HOUSTON, Oct. 31 /PRNewswire-FirstCall/ -- Helix Energy Solutions
(NYSE: HLX) reported third quarter net income of $57.0 million, or $0.60
per diluted share.
Summary of Results
(in thousands, except per share amounts and percentages)
Third Quarter Second Quarter Nine Months
2006 2005 2006 2006 2005
Revenues $374,424 $209,338 $305,013 $971,085 $535,444
Gross Profit 130,470 82,928 131,692 364,428 187,220
35% 40% 43% 38% 35%
Net Income 57,029 42,671 69,139 181,557 94,108
15% 20% 23% 19% 18%
Diluted Earnings
Per Share 0.60 0.53 0.83 2.09 1.17
Martin Ferron, President and Chief Executive Officer of Helix, stated,
"This was a rare quarter when we failed to meet our earnings expectations
for the following main reasons:
-- Our oil and gas sales averaged 35 mcfe/d less than our projection,
due primarily to pipeline shut-ins and production management issues
following the acquisition of Remington.
-- We had four major marine assets in the shipyard for longer than
anticipated to complete maintenance or upgrade work.
-- We incurred $16 million of dry hole cost related to two deepshelf
wells commenced by Remington in the second quarter before the
acquisition was closed.
-- We had around $6 million of contracting profit elimination due to a
focus on providing assets for production restoration.
-- We expensed around $6 million of facility repair work caused by the
hurricanes of last year. Eventually insurance proceeds should cover
much of this cost.
-- We incurred around $2 million of true one off integration costs
linked to the acquisition of Remington.
-- Spot natural gas prices were lower than expected, especially later in
the quarter.
"All of these factors contributed to around $0.40 of earnings
shortfall. The better news is that in Q4: we are gradually improving our
production as we get access to previously shut-in pipelines; all four of
the major marine assets will achieve much improved utilization; we have a
new production management team in place; we have reprioritized the deep
shelf drilling program; spot natural gas are higher; and we should not
incur any further one time acquisition related costs.
"Due to the improved situation in Q4 we maintain the full year 2006
earnings guidance of $2.80 - $3.20/share as provided on October 2nd. We
anticipate providing updated guidance for 2007 following Board approval of
our budget in mid-December."
Financial Highlights
* Revenues: The $165.1 million increase in year-over-year third 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 $69.6 million due primarily to the production
added from the Remington acquisition.
* Margins: 35% is five points less than the year ago quarter due
primarily to the aforementioned dry hole costs and facility repair
costs. Without these charges, gross margin for the third quarter 2006
would have been 41%.
* SG&A: $30.3 million increased $14.4 million from the same period a
year ago due primarily to increased overhead to support the Company's
growth. This level of SG&A was 8% of third quarter revenues, same as
the year ago quarter.
* Equity in Earnings: $1.9 million reflects primarily our share of
Deepwater Gateway, L.L.C.'s earnings for the quarter relating to the
Marco Polo facility offset by a loss on our investment in OTSL (our
Trinidadian investment) due primarily to mechanical issues experienced
on the Witch Queen.
* Income Tax Provision: The Company's effective tax rate for the
quarter was 35% which is less than the 37% rate in last year's third
quarter 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 for approximately $1.4 billion paying approximately 60% with cash
and 40% with Helix stock. The additional shares were the primary
cause of total diluted shares outstanding increasing to 96.9 million
for the third quarter 2006 from 82.2 million in the third quarter
2005. In addition, the Board of Directors authorized the Company to
buy back up to $50 million of its stock in the open market. During
October approximately 1.1 million shares were purchased at a weighted
average price of $29.22 per share.
* Balance Sheet: To fund the cash portion of the Remington acquisition
the Company entered into an $835 million Term B facility increasing
total debt to $1,277 million as of September 30, 2006. This
represents 47% debt to book capitalization and with $593 million of
EBITDAX during the last twelve months, this represents 2.2 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 Wednesday, November 1, 2006, will be webcast live.
A replay will be available from the Audio Archives page.
Helix Energy Solutions, headquartered in Houston, Texas, is an energy
services company that provides innovative solutions to the oil and gas
industry worldwide for marginal field development, alternative development
plans, field life extension and abandonment, with service lines including
diving services, shelf and deepwater construction, robotics, well
operations, well engineering and subsurface consulting services, platform
ownership and oil and gas production.
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 Nine Months Ended
Sep. 30, Sep. 30,
(in thousands, except
per share data) 2006 2005 2006 2005
(Unaudited)
Net revenues $374,424 $209,338 $971,085 $535,444
Cost of sales 243,954 126,410 606,657 348,224
Gross profit 130,470 82,928 364,428 187,220
Gain on sale of assets, net 2,287 329 2,570 1,254
Selling and administrative 30,309 15,892 78,751 41,588
Income from operations 102,448 67,365 288,247 146,886
Equity in earnings of
investments 1,897 3,721 12,653 8,158
Net interest expense and
other 15,103 2,766 20,543 4,868
Income before income taxes 89,242 68,320 280,357 150,176
Income tax provision 31,409 25,099 96,387 54,418
Net income 57,833 43,221 183,970 95,758
Preferred stock dividends 804 550 2,413 1,650
Net income applicable to common
shareholders $57,029 $42,671 $181,557 $94,108
Other Financial Data:
Net income applicable to
common shareholders $57,029 $42,671 $181,557 $94,108
Preferred stock dividends 804 550 2,413 1,650
Income tax provision 31,409 25,099 96,387 54,418
Net Interest expense and
other 15,103 2,766 20,543 4,868
Non-cash stock compensation
expense 1,910 311 5,726 708
Depreciation and amortization 63,879 28,746 131,451 83,925
Non-cash impairment --- --- --- 790
Dry hole expense 16,869 --- 37,615 ---
Exploration expense 2,651 928 3,680 5,950
Share of equity investments:
Depreciation 1,238 1,200 3,720 3,207
Interest expense, net 79 143 253 1,562
EBITDAX (A) $190,971 $102,414 $483,345 $251,186
Weighted Avg. Shares Outstanding:
Basic 91,531 77,526 82,706 77,372
Diluted 96,918 82,160 88,209 81,962
Earnings Per Share:
Basic $0.62 $0.55 $2.20 $1.22
Diluted $0.60 $0.53 $2.09 $1.17
(A) 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) Sep. 30, 2006 Dec. 31, 2005
(unaudited)
Current Assets:
Cash and equivalents $127,785 $91,080
Accounts receivable 299,980 228,058
Other current assets 102,143 52,915
Total Current Assets 529,908 372,053
Net Property & Equipment:
Marine Contracting 693,563 524,890
Oil and Gas Production 1,352,931 391,472
Equity Investments 210,457 179,844
Goodwill 805,706 101,731
Other assets, net 117,382 90,874
Total Assets $3,709,947 $1,660,864
LIABILITIES & SHAREHOLDERS' EQUITY
Sep. 30, 2006 Dec. 31, 2005
(unaudited)
Current Liabilities:
Accounts payable $208,398 $99,445
Accrued liabilities 177,192 145,752
Current mat of L-T debt (B) 14,727 6,468
Total Current Liabilities 400,317 251,665
Long-term debt (B) 1,262,098 440,703
Deferred income taxes 441,359 167,295
Decommissioning liabilities 138,713 106,317
Other long-term liabilities 4,582 10,584
Convertible preferred stock (B) 55,000 55,000
Shareholders' equity (B) 1,407,878 629,300
Total Liabilities & Equity $3,709,947 $1,660,864
(B) Debt to book capitalization -- 47% at September 30, 2006. Calculated
as total debt ($1,276,825) divided by sum of total debt, convertible
preferred stock and shareholders' equity ($2,739,703).
SOURCE Helix Energy Solutions
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Related links:
http://www.HelixESG.com
CONTACT:
Wade Pursell, Chief Financial Officer of
Helix Energy Solutions, +1-281-618-0400, or fax, +1-281-618-0505
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