HOS 8-K
Hornbeck Offshore Services, Inc. (HOS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
CURRENT REPORT
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Item 2.02 Results of Operations and Financial Condition.
On April 24, 2023, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release reporting its financial results for the first quarter 2023. The press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On April 24, 2023, Helix issued a press release reporting its financial results for the first quarter 2023. In addition, on April 25, 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 First 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: April 24, 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 | | | | | | | 23-007 | |
| | | | | | | | |
Date: April 24, 2023 | Contact: | Erik Staffeldt | | | | | ||
| | | Executive Vice President & CFO | | | |||
| | | | | | | | |
Helix Reports First Quarter 2023 Results
HOUSTON, TX – Helix Energy Solutions Group, Inc. (“Helix”) (NYSE: HLX) reported a net loss of $5.2 million, or $(0.03) per diluted share, for the first quarter 2023 compared to net income of $2.7 million, or $0.02 per diluted share, for the fourth quarter 2022 and a net loss of $42.0 million, or $(0.28) per diluted share, for the first quarter 2022.
Helix reported adjusted EBITDA1 of $35.1 million for the first quarter 2023 compared to $49.2 million for the fourth quarter 2022 and $2.5 million for the first quarter 2022. The table below summarizes our results of operations:
Summary of Results
($ in thousands, except per share amounts, unaudited)
|
| Three Months Ended |
| |||||||
| | 3/31/2023 | | 3/31/2022 | | 12/31/2022 | | |||
Revenues | | $ | 250,084 | | $ | 150,125 | | $ | 287,816 | |
Gross Profit (Loss) | | $ | 15,184 | | $ | (18,609) | | $ | 31,364 | |
| |
| 6 | % |
| (12) | % |
| 11 | % |
Net Income (Loss) | | $ | (5,165) | | $ | (42,031) | | $ | 2,709 | |
Diluted Earnings (Loss) Per Share | | $ | (0.03) | | $ | (0.28) | | $ | 0.02 | |
Adjusted EBITDA1 | | $ | 35,094 | | $ | 2,526 | | $ | 49,169 | |
Cash and Cash Equivalents2 | | $ | 166,674 | | $ | 229,744 | | $ | 186,604 | |
Net Debt1 | | $ | 91,278 | | $ | (1,065) | | $ | 74,964 | |
Cash Flows from Operating Activities | | $ | (5,392) | | $ | (17,413) | | $ | 49,712 | |
Free Cash Flow1 | | $ | (11,692) | | $ | (18,036) | | $ | 21,198 | |
Owen Kratz, President and Chief Executive Officer of Helix, stated, “Our 2023 performance has started out as we expected, with the Q7000 transiting to the Asia Pacific region, the Q5000 undergoing regulatory inspections, scheduled maintenance on our North Sea intervention vessels and seasonally slower Gulf of Mexico shelf and North Sea robotics activities. Nonetheless, we performed well, including both Siem Helix vessels operating a full quarter on their long-term contracts in Brazil that commenced late in the fourth quarter 2022, seasonally strong North Sea intervention vessels utilization, good utilization and rates on the Q4000, and continued expansion of our robotics capabilities with a full quarter of operations on our newly acquired i-Plough trencher. Our outlook for the remainder of the year is strong. The Q7000 should commence its New Zealand decommissioning project during the second quarter. We anticipate solid utilization in the North Sea and Gulf of Mexico Well Intervention businesses for the remainder of the year following the Q4000 completing its dry docking during the second quarter. Our Shallow Water Abandonment and Robotics businesses are expected to continue to have higher seasonal activity levels. We have contracted one of our new intervention riser systems on a long-term project offshore Australia, and we expect to commence our first trenching campaign in Taiwan during the second quarter. With this robust outlook for the remainder of the year, we began executing on our recently announced share repurchase program in the first quarter and expect to continue doing so this year, aligning with our cash generation.”
|
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 12/31/22 and $72.9 million as of 3/31/22 |
Segment Information, Operational and Financial Highlights
($ in thousands, unaudited)
|
| Three Months Ended | |||||||
| | 3/31/2023 | | 3/31/2022 | | 12/31/2022 | |||
Revenues: |
| |
|
| |
|
| |
|
Well Intervention | | $ | 142,438 | | $ | 106,367 | | $ | 167,658 |
Robotics | |
| 49,222 | |
| 37,351 | |
| 48,538 |
Shallow Water Abandonment1 | | | 49,381 | | | — | | | 57,409 |
Production Facilities | |
| 20,905 | |
| 18,294 | |
| 27,895 |
Intercompany Eliminations | |
| (11,862) | |
| (11,887) | |
| (13,684) |
Total | | $ | 250,084 | | $ | 150,125 | | $ | 287,816 |
| | | | | | | | | |
Income (Loss) from Operations: | | | | | | | | | |
Well Intervention | | $ | (8,143) | | $ | (31,758) | | $ | 2,554 |
Robotics | |
| 5,094 | |
| 1,480 | |
| 7,127 |
Shallow Water Abandonment1 | | | 6,822 | | | — | | | 5,864 |
Production Facilities | |
| 5,157 | |
| 5,851 | |
| 9,237 |
Change in Fair Value of Contingent Consideration | |
| (3,992) | |
| — | |
| (13,390) |
Corporate / Other / Eliminations | |
| (13,241) | |
| (8,550) | |
| (16,520) |
Total | | $ | (8,303) | | $ | (32,977) | | $ | (5,128) |
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 decreased $25.2 million, or 15%, during the first quarter 2023 compared to the prior quarter. Our first quarter 2023 revenues decreased primarily due to lower revenue on the Q7000, as well as lower utilization on the Q5000 and the North Sea vessels due to scheduled regulatory inspections and maintenance during the first quarter. The revenue decreases were offset in part by higher spot rates on the Q4000 and a full quarter of operations of the Siem Helix 1 and Siem Helix 2 on their long-term contracts at improved rates in Brazil. During the first quarter 2023, the Q7000 had 53 days of dry dock during which it generated no revenue and 37 days of paid transit and mobilization to Asia Pacific for which all revenues have been deferred. During the prior quarter, the Q7000 realized revenue over 71 days. During the first quarter 2023, the Q5000 underwent its periodic class certification, and the North Sea vessels performed collectively approximately one month of routine scheduled maintenance. Overall Well Intervention vessel utilization decreased to 80% during the first quarter 2023 compared to 97% during the prior quarter. Well Intervention generated operating losses of $8.1 million during the first quarter 2023 compared to operating income of $2.6 million during the prior quarter primarily due to lower revenues and higher cost deferrals during the first quarter.
Well Intervention revenues increased $36.1 million, or 34%, during the first quarter 2023 compared to the first quarter 2022. The increase was primarily due to higher utilization in the North Sea and higher rates in the Gulf of Mexico and Brazil, offset in part by lower revenue on the Q7000 during the first quarter 2023. North Sea revenues improved with strong winter season activity, generating 81% utilization compared to the first quarter 2022, which generated 13% utilization. Gulf of Mexico revenues also benefitted from an improved day rate environment year over year, and revenues in Brazil increased during the first quarter 2023 primarily due to improved rates as both vessels commenced long-term contracts with improved rates at the end of 2022. During the first quarter 2023, all transit and mobilization fees were deferred on the Q7000’s paid transit to its contracted work in Asia Pacific. Overall Well Intervention vessel utilization increased to 80% during the first quarter 2023 compared to 67% during the first quarter 2022. Well Intervention generated operating losses of $8.1 million during the first quarter 2023 compared to losses of $31.8 million during the first quarter 2022 primarily due to higher revenues.
Robotics
Robotics revenues increased $0.7 million, or 1%, during the first quarter 2023 compared to the prior quarter. The increase in revenues was due to higher overall rates on ROVs and vessels during the first quarter, offset in part by a slight reduction in vessel, ROV and trenching utilization during the first quarter. Chartered vessel activity decreased to 295 days compared to 332 days with fewer spot vessel days, and vessel utilization decreased to 91% compared to 96%, during the first quarter 2023 compared the prior quarter. Vessel days included 13 spot vessel days during the first quarter 2023 compared to 68 spot vessel days during the prior quarter. ROV and trencher utilization decreased to 56% during the first quarter 2023 compared to 58% during the prior quarter. Integrated vessel trenching days decreased to 66 days during the first quarter 2023, compared to 160 days during the prior quarter. Trenching activity during the first quarter also included 90 days’ utilization of the i-Plough as a stand-alone trencher performing site clearance on a third-party vessel. The IROV boulder grab had no utilization during the first quarter compared to 41 days’ utilization during the prior quarter completing seabed clearance operations on the U.S. east coast. Robotics operating income decreased $2.0 million during the first quarter 2023 compared to the prior quarter due to higher project costs.
Robotics revenues increased $11.9 million, or 32%, during the first quarter 2023 compared to the first quarter 2022. The increase in revenues was primarily due to higher ROV and trenching activities, offset in part by fewer vessel days year over year. ROV and trencher utilization increased to 56% during the first quarter 2023 from 35% during the first quarter 2022 and included 66 days of integrated vessel trenching in both the first quarters 2023 and 2022, as well as 90 days of stand-alone trencher activities during the first quarter 2023. Chartered vessel days decreased to 295 days compared to 323 days, and vessel utilization remained relatively flat at 91% during the first quarter 2023 compared to 90% during the first quarter 2022, due to fewer spot vessel days during the first quarter 2023 performing site clearance work in the North Sea. Robotics operating income increased $3.6 million during the first quarter 2023 compared to the first quarter 2022 primarily due to higher revenues.
Shallow Water Abandonment
Shallow Water Abandonment revenues decreased $8.0 million, or 14%, during the first quarter 2023 compared to the previous quarter. The decrease in revenues reflected generally lower winter seasonal activity in the Gulf of Mexico with a reduction in vessel utilization and fewer reimbursable revenues, offset in part by an increase in system utilization and increased heavy lift barge utilization, during the first quarter 2023. Overall vessel utilization was 58% during the first quarter 2023 compared to 67% during the prior quarter. Plug and abandonment and coiled tubing systems achieved 1,277 days utilization, or 68% based on 21 marketable systems, during the first quarter 2023 compared to 1,247 days utilization, or 65%, during the prior quarter, and the Epic Hedron heavy lift barge achieved 13 days utilization, or 14%, during the first quarter 2023 compared to being idle during the prior quarter. Shallow Water Abandonment operating income increased $1.0 million during the first quarter 2023 compared to the fourth quarter 2022 primarily due to improved margins with lower reimbursable revenues and costs.
Production Facilities
Production Facilities revenues decreased $7.0 million, or 25%, during the first quarter 2023 compared to the prior quarter due to lower oil and gas production with the Thunder Hawk wells being shut-in for planned maintenance during the current quarter as well as a retroactive rate adjustment during the prior quarter pursuant to our production contract with the Helix Producer I. Production Facilities operating income decreased $4.1 million during the first quarter 2023 compared to the prior quarter due to lower revenues.
Production Facilities revenues increased $2.6 million, or 14%, compared to the first quarter 2022 primarily due to higher oil and gas production with the contribution from our interest in the Thunder Hawk field acquired during the third quarter 2022 and improved rates on our Helix Producer I production contract. Production Facilities operating income decreased $0.7 million during the first quarter 2023 due to higher oil and gas operating costs following the Thunder Hawk field acquisition compared to the prior year.
Selling, General and Administrative and Other
Share Repurchases
Cash flows during the first quarter 2023 included $5.0 million for share repurchases pursuant to our recently announced share repurchase program.
Selling, General and Administrative
Selling, general and administrative expenses were $19.6 million, or 7.8% of revenue, during the first quarter 2023 compared to $22.8 million, or 7.9% of revenue, during the prior quarter. The decrease during the first quarter was primarily due to lower incentive compensation costs compared to the prior quarter.
Acquisition and Integration Costs
Acquisition and integration costs were $0.2 million during the first quarter 2023, a decrease of $0.1 million compared to the prior quarter and included primarily professional fees and financial and operational integration costs related to our acquisition of Alliance, which closed on July 1, 2022.
Change in Fair Value of Contingent Consideration
Change in fair value of contingent consideration was $4.0 million during the first quarter 2023 and reflects an increase in the fair value of the estimated earn-out payable in 2024 to the seller of Alliance.
Other Income and Expenses
Other income, net was $3.4 million during the first quarter 2023 compared to $14.3 million during the prior quarter. Other income, net includes predominantly unrealized non-cash foreign currency gains related to the approximate 2% and 8% strengthening of the British pound during the first quarter 2023 and fourth quarter 2022, respectively, on U.S. dollar denominated intercompany debt in our U.K. entities.
Cash Flows
Operating cash flows were $(5.4) million during the first quarter 2023 compared to $49.7 million during the prior quarter and $(17.4) million during the first quarter 2022. The reduction in operating cash flows quarter over quarter was primarily due to lower earnings and higher regulatory certification costs for our vessels and systems and higher working capital outflows during the first quarter 2023 compared to the prior quarter. The improvement in operating cash flows year over year was primarily due to higher earnings, offset in part by higher regulatory recertification costs for our vessels and systems and higher working capital outflows during the first quarter 2023 compared to the first quarter 2022. Cash paid for regulatory recertifications for our vessels and systems, which are included in operating cash flows, were $17.2 million during the first quarter 2023 compared to $3.9 million during the prior quarter and $5.5 million during the first quarter 2022.
Capital expenditures, which are included in investing cash flows, totaled $6.7 million during the first quarter 2023 compared to $28.5 million during the prior quarter and $0.6 million during the first quarter 2022. Capital expenditures during the fourth quarter 2022 included our acquisitions of three trenchers and an interest in two subsea intervention systems.
Free Cash Flow was $(11.7) million during the first quarter 2023 compared to $21.2 million during the prior quarter and $(18.0) million during the first quarter 2022. The decrease in Free Cash Flow quarter over quarter was primarily due to lower operating cash flows, offset in part by lower capital expenditures during the first quarter 2023. The improvement in Free Cash Flow year over year was primarily due to improved earnings 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 $166.7 million at March 31, 2023, excluding $2.5 million of restricted cash. Available capacity under our ABL facility at March 31, 2023 was $80.0 million, resulting in total liquidity of $246.7 million. At March 31, 2023 we had $260.5 million of long-term debt and Net Debt of $91.3 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 first quarter 2023 results (see the “For the Investor” page of Helix’s website, www.helixesg.com). The teleconference, scheduled for Tuesday, April 25, 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 1-800-749-1342 for participants in the United States and 1-212-231-2919 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 remaining 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; the COVID-19 pandemic and oil price volatility and their respective 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; the results and effects of the COVID-19 pandemic and actions by governments, customers, suppliers and partners with respect thereto; 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 Mar. 31, | ||||
(in thousands, except per share data) | | | 2023 | | 2022 | ||
| | | (unaudited) | ||||
| | | | | | | |
Net revenues | | | $ | 250,084 | | $ | 150,125 |
Cost of sales | | |
| 234,900 | |
| 168,734 |
Gross profit (loss) | | |
| 15,184 | |
| (18,609) |
Gain on disposition of assets, net | |
| 367 | |
| — | |
Acquisition and integration costs | | | (231) | | | — | |
Change in fair value of contingent consideration | | | (3,992) | | | — | |
Selling, general and administrative expenses | |
| (19,631) | |
| (14,368) | |
Loss from operations | |
| (8,303) | |
| (32,977) | |
Net interest expense | | |
| (4,187) | |
| (5,174) |
Other income (expense), net | |
| 3,444 | |
| (3,881) | |
Royalty income and other | |
| 1,863 | |
| 2,141 | |
Loss before income taxes | |
| (7,183) | |
| (39,891) | |
Income tax provision (benefit) | |
| (2,018) | |
| 2,140 | |
Net loss | | | $ | (5,165) | | $ | (42,031) |
| | | | | | | |
Loss per share of common stock: | | | | | | | |
Basic | | | $ | (0.03) | | $ | (0.28) |
Diluted | | | $ | (0.03) | | $ | (0.28) |
| | | | | | | |
Weighted average common shares outstanding: | | | | | | | |
Basic | | |
| 151,764 | |
| 151,142 |
Diluted | | |
| 151,764 | |
| 151,142 |
| |
| Mar. 31, 2023 |
| Dec. 31, 2022 | ||
(in thousands) | | | (unaudited) | | | | |
| | | | | | | |
ASSETS | |
| |
|
| |
|
| | | | | | | |
Current Assets: | |
| |
|
| |
|
Cash and cash equivalents | | | $ | 166,674 | | $ | 186,604 |
Restricted cash | | |
| 2,508 | |
| 2,507 |
Accounts receivable, net | | |
| 216,946 | |
| 212,779 |
Other current assets | | |
| 63,228 | |
| 58,699 |
Total Current Assets | | |
| 449,356 | |
| 460,589 |
| | | | | | | |
Property and equipment, net | | |
| 1,626,151 | |
| 1,641,615 |
Operating lease right-of-use assets | | |
| 191,051 | |
| 197,849 |
Deferred recertification and dry dock costs, net | | | 53,697 | | | 38,778 | |
Other assets, net | | |
| 49,079 | |
| 50,507 |
Total Assets | | | $ | 2,369,334 | | $ | 2,389,338 |
| | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | |
| | | | | | | |
Current Liabilities: | | | | | | | |
Accounts payable | | | $ | 134,363 | | $ | 135,267 |
Accrued liabilities | | |
| 60,811 | |
| 73,574 |
Current maturities of long-term debt | | |
| 38,452 | |
| 38,200 |
Current operating lease liabilities | | |
| 54,407 | |
| 50,914 |
Total Current Liabilities | | |
| 288,033 | |
| 297,955 |
| | | | | | | |
Long-term debt | | |
| 222,008 | |
| 225,875 |
Operating lease liabilities | | |
| 145,186 | |
| 154,686 |
Deferred tax liabilities | | |
| 97,577 | |
| 98,883 |
Other non-current liabilities | | |
| 100,810 | |
| 95,230 |
Shareholders' equity | | |
| 1,515,720 | |
| 1,516,709 |
Total Liabilities and Equity | | | $ | 2,369,334 | | $ | 2,389,338 |
Helix Energy Solutions Group, Inc.
Reconciliation of Non-GAAP Measures
| | |
| Three Months Ended | |||||||
(in thousands, unaudited) | | | | 3/31/2023 | | 3/31/2022 | | 12/31/2022 | |||
| | | | | | | | | | | |
Reconciliation from Net Income (Loss) to Adjusted EBITDA: | |
| |
|
| |
|
| |
| |
Net income (loss) | | | | $ | (5,165) | | $ | (42,031) | | $ | 2,709 |
Adjustments: | | | | | | | | | | | |
Income tax provision (benefit) | | | |
| (2,018) | |
| 2,140 | |
| 2,529 |
Net interest expense | | | |
| 4,187 | |
| 5,174 | |
| 4,333 |
Other (income) expense, net | | | |
| (3,444) | |
| 3,881 | |
| (14,293) |
Depreciation and amortization | | | |
| 37,537 | |
| 33,488 | |
| 40,096 |
EBITDA | | | |
| 31,097 | |
| 2,652 | |
| 35,374 |
Adjustments: | | | | | | | | | | | |
Gain on disposition of assets, net | | |
| (367) | |
| — | |
| — | |
Acquisition and integration costs | | | | 231 | | | — | | | 315 | |
Change in fair value of contingent consideration | | | | 3,992 | | | — | | | 13,390 | |
General provision (release) for current expected credit losses | |
| 141 | |
| (126) | |
| 90 | ||
Adjusted EBITDA | | | | $ | 35,094 | | $ | 2,526 | | $ | 49,169 |
| | | | | | | | | | | |
Free Cash Flow: | | | | | | | | | | | |
Cash flows from operating activities | | | $ | (5,392) | | $ | (17,413) | | $ | 49,712 | |
Less: Capital expenditures, net of proceeds from sale of assets | |
| (6,300) | |
| (623) | |
| (28,514) | ||
Free Cash Flow | | | | $ | (11,692) | | $ | (18,036) | | $ | 21,198 |
| | | | | | | | | | | |
Net Debt: | | | | | | | | | | | |
Long-term debt including current maturities | | | $ | 260,460 | | $ | 301,613 | | $ | 264,075 | |
Less: Cash and cash equivalents and restricted cash | |
| (169,182) | |
| (302,678) | |
| (189,111) | ||
Net Debt | | | | $ | 91,278 | | $ | (1,065) | | $ | 74,964 |
| April 25, 2023 First 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; the COVID-19 pandemic and oil price volatility and their respective 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; the results and effects of the COVID-19 pandemic and actions by governments, customers, suppliers and partners with respect thereto; 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 3/31/23 3/31/22 12/31/22 Revenues 250 $ 150 $ 288 $ Gross profit (loss) 15 $ (19) $ 31 $ 6% (12)% 11% Net income (loss) (5) $ (42) $ 3 $ Diluted earnings (loss) per share (0.03) $ (0.28) $ 0.02 $ Adjusted EBITDA1 Business segments 46 $ 9 $ 65 $ Corporate, eliminations and other (11) (7) (16) Adjusted EBITDA1 $ 3 35 $ 49 $ Cash and cash equivalents2 $ 230 167 $ 187 $ Net Debt1 $ (1) 91 $ 75 $ Cash flows from operating activities (5) $ (17) $ 50 $ Free Cash Flow1 $ (18) (12) $ 21 $ 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 12/31/22 and $73 million as of 3/31/22 Amounts may not add due to rounding |
| 7 7 Financial Results • Net loss of $5 million, $(0.03) per diluted share • Adjusted EBITDA1 of $35 million • Operating cash flows of $(5) million • Free Cash Flow1 of $(12) million Operations • Approximate 122 days scheduled regulatory inspections and maintenance on the Q7000, Q5000, Seawell and Well Enhancer during Q1 • Well Enhancer and Seawell strong winter season utilization • Q7000 paid transit and mobilization to Asia Pacific and underwent approximately 53 days of dry dock enroute to New Zealand for decommissioning operations Awards • Renewables trenching project on windfarm offshore Taiwan • Added approximate 60-day decommissioning contract to Q7000’s Australia campaign EXECUTIVE SUMMARY First Quarter 2023 Highlights 1 Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures; see non-GAAP reconciliations below Production Maximization $94 million 38% Decommissioning $145 million 58% Renewables $8 million 3% Other $3 million 1% Revenue by Core Market Quarter Ended March 31, 2023 |
| 8 8 Well Intervention • Well Intervention vessel fleet utilization 80% • 79% in the GOM • 68% in the North Sea and West Africa / Asia Pacific • 97% in Brazil • 15K IRS idle during quarter; 10K IRS mobilizing for contract offshore Australia Robotics • Robotics chartered vessels utilization 91% • 295 total vessel days (13 spot vessel days) • 156 days trenching utilization • ROV and trencher utilization 56% Shallow Water Abandonment • 65% liftboat, OSV and crewboat combined utilization • 31% diving support vessel (DSV) utilization • 14% utilization on the Epic Hedron heavy lift barge • 1,277 days P&A and coiled tubing (CT) systems utilization representing 68% utilization on 15 marketable P&A systems and six CT systems Production Facilities • Helix Producer I operated at full rates during quarter • Reduced oil and gas production due to scheduled maintenance in the Thunder Hawk field; stable production from the Droshky field EXECUTIVE SUMMARY First Quarter 2023 Segments |
| 9 9 Q1 2023 • Cash and cash equivalents of $167 million (excludes $3 million of restricted cash) • Liquidity1 of $247 million • Long-term debt2 of $260 million • Net Debt3 of $91 million Share Repurchases • Acquired 660,000 Helix common shares for approximately $5 million under our repurchase program in Q1 • Share repurchases expected to align with our cash generation; Helix initially targeting 25% of Free Cash Flow for share repurchases EXECUTIVE SUMMARY Balance Sheet 1 Liquidity at is calculated as the sum of cash and cash equivalents and available capacity under Helix’s ABL facility and excludes restricted cash of approximately $3 million 2 Net of unamortized issuance costs 3 Net Debt is a non-GAAP financial measure; see non-GAAP reconciliations below |
| 10 Operational Highlights |
| 11 11 OPERATIONAL HIGHLIGHTS Segment Results ($ in millions, unaudited) Three Months Ended 3/31/23 3/31/22 12/31/22 Revenues Well Intervention 142 $ 106 $ 168 $ Robotics 49 37 49 Shallow Water Abandonment1 - 49 57 Production Facilities 21 18 28 Intercompany eliminations (12) (12) (14) Total 250 $ 150 $ 288 $ Gross profit (loss) % Well Intervention (4) $ (3)% $ (28) (27)% $ 6 3% Robotics 7 14% 4 9% 9 18% Shallow Water Abandonment1 7 15% 7 - 11% Production Facilities 6 28% 7 36% 11 38% Eliminations and other (1) - - Total 15 $ 6% $ (19) (12)% $ 31 11% Utilization Well Intervention vessels 80% 67% 97% Robotics vessels 91% 90% 96% Robotics assets (ROVs and trenchers) 56% 35% 58% Shallow Water Abandonment vessels1 58% - 67% Shallow Water Abandonment systems1 68% - 65% 1 Shallow Water Abandonment includes the results of Helix Alliance beginning July 1, 2022, the date of acquisition; system utilization includes 21 marketable spreads Amounts may not add due to rounding |
| 12 12 • Q5000 – 59% utilized in Q1; performed production enhancement scopes on four wells under a multi-year campaign for Shell with a customer-provided 15K IRS; vessel completed scheduled regulatory inspection during the quarter • Q4000 – 100% utilized in Q1; completed a two-well production enhancement campaign for one customer and a one-well production enhancement scope for another customer; ended the quarter completing a two-well abandonment scope for a third customer • 15K IRS rental unit – idle in Q1 • 10K IRS units – 32% utilization on one system mobilizing for an 18-month contract offshore Australia OPERATIONAL HIGHLIGHTS Well Intervention - Gulf of Mexico |
| 13 13 • Well Enhancer – 87% utilized in Q1; performed production enhancement operations on three wells for two customers and P&A operations on five wells for three customers • Seawell – 76% utilized in Q1; completed continuous suspended well decommissioning campaign on seven wells for four customers, then conducted well suspension operations on five wells for two other customers • Q7000 – completed paid transit to Malaysia from Nigeria and subsequent regulatory and project-driven dry & wet dock periods and sea trials; commenced paid transit to Australia at end of Q1; 41% utilization includes 37 days paid transit and mobilization with related fees and costs deferred and expected to be recognized in 2023 as the vessel conducts operations OPERATIONAL HIGHLIGHTS Well Intervention - North Sea & West Africa / Asia Pacific |
| 14 14 • Siem Helix 1 – 94% utilized in Q1; performed decommissioning scopes on five wells in the Campos basin for Trident Energy • Siem Helix 2 – 100% utilized in Q1; performed production enhancement scope on one well and decommissioning scopes on four wells in the Campos basin for Petrobras OPERATIONAL HIGHLIGHTS Well Intervention - Brazil |
| 15 15 OPERATIONAL HIGHLIGHTS Well Intervention Utilization 59% 93% 92% 83% 88% 58% 74% 89% 86% 80% 88% 97% 79% 63% 40% 31% 9% 38% 63% 71% 38% 42% 44% 79% 99% 68% 99% 99% 99% 98% 100% 100% 72% 52% 87% 88% 99% 92% 97% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 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 Q1 performing long-term decommissioning project offshore Thailand • Grand Canyon III (North Sea) – 76% utilized in Q1; performed oil and gas trenching for two customers and ROV survey support for another oil and gas customer; commenced a renewable trenching project for another customer at end of quarter • Shelia Bordelon (GOM) – 98% utilized in Q1 performing ROV survey support for one customer • Glomar Wave (North Sea) – 35 days, or 92% utilized, following delivery of the vessel in Q1 performing site clearance operations • Spot Vessels – 13 days of spot vessel operations during Q1 on the Horizon Enabler performing renewables trenching operations for one customer; Siem Topaz began mobilizing for its renewable trenching project offshore Taiwan • Trenching – 66 integrated vessel trenching days on oil and gas and renewables projects on the Grand Canyon III and Horizon Enabler and 90 days trenching with the i-Plough on a third-party vessel performing boulder clearance operations OPERATIONAL HIGHLIGHTS Robotics |
| 17 17 OPERATIONAL HIGHLIGHTS Robotics Utilization 405 499 450 336 165 236 358 419 323 370 376 332 295 42 119 154 92 72 84 90 90 66 81 176 160 156 34% 34% 37% 32% 24% 36% 43% 38% 35% 53% 66% 58% 56% - 50 100 150 200 250 300 350 400 450 500 0% 10% 20% 30% 40% 50% 60% 70% Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 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 and 90 days during Q2 2020, Q3 2020 and Q1 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 December 1, 2022 Utilization Days |
| 18 18 Offshore • Liftboats – nine liftboats with combined utilization of 86% in Q1 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 39% in Q1 Energy Services • P&A Systems – 1,039 days utilization, or 77%, over 15 marketable P&A systems in Q1 • CT systems – 238 days utilization, or 44%, over six CT systems in Q1 Diving & Heavy Lift • DSVs – three diving support vessels with combined utilization of 31% in Q1 • Epic Hedron – heavy lift barge utilization of 14% during Q1 OPERATIONAL HIGHLIGHTS Shallow Water Abandonment |
| 19 19 OPERATIONAL HIGHLIGHTS Shallow Water Abandonment Utilization 1 Liftboat utilization includes nine liftboats during Q1 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 six coiled tubing systems and 15 marketable P&A systems during Q4 2022 and Q1 2023 72% 95% 86% 41% 71% 30% 69% 74% 63% 0% 80% 26% 86% 39% 31% 14% 77% 44% 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 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 3/31/23 • $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 $250 2023 2024 2025 2026 2027 Principal Payment Schedule at 3/31/23 ($ 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 $167 $(496) $(440) $(406) $(350) $(305) $(264) $(260) $348 $426 $380 $452 $305 $285 $247 $(229) $(161) $(143) $(58) $22 $(75) $(91) ($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, December 31, 2022 of $3 million and March 31, 2023 of $3 million 2 Long-term debt through December 31, 2020 was net of unamortized discounts and issuance costs; beginning January 1, 2021, long-term debt is net of issuance costs only 3 Liquidity is calculated as the sum of cash and cash equivalents and available capacity under Helix’s ABL facility and excludes restricted cash 4 Net Debt is a non-GAAP financial measure; see non-GAAP reconciliations below 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 3/31/23 |
| 23 2023 Outlook |
| 24 24 2023 OUTLOOK Forecast ($ in millions) 2023 2022 Outlook Actual1 Revenues $ 1,020 - 1,200 873 $ Adjusted EBITDA2 210 - 250 121 Free Cash Flow2 110 - 150 18 Capital Additions3 50 - 70 69 Revenue Split: Well Intervention $ 640 - 690 524 $ Robotics 190 - 230 192 Shallow Water Abandonment1 170 - 250 125 Production Facilities1 70 - 80 82 Eliminations (50) (50) Total Revenue $ 1,020 - 1,200 873 $ 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) – approximate 75-day dry dock commencing early Q2; subsequent awarded work into Q3 with identified opportunities and expected strong utilization for remainder of 2023 • Q5000 (Gulf of Mexico) – completed scheduled regulatory underwater inspection early April followed by contracted work on Shell multi-year campaign to late-Q3; subsequent awarded work into late-Q4 with expected strong utilization for remainder of 2023 • IRS rental units (Global) – 15K IRS has visibility for Q3; 10K IRS mobilizing for 18-month contract offshore Australia expected to commence Q2; second 10K IRS expected to be available to the rental market during the second half 2023 • Well Enhancer (North Sea) – contracted work to late-December and utilization expected through remainder of 2023 • Seawell (North Sea and Europe) – contracted work through remainder of 2023 and into 2024 • Q7000 (Asia Pacific) – completed transit to Australia mid-April for mobilization for contracted decommissioning projects offshore New Zealand and Australia expected to commence mid-Q2 2023 and to continue into late 2023 or early 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) – continuing to perform contracted decommissioning and ROV support work offshore Thailand with full utilization expected during Q2; vessel expected to remain in Thailand well into 2H and should have close to full utilization for remainder of 2023 • Grand Canyon III (North Sea) – commenced North Sea trenching campaign end of Q1 and expected to be nearly fully utilized performing trenching scopes into December • Shelia Bordelon (U.S.) – performing ROV survey support project expected to continue into 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 • Horizon Enabler (North Sea) – flexible charter, expected to perform seasonal trenching campaign commencing in May and continuing into Q4; identified projects in Q4 in both Mediterranean and North Seas with good utilization expected for remainder of 2023 • Glomar Wave (North Sea) – three-year charter through 2025 with committed and optional days each year; currently performing UXO survey for one customer on offshore windfarm project expected into Q3 with visibility during the remainder of 2023 • Trenchers (Global) – seven trenchers entering 2023, with expected 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 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 during 2023 • OSVs – expected seasonality in activity, with stronger mid-year utilization and seasonal slowdown Q1 and Q4 • Energy Services • P&A Systems – expected strong utilization for 12 to 15 P&A systems during remainder of 2023 • Coiled Tubing Systems – expected utilization on one to three coiled tubing systems during remainder of 2023 • Diving & Heavy Lift • DSVs – diving services expected to be seasonal, with stronger mid-year utilization and seasonal slowdown Q1 and Q4 • Epic Hedron – heavy lift barge expected to begin working mid-Q2 with identified opportunities through the mid-year season 2023 OUTLOOK Shallow Water Abandonment |
| 28 28 2023 Capital additions are forecasted at approximately $50 - $70 million: • Primarily maintenance capex related to regulatory recertification costs of our vessels and systems, which are reported in operating cash flows • Capital additions1 during Q1 approximated $25 million and included: • Approximately $19 million of regulatory certification costs • Approximately $6 million of capital expenditures • Capital additions during the remainder of 2023 are expected to be approximately $25 to $45 million Balance Sheet • Our total funded debt2 is expected to decrease by $34 million (from $267 million at March 31, 2023 to $233 million at December 31, 2023) as a result of scheduled principal payments during the remainder of 2023 • Remaining principal payment of $30 million of convertible senior notes due September 2023 Share Repurchase Program • Repurchased 660,000 shares for $5.0 million during Q1 2023 OUTLOOK Capital Additions & Balance Sheet 1 Capital additions represents total accrued capital additions; total cash capital spending was approximately $24 million during Q1 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 be approximately $50 million for foreseeable future Well Intervention • Expect strong Gulf of Mexico and North Sea intervention markets in 2024 with good utilization and rates • Seawell contracted backlog into 2024 • Expect continued operations in Brazil in 2024: • Q7000 under decommissioning contract with Shell 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 • Second new 10K IRS expected to be available in rental market 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 • Alliance earnout first half of 2024 • Execution of $200 million share repurchase program to align with free cash flow generation 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, Helix Energy Solutions Group, Inc. Sustainability continues to drive our business strategy and decision-making with a renewed 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 remaining 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. As part of such long standing refreshment process, the Corporate Governance and Nominating Committee remained engaged in a search for additional independent directors with the diverse characteristics sought by the Board, and in September 2022 the Board added two new gender and ethnically diverse members SUSTAINABILITY AND ESG |
| 33 Non-GAAP Reconciliations |
| 34 34 NON-GAAP RECONCILIATIONS Non-GAAP Reconciliations Year Ended ($ in thousands, unaudited) 3/31/23 3/31/22 12/31/22 12/31/2022 Reconciliation from Net Income (Loss) to Adjusted EBITDA: Net income (loss) (5,165) $ (42,031) $ 2,709 $ (87,784) $ Adjustments: Income tax provision (benefit) (2,018) 2,140 2,529 12,603 Net interest expense 4,187 5,174 4,333 18,950 Other (income) expense, net (3,444) 3,881 (14,293) 23,330 Depreciation and amortization 37,537 33,488 40,096 142,686 Gain on equity investment - - - (8,262) EBITDA 31,097 2,652 35,374 101,523 Adjustments: Gain on disposition of assets (367) - - - General provision (release) for current expected credit losses 141 (126) 90 781 Change in fair value of contingent consideration 3,992 - 13,390 16,054 Acquisition and integtation costs 231 - 315 2,664 Adjusted EBITDA 35,094 $ 2,526 $ 49,169 $ 121,022 $ Free Cash Flow: Cash flows from operating activities (5,392) $ (17,413) $ 49,712 $ 51,108 $ Less: Capital expenditures, net of proceeds from sale of assets (6,300) (623) (28,514) (33,504) Free cash flow (11,692) $ (18,036) $ 21,198 $ 17,604 $ Net Debt: Long-term debt and current paturities of long-term debt 260,460 $ 301,613 $ 264,075 $ 264,075 $ Less: Cash and cash equivalents and restricted cash (169,182) (302,678) (189,111) (189,111) Net Debt 91,278 $ (1,065) $ 74,964 $ 74,964 $ Three 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. |
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