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Helix Reports First Quarter 2014 Results

Stocks in this article: HLX

Helix Energy Solutions Group, Inc. (NYSE: HLX) reported net income of $53.7 million, or $0.51 per diluted share, for the first quarter of 2014 compared to net income of $1.6 million, or $0.02 per diluted share, for the same period in 2013 and net income of $36.5 million, or $0.35 per diluted share, in the fourth quarter of 2013.

First quarter 2014 results include a $10.5 million gain on the sale of our former spoolbase facilities located in Ingleside, Texas, and a $7.2 million insurance reimbursement settlement related to our former oil and gas business. These items contributed $0.11 of after-tax earnings per diluted share in the first quarter of 2014.

Owen Kratz, President and Chief Executive Officer of Helix, stated, “We successfully introduced the Helix 534 to our well intervention fleet in the first quarter and the vessel is off to a good start. We also realized better than expected Robotics activity in the first quarter of 2014; our Robotics unit is projected to have a much stronger 2014 versus 2013.”

Summary of Results

(in thousands, except per share amounts and percentages, unaudited)
 
Quarter Ended
  3/31/2014       3/31/2013       12/31/2013  
Revenues $ 253,572 $ 197,429 $ 226,837
 
Gross Profit $ 75,846 $ 52,567 $ 71,164
30 % 27 % 31 %
 
Net Income Applicable to

Common Shareholders

Income from continuing operations $ 53,719 $ 557 $ 36,503
Income from discontinued operations   -     1,058     -  
Total $ 53,719   $ 1,615   $ 36,503  
 
Diluted Earnings Per Share
Income from continuing operations $ 0.51 $ 0.01 $ 0.35
Income from discontinued operations $ -   $ 0.01   $ -  
Total $ 0.51   $ 0.02   $ 0.35  
 
Adjusted EBITDA from continuing operations $ 92,501 $ 42,031 $ 81,549
 

Segment Information, Operational and Financial Highlights

(in thousands, unaudited)
       
Quarter Ended
  3/31/2014     3/31/2013     12/31/2013  

Continuing Operations:

Revenues:
Well Intervention $ 159,700 $ 106,332 $ 132,559
Robotics 87,890 64,196 90,306
Subsea Construction 358 27,526 2,016
Production Facilities 23,140 20,393 19,216
Intercompany Eliminations   (17,516 )   (21,018 )   (17,260 )
Total $ 253,572   $ 197,429   $ 226,837  
 
Income from Operations:
Well Intervention $ 48,733 $ 36,450 $ 37,934
Robotics 10,180 (697 ) 15,141
Subsea Construction 228 3,551 4,654
Production Facilities 11,384 11,185 9,814
Gain on Sale of Assets 11,496 - -
Corporate/Other (13,875 ) (33,531 ) (12,781 )
Intercompany Eliminations   (1,198 )   (1,720 )   (822 )
Total $ 66,948   $ 15,238   $ 53,940  
 

Discontinued Operations (Oil and Gas):

Revenues $ - $ 48,847 $ -
Income from Operations $ - $ 4,360 $ -
 

Business Segment Results

  • Well Intervention revenues increased 20% in the first quarter of 2014 from revenues in the fourth quarter of 2013, due to both the addition of the Helix 534 into the fleet in mid-February and the recognition of deferred mobilization revenue related to the Skandi Constructor’s West Africa project. The spare rental intervention riser system (IRS no. 2) also positively contributed to revenues, while being on-hire for 42 days during the first quarter of 2014. Vessel utilization in the North Sea was slightly down – 86% utilization in the first quarter of 2014 versus 92% in the fourth quarter of 2013, primarily reflecting the regulatory dry dock for the Well Enhancer that commenced in mid-December 2013 but was completed late January 2014. The Q4000 achieved 100% utilization for the third consecutive quarter.
  • For Robotics, chartered vessel fleet utilization decreased to 80% for the quarter from 88% in the fourth quarter of 2013. Revenues were marginally impacted by the decrease in utilization – 3% decrease in first quarter 2014 – yet partially offset by strong ROV utilization. ROV utilization in the first quarter of 2014 increased by 4% over the fourth quarter of 2013. Revenues were also bolstered from the 62 days of utilization garnered from four additional spot vessels during the first quarter of 2014.
  • During the first quarter of 2014 we acquired the minority interest in Kommandor LLC, and as a result the company now owns 100% of the Helix Producer I.

Other Expenses

  • Selling, general and administrative expenses were 8.0% of revenue in the first quarter of 2014, 7.6% of revenue in the fourth quarter of 2013 and 11.8% in the first quarter of 2013.
  • Net interest expense and other increased to $5.3 million in the first quarter of 2014 from $2.8 million in the fourth quarter of 2013. Net interest expense decreased to $4.5 million in the first quarter of 2014 from $4.6 million in the fourth quarter of 2013. Other expense was $0.8 million in the first quarter of 2014 compared to $1.9 million of other income in the fourth quarter of 2013, primarily due to foreign exchange fluctuations in our non-U.S. dollar functional currencies.

Financial Condition and Liquidity

  • Our total liquidity at March 31, 2014 was approximately $1.1 billion, consisting of cash and cash equivalents of $470 million and $582 million in unused capacity under our revolver. Consolidated net debt at March 31, 2014 was $91 million. Net debt to book capitalization at March 31, 2014 was 6%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation below.)
  • We incurred capital expenditures (including capitalized interest) totaling $70 million in the first quarter of 2014, compared to $56 million in the fourth quarter of 2013 and $80 million in the first quarter of 2013.

Conference Call Information

Further details are provided in the presentation for Helix’s quarterly conference call to review its first quarter 2014 results (see the “Investor Relations” page of Helix’s website, www.HelixESG.com). The call, scheduled for 10:00 a.m. Central Daylight Time on Tuesday, April 22, 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 888-550-1479 for persons in the United States and +1-954-357-2908 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, Inc., headquartered in Houston, Texas, is an international offshore energy 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.

Reconciliation of Non-GAAP Financial Measures

Management evaluates Company performance and financial condition using certain non-GAAP metrics, primarily Adjusted EBITDA from continuing operations, 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. 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 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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