Execution of $200 million share repurchase program to align with free cash flow generation 33 Non-GAAP Reconciliations Non-GAAP Reconciliations 3/31/22 12/31/22 12/31/2022 (5,165) (2,018) 2,140 2,529 12,603 Net interest expense 4,187 5,174 4,333 18,950 Sustainability and ESG R CHUCER I E ● 9 30 SUSTAINABILITY AND ESG Corporate Sustainability "Safety, Sustainability and Value Creation – our core goals – support our vision as a preeminent offshore energy transition Company." Owen Kratz, President and Chief Ex ...

Helix Energy Solutions Forward-Looking Statements | --- | --- | --- | |-----------------------------------------------------------------|----------------------------------------------------------|-------| | | | | | | | | | | | | | | | | | | At Helix, our purpose | | | | is to enable energy transition through: | | | Maximizing Existing Reserves | Offshore Renewables & Wind Farms | | | Enhancing remaining production from existing oil and gas wells | Transitioning our energy economy to a sustainable model | | ...

2023 Capital additions are forecasted at approximately $50 - $70 million: • • 31 Expected continued strong operating and free cash flows • Anticipate continued strong renewables trenching market • Expected ongoing strong Gulf of Mexico shallow water decommissioning market • Balance Sheet • ENVIRONMENTAL, SOCIAL AND GOVERNANCE Non-GAAP Reconciliations 12/31/21 9/30/22 12/31/22 12/31/21 | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |------------------------------------------------- ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) Helix is an international offshore energy services company specializing in well intervention, robotics, and decommissioning services globally - Helix operates a three-legged business model focused on maximizing production of existing oil and gas reserves, supporting renewable energy developments, and decommissioning end-of-life fields[15](index=15&type=chunk) - The company's services are divided into **four** reportable business segments: Well Intervention, Robotics, Production Facilities, and the new Shallow Water Abandonment segment, which was formed in **Q3 2022** after the **acquisition** of Alliance[19](index=19&type=chunk) Major Customer Revenue Concentration | Year | Customer | Percentage of Consolidated Revenue | | :--- | :--- | :--- | | 2022 | Shell | 15% | | 2021 | Petrobras | 23% | | 2021 | Shell | 17% | | 2020 | Petrobras | 28% | | 2020 | BP | 17% | [Our Operations](index=7&type=section&id=Item%201.%20Business%23Our%20Operations) Helix's operations offer comprehensive offshore energy services, including well intervention, robotics, and decommissioning - The Well Intervention segment includes **seven** purpose-built **vessels** (Q4000, Q5000, Q7000, Seawell, Well Enhancer, Siem Helix **1**, Siem Helix **2**) and **12** intervention **systems**[20](index=20&type=chunk)[24](index=24&type=chunk) - The Robotics segment's **assets** as of December **31**, **2022**, included **41** work class **ROVs**, **seven** **trenchers**, and the IROV boulder grab. In **2022**, **43%** of this segment's **revenue** came from offshore renewable energy contracts[30](index=30&type=chunk)[31](index=31&type=chunk) - The Shallow Water Abandonment segment was added in July **2022** through the **acquisition** of Alliance, providing decommissioning services in the Gulf of Mexico shelf with **assets** including liftboats, OSVs, DSVs, and a heavy lift derrick barge[22](index=22&type=chunk)[32](index=32&type=chunk) - The Production Facilities segment operates the Helix Producer I (HP I) floating production vessel and the Helix Fast Response System (HFRS) for well control incidents in the Gulf of Mexico[23](index=23&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [Human Capital Resources](index=11&type=section&id=Item%201.%20Business%23Human%20Capital%20Resources) Helix employed 2,280 people as of December 31, 2022, emphasizing safety, diversity, and workforce retention - As of December **31**, **2022**, the company had **2,280 employees**, with **447** covered by collective bargaining agreements[47](index=47&type=chunk) - The global **voluntary turnover rate** was **12.5%** in **2022** (excluding Alliance **acquisition employees**), and **57%** of the workforce has been with Helix for **five** years or longer[51](index=51&type=chunk) - The company's Board of Directors added **two** new gender and ethnically diverse members in September **2022** as part of its board refreshment process[54](index=54&type=chunk) [Government and Environmental Regulation](index=14&type=section&id=Item%201.%20Business%23Government%20and%20Environmental%20Regulation) Helix's global operations are subject to extensive international and national regulations, including environmental laws and cabotage rules - Operations are subject to extensive regulation in the Gulf of Mexico, U.S. East Coast, Brazil, North Sea, Asia Pacific, and West Africa, including oversight from bodies like the U.S. Coast Guard, EPA, BOEM, and BSEE[56](index=56&type=chunk)[58](index=58&type=chunk) - The company is subject to local content requirements and cabotage rules, such as the Jones Act in the U.S., which restricts maritime cargo transportation to U.S.-built, owned, and crewed **vessels**[62](index=62&type=chunk)[63](index=63&type=chunk) - Key environmental regulations include the Oil Pollution Act (OPA), which imposes strict liability for oil spills, and MARPOL, which sets standards for pollution prevention from ships[68](index=68&type=chunk)[69](index=69&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant market, operational, financial, and regulatory risks, including volatile commodity prices and debt - The business is highly dependent on the cyclical oil and gas market and is adversely affected by low oil and gas prices, which reduce customer capital expenditures[108](index=108&type=chunk) - As of December **31**, **2022**, the company had a **service backlog** of **$847 million**, but there is a risk it may not be fully realized due to potential contract cancellations or modifications[116](index=116&type=chunk) - As of December **31**, **2022**, the company had **consolidated indebtedness** of **$264 million**, which could impair financial condition and limit operational flexibility[140](index=140&type=chunk) - The company is subject to the Jones Act due to its **acquisition** of **21** U.S. flagged **vessels**. Failure to maintain U.S. citizen status, including non-U.S. citizens owning **25%** or more of common stock, could adversely affect operations[155](index=155&type=chunk) [Unresolved Staff Comments](index=44&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - None[172](index=172&type=chunk) [Properties](index=44&type=section&id=Item%202.%20Properties) As of December 31, 2022, Helix's fleet comprised 27 owned and six chartered vessels, plus robotics assets and leased facilities Owned and Chartered Assets as of Dec 31, 2022 | Asset Type | Owned | Chartered | Total/Key Details | | :--- | :--- | :--- | :--- | | Vessels | 27 | 6 | Includes Q4000, Q5000, Q7000, Siem Helix 1&2 | | Intervention Systems | 8 IRSs, 3 SILs, 1 ROAM | - | 12 total systems | | P&A / Coiled Tubing | 15 P&A, 6 Coiled Tubing | - | 21 total systems | | Robotics Assets | 41 ROVs, 7 Trenchers, 1 IROV | - | 49 total assets | - The company's corporate headquarters are located in Houston, Texas. Most facilities are leased, with primary locations in Texas, Louisiana, Scotland, Singapore, and Brazil[179](index=179&type=chunk) [Legal Proceedings](index=47&type=section&id=Item%203.%20Legal%20Proceedings) The company faces lawsuits from offshore employees seeking overtime, impacted by a recent adverse Supreme Court ruling - The company is involved in several collective action lawsuits from offshore **employees** seeking overtime compensation[463](index=463&type=chunk) - The U.S. Supreme Court issued an adverse ruling against the company in **Q1 2023** related to one of these lawsuits, which is expected to affect similar pending cases[463](index=463&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[181](index=181&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Helix common stock trades on NYSE as HLX, with no cash dividends planned and a new $200 million share repurchase program - The company's common stock is traded on the New York Stock Exchange (NYSE) under the ticker symbol 'HLX'[187](index=187&type=chunk) - The company does not currently pay cash dividends and intends to reinvest earnings for future **growth**, **acquisitions**, or share repurchases[188](index=188&type=chunk) - On February **20**, **2023**, the Board authorized a new share repurchase program for up to **$200 million** of common stock, revoking a previous authorization[195](index=195&type=chunk)[249](index=249&type=chunk) [Reserved](index=51&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, Helix's revenue increased 29% to $873.1 million, reporting a net loss of $87.8 million despite improved Adjusted EBITDA Financial Performance Summary (2022 vs 2021) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $873.1M | $674.7M | +29% | | Gross Profit | $50.6M | $15.4M | +229% | | Net Loss | ($87.8M) | ($61.7M) | Increased Loss | | Adjusted EBITDA | $121.0M | $96.3M | +26% | | Backlog (Year-End) | $847M | $348M | +143% | - The **acquisition** of Alliance on July **1**, **2022**, created the new Shallow Water Abandonment segment, which contributed **$124.8 million** in **revenue** in the second half of **2022**[215](index=215&type=chunk)[224](index=224&type=chunk) - Robotics segment **revenue** grew **40%** to **$191.9 million** in **2022**, driven by higher **vessel**, trenching, and **ROV** activities, with **gross margin** improving from **10%** to **20%**[224](index=224&type=chunk)[225](index=225&type=chunk)[228](index=228&type=chunk) [Results of Operations](index=57&type=section&id=Item%207.%20MD%26A%23Results%20of%20Operations) In 2022, consolidated net revenues increased 29% to $873.1 million, driven by new segments and Robotics growth, resulting in a net loss Revenues by Segment (in thousands) | Segment | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Well Intervention | $524,241 | $516,564 | 1% | | Robotics | $191,921 | $137,295 | 40% | | Shallow Water Abandonment | $124,810 | $— | 100% | | Production Facilities | $82,315 | $69,348 | 19% | | **Total** | **$873,100** | **$674,728** | **29%** | Gross Profit (Loss) by Segment (in thousands) | Segment | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Well Intervention | $(40,107) | $(21,262) | 89% (Wider Loss) | | Robotics | $37,507 | $13,441 | 179% | | Shallow Water Abandonment | $23,919 | $— | 100% | | Production Facilities | $30,666 | $25,024 | 23% | | **Total** | **$50,616** | **$15,393** | **229%** | - The company incurred **$2.7 million** in **acquisition** and integration costs and a **$16.1 million** non-cash charge for the change in fair value of **contingent consideration** related to the Alliance **acquisition**[234](index=234&type=chunk)[235](index=235&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Item%207.%20MD%26A%23Liquidity%20and%20Capital%20Resources) As of December 31, 2022, Helix's liquidity was $284.7 million, with cash flow from operations decreasing to $51.1 million Liquidity and Debt Summary (in thousands) | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Net working capital | $162,634 | $251,255 | | Long-term debt | $225,875 | $262,137 | | Liquidity (Cash + ABL Availability) | $284,729 | $304,660 | Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Operating Activities | $51,108 | $140,117 | | Investing Activities | $(138,289) | $(8,271) | | Financing Activities | $(44,844) | $(95,997) | - Material cash requirements as of Dec **31**, **2022**, total **$783.8 million**, including **debt**, interest, operating leases, and an estimated **$42.8 million** earn-out consideration for the Alliance **acquisition** payable in **2024**[256](index=256&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Helix is exposed to market risks including foreign currency, interest rates, and commodity prices, with a $23.4 million foreign currency loss in 2022 - The company is exposed to foreign currency risk, primarily from the British pound. It recorded a **foreign currency transaction loss** of **$23.4 million** in **2022**, compared to a **$1.5 million loss** in **2021**[271](index=271&type=chunk)[272](index=272&type=chunk) - As of the report date, the company has no outstanding **debt** subject to floating interest rates, thus having no immediate exposure to interest rate risk on existing **debt**[273](index=273&type=chunk) - The company is exposed to volatile oil and natural gas prices through its ownership of production properties in the Production Facilities segment[274](index=274&type=chunk) [Financial Statements and Supplementary Data](index=73&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Helix's audited consolidated financial statements, including KPMG's unqualified opinion and critical audit matters [Report of Independent Registered Public Accounting Firm](index=73&type=section&id=Item%208.%20Financial%20Statements%23Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG issued an unqualified opinion on Helix's financial statements, highlighting critical audit matters on property impairment and acquisition fair value - The auditor, KPMG LLP, issued an **unqualified opinion** on the consolidated financial statements[275](index=275&type=chunk) - A **critical audit matter** was the evaluation of **property** and equipment for impairment triggering events, requiring subjective judgment regarding the impact of low utilization and day rates[281](index=281&type=chunk) - A second **critical audit matter** was the fair value measurement of the **contingent consideration** and **property** and equipment from the Alliance **acquisition**, involving complex assumptions about **gross profit**, replacement cost, and economic obsolescence[284](index=284&type=chunk) [Consolidated Financial Statements](index=78&type=section&id=Item%208.%20Financial%20Statements%23Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $2.39 billion, a net loss of $87.8 million, and $51.1 million cash from operations Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $460,589 | $529,538 | | Property and equipment, net | $1,641,615 | $1,657,645 | | **Total Assets** | **$2,389,338** | **$2,326,028** | | Total Current Liabilities | $297,955 | $278,283 | | Long-term debt | $225,875 | $262,137 | | **Total Liabilities** | **$872,629** | **$678,559** | | **Total Shareholders' Equity** | **$1,516,709** | **$1,647,469** | Consolidated Statement of Operations Highlights (in thousands) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net Revenues | $873,100 | $674,728 | $733,555 | | Gross Profit | $50,616 | $15,393 | $79,909 | | Income (loss) from operations | $(44,855) | $(48,687) | $13,025 | | Net income (loss) | $(87,784) | $(61,684) | $20,084 | [Notes to Consolidated Financial Statements](index=84&type=section&id=Item%208.%20Financial%20Statements%23Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the $145.7 million Alliance acquisition, $264.1 million long-term debt, and $846.7 million backlog - On July **1**, **2022**, the company acquired Alliance for a preliminary **purchase price** of **$145.7 million**, including **$119.0 million** in cash and **$26.7 million** in **contingent consideration**[364](index=364&type=chunk)[365](index=365&type=chunk) - **Total long-term debt** as of Dec **31**, **2022**, was **$264.1 million**, consisting of the **2023** Notes (**$30M**), **2026** Notes (**$200M**), and MARAD **Debt** (**$40.9M**), net of issuance costs[380](index=380&type=chunk) - As of Dec **31**, **2022**, **unsatisfied performance obligations** (**backlog**) totaled **$846.7 million**, with **$532.6 million** expected to be recognized as **revenue** in **2023**[423](index=423&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=130&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure - None[471](index=471&type=chunk) [Controls and Procedures](index=130&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Management concluded that disclosure controls and procedures were effective as of December **31**, **2022**[472](index=472&type=chunk) - The assessment of internal controls excluded the Alliance business, acquired on July **1**, **2022**, in accordance with SEC guidance for recent **acquisitions**[473](index=473&type=chunk) - There were no material changes in internal control over financial reporting during the fourth quarter of **2022**[478](index=478&type=chunk) [Other Information](index=131&type=section&id=Item%209B.%20Other%20Information) There is no other information to report - None[479](index=479&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=132&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the **2023** Annual Meeting of Shareholders[482](index=482&type=chunk) - The company's Code of Business Conduct and Ethics is available on its website at www.helixesg.com[483](index=483&type=chunk) [Executive Compensation](index=132&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the **2023** Annual Meeting of Shareholders[485](index=485&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=132&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the **2023** Annual Meeting of Shareholders[486](index=486&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=132&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the **2023** Annual Meeting of Shareholders[487](index=487&type=chunk) [Principal Accounting Fees and Services](index=132&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the **2023** Annual Meeting of Shareholders[488](index=488&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=133&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed with the Form 10-K, with all financial statement schedules omitted - This section includes a list of all financial statements filed with the report[490](index=490&type=chunk)[494](index=494&type=chunk) - All financial statement schedules are omitted because the required information is not applicable or is included elsewhere in the filing[491](index=491&type=chunk) [Form 10-K Summary](index=143&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - None[507](index=507&type=chunk)

Financial Data and Key Metrics Changes - In Q4 2022, revenues were $288 million, an increase of $15 million from Q3 2022. Net income improved by $22 million to $3 million compared to Q3 2022. Adjusted EBITDA for the quarter was $49 million [19][28] - For the full year 2022, revenues improved by $198 million to $873 million, with EBITDA increasing to $121 million from $96 million in 2021 [49][104] - The company ended the year with a net debt position of $75 million and a cash balance of $187 million [22][102] Business Line Data and Key Metrics Changes - The Robotics division achieved high utilization of 96% in Q4 2022, operating four vessels across various projects [29] - The Well Intervention business in the Gulf of Mexico had a utilization rate of 97% globally, with the Q5000 achieving 100% utilization [57][30] - The Helix Alliance segment reported 69% utilization for liftboats and 8% for P&A systems, with a total of 1,106 operational days [58] Market Data and Key Metrics Changes - Brazil's market is expected to see increased activity with three vessels contracted for 2024, indicating a shift towards a three-vessel market [1][64] - The North Sea market showed improved utilization and higher rates, with the Grand Canyon III achieving 100% utilization [37][60] - The U.S. East Coast is expanding with new trenching systems deployed for wind farm support, indicating growth in the renewables sector [38][65] Company Strategy and Development Direction - The company aims to position itself as a leading offshore energy transition service provider, focusing on decommissioning and renewables [50][88] - A share buyback program of up to $200 million has been authorized, reflecting the company's commitment to returning capital to shareholders [23][88] - The acquisition of Helix Alliance is expected to enhance the company's capabilities in shallow water decommissioning, diversifying revenue streams [50][79] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the visibility in the market, noting that demand began to increase following geopolitical events, particularly the Ukraine invasion [6][27] - The outlook for 2023 is significantly improved, with expectations of revenue between $1.0 billion and $1.2 billion and EBITDA in the range of $210 million to $250 million [104][105] - The company anticipates a strong second half of 2023, driven by contracted work and improving market conditions [105][106] Other Important Information - The company has a strong backlog and good visibility for the next few years, with long-term contracts in place [27][104] - The Robotics segment is benefiting from a tight market, with strong performance expected in both oil and gas and renewables [99][137] - The company plans to maintain capital spending discipline while focusing on free cash flow generation [118] Q&A Session Summary Question: What opportunities exist for the 15K Well Intervention stacks? - Management indicated good visibility and demand for the 15K systems, expecting similar utilization in 2023 as in 2022 [120][138] Question: What is the trajectory of P&A work in the Gulf of Mexico and globally? - Management noted a surge in decommissioning activity in the Gulf of Mexico, particularly in shallow water, driven by regulatory pressures and market dynamics [126][145] Question: How does the share buyback play into the convertible notes conversion? - The company plans to settle the convertible notes in cash and does not intend to use shares from the repurchase plan for this purpose [129][148] Question: What is the expected mix of renewables in the Robotics segment? - Management expects the renewables mix to increase, potentially reaching 50% or more, which would positively impact profitability [134][137]

Helix Energy Solutions Group, Inc. (NYSE:HLX) Q3 2022 Earnings Conference Call October 25, 2022 10:00 AM ET Company Participants Brent Arriaga - CAO & Corporate Controller Kenneth Neikirk - SVP, General Counsel & Corporate Secretary Owen Kratz - President, CEO & Director Scott Sparks - EVP & COO Erik Staffeldt - EVP & CFO Conference Call Participants James Schumm - Cowen and Company Donald Crist - Johnson Rice & Company David Smith - Pickering Energy Partners Insights Kay Hoh - Evercore ISI Operator Greetin ...

| --- | --- | --- | --- | --- | --- | |--------------------|-------|-------|-------|-------|-------| | | | | | | | | October 25, 2022 | | | | | | | Third Quarter 2022 | | | | | | | Conference Call | | | | | | | | | | | | | FORWARD-LOOKING STATEMENTS 2 This presentation 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 ...

| --- | --- | --- | --- | --- | --- | |-------------------------|-------|-------|-------|-------|-------| | | | | | | | | SEPTEMBER 2022 | | | | | | | Helix Energy Solutions | | | | | | | Company Update | | | | | | | | | | | | | FORWARD-LOOKING STATEMENTS 2 References in this presentation to "our" or "Helix" means Helix Energy Solutions Group, Inc., together with our subsidiaries. References in this presentation to "Alliance" means Helix Alliance Decom, LLC, a wholly-owned subsidiary of Helix. This presenta ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) For the six months ended June 30, 2022, Helix Energy Solutions Group reported a net loss of **$71.7 million**, a significant increase from the **$16.7 million** loss in the same period of 2021, driven by a decline in gross profit to a **$20.0 million** loss from a **$17.8 million** profit year-over-year, primarily due to weaker performance in the Well Intervention segment, with total assets decreasing to **$2.21 billion** from **$2.33 billion** at year-end 2021, and cash flow from operations turning negative **$23.3 million** from a positive **$92.5 million** in the prior year period Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric (in thousands, except per share) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Revenues | $312,737 | $325,356 | | Gross Profit (Loss) | $(19,963) | $17,754 | | Loss from Operations | $(51,953) | $(11,496) | | Net Loss | $(71,730) | $(16,733) | | Diluted Loss Per Share | $(0.47) | $(0.11) | Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric (in thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $260,595 | $253,515 | | Total Current Assets | $485,404 | $529,538 | | Total Assets | $2,213,653 | $2,326,028 | | Total Current Liabilities | $232,726 | $278,283 | | Long-term Debt | $258,977 | $262,137 | | Total Shareholders' Equity | $1,531,790 | $1,647,469 | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(23,254) | $92,540 | | Net cash provided by (used in) investing activities | $5,653 | $(6,761) | | Net cash used in financing activities | $(40,319) | $(62,802) | [Note 2 — Company Overview](index=11&type=section&id=Note%202%20%E2%80%94%20Company%20Overview) The company operates as an international offshore energy services provider with a three-pronged business model focused on production maximization, decommissioning, and renewable energy support, with operations divided into three reportable segments: Well Intervention, Robotics, and Production Facilities, serving deepwater regions globally, and a key recent development being the July 1, 2022 acquisition of Alliance, expanding services into the shallow waters of the Gulf of Mexico - The company's business model focuses on three core areas: maximizing production from existing oil and gas reserves, decommissioning end-of-life assets, and supporting offshore renewable energy projects[20](index=20&type=chunk) - Operations are managed through three segments: Well Intervention (vessels like Q4000, Q5000), Robotics (ROVs, trenchers), and Production Facilities (Helix Producer I)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - On July 1, 2022, the company acquired Alliance to expand its service capabilities into the shallow water Gulf of Mexico market[20](index=20&type=chunk) [Note 5 — Long-Term Debt](index=14&type=section&id=Note%205%20%E2%80%94%20Long-Term%20Debt) As of June 30, 2022, total long-term debt stood at **$259.0 million**, with the company maintaining an **$80 million** ABL Facility, which was increased to **$100 million** in July 2022, and during the period, the company fully redeemed the remaining **$35 million** of its 2022 Convertible Senior Notes upon maturity, with the debt structure also including 2023 Notes (**$30 million**), 2026 Notes (**$200 million**), and MARAD Debt (**$44.9 million**), and the company was in compliance with all debt covenants Scheduled Maturities of Long-Term Debt (as of June 30, 2022) | Debt Instrument (in thousands) | Less than one year | One to two years | Three to four years | Total Gross Debt | | :--- | :--- | :--- | :--- | :--- | | 2023 Notes | $0 | $30,000 | $0 | $30,000 | | 2026 Notes | $0 | $0 | $200,000 | $200,000 | | MARAD Debt | $8,133 | $8,538 | $9,412 | $44,930 | | **Total** | **$8,133** | **$38,538** | **$209,412** | **$274,930** | - The company fully redeemed the **$35 million** remaining principal of its 2022 Convertible Senior Notes upon maturity on May 1, 2022[36](index=36&type=chunk) - As of June 30, 2022, the company had no borrowings under its ABL Facility, with an available capacity of **$60.3 million**, and the facility was subsequently upsized from **$80 million** to **$100 million** on July 1, 2022[31](index=31&type=chunk)[35](index=35&type=chunk) - The company was in compliance with all debt covenants as of June 30, 2022[52](index=52&type=chunk) [Note 7 — Revenue from Contracts with Customers](index=19&type=section&id=Note%207%20%E2%80%94%20Revenue%20from%20Contracts%20with%20Customers) The company's revenue is primarily derived from short-term and long-term service contracts, with total revenue for the six months ended June 30, 2022, at **$312.7 million**, and short-term contracts contributing **$223.7 million**, and as of June 30, 2022, the company had **$551.5 million** in unsatisfied performance obligations (backlog), with **$232.4 million** expected to be recognized in the remainder of 2022 Disaggregated Revenue by Segment (Six Months Ended June 30, 2022, in thousands) | Segment | Short-term Revenue | Long-term Revenue | Total Revenue | | :--- | :--- | :--- | :--- | | Well Intervention | $177,394 | $35,264 | $212,658 | | Robotics | $46,989 | $40,212 | $87,201 | | Production Facilities | $0 | $35,972 | $35,972 | - As of June 30, 2022, the company reported **$551.5 million** in backlog (unsatisfied performance obligations)[61](index=61&type=chunk) - Of the total backlog, **$232.4 million** is expected to be recognized as revenue in 2022, **$233.5 million** in 2023, and **$85.6 million** in 2024[61](index=61&type=chunk) [Note 10 — Business Segment Information](index=24&type=section&id=Note%2010%20%E2%80%94%20Business%20Segment%20Information) For Q2 2022, the Robotics segment showed strong growth in revenue and operating income, while the Well Intervention segment experienced a significant decline, posting a **$22.5 million** operating loss compared to a **$6.7 million** loss in Q2 2021, and for the first six months of 2022, the Well Intervention segment's operating loss widened to **$54.3 million** from a **$1.5 million** loss a year prior, whereas the Robotics segment's operating income grew to **$11.1 million** from a **$2.7 million** loss Segment Performance (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenues** | | | | | | Well Intervention | $106,291 | $132,305 | $212,658 | $266,073 | | Robotics | $49,850 | $31,651 | $87,201 | $53,807 | | Production Facilities | $17,678 | $14,218 | $35,972 | $30,665 | | **Income (Loss) from Operations** | | | | | | Well Intervention | $(22,548) | $(6,719) | $(54,306) | $(1,476) | | Robotics | $9,666 | $255 | $11,146 | $(2,679) | | Production Facilities | $6,045 | $4,682 | $11,896 | $11,196 | [Note 16 — Subsequent Events](index=30&type=section&id=Note%2016%20%E2%80%94%20Subsequent%20Events) On July 1, 2022, the company completed its acquisition of Alliance, a provider of services for the upstream and midstream industries in the Gulf of Mexico shelf, with the transaction involving approximately **$120 million** in cash at closing, with potential post-closing earn-out consideration, and this acquisition is a strategic move to expand into the shallow-water decommissioning market - Completed the acquisition of Alliance on July 1, 2022, for approximately **$120 million** in cash at closing[89](index=89&type=chunk) - The acquisition includes a potential post-closing earn-out payable in 2024 based on Alliance's financial performance in 2022 and 2023[89](index=89&type=chunk) - This strategic acquisition expands the company's energy transition strategy by adding shallow-water decommissioning capabilities[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management noted that while high oil and gas prices should lead to higher customer spending, headwinds such as regional conflicts, inflation, and ESG initiatives may temper this growth, with the company's consolidated backlog at **$552 million** as of June 30, 2022, and Q2 2022 revenues flat year-over-year, as a **57%** increase in Robotics revenue was offset by a **20%** decrease in Well Intervention revenue, and the company's liquidity remains strong at **$320.9 million**, which is expected to be sufficient to fund operations, service debt, and cover costs from the recent Alliance acquisition [Executive Summary](index=33&type=section&id=Executive%20Summary) The company's business is influenced by oil and gas market conditions, with recent high prices expected to boost customer spending, however, management acknowledges risks from geopolitical issues, inflation, and the shift to renewable energy, and the company believes its focus on production enhancement, decommissioning, and renewables positions it well for the long term, with consolidated backlog standing at **$552 million** as of June 30, 2022 - Demand is influenced by oil/gas and renewable energy markets, and while high commodity prices are favorable, headwinds like regional conflicts, inflation, and ESG initiatives create uncertainty[100](index=100&type=chunk)[101](index=101&type=chunk) - The company is subject to rising costs due to inflation but believes it can manage these pressures through price adjustments and cost reduction efforts[108](index=108&type=chunk) - Consolidated backlog totaled **$552 million** as of June 30, 2022, with **$232 million** expected to be performed in the remainder of 2022[109](index=109&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) For Q2 2022, consolidated net revenues were flat at **$162.6 million** compared to Q2 2021, with a **57%** increase in Robotics revenue, driven by higher vessel and ROV activity, offset by a **20%** decline in Well Intervention revenue due to lower utilization of the Q7000 and lower rates in Brazil, which led to a consolidated gross loss of **$1.4 million** for the quarter, and for the six-month period, revenues decreased **4%** to **$312.7 million**, and the gross loss was **$20.0 million**, a sharp decline from a **$17.8 million** gross profit in the prior year period Segment Revenue and Gross Profit Comparison (Three Months Ended June 30) | Segment (in thousands) | Revenue 2022 | Revenue 2021 | % Change | Gross Profit (Loss) 2022 | Gross Profit (Loss) 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Well Intervention | $106,291 | $132,305 | (20)% | $(19,336) | $(2,542) | | Robotics | $49,850 | $31,651 | 57% | $11,597 | $2,286 | | Production Facilities | $17,678 | $14,218 | 24% | $6,687 | $5,103 | - The decrease in Well Intervention Q2 revenue was primarily due to lower utilization of the Q7000 in West Africa and lower rates and utilization for vessels in Brazil[119](index=119&type=chunk) - The increase in Robotics Q2 revenue was driven by higher vessel and ROV activity, with chartered vessel days increasing to **370** from **236** in Q2 2021[120](index=120&type=chunk) - For the six months ended June 30, 2022, consolidated gross loss was **$20.0 million** compared to a gross profit of **$17.8 million** in the prior year, a negative swing of **$37.7 million**[129](index=129&type=chunk)[134](index=134&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity stood at **$320.9 million** as of June 30, 2022, comprising **$260.6 million** in cash and **$60.3 million** in available borrowing capacity, and management believes this is sufficient to fund operations, service debt, and cover cash requirements for at least the next 12 months, including the recent **$120 million** cash payment for the Alliance acquisition, with cash flow from operations being negative **$23.3 million** for the first half of 2022, a significant decrease from a positive **$92.5 million** in the same period of 2021, reflecting lower earnings and higher costs Financial Condition (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Net working capital | $252,678 | $251,255 | | Long-term debt | $258,977 | $262,137 | | Liquidity | $320,857 | $304,660 | - Cash flow from operations decreased significantly to **$(23.3) million** for H1 2022 from **$92.5 million** in H1 2021, primarily due to lower earnings and negative changes in working capital[148](index=148&type=chunk)[149](index=149&type=chunk) - Material cash requirements include debt service, operating leases, and approximately **$31.0 million** for decommissioning obligations expected to be paid within the next 12 months[154](index=154&type=chunk)[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure as of June 30, 2022, is foreign currency exchange rate risk, as it operates globally and conducts business in currencies other than the U.S. dollar, and for the first six months of 2022, the company recorded foreign currency transaction losses of **$17.4 million**, primarily related to its UK subsidiaries due to the weakening of the British pound, and the company had no exposure to interest rate risk as it had no outstanding debt with floating rates - The primary market risk is foreign currency exchange rates due to global operations[160](index=160&type=chunk)[161](index=161&type=chunk) - For the six months ended June 30, 2022, the company recorded foreign currency transaction losses of **$17.4 million**, primarily due to the weakening of the British pound against the U.S. dollar[163](index=163&type=chunk) - The company had no exposure to interest rate risk as of June 30, 2022, because it had no outstanding debt subject to floating rates[160](index=160&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2022, and concluded that these controls were effective, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2022, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[164](index=164&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[165](index=165&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in several lawsuits filed by current and former offshore employees seeking overtime compensation, and in one case, an adverse ruling was issued by the Fifth Circuit Court of Appeals, and the U.S. Supreme Court granted the company's petition for a writ of certiorari in May 2022, and the company continues to defend these lawsuits but has established a liability for certain matters - The company is involved in several collective action lawsuits from offshore employees seeking overtime compensation[82](index=82&type=chunk) - In May 2022, the U.S. Supreme Court agreed to hear the company's appeal of an adverse ruling from the Fifth Circuit Court of Appeals in one of these cases[82](index=82&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company highlights new and updated risk factors following the Alliance acquisition, including the risk of failing to comply with the Jones Act's U.S. citizen ownership provisions, which is now more relevant due to the acquisition of **21** U.S. flagged vessels, and additionally, the company notes risks associated with executing strategic transactions, such as the potential for integration challenges, increased debt, and failure to achieve intended financial results - A new risk factor relates to compliance with the Jones Act, as the Alliance acquisition added **21** U.S. flagged vessels, and failure to maintain U.S. citizen status could adversely affect operations[169](index=169&type=chunk) - The company outlines risks related to strategic transactions, including difficulties in integrating acquired businesses, realizing expected synergies, and the potential for increased debt or share dilution[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the second quarter of 2022, the company did not repurchase any of its own equity securities, and as of June 30, 2022, the maximum number of shares that may yet be purchased under the company's stock repurchase program was approximately **9.3 million** - No shares were repurchased by the company during the three months ended June 30, 2022[178](index=178&type=chunk) - As of June 30, 2022, **9,260,720** shares remained available for repurchase under the company's publicly announced program[178](index=178&type=chunk)

Helix Energy Solutions Group, Inc. (NYSE:HLX) Q2 2022 Earnings Conference Call July 26, 2022 10:00 AM ET Company Participants Brent Arriaga - CAO & Corporate Controller Kenneth Neikirk - General Counsel Owen Kratz - CEO Scott Sparks - COO Erik Staffeldt - CFO Conference Call Participants James Schumm - Cowen Donald Crist - Johnson Rice David Smith - Pickering Energy Partners Samantha Hoh - Evercore ISI Operator Greetings, and welcome to the Second Quarter Helix Energy Solutions, 2022 Earnings Call. [Operato ...