Helix Energy Solutions Group, Inc. ("Helix") (NYSE: HLX) reported net
income of $1.3 million, or $0.01 per diluted share, for the first
quarter of 2019 compared to a net loss of $2.6 million, or $(0.02) per
diluted share, for the same period in 2018 and a net loss of $13.7
million, or $(0.09) per diluted share, for the fourth quarter of 2018.
Helix reported Adjusted EBITDA1 of $30.2 million for the
first quarter of 2019 compared to $27.6 million for the first quarter of
2018 and $23.2 million for the fourth quarter of 2018. The table below
summarizes our results of operations:
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Summary of Results
($ in thousands, except per share amounts, unaudited)
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|
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|
|
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Three Months Ended
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3/31/2019
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|
3/31/2018
|
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|
12/31/2018
|
|
Revenues
|
|
|
$
|
166,823
|
|
|
|
$
|
164,262
|
|
|
|
$
|
158,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
$
|
16,254
|
|
|
|
$
|
12,983
|
|
|
|
$
|
13,811
|
|
|
|
|
|
|
10
|
%
|
|
|
|
8
|
%
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
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|
Non-cash Loss on Equity Investment
|
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|
$
|
-
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|
|
|
$
|
-
|
|
|
|
$
|
(3,430
|
)
|
|
|
|
|
|
|
|
|
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|
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|
Net Income (Loss)
|
|
|
$
|
1,318
|
|
|
|
$
|
(2,560
|
)
|
|
|
$
|
(13,747
|
)
|
|
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Diluted Earnings (Loss) Per Share
|
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|
$
|
0.01
|
|
|
|
$
|
(0.02
|
)
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
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|
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Adjusted EBITDA1
|
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$
|
30,214
|
|
|
|
$
|
27,566
|
|
|
|
$
|
23,238
|
|
|
|
|
|
|
|
|
|
|
|
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|
Cash and cash equivalents
|
|
|
$
|
220,023
|
|
|
|
$
|
273,985
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|
|
|
$
|
279,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cash flows from operating activities
|
|
|
$
|
(34,246
|
)
|
|
|
$
|
41,046
|
|
|
|
$
|
45,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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1Adjusted EBITDA is a non-GAAP measure. See
reconciliation below.
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Owen Kratz, President and Chief Executive Officer of Helix, stated, "Our
first quarter results for 2019 reflect improved financial performance
both year over year and sequentially. Our Well Intervention segment
results improved quarter over quarter despite the seasonal slowdown in
the North Sea, and our Robotics segment continues to benefit from
improved asset utilization and a lower cost structure. As activity
levels increase in the North Sea and Gulf of Mexico, we expect to see
improved results in 2019 and believe we are positioned to deliver
improved results in a challenging market."
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Segment Information, Operational and
Financial Highlights
($ in thousands, unaudited)
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Three Months Ended
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|
|
|
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3/31/2019
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|
|
|
3/31/2018
|
|
|
|
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12/31/2018
|
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Revenues:
|
|
|
|
|
|
|
|
|
|
|
Well Intervention
|
|
|
$
|
122,231
|
|
|
|
$
|
129,569
|
|
|
|
$
|
114,799
|
|
|
Robotics
|
|
|
|
39,041
|
|
|
|
|
27,169
|
|
|
|
|
38,420
|
|
|
Production Facilities
|
|
|
|
15,253
|
|
|
|
|
16,321
|
|
|
|
|
15,859
|
|
|
Intercompany Eliminations
|
|
|
|
(9,702
|
)
|
|
|
|
(8,797
|
)
|
|
|
|
(10,722
|
)
|
|
Total
|
|
|
$
|
166,823
|
|
|
|
$
|
164,262
|
|
|
|
$
|
158,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations:
|
|
|
|
|
|
|
|
|
|
|
Well Intervention
|
|
|
$
|
9,641
|
|
|
|
$
|
13,877
|
|
|
|
$
|
4,869
|
|
|
Robotics
|
|
|
|
(3,904
|
)
|
|
|
|
(14,317
|
)
|
|
|
|
(1,236
|
)
|
|
Production Facilities
|
|
|
|
4,405
|
|
|
|
|
7,359
|
|
|
|
|
6,344
|
|
|
Corporate / Other / Eliminations
|
|
|
|
(9,873
|
)
|
|
|
|
(8,035
|
)
|
|
|
|
(13,467
|
)
|
|
Total
|
|
|
$
|
269
|
|
|
|
$
|
(1,116
|
)
|
|
|
$
|
(3,490
|
)
|
|
|
|
|
|
|
|
|
|
|
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Segment Results
Well Intervention
Well Intervention revenues increased $7.4 million, or 6%, and income
from operations increased $4.8 million, or 98%, in the first quarter of
2019 compared to the previous quarter. Despite lower vessel utilization
of 74% in the first quarter of 2019 compared to 79% in the previous
quarter driven by the seasonal slowdown in the North Sea, revenue and
operating income benefitted from higher operating rates in the Gulf of
Mexico as the Q5000 resumed operations on its long-term contract.
Well Intervention revenues decreased $7.3 million, or 6%, in the first
quarter of 2019 compared to the first quarter of 2018. The decrease was
primarily due to higher rates in the Gulf of Mexico on higher integrated
services revenue and higher IRS rental unit utilization in the first
quarter of 2018 compared to the first quarter of 2019, which were offset
in part by higher revenues in the North Sea in the first quarter of
2019. Income from operations decreased $4.2 million, or 31%, year over
year primarily due to reduced IRS rentals in the first quarter of 2019.
Robotics
Robotics revenues in the first quarter of 2019 increased by $0.6
million, or 2%, from the previous quarter. The increase was due to an
increase in overall ROV and chartered vessel utilization compared to the
previous quarter, which was partially offset by lower rates driven by a
seasonal reduction in trenching work in the North Sea. Chartered vessel
utilization increased to 88% in the first quarter of 2019, which
included 84 spot vessel days, from 78% in the fourth quarter of 2018,
which included 60 spot vessel days. Overall ROV asset utilization
increased to 39% in the first quarter of 2019 from 36% in the fourth
quarter of 2018. Trenching days in the first quarter of 2019 decreased
to 133 days compared to 151 days in the fourth quarter of 2018. Loss
from operations increased by $2.7 million in the first quarter of 2019
compared to the previous quarter due to fewer trenching days in the
first quarter.
Robotics revenues increased $11.9 million, or 44%, in the first quarter
of 2019 from the first quarter of 2018 due to higher overall vessel and
ROV utilization, including a higher number of trenching days year over
year. Vessel utilization was 88% in the first quarter of 2019 compared
to 56% in the first quarter of 2018. ROV asset utilization increased to
39% in the first quarter of 2019 from 30% in the first quarter of 2018,
and the first quarter of 2019 included 133 trenching days compared to 44
days in the first quarter in 2018. Loss from operations decreased by
$10.4 million in the first quarter of 2019 compared to the first quarter
of 2018 as a result of higher revenue and a reduction in charter costs
year over year.
Production Facilities
Production Facilities revenues decreased quarter over quarter and year
over year due to reduced revenue related to the Helix Fast Response
System, which was offset in part by production revenues.
Selling, General and Administrative and Other
Selling, General and Administrative
Selling, general and administrative expenses were $16.0 million, or 9.6%
of revenue, in the first quarter of 2019 compared to $17.3 million, or
10.9% of revenue, in the fourth quarter of 2018. The decrease in
expenses was principally attributable to a net decrease in employee
share-based and incentive compensation compared to the fourth quarter of
2018.
Other Income and Expenses
Other income, net was $1.2 million in the first quarter of 2019 compared
to other expense of $3.1 million in the fourth quarter of 2018. The
increase was primarily due to an increase in net foreign currency gains
quarter over quarter.
Cash Flows
Operating cash flow decreased to $(34.2) million in the first quarter of
2019 compared to $45.9 million in the fourth quarter of 2018 and $41.0
million in the first quarter of 2018. The decrease in operating cash
flow quarter over quarter and year over year was primarily due to the
timing of receipts from customers in the first quarter of 2019 as well
as higher regulatory certification costs for our vessels and systems,
which included planned dry docks costs for three of our vessels.
Capital expenditures totaled $11.7 million in the first quarter of 2019
compared to $81.7 million in the fourth quarter of 2018 and $21.2
million in the first quarter of 2018. Our capital expenditures in the
fourth quarter of 2018 included a $69.2 million installment payment to
the shipyard for the Q7000. Regulatory certification costs for
our vessels and systems, which are included in operating cash flows,
were $16.6 million in the first quarter of 2019 and included dry docks
on the Well Enhancer, Seawell and Helix Producer I
vessels and certification costs for the related intervention systems.
Free cash flow was $(45.9) million in the first quarter of 2019 compared
to $(35.7) million in the fourth quarter of 2018. The decrease was
primarily due to lower operating cash flow, partially offset by lower
capital expenditures in the first quarter compared to the fourth quarter
of 2018. Free cash flow in the first quarter of 2019 decreased by $65.7
million year over year due to lower operating cash flow on increased
working capital offset by lower capital expenditures year over year.
(Free cash flow is a non-GAAP measure. See reconciliation below.)
Financial Condition and Liquidity
Cash and cash equivalents at March 31, 2019 were $220.0 million.
Available capacity under our revolving credit facility was $147.3
million at March 31, 2019. Consolidated long-term debt decreased to
$429.2 million at March 31, 2019 from $440.3 million at December 31,
2018. Consolidated net debt at March 31, 2019 was $209.2 million. Net
debt to book capitalization at March 31, 2019 was 11%. (Net debt and net
debt to book capitalization are non-GAAP measures. See reconciliation
below.)
Conference Call Information
Further details are provided in the presentation for Helix’s quarterly
teleconference to review its first quarter 2019 results (see the
"Investor Relations" page of Helix’s website, www.HelixESG.com).
The teleconference, scheduled for Tuesday, April 23, 2019 at 9:00 a.m.
Central Time, will be audio webcast live from the "Investor Relations"
page of Helix’s website. Investors and other interested parties wishing
to participate in the teleconference may join by dialing 1-800-681-8614
for participants in the United States and 1-303-223-4370 for
international participants. The passcode is "Staffeldt." A replay of the
webcast will be available at "For the Investor" 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. For more information about Helix,
please visit our website at www.HelixESG.com.
Reconciliation of Non-GAAP Financial Measures
Management evaluates performance and financial condition using certain
non-GAAP metrics, 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, gain or loss on
extinguishment of long-term debt, net other income or expense, and
depreciation and amortization expense. Non-cash losses on equity
investments are also added back if applicable. To arrive at our measure
of Adjusted EBITDA, we exclude gain or loss on disposition of assets. In
addition, we include realized losses from foreign currency exchange
contracts not designated as hedging instruments and other than temporary
loss on note receivable, which are excluded from EBITDA as a component
of net other income or expense. Net debt is calculated as total
long-term debt less cash and cash equivalents. 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 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 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 and free cash flow provide useful information to
the public regarding our ability to service debt and fund capital
expenditures and may help our investors understand our operating
performance 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.
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 our strategy; any statements
regarding visibility and future utilization; any projections of
financial items; any statements regarding future operations
expenditures; any statements regarding the plans, strategies and
objectives of management for future operations; any statements regarding
our ability to enter into and/or perform commercial contracts; any
statements concerning developments; any statements regarding future
economic conditions or performance; any statements of expectation or
belief; and any statements of assumptions underlying any of the
foregoing. The 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 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 ultimate ability to realize current backlog;
employee 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 Helix’s most
recently filed Annual Report on Form 10-K and in Helix’s 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 except as required by the securities laws.
Social Media
From time to time we provide information about Helix on Twitter (@Helix_ESG)
and LinkedIn (www.linkedin.com/company/helix-energy-solutions-group).
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HELIX ENERGY SOLUTIONS GROUP, INC.
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Comparative Condensed Consolidated Statements of Operations
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
Three Months Ended Mar. 31,
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|
(in thousands, except per share data)
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net revenues
|
|
|
|
|
|
|
$
|
166,823
|
|
|
$
|
164,262
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
150,569
|
|
|
|
151,279
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
|
16,254
|
|
|
|
12,983
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
(15,985
|
)
|
|
|
(14,099
|
)
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
|
|
|
|
|
269
|
|
|
|
(1,116
|
)
|
|
|
|
|
|
|
Equity in losses of investment
|
|
|
|
|
|
|
|
(40
|
)
|
|
|
(136
|
)
|
|
|
|
|
|
|
Net interest expense
|
|
|
|
|
|
|
|
(2,098
|
)
|
|
|
(3,896
|
)
|
|
|
|
|
|
|
Loss on extinguishment of long-term debt
|
|
|
|
-
|
|
|
|
(1,105
|
)
|
|
|
|
|
|
|
Other income, net
|
|
|
|
|
|
|
|
1,166
|
|
|
|
925
|
|
|
|
|
|
|
|
Royalty income and other
|
|
|
|
|
|
|
|
2,345
|
|
|
|
2,855
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
|
|
|
|
1,642
|
|
|
|
(2,473
|
)
|
|
|
|
|
|
|
Income tax provision
|
|
|
|
|
|
|
|
324
|
|
|
|
87
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
$
|
1,318
|
|
|
$
|
(2,560
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Earnings (loss) per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
$
|
0.01
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
$
|
0.01
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
147,421
|
|
|
|
146,653
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
147,751
|
|
|
|
146,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Comparative Condensed Consolidated Balance Sheets
|
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|
|
|
|
|
|
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ASSETS
|
|
|
LIABILITIES & SHAREHOLDERS' EQUITY
|
|
(in thousands)
|
|
Mar. 31, 2019
|
|
Dec. 31, 2018
|
|
|
(in thousands)
|
|
|
|
Mar. 31, 2019
|
|
Dec. 31, 2018
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
Cash and cash equivalents (1)
|
|
$
|
220,023
|
|
$
|
279,459
|
|
|
Accounts payable
|
|
$
|
63,849
|
|
$
|
54,813
|
|
Accounts receivable, net
|
|
|
143,436
|
|
|
119,875
|
|
|
Accrued liabilities
|
|
|
81,842
|
|
|
85,594
|
|
Other current assets
|
|
|
87,184
|
|
|
51,594
|
|
|
Income tax payable
|
|
|
-
|
|
|
3,829
|
|
Total Current Assets
|
|
|
450,643
|
|
|
450,928
|
|
|
Current maturities of long-term debt (1)
|
|
|
47,888
|
|
|
47,252
|
|
|
|
|
|
|
|
|
|
|
Current operating lease liabilities (2)
|
|
|
55,241
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
248,820
|
|
|
191,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (1)
|
|
|
381,319
|
|
|
393,063
|
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities (2)
|
|
|
191,545
|
|
|
-
|
|
Property & equipment, net
|
|
|
1,818,069
|
|
|
1,826,745
|
|
|
Deferred tax liabilities
|
|
|
107,367
|
|
|
105,862
|
|
Operating lease right-of-use assets (2)
|
|
|
240,332
|
|
|
-
|
|
|
Other non-current liabilities
|
|
|
48,427
|
|
|
39,538
|
|
Other assets, net
|
|
|
98,277
|
|
|
70,057
|
|
|
Shareholders' equity (1)
|
|
|
1,629,843
|
|
|
1,617,779
|
|
Total Assets
|
|
$
|
2,607,321
|
|
$
|
2,347,730
|
|
|
Total Liabilities & Equity
|
|
$
|
2,607,321
|
|
$
|
2,347,730
|
|
|
|
|
|
(1)
|
|
Net debt to book capitalization - 11% at March 31, 2019.
Calculated as net debt (total long-term debt less cash and cash
equivalents - $209,184) divided by the sum of net debt and
shareholders' equity ($1,839,027).
|
|
(2)
|
|
Reflects adoption of Accounting Standards Update No. 2016-02,
"Leases (Topic 842)."
|
|
|
|
|
|
|
|
|
|
|
|
Helix Energy Solutions Group, Inc.
Reconciliation of
Non-GAAP Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Release:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
3/31/2019
|
|
|
3/31/2018
|
|
|
12/31/2018
|
|
|
|
|
(in thousands)
|
|
Reconciliation from Net Income (Loss) to
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
1,318
|
|
|
|
$
|
(2,560
|
)
|
|
|
$
|
(13,747
|
)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
|
324
|
|
|
|
|
87
|
|
|
|
|
1,174
|
|
|
Net interest expense
|
|
|
|
2,098
|
|
|
|
|
3,896
|
|
|
|
|
3,007
|
|
|
Loss on extinguishment of long-term debt
|
|
|
|
-
|
|
|
|
|
1,105
|
|
|
|
|
-
|
|
|
Other (income) expense, net
|
|
|
|
(1,166
|
)
|
|
|
|
(925
|
)
|
|
|
|
3,099
|
|
|
Depreciation and amortization
|
|
|
|
28,509
|
|
|
|
|
27,782
|
|
|
|
|
27,183
|
|
|
Non-cash loss on equity investment
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
3,430
|
|
|
EBITDA
|
|
|
|
31,083
|
|
|
|
|
29,385
|
|
|
|
|
24,146
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Realized losses from foreign exchange contracts not designated as
hedging instruments
|
|
|
|
(869
|
)
|
|
|
|
(690
|
)
|
|
|
|
(908
|
)
|
|
Other than temporary loss on note receivable
|
|
|
|
-
|
|
|
|
|
(1,129
|
)
|
|
|
|
-
|
|
|
Adjusted EBITDA
|
|
|
$
|
30,214
|
|
|
|
$
|
27,566
|
|
|
|
$
|
23,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow:
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
$
|
(34,246
|
)
|
|
|
$
|
41,046
|
|
|
|
$
|
45,917
|
|
|
Less: Capital expenditures, net of proceeds from sale of assets
|
|
|
|
(11,630
|
)
|
|
|
|
(21,214
|
)
|
|
|
|
(81,652
|
)
|
|
Free cash flow
|
|
|
$
|
(45,876
|
)
|
|
|
$
|
19,832
|
|
|
|
$
|
(35,735
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We define EBITDA as earnings before income taxes, net interest expense,
gain or loss on extinguishment of long-term debt, net other income or
expense, and depreciation and amortization expense. Non-cash losses on
equity investments are also added back if applicable. To arrive at our
measure of Adjusted EBITDA, we exclude gain or loss on disposition of
assets. In addition, we include realized losses from foreign currency
exchange contracts not designated as hedging instruments and other than
temporary loss on note receivable, which are excluded from EBITDA as a
component of net other income or expense. We define free cash flow as
cash flows from operating activities less capital expenditures, net of
proceeds from sale of assets. We use 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 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 and free cash
flow provide useful information to the public regarding our ability to
service debt and fund capital expenditures and may help our investors
understand our operating performance 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.
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