HOS 8-K
Hornbeck Offshore Services, Inc. (HOS)
8-K
2020-10-22
For: 2020-10-21
View Original
Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 2020
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant's telephone number, including area code 281 -618-0400
NOT APPLICABLE
(Former name, former address and former fiscal year, 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 October 21, 2020, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release announcing its third quarter results of operations for the period ended September 30, 2020. Attached hereto as Exhibit 99.1, and incorporated herein by reference, is the press release.
Item 7.01 Regulation FD Disclosure.
On October 21, 2020, Helix issued a press release announcing its third quarter results of operations for the period ended September 30, 2020. In addition, on October 22, 2020, Helix is making a presentation (with slides) to analysts and investors regarding its financial and operating results. Attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference, are the press release and the slides for the Third Quarter 2020 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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | ||||||||||
| 99.1 | |||||||||||
| 99.2 | |||||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | ||||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 21, 2020
| HELIX ENERGY SOLUTIONS GROUP, INC. | ||||||||||||||
| By: | /s/ Erik Staffeldt | |||||||||||||
| Erik Staffeldt | ||||||||||||||
| Executive Vice President and Chief Financial Officer | ||||||||||||||
EXHIBIT 99.1
 | PRESSRELEASE www.HelixESG.com | |||||||
| Helix Energy Solutions Group, Inc. | • | 3505 W. Sam Houston Parkway N., Suite 400 | • | Houston, TX 77043 | • | 281-618-0400 | • | fax: 281-618-0505 | |||||||||||||||||||||
| For Immediate Release | 20-017 | ||||||||||||||||||||||||||||
| Date: October 21, 2020 | Contact: | Erik Staffeldt | |||||||||||||||||||||||||||
| Executive Vice President & CFO | |||||||||||||||||||||||||||||
Helix Reports Third Quarter 2020 Results
HOUSTON, TX – Helix Energy Solutions Group, Inc. (“Helix”) (NYSE: HLX) reported net income1 of $24.5 million, or $0.16 per diluted share, for the third quarter 2020 compared to $31.7 million, or $0.21 per diluted share, for the same period in 2019 and $5.5 million, or $0.04 per diluted share, for the second quarter 2020. Adjusted EBITDA2 was $52.7 million for the third quarter 2020 compared to $66.3 million for the third quarter 2019 and $47.9 million for the second quarter 2020.
For the nine months ended September 30, 2020, Helix reported net income of $18.0 million, or $0.10 per diluted share, compared to net income of $49.9 million, or $0.33 per diluted share, for the nine months ended September 30, 2019. Adjusted EBITDA for the nine months ended September 30, 2020 was $120.0 million compared to $146.8 million for the nine months ended September 30, 2019. The table below summarizes our results of operations:
Summary of Results
($ in thousands, except per share amounts, unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| 9/30/2020 | 9/30/2019 | 6/30/2020 | 9/30/2020 | 9/30/2019 | |||||||||||||||||||||||||
| Revenues | $ | 193,490 | $ | 212,609 | $ | 199,147 | $ | 573,658 | $ | 581,160 | |||||||||||||||||||
| Gross Profit | $ | 34,628 | $ | 55,074 | $ | 29,576 | $ | 66,214 | $ | 111,262 | |||||||||||||||||||
| 18 | % | 26 | % | 15 | % | 12 | % | 19 | % | ||||||||||||||||||||
Net Income 1 | $ | 24,499 | $ | 31,695 | $ | 5,450 | $ | 18,011 | $ | 49,867 | |||||||||||||||||||
| Diluted Earnings Per Share | $ | 0.16 | $ | 0.21 | $ | 0.04 | $ | 0.10 | $ | 0.33 | |||||||||||||||||||
Adjusted EBITDA 2 | $ | 52,719 | $ | 66,273 | $ | 47,915 | $ | 119,977 | $ | 146,811 | |||||||||||||||||||
Cash and Cash Equivalents 3 | $ | 259,334 | $ | 286,340 | $ | 178,367 | $ | 259,334 | $ | 286,340 | |||||||||||||||||||
| Cash Flows from Operating Activities | $ | 52,586 | $ | 57,316 | $ | 23,264 | $ | 58,628 | $ | 89,877 | |||||||||||||||||||
Owen Kratz, President and Chief Executive Officer of Helix, stated, “Our third quarter operating results improved sequentially despite lower revenue, as we maintain strict cost control measures during this difficult time. COVID-19 continues to affect us, both in our operations and customer demand for our services, and we expect this to persist until the pandemic is resolved. Despite these challenges, our team continues to perform at high levels, safely operating our vessels and delivering services with outstanding uptime efficiency and minimal disruptions from the pandemic. During the third quarter we enhanced our financial position by reducing our costs and strengthening our balance sheet. We continue to repay maturing debt, and we proactively extended maturities on a portion of our long-term debt, creating a longer liquidity runway and establishing a debt reduction schedule more manageable in the current environment. We believe these actions will allow us to continue navigating through this difficult environment and position us for more favorable markets ahead.”
1 Net income attributable to common shareholders
2 Adjusted EBITDA is a non-GAAP measure. See reconciliation below
3 Excludes restricted cash of $42.1 million as of 6/30/20
Segment Information, Operational and Financial Highlights
($ in thousands, unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| 9/30/2020 | 9/30/2019 | 6/30/2020 | 9/30/2020 | 9/30/2019 | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| Well Intervention | $ | 140,803 | $ | 170,206 | $ | 145,841 | $ | 427,296 | $ | 451,511 | |||||||||||||||||||
| Robotics | 49,802 | 51,909 | 50,836 | 135,896 | 136,396 | ||||||||||||||||||||||||
| Production Facilities | 14,167 | 13,777 | 13,593 | 43,301 | 44,651 | ||||||||||||||||||||||||
| Intercompany Eliminations | (11,282) | (23,283) | (11,123) | (32,835) | (51,398) | ||||||||||||||||||||||||
| Total | $ | 193,490 | $ | 212,609 | $ | 199,147 | $ | 573,658 | $ | 581,160 | |||||||||||||||||||
| Income (Loss) from Operations: | |||||||||||||||||||||||||||||
| Well Intervention | $ | 18,844 | $ | 37,689 | $ | 11,758 | $ | 24,910 | $ | 74,002 | |||||||||||||||||||
| Robotics | 6,982 | 8,876 | 7,781 | 11,940 | 7,921 | ||||||||||||||||||||||||
| Production Facilities | 4,134 | 3,050 | 3,365 | 11,142 | 11,907 | ||||||||||||||||||||||||
| Goodwill Impairment | — | — | — | (6,689) | — | ||||||||||||||||||||||||
| Corporate / Other / Eliminations | (10,945) | (10,617) | (8,710) | (29,121) | (31,491) | ||||||||||||||||||||||||
| Total | $ | 19,015 | $ | 38,998 | $ | 14,194 | $ | 12,182 | $ | 62,339 | |||||||||||||||||||
Segment Results
Well Intervention Well Intervention revenues decreased $5.0 million, or 3%, from the prior quarter primarily due to lower vessel utilization in the North Sea and lower IRS utilization in the Gulf of Mexico, offset in part by higher utilization on the Q5000. North Sea and West Africa utilization declined with both the Q7000 and the Seawell idle during the third quarter. The 15K IRS utilization declined to 16% during the third quarter compared to 78% during the prior quarter. The Q5000 results improved with a full quarter of utilization during the third quarter after incurring a gap between projects during the second quarter. Overall Well Intervention vessel utilization declined to 68% compared to 72% during the prior quarter. Well Intervention income from operations increased $7.1 million compared to the prior quarter due to higher earnings on the Q5000 and reduced costs during the third quarter. Well Intervention revenues decreased $29.4 million, or 17%, in the third quarter 2020 compared to the third quarter 2019 due to lower utilization in the North Sea and the Gulf of Mexico and weaker foreign currency rates in Brazil. Well Intervention vessel utilization decreased to 68% in the third quarter 2020 from 97% in the third quarter 2019, with the Seawell warm stacked and lower utilization on the Q4000 during the third quarter 2020. Income from operations decreased $18.8 million, or 50%, in the third quarter 2020 compared to the third quarter 2019 primarily due to lower revenues and to stacking costs incurred on the Q7000 during the third quarter 2020. | ||
Robotics Robotics revenues decreased $1.0 million, or 2%, from the previous quarter primarily due to a decrease in vessel days with the completion of a marine salvage project offshore Australia during the second quarter 2020 and fewer days on the Ross Candies in the Gulf or Mexico, offset in part by an increase in trenching activity and ROV utilization during the quarter. Chartered vessel utilization remained flat at 95% compared to the previous quarter; however, vessel days decreased to 450 days during the third quarter 2020 compared to 499 days during the previous quarter. ROV, trencher and ROVDrill utilization was 37% during the third quarter 2020 compared to 34% during the previous quarter, and the third quarter included 154 days of trencher utilization compared to 119 days in the previous quarter. Robotics income from operations decreased $0.8 million from the prior quarter primarily due to lower revenues. Robotics revenues decreased $2.1 million, or 4%, compared to the third quarter 2019 primarily due to a decrease in trenching and ROV activity, offset in part by increased vessel days due to the ongoing renewables site clearance project in the North Sea during the third quarter 2020. ROV, trencher and ROVDrill utilization decreased to 37% in the third quarter 2020, which included 154 days of trencher utilization, compared to 44% in the same quarter 2019, which included 241 days of trencher utilization. Chartered vessel utilization was slightly down at 95% in the third quarter 2020 compared to 96% during the third quarter 2019; however, the third quarter 2020 included 450 vessel days, which included 196 days from the North Sea renewables site clearance project, compared to 292 vessel days during the third quarter 2019. Income from operations in the third quarter 2020 decreased $1.9 million compared to the third quarter 2019 due to lower revenues and the types of projects performed. | ||
Production Facilities Production Facilities revenues increased $0.6 million in the third quarter 2020 compared to the previous quarter and $0.4 million compared to the same quarter in the prior year due to higher oil and gas production revenues. | ||
Selling, General and Administrative and Other
Selling, General and Administrative Selling, general and administrative expenses were $16.1 million, or 8.3% of revenue, in the third quarter 2020 compared to $15.9 million, or 8.0% of revenue, in the second quarter 2020. The increase was primarily related to an increase in employee compensation costs, offset in part by lower credit losses compared to the second quarter 2020. | ||
Other Income and Expenses Other income, net was $8.8 million in the third quarter 2020 compared to other expense, net of $2.1 million in the second quarter 2020. The change was primarily due to net foreign currency gains in the third quarter 2020 compared to foreign currency losses in the prior quarter. | ||
Cash Flows Operating cash flow was $52.6 million in the third quarter 2020 compared to $23.3 million in the second quarter 2020 and $57.3 million in the third quarter 2019. The increase in operating cash flow quarter over quarter was primarily due to higher operating income and improvements in working capital compared to the prior quarter. The decrease year over year was primarily due to lower operating income, offset in part by improvements in working capital in the third quarter 2020 compared to the same quarter 2019. Capital expenditures totaled $1.6 million in the third quarter 2020 compared to $5.2 million in the previous quarter and $18.2 million in the third quarter 2019. Capital expenditures decreased year over year following the completion of the Q7000 during the first quarter 2020. Free cash flow was $51.4 million in the third quarter 2020 compared to $18.6 million in the second quarter 2020 and $39.2 million in the third quarter 2019. The increase quarter over quarter was due to higher operating cash flow in the third quarter 2020 compared to the previous quarter. The increase year over year was primarily due to lower capital expenditures during the third quarter 2020 compared to the third quarter 2019. (Free cash flow is a non-GAAP measure. See reconciliation below.) | ||
Financial Condition and Liquidity In August 2020 we issued $200.0 million of Convertible Senior Notes due 2026 (2026 Notes). We used the net proceeds of the 2026 Notes’ issuance to fund the repurchase of $90.0 million of our Convertible Senior Notes due 2022 (2022 Notes) and $95.0 million of our Convertible Senior Notes due 2023 (2023 Notes) and to acquire capped calls, which reduce the potential dilution associated with the 2026 Notes. Cash and cash equivalents were $259.3 million and available capacity under our revolving credit facility was $144.7 million at September 30, 2020. Consolidated long-term debt decreased to $356.9 million at September 30, 2020 from $386.9 million at June 30, 2020. The net decrease in debt was primarily due to the higher discount associated with the 2026 Notes compared to the discounts associated with the repurchased 2022 Notes and 2023 Notes. Consolidated net debt at September 30, 2020 was $97.6 million. Net debt to book capitalization at September 30, 2020 was 5%. (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 webcast and teleconference to review its third quarter 2020 results (see the “Investor Relations” page of Helix’s website, www.HelixESG.com). The teleconference, scheduled for Thursday, October 22, 2020 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 1-800-771-7943 for participants in the United States and 1-212-231-2907 for international participants. The passcode is “Staffeldt.” A replay of the webcast will be available on our website under "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.
Non-GAAP Financial Measures
Management evaluates performance and financial condition using certain non-GAAP measures, 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 impairment losses on goodwill and other long-lived assets and gains and losses on equity investments are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude the gain or loss on disposition of assets and the general provision for current expected credit losses, 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 and restricted cash. 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 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 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. 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 the ongoing COVID-19 pandemic and recent oil price volatility and their respective effects and results, our protocols and plans, our current work continuing, the spot market, our spending and cost reduction plans and our ability to manage changes; 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, renew 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. 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 the results and effects of the COVID-19 pandemic and actions by governments, customers, suppliers and partners with respect thereto; 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 our most recently filed Annual Report on Form 10-K and in our 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, which speak only as of their respective dates, 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), Facebook (www.facebook.com/HelixEnergySolutionsGroup) and Instagram (www.instagram.com/helixenergysolutions).
HELIX ENERGY SOLUTIONS GROUP, INC.
| Comparative Condensed Consolidated Statements of Operations | ||
| Three Months Ended Sep. 30, | Nine Months Ended Sep. 30, | |||||||||||||||||||||||||
| (in thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||||||||||||
| Net revenues | $ | 193,490 | $ | 212,609 | $ | 573,658 | $ | 581,160 | ||||||||||||||||||
| Cost of sales | 158,862 | 157,535 | 507,444 | 469,898 | ||||||||||||||||||||||
| Gross profit | 34,628 | 55,074 | 66,214 | 111,262 | ||||||||||||||||||||||
| Goodwill impairment | — | — | (6,689) | — | ||||||||||||||||||||||
| Gain on disposition of assets, net | 440 | — | 913 | — | ||||||||||||||||||||||
| Selling, general and administrative expenses | (16,053) | (16,076) | (48,256) | (48,923) | ||||||||||||||||||||||
| Income from operations | 19,015 | 38,998 | 12,182 | 62,339 | ||||||||||||||||||||||
| Equity in losses of investment | (11) | (13) | (33) | (82) | ||||||||||||||||||||||
| Net interest expense | (7,598) | (1,901) | (20,407) | (6,204) | ||||||||||||||||||||||
| Gain (loss) on extinguishment of long-term debt | 9,239 | — | 9,239 | (18) | ||||||||||||||||||||||
| Other income (expense), net | 8,824 | (2,285) | (3,672) | (2,430) | ||||||||||||||||||||||
| Royalty income and other | 208 | 362 | 2,526 | 2,897 | ||||||||||||||||||||||
| Income (loss) before income taxes | 29,677 | 35,161 | (165) | 56,502 | ||||||||||||||||||||||
| Income tax provision (benefit) | 5,232 | 3,539 | (16,132) | 6,739 | ||||||||||||||||||||||
| Net income | 24,445 | 31,622 | 15,967 | 49,763 | ||||||||||||||||||||||
| Net loss attributable to redeemable noncontrolling interests | (54) | (73) | (2,044) | (104) | ||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 24,499 | $ | 31,695 | $ | 18,011 | $ | 49,867 | ||||||||||||||||||
| Earnings per share of common stock: | ||||||||||||||||||||||||||
| Basic | $ | 0.16 | $ | 0.21 | $ | 0.10 | $ | 0.33 | ||||||||||||||||||
| Diluted | $ | 0.16 | $ | 0.21 | $ | 0.10 | $ | 0.33 | ||||||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||||
| Basic | 149,032 | 147,575 | 148,956 | 147,506 | ||||||||||||||||||||||
| Diluted | 149,951 | 148,354 | 149,824 | 148,086 | ||||||||||||||||||||||
| Comparative Condensed Consolidated Balance Sheets | ||
| Sep. 30, 2020 | Dec. 31, 2019 | ||||||||||||||||
| (in thousands) | (unaudited) | ||||||||||||||||
| ASSETS | |||||||||||||||||
| Current Assets: | |||||||||||||||||
| Cash and equivalents (1) | $ | 259,334 | $ | 208,431 | |||||||||||||
| Restricted cash (1) | — | 54,130 | |||||||||||||||
| Accounts receivable, net | 157,834 | 125,457 | |||||||||||||||
| Other current assets | 104,117 | 50,450 | |||||||||||||||
| Total Current Assets | 521,285 | 438,468 | |||||||||||||||
| Property and equipment, net | 1,776,010 | 1,872,637 | |||||||||||||||
| Operating lease right-of-use assets | 162,052 | 201,118 | |||||||||||||||
| Other assets, net | 46,127 | 84,508 | |||||||||||||||
| Total Assets | $ | 2,505,474 | $ | 2,596,731 | |||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||
| Current Liabilities: | |||||||||||||||||
| Accounts payable | $ | 66,320 | $ | 69,055 | |||||||||||||
| Accrued liabilities | 84,657 | 62,389 | |||||||||||||||
| Current maturities of long-term debt (1) | 73,401 | 99,731 | |||||||||||||||
| Current operating lease liabilities | 52,160 | 53,785 | |||||||||||||||
| Total Current Liabilities | 276,538 | 284,960 | |||||||||||||||
| Long-term debt (1) | 283,545 | 306,122 | |||||||||||||||
| Operating lease liabilities | 112,957 | 151,827 | |||||||||||||||
| Deferred tax liabilities | 118,411 | 112,132 | |||||||||||||||
| Other non-current liabilities | 4,958 | 38,644 | |||||||||||||||
| Redeemable noncontrolling interests | 3,579 | 3,455 | |||||||||||||||
| Shareholders' equity (1) | 1,705,486 | 1,699,591 | |||||||||||||||
| Total Liabilities and Equity | $ | 2,505,474 | $ | 2,596,731 | |||||||||||||
(1) Net debt to book capitalization - 5% at September 30, 2020. Calculated as net debt (total long-term debt less cash and cash equivalents and restricted cash - $97,612) divided by the sum of net debt and shareholders' equity ($1,803,098).
Helix Energy Solutions Group, Inc.
Reconciliation of Non-GAAP Measures
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||
| (in thousands, unaudited) | 9/30/2020 | 9/30/2019 | 6/30/2020 | 9/30/2020 | 9/30/2019 | |||||||||||||||||||||||||||||||||||||||
| Reconciliation from Net Income to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 24,445 | $ | 31,622 | $ | 5,450 | $ | 15,967 | $ | 49,763 | ||||||||||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||
| Income tax provision (benefit) | 5,232 | 3,539 | (271) | (16,132) | 6,739 | |||||||||||||||||||||||||||||||||||||||
| Net interest expense | 7,598 | 1,901 | 7,063 | 20,407 | 6,204 | |||||||||||||||||||||||||||||||||||||||
| (Gain) loss on extinguishment of long-term debt | (9,239) | — | — | (9,239) | 18 | |||||||||||||||||||||||||||||||||||||||
| Other (income) expense, net | (8,824) | 2,285 | 2,069 | 3,672 | 2,430 | |||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 33,985 | 27,908 | 33,969 | 99,552 | 84,420 | |||||||||||||||||||||||||||||||||||||||
| Goodwill impairment | — | — | — | 6,689 | — | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 53,197 | 67,255 | 48,280 | 120,916 | 149,574 | |||||||||||||||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||
| Gain on disposition of assets, net | (440) | — | (473) | (913) | — | |||||||||||||||||||||||||||||||||||||||
| General provision (release) for current expected credit losses | (38) | — | 108 | 656 | — | |||||||||||||||||||||||||||||||||||||||
| Realized losses from foreign exchange contracts not designated as hedging instruments | — | (982) | — | (682) | (2,763) | |||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 52,719 | $ | 66,273 | $ | 47,915 | $ | 119,977 | $ | 146,811 | ||||||||||||||||||||||||||||||||||
| Free Cash Flow: | ||||||||||||||||||||||||||||||||||||||||||||
| Cash flows from operating activities | $ | 52,586 | $ | 57,316 | $ | 23,264 | $ | 58,628 | $ | 89,877 | ||||||||||||||||||||||||||||||||||
| Less: Capital expenditures, net of proceeds from sale of assets | (1,174) | (18,153) | (4,692) | (18,255) | (43,086) | |||||||||||||||||||||||||||||||||||||||
| Free cash flow | $ | 51,412 | $ | 39,163 | $ | 18,572 | $ | 40,373 | $ | 46,791 | ||||||||||||||||||||||||||||||||||
EXHIBIT 99.2 2020 3rd Quarter Conference Call October 22, 2020
FORWARD-LOOKING STATEMENTS 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 the ongoing COVID-19 pandemic and recent oil price volatility and their respective effects and results, our protocols and plans, our current work continuing, the spot market, our spending and cost reduction plans and our ability to manage changes; 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, renew 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. 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 the results and effects of the COVID-19 pandemic and actions by governments, customers, suppliers and partners with respect thereto; 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 our most recently filed Annual Report on Form 10-K and in our 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, which speak only as of their respective dates, except as required by the securities laws. Social Media From time to time we provide information about Helix on social media, including: • Twitter: @Helix_ESG • LinkedIn: www.linkedin.com/company/helix-energy-solutions-group • Facebook: www.facebook.com/HelixEnergySolutionsGroup • Instagram: www.instagram.com/helixenergysolutions 2
PRESENTATION OUTLINE • Executive Summary (pg. 4) • Operational Highlights by Segment (pg. 9) • Key Financial Metrics (pg. 17) • 2020 Outlook (pg. 20) • Non-GAAP Reconciliations (pg. 25) • Questions and Answers 3
Executive Summary 4
EXECUTIVE SUMMARY ($ in millions, except per share data, unaudited) Three Months Ended Nine Months Ended 9/30/20 9/30/19 6/30/20 9/30/20 9/30/19 Revenues$ 193 $ 213 $ 199 $ 574 $ 581 Gross profit$ 35 $ 55 $ 30 $ 66 $ 111 18% 26% 15% 12% 19% Net income1 $ 25 $ 32 $ 5 $ 18 $ 50 Diluted earnings per share$ 0.16 $ 0.21 $ 0.04 $ 0.10 $ 0.33 Adjusted EBITDA2 Business segments$ 63 $ 76 $ 56 $ 146 $ 175 Corporate, eliminations and other (11) (10) (8) (26) (28) Adjusted EBITDA2 $ 53 $ 66 $ 48 $ 120 $ 147 Cash and cash equivalents3 $ 259 $ 286 $ 178 $ 259 $ 286 Cash flows from operating activities$ 53 $ 57 $ 23 $ 59 $ 90 1 Net income attributable to common shareholders 2 Adjusted EBITDA is a non-GAAP financial measure; see non-GAAP reconciliations on slide 26; amounts may not add due to rounding 3 Excludes restricted cash of $42 million as of 6/30/20 5
EXECUTIVE SUMMARY - HIGHLIGHTS Q3 2020 • Net income1 of $25 million, $0.16 per diluted share • Adjusted EBITDA2 of $53 million • Operating cash flows of $53 million • Free Cash Flow2 of $51 million, includes $2 million in capital spending Q3 2020 Year to date • Net income1 of $18 million, $0.10 per diluted share, which was impacted by the following: • Goodwill impairment charge of approximately $7 million associated with Subsea Technologies Group Limited • Net tax benefits of $8 million related to certain foreign subsidiary tax restructurings and $8 million related to tax law changes associated with the CARES Act • Extinguishment gains of $9 million on the repurchase of $185 million of our existing convertible notes • Adjusted EBITDA2 of $120 million • Operating cash flows of $59 million • Free Cash Flow2 of $40 million, includes $38 million in capital spending: • $19 million for regulatory certifications of our vessels and systems included in operating cash flows • $19 million in capital expenditures included in investing cash flows 1 Net income attributable to common shareholders 2 Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures; see non-GAAP reconciliations on slide 26 6
EXECUTIVE SUMMARY – Q3 2020 OPERATIONS Well Intervention • Utilization of 68% across the well intervention vessel fleet • 92% in the GOM • 31% in the North Sea and West Africa; Q7000 and Seawell warm-stacked • 99% in Brazil • 15K IRS utilization 16%; 10K IRS idle during quarter Robotics • Robotics chartered vessels utilization 95% • 450 total vessel days (291 spot days), including 196 days on a wind farm site clearance project • 154 days trenching utilization on renewables projects • ROVs, trenchers and ROVDrill utilization 37% Production Facilities • Helix Producer 1 operated at full rates during quarter • Nominal production benefit 7
EXECUTIVE SUMMARY – BALANCE SHEET Q3 2020 • Cash and cash equivalents of $259 million • Liquidity1 of $404 million • Long-term debt2 of $357 million • Net debt3 of $98 million Debt Refinancing • In August 2020, Helix issued $200 million of Convertible Notes due 2026 and purchased capped calls resulting in an effective conversion price of $8.42/share • Net proceeds of the 2026 Notes were used to repurchase $90 million of Convertible Notes due 2022 and $95 million of Convertible Notes due 2023 1 Liquidity at 9/30/20 is calculated as the sum of cash and cash equivalents ($259 million) and available capacity under our revolving credit facility ($145 million) 2 Net of unamortized discounts and issuance costs 3 Net debt at 9/30/20 is calculated as long-term debt ($357 million) less cash and cash equivalents ($259 million) 8
Operational Highlights by Segment 9
COVID-19 AND MARKET EVENTS • The ongoing COVID-19 pandemic and its impact on the global economy have resulted in weaker oil prices and caused significant disruption and uncertainty in the oil and gas market • The COVID-19 pandemic has created challenges for our operations, in particular crew changes due to travel restrictions; to date we are addressing these challenges by establishing and maintaining safety measures and protocols onboard the vessels and during crew changes • With the safety measures and protocols we have established for COVID-19, along with enhanced testing capabilities, we have thus far incurred minimal operational disruptions • The pandemic has negatively affected the global economy, our macro market along with our own outlook for 2020 as demand and pricing for our services has decreased and is expected to remain weak into 2021 • We have responded to revenue reductions by responsibly reducing our cost base, including warm stacking two vessels and cutting capital expenditures and targeted SG&A spending • We are continuing to take what we believe to be appropriate steps to protect our employees, customers and balance sheet 10
BUSINESS SEGMENT RESULTS ($ in millions, unaudited) Three Months Ended Nine Months Ended 9/30/20 9/30/19 6/30/20 9/30/20 9/30/19 Revenues Well Intervention$ 141 $ 170 $ 146 $ 427 $ 452 Robotics 50 52 51 136 136 Production Facilities 14 14 14 43 45 Intercompany Eliminations (11) (23) (11) (33) (51) Total1 $ 193 $ 213 $ 199 $ 574 $ 581 Gross profit (loss) % Well Intervention$ 22 16% $ 41 24% $ 15 10% $ 36 8% $ 85 19% Robotics 8 17% 11 21% 11 22% 19 14% 15 11% Production Facilities 5 33% 3 25% 4 27% 13 29% 13 29% Eliminations and other - - - (1) (1) Total1 $ 35 18% $ 55 26% $ 30 15% $ 66 12% $ 111 19% Utilization Well Intervention vessels 68% 97% 72% 71% 88% Robotics vessels 95% 96% 95% 93% 92% ROVs, trenchers and ROVDrill 37% 44% 34% 35% 42% 1 Amounts may not add due to rounding 11
WELL INTERVENTION – GULF OF MEXICO Gulf of Mexico • Q5000 – 100% utilized in Q3 for BP • Q4000 – 85% utilized in Q3; completed a two-well production enhancement campaign for one customer; performed decommissioning work for another customer; commenced a production enhancement project for a third customer after a short schedule gap • 15K IRS rental unit – 16% utilized in early Q3 for BP on the Q5000 • 10K IRS rental unit – System idle in Q3 12
WELL INTERVENTION – NORTH SEA AND WEST AFRICA North Sea and West Africa • Well Enhancer – 92% utilized in Q3; performed production enhancement and diving work for three customers and abandonment work for another customer • Seawell – vessel warm-stacked in Leith • Q7000 – vessel warm-stacked in Tenerife 13
WELL INTERVENTION – BRAZIL Brazil • Siem Helix 1 – 99% utilized in Q3; performed abandonment scopes on three wells • Siem Helix 2 – 98% utilized in Q3; performed workover and production enhancement operations on two wells and abandonment scopes on two wells 14
ROBOTICS • Grand Canyon II (Asia Pacific) – 100% utilized in Q3 performing ROV support work on wind farm project offshore Taiwan • Grand Canyon III (North Sea) – 73% utilized in Q3 primarily performing renewables trenching operations for one customer • Spot Vessels – 291 total days of spot vessel utilization • 196 days on three vessels performing seabed clearance and site preparation for wind farm project in the North Sea • 51 days on the Ross Candies performing ROV support work for six clients in the Gulf of Mexico • 44 days performing lump sum decommissioning project in the North Sea • Trenching – 154 total days of trenching utilization • 62 days of renewable trenching operations on Grand Canyon III • 92 days of trenching utilization on third-party vessel primarily on wind farm offshore Virginia, which included the longest length of cable of a U.S. wind farm 15
UTILIZATION 100% 97% 95% 95% 96% 80% 72% 60% 68% Q3 2020 Q2 2020 40% 44% Q3 2019 37% 34% 20% 0% Well Intervention Vessels Robotics Support Vessels ROVs, Trenchers and ROVDrill • Q5000 • Siem Helix 11 • Grand Canyon1,3 • 44 ROVs2 • Q4000 • Siem Helix 21 • Grand Canyon II1 • 1 ROVDrill unit2 • Seawell • Q70004 • Grand Canyon III1 • 4 Trenchers2 • Well Enhancer • Spot vessels1 1 Chartered vessels 2 One ROV retired in Q1 2020 and one ROV retired in Q4 2019 3 Grand Canyon charter expired November 2019 4 Q7000 included in utilization calculation from its commencement of operations in January 2020 16
Key Financial Metrics 17
DEBT INSTRUMENT PROFILE Total funded debt1 of $415 million at 9/30/20 • $35 million Convertible Senior Notes due 2022 – 4.25%2 Principal Payment Schedule at 9/30/20 ($ in millions) • $30 million Convertible Senior Notes due 2023 – 4.125%2 $250 • $200 million Convertible Senior Notes due 2026 – 6.75%2 $215 • $31 million Term Loan – LIBOR + 3.25% $200 • Quarterly amortization payments of approximately $0.9 million $150 with a final balloon payment of $27 million at maturity in Q4 2021 $91 • $56 million MARAD Debt – 4.93% $100 • Semi-annual amortization payments $43 $50 $38 • $63 million Q5000 Loan – LIBOR + 2.75% $10 $9 $9 $0 • Quarterly amortization payments of approximately $8.9 million • Final maturity payment of $54 million in January 2021 Term Loan CSN 2022 MARAD 1 Excludes unamortized debt discounts and debt issuance costs Q5000 Loan CSN 2023 CSN 2026 2 $200 million of Convertible Senior Notes due 2026 issued August 2020; net proceeds used to repurchase $90 million of Convertible Senior Notes due 2022 and $95 million of Convertible Senior Notes due 2023 18
DEBT & LIQUIDITY PROFILE $700 $626 $600 $496 $500 $440 $406 $400 $357 $300 $269 $229 $200 $161 $143 $98 $100 $0 12/31/16 12/31/17 12/31/18 12/31/19 9/30/20 Long-term Debt¹ Net Debt² Liquidity³ Liquidity3 of approximately $404 million at 9/30/20 1 Long-term debt is net of unamortized debt discounts and issuance costs 2 Net debt is calculated as long-term debt less cash and cash equivalents and restricted cash 3 Liquidity is calculated as the sum of cash and cash equivalents plus available capacity under our revolving credit facility and excludes restricted cash 19
2020 Outlook 20
2020 OUTLOOK: FORECAST ($ in millions) 2020 2019 Outlook Actual Revenues $ 710 - 735$ 752 Adjusted EBITDA1,2,3 135 - 145 180 Free Cash Flow1 50 - 85 31 Capital Additions4 ~ 38 161 Revenue Split: Well Intervention $ 525 - 540$ 593 Robotics 165 - 175 172 Production Facilities3 60 61 Eliminations5 (40) (74) Total $ 710 - 735 $ 752 1 Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See non-GAAP reconciliations on slide 26 2 2020 Outlook and 2019 Actual include an approximate $20 million reduction in EBITDA for mobilization costs paid in 2016-2017 for the Brazil contracts and expensed over the term of the contracts 3 2020 Outlook and 2019 Actual include nominal benefit from oil and gas production 4 2020 Outlook and 2019 Actual include regulatory certification costs for our vessels and systems; 2019 Actual includes capitalized interest; capitalized interest in 2020 Outlook is nominal 5 2019 Actual includes approximately $28 million of eliminations associated with intercompany P&A work on two Droshky wells performed for our Production Facilities segment 21
2020 OUTLOOK Total backlog at September 30, 2020 was approximately $481 million ($271 million for Well Intervention); backlog of $130 million expected to be realized during remainder of 2020 Well Intervention Outlook • Q4000 (Gulf of Mexico) – contracted backlog into November; identified opportunities with expected schedule gaps during remainder of Q4 • Q5000 (Gulf of Mexico) – contracted with BP through remainder of 2020 • IRS rental units (Gulf of Mexico) – 15K IRS potential opportunity during Q4; 10K IRS expected to be idle • Well Enhancer (North Sea) – contracted work through mid-October; subsequently warm stacked in Leith; available for work and pursuing opportunities during remainder of Q4 • Seawell (North Sea) – vessel warm stacked in Leith, available in the spot market • Q7000 (West Africa) – vessel warm stacked in Tenerife; vessel expected to begin mobilizing in Q4 for committed work in West Africa beginning early 2021 • Siem Helix 1 & 2 (Brazil) – under contract for Petrobras 22
2020 OUTLOOK Robotics Outlook • Grand Canyon II (Asia Pacific) – completed work in Taiwan mid-October; subsequently contracted for expected 30-day ROV support work in Japan; expected good utilization during remainder of Q4 • Grand Canyon III (North Sea) – expected strong utilization during Q4 performing trenching work for three customers • Ross Candies (Gulf of Mexico) – charter commitment expired early August; expect to continue operating vessel on “pay as you go” basis over near term • Renewables site clearance – ongoing North Sea wind farm site clearance project (boulder removal) utilizing two vessels of opportunity; duration will be weather dependent • Decommissioning – lump sum decommissioning project on Skandi Acergy completed mid- October; subsequent estimated 19-day lump sum decommissioning project expected to commence during Q4 23
2020 OUTLOOK: CAPITAL ADDITIONS & BALANCE SHEET 2020 Capital additions are currently forecasted at approximately $38 million, consisting of the following: • Growth Capex – $5 million related primarily to completion of Q7000 and related intervention system • Maintenance Capex – $33 million primarily for regulatory certification costs on our vessels and systems, including regulatory certification costs on Q4000, Q5000 and Seawell • Capital additions for the remainder of 2020 expected to be $9 million Balance Sheet • Our total funded debt1 level is expected to decrease by $10 million (from $415 million at September 30, 2020 to $405 million at December 31, 2020) as a result of scheduled principal payments • Tax refunds related to the CARES Act of $7 million expected during Q4 2020 / Q1 2021 and $12 million expected in 2021 1 Excludes unamortized debt discounts and issuance costs 24
Non-GAAP Reconciliations 25
NON-GAAP RECONCILIATIONS Twevle Months ($ in thousands, unaudited) Three Months Ended Nine Months Ended Ended 9/30/20 9/30/19 6/30/20 9/30/20 9/30/19 12/31/19 Adjusted EBITDA: Net income $ 24,445 $ 31,622 $ 5,450 $ 15,967 $ 49,763 $ 57,697 Adjustments: Income tax provision (benefit) 5,232 3,539 (271) (16,132) 6,739 7,859 Net interest expense 7,598 1,901 7,063 20,407 6,204 8,333 (Gain) loss on extinguishment of long-term debt (9,239) - - (9,239) 18 18 Other (income) expense, net (8,824) 2,285 2,069 3,672 2,430 (1,165) Depreciation and amortization 33,985 27,908 33,969 99,552 84,420 112,720 Goodwill impairment - - - 6,689 - - Non-cash gain on equity investment - - - - - (1,613) EBITDA$ 53,197 $ 67,255 $ 48,280 $ 120,916 $ 149,574 $ 183,849 Adjustments: Gain on disposition of assets, net$ (440) $ - $ (473) $ (913) $ - $ - General provision (release) for current expected credit losses (38) - 108 656 - - Realized losses from FX contracts not designated as hedging instruments - (982) - (682) (2,763) (3,761) Adjusted EBITDA$ 52,719 $ 66,273 $ 47,915 $ 119,977 $ 146,811 $ 180,088 Free cash flow: Cash flows from operating activities$ 52,586 $ 57,316 $ 23,264 $ 58,628 $ 89,877 $ 169,669 Less: Capital expenditures, net of proceeds from sale of assets (1,174) (18,153) (4,692) (18,255) (43,086) (138,304) Free cash flow$ 51,412 $ 39,163 $ 18,572 $ 40,373 $ 46,791 $ 31,365 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 impairment losses on goodwill and other long-lived assets and gains and losses on equity investments are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude the gain or loss on disposition of assets and the general provision for current expected credit losses, 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. 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 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 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. 26
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