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Helix Reports Fourth Quarter And Full Year 2013 Results

Stocks in this article: HLX

Helix Energy Solutions Group, Inc. (NYSE: HLX) reported net income of $36.5 million, or $0.35 per diluted share, for the fourth quarter of 2013 compared to a net loss of $171.6 million, or $(1.64) per diluted share, for the same period in 2012, and net income of $44.6 million, or $0.42 per diluted share, in the third quarter of 2013. Net income from continuing operations totaled $108.8 million, or $1.03 per diluted share, for the year ended December 31, 2013, as compared with a net loss of $70.0 million, or $(0.67) per diluted share, for the year ended December 31, 2012. Including our discontinued operations, net income for the year ended December 31, 2013 was $109.9 million, or $1.04 per diluted share, compared with a net loss of $46.3 million, or $(0.44) per diluted share, for the year ended December 31, 2012.

Owen Kratz, President and Chief Executive Officer of Helix, stated, “Fourth quarter operating cash flow, as measured by EBITDA, saw a 16% sequential increase over the third quarter ($81.5 million versus $70.2 million). Although earnings per share declined quarter-to-quarter, this was due in part to the third quarter gain on the sale of the Express and in part due to a higher effective income tax rate in the fourth quarter. Our Robotics business improved dramatically in the second half of 2013 while the Well Intervention business continues to be stout, posting a record quarterly revenues number.”

                   

Summary of Results

(in thousands, except per share amounts and percentages, unaudited)

 
Quarter Ended Year Ended
12/31/2013 12/31/2012 9/30/2013 12/31/2013 12/31/2012
Revenues $ 226,837 $ 201,696 $ 220,117 $ 876,561 $ 846,109
 
Gross Profit (Loss)
Operating $ 71,164 $ 49,026 $ 69,457 $ 260,685 $ 227,050
31 % 24 % 32 % 30 % 27 %
Contracting Services Impairments (1)   -     (157,951 )   -     -     (177,135 )
Total $ 71,164 $ (108,925 ) $ 69,457 $ 260,685 $ 49,915
 
Net Income (Loss) Applicable to

Common Shareholders

Income (Loss) from continuing operations $ 36,503 $ (99,679 ) $ 44,549 $ 108,849 $ (70,018 )
Income (Loss) from discontinued operations   -     (71,888 )   44     1,073     23,684  
Total $ 36,503   $ (171,567 ) $ 44,593   $ 109,922   $ (46,334 )
 
Diluted Earnings (Loss) Per Share
Income (Loss) from continuing operations $ 0.35 $ (0.95 ) $ 0.42 $ 1.03 $ (0.67 )
Income (Loss) from discontinued operations $ -   $ (0.69 ) $ -   $ 0.01   $ 0.23  
Total $ 0.35   $ (1.64 ) $ 0.42   $ 1.04   $ (0.44 )
 
Adjusted EBITDA from continuing operations $ 81,549 $ 47,699 $ 70,198 $ 268,311 $ 233,612
Adjusted EBITDAX from discontinued operations   -     65,528     -     31,754     367,216  
Adjusted EBITDAX (2) $ 81,549   $ 113,227   $ 70,198   $ 300,065   $ 600,828  
 
 
Note: Footnotes appear at end of press release.
           

Segment Information, Operational and Financial Highlights

(in thousands, unaudited)

 
Quarter Ended
12/31/2013 12/31/2012 9/30/2013

Continuing Operations:

Revenues:
Contracting Services $ 224,881 $ 224,201 $ 208,728
Production Facilities 19,216 20,082 24,366
Intercompany Eliminations   (17,260 )   (42,587 )   (12,977 )
Total $ 226,837   $ 201,696   $ 220,117  
 
Income (Loss) from Operations:
Contracting Services $ 57,729 $ 39,433 $ 49,212
Production Facilities 9,814 9,971 14,136
Gain (Loss) on Sale of Assets - (543 ) 15,812
Contracting Services Impairments (1) - (157,951 ) -
Corporate/Other (12,781 ) (31,551 ) (16,522 )
Intercompany Eliminations   (822 )   (4,995 )   21  
Total $ 53,940   $ (145,636 ) $ 62,659  
Equity in Earnings of Equity Investments $ 815   $ 887   $ 857  
 

Discontinued Operations (Oil and Gas):

Revenues $ - $ 110,089 $ -
Income (Loss) from Operations $ - $ (103,611 ) $ (68 )
 
 
Note: Footnotes appear at end of press release.
 

Contracting Services

  • Well Intervention revenues increased 16% in the fourth quarter of 2013 from revenues in the third quarter of 2013, primarily due to the strong utilization of the Skandi Constructor. Fourth quarter utilization of the Skandi Constructor was 100%, compared to 38% utilization in the third quarter when the vessel was docked in order to complete final modifications and install the well intervention equipment. Also during the fourth quarter of 2013, the Well Enhancer entered dry dock. On a combined basis, our three North Sea vessels – Seawell, Well Enhancer, Skandi Constructor – achieved 92% utilization in the fourth quarter compared to 78% utilization in the third quarter of 2013. In the Gulf of Mexico, the Q4000 utilization remained unchanged at 100% for the fourth quarter of 2013.
  • For Robotics, chartered vessel fleet utilization decreased to 88% for the quarter compared to 98% in the third quarter of 2013. However, both revenues and gross profit remained flat compared to the third quarter of 2013 due to a 53% increase in utilized trencher days in the fourth quarter of 2013.

Other Expenses

  • Selling, general and administrative expenses were 7.6% of revenue in the fourth quarter of 2013, 10.3% of revenue in the third quarter of 2013 and 12.7% in the fourth quarter of 2012. The decrease in selling, general and administrative expenses in the fourth quarter of 2013 compared to the third quarter of 2013 is primarily attributable to a $2.1 million allowance for doubtful accounts charge that was recorded in the third quarter of 2013.
  • Net interest expense and other decreased to $2.8 million in the fourth quarter of 2013 from $12.8 million in the third quarter of 2013. Net interest expense decreased to $4.6 million in the fourth quarter of 2013 compared to $6.6 million in the third quarter of 2013. The decrease in interest expense reflects the substantial reduction in our average interest rate following the redemption of the remaining $275 million of 9.5% Senior Unsecured Notes outstanding in the third quarter of 2013. Other income was $1.9 million in the fourth quarter compared to $6.2 million of other expense in the third quarter of 2013, which included the $8.6 million loss on early extinguishment of the Senior Unsecured Notes.

Financial Condition and Liquidity

  • Our total liquidity at December 31, 2013 was approximately $1.1 billion, consisting of cash and cash equivalents of $478 million and $584 million in unused capacity under our revolver. Consolidated net debt at December 31, 2013 was $88 million. Net debt to book capitalization at December 31, 2013 was 5%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation below.)
  • We incurred capital expenditures (including capitalized interest) totaling $56 million in the fourth quarter of 2013, compared to $176 million in the third quarter of 2013 and $157 million in the fourth quarter of 2012. For the years ended December 31, 2013 and 2012, capital expenditures totaled $370 million and $497 million, respectively.
Footnotes to “Summary of Results”:
      (1)   2012 impairment charges include $157.8 million for the Caesar and related mobile pipelay equipment (Q4), $14.6 million for the Intrepid and $4.6 million for well intervention assets at our former operations in Australia.
(2) Non-GAAP measure. See reconciliation below.
 

Footnotes to “Segment Information, Operational and Financial Highlights”:

(1) Fourth quarter 2012 impairment charges of $157.8 million were for the pending sale of the Caesar and related mobile pipelay equipment.
 

Conference Call Information

Further details are provided in the presentation for Helix’s quarterly conference call to review its fourth quarter 2013 results (see the “Investor Relations” page of Helix’s website, www.HelixESG.com). The call, scheduled for 9:00 a.m. Central Standard Time on Thursday, February 20, 2014, will be audio webcast live from the “Investor Relations” page of Helix’s website. Investors and other interested parties wishing to listen to the conference via telephone may join the call by dialing 800-896-0105 for persons in the United States and +1-212-271-4657 for international participants. The passcode is "Tripodo". A replay of the conference will be available under "Investor Relations" by selecting the "Audio Archives" link from the same page beginning approximately two hours after the completion of the conference call.

About Helix

Helix Energy Solutions Group, headquartered in Houston, Texas, is an international offshore energy company that provides key life of field services to the energy market. For more information about Helix, please visit our website at www.HelixESG.com.

Reconciliation of Non-GAAP Financial Measures

Management evaluates Company performance and financial condition using certain non-GAAP metrics, primarily Adjusted EBITDA from continuing operations, Adjusted EBITDAX, net debt and net debt to book capitalization. We calculate Adjusted EBITDA from continuing operations as earnings before net interest expense and other, taxes, depreciation and amortization. Adjusted EBITDAX is Adjusted EBITDA from continuing operations plus the earnings of our former oil and gas business before net interest expense and other, taxes, depreciation and amortization, and exploration expenses. Net debt is calculated as the sum of financial debt less cash and cash equivalents on hand. Net debt to book capitalization is calculated by dividing net debt by the sum of net debt, convertible preferred stock and shareholders’ equity. These non-GAAP measures are useful to investors and other internal and external users of our financial statements in evaluating our operating performance because they are widely used by investors in our industry to measure a company’s operating performance without regard to items which can vary substantially from company to company, and help investors meaningfully compare our results from period to period. Adjusted EBITDA and Adjusted EBITDAX should not be considered in isolation or as a substitute for, but instead is supplemental to, income from operations, net income or other income data prepared in accordance with GAAP. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, our reported results prepared in accordance with GAAP. Users of this financial information should consider the types of events and transactions which are excluded.

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