EX-99.1 2 hlx07242019-ex991.htm PRESS RELEASE DATED 7-24-19 Exhibit


EXHIBIT 99.1
 
logo.jpg
 
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
 
 
 19-009
 
 
 
 
Date: July 24, 2019
Contact:
Erik Staffeldt
 
 
 
Executive Vice President & CFO
 
 
 
Helix Reports Second Quarter 2019 Results
 
 
HOUSTON, TX – Helix Energy Solutions Group, Inc. (“Helix”) (NYSE: HLX) reported net income of $16.8 million, or $0.11 per diluted share, for the second quarter of 2019 compared to $17.8 million, or $0.12 per diluted share, for the same period in 2018 and $1.3 million, or $0.01 per diluted share, for the first quarter of 2019. Net income for the six months ended June 30, 2019 was $18.1 million, or $0.12 per diluted share, compared to $15.2 million, or $0.10 per diluted share, for the six months ended June 30, 2018.
 
Helix reported Adjusted EBITDA1 of $50.3 million for the second quarter of 2019 compared to $52.3 million for the second quarter of 2018 and $30.2 million for the first quarter of 2019. Adjusted EBITDA for the six months ended June 30, 2019 was $80.5 million compared to $79.8 million for the six months ended June 30, 2018. The table below summarizes our results of operations:
 
Summary of Results
 
($ in thousands, except per share amounts, unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
6/30/2019
 
6/30/2018
 
3/31/2019
 
6/30/2019
 
6/30/2018
 
 
 
 
 
 
 
 
 
 
Revenues
$
201,728

 
$
204,625

 
$
166,823

 
$
368,551

 
$
368,887

 
 
 
 
 
 
 
 
 
 
Gross Profit
$
39,934

 
$
42,897

 
$
16,254

 
$
56,188

 
$
55,880

 
20
%
 
21
%
 
10
%
 
15
%
 
15
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
$
16,823

 
$
17,784

 
$
1,318

 
$
18,141

 
$
15,224

 
 
 
 
 
 
 
 
 
 
Diluted Earnings Per Share
$
0.11

 
$
0.12

 
$
0.01

 
$
0.12

 
$
0.10

 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA 1
$
50,324

 
$
52,269

 
$
30,214

 
$
80,538

 
$
79,835

 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
261,142

 
$
288,490

 
$
220,023

 
$
261,142

 
$
288,490

 
 
 
 
 
 
 
 
 
 
Cash flows from operating activities
$
66,807

 
$
46,620

 
$
(34,246
)
 
$
32,561

 
$
87,666


 
Owen Kratz, President and Chief Executive Officer of Helix, stated, “As expected, our second quarter 2019 results benefitted from the seasonal pick-up in the North Sea Well Intervention and Robotics markets and the continued improvements in our Robotics business. Despite a few challenges, our results for the first half of 2019 are on par with the first half of 2018. While our outlook is not without its risks, we believe we remain positioned for a strong second half of 2019 as we continue to execute in this weak market.”


 
 
 
 
 
1 Adjusted EBITDA is a non-GAAP measure. See reconciliation below.




Segment Information, Operational and Financial Highlights
 
($ in thousands, unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
6/30/2019
 
6/30/2018
 
3/31/2019
 
6/30/2019
 
6/30/2018
Revenues:
 
 
 
 
 
 
 
 
 
Well Intervention
$
159,074

 
$
161,759

 
$
122,231

 
$
281,305

 
$
291,328

Robotics
45,446

 
39,060

 
39,041

 
84,487

 
66,229

Production Facilities
15,621

 
16,343

 
15,253

 
30,874

 
32,664

Intercompany Eliminations
(18,413
)
 
(12,537
)
 
(9,702
)
 
(28,115
)
 
(21,334
)
Total
$
201,728

 
$
204,625

 
$
166,823

 
$
368,551

 
$
368,887

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (Loss) from Operations:
 

 
 

 
 

 
 
 
 
Well Intervention
$
26,672

 
$
34,470

 
$
9,641

 
$
36,313

 
$
48,347

Robotics
2,949

 
(4,102
)
 
(3,904
)
 
(955
)
 
(18,419
)
Production Facilities
4,452

 
6,866

 
4,405

 
8,857

 
14,225

Corporate / Other / Eliminations
(11,001
)
 
(12,462
)
 
(9,873
)
 
(20,874
)
 
(20,497
)
Total
$
23,072

 
$
24,772

 
$
269

 
$
23,341

 
$
23,656

Segment Results
 
Well Intervention
Well Intervention revenues increased $36.8 million, or 30%, primarily due to the seasonal pick-up in activity in the North Sea. Overall well intervention vessel utilization increased to 94% in the second quarter from 74% in the first quarter. Income from operations increased $17.0 million, or 177%, in the second quarter of 2019 due to the seasonal improvement in the North Sea, partially offset by lower earnings on the Q5000 as a result of unplanned downtime during the quarter.
Well Intervention revenues decreased $2.7 million, or 2%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease year over year was due to lower coiled tubing revenue in the North Sea and a weaker British pound as well as lower IRS rental revenue, offset in part by higher revenues in the Gulf of Mexico and Brazil due to improved vessel utilization in those regions in the second quarter of 2019. Overall well intervention vessel utilization increased from 88% in the second quarter of 2018 to 94% in the second quarter of 2019. Income from operations decreased $7.8 million, or 23%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease was related to lower revenues in the North Sea, higher integrated services costs in the Gulf of Mexico and lower IRS rentals during the second quarter of 2019 compared to the second quarter of 2018.
Robotics
Robotics revenues in the second quarter of 2019 increased by $6.4 million, or 16%, from the previous quarter. The increase was due to the seasonal improvement in trenching rates in the North Sea and improvements in long-term chartered vessel utilization. Chartered vessel utilization increased to 92% in the second quarter of 2019, which included 24 spot vessel days, from 88% in the first quarter of 2019, which included 84 spot vessel days. Trenching days in the second quarter of 2019 totaled 138 days compared to 133 days in the previous quarter. Income from operations was $2.9 million in the second quarter, an improvement of $6.9 million, due to improved margins on trenching and lower costs related to fewer spot vessel days quarter over quarter.
Robotics revenues increased $6.4 million, or 16%, in the second quarter of 2019 compared to the second quarter of 2018 due primarily to an overall increase in long-term chartered vessel utilization. Chartered vessel utilization was 92% in the second quarter of 2019, which included 24 spot vessel days, compared to 70% in the second quarter of 2018, which included 54 spot vessel days. Income from operations in the second quarter of 2019 improved $7.1 million compared to the second quarter of 2018 due to improved margins on higher long-term charter vessel revenues and lower costs due to fewer spot vessel days year over year.
Production Facilities
Production Facilities revenues decreased year over year due to reduced revenue related to the Helix Fast Response System offset in part by production revenues.
 
Selling, General and Administrative and Other
 
Selling, General and Administrative
Selling, general and administrative expenses were $16.9 million, or 8.4% of revenue, in the second quarter of 2019 compared to $16.0 million, or 9.6% of revenue, in the first quarter of 2019. The increase in expenses was principally attributable to higher employee compensation costs due to the acceleration of $1.1 million of non-cash share-based awards during the second quarter.
Other Income and Expenses
Other expense, net was $1.3 million in the second quarter of 2019 compared to other income of $1.2 million in the first quarter of 2019. The change was primarily due to net foreign currency losses in the second quarter of 2019 compared to foreign currency gains in the first quarter of 2019.
Cash Flows
Operating cash flow increased to $66.8 million in the second quarter of 2019 compared to $(34.2) million in the first quarter of 2019 and $46.6 million in the second quarter of 2018. The increase in operating cash flow quarter over quarter is primarily due to reductions in working capital as well as lower regulatory certification costs for our vessels and systems during the second quarter. The increase year over year is primarily due to reductions in working capital in the second quarter of 2019 compared to increases in working capital in second quarter of 2018.
Capital expenditures totaled $15.8 million in the second quarter of 2019 compared to $11.7 million in the first quarter of 2019 and $20.8 million in the second quarter of 2018. Regulatory certification costs for our vessels and systems, which are included in operating cash flows, were $0.5 million in the second quarter of 2019 compared to $16.6 million in the first quarter of 2019 and $2.0 million in the second quarter of 2018. The first quarter 2019 regulatory certification costs included dry docks on the Well Enhancer, Seawell and Helix Producer I vessels and certification costs for the related intervention systems.
Free cash flow was $53.5 million in the second quarter of 2019 compared to $(45.9) million in the first quarter of 2019. The increase is primarily due to higher operating cash flow quarter over quarter. Free cash flow in the second quarter of 2019 increased by $27.6 million year over year due to higher operating cash flows and lower capital expenditures compared to the second quarter of 2018. (Free cash flow is a non-GAAP measure. See reconciliation below.)
Financial Condition and Liquidity
Cash and cash equivalents at June 30, 2019 were $261.1 million. Available capacity under our revolving credit facility was $171.3 million at June 30, 2019. Consolidated long-term debt decreased to $424.5 million at June 30, 2019 from $429.2 million at March 31, 2019. Consolidated net debt at June 30, 2019 was $163.3 million. Net debt to book capitalization at June 30, 2019 was 9%. (Net debt and net debt to book capitalization are non-GAAP measures. See reconciliation below.)
* * * * *
 
Conference Call Information
 
Further details are provided in the presentation for Helix’s quarterly teleconference to review its second quarter 2019 results (see the “Investors” page of Helix’s website, www.HelixESG.com). The teleconference, scheduled for Thursday, July 25, 2019 at 9:00 a.m. Central Time, will be audio webcast live from the “Investors” page of Helix’s website. Investors and other interested parties wishing to participate in the teleconference may join by dialing 1-800-403-7802 for participants in the United States and 1-303-223-2699 for international participants. The passcode is “Staffeldt.” A replay of the webcast will be available at “For the Investor” 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 and robotics operations. For more information about Helix, please visit our website at www.HelixESG.com.
 
Reconciliation of Non-GAAP Financial Measures
 
Management evaluates performance and financial condition using certain non-GAAP metrics, primarily EBITDA, Adjusted EBITDA, net debt, net debt to book capitalization and free cash flow. We define EBITDA as earnings before income taxes, net interest expense, gain or loss on extinguishment of long-term debt, net other income or expense, and depreciation and amortization expense. Non-cash losses on equity investments are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude gain or loss on disposition of assets, if any. In addition, we include realized losses from foreign currency exchange contracts not designated as hedging instruments and other than temporary loss on note receivable, 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 define free cash flow as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets.
 
We use EBITDA and free cash flow 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 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 and free cash flow 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 and free cash flow differently from the way we do, which may limit their usefulness as comparative measures. EBITDA, Adjusted EBITDA and free cash flow 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.
 
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; any statements regarding future operations expenditures; any statements regarding the plans, strategies and objectives of management for future operations; any statements regarding our ability to enter into and/or perform commercial contracts; 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 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 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 Helix’s most recently filed Annual Report on Form 10-K and in Helix’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), LinkedIn (www.linkedin.com/company/helix-energy-solutions-group) and Facebook (www.facebook.com/HelixEnergySolutionsGroup).




HELIX ENERGY SOLUTIONS GROUP, INC.
Comparative Condensed Consolidated Statements of Operations
 
 
Three Months Ended Jun. 30,
 
Six Months Ended Jun. 30,
(in thousands, except per share data)
 
2019
 
2018
 
2019
 
2018
 
 
(unaudited)
 
(unaudited)
 
 
 
 
 
 
 
 
 
Net revenues
 
$
201,728

 
$
204,625

 
$
368,551

 
$
368,887

Cost of sales
 
161,794

 
161,728

 
312,363

 
313,007

Gross profit
 
39,934

 
42,897

 
56,188

 
55,880

Selling, general and administrative expenses
 
(16,862
)
 
(18,125
)
 
(32,847
)
 
(32,224
)
Income from operations
 
23,072

 
24,772

 
23,341

 
23,656

Equity in losses of investment
 
(29
)
 
(135
)
 
(69
)
 
(271
)
Net interest expense
 
(2,205
)
 
(3,599
)
 
(4,303
)
 
(7,495
)
Loss on extinguishment of long-term debt
 
(18
)
 
(76
)
 
(18
)
 
(1,181
)
Other expense, net
 
(1,311
)
 
(3,441
)
 
(145
)
 
(2,516
)
Royalty income and other
 
190

 
561

 
2,535

 
3,416

Income before income taxes
 
19,699

 
18,082

 
21,341

 
15,609

Income tax provision
 
2,876

 
298

 
3,200

 
385

Net income
 
16,823

 
17,784

 
18,141

 
15,224

Net loss attributable to redeemable noncontrolling interests
 
(31
)
 
—

 
(31
)
 
—

Net income attributable to common shareholders
 
$
16,854

 
$
17,784

 
$
18,172

 
$
15,224

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share of common stock:
 
 

 
 

 
 

 
 

Basic
 
$
0.11

 
$
0.12

 
$
0.12

 
$
0.10

Diluted
 
$
0.11

 
$
0.12

 
$
0.12

 
$
0.10

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 

 
 

 
 

 
 

Basic
 
147,521

 
146,683

 
147,471

 
146,668

Diluted
 
148,101

 
146,724

 
147,931

 
146,668





Comparative Condensed Consolidated Balance Sheets
ASSETS
 
 
 
 
 
LIABILITIES & SHAREHOLDERS' EQUITY
(in thousands)
 
Jun. 30, 2019
 
Dec. 31, 2018
 
(in thousands)
 
Jun. 30, 2019
 
Dec. 31, 2018
 
 
(unaudited)
 
 
 
 
 
(unaudited)
 
 
Current Assets:
 
 
 
 
 
Current Liabilities:
 
 
 
 
Cash and cash equivalents (1)
 
$
261,142

 
$
279,459

 
Accounts payable
 
$
76,536

 
$
54,813

Accounts receivable, net
 
151,031

 
119,875

 
Accrued liabilities
 
84,611

 
85,594

Other current assets
 
77,764

 
51,594

 
Income tax payable
 
—

 
3,829

Total Current Assets
 
489,937

 
450,928

 
Current maturities of long-term debt (1)
 
117,033

 
47,252

 
 
 
 
 
 
Current operating lease liabilities (2)
 
54,449

 
—

 
 
 
 
 
 
Total Current Liabilities
 
332,629

 
191,488

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt (1)
 
307,455

 
393,063

 
 
 
 
 
 
Operating lease liabilities (2)
 
178,731

 
—

 
 
 
 
 
 
Deferred tax liabilities
 
108,344

 
105,862

Property & equipment, net
 
1,804,364

 
1,826,745

 
Other non-current liabilities
 
41,284

 
39,538

Operating lease right-of use assets (2)
 
227,213

 
—

 
Redeemable noncontrolling interests
 
3,383

 
—

Other assets, net
 
98,708

 
70,057

 
Shareholders' equity (1)
 
1,648,396

 
1,617,779

Total Assets
 
$
2,620,222

 
$
2,347,730

 
Total Liabilities & Equity
 
$
2,620,222

 
$
2,347,730


(1)
Net debt to book capitalization - 9% at June 30, 2019. Calculated as net debt (total long-term debt less cash and cash equivalents - $163,346) divided by the sum of net debt and shareholders' equity ($1,811,742).
(2)
Reflects adoption of Accounting Standards Update No. 2016-02, "Leases (Topic 842)."





Helix Energy Solutions Group, Inc.
Reconciliation of Non-GAAP Measures
 
Earnings Release:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
 
 
6/30/2019
 
6/30/2018
 
3/31/2019
 
6/30/2019
 
6/30/2018
 
 
 
 
 
(in thousands)
Reconciliation from Net Income to Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
$
16,823

 
$
17,784

 
$
1,318

 
$
18,141

 
$
15,224

Adjustments:
 
 
 
 

 
 

 
 

 
 

 
 

Income tax provision
 
 
 
2,876

 
298

 
324

 
3,200

 
385

Net interest expense
 
 
 
2,205

 
3,599

 
2,098

 
4,303

 
7,495

Loss on extinguishment of long-term debt
 
 
18

 
76

 
—

 
18

 
1,181

Other (income) expense, net
 
 
 
1,311

 
3,441

 
(1,166
)
 
145

 
2,516

Depreciation and amortization
 
 
 
28,003

 
27,877

 
28,509

 
56,512

 
55,659

EBITDA
 
 
 
51,236

 
53,075

 
31,083

 
82,319

 
82,460

Adjustments:
 
 
 
 

 
 

 
 

 
 

 
 

Realized losses from foreign exchange contracts not designated as hedging instruments
 
(912
)
 
(806
)
 
(869
)
 
(1,781
)
 
(1,496
)
Other than temporary loss on note receivable
 
 
—

 
—

 
—

 
—

 
(1,129
)
Adjusted EBITDA
 
 
 
$
50,324

 
$
52,269

 
$
30,214

 
$
80,538

 
$
79,835

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Free Cash Flow:
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from operating activities
 
 
 
$
66,807

 
$
46,620

 
$
(34,246
)
 
$
32,561

 
$
87,666

Less: Capital expenditures, net of proceeds from sale of assets
 
(13,303
)
 
(20,755
)
 
(11,630
)
 
(24,933
)
 
(41,969
)
Free cash flow
 
 
 
$
53,504

 
$
25,865

 
$
(45,876
)
 
$
7,628

 
$
45,697


We define EBITDA as earnings before income taxes, net interest expense, gain or loss on extinguishment of long-term debt, net other income or expense, and depreciation and amortization expense. Non-cash losses on equity investments are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude gain or loss on disposition of assets. In addition, we include realized losses from foreign currency exchange contracts not designated as hedging instruments and other than temporary loss on note receivable, if any, which are excluded from EBITDA as a component of net other income or expense. We define free cash flow as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets. We use EBITDA and free cash flow 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 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 and free cash flow 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 and free cash flow differently from the way we do, which may limit their usefulness as comparative measures. EBITDA, Adjusted EBITDA and free cash flow 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.