and cash equivalents and restricted cash (182,651) (263,100) (169,182) (182,651) (263,100) (189,111) Net Debt 78,317 $ 4,010 $ 91,278 $ 78,317 $ 4,010 $ 74,964 $ Three Months Ended Six Months Ended |
| 35 35 NON-GAAP RECONCILIATIONS Non-GAAP Definitions Non-GAAP Financial Measures We define EBITDA as earnings before income taxes, net interest expense, gains or losses on extinguishment of long-term debt, gains and losses on equity investments, net other income or expense, and depreciation and amortization expense. Non-cash impairment losses on goodwill and other long-lived assets are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude the gain or loss on disposition of assets, acquisition and integration costs, the change in fair value of the contingent consideration and the general provision (release) for current expected credit losses, if any. Net debt is calculated as long-term debt including current maturities of long-term debt less cash and cash equivalents and restricted cash. We define Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets. We use EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt to monitor and facilitate internal evaluation of the performance of our business operations, to facilitate external comparison of our business results to those of others in our industry, to analyze and evaluate financial and 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 measures of EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt provide useful information to the public regarding our operating performance and ability to service debt and fund capital expenditures and may help our investors understand and compare our results to other companies that have different financing, capital and tax structures. Other companies may calculate their measures of EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt differently from the way we do, which may limit their usefulness as comparative measures. EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt should not be considered in isolation or as a substitute for, but instead are supplemental to, income from operations, net income, cash flows from operating activities, or other income or cash flow data prepared in accordance with GAAP. Users of this financial information should consider the types of events and transactions that are excluded from these measures. See reconciliation of the non-GAAP financial information presented in this press release to the most directly comparable financial information presented in accordance with GAAP. |
| 36 36 |
