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 October 24, 2022, Helix Energy Solutions Group, Inc. (“Helix”) issued a press release reporting its financial results for the third quarter 2022. The press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On October 24, 2022, Helix issued a press release reporting its financial results for the third quarter 2022. In addition, on October 25, 2022, 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 Third Quarter 2022 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: October 24, 2022 |
| ||
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 | | | | | | | 22-019 | |
| | | | | | | | |
Date: October 24, 2022 | Contact: | Erik Staffeldt | | | | | ||
| | | Executive Vice President & CFO | | | |||
| | | | | | | | |
Helix Reports Third Quarter 2022 Results
HOUSTON, TX – Helix Energy Solutions Group, Inc. (“Helix”) (NYSE: HLX) reported a net loss1 of $18.8 million, or $(0.12) per diluted share, for the third quarter 2022 compared to net losses of $29.7 million, or $(0.20) per diluted share, for the second quarter 2022 and $19.0 million, or $(0.13) per diluted share, for the third quarter 2021. Helix reported adjusted EBITDA2 of $52.6 million for the third quarter 2022 compared to $16.8 million for the second quarter 2022 and $26.5 million for the third quarter 2021.
For the nine months ended September 30, 2022, Helix reported a net loss of $90.5 million, or $(0.60) per diluted share, compared to a net loss of $35.6 million, or $(0.24) per diluted share, for the nine months ended September 30, 2021. Adjusted EBITDA for the nine months ended September 30, 2022 was $71.9 million compared to $87.5 million for the nine months ended September 30, 2021. The table below summarizes our results of operations:
Summary of Results
($ in thousands, except per share amounts, unaudited)
|
| Three Months Ended |
| Nine Months Ended |
| |||||||||||
| | 9/30/2022 | | 9/30/2021 | | 6/30/2022 | | 9/30/2022 | | 9/30/2021 |
| |||||
Revenues | | $ | 272,547 | | $ | 180,716 | | $ | 162,612 | | $ | 585,284 | | $ | 506,072 | |
Gross Profit (Loss) | | $ | 39,215 | | $ | 3,000 | | $ | (1,354) | | $ | 19,252 | | $ | 20,754 | |
| |
| 14 | % |
| 2 | % |
| (1) | % |
| 3 | % |
| 4 | % |
Net Loss1 | | $ | (18,763) | | $ | (19,043) | | $ | (29,699) | | $ | (90,493) | | $ | (35,630) | |
Diluted Loss Per Share | | $ | (0.12) | | $ | (0.13) | | $ | (0.20) | | $ | (0.60) | | $ | (0.24) | |
Adjusted EBITDA2 | | $ | 52,568 | | $ | 26,532 | | $ | 16,759 | | $ | 71,853 | | $ | 87,512 | |
Cash and Cash Equivalents3 | | $ | 162,268 | | $ | 237,549 | | $ | 260,595 | | $ | 162,268 | | $ | 237,549 | |
Net Debt 4 | | $ | 98,807 | | $ | (4,338) | | $ | 4,010 | | $ | 98,807 | | $ | (4,338) | |
Cash Flows from Operating Activities | | $ | 24,650 | | $ | 28,712 | | $ | (5,841) | | $ | 1,396 | | $ | 121,252 | |
Free Cash Flow2 | | $ | 21,847 | | $ | 28,138 | | $ | (7,405) | | $ | (3,594) | | $ | 113,917 | |
Owen Kratz, President and Chief Executive Officer of Helix, stated, “We have been forecasting a stronger second half of 2022 and as evidenced by our strong results, we are off to a very good start. Our third quarter 2022 results improved significantly over the prior quarter, a combination of a stronger oil and gas market, seasonally high offshore activity, and the inclusion of Helix Alliance in our operating results for the quarter. Our bottom line was negatively impacted by the strengthening of the U.S. dollar affecting our foreign operating results and generating unrealized non-cash foreign currency losses during the quarter. We expect to continue the positive momentum in our operating results into the fourth quarter with continued strong performance in the Gulf of Mexico and North Sea. Additionally, with our recent contract extension for the Siem Helix 2 and the planned commencement of the Siem Helix 1 on a two-year P&A campaign, further improvements are expected in Brazil towards the end of the fourth quarter and beyond. As we maximize production for our customers and our late life properties, with our focused growth in the renewables market and the expansion of our decommissioning capabilities, we continue to execute our strategy to position Helix as a preeminent offshore Energy Transition company.”
|
1 Net loss attributable to common shareholders |
2 Adjusted EBITDA and Free Cash Flow are non-GAAP measures; see reconciliations below |
3 Excludes restricted cash of $2.5 million as of 9/30/22 and 6/30/22 and $71.3 million as of 9/30/21 |
4 Net debt is calculated as long-term debt (including current maturities of long-term debt) less cash and cash equivalents and restricted cash |
Segment Information, Operational and Financial Highlights
($ in thousands, unaudited)
|
| Three Months Ended |
| Nine Months Ended | |||||||||||
| | 9/30/2022 | | 9/30/2021 | | 6/30/2022 | | 9/30/2022 | | 9/30/2021 | |||||
Revenues: |
| |
|
| |
|
| |
|
| |
|
| |
|
Well Intervention | | $ | 143,925 | | $ | 131,314 | | $ | 106,291 | | $ | 356,583 | | $ | 397,387 |
Robotics | |
| 56,182 | |
| 42,623 | |
| 49,850 | |
| 143,383 | |
| 96,430 |
Shallow Water Abandonment 1 | | | 67,401 | | | — | | | — | | | 67,401 | | | — |
Production Facilities | |
| 18,448 | |
| 18,552 | |
| 17,678 | |
| 54,420 | |
| 49,217 |
Intercompany Eliminations | |
| (13,409) | |
| (11,773) | |
| (11,207) | |
| (36,503) | |
| (36,962) |
Total | | $ | 272,547 | | $ | 180,716 | | $ | 162,612 | | $ | 585,284 | | $ | 506,072 |
| | | | | | | | | | | | | | | |
Income (Loss) from Operations: | | | | | | | | | | | | | | | |
Well Intervention | | $ | (1,304) | | $ | (13,343) | | $ | (22,548) | | $ | (55,610) | | $ | (14,819) |
Robotics | |
| 11,708 | |
| 4,936 | |
| 9,666 | |
| 22,854 | |
| 2,257 |
Shallow Water Abandonment 1 | | | 16,320 | | | — | | | — | | | 16,320 | | | — |
Production Facilities | |
| 6,068 | |
| 5,089 | |
| 6,045 | |
| 17,964 | |
| 16,285 |
Corporate / Other / Eliminations | |
| (20,566) | |
| (7,013) | |
| (12,139) | |
| (41,255) | |
| (25,550) |
Total | | $ | 12,226 | | $ | (10,331) | | $ | (18,976) | | $ | (39,727) | | $ | (21,827) |
1 Shallow Water Abandonment includes the results of Helix Alliance beginning July 1, 2022, the date of acquisition
Segment Results
Well Intervention
Well Intervention revenues increased $37.6 million, or 35%, in the third quarter 2022 compared to the prior quarter. Our third quarter 2022 revenues increased due primarily to higher vessel utilization and an improvement in rates, offset in part by lower 15K IRS utilization and the impact of weaker foreign currency exchange rates compared to the prior quarter. Utilization in West Africa increased during the third quarter as the Q7000 recommenced operations following scheduled maintenance in Namibia during the prior quarter. Utilization in the North Sea continued to improve during the third quarter following a late commencement of seasonal activity during the second quarter. North Sea operating rate improvements were offset in part by a weaker British pound during the third quarter. Gulf of Mexico vessel utilization and rates improved during the quarter following scheduled regulatory inspections during the prior quarter, although utilization on our 15K IRS system decreased compared to the prior quarter. Overall Well Intervention vessel utilization increased to 87% during the third quarter 2022 compared to 67% during the prior quarter. Well Intervention net loss from operations improved $21.2 million compared to the prior quarter primarily due to higher revenues, offset in part by higher operating costs on increased activity during the third quarter.
Well Intervention revenues increased $12.6 million, or 10%, in the third quarter 2022 compared to the third quarter 2021. The increase was primarily due to higher utilization and rates in the Gulf of Mexico and the North Sea, offset in part by lower utilization in West Africa, lower rates in Brazil and the impact of weaker foreign currency exchange rates during the third quarter 2022 compared to the third quarter 2021. Utilization in the Gulf of Mexico improved year over year with fewer idle days in the third quarter 2022, and the North Sea maintained strong utilization during the quarter compared to the prior year, which saw an early seasonal slowdown during the third quarter 2021. West Africa utilization was lower during the third quarter 2022 as the Q7000 recommenced operations mid-quarter following scheduled maintenance whereas the vessel was fully utilized during the third quarter 2021. Revenues in Brazil declined year over year primarily due to the Siem Helix 2 under its existing contract at lower rates during the third quarter 2022, whereas the vessel was operating at higher rates during the third quarter 2021. Overall Well Intervention vessel utilization increased from 72% during the third quarter 2021 to 87% during the third quarter 2022. Well Intervention net loss from operations improved by $12.0 million in the third quarter 2022 compared to the third quarter 2021 primarily due to higher revenues.
Robotics
Robotics revenues increased $6.3 million, or 13%, in the third quarter 2022 compared to the prior quarter. The increase in revenues was due to higher vessel, ROV and trenching activities. Chartered vessel days increased to 376 days compared to 370 days, and vessel utilization increased to 98% compared to 94%, during the third quarter 2022 compared the prior quarter. Vessel days included 100 spot vessel days during the third quarter 2022 compared to 116 spot vessel days during the prior quarter. ROV and trencher utilization increased from 53% during the prior quarter to 66% in the third quarter 2022, which included utilization of our boulder grab for seabed clearance operations on the U.S. east coast following its deployment during the quarter. Trenching days increased to 176 days during the third quarter 2022 on the Grand Canyon III and the Horizon Enabler on both renewable energy and oil and gas trenching projects, compared to 81 days during the prior quarter. Robotics operating income increased $2.0 million during the third quarter 2022 compared to the prior quarter due to higher revenues, offset in part by higher costs on increased activity during the quarter.
Robotics revenues increased $13.6 million, or 32%, during the third quarter 2022 compared to the third quarter 2021. The increase in revenues was due to higher vessel, ROV and trenching activities year over year. Chartered vessel days increased to 376 days during the third quarter 2022 compared to 358 days during the third quarter 2021, and third quarter 2022 vessel utilization remained relatively flat, at 98% compared to 99% during the third quarter 2021. Vessel days during the third quarter 2022 included 100 spot vessel days compared to 176 spot vessel days during the third quarter 2021. ROV and trencher utilization increased to 66% in the third quarter 2022 from 43% in the third quarter 2021, and trenching days increased to 176 days during the third quarter 2022 compared to 90 days during the third quarter 2021. Robotics operating income increased $6.8 million during the third quarter 2022 compared to the third quarter 2021 due to higher revenues, offset in part by higher costs on increased activity year over year.
Shallow Water Abandonment
In the third quarter 2022, Shallow Water Abandonment generated revenues of $67.4 million and income from operations of $16.3 million, which reflected the operating results of Helix Alliance since its acquisition on July 1, 2022. Overall segment vessel utilization was 80% across 21 vessels and 1,077 days, or 59% of utilization across marketable plug and abandonment (P&A) and coiled tubing systems during the quarter.
Production Facilities
Production Facilities revenues increased $0.8 million, or 4%, in the third quarter 2022 compared to the prior quarter due primarily to oil and gas production from our interest in the Thunder Hawk Field following its acquisition on August 25, 2022. Production Facilities revenues decreased $0.1 million, or 1%, compared to the third quarter 2021 primarily due to lower oil and gas production. The Helix Producer I completed its scheduled five-year regulatory dry docking during the third quarter 2022.
Selling, General and Administrative and Other
Selling, General and Administrative
Selling, general and administrative expenses were $23.6 million, or 8.6% of revenue, in the third quarter 2022 compared to $16.0 million, or 9.9% of revenue, in the prior quarter. The increase during the third quarter was primarily due to higher employee incentive compensation costs and general and administrative costs in our Shallow Water Abandonment segment following the closing of our Alliance acquisition on July 1, 2022.
Acquisition and Integration Costs
Acquisition and integration costs are related to our acquisition of Alliance, which closed on July 1, 2022 and included primarily legal and professional fees as well as costs incurred to integrate Alliance’s operations and systems and to align its financial processes and procedures with those of Helix.
Other Income and Expenses
Other expense, net was $20.3 million in the third quarter 2022 compared to $13.5 million in the prior quarter and is comprised almost entirely of unrealized non-cash foreign currency losses of $19.7 million related to the approximate 8% weakening of the British pound during the third quarter 2022 on U.S. dollar denominated intercompany debt in our U.K. entities.
Cash Flows
Operating cash flows were $24.7 million during the third quarter 2022 compared to $(5.8) million during the prior quarter and $28.7 million during the third quarter 2021. The improvement in operating cash flows quarter over quarter was primarily due to improvements in operating income during the third quarter 2022 compared to the prior quarter. The reduction in operating cash flows year over year was primarily due to higher regulatory recertification costs for our vessels and systems and negative changes in working capital during the third quarter 2022 and tax refunds of $12.4 million related to the CARES Act received during the third quarter 2021, offset in part by higher operating income during the third quarter 2022. Regulatory recertification costs for our vessels and systems, which are included in operating cash flows, were $10.7 million and included the dry docking for the Helix Producer I during the third quarter 2022 compared to $9.3 million during the prior quarter and $0.9 million during the third quarter 2021.
Capital expenditures, which are included in investing cash flows, totaled $2.8 million during the third quarter 2022 compared to $1.6 million during the prior quarter and $0.6 million during the third quarter 2021. Our net cash flow from investing activities included a cash outflow of $112.6 million (net of acquired cash) for our acquisition of Alliance on July 1, 2022.
Free Cash Flow was $21.8 million in the third quarter 2022 compared to $(7.4) million during the prior quarter and $28.1 million during the third quarter 2021. The increase in Free Cash Flow quarter over quarter was due primarily to higher operating cash flow, and the decrease in Free Cash Flow year over year was due primarily to lower operating cash flow during the third quarter 2022. (Free Cash Flow is a non-GAAP measure. See reconciliation below.)
Financial Condition and Liquidity
Cash and cash equivalents were $162.3 million at September 30, 2022, excluding $2.5 million of restricted cash. On July 1, 2022, we amended our ABL facility to, among other things, increase the size of the facility from $80 million to $100 million. Available capacity under our ABL facility at September 30, 2022 was $81.8 million, resulting in total liquidity of $244.1 million. At September 30, 2022 we had $263.6 million of long-term debt and net debt of $98.8 million.
* * * * *
Conference Call Information
Further details are provided in the presentation for Helix’s quarterly teleconference to review its third quarter 2022 results (see the “For the Investor” page of Helix’s website, www.helixesg.com). The teleconference, scheduled for Tuesday, October 25, 2022 at 9:00 a.m. Central Time, will be audio webcast live from the “For the Investor” page of Helix’s website. Investors and other interested parties wishing to participate in the teleconference may join by dialing 1-877-243-4912 for participants in the United States and 1-303-223-0113 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 and robotics operations. Our services are centered toward and well positioned to facilitate global energy transition by maximizing production of remaining oil and gas reserves, decommissioning end-of-life oil and gas fields, and supporting renewable energy developments. 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, 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. 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, Adjusted 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, Adjusted 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 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 ability to identify, effect and integrate acquisitions, joint ventures or other transactions, including the integration of the Alliance acquisition; 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 including projections as to guidance and other outlook information; any statements regarding future operations expenditures; any statements regarding our plans, strategies and objectives for future operations; any statements regarding our ability to enter into, renew and/or perform commercial contracts; any statements concerning developments; any statements regarding our environmental, social and governance (“ESG”) initiatives; 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 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 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 law.
HELIX ENERGY SOLUTIONS GROUP, INC.
| |
| Three Months Ended Sep. 30, |
| Nine Months Ended Sep. 30, | ||||||||
(in thousands, except per share data) | | | 2022 | | 2021 | | 2022 | | 2021 | ||||
| | | (unaudited) | | (unaudited) | ||||||||
| | | | | | | | | | | | | |
Net revenues | | | $ | 272,547 | | $ | 180,716 | | $ | 585,284 | | $ | 506,072 |
Cost of sales | | |
| 233,332 | |
| 177,716 | |
| 566,032 | |
| 485,318 |
Gross profit | | |
| 39,215 | |
| 3,000 | |
| 19,252 | |
| 20,754 |
Gain (loss) on disposition of assets, net | |
| — | |
| 15 | |
| — | |
| (631) | |
Acquisition and integration costs | | | (762) | | | — | | | (2,349) | | | — | |
Change in fair value of contingent consideration | | | (2,664) | | | — | | | (2,664) | | | — | |
Selling, general and administrative expenses | |
| (23,563) | |
| (13,346) | |
| (53,966) | |
| (41,950) | |
Income (loss) from operations | |
| 12,226 | |
| (10,331) | |
| (39,727) | |
| (21,827) | |
Equity in earnings of investment | |
| 78 | |
| — | |
| 8,262 | |
| — | |
Net interest expense | | |
| (4,644) | |
| (5,928) | |
| (14,617) | |
| (17,900) |
Loss on extinguishment of long-term debt | |
| — | |
| (124) | |
| — | |
| (124) | |
Other expense, net | |
| (20,271) | |
| (4,015) | |
| (37,623) | |
| (1,438) | |
Royalty income and other | |
| 348 | |
| 297 | |
| 3,286 | |
| 2,603 | |
Loss before income taxes | |
| (12,263) | |
| (20,101) | |
| (80,419) | |
| (38,686) | |
Income tax provision (benefit) | |
| 6,500 | |
| (1,058) | |
| 10,074 | |
| (2,910) | |
Net loss | | |
| (18,763) | |
| (19,043) | |
| (90,493) | |
| (35,776) |
Net loss attributable to redeemable noncontrolling interests | |
| — | |
| — | |
| — | |
| (146) | |
Net loss attributable to common shareholders | | $ | (18,763) | | $ | (19,043) | | $ | (90,493) | | $ | (35,630) | |
| | | | | | | | | | | | | |
Loss per share of common stock: | | | | | | | | | | | | | |
Basic | | | $ | (0.12) | | $ | (0.13) | | $ | (0.60) | | $ | (0.24) |
Diluted | | | $ | (0.12) | | $ | (0.13) | | $ | (0.60) | | $ | (0.24) |
| | | | | | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | | | | | |
Basic | | |
| 151,331 | |
| 150,088 | |
| 151,226 | |
| 150,018 |
Diluted | | |
| 151,331 | |
| 150,088 | |
| 151,226 | |
| 150,018 |
| |
| Sep. 30, 2022 |
| Dec. 31, 2021 | ||
(in thousands) | | | (unaudited) | | | | |
| | | | | | | |
ASSETS | |
| |
|
| |
|
| | | | | | | |
Current Assets: | |
| |
|
| |
|
Cash and cash equivalents (1) | | | $ | 162,268 | | $ | 253,515 |
Restricted cash (1) | | |
| 2,506 | |
| 73,612 |
Accounts receivable, net | | |
| 228,043 | |
| 144,137 |
Other current assets | | |
| 83,301 | |
| 58,274 |
Total Current Assets | | |
| 476,118 | |
| 529,538 |
| | | | | | | |
Property and equipment, net | | |
| 1,607,840 | |
| 1,657,645 |
Operating lease right-of-use assets | | |
| 209,351 | |
| 104,190 |
Other assets, net | | |
| 62,188 | |
| 34,655 |
Total Assets | | | $ | 2,355,497 | | $ | 2,326,028 |
| | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | |
| | | | | | | |
Current Liabilities: | | | | | | | |
Accounts payable | | | $ | 131,898 | | $ | 87,959 |
Accrued liabilities | | |
| 112,321 | |
| 91,712 |
Current maturities of long-term debt (1) | | |
| 38,154 | |
| 42,873 |
Current operating lease liabilities | | |
| 48,102 | |
| 55,739 |
Total Current Liabilities | | |
| 330,475 | |
| 278,283 |
| | | | | | | |
Long-term debt (1) | | |
| 225,427 | |
| 262,137 |
Operating lease liabilities | | |
| 166,916 | |
| 50,198 |
Deferred tax liabilities | | |
| 97,373 | |
| 86,966 |
Other non-current liabilities | | |
| 53,452 | |
| 975 |
Shareholders' equity | | |
| 1,481,854 | |
| 1,647,469 |
Total Liabilities and Equity | | | $ | 2,355,497 | | $ | 2,326,028 |
(1) | Net debt of $98,807 as of September 30, 2022. Net debt calculated as long-term debt including current maturities of long-term debt less cash and cash equivalents and restricted cash. |
Helix Energy Solutions Group, Inc.
Reconciliation of Non-GAAP Measures
| | |
| Three Months Ended |
| Nine Months Ended | |||||||||||
(in thousands, unaudited) | | | | 9/30/2022 | | 9/30/2021 | | 6/30/2022 | | 9/30/2022 | | 9/30/2021 | |||||
| | | | | | | | | | | | | | | | | |
Reconciliation from Net Loss to Adjusted EBITDA: | |
| |
|
| |
|
| |
|
| |
|
| |
| |
Net loss | | | | $ | (18,763) | | $ | (19,043) | | $ | (29,699) | | $ | (90,493) | | $ | (35,776) |
Adjustments: | | | | | | | | | | | | | | | | | |
Income tax provision (benefit) | | | |
| 6,500 | |
| (1,058) | |
| 1,434 | |
| 10,074 | |
| (2,910) |
Net interest expense | | | |
| 4,644 | |
| 5,928 | |
| 4,799 | |
| 14,617 | |
| 17,900 |
Loss on extinguishment of long-term debt | |
| — | |
| 124 | |
| — | |
| — | |
| 124 | ||
Other expense, net | | | |
| 20,271 | |
| 4,015 | |
| 13,471 | |
| 37,623 | |
| 1,438 |
Depreciation and amortization | | | |
| 35,944 | |
| 36,719 | |
| 33,158 | |
| 102,590 | |
| 106,226 |
Gain on equity investment | |
| (78) | |
| — | |
| (8,184) | |
| (8,262) | |
| — | ||
EBITDA | | | |
| 48,518 | |
| 26,685 | |
| 14,979 | |
| 66,149 | |
| 87,002 |
Adjustments: | | | | | | | | | | | | | | | | | |
(Gain) loss on disposition of assets, net | | |
| — | |
| (15) | |
| — | |
| — | |
| 631 | |
Acquisition and integration costs | | | | 762 | | | — | | | 1,587 | | | 2,349 | | | — | |
Change in fair value of contingent consideration | | | | 2,664 | | | — | | | — | | | 2,664 | | | — | |
General provision (release) for current expected credit losses | |
| 624 | |
| (138) | |
| 193 | |
| 691 | |
| (121) | ||
Adjusted EBITDA | | | | $ | 52,568 | | $ | 26,532 | | $ | 16,759 | | $ | 71,853 | | $ | 87,512 |
| | | | | | | | | | | | | | | | | |
Free Cash Flow: | | | | | | | | | | | | | | | | | |
Cash flows from operating activities | | | $ | 24,650 | | $ | 28,712 | | $ | (5,841) | | $ | 1,396 | | $ | 121,252 | |
Less: Capital expenditures, net of proceeds from sale of assets | |
| (2,803) | |
| (574) | |
| (1,564) | |
| (4,990) | |
| (7,335) | ||
Free Cash Flow | | | | $ | 21,847 | | $ | 28,138 | | $ | (7,405) | | $ | (3,594) | | $ | 113,917 |
| October 25, 2022 Third Quarter 2022 Conference Call |
| Thispresentationcontainsforward-lookingstatementsthatinvolverisks,uncertaintiesandassumptionsthatcouldcauseourresultsto differmateriallyfromthoseexpressedorimpliedbysuchforward-lookingstatements.Allstatements,otherthanstatementsofhistorical fact,are“forward-lookingstatements”withinthemeaningofthePrivateSecuritiesLitigationReformActof1995,including,without limitation,anystatementsregardingtheCOVID-19pandemicandoilpricevolatilityandtheirrespectiveeffectsandresults,ourprotocols andplans,ourcurrentworkcontinuing,thespotmarket,ourabilitytoidentify,effect,andintegrateacquisitions,jointventuresorother transactions,includingtheintegrationoftheAllianceacquisition;ourspendingandcostreductionplansandourabilitytomanage changes;ourstrategy;anystatementsregardingvisibilityandfutureutilization;anyprojectionsoffinancialitemsincludingprojectionsas toguidanceandotheroutlookinformation;anystatementsregardingfutureoperationsexpenditures;anystatementsregardingourplans, strategiesandobjectivesforfutureoperations;anystatementsregardingourabilitytoenterinto,renewand/orperformcommercial contracts;anystatementsconcerningdevelopments;anystatementsregardingourenvironmental,socialandgovernance(“ESG”) initiatives;anystatementsregardingfutureeconomicconditionsorperformance;anystatementsofexpectationorbelief;andany statementsofassumptionsunderlyinganyoftheforegoing.Forward-lookingstatementsaresubjecttoanumberofknownandunknown risks,uncertaintiesandotherfactorsthatcouldcauseresultstodiffermateriallyfromthoseintheforward-lookingstatements,including butnotlimitedtotheresultsandeffectsoftheCOVID-19pandemicandactionsbygovernments,customers,suppliersandpartnerswith respectthereto;marketconditions;resultsfromacquiredproperties;demandforourservices;theperformanceofcontractsbysuppliers, customersandpartners;actionsbygovernmentalandregulatoryauthorities;operatinghazardsanddelays,whichincludedelaysin delivery,charteringorcustomeracceptanceofassetsortermsoftheiracceptance;ourabilitytosecureandrealizebacklog;the effectivenessofourESGinitiativesanddisclosures;humancapitalmanagementissues;complexitiesofglobalpoliticalandeconomic developments;geologicrisks;volatilityofoilandgaspricesandotherrisksdescribedfromtimetotimeinourreportsfiledwiththe SecuritiesandExchangeCommission(“SEC”),includingourmostrecentlyfiledAnnualReportonForm10-Kandinourotherfilingswith theSEC,whichareavailablefreeofchargeontheSEC’swebsiteat www.sec.gov ..Weassumenoobligationanddonotintendtoupdate theseforward-lookingstatements,whichspeakonlyasoftheirrespectivedates,exceptasrequiredbylaw. FORWARD-LOOKING STATEMENTS 2 |
| •Executive Summary (pg. 4) •Operational Highlights by Segment (pg. 10) •Key Financial Metrics (pg. 20) •2022 Outlook (pg. 23) •Environmental, Social and Governance (pg. 31) •Non-GAAP Reconciliations (pg. 32) •Questions and Answers 3 PRESENTATION OUTLINE |
| Executive Summary 4 |
| 5 Alliance •Alliance group of companies (Alliance) acquired on July 1, 2022 •Acquisition price of $119 million cash paid at closing, plus estimated earnout due 2024 •Alliance includes: •Alliance Offshore –ten lift boats, six offshore support vessels (OSVs) and one crew boat •Alliance Energy Services –14 marketable plug and abandonment (P&A) systems, with the ability to scale up to 20, and six coiled tubing systems •Triton Diving –three diving support vessels (DSVs) and one heavy lift barge •Helix Alliance results have been consolidated beginning July 1, 2022 and make up a new reportable segment: Shallow Water Abandonment Thunder Hawk •Interest in Thunder Hawk Field acquired from Murphy on August 25, 2022 •62.5% ownership in three producing wells and related subsea infrastructure •Acquisition effective date was November 1, 2021 with initial purchase price of $20 million; nominal cash received at closing after purchase price adjustments •Assumed ARO of approximately $24 million measured at its expected present value EXECUTIVE SUMMARY –Q3 2022 ACQUISITIONS |
| 6 EXECUTIVE SUMMARY ($ in millions, except per share amounts, unaudited) Three Months Ended 9/30/229/30/216/30/229/30/229/30/21 Revenues273 $ 181 $ 163 $ 585 $ 506 $ Gross profit (loss)39 $ 3 $ (1) $ 19 $ 21 $ 14%2%(1)%3%4% Net loss 1 (19) $ (19) $ (30) $ (90) $ (36) $ Diluted loss per share(0.12) $ (0.13) $ (0.20) $ (0.60) $ (0.24) $ Adjusted EBITDA 2 Business segments69 $ 34 $ 26 $ 104 $ 111 $ Corporate, eliminations and other(16) (7) (10) (32) (23) Adjusted EBITDA 2 53 $ 27 $ 17 $ 72 $ 88 $ Cash and cash equivalents 3 162 $ 238 $ 261 $ 162 $ 238 $ Net debt 4 99 $ (4) $ 4 $ 99 $ (4) $ Cash flows from operating activities25 $ 29 $ (6) $ 1 $ 121 $ Free Cash Flow 2 22 $ 28 $ (7) $ (4) $ 114 $ Nine Months Ended 1 Net loss attributable to common shareholders 2 Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures; see non-GAAP reconciliations on slide 33 3 Excludes restricted cash of $3 million at 9/30/22 and 6/30/22 and $71 million at 9/30/21 4 Net debt is calculated as long-term debt (including current maturities of long-term debt) less cash and cash equivalents and restricted cash Amounts may not add due to rounding |
| 7 Financial Results •Net loss 1 of $19 million, $(0.12) per diluted share •Adjusted EBITDA 2 of $53 million •Operating cash flows of $25 million •Free Cash Flow 2 of $22 million Operations •Strong utilization in the GOM and North Sea •Resumed campaign in Nigeria on the Q7000 following scheduled maintenance •Seasonally strong trenching and ROV activity, including the deployment of new boulder grab •Secured two-year extension with Petrobras on the Siem Helix 2 •Strong results from Helix Alliance, with good contributions from its vessels and P&A systems Year to Date •Net loss 1 of $90 million, $(0.60) per diluted share •Adjusted EBITDA 2 of $72 million •Operating cash flows of $1 million •Free Cash Flow 2 of $(4) million EXECUTIVE SUMMARY –Q3 2022 HIGHLIGHTS 1 Net loss attributable to common shareholders 2 Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures; see non-GAAP reconciliations on slide 33 |
| 8 Well Intervention •Well Intervention vessel fleet utilization 87% •88% in the GOM •79% in the North Sea and West Africa •99% in Brazil •15K IRS utilization 43%; 10K IRS idle during quarter Robotics •Robotics chartered vessels utilization 98% •376 total vessel days (100 spot vessel days) •176 days trenching utilization •ROV and trencher utilization 66% Shallow Water Abandonment •81% Liftboats and OSV utilization •86% Diving support vessel utilization •41% Epic Hedron utilization •1,077 days P&A and CT systems utilization representing aggregate 59% utilization on 14 marketable P&A and six CT systems Production Facilities • Helix Producer I operated at full rates and completed regulatory dry dock during quarter •Thunder Hawk stable production since acquisition August 25, 2022 EXECUTIVE SUMMARY –Q3 2022 SEGMENTS |
| 9 Q3 2022 •Cash and cash equivalents of $162 million (excludes $3 million of restricted cash) •Liquidity 1 of $244 million •Long-term debt 2 of $264 million •Net debt 3 of $99 million EXECUTIVE SUMMARY –BALANCE SHEET 1 Liquidity at September 30, 2022 is calculated as the sum of cash and cash equivalents and available capacity under Helix’s ABL facility and excludes restricted cash of approximately $3 million 2 Net of unamortized issuance costs 3 Net debt is calculated as long-term debt (including current maturities of long-term debt) less cash and cash equivalents and restricted cash |
| Operational Highlights By Segment 10 |
| BUSINESS SEGMENT RESULTS 11 ($ in millions, unaudited) Three Months EndedNine Months Ended 9/30/229/30/216/30/229/30/229/30/21 Revenues Well Intervention144 $ 131 $ 106 $ 357 $ 397 $ Robotics56 43 50 143 96 Shallow Water Abandonment 1 67 - - 67 - Production Facilities18 19 18 54 49 Intercompany eliminations(13) (12) (11) (37) (37) Total273 $ 181 $ 163 $ 585 $ 506 $ Gross profit (loss) % Well Intervention2 $ 1% (10) $ (7)% (19) $ (18)% (46) $ (13)% (3) $ (1)% Robotics14 24% 7 16% 12 23% 29 20% 8 9% Shallow Water Abandonment 1 17 26% - - 17 26% - Production Facilities7 37% 5 29% 7 38% 20 37% 18 36% Eliminations and other- - - (1) (2) Total39 $ 14% 3 $ 2% (1) $ (1)% 19 $ 3% 21 $ 4% Utilization Well Intervention vessels87%72%67%74%79% Robotics vessels98%99%94%94%95% Robotics assets (ROVs and trenchers)66%43%53%52%35% Shallow Water Abandonment vessels 1 80%- - 80%- Shallow Water Abandonment systems 1 59%- - 59%- 1 Shallow Water Abandonment includes the results of Helix Alliance beginning July 1, 2022, the date of acquisition Amounts may not add due to rounding |
| WELL INTERVENTION –GULF OF MEXICO • Q5000 –94% utilized in Q3; performed production enhancement and abandonment scopes on three wells for two customers including one with the 15K IRS; subsequently commenced work for Shell on a multi-year campaign • Q4000 –81% utilized in Q3; completed abandonment scope for one customer, followed by a single-well enhancement scope with the 15K IRS for one customer, and commenced a four-well campaign for another customer •15K IRS rental unit –43% utilized in Q3 on both the Q5000 and Q4000 for two separate clients •10K IRS rental unit –idle in Q3 12 |
| WELL INTERVENTION –NORTH SEA AND WEST AFRICA • Well Enhancer – 80%utilized in Q3; performed enhancement and decommissioning operations on four wells for two customers including West of Shetland for one customer; vessel incurred breakdown periods during Q3 • Seawell –99% utilized in Q3; performed enhancement and decommissioning operations, including diving, on eight wells for four customers • Q7000 –59% utilized in Q3; returned to Nigeria in July following scheduled regulatory flag and class recertification maintenance; recommenced operations performing production enhancement on two wells for one customer in Nigeria beginning early August 13 |
| WELL INTERVENTION –BRAZIL • Siem Helix 1 – 99% utilized in Q3; performed ROV work scopes for Trident Energy in preparation for decommissioning campaign; vessel performed two IRM scopes under a five-day term assignment for another customer during the quarter • Siem Helix 2 – 100 % utilized in Q3 for Petrobras; performed decommissioning scopes on four wells and production enhancement scope on one well; secured two-year extension through December 2024 expected to commence December 2022 14 |
| WELL INTERVENTION –UTILIZATION 15 59% 93% 92% 83% 88% 58% 74% 89% 86% 80% 88% 63% 40% 31% 9% 38% 63% 71% 38% 42% 44% 79% 99% 99% 99% 98% 100% 100% 72% 52% 87% 88% 99% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q4 21Q1 22Q2 22Q3 22 Gulf of Mexico¹ North Sea / West Africa² Brazil³ All Well Intervention Vessels 1 Gulf of Mexico includes the Q4000 and Q5000 2 North Sea / West Africa includes the Seawell , Well Enhancer and Q7000 3 Brazil includes the Siem Helix 1 and Siem Helix 2 |
| ROBOTICS • Grand Canyon II (Asia Pacific) –100% utilized in Q3 performing ROV support for windfarm project offshore Taiwan • Grand Canyon III (North Sea) –100% utilized in Q3; performed renewables trenching operations for two customers and oil and gas trenching for another customer • Shelia Bordelon (GOM) –100% utilized in Q3; performed ROV UXO survey support project and boulder removal project for two different customers supporting windfarm operations offshore U.S. east coast • Spot Vessels –100 total days of spot vessel utilization during Q3 •16 total days of spot vessel utilization during Q3 completing renewable seabed clearance work in the North Sea •84 days on the Horizon Enabler performing oil and gas trenching operations for one customer in Egypt and renewables trenching for another customer in the North Sea • Trenching –176 total days of trenching operations on the Grand Canyon III and the Horizon Enabler , including 100 days of renewable trenching and 76 days of oil and gas trenching 16 |
| ROBOTICS UTILIZATION 17 405 499 450 336 165 236 358 419 323 370 376 42 119 154 92 72 84 90 90 66 81 176 34% 34% 37% 32% 24% 36% 43% 38% 35% 53% 66% - 50 100 150 200 250 300 350 400 450 500 0% 10% 20% 30% 40% 50% 60% 70% Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q4 21Q1 22Q2 22Q3 22 Vessel Days Trenching Days ROV utilization (%) Vessels include the Grand Canyon II , Grand Canyon III , Horizon Enabler , Shelia Bordelon and spot vessels ROVs include 40 work class ROVs, four trenchers, one ROV Drill and one boulder grab in Q3 2022 ROV utilization included 44 ROVs during 2020, 42 ROVs during 2021 and 40 ROVs year-to-date 2022 |
| SHALLOW WATER ABANDONMENT • Offshore –ten liftboats with combined utilization of 72% in Q3 performing make safe, well abandonment, pipeline abandonment, coiled tubing, wireline, construction support, production support and dive support operations for five customers; six OSVs and one crew boat with combined utilization of 95% in Q3 • Energy Services –909 days combined utilization, or 71% over 14 marketable P&A systems in Q3, six coiled tubing systems utilized for combined 168 days, or 30% utilization in Q3 • Diving & Heavy Lift –three diving support vessels with combined utilization of 86% in Q3; heavy lift barge with utilization of 41% in Q3 performing platform removal operations for three customers 18 |
| SHALLOW WATER ABANDONMENT UTILIZATION –Q3 2022 19 1 Vessels include ten liftboats, six OSVs, one crew boat, three diving support vessels, and one heavy lift derrick barge 2 System utilization is based on 14 marketable P&A systems, with the ability to scale up to 20 P&A systems, and six coiled tubing systems 72% 95% 86% 41% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % Utilization Vessel 1 Utilization Liftboats OSVs and Crew Boat Diving Support Vessels Heavy Lift Derrick Barge 909 168 - 100 200 300 400 500 600 700 800 900 1,000 Days Utilization System 2 Utilization P&A Systems Coiled Tubing Systems (71%) (30%) |
| Key Financial Metrics 20 |
| DEBT INSTRUMENT PROFILE Total funded debt 1 of $271 million at 9/30/22 •$30 million Convertible Senior Notes due 2023 –4.125% •$200 million Convertible Senior Notes due 2026 –6.75% •$41 million MARAD Debt –4.93% •Semi-annual amortization payments through maturity in Q1 2027 $0 $50 $100 $150 $200 $250 202220232024202520262027 Principal Payment Schedule at 9/30/22 ($ in millions) CSN 2023 CSN 2026 MARAD $0 $38 1 Excludes $7 million of remaining unamortized debt issuance costs 21 $9 $210 $9 $5 |
| DEBT & LIQUIDITY PROFILE ($ in millions) 1 Cash includes cash and cash equivalents but excludes restricted cash at December 31, 2019 and 2021 and September 30, 2022 of $54million, $74 million and $3 million, respectively 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 $100 million ABL facilityand excludes restricted cash 4 Net debt is calculated as long-term debt (including current maturities of long-term debt) less cash and cash equivalents and restricted cash $267 $279 $208 $291 $254 $162 $(496) $(440) $(406) $(350) $(305) $(264) $348 $426 $380 $452 $305 $244 $(229) $(161) $(143) $(58) $22 $(99) ($500) ($400) ($300) ($200) ($100) $0 $100 $200 $300 $400 $500 Cash¹ Long-term debt² Liquidity³ Net debt⁴ 12/31/17 12/31/1812/31/1912/31/2012/31/219/30/22 22 |
| 2022 Outlook 23 |
| 24 2022 OUTLOOK: FORECAST 1 ($ in millions) 2022 2021 Outlook 1 Actual Revenues$ 785 - 860675 $ Adjusted EBITDA 2 100 - 12096 Free Cash Flow 2 0 - 30132 Capital Additions 3 50 - 6017 Revenue Split: Well Intervention$ 480 - 515517 $ Robotics180 - 200137 Shallow Water Abandonment 1 105 - 120- Production Facilities 4 70 - 7569 Eliminations(50) (48) Total$ 785 - 860675 $ 1 Helix Outlook presents the forecast for the Helix legacy businesses for the full year 2022 and for Shallow Water Abandonment,which includes the results of Helix Alliance beginning July 1, 2022 (date of acquisition) 2 Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See non-GAAP reconciliations on slide 33 3 Capital Additions include regulatory certification costs for our vessels and systems as well as other capital expenditures 4 Production Facilities revenues include Thunder Hawk Field production following its acquisition on August 25, 2022 |
| 25 2022 OUTLOOK –WELL INTERVENTION • Q4000 (Gulf of Mexico) –contracted work through Q4 with expected strong utilization during remainder of 2022 and into 2023 • Q5000 (Gulf of Mexico) – contracted work on the Shell multi-year campaign through remainder of 2022 and into 2023 • IRS rental units (Gulf of Mexico) –15K IRS and 10K IRS expected to be idle during Q4 • WellEnhancer (North Sea) –contracted work through Q4 with expected strong utilization during remainder of 2022 • Seawell (North Sea) –contracted work through Q4 with expected strong utilization during remainder of 2022 • Q7000 (West Africa, Asia Pacific) – campaign in Nigeria expected to conclude late Q4 followed by planned transit to the Asia Pacific region with an approximate 30-day docking prior to contracted decommissioning campaign offshore New Zealand expected to commence first half 2023 • Siem Helix 1 (Brazil) –contracted ROV survey and IRM work in Brazil into Q4 followed by two-year decommissioning contract for Trident Energy commencing late Q4 • Siem Helix 2 (Brazil) –under legacy contract for Petrobras through mid-December, followed by commencement of two-year negotiated extension contracted in September 2022 |
| 26 • Grand Canyon II (Asia Pacific) –returning to Thailand in Q4 for contracted decommissioning and ROV support work; vessel expected to have strong utilization through remainder of 2022 • Grand Canyon III (North Sea) –continuing to perform seasonal trenching campaign for several customers expected through mid-December with good visibility and strong utilization expected through remainder of 2022 • Horizon Enabler (North Sea)–continuing to perform trenching through mid-Q4 followed by scheduled shorter duration trenching projects into December • Shelia Bordelon (U.S.) – expected strong utilization through year end, including completing boulder site clearance services supporting a U.S. East Coast windfarm project, with expected follow-on ROV support project in GOM to commence mid-November for remainder of 2022 2022 OUTLOOK –ROBOTICS |
| 27 • Offshore – expect stable utilization on seven to nine liftboats and variable seasonal utilization on OSVs and crew boat for remainder of 2022 • Energy Services – strong utilization for eight to 12 P&A systems and one to three coiled tubing systems expected for remainder of 2022 • Diving & Heavy Lift – diving services expected into mid-Q4 followed by expected seasonal slowdown; heavy lift barge with seasonally limited opportunities during Q4 2022 OUTLOOK –SHALLOW WATER ABANDONMENT |
| 2022 Capital additions are forecasted at approximately $50 -$60 million: •Capital additions during Q3 approximated $13 million and included •Approximately $11 million for regulatory recertification costs, reported in operating cash flows •Approximately $3 million of capital expenditures for new property and equipment •Capital additions for remainder of 2022 expected to be approximately $15 to $25 million Helix Alliance acquisition closed July 1, 2022 for approximately $119 million ($113 million net of acquired cash) Balance Sheet •Our total funded debt 1 is expected to remain at $271 million through December 31, 2022 with no scheduled principal payments during the remainder of the year 2022 OUTLOOK: CAPITAL ADDITIONS & BALANCE SHEET 1 Excludes unamortized issuance costs 28 |
| 29 •Continue momentum on the three legs of our Energy Transition business model: production maximization, decommissioning and renewables •Continued integration of Helix Alliance and full-field abandonment capabilities •Expect to continue anticipated momentum from second half 2022 into 2023 •Operating cash flow improvements •Expected improved operating cash flows in 2023 compared to 2022 •Maintenance capex anticipated to be approximately $40-$50 million annually • Well Intervention •Expect strong Gulf of Mexico and North Sea intervention markets in 2023 with improving outlook for utilization and rates • Q7000 to continue with planned Asia Pacific campaign in New Zealand and Australia with approximately 200 days contracted •Expect continued operations in Brazil and stronger 2023 and beyond: •Two-year Trident award on the Siem Helix 1 expected to begin late Q4 2022 •Two-year Petrobras extension on the Siem Helix 2 commencing mid-December 2022 •Awarded multi-year decommissioning contract in Brazil on the Q7000 expected to commence 2023 • Robotics •Anticipate continued strong renewables trenching market •Continued renewables site clearance project opportunities, including in the U.S. markets •Tightening ROV market • Shallow Water Abandonment •Expected strong Gulf of Mexico shallow water decommissioning market •Full-year accretion of Helix Alliance earnings in 2023 BEYOND 2022 |
| 30 • Potential Improvements in 2023 1 We continue to expect 2023 to be substantially better than 2022, based on the following: • Brazil –Both vessels expected to be working in intervention mode at profitable rates in 2023; expected EBITDA improvement $55 to $65 million in 2023 • Q7000 –vessel expected to have improved rates during 2023 inclusive of paid mobilization with expected EBITDA improvement $17 to $27 million • Shallow Water Abandonment –Full year of contribution by Helix Alliance in 2023, with EBITDA expected to be $30 to $50 million in 2023, which would represent an incremental EBITDA benefit of $15 to $35 million compared to 2022 outlook • Utilization – Well Intervention increased utilization expected in 2023 compared to 2022, including the Q7000 , due to anticipated fewer days of regulatory maintenance and transit • Rates –Overall Well Intervention rates expected to be up 30% to 45% for full year 2023 compared to rates at the beginning of 2022 • Robotics –Higher ROV utilization expected in 2023 • Production Facilities –Expect continuation of Helix Producer I for 2023; ongoing oil and gas production from acquired interest in Thunder Hawk Field and decommissioning backlog with remaining Droshky wells 1 These potential improvements include key assumptions and estimates. Any significant variation from these key assumptions andestimates could limit our ability to achieve such improvements. BEYOND 2022 |
| 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, abandonment and decommissioning end of life wells and applying the techniques and technologies proven in offshore oil and gas fields to offshore renewables and wind farms.These efforts are published in greater detail in our 2021 Corporate Sustainability Report, a copy of which is available on our website at https://www.helixesg.com/about-helix/our-company/corporate- sustainability/ , and we anticipate publishing our 2022 Corporate Sustainability Report in the near future. 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 the Board added two new gender and ethnically diverse members 31 |
| Non-GAAP Reconciliations 32 |
| 33 NON-GAAP RECONCILIATIONS ($ in thousands, unaudited) Three Months EndedYear Ended 9/30/229/30/216/30/229/30/229/30/2112/31/21 Adjusted EBITDA: Net loss(18,763) $ (19,043) $ (29,699) $ (90,493) $ (35,776) $ (61,684) $ Adjustments: Income tax provision (benefit)6,500 (1,058) 1,434 10,074 (2,910) (8,958) Net interest expense4,644 5,928 4,799 14,617 17,900 23,201 Loss on extinguishment of long-term debt- 124 - - 124 136 Other (income) expense, net20,271 4,015 13,471 37,623 1,438 1,490 Depreciation and amortization35,944 36,719 33,158 102,590 106,226 141,514 Gain on equity investment(78) - (8,184) (8,262) - - EBITDA48,518 $ 26,685 $ 14,979 $ 66,149 $ 87,002 $ 95,699 $ Adjustments: (Gain) loss on disposition of assets, net- $ (15) $ - $ - $ 631 $ 631 $ Acquisition and integration costs762 - 1,587 2,349 - - Change in fair value of contingent consideration2,664 - - 2,664 General provision (release) for current expected credit losses624 (138) 193 691 (121) (54) Adjusted EBITDA52,568 $ 26,532 $ 16,759 $ 71,853 $ 87,512 $ 96,276 $ Free Cash Flow: Cash flows from operating activities24,650 $ 28,712 $ (5,841) $ 1,396 $ 121,252 $ 140,117 $ Less: Capital expenditures, net of proceeds from sale of assets(2,803) (574) (1,564) (4,990) (7,335) (8,271) Free Cash Flow21,847 $ 28,138 $ (7,405) $ (3,594) $ 113,917 $ 131,846 $ Nine Months Ended |
| 34 NON-GAAP AND OTHER DEFINITIONS Non-GAAPFinancialMeasures WedefineEBITDAasearningsbeforeincometaxes,netinterestexpense,gainsorlossesonextinguishmentoflong- termdebt,gainsorlossesonequityinvestments,netotherincomeorexpense,anddepreciationandamortization expense.Non-cashimpairmentlossesongoodwillandotherlong-livedassetsarealsoaddedbackifapplicable.To arriveatourmeasureofAdjustedEBITDA,weexcludethegainorlossondispositionofassets,acquisitionand integrationcosts,thechangeinfairvalueofcontingentconsiderationandthegeneralprovision(release)forcurrent expectedcreditlosses,ifany. WedefineFreeCashFlowascashflowsfromoperatingactivitieslesscapitalexpenditures,netofproceedsfrom saleofassets. WeuseEBITDA,AdjustedEBITDAandFreeCashFlowtomonitorandfacilitateinternalevaluationofthe performanceofourbusinessoperations,tofacilitateexternalcomparisonofourbusinessresultstothoseofothersin ourindustry,toanalyzeandevaluatefinancialandstrategicplanningdecisionsregardingfutureinvestmentsand acquisitions,toplanandevaluateoperatingbudgets,andincertaincases,toreportourresultstotheholdersofour debtasrequiredbyourdebtcovenants.WebelievethatourmeasuresofEBITDA,AdjustedEBITDAandFreeCash Flowprovideusefulinformationtothepublicregardingouroperatingperformanceandabilitytoservicedebtandfund capitalexpendituresandmayhelpourinvestorsunderstandandcompareourresultstoothercompaniesthathave differentfinancing,capitalandtaxstructures.OthercompaniesmaycalculatetheirmeasuresofEBITDA,Adjusted EBITDAandFreeCashFlowdifferentlyfromthewaywedo,whichmaylimittheirusefulnessascomparative measures.EBITDA,AdjustedEBITDAandFreeCashFlowshouldnotbeconsideredinisolationorasasubstitute for,butinsteadaresupplementalto,incomefromoperations,netincome,cashflowsfromoperatingactivities,or otherincomeorcashflowdatapreparedinaccordancewithGAAP.Usersofthisfinancialinformationshould considerthetypesofeventsandtransactionsthatareexcludedfromthesemeasures. |
| Thank you 35 |
