Helix Energy Solutions(US:HLX)2021-07-28 20:42Financial Performance - Consolidated net revenues for the three-month period ended June 30, 2021, decreased by 19% to $161.9 million compared to $199.1 million in the same period in 2020[133]. - Well Intervention revenues decreased by 9% to $132.3 million, primarily due to lower vessel utilization and rates[134]. - Robotics revenues decreased by 38% to $31.7 million, reflecting fewer vessel days and reduced trenching activities[135]. - Production Facilities revenues increased by 5% to $14.2 million, driven by higher revenues from a new agreement effective April 1, 2021[136]. - Gross profit decreased by $26.4 million to $3.1 million for the three-month period ended June 30, 2021, primarily due to lower gross profit in Well Intervention and Robotics segments[137]. - Consolidated net revenues for the six-month period ended June 30, 2021, decreased by 14% to $325.4 million compared to $380.2 million in the same period in 2020[146]. - Well Intervention revenues decreased by 7% to $266.1 million, primarily due to lower vessel utilization in the North Sea and Gulf of Mexico[147]. - Robotics revenues decreased by 38% to $53.8 million, attributed to fewer vessel days and decreased utilization of ROVs and ROVDrill[148]. - Production Facilities revenues increased by 5% to $30.7 million, driven by higher HFRS revenues and oil and gas production[149]. - Gross profit decreased by $13.8 million to $17.8 million, with significant declines in Well Intervention and Robotics segments[150]. Cash Flow and Liquidity - Free cash flow for the six months ended June 30, 2021, was $85.8 million, a significant improvement from a negative $11.0 million in the same period in 2020[130]. - Cash provided by operating activities was $92.5 million, a significant increase from $6.0 million in the same period in 2020[162]. - Operating cash flows increased to $92.5 million for the six-month period ended June 30, 2021, compared to $6.0 million for the same period in 2020, reflecting improvements in working capital and higher income tax refunds[167]. - Free cash flow rose by $96.8 million for the six-month period ended June 30, 2021, primarily due to increased operating cash flows and decreased capital expenditures[171]. - Liquidity as of June 30, 2021, was $416.2 million, down from $451.5 million at the end of 2020[160]. - Net cash outflows from financing activities were $62.8 million for the six-month period ended June 30, 2021, mainly due to the repayment of $59.1 million of scheduled maturities related to indebtedness[170]. - Capital expenditures for the six months ended June 30, 2021, totaled $(6,761) thousand, a decrease from $(17,081) thousand in the same period of 2020[168]. - As of June 30, 2021, the available borrowing capacity under the Revolving Credit Facility was $172.3 million, net of $2.7 million of letters of credit issued[166]. - Total cash obligations as of June 30, 2021, amounted to $646.4 million, with $190.6 million due within one year[172]. Market Conditions and Demand - The demand for services is influenced by the condition of the oil and gas and renewable energy markets, particularly the willingness of offshore energy companies to spend on operational activities and capital projects[117]. - The ongoing COVID-19 pandemic has resulted in a new period of market weakness, impacting the demand and rates for services offered to oil and gas customers[121]. - The company expects that oil and gas companies will increasingly focus on optimizing production of existing subsea wells rather than new exploration projects[122]. - The demand for services in the renewable energy market is affected by factors such as technological advancements and government subsidies for renewable energy projects[123]. Operational Insights - As of June 30, 2021, the company's consolidated backlog totaled $291 million, with $153 million expected to be performed over the remainder of 2021[124]. - Approximately 51% of the total backlog is represented by agreements with Petrobras for well intervention services offshore Brazil and a fixed fee agreement for the HP I[124]. - The company operates three reportable business segments: Well Intervention, Robotics, and Production Facilities[126]. - The company has a well intervention fleet that includes seven purpose-built vessels and 42 work-class ROVs, supporting operations globally[116]. - The performance of the business is largely affected by prevailing market prices for oil and natural gas, which are influenced by various economic and geopolitical factors[117]. - The company believes it has a competitive advantage in performing well intervention services efficiently, driven by the need to prolong well life and safely decommission end-of-life wells[122]. Expenses and Taxation - Selling, general and administrative expenses decreased to $13.4 million from $15.9 million, reflecting lower credit loss reserves[141]. - Net interest expense decreased to $5.9 million from $7.1 million, attributed to reduced overall debt levels[142]. - Net other income was $1.0 million for the three-month period ended June 30, 2021, compared to a net other expense of $2.1 million in the same period in 2020[143]. - Income tax benefit increased to $2.0 million from $0.3 million, with effective tax rates of 12.6% for 2021 and (5.2)% for 2020[144]. - Selling, general and administrative expenses decreased to $28.6 million from $32.2 million, reflecting lower credit loss reserves[154]. - Net interest expense decreased to $12.0 million from $12.8 million, due to lower overall debt levels[155]. Risks and Challenges - The ongoing COVID-19 pandemic continues to impact revenues and is expected to affect results in the foreseeable future[164]. - The company anticipates challenges in complying with debt covenants due to ongoing weak industry activity and potential decreases in revenues and EBITDA[166]. - Interest rate risk exposure includes $28.0 million of outstanding debt subject to floating rates, with a hypothetical increase of 100 basis points estimated to incur an additional $0.2 million in interest expense[178]. - The company does not anticipate borrowing under the Revolving Credit Facility other than for the issuance of letters of credit[166].