HOUSTON, Oct. 31 /PRNewswire-FirstCall/ -- Helix Energy Solutions
(NYSE: HLX) reported third quarter net income of $82.8 million, or $0.88
per diluted share. This level of earnings per share, which represents an
all time record for the company, is 47% better than last year's third
quarter results.
Summary of Results
(in thousands, except per share amounts and percentages)
Third Quarter Second Quarter
2007 2006 2007
Revenues $460,573 $374,424 $410,574
Gross Profit 166,318 130,470 141,765
36% 35% 35%
Net Income 82,828 57,029 65,786(1)
18% 15% 16%(1)
Diluted Earnings Per Share 0.88 0.60 0.70(1)
(1) Excludes impact of non-recurring items: OTSL impairment, DOJ
settlement and sale of diving asset.
Martin Ferron, President and Chief Executive Officer of Helix, stated,
"During the Q2 earnings conference call we predicted that our contracting
services group would have a strong second half of the year; we would bring
several key shelf development projects onstream in the same time frame; and
we might monetize some of the forward value created in our deepwater
production portfolio.
"Taking each of these predictions in turn: we achieved significantly
better than expected results in our contracting services business, with
much of the improvement being attained in our rapidly growing deepwater
segments; our production and field development efforts were hampered by
approximately 20 days of precautionary stand-downs related to approaching
tropical weather systems; and we successfully sold down a minority interest
in the Phoenix project on favorable terms.
"The net effect of these operating factors was that we achieved a
record quarter for both earnings and EBITDAX. Looking forward we expect a
seasonally slower Q4 for contracting services and a full quarter of upgrade
time for the Q4000. These factors should be more than offset by enhanced
production performance as the field start-ups, delayed in Q3, come on line,
and lower operating costs linked to the hurricanes of 2005. All things
considered we expect Q4 earnings to be in the range of $0.85 -- $1.05,
which could lead to another record for performance."
Financial Highlights
-- Revenues: The $86.1 million increase in year-over-year third quarter
revenues was driven entirely by Contracting Services increases, due
primarily to extra capacity on the shelf (Cal Dive) and continued
escalating market demand in the deepwater. On the oil and gas side we
were able to sell a 30% working interest in the Phoenix oilfield
resulting in $18.8 million of operating income during the quarter.
-- Margins: 36% is slightly better than 35% in the third quarter of 2006
as this year's results included approximately $11.6 million of charges,
net of insurance proceeds, for the clean up and removal of facilities
damaged during the 2005 hurricanes, while the 2006 third quarter
results included approximately $16 million of charges for two deep
shelf dry holes.
-- SG&A: $42.1 million increased $11.8 million from the same period a
year ago due primarily to increased overhead to support our growth.
This level of SG&A was 9% of third quarter revenues, compared to 8% in
the year ago quarter.
-- Equity in Earnings: $7.9 million is comprised of our share of earnings
for the quarter relating to the Marco Polo facility and the
Independence Hub facility.
-- Income Tax Provision: The Company's effective tax rate for the quarter
was 33%, compared to 35% for last year's third quarter due primarily to
increased earnings in lower rate foreign jurisdictions and increased
deductions relating to increased oil and gas sales.
-- Balance Sheet: Total consolidated debt as of September 30, 2007 was
$1.5 billion. This includes $117 million under Cal Dive's revolving
facility which is non-recourse to Helix. This represents 44% net debt
to book capitalization and with $771.8 million of adjusted EBITDAX
during the last twelve months, this represents 1.8 times trailing
twelve month adjusted EBITDAX.
Further details are provided in the presentation for Helix's quarterly
conference call (see the Investor Relations page of
http://www.HelixESG.com). The call, scheduled for 9:00 a.m. Central
Daylight Time on Thursday, November 1, 2007, will be webcast live. If you
wish to dial in to the call the telephone number is 888-928-9122 (Domestic)
or 517-623-4000 (International). The passcode is Pursell. A replay will be
available from the Audio Archives page on our website.
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 oil and gas business unit. That business unit 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.
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
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, 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, 2006 as amended. 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) 2007 2006 2007 2006
(Unaudited)
Net revenues $460,573 $374,424 $1,267,202 $971,085
Cost of sales 294,255 243,954 823,504 606,657
Gross profit 166,318 130,470 443,698 364,428
Gain on sale
of assets, net 20,701 2,287 26,385 2,570
Selling and
administrative 42,146 30,309 106,134 78,751
Income from operations 144,873 102,448 363,949 288,247
Equity in earnings of
investments 7,889 1,897 9,245 12,653
Net interest expense
and other 13,467 15,103 40,765 20,543
Income before income taxes 139,295 89,242 332,429 280,357
Income tax provision 45,327 31,409 111,711 96,387
Minority interest 10,195 - 21,533 -
Net income 83,773 57,833 199,185 183,970
Preferred stock
dividends 945 804 2,835 2,413
Net income applicable to
common shareholders $82,828 $57,029 $196,350 $181,557
Weighted Avg. Shares
Outstanding:
Basic 90,111 91,531 90,051 82,706
Diluted 95,649 96,918 96,087 88,209
Earnings Per Share:
Basic $0.92 $0.62 $2.18 $2.20
Diluted $0.88 $0.60 $2.07 $2.09
COMPARATIVE CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(in thousands) Sep. 30, 2007 Dec. 31, 2006
(Unaudited)
Current Assets:
Cash and equivalents $50,436 $206,264
Short term investments - 285,395
Accounts receivable 407,725 370,709
Other current assets 155,052 61,532
Total Current Assets 613,213 923,900
Net Property & Equipment:
Contracting Services 1,040,671 800,503
Oil and Gas 1,711,171 1,411,955
Equity investments 212,975 213,362
Goodwill 835,073 822,556
Other assets, net 132,937 117,911
Total Assets $4,546,040 $4,290,187
LIABILITIES & SHAREHOLDERS' EQUITY
(in thousands) Sep. 30, 2007 Dec. 31, 2006
(Unaudited)
Current Liabilities:
Accounts payable $261,569 $240,067
Accrued liabilities 269,289 199,650
Income taxes payable 33,079 147,772
Current mat of L-T debt (1) 25,978 25,887
Total Current Liabilities 589,915 613,376
Long-term debt (1) 1,444,649 1,454,469
Deferred income taxes 488,634 436,544
Decommissioning liabilities 149,602 138,905
Other long-term liabilities 6,770 6,143
Minority interest 80,091 59,802
Convertible preferred stock (1) 55,000 55,000
Shareholders' equity (1) 1,731,379 1,525,948
Total Liabilities & Equity $4,546,040 $4,290,187
(1) Net debt to book capitalization -- 44% at September 30, 2007.
Calculated as total debt less cash and equivalents and short-term
investments $1,420,191 divided by sum of total debt less cash and
equivalents and short-term investments, convertible preferred stock
and shareholders' equity $3,206,570.
Helix Energy Solutions Group, Inc.
Reconciliation of Non GAAP Measures
Three and Nine Months Ended September 30, 2007
Earnings Release:
Balance Sheet: "... 1.8 times trailing twelve month adjusted EBITDAX."
Reconciliation From Net Income to Adjusted EBITDAX (excluding gain on sale
of Cal Dive IPO in 4Q06 and non-recurring items:
OTSL impairment, DOJ accrual, and sale of diving asset in 2Q07):
3Q07 2Q07 1Q07 4Q06 3Q06
(in thousands, except ratio)
Net income
applicable to
common
shareholders $82,828 $57,702 $55,820 $65,948 57,029
Preferred stock
dividends 945 945 945 945 804
Income tax
provision 40,626 30,456 28,617 34,166 31,409
Net interest
expense and
other 12,971 13,605 12,331 13,981 15,103
Non-cash stock
compensation
expense 3,147 3,546 3,267 2,797 1,910
Depreciation and
amortization 83,564 71,918 67,558 61,809 63,879
Exploration
expense 1,476 2,978 1,190 1,820 19,520
Non-recurring
items - 8,602 - - -
Share of equity
investments:
Depreciation 1,723 1,965 1,004 1,004 1,004
Interest expense,
net (258) (38) (57) (70) (59)
Adjusted EBITDAX $227,022 $191,679 $170,675 $182,400 $190,599
Trailing Twelve
Months Adjusted
EBITDAX $771,776
Net Debt at
September 30,
2007 (a) $1,420,191
Ratio 1.8
We calculate adjusted EBITDAX as earnings before net interest expense,
taxes, depreciation and amortization, exploration expense, non-cash stock
compensation expense and our share of depreciation, net interest expense
and taxes from our equity investments. Further, we reduce adjusted EBITDAX
for the minority interest in Cal Dive that we do not own. Adjusted EBITDAX
margin is defined as adjusted EBITDAX divided by net revenues. 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 EBITDAX 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.
(a) Total debt less cash, cash equivalents and short term investments
SOURCE Helix Energy Solutions
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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
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