HOUSTON, Feb. 26 /PRNewswire-FirstCall/ -- Helix Energy Solutions
(NYSE: HLX) reported net income for the year ended December 31, 2006 of
$344.0 million, or $3.87 per share. In December 2006 we completed a
carve-out IPO of our Shelf Contracting segment ("Cal Dive") selling 27% of
that business. Removing the total impact of executing this transaction
(i.e., gain on sale net of tax effect, incremental SG&A) annual results
would have been net income of approximately $253 million, or $2.85 per
share. Net income for the fourth quarter was $162.5 million, or $1.73 per
share, which included a gain from the Cal Dive IPO of $97 million net of
tax, or $1.02 per share.
Summary of Results
(in thousands, except per share amounts and percentages)
Fourth Quarter Third Quarter Twelve Months
2006 2005 2006 2006 2005
Revenues $395,839 $264,028 $374,424 $1,366,924 $799,472
Gross Profit 150,980 95,852 130,470 515,408 283,072
38% 36% 35% 38% 35%
Net Income 162,479 56,006 57,029 344,036 150,114
41% 21% 15% 25% 19%
Diluted
Earnings
Per Share 1.73 0.69 0.60 3.87 1.86
Martin Ferron, President and Chief Executive Officer of Helix, stated,
"2006 was a very notable year for the evolution of our unique business
model. We not only grew earnings by 53% over 2005 levels, but also set the
foundation for further growth over the medium term by taking key strategic
steps for the two strands of our business: contracting services and oil/gas
production. These initiatives are highlighted in the slide presentation
that will be used as the basis of our earnings conference call tomorrow.
"While 2006 was a busy year for acquisitions and organic growth
investments, the theme for 2007 will very much be strong execution. Our
focus is on delivering our projected operating results and managing the
important capital projects that will enhance our future returns. I am
confident that the very talented personnel of Helix will once again rise to
this challenge.
"In December, we provided 2007 Earnings Guidance in a range of $3.35 -
$4.75 and stated that this included 100% of Cal Dive's results. Our outlook
for the year hasn't changed. However, we are now able, along with Cal Dive,
to provide specific guidance on that business. We estimate Cal Dive's net
income for 2007 will be between $118 million and $136 million. Accordingly,
we are adjusting our guidance to $3.02 to $4.37 per share to reflect the
minority interest (27%) in Cal Dive's earnings. As discussed in December,
we estimate approximately 40% of our 2007 earnings will be in the first
half of the year with 60% in the second half."
Financial Highlights
* Gain on Sale: In December 2006, we completed a carve-out IPO of our
Shelf Contracting segment (Cal Dive) selling 27% of that business for
net proceeds of $265 million. Cal Dive also borrowed $200 million and
distributed it to us as a dividend in December. We recognized a book
gain of $236 million ($97 million after taxes) as a result of these
transactions.
* Revenues: The $131.8 million increase in year-over-year fourth
quarter revenues was driven primarily by significant improvements in
contracting services revenues due to the introduction of newly
acquired assets and much better market conditions. In addition, Oil
and Gas sales increased $53.8 million due primarily to the production
added from the Remington acquisition.
* Margins: 38% is two points higher than the year ago quarter, and
three points better than last quarter, due primarily to the
aforementioned improvements in contracting services market conditions.
In our Oil and Gas segment, reduced facility repair costs in 4Q 2006
versus 4Q 2005 offset the margin impact of lower realized gas prices.
* SG&A: $40.8 million increased $19.6 million from the same period a
year ago due primarily to increased overhead to support the Company's
growth and bonus accruals in 4Q as financial targets were exceeded.
This level of SG&A was 10% of fourth quarter revenues, compared to 8%
in the year ago quarter.
* Equity in Earnings: $5.5 million reflects primarily our share of
Deepwater Gateway, L.L.C.'s earnings for the quarter relating to the
Marco Polo facility.
* Income Tax Provision: Backing out the impact of the IPO, the
Company's effective tax rate for the quarter was 34% which is higher
than the 27% rate in last year's fourth quarter which included some
adjustments due primarily to the Company's ability to realize foreign
tax credits due to improved profitability both domestically and in
foreign jurisdictions.
* Shares Outstanding: On July 1, 2006, Helix acquired Remington Oil &
Gas Corporation for approximately $1.4 billion paying approximately
58% with cash and 42% with Helix stock. The additional shares were
the primary cause of total diluted shares outstanding increasing to
94.5 million for the fourth quarter 2006 from 82.9 million in the
fourth quarter 2005. This increase was partially offset by the
Company buying back $50 million (1.7 million shares) of its stock in
the open market during the fourth quarter.
* Balance Sheet: Total consolidated debt as of December 31, 2006 was
$1.5 billion. This includes $201 million under Cal Dive's new
revolving facility which is non-recourse to Helix. We had
$492 million of cash and liquid investments on hand as of
December 31, 2006. This represents 38% net debt to book
capitalization and with $889 million of EBITDAX in 2006, this
represents 1.7 times trailing twelve month EBITDAX.
Further details are provided in the presentation for Helix's quarterly
conference call (see the Investor Relations page of http://www.HelixESG.com
). In addition, reconciliations of non-GAAP measures are included on the
Investor Relations page of our website. The call, scheduled for 9:00 a.m.
Central Standard Time on Tuesday, February 27, 2007, will be webcast live.
A replay will be available from the Audio Archives page.
Helix Energy Solutions, headquartered in Houston, Texas, is an
international offshore energy company that provides development solutions
and other key life of field services to the open energy market as well as
to our own reservoirs. Our oil and gas business is a prospect generation,
exploration, development and production company. Employing our own key
services and methodologies, we seek to lower finding and development costs,
relative to industry norms.
FORWARD-LOOKING STATEMENTS
This press release and attached presentation contain 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 statements that could be deemed "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995, including, without limitation, any projections of revenue,
gross margin, expenses, earnings or losses from operations, or other
financial items; future production volumes, results of exploration,
exploitation, development, acquisition and operations expenditures, and
prospective reserve levels of property or wells; any statements of the
plans, strategies and objectives of management for future operations; any
statement concerning developments, performance or industry rankings
relating to services; 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 risks, uncertainties
and assumptions referred to above include the performance of contracts by
suppliers, customers and partners; employee management issues; complexities
of global political and economic developments, geologic risks and other
risks described from time to time in our reports filed with the Securities
and Exchange Commission ("SEC"), including the Company's Annual Report on
Form 10-K for the year ending December 31, 2005 and subsequent quarterly
reports on Form 10-Q. We assume no obligation and do not intend to update
these forward-looking statements.
HELIX ENERGY SOLUTIONS GROUP, INC.
Comparative Condensed Consolidated Statements of Operations
Three Months Ended Twelve Months Ended
(in thousands, except per Dec. 31, Dec. 31,
share data) 2006 2005 2006 2005
(Unaudited)
Net revenues $395,839 $264,028 $1,366,924 $799,472
Cost of sales 244,859 168,176 851,516 516,400
Gross profit 150,980 95,852 515,408 283,072
Gain on sale of assets, net 247 151 2,817 1,405
Selling and administrative 40,829 21,202 119,580 62,790
Income from operations 110,398 74,801 398,645 221,687
Equity in earnings of
investments 5,477 5,301 18,130 13,459
Gain on subsidiary equity
transactions 223,134 0 223,134 0
Net interest expense and
other 14,091 2,691 34,634 7,559
Income before income taxes 324,918 77,411 605,275 227,587
Income tax provision 160,769 20,601 257,156 75,019
Minority interest 725 0 725 0
Net income 163,424 56,810 347,394 152,568
Preferred stock dividends 945 804 3,358 2,454
Net income applicable to
common shareholders $162,479 $56,006 $344,036 $150,114
Other Financial Data:
Net income applicable to
common shareholders $162,479 $56,006 $344,036 $150,114
Preferred stock dividends 945 804 3,358 2,454
Income tax provision 160,769 20,601 257,156 75,019
Net Interest expense and
other 13,981 2,691 34,524 7,559
Non-cash stock
compensation expense 2,797 673 8,523 1,381
Depreciation and
amortization 61,754 26,758 193,205 110,683
Non-cash impairment --- --- --- 790
Dry hole expense 720 --- 38,335 ---
Exploration expense 1,100 515 4,780 6,465
Share of equity
investments:
Depreciation 1,240 1,220 4,960 4,427
Interest expense, net 36 46 289 1,608
EBITDAX(1) $405,821 $109,314 $889,166 $360,500
Weighted Avg. Shares
Outstanding:
Basic 90,273 77,659 84,613 77,444
Diluted 94,461 82,876 89,874 82,205
Earnings Per Share:
Basic $1.80 $0.72 $4.07 $1.94
Diluted $1.73 $0.69 $3.87 $1.86
(1) The Company calculates EBITDAX as earnings before net interest
expense, taxes, depreciation and amortization, dry hole and non-cash
impairments, exploration expense, non-cash stock compensation expense
and the Company's share of depreciation, net interest expense and
taxes from its equity investments. EBITDAX and EBITDAX margin
(defined as EBITDAX divided by net revenues) are supplemental non-
GAAP financial measurements used by the Company and investors in the
energy industry in the evaluation of its business due to the
measurements being similar to income from operations.
Comparative Condensed Consolidated Balance Sheets
ASSETS
(000's omitted) Dec. 31, 2006 Dec. 31, 2005
(unaudited)
Current Assets:
Cash and equivalents $206,264 $91,080
Short term investments 285,395
Accounts receivable 370,709 228,058
Other current assets 61,532 52,915
Total Current Assets 923,900 372,053
Net Property & Equipment:
Contracting Services 800,503 524,890
Oil and Gas 1,411,955 391,472
Equity Investments 213,362 179,844
Goodwill 822,556 101,731
Other assets, net 117,911 90,874
Total Assets $4,290,187 $1,660,864
LIABILITIES & SHAREHOLDERS' EQUITY
Dec. 31, 2006 Dec. 31, 2005
(unaudited)
Current Liabilities:
Accounts payable $240,067 $99,445
Accrued liabilities 199,650 138,464
Income taxes payable 147,772 7,288
Current mat of L-T debt (2) 25,887 6,468
Total Current Liabilities 613,376 251,665
Long-term debt (2) 1,454,469 440,703
Deferred income taxes 436,544 167,295
Decommissioning liabilities 138,905 106,317
Other long-term liabilities 6,143 10,584
Minority interest 59,802 ---
Convertible preferred stock (2) 55,000 55,000
Shareholders' equity (2) 1,525,948 629,300
Total Liabilities & Equity $4,290,187 $1,660,864
(2) Debt to book capitalization - 48% at December 31, 2006. Calculated as
total debt ($1,480,356) divided by sum of total debt, convertible
preferred stock and shareholders' equity ($3,061,304).
SOURCE Helix Energy Solutions Group, Inc.
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Related links:
http://www.HelixESG.com
CONTACT:
Wade Pursell, Chief Financial Officer of
Helix Energy Solutions Group, Inc., +1-281-618-0400, or fax,
+1-281-618-0505
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