HOUSTON, May 2 /PRNewswire-FirstCall/ -- Helix Energy Solutions reported first quarter net income of $55.8 million, or $0.60 per diluted share.
Summary of Results
(in thousands, except per share amounts and percentages)
First Quarter Fourth Quarter
2007 2006 2006
Revenues $396,055 $291,648 $395,839
Gross Profit 135,615 102,266 150,980
34% 35% 38%
Net Income 55,820 55,389 162,479*
14% 19% 41%
Diluted Earnings Per Share 0.60 0.67 1.73*
* Includes gain from sale of Cal Dive IPO of $96.5 million, net of taxes,
or $1.02 per diluted share.
Martin Ferron, President and Chief Executive Officer of Helix, stated, "Historically Q1 has been our slowest quarter for earnings due to seasonality and scheduled maintenance activity. This, together with the planned ramp up in our oil and gas production this year, is why we guided that less than 20% of our 2007 earnings would occur in this Q1. Actual earnings were near where we expected, despite production being in the bottom third of our guidance range and another period of unscheduled downtime for the Q4000. This points to the continuing strengthening of the market for our Contracting Services and our performance in deepwater pipelay, robotics and shallow water services (Cal Dive) was particularly encouraging. Additionally we were extremely pleased with the outcome of our exploration program adding around 100 bcfe to our proven reserves. Obviously we were delighted to replace more than our anticipated 2007 production in just one quarter."
"During the improved weather of Q2 we will swing into action with our production enhancement efforts and the results should start to show in Q3. For that reason we expect our Q2 earnings performance to be similar to that achieved in Q1. We have also completed an assessment of the key variables that drive our earnings for the year and that will be covered in the conference call tomorrow. Based on this analysis, we narrow our full year earnings guidance range to $3.00 -- $3.90/share."
Financial Highlights
* Revenues: The $104.4 million increase in year-over-year first quarter
revenues was driven primarily by significant improvements in
contracting services revenues due to the introduction of newly
acquired assets and improved market conditions. In addition, Oil and
Gas sales increased $50.7 million due primarily to the production
added from the Remington acquisition.
* Margins: 34% is essentially flat with the year ago quarter (35%) as
improved margins in the Oil and Gas segment ($20.7 million Tulane
write off in 1Q 2006) offset lower margins in the Contracting Services
segment (Q4000 downtime in 1Q 2007 due to thruster problems).
* SG&A: $30.6 million increased $9.6 million from the same period a
year ago due primarily to increased overhead to support the Company's
growth. This level of SG&A was 8% of first quarter revenues, slightly
above the 7% in the year ago quarter.
* Interest Expense: $13.0 million is $10.5 million more than the $2.5
million in the first quarter of 2006 due primarily to the debt
incurred for the cash portion ($835 million) of the Remington
acquisition in July, 2006.
* Equity in Earnings: $6.1 million reflects primarily our share of
Deepwater Gateway, L.L.C.'s earnings for the quarter relating to the
Marco Polo facility.
* Income Tax Provision: The Company's effective tax rate for the
quarter was 34% which is essentially the same as last year's first
quarter.
* Shares Outstanding: On July 1, 2006, Helix acquired Remington Oil &
Gas Corporation for approximately $1.4 billion paying approximately
58% with cash and 42% with Helix stock. The additional shares were
the primary cause of total diluted shares outstanding increasing to
94.3 million for the first quarter 2007 from 83.8 million in the first
quarter 2006. This increase was partially offset by the Company
buying back $50 million (1.7 million shares) of its stock in the open
market during the fourth quarter.
* Balance Sheet: Total consolidated debt as of March 31, 2007 was $1.45
billion. This includes $172 million under Cal Dive's new revolving
facility which is non-recourse to Helix. We had $203 million of cash
and liquid investments on hand as of March 31, 2007. This represents
43% net debt to book capitalization and with $691 million of EBITDAX
(excluding the gain on sale of the Cal Dive IPO) over the last twelve
months, this represents 1.8 times trailing twelve month EBITDAX.
Further details are provided in the presentation for Helix's quarterly conference call (see the Investor Relations page of http://www.helixesg.com/ ). The call, scheduled for 9:00 a.m. Central Daylight Time on Thursday, May 3, 2007, will be webcast live. A replay will be available from the Audio Archives page.
Helix Energy Solutions, headquartered in Houston, Texas, is an international offshore energy company that provides development solutions and other key life of field services to the open energy market as well as to our own reservoirs. Our oil and gas business is a prospect generation, exploration, development and production company. Employing our own key services and methodologies, we seek to lower finding and development costs, relative to industry norms.
FORWARD-LOOKING STATEMENTS
This press release and attached presentation contain 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 of historical fact, are statements that could be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, any projections of revenue, gross margin, expenses, earnings or losses from operations, or other financial items; future production volumes, results of exploration, exploitation, development, acquisition and operations expenditures, and prospective reserve levels of property or wells; any statements of the plans, strategies and objectives of management for future operations; any statement concerning developments, performance or industry rankings; any statements regarding future economic conditions or performance; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions referred to above include the performance of contracts by suppliers, customers and partners; employee management issues; complexities of global political and economic developments, geologic risks and other risks described from time to time in our reports filed with the Securities and Exchange Commission ("SEC"), including the Company's Annual Report on Form 10-K for the year ending December 31, 2006 and subsequent quarterly reports on Form 10-Q. We assume no obligation and do not intend to update these forward-looking statements.
Comparative Condensed Consolidated Statements of Operations
Three Months Ended Mar. 31,
(in thousands, except per share data) 2007 2006
(Unaudited)
Net revenues $396,055 $291,648
Cost of sales 260,440 189,382
Gross profit 135,615 102,266
Selling and administrative 30,600 21,028
Income from operations 105,015 81,238
Equity in earnings of investments 6,104 6,236
Net interest expense and other 13,012 2,190
Income before income taxes 98,107 85,284
Income tax provision 33,123 29,091
Minority interest 8,219 ---
Net income 56,765 56,193
Preferred stock dividends 945 804
Net income applicable to common shareholders $55,820 $55,389
Weighted Avg. Shares Outstanding:
Basic 89,994 77,969
Diluted 94,312 83,803
Earnings Per Share:
Basic $0.62 $0.71
Diluted $0.60 $0.67
Comparative Condensed Consolidated Balance Sheets
ASSETS
(in thousands) Mar. 31, 2007 Dec. 31, 2006
(unaudited)
Current Assets:
Cash and equivalents $183,134 $206,264
Short-term investments 19,575 285,395
Accounts receivable 385,631 370,709
Other current assets 62,992 61,532
Total Current Assets 651,332 923,900
Net Property & Equipment:
Contracting Services 836,261 800,503
Oil and Gas 1,505,291 1,411,955
Equity investments 219,720 213,362
Goodwill 824,137 822,556
Other assets, net 123,030 117,911
Total Assets $4,159,771 $4,290,187
Comparative Condensed Consolidated Balance Sheets
LIABILITIES & SHAREHOLDERS' EQUITY
(in thousands)
Mar. 31, 2007 Dec. 31, 2006
(unaudited)
Current Liabilities:
Accounts payable $210,688 $240,067
Accrued liabilities 190,694 199,650
Income taxes payable 9,969 147,772
Current mat of L-T debt [A] 25,993 25,887
Total Current Liabilities 437,344 613,376
Long-term debt [A] 1,420,764 1,454,469
Deferred income taxes 454,539 436,544
Decommissioning liabilities 139,213 138,905
Other long-term liabilities 7,343 6,143
Minority interest 68,525 59,802
Convertible preferred stock [A] 55,000 55,000
Shareholders' equity [A] 1,577,043 1,525,948
Total Liabilities & Equity $4,159,771 $4,290,187
[A] Net debt to book capitalization -- 43% at March 31, 2007. Calculated
as total debt less cash and equivalents and short-term investments
($1,244,048) divided by sum of total debt less cash and equivalents
and short-term investments, convertible preferred stock and
shareholders' equity ($2,876,091).
Helix Energy Solutions Group, Inc.
Reconciliation of Non GAAP Measures
Three Months Ended March 31, 2007
Earnings Release:
Balance Sheet: " ... 1.8 times trailing twelve month EBITDAX."
Reconciliation From Net Income to EBITDAX
(excluding gain on sale of Cal Dive IPO):
1Q07 4Q06 3Q06 2Q06 1Q06
(in thousands, except ratio)
Net income applicable
to common shareholders $55,820 $65,948 $57,029 $69,139 55,389
Preferred stock dividends 945 945 804 805 804
Income tax provision 28,617 34,166 31,409 35,887 29,091
Net interest expense
and other 12,331 13,981 15,103 2,983 2,457
Non-cash stock
compensation expense 3,267 2,797 1,910 2,251 1,565
Depreciation and
amortization 67,558 61,809 63,879 34,346 33,226
Exploration expense 1,190 1,820 19,520 1,029 22,105
Share of equity
investments: --- --- --- --- ---
Depreciation 1,004 1,004 1,004 1,003 1,008
Interest expense, net (57) (70) (59) (43) (27)
EBITDAX $170,675 $182,400 $190,599 $147,400 $145,618
Trailing Twelve
Months EBITDAX $691,074
Net Debt at
March 31, 2007 (a) $1,244,048
Ratio 1.8
We calculate EBITDAX as earnings before net interest expense, taxes,
depreciation and amortization, exploration expense, non-cash stock
compensation expense and our share of depreciation, net interest expense
and taxes from our equity investments. Further, we reduce EBITDAX for the
minority interest in Cal Dive that we do not own. EBITDAX margin is
defined as EBITDAX divided by net revenues. These non-GAAP measures are
useful to investors and other internal and external users of our financial
statements in evaluating our operating performance because it is widely
used by investors in our industry to measure a company's operating
performance without regard to items which can vary substantially from
company to company and helps investors meaningfully compare our results
from period to period. EBITDAX should not be considered in isolation or
as a substitute for, but instead is supplemental to, income from
operations, net income or other income data prepared in accordance with
GAAP. Non-GAAP financial measures should be viewed in addition to, and
not as an alternative to our reported results prepared in accordance with
GAAP. Users of this financial information should consider the types of
events and transactions which are excluded.
(a) Total debt less cash, cash equivalents and short-term investments
