UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
For the quarterly period ended
or
For the transition period from__________ to__________
Commission File Number:
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
(
(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:
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. ☑
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). ☑
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.
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).
As of October 21, 2024,
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
(Unaudited) | ||||||
ASSETS |
|
|
|
| ||
Current assets: |
|
|
|
| ||
Cash and cash equivalents | $ | | $ | | ||
Accounts receivable, net of allowance for credit losses of $ |
| |
| | ||
Other current assets |
| |
| | ||
Total current assets |
| |
| | ||
Property and equipment |
| |
| | ||
Less accumulated depreciation |
| ( |
| ( | ||
Property and equipment, net |
| |
| | ||
Operating lease right-of-use assets |
| |
| | ||
Deferred recertification and dry dock costs, net | | | ||||
Other assets, net |
| |
| | ||
Total assets | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
| ||
Current liabilities: |
|
|
|
| ||
Accounts payable | $ | | $ | | ||
Accrued liabilities |
| |
| | ||
Current maturities of long-term debt |
| |
| | ||
Current operating lease liabilities |
| |
| | ||
Total current liabilities |
| |
| | ||
Long-term debt |
| |
| | ||
Operating lease liabilities |
| |
| | ||
Deferred tax liabilities |
| |
| | ||
Other non-current liabilities |
| |
| | ||
Total liabilities |
| |
| | ||
Commitments and contingencies | ||||||
Shareholders’ equity: |
|
|
|
| ||
Common stock, |
| |
| | ||
Retained earnings |
| |
| | ||
Accumulated other comprehensive loss |
| ( |
| ( | ||
Total shareholders’ equity |
| |
| | ||
Total liabilities and shareholders’ equity | $ | | $ | |
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 | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Net revenues | $ | | $ | | $ | | $ | | ||||
Cost of sales |
| |
| |
| |
| | ||||
Gross profit |
| |
| |
| |
| | ||||
Gain (loss) on disposition of assets, net |
| |
| — |
| ( |
| | ||||
Acquisition and integration costs | — | — | — | ( | ||||||||
Change in fair value of contingent consideration | — | ( | — | ( | ||||||||
Selling, general and administrative expenses |
| ( |
| ( |
| ( |
| ( | ||||
Income from operations |
| |
| |
| |
| | ||||
Net interest expense |
| ( |
| ( |
| ( |
| ( | ||||
Losses related to convertible senior notes |
| — |
| — |
| ( |
| — | ||||
Other expense, net |
| ( |
| ( |
| ( |
| ( | ||||
Royalty income and other |
| |
| |
| |
| | ||||
Income before income taxes |
| |
| |
| |
| | ||||
Income tax provision |
| |
| |
| |
| | ||||
Net income | $ | | $ | | $ | | $ | | ||||
Earnings per share of common stock: |
|
|
|
|
|
|
|
| ||||
Basic | $ | | $ | | $ | | $ | | ||||
Diluted | $ | | $ | | $ | | $ | | ||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
| ||||
Basic |
| |
| |
| |
| | ||||
Diluted |
| |
| |
| |
| |
The accompanying notes are an integral part of these condensed consolidated financial statements.
HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in thousands)
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 | 2024 |
| 2023 | ||||||
Net income | $ | | $ | | $ | |
| $ | | |||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
| ||||
Foreign currency translation gain (loss) |
| |
| ( |
| |
| | ||||
Other comprehensive income (loss), net of tax |
| |
| ( |
| |
| | ||||
Comprehensive income (loss) | $ | | $ | ( | $ | |
| $ | |
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 SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in thousands)
Accumulated | ||||||||||||||
Other | Total | |||||||||||||
Common Stock | Retained | Comprehensive | Shareholders’ | |||||||||||
| Shares |
| Amount |
| Earnings |
| Loss |
| Equity | |||||
Balance, June 30, 2024 |
| | $ | | $ | | $ | ( | $ | | ||||
Net income |
| — |
| — |
| |
| — |
| | ||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| |
| | ||||
Activity in company stock plans, net and other |
| |
| |
| — |
| — |
| | ||||
Share-based compensation |
| — |
| |
| — |
| — |
| | ||||
Balance, September 30, 2024 |
| | $ | | $ | | $ | ( | $ | | ||||
Balance, June 30, 2023 |
| | $ | | $ | | $ | ( | $ | | ||||
Net income |
| — |
| — |
| |
| — |
| | ||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| ( |
| ( | ||||
Settlement of convertible debt conversion |
| — |
| ( |
| — |
| — |
| ( | ||||
Repurchases of common stock | ( | ( | — | — | ( | |||||||||
Activity in company stock plans, net and other |
| |
| |
| — |
| — |
| | ||||
Share-based compensation |
| — |
| |
| — |
| — |
| | ||||
Balance, September 30, 2023 |
| | $ | | $ | | $ | ( | $ | |
Accumulated | ||||||||||||||
Other | Total | |||||||||||||
Common Stock | Retained | Comprehensive | Shareholders’ | |||||||||||
| Shares |
| Amount |
| Earnings |
| Loss |
| Equity | |||||
Balance, December 31, 2023 |
| | $ | | $ | | $ | ( | $ | | ||||
Net income |
| — |
| — |
| |
| — |
| | ||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| |
| | ||||
Settlement of convertible debt conversion |
| — |
| ( |
| — |
| — |
| ( | ||||
Repurchases of common stock |
| ( |
| ( |
| — |
| — |
| ( | ||||
Termination of capped calls |
| — |
| |
| — |
| — |
| | ||||
Activity in company stock plans, net and other |
| |
| ( |
| — |
| — |
| ( | ||||
Share-based compensation |
| — |
| |
| — |
| — |
| | ||||
Balance, September 30, 2024 |
| | $ | | $ | | $ | ( | $ | | ||||
Balance, December 31, 2022 |
| | $ | | $ | | $ | ( | $ | | ||||
Net income |
| — |
| — |
| |
| — |
| | ||||
Foreign currency translation adjustments |
| — |
| — |
| — |
| |
| | ||||
Settlement of convertible debt conversion |
| — |
| ( |
| — |
| — |
| ( | ||||
Repurchases of common stock | ( | ( | — | — | ( | |||||||||
Activity in company stock plans, net and other |
| |
| |
| — |
| — |
| | ||||
Share-based compensation |
| — |
| |
| — |
| — |
| | ||||
Balance, September 30, 2023 |
| | $ | | $ | | $ | ( | $ | |
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 CASH FLOWS
(UNAUDITED)
(in thousands)
Nine Months Ended | |||||||
September 30, | |||||||
| 2024 |
| 2023 |
| |||
Cash flows from operating activities: |
|
|
|
| |||
Net income | $ | | $ | | |||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
| ||||
Depreciation and amortization |
| |
| | |||
Amortization of debt discount |
| |
| — | |||
Amortization of debt issuance costs |
| |
| | |||
Share-based compensation |
| |
| | |||
Deferred income taxes |
| |
| | |||
(Gain) loss on disposition of assets, net |
| |
| ( | |||
Losses related to convertible senior notes |
| |
| — | |||
Unrealized foreign currency loss |
| ( |
| | |||
Change in fair value of contingent consideration | — | | |||||
Changes in operating assets and liabilities: |
|
|
|
| |||
Accounts receivable, net |
| |
| ( | |||
Other current assets | ( | ( | |||||
Income tax payable |
| ( |
| ( | |||
Accounts payable and accrued liabilities |
| ( |
| | |||
Deferred recertification and dry dock costs, net | ( | ( | |||||
Other, net |
| |
| | |||
Net cash provided by operating activities |
| |
| | |||
Cash flows from investing activities: |
|
|
|
| |||
Capital expenditures |
| ( |
| ( | |||
Proceeds from sale of assets | | | |||||
Proceeds from insurance recoveries |
| |
| — | |||
Net cash used in investing activities |
| ( |
| ( | |||
Cash flows from financing activities: |
|
|
|
| |||
Payments related to convertible senior notes |
| ( |
| ( | |||
Repayment of MARAD Debt |
| ( |
| ( | |||
Proceeds from settlement of capped calls |
| |
| — | |||
Debt issuance costs |
| ( |
| ( | |||
Repurchases of common stock | ( | ( | |||||
Payments related to tax withholding for share-based compensation |
| ( |
| ( | |||
Proceeds from issuance of ESPP shares |
| |
| | |||
Payment of earn-out consideration | ( | — | |||||
Net cash used in financing activities |
| ( |
| ( | |||
Effect of exchange rate changes on cash and cash equivalents |
| ( |
| ( | |||
Net decrease in cash and cash equivalents |
| ( |
| ( | |||
Cash and cash equivalents: |
|
|
|
| |||
Balance, beginning of year |
| |
| | |||
Balance, end of period | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
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 in U.S. dollars have been prepared in accordance with 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 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 loss, statements of shareholders’ equity and statements of cash flows, as applicable. The operating results for the three- and nine-month periods ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. Our balance sheet as of December 31, 2023 included herein has been derived from the audited balance sheet as of December 31, 2023 included in our 2023 Annual Report on Form 10-K (our “2023 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 2023 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.
New accounting standards
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Improvements to Reportable Segment Disclosures,” which requires entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (the “CODM”) and included within each reported measure of segment profit or loss as well as an amount for other segment items by reportable segment and a description of its composition. ASU No. 2023-07 requires all annual disclosures about a reportable segment’s profit or loss and assets to be provided in interim periods as well. Among other things, this ASU also requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. ASU No. 2023-07 will be effective on a retrospective basis for annual periods beginning January 1, 2024 and for interim periods beginning January 1, 2025. This ASU is not expected to have a material impact on our consolidated financial statements other than increased disclosure requirements.
In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures,” which requires entities to disclose, on an annual basis, specific categories in a tabular rate reconciliation using both percentages and reporting currency amounts and to provide additional information for reconciling items that meet a quantitative threshold. This ASU also requires that entities disclose on an annual basis: a) income taxes paid (net) disaggregated by federal, state and foreign taxes, b) income taxes paid (net) by individual jurisdiction, c) income (or loss) from continuing operations before income tax expense (or benefit) between domestic and foreign, and d) income tax expense (or benefit) from continuing operations by federal, state and foreign. Certain previous disclosure requirements on unrecognized tax benefits and cumulative amount of temporary differences are eliminated. ASU No. 2023-09 will be effective for us for annual periods beginning January 1, 2025. This ASU is not expected to have a material impact on our consolidated financial statements other than increased disclosure requirements.
We do not expect other recently issued accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.
7
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, robotics and decommissioning operations. Our services are key in supporting a global energy transition:
● | Production maximization — our assets and methodologies are specifically designed to efficiently enhance and extend the lives of existing oil and gas reserves; we also offer an alternative to take over end-of-life reserves in preparation for their abandonment; |
● | Decommissioning — we are a full-field abandonment contractor and believe that regulatory push for plug and abandonment (“P&A”) and transition to renewable energy will facilitate the continued growth of the abandonment market; and |
● | Renewables — we are an established global leader in jet trenching and provide specialty support services to renewable energy developments such as offshore wind farms, including boulder removal and unexploded ordnance clearance. |
We provide a range of services to the oil and gas and renewable energy markets primarily in the Gulf of Mexico (deepwater and shelf), U.S. East Coast, Brazil, North Sea, Asia Pacific and West Africa regions. Our North Sea operations and our Gulf of Mexico shelf operations are usually subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months. Our services are segregated into
Our Well Intervention segment provides services enabling our customers to safely access subsea offshore wells for the purpose of performing production enhancement or decommissioning operations, thereby mitigating the need to drill new wells by extending the useful lives of existing wells and preserving the environment by preventing uncontrolled releases of oil and natural gas. Our well intervention vessels include the Q4000, the Q5000, the Q7000, the Seawell, the Well Enhancer, and
Our Robotics segment provides trenching, seabed clearance, offshore construction and inspection, repair and maintenance (“IRM”) services to both the oil and gas and the renewable energy markets globally, thereby assisting the delivery of renewable 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, IROV boulder grabs and robotics support vessels under term charters as well as spot vessels as needed. We offer our ROVs, trenchers and IROV boulder grabs on a stand-alone basis or on an integrated basis with chartered robotics support vessels.
Our Shallow Water Abandonment segment provides services in support of the upstream and midstream industries predominantly in the Gulf of Mexico shelf, including offshore oilfield decommissioning and reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift and commercial diving services. Our Shallow Water Abandonment segment includes Helix Alliance that was acquired in July 2022, which offers a diversified fleet of marine assets including liftboats, offshore supply vessels (“OSVs”), dive support vessels (“DSVs”), a heavy lift derrick barge, a crew boat, P&A systems and coiled tubing (“CT”) systems.
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”), which combines the HP I, the Q4000 and the Q5000 with certain well control equipment that can be deployed to respond to a well control incident, and our ownership of mature oil and gas properties. All of our current Production Facilities activities are located in the Gulf of Mexico.
8
Note 3 — Details of Certain Accounts
Other current assets consist of the following (in thousands):
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Prepaids | $ | |
| $ | | |
Contract assets (Note 8) | | | ||||
Deferred costs (Note 8) |
| |
| | ||
Other |
| |
| | ||
Total other current assets | $ | |
| $ | |
Other assets, net consist of the following (in thousands):
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Prepaid charter (1) | $ | |
| $ | | |
Deferred costs (Note 8) | |
| | |||
Other receivable (2) |
| |
| | ||
Intangible assets with finite lives, net |
| |
| | ||
Other |
| |
| | ||
Total other assets, net | $ | |
| $ | |
(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. |
(2) | Represents the present value of the agreed-upon amounts that we are entitled to receive from Marathon Oil Corporation (“Marathon Oil”) for remaining P&A work to be performed by us on Droshky oil and gas properties we acquired from Marathon Oil in 2019. |
Accrued liabilities consist of the following (in thousands):
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Accrued payroll and related benefits | $ | |
| $ | | |
Accrued interest | | | ||||
Income tax payable |
| |
| | ||
Deferred revenue (Note 8) |
| |
| | ||
Earn-out consideration (1) |
| — |
| | ||
Other (2) |
| |
| | ||
Total accrued liabilities | $ | |
| $ | |
(1) | Represents the final amount of the earn-out consideration associated with the acquisition of the Alliance group of companies (collectively “Alliance”) on July 1, 2022, which was paid to the seller of Alliance in cash on April 3, 2024. |
(2) | Amounts as of December 31, 2023 included $ |
9
Other non-current liabilities consist of the following (in thousands):
September 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Asset retirement obligations (Note 12) | $ | |
| $ | | |
Other (1) |
| |
| | ||
Total other non-current liabilities | $ | |
| $ | |
(1) | Amount as of December 31, 2023 included $ |
Note 4 — Leases
We charter vessels and lease facilities and equipment under non-cancelable contracts that expire on various dates through 2034.
The following table details the components of our lease cost (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Operating lease cost | $ | | $ | | $ | |
| $ | | |||
Variable lease cost |
| |
| |
| |
| | ||||
Short-term lease cost |
| |
| |
| |
| | ||||
Sublease income |
| ( |
| ( |
| ( |
| ( | ||||
Net lease cost | $ | | $ | | $ | |
| $ | |
Maturities of our operating lease liabilities as of September 30, 2024 are as follows (in thousands):
|
| Facilities and |
| ||||||
| Vessels |
| Equipment |
| Total | ||||
Less than one year | $ | | $ | |
| $ | | ||
One to two years |
| |
| |
| | |||
Two to three years |
| |
| |
| | |||
Three to four years |
| |
| |
| | |||
Four to five years |
| |
| |
| | |||
Over five years |
| |
| |
| | |||
Total lease payments | $ | | $ | |
| $ | | ||
Less: imputed interest |
| ( |
| ( |
| ( | |||
Total operating lease liabilities | $ | | $ | |
| $ | | ||
Current operating lease liabilities | $ | | $ | |
| $ | | ||
Non-current operating lease liabilities |
| |
| |
| | |||
Total operating lease liabilities | $ | | $ | |
| $ | |
10