Hornbeck Offshore Services, Inc 10-Q for FY2022 Q3

Hornbeck Offshore Services, Inc. (HOS)

10-Q 2022-10-26 For: 2022-09-30

Added on April 09, 2026

About this 10-Q

Hornbeck Offshore Services, Inc filed this 10-Q on October 26, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $272.55M; up 50.8% from $180.72M a year earlier
Net loss: $18.76M; compared with a net loss of $19.04M a year earlier
Diluted EPS: -$0.12; compared with -$0.13 a year earlier

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Minnesota		95-3409686
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
3505 West Sam Houston Parkway North
Suite 400
Houston Texas		77043
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	HLX	New York Stock Exchange


Large accelerated filer ☑	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐


PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements:	3
	Condensed Consolidated Balance Sheets – September 30, 2022 (Unaudited) and December 31, 2021	3

	Condensed Consolidated Statements of Operations (Unaudited) – Three and nine months ended September 30, 2022 and 2021	4

	Condensed Consolidated Statements of Comprehensive Loss (Unaudited) – Three and nine months ended September 30, 2022 and 2021	5

	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) – Three months ended September 30, 2022 and 2021	6

	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) – Nine months ended September 30, 2022 and 2021	7

	Condensed Consolidated Statements of Cash Flows (Unaudited) – Nine months ended September 30, 2022 and 2021	8

	Notes to Condensed Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	42

PART II.	OTHER INFORMATION	42

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.	Defaults Upon Senior Securities	44

Item 4.	Mine Safety Disclosures	44

Item 5.	Other Information	44

Item 6.	Exhibits	45

	Signatures	46


	September 30,		December 31,
	2022		2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	162,268	$	253,515
Restricted cash		2,506		73,612
Accounts receivable, net of allowance for credit losses of $2,187 and $1,477, respectively		228,043		144,137
Other current assets		83,301		58,274
Total current assets		476,118		529,538
Property and equipment		2,945,654		2,938,154
Less accumulated depreciation		(1,337,814)		(1,280,509)
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		38,154		42,873
Current operating lease liabilities		48,102		55,739
Total current liabilities		330,475		278,283
Long-term debt		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
Total liabilities		873,643		678,559
Commitments and contingencies
Shareholders’ equity:
Common stock, no par, 240,000 shares authorized, 151,808 and 151,124 shares issued, respectively		1,297,296		1,292,479
Retained earnings		320,579		411,072
Accumulated other comprehensive loss		(136,021)		(56,082)
Total shareholders’ equity		1,481,854		1,647,469
Total liabilities and shareholders’ equity	$	2,355,497	$	2,326,028


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
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


						Accumulated
						Other		Total		Redeemable
	Common Stock			Retained		Comprehensive		Shareholders’		Noncontrolling
	Shares	Amount		Earnings		Loss		Equity		Interests
Balance, June 30, 2022	151,714	$	1,295,016	$	339,342	$	(102,568)	$	1,531,790	$	—
Net loss	—		—		(18,763)		—		(18,763)		—
Foreign currency translation adjustments	—		—		—		(33,453)		(33,453)		—
Activity in company stock plans, net and other	94		274		—		—		274		—
Share-based compensation	—		2,006		—		—		2,006		—
Balance, September 30, 2022	151,808	$	1,297,296	$	320,579	$	(136,021)	$	1,481,854	$	—


	July 1, 2022
Cash consideration	$	118,961
Contingent consideration		26,700
Total fair value of consideration transferred	$	145,661

Assets acquired:
Cash and cash equivalents	$	6,336
Accounts receivable ⁽¹⁾		43,378
Other current assets		4,879
Property and equipment		118,619
Operating lease right-of-use assets		1,205
Intangible assets		1,400
Other assets		2,133
Total assets acquired	$	177,950
Liabilities assumed:
Accounts payable	$	20,480
Accrued liabilities		3,073
Operating lease liabilities		1,205
Deferred tax liabilities		7,531
Total liabilities assumed		32,289
Net assets acquired	$	145,661


			Facilities and
	Vessels		Equipment		Total
Less than one year	$	56,405	$	6,334	$	62,739
One to two years		57,040		5,753		62,793
Two to three years		47,724		3,390		51,114
Three to four years		35,200		867		36,067
Four to five years		30,569		885		31,454
Over five years		7,589		2,790		10,379
Total lease payments	$	234,527	$	20,019	$	254,546
Less: imputed interest		(36,767)		(2,761)		(39,528)
Total operating lease liabilities	$	197,760	$	17,258	$	215,018

Current operating lease liabilities	$	42,621	$	5,481	$	48,102
Non-current operating lease liabilities		155,139		11,777		166,916
Total operating lease liabilities	$	197,760	$	17,258	$	215,018


	2023		2026		MARAD
	Notes		Notes		Debt		Total
Less than one year	$	30,000	$	—	$	8,333	$	38,333
One to two years		—		—		8,749		8,749
Two to three years		—		—		9,186		9,186
Three to four years		—		200,000		9,644		209,644
Four to five years		—		—		5,001		5,001
Gross debt		30,000		200,000		40,913		270,913
Unamortized debt issuance costs ⁽¹⁾		(179)		(4,958)		(2,195)		(7,332)
Total debt		29,821		195,042		38,718		263,581
Less current maturities		(29,821)		—		(8,333)		(38,154)
Long-term debt	$	—	$	195,042	$	30,385	$	225,427


	Well				Shallow Water		Production		Intercompany		Total
	Intervention		Robotics		Abandonment		Facilities		Eliminations		Revenue
Three months ended September 30, 2022
Short-term	$	111,378	$	26,695	$	67,401	$	—	$	(135)	$	205,339
Long-term		32,547		29,487		—		18,448		(13,274)		67,208
Total	$	143,925	$	56,182	$	67,401	$	18,448	$	(13,409)	$	272,547

Three months ended September 30, 2021
Short-term	$	92,954	$	30,186	$	—	$	—	$	—	$	123,140
Long-term		38,360		12,437		—		18,552		(11,773)		57,576
Total	$	131,314	$	42,623	$	—	$	18,552	$	(11,773)	$	180,716

Nine months ended September 30, 2022
Short-term	$	288,772	$	73,684	$	67,401	$	—	$	(770)	$	429,087
Long-term		67,811		69,699		—		54,420		(35,733)		156,197
Total	$	356,583	$	143,383	$	67,401	$	54,420	$	(36,503)	$	585,284

Nine months ended September 30, 2021
Short-term	$	218,840	$	60,605	$	—	$	—	$	—	$	279,445
Long-term		178,547		35,825		—		49,217		(36,962)		226,627
Total	$	397,387	$	96,430	$	—	$	49,217	$	(36,962)	$	506,072


	Three Months Ended			Three Months Ended
	September 30, 2022			September 30, 2021
	Income		Shares	Income		Shares
Basic and Diluted:
Net loss attributable to common shareholders	$	(18,763)		$	(19,043)
Net loss available to common shareholders	$	(18,763)	151,331	$	(19,043)	150,088


			Grant Date
			Fair Value
Date of Grant	Award Type	Shares/Units	Per Share/Unit		Vesting Period
January 1, 2022 ⁽¹⁾	RSU	1,065,705	$	3.12	33% per year over three years
January 4, 2022 ⁽¹⁾	PSU	1,065,705	$	4.25	100% on January 4, 2025
January 4, 2022 ⁽²⁾	Restricted stock	15,775	$	3.12	100% on January 1, 2024
April 1, 2022 ⁽²⁾	Restricted stock	14,710	$	4.78	100% on January 1, 2024
July 1, 2022 ⁽²⁾	Restricted stock	14,867	$	3.10	100% on January 1, 2024
September 22, 2022 ⁽³⁾	Restricted stock	19,328	$	4.38	100% on September 22, 2023


	2022		2021
AROs at January 1,	$	29,658	$	30,913
Liability incurred during the period		23,601		—
Revisions in estimates		—		(2,631)
Accretion expense		1,465		736
AROs at September 30,	$	54,724	$	29,018


	2022		2021
Balance at January 1,	$	1,477	$	3,469
Additions (reductions) ⁽¹⁾		710		(213)
Write-offs ⁽²⁾		—		(1,846)
Balance at September 30,	$	2,187	$	1,410


	September 30,		December 31,
	2022		2021
Accrued payroll and related benefits	$	39,548	$	28,657
Accrued interest		2,116		6,746
Income tax payable		1,614		—
Deferred revenue (Note 8)		20,840		8,272
Asset retirement obligations (Note 12)		30,961		29,658
Other		17,242		18,379
Total accrued liabilities	$	112,321	$	91,712


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Operating lease cost	$	16,088	$	14,336	$	44,348	$	45,391
Variable lease cost		4,488		4,298		14,035		11,417
Short-term lease cost		9,112		6,258		22,121		13,233
Sublease income		(300)		(289)		(930)		(967)
Net lease cost	$	29,388	$	24,603	$	79,574	$	69,074


	2022
Balance at July 1,	$	26,700
Change in fair value		2,664
Balance at September 30,	$	29,364


	September 30, 2022				December 31, 2021
	Principal		Fair		Principal		Fair
	Amount ⁽¹⁾		Value ⁽²⁾		Amount ⁽¹⁾		Value ⁽²⁾
MARAD Debt (matures February 2027)	$	40,913	$	40,496	$	48,850	$	52,481
2022 Notes (matured May 2022)		—		—		35,000		34,794
2023 Notes (mature September 2023)		30,000		29,504		30,000		29,054
2026 Notes (mature February 2026)		200,000		205,754		200,000		200,562
Total debt	$	270,913	$	275,754	$	313,850	$	316,891


	Three Months Ended						Increase/
	September 30,						(Decrease)
	2022			2021			Amount		Percent
Net revenues —
Well Intervention	$	143,925		$	131,314		$	12,611	10	%
Robotics		56,182			42,623			13,559	32	%
Shallow Water Abandonment		67,401			—			67,401	100	%
Production Facilities		18,448			18,552			(104)	(1)	%
Intercompany eliminations		(13,409)			(11,773)			(1,636)
	$	272,547		$	180,716		$	91,831	51	%

Gross profit (loss) —
Well Intervention	$	1,839		$	(9,570)		$	11,409	119	%
Robotics		13,514			6,894			6,620	96	%
Shallow Water Abandonment		17,381			—			17,381	100	%
Production Facilities		6,854			5,451			1,403	26	%
Corporate, eliminations and other		(373)			225			(598)
	$	39,215		$	3,000		$	36,215	1,207	%

Gross margin —
Well Intervention		1	%		(7)	%
Robotics		24	%		16	%
Shallow Water Abandonment		26	%		—	%
Production Facilities		37	%		29	%
Total company		14	%		2	%

Number of vessels, Robotics assets or Shallow Water Abandonment systems ⁽¹⁾ / Utilization ⁽²⁾
Well Intervention vessels		7 / 87	%		7 / 72	%
Robotics assets ⁽³⁾		46 / 66	%		47 / 43	%
Chartered Robotics vessels		5 / 98	%		5 / 99	%
Shallow Water Abandonment vessels ⁽⁴⁾		21 / 80	%		— / —	%
Shallow Water Abandonment systems ⁽⁵⁾		20 / 59	%		— / —	%


	Total		Short-Term		Long-Term
MARAD debt	$	40,913	$	8,333	$	32,580
2023 Notes		30,000		30,000		—
2026 Notes		200,000		—		200,000
Interest related to debt		53,467		17,082		36,385
Property and equipment		8,249		8,249		—
Operating leases ⁽¹⁾		430,522		110,960		319,562
Total cash obligations	$	763,151	$	174,624	$	588,527


				(c)	(d)
				Total number	Maximum
				of shares	number of shares
	(a)	(b)		purchased as	that may yet
	Total number	Average		part of publicly	be purchased
	of shares	price paid		announced plans	under the plans
Period	purchased ⁽¹⁾	per share		or programs	or programs ⁽²⁾
July 1 to July 31, 2022	3,520	$	2.65	—	9,275,587
August 1 to August 31, 2022	—		—	—	9,275,587
September 1 to September 30, 2022	—		—	—	9,339,021
	3,520	$	2.65	—


Exhibit Number	Description	Filed or Furnished Herewith or Incorporated by Reference from the Following Documents (Registration or File Number)
3.1	2005 Amended and Restated Articles of Incorporation, as amended, of Helix Energy Solutions Group, Inc.	Exhibit 3.1 to the Current Report on Form 8-K filed on March 1, 2006 (000-22739)
3.2	Second Amended and Restated By-Laws of Helix Energy Solutions Group, Inc., as amended.	Exhibit 3.1 to the Current Report on Form 8-K filed on September 28, 2006 (001-32936)
4.1	Amendment No. 1, dated as of July 1, 2022, to Loan, Security and Guaranty Agreement, among Helix Energy Solutions Group, Inc., Helix Well Ops Inc., Helix Robotics Solutions, Inc., Deepwater Abandonment Alternatives, Inc., Helix Well Ops (U.K.) Limited and Helix Robotics Solutions Limited as borrowers, the guarantors party thereto, the lenders party thereto, and Bank of America, N.A., as agent and security trustee for the lenders.	Exhibit 4.1 to the Current Report on Form 8-K filed on July 1, 2022 (001-32936)
31.1	Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by Owen Kratz, Chief Executive Officer.	Filed herewith
31.2	Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by Erik Staffeldt, Chief Financial Officer.	Filed herewith
32.1	Certification of Helix’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.	Furnished herewith
101.INS	XBRL Instance Document.	The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document.	Filed herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	Filed herewith
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	Filed herewith
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	Filed herewith
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	Filed herewith
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).	Filed herewith


		HELIX ENERGY SOLUTIONS GROUP, INC.
		(Registrant)

Date: October 26, 2022	By:	/s/ Owen Kratz
		Owen Kratz
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: October 26, 2022	By:	/s/ Erik Staffeldt
		Erik Staffeldt
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

	/s/ Owen Kratz
	Owen Kratz
	President and Chief Executive Officer

	/s/ Erik Staffeldt
	Erik Staffeldt
	Executive Vice President and Chief Financial Officer