10-Q 1 hlx-20220331x10q.htm 10-Q
0000866829--12-312022Q1false1511420001499350004000004000000.01500.0200P9MP12MP12M4203100031190000000866829us-gaap:RetainedEarningsMember2022-03-310000866829us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000866829us-gaap:RetainedEarningsMember2021-12-310000866829us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000866829us-gaap:RetainedEarningsMember2021-03-310000866829us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000866829srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate202006Memberus-gaap:RetainedEarningsMember2020-12-310000866829srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate202006Memberus-gaap:CommonStockMember2020-12-310000866829srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate202006Member2020-12-310000866829us-gaap:RetainedEarningsMember2020-12-310000866829us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000866829us-gaap:EmployeeStockMember2022-03-310000866829hlx:IncentivePlan2005Member2022-03-310000866829us-gaap:EmployeeStockMember2022-01-012022-03-310000866829us-gaap:PerformanceSharesMemberus-gaap:CommonStockMember2021-01-012021-01-310000866829us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310000866829us-gaap:RestrictedStockMember2022-01-012022-03-310000866829us-gaap:PerformanceSharesMember2022-01-012022-03-310000866829us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310000866829us-gaap:RestrictedStockMember2021-01-012021-03-310000866829us-gaap:PerformanceSharesMember2021-01-012021-03-310000866829srt:MinimumMemberus-gaap:PerformanceSharesMember2021-01-042021-01-040000866829srt:MaximumMemberus-gaap:PerformanceSharesMember2021-01-042021-01-040000866829us-gaap:PerformanceSharesMember2021-01-012021-01-3100008668292024-01-012022-03-3100008668292023-01-012022-03-3100008668292022-04-012022-03-310000866829us-gaap:ShortTermContractWithCustomerMemberhlx:WellInterventionMember2022-01-012022-03-310000866829us-gaap:ShortTermContractWithCustomerMemberhlx:RoboticsMember2022-01-012022-03-310000866829us-gaap:LongTermContractWithCustomerMemberhlx:WellInterventionMember2022-01-012022-03-310000866829us-gaap:LongTermContractWithCustomerMemberhlx:RoboticsMember2022-01-012022-03-310000866829us-gaap:LongTermContractWithCustomerMemberhlx:ProductionFacilitiesMember2022-01-012022-03-310000866829us-gaap:IntersegmentEliminationMemberus-gaap:ShortTermContractWithCustomerMember2022-01-012022-03-310000866829us-gaap:IntersegmentEliminationMemberus-gaap:LongTermContractWithCustomerMember2022-01-012022-03-310000866829us-gaap:IntersegmentEliminationMemberhlx:WellInterventionMember2022-01-012022-03-310000866829us-gaap:IntersegmentEliminationMemberhlx:RoboticsMember2022-01-012022-03-310000866829us-gaap:ShortTermContractWithCustomerMember2022-01-012022-03-310000866829us-gaap:LongTermContractWithCustomerMember2022-01-012022-03-310000866829us-gaap:IntersegmentEliminationMember2022-01-012022-03-310000866829hlx:WellInterventionMember2022-01-012022-03-310000866829hlx:RoboticsMember2022-01-012022-03-310000866829hlx:ProductionFacilitiesMember2022-01-012022-03-310000866829us-gaap:ShortTermContractWithCustomerMemberhlx:WellInterventionMember2021-01-012021-03-310000866829us-gaap:ShortTermContractWithCustomerMemberhlx:RoboticsMember2021-01-012021-03-310000866829us-gaap:LongTermContractWithCustomerMemberhlx:WellInterventionMember2021-01-012021-03-310000866829us-gaap:LongTermContractWithCustomerMemberhlx:RoboticsMember2021-01-012021-03-310000866829us-gaap:LongTermContractWithCustomerMemberhlx:ProductionFacilitiesMember2021-01-012021-03-310000866829us-gaap:IntersegmentEliminationMemberus-gaap:LongTermContractWithCustomerMember2021-01-012021-03-310000866829us-gaap:IntersegmentEliminationMemberhlx:WellInterventionMember2021-01-012021-03-310000866829us-gaap:IntersegmentEliminationMemberhlx:RoboticsMember2021-01-012021-03-310000866829us-gaap:ShortTermContractWithCustomerMember2021-01-012021-03-310000866829us-gaap:LongTermContractWithCustomerMember2021-01-012021-03-310000866829us-gaap:IntersegmentEliminationMember2021-01-012021-03-310000866829hlx:WellInterventionMember2021-01-012021-03-310000866829hlx:RoboticsMember2021-01-012021-03-310000866829hlx:ProductionFacilitiesMember2021-01-012021-03-310000866829hlx:TermLoanMaturingDecember2021Member2021-09-012021-09-300000866829hlx:TermLoanMaturingDecember2021Member2021-01-012021-03-310000866829hlx:NordeaQ5000LoanMaturingJanuary2021Member2021-01-012021-03-310000866829hlx:MARADDebtMaturingFebruary2027Member2021-01-012021-03-310000866829us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000866829us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000866829us-gaap:CallOptionMember2022-03-310000866829us-gaap:OperatingSegmentsMemberhlx:WellInterventionMember2022-01-012022-03-310000866829us-gaap:OperatingSegmentsMemberhlx:RoboticsMember2022-01-012022-03-310000866829us-gaap:OperatingSegmentsMemberhlx:ProductionFacilitiesMember2022-01-012022-03-310000866829us-gaap:OperatingSegmentsMember2022-01-012022-03-310000866829us-gaap:CorporateNonSegmentMember2022-01-012022-03-310000866829us-gaap:OperatingSegmentsMemberhlx:WellInterventionMember2021-01-012021-03-310000866829us-gaap:OperatingSegmentsMemberhlx:RoboticsMember2021-01-012021-03-310000866829us-gaap:OperatingSegmentsMemberhlx:ProductionFacilitiesMember2021-01-012021-03-310000866829us-gaap:OperatingSegmentsMember2021-01-012021-03-310000866829us-gaap:CorporateNonSegmentMember2021-01-012021-03-310000866829us-gaap:RetainedEarningsMember2022-01-012022-03-310000866829us-gaap:RetainedEarningsMember2021-01-012021-03-310000866829srt:MinimumMemberhlx:AssetBasedCreditAgreementMaturingSeptember2026Member2022-01-012022-03-310000866829srt:MaximumMemberhlx:AssetBasedCreditAgreementMaturingSeptember2026Member2022-01-012022-03-310000866829country:UShlx:AssetBasedCreditAgreementMaturingSeptember2026Member2022-03-310000866829country:GBhlx:AssetBasedCreditAgreementMaturingSeptember2026Member2022-03-310000866829hlx:RevolvingCreditFacilityMaturingDecember2021Member2021-09-300000866829hlx:VesselsMember2022-03-310000866829hlx:FacilitiesAndEquipmentMember2022-03-310000866829hlx:VesselsMember2021-12-310000866829hlx:FacilitiesAndEquipmentMember2021-12-310000866829us-gaap:QualifiedPlanMember2022-01-012022-03-310000866829hlx:FixedValueCashAwardsMember2022-01-012022-03-310000866829hlx:FixedValueCashAwardsMember2021-01-012021-03-310000866829hlx:FixedValueCashAwardsMember2022-03-310000866829hlx:FixedValueCashAwardsMember2021-03-310000866829hlx:NordeaQ5000LoanMaturingJanuary2021Member2021-01-310000866829hlx:AssetBasedCreditAgreementMaturingSeptember2026Member2022-01-012022-03-310000866829hlx:MARADDebtMaturingFebruary2027Member2022-01-012022-03-310000866829srt:MinimumMemberhlx:ConvertibleSeniorNotesMaturingSeptember2023Member2022-01-012022-03-310000866829srt:MinimumMemberhlx:ConvertibleSeniorNotesMaturingFebruary2026Member2022-01-012022-03-310000866829srt:MaximumMemberhlx:ConvertibleSeniorNotesMaturingSeptember2023Member2022-01-012022-03-310000866829srt:MaximumMemberhlx:ConvertibleSeniorNotesMaturingFebruary2026Member2022-01-012022-03-310000866829hlx:MARADDebtMaturingFebruary2027Member2022-03-310000866829hlx:ConvertibleSeniorNotesMaturingSeptember2023Member2022-03-310000866829hlx:ConvertibleSeniorNotesMaturingMay2022Member2022-03-310000866829hlx:ConvertibleSeniorNotesMaturingFebruary2026Member2022-03-310000866829hlx:MARADDebtMaturingFebruary2027Member2021-12-310000866829hlx:ConvertibleSeniorNotesMaturingSeptember2023Member2021-12-310000866829hlx:ConvertibleSeniorNotesMaturingMay2022Member2021-12-310000866829hlx:ConvertibleSeniorNotesMaturingFebruary2026Member2021-12-310000866829srt:MinimumMemberhlx:AssetBasedCreditAgreementMaturingSeptember2026Memberus-gaap:SubsequentEventMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2023-06-302023-06-300000866829srt:MaximumMemberhlx:AssetBasedCreditAgreementMaturingSeptember2026Memberus-gaap:SubsequentEventMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2023-06-302023-06-300000866829srt:MinimumMembercountry:UShlx:AssetBasedCreditAgreementMaturingSeptember2026Memberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-03-310000866829srt:MinimumMembercountry:UShlx:AssetBasedCreditAgreementMaturingSeptember2026Memberus-gaap:BaseRateMember2022-01-012022-03-310000866829srt:MinimumMembercountry:GBhlx:AssetBasedCreditAgreementMaturingSeptember2026Memberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-03-310000866829srt:MinimumMembercountry:GBhlx:AssetBasedCreditAgreementMaturingSeptember2026Memberhlx:SterlingOvernightInterbankAverageRateSoniaMember2022-01-012022-03-310000866829srt:MaximumMembercountry:UShlx:AssetBasedCreditAgreementMaturingSeptember2026Memberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-03-310000866829srt:MaximumMembercountry:UShlx:AssetBasedCreditAgreementMaturingSeptember2026Memberus-gaap:BaseRateMember2022-01-012022-03-310000866829srt:MaximumMembercountry:GBhlx:AssetBasedCreditAgreementMaturingSeptember2026Memberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-03-310000866829srt:MaximumMembercountry:GBhlx:AssetBasedCreditAgreementMaturingSeptember2026Memberhlx:SterlingOvernightInterbankAverageRateSoniaMember2022-01-012022-03-310000866829us-gaap:CommonStockMember2022-03-310000866829us-gaap:CommonStockMember2021-12-310000866829us-gaap:CommonStockMember2021-03-310000866829us-gaap:CommonStockMember2020-12-3100008668292021-01-012021-12-310000866829us-gaap:OperatingSegmentsMemberhlx:WellInterventionMember2022-03-310000866829us-gaap:OperatingSegmentsMemberhlx:RoboticsMember2022-03-310000866829us-gaap:OperatingSegmentsMemberhlx:ProductionFacilitiesMember2022-03-310000866829us-gaap:CorporateNonSegmentMember2022-03-310000866829us-gaap:OperatingSegmentsMemberhlx:WellInterventionMember2021-12-310000866829us-gaap:OperatingSegmentsMemberhlx:RoboticsMember2021-12-310000866829us-gaap:OperatingSegmentsMemberhlx:ProductionFacilitiesMember2021-12-310000866829us-gaap:CorporateNonSegmentMember2021-12-310000866829hlx:ConvertibleSeniorNotesMaturingSeptember2023Member2022-01-012022-03-310000866829hlx:ConvertibleSeniorNotesMaturingMay2022Member2022-01-012022-03-310000866829hlx:ConvertibleSeniorNotesMaturingFebruary2026Member2022-01-012022-03-310000866829hlx:ConvertibleSeniorNotesMaturingSeptember2023Member2021-01-012021-03-310000866829hlx:ConvertibleSeniorNotesMaturingMay2022Member2021-01-012021-03-310000866829hlx:ConvertibleSeniorNotesMaturingFebruary2026Member2021-01-012021-03-3100008668292021-03-3100008668292020-12-310000866829us-gaap:CommonStockMember2022-01-012022-03-310000866829us-gaap:CommonStockMember2021-01-012021-03-310000866829us-gaap:RestrictedStockMembersrt:DirectorMember2022-01-042022-01-040000866829us-gaap:PerformanceSharesMembersrt:ExecutiveOfficerMember2022-01-042022-01-040000866829us-gaap:RestrictedStockUnitsRSUMembersrt:ExecutiveOfficerMember2022-01-012022-01-010000866829us-gaap:PerformanceSharesMember2022-01-040000866829us-gaap:PerformanceSharesMember2021-01-040000866829us-gaap:PerformanceSharesMember2022-01-042022-01-040000866829us-gaap:PerformanceSharesMember2021-01-042021-01-0400008668292021-01-012021-03-310000866829hlx:WellInterventionMember2022-03-310000866829srt:ProFormaMemberhlx:AssetBasedCreditAgreementMaturingSeptember2026Member2022-03-310000866829hlx:AssetBasedCreditAgreementMaturingSeptember2026Member2022-03-310000866829srt:MinimumMemberhlx:AssetBasedCreditAgreementMaturingSeptember2026Member2022-03-3100008668292022-03-3100008668292021-12-310000866829hlx:ConvertibleSeniorNotesMaturingSeptember2023Member2022-01-012022-03-310000866829hlx:ConvertibleSeniorNotesMaturingMay2022Member2022-01-012022-03-310000866829hlx:ConvertibleSeniorNotesMaturingFebruary2026Member2022-01-012022-03-310000866829hlx:ConvertibleSeniorNotesMaturingSeptember2023Member2021-01-012021-03-310000866829hlx:ConvertibleSeniorNotesMaturingMay2022Member2021-01-012021-03-310000866829hlx:ConvertibleSeniorNotesMaturingFebruary2026Member2021-01-012021-03-310000866829us-gaap:CallOptionMember2022-01-012022-03-3100008668292022-04-2200008668292022-01-012022-03-31xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:purehlx:itemhlx:segment

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________ to__________

Commission File Number: 001-32936

Graphic

HELIX ENERGY SOLUTIONS GROUP, INC.

(Exact name of registrant as specified in its charter)

Minnesota

   

95-3409686

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

3505 West Sam Houston Parkway North

Suite 400

Houston Texas

77043

(Address of principal executive offices)

(Zip Code)

(281) 618–0400

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

   

Trading Symbol(s)

   

Name of each exchange on which registered

Common Stock

HLX

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  No

As of April 22, 2022, 151,651,384 shares of common stock were outstanding.

TABLE OF CONTENTS

PART I.

FINANCIAL INFORMATION

PAGE

Item 1.

Financial Statements:

3

Condensed Consolidated Balance Sheets – March 31, 2022 (Unaudited) and December 31, 2021

3

Condensed Consolidated Statements of Operations (Unaudited) – Three months ended March 31, 2022 and 2021

4

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) – Three months ended March 31, 2022 and 2021

5

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) – Three months ended March 31, 2022 and 2021

6

Condensed Consolidated Statements of Cash Flows (Unaudited) – Three months ended March 31, 2022 and 2021

7

Notes to Condensed Consolidated Financial Statements (Unaudited)

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

33

Item 1.

Legal Proceedings

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 6.

Exhibits

34

Signatures

35

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

March 31, 

December 31, 

    

2022

    

2021

(Unaudited)

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

229,744

$

253,515

Restricted cash

 

72,934

 

73,612

Accounts receivable, net of allowance for credit losses of $1,351 and $1,477, respectively

 

141,778

 

144,137

Other current assets

 

59,274

 

58,274

Total current assets

 

503,730

 

529,538

Property and equipment

 

2,916,214

 

2,938,154

Less accumulated depreciation

 

(1,306,162)

 

(1,280,509)

Property and equipment, net

 

1,610,052

 

1,657,645

Operating lease right-of-use assets

 

150,894

 

104,190

Other assets, net

 

42,694

 

34,655

Total assets

$

2,307,370

$

2,326,028

LIABILITIES AND SHAREHOLDERS' EQUITY

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

97,531

$

87,959

Accrued liabilities

 

74,873

 

91,712

Current maturities of long-term debt

 

43,117

 

42,873

Current operating lease liabilities

 

41,464

 

55,739

Total current liabilities

 

256,985

 

278,283

Long-term debt

 

258,496

 

262,137

Operating lease liabilities

 

112,507

 

50,198

Deferred tax liabilities

 

86,244

 

86,966

Other non-current liabilities

 

392

 

975

Total liabilities

 

714,624

 

678,559

Commitments and contingencies

Shareholders’ equity:

 

  

 

  

Common stock, no par, 240,000 shares authorized, 151,637 and 151,124 shares issued, respectively

 

1,292,935

 

1,292,479

Retained earnings

 

369,041

 

411,072

Accumulated other comprehensive loss

 

(69,230)

 

(56,082)

Total shareholders’ equity

 

1,592,746

 

1,647,469

Total liabilities and shareholders’ equity

$

2,307,370

$

2,326,028

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

Three Months Ended

March 31, 

    

2022

    

2021

Net revenues

$

150,125

$

163,415

Cost of sales

 

168,734

 

148,791

Gross profit (loss)

 

(18,609)

 

14,624

Selling, general and administrative expenses

 

(14,368)

 

(15,179)

Loss from operations

 

(32,977)

 

(555)

Net interest expense

 

(5,174)

 

(6,053)

Other income (expense), net

 

(3,881)

 

1,617

Royalty income and other

 

2,141

 

2,057

Loss before income taxes

 

(39,891)

 

(2,934)

Income tax provision

 

2,140

 

116

Net loss

 

(42,031)

 

(3,050)

Net loss attributable to redeemable noncontrolling interests

 

 

(172)

Net loss attributable to common shareholders

$

(42,031)

$

(2,878)

Loss per share of common stock:

 

  

 

  

Basic

$

(0.28)

$

(0.02)

Diluted

$

(0.28)

$

(0.02)

Weighted average common shares outstanding:

 

  

 

  

Basic

 

151,142

 

149,935

Diluted

 

151,142

 

149,935

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in thousands)

Three Months Ended

March 31, 

2022

    

2021

Net loss

$

(42,031)

 

$

(3,050)

Other comprehensive income (loss), net of tax:

 

  

 

  

Foreign currency translation gain (loss)

 

(13,148)

 

4,613

Other comprehensive income (loss), net of tax

 

(13,148)

 

4,613

Comprehensive income (loss)

 

(55,179)

 

1,563

Less comprehensive loss attributable to redeemable noncontrolling interests:

 

  

 

  

Net loss

 

 

(172)

Foreign currency translation gain

 

 

36

Comprehensive loss attributable to redeemable noncontrolling interests

 

 

(136)

Comprehensive income (loss) attributable to common shareholders

$

(55,179)

 

$

1,699

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

Accumulated

 

Other

Total

Redeemable

Common Stock

Retained

Comprehensive

Shareholders’

Noncontrolling

    

Shares

    

Amount

    

Earnings

    

Loss

    

Equity

    

Interests

Balance, December 31, 2021

 

151,124

$

1,292,479

$

411,072

$

(56,082)

$

1,647,469

 

$

Net loss

 

 

 

(42,031)

 

 

(42,031)

 

Foreign currency translation adjustments

 

 

 

 

(13,148)

 

(13,148)

 

Activity in company stock plans, net and other

 

513

 

(1,178)

 

 

 

(1,178)

 

Share-based compensation

 

 

1,634

 

 

 

1,634

 

Balance, March 31, 2022

 

151,637

$

1,292,935

$

369,041

$

(69,230)

$

1,592,746

 

$

Accumulated

 

Other

Total

Redeemable

Common Stock

Retained

Comprehensive

Shareholders’

Noncontrolling

    

Shares

    

Amount

    

Earnings

    

Loss

    

Equity

    

Interests

Balance, December 31, 2020

 

150,341

$

1,327,592

$

464,524

$

(51,620)

$

1,740,496

 

$

3,855

Net loss

 

 

 

(2,878)

 

 

(2,878)

 

(172)

Cumulative-effect adjustments upon adoption of ASU No. 2020-06

 

 

(41,456)

 

6,682

 

 

(34,774)

 

Foreign currency translation adjustments

 

 

 

 

4,613

 

4,613

 

36

Accretion of redeemable noncontrolling interests

 

 

 

(241)

 

 

(241)

 

241

Activity in company stock plans, net and other

 

374

 

(1,600)

 

 

 

(1,600)

 

Share-based compensation

 

 

1,844

 

 

 

1,844

 

Balance, March 31, 2021

 

150,715

$

1,286,380

$

468,087

$

(47,007)

$

1,707,460

 

$

3,960

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Three Months Ended

March 31, 

    

2022

    

2021

Cash flows from operating activities:

 

  

  

Net loss

$

(42,031)

$

(3,050)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

  

Depreciation and amortization

 

33,488

 

34,566

Amortization of debt issuance costs

 

590

 

810

Share-based compensation

 

1,672

 

1,904

Deferred income taxes

 

(722)

 

(892)

Unrealized foreign currency (gain) loss

 

2,603

 

(951)

Changes in operating assets and liabilities:

 

  

 

  

Accounts receivable, net

 

906

 

(463)

Income tax receivable

1,230

6,256

Other current assets

(534)

9,361

Accounts payable and accrued liabilities

 

(4,646)

 

(4,881)

Other, net

 

(9,969)

 

(2,791)

Net cash provided by (used in) operating activities

 

(17,413)

 

39,869

Cash flows from investing activities:

 

  

 

  

Capital expenditures

 

(623)

 

(1,329)

Net cash used in investing activities

 

(623)

 

(1,329)

Cash flows from financing activities:

 

  

 

  

Repayment of Term Loan

 

 

(875)

Repayment of Nordea Q5000 Loan

 

 

(53,572)

Repayment of MARAD Debt

 

(3,920)

 

(3,734)

Debt issuance costs

 

(136)

 

(43)

Payments related to tax withholding for share-based compensation

 

(1,525)

 

(1,878)

Proceeds from issuance of ESPP shares

 

173

 

217

Net cash used in financing activities

 

(5,408)

 

(59,885)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

 

(1,005)

 

406

Net decrease in cash and cash equivalents and restricted cash

 

(24,449)

 

(20,939)

Cash and cash equivalents and restricted cash:

 

  

 

  

Balance, beginning of year

 

327,127

 

291,320

Balance, end of period

$

302,678

$

270,381

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 — Basis of Presentation and New Accounting Standards

The accompanying condensed consolidated financial statements include the accounts of Helix Energy Solutions Group, Inc. and its subsidiaries (collectively, “Helix”). Unless the context indicates otherwise, the terms “we,” “us” and “our” in this report refer collectively to Helix and its subsidiaries. All material intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements have been prepared pursuant to instructions for the Quarterly Report on Form 10-Q required to be filed with the Securities and Exchange Commission (the “SEC”) and do not include all information and footnotes normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP in U.S. dollars and are consistent in all material respects with those applied in our 2021 Annual Report on Form 10-K (our “2021 Form 10-K”). The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in the financial statements and the related disclosures. Actual results may differ from our estimates. We have made all adjustments, which, unless otherwise disclosed, are of normal recurring nature, that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income (loss), statements of shareholders’ equity and statements of cash flows, as applicable. The operating results for the three-month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. Our balance sheet as of December 31, 2021 included herein has been derived from the audited balance sheet as of December 31, 2021 included in our 2021 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in our 2021 Form 10-K.

Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current presentation format.

We do not expect any recently issued accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.

Note 2 — Company Overview

We are an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention and robotics operations. Traditionally, our services have covered the lifecycle of an offshore oil or gas field. In recent years, we have seen an increasing demand for our services from the offshore renewable energy market. We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions. Our North Sea operations are subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months. Our services are segregated into three reportable business segments: Well Intervention, Robotics and Production Facilities (Note 10).

Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations, thereby avoiding drilling new wells by extending the useful lives of existing wells and preserving the environment by preventing uncontrolled releases of oil and gas. Our well intervention vessels include the Q4000, the Q5000, the Q7000, the Seawell, the Well Enhancer, and two chartered monohull vessels, the Siem Helix 1 and the Siem Helix 2. Our well intervention equipment includes intervention systems such as intervention riser systems (“IRSs”), subsea intervention lubricators (“SILs”) and the Riserless Open-water Abandonment Module, some of which we provide on a stand-alone basis.

Our Robotics segment provides offshore construction, trenching, seabed clearance, and inspection, repair and maintenance (“IRM”) services to both the oil and gas and the renewable energy markets globally, thereby assisting the delivery of affordable and reliable energy and supporting the responsible transition away from a carbon-based economy. Additionally, our Robotics services are used in and complement our well intervention services. Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and robotics support vessels under term charters as well as spot vessels as needed.

8

Our Production Facilities segment includes the Helix Producer I (the “HP I”), a ship-shaped dynamically positioned floating production vessel, the Helix Fast Response System (the “HFRS”) and our ownership of oil and gas properties. All of our current Production Facilities activities are located in the Gulf of Mexico.

Note 3 — Details of Certain Accounts

Other current assets consist of the following (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Contract assets (Note 7)

$

166

 

$

639

Prepaids

 

16,806

 

18,228

Deferred costs (Note 7)

 

5,993

 

2,967

Income tax receivable

 

68

 

1,116

Other receivable (Note 11)

 

29,522

 

28,805

Other

 

6,719

 

6,519

Total other current assets

$

59,274

 

$

58,274

Other assets, net consist of the following (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Deferred recertification and dry dock costs, net

$

24,163

 

$

16,291

Deferred costs (Note 7)

 

222

 

381

Prepaid charter (1)

 

12,544

 

12,544

Intangible assets with finite lives, net

 

3,339

 

3,472

Other

 

2,426

 

1,967

Total other assets, net

$

42,694

 

$

34,655

(1)Represents prepayments to the owner of the Siem Helix 1 and the Siem Helix 2 to offset certain payment obligations associated with the vessels at the end of their respective charter term.

Accrued liabilities consist of the following (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Accrued payroll and related benefits

$

19,661

 

$

28,657

Accrued interest

2,761

6,746

Deferred revenue (Note 7)

 

5,559

 

8,272

Asset retirement obligations (Note 11)

 

30,399

 

29,658

Other

 

16,493

 

18,379

Total accrued liabilities

$

74,873

 

$

91,712

Other non-current liabilities consist of the following (in thousands):

March 31, 

December 31, 

    

2022

    

2021

Deferred revenue (Note 7)

$

191

 

$

476

Other

 

201

 

499

Total other non-current liabilities

$

392

 

$

975

9

Note 4 — Leases

We charter vessels and lease facilities and equipment under non-cancelable contracts that expire on various dates through 2031. We also sublease some of our facilities under non-cancelable sublease agreements.

The following table details the components of our lease cost (in thousands):

Three Months Ended

March 31, 

    

2022

    

2021

Operating lease cost

$

14,462

 

$

16,216

Variable lease cost

 

4,922

 

3,484

Short-term lease cost

 

5,438

 

1,732

Sublease income

 

(249)

 

(349)

Net lease cost

$

24,573

 

$

21,083

Maturities of our operating lease liabilities as of March 31, 2022 are as follows (in thousands):

    

    

Facilities and

    

    

Vessels

    

Equipment

    

Total

Less than one year

$

42,951

$

5,441

 

$

48,392

One to two years

 

37,056

 

4,752

 

41,808

Two to three years

 

38,279

 

4,297

 

42,576

Three to four years

 

17,155

 

1,712

 

18,867

Four to five years

 

21,124

 

1,044

 

22,168

Over five years

 

 

3,812

 

3,812

Total lease payments

$

156,565

$

21,058

 

$

177,623

Less: imputed interest

 

(20,297)

 

(3,355)

 

(23,652)

Total operating lease liabilities

$

136,268

$

17,703

 

$

153,971

Current operating lease liabilities

$

36,843

$

4,621

 

$

41,464

Non-current operating lease liabilities

 

99,425

 

13,082

 

112,507

Total operating lease liabilities

$

136,268

$

17,703

 

$

153,971

Maturities of our operating lease liabilities as of December 31, 2021 are as follows (in thousands):

    

    

Facilities and

    

    

Vessels

    

Equipment

    

Total

Less than one year

$

55,573

$

5,601

 

$

61,174

One to two years

 

34,580

 

4,844

 

39,424

Two to three years

 

2,470

 

4,514

 

6,984

Three to four years

 

 

2,462

 

2,462

Four to five years

 

 

1,074

 

1,074

Over five years

 

 

4,193

 

4,193

Total lease payments

$

92,623

$

22,688

 

$

115,311

Less: imputed interest

 

(5,633)

 

(3,741)

 

(9,374)

Total operating lease liabilities

$

86,990

$

18,947

 

$

105,937

Current operating lease liabilities

$

51,035

$

4,704

 

$

55,739

Non-current operating lease liabilities

 

35,955

 

14,243

 

50,198

Total operating lease liabilities

$

86,990

$

18,947

 

$

105,937

10

The following table presents the weighted average remaining lease term and discount rate:

March 31, 

December 31, 

    

2022

2021

Weighted average remaining lease term

 

4.0

years

2.4

years

Weighted average discount rate

 

6.99

%  

7.57

%

The following table presents other information related to our operating leases (in thousands):

Three Months Ended

March 31, 

    

2022

    

2021

Cash paid for operating lease liabilities

$

16,010

 

$

16,502

Right-of-use assets obtained in exchange for new operating lease obligations (1)

 

60,699

 

113

(1)Amount in 2022 primarily relates to the charter extensions for the Siem Helix 1 and the Siem Helix 2 (Note 12).

Note 5 — Long-Term Debt

Scheduled maturities of our long-term debt outstanding as of March 31, 2022 are as follows (in thousands):

2022

2023

2026

MARAD

 

    

Notes

    

Notes

    

Notes

    

Debt

    

Total

Less than one year

$

35,000

$

$

$

8,133

 

$

43,133

One to two years

 

 

30,000

 

 

8,539

 

38,539

Two to three years

 

 

 

 

8,965

 

8,965

Three to four years

 

 

 

200,000

 

9,412

 

209,412

Four to five years

 

 

 

 

9,881

 

9,881

Gross debt

 

35,000

 

30,000

 

200,000

 

44,930

 

309,930

Unamortized debt issuance costs (1)

 

(16)

 

(270)

 

(5,592)

 

(2,439)

 

(8,317)

Total debt

 

34,984

 

29,730

 

194,408

 

42,491

 

301,613

Less current maturities

 

(34,984)

 

 

 

(8,133)

 

(43,117)

Long-term debt

$

$

29,730

$

194,408

$

34,358

 

$

258,496

(1)Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement.

Below is a summary of certain components of our indebtedness:

Credit Agreement

On September 30, 2021, we entered into an asset-based credit agreement (the “ABL Facility”) with Bank of America, N.A. (“Bank of America”), Wells Fargo Bank, N.A. and Zions Bancorporation. The ABL Facility provides for an $80 million asset-based revolving credit facility, which matures on September 30, 2026, with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $50 million. The ABL Facility also permits us to request an increase of the facility by up to $70 million, subject to certain conditions.

Commitments under the ABL Facility are comprised of separate U.S. and U.K. revolving credit facility commitments of $45 million and $35 million, respectively. The ABL Facility provides funding based on a borrowing base calculation that includes eligible U.S. and U.K. customer accounts receivable and cash, and provides for a $10 million sub-limit for the issuance of letters of credit. As of March 31, 2022, we had no borrowings under the ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $41.2 million, net of $2.3 million of letters of credit issued under that facility.

11

We and certain of our U.S. and U.K. subsidiaries are the initial borrowers under the ABL Facility, whose obligations under the ABL Facility are guaranteed by those borrowers and certain other U.S. and U.K. subsidiaries, excluding Cal Dive I – Title XI, Inc. (“CDI Title XI”), Helix Offshore Services Limited and certain other enumerated subsidiaries. Other subsidiaries may be added as guarantors of the facility in the future. The ABL Facility is secured by all accounts receivable and designated deposit accounts of the U.S. borrowers and guarantors, and by substantially all of the assets of the U.K. borrowers and guarantors.

U.S. borrowings under the ABL Facility initially bear interest at the LIBOR rate plus a margin of 1.50% to 2.00% or at a base rate plus a margin of 0.50% to 1.00%. U.K. borrowings under the ABL Facility denominated in U.S. dollars initially bear interest at the LIBOR rate and U.K. borrowings denominated in the British pound initially bear interest at the SONIA daily rate, each plus a margin of 1.50% to 2.00%. We also pay a commitment fee of 0.375% to 0.50% per annum on the unused portion of the facility. Beginning on the earlier of June 30, 2023, cessation of LIBOR or an earlier opt-in election, LIBOR will be replaced by either SOFR or term SOFR plus a margin of 0.114% to 0.428% or an alternate benchmark rate.

The ABL Facility includes certain limitations on our ability to incur additional indebtedness, grant liens on assets, pay dividends and make distributions on equity interests, dispose of assets, make investments, repay certain indebtedness, engage in mergers, and other matters, in each case subject to certain exceptions. The ABL Facility contains customary default provisions which, if triggered, could result in acceleration of all amounts then outstanding. The ABL Facility requires us to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 if availability is less than the greater of 10% of the borrowing base or $8 million. The ABL Facility also requires us to maintain a pro forma minimum excess availability of $16 million for the 91 days prior to the maturity of each of our outstanding convertible senior notes.

2022 Notes

The 2022 Notes bear interest at a coupon interest rate of 4.25% per annum payable semi-annually in arrears on November 1 and May 1 of each year until maturity. The 2022 Notes mature on May 1, 2022 unless earlier converted, redeemed or repurchased by us. The 2022 Notes are convertible by their holders at any time beginning February 1, 2022 at an initial conversion rate of 71.9748 shares of our common stock per $1,000 principal amount, which currently represents 2,519,118 potentially convertible shares at an initial conversion price of approximately $13.89 per share of common stock. On March 28, 2022, we elected to satisfy our conversion obligation by delivering cash.

The effective interest rate for the 2022 Notes is 4.8%. For each of the three-month periods ended March 31, 2022 and 2021, total interest expense related to the 2022 Notes was $0.4 million primarily from coupon interest expense.

2023 Notes

The 2023 Notes bear interest at a coupon interest rate of 4.125% per annum payable semi-annually in arrears on March 15 and September 15 of each year until maturity. The 2023 Notes mature on September 15, 2023 unless earlier converted, redeemed or repurchased by us. The 2023 Notes are convertible by their holders at any time beginning March 15, 2023 at an initial conversion rate of 105.6133 shares of our common stock per $1,000 principal amount, which currently represents 3,168,399 potentially convertible shares at an initial conversion price of approximately $9.47 per share of common stock. Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

12

Prior to March 15, 2023, holders of the 2023 Notes may convert their notes if the closing price of our common stock exceeds 130% of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2023 Notes is equal to or less than 97% of the conversion value of the notes during the five consecutive business days immediately after any ten consecutive trading day period (trading price condition). Holders of the 2023 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 47.5260 shares of our common stock per $1,000 principal amount.

Prior to March 15, 2021, the 2023 Notes were not redeemable. On or after March 15, 2021, we may redeem all or any portion of the 2023 Notes if the price of our common stock has been at least 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice. Any redemption would be payable in cash equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments. Holders of the 2023 Notes may convert any of their notes if we call the notes for redemption. Holders of the 2023 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2023 Notes).

The indenture governing the 2023 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2023 Notes together with any accrued interest will become immediately due and payable.

The effective interest rate for the 2023 Notes is 4.8%. For each of the three-month periods ended March 31, 2022 and 2021, total interest expense related to the 2023 Notes was $0.4 million, with coupon interest expense of $0.3 million and the amortization of debt issuance costs of $0.1 million.

2026 Notes

The 2026 Notes bear interest at a coupon interest rate of 6.75% per annum payable semi-annually in arrears on February 15 and August 15 of each year, beginning February 15, 2021 until maturity. The 2026 Notes mature on February 15, 2026 unless earlier converted, redeemed or repurchased by us. The 2026 Notes are convertible by their holders at any time beginning November 17, 2025 at an initial conversion rate of 143.3795 shares of our common stock per $1,000 principal amount, which currently represents 28,675,900 potentially convertible shares at an initial conversion price of approximately $6.97 per share of common stock. Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

Prior to November 17, 2025, holders of the 2026 Notes may convert their notes if the closing price of our common stock exceeds 130% of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2026 Notes is equal to or less than 97% of the conversion value of the notes during the five consecutive business days immediately after any ten consecutive trading day period (trading price condition). Holders of the 2026 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 64.5207 shares of our common stock per $1,000 principal amount.

Prior to August 15, 2023, the 2026 Notes are not redeemable. On or after August 15, 2023, we may redeem all or any portion of the 2026 Notes if the price of our common stock has been at least 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice. Any redemption would be payable in cash equal to 100% of the principal amount plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments. Holders of the 2026 Notes may convert any of their notes if we call the notes for redemption. Holders of the 2026 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2026 Notes).

13

The indenture governing the 2026 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2026 Notes together with any accrued interest will become immediately due and payable.

The effective interest rate for the 2026 Notes is 7.6%. For each of the three-month periods ended March 31, 2022 and 2021, total interest expense related to the 2026 Notes was $3.7 million, with coupon interest expense of $3.4 million and the amortization of debt issuance costs of $0.3 million.

2026 Capped Calls

In connection with the 2026 Notes offering, we entered into capped call transactions (the “2026 Capped Calls”) with three separate option counterparties. The 2026 Capped Calls are for an aggregate of 28,675,900 shares of our common stock, which corresponds to the shares into which the 2026 Notes are initially convertible. The capped call shares are subject to certain anti-dilution adjustments. Each capped call option has an initial strike price of approximately $6.97 per share, which corresponds to the initial conversion price of the 2026 Notes, and an initial cap price of approximately $8.42 per share. The strike and cap prices are subject to certain adjustments. The 2026 Capped Calls are intended to offset some or all of the potential dilution to Helix common shares caused by any conversion of the 2026 Notes up to the cap price. The 2026 Capped Calls can be settled in either net shares or cash at our option in components commencing December 15, 2025 and ending February 12, 2026, which could be extended under certain circumstances.

The 2026 Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting Helix, including a merger, tender offer, nationalization, insolvency or delisting. In addition, certain events may result in a termination of the 2026 Capped Calls, including changes in law, insolvency filings and hedging disruptions. The 2026 Capped Calls are recorded at their aggregate cost of $10.6 million as a reduction to common stock in the shareholders’ equity section of our condensed consolidated balance sheets.

MARAD Debt

In 2005, Helix’s subsidiary CDI – Title XI issued its U.S. Government Guaranteed Ship Financing Bonds, Q4000 Series, to refinance the construction financing originally granted in 2002 of the Q4000 vessel (the “MARAD Debt”). The MARAD Debt is guaranteed by the U.S. government pursuant to Title XI of the Merchant Marine Act of 1936, administered by the Maritime Administration (“MARAD”). The obligation of CDI Title XI to reimburse MARAD in the event CDI Title XI fails to repay the MARAD Debt is collateralized by the Q4000 and is guaranteed 50% by us. In addition, we have agreed to bareboat charter the Q4000 from CDI Title XI for so long as the MARAD Debt remains outstanding. The MARAD Debt is payable in equal semi-annual installments, matures in February 2027 and bears interest at a rate of 4.93%. The agreements relating to the bonds and the terms and conditions of our obligations to MARAD in respect of the MARAD Debt are typical for U.S. government-guaranteed ship financing transactions, including customary restrictions on incurring additional liens on the Q4000 and trading restrictions with respect to the vessel as well as working capital requirements.

Other

We previously had a credit agreement with a syndicated bank lending group for a term loan (the “Nordea Q5000 Loan”) to finance the construction of the Q5000. The loan was secured by the Q5000 and its charter earnings. In January 2021, we repaid the remaining principal amount of $53.6 million.

We previously had another credit agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America. The Credit Agreement was comprised of a term loan (the “Term Loan”) and a revolving credit facility (the “Revolving Credit Facility”) with a maximum availability of $175 million and had a maturity date of December 31, 2021. Concurrent with our entering into the ABL Facility, the Credit Agreement was terminated. The $28 million remaining balance of the Term Loan was repaid in full and the letters of credit issued under the Revolving Credit Facility were transferred to the ABL Facility. We had no borrowings under the Revolving Credit Facility.

14

In accordance with the ABL Facility, the 2022 Notes, the 2023 Notes, the 2026 Notes and the MARAD Debt, we are required to comply with certain covenants, including a springing fixed charge coverage ratio and minimum liquidity with respect to the ABL Facility and the maintenance of net worth, working capital and debt-to-equity requirements with respect to the MARAD Debt. As of March 31, 2022, we were in compliance with these covenants.

The following table details the components of our net interest expense (in thousands):

Three Months Ended

March 31, 

    

2022

    

2021

Interest expense

$

5,307

 

$

6,112

Interest income

 

(133)

 

(59)

Net interest expense

$

5,174

 

$

6,053

Note 6 — Income Taxes

We operate in multiple jurisdictions with complex tax laws subject to interpretation and judgment. We believe that our application of such laws and the tax impact thereof are reasonable and fairly presented in our condensed consolidated financial statements.

For the three-month periods ended March 31, 2022 and 2021, we recognized income tax expense of $2.1 million and $0.1 million, respectively, resulting in effective tax rates of (5.4)% and (4.0)%, respectively. These variances were primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions as well as losses for which no financial statement benefits have been recognized. For both periods, our aggregate tax expense was greater than the aggregate tax benefit of our losses, resulting in negative effective tax rates. The effective tax rate for the three-month period ended March 31, 2022 was significantly lower than the U.S. statutory rate primarily due to non-creditable foreign income and deemed profit taxes, as well as unbenefited tax losses.

Note 7 — Revenue from Contracts with Customers

Disaggregation of Revenue

Our revenues are primarily derived from short-term and long-term service contracts with customers. Our service contracts generally contain either provisions for specific time, material and equipment charges that are billed in accordance with the terms of such contracts (dayrate contracts) or lump sum payment provisions (lump sum contracts). We record revenues net of taxes collected from customers and remitted to governmental authorities. Contracts are classified as long-term if all or part of the contract is to be performed over a period extending beyond 12 months from the effective date of the contract. Long-term contracts may include multi-year agreements whereby the commitment for services in any one year may be short in duration. The following table provides information about disaggregated revenue by contract duration (in thousands):

Well

Production

Intercompany

Total

    

Intervention

    

Robotics

    

Facilities

    

Eliminations

    

Revenue

Three months ended March 31, 2022

 

  

 

  

 

  

 

  

 

  

Short-term

$

91,346

$

21,137

$

$

(635)

$

111,848

Long-term

 

15,021

 

16,214

 

18,294

 

(11,252)

 

38,277

Total

$

106,367

$

37,351

$

18,294

$

(11,887)

$

150,125

Three months ended March 31, 2021

 

  

 

  

 

  

 

  

 

  

Short-term

$

49,217

$

9,407

$

$

$

58,624

Long-term

 

84,551

 

12,749

 

16,447

 

(8,956)

 

104,791

Total

$

133,768

$

22,156

$

16,447

$

(8,956)

$

163,415

15

Contract Balances

Accounts receivable are recognized when our right to consideration becomes unconditional.

Contract assets are rights to consideration in exchange for services that we have provided to a customer when those rights are conditioned on our future performance. Contract assets generally consist of (i) demobilization fees recognized ratably over the contract term but invoiced upon completion of the demobilization activities and (ii) revenue recognized in excess of the amount billed to the customer for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. Contract assets are reflected in “Other current assets” in the accompanying condensed consolidated balance sheets (Note 3). Contract assets were $0.2 million at March 31, 2022 and $0.6 million at December 31, 2021. We had no credit losses on our contract assets for the three-month periods ended March 31, 2022 and 2021.

Contract liabilities are obligations to provide future services to a customer for which we have already received, or have the unconditional right to receive, the consideration for those services from the customer. Contract liabilities may consist of (i) advance payments received from customers, including upfront mobilization fees allocated to a single performance obligation and recognized ratably over the contract term and/or (ii) amounts billed to the customer in excess of revenue recognized for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. Contract liabilities are reflected as “Deferred revenue,” a component of “Accrued liabilities” and “Other non-current liabilities” in the accompanying condensed consolidated balance sheets (Note 3). Contract liabilities totaled $5.7 million at March 31, 2022 and $8.7 million at December 31, 2021. Revenue recognized for the three-month periods ended March 31, 2022 and 2021 included $4.3 million and $2.5 million, respectively, that were included in the contract liability balance at the beginning of each period.

We report the net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period.

Performance Obligations

As of March 31, 2022, $548.1 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $263.4 million, $203.4 million and $81.3 million in 2022, 2023 and 2024, respectively. These amounts include fixed consideration and estimated variable consideration for both wholly and partially unsatisfied performance obligations, including mobilization and demobilization fees. These amounts are derived from the specific terms of our contracts, and the expected timing for revenue recognition is based on the estimated start date and duration of each contract according to the information known at March 31, 2022.

For the three-month periods ended March 31, 2022 and 2021, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

Contract Fulfillment Costs

Contract fulfillment costs consist of costs incurred in fulfilling a contract with a customer. Our contract fulfillment costs primarily relate to costs incurred for mobilization of personnel and equipment at the beginning of a contract and costs incurred for demobilization at the end of a contract. Mobilization costs are deferred and amortized ratably over the contract term (including anticipated contract extensions) based on the pattern of the provision of services to which the contract fulfillment costs relate. Demobilization costs are recognized when incurred at the end of the contract. Deferred contract costs are reflected as “Deferred costs,” a component of “Other current assets” and “Other assets, net” in the accompanying condensed consolidated balance sheets (Note 3). Our deferred contract costs totaled $6.2 million at March 31, 2022 and $3.3 million at December 31, 2021. For the three-month periods ended March 31, 2022 and 2021, we recorded $4.6 million and $10.4 million, respectively, related to amortization of these deferred contract costs. There were no associated impairment losses for any period presented.

For additional information regarding revenue recognition, see Notes 2 and 12 to our 2021 Form 10-K.

16

Note 8 — Earnings Per Share

We have shares of restricted stock issued and outstanding that are currently unvested. Because holders of shares of unvested restricted stock are entitled to the same liquidation and dividend rights as the holders of our unrestricted common stock, we are required to compute basic and diluted earnings per share (“EPS”) under the two-class method in periods in which we have earnings. Under the two-class method, net income or loss attributable to common shareholders for each period is allocated based on the participation rights of both common shareholders and the holders of any participating securities as if earnings for the respective periods had been distributed. For periods in which we have a net loss we do not use the two-class method as holders of our restricted shares are not obligated to share in such losses.

Basic EPS is computed by dividing net income or loss available to common shareholders by the weighted average shares of our common stock outstanding. The calculation of diluted EPS is similar to that for basic EPS, except that the denominator includes dilutive common stock equivalents and the numerator excludes the effects of dilutive common stock equivalents, if any. The computations of the numerator (earnings or loss) and denominator (shares) to derive the basic and diluted EPS amounts presented on the face of the accompanying condensed consolidated statements of operations are as follows (in thousands):

Three Months Ended

Three Months Ended

March 31, 2022

March 31, 2021

    

Income

    

Shares

    

Income

    

Shares

Basic and Diluted:

 

  

 

  

 

  

 

  

Net loss attributable to common shareholders

$

(42,031)

 

$

(2,878)

 

  

Less: Accretion of redeemable noncontrolling interests

 

 

(241)

 

  

Net loss available to common shareholders

$

(42,031)

151,142

$

(3,119)