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Helix Reports Second Quarter 2014 Results

Stocks in this article: HLX

Helix Energy Solutions Group, Inc. (NYSE: HLX) reported net income of $57.8 million, or $0.55 per diluted share, for the second quarter of 2014 compared to net income of $27.2 million, or $0.26 per diluted share, for the same period in 2013 and net income of $53.7 million, or $0.51 per diluted share, in the first quarter of 2014. Net income for the six months ended June 30, 2014 was $111.5 million, or $1.05 per diluted share, compared with net income of $28.8 million, or $0.27 per diluted share, for the six months ended June 30, 2013.

The first quarter 2014 results included a $10.5 million gain on the sale of our former spoolbase facility located in Ingleside, Texas, and a $7.2 million insurance claim 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 believe that the market environment remains positive for well intervention services, and our well intervention assets have continued to perform at a high level. Robotics delivered increased results in the second quarter reflecting both stronger demand for trenching services and normal seasonal activity uplift.”


Summary of Results

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

Quarter Ended Six Months Ended
6/30/2014 6/30/2013 3/31/2014 6/30/2014 6/30/2013
Revenues $ 305,587 $ 232,178 $ 253,572 $ 559,159 $ 429,607
Gross Profit $ 109,138 $ 67,497 $ 75,846 $ 184,984 $ 120,064
36 % 29 % 30 % 33 % 28 %
Net Income Applicable to

Common Shareholders

Income (Loss) from continuing operations $ 57,782 $ 27,240 $ 53,719 $ 111,501 $ 27,797
Income (Loss) from discontinued operations   -     (29 )   -     -     1,029  
Total $ 57,782   $ 27,211   $ 53,719   $ 111,501   $ 28,826  
Diluted Earnings Per Share
Income from continuing operations $ 0.55 $ 0.26 $ 0.51 $ 1.05 $ 0.26
Income from discontinued operations $ -   $ -   $ -   $ -   $ 0.01  
Total $ 0.55   $ 0.26   $ 0.51   $ 1.05   $ 0.27  
Adjusted EBITDA from continuing operations $ 109,050 $ 74,533 $ 92,501 $ 201,551 $ 116,564

Segment Information, Operational and Financial Highlights

(in thousands, unaudited)

Quarter Ended
6/30/2014 6/30/2013 3/31/2014
Well Intervention $ 181,218 $ 99,323 $ 159,700
Robotics 119,704 88,374 87,890
Subsea Construction - 37,659 358
Production Facilities 24,049 24,174 23,140
Intercompany Eliminations   (19,384 )   (17,352 )   (17,516 )
Total $ 305,587   $ 232,178   $ 253,572  
Income from Operations:
Well Intervention $ 64,775 $ 23,912 $ 48,733
Robotics 21,877 13,296 10,180
Subsea Construction 145 11,477 228
Production Facilities 10,459 14,643 11,384
Gain (Loss) on Disposition of Assets (1,078 ) (1,085 ) 11,496
Corporate / Other (17,467 ) (14,207 ) (13,875 )
Intercompany Eliminations   45     (839 )   (1,198 )
Total $ 78,756   $ 47,197   $ 66,948  

Business Segment Results

  • Well Intervention revenues increased 13% in the second quarter of 2014 from revenues in the first quarter of 2014, due to having a full quarter of the Helix 534 at full utilization, as well as all three North Sea vessels being 100% utilized in the second quarter. The spare rental intervention riser system (IRS no. 2) continues to positively contribute to revenues; the unit was on-hire for 86 days during the second quarter of 2014 versus 42 days in the first quarter of 2014. Vessel utilization for the Q4000 in the Gulf of Mexico was slightly down – 90% utilization in the second quarter of 2014 versus 100% in the first quarter of 2014, due to a planned regulatory inspection and thruster repairs.
  • For Robotics, chartered vessel fleet utilization increased to 89% for the quarter from 80% in the first quarter of 2014. Overall stronger asset utilization and an increase in vessel days worked were the primary drivers resulting in a 36% growth in revenues in the second quarter of 2014 over the first quarter of 2014. Spot vessels contributed 161 days of vessel utilization during the second quarter of 2014. ROV, trencher and ROVDrill utilization in the second quarter of 2014 increased by 7% over the first quarter of 2014.
  • During the second quarter of 2014, the Marco Polo platform was shut in following a compressor fire on May 8, 2014. The platform remained shut in for the remainder of the quarter, thus marginally affecting Production Facilities earnings in the second quarter. Production resumed at the platform in early July 2014.

Other Expenses

  • Selling, general and administrative expenses were 9.6% of revenue in the second quarter of 2014, 8.0% of revenue in the first quarter of 2014 and 8.3% in the second quarter of 2013. Our second quarter 2014 expense includes $5.2 million of charges associated with the provision for uncertain collection of a portion of our existing trade receivables related to our Robotics segment.
  • Net interest expense and other decreased to $4.5 million in the second quarter of 2014 from $5.3 million in the first quarter of 2014. Net interest expense remained flat at $4.5 million in both the second and first quarter of 2014. Other expense was minimal in the second quarter of 2014 compared to $0.8 million in the first quarter of 2014, which reflects foreign exchange fluctuations in our non-U.S. dollar functional currencies.

Financial Condition and Liquidity

  • Our total liquidity at June 30, 2014 was approximately $1.1 billion, consisting of $501 million in cash and cash equivalents and $583 million in unused capacity under our revolver. Consolidated net debt at June 30, 2014 was $57 million. Net debt to book capitalization at June 30, 2014 was 3%. (Net debt to book capitalization is a non-GAAP measure. See reconciliation below.)
  • We incurred capital expenditures (including capitalized interest) totaling $105 million in the second quarter of 2014, compared to $70 million in the first quarter of 2014 and $59 million in the second quarter of 2013.

Conference Call Information

Further details are provided in the presentation for Helix’s quarterly conference call to review its second quarter 2014 results (see the “Investor Relations” page of Helix’s website, The call, scheduled for 9:00 a.m. Central Daylight Time on Tuesday, July 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

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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