Financial Highlights Q2 2024 Performance Summary Helix reported a significant turnaround in Q2 2024 with a net income of $32.3 million, compared to a net loss of $26.3 million in Q1 2024 and net income of $7.1 million in Q2 2023, with the Q1 2024 loss impacted by a $20.9 million pre-tax loss from debt retirement, and Adjusted EBITDA more than doubled quarter-over-quarter to $96.9 million, showing strong year-over-year growth Q2 2024 Key Financial Metrics ($ in millions) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Net Income (Loss) | $32.3 | $(26.3) | $7.1 | | Diluted EPS | $0.21 | $(0.17) | $0.05 | | Adjusted EBITDA | $96.9 | $47.0 | $71.3 | First Half (H1) 2024 vs 2023 Performance ($ in millions) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Income | $6.0 | $1.9 | | Diluted EPS | $0.04 | $0.01 | | Adjusted EBITDA | $143.9 | $106.4 | - The net loss in Q1 2024 included a significant pre-tax loss of approximately $20.9 million, or $(0.14) per diluted share, related to the retirement of Convertible Senior Notes due 20263 CEO Commentary The CEO highlighted strong Q2 2024 performance driven by seasonal activity increases and improvements across all segments, with a particularly strong showing from the Robotics segment, while acknowledging near-term softness in the Shallow Water Abandonment market, noting that recent financial clean-ups, such as the Alliance earn-out settlement and convertible note retirement, provide a clearer view of the company's performance, with the focus remaining on executing the Energy Transition strategy with expectations for further improvements in 2025 - Performance benefitted from a seasonal pick-up in activity in the North Sea and Gulf of Mexico shelf22 - The Robotics segment outperformed with strong results from trenching and renewables operations in the North Sea and Asia Pacific22 - The settlement of the Alliance earn-out and retirement of 2026 convertible notes are expected to provide clearer financial results and cash flows going forward22 Segment Performance Analysis Well Intervention The Well Intervention segment saw revenue increase 4% quarter-over-quarter to $224.7 million, driven by higher utilization and rates in the North Sea, and year-over-year, revenue surged 46% due to improved utilization and rates in the Gulf of Mexico and higher contributions from the Seawell and Q7000 vessels, with overall vessel utilization standing at 94% for the quarter Well Intervention Performance ($ in thousands) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Revenues | $224,679 | $216,459 | $154,221 | | Operating Income | $29,299 | $18,679 | $3,380 | - QoQ revenue growth was driven by higher utilization and rates for the Well Enhancer in the North Sea following its Q1 dry dock, and higher rates in the Gulf of Mexico5 - YoY revenue growth was primarily due to higher utilization and rates in the Gulf of Mexico (as Q4000 was in dry dock in Q2 2023) and a full quarter of utilization from the Q700012 - Overall vessel utilization was 94% in Q2 2024, compared to 90% in Q1 2024 and 84% in Q2 2023512 Robotics The Robotics segment delivered strong growth, with revenues increasing 61% quarter-over-quarter and 16% year-over-year to $81.2 million, driven by seasonally higher vessel, trenching, and ROV activities, and utilization for ROV and trenchers reached 76%, a significant increase from both the prior quarter and the previous year Robotics Performance ($ in thousands) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Revenues | $81,249 | $50,309 | $70,050 | | Operating Income | $28,400 | $5,450 | $17,467 | - QoQ revenue surged 61% due to seasonally higher activity, with chartered vessel utilization at 97% and integrated vessel trenching days increasing to 232 from 85 in Q125 - YoY revenue grew 16% due to higher chartered vessel days, trenching, and ROV activities13 - ROV and trencher utilization increased to 76% in Q2 2024, up from 58% in both Q1 2024 and Q2 20231325 Shallow Water Abandonment This segment's performance reflected market softness, with revenues increasing 89% quarter-over-quarter to $50.8 million due to seasonal activity, but falling 33% year-over-year, attributed to lower activity and a softer Gulf of Mexico shelf market, leading to a significant drop in operating income from $19.8 million in Q2 2023 to a loss of $0.3 million in Q2 2024 Shallow Water Abandonment Performance ($ in thousands) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Revenues | $50,841 | $26,853 | $76,306 | | Operating Income (Loss) | $(281) | $(12,428) | $19,762 | - YoY revenue decreased 33% due to lower activity levels and a softer Gulf of Mexico shelf market, with overall vessel utilization dropping to 58% from 78% in Q2 202314 - QoQ revenue increased 89% reflecting seasonally higher activity levels on the Gulf of Mexico shelf, with vessel utilization up from 41% in Q1 202426 Production Facilities The Production Facilities segment's revenue grew 5% quarter-over-quarter and 10% year-over-year to $25.4 million, swinging to an operating income of $9.1 million from a loss of $1.5 million in the prior quarter, primarily because Q1 was impacted by $8.6 million in workover costs Production Facilities Performance ($ in thousands) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Revenues | $25,400 | $24,152 | $23,128 | | Operating Income (Loss) | $9,097 | $(1,543) | $7,774 | - The significant QoQ improvement in operating income was mainly due to the absence of approximately $8.6 million in workover costs incurred on the Thunder Hawk wells during Q1 202419 - YoY revenue increased 10% due to higher oil and gas production, as both fields had been shut-in for maintenance during parts of Q2 202327 Other Financial Details Selling, General and Administrative (SG&A) SG&A expenses were $22.3 million in Q2 2024, a slight increase from $21.0 million in the prior quarter due to higher compensation costs, and as a percentage of revenue, SG&A improved to 6.1% from 7.0% in Q1 2024 SG&A Expenses ($ in millions) | Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | SG&A Expense | $22.3 | $21.0 | | SG&A as % of Revenue | 6.1% | 7.0% | Other Income and Expenses Other expense, net, was $0.4 million in Q2 2024, a significant decrease from $2.2 million in Q1 2024, with the prior quarter's expense primarily driven by foreign currency losses related to the depreciation of the British pound, which had an inconsequential impact in the current quarter - Other expense, net was $0.4 million in Q2 2024, down from $2.2 million in Q1 20246 - The higher expense in Q1 2024 was mainly due to foreign currency losses from the depreciation of the British pound against the U.S. dollar6 Share Repurchases During the second quarter of 2024, the company repurchased approximately 0.5 million shares of its stock for a total of $5.2 million - The company repurchased 0.5 million shares for $5.2 million in Q2 202428 Financial Condition and Liquidity Cash Flow Analysis Operating cash flow was an outflow of $12.2 million in Q2 2024, heavily impacted by a $58.3 million Alliance earn-out payment, compared to an inflow of $64.5 million in Q1 2024, consequently, Free Cash Flow was negative at $16.2 million for the quarter, with capital expenditures remaining low at $4.0 million Cash Flow Summary ($ in millions) | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Operating Cash Flow | $(12.2) | $64.5 | $31.5 | | Capital Expenditures | $4.0 | $3.6 | $1.3 | | Free Cash Flow | $(16.2) | $61.2 | $30.2 | - Q2 2024 operating cash flow included a $58.3 million payment for the Alliance earn-out16 Liquidity and Debt Position As of June 30, 2024, Helix maintained a solid liquidity position of $370.1 million, consisting of $275.1 million in cash and $95.1 million available under its ABL facility, with consolidated long-term debt standing at $318.6 million, resulting in a Net Debt of $43.6 million Liquidity and Debt as of June 30, 2024 ($ in millions) | Metric | Amount | | :--- | :--- | | Cash and cash equivalents | $275.1 | | ABL Facility Capacity | $95.1 | | Total Liquidity | $370.1 | | Long-term Debt | $318.6 | | Net Debt | $43.6 | Consolidated Financial Statements Condensed Consolidated Statements of Operations For the second quarter of 2024, the company reported total revenues of $364.8 million, leading to a gross profit of $75.5 million, and after accounting for all operating and non-operating expenses, including a $14.7 million tax provision, net income was $32.3 million, or $0.21 per diluted share Q2 2024 Statement of Operations Highlights ($ in thousands) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net revenues | $364,797 | $308,817 | | Gross profit | $75,486 | $55,349 | | Income from operations | $53,193 | $20,205 | | Net income | $32,289 | $7,100 | | Diluted EPS | $0.21 | $0.05 | Comparative Condensed Consolidated Balance Sheets As of June 30, 2024, Helix had total assets of $2.60 billion, compared to $2.56 billion at year-end 2023, with total liabilities standing at $1.10 billion, and shareholders' equity at $1.50 billion, while cash and cash equivalents decreased to $275.1 million from $332.2 million at the end of 2023 Balance Sheet Highlights ($ in thousands) | Line Item | June 30, 2024 | Dec. 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $275,066 | $332,191 | | Total Current Assets | $623,915 | $697,841 | | Total Assets | $2,596,937 | $2,556,036 | | Total Current Liabilities | $300,174 | $448,618 | | Total Liabilities | $1,100,149 | $1,054,036 | | Shareholders' equity | $1,496,788 | $1,501,000 | Non-GAAP Financial Measures Reconciliation of Non-GAAP Measures The company uses non-GAAP measures like Adjusted EBITDA, Free Cash Flow, and Net Debt for performance evaluation, and for Q2 2024, Net Income of $32.3 million was reconciled to Adjusted EBITDA of $96.9 million by adjusting for taxes, interest, D&A, and other items, with Free Cash Flow calculated as $(16.2) million from operating cash flows of $(12.2) million less capital expenditures, and Net Debt confirmed at $43.6 million - Management uses EBITDA, Adjusted EBITDA, Free Cash Flow, and Net Debt to monitor performance, compare with industry peers, and for strategic planning3448 Q2 2024 Reconciliation of Net Income to Adjusted EBITDA ($ in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $32,289 | | Income tax provision | $14,725 | | Net interest expense | $5,891 | | Other expense, net | $382 | | Depreciation and amortization | $43,471 | | EBITDA | $96,758 | | Other adjustments | $137 | | Adjusted EBITDA | $96,895 | Q2 2024 Free Cash Flow & Net Debt Calculation ($ in thousands) | Metric | Calculation | Result | | :--- | :--- | :--- | | Free Cash Flow | | $(16,153) | | Cash flows from operating activities | | $(12,164) | | Less: Capital expenditures, net | | $(3,989) | | Net Debt | | $43,563 | | Long-term debt | | $318,629 | | Less: Cash and cash equivalents | | $(275,066) |
Helix Energy Solutions(HLX) - 2024 Q2 - Quarterly Results